ConocoPhillips Company v. Vaquillas Unproven Minerals, LTD.

Opinion

ACCEPTED 04-15-00066-CV FOURTH COURT OF APPEALS SAN ANTONIO, TEXAS 5/29/2015 9:04:03 AM NO. 04-15-00066-CV KEITH HOTTLE CLERK

IN THE COURT OF APPEALS

FILED IN FOR THE FOURTH DISTRICT OF TEXAS AT SAN ANTONIO 4th COURT OF APPEALS SAN ANTONIO, TEXAS

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05/29/15 9:04:03 AM KEITH E. HOTTLE CONOCOPHILLIPS COMPANY APPELLANT Clerk

V.

VAQUILLAS UNPROVEN MINERALS, LTD. APPELLEE

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On Appeal from the 406th District Court, Webb County, Texas

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BRIEF OF APPELLEE

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GREGG OWENS State Bar No. 15383500 JOHN R. HAYS, JR. P. MICHAEL JUNG State Bar No. 09303300 State Bar No. 11054600 ALICIA R. RINGUET Strasburger & Price, LLP State Bar No. 24074958 4400 Bank of America Plaza Hays & Owens L.L.P. 901 Main Street 807 Brazos Street, Suite 500 Dallas, Texas 75202 Austin, Texas 78701 (214) 651-4300 (512) 472-3993 (214) 659-4022 (telecopy) (512) 472-3883 (telecopy) michael.jung@strasburger.com gregg.owens@haysowens.com john.hays@haysowens.com

RAUL LEAL ARMANDO X. LOPEZ State Bar No. 24032657 State Bar No. 12562400 Raul Leal Incorporated Armando Lopez, Attorney at Law 5810 San Bernardo, Suite 390 1510 Calle Del Norte, Suite 16 Laredo, Texas 78041 Laredo, Texas 78041 (956) 727-0039 (956) 726-0722 (956) 727-0369 (telecopy) (956) 726-6049 (telecopy) rleal@rl-lawfirm.com mandox@rio.bravo.net

ATTORNEYS FOR APPELLEE

ORAL ARGUMENT REQUESTED

IDENTITIES OF PARTIES AND COUNSEL

Party Counsel ConocoPhillips Company Michael V. Powell Appellant Cynthia K. Timms Elizabeth L. Tiblets Locke Lord LLP 2200 Ross Avenue, Suite 2200 Dallas, Texas 75201-6776

Adolfo Campero Campero & Associates, P.C. 315 Calle Del Norte, Suite 207 Laredo, Texas 78041 Vaquillas Unproven Minerals, Ltd. Gregg Owens Appellee John Hays Hays & Owens L.L.P. 807 Brazos Street, Suite 500 Austin, Texas 78701

P. Michael Jung Strasburger & Price, LLP 4400 Bank Of America Plaza 901 Main Street Dallas, Texas 75202

Raul Leal Raul Leal Incorporated 5810 San Bernardo, Suite 390 Laredo, Texas 78041

Armando X. Lopez Armando Lopez, Attorney at Law 1510 Calle Del Norte, Suite 16 Laredo, Texas 78041

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TABLE OF CONTENTS

Identities of Parties and Counsel.................................................................................i

Table of Contents ...................................................................................................... ii

Index of Authorities ................................................................................................... v

Statement of the Case............................................................................................. viii

Issue Presented ....................................................................................................... viii

Statement of Facts ...................................................................................................... 1

The Leases ....................................................................................................... 1

The Field Rules ................................................................................................ 2

The Well Density Rule .................................................................................... 4

The Partial Releases ......................................................................................... 4

The Litigation .................................................................................................. 5

Summary of the Argument......................................................................................... 5

Introduction to the Argument..................................................................................... 8

Oil and Gas Leases .......................................................................................... 8

Retained-Acreage Clauses ............................................................................... 9

Spacing, Density, and Units Under the Rules ............................................... 10

Argument.................................................................................................................. 11

I. UNDER THE PLAIN MEANING OF THE RETAINED-

ACREAGE CLAUSE, CONOCO IS OBLIGATED TO RELEASE ALL ACREAGE EXCEPT FOR 40 ACRES PER WELL. ....................................................................................... 11

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A. It Is the Spacing or Proration Provided by the Field Rule, Not Necessarily the Text of the Field Rule Itself, that Must Establish Units of Acreage Per Well. .................. 13

B. The Spacing Provided by Field Rule 2 “Establishes”

Units of Acreage per Well. ..................................................... 14

C. The Units Established by Field Rule 2’s Spacing Requirements Are “Different Units” Because They Are Different from 640 Acres. ............................................... 18

II. OTHER RULES OF CONSTRUCTION DO NOT PERMIT OR REQUIRE THE COURT TO DISREGARD THE PLAIN MEANING OF THE RETAINED-ACREAGE CLAUSE. ............................................................................................ 20

A. The Rule Against Surplusage Does Not Change the Result. ....................................................................................... 20

1. That Any Drilling Unit Established as a Result of Field-Rule Spacing Would Likely Be Less Than 640 Acres Does Not Create Surplusage. ........... 21

2. The 640-Acre Pooling Authorization Is Not Rendered Surplusage. .................................................. 23

3. The Requirement That Each Retained Unit Contain “At Least” One Well Is Not Rendered Surplusage. .................................................................... 24

4. That a Particular Field-Rule Spacing Establishes the Drilling Unit for Gas Wells at the Same Acreage as the Drilling Unit for Oil Wells Does Not Create Surplusage. ............................ 25

B. The Rule Regarding Special Limitations on a Grant of Leasehold Rights Has No Application Here..................... 26

III. THE MANIFEST PURPOSE OF THE RETAINED-

ACREAGE CLAUSE IS SERVED BY THE TRIAL COURT’S CONSTRUCTION. ........................................................ 28

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Prayer ....................................................................................................................... 29

Certificate of Service ............................................................................................... 30

Certificate of Compliance ........................................................................................ 31

Appendix Tab Amended Order on Cross-Motions for Summary Judgment (CR 433-35) ................................................................................................. 1 Amended Oil and Gas Mineral Lease [26,622.79-acre tract] (CR 283-301) ............................................................................................... 2 Oil and Gas Mineral Lease [6,740-acre tract] (CR 302-23) ........................... 3 Final Order Amending Field Rules for the Vaquillas Ranch (Lobo Cons.) Field Webb County, Texas (CR 254-55) .................................. 4 16 Tex. Admin. Code § 3.38 (CR 234-40) ..................................................... 5

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INDEX OF AUTHORITIES

Cases

Anadarko Petroleum Corp. v. Thompson, 94 S.W.3d 550 (Tex. 2002) .................................................................... 11, 26

Columbia Gas Transmission Corp. v. New Ulm Gas, Ltd., 940 S.W.2d 587 (Tex. 1996) .........................................................................16

ConocoPhillips Co. v. Ramirez, No. 04-05-00488-CV, 2006 Tex. App. LEXIS 5710 (Tex. App. – San Antonio 2006, no pet.) (mem. op.) ............................................................9, 22

Endeavor Energy Resources, L.P. v. Discovery Operating, Inc., 448 S.W.3d 169 (Tex. App. – Eastland 2014, pet. filed) ..............................27

Garcia v. King, 139 Tex. 578, 164 S.W.2d 509 (1942) ............................................................9

Heritage Resources, Inc. v. NationsBank, 939 S.W.2d 118 (Tex. 1996) ............................................................ 11, 16, 19

Jones v. Killingsworth, 403 S.W.2d 325 (Tex. 1965) ............................................................ 16, 17, 18

Railroad Commission v. WBD Oil & Gas Co., 104 S.W.3d 69 (Tex. 2003) .............................................................................2

Springer Ranch, Ltd. v. Jones, 421 S.W.3d 273 (Tex. App. – San Antonio 2013, no pet.) ...........................21

Unit Petroleum Co. v. David Pond Well Service, Inc., 439 S.W.3d 389 (Tex. App. – Amarillo 2014, pet. filed)..............................25

Universal CIT Credit Corp. v. Daniel, 150 Tex. 513, 243 S.W.2d 154 (1951) ..........................................................21

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Wagner & Brown, Ltd. v. Sheppard, 282 S.W.3d 419 (Tex. 2008) .........................................................................24

Statutes

Tex. Civ. Prac. & Rem. Code § 51.014(d).................................................................5

Administrative Materials

16 Tex. Admin. Code § 3.31(c)(1)...........................................................................15

16 Tex. Admin. Code § 3.37 ......................................................................... 4, 10, 22

16 Tex. Admin. Code § 3.38 ............................................................................ passim

16 Tex. Admin. Code § 3.38(b) .................................................................................4

16 Tex. Admin. Code § 3.38(b)(2)(A) .....................................................................16

16 Tex. Admin. Code § 3.38(b)(2), table entry (6) ..............................................4, 18

16 Tex. Admin. Code § 3.38(f) ................................................................................25

Secondary Sources

1 Ernest E. Smith & Jacqueline Lang Weaver, Texas Law of Oil and Gas § 4.1(B) (2014) ................................................................................................8

1 Ernest E. Smith & Jacqueline Lang Weaver, Texas Law of Oil and Gas § 5.2(B)(3) (2014) ............................................................................................9

2 Ernest E. Smith & Jacqueline Lang Weaver, Texas Law of Oil and Gas § 10.1(B)(2) (2014) ........................................................................................11

Black’s Law Dictionary (10th ed. 2014) ..................................................................18

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Bruce M. Kramer, Oil and Gas Leases and Pooling: A Look Back and a Peek Ahead, 45 Tex. Tech. L. Rev. 877 (2013) ............................................10

William Shakespeare, The Merchant of Venice, act III, scene 5 (circa 1598).........14

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STATEMENT OF THE CASE

Nature of the Case Suit by oil-and-gas lessor for damages, specific performance, and other relief, alleging lessee’s incomplete compliance with its obligation to release unused leasehold acreage following termination of a continuous-drilling period Course of Proceedings Cross-motions for summary judgment regarding the scope of the defendant’s obligation to release acreage Trial Court 406th District Court, Webb County Hon. Oscar J. Hale, Jr., presiding Trial Court Disposition Plaintiff’s motion for partial summary judgment granted (CR 420); defendant’s motion for summary judgment denied (id.); permissive interlocutory appeal granted (CR 433-35) (Appendix 1)1

ISSUE PRESENTED

Did the trial court correctly grant summary judgment that Conoco breached its obligation under the Leases by failing to release all acreage in excess of 40 acres for each producing and shut-in natural gas well capable of producing in paying quantities?

1 Record citations will be in the form (CR xx), indicating page xx of the Clerk’s Record. Where an item appears in the appendix to this brief, that fact will be indicated by the notation “(Appendix aa),” where aa refers to the appropriate numbered tab in the appendix.

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STATEMENT OF FACTS

The Leases. This case concerns two oil-and-gas leases (“the Leases”), each

of which contains a retained-acreage clause requiring the lessee to release the acre-

age it chooses not to timely develop; the clauses are identically worded in material

respects.

The first lease, dated June 15, 1974, and amended on November 1, 1987,

covered 26,622.79 acres of land in Webb County. (CR 276-82 (original lease); CR

283-301 (Appendix 2) (amended lease)). (The amended lease will be referred to as

“the 26,622.79-acre Lease”). Paragraph 18 of the amended lease required the les-

see to release undeveloped acreage three years hence:

On November 1, 1990, Lessee covenants and agrees to execute and deliver to Lessor a written release of any and all portions of this lease which have not been drilled to a density of at least 40 acres for each producing oil well and 640 acres for each producing or shut-in gas well, except that in case any rule adopted by the Railroad Commission of Texas or other regulating authority for any field on this lease provides for a spacing or proration establishing different units of acreage per well, then such established different units shall be held under this lease by such production, in lieu of the 40 and 640-acre units above mentioned … .

(CR 286-87 (¶ 18)).2 In the event of ongoing drilling or reworking operations as of

2 The paragraph further provided that “[e]ach retained unit shall contain at least one (1) well producing or capable of producing oil or gas in paying quantities, and the acreage within a unit shall be contiguous.” (CR 287).

SP-#6737091-v1-Vaquillas_Brief_of_Appellee.docx the 1990 date, however, a proviso postponed the release obligation until ninety

days after the cessation of good-faith continuous drilling on the leasehold property.

(CR 287 (¶ 18)).

The second lease, dated November 1, 1987, covered 6,740 acres in Webb

County. (CR 302-23) (Appendix 3). It contained a nearly-identical release para-

graph, triggered at the end of the primary term (November 1, 1990) or ninety days

after the cessation of good-faith continuous drilling. (CR 305-06 (¶ 18)).

For material purposes, Appellee Vaquillas Unproven Minerals, Ltd., is the

lessor under the Leases (CR 273-74 (¶ 3)), and Appellant ConocoPhillips Compa-

ny (“Conoco”) is the lessee under the Leases.

The Field Rules. Because the statewide general rules for oil and gas devel-

opment adopted by the Railroad Commission “cannot adequately address the wide-

ly varying conditions found in the thousands of oil and gas reservoirs in Texas, the

Commission may issue orders with detailed regulations for a specific field, which

the Commission calls field rules.” Railroad Commission v. WBD Oil & Gas Co.,

104 S.W.3d 69, 70 (Tex. 2003).

On February 24, 1998, the Railroad Commission, at Conoco’s request,

adopted field rules for the Vaquillas Ranch (Lobo Cons.) Field, which included the

two Vaquillas leaseholds. (CR 245-48). Rule 2 of the field rules established spac-

ing requirements for gas wells:

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No gas well shall hereafter be drilled nearer than FOUR HUNDRED SIXTY SEVEN (467) feet to any property line, lease line or subdivision line and no well shall be drilled nearer than ONE THOUSAND TWO HUNDRED (1,200) feet to any applied for, permitted or completed well in the same reservoir on the same lease, pooled unit or unitized tract. The aforementioned distances in the above rule are minimum distances to allow an operator flexibility in locating a well, and the above spacing rule and the other rules to follow are for the purpose of permitting only one well to each drilling and proration unit.

(CR 247) (provisions for exceptions omitted). As it does when adopting field

rules, the Commission considered the unique characteristics of the specific field

and found that Rule 2 and the other field rules would prevent waste and would pro-

tect correlative rights. (CR 252 (¶ 3)).

On November 2, 2010, the Railroad Commission amended the field rules,

again at Conoco’s request. (CR 254-55) (Appendix 4). The new Rule 2 is similar

to the old rule, but eliminated the minimum between-well spacing requirement for

wells permitted at least 660 feet from the nearest property line, lease line, or subdi-

vision line. (CR 254). (We will refer to the amended rule as “Field Rule 2.”)

Again, the Commission considered the unique characteristics of the field and found

that the amendment was necessary to prevent waste and protect correlative rights.

(CR 263 (¶ 3)).3

3 The Commission, through its adoption of special field rules for the field, considered the evi-

(footnote continued on next page …)

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The Well Density Rule. The Railroad Commission’s Rule 38 (Appendix

5), entitled “Well Densities,” prescribes well densities by prescribing minimum

acreage requirements per well based on the spacing applicable to the field. 16 Tex.

Admin. Code § 3.38(b); (CR 234, 240). For wells subject to spacing requirements

of 467’ from the property, lease, or subdivision line and 1200’ from adjacent wells,

the required acreage to drill a well is 40 acres. 16 Tex. Admin. Code § 3.38(b)(2),

table entry (6); (CR 234, 240).4

The Partial Releases. Conoco chose to end its continuous drilling program

on June 21, 2012 (CR 242 (¶ 17)),5 thus triggering its release obligations under the

Leases ninety days later. On February 17, 2014, Conoco executed two partial re-

leases (CR 90-166, 167-79). These releases defined 41 retained tracts on the two

(… footnote continued from previous page) dence presented and in its expertise concluded that 467-foot lease-line spacing and 1,200 between -well spacing requirements were the appropriate spacing rule for development in this particular field. (See CR 247). It makes no difference that this happens to be the same spacing as that set out in Statewide Rule 37 for fields where the Commission has not considered the evidence and adopted special field rules. This was the spacing adopted for this field, based on the evidence for this field. 4 The elimination of the spacing requirement for interior wells via amended Field Rule 2 did not alter the drilling unit size. Vaquillas produced uncontroverted summary judgment evidence that, after the amendment, the Railroad Commission continued to require standard drilling units of 40 acres per well (CR 232) and Conoco continued to regard the drilling unit requirement for interior wells as 40 acres per well (CR 267). 5 This is the date shown in the record as to the 26,622.79-acre Lease. Conoco acknowledges that its continuous drilling program as to both Leases ended on or about June 21, 2012. Brief of Appellant at 7.

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SP-#6737091-v1-Vaquillas_Brief_of_Appellee.docx leaseholds, encompassing 208 gas wells, and released the remaining leasehold

acreage. (Id.). Many of the retained tracts were 640 acres in size, although some

were as small as 172.43 acres. (Id.).

The Litigation. Believing that it was Conoco’s obligation under the Leases

to release all acreage except for 40 acres for each producing or shut-in gas well,

Vaquillas brought this suit, seeking a judgment to that effect, together with specific

performance, damages, and attorneys’ fees. (CR 190-99). Conoco moved for

summary judgment (CR 27-42) and Vaquillas moved for partial summary judg-

ment confirming its interpretation of the Leases (CR 200-29). The trial court, after

a half-day oral hearing, granted Vaquillas’s motion and denied Conoco’s. (CR

420).

Conoco moved in the trial court for permission to file an interlocutory ap-

peal under Tex. Civ. Prac. & Rem. Code § 51.014(d); Vaquillas did not oppose the

motion. (CR 422-26). The trial court amended its summary judgment order to in-

clude the required statutory findings. (CR 433-35) (Appendix 1). This Court

granted Conoco’s petition to appeal.

SUMMARY OF THE ARGUMENT

The plain meaning of the retained-acreage clause supports the trial court’s

determination that Conoco was entitled to retain only 40 acres for each producing

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SP-#6737091-v1-Vaquillas_Brief_of_Appellee.docx or shut-in gas well. That clause established a default retention of 640 acres for gas

wells, but contained an exception triggered by a field rule providing for a spacing

establishing different units of acreage per well.

Field Rule 2 was such a rule. It provided for a spacing that established a 40-

acre drilling (spacing) unit. The 40-acre unit was no less “established” because it

was a minimum; minimum-size drilling units, typically linked to spacing require-

ments, are the universal norm in Texas oil and gas regulation, and are the only type

of units that makes sense.

The 40-acre units established by Field Rule 2’s spacing requirements were

“different units of acreage,” as required by the Leases, because they were “differ-

ent” from the 640 acres specified in the default provision of the retained-acreage

clause.

Application of the plain language of the clause gives meaning to all Lease

provisions and does not render any provision superfluous. The exception language

controls in lieu of the default retained-acreage provision, but only in those instanc-

es where a field rule has been adopted and provides for a spacing, and that spacing

establishes different units of acreage than 640 acres per well. An exception that

renders a default provision inapplicable under some, or even most, circumstances

does not thereby render the default provision superfluous.

The pooling clause of the Leases, which allows the operator to pool units up

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SP-#6737091-v1-Vaquillas_Brief_of_Appellee.docx to 640 acres, cannot be construed as preventing retained acreage sizes of less than

640 acres per well. To do so would indeed render contractual language (the excep-

tion language in the retained-acreage clause) superfluous.

The fact that the operation of the exception under the facts of this case al-

lows only 40 acres per well to be retained does not render superfluous the require-

ment that each retained unit contain “at least” one well. That happens only if the

exception language is triggered, and only if the Railroad Commission does not au-

thorize a variance to the standard drilling unit size. As noted, rendering contractual

language sometimes inapplicable does not mean it is rendered superfluous.

Although the retained acreage sizes for oil and gas wells are different under

the default provision of the retained-acreage clause, there is no reason why that

must necessarily be true when the exception is applied. Again, the default provi-

sion is not rendered superfluous, merely inapplicable under the circumstances.

The presumption against special limitations on the grant of leasehold rights,

cited by Conoco, is a rule for resolving ambiguities, not for creating them in dero-

gation of the plain language of the lease.

The trial court’s construction of the retained-acreage clause comports with

their manifest purpose: the lessee is allowed to retain the acreage necessary to sup-

port its existing wells, and the remaining acreage is released to the lessor for de-

velopment.

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INTRODUCTION TO THE ARGUMENT

Oil and Gas Leases. An oil and gas lease is, at its core, a bargain struck by

a landowner, who desires to have the hydrocarbons beneath his land developed,

with another, who has the experience and capability to do so by undertaking the

complex process of drilling and producing those hydrocarbons. 1 Ernest E. Smith

& Jacqueline Lang Weaver, Texas Law of Oil and Gas § 4.1(B) (2014). In order to

have their minerals developed, landowners generally must transfer the rights to ex-

plore, drill, produce, and market the minerals to an oil and gas company with the

skill and financial ability to do so, such as Conoco. Id. The landowner wants the

minerals to be developed and produced; the company wants the opportunity to

make a profit.

Landowners almost invariably use an oil and gas lease to transfer the rights

to develop and produce the minerals to the oil and gas company. Id. Under such a

lease, the company, in return for the risk it assumes, receives the lion’s share of the

profit derived from production and a generous time period (typically so long as

production is obtained and maintained in paying quantities) within which to con-

tinue operations on the lease.

Absent an express limitation in the lease, a lessee’s rights under an oil and

gas lease may continue, as to the entire property, for an indefinite period of time.

This is true because leases are typically structured so that if oil or gas in paying

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SP-#6737091-v1-Vaquillas_Brief_of_Appellee.docx quantities is found during the lease’s primary term, the oil and gas company’s

rights to operate continue as long as any well is producing oil or gas in paying

quantities on the leased property. Id.

Retained-Acreage Clauses. Oil and gas leases frequently contain a re-

tained-acreage clause, which provides operators with the choice and flexibility to

develop the acreage to a specified density, or not to do so and have unused acreage

revert to the landowners/lessors. The clause also helps the landowners/lessors en-

sure that their property is fully developed within a reasonable period of time, by

allowing development of reverted acreage by another lessee. 1 Smith & Weaver,

supra, § 5.2(B)(3).6 In specifying the density for development, a retained-acreage

clause sometimes refers to Railroad Commission rules. Id. (citing ConocoPhillips

Co. v. Ramirez, No. 04-05-00488-CV, 2006 Tex. App. LEXIS 5710 (Tex. App. –

San Antonio 2006, no pet.) (mem. op.)).

Retained-acreage clauses also help a lessor avoid cumbersome and expen-

sive litigation to ensure prudent development. As a leading writer and scholar on

oil and gas law has observed, such clauses “replaced the lessor’s need to utilize the

implied covenant of reasonable development as the sole means to see that its acre-

6 It is well-established that an oil-and-gas lessor “should not be required to suffer a continuation of the lease after the expiration of the primary period merely for speculation purposes on the part of the lessees.” See Garcia v. King, 139 Tex. 578, 164 S.W.2d 509, 513 (1942).

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SP-#6737091-v1-Vaquillas_Brief_of_Appellee.docx age is fully developed.” Bruce M. Kramer, Oil and Gas Leases and Pooling: A

Look Back and a Peek Ahead, 45 Tex. Tech. L. Rev. 877, 881 (2013) (footnote

omitted).

Spacing, Density, and Units Under the Rules. Field rules typically ad-

dress, among other things, spacing requirements. The Railroad Commission’s

spacing requirements typically establish the minimum distance a well may be lo-

cated to the nearest lease line, property line, or subdivision line, and to other wells

on the same lease completed in the same reservoir. See generally 16 Tex. Admin.

Code § 3.37 (statewide spacing rule); Field Rule 2 (spacing rules for the field in

question). These spacing rules are minimum requirements; an oil or gas operator

may space wells farther apart if it chooses.

Spacing, by its nature, is intertwined with density: the farther apart wells are

spaced, the less densely a particular tract can be developed. Believing that “spac-

ing rules alone do not ensure the orderly development of a field” (CR 269), the

Railroad Commission has also promulgated density requirements; these govern the

number of wells that may be drilled on a given amount of acreage in a reservoir,

and are tied to the applicable spacing requirement. 16 Tex. Admin. Code § 3.38.

The density requirement prescribes the required size of the “drilling unit” –

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SP-#6737091-v1-Vaquillas_Brief_of_Appellee.docx the number of acres the operator must have to drill a well.7 Such units are by their

nature minimum-sized units, because they prescribe the minimum acreage required

to obtain a Railroad Commission permit to drill a well. An operator may always

drill a well with more acreage than the minimum.

***

With this background, we turn to an analysis of the Lease clause in question.

ARGUMENT

I. UNDER THE PLAIN MEANING OF THE RETAINED-

ACREAGE CLAUSE, CONOCO IS OBLIGATED TO RE- LEASE ALL ACREAGE EXCEPT FOR 40 ACRES PER WELL.

Conoco correctly acknowledges that the terms of an oil and gas lease, like

those of any other contract, are to be given “their plain, ordinary, and generally ac-

cepted meaning unless the instrument shows that the parties used them in a tech-

nical or different sense.” Heritage Resources, Inc. v. NationsBank, 939 S.W.2d

118, 121 (Tex. 1996), quoted in Brief of Appellant at 16; accord, e.g., Anadarko

Petroleum Corp. v. Thompson, 94 S.W.3d 550, 554 (Tex. 2002). We therefore

begin with the plain meaning of Paragraph 18 of the Leases.

7 The “drilling unit” is sometimes referred to as a “spacing unit” or a “development unit.” 2 Smith & Weaver, supra, § 10.1(B)(2).

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Paragraph 18 sets forth a default provision for release of leasehold acreage

(lands in excess of 40 acres for oil wells and 640 acres for gas wells), but then cre-

ates an exception:

except that in case any rule adopted by the Railroad Commission of Texas or other regulating authority for any field on this lease provides for a spacing or proration establishing different units of acreage per well, then such established different units shall be held under this lease by such production, in lieu of the 40 and 640-acre units above mentioned.

(CR 287 (¶ 18), 305-06 (¶ 18)). This case turns on the meaning and application of

the exception.

Parsing the exception:

“in case  any rule  adopted by  the Railroad Commission of Texas  or other regulating authority  for any field on this lease  provides for  a spacing or proration  establishing different units of acreage per well, then  such established different units  shall be held under this lease by such production,  in lieu of the 40 and 640-acre units above mentioned .”

It is undisputed and indisputable that Rule 2 of the field rules for the

Vaquillas Ranch (Lobo Cons.) Field is a rule adopted by the Railroad Commission

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SP-#6737091-v1-Vaquillas_Brief_of_Appellee.docx for the field encompassing the leaseholds. It is likewise undisputed and indisputa-

ble that Field Rule 2 provides for spacing for gas wells. Unfortunately, here the

absence of dispute ends.

A. It Is the Spacing or Proration Provided by the Field Rule, Not Necessarily the Text of the Field Rule Itself, that Must Establish Units of Acreage Per Well.

Conoco has argued from time to time that Field Rule 2 provides only for

well spacing, not well density, and that accordingly the exception in the retained-

acreage clause has not been triggered.8 But this argument mistakes the language of

the exception: it does not require that the text of the field rule by itself establish dif-

ferent units of acreage per well, but only that the field rule provide for “a spacing

or proration” that in turn establishes different units of acreage per well. Field Rule

2 provides for a spacing,9 and that spacing in turn establishes units of acreage per

well through the operation of Rule 38. And so the terms of the exception are satis-

fied even though the drilling unit density does not appear in the field rule itself.

8 See, for example, Brief of Appellant at 8 (“The Field Rules do not ‘establish’ any mandatory units of acreage per well”). 9 Conoco is correct that proration, which is the subject of Field Rule 3, is not at issue in this case. See Brief of Appellant at 9.

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B. The Spacing Provided by Field Rule 2 “Establishes” Units of Acreage per Well.

Conoco’s primary argument in this Court is that the spacing provided by

Field Rule 2 “establishes” no units of acreage whatsoever. See Brief of Appellant

at 12, 17-18. It says that to “establish” means (according to dictionaries) “to settle,

make, or fix firmly,” which, it implies, happens only when a single inflexible result

is mandated. Id. at 17. Thus, according to Conoco, the spacing requirement would

“establish” units of acreage only if, like Shylock’s bond,10 Rule 38 (through which

Field Rule 2 operates to establish density) prescribed fixed units of acreage that

could not be varied in either direction by the operator.

But this argument ignores the reality, history, and purpose of oil and gas

regulation. The goal of both spacing requirements and well-density requirements

is to allow effective and efficient development of minerals while preventing waste

and injury to correlative rights caused by excessively dense drilling. Thus the

10 “Therefore prepare thee to cut off the flesh. Shed thou no blood, nor cut thou less nor more But just a pound of flesh: if thou cut’st more Or less than a just pound, be it but so much As makes it light or heavy in the substance, Or the division of the twentieth part Of one poor scruple, nay, if the scale do turn But in the estimation of a hair, Thou diest and all thy goods are confiscate.”

William Shakespeare, The Merchant of Venice, act III, scene 5 (circa 1598).

-14-

SP-#6737091-v1-Vaquillas_Brief_of_Appellee.docx

Railroad Commission establishes spacing requirements that by their very nature

are minimums. And as noted above, spacing is closely linked with density, be-

cause wells spaced farther apart are necessarily less dense and vice versa. Thus it

is no surprise that Rule 38, like every other density rule in Texas, prescribes drill-

ing units that are minimums, linked to spacing requirements that are likewise min-

imums.

The exception language in Paragraph 18 is triggered by field-specific prora-

tion rules as well as field-specific spacing rules, and Conoco’s argument is also in-

consistent with Commission practice relating to proration units. Just as density

rules always prescribe minimums, prescribed proration unit sizes are always max-

imums; an operator can assign fewer acres to a proration unit. 16 Tex. Admin.

Code § 3.31(c)(1). If Conoco were correct that the unit standard cannot be estab-

lished unless it is fixed and invariable, this would render of no effect the language

in the Leases providing for retained acreage other than 640 acres in the event of a

field-specific proration rule establishing different-sized units.

Conoco’s Shylockian interpretation, whereby the exception applies only

when the Commission establishes a precise and invariable drilling-unit size, would

deprive the exception of any meaning, because the Commission never does that

-15-

SP-#6737091-v1-Vaquillas_Brief_of_Appellee.docx and it would make no sense for the Commission ever to do that.11 It would thereby

violate the interpretive presumption “that the parties to a contract intend every

clause to have some effect.” See Heritage, 939 S.W.2d at 121. It would also vio-

late the maxim that contracts are to be construed in light of the circumstances sur-

rounding their formation. See, e.g., Columbia Gas Transmission Corp. v. New Ulm

Gas, Ltd., 940 S.W.2d 587, 591 (Tex. 1996).

The Paragraph 18 exception requires only that the spacing imposed under

Field Rule 2 establish “units of acreage per well.” The spacing, operating through

Rule 38, does indeed establish units of acreage per well, in the only way drilling

units are ever established in Texas. See 16 Tex. Admin. Code § 3.38(b)(2)(A)

(prescribing the “standard drilling unit”). It “settles” and “makes” those units,

“fixing” them “firmly.” That they are minimums does not make them any less es-

tablished.

Conoco relies on Jones v. Killingsworth, 403 S.W.2d 325 (Tex. 1965), but

that case undercuts Conoco’s position rather than supporting it. Jones involved a

lessee’s attempt to create a 160-acre pooled unit for oil rather than an 80-acre unit,

which the lessor believed to be the maximum size allowed under the pooling clause

11 A fixed drilling unit size would lead to absurd results, such as the denial of a drilling permit to an operator with a 45-acre tract because the established density is 40 acres.

-16-

SP-#6737091-v1-Vaquillas_Brief_of_Appellee.docx of the parties’ lease. Similar to the retained-acreage clause in this case, the pooling

provision in Jones created an exception to the default maximum pooled-unit size

when a different one was prescribed by a governmental authority:

Units pooled for oil hereunder shall not substantially exceed 40 acres each plus a tolerance of 10% thereof, provided that should governmental authority having jurisdiction prescribe or permit the creation of units larger than those specified, units thereafter created may conform substantially in size with those prescribed by governmental regulations .

Id. at 327 (emphasis added).

The lessee in Jones argued that applicable Railroad Commission rules,

which prescribed oil proration units of not less than 80 acres but permitted units up

to 160 acres, triggered the exception clause and allowed pooled units not substan-

tially exceeding 160 acres. Id. at 327. The Supreme Court disagreed, noting that

the exception enlarged the pooled-unit limit only to allow units to conform to “pre-

scribed” units, not to “permitted” units. It stated firmly that “[t]he Commission

prescribed a unit of 80 acres,” in spite of the fact that “there may be larger units of

not more than 160 acres.” Id. at 328 (emphasis in original).

The lessons of Jones are twofold. When a lease references the size of units

prescribed by the Railroad Commission, that size controls, not some other size that

is merely permitted. And units are no less “prescribed” because other units are

permitted.

That matches the language of Rule 38:

-17-

SP-#6737091-v1-Vaquillas_Brief_of_Appellee.docx

The standard drilling unit for all oil, gas, and geothermal resource fields wherein only spacing rules ... are applicable is hereby prescribed to be the following.

Spacing Rule Acreage Requirement

***

(6) 467 – 1200 40

16 Tex. Admin. Code § 3.38(b)(2)(A), table entry (6) (emphasis supplied).

“Prescribe,” means “[t]o dictate, ordain, or direct; to establish authoritatively

(as a rule or guideline),” Black’s Law Dictionary 1373 (10th ed. 2014) (emphasis

added), and thus has an equivalent meaning to “establish.” And so had Conoco

advanced its Shylockian theory in Jones, it would have been arguing a position

neither litigant there had the temerity to argue – that nothing had been “pre-

scribed,” and that the pooling limit under the lease therefore remained at 40 acres

in the absence of a Railroad Commission rule or order creating an inflexible prora-

tion or drilling unit size. By holding that the field rule prescribed a unit of 80

acres, the Jones Court rejected Conoco’s theory that the Railroad Commission’s

specification of the unit size as a minimum is no specification at all.

C. The Units Established by Field Rule 2’s Spacing Requirements Are “Different Units” Because They Are Different from 640 Acres.

Conoco notes that “[Field] Rule 2 provides no different spacing from the

-18-

SP-#6737091-v1-Vaquillas_Brief_of_Appellee.docx

Statewide Rules applicable before field rules were adopted for this field.” Brief of

Appellant at 9. It thereby insinuates that only a field rule that imposes spacing re-

quirements different from prior spacing requirements, or from the statewide spac-

ing requirements of Rule 37, triggers the exception clause in Paragraph 18. (Else-

where, however, Conoco admits that “before [the exception] comes into play, the

Commission must ‘establish’ units of a different size than 640 acres.” Brief of

Appellant at 18 n.4 (emphasis supplied).)

The language of Paragraph 18, viewed in its entirety,12 makes crystal clear

what the “established different units” must be “different” from. Having just lim-

ited the lessee’s retained acreage to “40 acres for each producing oil well and 640

acres for each producing or shut-in gas well,” the paragraph then created an excep-

tion “in case any rule … provides for a spacing or proration establishing different

units of acreage per well.” The “different units” are thus units different from 40

acres for oil wells or 640 acres for gas wells. And if there were any lingering

doubt, it would be resolved by the language that appears next: the “different units”

are to be held by production “in lieu of the 40 and 640-acre units above men-

tioned.”

12 In construing an oil and gas lease, one must “examine the entire document and consider each part with every other part so that the effect and meaning of one part on any other part may be determined .” Heritage, 939 S.W.2d at 121.

-19-

SP-#6737091-v1-Vaquillas_Brief_of_Appellee.docx

***

In summary, then, the plain-meaning rule supplies the outcome of this case:

 Field Rule 2 is a rule adopted by the Railroad Commission;

 it is a rule for the field encompassing the leaseholds;

 it provides for a spacing;

 the spacing establishes drilling units of 40 acres per well;

 that is different from the 640-acre gas well density applicable under the default provision of Paragraph 18; and so

 such established different units (40 acres per well)

 are held under the Leases in lieu of the 640-acre units.

In short, the trial court got it right.

II. OTHER RULES OF CONSTRUCTION DO NOT PERMIT OR REQUIRE THE COURT TO DISREGARD THE PLAIN MEAN- ING OF THE RETAINED-ACREAGE CLAUSE.

Unable to prevail under the plain-meaning rule, Conoco offers various rea-

sons why its construction of the retained-acreage clause should nevertheless pre-

vail. None has merit.

A. The Rule Against Surplusage Does Not Change the Result.

Conoco invokes the well-known rule that a contract should be interpreted so

that none of its provisions is thereby rendered superfluous. Brief of Appellant at

-20-

SP-#6737091-v1-Vaquillas_Brief_of_Appellee.docx 27, citing, e.g., Springer Ranch, Ltd. v. Jones, 421 S.W.3d 273, 279 (Tex. App. –

San Antonio 2013, no pet.). But Conoco misconceives the rule.

The rule is that “no part of an instrument is to be rejected altogether except

as rather a last resort.” McBride v. Hutson, 157 Tex. 632, 306 S.W.2d 888, 894

(1957) (emphasis added); see Universal CIT Credit Corp. v. Daniel, 150 Tex. 513,

243 S.W.2d 154, 158 (1951) (declining to adopt construction that would read pro-

visions out of contract “entirely”). That a particular contractual provision over-

rides another provision under some, or even most, circumstances does not render

the overridden provision surplusage; it merely exemplifies the ordinary, everyday

interplay of contractual provisions. Only where a particular construction deprives

a provision of all possible applicability is the rule triggered. That is not the case

here.

1. That Any Drilling Unit Established as a Result of Field-Rule Spacing Would Likely Be Less Than 640 Acres Does Not Create Surplusage.

Conoco speculates, with no basis, that it is “likely” that a field-rule spacing

requirement would establish a minimum drilling unit less than 640 acres (as to gas

wells), thereby causing the exception in Paragraph 18 to swallow the default re-

tained-acreage language of that paragraph if minimum drilling units qualify as “es-

tablished different units.” Brief of Appellant at 12, 19-20. But an exception al-

-21-

SP-#6737091-v1-Vaquillas_Brief_of_Appellee.docx ways swallows the general rule in the particular circumstances where the exception

applies – that is its intended function. For Conoco’s argument to be valid, the ex-

ception would have to swallow the default provision in all, or at least virtually all,

cases, regardless of circumstances.

That is not true here, as this Court’s decision in ConocoPhillips Co. v.

Ramirez, No. 04-05-00488-CV, 2006 Tex. App. LEXIS 5710 (Tex. App. – San

Antonio 2006, no pet.) (mem. op.), illustrates. There, the retained-acreage clause

was similarly worded to Paragraph 18 here, but there was a critical difference from

this case: there was no field-specific rule providing for a spacing requirement.

This Court declined to treat statewide Rule 37 as an adopted rule for the field, and

accordingly ruled for the lessee. Id. at *6-7. One reason for the Court’s decision

in Ramirez was that treating Rule 37 as a rule for the field would leave the default

retained-acreage language of the lease literally no room in which to operate. Id. at

*8-9.

Ramirez thus demonstrates that the exception will override the default provi-

sion only in those cases such as the present, where a formally-adopted rule for the

field provides for a spacing that establishes a unit of acreage less than 640 acres.

Allowing one provision (the exception) to trump another (the default provision) in

every instance would, as Ramirez recognized, render the latter provision surplus-

age; allowing the exception to control in a finite set of circumstances (field-rule

-22-

SP-#6737091-v1-Vaquillas_Brief_of_Appellee.docx spacing that establishes a drilling unit different from 640 acres) does not.

2. The 640-Acre Pooling Authorization Is Not Rendered Surplusage.

Conoco contends that establishment of a retained unit size of less than 640

acres would interfere with its right under the Leases to pool up to 640 acres for gas

wells. Brief of Appellant at 12-13, 18, 24-26. This is not correct, and is a classic

example of an argument that “proves too much.” For it would apply no matter

how clearly a field rule provided for a spacing establishing different units of acre-

age; in short, it would render the exception clause under paragraph 18 nugatory

under all circumstances. That, as Conoco points out elsewhere, is a construction to

be avoided under Texas law.13

At the end of the day, there is no need for this Court to attempt to resolve a

speculative issue about the potential interaction between the pooling clause and the

retained-acreage clause, and what might result if pooled acreage were released un-

13 Indeed, if Conoco were correct that a difference between the retained acreage size under the retained-acreage clause and the allowable unit size under the pooling clause would render the latter nugatory, that would also be the case even if the lessee were to retain the default 640 acres. This is because the pooling clause allows pooled units up to 704 acres in size (640 acres plus 10%), while the default retained-acreage provision allows for only 640 acres, and not one acre more. In any event, Conoco has not argued that it actually formed any pooled units under the pooling clause, and presented no evidence to that effect.

-23-

SP-#6737091-v1-Vaquillas_Brief_of_Appellee.docx der the latter clause. That is not this case and can await another day.14

3. The Requirement That Each Retained Unit Contain “At Least” One Well Is Not Rendered Surplusage.

The retained-acreage clause states that “[e]ach retained unit shall contain at

least one (1) well producing or capable of producing oil or gas in paying quantities,

and the acreage within a unit shall be contiguous.” (CR 287 (¶ 18), 306 (¶ 18)).

Conoco argues that retained unit sizes cannot be governed by drilling unit sizes,

because a retained unit could never contain more than one well and so the “at

least” language would be rendered superfluous. Brief of Appellant at 25-26.

Here again, Conoco confuses permissible superfluity under some circum-

stances with the categorical superfluity that the rules of construction attempt to

avoid. If a field rule is adopted, and if the field rule provides for spacing, and if

that spacing establishes drilling units, and if the field rule does not provide for op-

tional units,15 then, generally speaking, a retained unit would not have more than

14 Wagner & Brown, Ltd. v. Sheppard, 282 S.W.3d 419 (Tex. 2008), although not a retained- acreage case, suggests how the issue should come out. There, the Court held that, under the terms of the particular lease in question, the pooled unit survived the loss of the lease, with the lessor succeeding to the lessee’s rights and obligations with respect to the unit. 15 Optional units allow for drilling at a greater density than the “standard” or “prescribed” drilling unit. For instance, a field rule that provided for 40-acre units, with optional 20-acre units, would allow two wells to be drilled on each 40-acre retained tract. See generally, e.g., Unit Petroleum Co. v. David Pond Well Service, Inc., 439 S.W.3d 389, 395 n.6 (Tex. App. – Amarillo

(footnote continued on next page …)

-24-

SP-#6737091-v1-Vaquillas_Brief_of_Appellee.docx one well. But if any of those things is not true, then a multi-well retained unit is a

possibility. The anti-superfluity rule requires no more than this.

Moreover, Conoco’s argument ignores the possibility of the operator’s ob-

taining density exceptions to allow additional wells to be drilled to a greater densi-

ty. 16 Tex. Admin. Code § 3.38(f) authorizes the Railroad Commission to grant

exceptions to the Rule 38 well density requirements in order to prevent waste or to

prevent the confiscation of property. Field Rule 2 provides likewise. (CR 254-55).

In the case of such an exception, a retained unit might contain more than one well.

4. That a Particular Field-Rule Spacing Establishes the Drilling Unit for Gas Wells at the Same Acreage as the Drilling Unit for Oil Wells Does Not Create Surplusage .

Conoco also argues that treating Field Rule 2 as providing for spacing that

establishes a 40-acre drilling unit for gas wells would be anomalous, because the

gas-well retained acreage would then equal the default oil-well retained acreage.

Brief of Appellant at 13, 26. But the fact that the default provision of the retained-

acreage clause specified different retained acreages for oil wells and for gas wells

does not mean that the acreages must continue to be different once the exception is

(… footnote continued from previous page) 2014, pet. filed).

-25-

SP-#6737091-v1-Vaquillas_Brief_of_Appellee.docx applied. Conoco posits no reason why the two acreage numbers must necessarily

be different. And, as mentioned, the fact that the effect of Field Rule 2 is to make

the drilling units the same for oil and for gas does not render superfluous the de-

fault provision with the two different numbers – it merely renders the default pro-

vision inapplicable under the circumstances.

B. The Rule Regarding Special Limitations on a Grant of Leasehold Rights Has No Application Here.

Conoco argues that construing the spacing provided for by Field Rule 2 as

establishing “different [40-acre] units of acreage” would violate “the established

rule of Texas law that ‘we will not hold the lease’s language to impose a special

limitation on the grant unless the language is so clear, precise, and unequivocal that

we can reasonably give it no other meaning.’” Brief of Appellant at 13, citing

Anadarko Petroleum Corp. v. Thompson, 94 S.W.3d 550, 554 (Tex. 2002); see

Brief of Appellant at 27-31.

It fails to recognize, however, that this rule has no practical effect in the con-

struction of an unambiguous contract. If contractual language is so unclear, impre-

cise, or equivocal that a court can reasonably give it two different meanings (one

imposing a special limitation and the other not doing so), then the contract is am-

biguous. Yet Conoco correctly concedes that the Leases are unambiguous. Brief

of Appellant at 16.

-26-

SP-#6737091-v1-Vaquillas_Brief_of_Appellee.docx

In Endeavor Energy Resources, L.P. v. Discovery Operating, Inc., 448

S.W.3d 169 (Tex. App. – Eastland 2014, pet. filed), an oil and gas lease contained

an automatic termination clause, triggered by the end of continuous development,

applicable to all acreage not assigned to a proration unit containing the number of

acres required to obtain the maximum producing allowable. The applicable field

rule specified proration units of 80 acres, but allowed the operator to allocate up to

80 additional unassigned acres to each unit. The operator in question had exer-

cised this right as to some wells but not others; it contended that it was allowed to

retain acreage that it could have assigned to proration units but did not.

Although the court held that the termination clause was a special limitation

on the grant, it nevertheless rejected the lessee’s contention that it was allowed to

retain 160 acres per well. The court held instead that the lease unambiguously lim-

ited the retained acreage to lands actually assigned by the operator to a proration

unit. 448 S.W.3d at 175-78. It distinguished Chesapeake Exploration, L.L.C. v.

Energen Resources Corp., 445 S.W.3d 878 (Tex. App. – El Paso 2014, no pet.),

relied on by Conoco here, noting that that case had applied the plain language of an

unambiguous special limitation just as the Endeavor court was doing. 448 S.W.3d

at 178-79.

In short, the rule on which Conoco relies is a rule for resolving ambiguities,

not a rule allowing unambiguous contractual language to be construed against its

-27-

SP-#6737091-v1-Vaquillas_Brief_of_Appellee.docx plain meaning.

III. THE MANIFEST PURPOSE OF THE RETAINED-ACREAGE CLAUSE IS SERVED BY THE TRIAL COURT’S CONSTRUC- TION.

Stepping back for a moment from the details of the retained-acreage clause

and the field rule and statewide rules, one can see that the manifest purpose of the

retained-acreage clause is served by linking the lessee’s release obligation to the

minimum drilling units established by the Railroad Commission. Doing so pro-

vides a standard for the appropriate density of development, and for the release of

acreage that is not developed to that standard. And doing so helps the lessor avoid

having to pursue a claim for breach of the implied covenant of reasonable devel-

opment.

Absent the clause, a single well on each leasehold would have sufficed to

hold the entire 33,362.79 acres, even if the lessee had no intention of ever drilling

further wells on the property. The default provision of the clause prevented this

result, by requiring the release of all acreage in excess of specified acreage pre-

sumptively necessary to support existing wells.

But the clause included an exception that acknowledged the possibility that

the Railroad Commission might make a field-specific spacing determination lead-

ing to a minimum drilling unit smaller than (or, conceivably, larger than) the acre-

-28-

SP-#6737091-v1-Vaquillas_Brief_of_Appellee.docx age specified in the default provision. It directed the lessee, in that event, to con-

form its release to the modified drilling unit size. The manifest purpose of the ex-

ception is to protect the lessee, by allowing it to retain the acreage necessary to

support its wells and relieving it of further development obligations, but also to

protect the lessor, by allowing acreage not necessary to support the lessee’s wells

to revert and to be developed by the lessor or a new lessee. Acreage that has not

been developed and remains mere scenery cannot be retained.

That is what the trial court’s judgment does here. Of the 33,362.79 acres

covered by the Leases, Conoco has attempted to retain 23,671.63 acres. (CR 90-

166, 167-79). Under Field Rule 2 and Rule 38, it needs 8,320 acres to support its

208 wells. It has chosen not to develop the remaining 15,351.63 acres, yet seeks to

hoard that acreage and prevent Vaquillas from developing it. The exception lan-

guage in Paragraph 18 was crafted to prevent this result, and was properly applied

to do so.

PRAYER

Appellee Vaquillas Unproven Minerals, Ltd., respectfully prays: (1) that the

judgment of the trial court be affirmed; (2) that it recover its costs in this Court;

and (3) for such other and further relief to which it may be entitled at law or in eq-

uity.

-29-

SP-#6737091-v1-Vaquillas_Brief_of_Appellee.docx

GREGG OWENS Respectfully submitted, State Bar No. 15383500 JOHN R. HAYS, JR. State Bar No. 09303300 /s/ P. Michael Jung ALICIA R. RINGUET P. MICHAEL JUNG State Bar No. 24074958 State Bar No. 11054600

Hays & Owens L.L.P. Strasburger & Price, LLP 807 Brazos Street, Suite 500 4400 Bank of America Plaza Austin, Texas 78701 901 Main Street (512) 472-3993 Dallas, Texas 75202 (512) 472-3883 (telecopy) (214) 651-4300 gregg.owens@haysowens.com (214) 659-4022 (telecopy) john.hays@haysowens.com michael.jung@strasburger.com

RAUL LEAL ARMANDO X. LOPEZ State Bar No. 24032657 State Bar No. 12562400

Raul Leal Incorporated Armando Lopez, Attorney at Law 5810 San Bernardo, Suite 390 1510 Calle Del Norte, Suite 16 Laredo, Texas 78041 Laredo, Texas 78041 (956) 727-0039 (956) 726-0722 (956) 727-0369 (telecopy) (956) 726-6049 (telecopy) rleal@rl-lawfirm.com mandox@rio.bravo.net

ATTORNEYS FOR APPELLEE

CERTIFICATE OF SERVICE

I hereby certify that this Brief of Appellee has been served on the appellant

by electronic service on Michael V. Powell, Esq., Attorney for Appellant Cono-

coPhillips Company; and Adolfo Campero, Esq., Attorney for Appellant Cono-

coPhillips Company; both on this 29th day of May, 2015.

-30-

SP-#6737091-v1-Vaquillas_Brief_of_Appellee.docx

/s/ P. Michael Jung P. MICHAEL JUNG

CERTIFICATE OF COMPLIANCE

This brief complies with Tex. R. App. P. 9.4(i)(2)(B), because the brief con-

tains 6,781 words, excluding the parts of the brief exempted by Tex. R. App. P.

9.4(i)(1).

/s/ P. Michael Jung P. MICHAEL JUNG

-31-

SP-#6737091-v1-Vaquillas_Brief_of_Appellee.docx

Appendix

SP-#6737091-v1-Vaquillas_Brief_of_Appellee.docx

433

:;

CAUSE NO. 2014CVQ000438 D4

VAQUILLAS UNPROVEN MINERALS, § IN THE DISTRICT COURT LTD, § § ....

= ;-.~ - '.""" " , Plaintiff, § en :x.<..n § , L. :z:,. :z ::>= '--=1;:;;

v. § WEBB COUNTY, T"""JU:> N - -< '"

§ ! CO Ie:> . :0 r'l

I

CONOCOPHILLIPS COMPANY, § -U 3.:

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Defendant. § 00 -:'§C . -< --='V)

AMENDED ORDER ON CROSS-MOTIONS FOR SUMMARY JU ..

~

On October 30,2014, Defendant's Motion for Summary Judgment and lai tiffs Cross-

Motion for Partial Summary Judgment were heard. The Court, having reviewed the motion,

briefs, responses, competent summary judgment evidence, and argument of counsel, rules on "

these motions as follows.

IT IS ORDERED, ADJUDGED, AND DECREED that Defendant's Motion for

Summary Judgment is DENIED.

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Plaintiffs Cross-

Motion for Partial Summary Judgment is GRANTED. The Court DECLARES that Defendant

has breached the 26,622.79-acre Lease and the 6,740-acre Lease by failing to release all acreage

in excess of 40 acres for each producing and shut-in natural gas well capable of producing in

paying quantities.

This Order of the Court decides the central question in this case, which is the number of

acres under two oil and gas leases that Defendant ConocoPhillips Company retains under the

"retained acreage" clauses of the leases at the conclusion of ConocoPhillips' continuous drilling

operations. The Court finds that the question decided by this order is a controlling question of

AMENDED ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT PAGEl

434

law as to which there is a substantial ground for difference of opinion. The Court also fmds that

I .,'.'1 immediate appeal of the order will materially advance the ultimate termination of this litigation.

This Court's Order, and the underlying controlling question of law, involve the parties'

competing legal interpretations of the language of the "retained acreage" clauses and certain

Field Rules adopted by the Railroad Commission of Texas. Although the Court has ruled in

favor of the Plaintiff lessor, Vaquillas Unproven Minerals, Ltd., the Court concludes there are

substantial grounds for difference of opinion regarding whether the leases allow ConocoPhillips

to retain 40 acres per well, as Plaintiff contends, or 640 acres, as ConocoPhillips contends.

An immediate appeal from this Court's Order will materially advance the final

conclusion of litigation. Plaintiff seeks judgment ordering ConocoPhillips to execute releases of

over 15,000 acres described in the leases, as well as possible direct and consequential damages

flowing from ConocoPhillips' alleged breach of the "retained acreage" clauses of the leases. If

ConocoPhillips is forced to release the acreage but later wins an appeal determining that

ConocoPhillips' original interpretation is correct, significant problems could develop. On the

.; other hand, the lessor, Vaquillas Unproven Minerals, Ltd. is interested in having the release of .,:]

acreage as soon as possible. Furthermore, the Court and the parties anticipate that a

determination of Plaintiffs damages, if any, will be costly and time-consuming.

ConocoPhillips desires to take an interlocutory appeal. The Court rules that such appeal

shall be defined by the lease interpretation question addressed in the parties' cross-motions for

summary judgment. More specifically, the question is whether the leases' retained acreage

clause allows ConocoPhillips Company to retain only 40 acres per each producing or shut-in gas

well it has drilled on the two leases, or whether ConocoPhillips is allowed to retain 640 acres

(Plus I 0% tolerance) for each wells.

AMENDED ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT PAGE 2

435

IT IS HEREBY ORDERED that, pursuant to Texas Civil Practice & Remedies Code §

51.014(d) (West. Supp. 2014) an interlocutory appeal is ALLOWED from this Order.

IT IS FURTHER ORDERED that trial of this action is stayed pending the interlocutory

,j appeal. The Court's Pre-Trial Guideline Order and Scheduling Order are hereby VACATED. -:1

The parties may proceed with discovery and pretrial proceedings by agreement or with leave of

Court.

SIGNED this 4- day Of9"'=".jI.tAA-..,=="T\------' 2015.

( )~,,~ Ho1:"Oscar 1. Hale, Jr. Judge Presiding

AMENDED ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT PAGE 3

283

.'\" ~-'. '~wWi P'i>du~tn U {'"'' ?O,~lnllnll ~ SI'lionlr, Co •• 1l0UI\0~. T'~II uo ACAI PoOUnr- Pr:ovilion _, I ~!, " OIL, GAS AND Mliu(RAL LEASE AMENDING OIL', GAS AND''ntNERAL.

LEASE DATED JUNE 15, 1974 (AS AMENDED) BETWEEN LESSOR-AND LESSEE HEREIN

26,622.79-acres of land, more or less, situated'in Webb County. Texas more fully described in Exhibit "A" attacli"ed"'he'reto and made a part of this Lease for all relevant purposes. including limitations upon warranty as specifically set out therei~.

"""'""" For lb. \!\1rJIQ" of cdc\1IUln, tho nnt.LI 1l17RI'l\t •• lI,''''n.t~r PfilYI~t<I. fo •• uld Iud I. U,llDlt..! 10 cOIIIP" ... , .. ?~.,_6~.~ ..:,?.9-... .. _.. ___ ._____ ;-_....Crl ••. ,,:b,llo.r It IdlU-l': ~Prl'" mort or:,I~... . .five t. Svbh.:t to Ilo. otlar pro.,hIGn' bu_11I "ntalll.!!, IloII' I.....h ..11 ~. for .. uma of ofttt 7U.. from. Iblo duo (nilid "p,I,"1r7 tHl>lh)

and ~.rl?' ll1'''1!~r ,II oil. I"U or oUl_V ~ln.~I.h.ll~oaod. frolll .,.11 II, nd or lan.d w1!ll'lllJJclI ..Id lind II ~tocl 1I ... un41'.

_.11. or '" tllt ,roo:Ilt ot r...10~ I..", Ult plpotU"",lo .. lIle" t.b. _Ira lal,. lot unnHLN I Lt._ ''il''h~er'oi~M! ~ !l..rtgt.J.P~?L.~2-~1 t.f'olf~,f~2:.~·Ii~not!ib,p'f4~~.~ ••lMl .J..t&. .-U-lr~d!la~~1. \~t..°nrrY-;~.~tl~.

1111,. fro.r.a tll'lt 10 LIlli' pardi ... In,. fO,..II., 011 III Ito PO ...... /Oll. flo,.lnl·th,·nnr"t Price thltlto,"'Il..hllhi ·-tor tho n,rd _h_ro' roducocl on' lb, dat,·ot·pUrch ..u (tI) I 1.11. • f' I

EXHIBIT B-2

Jst ·'b.'

'01' .0. , ,lilt.,

... • f'I) · ~'J J.

l:t

---------._._._-- STAn OF_ _ _ _ _ _ _ _ _ _ _ _ _ } l'B:LU 8tNGL& J.CKHOWLEDOM&HT COUNTY OF._ •• R _ _ _ _ _ _ _ _ _ _ __

",non,lI, .'''nrtd ... _ _ __

------_.._------------------------_._--

u.. =_ kno .. /\ 1.0 m. to 1H til, tHlnGn'N .holt II ..... L_. _ _ _ •____ ublerl~ 1.0 IOUlOh" h.rtNm.nl. and acllncnrhd,td 1.0 "hat _.b .. _. U.c:II~ \h. 11llJI. 'or \hI P"'!'POtu an4 aontl4u.Uoli \b..,1111 uPln..d. .

OIVin lind., 1117 hnl! and ...\ ot oute •• \hll tht-____ odl' 01 _ _ _ _ _ _ •_ _._ _ _ _ ._ _ _ • A. D. 11_-_.

NO~r7 PllbU. In ,114 'o,_ _ _ _ _ _ _ _ CoIIlIt1, _ _ _ _ __

STATt 0,._ _ ._._. _ _ _ _ _ _ _ _' ___ } TEXAS lOINT ACKNOWLEOCMENT COUNTY OF_ _ _ •_ _ _ _ _ _ _ _ B.!or. lilt, \b'un41"lllItd, • Notarr Pllt.nc In and (Dr ,,14 CoIIntJ I"d SI.\4, on IlII! dar Ptrton_II,

CI~Il\ lind .. lII, bLM and Hil of oUlct, \bI,1 th ... _____dl,. 01 __

,• •r r ~ . l' ."., I f ~ 0 .l.

l ~ :I •,• •0 I f fI I

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1;

: ~ I ,• [ \ ":l • l' l' r , !, i \• ..i I ,I: ~ I:l,. •1 ! ~ I •• f • f. f p •• , l -e • l. }

I

f. \ t I i

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~ ,~ i i -....,,~--

. .. -~... ---.- 284

".

ADDENDUM TO AMENDED OIL AND GAS LEASE From Vagui11as Ranch Co., Ltd. et a1 To Conoco Inc., Oated November 1, 1987

12. Should Lessee be prevented from complying with covenants of this lease by reason of conditions or acts set forth in Paragraph '11' hereof, then Lessee agrees annually to pay to Lessor an amount equal to the delay rentals herein provided for during such period of prevention, whether same be during or subsequent to the primary term, and such payment shall be made at the end of each year of prevention either to Lessor or to the depository above named for credit to the account of Lessor.

13. This lease does not cover or include any right or privilege of hunting or fishing on any part of the above described land, cwd Lessee agrees with lessor that neither he nor his assigns or agents or employees of his aSSigns, will bring firearms or dogs upon the leased premises, and should this provision against hunting and fishing be violated by any agents I servants, employees or contractors of Lessee's assigns, any such person so Violating same shall have no further right to enter upon the leased premises, and such person shall be regarded as and shall be a trespasser on the premises of Lessor and be subject to the penalties imposed upon trespassers under the laws of the State of Texas.

14. It Is expressly agreed and understood that after production of

oil and gas in commercial quantities is obtained from the leased premises, the mi nimum annua 1 income to Lessor from payment of renta 1s , shut- i n royalty and royalty on production shall be sum of not less than Two ($2.00) Dollars per acre on the total acreage retained and then covered by this lease, but this provision shall not impair the right and privilege of Lessee, his successors and aSSigns, to release and surrender any part of the above described leased premises as herein provided. Lessee, his successors and aSSigns, shall determine within 90 days from the expiration of any lease year during which royalties have been paid on actual production the amount of any deficiency, and shall within said gO-day period pay such deficiency to Lessor or deposit same to Lessor's credit at

i-CIlP - -0012146i ----

-1-

GWB2/dm 130(1)

, -,- ,.. , , 285

286

the depository hereinabove designated. Default in the payment of such deficiency shall "at operate to tenllinate this lease or any part hereof, but Lessee, his successors and assigns, agrees to personally pay such deficiency to Lessor at Laredo in Webb County, Texas, together with any reasonable cost, including attorney's fees, incurred by Lessor in collecting such deficiency if not paid within the gO-day period hereinabove provided for.

15. Nothwithstanding any other provision herein contained, this oil, gas and mineral lease is limited to oil, gas and sulphur and minerals produced with oil and gas, and does not include minerals other than oil, gas and sulphur and minerals produced with oil and gas, as Lessor herein excludes from the leasehold estate herein granted, and reserves unto himself, his heirs and assigns, all minerals other than oil, gas and sulphur and minerals that may be produced with oil and gas, but it is expressly agreed that 'gas' as used herein includes gas, condensate, distillate or any other gaseous substance or any other mineral produced with oil and gas, including sulphur.

16. The right to pool under Paragraph '4' of this Oil, gas and mineral lease shall be limited to lease or leases on land belonging ·to Lessor herein, or in which lessor owns an interest in the oil, gas and other minerals.

17. For the purposes of the annual renta 1 payments due under paragraph 5, Lessor and Lessee agree that said payments have been timely

paid and received, and that this Lease is perpetuated, without the necessity of further delay rental payments, until the expiration of the primary term.

18. On November 1, 1990, Lessee covenants and agrees to execute and deliver to Lessor a written release of any and all portions of this lease which have not been drilled to a density of at least 40 acres for each producing oil well and 640 acres for each producing or shut-in gas well, except that in case any rule adopted by the Railroad Commission of Texas or other regulating authority for any field on this lease provides for a

!CiiP" ooi21471 -2- -----~-----

GWB2/dm 130(1)

spacing or proration establishing different units of acreage per well, then such established different units shall be held under this lease by such production, in lieu of the 40 and 640-acre units above mentioned; provided, however, that if at such date lessee is engaged in drilling or reworking operations the date for the execution and delivery of such release shall be postponed and the entire lease shall remain in force so long "as operations on said well or wells are prosecuted with reasonable diligence, and if, after the completion or abandonment of any such well lessee commences the drilling of an additional well within Ninety (90) days from the completion or abandonment of the preceding well, or continuously conducts drilling operations in good faith and with reasonable diligence on said lease "Without any cessation for longer than Ninety (90) days, said lease shall remain in full force and effect during such drilling operations and until the end of Ninety (90) days after the completion or abandonment of the final well, at which time lessee shall execute and deliver to lessor said written release, releasing all portions of the lease not then so developed. Each retained unit shall contain at least one (1) well producing or capable of producing oil or gas in paying quantities, and the acreage within a unit shall be contiguous.

If, after the date the partial release called for under this Paragraph 18 takes affect, all production from a retained unit around a well or wells cease to produce oil or gas in commercial or in paying quantities, Lessee shall have one hundred eighty (180) days thereafter within which to commence operations to establish or re-establish production therein in commercial or paying quantities, whether such production be from the same wellbore or other wellbore. If such operations result in commercial producti on, then thi s 1ease, as it app 1 i es to such un it sha 11 continue until such commercial or paying production again ceases. However, if such operations do not result in commercial production, then Lessee shall have ninety (90) days after completion of such operations within which to commence drilling or reworking operations within such unit, and this lease, as it applies to said unit, shall remain in force so long as operations on said well or for drilling or reworking of any additional well therein are prosecuted with no cessation of more than ninety (90) consecutive days, and if they result in the production of oil or gas therein, so long thereafter

lCOPOo121"~ -3- --------:--

GWB2/dm 130(1)

as oil or gas is produced from said unit. As to any unit upon which commercial production may periodically terminate, the above right to timely resume operations and continue this lease as to such unit shall be reoccurring right.

The stipulation above as to the size of retained tracts around wells shall never be construed as a satisfaction of Lessee's right, duty and obligation to reasonably develop the leasehold held by Conoco or its successors or assigns. After November 1, 1990, Lessee agrees to drill such additional wells on the leased premises or such portions thereof as may be in force

and effect from time to time, as may be necessary to reasonable develop the same for the production of oil and/or gas as a reasonable prudent operator.

19. A portion of paragraph 3 has been deleted and the following is in lieu thereof.

(b) ,on gas, including caSinghead gas or other gaseous substances,

produced from said land, the Lessors royalty shall be calculated and paid as follows:

a) Sales To Non-Affiliated Third Parties:

In the event Lessee enters into a gas sales contract with a

non-affiliated third party, Lessor's royalty shall be one-sixth (1/6) of the gross proceeds received by Lessee from the sale of such gas.

b) Sales To Related Or Affiliated Entities For Resale:

In the event Lessee enters into a gas sales contract to sell gas to a related or affiliated entity, then Lessor's royalty shall be computed on the greater of the following: 1. One-sixth (1/6) of the gross proceeds received by lessee or any affiliate or related entity from the sale of such gas to the first non-affiliated entity, or

2. One-sixth (1/6) of the highest price reasonably obtainable for gas by Lessee and other producers or operators in the

-4-

GWB2/dm 130(1)

east one-fourth of Webb County, Texas, who are producing gas

of like kind, quality and quantity.

In this regard, it is understood that the "highest price reasonably obtainable" may be equal to, but is not necessarily, the highest price then being obtained by other producers or operators in the east one-fourth Of Webb County, Texas, who are producing gas of 11ke kind, quality and quantity.

c) Taking, Selling Or Delivery Of Gas To Lessee Or Its Related Or Atfil iated Entities For Use (Not For Resale): In the event Lessee takes gas for its own use, or sells or transfers gas to a related or affiliated entity for use, then Lessor's royalty shall be computed on tbe greater of the following:

1. One-sixth (1/6) of the highest price reasonably obtainable for gas by Lessee and other producers 01" operators in the east one-fourth of Webb County, Texas, who are producing gas of like kind, quality and quantity.

In this regard; it is understood that the "highest price reasonably obtainable" may be equal to but is not necessarily the highest price then being obtained by other producers or operators in the east one-fourth of Webb County, Texas, who are producing gas of like kind, quality and quantity, or

2. One-sixth (1/6) of the quarterly weighted average of the pri ces being pa i d by "purchasers" (as here; nafter defi ned) in the east one-fourth of Webb County, Texas, who are purchas i ng gas of 1i ke ki nd and qua 1i ty. For the purposes of calculating the average price under this Paragraph c2, prices paid shall be those as reported in the Energy Planning Book publ ication or as reported to the State of

-5-

GWB2/dm 130(1)

Texas for severence tax purposes. uPurchasers" shall mean

the. three largest purchasers based on volume of gas purchased for such calendar quarter, in the east one-fourth of Webb County, Texas. For an example of the calculation of the quarterly weighted average of such price, see Exhibit UB"

Lessor and Lessee shall meet within eleven (11)· months after the end of each calander year. At least thirty (30) days prior to such meeting, Lessee should furnish to Lessor a statement or other documentation of the basis upon which royalties accrued to lessor under the terms of the Lease for the previous calender year. Any additional royalties calculated by Lessee to be due, if any, shall be paid at such meeting. Within one (1) year from delivery of the above referred to statement or other documentation, lessor shall notify Lessee of any discrepancies. Failure to notify lessee timely of any discrepancies shall constitute final acceptance of royalty payments as covered by such s~atements or other documentation. The first period for which Lessee shall prepare such statements or other documentation shall begin on April 1, 1988 and end on December 31, 1988. Nothing in this paragraph shall preclude Lessor from claiming any royalty which Lessor is entitled to as a result of mistake in computation, oversight in computation, or error in computation of royalty or which may result from the subsequent disclosure of a discrepancy.

LESSOR'S royalty shall be without deduction for any costs. such as, but not limited to, costs of producing, gathering, storing, separating, treating, dehydrating, compreSSing, processing, transporting and otherwise making the oil, gas and associated substances ready for sale or use, except for a) severance and related taxes, and b) reasonable transportation expenses which may be necessary to be paid to non-affiliated third parties or entities to get Lessor's gas to a market or point of sale off the leased premises and which sale or sales will result in a net price equal to or higher than if said gas had been sold at the wellhead.

LESSOR'S royalty on all production from depths below the stratigraphic equivalent of the top of the Cretaceous System as seen at 12,810 feet

--------- lcop 0012151 I -6-

GWB2/dm 130(1)

in the electric log of the Vaquillas #7 Well located 260' FNL and 1,700' FWL of Survey 987, A2061, Webb County, Texas, under the lands now held by Lessee under this Lease shall be one-fifth (1/5) instead of one-sixth (1/6).

LESSEE may submit a copy of a proposed gas sales contract to Lessor which is acceptable to Lessee and request that Lessor approve same for royalty computation purposes. Lessor shall have thirty (30) days after receipt of a gas contract to approve same. If lessor approves same or does

not timely decline to do so, then lessor's royalty on gas sold under such gas sales contract shall be based on the gross proceeds received under said contract.

GAS contracts with a term in excess of three (3) years shall contain a provision for price redetermination no later than the end of the 3rd year and subsequent price redeterminations thereafter at intervals no greater than two (2) years apart.

20. Lessee agrees to fill all slush pits and level the same when they have ceased to be used and to restore the land to as near its original state as is practicable and to pay for damages to the surface of the land and the improvements, water wells, growing crops and livestock thereon, and to any other personal property of Lessor, Vaquillas Ranch Company, Ltd., occasioned by, arising out of, or resulting from operations by Lessee, his agents, employees or independent contractors on the land hereby leased to Lessee. Lessee also agrees, when requested in writing by Lessor, to divulge to Lessor true and correct information as requested by Lessor as to all drilling, producing and marketing operations conducted under this lease and to furnish to lessor copies of all electric well logs taken hereunder; provfded, however, Lessee shall not be obligated to release such information until it has been released to the industry.

21. lessee hereby agrees to ensure that the two exit gates on F.M.

2895 (Forest Gate and Reynolds Gate) are guarded in an efficient and prudent manner during drill ing, reworking or plugging operations and at other times as mutually agreed to by Lessee and Lessor. As to the exit

-7-

GWB2/dm 130(1)

gate on the north side of U.S. Highway 59, Lessee agrees to use its best efforts to work out an arrangement with other exploration companies using such gate to ensure that it is guarded in an efficient and prudent manner during drilling, reworking or plugging operations and other times as mutually agreed to by Conoco and Lessor. Further, Lessee agrees to use its best efforts to work out an arrangement with TransAmerican Natural Gas Corporation or its successors or assigns to ensure that the exit gate located 9 miles north of Aguilares, Texas, on F.M. 2895 is guarded in an

efficient and prudent manner during drilling, reworking or plugging operations and at other times as mutually agreed to by Lessee and lessor. In regard to gates used by Lessee and other exploration companies, Lessee agrees to pay its share of the cost of guarding such gates when such gate guards are required under this agreement. Lessee shall not be obligated to furnish a gate guard on any gate which has been abandoned or is not being used by Lessee.

22. Lessee agrees that before abandoning any well drilled on said lease for oil or gas purposes, it will notify the owner or the surface estate in person or by telephone of its intention to do so, and it will allow said owner of the surface estate a reasonable time, not exceeding twenty-four (24) hours thereafter, within which to elect to take over the hole for the purpose of attempting to make and complete a water well. lessee agrees to consult with such surface owner as to the location of a potential water zone, without any liability or warranty for such consultation. Upon the owner of the surface estate election, within the specified time, to attempt to complete the well as a water well and complying with all rules and regulations of the Railroad Commission of Texas and applicable statutes, Lessee will, at its expense, set all plugs to just below the deSignated water sand as may be required by the Railroad Corrmi ss ; on and thereafter deli ver the we 11 to sa i d owner of the surface estate, leaving in such well all surface casing and such intermediate casing as may have been run and set to at least the depth of the designated water sand and thereafter the owner of the surface state shall own the well and shall be responsible for all subsequent matters in connection with the well and for compliance with the applicable statutes and regulations of all regulatory agencies having jurisdiction. Lessee shall have no liability to

-8-

GWB2/dm 130( 1) --~-~---

IcOP 0012153 I - -..- - -.- - -

, ,

292 --

Lessor in connection with any of the operations which may be conducted by the owner of the surface estate who shall thereafter bear all responsibility and liability with respect thereto. It is expressly understood that Lessee shall not be required to furnish any additional casing or other equipment for any well plugged back at the request of the owner of the surface estate under this paragraph. Should the owner of the surface estate elect not to attempt to make a producing water well out of any such hole, Lessee shall plug the well in accordance with all applicable rules, regulations and statutes.

23. It is expressly agreed and understood that for the purposes of this lease the following definitions shall apply:

lICorranencesll - A well shall be deemed commenced on the date which the drilling bit enters the earth for the drilling of a well.

IIAbandoned li - A well shall be deemed abandoned on the day when it is finally plugged as a dry hole.

"Completed" - A well shall be deemed completed thirty (30) days after the day the Lessee sets production casing.

24. Lessor and lessee agree to 1imit the commencement of actual

drilling during deer hunting season to 1) those wells drilled in areas which would not disturb deer hunting, and 2) offset wells. If Lessee must commence a well during deer hunting season to perpetuate said lease, then Lessor will either a) not object to the drilling of such well during deer hunting season or b) agree to extend the commencement date for such well to a mutually agreeable date after deer hunting season ends. For the purposes of this paragraph "deer hunting season II shall be that period defined by

State law.

25. Nothwlthstanding anything contained herein to the contrary, the Lessor at any time and from time to time, upon not less than ninety (90) days notice to the holder of this lease, may elect to require the payment of any royalties accruing to such royalty owner under this lease to be made in kind; provided that any expenses incident to the exercise of such

election shall be borne by Lessor and such election shall be for periods of not less than twelve (12) months. Lessor shall only be allowed to take in

-9-

GW82/dm 130(1)

kind when lessee is producing for his own account. In the event of such an election by Lessor, Lessee shall cooperate fully with Lessor in allowing Lessor to take their royalty in kind, including permitting Lessor to use Lessee's wellhead equipment and, to the extent that Lessee has assignable rights, the use of lessee's purchaser's transportation facilities in good faith and not to exceed prevailing charges for similar services in the industry at the time if Lessee or its affiliates are transporting the gas, but if Lessee has a third party contract for the transport of said gas, Lessor will be bound by said contract. Should Lessee desire to enter into a gas purchase contract having a term of more than one (1) year, then (a) Lessee shall include in such contract a provision that allows Lessor to elect to take its gas in kind and be released from such contract one hundred twenty (120) days after notice, or (b) Lessor may approve of such contract in writing, in which event, lessor may elect to tak.e its gas in kind either at the end of such gas contact or one (1) year after notice to Lessee, whichever happens sooner. Any equipment installed by Lessor necessary to take in kind must be approved by lessee and maintained according to lessee's specifications.

If Lessee is unable to obtain a more favorable gas contract because of lessor's reservation of this election to take in kind, then lessee may elect to give notice of its intention to sign a gas contract acceptable to Lessee and request that lessor join in signing same, and if lessor elects to Sign same, then Lessor's royalty share of revenue shall be bound by such contract and Lessor may not elect to take its royalty in kind during the term of such gas purchase contract.

26. This Amendment is applicable to only that leasehold interest presently owned and held by Conoco Inc. Nothing contained herein shall in any way inure to the benefit of or be applicable to third parties who hold or claim any interest in said 26,622.79 acre lease or who claim an undivided interest therin either jointly or separately with Conoeo. Nothing herein shan in any way prejudice any claim, demand or cause of action which Vaquillas may have or assert against third parties holding any leasehold interests in Vaquillas lands. Nothing herein shall be construed as a release or modification of any right, claim or cause of action which

-10- i'cop.~ls51 GWB2/dm 130(1) ---~-------

Vaquillas may have aga.inst third parties who claim any interest in said 26,622.79 acre lease or any other Vaqui11as lease.

27. Lessor does further RATIFY, CONFIRM and ADOPT all of the terms, provisions and conditions of said June 15, 1974 Lease, as amended and as it applies to those rights held by Conoco Inc. thereunder, and that such lease, as amended and as it applies to Conoee Inc. is in full force and effect as of this date. Further, nothing contained herein shall in any way inure to the benefit of or be' applicable to any interest held by third parties in and to the June 15, 1974 Oil and Gas lease.

DATED this <51'~ day of January, 1988.

VAQUILLAS RANCH COMPANY, LTD. VAQUILLAS UNPROVEN MINERAL TRUST

8y:

By:

VAQUILLAS PROVEN MINERAL TRUST CONOCO INC.

. Wal er, Jr., rustee !jd By: ~.f~~~-Jl/~ By: 6: ,~og*~ &~ 'tl~ E. er

I

uiros, ru tee )

-11-

GWB2/dm 130(1)

EXH I 8 I T "A"

.!!llir A8STRACT CERTIFICATE GRANTEE ACRES

16~9 I'll 0 llS8 eeso • RGNG 640;0 1651 1112 1159 eeso & RGNG 640.0 1652 2876 1159 \/. H. Taylor 640.0 1661 1122 1164 CCSO & RGNG 640.0 1663 1123 1165 ecso & RGNG 640.0 1633 1323 4/808 GC & SF 640.0 163~ 2252 4/808 GC & SF 659.96 1665 1124 1166 CCSO & RGNG 640.0 5.1/21666 2253 1166 eeso & RGNG 328.75 N.l/2 1666 3142 1166 ceso & RGNG 328.79 468 2255 236 AS & H 659. '" 467 799 236 AS • H 640.0 1635 1797 17 TC Ry. 640.0 865 1438 12/2541 H • GN 640.0 1683 1115 1175 CCSO & RGNG 640.0 1691 1267 5446 Ge • SF 640.0 1696 2418 5448 GC • SF 640.0 1695 1268 5448 Ge • SF 640.0 279 (pt. only) 1353 3702 GC & SF 458.2 1004 2421 21105 J. Poi tevent 634.58 1692 2419 5~~6 GC • SF . 613.04 1693 1269 5447 GC. SF 640.0 2112 2420 & 1925 631 B.~F. James 627.12 276 i552 3700 Ge & SF 640.23 228 2550 134~, .. CCSO ,& 'RGNG 636.93 '227 1133 13W~ ceso & RGNG 640.0 988 2593 2/103 J •. Pol tevent 637.10 987' 2061 .211,93' J .. Poltevent 640.0 213' 1141 13~9. eeso & RGNG 640.0 275' 1336 3700 ' , 'GC ',,& "SF' 640.0 ·27H' 1337 3701 cqQ& RGNG 640;0 :~'.1/~ '31. BI9Ck 2 1043 453 ..eeso:,,& ,~GNG 320.0 , 25. Block 2 1042 ~52 'eeso & RGNG 640.0 '232" 2148 1346 CCSO & ReNe 462.70 '233" 1117 1347 ceso &ReNe 4~5.9 N.H2 51. Block 2 1045 460 . ecso & ReNe 320.0 ,259 (pt. only) 1137 1074 eeso &RGNG 600.0 1955 1328 4526 Ge & SF 640.0 2057 985 302 eeso & ReNG 652.25 2060 (pt. only) 3329-30 303 CT & H 440.0 LI/2 2059 984 303 eT& H 320.0 E.l/2 1953" 1329 4527 Ge& SF 320.0 1627 (Pt. only) 1324 4683 Ge & SF 160.0 1629 (pt. only) 1275 4682 GC & SF 292.65 \/.1/2 1662 2230 1164 eeso & RGNe E.l/21648 329.31 \/.1/21648 24" 1157 eeso & RGNe 325.75 3301 1157 ceso & ReNe 325.75 26. Block 21'1 452 R. D •. Barnsley 640.0 2335 3025 School W. Brown 27.3 E.l/2 1956* 2560 4526 Ge & SF 327.34 Lessor's·warranty hereunder as to all of Surveys 987,273,275,27],26, the E.l/Z of 1953, E.I/2 of 1956 and ~Ol.9 acres out of Survey 233 (all except 54 acreS out of SW corner of said Sur. 23;) Is expressly limited to 1/2 of the executIve rights In the 011. and gas rights In and under said lands, and as to all of Survey 232 :I~ :e~pressly limited to 4/5 of the execut ive rIghts In the oll.and gas rights. . .,

The following parts of surveys are expressly exc1uded'~eref~om, -vIz.·:. (I) The SE 1/4 of S~ 1/4, 511 1/4 of HE 1/4 (80 acs.L'andN ',1/2 of S~ I/~ and S\/ 1/4 of s~ 1/4 (120 acs.) of CT&H Survey 2060. ..' .".', ..... ' ..

(2) The w. 3/4 or GC~SF Survey 1627 described tn O&G Lse. to Daniel A. Pedrotti dated September 24, 1973, as a~ended.

Any part of a survey listed herein not included \.,.Ithin any specific fraction.,1 reference preceding the su'rver refercnc;e.

(4) The HE 160 acre' of GC&SF Survey 279. (5) ·Block 11 as per the E.D.Claggett Subdivision of rccord 2 Plat Records 29, Wcbh County, contiJinlng ~O acre~ tl~in9 the N\I I/lf of SE Ill; of CCSO & RGNG Survl'~' 259.

I

(6) All of the \"I. 320 ;l.:r~'i> of Survey 1629 d(.'scribl!d and included In O&G lsc. tu l),lIllel A.

Pedrotti dated $"j'\.';:lh\.'r 2~, 1973, a,s amcndt"d, T~OPOOI2i57:. --~---~-.--- 296

EXlIlIlT •

C.lculatlon of toy.hy to b. SNld on ,II d.. ~I't'.nd to L..... or ,utill.tll for UII ,.M nn for 1' . . . 1.') In ,,"cardlne. vlth p.,.,rlp)! 19.

"lnclp.h ,.y L.llor roy.Uy b.nd on thl ,r ..ttr of th' v.l;ht.d .v.,.;. price ptld by th. th,u lar, .. t volUdtrtc pUrchllra for the ".l.nd,r qulner In the .. at q\lIrttl' of v.bb Covnty 01' the 1III10"ttll 'Yin'll' of th. pr!c; .. us.d by tilt L... or for roy., lY P')'MAt pIoIrpD . . . .

Oat. Sourc.s [n...vy 'luvdn; loot publication or IS reported to til. nu. of tun hlr IIv.rene. tax pvrpaa.,.

sup 1. [lIlc;ul". th. v.I'IIht.d IIV'1'II0' prln tor the IIMth for ,lIc;h of tllll 'hI''' ttr..,."

volu-. P\lrc;hllll. for til quirt., 11"_ the tax r.carda.

Pureh .... fro .. 's!I!P'ny A

L.ne , 100,000 2.00 ZOO,a63 Unit 14 ao,ooo 1.51 120,eOO

leO,ezt I." 29t,733

TOtAL Unftltd T.... 360,ez, Tren._I .. ton

613,396/160,e21 • SI.70/MMltu.

IIp .. t pl'oc.du,. for reNlnln~ two lIantlll for thll purch ... r .nd for remaining tlla purch .......

Step 2. Calcul't. the vahllt.d IVerl\l' prle. of the thr •• Ilrv.n va\ulII.trlc pur!;""'" lor the qulrllt u.lno JIIOntilly VII" .. troll IUp 1.

"onth·J'oy,ry '9!§ Month· ,ebruuy 19815 Honth , H.reh IfIU!

Emb.WL VOlUM Prlca Extension VO\\nI' Pr!c. Exten.lon Val~. Prlc. Ext.nslan Me' l/HCf • MCf S/HC' • Me' S/KC' • United Tax.. 360,821 1.10 613,396 397,130 1.515 627,465 3Z0,l06 1.58 506,083 TUMIII .. lon

UTUO! South Gulf

Tot.l.

'oo,m ill..222 LH 1,136,044 1.5$ 620,346 ~ = 350,723

1,833,74Z 1,047,009 1.60 WI.

561,157 lll.m 500,1261.55 ~.'~,5~'"--o'~~~'~'"'

1,613,255 1,121,432 775,195

1,756,658

SUI! of Volu.." lUll ot ExUn,'o!\, Vefghud Ayerai' P~!c,

Toul. 3,304,485 5,263,855 1.59

sup 3. tlleulu. w.IGht.d ,v,nv' prtu und by L..... to calcul'tI roy.lty p'YIII,nta on ' " d,llvered to L..... or .HtI"t .. and not for 1' . . . 1••

Month.January 'filII Month.February 191111 Mgnth·Mush 1988

Voh... Pl'lc. Extln.fan vatu-. Prfc. Ext.n.lon \/01101IIII Prlc. Exun,lon MCf '/IICf • Kef SIMCf • 'Of $-/Her • 155,000 1.60 248,000 140,000 1.62 Z26,aOO 155,000 l.se 244,900

III! 9' YoIV .." SUP' 9' ClIun.'on. ""phtrd Aysrur Pelu

719,100 1.60

IUp 4. COIIPIr. w.l,ht.d 'Y'l"Ig. price c,IGullt.d In Sup 2 to lh. 1I.!vhud ..... r.'. , .....

prlc. c,lcul.ud In n.p 3.

SI.60IHCf I, lraUer th.n St.59/KCf '0 no .ddltlon.t !"Oy.lty P.YIII,/1t •• r, requlrad 10r th h qull'ur.

VOIUIIII .nc! prlc" v"d In thlt t . . .pl. Itl Utld for IIlunl'ulan .nd ... y nat b. nfl'''I .... ' of .ctu.1 condltlona.

THE STATE OF TEXAS § § COUNTY OF WEBB § <.{iL This instrument was acknowledged before me on the q day of January, 1988, by J. O. WALKER, JR., General Partner of Vaquillas Ranch Co., Ltd., A Texas Limited Partnership, on behalf of said partnership.

~ .. &LA," *~V{'~ Notary Public in an or The State of Texas. <)C) My COl11llission Expires 7-3- 0 ,

Lt:l\lRA BA LL€vJ Printed/stamped name of Notary.

THE STATE OF TEXAS § § COUNTY OF WEBB § oy--L This instrument was acknowledged before me on the I day of January, 198B, by E. WALKER QUIROS, General Partner of Vaquillas Ranch Co., Ltd., A Texas Limited Partnership, on behalf of said partnership.

THE STATE OF TEXAS § § COUNTY OF WEBB §

This instrument was acknowledged before me on the 9~ day of January, 1988, by GENE S. WALKER, General Partner of Vaqulilas Ranch Co., Ltd., A Texas Limited Partnership, on behalf of said partnership.

~ ub~in and for The State of Texas. J- 09' My Comission Expires 7- 3- "

~fI<)RA 804 usvJ Printed/stamped name of Notary.

THE STATE OF TEXAS § § COUNTY OF WEBB §

This instrument was acknowledged before me on the 9~ day of January, 1988, by EVAN B. QUIROS, General Partner of Vaquillas Ranch Co .. Ltd., A Texas Limited Partnership, on behalf of said partnership.

d.cblJ ~,J(1,,'}j Notary Public in and for The State of Texas. My COI11Ilisslon Expires '1-3-&,,9 /v,q v I~/I t5A LUi vJ Printed/stamped name of Notary. -12-

GWB2/dm 130( I)

THE STATE OF TEXAS § § COUNTY OF WEBB § ~ This instrument was acknowledged before me on the CJ day of January, 1988, by J. O. WALKER, JR .. Trustee for The Vaquillas Unproven Mineral Trust.

c~ . itA- .~fi. flu.if Notary ~ublic in a~for The State of Texas. 00 My Commission Expires: 7- 3- 6 I

LA) t>RA b>A UEN Printed/stamped name of Notary.

THE STATE OF TEXAS § § COUNTY OF WEBB § ~ This instrument was acknowledged before me on the 7'

day of January, 1988, by E. WALKER QUIROS, Trustee for the Vaquillas Unproven Mineral Trust.

~"~4~~ Notary Pu lie 1n and for The State of Texas. My Commission Expires: 7-:3- 8'9 0A tJfG,4 HI! LLEvJ Printed/stamped name of Notary.

THE STATE OF TEXAS § § COUNTY OF WEBB § n~ Thi 5 instrument was acknowledged before me on the -, day of January, 1988, by GENE S. WALKER, Trustee of the Vaquillas Unproven Mineral Trust.

~"94~," oOr"t ~Pub ie in and for The State of Texas My Commission Expires: '1- 3- 111 /""1IUi2A 1:54 LLSvJ Printed/stamped name of Notary.

THE STATE OF TEXAS § § COUNTY OF WEBB §

This instrument was acknowledged before me on the day of January, 1988, by EVAN B. QUIROS, Trustee of Vaquillas Unproven Minera 1 Trust. ~ "

- ~ !! ), a" ~y Public in and for 4J! 0,,,9-'

The State of Texas My Commission Expires: '7-3-117 Lc,[)f(,a 15", LLe:vJ Printed/stamped name of Notary.

-13-

GWB2/dm 130(1)

THE STATE OF TEXAS § § COUNTY OF WEBB §

This instrument was acknowledged before me on the '1 ~ day of January, 1988, by J. O. WALKER, JR., Trustee of Vaquillas Proven Mineral Trust.

NOtarY ic in and for The State of Texas " My Commission Expires: 7-3- i?{ IvAM.A /2,,</ LIE vJ Prlnted/stamped name of Notary.

THE STATE OF TEXAS § § COUNTY OF WEBB § yh the 9 day of January, 1988, by E. Proven Mineral Trust.

(.~~~~~~~~~~~-- otary u ic 1n and for The State of Texas My Commission Ex~es: 7-.:3- ~'l L4tJ!<A & Li..GvJ Printed/stamped name of Notary.

THE STATE OF TEXAS § § COUNTY OF WEBB §

This instrument was acknowledged the 9 'ti0 day of January, 1988, by GENE S.WALKER, Trust Proven Mineral Trust.

otary ub lC 1n an for The State of Texas My Commission Expires: 7-.3 - 'g'1 ivA iJ/2A BA LL;;;.,J Printed/stamped name of Notary.

THE STATE OF TEXAS § § COUNTY OF WEBB §

on the This instrument was acknowledged before me 9 day of

L

January, 1988, by EVAN B. QUIROS, Trustee of Vaquill as Proven Mineral Trust.

Notary Public in and for The State of Texas My COnInission Expires: 7-3- :;;J .LAuRA 8-4 LLevV Printed/stamped name of Notary.

-14-

GWB2/dm 130(1)

......

THE STATE OF TEXAS § § COUNTY OF WEBB §

This instrument was acknowledged before me on the 'l-J-b day of January, 1988, by Iefi c. • .s"--;;l er , Attorney·in-Fact for CONO(? INC., ali aware corporation, on behalf of said corporation.

The State of Texas My Commission Expires: '7-I&" qg'

LJ e.11"" /J'la. Y' Ke. rt-

Printedlstamped name of Notary.

·15· GWB2/dm 130(1)

301 ·r...".... .

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'i • It.odIlUU U (1"1)

.. i.J:I UD ACI" 1'00111\11: PrO>'b!t.on

• OIL, GAS AND MINERAL LEASE THIS AGltEEKENT mat. lbb,-1.~ .. _ _ _ _ _ _ .4&T ot. Novemb~L ____ R__ R. __ 'R. __ .. __ ._...lI..!!?_. ,*_11 Vaguillas Rancl!SomruillY.t.-Ltd.; Vaqui11~Jm.p.roven_MinJrral Tn,tst i ...Y!9..l!.!.+1.~!"9.Y.~!L ~~ral-1.~ust..LI!f:..t,!!!~nd thr.g.H8!L.!~f!...&rulenLPJ!r..t.~ ....-h..JLr.....IDt1.lter. Jr ~._. ___ ._. _ _ ~. Wal~r.-JlU-..!~,~~~~!!$~L~M_~"!!!J_I.. ....Q.\!ill_I!· , . ___._.'._.____ ..'

;::.~:~ 0111 ~ IrIOra) ...boN add ..... lu_ ., p..!.~o:-i~;J:D86:-~p Texa! 7804i=~===_====_~ and __G..?.!!~~.£:..z.y_~_~ox 219L..Jlo'!~!Q..lh_~~!lP_..l.1.£?_~____ ,. __ ._. ___ .• t.-. WlTNESS!:TH1 -I. ~ III ccmaW...,LlOII ot......!en Dollar"§._!lE.Q._.9,~J~~~!,-o_4....rul!Ly'~.!..\@blt;L~..QJ!§.!~.E~!!2.!L._R'-_...»oIl&r, II...! 0.00 ) In bDd paM!,. ot Lbe lO,llUII bu.ln Pf'OyIW. Illd of u.. Apft_t. of LMaw blf'lln toat.lM4, bereb, paa,ta. kuM L114 lott.o uclual....,. viii,;·L.'_ fur tb. rnupoM 01 IlIn,UaIUlla. t:XpJ.orllll'. Pr'OtPlCltill•• kDU ... u>d mIlIllI&' lor ...d. Pf'Odud.n.. 011. "" I.N! all otb ... mIr.lra", COII41Kt.1D.S p;plor.~n. noIo.le and I'toph,.1c&1 .",....,.. b,. ~a»b, COra UIl. 1'n.'Pi&;r &114, 1n&.. n.tl • - ...~:~~. au, ...tv ant! ~Ir flllld ......01 air lIIto ...bnrt.... nratl, II}'I .... pipe Una. bullcUl" ..-da "nita,. ~ ItILlD.... te _ _ U11M III _ ' - IlnIoo hIr'M tbtr.ull IIII!. 0.. , O.... r end. Urwl ludi _1IId or claim.:! b, Lutor adlac&llt alii! _ il INO 't~ to prod.\I~ "VI, tat. cer. or, kNot. t.ralI.IlJOl1. &114 _" laid llrodtlcb, ud. boaf;lll&' It. IIIIplonn. ~ toU_IN!' duenbtcl Iud hL __ H~ W _ _ _ _ _ _ _• _ _• ___ Co"II~. T...... ""..I"

6~740 acres of land~ more or less~ situated in Webb County, Texas, more fully described in Exhibit "AI] attached hereto and made a part of this Lease for all relevant purposes, including limitations upon warranty as specifically set out therein,

.'

irATI; or .

~ OOUIITY .,._ __ ~~L-

--} _ _ ._ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ._ __

=-_~ 't:r ':...bt~~ ~-iii;;;ii~...nbMrlbed to the lorqolq hl~t. UI4 KlIIIO'WIedp;!. to =- tbd _he.... aecut«l GI.. " ulld" l1li' bud al'l4 lilt&! or ofnoe., u. .. u... ___ -U7 ot _ _ ._ _ _ _ _ _ ~ __________ • A. D. 11. ____ .••

--_.__._--_ ....

NotaQ Publlll h~ fAd for .----~~. -----

T&1UJ'OlNr A.CKHOWLJmOMEHT

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• r i • I • ADDENDUM TO OIL AND GAS LEASE • From Vaquillas Ranch Co., Ltd. et al To Conoco Inc., Dated November 1, 1987

12. Should Lessee be prevented from complyin9 with covenants of this lease by reason of conditions or acts set forth in Paragraph '11' hereof, then Lessee agrees annually to pay to Lessor an amount equal to the delay rentals herein provided for during such period of prevention, whether same be during or subsequent to the primary term, and such payment shall be made at the end of each year of prevention either to Lessor or to the depository above named for credit to the account of Lessor.

13. This lease does not cover or Include any right or privilege of hunting or fishing on any part of the above described 1and, and Lessee agrees with Lessor that neither he nor his aSSigns or agents or employees of his assigns, will bring firearms or dogs upon the leased premises, and should this provision against hunting and fishing be violated by any agents, servants J employees or contractors of Lessee IS ass igns, any such • person so Violating same shall have no further right to enter upon the 1eased prem1 ses, and such person sha 11 be rega rded as and sha 11 be a

trespasser on the premises of Lessor and be subject to the penalties imposed upon trespassers under the laws of the State of Texas.

14. It is expressly agreed and understood that after production of .,

oil and gas in corrmercial Quantities is obtained from the leased premises, ~C'I

the minimum annual income to Lessor from payment of rentals, shut-in 0 1 )

royalty and royalty on production shall be sum of not less than Two_($2.00) Do1lars per acre on the total acreage retained and then covered by this

lease, but this proviSion shall not impair the right and privilege of Lessee, his successors and aSSigns, to release and surrender any part of

the above described leased premises as herein provided. Lessee, his successors and aSSigns, shall detennine within 90 days from the expiration of any lease year during which royalties have been paid on actual production the amount of any deficiency, and shall within said 90-day

period pay such deficiency to lessor or deposit same to Lessor's credit at

GW82/dm 124(7)

""'I JUt 1 4 ~ 304

..

". ,.

the depository hereinabove designated.

• Default in the payment of such deficiency shall not operate to terminate this lease or any part hereof. but Lessee. his successors and assigns. agrees to personally pay such deficiency to Lessor at Laredo in Webb County. Texas. together with any reasonable cost, including attorney's fees, incurred by Lessor in

collecting such deficiency if not paid within the gO-day period hereinabove provided for.

15. Nothwlthstanding any other provision herein contained. this oil.

gas and mineral lease is limited to oil. gas and sulphur and minerals produced with oil and gas. and does not include minerals other than oil. gas and sulphur and minerals produced with oil and gas. as Lessor herein excludes from the leasehold estate herein granted, and reserves unto himself. his heirs and assigns. all minerals other than Oil. gas and su1 phur and mi nera 1s that may be produced with oil and gas. but it is expressly agreed that Igas' as used herein includes gas, condensate, distillate or any other gaseous substance or any other mineral produced with oil and gas, including sulphur.

16. The right to pool under Paragraph '4' of this oil. gas and mineral lease shall be limited to lease or leases on land belonging to lessor herein, or in which lessor owns an interest in the Oil, gas and other minera 1s .

17. For the purposes of the annual rental payments due under paragraph 5, lessor and lessee agree that said payments have been timely paid and received. and that this Lease is perpetuated. without the necessity of further delay rental payments. until' the expiration of the primary term.

18. At the end of the primary tenn hereof, lessee covenants and L ()?

agrees to execute and deliver to lessor a written release of any and all portions of this lease which have not been drilled to a density of at least 40 acres for each producing 011 well and 640 acres for each producing or shut-in gas well. except that in case any rule adopted by the Railroad Commission of Texas or other regulating authority for any field on this

GWB2/dm 124(7)

• • lease provides for a spacing or proration establ1shing different units of acreage per well, then such established different units shall be held under ~e~se by - su~h production, in 1ieu of the 40 and 640-acre units above mentioned; provided, however, that if at such date lessee is engaged in

drilling or reworking operations the date for the execution and delivery of such release shall be postp~n;d a~d the entire Tease shall remain in force so long as operations on said well or wells are prosecuted with reasonable diligence, and if, after the completion or abandonment of any such well ~.) :

Lessee commences the drilling of an additional well within Ninety (90) days from the completion or abandonment of the preceding welT, or continuously conducts drilling operations in good faith and with reasonable diligence on said lease without any ces?atjon for longer than Ninety (90) days, said lease shall remain in full force and effect during such drilling operations and until the end of Ninety (90) days after the completion or abandonment of the final well, at which time Lessee shall execute and deliver to Lessor said written release, releasing all portions of the lease not then so developed. Each retained unit shall contain at least one (1) well producing or capable of producing oil or gas in paying quantities, and the acreage within a unit shall be contiguous.

If, after the date the partial release called for under this Paragraph 18 takes affect, all production from a retained unit around a well or wells

cease to produce 011 or gas in commercial or in paying quantities, Lessee

shall have one hundred eighty (180) days thereafter within which to commence operations to establish or re-establish production therein in

cormnercial or paying quantities, whether such production be from the same well bore or other wellbore. If such operations result in commercial product; on, then thi s 1ease, as it app 1; es to such uni t sha 11 conti nue until such commercial or paying production again ceases. However, if such operations do not result in commercial production, then Lessee shall have ni nety (90) days after comp 1et i on of such operati ons within whi ch to commence drilling '·or reworking operations within such unit, and this lease, as it applies to said unit, shall remain in force so long as operations on said well or for drilling or reworking of any additional well therein are prosecuted with no cessation of more than ninety {gO} consecutive days, and if they result in the production of oil or gas therein, so long thereafter

GWB2/ dm 124 (7)

• • ", . ,.

as oil or gas is produced from said unit. As to any unit upon which commercial production may periodically terminate, the above right to timely resume operations and continue this lease as to such unit shall be reoccurring right.

The stipulation above as to the size of retained tracts around wells shall never be construed as a satisfaction of Lessee's right, duty and obligation to reasonably develop the leasehold held by Canoe a or its successors or ass 19ns. After November I, 1990, Lessee agrees to dri 11 such add i tiona 1 wells on the leased premises or such portions thereof as may be in force and effect from time to time, as may be necessary to reasonable develop the same for the production of oil and/or gas as a reasonable prudent operator.

19. A portion of paragraph 3 has been deleted and the following Is in lieu thereof.

(b) on gas, including casinghead gas or other gaseous substances, produced from said land, the Lessors royalty shall be calculated and paid as follows:

a) Sales To Non-Affiliated Third Parties:

In the event Lessee enters into a gas sales contract with a non-affiliated third party, Lessor's royalty shall be one-fifth (l/5) of the gross proceeds received by Lessee from the sale of such gas.

b) Sales To Related Or Affiliated Entities For Resale:

In the event Lessee enters into a gas sales contract to sell gas to a related or affiliated entity, then Lessor's royalty shall be computed on the greater of the following: 1. One-fifth (1/5) of the gross proceeds received by Lessee or any affiliate or related entity from the sale of such gas to the first non-affiliated entity, or

2. One-fifth (1/5) of the highest price reasonably obtainable for gas by lessee and other producers or operators in the

-4-

GWB2/dm 124(7)

• • east one-fourth of Webb County, Texas, who are producing gas of like kind, quality and quantity.

In this regard, it is understood that the IIhighest price

reasonably obtainable" may be equal to, but is not necessarily, the highest price then being obtained by other producers or operators in the east one-fourth of Webb County. Texas. who are producing gas of like kind, quality and quantity.

c) Taking, Selling Or Delivery Of Gas To lessee Or Its Related Or Affiliated Entities For Use (Not For Resale): In the event Lessee takes gas for its own use, or sells or

transfers gas to a related or affiliated entity for use, then lessor's royalty shall be computed on the greater of the following:

1. One-fifth (1/5) of the highest price reasonably obtainable for gas by lessee and other producers or operators in the east one-fourth of Webb County, Texas, who are producing gas of like kind. quality and quantity.

In this regard, it is understood that the "highest price reasonably obtainable" may be equal to but is not

necessarily the highest price then being obtained by other producers or operators in the east one-fourth of Webb County, Texas, who are producing gas of like kind, quality and quantity, or

2. One-fifth (l/5) of the quarterly weighted average of the prices being paid by "purchasers" (as hereinafter defined) in the east one-fourth of Webb County, Texas, who are

purchasing gas of like kind and quality. For the purposes of calculating the average price under this Paragraph e2.

prices paid shall be those as reported in the Energy Planning Book publ ication or as reported to the State of

-5-

GWB2/dm 124(7)

• Texas for severence tax purposes. the three largest purchasers • "Purchasers II sha 11 mean based on volume of gas purchased for such calendar quarter, in the east one-fourth of Webb County. Texas. For an example of the calculation of the quarterly weighted average of such price, see Exhibit

Lessor and Lessee shall meet within eleven (11) months after the end of each calander year. At least thirty (30) days prior to such meeting, lessee should furnish to Lessor a statement or other documentation of the basis upon which royalties accrued to Lessor under the terms of the Lease for the previous calender year. Any additional royalties calculated by Lessee to be due, if any, shall be paid at such meeting. Within one (1) year from del ivery of the above referred to statement or other documentation, Lessor shall notify Lessee of any discrepancies. Failure to notify Lessee timely of any discrepancies shall constitute final acceptance of royalty payments as covered by such statements or other documentation. The first period for which Lessee shall prepare such statements or other documentation shall begin on April I, 1988 and end on December 31, 1988. Nothing in this paragraph shall preclude Lessor from claiming any royalty which Lessor is entitled to as a result of mistake in computation, overSight 1n computation, or error in computation of royalty or which may result from the subsequent disclosure of a discrepancy.

LESSOR'S royalty shall be without deduction for any costs, such as, but not limited to, costs of producing. gathering, storing, separating, treating, dehydrating, compreSSing, proceSSing, transporting and otherwise making the Oil, gas and associated substances ready for sale or use, except for a) severance and related taxes, and b) reasonable transportation expenses which may be necessary to be paid to non-affiliated third parties or entities to get Lessor's gas to a market or pOint of sale off the leased premi ses and wh1 ch sa 1e or sa 1es wi 11 result in a net pri ce equa 1 to or r" higher than if said gas had been sold at the wellhead. " I

LESSEE may submit a copy of a proposed gas sales contract to Lessor which is acceptable to Lessee and request that Lessor approve same for

-6-

GW82/dm 124(7)

". -

• roya lty computation purposes.

• Lessor sha 11 have thirty (3D) days after receipt of a gas contract to approve same. If Lessor approves same or does not timely decline to do so, then Lessor's royalty on gas sold under such gas sales contract shall be based on the gross proceeds received under said contract.

GAS contracts with a term in eXcess of three (3) years shall contain a provision for price redetermination no later than the end of the 3rd year and subsequent price redeterminations thereafter at intervals no greater than two (2) years apart.

20. Lessee agrees to fill all slu~h pits and level the same when they have ceased to be used and to restore the land to as near its original state as is practicable and to pay for damages to the surface of the land and the improvements, water wells, growing crops and livestock thereon, and to any other personal property of Lessor, Vaquillas Ranch Company, Ltd., occasioned by. arising out of, or resulting from operations by Lessee, his agents, employees or independent contractors on the land hereby leased to Lessee. Lessee also agrees. when requested in writing by Lessor. to divulge to Lessor true and correct information as requested by Lessor as to all drilling, producing and marketing operations conducted under this lease and to furnish to Lessor copies of all electric well logs taken her.eunder; provided. however, lessee shall not be obligated to release such information until it has been released to the industry.

21. Lessee hereby agrees to ensure that the two exit gates on F.M.

2895 (Forest Gate and Reynolds Gate) are guarded in an efficient and prudent manner during drilling, reworking or plugging operations and at other times as mutually agreed to by Lessee and Lessor. As to the exit gate on the north side of U.S. Highway 59, Lessee agrees to use its best efforts to work out an arrangement with other exploration companies using such gate to ensure that it is guarded in an efficient and prudent manner during drilling, reworking or plugging operations and other times as mutually agreed to by Lessee and lessor. Further, Lessee agrees to use its best efforts to work out an arrangement with TransAmerican Natural Gas Corporation or its successors or assigns to ensure that the exit gate

-7-

GWB2/dm 124(7)

• • ....

located 9 miles north of Aguilares, Texas, on F.M. 2895 is guarded in an efficient and prudent manner during drilling, reworking or plugging operations and at other times as mutually agreed to by Conoco and Lessor. In regard to gates used by lessee and ather exploration companies, Lessee agrees to pay its share of the cost of guarding such gates when such gate guards are required under this agreement. lessee shall not be obligated to furnish a gate guard on any gate which has been abandoned or is not being

used by Lessee.

22. Lessee agrees that before abandoning any well drilled on said d; 'p':)

lease for oil or gas purposes, it will notify the owner or the surface estate in person or by telephone of its intention to do so, and it will allow said owner of the surface estate a reasonable time, not exceeding

twenty-four (24) hours thereafter, within which to elect to take over the hole for the purpose of attempting to make and complete a water well. lessee agrees to consult with such surface owner as to the location of a potentia 1 water zone. without any 1iabil ity or warranty for such consultation. Upon the owner of the surface estate election, within the specified time, to attempt to complete the well as a water well and complying with all rules and regulations of the Railroad Commission of Texas and applicable statutes, Lessee will, at its expense, set all plugs to just below the designated water sand as may be required by the Railroad Commission and thereafter deliver the well to said owner of the surface estate, leaving in such well all surface casing and such intennediate casing as may have been run and set to at least the depth of the designated water sand and thereafter the owner of the surface state shall own the well and shall be responsible for all subsequent matters in connection with the well and for compliance with the applicable statutes and regulations of all regulatory agencies having jurisdiction. Lessee shall have no liability to Lessor in connection with any of the operations which may be conducted by the owner of the surface estate who shall thereafter bear all responsibility and liability with respect thereto. It is expressly understood that lessee shall not be required to furnish any additional casing or other equipment for any well plugged back at the request of the owner of the surface estate under this paragraph. Should the owner of the surface estate elect not to attempt to make a producing water well out of

-8-

GWB2/dm 124(7)

" ..

• any such hole. Lessee shall plug the well in accordance with all applicable rules. regulations and statutes.

23. It is expressly agreed and understood that for the purposes of this lease the following definitions shall apply:

"Cormnences" - A well shall be deemed corranenced on the date which the drilling bit enters the earth for the drilling of a well.

IIAbandoned ll - A well shall be deemed abandoned on the day when it is finally plugged as a dry hole.

"Completed" - A well shall be deemed completed thirty (30) days after the day the Lessee sets production casing.

24. Lessor and Lessee agree to limit the commencement of actua I Ao~ drilling during deer hunting season to 1) those wells drilled in areas which would not disturb deer hunting. and 2) offset wells. If Lessee must

commenCe a well during deer hunting season to perpetuate said lease, then Lessor will either a) not object to the drilling of such well during deer hunting season or b) agree to extend the commencement date for such well to a mutually agreeable date after deer hunting season ends. For the purposes of this paragraph "deer hunting season" shall be that period defined by State law.

25. Nothwithstanding anything contained herein to the contrary. the lessor at any time and from time to time, upon not less than ninety (90)

days notice to the holder of this lease, may elect to require the payment

of any royalties accruing to such royalty owner under this lease to be made in kindj provided that any expenses incident to the exercise of such

election shall be borne by Lessor·and such election shall be for periods of not 1es5 than twelve (12) months. Lessor shall only be allowed to take in kind when Lessee is producing for his own account. In the event of such an

election by Lessor, Lessee shall cooperate fully with Lessor in allowing Lessor to take their royalty in kind, including permitting lessor to use

lessee's wellhead equipment and, to the extent that lessee has assignable rights, the use of Lessee's purchaser'S transportation facilities in good

fa ith and not to exceed preva i1 i ng charges for s imil ar servi ces in the

industry at the time if lessee or its affiliates are transporting the gas,

-9-

GWB2/dm 124( 7)

.... . '.

., • but if Lessee has a third party contract for the transport of said gas, Lessor will be bound by said contract. Should Lessee desire to enter into a gas purchase contract having a term of more than one (1) year, then (a) Lessee shall include in such contract a provision that allows Lessor to elect to ta~e its gas in kind and be released from such contract one hundred twenty (120) days after notice, or (b) Lessor may approve of such contract in writing, in which event, Lessor may elect to take its gas in kind either at the end of such gas contact or'one (1) year after notice to Lessee, whichever happens sooner. Any equipment installed by lessor necessary to take in kind must be approved by Lessee and maintained according to Lessee's specifications.

If Lessee is unable to obtain a more favorable gas contract because of Lessor's reservation of this election to take in kind, then Lessee may elect to give notice of its intention to sign a gas contract acceptable to Lessee and request that Lessor join in signing same, and if Lessor elects to sign same, then lessor's royalty share of revenue shall be bound by such contract and Lessor may not elect to take its royalty in kind during the term of such gas purchase contract.

DATED this 91Jr day of January, 1988.

VAQUILLAS RANCH COMPANY, LTD. VAQUILLAS UNPROVEN MINERAL TRUST

BY~.~ Bti?~ge ·~~r.,ru~tee

By: g~~ hra E.

~~w eriliros By: g.

E. Wa

By:

By:

""=:--.

-10-

GWB2/dm 124(7)

• • .. , ...

VAQUILLAS PROVEN MINERAL TRUST CONOCO INC.

BY~~4 rif1BY: "':'{!fd:::=f:f¥:f1ia";;ct~--~ By: c$:Wy!'~~f(: Tr~

-11-

GWB2/dm 124(7)

' ..

,I'i : (; {'e...'

"1:j ,_,

SURVEY ABSTRACT CERTIFICATE GRANTEE ACRES

·1652 2876 1159 w. H. TAYLOR 640.0 -1661 1122 1164 CCSD & RGNG 640.0 -1663 1123 1165 CCSD & RGNG 640.0 ~ .y ~-."t63"3 . 1323 4/808 GC & SF 640.0 , -'"1634 225..7_. __ ._.4/.8.08____ GC L~F._._· ...... __ 6_59.!-96..., =-n65 1124 1166 CCSD & RGNG 640.0 ""~ -~d635_ 1797 17 TC RY; 640.0--.

- 2060 (SE/4 3329-30 .- '303 . -"---CT--&'M' -- ----r6-0":-0.· only)

-1953 (E 1/2) 1329 4527 GC & SF 320.0 1627 (pt. 1324 4683 GC L SF 160.0 only)

-1629 (pt. 1275 4682 GC & SF 264.65 only)

1662 (W 1/2) 2230 1164 CCSD & RGNG 329.31 1648 (E 1/2) 2441 1157 CCSD &- RGNG 325.75 1648 (W 1/2) 3301 1157 CCSD & RGNG 325.75 2335 3025 SCHOOL W. BROON 27.3 • 1956 (E 1/2) 2560 4526 GC & SF 327.34

The following parts of surveys are expressly eXCluded herefrom, viz. : (1) The SE 1/4 of SW 1/4, SW 1/4 of NE 1/4 (80 acs.) and N 1/2 of SW 1/4 and SW 1/4 of SW 1/4 (120 acs.) of €T & M Survey 2060. (2) The W. 3/4 of GC & SF survey 1627 described in O&G Lease to Daniel A. Pedrotti dated September 24, 1973, as amended.

(3) All of the W. 320 ~cres of Survey 1629 described and included in O&G Lease to Daniel A. Ped~otti dated September 24, 1973, as amended.

I\O~ for ,,,.t,)

• ,.{cul.tlon of roy,lty n b. p.td on gn d.~IY.,.d to In "'ardlne. vllh p.t.,r.ph 19.

lXlllllt •

'ty L"lot roy.lty ~.nd on th. "nUt of the v.l,hud ''1ln" prl"

I. .....

• or Affllh'n for UII (.nd

p.lel by till tnr .. hr,.n Yol~trlC pur~ ... n hr th. nt.nd" qUtrUt In th. un II.U,tUt of lI,bb CO\ll\~Y or tbt 1i,Iebtld IVlnu 01 'hi prln' uud by ,h. LUlOr for roYllty P')'IIMt P'o/t'P0un

C.1cul.tlon: Oet,,..lnl .ddltlon.l roytlty p')'II.nu, If ,ny.

lnlrlY 'hMlnt loot publication or II reporud to ,h. st." of Tun lor "'IlrI"" Ull purpo ....

sup 1. ,.1culiU th. v.llbUd lY'u,.

ptlet for th • .onth tor nch of th. tht .. ,,,,.n vol\,a, pureh .... for "" qultU,. fro. th. tlX ncord ••

M2Mb· J."y.,y IOA§

I. .... 1 100,000 Z.OO ZOO,86) Unit '4 eo,ooo 1.51 1Z0,800

'v.-ch" .. fC!!III '2"'p,ny ,

\lIU '2 180,821 1.62

TOllL Vnlud Tun 360,1121 TUM.lnlon

611,396/360,1121 • $1.7o/MIt"~.

llput prondun tor nllllning tvo _linIn, hI' thl. pur~h"lr t.mI tor rtlulnlng '.,,0 purch, .. r ••

"'P Z. C.lc:",ln. lb, .",Ight,d .VIr.gl prlu of thl thrll I.r,nt vohlll.tric purch .. ln hr thl qu.rtlr Ulln" IIOnthly '1.11,111 trOll sup 1.

~ Mereh 1900 M0nSb·J·oy'CY 12" Montb • hbrupry 1!1I11 Month

~ Volva' Prll::t !xnn.lon VOIUNI PrlCi !xtlnlhn VoIUIII, 'ric:, ElIuntlOn Kef S/Mcr • "Of • /ltef • "Of .s/Her • Unlud hx .. ~60,'Z1 1.70 611,~96 3PT,Uo 1,$1 617,465 nO,306 1.51S 506,083

-

Tra""alulon

UIIAoe 620,346 561,157 500,1261.n 175,195 South Cult l1Lill Ul..2.22 'WJ,IIL..£"tll.J11I'22 1,136,044 '.83l,7n 1,047,009 1,67],lS5 1,121,432 1,756,858

'v- 0' VoIUlo" Su.. of [!It$'l'IJlgn, v.lghulf "Ylr.S' hiS!

10ul. '.59

sup 3. C,I;III.te ".I,hud .V'I'IVI prln "'ltd b.,. L..... to ulc:ulu. roytlt.,. p.YII.nu on VIt dlllVlrtd to L..... or ,,,lIln .. Inc! not for ,"'1 ••

t!0n,b·J,nytcy 1911!! IConth."bruary 19M Monfh'H!Ireh 19M

Yolu.I 'rln htlnllon VolulI' PriCI Eltlnllon VotU-I Prlc-. Extrnllon "Of $IltC1 • HCf S/MCr • "Of .s/MC'

155,000 1.60 241,000 140,000 1,62 126,800 ISS,oOO l.sa 2U,900

h,. of V2'u.,,.. SUI! 2' huC! '2n.

719,700 1.60

u.p '. CPptr, .."I,hUd .... ".,' pd;, Clleul.tld In .sup Z to thl IIIhhud .... .,.g. ~"nl pd" ni;ui.t.d 'n ,up 3.

'1,60/)lC1 'I ,r.n.r 111 .... $l.S9/MCf .0 no .ddlttOMt roy.lty p.y.tI\U ' f ' rtq\l.lftd tor this qUlrt,r,

IIOUt '101",-", IIId prlu. Ulld 'n tbl. 'XI.,l • • t I "'. . d for IIlunrnlon .nd ••.,. not b.

tlH,nlvI of ICtu.1 c:~hlont,

, . ~

, , . THE STATE OF TEXAS COUNTY OF WEBB • § § § • This instrument was acknowledged before me on the 9~day of January, 1988, by J. O. WALKER, JR., General Partner of Vaquillas Ranch Co., Ltd., A Texas Limited Partnership, on behalf of said partnership,

$.-.1"

.......

:':,".. ', ".- ..•. ...

~;~.­ ,- ~.. ... .

...........

~!~ ota+Y ~600.'S-

~lC in and for i~/ . .. The State of Texas. \ :

My Coomission Expires 6A LLGvJ 7- B - '89 '. '"'......... ._...... . ~ ~..

.0A!J/?,q Printed/stamped name of Notary.

THE STATE OF TEXAS § § COUNTY OF WEBB §

This instrument was acknowledged before me on the 9Y+- day of January. 1988, by E. WALKER QUIROS, General Partner of Vaqulllas Ranch Co., Ltd •• A Texas Limited Partnership. on behalf of said partnership.

. •:!o"

.. f .

""

~h~al2~J[y otarYublic in and for i . .~~/ The State of Texas. § ~i My COlllllission Expires (;I '7-:3 - 0 9 •, ~IJ.O)RA ~ LLEW \ .. '~~':-- ..... -. Printed/stamped name of Notary.

THE STATE OF TEXAS § § COUNTY OF WEBB §

This instrument was acknowledged before me on the 't'-II- day of January, 1988, by GENE S. WALKER. General Partner of Vaquillas Ranch Co., Ltd .. A Texas Limited Partnership, on behalf of said partnership.

~~~~,,;y an NOtarYUbfc in or The State of Texas. My COlllllission Expires 7- 3-89 L4tJt<A 13-4 LLevJ Printed/stamped name of Notary.

THE STATE OF TEXAS § § COUNTY OF WEBB §

This instrument was acknowledged before me on the Cf 'I-k-

day of January, 1988, by EVAN B. QUIROS, General Partner of Vaquillas Ranch Co., Ltd., A Texas Limited Partnership, on behalf of said partnership.

~ ublic in and for The State of Texas. My Commission Expires 7-3-89 LA IJi<A &4 LLCJyj Printed/stamped name of Notary. -12-

GWB2/dm 130(!)

• .. ' .

\

'. .- - • . • THE STATE OF TEXAS COUNTY OF WEBB § § § • This instrument was acknowledged before me on the 9+L day of January, 1988, by J. O. WALKER, JR_, Trustee for The Vaquillas Unproven Mineral Trust.

~,~ ~a~{2gd}- Offi'YPu1C in ancrror The State of Texas - CIa My CORmission Expires: 7- 3-a I

LA~R.A t>,,,, LLe"J Printed/stamped name of Notary.

THE STATE OF TEXAS § § COUNTY OF WEBB §

This instrument was acknowledged before me on the g~ day of January, 1988, by E. WALKER QUIROS, Trustee for the Vaquillas Unproven Mineral Trust.

- '.

~~2ht~~ The State of Texas. 9 My Conmission Expires: '7-:3- g LlluRA BAU,£vJ Printed/stamped name of Notary.

THE STATE OF TEXAS § § COUNTY OF WEBB §

This instrument was acknowledged before me on the 9 --r/:...J day of January, 1988, by GENE S. WALKER, Trustee of the Vaquillas Unproven Mineral Trust.

Notary Pu ~in and for The State of Texas My Commission Expires: 7-3- 'i?'7 LA ORA 3,0 LLE:vJ Printed/stamped name of Notary.

THE STATE OF TEXAS § § COUNTY OF WEBB § '-f-L;

This instrument was acknowledged before me on the 9 day of January, 1988, by EVAN B. QUIROS, Trustee of Vaquillas Unproven Mineral Trust.

-.:/~ ~c~n~Y The State of Texas a My Commission Expires: 7-3-f? I JvMR/i J:3A LLevJ Printed/stamped name of Notary.

-13-

GWB2/dm 130(1)

• • -, ,.

--- 320

Co· ._

, ,

COUNTY OF WEBB • THE STATE OF TEXAS § § § .

• o~ This instrument was acknowledged before me on the ,-,-::-.:-'--0'==-, day of January, 1988, by J. O. WALKER, JR., Trustee of Vaquillas Proven Mineral Trust.

{~?/ .,- <: :; ~ j

..-"<; ~ ~~ OCk.ft---

atarYUiC'in an for The State of Texas My Coomission Expires: '7'-:3 - J?9 ~ \ .. /~ LA ORA ~ UBvJ ~"

,... - ...... Printed/stamped name of Notary.

.

THE STATE OF TEXAS § § COUNTY OF WEBB §

This instrument was acknowledged before me on the day of 9'f1-, January, 1988, by E. WALKER QUIROS, ~: vaqu~ Proven Mineral Trust.

_' t, "," , Notary putiM in The State of Texas an~ 00 My Commi ss i on Expi res: 7- 3 - tJ f

LfiIJ/(,q 13A L1..HvJ Printed/stamped name of Notary,

THE STATE OF TEXAS § § COUNTY OF WEBB §

This instrument was acknowledged before me on the 9-tV day of January, 1988, by GENE S.WALKER, Trustee of Vaquillas Proven Mineral Trust.

}'

", ~. .~ ~~~d~~l(y The State of Texas '" . My Commission Expires! 7-3-/?9 i..JAOI2A BA U_~ vJ ' ..

-:. " Printed/stamped name of Notary_ "

THE STATE OF TEXAS § § COUNTY OF WEBB § ~'

This instrument was acknowledged before me on the 9 day of January, 1988, by EVAN B. QUIROS, Trustee of Vaquillas Proven Mineral Trust.

~uh4 ~" O~.a-=' Notary Public in and for The State of Texas OQ My Conmission Expires: 7-3-0 I

0Mi(A 80'1 LLBv.j Printed/stamped name of Notary.

-14-

GWB2/dm 130( 1)

• • .,..

,.

..

THE STATE OF TEXAS • § § • COUNTY OF WEBB §

Thi s instrument '1 cit . day of Attorney·in-Fact corporation.

The State of Texas My Commission Expires: 9-/8' -yf'

L)e//«. fl1<>. Y'A-"er27 Printed/Stamped name of Notary.

·15-

GWB2/dm 130(1)

RAILROAD COMMISSION OF TEXAS OFFICE OF GENERAL COUNSEL

OIL AND GAS DOCKET IN THE VAQUILLAS RANCH (LOBO NO. XX-XXXXXXX CONS.) FIELD, WEBB COUNTY, TEXAS

FINAL ORDER AMENDING FIELD RULES FOR THE VAQUILLAS RANCH (LOBO CONS.) FIELD WEBB COUNTY, TEXAS The Commission finds that after statutory notice in the above-numbered docket heard on September 23, 2010, the presiding examiner has made and filed a report and recommendation containing findings of fact and conclusions of law, for which service was not required; that the proposed application is in compliance with all statutory requirements; and that this proceeding was duly submitted to the Railroad Commission of Texas at conference held in its offices in Austin, Texas.

The Commission, after review and due consideration of the examiner's report and recommendation, the findings of fact and conclusions of law contained therein, hereby adopts as its own the findings of fact and conclusions of law contained therein, and incorporates said findings of fact and conclusions of law as if fully set out and separately stated herein.

Therefore, it is ordered by the Railroad Commission of Texas that Rule 2 of the field rules adopted in Final Order No. XX-XXXXXXX, effective February 24, 1998, for the Vaqui/las Ranch (Lobo Cons.) Field, Webb County, Texas, is amended as hereafter set out:

RULE 2: No well shall hereafter be drilled nearer than FOUR HUNDRED SIXTY SEVEN (467) feet to any property line, lease line or subdivision line and no well shall be drilled nearer than ONE THOUSAND TWO HUNDRED (1,200) feet to any applied for, permitted or completed well in the same reservoir on the same lease, pooled unit or unitized tract. Provided, however, there is no minimum between-well spacing requirement between a well being permitted at least 660 feet from the nearest property line, lease line or subdivision line, and the other wells permitted, drilled or completed on the same lease, pooled unit or unitized tract. A well being permitted at a distance less than SIX HUNDRED SIXTY (660) feet from the nearest property line, lease line or subdivision line must be a minimum of ONE THOUSAND TWO HUNDRED (1,200) feet from any applied for, permitted or completed well in the same reservoir on the same lease, pooled unit or unitized tract, or an exception to Rule 37 must be obtained.

The aforementioned distances in the above rule are minimum distances to allow an operator flexibility in locating a well, and the above spacing rule and the other rules to follow are for the purpose of permitting only one well to each drilling and proration unit. Provided however, that the Commission will grant exceptions to permit drilling within

. '" ,~, EXHIBIT

A-5 254

OIL AND GAS DOCKET NO. XX-XXXXXXX Page 2

shorter distances and drilling more wells than herein prescribed whenever the Commission shall have determined that such exceptions are necessary either to prevent waste or to prevent the confiscation of property. When exception to these rules is desired, application therefore shall be filed and will be acted upon in accordance with the provisions of Commission Statewide Rule 37 and 38, which applicable provisions of said rule are incorporated herein by reference. Provided however, that persons who are presumed to be affected by a request for an exception to the between-well spacing requirement shall be limited to the operators and ownersllessees of tracts, lease or units within one mile or less of the proposed well.

In applying this rule the general order of the Commission with relation to the subdivision of property shall be observed.

Done this 2nd day of November, 2010.

RAILROAD COMMISSION OF TEXAS

(Order approved and signatures affixed by OGe Unprotested Master Order dated November 2,2010)

: Texas Administrative Code http://info.sos.state. tx. us/pls/pu b/readtac$ex t. TacPage ?sl=R&app=9& p_ d ...

«Prev Rule Next Rule» Texas Administrative Code TITLE 16 ECONOMIC REGULATION PART 1 RAILROAD COMMISSION OF TEXAS CHAPTER 3 OIL AND GAS DIVISION RULE §3.38 Well Densities

(a) Definitions. The following words and terms. when used in this section. shall have the following meanings. unless the context clearly indicates otherwise.

(I) Commission designee--Director of the Oil and Gas Division or any Commission employee designated in writing by the director or the Commission.

(2) Drilling unit--The acreage assigned to a well for drilling purposes.

(3) Proration unit--The acreage assigned to a well for the purpose of assigning allowables and allocating allowable production to the well.

(4) Substandard acreage--Less acreage than the smallest amount established for standard or optional drilling units.

(5) Surplus acreage--Substandard acreage within a lease, pooled unit, or unitized tract that remains unassigned after the assignment of acreage to each applied for, permitted, or completed well in a field, in an amount equaling or exceeding the amount established for standard or optional drilling units. Surplus acreage is distinguished from the term "tolerance acreage,"in that tolerance acreage is defined in context with proration regulation, while surplus acreage is defined by this rule only in context with well density regulation.

(6) Tolerance acreage--Acreage within a lease, pooled unit, or unitized tract that may be assigned to a well for proration purposes pursuant to special field rules in addition to the amount established for a prescribed or optional proration unit.

(b) Density requirements.

(1) General prohibition. No well shall be drilled on substandard acreage except as hereinafter provided.

(2) Standard units.

(A) The standard drilling unit for all oil, gas, and geothermal resource fields wherein only spacing rules, either special, country regular, or statewide, are applicable is hereby prescribed to be the following.

Attached Graphic

(B) The spacing rules listed in subparagraph (A) of this paragraph are not exclusive. If any spacing rule not listed in subparagraph (A) of this subsection is brought to the attention of the commission, it will ber-----, gi ven an appropriate acreage assignment. EXHIBIT

A-2 (c) Development to final density. An application to drill a well for oil, gas, or geothermal resource on a L:::::::::::::::.J drilling unit composed of surplus acreage, commonly referred to as the "tolerance well," may be granted as 234

I of 6 9/8120143: 17 PM : Texas Administrative Code http://info.sos.state.tx.us/pls/pub/readtac$ext.TacPage?s1=R&app=9&p_d...

regular when the operator seeking such permit certifies to the commission in a prescribed form the necessary data to show that such permit is needed to develop a lease, pooled unit, or unitized tract to final density, and only in the following circumstances:

(I) when the amount of surplus acreage equals or exceeds the maximum amount provided for tolerance acreage by special or county regular rules for the field, provided that this paragraph does not apply for a lease, pooled unit, or unitized tract that is completely developed with optional units and the special or county regular rules for the field do not have a tolerance provisions expressly made applicable to optional proration units;

(2) if the special or county regular rules for the field do not have a tolerance provision expressly made applicable to optional proration units, when the amount of surplus acreage equals or exceeds one-half of the smallest amount established for an optional drilling unit; or

(3) if the applicable rules for the field do not have a tolerance provision for the standard drilling or proration unit, when the amount of surplus acreage equals or exceeds one-half the amount prescribed for the standard unit.

(d) Applications involving the voluntary subdivision rule.

(I) Density exception not required. An exception to the minimum density provision is not required for the first well in a field on a lease, pooled unit, or unitized tract composed of substandard acreage, when the leases, or the drill site tract of a pooled unit or unitized tract:

(A) took its present size and shape prior to the date of attachment of the voluntary subdivision rule (§3.37(g) of this title (relating to Statewide Spacing Rule)); or

(B) took its present size and shape after the date of attachment of the voluntary subdivision rule (§3.37(g) of this title (relating to Statewide Spacing Rule)) and was not composed of substandard acreage in the field according to the density rules in effect at the time it took its present size and shape.

(2) Density exception required. An exception to the density provision is required, and may be granted only to prevent waste, for a well on a lease, pooled unit, or unitized tract that is composed of substandard acreage and that:

(A) took its present size and shape after the date of attachment of the voluntary subdivision rule (§3.37(g) of this title (relating to the Statewide Spacing Rule)); and

(B) was composed of substandard acreage in the field according to the density rules in effect at the time it took its present size and shape.

(3) Unit dissolution.

(A) If two or more separate tracts are joined to form a unit for oil or gas development, the unit is accepted by the Commission, and the unit has produced hydrocarbons in the preceding twenty (20) years, the unit may not thereafter be dissolved into the separate tracts with the rules of the commission applicable to each separate tract if the dissolution results in any tract composed of substandard acreage for the field from which the unit produced, unless the Commission approves such dissolution.

(B) The Commission shall grant approval only after application, notice, and an opportunity for hearing.

235

20f6 9/8/20143:17 PM : Texas Administrative Code http://info.sos.state.tx.us/pls/pub/readtac$ext.TacPage?s1=R&app=9&p_d...

The applicant seeking the unit dissolution shall provide a list of the names and addresses of all current lessees and unleased mineral interest owners of each tract within the joined or unitized tract at the time the application is filed. The Commission shall give notice of the application to all current lessees and unleased mineral interest owners of each tract within the joined or unitized tract. Additionally, if one or more wells on the unitized tract has produced from the field within the l2-month period prior to the application, the applicant shall include on the list all affected persons described in subsection (h)(I)(A) of this section, and the Commission shall give notice of the application to these affected persons.

(C) A Commission designee may grant administrative approval if the Commission designee determines that granting the application will not result in the circumvention of the density restrictions of this section or other Commission rules, and if either:

(i) written waivers are filed by all affected persons; or

(ii) no protest is filed within the time set forth in the notice of application.

(e) Application involving unitized areas with entity for density orders. An exception to the minimum density provision is not required for a well in a unitized area for which the commission has granted an entity for density order, if the sum of all applied for, permitted, or completed producing wells in the field within the unitized area, multiplied by the applicable density provision, does not exceed the total number of acres in the unitized area. The operator must indicate the docket number of the entity for density order on the application form.

(f) Exceptions to density provisions authorized. The Commission, or Commission designee, in order to prevent waste or, except as provided in subsection (d)(2) of this section, to prevent the confiscation of property, may grant exceptions to the density provisions set forth in this section. Such an exception may be granted only after notice and an opportunity for hearing.

(g) Filing requirements.

(I) Application. An application for permit to drill shall include the fees required in §3.78 of this title (relating to Fees and Financial Security Requirements) and shall be certified by a person acquainted with the facts, stating that all information in the application is true and complete to the best of that person's knowledge.

(2) Plat. When filing an application for an exception to the density requirements of this section, in addition to the plat requirements in §3.5 of this title (relating to Application to Drill, Deepen, Reenter, or Plug Back) (Statewide Rule 5), the applicant shall attach to each copy of the application a plat that:

(A) depicts the lease, pooled unit, or unitized tract, showing thereon the acreage assigned to the drilling unit for the proposed well and the acreage assigned to all current applied for, permitted, or completed oil, gas, or oil and gas wells in the same field or reservoir which are located within the lease, pooled unit, or unitized tract;

(B) on large leases, pooled units, or unitized tracts, if the established density is not exceeded as shown on the face of the application, outlines the acreage assigned to the well for which the permit is sought and the immediately adjacent wells on the lease, pooled unit, or unitized tract;

(C) on leases, pooled units, or unitized tracts from which production is secured from more than one field, outlines the acreage assigned to the wells in each field that is the subject of the current application;

236

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(D) corresponds to the listing required under subsection (g)(1)(A) of this section.

(E) is certified by a person acquainted with the facts pertinent to the application that the plat is accurately drawn to scale and correctly reflects all pertinent and required data.

(3) Substandard acreage. An application for a permit to drill on a lease, pooled unit, or unitized tract composed of substandard acreage must include a certification in a prescribed form indicating the date the lease, or the drill site tract of a pooled unit or unitized tract, took its present size and shape.

(4) Surplus acreage. An application for permit to drill on surplus acreage pursuant to subsection (c) of this section must include a certification in a prescribed form indicating the date the lease, pooled unit, or unitized tract took its present size and shape.

(5) Certifications. Certifications required under paragraphs (3) and (4) of this subsection shall be filed on Form W-lA, Substandard Acreage Certification.

(A) The operator shall file the Form W-IA with the drilling permit application and shall indicate the purpose of filing. The operator shall accurately complete all information required on the form in accordance with instructions on the form.

(B) The operator shall list the field or fields for which the substandard acreage certification applies in the designated area on the form. If there are more than three fields for which the certification applies, the operator shall attach additional Forms W-IA and shall number the additional pages in sequence.

(C) The operator shall file the original Form W-IA with the Commission's Austin office and a copy with the appropriate district office, unless the operator files electronically through the Commission's Electronic Compliance and Approval Process (ECAP) system.

(D) The operator or the operator's agent shall certify the information provided on the Form W-IA is true, complete, and correct by signing and dating the form, and listing the requested identification and contact information.

(E) Failure to timely file the required information on the appropriate form may result in the dismissal of the application.

(h) Procedure for obtaining exceptions to the density provisions.

(1) Filing requirements. If a permit to drill requires an exception to the applicable density provision, the operator must file, in addition to the items required by subsection (g) of this section:

(A) a list of the names and addresses of all affected persons. For the purpose of giving notice of application, the Commission presumes that affected persons include the operators and unleased mineral interest owners of all adjacent offset tracts, and the operators and unleased mineral interest owners of all tracts nearer to the proposed well than the prescribed minimum lease-line spacing distance. The Commission designee may determine that such a person is not affected only upon written request and a showing by the applicant that:

(i) competent, convincing geological or engineering data indicate that drainage of hydrocarbons from the particular tracts subject to the request will not occur due to production from the proposed well; and

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(ii) notice to the particular operators and unleased mineral interest owners would be unduly burdensome or expenSIve;

(B) engineering and/or geological data, including a written explanation of each exhibit, showing that the drilling of a well on substandard acreage is necessary to prevent waste or to prevent the confiscation of property;

(C) additional data requested by the Commission designee.

(2) Notice of application. Upon receipt of a complete application, the Commission will give notice of the application by mail to all affected persons for whom signed waivers have not been submitted.

(3) Approval without hearing. If the Commission designee determines, based on the data submitted, that a permit requiring an exception to the applicable density provision is justified according to subsection (f) of this section, then the Commission designee may issue the exception permit administratively if:

(A) signed waivers from all affected persons were submitted with the application; or

(B) notice of application was given in accordance with paragraph (2) of this subsection and no protest was filed within 21 days of the notice; or

(C) no person appeared to protest the application at a hearing scheduled pursuant to paragraph (4)(A) of this subsection.

(4) Hearing on the application.

(A) If a written protest is filed within 21 days after the notice of application is given in accordance with paragraph (2) of this subsection, the application will be set for hearing.

(B) If the application is not protested and the Commission designee determines that a permit requiring an exception to the applicable density provision is not justified according to subsection (f) of this section, the operator may request a hearing to consider the application.

(i) Duration. A permit is issued as an exception to the applicable density provision shall expire two years from the effective date of the permit; unless drilling operations are commenced in good faith within the two year period.

Source Note: The provisions of this §3.38 adopted to be effective November 1, 1989, 14 TexReg 5255; amended to be effective April 21, 1997,22 TexReg 3404; amended to be effective July 10,2000,25 TexReg 6487; amended to be effective June 11,2001,26 TexReg 4088; amended to be effective February 13,2002, 27 TexReg 906; amended to be effective September 1,2004,29 TexReg 8271

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HOM EI TEXAS RE GISTE RI TEXAS ADHIIUSTllATlVE CODE I OPEII MEETIIIG\ I HELP I

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Figure: 16 TAC §3.38(b)(2)(A) http://info.sos.state.tx.us/fids/ 16_0003_0038- I.html

Figure: 16 TAC §3.38(b)(2)(A)

Acreage Requirement Spacing Rule I II I

(1) 150 - 300 2 I I (2) 200 - 400 4

(3) 330 - 660 10

(4) 330 - 933 20 I (5) 467 - 933 20

(6) 467 - 1200 40

(7) 660 - 1320 40

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· :: .,. ; iti " " ,i,'h' 0 -" II flf:-.

, . - f r·~-IoCI.· --t /:Olf Dr~,L:.?[;o "'[/UNty .... Urn':'':' . . . []fr h CAUSE NO. 2014 CVQOOO 438 04 lO/~ NOV 2S ,,) -4r L1~~:

VAQUILLAS UNPROVEN § IN THE DlSTRlCT COPRT OF PI'f I: S3 MINERALS ~ , LTD ., § "'tB8 e'IL.f::]

OU1-ITy' ~ Plaintiff, § , rQAS § v. § WEBB COUNT , E § CONOCOPHILLlPS COMPANY, § Defendant § 406th JUDICIAL DlSTRlCT

ORDER ON MOTIONS FOR SUMMARY JUDGMENT

On October 30, 2014, Defendant's Motion for Summary Judgment and Plaintiffs

Cross-Motion for Partial Summary Judgment were heard. The Court, having reviewed

the motions, briefs, responses, competent' summary judgment evidence. and argument of

counsel, rules on these motions as follows.

IT IS ORDERED, ADJUDGED, AND DECREED-that Defendant's Motion for

Summary Judgment is DENIED.

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Plaintiffs

Cross-Motion for Partial Summary Judgment is GRANTED. The Court DECLARES

that Defendant has breached the 26,622.79-acre Lease and the 6,740-acre Lease by

failing to release all acreage in excess of 40 acres for each producing and shut-in natural

gas well capable of producing in paying quantities.

SIGNED this z- S day of November, 2014.

-----------~ OSCAR J. HALE, JR. JUDGE PRESIDING

ORDER ON MOTIONS FOR SUMM ARY JUDGMENT - Sole Page

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OIL, GAS AND MINERAL LEASE : '.v~1 4GOPlcc324 TillS AI,Ilt:t;"U;NT ,..,,. tbi' 15 th •.,., . -lune, III 74 ..... _ VIIQUILLIIS MNCII COMPIINY, LTD., a limited partnership acting herein through its qeneral partners, J. O. WALKER, JR., GENE' S. WIILKER, E\(IIN D. QUIROS and E.•. NIILKER QUIROS (a/k/a Mary Elizabeth Quiros) Ltnor\Wh.'''.,CInI"rmu",._hun,rI<tml'l: .p. 0 •. Box 1086, Laredo, Texas 78040 ••• CONTINENTIIL OIL COMPIINY ,1....,·, WIlN".sr.TII, I, I ... ", I••• " "..... , . ,f TEN DOLLIIRS & OTIIER ,GOOD & VALUABLE CONSIDEi{l\'rION,,';_

I' .10.00 ,. In hln4 paid. 01 Ihl "".ltl", herein lllo"itltd. ,n4 0' lb. ,.,,,,mtnU Dt .... _ htrtl" NIII ..i"..... htnbr .r,"t •. ~i-:::,d~i!: I:j:.lu:!:~!r:i~~' ::;I~'lfi'~'n.' ~.!t::},;W.:nuJ ~=~~k~jlf~II~~ ~;'fib:' .!~:::~~;~. ::;:i-;::."! r:Ii~~"".!.i' :::"~~~"'~';:..",,,:!' I:~I~:: . . . . . . I.n "n,1 "In., 'I ... ' ......,.. 11110 .""",t,,, ." •••. 1I"ina' I,il" lin ••• " ... ildilllll r"dt. '.11 .... pow., JI.t ioll'. tltllph ... ". Ji"" ."" oUilf I(~ lit I"''' LbtI""lOR .",01. on .... VI( 1.4 'UOII t.n. II.. ","" (I.,,,," .., LI_ .dlUC"I .lId "",,1,100\1' '''',Itlu. 10 P, ...... c•• IIV. . . . . . u, • • ,.

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\ 26,622.79 acres of land, more or less, situated in' Webb County, Texas, more fully described in Exhibit "A" annexed hereto and made a part of this lease for all relevant purposes , including. limitations upon warranty as specifically set out therein.

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or ,,11. .. , I... " .,! •• n . n, ,1 Inn.l ... ilto';, In .. h nl, ,,' in ,'nrl. "n.1 in .... nt U.aee 01......", it 110,,11 I.~ 11,10,,,.:,,' .. 01 to .II,h lil'n " 'i, h , i.: hl 10 (lrlf"n. 'I\no~ .nd al'l,l, 'rlllal. ", .. I ".)' ''I\l'·~ ",·r,u;n ... hr"'uln"" law.,d •• ti"f"lnll' .amf'. Wilh .."t ImIH.im,~nt of I.......,,·. ,i",h" IInd"r ,to .....nrrlln'r In . , .. n! nf til':"'" "r 10,1.·. il I, ".: .. ~.I 11".1 ,t Ihi, 1.n~f' ru,'l'n • I"•• inl u •• ' in 110. oil, •••• ,ul"hur. or oth~, minu.l. in .11 0, an, t,.,1 of 'Iid I.nd liolln II. ... nlon. "n.1 1II .• II,j",,1 f .... ~inll'l(I "'Inll' ,,,.. h.thl'r I ... ~ "" , · . in'I', ..1t I. h.,~," p~~r-J;l~=IICa/ .'...

Hi ...1 II' not). fI, no Inll"l'I' th .. '~in. ,h~'n II. .. I'}'II III" . OJoaIC " t" rui,,1I' h "nl In, I'ul •• In " 'hlth th,. 1.11" ~u"PI' I.... Ihlln lu ~h full Inlp,ul. ,1'1,11 I... , .• i,1 '.n'~ 10. 1""I~'''i .. n ,I!

'h~ ;":",nt 11 .•·,,..n.

. 10 ... 11 if IIU ~. r"~t' ... t t>, th i, 1(l1t.... L....H. I', II.. ,,·h(,llt .nd undl.';d... 1 f~ . imrol ....1.", Ih .. " in. All ,,,),,. It, inh r .. ·t -"" .. , ... 1 I" ~:,,~~·~·r_~i-~.:·'!':;":[. n;~\I"~~:.~: !;:~j'~'.:~~~I'~~'~~"'':;'~~;~:~~'li~~'p!;;;i:r ~~~';;~~'~:Ii~. ~:~ :=te~F:iI'::. ":,I::':..:'::'I'~...j:~" :~~!~','~.i. 'h.rl un,I I" .hall nOl IDlI," lr the , J"h l Clt 1"._ 10 ,~oJ Ut . ' o'.ll i....

11. Sto".. J,t l ... nPf I... {Ir .... ",rd fmm tompl,.inll' ... ilh an,. ul'r .... nr imro,l il'd fo .. ~nllnt 01 Ihi' I.".... from .. nnd"rtin", driJlinl/ n, ,. • •ltl.i,,1I'

01·....";"". ItoC' ..... n u, h"m 1... ~I"r;l\.: n, 1 u .. I(U th"r"f,om I" rl'lI''''n 01 ~"nrf'" ... f nr inlll>ilitr 10 nbl.in or Itt UN! lf1",h,m."t 0, m ,lr:i.l. 0' b, uP",,,:.,,n of 'UTo''' ,nll)"l1". lin,. 1:... 1.,.1 0' 1110.'. I.. w tI, "1'1,. 0,,1.,. ",I, or ,. ... ul,,'iol\ IIf I/o~,rnm. ntll l .ulhn,il,. th.n .hil .. .a 1""""'. '1. I ........••

-

nt,Io,.:""o" In ".III: .lr ... ,'h aurl, ro.,.n.n, .h~U I.•• uol •• "d .. l. Ind I...,.~", .1'1,11 "uI 1,(1 linlol, In d.m",uI rto, f.iluT. to , .•mrol, th"""lIh ; . r.d Ihi, II'~'" .hall I.. f~ ·.· .. d.~1 .hil. ,.n.l .... I•. nll'" I .... ~ ... il 1'" ... nl O'd I., lin, .uth t ... ""! from rnndurtin .. drillin .. or ,..n,l. ;n" ol,.r .. I,,"1 '" nr ""1'11 ",' .• 1111" ... 10' toil or II.' f,"m Ih~ I,,,,,", I'r.n:tl .... ; "noJ Ihe IIIn, .1.,1., (..._ i, loG p ..... nl'd .h.n not be tlJllnltd. •• ain.t Ltn" •• nJ\h'fI~ In th;. kaaa , to tI,. ",.n"'" n'''' ''·,l h",.... I'''II'.

" ,

I 12. It is mutually aqree~, notwithstandinq any other provision . '

herein contained, as follows: " .

(al-- Should Lesse e be prevented from complying with covenants of , this leuse by reason of conditions or acts set forth in paragraph '.11', hereof, then Lessee agrees annually to pay to Lessor an amount equal . to the delay rentals herein provided for during such period of pre·' vention, whether same be during or subsequent to the prlmary term, and such payment shall be made at the end of each year of preventi o n either to Lessor or to the depository above named for eredit to the account of Lessor.

(b) This lease does not cover or include any right_o ar privilege of hunting or fishinq on uny purt of the above described' lund. and Lessee u yr ccs with Lessor that neither he nor his assigns .or ugcnts or employees of his 3ssiqns, will bring firearms or dogs upon the ,,-

leased premises, and should this provision against hunting and fishing be violated by any agents, servants, employees or contractors of Lessce's assIgns, any such person so violating same shall have no further right ,to enter upon the leased premises, and such person shall be rcgarded as and shall be a trespasser on the premises of Lessor and be subject to the penalties imposed upon trespasser~ under the laws of the State of Texus.

I (c) I t is ' expressly ugreed and understood that, after production of oil and gas in conunercioll quantities is obtained from the leased premises, the minimum annual income to Lessor from payment of rentals, shut-in royalty and royalty on production shall be a sum of :lot lCHs than 1'wo (S2.00) Dollars per acre on the total acreage retained ami then covered by this lease, but this provision shall not impair th,~ right and privilege of Lessee, his successors and assigns, to rele,lse and surrender any part of the above described leased premises as herein provided. Lessee, his successors and assigns, shall determine wit!lin 90 days from the expiration of any lease year during which ro, cllties have been paid on actual production the amount of any deficiency , and shall within said 90-day period pay such defi.ciency to Les sor or deposit same to Lessor's credit at the depository hereinabove designated. Default in the payment of such deficiency shall not operate to terminate this lease or any part hereof, but Lessee, his successors and assigns, agrees to personally p~y such deficiency to Lessor' at Laredo in \"'ebb County, Texas, together with any r~asohable cost, including attorney's fees, incurred by Lessor in collecting such deficiency if not paid within the 90-day period hereinabove provided for. ,

460 ",tE 327'

,-

:,~j !~~t:·./it~ ' st.lr.I..;.I.:lt; .lny (Jr:;' ~c 'n:-Ovi3io :\ h~:cc-in cO:'\t..l~r.':: d, t;,i I)il.~ 'J·~ . i .l:\j :-.~~ .: r.ll l\! .I..>>! i:; ti ::li::c~ t::' olt. · rj.J.~ ~1.:1d ~.iulp~ui L!:1d ;,i~,~ .. ' . i ~ :··) ;h.: c..:!,j ·... !.:h oil .J.'1d 'jJ:.i, ..!.: .:,! d'J'~!> n:>t i:-•.::J.u:.i~ r.11.n·~ c.Jl.~ or:!\~= t:.:-: .• '.:<. ' .: 1:" .l;'\..! !;Ul;l:1t:: .:aad i:ti:".'::: .li:; :-:O '.i '.;c~a \ll:'~ oil ~~:1 ;i ';<l..i, ...t:..; L ·.! ...• v: ."': ~:. :~ ~{~ ...:;.. :::11": ·":~s ir c.) ~ tjL~ l ·: :: ,j.:: l.Jl..J .,:!S::'.J.:C :-: c:· c~":1 ti=- · ::.at.~·.!, ~1~rj, r ' ~ :; '~ : ':~:i

1- ',.:-.:'.J h!..-..: :d l , hi::. r. ·: ,:i(5 ~tr. o .l :';':.i i.J:-.~ . ..'!.l~ mir. ·~!'.11::.o \:t: ~~c eft.l n (I ll 0:.1 , ;~ ~ ~i.~ .!~ ~ i:

~~!~~ur i~ .l~~ ~x~r~s51y aqr0~d I~i~~r~l~ t~ ~t t ~ .l:

~~I '~~s'

=c prod~cad ~Lth oil and :; l :i, ~3 u5ed ~er~in inclu~c~ (;!~.

co:-.,";...!r.::i..lt..!, rii~tillatl! or .J.'1V ot!1er O.1;3eOUS su!:l::it.lr.cc or any o t: h~.c r.tLn <.! !'.'ll. pro..!uccd with oil <In:,;, qolS, inclucinc; sulphur.

(0) The right to pool un der pc1rac;ra?h '4' of this oil, gas clnd.

n~~~:~l lease sh31l be limited to leasa or leases on l~nd belonqing t~ ~~ssor herein, or in "hich Lessor o~ns an interest in the oil, g3~ . ~n~ other ~iner~ls. ,, (=l Corrmencement of operati9ns for drilling of a well for oil or .

glS to a depth of 5,000 feet or less shall entitle Lessee to' a credit O~ tne rent~lsmquired under paraqraph '5' hereof only in the ~~dunt of Sl,Z80.00, but if operations for drilling are conducted to a depth b~lc .... S,~OO feet, such credit Sholl1 be increased from $i,280.00 to ~2,360.CO and Lessee shall, by an inscr~ent to be filed fc~ rcco~d ir: r:!"ic \J:ficc of the County Clerk of h'ebb County, select and desc::-ioe . G~O con~ig~ous acres as to which rentals are to ·be credited if tho ,,"~1.:!.. is drilled to a depth of 5,000 fe et or less, or select and de sc ribe i,LCO contiguous acres to, which rentals are to be credited if a w~ll 00 i~ d=illed bdlow ddpth Ot 5,000 feet, and pay~ent of . delay rentals or ~ production of oil, gas and other minerals is to be required in o=cer ~ to ~cntinue the lease 1n force and effect as to the remaining acreaqa, ~ ~nd su:h payment or production shall eli~inate requirement to select ~c:es in accord~nce with above provisions.

(g) ht the end of the primary te~ hereof, Lessee covenants an~ ~G=ces to execute and deliver to Lessor a written release of any a~ d .!ll portions ot this lease which have not been drilled to a densi,,:~' of ~~ l~dst 40 acros for each producing oil well and 640 acres tor each .. o~~=~ci~g or shut-in g~s well, except that in c~se any rule adoptee

I by th~ Railroad Cor.unission of Texas or other regu1atinq autho:-icj" ~ol.· any field on this lease provides for a spacinq or proration establishin G' dif':erent units of acreage per ,.,ell, then such established di:::eront unit~ sh~ll be held under this lease by such production, in lieu of the ':0 3:id 6~0-d.cre units above r.tantio:1edi provide\!, however, that i! Zo. t such Colt!! lessee is enc;aged in drilling or reworkinq operatio:1s t~E.· cate to :' the ~xecution and delivery of such releas~ shall be postponed e.;'I d t : ~~ entire lea3~ shall renJ.in in force so long as operJ.tions on 5.t :' :; well c:" I,. ~lls are prosecuted with reasonable diliqenc~, ar.::! if, a~t~r T:.::~ c ; ~::-. ;Jlet!.on or abandon;:i\ent of any such well Lessee cornr.tences the d=i 111n; of. .JJ) dl!ditional well within tlinety (90) days from the co~?l9tion CJ:: abJ.ndor'J:~ent of the preceding well, 0:' continuously conduct.s 0=':'1:..:.,:; o~~ratio:is in good faith and with reasonable diligence on s~id l~~;~ \t/~thoL!t ~::''1 cessa~i.on for lO:1qer tha;'l Ninety (90) days, said l~as ·! 5 .1;t!! r'~;-:.l ':'r:. L .... :;,;11 :o=ce anc. effect d~::in9 such drillir:g- o?ecatio:'.s a:-.',;. .i.:1~il r.: ;-.2' ·.!:1C 0 :: ~li net'l ( c;lO) daY:i .J:t.ec tr.e coo:.pleti'On or abanc.o:\.;;a:-at c : !"";-:.e :i::.)l ·... e .:. .:., ...l ~ h'nic;' t L7.e. Lessee :;hall e x sc:.!t.e ar.c! d~li'/ar to :..~s:; o :.- said ! ~ rit: 0 n :~~~13e. r cl~dsinq all portio~s of th2 l~ase not th~~ 30 ~ ~v~lo~ed.

(Ill I t is .J lJ rc.· ed that where the Lessee hcreunuer cntcrs into .J ' ;015 !

pur cj)oJ.~i(! contrclCl w ith .J th i rd party culling for a price olt the wellhc3d .Jt le .l st cquoJl to the tDcn iJest obt.:.ainable price for ":las of the san.\~ or sir.1i t .:.. r i).T.U. content at th e wellhead in \iebb County, that the <Jus !'rice so p rc.Nicied for i'n such c ontract silall be considered to be the mol rh.· t v.Jl ue o f th c' (jol~ fo r the pUQ)()SC 5 of computing t he royalty on 'JolS hcrcund,!r; l.l rovl(lcd LCS 5CC shall not e llter in to any gas purchase with a third P;l.rt'l aurinq t.he t er m of t h is l ec1~c exce p t and unless such qas purchase COOl:ract cont a ins specific provi s ion for rcdctcrmin c1 tion oC price con si stent with tilL' iir'st s e ntence in this polra<Jr~1ph, be ing the then best obtc1i nab ll! j,ricc inr 1)":'5 olt the wellhead in the area .lnu thClt such C)ilS purchase cont 1",lc t SJ,.l ll I'C"viuc tholt r c d<'tl ~nd n.ltion be made ~t intervals no q rc<ltcr tll .ln two (l) yc.1rs .1j>art.

J (d a'lrc cs t o f ill ~111 :;1 11 :">)) p i tH Clnd leve l lht' !;.WI., \"';" '; 1 J.(!s :; (~e U,,':' h.lve (.'t·.I!lod to ht! U:il!d ,111(1 to re:'lorc thu l,and to .l:i n". ll' i t:i nri'illhtl :.ti,tu ,III i H pr.u~ ti( ; 'l i, l o ..lfld to P ;I\' fur d.ll:"\'I ,':1 l , ' t Ill' :;ul'l.a·'~· (,1' l!I!.: 1.1I1d •• nd llll..' iUlpl'lIV'·I ; h.~lItn, \.... l.ll'r wt...dl!i, 'Jrowin'l cr op: . .Ilhi 11\,,·- fito ck lhecoon, iH\U to .uti OthCl' pcr :.ona l property uf lotHHH .•r, V,hJuil i· l!.>

Itanch Company, r,ttl., nccaRjoned by·, arising out of, or resulting .from operations by Lessee, his olgcnts, employees or indepcmdentcontractor~. on the land hereby leased to Lossee. Lessee also agrees, when request I,d in writincJ by Lessor, to divulqe to Lessor true· and correct informaliidl as relJuested by Lessor as to all drilliny, producing and marketinq 01'(·1·,1- t ions conducted under this lease and to furnish to Lessor copies of .I i j

eleetric well logs taken h~rC!under: provided, however, Lessee shall m,t be (1)1 iqatcd to release such information until it has been released t l ' the industry.

IN \-.JITNESS WIIEREOF, this instrument is executed on the da~e first aLu'/e wr i t ten ~

VAQUILLAS RANCII COMPANY, LTD.

BY"J+i~~~~~~-q~~~, «;Ieneral partner

~-

~

.. ~

!.

r: I, -. L

, "

,-

••

'"," .-

l ,-, .... . ~.,

,. --, BY, t. {(lalkll ~Ln E. WALKER QUIROS, a general " \ partner

STATE OF TEXAS

COUNTY OF WEBB I .

BEFORE ME, the undersigned authority, on this day personally appeared J. o. \;ALKER, JR., EVAN B. QUIROS and E. WALKER QUIROS, members of th., partnership firm of VAQUILLAS RANCH COMPANY, LTD., known to me to be the persons whose names are subscribed to the foregoing instrument, and ~lck­ nowledged to me that they executed the same as the act of VAQUILLAS JU'NCH C01>WANY, LTD., a limited partnership, for the purposes and considerat:ion therein cxp~essed, andm the capacity therein stated.

(lj\iE~'-m;DE~'MY llANO AND SEAL OF OFFICE, this the .IJf'~L day of Jun<>,1974 • . ~ '.

" ~ ---? _d"'~ , -Notary Public, Webb County, Texas

.. ' . .:.

s'rA1'E Ot· TEXAS

COUNTY OF, WEBB

DEFORE Mr., the undersigned authority, on this day personally appeared GEUt: S. ~IALKI:R, a member of the partnership ,'irm of VAQUILLAS RANCH COfo.1PANY, LTD., known to me to be the person whose name is subscribed to I the for.q'golng instrument, and acknowledged to me that he executed the same as the act of VAQUILLAS RANCII COMPANY, LTD., a limited partnership, "

for ·the PUClJOSeS and consiucrcltion therein expressed, and in the capacity therein state~.t GIVEN U\IDER.HY llANO AND SEAL OF OFFICE, this the .(i>1'day of Jun".1974 • ." ....

.......

.. ~~---r?'~::;:;::::;;cc~ ~-;-;:-

__ _ Notary PubliC, Webb Coun ty, 'l'cxas

"':'-#- ~ c;3 . EXHIBIT "A"

~ ASSTRAeT CERTIFICATE GRANTEE It~9 1110 . 1158 eeso • ReNe 6~O , O It51 1112 1159 eeso , ReNe 6~0.0 1651 2876 1159 w. H. Taylor 64').0 It61 1122 1164 eeso 'ReNe 640.0 166) 112 ) 1165 eeso & ReNe 640.0 16J) 132) 4/808 ee , SF 640 . 0 16)~ 2252 4/808 ee & SF 659.96 1665 '124 1166 eeso & ReNe 640. 0 5.1/1 It66 2253 1166 eeso • ReNG 328.7S N. I/2 1666 )142 1166 eeso , ReNe )28 . 7 ~ 468 2255 236 AS , " 659. II, 467 799 236 AS ' , " 640 . 0 TC Ry . 640 , 0 __ 16)5 1797 17 865 1438 1212541 H , eN 640 . 0 168) 1115 '1175 eeso & ReNe 640.0 1691 1267 5446 Ge & SF 640.0 1696 2418 5448 ee & SF 640.0 1695 1268 , 5448 ec & SF 640 .0 279 (pL only) 135) 3702 ee , SF 458.1 1004 2421 21105 J . Poltevent 634.58 It92 2~19 5446 ee • SF t11 . 04 169) 1269 5447 ec& SF 640.0 2112 2.20 & 192$ 631 8. F. James 627.12 276~ · ,2552 3700 e( & SF "640 . 1)- 228 '2550 1344 e(SO & ReNe - 6)6 . 9) 227 - 11 ))< 1344 eeso & ReNe 640.0 988 2593 21103 J. Poltevent 637,10 981" . 206'1 2/103 J . Poitevent 640.0 2]) ' _ 1141 1)49 CCsO & ReNe 640 . 0 275 ',' 1336 3700 ee & SF 640 . 0 277' ~1Jl7 3701 e(so & ReNe 640.0 '1 5. 112 ~I, 8 1 ~ck2 25, Sbck 2 104}. 10102 453 452 eeso & ReNG eeso & ReNe 320.0-' 640,0 ~~,

C

• :2)2 ' 2148 1346 eeso & ReNe 462.70 rflC 2)3"- 1117 1347 eeso & ReNe 455.9 -. .:..:

-, H. I/2 51, S:ock 2 259 (p t . ollly) '1955 1045 11 37 1328 460 1074 4526 )oi eeso & ReNe eeso & ReNe ee & SF eeso & ReNe 320 . 0 600.0 640.0 652.2;

~.' i .". .

2057 985 '2060 ·Ipt. only) 3329-30 30) eT & " 440 , 0 ~,'

LI/2 ' 2059 ' 984 )0) eT& " 32h . o -- :',' E. I/l-1953'"' 1329 4527 ec& SF 310 . 0 ~!

- 1627 (p t. only) 1324 4683 ee & SF 160.0 ~ I ..• .1629 ip t. only) 1275 4682 ee • SF 192 . 6:; '. vU, > :.

W. II2 - lt62 2230 1164 eeso & ReNe 319,3 , 9 .,. ' £0112 1648 2441 1157 eeso & ReNe 325.7!;~ ; . W.1/21648 3301 1157 eeso & ReNe 315.7'; ,"

452 R. 0, Barns ley 640 . 0' · ~\ .~ : ,.

-26, .Hock ,2* 2JJ ; 3025 School W. Brown 27 . 3 ~i'

£.1/ 2. 1950" 2~60 4526 ee & SF 327.3 L .~- ~

less o r's WJrr;:.nt '! hereunder as to all of Surveys 987.213.275,277,26, the E.1/2 'of I~SL E . 112 of 19S~ ,"11 ':; 401.9 acres out of Survey 233 (a1) e Kcept S~ acre,s out . of SW corner of s aid Sur. 233) is e~;')ressly Itmite~ to 112 of the executive rights In the 011 and gas .right!i In clnd un d~.r said lands, .)nd as to all of Survey 232 is expressly linlit-."d t o 4/S of the n :.c cutive rlqtll'" ill thl.' 9 i ; ,lnd gas rights.

The f o llo\'tlng rhuts of surveys olre expressly excluded herefrom, viz.:

(1) Th e 5£ 1/4 o( sw 1/4: SW 1/4 of NE 1/4 (80 acs.) and N 1/2 of SW 1/4 and SW 1/4 o f SW 1/.

(1/0 ae •. ) of eT&" Survey ' 2060.

TIlt.' W. 3/4 of CC&sr Survey 1627 described In O&C Lse. to, Daniel A. Pcdrou I datt·.!

I:

(2 )

S"IJtcn lbcr 2 ~, 1973. il';i .11l1 '~ II(J('d,

I (}) AllY Polrt of .J s.urvcy II'loh:d herl,.,ln not 11l,IIHJt'd wIthin any sputlfl, fr.lctlnnlll 1, ' 1 " "'11\',, p " ,· c.: I~dln~J the c.urv,'Y referencc, (/0) 1111' N( 1(,0 .Jcre", of Ge&Sf Surv,'y 179. (S) Ult.d 11 a~ pcr thll E,O . Cla!I' ICll CjulKllvl ... lon of "'cord 'I PI.u R,'(. ol'd '. ='~. Webb r . hIllIY.

t: lllllolinl1l9 ltD .1crcs, bcln9 tlu' NOW 1/4 of SE 1/4 ' of r.CSD I. HGNG 511/\,'.,." ;>1,'1 , (6) /\11 of tb.! W. 320 .left''> u f S.iI,V·' .... 16]9 d c,. ~ rihl.·d clnd Includ"d In or. (; t·"" w D.!" j., J A, 1"' d""tllllil ll~d . Sl.' I"I· II'''' 'r ::.. !''J / I. as amended •

. ~

,

Filed 9/8/20144:12:20 PM Esther Degollado District Clerk Webb District 2014 CVQOOO 438 D4

CAUSE NO. 2014 CVQOOO 438 D4

VAQUILLAS UNPROVEN MINERALS, § IN THE DISTRICT COURT OF LTD., § Plaintiff, § § WEBB COUNTY, TEXAS v. § § CONOCOPHILLIPS COMPANY, § 406th JUDICIAL DISTRICT Defendant

AFFIDAVIT OF DINO O. SMITH

STATE OF TEXAS § § COUNTY OF WEBB §

Before me, the undersigned authority, on this day personally appeared Dino O.

Smith, who, after being placed by me under oath, stated the following:

1. "My name is Dino O. Smith. I am over eighteen years of age, am of sound mind, have never been convicted of a felony or a crime involving moral turpitude, and I am fully competent to make this Affidavit. I have personal knowledge of the facts stated in this Affidavit, and they are true and <;orrect.

2. I am a member Management Committee of Vaquillas LLC. ("Managing Member"), the general partner of Vaquillas Unproven Minerals, Ltd. ("Vaquillas"). I have served on this board since January 2012. I am involved in various aspects of the operations of Vaquillas, including the day to day management of the various mineral interests owned by Vaquillas. These responsibilities include, but are not limited to:

a. planning and directing of Vaquillas Energy department activities, policies, objectives, and initiatives according to the mission of the organization, b. ensuring the department meets budgeted financial goals and objectives, c. negotiating leases, easements, surface use agreements, and other contracts, d. reviewing lanalyzing existing agreements, contracts, abstracts and title opinions, and e. developing and maintaining a functional on-line energy library. In order to carry out these responsibilities, I have had to become familiar with the business records and record keeping practices of Vaquillas.

3. Except as to royalty interests in production from certain wellbores, Vaquillas

IRX'~nIT I Unproven Minerals, Ltd. is the successor to the entities that were original lessors

AWIDA vcr OF DINO O. SMITH PAGE<

to Continental Oil Company and Conoco, Inc. of the oil and gas leases set out below.

BUSINESS RECORDS AFFIDAVIT

4. As a member of the board of Vaquillas LLC and in my capacity of manager of mineral interests of Vaquillas, I have personal knowledge regarding the records and recordkeeping practices of the company and am qualified to attest to the authenticity of the companies' business records.

5. The documents listed below and attached as exhibits to this Affidavit are records from Vaquillas. These records are kept by Vaquillas in the regular course of business, and it was the regular course of business of this company for an employee or representative of the company, with knowledge of the act, event or opinion that was recorded, to make this record or to transmit the information to be included in these records. These records were made at or near the time or reasonably soon after the act, event, condition, opinion, or diagnosis that was recorded. These records are exact duplicates ofthe originals."

Exhibit B-1: June 15, 1974 Oil, Gas and Mineral Lease between Vaquillas Ranch Company, Ltd., a limited partnership acting herein through its general partners, J.O. Walker, Jr., Gene S. Walker, Evan B. Quiros and E. Walker Quiros (a/k/a Mary Elizabeth Quiros) and Continental Oil Company for 26,622.79 acres of land, more or less, situated in Webb County, Texas.

Exhibit B-2: November 1, 1987 Oil, Gas and Mineral Lease Amending Oil, Gas and Mineral Lease dated June 15, 1974 (As Amended) between Vaquillas Ranch Company, Ltd.; Vaquillas Unproven Mineral Trust; Vaquillas Proven Mineral Trust; acting by and through its general partners, J. O. Walker, Jr., E. Walker Quiros, Gene S. Walker and Evan B. Quiros, and Conoco, Inc., Lessee for 26,622.79 acres, more or less, situated in Webb County, Texas.

Exhibit B-3: November I, 1987 Oil, Gas and Mineral Lease between Vaquillas Ranch Company, Ltd.; Vaquillas Unproven Mineral Trust; Vaquillas Proven Mineral Trust; acting by and through its general partners, J. O. Walker, Jr., E. Walker Quiros, Gene S. walker and Evan B. Quiros and Conoco Inc. for 6,740 acres, more or less, situated in Webb County, Texas.

AFFIDAVIT OF DINa O. SMITH PAGE 2

245

-

RAILROAD COMMISSION OF TEXAS OFFICE OF GENERAL COUNSEL

OIL AND GAS DOCKET NO. XX-XXXXXXX

FINAL ORDER CONSOLIDATING VARIOUS FIELDS INTO A NEW FIELD CALLED THE VAQUILLAS RANCH (LOBO CONS.) FIELD AND ADOPTING FIELD RULES FOR THE VAQUILLAS RANCH (LOBO CONS.) FIELD WEBB COUNTY, TEXAS

The Commission finds that after statutory notice in the above-numbered docket heard on October 8, 1997, the presiding examiner has made and filed a report and recommendation containing findings of fact and conclusions of law, for which service was not required; that the proposed application is in compliance with all statutory requirements; and that this proceeding was duly submitted to the Railroad Commission of Texas at conference held in its offices in Austin, Texas.

The Commission, after review and due consideration of the examiner's report and recommendation, the findings of fact and conclusions of law contained therein, hereby adopts as its own the findings of fact and conclusions of law contained therein, and incorporates said findings of fact and conclusions of law as if fully set out and separately stated herein.

Therefore, it is ordered by the Railroad Commission of Texas that the following fields located in Webb County, Texas, are hereby combined into a new field called the Vaquillas Ranch (Lobo Cons.) Field (No. q3~t 5 400 ):

BALTAZAR (LOBO 6 10470) FIELD 05357400 BARNSLEY (LOBO 10900) FIELD 05791 800 BARNSLEY (LOBO) FIELD 05791 400 BONEBRAKE (LOBO 6) FIELD 10419 500 BONEBRAKE (UPPER LOBO) FIELD 10419 800 CALICHE CREEK (LOBO) FIELD 14735225 CARR (LOBO 10100) FIELD 15874 350 CARR (LOBO 8300) FIELD 15874 235 CARR (LOBO 8600) FIELD 15874 250 CARR (LOBO 8700) FIELD 15874275 CARR (LOBO) FIELD 15874200 CARR (WILCOX 8200) FIELD 15874 600 CARR (WILCOX 8300) FIELD 15874 700 CARR (WILCOX) FIELD 15874 500 CATTO (LOBO 9900) FIELD 16405400 CATTO (LOBO 10200) FIELD 16405 500

EXHIBIT A-4

OIL AND GAS DOCKET NO. XX-XXXXXXX PAGE 2

DESPARADO (LOBO 6) FIELD 24394500 DIAMONDBACK (LOBO 3) FIELD 24574400 GATO CREEK (9800) FIELD 34238400 GATO CREEK (LOBO 1) FIELD 34238 300 GATO CREEK (LOBO 1-SEGA) FIELD 34238 325 GATO CREEK (LOBO 3) FIELD 34238 350 GATO CREEK (LOBO 6 SEGMENT A) FIELD 34238 375 GATO CREEK, SE (9800) FIELD 34242 980 GATO CREEK, SE (LOBO 1) FIELD 34242 500 GATO CREEK, SE (UP. LOBO STRAY) FIELD 34242 750 HIRSCH (LOBO 9746) FIELD 41659075 JURASCHEK (LOBO) FIELD 47740 500 JURASCHEK (WILCOX 11600) FIELD 47740600 LUNDELL (LOBO 9200) FIELD 55755 180 LUNDELL (LOBO) FIELD 55755 175 MCLEAN (LOBO) FIELD 59725500 MUJERES CREEK (LOBO 1) FIELD 63668 300 MUJERES CREEK (LOBO 3) FIELD 63668400 MUJERES CREEK (LOBO 6) FIELD 63668500 MUJERES CREEK (LOBO) FIELD 63668250 MUJERES CREEK, SOUTH (LOBO) FIELD 63670500 NICHOLSON (LOBO 3) FIELD 65469020 NORDAN (LOBO) FIELD 65934500 POZO (LOBO) FIELD 72838500 RANCHO VIEJO, S. (LOBO 6) FIELD 74570 100 RANCHO VIEJO (LOBO 3) FIELD 74568680 RANCHO VIEJO (LOBO 6) FIELD 74568700 VAQUILLAS RANCH (LOBO 8100) FIELD 93215450 VAQUILLAS RANCH (UP. LOBO STRAY) FIELD 93215600 VAQUILLAS RANCH (WALKER 8300) FIELD 93215680 VAQUILLAS RANCH (WALKER 8600) FIELD 93215690 VAQUILLAS RANCH (WALKER, N.) FIELD 93215670 VAQUILLAS RANCH (WILCOX 11,100) FIELD 93215 700 VAQUILLAS RANCH (WILCOX 11,600) FIELD 93258750 VAQUILLAS RANCH (WILCOX 11,900) FIELD 93215 725 VAQUILLAS RANCH (YARSA) FIELD 93258 900 VENADA (9800) FIELD 93436 800 VENADA (LOBO) FIELD 93436300 VERGARA (LOBO 9300) FIELD 93537750 VERGARA (LOBO) FIELD 93537 500

It is further ordered that the following rules are adopted for the Vaquillas Ranch (Lobo Cons.) Field:

r

!

I

OIL AND GAS DOCKET NO. XX-XXXXXXX PAGE 3

RULE 1: The entire Lobo Formation from the Lobo Unconformity to the top of the Wills Point (Midway Shale) and including the above listed fields in Webb County, Texas, shall be designated as a single reservoir for proration purposes and be designated as the Vaquillas Ranch (Lobo Cons.) Field.

RULE 2: No gas well shall hereafter be drilled nearer than FOUR HUNDRED SIXTY SEVEN (467) feet to any property line, lease line or subdivision line and no well shall be drilled nearer than ONE THOUSAND TWO HUNDRED (1,200) feet to any applied for, permitted or completed well in the same reservoir on the same lease, pooled unit or unitized tract. The aforementioned distances in the above rule are minimum distances to allow an operator flexibility in locating a well, and the above spacing rule and the other rules to follow are for the purpose of permitting only one well to each drilling and proration unit. Provided however, that the Commission will grant exceptions to permit drilling within shorter distances and drilling more wells than herein prescribed whenever the Commission shall have determined that such exceptions are necessary either to prevent waste or to prevent the confiscation of property. When exception to these rules is desired, application therefore shall be filed and will be acted upon in accordance with the provisions of Commission Statewide Rule 37 and 38, which applicable provisions of said rule are incorporated herein by reference. Provided however, that persons who are presumed to be affected by a request for an exception to the between-well spacing requirement shall be limited to the operators and ownersllessees of tracts, lease or units within one mile or less of the proposed well.

In applying this rule the general order of the Commission with relation to the subdivision of property shall be observed.

RULE 3: The daily allowable production of gas from individual wells completed in the subject field shall be determined by allocating the allowable production, after deductions have been made for wells which are incapable of producing their gas allowables, among the individual wells in the following manner:

TEN percent (10%) of the total field allowable shall be allocated equally among the individual wells producing from this field.

NINETY percent (90%) of the total field allowable shall be allocated among the individual wells in the proportion that the deliverability of such well, as evidenced by the most recent G-10 test filed with the Railroad Commission bears to the summation of the deliverability of all proratable wells producing from this field.

It is further ordered by the Railroad Commission of Texas that the allocation formula for the Vaquillas Ranch (Lobo Cons.) Field be suspended. The allocation formula may be reinstated administratively if the market demand for gas in the Vaquillas Ranch (Lobo Cons.) Field drops below 100% of deliverability. If the market demand for gas in the Vaquillas Ranch (Lobo Cons.) Field drops below 100% of deliverability while the allocation formula is suspended, the operator shall immediately notify the Commission and the allocation formula shall be immediately

11

247

J

OIL AND GAS DOCKET NO. XX-XXXXXXX PAGE 4

reinstated. Failure to give such notice to the Commission may result in a fine (as provided for in Tex. Nat. Res. Code §86.222) for eac day the operators fail to give notice to the Commission.

Effective this d/f ~ay of , 19q9 .

COMMISSIO~ a:zON

CHARUS R. MAlTHEWS, 0iAJRMAN LINDIL C. FOWLER, JR., G£Nf:.RA1. COUNSEL BARRY WII.L1AMSON, COMMISSIONER LARRy BOREllA, Am: DIRECTOR CARoLE KEETON RYU.NDER, COIIMISSIONER OlL & GAS SE.cnON

RAILROAD COMMISSION OF TEXAS OFFICE OF GENERAL COUNSEL February 24, 1998

OIL AND GAS DOCKET NO. XX-XXXXXXX

THE APPLICATION OF CONOCO INC. TO CONSIDER CONSOLIDATION OF VARIOUS FIELDS INTO A NEW FIELD CALLED THE VAQUILLAS RANCH (LOBO CONS.) FIELD, WEBB COUNTY

Heard by: Donna K. Chandler on October 8, 1997

Appearances: Representing:

Ron Schultz Conoco Inc. Gary Compton Kerry Pollard Oracio Estrada

James Doherty Sonat Exploration Co.-Houston

Don Rhodes Hurd Enterprises LTD

EXAMINER'S REPORT AND RECOMMENDATION

STATEMENT OF THE CASE

Conoco Inc. requests that 56 fields be consolidated into a new field to be called the Vaquillas Ranch (Lobo Cons.) Field. Conoco further requests that the following rules be adopted for the new field:

1. Designation of the Vaquillas Ranch (Lobo Cons.) Field as the entire Lobo Formation described as the interval from the Lobo unconformity to the Wills Point (Midway Shale);

.,,2. Well spacing a minimum of 467 feet from lease lines and 1,200 feet ,' between wells.

. 3. Allocation based on 90% deliverability and 10% per well .

.,Gonoco also requests that the allocation formula in the consolidated field be suSpended.

1701 NORm CONGRESS AVENUE * roo 800-735·2989 OR roy 512-463-7284 POST OFFICE Box 12967 * AUSTIN, TEXAS 78711·2967 AN EQUAL OPPORruNITY EMPLOYER * PHONE: 5121463-6924 FAX: 512/463-6989 250 http://www.rrc.state.tx.us

I

i

OIL AND GAS DOCKET NO. XX-XXXXXXX PAGE 2

At the hearing, Conoco amended its application to include 4 fields which had not been included in the Notice of Hearing and delete 4 fields which had been included in the Notice of Hearing.

After the hearing, Conoco requested that, in conjunction with the proposed 467 f-1,200' well spacing rule, that persons presumed to be affected by a between-well spacing exception be limited to operators and ownersllessees of tracts, leases or units within one mile or less of the proposed well. Notice of this request was given to aI/ operators in the fields and no objections were received. The examiner recommends approval of the field consolidation, adoption of the proposed field rules and suspension of the allocation formula.

DISCUSSION OF THE EVIDENCE

The fields proposed for consolidation into the Vaquillas Ranch (Lobo Cons.) Field were all discovered after 1981. All aFe Lobo gas reservoirs and most operate under Statewide rules. The allocation formula in each field is currently suspended.

There are currently more than 600 active wells in the 56 fields. Current average production is 320 MCFD per well, with a range from less than 50 MCFD to over 1,200 MCFD. Cumulative production from the fields is over 1 TCF of gas.

It is proposed that the consolidated field interval include the entire Lobo Formation from the base of the Lobo Unconformity to the top of the Wills Point (Midway Shale). The depth interval is generally approximately 7,200 feet to 9,700 feet.

With consolidation, wells can be produced to a lower economic limit. Conoco estimates that incremental recovery per new well will be a minimum of 25 MMCF. Conoco plans to drill approximately 400 new wells in this area, resulting in additional recovery of 10,000 MMCF.

Because the proposed consolidated field consists of numerous productive zones, a two-factor allocation formula is necessary. The proposed two-factor allocation formula based on 10% per well and 90% deliverability satisfies this requirement.

The allocation formula in each field is currently suspended. It is therefore appropriate to suspend the allocation formula in the consolidated field ..

FINDINGS OF FACT

1. Notice of this hearing was sent to all affected persons in the .subject area field at least ten (10) days prior to the subject hearing.

2. The 56 fields proposed for consolidation into the Vaquillas Ranch (Lobo Cons.) Field were all discovered after 1980 and are all non-associated Lobo gas reservoirs.

OIL AND GAS DOCKET NO. XX-XXXXXXX PAGE 3

3. There are currently more than 600 active wells in the 56 fields and current average production is 320 MCFD per well. Cumulative production from the 56 fields is over 1 TCF of gas.

4. The Lobo Formation in this area is found from approximately 7,200 feet to approximately 9,600 feet.

5. It is estimated that a minimum incremental recovery of 25 MMCF per new well will result from the consolidation and approximately 400 new wells are planned for this area.

6. The proposed two-factor allocation formula based on 10% per well and 90% deliverability is a reasonable formula which will protect the correlative rights of mineral owners in the fields.

7. The allocation formula in each field is currently suspended.

CONCLUSIONS OF LAW

1. Proper notice was given to all parties as set out in the provisions of all applicable codes and regulatory statutes.

2. All things have occurred and been accomplished to give the Commission jurisdiction in this matter.

3. Approval of the proposed field consolidation, adoption of the proposed field rules and suspension of the allocation formula will prevent waste and will not harm correlative rights.

EXAMINER'S RECOMMENDATION

Based on the above findings and conclusions of law, the examiner recommends approval of the field consolidation and adoption of the field .rules for the Vaquillas Ranch (Lobo Cons.) Field. It is further recommended that the allocation formula in the consolidated field be su:;pended.

Technical Examiner

VICTOR G. CARRILLO, CHAIRMAN LINDIL C. FOWLER, JR., GENERAL COUNSEL ELIZABETH A. JONES, COMMISSIONER COLIN K. LINEBERRY, DIRECTOR MICHAEL L. WILLIAMS, COMMISSIONER HEARINGS SECTION

RAILROAD COMMISSION OF TEXAS OFFICE OF GENERAL COUNSEL OIL AND GAS DOCKET NO. XX-XXXXXXX

THE APPLICATION OF CONOCOPHILLIPS COMPANY TO AMEND THE FIELD RULES FOR THE VAQUILLAS RANCH (LOBO CONS.) FIELD, WEBB COUNTY, TEXAS

Heard by: Donna K. Chandler on September 23,2010

Appearances: Representing:

Jamie Nielson ConocoPhillips Company Greg Cloud Tod Lippincott

Glenn Johnson Chesapeake Operating, Inc.

EXAMINER'S REPORT AND RECOMMENDATION

STATEMENT OF THE CASE

Field rules for the Vaquillas Ranch (Lobo Cons.) Field were adopted on February 24, 1998 in Docket No. XX-XXXXXXX. The rules in effect for the field are summarized as follows:

1. Designation of the field as the correlative interval from the top of the Lobo Unconformity to the top of the Wills Point (Midway Shale);

2. 467'-1,200 well spacing;

3. Allocation based on 90% deliverability and 10% per well.

ConocoPhiJIips requests that the spacing rule be amended to eliminate the between-

well spacing requirement, as long as the well to be permitted is at least 660 feet from a lease line. If the well to be permitted is less than 660 feet from a lease line, then the well must be 1,200 feet from the nearest well on the lease, or a Rule 37 exception must be obtained;

'-This application was unprotested and the examiner recommends approval of the re:ql1ested field rule change.

1701 NORTH CONGRESS AVENUE TDD 800.735·2989 OR TDY 512-463·7284 * POST OFFICE Box 12967 * AUSTIN, TEXAS 78711·2967 AN EQUAL OPPORTUNITY EMPLOYER * PHONE: 512/463·6924 FAX: 261 512/463·6989 h_. 11 •• _-" ," " , .

OIL AND GAS DOCKET NO. XX-XXXXXXX Page 2

DISCUSSION OF THE EVIDENCE

The Vaquillas Ranch (Lobo Cons.) Field was formed in 1998 with the consolidation of numerous fields. The field is classified as associated-prorated with AOF status. There are 593 gas wells on the current schedule and no oil wells.

The subject field is one of 11 fields in the Wilcox Lobo trend in Webb and Zapata Counties for which a change in spacing rule is being requested. The Wilcox throughout the area is highly faulted and as a result of the very complex geology, it is difficult to develop the many separate fault blocks which comprise the various fields. Recent infill wells are encountering fault blocks which have virgin pressure.

Several fields in the area have already adopted a spacing rule which eliminates the between-well spacing requirement. ConocoPhillips is proposing a between-well spacing rule which is more restrictive. The proposed rule eliminates a between-well spacing requirement as long as the well to be permitted is at lease 660 feet from lease lines. If the proposed well is less than 660 feet from lease lines, then the well would require a Rule 37 exception if it is less than 1,200 feet from the nearest well. This rule would allow operators to exploit interior portions of their leases, while still giving notice of a between-well spacing exception to offsetting operators if the proposed location is less than 660 feet from the lease line. Offset operators will be given an opportunity to protest an application if they believe that such location would encounter a fault block which may extend to their property.

FINDINGS OF FACT

1. Notice of this hearing was given to all persons entitled to notice at least ten days prior to the date of hearing.

2. Field rules for the Vaquillas Ranch (Lobo Cons.) Field provide for a designated interval, 467'-1,200' well spacing and allocation based on 90% deliverability and 10% per well.

3. The Vaquillas Ranch (Lobo Cons.) Field is classified as associated-prorated with AOF status. There are 593 gas wells on the current schedule and no oil wells.

4. The Wilcox throughout the area of Webb and Zapata Counties is highly faulted. As a result of the very complex geology, it is difficult to develop the many separate fault blocks which comprise the various fields.

5. Many fields in the Wilcox Lobo trend in Webb and Zapata Counties have rules which eliminate the between-well spacing requirement.

At

OIL AND GAS DOCKET NO. XX-XXXXXXX Page 3

6. The spacing rule proposed by ConocoPhillips eliminates a between-well spacing requirement as long as the well to be permitted is at lease 660 feet from lease lines. The proposed rule will provide for ease of development of interior portions of leases.

CONCLUSIONS OF LAW

1. Proper notice of this hearing was given to all persons legally entitled to notice.

2. All things have occurred or been accomplished to give the Railroad Commission jurisdiction in this matter.

3. Amending the spacing rule for the Vaquillas Ranch (Lobo Cons.) Field is necessary to prevent waste and protect correlative rights.

EXAMINER'S RECOMMENDATION

Based on the above findings and conclusions, the examiner recommends that the spacing rule for the Vaquillas Ranch (Lobo Cons.) Field be amended as proposed by ConocoPhillips.

Donna K. Chandler Technical Examiner

CAUSE NO. 2014CVQ000438 D4

VAQUILLAS UNPROVEN MINERALS, § IN THE DISTRICT COURT OF LTD, § § Plaintiff, § § v. § WEBB COUNTY, TEXAS § CONOCOPHILLIPS COMPANY, § § Defendant. § 406TH JUDICIAL DISTRICT

DEFENDANT CONOCOPHILLIPS COMPANY'S RESPONSE TO PLAINTIFF VAQUILLAS UNPROVEN MINERALS, LTD. 'S FIRST SET OF INTERROGATORIES

Defendant ConocoPhillips Company, acting pursuant to Tex. R. Civ. P. 197, responds to

Plaintiffs First Set of Interrogatories as shown on the attached pages.

By Rule 11 agreement between counsel for Plaintiff and Defendant, ConocoPhillips' time

for responding to these interrogatories was extended to and including July 7, 2014.

ConocoPhillips objects to the "Definitions" set forth on pages 4-5 of Plaintiffs First Set

of Interrogatories as follows:

1. ConocoPhillips objects to the twenty-one "Definitions" in their entirety for the

reason that they consist mainly of boilerplate "definitions," not tailored to Plaintiffs First Set of

Interrogatories. For example, they include instructions "to produce" documents, which is not the

proper function of interrogatories. As another example, the definitions include many words

never used in Plaintiffs interrogatories. ConocoPhillips declines to attempt to comply with

Plaintiffs boilerplate definitions, but instead will comply with the requirements of Tex. R. Civ.

P.195.

2. ConocoPhillips objects to the definitions of "documents" and "records." This

"definition" was obviously not written to be used with interrogatories because it talks about

EXHIBIT

A-3

which it relies established units of different sizes from 40 acres for oil wells and 640 acres for gas wells, then that is wrong, and ConocoPhillips denies it.

14. Identify by the Well name(s) used in the Partial Releases and the corresponding API Number each Well you contend entitles you to any Retained Acreage pursuant to the Vaquillas Leases.

ANSWER: Objection: ConocoPhillips objects to this interrogatory because it is vague and ambiguous.

Subject to the foregoing objection, the Partial Releases described in Plaintiff s Definition 19 provide well names and numbers, and ConocoPhillips does not understand what more Plaintiff wants other than API numbers. The API numbers are equally available to Plaintiff from public sources as they are available to ConocoPhillips; but ConocoPhillips will attach, as Exhibit A to these Answers to Interrogatories, a map from which Plaintiffs counsel may derive API numbers.

15. Identify by API Number any Wells located on the acreage covered by the Vaquillas Leases that were not drilled by or for Conoco under the Vaquillas Leases but in which Conoco owns an interest.

ANSWER: Objection: ConocoPhillips objects to this interrogatory because it is incomprehensible, vague, and ambiguous. It asks about "Wells," which Plaintiff defines in its Definition 16 as "wells drilled by or for Conoco," but this interrogatory purports to inquire of wells "not drilled by or for Conoco," so the interrogatory contradicts itself. The interrogatory also appears to ask whether ConocoPhillips owns an interest in Wells on acreage covered by the Vaquillas Leases, but that are not subject to the Vaquillas Leases, yet Plaintiffs definition of "Wells" states they were drilled under the terms of the Vaquillas Leases. ConocoPhillips cannot be required to guess or speculate what Plaintiff is asking.

16. Identify by API Number and rig release date the Final Well completed or abandoned during Conoco's drilling and reworking operations engaged in on and after November 1, 1990 on the 26,622.79 Acre Lease.

ANSWER: The well was the Vaquillas A-7 249, API No. 42-479-41635.

17. State the date you contend to be the 90th day after completion or abandonment of the Final Well at which time a written release of acreage was to be provided pursuant to Paragraph 18 of the 26,622.79 Acre Lease.

ANSWER: ConocoPhillips believes the relevant date was June 21, 2012.

18. Identify by API Number and rig release date the Final Well completed or abandoned during Conoco's drilling and reworking operations engaged in on and after November 1, 1990 on the 6,740 Acre Lease.

DEFENDANT'S RESPONSE TO PLAINTIFF'S FIRST SET OF INTERROGATORIES -8

PARTIAL RELEASE OF OIL AND GAS LEASE

STATE OF TEXAS § § COUNTY OF WEBB §

WHEREAS on June 15, 1974, Vaquitlas Ranch Company, Ltd., a limited partnership acting- therein through its general partners, J.D. Walker, Jr., Gene S. Walker, Evan B. Quiros and E. Walker Quiros, as Lessors, and Continental Oil Company, as Lessee, entered into an Oil and Gas Lease, recorded in Volume 460, Page 324 of the Deed Records of Webb County, Texas, covering 26,622.79 acres of land, more or less, hereinafter referred to as ~the Lease,· and;

WHEREAS the Lease was revised, more particularly described in that certain Oil. Gas and Mineral Lease Amending Oil, Gas and Mineral Lease dated November 1, 1987, as evidenced by said Memorandum of Amendment to Oil and Gas Lease, dated June 16, 1988: recorded in Volume 1303, Page 879 in the Real Property Records of Webb County. Texas.

WHEREAS the Lease has also been amended from time to time. as reflected in the Public Records of Webb County, Texas, and all references to the Lease herein shall be to the Lease as amended.

NOW THEREFORE, in consideration of Ten Dollars ($10.00) and other good and valuable consideration, the receipt of which is hereby acknowledged, ConocoPhillips Company, does hereby RELEASE, RELINQUISH and SURRENDER unto the Lessor, all of its right, title and interest and estate in the Lease SAVE AND EXCEPT THOSE LANDS AS MORE PARTICULARLY DESCRIBED ON THE EXHIBIT "A," AND FURTHER DESCRIBED ON EXHIBITS A-1 THROUGH A-36 ATTACHED HERETO AND MADE A PART HEREOF.

Provided, however, Lessee shall have and retain full rights of access and all easements of ingress and egress over and across those lands covered by the Lease, including the lands which are hereby released, for the production of oil and gas and operations in the acreage not hereby released, and Lessee shall not be required to remove or relocate any pipelines. utilities, roads. tank batteries, or other surface equipment or installations from any portion of the Lease or lands herein released for so long as same continues to be used for the exploration, development or operation of such portions of the Lease that continue in force and effect

This instrument is binding upon and inures to the benefit of the parties hereto, their heirs, successors and assigns.

Executed this ) 1'th day of f.kaflj ,2014.

LESSEE:

::~oc~ Michael P. Rose Attorney-In-Fact

Volume: 3577 Page: 454 - 530 00e#1194188 Doc Type: PARTIAL RB.EASE OF OIL & GAS lEASE Recocd Date: 21251201411:28:17 AM Record By: Mtc 199129-001 Fees·$330.00.

Margie RamIrez Ibarra, Webb County Cieri!.

ACKNOWLEDGEMENT

STATE OF TEXAS § § COUNTY OF HARRIS §

ACKNOWLEDGED BEFORE ME, this 11Ie). day of F...

'bonnJ , 2014, by Michael P. Rose. Attorney-in-Fact for ConocoPhillips Company, a Delaware (Corporation, on behalf of said corporation.

199129-001

OVERALL EXHIBIT "A"

CONOCOPHILLIPS COMPANY VAQUILLAS RANCH RETAINEO TRACTS 1-36 CONTAINING A TOTAL OF 21,291.86 ACRES

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A-2<C. 633.38 ~~O+---t-··-··..., Acres -J. 1.-30 I A-25 618.~62!:rD5 : 323.87 : s:'~c;o i'f-":':'::::A=_i"F-t--'-"+'~~--i r-----

-t---+-~S~'~7'f"'-i"'~~;'rl ...-26 ...-27 J~7::O .I I i 635.36 614.74 I_~""~~~+;::;:;-r'---,-'_.J r 4~O~:1, ~23t<C.1 !

1---- kres Acn!s kru Ac::res !

iii ; , ! I '--c.. . ...l." _.J..,,---L._ . ..L ·--L j GRAPIflC SCALE

( It! f[[1 )

1_ HOWLANDENGINEERING 11!PEf'lmI\eghn T81~N._A~ AND SURVEYING CO_ _ _ r..on TDPl$_~""

LMedo.TX11I041 P.!leG.72ZMll WWN.hoWIandcompanles.com CONOCOPHILLIPS COMPANY VAQUIUAS RANCH RETAINED TRACTS BASE HAP LEASE 199129-001 WE.aa COUNTY, TEXAS WARNING; BASIS OF BE.ARlNG: C.P.S. TK. So"th 20n .., NAD.-27. nas Pl.Jl.T IoIAY HOT SHOll' AU. CIIOSStICS or PFEIJIfES Oft CABl£S. ~D Elfl)ljEEJIIH(: H A _.'on

I

0

lG-ll_1"

DRAWN BY; LA.F./S.I.t.4.

NIl) ~c co., IiC. ASSI..t-ItS NO RESPONSIBIlITY TO lOC\1£ ppElJl-£ Oft CAa£ ~cs. CHECKED BY: J.S. =~H:C~RE~~~~~~~.OIAt fEE 0'M6SHP Oft JOB No. 22131-13 SHEff; 1 OF 1

It\fICI'MNID\i1lR\lO'WG DUAAr>.OltI1\Iob>\2DlNllJI_lJ\27\ll_IJ.do.g.IJI/2Ol.2:].:I ....... _ PDf

HONLAND ENGINEERING AND SURVEYING CO.

EXIllBIT "A-l"

FIELD NOTES FOR CONOCOPmLL~SCOMPANY VAQUILLAS RANCH LEASE 199129.{l01 RETAlNED TRACT 1 (VAQUILLAS RANCH WELLS A·3 No. 61, No. 67, No. 199, No. 200, & No. 203)

640.00 ACRES

A TRAer OF LAND CONTAINING 640.00 ACRES, more or less, being out of the VaquiUas Ranch Lease 199129·001, 26,622.79 Acres (Called), situated in Survey 1955, G.C. & S.F. R.R. CO., Abstract 1328, Webb County, Texas, and being more particularly described as follows:

BEGINNING at a fOWld !h." iron rod next to a fence comer, which bears N 56°51'30" W, a dislance of 886.46 feet, from the Vaqui1las Ranch A 3 No. 199 Well;

THENCE, N 89004'24" E, along an existing fence line, a distance of392.77 FEET, to a point for a deflection right;

THENCE, N 89°17'59" E. continuing along said existing fence line, a distance of 1,379.80 FEET, to a point for a deflection right;

THENCE, N 89042'30" E, continuing along said existing fence line, a distance of 695.33 FEET, to a found 1 W' pipe at fence comer, for the Northeast comer hereof;

THENCE, S OO~O'36" E, along an existing fence line, a distance of2,S33.32 FEET, to a point for a deflection right;

THENCE, S 00°19' 10" E, continuing along said existing fence line, a distance of2,829.S2 FEET, to a point for a deflection left;

THENCE, S 00°20'17" E, continuing along said existing fence line, a distance of2,697.S8 FEET, to a point, for the Southeast corner hereof;

THENCE, S 89°39'43" W, a distance of 4,334.37 FEET, to a point for the Southwest comer hereof;

THENCE, N 00°38'14" W, a distance of 4,273.09 FEET, to a point under an existing fence line, for an exterior comer hereof;

THENCE, N 89°20'19" E, along an existing fence line, a distance of 1,910.21 FEET, to a fOWld Y.t" iron rod at fence comer, for an interior comer hereof;

THENCE, N O()039'19" W, along an existing fence line, a distance of3,668.08 FEET, to a point for 8 deflection right;

THENCE, N 00°33'14" W, continuing along said existing fence line, 8 distance of96.40 FEET, to the POJNT OF BEGINNING, containing 640.00 acres of land, more or less.

Basis of Bearing: G.P.S., TX. South Zone, NAO-27

SHEETlOF2 H;\HOWLAND\SURVEYING DEPARTMEN1\lobs\2013\l2131.1-13\22J31.1-J3.doc

www.howlandcompanies.com 7615 N. Bartlett Avenue , P.O. 80)(451128 (78045) i Laredo, TX78041 P. 956.722.4411 F.956.722.5414 TBPE Firm Registration No. F-4097 I TBPLS Arm Registration No. 100464-00

CONOCO PHILLIPS COMPANY VAQUIUAS RANCH LEASE 199129-001. N RETAINED lRACT 1 (VAQUIUAS RANCH A-3 WELLS No. 61. No. 67. No. 199. No. 200. '" No. 203)

640.00 ACRES WEBS coutm', TEXAS

SURVEY 294 ABSTRACT 2227 - •• - •• --c:::;::;::;..<----

VAOUILLAS RANCH A-3 No. 61 :0 VAQUILlAS RANCH SURVEY 2096 D. C. FANNING , (SHL) A-.3 No. 61 (BHL)

ABSTRACT 2226 '" ~

t

z SURVEY 1955 G.C. & S.F. R.R. CO.

ABSTRACT 1328 WEBB COUNTY, TEXAS WEST 1/2 SURVEY 1844 P.K. CONNOWAY N 89"20'19- E ... ABSTRACT 2168 VAOUILLAS -¢-

RANCH A-J No. 67

AVAQUlllAS ¥ RANCH No. 211

CONOCOPHILLIPS COMPANY VAQUILLAS RANCH LEASE 199129-001 26,622.79 ACRES (CALlED) RETAINED 840.00 ACRE UNrr SURVEY 1956 H. E. BROCK !

ABSTRACT 2560 J:

... ~ VAQUILlAS RANCH A-J No. 200 (BHl)-® VAQUILlAS RANCH A-3 No. 200 (SHL)

z

VAQUJLl.AS -¢f)VAQUILLAS RANCH RANCH A-3 No. 203 A-3 No. 203 (BHL) (SHL)

r-~~--.'.--"--LT-"-'--------------"--" __ __________________-,__JL__• _______ --------

~

GRAPHIC SCALE

T.-...............'"'""""",~~~T· (Ill fEET)

SURVEY 2058 C.T. & M.C. RR. CO .

ABSTRACT 2880 SURVEY 851 S.B. TURNER ABSTRACT 1842 , 10<10 _ lacon.

ww. UHIT UH£ - ,- """ "'<£ ------- TIES _ •• _ SURVEY UNE ~ a>.s1S OF BEARINC: COPS. Tx. South ZQl'1C, NAD.-27. TNS PlAT "'1'1' If'JT .5I-JJW ,ou CROss:tICS ~ I'F'£lJNES OR CIa!S. ~D ENClNtElllHG CfIOSSUj= Nf:J SUJM:1'IIC Co.. INC. ASSUIoIES HO II£SI'OHSItIUT'I' TO ~Tt ~D.I'tt OR c.oa.r ItO CU&I IS IIERD!T II.IDE ~ CUIRENT OR ...cn.w. S{g1CE/lt1/l~ f"E:E aMf£R$HtP OR I.LSSOR. lml 0R.0M'tC W« El<CU/SMl.'I' roo ~ CDII)JfY. ~ HOM.NIO ~ N'I;) SUIIV£I'WC co.. ..c. 2!lIlCl

ENGINEERING AND SURVEYING CO.

EXHIBIT"A-2"

FIELD NOTES FOR CONOCOPHILLIPS COMPANY V AQUILLAS RANCH LEASE 199129-001 RETAINED TRACT 2 (VAQUILLAS RANCH A-S WELLS No. 126, No. 166, No. 205, & No. 230)

640.00 ACRES

A TRACT OF LAND CONTAINING 640.00 ACRES, more orless, being out of the V.quillas Ranch Lease 199129·001,26,622.79 Acres (Called), situated in Survey 2057, C.T. & M.C. R.R. CO., Abstract 985, Webb County, Texas, and being more particularly described as follows:

BEGINNING at a found fence comer post, which bears N 38°52'07" W, a distance of 2,936.16 feet, from the V.quillas Ranch A-5 No. 205 Well;

THENCE, N 89°22'34" E. along an existing fence line, a distance 0[3,669.76 FEET, to a found 60 D nail at fence comer, for a deflection right;

THENCE, N 89°35'52" E. along an existing fence line, a distance of 1,477.59 FEET, to a point for the Northeast corner hereof;

THENCE, S 00'37'35" E, a distance of 5,425.18 FEET, to a point, for the Southeast comer hereof;

THENCE, WEST. a distance of 5,187.42 FEET. to a point for the Southwest comer hereof;

THENCE, NORTH, a distance 0[3,634.94 FEET, to a found W' iron rod at fence comer, for a deflection left;

THENCE, N OOOJ7'32" W, along an existing fence line, a distance of 1,739.69 FEET. to the POINT OF BEGINNING, containing 640.00 acres ofland, more or less.

Basis of Bearing: G.P.S., TX. South Zone, NAD-27

SHEET I OF2 ..f\'·~· H:\HOWLAND\sURVEYlNG DEPARTMENl\Job5\2013\22131.2·13U1131.2·13.00c . ;/:-:-"

: ;:;X.~"J :{i~"·;·;

www.howlandcompanies.com 7615 N. Bartlett Avenue ! P.O. Box 451128 (78045) r Laredo, lX78041 P. 956.722.4411 r F.956.722.5414 TBPE Firm RegIstration No. F-4097 : TBPLS Firm Registration No. 100464-00

EXHIBIT "A-2"

CONOCOPHILLIPS COMPANY VAQUILLAS RANCH LEASE 199129-001 N RErAINED TRACT 2 (VAQUILLAS RANCH A-5 WELLS No. 126. No. 166. No. 205. &; No. 230)

640.00 ACRES WEBB COUNTY. TEXAS

!,

(PO~ SURVEY 1954 D. C. FANNING ABSTRACT 2226

I

:

SURVEY 1956 D. C. FANNING ABSTRACT 2591

Faund 60 0 Naa I I ;

SURVEY 1956 H. E. BROCK ABSTRACT 2560

~.J- o found Fenc:o I N 89'22'34- E _ 3.689.76" 0 fence Comer-z.. t N ~~::: E Carner Post ~--..-1----~~~~:-~~~~,~~~,::~,~::~,~~~::~,f:::~'::::~'~_-T"I--"·------

, ,

I

I

'_ '\. r I'

' , , , , :

'\~:

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XI I

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'\.~ ~: CONOCOPHILLIPS COMPANY XI :

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I

NI VAQUILlAS RANCH LEASE 199129-001 26,622.79 ACRES (CAlLED) RErAlHED 840.00 ACRE UNIT >< \

I

I

~-----~'71 'found t " l iI '-:-..Iron Rod '\ I VAQUlllAS A ~.I o F..-.ca Comer \, : VAOUILLAS RANCH RANCH V _______ ~~~ _______ {) .-¢- A-5 No. 205 A-5 No. 166 ~I VAQUILlAS RANCH (BHl) 10-.

A-5 No. 205 VAQUILlAS RANCH-¢- . .~.I (SHl) A-5 No. 2.30 _ ,; (BHL) . ':n I VAQUlllAS RANCHO I')

~ I'

U'"

.N 11;

'"'" "'''''' SURVEY 2057 A-5 No. 230 ~ ~..;

.~ (SHL)

~" C.T. & M.C. R.R. CO.

~~~ , ABSTRACT 9S5

"",,,,,,,....

WEBB COUNTY. TEXAS \:

"'u!:!

ci ~ A

V

VAQUILLAS RANCH ~

1

A-5 No. 126

--------~------------~~~~~----r__----~~----~ , VAOUllLAS -¢- WEST ... ~.187.42· , RANCH A-5 No. 118 VAQUILlAS

I

A-5 No. 101 I

I, -¢-

f

I-~-:;: -O~ ~ SURVEY 2060 , L.F. UPDEGROVE 00::;;;

"'Ol'"

Ii ABSTRACT 3330 ~~:

1, >-1Zl~

A

¥. RANCH VAQUILLAS : NE 1/4 : g; "

GRAPHIC SCALE A-5 No. 40 SURVEY 2060 1 !5~&J T R.D. GUINN "''''!:!

1

, ABSTRACT 3331 ,

I

( tI FEET ) , ... h _ lDCOFl.

lEGEND , R.... I.lon 0 .. '_

HOWLAN~ 0 -¢- W",-

'" HORIZONTAL \'tElL 5Ul1FAC£ I.OCJITlOH , , 04-12 13 QS-l1 13 ENGINEERING AND SURVEYING CO.

TBPEArmR<lgb_No.f.4Cm TBPLSfhn~Ho.IOO46+O) , UNIT UHt f'[HCE UNt 00--06-1J 7815N._A_ landQ,TX.7!GI1 P.!irM.1ttMll - -- - "" • 10-18-13

WARNING: 8ASIS OF BEARING; C.P.S.

ww-N.howlandcompanles.=m

r•. South Zone, HAD. 27.

-- SURVEY UIIE

ntS PlAT w.y NOt Sl'fO'II' AU. mosstICS Of PI'WI£$ OR C\Il.ES. HOOI\NIO [NOII££.IIN; DRAWN BY: LAF./S.LU, ,tIIO SIJR\ItYIHG CO- IHC.. ASSIJI,I£5 NO R£SPOIG!IIUIY TO !.OCATE PIP£l.I£ 011 CIo6U: CIIOSSN'lS. toO Cl).III IS Il£R[B"I' WD£ R.[c.o.<!o./C CIMIEHT OR =wi.. sutT~ F'El: 0Wt!ERSHI" OR CHECKED BY: J.S. lt$SCIl. !)tIS DAAIrIIfC .....oc EXCI.USMl.Y ftIR ~ Cl)UIWN.

JOB No. 221J1.2 13 ~ ~o [N(;»I(.tAII'C NrJ ~c co., \He:. 2D1JC SHEET: 2 OF 2

HOWLJ[\~~D)

ENGINEERING AND SURVEYING CO.

EXHIBIT"A-3"

FIELD NOTES FOR CONOCOPmLL~SCOMPANY V AQUILLAS RANCH LEASE 199129-001 RETAINED TRACT 3 (VAQUILLAS RANCH A-5 WELLS No. 40, No. 97, No. 101, No. 108, No. 110, No. 113, & No. 118)

515.26 ACRES

A TRACT OF LAND CONTAlNlNG 515.26 ACRES, more or less, being out of the Vaquillas RlmchLease 199129-001, 26,622.79 Acres (Called), silUated in Survey 2059, C.T. & M.C. RR. CO., Abslracl 984, acd Survey 2060, L.F. Updegrove, Abslracl 3330, Webb County, Texas, and being more particularly described as follows:

BEGINNING al a poinl which bears N 11 °25'37" W, a distance of2, 799.89 fee~ from the Vaquillas Ranch A-5 No. 108 Well;

THENCE, EAST, a distance of 6,540.37 FEET, to a point for the Northeast corner hereof;

THENCE, S 01°14'46" E. a distance ofl,214.36 FEET, to a point for an exterior comer hereof;

THENCE, S 88°51'20" W, a distance 0[1,363.69 FEET, to a point for an interior comer hereof;

THENCE, S 00°34'04" E, a distance of 1,364.74 FEET, to a point for an exterior corner hereof;

THENCE, S 89°54'17" W. a distance of 2,712.87 FEET, to a point for an interior comer hereof;

THENCE, S OO~3'37" E, a distance of24.86 FEET, to a point for a deflection left;

THENCE, S 00°33'33" E, a distance of2,796.79 FEET, to a point under an existing fence line, for the Southeast comer hereof;

THENCE, S 89°25'42" W. along an existing fence line, a distance 0[2,494.30 FEET, to a point for a deflection right;

THENCE, S 89°37'21" W. continuing along said existing fence line, a distance 0[60.97 FEET, to a point for the Southwest comer hereof;

THENCE, N 00'14'54" E, a distance of5,457.34 FEET, 10 the POINT OF BEGINNING, containing 515.26 acres of land, more or less.

Basis of Bearing: G.P.S., TIC South Zone, NAD-27

SHEET 1 OF2 Il:\HOWLAND\sURVEYlNG DEP ARTMENl\Jobs\2013\22131.3-J3\22131.3-13.00c

www.howlandcompanies.com 7615 N. Bartlett Avenue . P.o. Bo)( 451128 (78045) j Laredo, TX78041 P. 956.722.4411 F.956.722.5414 TaPE Firm Registration No. F-4097 : TaPLS Firm Registration No. 100464-00

EXHIBIT "A-3"

CONOCOPHILLiPS COMPANY VAQUIUAS RANCH LEASE 199129-001 N RETAINED lRACT 3 (VAQUIUAS RANCH A-5 WELLS No. 40. No. 97. No. 101.

No. 108. No. 110. No. 113.8< No. 118)

515.26 ACRES WEBB COUNlY. lEXAS

SURVEY 2057 SURVEY 1953 C.T. & M.C. R.R. CO.

G.C. & S.F. R.R. CO. ABSTRACT 985 ABSTRACT 1329 A VAQUILlAS Y RANCH A-5 No. 126

EAST ... 8,.540.37"

--~---r----------~~~~-----------------4-----

,, 1, , , -¢-

, VAQUILlAS CONQCQPHILLIPS COMPANY VAQUJLLAS \\"L ;,-1' VAQUILlAS RANCH LEASE 199129-001 RANCH A-5 No. 116 A-5 No. 101

\... rt I 26,622.79 ACRES (CALLED) -¢-

\", NI RETAINED S1fj.26 ACRE UNrT SURVEY 2060 \'j. I L.F. UPDEGROVE \!1, t ABSTRACT 3330 \£ I S 88'15"20- W It : VAOUILLAS 1,383.69' 00::;;

~111~ \t->I

. ,. , \~ I

\~.:

SURVEY 2059 C.T. & M.C. R.R. CO.

ABSTRACT 984

I

RANCH A-5 No. 40 y A ILl !,.,. 0....

SWI/40F NE 1/4 I "'S:E-< :

~ZU

~, ~:t SURVEY 2060 ;> rt.l ~ \,!, WEBB COUNTY. TEXAS , !!~ R.D. GUINN , "''';E-< •• , I II) - ABSTRACT 3331 I ~ tri fg \i SEE ' - ' I .~ DETAIL LO_-'';--~S-:':::~:::''~'I='"':-::W:-N-:2.::-7=':::2Hr:-::::----?-''' .. -

1&1 VAQUILLAS • ' - p67',J., RANCH .... -L- .... - ,.:1i 1- - - - V A-5 No, 108 cr~~~'1iO. ~~CH ~ SURVEY 2060 R.D. GUINN (SHl)

~ VAQUlLlAS RANCH z

~, ABSTRACT 3332 V L-4 No. 95 VAQUILLAS (BHL)

r------i RANCH A-5 No. 113 SURVEY 2060 -¢- VAQUILlAS -¢-

RANCH A-S No. 97 ... C.C. MARSHALL ABSTRACT 3329 SE 1/4 OF :

SW 1/4 I i i SURVEY 2060 A VAQUILLAS RANCH V L-4 No. 105 R.D. GUINN VAQUILLAS A ABSTRACT 3331 RANCH ¥ A-S No. 110

DETAIL.: N.T.5.

-s 89"37'21- W 60.97'

NORTH HALF SURVEY 1838 5 00'23'3/ E./ P.K. CONNOWAY 24.86' ---/ ABSTRACT 2187

GRAPIDC ~ ~ --••J-" ~~

(If fUT) I Inch _ lOOOrt.

T

LEGEND R_yllion Dat,:

o

HOWLANIJ ENGINEERING ANO SURVEYING co.

-¢-

= IIORllONTAI. WElL = =ACE I..OCAnOH

1

:I.

0411131 QS-17-13 T8PEFbI~NO.fJHn TBPUIAm ~"""'I~ 781~H._A ..... Lot.,m,lX.78DoII P.IIM.7U44I'

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.. SURVEY UNE 4 Io-'B-I3

WARNING: BASIS OF 8EARING: G.P.S. Tx. South Z""~, NAD.-:l.7.

FIELD 1lI\T£ '''''' .,' DRAWN BY: LAF./S.UJ.

CHECKED BY; J.S. JOB No. 22131.3-13 SHEET: 2 OF 2

HOWLANID;

ENGINEERING AND SURVEYING CO.

EXHIBIT "A-4"

FIELD NOTES FOR CONOCOPHllWWFSCOMPANY V AQUILLAS RANCH LEASE 199129-001 RETAINED TRACT 4 (VAQUILLAS RANCH CO., LTD. WELLS No. 11, No. 20, No. 30 & VAQUILLAS STATE G.V. No. 5)

640.00 ACRES

A TRACT OF LAND CONTAlNlNG 640.00 ACRES, more or less, being out of the Vaquillas Ranch Lease 199129-001,26,622.79 Acres (Called), situated in Survey 468, N.B. Gossett, Abstract 2255; and Survey 1634, N.B. Gossett, Abstract 2252, Webb County, Texas, and being more particularly described as follows:

BEGINNlNG at a point which bears N 15°06'54" E, a distance of 1,098.65 fee~ from the Vaquillas Ranch State G.U. No.5 Well;

THENCE, S 00°31'13" E, a distance of 1,549.69 FEET, to a point for the Southeast corner hereof;

THENCE, S 89°43'43" W, a distance of 10,925.96 FEET, to a point for the Southwest comer hereof;

THENCE, N 00°12'49" W, a distance of3,536.51 FEET, to a point for the Northwest corner hereof;

THENCE, N 89°52'00" E, a distance of5,489.79 FEET, to a point for an exterior comer hereof;

THENCE, S OO~2'48" E, a distance of 1,945.34 FEET, to a point for an interior comer hereof;

THENCE, S 89°58'23" E, a distance of 5,422.26 FEET, to the POINT OF BEGINNING, containing 640.00 acres of land, more or less.

Basis of Bearing: G.P.S., TIC South Zone, NAD·27

SHEET 1 OF2 H:\HOWLANDISURVEYING DEPARTMEN1\Jobs\20 13\22 [11.4-13U2131.4-I3.doc

www.howlandcompanies.com 7515 N. Bartlett Avenue , P.O. Box 451128 {7B045} ~ laredo, TX78041 P. 956.722.4411 I F.956.722.5414 TBPE FIrm Registration No. F-4097 TBPLS Arm Registration No. 100464-00

SURVEY 1633 G.C. & S.F. R.R. CO.

ABSTRACT 1323

t-- N 89"S2'OO· E ... ~480.7S1· r-

CONOCOPHILLIPS COMPANY I... SURVEY 467 A.B. & M. ABSTRTACT 799 SURVEY 1664 G.T. BLACK ABSTRACT 2698 VAQUllLAS RANCH lEASE 199129-001

i,.• 26,622.79 ACRES (CALLED) RETJJN£D &40.00 ACRE UNIT

I

'" S 89"58'23- E ... 5,422.26'

VAQUILlAS RANCH STATE G.U. No. l-R -¢- rpo~ (BBG~~J ~

~ SURVEY 1634 -¢- : .../ ~ ~J ~/:f .~~~ ~~ ..

N.B. GOSSE'IT VAQUllLAS RANCH CO. LTD. No. 20 z ABSTRACT 2252 -I WEBB COUNTY. TEXAS VAQUILLAS i ~13 ~II!

~,. ~ ~ VAQUILlAS RANCH CO. RANCH CO. LTD. No. 11 LTD. No. 30 -¢- YAOUILLAS RAN NO.C~ -¢- STATE G.V. W

S 89'43'4j--W----;; 10.925.98'

SURVEY 468 •

IYAO~l:'

VACUIUAS RA"';CH N.8. GOSSETT co. LTD. No, 73 ABSTRTACT 2255 GRAPHIC SCALE -¢-

k.-_-L:~-r Ii 1j -¢- VAQUlllJIS RANCH CO. LTD. No. 59 ,"" - -

I RANCH CO.V ( IH rtET ) No. 24 \ 1n,h .. IOOOn.

CONOCOPHILLIPS COMPANY VAQUILlAS RANCH lEASE 199129-001 RETAINED TRACT 4 _ " SURVEY ut/£ (VAQUILlAS RANCH CO.• LID. WELLS No. 11. No. 20, No. 30, 8< VAQUILlAS STATE G.U. No.5)

640.00 ACRES wEBB COUNTY, TEXAS

HOWLAND ENGINEERING AND SURVEYING CO.

EXHIBIT "A-5"

FIELD NOTES FOR CONOCOPIDLLWSCOMPANY V AQUUJ..AS RANCH LEASE 199129-001 RETAINED TRACT 5 (VAQUllJ..AS RANCH CO., LTD. WELLS No.3, No. 14, No. 41, No. 45, & No. 69,)

640.00 ACRES

A TRACT OF LAND CONTAJNING 640.00 ACRES, more or less, being out ofthe V.quillas Ranch Lease 199129-001, 26,622.79 Acres (Called), situated in Survey 865, H. & G.N. R.R. CO., Abstract 1438, Webb County, Texas, and being more particularly described as follows:

BEGINNING at a point under an existing fence line which bears N 24°04'13" W, a distance of2,161.34 feet, from the Vaquillas Ranch Co., LTD. No. 69 Well;

THENCE, N 89'30'43" E, partially along an existing fence line, a distance of 5,303.50 FEET, to a point for the Northeast comer hereof;

THENCE, S 000:28'34" E, a distance of2,802.66 FEET, to a point for a deflection right;

THENCE, S 00°09'23" E, a distance of2,489.65 FEET, to a point for the Southeast comer hereof;

THENCE, S 89°35'00" W, a distance of5,256.20 FEET, to a point for the Southwest corner hereof;

THENCE, N 00°14'17" W, a distance of3,677.21 FEET, to a point for an interior corner hereof;

THENCE, S 89°45'43" W, a distance of 44.35 FEET, to a found I" pipe at fence corner, for an exterior corner hereof;

THENCE, N 00°37'50" W, along an existing fence line, a distance of 1,608.36 FEET, to the POINT OF BEGINNING, containing 640.00 acres of land, more or less.

Basis of Bearing: G.P.S., TX. South Zone, NAD-27

SHEETlOF2 H:\HOWLANOOURVEYING DEPAR1MENJ\JabsUO 13U2131.5-13U2131.5-13.doc

www.howlandcompanies.com 7615 N. Bartlett Avenue P.O. Box 451128 (78045) ! Laredo, 1X 78041 P. 956.722.4411 F.956.722.5414 T6PE Firm RegistratIon No. F-4097 TBPL$ Firm Registration No. 100464-0{)

CONOCOPHILLIPS COMPANY VAQUIUAS RANCH LEASE 1N99129-001 - RETAINED "TRACT 5 (VAQUIUAS RANCH CO•• LTD. WELLS No.3. No. 14 No. 41. No. 45. & No. 69)

640.00 ACRES WEBB COUNlY. TEXAS

SURVEY BBB SURVEY 2238 FRANCISCO CONTRERAS P.O. BODE ABSTRACT 2065 ABSTRACT 3016 I

SURVEY 2336 J.E. ANDERSON ABSTRACT 3183

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-¢- No. 69 (SHL)

VAOUILlAS RANCH CO. LTD. CONOCOPHIWPS COMPANY No. 56 VAQUIUAS RANCH LEASE 199129-001 26,622.79 ACRES (CALLED) RET'AJNED 840.00 ACRE UNfT

SURVEY 665 H. & C.N. R.R. CO.

ABSTRACT 1436 WEBB COUNTY. TEXAS

Found 1" Pipe o Fene.. Comar SURVEY 1683 C.C,S.D. & R.G.N.G. RR. CO.

S 89"45'04Y W ABSTRACT 1115 ....".. SURVEY 1700 H.E. BROCK ABSTRACT 2559 -¢-

GRAPHIC VAQUILLAS RANCH CO. LID.

~ ~ ki......J-I 500 T No. 23

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WARNING: 8I.SlS OF BOOING: C.P.S. lx. South Zone. I-IAO.-27. THIS IVIl IlAY HOT $HOW ALI. aIOSSI'ICS Of P\PQJN£S OR CA8.tS. IIO\\\NI() E>IGII~ .1. AAI) ~e en, lie. ~ NO ~IIUTY TO lOCA.TE Pf'UK CIt coa£ D!CISSINCS. NO CI.AIW IS HEN££r1 1M!)( R£lW!\lIH(l I;:l.1lR[HT OR ...:TUI,L SUIU'.o.et/lolHERN. ru: OWNERSIfP OR I.£SSOIt. 1lItS QFV,JIIIIC: WDE DCClllSMl.y Rl!I CONOCOI'HUJPS 1Xl!.IP.lHY. COP'I'RlCHT HOWl.OHl ENGIIlEEItIiG N«l SI.JIM'IlI«O co.. n;:. 20130

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ENGINEERING AND SURVEYING CO.

EXHIBIT"A-6"

FIELD NOTES FOR CONOCOPmLLWSCOMFANY VAQUILLAS RANCH LEASE 199129-001 RETAINED TRACT 6 (VAQUILLAS RANCH CO., LTD. WELLS No. 31, No. 56 & W.R. CARR, ET AL No.1)

620.58 ACRES

A TRACf OF LAND CONTAINING 620.58 ACRES, more or less, being out of the Vaquillas Ranch Lease 199129·001, 26,622.79 Acres (Called1 situated in Survey 1635, T.C. R.R. CO., Abstract 1797; Survey 865, H. & G.N. R.R. CO., Abstract 1438; and Survey 467, A.B. & M., Abstract 799, Webb County, Texas, and being more particularly described as follows:

BEGINNING at a point which bears N 67°46'35" W. a distance of4,196.87 feet. from the Vaquillas Ranch Co., LTD. No. 31 Well;

THENCE, N 88°55'14" E, a distance of2,040.09 FEET, to a point under an existing fence line, for a deflection right;

THENCE, N 89051'04" E, a distance of3,989.57 FEET, to a found I" pipe at fence comer, for a deflection left;

THENCE, N 89°45'43" E, a distance of 44.35 FEET, to a point for the Northeast comer hereof;

THENCE, S 00°14'17" E, a distance of3,677.21 FEET, to a point for an exterior comer hereof;

THENCE, S 89°35'00" W. a distance of 44.35 FEET, to a point for a deflection right;

THENCE, S 89054'09" W, a distance of 1,767.82 FEET, to a point for an interior comer hereof;

THENCE, S 00°17'52" E, a distance of3,432.25 FEET, to a p'oint for a deflection left;

THENCE, S 00°38'54" E, a distance of 54.14 FEET. to a point for the Southeast comer hereof;

THENCE, N 89°49'18" W, a distance of2,249.93 FEET. to a point for the Southwest comer hereof;

THENCE, N 00°10'41" E, a distance of 54.13 FEET, to a point for a deflection left;

THENCE, N 00°21'54" W, a distance of 1,361.31 FEET, to a found fence corner post, for a deflection left;

THENCE, N 00°30'20" W, a10ng an existing fence line, a distance of 1,631.92 FEET, to a point for a deflection right;

THENCE, N 00°28'47" W, continuing along said existing fence line, a distance of 882.77 FEET, to a point for a deflection left;

THENCE, N 00°29'28" W. continuing along said existing fence line, a distance of 1,092.72 FEET, to a point for an interior comer hereof;

SHEET 1 OF3

www.howlandcompanies.com 7615 N. Bartlett Avenue P.O. Box 451128 (78045) j Laredo, 1)( 78041 P. 956.722.4411 F.956.722.5414 TBPE FInn Registration No. F-4C97 • TBPts Firm Reglstratlon No. 100464-00

Continuation

THENCE, S 88°55'14" W, a distance of 1,965.93 FEET, to a point for an exterior comer hereof;

THENCE, N 01°04'46" W, a distance of2,125.56 FEET, to the POINT OF BEGINNING, containing 620.58 acres ofland, more or less.

Basis of Bearing: G.P.S., TX. South Zone, NAD-27

SHEET 2 OF3 H:\HOWLAND\SURVEYING DEP ARTMEN1\Jobs\20 13U2131.6·13\22131.6-13.doe

www.howlandcompanies.com 7615 N. Bartlett Avellue P.O. Box 451128 (78045) laredo,1)( 78041 P. 956.722.4411 F. 956.722.5414 TBPE FIrm Registratioll No. F-4097 i TBPLS Firm Reglstratioll No. 100464-00

EXHIBIT "A-6"

CONOCOPHILLIPS COMPANY VAQUlllAS RANCH LEASE 199129-001 N RETAIN EO TRACT 6 (VAQUlllAS RANCH CO•• LID. WELLS No. 31. No. 56 &:

W.R. CARR. ET AL No.1)

620.58 ACRES WEBB COUNlY. TEXAS

VAQUlllAS RANCH CO. LTD. No. 69 (SHL)

K

W.R. CARR. ET At No. 1

I

K

-¢-

I

S 88'65'104,- W 1.985.93'

CONOCOPHILUPS COMPANY SURVEY 1632 VAQUfUAS RANCH LEASE 199129-001 FRANK BARRETI 26,622.79 ACRES (CAUED) ABSTRACT 2140 RET~ED 820M ACRE UNrT

~~~~~~------­ S 89"54'09" W

z

S 89'35'00- W 1.767.82' ........

DETAil: 1i r . . . .· N 89"4&'43" E ..'" ', ~.

SURVEY 1683 C.C.S.D. & R.G.N.G. R.R. co.

N.T.S. ill ABSTRACT 1115 il"'l g~ ~VAOUILLAS RANCH Found 1·) S..:- C~~. \~. PlJ>ftc!~~" Z I' ...I 1--' --, --, --, --, - - X ---!"

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-=~'-S 00'38'54" E VAOUILlAS RANCH SURVEY 467 54.13" N 89"49'18" W ... 2,249.93" • 154.14' CO. LTD. LR&M. ABSTRTACT 799 -¢-

VAOUILLAS RANCH {)-

I

, No. JJ 5T (BHL)

GRAPHIC SCALE CO. LTD. No. 71 VAQUILlAS I 9 ~ C~CT~. -¢-

!.GO 500 : - . - . - - - - ( 1/1 F'([f )[ 'or'

I loch _ lOOlln.

.

2000

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No. 53 I

I

VAQU1LlAS RANCH CO. LTD. No.5

LEGEND Rnillon o = HORIZONTAL WEll M-17 13 -¢- " =ACt 1.OC.I.TIOH 06-06-13 ENGINEERING AND SURVEYING CD. _';':;'._ _ :~1.R(~£ 08-14 13 TlIPE Fhn IIo;IMdoo _ ~1 T8P\..S Fhn ~...,. 1000IM«I 7~"N._AYalII. ~-"TX.7lllMl P.III:I4.72:1.4411 10-18-13 www.howlandcompanies.com - - - - - - - = TIES .. .. = SURV£Y UItE 11-27-13 WARNING: BAStS or BOOING: G.P.s. Tx. South 2on... NAD.-27. n.:; PlAt IUIoI' NDl' SIIOJf IU aIOSSJjCS Of' PlPEIJIoIES 00 coatS.. ~tI ~ FlUD DATE "'0' PAGE ~ DRAWN BY: LAF./S.I.Id.

ANti ~c CO.• ItIC. ASSI..IW£S HO RESI'ONSElUTY Ttl lOCAl'( PP£lJNE 00 c.oa..E al'CSSlNGS.. ~~~":~l~~~~FD:~~OR "' 'I' 'I' CHECKED BY: J.S.

JOB No. 22131.6-13 COI'T!IJ::Hf HQWl.AIo[I DlCI££RINC NIO ~ co~ tlC.20130 SHEET: .l or :5

EXHIBIT "A-7"

FIELD NOTES FOR CONOCOPmLL~SCOMWANY VAQUILLAS RANCH LEASE 199129-001 RETAlNED TRACT 7 (VAQUllLAS RANCH CO., LTD. WELLS No.5, No.8, No. 23, No. 25, No. 33 ST, & No. 64)

639.48 ACRES

A TRACT OF LAND CONTAINING 639.48 ACRES, more or less, being out of the Vaquillas Ranch Lease 199129-001,26,622.79 Acres (Called), situated in Survey 1683, C.C.S.D. & R.G.N.G. RR. CO., Abstract 1115, Webb County, Texas, and being more particularly described as follows:

BEGINNING at a point which bears N 09'35'49" W, a distance ofl,4l7.68 feet, from the Vaquillas Ranch Co., LTD. No. 64 Well;

THENCE, N 89°54'09" E, a distance of 1,767.82 FEET, to a point fora deflection left;

THENCE, N 89'35'00" E, a distance of3,454.97 FEET, to a point for the Northeast corner hereof;

THENCE, S 00'02'16" W, a distance of 4,514.84 FEET, to a point for a deflection left;

THENCE, S 00'56'49" E, a distance of 845.79 FEET, to a point for the Southeast corner hereof;

THENCE, S 89°46'53" W, a distance af 2,479.20 FEET, to a paint for a deflection right;

THENCE, S 89°59'21 n W, a distance af2,715.08 FEET, to. a paint for the Southwest corner hereof;

THENCE, N 00°38'54" W, a distance of 1,910.27 FEET, to a point for a deflection right;

THENCE, N 00'17'52" W, a distance of3,432.25 FEET, to the POINT OF BEGINNING, containing 639.48 acres af land, more or less.

Basis of Bearing: G.P.S., TIC South Zone, NAD-27

SHEET 10F2 H:\HOWLAND\sURVEYrNG DEP ARTMENl'JohJ\20 13\22131.7·13\221 J 1.7-1 J.doc

www.howlandcompanies.com 7615 N. Bartlett Avenue I P.O. 80)(451128 (78045) ; Laredo, 1X78041 P. 956.722.4411 ! F.956.722.5414 TBPE Rnn Registration No. F-4097 TSPLS Firm Registration No. 100464-00

EXHIBIT "A-T'

CONOCOPHILLIPS COMPANY VAQUILLAS RANCH LEASE 199129-001 N RETAINED TRACT 7 (VAQUILLAS RANCH CO., LTD. WEllS No.5, No. S, No. 23, No. 25, No. 33 ST, & No. 64)

639.46 ACRES WEBB COUNTY. TEXAS

-¢-VAQUILlAS RANCH CO. LTD. No. 31

SURVEY 1635 T.C. R.R. CO. SURVEY 665 ABSTRACT 1797 H. & G.N. R.R. CO.

I ABSTRACT 1438

~~ 1:

N 88'54'09- E N 1.787.82' N 89'35'00- E ,.. 3.454.91'

~~~~~----~~~~~--~-----­ , 1 N 09'35'49" W--.. I I 1.417.68' " \ I ~ lia l~ i,,- SURVEY 1683 C.C.S.D. & R.G.N.G. R.R. CO.

~ \l ABSTRACT 1115 ill Ifi ~~~VAQUILLAS RANCH CO. LTD. No. 64 WEBB COUNTY, TEXAS

, ~ "'. VAQUILLAS RANCH..Q-

eD. LTD. No. 23 !

~ VAQUILtAS RANCH CO. LTD. No. 3.3 ST o , 8::.:::g'"

<-UN (SHL)

CONOCOPHILLIPS COMPANY VAQUILlAS RANCH LEASE 199129-001 .l;'" ~§1t>

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g;,;01 26.622.79 ACRES (CAllED) RETNNED 6Ji.48 ACRE UNIT .&;

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-------- VAOUIllA$ RANCH co.~ ~ LTD. No. 33 ST (8HL)

VAQUlllAS 5 C~N&~. -¢- No. 53 t -¢-

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co. LTD. No.5 -¢- VAQUILlAS RANCH CO. LTD. No. 8 ~ ...... _ _

VAQUllLAS RANCH SURVEY 467 co. LTD. No. 25 A.B.&M.

ABSTRTACT 799 z ____~----____--_¢"

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S 89"9'21· W ... 2.71S.0S' ! S 89"48'53- W - 2,479.20'

, SURVEY 1684- • • ~

D. B. GRACY ABSTRACT 2910 I I, ~oco ",u_ -)-oO:;u 'e-

SURVEY 1684 , f:!00< 1--------- ----- _..-I G.T. BLACK 'p~CI'l " .~ ABSTRACT 2698 I, ",e-<;;j GRAPHIC SCALE , ( IN f'tET)

T I, I InI:h _ lOOOn.

LEGEND R,vlston , Dola

HOWlANf3 ENGINEERING AND SURVEYING TI!PE Fmo I\t9IOII'-'Ho. F-«1i11 TBPL.SArm~tfc.l~ co.

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WARNING: BASIS Of" BEARING: G.P.S. h. South Centrol Zonll, NAD. 27. 11«5 !'tAT WOY NOr SHOW AU. CROSStiCS Of PIP£l.ffES OR ~ HCNlJ.I10 D<GUfEmNG NfO SIRo'E'I"tIG CO~ IN(;. ASSUolES NO IlESPCitGINlY TO LOCAl[ PPUIfE OR eo.au: C/lOSSIIiGS. HO CI.RK IS HEREB'I" w.ot ~ CUVIO(\" OR /<CT\IAl SURF"ACt/IIIHEIW. f"EE O'II'>IJ!S>F OR LLSSOR. l1II:5 DRA>nHC; w«: fXCI.USMl.y fUR IUIUNCTON ~ OA<: co. IP.

FlELD DATE eo, 'I'

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JOB No. 22131.7 13 CCIP'tRICllT IIO'WI\H<l) ~~ NO SI..I'M'n-IG co.. tic. 20IJQ SHEET: 2 or 2

EXHIBIT"A-8"

FIELD NOTES FOR CONOCOPHILLIPS COMPANY V AQUILLAS RANCH LEASE 199129-001 RETAINED TRACT 8 (V AQUILLAS RANCH CO., LTD. WELLS No. 29 ST, No. 53, No. 61, No. 71, AND STATE G_u. No. 1-R & No. 15)

640.00 ACRES

A TRACf OF LAND CONTAINING 640.00 ACRES, more or less, being out of the Vaquillas Ranch Lease 199129-001,26,622.79 Acres (Called), situated in Survey 467, A.B. & M., Abstract 799, Webb County, Texas, and being more particularly described .s follows:

BEGINNING at a point which bears N 71 °42'56" W, a distance 00,308.04 feet, from the Vaquillas Ranch Co., LTD. No. 29 ST Well;

THENCE, N 89°34'30" E, a distance 0[3,072.45 FEET, to a point for an exterior comer hereof;

THENCE, S 00°10'42" W, a distance of54.13 FEET, to a point for an interior comer hereof;

THENCE, S 89°49'18" E, a distance of2,249.93 FEET, to a point for the Northeast comer hereof;

THENCE, S 00°38'54" E, a distance 0[1,856.13 FEET, to a point for a deflection right;

THENCE, S 00°10'56" E, a distance ofl~31.92 FEET, to a point for a deflection right;

THENCE, S 00°33'35" W. a distance of 1,995.98 FEET, to a point for the Southeast corner hereof;

THENCE, N 89°58'23" W, a distance of 5,333.62 FEET, to • point for the Southwest corner hereof;

THENCE, N 00°22'48" W, a distance of 1,945.34 FEET, to a point for a deflection right; : .i

THENCE, N 00°19'36" E, a distance of 3,274.41 FEET, to the POINT OF BEGINNING, containing 640.00 acres ofland, more or less.

Basis of Bearing: G.P.S., TX. South Zone, NAD-27

SHEET 1 OF2 H:\HOWLANDISURVEYING DEPARTMENru0b5\20 13\22131.8-13\22131.8-13.doc

www.howlandcompanies.com 7615 N. Bartlett Avenue I P.O. Box 451128 (78045J ! Laredo, 1)( 78041 P. 956.722.4411 F.956.722.5414 TBPE Firm RegIstration No. F-4097 I TBPL5 Firm Registration No. 100464-00

CONOCOPHILLIPS COMPANY VAQUILLAS RANCH LEASE 199129-001 N RETAINED mACT 8 (VAQUILLAS RANCH CO.• LTD. WELLS No. 29 ST. No. 53. No. 61. No. 71. AND No. 1-R &: No. 15)

SURVEY 1632 FRANK BARRE'IT I ><

~-"~:-;"11;. =q-, ___ xABS~CTx 214~ __ , __ ,~ SURVEY 1635 T.C. R.R. CO. VAOUILlAS

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RANCH ABSTRACT 1797 No. .33 ST (SHL)

oU .... N 89"34'30- E .... 3,072.46'" ..

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VAQUIUAS RANCH lEASE 199129-001 26,622.79 ACRES (CAlLED)

RETAINED &40.00 ACRE UNIT VAQUILLAS RANCH CO. LTO. No. 61 RANCH SlATE G,U.

No. 15 -....

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----- SURVEY 46?

A.B. & M.

~ ABSTRACT 799 WEBB COUNTY. TEXAS .,

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N 89"58'23- W .... S.333.62' ~"g §loa> SURVEY 46B -¢-VAQUILLAS co.

RANCH LTD. No. 20 a> ~ N.B. GOSSETT ABSTRACT 2255

-¢- -¢-

VAQUILLAS RA.'\ICH n. VAOUILlAS RANCH CO. LTD. No . .30 V VAQUILLAS RANCH STATE .G.U.

CO. LTO. No. 11 No.5

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UNIT IDlE -,-- rENC[ UN[ ------- TIES ---- SUI!V['I"UN[ ~ Bt.S1S OF 8E.AR1IiG; C.P.S. Tx. Souttl Zone. NAO.-27.

HOWLA~~D ENGINEERING AND SURVEYING CO.

EXHIBIT "A-9"

FIELD NOTES FOR CONOCOPIDLLWSCOMPANY VAQUll..LAS RANCH LEASE 199129-001 RETAINED TRACT 9 (VAQUll..LAS RANCH CO., LTD. WELLS No. 39, No. 40, & No. 46)

635.23 ACRES

A TRACT OF LAND CONTAlNlNG 635.23 ACRES, more or less, being out ofthe Vaquillas Ranch Lease 199129-001,26,622.79 Acres (Called), situated in Survey 1633, G.C. & S.F. R.R. CO., Abstract 1323; and Survey 467, A.B. & M., Abstract 799,Webb County. Texas, and being more particularly described as fcl1ows:

BEGINNING.t a point which bears N 66°46'35" W,. distance of 1,328.20 feet, from the V.quill.s Ranch Co., LTD. No. 40 Well;

THENCE, N 89°30'45" E, a distance of2,492.56 FEET, to a found fence corner post, for a deflection right;

THENCE, N 89°32'27" E, along an existing fence line, a distance ofl,572.15 FEET, to a point for a deflection left;

THENCE, N 89°29'25" E, continuing along said existing fence line, a distance of 2,016.77 FEET, to a point for the Northeast comer hereof;

THENCE, S 00°33'08" W, a distance of 1,348.09 FEET, to a point to an exterior corner hereof;

THENCE, S 89°34'30" W, a distance 0£80.70 FEET, to a point to an interior comer hereof;

THENCE, S 00°19'36" W, a distance of3,274.41 FEET, to a point for the Southeast corner hereof;

THENCE, S 89°52'00" W, a distance of 5,977.93 FEET, to a point for the Southwest corner hereof;

THENCE, N 00°06'46" E,' distance of4,585.15 FEET, to the POINT OF BEGINNING, containing 635.23 acres of land, more or less.

Basis of Bearing: G.P .S., TX. South Zone, NAD-27

SHEET 1 OF2 H:\HOWLAND\SURVEYmG DEPAR~0b3\2013U2131.9-13U2131.9-13.doc

www.howlandcompanies.com 7615 N. Bartlett Avenue i P.O. Bo)( 451128 (78045) i Laredo, lX 78041 P_ 956.722.4411 F.956.722.5414 TBPE Firm Registration No. F-4097 TBPLS Firm Registration No. 100464-00

EXHIBIT "A-9"

CONOCOPHILLIPS COMPANY VAQUILU\S RANCH LEASE 199129-001 N RETAINED TRACT 9 (VAQUILU\S RANCH CO., LTD. WElLS No. 39, No. 4{), & No. 46)

635.23 ACRES WEBS COUNlY. TEXI\S

., I j

r----,, SURVEY 1631 G,C. & S.F. R.R. CO.

A

ABSTRACT 1317 SURVEY 1632 , FRANK BARRE'IT ABSTRACT 2140

I

SURVEY 1633 G.C. & S.F. R.R. CO.

ABSTRACT 1323 WEBB COUNTY. TEXAS ",.,,,, "'" 10 '"

1-----

~~gJ ~ ... ~, -¢-VAQUJLlAS S 89".34'30- W ~O~ RANCH CO. LTO. No. 39 80.70'

","'''' ::>i!i!;; ~I enu", :!;< ~, CONOCQPHILLIPS COMPANY 1!l, VAQUILlAS RANCH LEASE 199129-001

~I, 26.622.79 ACRES (CALLED) RETAINED 635.23 ACRE UNrr

, I,, -¢-VAQUlllAS RANCH CO. LTD. No. 46

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0 S 89"52'00" W ... 5,9n 33' > .... U" ,.

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I• N.R GOSSETT ABSTRACT 2252 I•

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LEGEND R....blon DCI~

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WARNING: BASIS OF B£ARlNG: G.P.s. Tx. South Zon ... NAO. 27.

.. n"

SlJRVtY UHr 4 10-18-13

ms P\.IIl ....T Hal' StOI ~ CI!OSSIIClS Df PIP£l.JN[S OR C08.£S. IIOIIII.JIIIO EliGll<[(RIItt;: FJELD DAT( ORAWN BY: LAF.jS.l.I.t NffJ ~ CO~ IHC. ASsWES HO RtSPOIIS8IJTT m LDC.IJE ~ ~ c:oau: CROSSIIfGS.

CHECKED BY: J,S.

~~~~~~~~fU~O>I JOB No. 22131.9 13 CCIPIlI!tIn" MOII'..Io/<I) ~ AHD SUi\01tIIl co., toH;. 2OIlO SHEET: 2 OF 2

HOWIMANlt~ ENGINEERING AND SURVEYING CO.

EXIDBIT "A-I0"

FIELD NOTES FOR CONOCOPBILUPSCOMPANY VAQUILLAS RANCH LEASE 199129-001 RETAINED TRACT 10 (VAQUILLAS RANCH CO., LTD. WELLS No. 27, No. 43, No. 44, No. 59, No. 73, No. 74 & VAQUILLAS RANCH A-2 No.6)

640.00 ACRES

A TRACT OF LAND CONTAlNING 640.00 ACRES, more or less, being out ofthe Vaquillas Ranch Lease 199129-001,26,622.79 Acres (Called), situated in Survey 468, N.B. Gossett, Abstract 2255; North V, of Survey 166, A.C. Goeth, Abstract 3142; and Survey 1634, N.B. Gossett, Abstract 2252, Webb County, Texas, and being more particularly described as follows:

BEGINNING at a point which bears N 29°17'05" E, a distance 0[2,149.76 feet, from the Vaquillas Ranch Co. Ltd. No. 44 Well;

THENCE, S 00'31'13" E, a distance of 3,087.94 FEET, to a point for the Southeast corner hereof;

THENCE, WEST, a distance 0[7,909.49 FEET, to a point for the Southwest comer hereof;

THENCE, N 00°00'03" W, a distance 0[1,852.04 FEET, to a point for an interior comer hereof;

THENCE, S 89°43'42" W, a distance 0[3,039.93 FEET, to a point for an exterior comer hereof;

THENCE, N 00°12'49" W. a distance of 1,198.42 FEET, to a point for the Northwest corner hereof;

THENCE, N 89'43'43" E, a distance of 10,925.96 FEET, to the POINT OF BEGINNING, containing 640.00 acres of land, more or less.

Basis of Bearing: G.P.S., TX. South Zone, NAD-27

SHEET 1 OF2 H:\HOWLANmSURVEYING DEI'AR'IMENlVobs\2013\22131.ll-13\22I3I.II-l3.doc

www.howlandcompanies.com 7615 N. Bartlett Avenue i P.O. Box 451128 (78045) I Laredo, TX78041 P. 956.722.4411 F.956.722.5414 TaPE Finn Registration No. F-4097 f TBPLS Firm Registration No. 100464-00

113

-¢- SURVEY 1684 G.T. BLACK VAQUIUAS RANCH CO. LTD. No. 20 ABSTRACT 2898 SURVEY 1634 VAQUlllAS VAQUILLAS RANCH CO.

N.B. GOSSETT RANCH CO. LTD. No. 11 ABSTRACT 2252 LTD. No. 30 -¢- -¢- VAQUIUAS RANCH-¢-

STATE G.U. No. 5 N 8V43'4J"

CQNQCOPHllLiPS COMPANY VAQUILLAS RANCH VAQUllLAS RANCH LEASE 199129-001 CO. LTD. No. 73 26,622.79 ACRES (CALLED) -¢- RETAINED &40,00 JaIE. UNrT z -¢- VAOUlllAS RANCH .. -¢-

I-.l s 89"043'''2- W ,.. 3.039.93' • ,------------1I VAQUILLAS RANCH CO. LTD. No. 43-¢-

CO. LTD. No. 59 CI!

8

VAQUILLAS RANCH CO.

ri LTD. No. 24 SURVEY 468 , .,;

NORTH 1/2 -¢-VAQUlLlAS RANCH N.B. GOSSETT -rt-___ 1Q.6!'__ --I1o.I u,..

. SURVEY 1666 A.C. GOETH ABSTRACT 3142 CO. LTD. No. 74 ABSTRTACT 2255 WEBB COUNTY. TEXAS CO. LTD .

,..,_ • ;;;

;cd~ to ....... - PO >-. t;

SURVEY 1665 C.C.S.D. & R.G.N.G. RR CO.

ABSTRACT 1124 I VAQUILLAS RANCH A-2 No.6-¢-

-¢-VAQUllLAS RANCH CO. LTD. No. 27 !'lf;1"'' ' ., '" '" [::

" "'til til .';';]

U

.;

WEST N 7.909...• A -¢--

co. lTD. No. 32 -y- VAQUILLAS

L ____ .________________ :O~ :'N:._2~l~D~ ~1 __ I VAQUILLAS RANCH I RANCH CO

GRAPHIC SCALE 50.!. _.9 ~ lope! 2c:x'

(tlrm)

I _ l000fl Inc~

EXHIBIT "A-ion CONOCOPHILLIPS COMPANY VAQUIUAS RANCH LEASE 199129-001 UNIT UH[ - - , - - .. rENCE UN£ RETAINED TRACT 10 - - - - - - - = m;s (VAQUIUAS RANCH CO.. LTD. WEllS No. 27. No. 43. No. 44. u"'

No. 59. No. 73. No. 74 '" VAQUIUAS RANCH A-2 No.6)

640.00 ACRES WEBB COUNT'(, TEXAS

~ ~$,l~ HO'lQfllj •• A~~'i!.[lr::lhb7 ENGINEERING AND SURVEYING CO.

EXHIBIT "A-11"

FIELD NOTES FOR CONOCOPIDLLWSCOMPANY V AQUILLAS RANCH LEASE 199129-001 RETAINED TRACT 11 (VAQUILLAS RANCH CO., LTD. WELLS No.7, No. 12, No. 18, No. 22, No. 24, No. 35, No. 51, No. 65, No. 67, & No. 68)

640.00 ACRES

A TRACT OF LAND CONTAlNlNG 640.00 ACRES, mOre or less, being out of the Vaquillas Ranch Lease 199129-001,26,622.79 Acres (Called), situated in Survey 1691, G.C. & S.F. R.R. CO., Abstract 1267; Survey 1696, G.C. & S.F. R.R. Co., Abstract 2418; North Y, of Survey 1666, A.C. Goeth, Abstract 3142; and South Y, of Survey 1666, N.B. Gossett, Abstract 2253, Webb County. Texas, and being more particularly described as follows:

BEGINNING at a point which bears N 67°14'28" W, a distance of 873.05 feet, from the Vaquillas Ranch Co. LID. No. 24 Well;

THENCE, N 89°24'40" E, a distance of5,260.70 FEET, to a point for an exterior comer hereof;

THENCE, S OO~2'59" E, a distance of 1,911.15 FEET, to a point for an interior corner hereof;

THENCE, EAST, a distance of 1,816.67 FEET, to a point for an exterior corner hereof;

THENCE, SOUTH, a distance of 3,271.85 FEET, to a point under an existing fence line, for the Southeast corner hereof;

THENCE, WEST, along an existing fence line, a distance of 4,066.67 FEET, to a point for an interior comer hereof;

THENCE, SOUTH, a distance of 50.64 FEET, to a point for an exterior corner hereof;

THENCE, S 89°32'20" W. a distance of249.85 FEET, to a point for an exterior comer hereof;

THENCE, NORTH, a distance of 1,930.06 FEET, to a point for an interior comer hereof;

THENCE, WEST, a distance of 2,743.83 FEET, to a point for an exterior comer hereof;

THENCE, N 00°31'13" W, a distance of3,251.63 FEET, to the POlNT OF BEGINNING, containing 640.00 acres of land, more or less.

Basis of Bearing: G.P.S., TX. South Zone, NAD-27

SHEET 1 OF2 H:\HOWLA ND\Sl/RVEYING DEPARThffiNl\JobsUO 13\22131.12·13\2213 L 12-13.doc

www.howlandcompanies.com 7615 N. BartfettAvenue , P.O. Box 451128 (78045) : laredo, lX7S041 P. 956.722.4411 F.956.722.5414 TBPE Arm Registration No. F-4097 ; TBPl5 Firm Registration No. 1004&4-00

EXHIBIT "A-11"

CONOCOPHILLiPS COMPANY VAQUIli.AS RANCH LEASE 199129-001 N RETAINED TRACT 11 (VACUIli.AS RANCH CO .• LID. WELLS No.7. No. 12. No. 18. No. 22.

No. 24. No. 35. No. 51. No. 65. No. 67. & No. 68)

640.00 ACRES WEBa COUNTY. TEXAS

M

.J -¢- •. i. )

SURVEY 1684 VAQUIUAS G.T. BLACK RANCH , A-1 No . .3 j.

ABSTRACT 269B

.~'I' .:..:.::.:.JH N 6714'28' W m:os---- - - - .... _ .... _ .... - - - - - - - VAQUIUAS N 89"24'W E ,.. S.260.70· RANCH ........... !5! VAQUILLAS A-l No. 214 {BHL} "

-~'--'::V- "

VAOUILLAS VAQUlllAS RANCH A-1 No.7 ¢-

RANCH CO. -¢- RANCH CO. -¢- VAQUJUAS LTO. No. 24 LlO. No. 7 RANCH VAOUlLlAS A-l No. 214 SURVEY 468 -¢- RANCH CO. (SHl)

LTD. No. 67 A.B. & M. SURVEY 1696 ABSTRACT 2255 G.C. & S.F. R.R. CO.

ABSTRACT 2418 CONOCOPHILLIPS COMPANY VAQU1LLAS RANCH LEASE 199129-001 26.622.79 ACRES (CALLED) VAQUILLAS EAST .... 1.818.67"

RETAHD 540.00 ACRE UNIT -¢- RANCH CO.

LTD. No. 12 SURVEY 1691 z VAQUllLAS G.C. & S.F. R.R. CO.

-¢- RANCH CO.

VAQUILLAS ABSTRACT 1287 LTO. No. 51 WEBB COUNTY. TEXAS -¢- RANCH CO.

LTD. No. 18 VAQUILLAS RANCH CO. LTO. No. 65 .O(SHL)

WEST - 2.743.83" VAQUILLAS -¢- . VAOUILLAS NORTH 1/2 SURVEY 1666 A.C. GOETH ~_.'::! RANCH CO.

LTO. No, 65 -¢- RANCH CO.

LTD. No. 35 (BHL)

----- ------- --- --, ABSTRACT 3142

VAQUlllAS ~ VAQUILLAS RANCH CO.V _r't RANCH CO. ~ SOUTH 1/2 LTD. No. 68 . VAQUILLAS LTD. No. 22 SURVEY 1666 (BHL) RANCH CO.

LTO. No. 68 N.B. GOSSETT (SHL) ABSTRACT 2253

-- - --- --- - -- - - !,.,.4;===---==:::~~~.----~I.--.< WEST ,.. 4,066.67 ....., SOUTH ,.. &>.64'

S 89"32'20· W 249.85'

SURVEY 1678 C.C.S.D. & RG.N.G. RR CO.

ABSTRACT 2495 GRAPHIC SCALE

.---.---

LEGEND Rublon o"t.

o '"

HOWLANDENGINEERING AND SURVEYING CO. TBP£flrmRooknltlnND..Fo4W1 TBI'L!I~~oGc:<l"",'(l(1164.OO -¢-

""';",-- : ::; u"'

HORIZONTAL WELL SU!lFAC[ LOCATION

2

05-17-13 060613 08 14-1~ 76'SH._ ....VOBIO ~.l)(.7fIG4' P.IIoSII.T.Z:Z.44lt X = FEHe( UNt - - - - - - - ,. TIES 10-18 13 WoIfW.howlandcomp&r"lles.com • SURVEY UNE 11-27 13 WARNING; Bo\SIS or BEARING: G.PS. Tx. South ZOllO, NAD.-27.

FIELD DATE DRAWN BY: ur./Sol.I.!.

CHECKED BY: J.S. JOB No. 22131.12-1J SHEET: 2 OF 2

EXHIBIT "A-12"

FlELDNOTES FOR CONOCOPHllL~SCOMFANY V AQUILLAS RANCH LEASE 199129-001 RETAINED TRACT 12 (VAQUlLLAS RANCH A-2 WELLS No.4, No. 38, No. 68 & VAQUlLLAS RANCH CO. LTD. No.2, No. 32)

640.00 ACRES

A TRACT OF LAND CONTAINING 640.00 ACRES, more or less, being out of the Vaquillas Ranch Lease 199129-001, 26,622.79 Acres (Called), situated in Survey 468, N.B. Gossett, Abstract 2255; North 112 of Survey 1666, A.C. Goeth, Abstract 3142; and South lI2 of Survey 1666, N.B. Gossett, Abstract 2253, Webb County, Texas, and being more particularly described as follows:

BEGINNING at a point which bears N 65'04'35" W, a distance of5,456.00 feet, from the Vaquillas Ranch A-2 No. 38 Well;

THENCE, EAST, a distance of7,909.49 FEET. to a point for an exterior comer hereof;

THENCE, S 00°31'13" E, a distance of864.99 FEET, to a point for an interior comer hereof;

THENCE, EAST. a distance 0[2,743.83 FEET, to a point for an exterior comer hereof;

THENCE, SOUTH, a distance of 1,930.06 FEET, to a point for the Southeast comer hereof;

THENCE, S 89°32'20" W, a distance 0[10,661.34 FEET, to a point for the Southwest comer hereof;

THENCE, N 00'00'13" W, a distance of 2,880.79 FEET, to the POINT OF BEGINNING and containing 640.00 acres of land, more or less.

Basis of Bearing: G.P.S.) TX. South Zone, NAD~27

SHEETIOF2 H:\HOwt.AND\'sURVEYrNG OEPARTMEN1\Jobs\20 13\22131.13·13\22131.13-13.doc

www.howlandcompanies.com 7615 N. Bartlett Avenue . P.O. BoK451128 (78045) laredo, TX78041 P. 956.722.4411 F.956.722.5414 TBPE FIrm Registration No. F-4097 TBPtS Finn Registration No. l00464-{)(J

·... __ ._..._ - - - - - - - - - - - - - -

117 A VAQUILl'S VAQUILlAS ¥ RANCH CO.

LTD. No. 74 1:/ LTO.

RANCH CO.

No. 44 SURVEY 1691 G.C. & S.F. R.R. co.

VAQUILlAS -¢- RANCH CO.

LTD. No. 27 ABSTRACT 1267 VAQUILlAS RANCH CO. LlD. No. 12 1:/ II.;~ i<.... :VAQUILl,A::> Q:'

FASl' - 7.009•••• ~ IIJ VAQUILLAS 1:/ Llo.

RANCH CO.

VAQUILJ...6S~_ - ~. No. 51 VAQUILlAS RANCH CO.

SURVEY 466 RANCH CO.,.,... :-8: -¢- RANCH CO.

L _________ _ LTD. No. 32 LTD. No.2 N.B. GOSSETT ~:t LTD. No. 18 VAQU1LlAS !!~ RANCH CO.

ABSTRACT 2255 LTD. No.6':

EAST ... 2.74J.83'

'" (SHL)

VAQUILLAS 1:/ . 0

-_ .... _ _----- ---- -- --- --- -- -- -----

NORTH 1/2 SURVEY 1666 A.C. GaETH. ABSTRACT 3142 .... VAQUILLAS 1:/A-2RANCH No.4 SOUTH 1/2 SURVEY 1666 -

RANCH CO. LTD. No. 65 (BHL)

VAQUILLAS RANCH CO. LTD. No. Sa.n.",.

(8HL) "'I'U N.B. GOSSETT VAQUILLAS CONOCOPH1U1PS COMPANY RANCH VAQUJLlAS RANCH lEASE 199129-001 ABSTRACT 2253 LTD. No.

26,622.79 ACRES (CAlLED) WEBB COUNTY. TEXAS (SHL) RETNNED 640.00 ACRE UNT

w ... to.681~·

SURVEY 1676 SURVEY 1667 I C.C.S.D. & R.G.N.G.

C.C.S.D. & R.G.N.G. R.R. CO. SURVEY 1677 R.R. CO.

GRAPHIC SCALE ABSTRACT 1125 e.C.S.D. & R.G.N.G. R.R. co. ABSTRACT 2495 ~ 1;;U 1-;;-.- Ii 2000I ABSTRACT 1130

{IN tUT 1 I noh _ nXl9n

EXHIBIT "A-12"

~~ = = = : = ~I~'~· ~'·,~"~'~ iD!.'~'·~ l ,L'ftEI..L 04 11-1J

¥ _ ....

~OCATlON 05-17-13

. "" ""'

w~

CONOCOPHILLIPS COMPANY VAQUIUAS RANCH LEASE 199129-001 N RETAINED TRACT 12 .. rENeE UNE "-,,-,, - - - - - - - .. 11£S _ ... _ .. SUII\II:YUHE (VAQUIUAS RANCH A-2 WELLS No.4, No. 38. No. 68 & VAQUIUAS RANCH co.

LlD. No.2. No. 32)

640.00 ACRES WEBB COUNlY. TEXAS

EXHIBIT "A-13"

FIELD NOTES FOR CONOCOPHUJJPSCOMPANY VAQUILLAS RANCH LEASE 199129-001 RETAINED TRACT 13 (VAQUlLLAS RANCH A-I WELLS No.3, No.7, No. 33, No. 144, No. 156, No. 163, No. 214)

636.53 ACRES

A TRACT OF LAND CONTAlNlNG 636.53 ACRES, more or less, being out of the Vaquillas Ranch Lease 199129·001,26,622.79 Acres (Called), situated in Survey 1696, P.B. Reynolds, Abstract 2418; and Survey 1695, G.C. & S.F. R.R. CO., Abstract 1268, Webb County. Texas, and being more particularly described as follows:

BEGINNING at a point which bears N 53°13'51" W, a distance of 1,137.24 feet, from the Vaquillas Ranch A-I No.3 Well;

THENCE, N 89°19'22" E, a distance of 6,735.31 FEET, to a point for the Northeast comer hereof;

THENCE, S 00°58'29" E, a distance of 4,150.50 FEET. to a point for the Southeast corner hereof;

THENCE, S 89°19'59" W, a distance of 11.7S FEET, to a point for a deflection right;

THENCE, N 89°52'06" W, a distance of 4,950.94 FEET, to a point for a deflection left;

THENCE, WEST, a distance of 1,816.67 FEET, to a point for the Southwest comer hereof;

THENCE, N 00°22'59" W, a distance ofl,911.15 FEET, to a point for a deflection right;

THENCE, N 00"21'20" W, a distance of 2,147.98 FEET, to the POINT OF BEGINNING and containing 636.53 acres of land, more or less.

Basis of Bearing: G.P.S., TX. South Zone, NAD-27

SHEET 1 OF2 K\HOWLAND\sURVEYING DE>ARTMEN1\IobsUOl1U211I.14-13U2131.14-13.doc

www.howlandcompanies.com 7615 N. S<lrtlettAvenue I P.O. Box 451128 (78045) ! laredo, TX78041 P. 956.722.4411 F.956.722.5414 TBPE Firm Registration No. F-4097 j TBPLS Firm Registration No. 100464-{10

CONOCOPHILLIPS COMPANY VAQUILlAS RANCH LEASE 199129-001 ~ RETAINED lRACT 13 (VAQUILlAS RANCH A-1 WELLS No.3. No.7. No. 33. No. 144.

No. 156. No. 163. No. 214)

636.53 ACRES

SURVEY 1697 T.M. RR CO. ABSTRACT 1813

-,--,--,-

VAQUILLAS -¢-

RANCH A-t No. 3::5

3 VAQUILlAS

-¢-A_t~o~H153 CONOCOPHILLIPS COMPANY VAQUIL!AS RANCH LEASE 199129-001 26,622.79 ACRES (CALLED) RETAINED ~ ACRE UMJ'

VAQUlUAS RANCH ...

VAQUILlAS VAOUILLAS RANCH A-I No. 214 (BHL)

-¢-A-IRANCH No. 144 A-I No.7 ¢- VAQUILlAS -¢- VAQUILLAS RANCH A-I No. 156 RANCH A-I No. 214 SURVEY 1696 P.B. REYNOLDS (SHL) ¢- '" al (SHL) ABSTRACT 2418 VAQUILLAS """ """ ~~ WEBB COUNTY. TEXAS RANCH A-1 No. 156 (SHL)

WEST ... ',816.87' N 69"52'06" W .... 4,9~.94'

DETAIL

DETAIL: N.T.S.

SURVEY 1691 5 89"19'59" W G.C. & S.F. R.R. CO.

SURVEY 1692 11.75'~ ABSTRACT 1267 P.B. REYNOLDS ABSTRACT 2419 VAQUlllAS -¢- RANCH CO.

LTD. No. 35 RANCH VAQUJLlAS A-l No. 73

VAQUILLAS RANCH A-L No. 106 RANCH CO.-¢- LTD. No. 22 (8HL)

VAQUILlAS GRAPHIC SCALE -¢- RANCH -¢-

~';~I)(I 1000

~!ioIii-~-Iii-~",=~==;;;;,\,~lIIIIIjiiiiiiiiiiiii,\'~~~~""II'

2000 A

¥ VAQUILlAS RANCH A-I No. 72 A-l No. 24 o VAQUlllAS A-l No.

RANCH A-L No. 'O~ (BHL) ~ (IH F'ED) (SHL) V 1 ItI<h _ 'COOn.

Ut\IT UNE rENeE UNE n", SlJRVFt UN<:

~ &.SIS OF BEARING: G.P.s. Tx. South Zone, NAD.-27. 1KS PI..(f WI.. NOT SI:IOW .ou ~ or PPEI.JNES QI. coaIS. ItC7IilHIO ~ NlD SIJI!YE'VIHC CO- INC. ASSU.IES /K) RESPQ.SU'UTT TO I,OCO.Tt PI!'EI.H:: 0lI CA8I.( CRDSSI'IGS. IfO ClNII IS IIER£8T w.l)r ~ CI.IRIIDfT 011 AI:TU\I. SURfACE/W~ f[£ O'MID!SMIP OR I.LSSCa ntIS tfI.t.\fI'M'; W.DE CXCWSMJ.Y fOR CCHCICOF'tlU.I' COU'N«. IXPI'RIGHT IIOWI.NlO ~ IH) Sl.1IM'I'1NG co., INC. 20130

HOW~~~[lW ENGINEERING AND SURVEYING CO.

EXHIBIT "A-14"

FIELD NOTES FOR CONOCOPHllWWFSCOMPANY V AQUILLAS RANCH LEASE 199129-001 RETAINED TRACT 14 (VAQUILLAS RANCH A-I WELLS No. 18, No. 35, No. 85, No. 155, No. 185, & No. 240)

640.00 ACRES

A TRACT OF LAND CONTAINING 640.00 ACRES, more or less, being out of the V.quillas Ranch Lease 199129-001,26,622.79 Acres (Called), situated in Survey 1695, G.B. & C.N.G. R.R. CO., Abstract 1268, Webb County, Texas, and being more particularly described as follows:

BEGINNING.t. found 2" pipe which bears N 41°50'50" W,' distance of 1,969.80 feet, from the V.quillas Ranch A-I No. 35 Well;

THENCE, N 89~1'27" E, a distance of 6,725.49 FEET, to a point for the Northeast comer hereof;

THENCE, S 00°48'50" E, a distance ofl,999.0S FEET, to a point for a deflection right;

THENCE, S 00°39'16" E, a distance of2,lSO.OO FEET, to a point for the Southeast corner hereof;

THENCE, S 89°20'44" W, • distance of 6,707.86 FEET, to • point for the Southwest comer hereof;

THENCE, N 00°58'29" W, • distance of 4,150.50 FEET, to the POiNT OF BEGINNING and containing 640.00 acres of land, more or less.

Basis of Bearing: G.P.S., TX. South Zone, NAD-27

SHEET 1 OF2 H:\HOWLAND\SURVEYrNG DEr ARTMEN1'Jobs\20 13\22131.15-13\22131.15-13.doc

www.howlandcompanies.com 7615 N. Bartlett Avenue . P.O. Box 451128 (78045) . Laredo, TIC 78041 P. 956.722.4411 F.956.722.5414 TBPE Firm Registration No. F-4097 , TBPL5 Firm Registration No. 100464-00

EXHIBIT "A-14"

CONOCOPHILLIPS COMPANY VAQUILLAS RANCH LEASE 199129-001 - RETAINED TRACT 14 (VAQUILLAS RANCH A-1 WELLS No. 1B. No. 35.

No. B5. No. 155. No. 185. &: No. 240)

640.00 ACRES WEBB COUNTY, TEXAS

! :• I• • I• 0 • ""

'"<-"'''

.'"

SURVEY 1698 T.M. R.R. CO.

I• Np:; .....

>- .t;

ABSTRACT 2592 • [;!"'g ",'"

"''''''' '" .~ _ • N 89"21'zr E ,.. 8.725..49' "

oj

t,, ~: ~, , ,,, I.., , CONOCOPHllLIPS COMPANY • ',\: VAQUILLAS Ii! L... ____',,~L ___ -¢- RANCH YAQUIU..AS RANCH lEASE 199129-0Q1 26,622.79 ACRES (CAUEO)

S I A-l No. 35 RET.NNED &40.00 Jal£ lRoIlT :;;

, ----

~ VAQUILLAS -¢-A-IRANCH Iz VAQU1LlAS No. 185

SURVEY 1695 G.B. & C.N.G. R.R. CO.

ABSTRACT 1286 -¢- A-IRANCH No. 18 WEBB COUNTY. TEXAS VAQUILLAS VAOUILlAS -¢-A-IRANCH -¢- A-IRANCH No. 85 No. 155

VAQUILLAS S 89"20'4-4- W I'" 8.707.86'

RANCH VAQU1LLAS A-I No. 215~-O RANCH •I VAQUIUAS VAQUILLAS ,..l.,:

RANCH V (8HL) ¥ A-I No. 215 tr A-I No. 191 (SHl)

r RANCH A-I No. 193 VAQUILlAS VAOUILLAS RANCH -¢- RANCH A-I No. 24'-r\.,.

A-I No. 11 (BHL) '"0 VAQUlllAS o liAS n. RANCH SURVEY 1692 VARA~CH V A-I No. 241 P.B. REYNOLDS A-I No. 184 (SHl) -¢-

VAOUILlAS ~ ABSTRACT 2419 SURVEY 2112 VAQUILLAS I RANCH ¥ P.B. REYNOLDS RANCH' A-1 No. 73 ABSTRACT 2420 A-I No. 1301 GRAPHIC SCALE VAOUtLlAS -¢- RANCH VAQUllLAS k-_J_~~ 'j VAQUILlAS -¢- A-IRANCH A-l No. 186 RANCH No. 15 A-l No. 2~ I It< FEET ) , Inch _ .ooon. I (BHL) ~

LEG£HD Revision 0. ••

HOWlANlW ENGINEERING AND SURVEYING CO.

lW'E"""'~""F-40!J7 TDPl.!I"""RIQ1ontoA .... l~

0

-¢- , - HORIZOHTAL WELl.

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EXHIBIT "A-IS"

FIELD NOTES FOR CONOCOPHILUPSCO~ANY VAQUILLAS RANCH LEASE 199129-001 RETAINED TRACT 15 (VAQUILLAS RANCH A-I WELLS No. 180 & No. 217)

541.82 ACRES

A TRACT OF LAND CONTA1NING 541.82 ACRES, more or less, being out oflhe Vaquillas Ranch Lease 199129-001,26,622.79 Acres (Called), situated in Survey 279, O.C. & S.F. R.R. CO., Abstract 1353; and Survey 1004, P.B. Reynolds, Abstract 2421, Webb County, Texas, and being more particularly described as follows:

BEGINNING ata point which bears S 54'13'31" E, a distance of 2,749.54 feet, from the Vaquillas Ranch A-I No. 180 Well;

THENCE, S 89°24'49" W, a distance of 5,281.57 FEET, to a point for the Southwest corner hereof;

THENC~ N 00°46'34" W. a distance of2,624.47 FEET, to a point for a deflection rigbt;

THENCE, N 00°30'06" W, a distance of 3,119.05 FEET, to a point for the Northwest comer hereof;

THENCE, N 89°45'42" E, a distance of2,654.31 FEET, to a point for an exterior corner hereof;

THENCE, S OO~8'SO" E, a distance of2,550.31 FEET, to a point for an interior comer hereof;

THENCE, N 89°35'17" E, a distance of2,653.22 FEET, to a point for an exterior corner hereof;

THENCE, S 00°16'38" E, a distance of3,169.04 FEET, to the POINT OF BEGINNING, containing 541.82 acres of land, more or less.

Basis of Bearing: G.P.S., TX. South Zone, NAD-27

SHEET 1 OF2 H:\HOWLAND\SURVE'tING DEPARTMENl\l'obs\20 11\22Jll.l6-13\22111.16-13.dce

www_howlandcompanies.com 7615 N. Bartlett Avenue , P.O. 80)(451128 (78045) , laredo, TX78041 P. 956.722.4411 F.956.722.5414 TBPE Flrm Registration No. F-4097 : TBPLS Finn RegIstration No. 100464-00

EXHIBIT "A-15" CONOCOPHILLIPS COMPANY VAQUILLAS RANCH LEASE 199129-001 RETAINED lRACT 15 (VAQUILLAS RANCH A-I WEllS No. 180 & No. 217)

541.82 ACRES WEBB TEXAS

SURVEY 41

---~ SURVEY 280 C.C.S.D. 8< J. LEONARD ~ R.G,N.G. R.R. CO. ABSTRACT 2634 \ ABSTRACT 1039

SURVEY 1698 •

IABT,'SM'T'I"R'C·R'T· i~92~ • __ N:;. :"':.;:;":. '~: 2;•. .:E;"N-="::"":.:::.3;.;1_'- - ? - - - - - - -- - - -- - - -1 SURVEY 279 G.C. 8< S.F. R.R. CO.

ABSTRACT 1353

I

WEBB COUNTY. TEXAS

'"

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SURVEY 40 C.R. DAVIS ABSTRACT 2203 CONOCOPHILL1PS COMPANY VAOUILLAS RANCH LEASE 199129-001 26,622.79 ACRES (CALLED) RETAlh£D 541.82 N.!R£ t.tm'

VAQUILlAS RANCH A-I No. 180*:: ________ !~~:... _________ I&J

1 " ~ ,. VAQUILlAS RANCH .

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VAQUILLAS ~OC~ ~----------~(8~H~0~--~~~~~--~~~------------------·1r--, S 89"24'49- W ... fi,281.57'

A-I No -y VAQUILlAS RANCH • "'.OA-l No. 242 VAQUlllAS RANCHV' (SHl) A-I No. 242 (BHL)

VAQUIUAS RANCHA SURVEY 1004 A-I No. 157 Y P.B. REYNOLDS ABSTRACT 2421

GRAPHIC SCALE VAQUILlAS RANCH

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A-l No. 218 (BHL) VAQUIUAS RANCH RANCH 216

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EXHIBIT "A-16"

FIELD NOTES FOR CONOCOPBIL~SCOMPANY V AQUILLAS RANCH LEASE 199129-001 RETAINED TRACT 16 (VAQun.LAS RANCH A-I WELLS No. 29, No. 44, No. 157, No. 212, No. 216, No. 218, & No. 242)

558.74 ACRES

A TRACT OF LAND CONTAlNING 558.74 ACRES, more or less, being out of the V.quillas Ranch Lease 199129-001,26,622.79 Acres (Called), situated in Survey 1004, P.B. Reynolds, Abstract 2421, Webb County, Texas, and being more particularly described as follows:

BEGINNlNG at a point which bears N 74°36'06" E, a distance of 2,077.33 feet, from the V.quillas Ranch A·I No. 242 Well;

THENCE, S 00°31 '16" E, a distance of 4,612.08 FEET, to a point for the Southeast comer hereof;

THENCE, S 89°23'44" W, a distance of 5,270.83 FEET, to a point for the Southwest corner hereof;

THENCE, N 00°39'16" W, a distance of 4,613.75 FEET, to a point for the Northwest comer hereof;

THENCE, N 89"24'49" E, a distance of 5,281.57 FEET, to the POINT OF BEGINNING, containing 558.74 acres of land, more or less.

Basis of Bearing: G.P.S., TX. South Zone, NAD·27

j

,I

SHEET 1 OF2 H:\HOWLAND\sURVEYlNG DEPARTMEN1\lohs\20 13UlI31.17-13U2131.17-13.doc

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EXHIBIT "A-16"

CONOCO PHILLIPS COMPANY VAQUILlAS RANCH LEASE 199129-001 N RErAINED TRACT 16 (VAQUIUAS RANCH A-1 WELLS No. 29. No. 44. No. 157.

No. 212. No. 216. No. 218. & No. 242)

558.74 ACRES WEBB COUNTY. TEXAS

I, VAQUIUAS!

A RANCH

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I

SURVEY 279 G,C. & S.F. R.R. CO.

ABSTRACT 1353 0 VAQUILtAS RANCH V A _ 1 No. 180

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VAQUILlAS A-I No. 217 I "'''''''

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: (BHL) -¢- N 89"2...·-49· E ... 5.281.5'" :

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VAQUIUAS-Q VAQUILLAS:a1 _1:!..1iO"f1·~ RANCH RANCH A&~~:.: ___ ~ __________ _ A-I No. 240 A-I No. 242 V VAQUILlAS 2.008'

(BHL) RANCH A-I No. 242 (SHL) SURVEY 40 -""t.. VAQUILlAS 5 V RANCH C.R. DAVIS A-I No. 157 ABSTRACT 2203

- -----;:-

~ CONOCOPHILLIPS COMPANY VAQUILlAS RANCH LEASE 199129-001 26,622.79 ACRES (CALLED) ~ RETAlliED &!58..74 ~ UNIT ~ VAOUILlAS RANCH A-1 No. 191 A G -y- oi VAQUrLLAS RANCH .Q- VA~~~ r------

• SURVEY 2112 t P .B. REYNOLDS :It A-I No. 21SO VAQUIUAS (BHl) RANCH A-I No. 218 A-1 No. 216d'"'t..

(BHL) ¥ VAQUJLLAS ... ':0 ABSTRACT 2420. (SHL) RANCH

P VAOUILLAS RANCH ,., ~ SURVEY 1004 P.B. REYNOLDS A-I No. 216 -

(SHL) ~ A-1 No. 241 ~ ABSTRACT 2421 (5HL) -¢-Z VAOUILlAS WEBB COUNTY. TEXAS -¢- RANCH VAOUlllAS A-l No. 29 RANCH A-1 No. 130 VAOUlUAS RANCH h VAOUILLAS A-1 No. 212 rr. RANCH o (SHL)

A-I No. 186 VAQUILlAS -¢-

_N VAOUIU.AS RANCH ¥ RANCH A-1 No. 44 A-I No. 212 (BHl)

S 89"23'''- W ~ a.27D.aJ'

VAQUILL.AS VAQUILLAS RANCH ~ RANCH A-I No. 239 A-1 No. 187 (SHL) 1 (). VAQU1UAS V RANCH A-I No. 239

(BHLI

SURVEY 1003 J. POITEVENT ABSTRACT 1655

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EXHIBIT "A-17"

FIELD NOTES FOR CONOCOPRUJJPSCOMPANY VAQUILLAS RANCH LEASE 199129·001 RETAINED TRACT 17 (VAQUILLAS RANCH A-1 WELLS No. 15, No. 71, No. 130, ~~~~~~~m~m~~~~~~ No. 239, No. 241, & VAQUILLAS RANCH A No. 89)

635.73 ACRES

A TRACT OF LAND CONTAlNlNG 635.73 ACRES, more or less, being out of the Vaquillas Ranch Lease 199129·001,26,622.79 Acres (Called), situated in Survey 2112, P.B. Reynolds, Abstract 2420, Webb County, Texas, and being more particularly described as follows:

BEGINNING at a point which bears N 41°40'24" W. a distance of 1,866.60 feet, from the Vaquillas Ranch A·I No. 184 Well;

THENCE, N 89"20'44" E, a distance of3,399.18 FEET, to a point for the Northeast comer hereof;

THENCE, S 00°39'16" E, a distance of3,089.17 FEET, to a point for a deflection right;

THENCE, S 00°12'57" E, along an existing fence line, a distance of3,414.86 FEET, to a point for the Southeast comer hereof;

• THENCE, S 89°22'44" W, a distance 0[5,109.93 FEET. to a point for the Southwest comer hereof;

THENCE, N 00°20'48" E, a distance of3,275.75 FEET, to a point for an exterior corner hereof;

THENCE, N 89°26'27" E, a distance of 1,655.49 FEET, to a point for an interior comer hereof;

THENCE, N 00°13'32" W, a distance of3,228.56 FEET, to the POINT OF BEGINNING, containing 635.73 acres ofland, more or less.

Basis of Bearing: G.P.S., TX. South Zone, NAD·27

SHEET 1 OF2 H:\HOWLAND\SURVEYmG DEPARTMEl\i\JobsI2013\22131.18-13\22131.18-13.doc

www.howlandcompanies.com 7615 N. SarttettAvenue P.O. Box 451U8 (78045) laredo, 1)( 78041 P. 956.722.4411 F.956.722.5414 TBPE Firm Registration No. F-4097 I TBPLS Firm Registration No. 100464-00

EXHIBIT "A-17"

CONOCOPHILLIPS COMPANY VAQUIUAS RANCH LEASE 199129-001 N RETAINED TRACT 17 (VAOUIUAS RANCH A-l WEllS No. 15. No. 71. No. 130. No. 145. No. 184. No. 186. No. 187.

No. 191. No. 192. No. 193. No. 194. No. 239. No. 241. & VAQUIUAS RANCH A No. 89)

635.73 ACRES WEBB COUNTY. TEXAS

VAQUILlAS RANCH) ..,...:

.rJ VAOUlliAS -¢- A-I No. 240 I

.~ RANCH VAOUJUAS A-I No. 18 RANCH A-I No. 155 VAOUJUAS -¢- -¢-

J

SURVEY 1695 RANCH G.B. & C.N.G. R.R. CO. A-I No. 85 ABSTRACT 1268 -d~________~N~~~~·:":·-!E~-~3~~~~.1~8~· __________~ f- - - - - • - - - - - - - - - - -- ",... t VAOUILLAS " 1

V

"0. A-IRANCH No. 215 VAQUJUAS RANCH tr '<.iro;'~... 1·I VAQUILlAS RANCH or A-I No. 191 r'-I:

VAQUILlAS (SHL) A-I No. 193 \. ~ I~ VAQUILLAS ~CIlc;j o~ ...

A-l;~~215 VA~~ ~ij "("~~,~Q•.• !,~ RANCH 1:: A-I No. 241 00'"

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(BHL) A '¥' A-I No. 11

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"'tJ VAQUILlAS ~~'-'

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RANCH 1 SURVEY 1692 1 1----,"',.----4;l- A-1 No. 241 w "m"' P.B. REYNOLDS ~ , VAQUILLAS (SHL)

-¢- :. "''';~ I..... RANCH rv VAQU1LLAS RANCH 1\-1 No. 7J AB,STRACT 2419 VAOUILLAS A-I No. 184 VAQUJLlAS RANCH j VAOtJlLLAS /1-1 No. 130 RANCH RANCH A-1 No. 212 A-I No. 237 VAQUILlAS (8Hl)

z

VAQUIUAS

A

¥ VAQUILlAS RANCH '" (SHL)

VAOUILLAS RANCH A-I No. 237 ail- -¢- RANCH A-I No. 15 A-I No. 186

0

A_t~o~H198 (SHL)

o (SHL) N 89"2S'2r E ~~<~__~1~.~==.~~~· ______~ V=6~ r---' V=6~ J...-.., ,~-=.

A-I No. 187 A-I No. 212 VAQUllLAS ---""-- (8HL)

RANCH V -¢- VAOUlu.AS RANCH A-I No. 91 -¢- CONOCOPHILlIPS COMPANY A-I No. 239 (SHL) % VAOUILlAS RANCH LEASE 199129-001 .

VAOUILlAS VAQUIllAS RANCH 26,622.79 ACRES (CAllED) VA~~~~ ill -. .

RETAINED W.73 ACRE UN:T A-I No. 239 RANCH A-I No. 192 (BHL) ~ b A-I No. 195 (SHL) VAQUILLAS RANCH 1 II No. 89

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SURVEY 2112 SURVEY 1693 ~ VAQUILLAS P.B. REYNOLDS • A RANCH G.B. & C.N.G. ~ VA_I No. 194 ABSTRACT 2420 R.R. CO. 0 WEBB COUNTY. TEXAS ABSTRACT 1269:z '"

VAOUllLAS VAQUILLA5 -¢- RANCH RANCH A-I No. 71 A-I No. 90 VAQUILLAS -¢- -¢- II RANCH 1 No. 145

b- 589"22'44- W .... 5.109.93'

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VAOUILlAS RANCH SURVEY 2367 A-I No. 208 F.R. FEILLE AB~:T.~ _ _ _ ._ .. '11 .. "Ii I w_ _ • _ _ , _ _ , ='lI

GRAPHIC SCALE SURVEY 278 FRED SPEED ~~~~?~_~~~~':'~~~~'=~'~~~T ABSTRACT 2462 CIIII"EET) 1 In<~ ~ '(lOOn.

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EXHIBIT "A-18"

FlELDNOTES FOR CONOCOPmLLWSCOMPANY V AQUILLAS RANCH LEASE 199129-001 RETAINED TRACT 18 (VAQUILLAS RANCH A-I WELLS No. 11, No. 24, No. 72, No. 73, No. 106, No. 198, No. 215, & No. 237)

615.92 ACRES

A TRACT OF LAND CONTAlNlNG 615.92 ACRES, more or less, being out of the Vaquillas Ranch Lease 199129-001,26,622.79 Acres (Called), situated in Survey 1692, P.B. Reynolds, Abstract 2419, Webb County, Texas, and being more particularly described as follows:

BEGINNING at a point which bears N 77'14'2T' E, a distance of2,088.50 feet, from the Vaquillas Ranch A-I No. 215 Well;

THENCE, S 00°13'32" E, a distance of3,228.56 FEET, to a point for the Southeast comer hereof;

THENCE, S 890:26'27" W. a distance of7,026.24 FEET, to a found fence comer post for a deflection right;

THENCE, S 89'56'25" W, a distance ofl,257.95 FEET, to a point for the Southwest comer hereof;

THENCE, NORTH, a distance of3,271.85 FEET, to a point for the Northwest comer hereof;

THENCE, S 89°52'06" E, a distance of 4,950.94 FEET, to a point for a deflection left;

THENCE, N 89°20'44" E, a distance of3,320,43 FEET, to the POINT OF BEGINNING, containing 615.92 acres ofland. more or less.

Basis of Bearing: G.P.S., TX. South Zone, NAD·27

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TBPE Finn Registration No. F-4097 : TBPLS Firm Registration No. 100464-00 ~'::;.~{:

VAQUILL6.S RANCH A-I No. 18 SURVEY 1698 '. 156 VAQUILLAS SURVEY 1695 -¢- RANCH P.B. REYNOLDS (SHL)

G.B. & C.N.G. R.R. CO. A-I No. 155 ABSTRACT 2418 ABSTRACT 1268 N 7714'27· ( 2,088.50'

I S OIlll·Q;t UO Co ... 't,IIIIOU.IIII't ... 011 "'... ....,. 1:. ......""'.... .,.... [ '--- - - - - - - , J>'"'""'-'::

VAQUILLAS RANCH A-1 No. 215>'<A-_---

(BHL) V\.J----------:;;:;..-;,--- VAQUILLAS VAQUILLAS RANCH 1 RANCH A-I No. 193 SURVEY 1691 " A-I No. 215 VAQUILLAS

~il i, VAQUILL6.S G.C. & S.F. R.R. CO. CONOCOPHILLIPS COMPANY (SHL) -¢- A-IRANCH RANCH CO. ABSTRACT 1267 VAQUILLAS RANCH LEASE 199129-001 No. 11 LTD. No. 65 ~ 26,622.79 ACRES (CAllED) o (SHL)

~I! RET~ED 61S.92 ~ UrtT SURVEY 1692 P.B. REYNOLDS VAQUILLAS A RANCH V VAQUILLAS A-l No. 184 i)- RANCH CO.

·"1 ABSTRACT 2419 '" ~I""I VAQUILLAS .r'-f

~ LTD. No. 35 RANCH V WEBB COUNTY, TEXAS §z VAQUIUAS RANCH A-I No. 73 VAQUILl.AS RANCH § VAQUILLAS A A-l No. 106 A-I No. 237 ., .II"

RANCH CO.V (BHL) VAQUILLAS VAQUILLAS (BHL) VAQUILLAS LTD. No. 22 VAOUILlAS RANCH -¢-

VAQUILLAS RANCH A RANCH RANCH A-I No. 237 cP- -¢- RANCH A-l No. lS

.II"

LTD. No. 68 A-I No. 72 A-I No. 24 -y- VAQUILlAS A-I No 198 VAQUILLAS (SHL) -¢- O RANCH (BHL) RANCH (SHL)

F"an<:a Poot ' A-L No. 106 f-t. 0 A-I No 198 (SHL) V (SHL)

s

1.257.~' -¢- VAQUILlAS • SURVEY 1678 RANCH I

ABSTRACT 2495 A-I No. 911 -¢-

VAQUILLAS RANCH A-I No. 192

1

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VAQUILLAS VAQUILlAS SURVEY 2112 GRAPHIC SCALE RANCH RANCH A VAQUILLAS P .B. REYNOLDS A-I No. 92 A-I No. 195 V 0 RANCH ABSTRACT 2420 VAOUfLLAS '~B; ..:-.-~ (!If ..... I , ,... h ..

'j ,ooon.

""I It -¢- (BHL) A-I No. 19S (SHL)

-¢- RANCH A No. 89

EXHIBIT "A-18" CONOCOPHILLIPS COMPANY VAQUIUAS RANCH L£ASE 199129-001 ~ RETAINED TRACT 18 (VAQUIUAS RANCH A-1 WEUS No. 11, No. 24, No. 72, No. 73.

No, 106, No, 198. No. 215, '" No. 237)

615.92 ACRES WEBB COUNtY, TEXAS

HOWLAND ENGINEERING AND SURVEYING CD.

EXHIBIT "A-19"

FlELDNOTES FOR CONOCOPmLLWSCOMPANY V AQUILLAS RANCH LEASE 199129-001 RETAlNED TRACT 19 (VAQUILLAS RANCH A-I WELLS No. 25, No. 90, No. 91, No. 92, No. 132, No. 143, No. 195 No. 208, & No. 238)

640.00 ACRES

A TRACT OF LAND CONTAINING 640.00 ACRES, more or less, being out of the V.quillas Ranch Lease 199129·001,26,622.79 Acres (Called), situated in Survey 1693, G.B. & C.N.G. R.R. CO., Abstract 1269, Webb County, Texas, and being more particularly described as follows:

BEGINNING at a point which bears N 24°31 '42" W, a distance of 1,631.39 feet, from the Vaquillas Ranch A·I No. 92 Well;

THENCE, N 89026'27" E, a distance of5,370.75 FEET, to a point for the Northeast comer hereof;

THENCE, S 00020'48" W, a distance of3,275.75 FEET. to a point for a deflection right;

THENCE, S 00°41'52" W, a distance of 862.52 FEET, to a point for a deflection-left;

THENCE, S 00021'12" E, a distance of 1,087.58 FEET, to a point for the Southeast corner hereof;

THENCE, S 89'28'19" W, a distance of 5,311.17 FEET, to a point for the Southwest comer hereof;

THENCE, N 00"23'39" W, a distance of 5,222.38 FEET, to the POINT OF BEGINNING and containing 640.00 acres of land, more or less.

Basis of Bearing: G.P.S., TX. South Zone, NAD-27

SHEET 1 OF2 H:\HOWLAND\SUR VI:."YING DEPARTMEN"NobsU013\22 131.21-13\22131.21-I3.doc

www.howlandcompanies.com 7615 N. Bartlett Avenue P.O. Box 451128 (78045) i Laredo, 1X7B041 P. 956.722.4411 F.956.722.5414 TBPE Rrm Registration No. F-4097 TBPLS Arm Registration No. 100464-00

CONOCOPHllLiPS COMPANY VAQUlllAS RANCH lEASE 199129-001 N RETAINED TRACT 19 (VAQUlllAS RANCH A-1 WElLS No. 25, No. 90, No. 91, No. 92, No. 132, No. 143, No. 195 No. 208, '" No. 238)

640.00 ACRES

il A

V

VAQUIUAS RANCH A-I No. 11

"I I" XI SURVEY 1892

I "I !B~T:::J:~Ift~ VAQUILLAS RANCH -¢-A:~~~:3 VAQUlllAS RANCH "I >< A-L No. 106 A-I No. 237 VAQUlllAS (BHL) (BHL)

II

RANCH >'<. VAQUIWIS ""'-

>< -¢- A-I No. 24 V RANCH LIT'

1"-<: VAQUILlAS >< VA~~6~ A-I No. 198 VA~~6~ VAQUILlAS V RANCH 106 (BHL) A-1 No. 198 RANCH A-I No. 72 >< -¢- 0 (SHL) A-I No. 237 ~._....__ ....

.~~_"':::;;::::::::::'...!!N~"'~2:!.'~2J":'~E:,~:..!~~~:"' _:''::~'::~ ",,''Y-- __ (_5H_L)__ _ ....

-¢- VAqUIUAS RANCH A-I No. 91 -¢-

VAQUIUAS VAOUILLAS RANCH VAQUILlAS RANCH A-I No. 192 RANCH A A-I No. 195

92

A-I No. 195 (BHl)

¥o (SHL)

(I)

...., VAOU!LlAS J?c... VAQUILLAS RANCH ' U RANCH VAQUIUAS -¢-

VAQUlllAS RANCH A-I No. 194 ~., A-I No. 238 A-I No. 238 0: (BHL) (SHL)

-¢- RANCH ~

on , "

A-I No. 25 SURVEY 2112 "'~'" r- " ~C.?N • 1 CONOCOPHllLlPS COMPANY VAQU1LlAS RANCH LEASE 199129-001 VAQUllLAS RANCH P.B. REYNOLDS ABSTRACT 2420 "' ....

i !~I 26,622.79 ACRES (CALlEO) A-I No. 90 ~~~ RETAINED &40.00 ACRE UNIT -¢- ~B~ "

-¢- -------¢-

"'~~ z VAQUllLAS

,." I~ RANCH A-I No. 208 SURVEY 2367 F.R. FEILLE ABSTRACT 3333

II

"

SURVEY 1693 G.B. & C.N.G. R.H. CO.

ABSTRACT 1269 I WEBB COUNTY, TEXAS

I ..-'"-<: VAQUILlAS ¥ RANCH A-I No. 1.32

SURVEY 276 5 FRED SPEED ABSTRACT 2462

I

"

I

"

SURVEY 1694 FRED SPEED I ABSTRACT 2461

( IN FlIT )

EXHIBIT "A-20"

FIELD NOTES FOR CONOCOPHILLIPS COMPANY VAQUILLAS RANCH LEASE 199129-001 RETAINED TRACT 20 (VAQUILLAS RANCH E WELLS No. 31, No. 70, No. 82, No. 209, & No. 210 S'I")

502.31 ACRES

A TRACT OF LAND CONTAINING 502.31 ACRES, more or less, being out ofthe Vaquillas Ranch Lease 199129-001,26,622.79 Acres (Called), situated in Survey 277, G.C. & S.F. R.R. CO., Abstract 1337, Webb County, Texas, and being more particularly described as follows:

BEGlNNlNG at a point which bears N 66"41 '22" W, a distance ofl,659.92 feet, from the Vaquillas Ranch E No. 31 Well;

THENCE, N 88°50'37" E. a distance of 10,425.89 FEET. to a found concrete monument under an existing fence line, for the Northeast comer hereof;

THENCE, S 00°36'47" E, along an existing fence line, a distance of 686.92 FEET, to a point for an exterior comer hereof;

THENCE, S 89°31'31" W. a distance of 5,280.30 FEET. to a point for an interior corner hereof;

THENCE, S OO~8'29" E. a distance of2,992.64 FEET. to a point for an exterior comer hereof;

THENCE, S 89°49'01" W. a distance of 5,164.33 FEET. to a point for the Southwest corner hereof;

THENCE, N 00°11 '12" W, a distance of 3,529.26 FEET, to the POlNT OF BEGINNING. containing 502.31 acres of land. more or less.

Basis of Bearing; G.P.S., TX. South Zone, NAD-27

SHEET 1 OF2 H:IHOWLAND\SURVEYrNG DEP ARTMENT\Jobs\20 13\21131.22-13\22\31.22-13.doc

www.howlandcompanies.com 7615 N. Bartlett Avenue I P.O. Box 451128 (78045) : Laredo. TX 78041 P. 956.722.4411 J F.956.722.5414 TaPE Firm Registration No. F-4097 ! TBPLS Firm Registration No. 100464-00

SURVEY 278 FRED SPEED ABSTRACT 2482

____________-.____________________________ ______________________________________ '"

~ ~ ~N~8<~~:·sr~~E:-~'~O~.'~~~B9~·------ -y~.

:t~ VAQUILLAS :I! iii'

VAQUILLAS RANCH Is RANCH -¢-E No. 209 (Il

AE No. 210 ST o V ('HL)

- ~- ....... W ... ~.280.JO·

E No. 31 VAQUILtAS RANCH E No. 210 ST SURVEY 1694 FRED SPEED ABSTRACT 2461 ., SURVEY 277 G.C. & S.F. R.R. CO.

ABSTRACT 1337 (SHL)

-¢- VAQUILLAS RANCH E No. 70 I~5

N

WEBB COUNTY. TEXAS ~ '"

§ ~ CONOCOPHllLIPS COMPANY VAQUILlAS RANCH LEASE 199129-001 SURVEY 32 z 26,622.79 ACRES (CALLED)

RETNNED 502.31 ACRE UNIT A VAQUlLlAS I Is C.R. DAVIS ABSTRACT 2582 ¥ RANCH E No. 82

S 89"-49'01· W ... 5,164.33'

SURVEY 275 G.C. & S.F. R.R. CO.

GRAPHIC SCALE ABSTRACT 1336 .J i.-.-.-. "I !!oOO _. . . .

l!oO ~oo

( JI fEET)

' 1000 2000 I VAQUILLAS RANCH 1 .... h _ 1000", A No. 19

EXHIBIT "A-20"

CONOCOPHILLIPS COMPANY UNIT UH£ - - , - - '" rENCr UHr VAQUILlAS RANCH LEASE 199129-001 - RETAINED lRACT 20 - - - - - - - '" TI[s (VAQUILlAS RANCH E WELLS No. 31. No. 70.

No. 82. No. 209. & No. 210 Sf)

502.31 ACRES WEBB COUNTY, TEXAS

ENGINEERING AND SURVEYING CO.

EXHIBIT "A-21"

FIELD NOTES FOR CONOCOPHllL~SCOMPANY V AQUILLAS RANCH LEASE 199129-001 RETAlNED TRACT 21 (VAQUILLAS RANCH A-7 WELL No. 249)

608.05 ACRES

A TRACT OF LAND CONTAlNlNG 648.05 ACRES. more or less. being out of the Vaquillas Ranch Lease 199129-001,26,622.79 Acres (Called), situated in Survey 259, C.C.S.D. & R.GN.G. & R.R. CO., Abslract 1137, Webb County, Texas, and being more particularly described as follows:

BEGINNING at a point which bears N 39°24'54" W, a dislance of 1,866.66 feet, from the Vaquillas Ranch A·7 No. 249 Well;

THENCE, N 88°53'51" E, a dislance of5,385.00 FEET, to a point for the Northeast comer berof;

THENCE, S 00°35'40" E, a distance of 5,280.00 FEET, to a point for the Southeast comer hereof;

THENCE, S 89°32'20" W. a distance 0[5,369.40 FEET, to a point for the Southwest comer hereof;

THENCE, N 00°45'49" W, a dislance of 5,219.79 FEET, to the POINT OF BEGINNING and containing 648.05 acres of land, more or less.

LESS AND EXCEPT 40.00 ACRES, described as follows:

BEGINNING at a point which bears S 52°35'23" E, a dislance of 1,871.58 feet, from the Vaquillas Ranch A-7 No. 249 Well;

THENCE, N 89°32'20" E, a distance ofl,320.00 FEET, to a point for the Northeast corner hereof;

THENCE, S 00<>27'40" E, a distance 0[1,320.00 FEET, to a point for the Southeast comer hereof;

THENCE, S 89°32'20" W, a distance 0[1,320.00 FEET, to a point for the Southwest corner hereof;

THENCE, N 00°27'40" W, a dislance of 1,320.00 FEET, to the POINT OF BEGINNING, containing 40.00 acres of land, more or less.

Basis of Bearing: G.P.S., TX. South Zone, NAD-27

SHEET! OF2 H:\HOWLAND\SURVEYING DEPARTMENT\JobsUO\3\2213\.2l-\3\22\31.2)·13.doc

www.howlandcompanies.com 7615 N. Bartlett Avenue : P.O. Box 451128 (78045) ; lan:do, lX 78041 P. 956.722.4411 F.956.722.5414 TBPE FJrm Reg15tration No. F-4097 , T8PL5 Firm Registration No. 100464-00

EXHIBIT "A-21"

CONOCOPHILLIPS COMPANY VAQUILlAS RANCH LEASE 199129-001 RETAINED TRACT 21 (VAQUILlAS RANCH A-7 WEll. No. 249)

608.05 ACRES WEBB COUNTY, TEXAS

SURVEY 36 ~, C.R. DAVIS ABSTRACT 2581 , I SURVEY 35 C.C.S.D. & R.G.N.G. R.R. CO.

ABSTRACT 1036

I

I SURVEY 18

I C.C.S.D. & R.G.N.G. R.N. CO. I ABSTRACT 2727 ,

SURVEY 259 C.C.S.D. & SURVEY 264 R.G.N.G. R.R. CO. G.C. & ABSTRACT 1137 S.F. R.R. CO.

WEBB COUNTY. TEXAS ABSTRACT 3302

, ~ ... ... ~~ l£SS .. EXCEI'T 40.00 H:RES ~8 \:;0 ~~ l!~ z .

S 89'3220 W 1,320.00'

CONQCOPHILLIPS COMPANY VAQUJLlAS RANCH LEASE 199129-001 26.622.79 ACRES (CAlLED) RETNNED 608.05 M;R£ lNf

- - - - - - --{-----------::;S..,""W32;:;::·20;n-·;W,-:_:"<5.3 W '.;-."':;;:-.-----------t-- ------

0", ,, '" u ....

~:d~~ NORTH HALF SURVEY 34 >-oAt:t:E-< C.C.S.D. & R.G.N.G. R.R. CO. I, . u [;'~00l ~ L! 'Eo< ABSTRACT 2816 , :>uZi{f} "' "Ol ",""

I, GRAPHIC SCALE ,

I

( 1M Ir>e~ rro ) _ lD01Jf\.

T I,, LEGEND Rnlslon , Do'.

HOW~L~~tQ)ENGINEERING AND SURVEYlNG CO.

0

-¢-

" HORIZONTAl WHl SUAr... CC l.OC.I.nOH Will , 04-12-13 05-17-13 lIIPEFhnIl8gklrollan ...... f..4aI1 ltIPLSFmIlogialldcnNo.IOO4&I-(I()

1'I115N._ ...-... UncII>.1X.11IO<1 P.9:!6.172Mll , UtlIT UHC fUlCi: ~E , J 06 06 13 -

www.howlandcompanles.com

WARNING: IlIoS1S Of BEARING: C,PS. T~. South Csntrnl Zeme, NAD.-27.

.. - .n SURVEY lINE 08 14-13

OAAWN BY: ALC./LAF. CHECKED BY: J.S. JOB No. 22131.2J-1J SHEET: 2 OF 2

HOWLAI~D ENGINEERING AND SURVEYING CO.

EXHIBIT"A-22"

FIELD NOTES FOR CONOCOPHDUWPSCOMPANY V AQUILLAS RANCH LEASE 199129-001 RETAlNED TRACT 22 (VAQUILLAS RANCH A WELLS No. 14, No. 19, No. 20, & VAQUILLAS RANCH B No. 13)

612.33 ACRES

A TRACT OF LAND CONTAINlNG 612.33 ACRES, more or less, being out ofthe Vaquillas Ranch Lease 199129·001,26,622.79 Acres (Cailed), situated in Survey 275, G.C. & S.F. R.R. CO., Abstract 1336, Webb County, Texas, and being more particularly described as follows:

BEGINNING ata point which bears N 46°23'57" W, a distance of936.17 feet, from the Vaquillas Ranch A No. 14 Well;

THENCE, N 89°49'01" E, a distance of5,164.33 FEET, to a point for the Northeast comer hereof;

THENCE, S 00°30'14" E, a distance of5,150.08 FEET, to a point for the Southeast comer hereof;

THENCE, S 89°49'01" W. a distance of5,194.07 FEET, to a point for the Southwest comer hereof;

THENCE, N 00°10'23" W, a distance of 5,150.00 FEET, to the POINT OF BEGINNING. containing 612.33 acres of land, more or less.

Basis of Bearing: G.P.s., TIC South Zone, NAD·27

SHEET 1 OF2 H;U:l.QWLAND\SURVEYrnG DEPARl'MEN"NobsUOI3\22\ J L24-13\22lll.24-I3.doc

www.howlandcompanies.com 7615 N. Bartlett Avenue i P.O. Box 451128 (78045) i Laredo, l'X 78041 P. 956.722.4411 F. 956.722.5414 TBPE Firm Registration No. F-4097 J TBPLS Firm Registration No. 100464-00

EXHIBIT "A-22" CONOCOPHILLIPS COMPANY VAQUILLAS RANCH LEASE 199129-001 N RETAINED TRACT 22 (VAQUILLAS RANCH A WEllS No. 14. No. 19. No. 20. &: VAQUILLAS RANCH B No. 13)

612.33 ACRES WEBB COUNlY. TEXAS

..... VAQUJUAS V RANCH • E No. 70

SURVEY 277

I G.C. & S.F. R.R. CO.

ABSTRACT 1337

I V .r·C VAQUILlAS RANCH

i f.pafJft ~ E No. 82

______ If !,""""""G

VAQUILLAS RANCH A No. 19

~:i CONOCOPHllLlPS COMPANY VAQUlllAS RANCH LEASE 199129-001 ~ <o~:g '" , 26,622.79 ACRES (CALLED) :i i------

fuON RETAINED 812..33 ACRE UNIT ,..:'1 ..

'"

..

~ ~"'U It 13 ..,.n! ~ rt.l0~

0

,.~ SURVEY 275 G.C. & S.F. R.R. CO.

~ ABSTRACT 1336 '"

WEBB COUNTY, TEXAS

o

u

-¢-

VAQUILLAS RANCH A No. 20 VAQUILLAS RANCH 8 No. 13 Ii~ ~ei8 '"

>-ze-o ~ei~ ------ S 89"49'01· W ... ~.194.07'

"",,,,,,,... """ 0:

Q';l rn

u

u

SURVEY 274 G.T. BLACK ABSTRACT 2551

GRAPHIC SCALE

(IN m:r)

'i r 1 Inch ~ .DODFl.

HOWLAND ENGINEERING AND SURVEYING CO.

EXHIBIT" A-23"

FIELD NOTES FOR CONOCOPmL~COMFANY V AQUllLAS RANCH LEASE 199129-001 RETAlNED TRACT 23 (VAQUILLAS RANCH A WELLS No. 27, No. 36, No. 146, No. 149, & No. 158)

639.04 ACRES

A TRACT OF LAND CONTAINING 639.04 ACRES, more or less, being out ofthe Vaquillas Ranch Lease 199129-001,26,622.79 Acres (Called), situated in Survey 276, G.T. Black, Abstract 2552, Webb County. Texas, and being more particularly described as follows:

BEGINNING at a found iron rod on the West right-of-way line of Ranch Road 2895, which bears N 52°54'37" W, a distance of 838.32 feet, from the Vaquillas Ranch A No. 36 Well;

THENCE, N 89°34'02" E, along as existing fence line, a distance of5,282.71 FEET, to a found concrete monument, for the Northeast comer hereof;

THENCE, S 00°10'23" E, a distance of 5,279.75 FEET, to a point for the Southeast corner hereof;

THENCE, S 89°33'08" W, a distance of 5,260.79 FEET, to a found 2" pipe. for the Southwest comer hereofj

THENCE, N 00024'40" W, a distance of 5,281.06 FEET, to the POINT OF BEGINNING. containing 639.04 acres efland, more or less.

Basis of Bearing : G.P.S., TX. South Zone, NAD-27

SHEET 1 OF2 H:\HOWLAND\SURVEYING DEPARTMENl\JobsUO \3\22 BI.25-13\22131.ZS·13.doc

www.howlandcompanies.com 7615 N. Bartlett Avenue P.O. Box 45112B (7B045) J Laredo, TX 78041 P. 956.722.4411 F.956.722.5414 TBPE FIrm Registration No. F--4097 ! TBPL5 Firm Registration No. 100464000

CONOCOPHILLIPS COMPANY VAQUILLAS RANCH LEASE 199129-001 ~ RETAINED TRACT 23 (VAOUILLAS RANCH A WELLS No. 27. No. 36.

No. 146. No. 149. ole No. 158)

639.04 ACRES

·I !

~ • .Ii

·I ~

I~ SURVEY 1694 F. SPEED ABSTRACT 2461

Found

I

I j .. _--- ~~-.-----'::'':::'::;:;':::'''':'~::::':'''-----+- --- --

N 52'54'37"

838.32' 1-+-;;;.;;-.:0- VAQUILLAS RANCH A No. 36 VAOUILlAS RANCH -¢-

A No. 27 VAQUIUAS • RANCH

·II A No. 14

VAQUILLAS

-¢- A ~~C~49 ·I '.," ·I CONOCOPH1LLIPS COMPANY VAQUllLAS RANCH LEASE 199129-001 ~

0

'" ~ ·I -¢-

VAQUILtAS 26,622.79 ACRES (CAUEO) RETAINED 839.04 ACRE UtIT ... .

'" "'''

U'" .., N!i ......

O~~ RANCH ~.:t;

'"< .... ~OC\J ·I A No. 158 SURVEY 276 j:l

0

~ ",.;0'1 ",,,,!;;

>-~t; ~E~ z ·I G.T. BLACK ABSTRACT 2552 WEBB COUNTY. TEXAS VAQUILlAS U> en u.!:l ci en~!:l

Z

·I RANCH A No. 146 (8HL) -¢-

",.. ·I I VAQUllLAS VAQUJLlAS RANCH A No. 20

I RANCH A No. 14S0 (SHL)

.

------ ~+-------:-=~~::-::::--------f-- -- -- 5 W ... 5.2.60.79'

VAQUILlAS -¢- RANCH

·I No. 174

SURVEY 226 I, G.T. BLACK ABSTRACT 2550 GRAPHIC SCALE :500 9 ~ ~ 1000 2000 ,"_-,.wi;;;..,jwwwi I I ( tI rn;r )

~ BASIS 0, SEARING: G.P.S. Tx. SDUth Control Zon .. , NAD.-27. nus PlAT w.y NOT SKlW 1U CRCISSJjCS or PI'El.JNES 011 CAil.£S. HOIIItNIO EllWiElJaNC NO SUIM'I'IIG co.. INC, ASSIJII£S NO /!ES?OI'ISI!JUfY 1'0 lOCATE PPEI..II£ Of! coa.£ CROSSIH'lS. ~~~~~~~~~CJJ~a:--°!l ~ IICN\JKI ~ NO SUIM'rNl co.. tIC. 2Q1JC

HO "'~ IfiJ., ffi1),~wr.~1 . '• •J[.~~~[l):b,Jt co.

ENGINEERING AND SURVEYING

EXHIBIT"A-24"

FIELD NOTES FOR CONOCOPmLUWSCOMPANY VAQUILLAS RANCH LEASE 199129-001 RETAINED TRACT 24 (VAQUILLAS RANCH WELLS No. 16, No. 164, No. 174, AND VAQUILLAS RANCH A WELLS No. 111, No. 116, & No. 125)

633.38 ACRES

A TRACT OF LAND CONTAINING 633.38 ACRES, more or less, being out of the Vaquillas Ranch Lease 199129-001,26,622.79 Acres (Called), situated in Survey 228, G.T. Black, Abstract 2550, Webb Couoty, Texas, and being more particularly described as follows:

BEGINNING at a found 2" pipe on the West right-of-way line of Ranch Road 2895, which bears N 73"18'04" W, a distance of2,034.65 feet, from the Vaquillas Ranch No. 174 Well;

THENCE, N 89033'08" E, a distance 0[5,260.79 FEET, to a point for the Northeast corner hereof;

THENCE, S 00°10'58" E, a distance of 5,254.72 FEET, to a point for the Southeast corner hereof;

THENCE, S 89032'59" W, a distance of 5,240.13 FEET, to a point under an existing fence on the West right-of-way line of said Ranch Road 2895, for the Southwest comer hereof;

THENCE, N 00°24'29" W, a distance of 5,254.89 FEET, to the POINT OF BEGINNING, containing 633.38 acres ofland, more or less.

Basis of Bearing: G.P.S., TIC South Zone, NAD·27

,. !; X1., j;;': ;,ii·~ ~:~1 h~l /.. .~; "

SHEET 1 OF2 H:\HOWLANDl.SURVEYlNQ DEPARTMEt-rNobsU013\22131.26-13\22131.l6-13.doc

www.howlandcompanies.com 7615 N. Bartlett Avenue P.O. Box 451128 (78045) . laredo, TX 78041 P. 956.722.4411 I F. 956.722.5414 TBPE Firm Registration No. F·4097 ; TBPLS FIrm Registration No. 100464-00

CONOCOPHILLIPS COMPANY VAQUILLAS RANCH L£ASE 199129-001 N RETAINED TRACT 24 (VAQUILLAS RANCH WEllS No. 16. No. 164. No. 174. AlND VAQUILLAS RANCH A WELLS No. 111. No. 116. '" No. 125)

633.36 ACRES

ej o~~ "'<'" ~ClCIJ SURVEY 276 G.T. BLACK "'''' ~~(J ABSTRACT 2552 "'O~ ::>-u> VAQUILlAS -¢- A RANCH rt.l~~ VAQUILl.AS No. 20

~ ______-{!010:-_______...:;N"...

:;;.:..

'" RANCH :;:·.;;08:.·..:E'-'-N..::=:..:..________-ir - - -

VA No. 146 --

VAQUIu.AS RANCH No. 174

SURVEY 274 G.T. BLACK SURVEY 228 ABSTRACT 2551 G.T. BLACK

o

(J ABSTRACT 2550 VAQUllLAS _no WEBB COUNTY, TEXAS

-~g '"

'".~ RANCH V No. 164

"'''~ ~~t CONOCOPHILLIPS COMPANY VAQUJUAS RANCH LEASE 199129-001

"''''~ 26,622.79 ACRES (CALLED)

::>",u> RETAtiED 8J3.J8 N:R£ UNrr "' . ':!

'"

U

rIi VAQUILL.AS -¢-

VAQUIll.AS RANCH ..

U Ii -¢- ""'NCH A No. 116 A No. 125

-~

I

I"'f VAQUILLAS A VAQUILLAS V RANCH V RANCH No. 16 A No. 111

--- - - ---rt.l-------:::-:::::::::::-:::--:-:=-------1 s W ... 15,240.13'

VAQUILlAS -¢-

'II - RANCH No. 10

,I SURVEY 227 C.C.S.D. & R.G.N.G. RR CO. VAQUILlAS~ RANCH

i1i ~ ABSTRACT 1133 No. 12 T

GRAPHIC SCALE

i\O-.____ Uf, soo ?_~ soo

( .HUT)

T

1 1'><>1 ~ l000fl.

= HORIZONTAl. WELL SURFACE l.OCATlOH wru UNIT LDlE - ,- m«:£ UNE ------- T1£S _ •• _ SURVEY UH[

~ BASIS OF BEARING, G.P.S. Tx. South Zoo", NAD.-27. llG PLAT I&I.Y toOT S>!OW IoU. CROSSINGS or I'!I'(U;£5 011 CIBlES. I/OWlNID EHGNDlIIG NID SU~ co~ IHC. ASSIJIoIES NO ~ 10 l.OCATE WatfE 011 coa.E CROSSINGS. ~~~~~~O)~:~ rn: OWHEIISHP OR CIJP'rI'IICHT ItOIII\NIO o.'CIH[ERIIIGAlCl ~ O)~ INC. 20IlC

142

, UlI[Li1j'\~\D[5) HO 'WWA~~~tliJ'''''LlW ~1Lz---'

ENGINEERING AND SURVEYING CO.

EXHIBIT "A-25"

FIELD NOTES FOR CONOCOPHILLIPS COMPANY VAQUILLAS RANCH LEASE 199129-001 RETAINED TRACT 25 (VAQUILLAS RANCH WELLS No. 10, No. 11, No. 12, VAQUILLAS RANCH A No. 80, & No. 99)

640.00 ACRES

A TRACT OF LAND CONTAlNlNG 640.00 ACRES, more or less, being out of the V.quillas Ranch Lease 199129-001,26,622.79 Acres (Called), situated in Survey 227, C.C.S.D. & R.G.N.G. R.R. CO., Absttact 1133; and Survey 273, C.C.S.D. & R.G.N.G. R.R. C.O., Abstract 1141, Webb County. Texas, and being more particularly described as follows:

BEGlNNlNG at a point which bears N 33'34'02" E, • distance of 1,360.57 feet, from the Vaquillas Ranch No. 12 Well;

THENCE, S 00D26'16" E, a distance of 4,991.78 FEET, to a point for the Southeast comer hereof;

THENCE, S 89°36'57" W. a distance of332.74 FEET, to a point for a deflection left;

THENCE, S 89°36'41" W, a distance of 5,270.89 FEET, to a point for the Southwest comer hereof;

THENCE, N 00°05'03" W, a distance of 4,985.84 FEET, to a point for the Northwest corner hereof;

THENCE, N 89'32'59" E, a distance of 5,572.87 FEET. to the POINT OF BEGINNING and containing 640.00 acres afland. more or less.

Basis of Bearing: G.P.S., TX. South Zone, NAD·27

SHEET 1 OF2 H;\HOWLAND\sURVEYJNG DEPARTMENT\JobsUO 13\22131.27-13\22131.27-13.1101:

www.howlandcompanies.com 7615 N. SartiettAvenue : P.O. 80)(451128 (78045) , Laredo, TX78041 P. 956.722.4411 J F.956.n2.5414 TBPE Finn Registration No. F-4097 : TBPLS Finn Registration No. 100464-00

IBIT "A-25"

CONOCOPHILLiPS COMPANY VAQUILLAS RANCH LEASE 199129-001 ~ RETAINED TRACT 25 (VAQUILLAS RANCH WELLS No. 10. No. 11. No. 12.

VAQUILLAS RANCH A No. 80. & No. 99)

640.00 ACRES

a C) -¢- Pi VAQUllLAS VAQUILLAS RANCH .-\~~ SURVEY 226 foe RANCH A No. 125 .0 . ~ G.T. BLACK V A No. 116 <D,,~ ABSTRACT 2550 ~:Z;t; ~~O'i g;"'E-o en"~ n VAOUILlAS I SURVEY 274 "oj C)

,...... VAQUILtAS V RANCH V RANCH • A No. 111 G.T. BLACK ABSTRACT 2551 No. 16 ti

H

VAQUILlAS " -¢- RANCH

.0

I

"

No. 10

"'",.0 ffi~~ I CONQCOPHILLIPS COMPANY No. 12

ii ~ VAQUlllAS RANCH LEASE 199129-001 .. ~t; 26,622.79 ACRES (CAlLED) ~",O'i RET~ED &40.00 N:1£ UNIT g; . b; "1 I", en"'"

'" J,., Iol! " ~ VAQUILtAS -¢- RANCH No. 11

~:g i" -¢-

SURVEY 227 C.C.S.D. & R.G.N.G. R.R. CO.

ABSTRACT 1133 !3

I

YAQUILlAS WEBB COUNTY. TEXAS z RANCH VAQutLlAS A No, 99 -¢- RANCH A No. 80

I

I

"

I

------ 5 89'36'41· W ... :5,270,.89'

w

" VAQUILLAS

I

"

-¢- RANCH No. 18 -¢-

VAQUILLAS RANCH No. 15 (8HL)

I

" OVA~~~ VAQUILLAS

I

"

No. 15 (SHL)

~ RANCH A No. 2J1

I

SURVEY 967 J. POITEVENT I SURVEY 966 I ABSTRACT 2061 GRAPHIC SCALE ~~~ J.H. FULLER py.;;---- 500

( IN ro:r )

: iO'X!

T ABSTRACT 2593

I In</! _ looon

UNIT UHt -,- n:/tCE; UNE ------- nrs - •• - S\lR'V£Y UHE ~ BASIS OF BE'ARlNG: G.P.s. Tx. South Zone. NAO.-27.

HOWi~~~[x)

ENGINEERING AND SURVEYING CO.

EXHIBIT"A-26"

FIELD NOTES FOR CONOCOPHILLIPS COMPANY VAQUllLAS RANCH LEASE 199129-001 RETAiNED TRACT 26 (VAQUllLAS RANCH WELLS No. 15, No. 18, No. 154, No. 177, No. 182, AND VAQillLLAS RANCH A No. 175, & No. 231)

635.36 ACRES

A TRACT OF LAND CONTAINING 635.36 ACRES, more or less, being out of the Vaquillas Ranch Lease 199129-001,26,622.79 Acres (Called), situated in Survey 988, J.H. Fuller, Abstract 2593, Webb County. Texas, and being more particularly described as follows:

BEGlNNING at a point which bears N 59'15'10" W, a distance of907.68 feet, from the Vaquillas Ranch No. 18 Well;

THENCE, N 89°36'41" E, a distance of 5,270.89 FEET. to a point for the Northeast comer hereof;

THENCE, S 00'06'58" E, a distance of 5,240.20 FEET, to a point for the Southeast comer hereof;

THENCE, S 89°23'40" W. a distance of5,272.32 FEET, to a point for the Southwest comer hereof;

THENCE, N 00'06'07" W, a distance of 5,260.16 FEET, to the POINT OF BEGINNING, containing 635.36 acres of land, more or less.

Basis of Bearing: G.P.S., TX. South Zone, NAD-27

SHEET 1 OF2 H:\HOWLAND\sURVEYING DEP ARTMENl\JobstlO 13\22131 28-13\221lI.2g..13.doc

www.howlandcompanies.com 7615 N. Bartlett Avenue ; P.O. Box 451128 (78045) : Laredo, TX 78041 P. 956.722.4411 F.956.722.5414 TSPE FIrm Registration No. F-4097 ; TBPL5 FIrm RegistratIon No. 100464-00

EXHIBIT "A-26" CONOCOPHILLIPS COMPANY VAQUILlAS RANCH LEASE 199129-001 N RETAINED TRACT 26 (VAQUILlAS RANCH WELLS No. 15. No. 18. No. 154. No. 177.

No. 182. AND VAQUILlAS RANCH A No. 175. ole No. 231)

635.36 ACRES WEBB COUNlY, TEXAS

~ !, J! ~ "

VAOUILlAS RANCH -¢-

VAOUILI.,AS RANCH A No. 99

I

~ tI A No. 80

SURVEY 227 C.C.S.D. & R.G.N.G. R.R. co.

ABSTRACT 1133 I N 59"15'10· W ___

I-- - - - i / 07.61,1.'

N 1S9"J8'41· E - S,270.e9'

- -:::..j.,:/-I-....----....::....:::=:....:....:.;.;:::::::::..------:7""'"1"'" - - -

... ---,,--- ..

--

1"'( to _,-' rtI---::~VAaUJLlAS ><.

>< 779 RANCH

No. 18 -¢-VAQUlllAS . RANCH No. 15 (BHL)

__ '1---"

"I OVA~~~S VAQUJllAS -¢-RANCH A i No. 15 (SHL)

SURVEY 986 No. 231

" J.H. FUILER ABSTRACT 2593

I WEBB COUNTY. TEXAS

I _'~NO'

A

VAQUILlAS RANCH .~.

VAQUILlAS RANCH A "

_,,-"

__ " 182

"1----

'1---- ;.\ ../\ V No. 175

z

CONOCOPH1LLIPS COMPANY VAQUILLAS RANCH LEASE 199129-001 26,622.79 ACRES (CALLED)

" \ ..

,.., VAQUILlAS RANCH REl'AliED 835.3e ACRE UNIT "\ V No. 154 "\

I

><

V

,. , VAOUllLAS'\ RANCH No. 177 \

_____ )U"

-, f-------:=~~:_:::_ 5 89"23'40"' W ... .5,272.32.'

......... \---r- ~~

,, I, ",co , 0'-''''

coo",

:~:"

SURVEY 229 C.C.S.D. & R.G.N.G. R.R. CO.

I,, [;'

'::>" • en~ ABSTRACT 1132 GRAPIDC SCALE

T en~':'l

I

{ IN f'!:rT ""'~

l

_ lOOCn.

I, l.£CENO Rlvblon , Dol.

HOWlANtldENGINEERING AND SURVEYING CO. llIPEFmRoglon _ _ ~l TlII'LSFm~ND.'1XM64-O:J

o

-¢-

.. IIORIZONTAl. WELL SURFACt LOCATION wru UNIT UNt 0"-11-13

FENCE UN£:

7815N._II_ t.ot.lo.TX.7IIO'1 P.Il:ie.T.l2.Mll w...w.howlandcompanles.com .'"

SURV£Y UN!

WARNING: BASIS OF" BEAAlNG: G.P.s. Tx. South Central Zone. NAD.-27. 1}G PUJ lIAr NOT SHOW JU alOSStfCS Of' PIPElJNE5 00 c.oaJ:li. HO\II'lHiO ENCl1NCERING FIElD DATE BOOK PAGE, DRAWN BY: L.A.!=". NlD ~ co~ tIC. IISS1.IoCi NO RESI'ONSIIlUIY TIl UlCA.T£ PP£UNE 00 CAIJ.£ C!OSSINCS. NO Cl.AAI IS 1I0!E8't' II,IoOC _DING ClRROIJ OR ACTIW. SURl'JLt/IoI1HDW. U3SOIt. nilS DfWiI'IiIl w« DCCWs1VEJ..T fllf! ~ ~ o.t;C: co. U'.

ru:

0IiINERS>IP Of! " " "' CHECKED BY: J.S.

JOB No. 22131.28-13 COI"I'RICHT ItCIWI»Il ENCII£EI!fiG AND Sl.Rt'E'I'I/<C co., t«:. 2013C SHEET: 2 OF 2

HOWLL~~\~~~ ENGINEERING AND SURVEYING CO.

EXHIBIT "A-27"

FIELD NOTES FOR CONOCOPmLLWSCOMPANY V AQUILLAS RANCH LEASE 199129-001 RETAINED TRACT 27 (VAQUILLAS RANCH A-12 WELLS No. 168 & No. 202)

614.74 ACRES

A TRACT OF LAND CONTAlNlNG 614.74 ACRES, more or less, being out ofthe Vaquillas Ranch Lease 199129-001,26,622.79 Acres (Called), situated in Survey 987, 1. Poitevent, Abstract 2061, Webb County, Texas, and being more particularly described as follows:

BEGlNNlNG at a point which bears N \3°58'44" E, a distance of 1,605.58 feet, from the Vaquillas A-12 Ranch No. 168 Well;

THENCE, S 00°30'00" E. a distance of 5,218.37 FEET, to a found 8" fence comer POst. for the Southeast comer hereof;

THENCE, S 89~2'22" W, a distance of5,138.40 FEET, to a point for the Southwest corner hereof;

THENCE, N 00·06'58" W, • distance of 5,240.20 FEET, to a point for the Northwest comer hereof;

THENCE, N 89°36'57" E, a distance of 5,103.29 FEET, to the POINT OF BEGINNING, containing 614.74 acres afland, more or less.

Basis of Bearing: G.P.S., TIC South Zone, NAD-27

SHEET 1 OF2 H:\HOWLANDISURVEYING DEP ARTMENl'Jobs\20 13U2131.29-13U2 131.29-13.doc

www.howlandcompanies.com 7615 N. Bartlett Avenue P.O. 80)1451128 (78045) i Laredo, lX78041 P. 956.722.4411 I F.956.722.5414 TBPE Firm RegIstration No. F-4097 i TBP15 Firm Registration No. 100464-00

EXHIBIT "A-27"

CONOCOPHILLIPS COMPANY VAQUlllAS RANCH LEASE 199129-001 ~ RETAINED TRACT 27 (VAQUlllAS RANCH A-12 WELLS No. 168 '" No. 202)

614.74 ACRES WEBB COUNTY, TEXAS

SURVEY 273 C.C.S.D. & RG.N.G. R.R. CO. /

SURVEY 227 I ABSTRACT 1141

,.--f •

I~'C.';.~.

& R.G.N.G .• R.R. CO. ABSTRACT 1133 ...____'

___ '1.--'1.--r x VAQUILlAS .--'$.---'"

~.103.29· --- -,-~'::::':"-----:':"=:::"""'::"~=~---r'?'

\ N 89"Msr E ... RANCH A-4 No. 173

~/ .1 J~ x

\ ~I :ltd !:!,-- VAQUIL1.AS..:1

\ RANCH A-12 No. 168~ (BHL)

I ;e:1

I :

SURVEY 9BB J.H. FUlJ.ER ABSTRACT 2593 \ x '" I,

VAOUlllAS0-401• RANCH -¢-

SURVEY 9B7 \ A-12 No. 168 VAQUILlAS

l J. POITEVENT Xi (SHL) RANCH ABSTRACT 2061 A-4 No. 121 WEBB COUNTY, TEXAS VAQUJUAS l x .n. RANCH :I: VA No. 175· I A VAOUIUAS

i CONOGOPH1LLlPS COMPANY VAQUILLAS RANCH LEASE 199129-001

x

I

~- RANCH A-12 No. 202

26,622.79 ACRES (CALLED) RErAIN£D 814.74 ACRE utIT

I

x

I oj

VAQUllLAS -¢-

I RANCH C No. 64

5 89"22'22"' W - 15.138.40" Found 8"

Fanca Post

SURVEY 230 W.R. A1J.DREDGE ABSTRACT 2523

GRAPHIC SCALE :lOO 0 2SO SOO 1000

"'.-.«w...J--i ( tll'!FI )

1 In<~ ~ .DOOR.

UNIT UNE -,- fI"HCEUl'IE ------- TIts - .... - SURVEY UHE ~ BIoSIS or BEARlIiG: G.P.S. lx. South Central Zone. NAD.-27. Tlf:S PI.» W.T NJT S>IOIII' ALl. CIIOSSIIc:s Of' P'PEI.Jt6 OR CAel.[S. tlOWlAIID £NCIN(£~

HOWLA~JD ENGINEERING AND SURVEYING CO.

EXHIBIT "A-28"

FIELD NOTES FOR CONOCOPHIL~SCOMPANY V AQUILLAS RANCH LEASE 199129-001 RETAlNED TRACT 28 (VAQUlLLAS RANCH A-6 WELLS No. 41, No. 57, No. 229, VAQUlLLAS RANCH H No. 28, No. 109, VAQUlLLAS RANCH H No. 224 A & V AQUILLAS RANCH H No. 46 C)

640.00 ACRES

A TRACT OF LAND CONTA1NING 640.00 ACRES, more or less, being out of the Vaquillas Ranch Lease 199129-001,26,622.79 Acres (Called), situated in Survey 31, C.C.S.D. R.G.N.G. R.R. CO., Abstract 1043; and Survey 26, R.O. Barnesley, Abstract 2133, Webb County, Texas, and being more particularly described as follows:

BEG1NN1NG at a point which bears N 58°26'33" W, a distance of 1,644.66 feet, from the Vaquillas Ranch A-6 No. 41 Well;

THENCE, N 89"29'46" E, a distance 0[5,358.90 FEET, to a point for the Northeast corner hereof;

THENCE, S OO~9'0S" E, a distance of2,525.78 FEET, to a point for a deflection left;

THENCE, S 01°28'37" E, a distance of2,670.53 FEET, to a point for the Southeast comer hereof;

THENCE, S 89°32'59" W, a distance of 5,399.74 FEET, to a point for the Southwest comer hereof:

THENCE, N 00°32'40" W, a distance of5,190.85 FEET, to the P01NT OF BEGINNING and containing 640.00 acres of land, more or less.

Basis of Bearing: G.P.S., TX. South Zone, NAD·27

SHEET 1 OF2 H:\HOWLAND\SURVEYING DEPARTMENNobs\2013\22131.31-13\22\lJ.31.13.doc

www.howlandcompanies.com 7615 N. Bartlett Avenue : P.O. Bo)(451128 (78045) laredo, TX78041 P. 956.722.4411 F.956.722.5414 TBPE Arm RegIstration No. 1'-4097 TBPL5 Firm Registration No. 100464-00

EXHIBIT "A-28"

CONOCOPHILLIPS COMPANY VAQUIUAS RANCH LEASE 199129-001 ~ RETAINED TRACT 26 (VAQUIUAS RANCH A-6 WEllS No. 41, No. 57, No. 229, VAQUIUAS RANCH H No. 26, No. 109, VAQUIUAS RANCH H No. 224 A 8< VAQUIUAS RANCH H No •.46 C)

640.00 ACRES WEBB COUI'nY. TEXAS , ( Aj

VAQUJlLAS RANCH B No. 13 SURVEY 31 C.C.S.D. & R.G.N.G. R.R. CO.

ABSTRACT 1043 WEBB COUNTY. TEXAS

A

CONOCOPHIWPS COMPANY

~, VAQUIUAS RANCH LEASE 199129-001 26.622.79 ACRES (CAlLED) RETAttED &40.00 Jaf£ UNIT

VAQUJUAS RANCH A-6 No. 229 '"

_¢_ (SHL) VAQUILLAS RANCH

~~ .0 VAQUllLAS RANCH -¢- A-6 No. 57

, A-6 No. 229 (SHL)

~

~ r-------------------------~-----

~z VAQUILLAS VAQUIUAS RANCH RANCH -¢- H No. 109 -¢-H No. 46 C

SURVEY 274 G.T. BLACK ABSTRACT 2551 SURVEY 26 R.O. BARNESLEY VAQUILLAS ABSTRACT 2133 RANCH -¢-H No. 224 A VAQUIUAS -¢-

RANCH VAQUILLAS RANCH t- ______ ~-------__;:_:::::::;:~::__:_:::::-¢-~H:_N-O-._28_ _ _ _ _~ A-6 No. 83

5 89"32'59- W ... S,399.74'

VAOUILLAS RANCH -¢- H No. 96

CRAPtnC SCALE VAQUILLAS ~ 0 ~:IOG 1; VAQUllLAS RANCH

~.---- ( IN FEEr ) , -¢- H RANCH No. 225 -¢-H No. 115

I Inch _ l000n

HOWLANDENGINEERING AND SURVEYING CO. TaPE FmI fto\IIoO'IoIlon Mo.I'-4O!I7 1WU All> ~ No:>. 1!X1018of..m 71115N. _ _ I.M.:Io. TX.71004' P._722-'4l1 www.howIondcompanies..com SURVEY UN[ WARNING: BASIS OF 8(AR1NG: G.P,s. lx. South Zon ... NAD.-27. TICS PlAT w.y NOT ~ ALI. CROSSINt$ Of P\PEa£S OR coa.E5. 1i0WlNf0 ~ flELD DATE DRAWN BY; LA''/S.I.I.I. AIIO SUIMYfIG CO~ IHC:. ~ NO R£:SI>ONSIBUIY TO LOCUt PF£UI( OR C>aL CRCISSIHGS. ~1I~~~~~d:x:o~~.ElW. m: OIMRSIIP OR " OiECKED BY: J.5.

JOB NC). 221J1.J1 13 COP'rI!IGHT IfC7IIIlNIO ~ANO SlIIM:'I'\NC CO~ toIC.. 2013C SHEET: 2 0. 2

HOWL1i\~;~~ ENGINEERING AND SURVEYING CO.

EXHIBIT "A-29"

FIELD NOTES FOR CONOCOPIDLL~SCOMPANY V AQUILLAS RANCH LEASE 199129-001 RETAINED TRACT 29 (VAQUILLAS RANCH H WELLS No. 96, No. 115, No. 162, No. 226, VAQUILLAS RANCH D No. 117, No. 153, No. 223 & VAQUILLAS RANCH No. 17)

618.16 ACRES

A TRACT OF LAND CONTAlNING 618.16 ACRES, more or less, being out ofthe Vaquillas Ranch Lease 199129-001,26,622.79 Acres (Called), situated in Survey 26, R.O. Bamesley, Abstract 2133; aod Survey 273, C.C.S.D. & R.G.N.G. R.R. C.O., Abstract 1141, Webb County, Texas, and being more particularly described as follows:

BEGINNING at Ii point which bears N 33'41'33" E, a distance of 1,796.29 feet, from the Vaquillas Ranch H No. 162 Well;

THENCE, S 01'28'37" E, a distaoce of2,576.14 FEET, to a point for the Southeast comer hereof;

TllENCE, S 89'10'24" W, a distaoce of 10,341.47 FEET, to a point for the Southwest comer hereof;

TllENCE, N 00'26'16" W, a distaoce of2,643.65 FEET, to a point for the Northwest comer hereof;

THENCE, N 89'32'59" E, a distaoce of 10,294.50 FEET, to the POINT OF BEGINNING and containing 618.16 acres of land, more or less.

Basis of Bearing: G.P.S., TIC South Zone, NAD-27

SllEET 1 OF2 H;\HOWLAND\SURVEYING DEPARTMEN"Nobs\20 I 3\22 13\.32-t)\22131.32-13.doc

www.howlandcompanies.com 7615 N. Bartlett Avenue i P.O. Box 451128 (78045) I laredo, 1)(78041 P. 956.722.4411 F.956.722.5414 TaPE FIrm Registration No. F-4097 I TBPLS FIrm Registration No. 100464-00

SURVEY 274 G.T. BLACK ABSTRACT 2551 VAQUIl.l..AS ~ RANCH POIH1' 01'

,..o..H No. 224-A BEGINNING ~~' V ~ VAQUILLM __

------_ .... _--_ .... --

V RANCH I A H No. 28 A No. { " .... _ _ .... _ .. .. N 8g'32,'S- E .... 10,294lSO' V , .... II I /

'1~ I;;~In VAQUILlAS SURVEY 26 I I.W

i

~t'<r VAQUlllAS RANCH R 0 BARNESLEY

~ -r>0 RANCH A H No, 96 ABSTRACT 2133 ;""1 ~~Oj e,;

No. 117 V WEBB COUNTY, TEXAS !:

-'Z U,..'"...

'I'"

ooj ,,> " ",to 0 <Ii C'l CONOCOPHILLIPS COMPANY I: / ' 0:: 0 . . .

j!;:

-¢- VAQUILLAS RANCH LEASE 199129-001 1/ !>.:d .0 VAQUILLAS ~ 26,622.79 ACRES (CALLED) '" ___'"~___ 1:; ~ .o:;~ RANCH 10 VAQUIUAS _r'-!._ RANCH V RETAINED 018.10 ACRE oorr VAOUILlAS V icI ~~~~ No. 12 T RANCH VAOUILtAS t'oI '-i ';j

i

o No. 223 VAQUILtAS

z

VAQU1UAS RANCH No. 17 (SHL)

o

-¢-

RANCH H No. 226 ,..J..,: H No. 115

V

RANCH H No. 162 . :;

U

~ t--~ "~ ~~O"'"

"",.. E"oj~ !5~~Ul SURVEY 273 tIl~ ~ C.C.S.D. & R.G.N.G. R.R. CO.

t.i ABSTRACT 1141

GRAPHlC SCALE j \ IN .ITT ) 1 ''''~ .. 1000 Fl ,.-1

HOWLAND EXHIBIT "A-29"

CONOCOPHILLIPS COMPANY VAQUILLAS RANCH LEASE 199129-001 - RETAINED TRACT 29 --,--

(VAQUILLAS RANCH H WEUS No. 96, No. 115, No. 162, - .... _ • SU!IVtY UIIE No. 226, VAQUILLAS RANCH D No. 117, No. 153, No. 223 & VAQUILLAS RANCH No. 17)

618.16 ACRES WEBB COUNTY. TEXAS

HOWLL~~~j[ID ENGINEERING AND SURVEYING CO.

EXHIBIT "A-30"

FIELD NOTES FOR CONOCOPIDLL~SCOMPANY VAQUILLAS RANCH LEASE 199129-001 RETAlNED TRACT 30 (VAQUILLAS RANCH A.{i WELLS No. 30, No. 83, & No. 228)

323.87 ACRES

A TRACT OF LAND CONTAINING 323.87 ACRES, more or less, being out of the Vaquillas Ranch Lease 199129-001,26,622.79 Acres (Called), situated in Survey 51, C.C.S.D. & R.G.N.G. R.R. CO., Abstract 1045, Webb County, Texas, and being more particularly described as fonows:

BEGINNING at a point which bears S 60°45'43" W, a distance of 996.74 feet, from the Vaquillas Ranch A-6 No. 83 Well;

THENCE, N 01~8'38" W. a distance of2,622.92 FEET. to a point for the Northwest comer hereof;

THENCE, N 89°15'20" E, a distance of 5,375.43 FEET, to a point for the Northeast comer hereof;

THENCE, S 00°51 '59" E, a distance of2,640.06 FEET. to a point for the Southeast comer hereof;

THENCE, S 89°26'29" W, a distance of5,347.54 FEET, to the POINT OF BEGINNING, containing 323.87 acres of land. more or less.

Basis of Bearing: G.P.S., TIC South Zone, NAD-27

SHEET 10F2 H:\HOWLAND\SURVEYING DEPARThlENTUobs\2013\22J31.33-13\2213 I .3l-13.doc

www.howlandcompanies.com 7615 N. Bartlett Avenue : P.O. 80)(451128 (78045) ; laredo, TX 78041 P. 956.722.4411 F.956.722.5414 TBPE Firm Registration No. F-4097 i TBPL5 Finn Registration No. 100464-00

EXHIBIT "A-30"

CONOCOPHILLIPS COMPANY VAQUILLAS RANCH LEASE 199129-001 ~ RETAINED TRACT 30 (VAQUILLAS RANCH A-6 WELLS No. 30. No. 83, '" No. 228)

323.87 ACRES WEBB COUNTY, TEXAS

8

'" Ii~ \-----l ~ci~ >oZe-. ~ci" g;,"~ ",,,,,,, o~ .,; t.i SURVEY 260 t.i ERNEST C. GASSER VAQUILlAS RANCH ABSTRACT 2607 -¢- A-6 ,, No. 57

_____ -+_ _ _ N 89"15'20· E ... ~.J1!5.43· ....::..::~:...:...=::::.:=- __ --L-.-----

I

VAQUILlAS CONOCDPHllLlPS COMPANY RANCH vAourlLAS RANCH LEASE 199129-001 -¢-A-6 No. 30 26,622.79 ACRES (CALLED) REfAINED 323.87 ACRE UtIT

VAQUILlAS RANCH -¢-A-6 No. 228

:\.~. I~ , , SURVEY 51 C.C.S.D. & R.G.N.G. R.R. CO.

ABSTRACT 1045 r'-!_ VAOUlLlAS WEBB COUNTY. TEXAS ¥ RANCH H No. 162

_____ +--------------------------+---'---1 GRAPlUC SCALE 0 2511 SOD 100(1 SURVEY 24 'j !)O(I

&-.-:;;;;J-I . R.O. BARNESLEY ABSTRACT 2134

UMIJ UHE

""" "'" nES SURV£'r UHE ~ BASIS D. BEAArNG: G.P.s. Tx. South Central 20nll, NAD.-27. ll1IS P\JIT IoIo',T HOT $»OW ,ou CROSSJ'II:S Of' PIPElJI/Ell OR C\a£S. IIOOI'IHfO ~ }JjI) !iUI'o£TI'IC co.. ~ ASSIAI£S HO /lE5PIJIiSI9UT'1' TO L.OCA.TE Pf'U.II,E OR CIa..[ CIIOSSINCS. HO CUIII 15 HDtElI'I' w.oc ~ C\R!£NT OR JCfUlL Sl.WJa/W([!IA(. fU ~ OR 1lSSOR. 1'1115 OIIAIYI'IG IW)( I'JIa.U5fYD.Y fOR !II.AJNCTCW IIES(UIClS 00K co. LP. ~ HOWI.AICl DICIl€tRN: NtO Sl.IIM"'I'Il'!G CO., N;:. 20130

154

..,a'WWj HO •• :~.i. J ~-~ q ENGINEERING AND SURVEYING CD.

,/YA~ ~rl~~~i':! ·-~El \J~.'

EXHIBIT "A-31"

FlELDNOTES FOR CONOCOPHILLIPS COMPANY VAQUILLAS RANCH LEASE 199129-001 RETAINED TRACT 31 (VAQUILLAS RANCH A-4 WELLS No. 150, No. 167 & No. 227)

567.81 ACRES

A TRACf OF LAND CONTAINING 567.81 ACRES, more or less, being out ofthe Vaquillas Ranch Lease 199129-001,26,622.79 Acres (Called), situated in Survey 25, C.C.S.D. & R.G.N.G. R.R. CO., Abstract 1042; and Survey 273, C.C.S.D. & R.G.N.O. R.R. CO., Abstract 1141, Webb County, Texas, and being more particularly described as follows:

BEGINNING at a point which bears N 34°45'22" E, a distance of820.70 feet, from the Vaquillas Ranch A-4 No. ISO Well;

THENCE, S 01°11 '23" E, • distance of2,428.19 FEET, to a point for the Southeast comer hereof;

THENCE, S 89°36'57" W, a distance ofl0,373.11 FEET, to a point for the Southwest corner hereof;

THENCE, N 00"26'16" W, a distance 0[2,348.13 FEET, to a point for the Northwest comer hereof;

THENCE, N 89°10'24" E, a distance of 10,341.47 FEET, to the POINT OF BEGINNING and containing 567.81 acres of land, more or less.

Basis of Bearing: G.P.S., TX. South Zone, NAD-27

SHEET 1 OF2 H:UIO\VL.AND\SURVEYING DEPARTMENNob.s\20 13\22131.34-13\22\3 L34-1J.doc

www.howlandcompanies.com 7615 N. Bartlett Avenue : P.O. Box 451128 (7S045) . laredo, TX7B041 P. 956.722.4411 F.956.722.5414 TBPE Firm RegistratIon No. F-4097 i TBPLS Firm Registration No. 10Q464.00 >.~i?::·'f" :' ":g ..

SURVEY 26 VAQUILlAS r.:i LO RANCH Z "

R.O. BARNESLEY H No. 152 LO~O""" - ' 0

SURVEY 273 ABSTRACT 2133 VAQUILlAS -¢- >-Cr:UE-<

C.C.S.D. & R.G.N.G. R.R. CO. VAQUILLAS RANCH ~oOl,,~ ~~~~ ~ ~ RANCH -¢-H No. 115 ABSTRACT 1141 -¢- H No. 226 ~ ~ iiIODININO )

~ oj

N 89"10'24- E ... 10.341.47" SURVEY/UNIT UNE VAQUIllAS / .... - ..

RANCH I I N J4'45'22" E d A-4 No. 167 VAQU1LLAS 1;;1 I 620.70' u ;., (9HL) _A

V

RANCH A-4 No. 227 ",I 1/ / • ~ (")

'" "'" I ; ~ CONOCOPHllUPS COMPANY o -¢- VAQUILlAS ~o\!Il: ~ gg ci;:::

~

t

YAQU!LlAS RANCH LfASE 199129-001 26,622.79 ACRES (CALLED)

VAQUILLAS RANCH RANCH A-4 No. 150 ~

N

Z E-< I RErolJNED 561.81 N:;fiE UNIT A-4 No. 167 ~~U ~ ...

. (SHL)

~"'~

+ .____'- .

~~....J /

",oOl~ <=i ,Ii ----I'

SURVEY 25 C.C.S.D. & R.G.N.G. R.R. CO.

e

1_ Cf.I Z 'I.. _ _ 'f.. \ ABSTRACT 1042 0

l.i u _, WEBB COUNTY. TEXAS U> >< ....

~!j~ ~~~ ---~--------------------~'~\----S-U-~--I-U-N-"--U-NE---------------'~~S~~~3.~'=07=·~W~H~1~~-3-73-.-"~·----------------------------------------~ .

'"~~'''"

COn:~ ~ ~ C\l .. -¢- "'""'~~..

II A_4rv.::O~HI73 \ I • VAQUILLAS .",

>- :> t; SURVEY 987 VAQUILLAS ~\;!

~ .. ;s J. POITEVENT RANCH ~'"I': A-12 No. 16B-¢- " CIJ ..,; !a., ABSTRACT 2061 ><\ (BHL) 'I.(C.J. SURVEY 232 BERGSTROM ABSTRACT 2148 VAQUllLAS GRAPHIC SCALE

>< VAQUILlAS RANCH A-12 No. 168 0 I I I -¢-

VAQUllLAS RANCH RANCH -r>-A-4 No. 151 ksJ,;;J..J'·r ( IN IUT l

T

\ (SHL) • I A-4 No. 121 , .... h _ l000f\.

EXHIBIT "A-31 "

CONOCOPHILLIPS COMPANY VAQUIUAS RANCH LEASE 199129-001 N RETAINED TRACT 31 (VAQUIUAS RANCH A-4 WELlS No. 150. No. 167 & No. 227)

567.81 ACRES WEBB COUNT'!', TEXAS

HO·. au. riW'l 'W1rjhLi~~S~~~ If§}. a\~~l ENGINEERING AND SURVEYING CO.

EXHIBIT "A-32"

FIELD NOTES FOR CONOCOPmLL~SCOMPANY VAQUILLAS RANCH LEASE 199129-001 RETAINED TRACf 32 (VAQUILLAS RANCH C WELLS No. 84, No. 103, No. 160, & No. 246 S1")

460.44 ACRES

A TRACT OF LAND CONTAlNlNG 460.44 ACRES, more or less, being out ofthe V.quillas Ranch Lease 199129·00 I, 26,622.79 Acres (Called), situated in Survey 232, C.J. Bergstrom, Abstract 2148. Webb County. Texas, and being more particularly described as follows:

BEGINNlNG at a point which bears S 25'59'31" W, a distance of2,521.75 feet, from the Vaquillas Ranch C No. 84 Well;

THENCE, N 00°08'17" W, a distance of 1,437.56 FEET, to a point for a deflection left;

THENCE, N 00'30'00" W, a distance of5,218.37 FEET, to a point for the Northwest comer hereof;

THENCE, N 89°36'.57" E, a distance of 131.54 FEET, to a point for the northernmost Northeast corner hereof;

THENCE, S OO~8'50" E, a distance of2,901.83 FEET, to a point for an interior comer hereof;

THENCE, N 89°56'18" E. a distance of 5,133.27 FEET, to a point for the southernmost Northeast comer hereof;

THENCE, S 00'43'00" E, a distance of3,709.15 FEET, to a point for the Southeast comer hereof;

THENCE, S 89'26'29" W, a distance of 5,286.78 FEET, to the POINT OF , BEGINNING, containing 460.44 acres of land, more or less. ,~

Basis of Bearing: G.P.S., TX. South Zone, NAD-27

SHEET 1 OF2 H:\HOWLAND\sURVEYING DEP ARTMEN1\Jobs\20 13U2131.J5-1l\2213 U5-13.doe

www.howlandcompanies.com 7615 N. Bartlett Avenue ; P.O. Bo)l;451U8 (78045) j laredo,1X78041 P. 956.722.4411 F.956.722.5414 TBPE FIrm RegistratIon No. M097 ; TBPLS FIrm RegistratIon No. 100464-00

EXHIBIT "A-32"

CONOCOPHILLIPS COMPANY VAQUILLAS RANCH LEASE 199129-001 ~ RETAINED TRACT 32 (VAQUILLAS RANCH C WELLS No. 84. No. 103. No. 160. '" No. 246 sr)

460.44 ACRES WEBB COUt((Y, TEXAS

SURVEY 273 1 C.C.S.D. &: R.G.N.G. I _N 8V.:se'S7" E R.R. CO. '/ 131.54'

1 .' • ,...------

ABSTRACT 1141 • c',l

~ ....

-¢- 1 VAOUILLAS SURVEY 25 • RANCH A-4 No. 173 C.C.S.D. & R.G.N.G. R.R. CO. • VAQUILlAS ABSTRACT 1042 RANCH A-12 No. 168¥ "'. 1 (BHL) • ... VAQUILlAS • RANCH ~~~

1

I """0> VAOUIUASO -¢-A-4 No. 151 -¢-

RANCH A-12 No. 168 VAQUILlAS VAQUlUAS RANCH • • '"

"Z'" "'eii"

(SHL) RANCH A-4 No. 247 o ~",Ol on A-4 No. 121 (SHl)

1 "m ·m...

VAQUILLAS • ~!:l RANCH • ..l..A-4 No. 247 V (BHl)

------

z .n_ VAQUlllAS SURVEY 232 V RANCH C No. 160 C.J. BERGSTROM SURVEY 987 ABSTRACT 2148 J. POITEVENT WEBB COUNTY. TEXAS ABSTRACT 2061

____ !.!!1~ ___ A VARAOUN'llAS CONOCQPH1LLIPS COMPANY VAQU1LL.AS RANCH LEASE 199129-001 '" ~ ._ VAQUILlAS,.¢ RANCH B-t No. 23 ,tr' CH 26,622.79 ACRES (CAllED) I'S' ci ;.,/, C No. 84 RErAiNED 4eO.44 N:;R£ UNIT l C')~ ; :

~i ... ~t?o-

t- - - - --- "*' I u~ :1

1

"S _

>=f=li'==.''t=l=l=l=l=l-l=l-l=-'-,-'-,- ~ VAQUIUAS ~ VAQUIUAS

0

~ ... ., '"Ut;

!5ci:~ ~ • / .':;1 I", 1~ RANCH CNo.10Jn RANCH CNo.246srU) rod ~

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'J..'iD ..... aq ~'

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"', I <-l"

I

I

VAQUILlAS RANCH CNo.246ST (SHL)

"-¢-

"86 '? : (BHL) VAQUILLAS ~,..: Z,'

/ :I RANCH A-10 No. 81

SURVEY 230 / _ _ _ _Li ~ _ _-:;-=:::::::::-:-:-:-:::::-::::;--------r - - - ---

W.R. AlLDREDGE ABSTRACT 2523 il

I

POINTol\ S 89"2S'29- W ,.. 5.288.7S'

·1 ~ I: SURVEY 231 C.C.S.D. & R.G.N.G. R.R. CO.

11 ABSTRACT 1116

i:

GRAPHIC SCALE

:-.-.*'L;;;;I--J :.00 0 2.ro:soa : 1000

T • 1 wh _ looon

LECEND i Rnlslon Oat.

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HOWLAND ENGINEERING AND SURVEYING CO. llIPE_Rog1o_tc.~WI T'1IPUlnm~_'(J)16+.CO = HORIZOHTAI. wru. I !H-09-1J

7 & " N , _ A _ lMwdo,.lX.nool P.II5e.722.«ll www.howlandccmpanles.com WARNING: BoOSlS OF BEARING: G.P.S. lx. South ~ntrol Zone. NAD. 27. lllIS PVoT IlAV HOT St!O'II' ,IU Cf'!OS!';NCS or PFEl..JNES 01 coaLS. HCNI\J:HD DQ,£ERN: Flao OA.TE 8 , PAGE" DRAWN BY: UF. NfO Sl.IIM:J1oIG CO- INC. ASS1M:S HO RESPOtiSIBUTl' 10 !.OCATE PIPfl.HE 01 aa.r C1K:IS9NGS.

~ti:s~~~~~~~~=r:xJ.tttlP~ QI " "' " CHECK£O BY: J.S.

JOB No. 221~'.JS 1~ COP"I'RC>{T IfO'IIlNIO DIC:fI~ NiO SlJlM."nHC CO~ INC. 2013= SHEET: 2 OF 2

HOaQl 'WWJ~~ &~~ r~\J; loKi ENGINEERING AND SURVEYING CO.

'. ~:&f;or

EXHIBIT"A-33"

FIELD NOTES FOR CONOCOPHIL~SCOMPANY V AQUILLAS RANCH LEASE 199129-001 RETAINED TRACT 33 (VAQUILLAS RANCH WELL A-I0 No. 81, VAQUILLAS RANCH B-1 WELLS No. 23, & No. 120)

382.64 ACRES

A TRACf OF LAND CONTAlNlNG 382.64 ACRES, more or less, being out of the Vaquillas Ranch Lease 199129-001,26,622.79 Acres (Called), situated in Survey 233, C.C.S.D. & R.G.N.G. R.R. CO., Abstract 1117, Webb County, Texas, and being more particularly described as follows:

BEGINNING at a point which bears N 42°39'42" W, a distance of 1,797.35 feet, from the Vaquillas Ranch B-1 No. 23 Well;

THENCE, N 89°08'54" E, a distance of 4,485.02 FEET. to a point under an existing fence linc, for the Northeast comer hereof;

THENCE, S 00°19'51" E, along an existing fence line, a distance of 3,744.45 FEET, to a point for the Southeast comer hereof;

THENCE, S 89°36'00" W, a distance of4,459.86 FEET, to a point for the Southwest comer hereof;

THENCE, N 00°43'00" W, a distance of3,709.15 FEET, to the POINT OF BEGINNING, containing 382.64 acres of land, more or less.

Basis of Bearing: G.P.S., TX. South Zone, NAD-27

SHEET 1 OF2 H:\HOWLANDISURVEYING DEPARTMENNobs\1O\3\21\31.36-\3\2113L36-13.doc

www_howlandcompanies.com 7615 N. BartlettAvenue P.O. Box 451128 (78045) l laredo, TIC 78041 P. 956.722.4411 F.956.722.5414 TaPE Arm Registration No. F-4097 ! TBPLS Firm RegistratIon No. lOO464-{lO

EXHIBIT "A-33"

CONOCOPHILLIPS COMPANY VAQUlUAS RANCH LfASE 199129-001 ~ RETAINED TRACT 33 (VAQUlUAS RANCH A-l0 waL No. 81. VAQUlUAS RANCH 8-1 WELlS No. 23. &: No. 120)

382.64 ACRES WEBB COUNlY. TEXAS

:

I

I

SURVEY 24 R.O. BARNESLEY ABSTRACT 2134

SURVEY 232 C.J. BERGSTROM ABSTRACT 2148 CONOCOPHILLIPS COMPANY VAQUILlAS RANCH LEASE 199129-001 26.622.79 ACRES (CALlED) RErAlHED J82.M Iaf£. UNT

J,

z

... ~ SURVEY 271 ~l~~)(...!....-i(_- SURVEY 233 b C.C.S.D. & R.G.N.G.

VAQUILlAS C.C.S.D. & R.G.N.G. R.R. CO. ., R.R. CO.

VAQUILlAS # RANCH C No. 246 5T ABSTRACT 1117 WEBB COUNTY. TEXAS -r;f-'

RANCH No. 120 '"

ABSTRACT 1136 VA~~~ (SHL)

C No. 246 51 -¢-

(BHL) VAQUlllAS RANCH A-l0 No. 81

- --- - - 4-----::-=:::-:::--:-:::-:::::-----1 S 89"3fI'OO· W ........ 4!59.86· SURVEY 231 I C.C.S.D. & R.G.N.G.

RR. CO. ABSTRACT 1116

I

I

I

SURVEY 234

1

C.J. BERGSTROM ABSTRACT 2146

1

~ 1-;;-.---- [ GRAPHIC SCALE 9Z70:IOO Ij ( III n::u) 1 ItIdI .. lOOOrt.

T I1 LEGEND R.... lslon Dcle

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HOWLANDENGINEERING AN) SURVEYING CO. Tll?EAooI~Ha.F-4D!17 TUP\..SFkmRoogllhlotlNl>.ICIO'&4«I -¢- -~,--

= H0RI2ONTAL = WElL ;m:ACE lOCATION

: ~a:UKJa:

, 04-09-IJ

7515N._-. • ...-.r.c.7!G41 P._121M11 www.howlandoompanies.oom - - - - - - - = TIES .. .. .. StJR\I£Y LINE WARNING: BASIS OF BOOING: G.P.S. lx. South Centrol ZonD, NAO.-27. ms PUll YAY HOT SHall' AU. tmISSHCS OF Pl'£l..l1IES 01'1 CIa.£S. HOWI.N«I ~ flElD DATE PAGE 5 DRAWN BY: UF.

"I' CHECKED BY: J.S.

JOO No. 221:::11.36-13 SHEET: 2 OF 2

HOWLAND ENGINEERING AND SURVEYING CO.

EXBlBIT "A-34"

FIELD NOTES FOR CONOCOPIDL~SCOMPANY V AQUILLAS RANCH LEASE 199129-001 RETAINED TRACT 34 (VAQUILLAS RANCH A-8 WELLS No. 59, No. 66, & VAQUILLAS RANCH A No. 86)

606.84 ACRES

A TRACT OF LAND CONTAINING 606.84 ACRES, more or less, being out of the Vaquillas Ranch Lease 199129·001,26,622.79 Acres (Called), situated in Survey 1649, C.C.S.D. & R.G.N.G. R.R. CO., Abstract 1110, Webb County, Texas, and being more particularly described as follows:

BEGINNING at a point which bears N 38'23'35" E, a distance of2,217.27 feet, from the Vaquillas Ranch A-8 No. 59 Well;

THENCE, S 00°17'51" W, a distance 0[5,027.60 FEET, to a point for the Southeast comer hereof;

THENCE, S 89°24'12" W, a distance of5,177.16 FEET, to a point for the Southwest corner hereof;

THENCE, N 00°30'01" W, a distance of 5,115.58 FEET, to a point for the Northwest corner hereof;

THENCE, S 89°37'46" E, a distance of 5,247.75 FEET, to the POINT OF BEGINNING, containing 606.84 acres ofland, more or less.

Basis of Bearing: G.P.S., TX. South Zone, NAD-27

SHEET 1 OF2 H:\HOWLAND\sURVEYING DEPAR1MENl\JobsUO \3\22131.37-13\22131.37-I3.doc

www.howlandcompanies.com 7615 N. Bartlett Avenue , P.O. Box 451128 (78045) ! laredo, TX78041 P. 956.722.4411 F.956.722.5414 TBPE Firm Registration No. F4097 ; TBPLS Firm Registration No. 100464-00

EXHIBIT "A-34"

CONOCOPHILLIPS COMPANY VAQUILLAS RANCH lEASE 199129-001 N RETAINEO lRACT 34 (VAQUILLAS RANCH A-8 WELLS No. 59. No. 65. '" VAQUILLAS RANCH A No. 86)

606.84 ACRES WEBB COUNTY, TEXAS

:

I

SURVEY 1646 SURVEY 1648 srrz rpo;;.~ O.A. '" F.A. C.M. SAWYER ABSTRACT 3301 ABSTRACT 2441 I: (,~ , r-----------~~~~~~~---l.-------~/~-------

S 89"37'46- E 1- S/l47.75'

I 4/ " ~";I SURVEY 1927 T.M.R.R. CO. , ,'"' ABSTRACT 1808 ~I ~/ . .:: ..:?/ I _6.'?/' :

I

~7 , I ' 1/ ~ CONOCOPHILUPS COMPANY ~------" . .---- h ~ :a VAQUILlAS RANCH lEASE 199129-00 I VAOUlUAS

S

f-------~, 26,622.79 ACRES (CALlED)

RETAI£D 608.84 ...mE UNT RANCH A-B No. 59 .n , .'" '"

i

z

SURVEY 1649 C.C.S.D. '" R.G.N.G. R.R. CO.

ABSTRACT 1110 VAQUILlAS RANCH A-a No. 66 rc

V

~ ..~ WEBB COUNTY. TEXAS

VAQUILLAS -¢- RANCH A No. 86

-.-----~-----------~~~~~--------~~-.--

~ 89'24"2- W ... 5.1".18' .. -

, SURVEY 1906 T.T. R.R. CO. ABSTRACT 3103

SURVEY 1653 e,C.S.D. & R.G.N.G. R.R. co.

ABSTRACT 1099

GRAPHIC SCALE

( IN fEEl" ) • IncIo _ loroR.

0+-11->'

WARNING: BASIS or BfARING: G.P.S. T~. So ... th ZOI'll!, NAD. 27. nus ptAT WI'!' IiOl SHOll' ALI. CROSSt!GS Of I'\I'EIJhG OR a.a.r:s.. IlCJIII'lNIO ENC1I/I£ERN; ..... 0 SUIM:'I'I'tG co. INC. ~ NO Ii£SPC»!SIEIlIIY ro lOClTE PIPDJNt OR C08IL CIIIlS$HClS. NO Q).&I IS ItERmT ....c[ I!teN!P!IG OJRRDIT 011 IoCfUI.L SIRlF.ra:tJaNf1tAI. r:EI: 0II't0S>!P OR FlEUl DATE ., PAGE :s DRAWN SY:

CHECKED av:

LA.F.

J.S.

u=R. nIlS 0IWI'IH(l WNX txQ..l.!SMl.Y RlII CCINOCOP1iU.1P5 COIWNIT. JOB No. 221J1.J7-1J COPTlIlCHT ~ EHCNDiHD .lHO ~ 1;0., INC. 20130 SHEET: 2 or 2

HOWL.A~~mJ ENGINEERING AND SURVEYING CO.

EXHIBIT"A·35"

FIELD NOTES FOR CONOCOPRU J ,IPS COMPANY VAQUILLAS RANCH LEASE 199129·001 RETAINED TRACT 35 (VAQUILLAS RANCH A·l1 WELLS No. 55, No. 58, No. 79 & No. 147)

640.00 ACRES

A TRACT OF LAND CONTAlNlNG 640.00 ACRES, mare or less, being out of the Vaquillas Ranch Lease 199129-001,26,622,79 Acres (Called), situated in Survey 1651, C,C.S,D, & R.G,N,G. R.R. CO" Abstract 1112, Webb County, Texas. and being more particularly described as follows:

BEGINNING at a point which bearsN 46°43'15" W, a distance of799.66 feet, from the Vaquillas Ranch A·II No. 79 Well;

THENCE, EAST, a distance of 5,173.18 FEET, to a point for the Northeast corner hereof;

THENCE, S 00°01'12" E, a distance 0[5,422.60 FEET, to a point for the Southeast comer hereof;

THENCE, WEST, a distance 0[5,077.78 FEET, to a point for the Southwest comer hereof;

THENCE, N 01°30'06" W, a distance of3,788.66 FEET. to a point for a deflection right;

THENCE, N 00°04'11" E, a distance of 1,635.25 FEET, to the POINT OF BEGINNING and containing 640.00 acres of land, more or less.

Basis of Bearing: G,P.S" TJC South Zone, NAD·27

SHEET 1 OF2 H:\HOWLANDISURVEYING DEPARTMENl'Jobs\2013U2131.38-i3\22131.38-13.doc

www.howiandcompanies.com 7615 N. Bartlett Avenue , P.O. 80,,451128 (78045) i Laredo, 1)[ 78041 P. 956.722.4411 I F.956.722.5414 TBPE FInn Registration No. F-4097 I TBPLS Finn RegistratIon No. 100464-00

EXHI "A-35"

CONOCOPHILLIPS COMPANY VAQUILLAS RANCH LEASE 199129-001 ~ RETAINEO TRACT 35 (VAQUILLAS RANCH A-11 WEU.S No. 55. No. 58. No. 79. '" No. 147)

640.00 ACRES WEBB COUNTY, T£XIo.S

SURVEY 1647 C.C.S.D. & R.G.N.G. R.R. CO. ABSTRACT 11 01 i

I

SURVEY 1646 BLAS PENA ABSTRACT 2396

~ _ N 46"43'15' W p799.66· f-o-- - - - - - - - - - -EAST - -... ,&.173.18 ........---------

SURVEY 1664

. W.H. TAYLOR ABSTRACT 2877

~ A VAQU!UAS V RANCH A-l' No. 55

-----~ CONOCQPHIUIPS COMPANY VAQUILlAS RANCH lEASE 199129-001 26.622.79 ACRES (CALLED) RETAINED 540.00 II;fl£ UNTT -¢-

VAQUIUAS RANCH A-11 No. 58

SURVEY 1651 C.C.S.D. & R.G.N.G. R.R. CO.

ABSTRACT 1112 WEBB COUNTY. TEXAS

f-------

-¢- .;

u

VAQUILlAS RANCH SURVEY 1650 A-11 No. 147 C.M. SAWYER ABSTRACT 2444 WEST ... ~.CfT1.7e·

SURVEY 1652

------1 GRAPHIC SCALE W.H. TAYLOR ABSTRACT 2876 •• -p-VAaUIUA~ I RANCH I L No. 196 '<

( tl /'EO' )

T

HOWlt~~~ ENGINEERING AND SURVEYING CO.

EXHIBIT "A-36"

FIELD NOTES FOR CONOCOPHIL~SCOMPANY V AQUILLAS RANCH LEASE 199129-001 RETAINED TRACT 36 (VAQUILLAS RANCH A-4 WELLS No. 121, No. 151, No. 173 & No. 247)

367.60 ACRES

A TRACT OF LAND CONTA1NING 367.60 ACRES, more or less, being out ofthe Vaquillas Ranch Lease 199129·001,26,622.79 Acres (Called), situated in Survey 25, C.C.S.D. & R.G.N.G. R.R.CO., Abstract 1042, Webb County, Texas, and being more particularly described as follows:

BEGINNING at a point which bears N 72'18'31" W, a distance of 1,190.94 fee~ from the Vaquillas Ranch A-4 No. 173 Well;

THENCE, N 89036'57" E, a distance 0[5,471.02 FEET. to a point for the Northeast comer hereof;

THENCE, S 01°11'25" E, a distance of2,927.97 FEET, to a point for the Southeast comer hereof;

THENCE, S 89°08'54" W, a distance of374.16 FEET, to a point for a deflection right;

THENCE, S 89'56'18" W, a distance of 5,133.27 FEET, to a point for the Southwest comer hereof;

THENCE, N 00'28'50" W, a distance of 2,901.83 FEET, to the POINT OF BEGINNING and containing 367.60 acres of land, more or less.

Basis of Bearing: G.P.S., TX. South Zone, NAD-27

SHEET 1 OF2 H:\HOWLAND\SURVh"YING DEPARTMENI\JobsUOI3122131.39-J3U2J31.39-13.doc

www.howlandcompanies.com 7615 N. BartJettAvenue I P.O. Box 451U8 (78045) ; laredo,1)( 78041 P.956.72Z.4411 F.956.nZ.5414 TBPE Arm Registration No. F-4097 I TBPLS Firm Registration No. 100464-00

EXHIBIT "A-36" CONOCOPHILLIPS COMPANY VAQUIUAS RANCH LEASE 199129-001 N RETAINED TRACT 36 (VAQUIUAS RANCH A-4 WEUS No. 121. No. 151. No. 173. '" No. 247)

367.60 ACRES WEBB COUNTY, TEXAS

: -¢- i~

-= ou VAOUILLAS t

'"

M~:;jl ~r.;::: ~:Z;t> ~----- """:~-::;."" ---:,:=--+ ·i~ ,, A-4 No 167. n A-4 No. 227 RANCH I Ct:~~ (BHL) ¥ -¢- A-4 No. 150-¢-

::J.:d~ VAOU'wP I '.j!j1' "' . < "cjoj I, RANCH A-4 No. 167 1H , (SHL)

cj I, SURVEY 25 C.C.S.D. & R.G.N.G. R.R. CO.

, ABSTRACT 1042 WEBB COUNTY. TEXAS N 72'18'3'· W /,,190.94' I _

~~~ __-,/L-__7i______-!N~8V~3~.~~~7~·~E~-~~~'7~1~.02~·______________________~ k!

- - - - - -

!, ---- I -"'-_ ... 1:).

___ .lJ.~:'_~~ VAQUlUAS --- -y- RANCH A-4 No. 173 CONOCOPHILLIPS COMPANY VAQUllLAS RANCH A-12 No. 168A (BHL) ¥ 1:1 ;; ::I • VAQUILLAS RANCH LEASE 199129-001

VAQUILLAS 26,622.79 ACRES (CAlLED) RETAiNm 357.eo N:iP£ UNIT !•

w

VAQUlU.AS

i!"'

VAQUlllAS 0 RANCH -¢-A-4 No. 121 RANCH -¢-A-4 No. 151 RANCH VAOUILlAS A-12 No. 168 (SHL)

iii RANCH ~ A-4 No. 247 z o (SHL)

VAQUllLAS RANCH

vr A-4 No. 247· ~________________~~(B_H~~_-~~.~______________~~____ _ S 89'58'18· W ,.. 6.133.27" • S 89"08'54- W SURVEY 987 A VAQUILlAS 374.16' J. POITEVENT Y RANCH I C No. 160 ABSTRACT 2061 SURVEY 232 C.J. BERGSTROM VAQUILlAS ABSTRACT 2148 RANCH -¢- C No. 84

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EXHIBITD

PARTIAL RELEASE OF OIL AND GAS LEASE

STATE OF TEXAS § § COUNTY OF WEBB §

WHEREAS on January 9, 1988, Vaquillas Ranch Company, Ltd., Vaquillas Unproven Mineral Trust and Vaquillas Proven Mineral Trust acting therein through its general partners, J.O. Walker, Jr., Gene S. Walker, Evan B. Quiros and E. Walker Quiros. as Lessors, and Canoee Inc.• as Lessee. entered into an Oil. Gas and Mineral Lease dated November 1, 1987. covering 6,740 acres of land, more or less, hereinafter referred to as ~the Lease,· and;

WHEREAS the Lease description was amended May 31, 1988, by deleting the acreage covered from 6,740 acres, more or less, to include a revised total of 4,800 acres, more or less, as evidenced by Memorandum of Oil and Gas lease, dated June 16, 1988; recorded In Volume 1303, Page 886 of the Real Property Records of Webb County, Texas.

WHEREAS the Lease has also been amended from time to time, as reflected in the Public Records of Webb County, Texas, and all references to the Lease herein shall be to the Lease as amended.

NOW THEREFORE, in consideration of Ten Dollars ($10.00) and other good and valuable consideration, the receipt of which Is hereby acknowledged, ConocoPhlilips Company, does hereby RELEASE, RELINQUISH and SURRENDER unto the Lessor, all of its right, title and interest and estate in the Lease SAVE AND EXCEPT THOSE LANDS AS MORE PARTICULARLY DESCRIBED ON THE EXHIBIT "A," AND FURTHER DESCRIBED ON EXHIBITS A-1 THROUGH A-5 ATTACHED HERETO AND MADE A PART HEREOF.

Provided, however, Lessee shali have and retain full rights of access and all easements of ingress and egress over and across those lands covered by the Lease, including the lands which are hereby released, for the production of oil and gas and operations in the acreage not hereby released, and Lessee shall not be required to remove or relocate any pipelines, utilities, roads, tank batteries, or other surface equipment or installations from any portion of the lease or lands herein released for so long as same continues to be used for the exploration, development or operation of such portions of the Lease that continue in force and effect

This instrument is binding upon and inures to the benefit of the parties hereto, their heirs, successors and assigns.

~ VOIm1e: 35T7 Page:44D-453 Executed this n day of f~\o",'Q""

I

. 2014. Doc # 1194181 OocType: PARTIAL RB£ASE OF Oil & GAS lEASE Record DIlle: 21251201" 11:28:17 AM Record By: MIC Fees $71.00 Margie Ramirez JbamI. Webb County Clerk

LESSEE:

::~OC~ Michael P. Rose Attorney-In-Fact

25757Hl01

ACKNOWLEDGEMENT

STATE OF TEXAS § § COUNTY OF HARRIS §

ACKNOWLEDGED BEFORE ME, this rl '" day of 1"''''10"•• % ' 2014, by Michael P. Rose, Attorney-in-Fact for ConocoPhiltips Company, a Delaware orporation, on behalf of said corporation.

257577-001

OVERALL EXHIBIT "A" !

:\------,--'-iL CONOCOPHILLIPS COMPANY VAQUILLAS RANCH RETAINED TRACTS 1-5 i !! I CONTAINING A TOTAL OF 2,379.77 ACRES j ii'

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CONOCOPHILLIPS COMPANY HOWLAND ENGINEERINO AND SURVEYING CO.

TBPERmRrlglolr__ IIo.F'-OCm TBPl.5Fm1~lIo.l_ n.QUILIAS RANCH RETAINED TRACTS BASE YAP 7111SN._ ......... I.anIcIO, TX.nGll www.howtandcompanJas.com P.IIM.nz..wll LEASE 2~7~77-001 WEBB COUNJY, TEXAS WARNING: BASIS OF B£.I.RING: C.P.S. T•. South Zon ... NAD. 27. ms Pl.lT w:t HOT Stm "'-L CRCSSIHCS Of I'If'£l.I'£S OR eo.au:s. IKJIIII..NlD ~c DRAWN BY: LAF./S.l,M. 1M) ~ co.. INC. J.SSULS HO ReiPCI'ISIIUlY TO LOCATE PF£I.K (II coa.t CIIOSSlNCS.

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HOWLAND ENGINEERING AND SURVEYING CO.

EXHIBIT "A-I"

F1ELDNOTES FOR CONOCOPmLLWSCOMPANY VAQUILLAS RANCH LEASE 257577-001 RETAINED TRACT I (VAQUILLAS RANCH L-6 WELL No. 211)

328.36 ACRES

A TRACf OF LAND CONTAINING 328.36 ACRES, more or less, being out of the VaquiUas Ranch Lease 257577'{)01, 6,740.00 ActOS (Called), situated in Survey 1956, HE. Brock, AbslIact 2560, Webb County, Texas, and being more particularly described as follows:

BEGINNING at a found monument at fence comer, which bears N 70°15'08" W. a distance of 1,699.67 fee~ from the Vaquillas Ranch L-6 No. 211 Well;

THENCE, N 89~O'09" E, along an existing fence line, a distance of3,112.47 FEET, to a point for the Northeast comer hereof;

THENCE, S 00°38'14" E, a distance of 4,600.71 FEET. to a point under an existing fence, for the Southeast comer hereof;

THENCE, S 89030'49" W, along an existing fence line, a distance of 1,416.19 FEET, to a point for a deflection right;

THENCE, S 89035'52" W, continuing along said existing fence 1ine, a distance of 1,696.63 FEET. to a found 60 D nail at fence comer, for the Southwest corner hereof;

THENCE, N 00°37'59" W, continuing along an existing fence line, a distance of 4,588.56 FEET, to the POINT OF BEGINNING, containing 328.36 acres of land, more or less.

Basis of Bearing: G.P.S., TIC. South Zone, NAD-27

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SHEET! OF2 H:\HOWLAND\SURVEYING DEPARTMENNobs\20IJ\22160.1-1JI22160.I-IJ.doc

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EXHIBIT "A-1 "

CONOCOPH1LLlPS COMPANY VAQUILLAS RANCH LfASE 257577-001 RETAINED TRACT 1 (VAQU1LLAS RANCH L-6 WELL No. 211)

328.36 ACRES WEBB COUNTY. TEXAS

SURVEY 2096 D.C. FANNING ABSTRACT 2228

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L-6 No. 211 ABSTRACT 1326

CONOCOPHILLIPS COMPANY VAQUILlAS RANCH LEASE 257577-001 6.740.00 ACRES (CALLED) RETNNED J28.38 ACRE UNfT

VAOUILlAS RANCH A-3 No. 200 (BHL)

SURVEY 1956 D.C. FANNING -!b ABSTRACT 2591 z SURVEY 1956 VAOUlUAS RANCH H.E. BROCK A-3 No. 200 (SHL) ABSTRACT 2560 WEBB COUNTY. TEXAS

r cfound 60 0 ~ .. Ko~ 0 Fencl! ComIIr

~-~.----~" '--~';-~~'--~'~'~~~':-~S~~~30~"~2'.~W~·~"-1=;-~I---'S~.~~~~~"~·~W;--<~-----~---'-------~--~ 1.696.63' ~ 1,416.19'

SURVEY 2057 \ :

C.T. & M.C. R.R. CO.

ABSTRACT 965 \I 1: SURVEY 2056 "\ I, C.T. & M.C. R.R. CO.

ABSTRACT 2680

VAQUILlAS RANCH A-5 No. 205 (SHl)O VAQUILlAS RANCH -¢- A-5 No. 205 (BHL)

VA~~~-Q. A-S No. 166 Ii: \ GRAPHIC SCALE II T O VAQU1UAS "RANCH A-5 No. 230 ( "HErr)

(SHL~J

LEGEND o .'"

HOWLAND ENGINEERING AND SURVEYING CO.

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HORIZONTAl WELL ~.f.CE LOCATION 1 04-10-13

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EXHIBIT"A·2"

FIELD NOlES FOR CONOCOPHllWWPSCOMPANY VAQUILLAS RANCH LEASE 257577-001 RETAiNED TRACT 2 (VAQUILLAS RANCH L4 WELLS No. 95 & No. 105)

172.43 ACRES

A TRACT OF LAND CONTAINING 172.43 ACRES, more or less, being out of the Vaquillas Ranch Lease 257577-001. 6,740.00 Acres (Called), situated in SE !4 of Survey 2060, C.C. Marshall, Abstract 3329, Webb County, Texas, and being more particularly described as follows:

BEGINNING at a point which bears N 50°34'35" W, a distance of 490.36 feet, from the Vaquillas Ranch L-4 No. 95 Well;

THENCE, N 89°18'10" E. a distance of 1,350.57 FEET, to a point for a deflection right;

THENCE, S 89°39'06" E, a distance of 1,338.93 FEET, to a point on an existing fence line, for the Northeast comer hereof;

THENCE, S 00°18'08" E, along an existing fence line, a distance of2,765.12 FEET, to a found fence comer post, for the Southeast comer hereof;

THENCE, S 89°15'36" W, along said existing fence line, a distance of2,691.33 FEET, to a point for the Southwest comer hereof;

THENCE, N 00°48'19" W, a distance of 1,517.91 FEET, to a point for a deflection right;

THENCE, N 00"22'53" E, • distance ofl,273.82 FEET, to the POINT OF BEGINNING, containing 172.43 acres of land, more or less.

Basis of Bearing: G.P.S., TX. South Zone, NAD~27

SHEETlOF2

H:\HOWLAND\SURVEYrNG DEPARTMEm\Job$\20\3\22\ fiO.l- B\22\60.2-13.doc

www.howlandcompanies.com 7615 N. Bartlett Avenue P.O. Box 451128 (78045) ! Laredo, 1)( 78041 P. 956.722.4411 F.956.722.5414 TBPE Finn Registration No. F-4097 • TBPLS Firm Registration No. 100464-00

EXHIBIT "A-2"

CONOCOPHILLIPS COMPANY VAQUILLAS RANCH LEASE 257577-001 RETAINED TRACT 2 (VAQUILLAS RANCH, L-4 WEllS No. 95 /I< No. 105)

172.43 ACRES WEBS COUNTY, TEXAS

I A VAQUILlAS ¥ RANCH A-5 No. 126 SURVEY 2058 I · I C.T. & M.C. R.R. CO.

A-2880

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A-5 No. 118 A-5 _~Ol I' 8_ 1 .

SURVEY 2080 V 0 ..

C,TAa~T~~T R:i~30CO, : ~:: i /~i!i VAQUILLAS RANCH A-S No. 40 , - - -- - - --i I ~~~ => Od CIl lj o : SURVEY 2060 R.D. GUINN I I rn U"", ~ ';i!

~ I ABSTRACT 3331

I ______ --~~:h.;:b":.V~~l~ E i ~=: E s SURVEY 1884 I 49Cl36'

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~i VAQUILLAS RANCH L-4 No. 95 M.E. WIDEMAN ABSTRACT 2501

SURVEY 2060 i:l i! ", (SHL)

R.D. GUINN "§ 11Pi -¢-VAQUlUAS RANCH L-4 No. 95 ABSTRACT 3332 .... (BHL)

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CONOCOPHILLIPS COMPANY ...

r------ VAQUILLAS RANCH LEASE 257577-001 8 6,740.00 ACRES (CALLED) co I 0 ~ J: ""'..NED 112.43 ACRE UN~ § tOZM •• OZM at ... NSf-" :-~ SE 1/4 OF ~ ill I> .

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!l- VAQUIL~ RANCH SURVEY 2060 c. C. MARSHAlL 0:: A E-o Z L-4 No. 105 ABSTRACT 3329 =>~rIl

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=rr~~~ I • NORTH 1/2 SURVEY 1836 P.K. CONNOWAY ABSTRACT 2187

I

SURVEY 260 MARY E. WIDEMAN ABSTRACT 2504

GRAPHIC SC~ - - - - - - - - - -S:: ~-- - - --i k-.JJ-; Ii ( IN FlIT )

T ~~J:~ ABSTRACT 2137 :I I III<:h - 10CXlF\.

LEGEND Ravl.lon , Do'.

HOWlANrE ENGINEERING AND SURVEYING CO.

TIIPE flm Ro;Iahb> Ho>.I4C9l' T1IPLS flm~ No.. 1(I041I0I.00 o ,. HORIZOKTAl. WELL stJRI'ACt LOC4l1OH "'"- UNIT UHE , -" "

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ENGINEERING AND SURVEYING CO.

EXHIBIT"A-3"

FIELD NOTES FOR CONOCOPHILLIPS COMPANY VAQUILLAS RANCH LEASE 257577-1)01 RETAINED TRACT 3 (VAQUILLAS RANCH L WELLS No. 129, No. 137, No. 171, No. 135 & No. 196)

640.00 ACRES

A TRACT OF LAND CONTAINING 640.00 ACRES, more or less, being out of the Vaquillas Ranch Lease 257577-001, 6,740.00 Acres (Called), situated in Survey 1661, C.C.S.D. & R.G.N.G. R.R. CO., Abstract 1122; and Survey 1663, C.C.S.D. & R.G.N.G. R.R. CO., Abstract 1123, Webb County, Texas, and being more particularly described as follows:

BEGINNING at a point which bears N 52D 37'00" E. a distance of 1,377.16 feet, from the VaquiUas RanchL No. 137 Well;

THENCE, S 00°36'33" W, a distance of 4,858.64 FEET, to a point for a deflection left;

THENCE, S 00°31'54" W, a distance 0[355.21 FEET, to a point for the Southeast corner hereof;

THENCE, WEST, a distance of 5,314.75 FEET. to a point for the Southwest COmer hereof;

THENCE, N 00°07'00" W, a distance of 5,213.52 FEET, to a point for the Northwest corner hereof;

THENCE, N 89°59'58" E, a distance 0[5,380.33 FEET, to the POINT OF BEGINNING, containing 640.00 acres of land, more or less.

Basis of Bearing: G.P.S., TX. South Zone, NAD-27

SHEET! OF2 H:\HOWLAND\SURVEYING DEPARTMENl\Iobs\2013\22160.3-!3\22160.3-I3.doc

www.howlandcompanies.com 7615 N. Bartlett Avenue P.O. Box 45112B (78045) ! Laredo, 1)( 78041 P. 956.722.4411 F.956.722.5414 TBPE FIrm Registration No. F-4097 ; TBPL5 FIrm Registration No. 100464-00

CONOCOPHILLIPS COMPANY VAQUILLAS RANCH LFASE 257577-001 RETAINED TRACT 3 (VAQUILLAS RANCH L WELLS No. 129, No. 137, No. 171, No. 135 & No. 196)

640.00 ACRES WEBB TEXAS

SURVEY 1665 e.C.S.D. & SURVEY 1664 R.G.N.G. R.R. CO. W.H. TAYLOR • ABSTRACT 1124 ABSTRACT 2877

-¢-

VAOUlllAS RANCH A-l1 No. 147

CONOCOPH1LLlPS COMPANY VAQU1LlAS RANCH lEASE 257577-001 6,740.00 ACRES (CAlLED) RETAINED 640.00 ACRE UNIT

~ " VAQUIUAS RANCH L No. 196 ~ SURVEY 1663 $ C.C.S.D. & R.G.N.G. R.R. CO. !> ABSTRACT 1123 !! WEBB COUNTY. TEXAS

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VAQUILlAS -¢-

RANCH L No. 129 VAOUILLAS RANCH l No, 171

VAQUILlAS RANCH l No. 135 -- - - - - --- --- - - -- - - -- -$- --

WEST ... ~.314.7!5·

SURVEY 1661 C.C.S.D. & R.G.N.G. R.R. CO.

ABSTRACT 1122

--~ VAQUILlAS RANCH L No. 190 SURVEY 1668 -¢- VAQUIUAS I Y. VERGARA RANCH • ABSTRACT 2490 l No. 136

GRAPIDC SCALE -¢- I :.00 0 ~:.oo 'DIXI !ow__""""" . T VAOULLLAS RANCH 1 net. _ IDOOrt. -¢- L No. 134

~ BASIS OF BEAAlNG: c,p.s. Tx. South Zone, NAD.-27. ms PU.T WIlY NOT SIIO'II' IU O!OSSHCS OF PI'ElJ/£S OR tAlUS. tK7IIIVHJ ~ N!O !aJ'M;Y'tIO CO•• NC. A$SlJ,I[S HQ ~ TO l..IX:-'lL I'IPELI!£ OR ~ C'!OS$NCS. I«) aNII IS HtRDI'r loW)[ I!tCOIDIC aRI01T 011 ILT\W. SlW~ FU: ~ OR l(SSOR. n.s DfWIIHG IoWlE EXI;1lISMl.y fOIl cottCICOPHUS'S COloiPNfY. CCIPI'RDIT IIOfI\HIO ~ IHJ SlIM:YIHC 00., tIC. 2Ql~C

ENGINEERING AND SURVEYING CO.

EXHIBIT"A-4"

FIELD NOTES FOR CONOCOPHllWWPSCOMPANY VAQUILLAS RANCH LEASE 257577"()01 RETAINED TRACT 4 (VAQUILLAS RANCH L WELLS No. 134, No. 136, No. 140, & No. 190)

598.98 ACRES

A TRACT OF LAND CONTAINING 598.98 ACRES, more or less, being out of the Vaquillas Ranch Lease 257577-001. 6.740.00 Acres (Called). situated in Survey 1661. C.C.S.D. & R.G.N.G. R.R. CO., Abstract 1122, Webb County, Texas, and being more particularly described as follows:

BEGINNING at a point which bears S 69°30'42" W, a distance of 936.29 feet, from the Vaquillas Ranch L No. 140 Well;

THENCE, N 00°00'04" E, a distance of 3,136.05 FEET. to a point for an exterior comer hereof;

THENCE, EAST, a distance of 611.10 FEET, to a point for an interior comer hereof;

THENCE, N 00007'00" W. a distance of 1,238.25 FEET, to a point for the Northwest corner hereof;

THENCE, EAST, a distance of 5,314.75 FEET, to a point for the Northeast corner hereof;

THENCE, S 00°31'54" W. a distance of 4tl53.62 FEET, to a point for the Southeast comer hereof;

THENCE, S 89il31'S4" W, a distance of2,354.96 FEET, to a point for an interior comer hereof;

THENCE, S OOOZ8'06" E, a distance of597.66 FEET, to a point for the South comer hereof;

THENCE, N 80025'28" W, a distance of3,582.90 FEET, to the POINT OF BEG1NNING, containing 598.98 acres of land, more or less.

Basis of Bearing: G.P.S., TX. South Zone, NAD-27

SHEETIOF2 H:\HOWLANOISURVEYING DEPAR1ME\'1\IobsIJOI3\22J60.4-13\22160.4-13.doc

www.howlandcompanies.com 7615 N. Bartlett Avenue P.O. Box 451128 (78045) : Laredo, TX78041 P. 956.722.4411 F.956.722.5414 TBPE Arm Registration No. F-4097 : TBPLS Firm Registration No. 100464-00

EXHIBIT "A-4"

CONOCOPHllLiPS COMPANY VAQUIUAS RANCH lEASE 257577-001 RETAINEO TRACT 4 (VAQUIUAS RANCH L WELLS No. 134, No. 136, No. 140, &: No. 190)

598.98 ACRES WEBB COUNTY, TEXAS

i SURVEY 1663 VAQUIUAS -Q-

i~ VAQUlllAS C.C.S.D. & R.G.N.G. R.R.

ABSTRACT 1123 co.

RANCH L No. 129

itr" RANCH L No. 171

i VAQUlllAS RANCH L No. 135 r··_··_··_··_··_··_··_··_··_··_··_··_··_··-.:r-··-··i EAST ow .5.314.75'

SURVEY 1661 C.C.S.D. 8< R.G.N.G. R.R. CO.

z ABSTRACT 1122 WEBB COUNTY. TEXAS fAST ___ _ r·:::'.::'·~10:..'~ VAQurUAS -¢-VAQUIUAS RANCH RANCH L No. 136 L No. 190 -¢-

CONOCOPHILLIPS COMPANY -¢- VAQUILLAS VAQUILlAS RANCH LEASE 257577-001 RANCH 6,740.00 ACRES (CALLED) L No. 134 RETAINED 159B.V8 ACRE UNff

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-- S 8Sr31 154 W ow 2,.354.96'

POIN'f or'\ BJlGOOfINCV

SURVEY 374 L. AYALA ABSTRACT 2125 I SURVEY 1660 C.C.S.D. & R.G.N.G. R.R. CO.

I ABSTRACT 2229

~ GRAPHIC SCALE O:l3ll!>DO 'i

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LEGEND , Rm.lon ~

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EXHIBIT"A-S"

FIELD NOTES FOR CONOCOP~L~SCOMPANY V AQUILLAS RANCH LEASE 257577-001 RETAINED TRACT 5 (VAQUILLAS RANCH L WELLS No. 138, No. 139, No. 133 & No. 188 ST)

640.00 ACRES

A TRACT OF LAND CONTAINING 640.00 ACRES, more or less, being out of the VaquiIlas Ranch Lease 257577-00 I, 6,740.00 Acres (Called), situated in the West Y2 of Survey 1662. RE. Farr, Abstract 2230; and Survey 1652, W.H. Taylor, Abstract 2876, Webb County, Texas, and being more particularly described as follows:

BEGINNING at a point which bears S 41°48'58" E. a distance of782.90 feet, from the VaquiUas Raneh L No. 138 Well;

THENCE, N 800 01'00" W. a distance of 1,834.72 FEET, to a point for the Southwest comer hereof;

THENCE, NORTH. a distance of 1,133.33 FEET, to a point for an exterior comer hereof;

THENCE, EAST, a distance of97.21 FEET, to a point for an interior comer hereof;

THENCE, NORTH, a distance of 5,125.38 FEET. to a point for the Northwest comer hereof;

THENCE, S 89°33'23" E, a distance of 5,644.97 FEET, to a point for the Northeast comer hereof;

THENCE, S 00°07'00" E, a distance of 4,247.26 FEET, to a point for an exterior comer hereof;

THENCE, WEST, a distance of3,943.78 FEET, to a point for an interior comer hereof;

THENCE, S 00 0 00'05" E, a distance of1,285.82 FEET, to the POINT OF BEGINNING, containing 640.00 acres of land, more or less.

Basis of Bearing: G.P.S., TX. South Zone, NAD-27

SHEET 1 OF2 H:\HOWLAND\SURVEYmGDEPAR1MEmUobs\2013\22160.5-13\22160.5-13.doc

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EXHIBIT "A-5"

CONOCOPHILLIPS COMPANY VAQUIUAS RANCH LEASE 257577-001 RETAINED TRACT 5 (VAQUIUAS RANCH L WELLS No. 133. No. 138. No. 139 & No. 188 ST)

640.00 ACRES WEBB COUNTY. lEXA.S

SURVEY 1650 -------------------.

C.C.S.D. & R.G.N.G. R.R. CO. ABSTRACT 2444

S 89'33'23- E .... 5,844.D7'

-------~---------_r~~~~~--------~ SURVEY 1652 SURVEY 1653 W.H. TAYLOR C.C.S.D. & ABSTRACT 2878 R.G.N.G. R.R. CO. CONOCOPHILLIPS COMPANY ABSTRACT 1099 VAQUILtAS RANCH LEASE 257577-001 6.740.00 ACRES (CALLED)

i...• RETAINED 840.00 ACRE UNrr VAQUILlAS RANCH -¢-L No. 133

-¢- VAQUILLAS RANCH k VAQUILlAS l No. 188 ST ~ RANCH L No. 1J9 (8HL) -¢- 0

WEST ~ SURVEY 1862 R.E. FARR ABSTRACT 2230 VAQUIUAS RANCH

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WEBB COUNTY. TEXAS L No. 18B ST

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...• ~ SURVEY 1662 A.F. CARROLL

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VAOUILlAS RANCH :sg ABSTRACT 3094

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GRAPlflC SCALE 'i[ SURVEY 373 S. & M. ABSTRACT 1718

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B""" PAGE 5 DAAWN BY: AL.C./S.I.Io4.

" '1' CHECKED BY: JS.

JOB No. 22160.5-U SHEET: 2 or z

Filed 9/3/20144:05:53 PM Esther Degollado District Clerk Webb District 2014CVQ000438 D4

CAUSE NO. 2014 CVQOOO 438 D4

VAQUILLAS UNPROVEN MINERALS, § IN THE DISTRICT COURT OF LTD, § Plaintiff, § § WEBB COUNTY, TEXAS v. § § CONOCOPHILLIPS COMPANY, § 406th JUDICIAL DISTRICT Defendant

PLAINTIFF'S FIRST AMENDED ORIGINAL PETITION

TO THE HONORABLE JUDGE OF SAID COURT:

Vaquillas Unproven Minerals, Ltd. ("Vaquillas"), Plaintiff, complains of

ConocoPhillips Company ("Conoco"), Defendant, and respectfully shows:

I.

DISCOVERY CONTROL PLAN

1. Plaintiff affirmatively pleads that discovery should be conducted III

accordance with Texas Rule of Civil Procedure 190.4 (Level 3).

II.

PARTIES

2. PlaintiffVaquillas is a Texas Limited Partnership with its principal place of

business in Laredo, Webb County, Texas.

3. Defendant Conoco is a Delaware Corporation with its principal place of

business in Houston, Texas. Conoco has been served and appeared herein.

4. Pursuant to Rule 39(c)'s requirement to name, if known, any person

described in subdivision (a) (1)-(2) as persons to be joined if feasible, Vaquillas hereby

identifies ExxonMobil Corp., Devon Energy Production Co., L.P., Kim Lake Inc., and

PLAINTIFF'S FIRST AMENDED ORIGINAL PETITION Page 1

Muryl Olinger. The reason they have not been made parties is because Vaquillas has

only recently determined (through Conoco's supplementation of its discovery responses)

that they are owners of interests in the oil and gas leases that are the subject of this

litigation. In addition, they appear to be parties to a Joint Operating Agreement under

which Conoco is the "Operator" and they are "Non-Operators." That operating

agreement provides for the defense of lawsuits such as this to be under the general

direction of a committee of lawyers representing the parties with the Operator's attorney

as Chairman, and includes provisions for the Operator and non -operators to share the

costs of the litigation. Based on the operating agreement's provision relating to defense

of lawsuits, Conoco's attorneys would act as Chairman in accordance with the operating

agreement. This issue has been raised with Conoco. Vaquillas stands ready to join these

persons and entities as parties if Conoco objects to their non-joinder, so long as it does

not delay the case or cause prejudice to Vaquillas.

III.

JURISDICTION AND VENUE

5. The District Courts of the State of Texas have jurisdiction over these claims

and these parties. Conoco's principal offices are in Houston, Texas, and its Texas oil and

gas operations are the subject of this cause.

6. This suit involves a dispute over two oil and gas leases which relate to real

property in Webb County, Texas. Venue is therefore proper (and mandatory) in Webb

County, Texas, under Sections 15.002(a) (I) and 15.011 of the Texas Civil Practice &

Remedies Code.

PLAINTIFF'S FIRST AMENDED ORIGINAL PETITION Page 2

IV.

RELIEF SOUGHT

7. Vaquillas seeks a release of acreage previously the subject of an oil and gas

lease, specific performance, and monetary relief over $1,000,000.

V. FACTS

8. Conoco has violated its agreement with Vaquillas by failing to execute and

deliver to Vaquillas a written release of all acreage in excess of 40 acres for each

producing and shut-in natural gas well capable of producing in paying quantities on

certain leased property that reverted to Vaquillas as a matter of law.

9. The following properties (the "Subject Property") are the subject of this

lawsuit:

26,622.79 acres ofland, more or less, situated in Webb County, Texas more fully described in the Oil, Gas and Mineral Lease dated June 15, 1974 (as amended) between Vaquillas Ranch Company, Ltd. et aI., as Lessor, and Conoco Inc., as Lessee, a copy of which is recorded in Volume 460, Pages 324-330 of the Webb County Deed Records (hereinafter the "26,622.79 acre lease"); and

6,740 acres of land, more or less, situated in Webb County, Texas more fully described in the Oil, Gas and Mineral Lease, dated effective November 1, 1987, and entered into by and between Vaquillas Ranch Company, Ltd., Vaquillas Unproven Mineral Trust, and Vaquillas Proven Mineral Trust, as Lessor, and Conoco Inc., as Lessee, a Memorandum of which is recorded in Volume 1303, Pages 886 et seq. of the Webb County Real Property Records (hereinafter the "6,740 acre lease").

10. Plaintiff Vaquillas is successor-in-interest to the Lessor(s) with respect to

both oil and gas leases described above. Defendant Conoco is a successor-in-interest to

the Lessee(s) with respect to both oil and gas leases described above.

PLAINTIFF'S FIRST AMENDED ORIGINAL PETITION Page 3

193

11. Both leases described in Paragraph 8 above have been amended and

supplemented a number of times. On or about November 1, 1987, the 26,622.79 acre

lease was amended to include a Paragraph 18. On the same date, the 6,740 acre lease was

entered into, containing the same Paragraph 18. This paragraph provides for the release

of acreage at the end of the continuous drilling program. In order to be engaged in a

continuous drilling program, Conoco must commence the drilling of a new well within 90

days after the completion of each well. At the end of the continuous drilling program

(i.e., when Conoco ceases to commence the drilling of new wells within the 90 day

period(s», Conoco is allowed to maintain its leases of the Subject Property only as to an

amount of acreage surrounding each well it drilled that is capable of producing in paying

quantities. Both leases require Conoco to execute and deliver to Vaquillas a written

release of any acreage not earned by drilling operations.

12. Under Paragraph 18 of both oil and gas leases, un-earned acreage reverted

to Vaquillas 90 days after Conoco ceased drilling wells under the continuous drilling

clause. In this case, that date occurred no later than June 21, 2012 ("Release Date").

This is the date ninety days after Conoco's Vaquillas Ranch A-7 No. 249 Well was

completed. Conoco's Vaquillas Ranch A-7 No. 249 Well was the last well it drilled on

the Subject Property.

13. Conoco takes the position that it has earned 40 acres per oil well and 640

acres per gas well. Conoco's position is not correct as to gas wells because it disregards

an important provision of both leases.

PLAINTIFF'S FIRST AMENDED ORIGINAL PETITION Page 4

194

14. Paragraph 18 of both leases controls how much acreage Conoco is allowed

to retain for each well it has drilled. Paragraph 18 states that if the Railroad Commission

of Texas adopts a rule for the field that provides for a spacing or proration establishing

units of acreage per well different than 40 acres for oil wells or 640 acres for gas wells,

Conoco may retain only the acreage provided by the units established by virtue of the

spacing provided by the Commission's rule:

... Lessee covenants and agrees to execute and deliver to Lessor a written release of any and all portions of this lease which have not been drilled to a density of at least 40 acres for each producing oil well and 640 acres for each producing or shut-in gas well, except that in case any rule adopted by the Railroad Commission of Texas or other regulating authority for any field on this lease provides for a spacing or proration establishing different units of acreage per well, then such established different units shall be held under this lease by such production, in lieu of the 40 and 640-acre units above mentioned. (Emphasis supplied).

15. After the November 1, 1987 amendment to the two leases, the Railroad

Commission did adopt a rule for the Vaquillas Ranch (Lobo Cons.) Field that provided

for spacing that established 40 acre units of acreage for each gas well rather than 640

acres. Therefore, Conoco is not allowed to retain more than 40 acres for each of the gas

wells it drilled on the Subject Property. The acreage to be released will hereafter be

referred to as the "Reverted Minerals."

16. On February 17,2014, Conoco filed of record in Webb County, Texas two

Partial Releases ("Partial Releases") of the two oil and gas leases, but these releases did

not release all the reverted acreage (i.e., all acreage in excess of 40 acres for each

producing and shut-in natural gas wells).

PLAINTIFF'S FIRST AMENDED ORIGINAL PETITION PageS

195

17. Without waiver of its right to do so at a later time and retaining all of its

rights under the two leases in question, Vaquillas does not challenge by this cause

Conoco's rights or interest in the wells it drilled on the Subject Property and producing in

paying quantities at the Release Date.

VI.

CAUSES OF ACTION

18. The foregoing Paragraphs 1 to 15, which are incorporated by reference

herein as if recited verbatim, support the following causes of action and claims:

19. Breach of Contract: At the Release Date, the Reverted Minerals

automatically reverted to Vaquillas. Conoco was required to provide Vaquillas with a

fully executed and recordable release of Reverted Minerals under the 26,622.79 acre

lease and the 6,740 acre lease, but Conoco has failed and refused to provide Vaquillas

with a release of all acreage in excess of 40 acres for each producing and shut-in natural

gas well capable of producing in paying quantities. Vaquillas has suffered direct and

foreseeable and indirect or consequential damages from these breaches of contract in

excess of the minimum jurisdictional amount.

20. Specific Performance: Conoco has failed to provide Vaquillas with a

release of all acreage in excess of 40 acres for each producing and shut-in natural gas

well, as provided for in the leases. Conoco should be ordered to specifically perform this

obligation to provide to Vaquillas a release of all acreage in excess of 40 acres for each

producing and shut-in natural gas well capable of producing in paying quantities.

PLAINTIFF'S FIRST AMENDED ORIGINAL PETITION Page 6

196

21. Removal of Cloud and Action to Quiet Title: As is set out above, the

26,622.79 acre lease and the 6,740 acre lease terminated as of the Release Date as to the

Reverted Minerals. Vaquillas would show that after making the oil and gas leases of the

Subject Property it was the owner of the reversionary interest in the mineral estate in the

Subject Property. On the Release Date, the mineral interest in the Reverted Minerals

reverted to Vaquillas. By Conoco's filing of the Partial Releases that did not release all

acreage in excess of 40 acres for each producing and shut-in natural gas well capable of

producing in paying quantities Conoco has clouded Vaquillas' title to the Reverted

Minerals, forcing Vaquillas to seek judicial confirmation of Vaquillas' interest in the

Reverted Minerals and judgment quieting title to the Reverted Minerals in Vaquillas.

22. Attorneys' Fees: As set out above, Conoco has breached (and continues to

breach) its obligation under the 26,622.79 acre lease and the 6,740 acre lease to execute

and deliver to Vaquillas a written release of all acreage in excess of 40 acres for each

producing and shut-in natural gas well capable of producing in paying quantities.

Vaquillas' claims have been presented to Conoco and Conoco has failed to release the

acreage in question within 30 days after presentment. Accordingly, Vaquillas is entitled

to its reasonable and necessary attorneys' fees with respect to this action. TEX. CIV.

PRAC. & REM. CODE §38.00 1.

23. Conditions Precedent: All conditions precedent to the bringing of these

claims has been performed or has occurred and Vaquillas was at all relevant times ready,

PLAINTIFF'S FIRST AMENDED ORIGINAL PETITION Page 7

197

willing and able to timely perform and did perform all of its obligations under the two

leases.

VII.

REQUEST FOR DISCLOSURES

24. Pursuant to Texas Rule of Civil Procedure 194, Plaintiff requests that

Defendant supplement Plaintiff's request for disclosure pursuant the Texas Rules of Civil

Procedure.

PRAYER

25. For these reasons, Plaintiff Vaquillas Unproven Minerals, Ltd. asks for

judgment against Defendant ConocoPhillips Company for the following:

I. damages, both direct and indirect or consequential in excess of the minimum jurisdictional amount;

II. judgment holding that the oil and gas leases in question have terminated as to all acreage described in such leases except 40 acres around the wellbore of each producing and shut-in natural gas well drilled by Conoco and capable of producing in paying quantities;

111. judgment holding that the Partial Releases are in valid and unenforceable, removing them from the title to the property made the subject of this litigation, and quieting title in Plaintiff;

IV. judgment ordering Conoco to execute a written release of the Reverted Minerals;

v. reasonable and necessary attorneys' fees; VI. prejudgment interest as provided by law; V11. post-judgment interest as provided by law; V111. costs of suit; and IX. all other relief to which Plaintiff is entitled.

Respectfully submitted,

By: lsi Gregg Owens Gregg Owens

PLAINTIFF'S FIRST AMENDED ORIGINAL PETITION Page 8

Gregg Owens, SBN 15383500 gregg.owens@haysowens.com John R. Hays, Jr., SBN 09303300 john.hays@haysowens.com Alicia R. Ringnet, SBN 24074958 alicia.ringuet@haysowens.com HA YS & OWENS L.L.P. 807 Brazos Street, Suite 500 Austin, Texas 78701 (512) 472-3993 (512) 472-3883 Facsimile

Michael Jung, SBN 11054600 michaeljung@strasburger.com STRASBURGER & PRICE, LLP 901 Main Street, Suite 4400 Dallas, Texas 75202-3794 (214) 651-4724 (214) 651-4330 Facsimile

Armando X. Lopez, SBN 12562400 mandox@rio.bravo.net LAW OFFICES OF ARMANDO X. LOPEZ 1510 Calle Del Norte, Suite 16 Laredo, Texas 78041 (956) 726-0722 (956) 726-6049 Facsimile

Raul Leal, SBN 24032657 rleal@rl-lawfirm.com RAUL LEAL INCORPORATED 5810 San Bernardo, Suite 390 Laredo, Texas 78041 (956) 727 -0039 (956) 727-0369 Facsimile

ATTORNEYS FORVAQUILLAS UNPROVEN MINERALS, LTD.

PLAINTIFF'S FIRST AMENDED ORIGINAL PETITION Page 9

CERTIFICATE OF SERVICE

I hereby certifY that a true copy of this document is being served on the following persons by the means shown on this the 3rd day of September, 2014.

By: lsi Gregg Owens Gregg Owens

Mr. Michael V. Powell via Electronic Mail mpowell@lockelord.com Ms. Elizabeth L. Tiblets etiblets@lockelord.com LOCKE LORD LLP 2200 Ross Avenue, Suite 2200 Dallas, Texas 75201-6776

Mr. Adolfo Campero via Electronic Mail acampero@camperolaw.com CAMPERO & ASSOCIATES, P.C. 315 Calle Del Norte, Suite 207 Laredo, Texas 78041

ATTORNEYS FOR DEFENDANT CONOCOPHILLIPS COMPANY

PLAINTIFF'S FIRST AMENDED ORIGINAL PETITION Page 10

Filed 7/30/201412:03:15 PM Esther Degollado District Clerk Webb District 2014CVQ000438 D4

CAUSE NO. 2014CVQ000438 D4

VAQUILLAS UNPROVEN MINERALS, § IN THE DISTRICT COURT OF LTD, § § Plaintiff, § § v. § WEBB COUNTY, TEXAS § CONocopmLLIPS COMPANY, § § Defendant. § 406TH JUDICIAL DISTRICT

DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

TO THE HONORABLE JUDGE OF SAID COURT:

Defendant ConocoPhillips Company ("ConocoPhillips") moves, pursuant to Tex. R. Civ.

P. I 66a(b), for summary judgment that Plaintiff Vaquillas Unproven Minerals, Ltd.

("Vaquillas") take nothing by this action. There are no genuine issues of material fact, and

ConocoPhillips is entitled to judgment as a matter oflaw.

I. INTRODUCTION: VAQUILLAS' SUIT PRESENTS ONE ISSUE ABOUT THE PROPER INTERPRETATION OF TWO OIL AND GAS LEASES

This action turns on the proper interpretation of certain language found in two Oil, Gas,

and Mineral Leases under which Vaquillas claims to be the sole current "Lessor," and

ConocoPhillips is the current Lessee. (See Plaintiff s Original Petition ~ 9). Vaquillas has

described the two Leases in paragraph 8 of its Original Petition as the "26,622.79 Acre Lease"

and the "6,740 Acre Lease," and ConocoPhillips has attached true and correct copies of those

two Leases (without amendments not pertinent here) as Exhibits A and B to the Declaration of

Dana C. Huebner attached at Tab 1 to this Motion for Summary Judgment (the "Leases").

DEFENDANT'S MOTION FOR SUMMARY JUDGMENT PAGEl

Although all of the language in the Leases is important, 1 Vaquillas bases all of its claims

in this lawsuit on the following language from Paragraph 18 of both Leases. 2 (ConocoPhillips

will indent and number the sentences and separate phrases quoted from Paragraph 18 in order to

facilitate later discussion of them.i

Sentence (1): On November I, 1990, Lessee covenants and agrees to

execute and deliver to Lessor a written release of any and all portions of this lease

which have not been drilled to a density of at least 40 acres for each producing oil

well and 640 acres for each producing or shut-in gas well,

Sentence (2): except that in case any rule adopted by the Railroad

Commission of Texas or other regulating authority for any field on this lease

provides for a spacing or proration establishing different units of acreage per well,

then such established different acreages shall be held under this lease by such

production, in lieu ofthe 40 and 640-acre units above mentioned;

Sentence (3): provided, however, that if at such date lessee is engaged in

drilling or reworking operations the date for the date for execution and delivery of

such release shall be postponed and the entire lease shall remain in force so long

1When interpreting an oil and gas lease, the Court must "examine the entire document and consider each part with every other part so that the effect and meaning of one part on any other part may be determined." Heritage Resources, Inc. v. NationsBank, 939 S.W.2d 118, 121 (Tex. 1996).

2Each of the alleged causes of action in Plaintiffs Original Petition is based on Vaquillas'

erroneous interpretation of Paragraph 18. See Plaintiffs Original Petition '11'11 17-20. This Motion for Summary Judgment explains why Vaquillas' interpretation is wrong as a matter of law. Consequently, this motion seeks summary judgment on the entire case.

3This quotation is from the "26,622.79 Acre Lease," as described in Paragraph 8 of Vaquillas' Petition. The only difference between this language in the two Leases is that the second lease, the "6,740 Acre Lease" described by Vaquillas starts with: "At the end of the primary term, Lessee covenants and agrees .... " DEFENDANT'S MOTION FOR SUMMARY JUDGMENT PAGE 2

29

as operations on said well or wells are prosecuted with reasonable diligence, and

if, after the completion or abandonment of any such well Lessee commences the

drilling of an additional well within Ninety (90) days from the completion or the

abandonment of the preceding well, or continuously conducts drilling operations

in good faith and with reasonable diligence on said lease without any cessation for

longer than Ninety (90) days, said lease shall remain in full force and effect

during such drilling operations and until the end of Ninety (90) days after the

completion or abandonment of the final well, at which time Lessee shall execute

and deliver to Lessor said written release, releasing all portions of the lease not

then so developed.

Sentence (4): Each retained unit shall contain at least one (1) well

producing or capable of producing oil or gas in paying quantities, and the acreage

within a unit shall be contiguous.

See Petition ~~ 11, 13; Huebner Declaration, Exhs. A & B (emphasis added).

The wells on the Leases produce gas, so the relevant "development" obligation and the

retained acreage size to which the parties agreed in Sentence (1), quoted above, is 640 acres.

There is no dispute between the parties that ConocoPhillips maintained the 26,622.79 Acre Lease

in full force and effect for many years after November 1, 1990, and the 6,740 Acre Lease in full

force and effect for many years after its primary term by continuous drilling. There is no dispute

that ConocoPhillips' continuous drilling operations ended at or about the time Vaquillas states in

Paragraph II of its Original Petition. Due to the end of continuous drilling operations, COPC

filed the Releases of Acreage that it believed were due to Vaquillas as stated in the final phrase

of Sentence (3) and in Sentence (4), copies of which are attached as Exhibits C and D to the

DEFENDANT'S MOTION FOR SUMMARY JUDGMENT PAGE 3

Huebner Declaration, filed herewith. ConocoPhillips' Releases of Acreage retained 640-acre

units around producing gas wells, as agreed in Sentence (1).

The sole dispute between the parties to this case turns the proper interpretation of

Sentence (2), quoted above. There is no disagreement that the Railroad Commission of Texas

(the "Commission") has adopted Field Rules for the Vaquillas Ranch (Lobo Cons.) Field, Webb

County, Texas. Those Field Rules apply to the wells at issue in this case. Those Field Rules,

originally effective February 24, 1998, were amended into their current form effective November

2,2010. The Field Rules for the Vaquillas Ranch (Lobo Cons.) Field, as amended, are attached

as Tab 2 to this Motion. The Court may take judicial notice of these Field Rules adopted by the

Commission, and ConocoPhillips requests it to do so. TEX. R. EVID. 201.

Vaquillas contends the Field Rules triggered the exception in Sentence (2) to the parties'

basic agreement of Sentence (1), which was that ConocoPhillips would retain 640 acres for gas

wells. (Plaintiffs Original Petition ~~ 13-14). Vaquillas contends that the Field Rules

"established different units of acreage per well," specifically only 40-acre units for gas wells, and

that consequently, COPC must forfeit, because of Paragraph 18, a great deal more acreage from

the two Leases than it already has released to Vaquillas. (See Plaintiffs Original Petition ~~ 14,

17,18,19).

For the reasons explained below, Vaquillas' contentions are wrong Under the

straightforward, plain meaning of Paragraph 18, the Commission's Field Rules do not "establish"

different units of acreage per well. Those Rules state only that no well may be drilled on less

than 40 acres, which is exactly the same minimum density that applied under the Commission's

Statewide Rules in effect for these Leases before the Commission adopted Field Rules. The

Field Rules say nothing about any maximum acreage that may be assigned to gas wells.

DEFENDANT'S MOTION FOR SUMMARY JUDGMENT PAGE 4

Consequently, nothing in the Field Rules is inconsistent with, or overrides, the parties' basic

agreement that gas wells retain 640 acres. Nothing about those Field Rules "establishes" any

unit different from 640 acres. 4

II. PERTINENT PROVISIONS OF THE TWO LEASES

As Texas oil and gas leases, the two Leases actually are conveyances by which the Lessor

granted a fee simple determinable in the minerals in and under the land described in the Leases

to the Lessee, who is more properly referred to as a "Grantee." Natural Gas Pipeline Co. v.

Pool, 124 S.W.3d 188, 192 (Tex. 2003); accord Anadarko Petroleum Corp. v. Thompson, 94

S.W.3d 550, 554 (Tex. 2002). By the first Lease, Vaquillas and its predecessors granted to

ConocoPhillips' predecessor the mineral estate in and under 26,622.79 acres of Webb County

land for "five years (called "primary term") and as long thereafter as oil, gas or other mineral is

produced from said land or land with which said land is pooled hereunder." By the second

Lease, Vaquillas and its predecessors did the same for an additional 6,740 acres of Webb County

land, except the term of that Lease was for "three years ... and as long thereafter as oil, gas or

other mineral is produced from said land or land with which said land is pooled .... "

"An oil, gas and mineral lease is indivisible by its nature. Production from any part of

the lease keeps the lease in effect during the primary term and for long as oil, gas and other

minerals are being produced as to all lands described in the instrument." Shown v. Getty Oil Co.,

645 S.W.2d 555, 560 (Tex. App.-San Antonio 1982, writ refd). Accord, Matthews v. Sun Oil

4 There are field rules that do "establish" maximum acreages. As one example, Tab 3 to this Motion is a copy of the Final Order Adopting Temporary Rules and Regulations for the Big Reef (Edwards) Field, Webb County. Rule 3 of that Field Rule establishes standard drilling and proration units to be 160 acres. Those rules provide that "no proration unit shall consist of more than ONE HUNDRED SIXTY (160) acres, plus a 10% tolerance. ConocoPhillips' point is that the Field Rules for the Vaquillas Ranch (Lobo Cons.) Field do not establish any such "maximum" units. DEFENDANT'S MOTION FOR SUMMARY JUDGMENT PAGES

Co., 425 S.W.2d 330, 333 (Tex. 1968); Humphrey v. Seale, 716 S.W.2d 620, 622 (Tex. App.-

Corpus Christi 1986, no writ).

Accordingly, ConocoPhillips' extensive production from the two Leases entitles

ConocoPhillips to maintain the Leases in full force and effect as to all of the land covered by the

Leases until one of two events came to pass, both of which are "limitations on the grant." The

first limitation on the grant is found in the habendum clauses of the two Leases and is cessation

of production in paying quantities, an event that has not occurred. Under Vaquillas' arguments,

the second limitation on the grant is the requirement to deliver releases of undeveloped acreage

that is contained in Paragraph 18. Consequently, the question posed by Vaquillas' Petition is

whether by virtue of a second limitation on the grant contained in the two Leases,

ConocoPhillips must release thousands of additional acres it has earned by extensive drilling and

would continue to hold under the habendum clauses because Sentence (2) of Paragraph 18 means

it may retain only 40, rather than the agreed 640, acres around producing wells?

Note that both Leases expressly authorized ConocoPhillips to assign acreage up to 640-

acres (plus a tolerance of 10 percent) to gas wells. Paragraph 4 of both Leases grants optional

pooling authority to the Lessee and says:

... units pooled for gas hereunder shall not substantially exceed in area 640 acres each plus a tolerance often percent (10%) thereof, provided that should governmental authority having jurisdiction prescribe or permit the creation of units larger than those specified, for the drilling or operation of a well at a regular location or for obtaining maximum allowable from any well to be drilled, drilling or already drilled, units thereafter may conform substantially in size with those prescribed or permitted by governmental regulations.

Paragraph 16 of both Leases created an additional limitation on the Lessee's pooling authority by

restricting the option to pool to leases covering land belonging to Vaquillas or in which

Vaquillas owned an interest, but that restriction is not pertinent here.

DEFENDANT'S MOTION FOR SUMMARY JUDGMENT PAGE 6

Accordingly, the normal and completely authorized block of acreage under these Leases

for gas wells is 640 acres. As noted above, that acreage for gas wells was expressly authorized

by the pooling clause. Under Sentence (1) of Paragraph 18, that was the parties' agreement for

"retained acreage" around gas wells at the time Paragraph 18 came into playas an active

limitation on the grant of a fee simple determinable to ConocoPhillips "as long thereafter as oil,

gas or other mineral is produced from said land or land with which said land is pooled .... "

(Leases ~2).

III. THE FIELD RULES

The Field Rules do not, on their face, say anything about a minimum density, or

minimum acreage around wells. (See Tab 2 to this Motion). The Field Rules state (with an

important exception) that wells must be at least 467 feet from property and lease boundaries

("lease line spacing") and at least 1,200 feet apart if they are drilled to the "same reservoir on the

same lease, pooled unit, or unitized tract" ("between well spacing"). The exception added by the

20 I 0 amendment to the Field Rules is that there is no between well spacing for wells drilled at

least 660 feet from the nearest property or lease boundary.

The minimum distances of 467 feet for lease line spacing and 1,200 feet for between well

spacing are the very same minimum distances set forth by Statewide Spacing Rule 37, which

governed wells on these Leases before the Commission adopted Field Rules. See 16 T.A.C. §

3.37(a)(l) (stating the Statewide Spacing Rule as follows: "No well for ... gas ... shall

hereafter be drilled nearer than 1,200 feet to any well completed in or drilling to the same

horizon on the same tract or farm, and no well shall be drilled nearer than 467 feet to any

property line, lease line, or subdivision line."). So, the Field Rules did not adopt any "different"

DEFENDANT'S MOTION FOR SUMMARY JUDGMENT PAGE 7

34

spacing rules from the Statewide Rules already in effect before the Commission promulgated

those Field Rules.

When, as here, a Field Rule of the Commission does not contain a well density

requirement, which is the minimum amount of acreage needed to drill a well, but does prescribe

minimum spacing requirements, one looks to the Commission's Statewide Rule 38, titled "Well

Densities," to ascertain minimum densities. 16 T.A.C. § 3.38. "Rule 38 establishes the minimum

number of acres to be assigned to each well in a given reservoir." 2 E. Smith & J. Weaver,

TEXAS LAW OF OIL AND GAS ~ 9.3(B) (2013). Statewide Rule 38(b)(2)(A) provides that for

spacing rules requiring a minimum 467 feet lease line spacing and 1,200 feet between-wells

spacing (which is the case for both the Statewide Spacing Rule 37 and the Field Rules for the

Vaquillas Ranch (Lobo Cons.) Field), the minimum number of acres that must be assigned to

each well is 40 acres. There is no maximum number of acres that may be assigned to each well.

Except for the requirement that there must be at least 40 acres, Rule 38 does not require acreages

of any particular size to be assigned to gas wells. s

The only relevant prohibition in Rule 38 is that "[nlo well shall be drilled on substandard

acreage," which means in this case, no well shall be drilled on less than 40-acre units. 16 T.A.C.

§3.38(b)(1). None of the applicable Commission rules prohibits drilling on, or retention of, units

larger than 40 acres per well. As stated above, neither the Field Rules nor Statewide Rule 38

5Proper interpretation of the Commission's Field Rules is, of course, a question oflaw for the Court. See, e.g., State v. Bilbo, 392 S.W.2d 121, 122 (Tex. 1965) (interpretation of certificate issued by the Commission presents a question oflaw).

DEFENDANT'S MOTION FOR SUMMARY JUDGMENT PAGES

35

establishes any maximum acreage per well. 6 Consequently, these parties' agreement that

ConocoPhillips may retain 640 acres of retained acreage around gas wells complies in every

respect with the Field Rules for the Vaquillas Ranch (Lobo Cons.) Field and Statewide Rule 3S.

As a matter of common sense, blocks of 640 acres plainly satisfy the requirement that there must

be at least 40 acres assigned.

As will be discussed in greater detail below, nothing in the Field Rules for the Vaquillas

Ranch (Lobo Cons.) Field requires, mandates, or-important here--"establishes" any units of less

than 640 acres.

Rule 3 of the Field Rules addresses proration. There is no factor in the proration formula

for the Vaquillas Ranch (Lobo Cons.) Field for the amount of acreage assigned to wells. Other

field rules do employ acreages as a factor for proration, but these Field Rules do not.

IV. ARGUMENT AND AUTHORITIES

A. The Word the Parties Chose for Paragraph 18: "Establish."

In order to decide this case, the Court must closely analyze the specific language these

parties chose to use for Paragraph IS of these Leases. The operative words from the exception in

Sentence (2), quoted above, are: "in case any rule adopted by the [Commission] for any field on

this lease provides for a spacing or proration establishing different units of acreage per well. then

such established different units shall be held under this lease by such production, in lieu of the ..

. 640-acre units above mentioned."

The leading Texas Supreme Court opinion on this type of language-which

ConocoPhillips says compels a decision in its favor-is Jones v. Killingsworth, 403 S.W.2d 325

6As noted above, the maximum acreage limitation for the wells at issue here is set forth in Paragraph 4 of the Leases. Paragraph 4 prohibits ConocoPhillips from assigning more than 640 acres (Plus a 10 percent tolerance) to each gas well. DEFENDANT'S MOTION FOR SUMMARY JUDGMENT PAGE 9

(Tex. 1965). In Jones, the Court was called upon to construe a pooling provision in an oil and

gas lease that provided, in pertinent part, as follows:

Units pooled for oil hereunder shall not substantially exceed 40 acres each in area, and units pooled for gas hereunder shall not substantially exceed 640 acres each plus a tolerance of 10% thereof, provided that should governmental authority having jurisdiction prescribe or permit the creation of units larger than those specified, units thereafter created may conform substantially in size with those prescribed by governmental regulations.

Id. at 327 (emphasis added). The Railroad Commission promulgated Field Rules for the field

covered by the Jones lease, and those Field Rules required operators to assign a minimum of 80

acres to oil wells, but went further to permit them also to assign an additional 80 acres, for a total

of 160 acres to oil wells. Id.

The dispute before the Supreme Court was that the lessor, Jones, contended the language

of her lease authorized the lessee, Killingsworth, to unitize only 80 acres around oil wells.

Killingsworth, the lessee, contended the Field Rules permitted him to create units that conformed

substantially to the maximum acreage of 160 acres that was permitted for oil wells by the

applicable Field Rules. The Supreme Court decided the case for Jones by focusing on the

difference between two specific words-"prescribed" and "permitted"-that the parties had

employed in the Jones-to-Killingsworth lease. The Court held as follows:

The lessors did not consent to enlarge an oil proration unit to any size permitted by governmental regulations. They gave their consent to enlarge a unit of substantially 40 acres, but only to the extent of the size of units prescribed by the regulatory authority. The fact that the Railroad Commission may permit a much larger unit cannot be read into the lease contract when, as here, the authority create larger units is expressly limited to units of the size prescribed by the Railroad Commission. The Commission prescribed a unit of 80 acres. [The field rules clearly say that there must be a proration unit of at least 80 acres, and there may be larger units of not more than 160 acres]. * * *

The parties obviously knew when the lease contract was executed that a permitted oil proration unit could conceivably be much larger in area than one prescribed by governmental authority. To say that a lessee can pool lessors' land

DEFENDANT'S MOTION FOR SUMMARY JUDGMENT PAGE 10

with units of any size permitted by the Railroad Commission would defeat the intention of the parties to restrict the size of the units to the size prescribed by govemmental authority.

Id at 328 (emphasis in original).

The same analysis is applicable here. Before the exception in Sentence (2) of the

Vaquillas Leases, quoted above, comes into play, the Railroad Commission must "establish"

units for gas wells of a different size than 640 acres. The parties used the word "establish" twice,

saying first "establishing different units of acreage," and second, referring to "established

different units." The parties did not say the exception in Sentence (2) comes into play if the

Railroad Commission adopts a Field Rule that merely "permits" the creation of gas units of

fewer than 640 acres, and that is all the Field Rules for the Vaquillas Ranch (Lobo Cons.) Field

do. They permit operators to drill wells on a minimum of 40 acres, but they do not "establish"

40 acre units.

Unless words are specifically defined in oil and gas leases, Texas courts give those words

their "plain, ordinary, and generally accepted meaning." Heritage Resources, 939 S.W.2d at

121. The ordinary meaning of the word "establish" is "to settle, make, or fix firmly." BLACK'S

LEGAL DICTIONARY at 626 (9th ed. 2009). Similarly, an old Texas case says "established"

means "[m]ake steadfast, firm, or stable, to settle on a firm or permanent basis." Rowley v.

Braley, 286 S.W. 241,245 (Tex. Civ. App.-Amarillo 1926, writ dism'd). WEBSTER'S THIRD

NEW INTERNATIONAL UNABRIDGED DICTIONARY (1993) says "establish" means either "to make

firm or stable," or to "settle or fix after consideration by enactment or agreement." Id at 778.

Using those definitions, it is flatly incorrect for Vaquillas to argue that the Field Rules in

question "settle" or "fix firmly" that there must be only 40 acre units of acreage for gas wells.

Those Rules clearly do not. Those Rules provide nothing more than that gas wells must have a

DEFENDANT'S MOTION FOR SUMMARY JUDGMENT PAGE 11

38

minimum of 40 acres, and ConocoPhilIips' retained acreage blocks of 640 acres clearly meet that

minimum limit.

ConocoPhillips was well within its authority under the Vaquillas Leases' pooling clauses

to assign 640 acres to gas wells, and nothing in the Field Rules "established" or in any way

compelled ConocoPhilIips to reduce its units to any different size.

In order for the Court to give Sentence (2) the meaning for which Vaquillas contends, the

Court would have to rewrite that sentence in both Vaquillas Leases to say something like: "in

case any rule adopted by the Railroad Commission of Texas or other regulating authority for any

field on this lease provides for a spacing or proration [permitting] different units of acreage per

well, then such [permitted] different units shall be held under this lease by such production, in

lieu of the ... 640-acre units above mentioned." But this Court may not rewrite the Vaquillas

Leases in the guise of interpreting them. E.g., EOG Resources, Inc. v. Killam Oil Co., Ltd., 239

S.W.3d 293, 300 (Tex. App.-San Antonio 2007, pet. denied). And that is precisely the

interpretation the Supreme Court rejected in Jones. 7 "Prescribe" does not mean "permit," and

"establish" does not mean "permit."

B. The Presumption Against a "Limitation on the Grant."

For the reasons explained above, there is no room for doubt about the proper meaning of

Sentence (2). As explained above, "establish" does not mean "permit." Indeed, "establish"

means "to settle, make, or fix firmly," which is a far cry from "permit" or "allow." But even if

there were some possible doubt or ambiguity in Paragraph 18, the Court would be required to

interpret Paragraph 18 as ConocoPhillips contends because of the long-standing, very strong,

7The Supreme Court decided Jones v. Killingsworth in 1965, several years before either of the Vaquillas Leases was executed. With knowledge of the Court's interpretation in Jones, there can be little doubt that if these parties intended for Sentence (2) to apply when the Railroad Commission merely permitted smaller units, they would have said so. DEFENDANT'S MOTION FOR SUMMARY JUDGMENT PAGE 12

39

rule in Texas law that "the language used by the parties to an oil and gas lease will not be held to

impose a special limitation on the grant unless it is clear and precise and so unequivocal that it

can reasonably be given no other meaning." Rogers v. Ricane Enterprises, Inc., 773 S.W.2d 76,

79 (Tex. 1989). Accord, Anadarko Petroleum Corp. v. Thompson, 94 S.W.3d 550, 554 (Tex.

2002); Fox v. Thoreson, 398 S.W.2d 88, 92 (Tex. 1966); Knight v. Chicago Corp., 188 S.W.2d

564, 566 (Tex. 1945).

VaquiIIas wants the Court to interpret Sentence (2) of Paragraph 18 as a limitation on the

lessors' grant to ConocoPhiIIips of a fee simple determinable in the mineral estate in and under

all land described in the VaquiIIas Leases. Although ConocoPhillips disagrees, VaquiIIas even

describes Paragraph 18 as an automatic, self-executing limitation on VaquiIIas' grant to

ConocoPhiIIips. Paragraph 11 of Plaintiffs Original Petition alleges: "Under Paragraph 18 of

both oil and gas leases, un-earned acreage reverted to Vaquillas 90 days after Conoco ceased

drilling wells under the continuous drilling clause." VaquilIas even describes the additional

acreage it contends ConocoPhillips must release as the "Reverted Minerals." (Plaintiffs

Original Petition ~ 14). Accordingly, VaquiIIas wants the Court to interpret Sentence (2) to

result in ConocoPhilIips' loss of an additional thousands of acres of leasehold estate, i.e.,

VaquiIIas seeks a ruling from this Court that ConocoPhillips forfeited the thousands of acres

VaquiIIas calls the "Reverted Minerals," which are those acres included within the 640-acre

"Retained Units" that ConocoPhillips retained when it executed releases to Vaquillas under

Paragraph 18, but would not be within the only 40-acre blocks Vaquillas claims Sentence (2)

allowed ConocoPhillips to retain.

When the word "establish" in Sentence (2) is given its proper, ordinary meaning,

Vaquillas' interpretation of Sentence (2) is not a permissible--or even reasonable--

DEFENDANT'S MOTION FOR SUMMARY JUDGMENT PAGE 13

40

interpretation. That is especially true in view of the Texas Supreme Court's strong presumption

against construing lease provisions as limitations on the grant, which is what Vaquillas contends

Sentence (2) of Paragraph 18 is. Vaquillas' interpretation should be rejected as a matter oflaw.

V. THE SUMMARY JUDGMENT RECORD

The summary judgment record that ConocoPhillips places before the Court consists of:

1. The Declaration of Dana C. Huebner, attached as Tab I, which authenticates

copies of the two Leases and the Partial Releases of Oil and Gas Leases that ConocoPhillips has

already filed of record releasing acreage from the two Leases, but retaining 640-acre blocks of

acreage around producing gas wells.

2. The Field Rules for the Vaquillas Ranch (Lobo Cons.) Field, Webb County,

Texas, as amended, attached at Tab 2.

3. ConocoPhillips relies on Plaintiffs Original Petition to show what Plaintiff

contends in this case and for certain admissions therein that demonstrate that certain facts are

undisputed. ConocoPhillips has generally denied the allegations in Plaintiffs Original Petition.

If this Motion for Summary Judgment is denied, ConocoPhillips reserves all rights to contest the

allegations in the Petition.

VI. PRAYER FOR RELIEF

Defendant ConocoPhillips Company prays that this Motion for Summary Judgment will

be granted and that final judgment be entered that Plaintiff Vaquillas Unproven Minerals, Ltd.,

take nothing by this action. ConocoPhillips also prays for recovery of its costs and for all other

relief to which it is entitled.

DEFENDANT'S MOTION FOR SUMMARY JUDGMENT PAGE 14

CERTIFICATE OF SERVICE

I hereby certify that a true and correct copy of the foregoing Defendant's Motion for Summary Judgment was served via email on the following counsel of record for Plaintiff as stated on this 30th day of July 2014:

Gregg Owens Raul Leal Email: gregg.owens@haysowens.com Raul Leal Incorporated Robert G. Hargrove 5810 San Bernardo, Suite 390 Email: rob.hargrove@haysowens.com Laredo, Texas 78041 Hays & Owens L.L.P. Tel: 956.727.0039 807 Brazos Street, Suite 500 Fax: 956.727.0369 Austin, Texas 7870 I Email: rleal@rl-Iawfirm.com Tel: 512.472.3993 Fax: 512.472.3883

Michael Jung Armando X. Lopez Strasburger & Price, LLP 1510 Calle Del Norte, Suite 16 90 I Main Street, Suite 4400 Laredo, Texas 78041 Dallas, Texas 75202-3794 Tel: (956) 726-0722 Tel: 214.651.4724 Fax: (956) 726-6049 Fax: 214.651.4330 (main) mandox@rio.bravo.net Fax: 214.659.4022 (direct) Email: michael.jung@strasburger.com

Counsel for Vaquillas Unproven Minerals, Ltd.

DEFENDANT'S MOTION FOR SUMMARY JUDGMENT PAGE 16

Dated: July 30, 2014 Respectfully submitted,

7n~~c'7 Michael powell State Bar No. 16204400 Email: mpowell@lockelord.com Elizabeth L. Tiblets State Bar No. 24066194 Email: etiblets@lockelord.com LOCKE LORD LLP 2200 Ross Avenue, Suite 2200 Dallas, Texas 75201-6776 Tel: 214-740-8520 Fax: 214-740-8800

Adolfo Campero State Bar No. 00793454 CAMPERO & ASSOCIATES, P.C. 315 Calle Del Norte, Suite 207 Laredo, Texas 78041 Tel: 956-796-0330 Fax: 956-796-0399 Email: acampero@camperolaw.com

ATTORNEYS FOR DEFENDANT CONOCOPHILLIPS COMPANY

DEFENDANT'S MOTION FOR SUMMARY JUDGMENT PAGE 15

Filed 9/8/20144:12:20 PM Esther Degollado District Clerk Webb District 2014 CVQOOO 438 D4 CAUSE NO. 2014 CVQOOO 438 D4

VAQUILLAS UNPROVEN MINERALS, § IN THE DISTRICT COURT OF LTD., § Plaintiff, § § v. § WEBB COUNTY, TEXAS § CONOCOPHILLIPS COMPANY, § Defendant § 406th JUDICIAL DISTRICT

PLAINTIFF'S CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT AND RESPONSE TO DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

PLAINTIFF'S CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT AND RESPONSE TO DEFENDANT'SMOTJON FOR SUMMARY JUDGMENT PAGEl

TABLE OF CONTENTS

I. SUMMARY ......................................................................................................................... 3

II. SUMMARY JUDGMENT STANDARD .......................................................................... 6

III. BACKGROUND ................................................................................................................. 7

A. The purpose of an oil and gas lease, as well as a retained acreage clause, is to develop property to produce minerals ................................................................................................... 7 B. Spacing, density, and proration units .............................................................................. 8 C. The Leases contain a retained acreage clause limiting the amount of acreage Conoco was allowed to retain for each well........................................................................................ 10 D. The Railroad Commission adopted spacing rules for the Vaquillas Ranch (Lobo Cons.) Field .............................................................................................................................. 12 IV. ARGUMENT AND AUTHORITIES ............................................................................. 13

A. Under the plain language of the Leases, Conoco is entitled to retain no more than the 40-acre units per well established by the Railroad Commission ........................................ 13 B. Conoco's contention that the field rules for the Vaquillas Ranch (Lobo Cons.) field do not establish 40-acre units requires the Court to disregard or to add words to the Leases ........................................................................................................................................ 16 C. Jones v. Killingsworth, cited by Conoco, supports Vaquillas's position that the field rules "establish" or "prescribe" 40-acre units, and operators are only "permitted" to form larger units ...................................................................................................................... 19 D. Conoco's interpretation ignores the inherent role of drilling units as specifying the minimum acreage required to drill wells, and thereby renders the word "spacing" in Paragraph 18's agreed exception meaningless ..................................................................... 22 E. Conoco's argument regarding a presumption against a "limitation on the grant" is not relevant to the question of whether Conoco is obligated to execute a formal release of the Reverted Minerals. Further, the presumption does not apply in the context of Paragraph 18's clear condition .............................................................................................. 24 V. CONCLUSION ................................................................................................................. 25

VI. SUMMARY JUDGMENT EVIDENCE ....................... ....................... ........................... 26

VI. PRAYER ........................................................................................................................... 28

PLAINTIFFS CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT AND RESPONSE TO DEFENDANT'S MOTION FOR SUMMARY JUDGMENT PAGE 2

CAUSE NO. 2014 CVQOOO 438 D4

VAQUILLAS UNPROVEN MINERALS, § IN THE DISTRICT COURT OF LTD., § Plaintiff, § § v. § WEBB COUNTY, TEXAS § CONOCOPHILLIPS COMPANY, § Defendant § 406th JUDICIAL DISTRICT

PLAINTIFF'S CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT AND RESPONSE TO DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

TO THE HONORABLE JUDGE OF SAID COURT:

Plaintiff Vaquillas Unproven Minerals, Ltd. ("Vaquillas") moves for partial

summary judgment against Defendant ConocoPhillips Company ("Conoco"), and urges

the denial of Cono co's motion for summary judgment, and in support respectfully shows:

I. SUMMARY

Vaquillas seeks a partial summary judgment holding that Conoco retains only 40

acres for each producing and shut-in gas well drilled by Conoco on the oil and gas leases

that are the subject of this lawsuit. Vaquillas also seeks denial of Conoco's motion for

summary judgment.

The central issue in this case is the legal interpretation of a retained acreage clause

that is identical in two oil and gas leases between Vaquillas, as lessor, and Conoco, as

lessee. Under both leases, Conoco was entitled to retain acreage for each producing or

shut-in gas well capable of producing in paying quantities upon the expiration of its

continuous drilling program. For each gas well Conoco drilled, it was entitled to retain

acreage equal to the size of units established by the spacing provided in the rules adopted

PLAINTIFF'S CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT AND RESPONSE TO DEFENDANT'SMOTJON FOR SUMMARY JUDGMENT PAGE 3

203

by the Railroad Commission for the field of production, here 40 acres per well. Had the

Commission not adopted such rules, Conoco would have been entitled to retain 640 acres

per gas well. But that is not the case. Conoco did not drill the additional wells to

develop the leasehold acreage to the density provided by the Railroad Commission rules.

Accordingly, the leases terminated as to all but the 40 acres retained for each well, and

the remaining acreage reverted to Vaquillas.

The key language is in Paragraph 18 of both Leases:

... Lessee covenants and agrees to execute and deliver to Lessor a written release of any and all portions of this lease which have not been drilled to a density of at least 40 acres for each producing oil well and 640 acres for each producing or shut-in gas well, except that in case any rule adopted by the Railroad Commission of Texas ... for any field on this lease provides for a spacing or proration establishing different units of acreage per well, then such established different units shall be held under this lease by such production, in lieu of the 40 and 640-acre units above mentioned ...

(Emphasis added).l

Some 33,363 acres were leased to Conoco. As reflected in Conoco's written

releases, 208 wells were drilled under the leases prior to the expiration of the continuous

2

drilling program As it was entitled to retain 40 acres for each well, Conoco was entitled

to retain a total of up to 8,320 acres (208 x 40)3 The remaining 25,043 acres reverted to

Vaquillas (the "Reverted Minerals").

126,622.79 Acre Lease at ~ 18 (Ex. B-2 to Smith Aff.); 6,740 Acre Lease at ~ 18 (Ex. B-3 to Smith Aff.). 2 Conoco's Motion for Summary Judgment ("Conoco MSJ") at Exs. C and D. 3 This, of course, is assuming that each of the 208 wells is producing or capable of producing in paying

quantities. That issue is not before the Court in this motion.

PLAINTIFF'S CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT AND RESPONSE TO DEFENDANT'SMOTJON FOR SUMMARY JUDGMENT PAGE 4

Summary judgment evidence establishes the following as a matter of law or

uncontested fact:

• The Railroad Commission of Texas adopted special field rules for the

4

Vaquillas Ranch (Lobo Cons.) Field

• Those field rules apply to the wells drilled by Conoco under the two

5

Vaquillas Leases

• The spacing provided for in the special field rules established units of acreage for gas wells. 6

7

• Those units were different than 640 acres.

• The units established were 40 acres per well. 8

• Conoco ended its continuous drilling program on or about June 21, 2012 (90 days after the completion date of Conoco's Vaquillas Ranch A-7 No. 249 Well (API No. 42-479-41635), which is the last well drilled under the continuous drilling program)9

• The leases terminated for all but 40 acres for each producing or shut-in gas well capable of producing in paying quantities on June 21, 2012 (90 days after completion of the above-referenced well), and the acreage thereby reverted to Vaquillas lO

• Conoco was required to execute a formal release for the Reverted Minerals, but has not done so as to most of the acreage that comprises the Reverted · Mmera Is. 11

Conoco acknowledges that it was not entitled to retain all the leasehold acreage,

but claims that it is entitled to retain significantly more than 40 acres per well, for a total

4Ex. A-I to Ringuet Aff., accord Conoeo MSJ at 4. sId. 616 TAC § 3.38(b)(2)(A) (Ex. A-2 to Ringuet Aff.). 7Id. sid. 9 Conoeo's Resp. to Interrogs. Nos. 16 & 17 at p. 8. (Ex. A-3 to Ringuet Aff.). 10 Ex. B-2 & B-3 to Smith Aff. 11 Ex. B-2 & B-3 to Smith Aff.; Exs. C & D to Conoeo Motion.

PLAINTIFF'S CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT AND RESPONSE TO DEFENDANT'SMOTJON FOR SUMMARY JUDGMENT PAGE 5

205

of 23,671.63 acres. This stands in sharp contrast to the 8,320 acres retainable on the

basis of 40 acres per well. Conoco thus wrongfully claims title to 15,351.63 acres of the

Reverted Minerals. Conoco's wrongful claim of title to these disputed minerals forced

Vaquillas to file this case.

In support of its argument that it is entitled to retain 640 acres per well, Conoco

argues that the Commission did not "establish" 40-acre units because the units

established by the special field rule for the Vaquillas Ranch (Lobo Cons.) Field only set

out the minimum amount of acreage for drilling units required to drill a well. Conoco

also suggests that the 40-acre units established by the special field rules for the Vaquillas

Ranch (Lobo Cons.) Field do not trigger the exception set forth in Paragraph 18 because

they are not different than the 40-acre units established by the statewide rules. Each

contention misses the point and requires that certain language be ignored and that other

words be added to the Leases, contrary to accepted rules of contract instruction.

II. SUMMARY JUDGMENT STANDARD

This is a "traditional" motion for summary judgment, filed pursuant to Rule

166a(c), as to certain of Va quill as's claims against Conoco. "[T]here is no genuine issue

as to any material fact and [Vaquillas is] entitled to judgment as a matter of law on the

issues expressly set out in the motion.,,13

12 Conoeo MSJ at Exs. C and D. 13 TEX. R. CIV. P. 166a(e).

PLAINTIFF'S CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT AND RESPONSE TO DEFENDANT'SMOTJON FOR SUMMARY JUDGMENT PAGE 6

III. BACKGROUND

A. The purpose of an oil and gas lease, as well as a retained acreage clause, is to develop property to produce minerals.

An oil and gas lease is, at its core, a bargain struck by a landowner/lessor to have

developed the hydrocarbons beneath his land with another who has the experience and

capability to do so by undertaking the complex process of drilling and producing those

hydrocarbons.14 The landowner/lessor wants the mineral value of the land developed; the

oil and gas company/lessee wants the opportunity to make a profit. In order to have their

minerals developed, landowners/lessors generally must transfer the rights to explore,

drill, produce, and market the minerals to an oil and gas company with the skill and

15

financial ability to do so, such as Conoco. The oil and gas lease is the instrument that is

almost invariably used to transfer these rights to the oil and gas company. 16 In return for

the risk assumed by the oil and gas company, it receives the lion's share of the profit

derived from production and a generous time period (typically so long as production is

obtained and maintained in paying quantities) within which to continue operations on the

lease.

Absent an express limitation in the lease, a lessee's rights under an oil and gas

lease may continue, as to the entire property, for an indefinitely long period of time. This

is the case because leases are typically structured so that if oil or gas in paying quantities

is found during the lease's primary term, the oil and gas company's rights to operate will

14 1 Ernest E. Smith and Jacqueline Lang Weaver, Texas Law of Oil and Gas § 4.1(B) (2014). 15 ld. 16 ld.

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continue for so long thereafter as any well is producing oil or gas in paying quantities on

the leased property. 17

Oil and gas leases frequently contain a retained acreage clause that provides

operators with the choice and flexibility to develop the acreage to a specified density, or

to not do so and have acreage revert to the landowners/lessors. The retained acreage

clause also helps the landowners/lessors ensure that his property is fully developed within

a reasonable period of time, by allowing development of reverted acreage by another

lessee. IS In specifying the density for development, the clause may provide for reference

19

to Railroad Commission rules.

B. Spacing, density, and proration units.

The Railroad Commission is responsible for preventing waste of the state's oil and

gas natural resources and protecting the correlative rights of mineral owners, and it

20

adopts statewide rules and special field rules as means to accomplish this end Special

field rules for a given field (reservoir) are commonly referred to simply as "field rules."

Field rules typically address, among other things, spacing requirements. The

Railroad Commission's spacing requirements typically establish the minimum distance a

well can be located to the nearest lease line, property line, or subdivision line, and to

21

other wells on the same lease completed in the same reservoir Spacing in effect

17 ld. 18 1 Smith & Weaver § 5.2(B)(3). 19 1 Smith & Weaver § 5.2(B)(3) (citing ConocoPhillips Co. v. Ramirez, 2006 WL 1748584 (Tex. App.-

San Antonio 2006, no pet.) (mem. op.). 20 R.R. Com'n of Texas v. WED Oil & Gas Co., 104 S.W.3d 69 (Tex. 2003). 21 16 TAC § 3.37.

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mandates that a certain number of acres be allotted to a given well, and is intertwined

with "density."

The Railroad Commission's "density" requirements govern the number of wells

22

that may be drilled on a given amount of acreage in a reservoir The density

requirement does so by prescribing the minimum required size of the "drilling unit" - the

minimum number of acres the operator must have to drill a well. 23 This is the essential

nature of the drilling unit. The "drilling unit" is on occasion also referred to as a "spacing

unit" or a "development unit.,,24 Such units are by their nature minimum-sized units,

because they prescribe the minimum acreage required to obtain a Railroad Commission

permit to drill a well. An operator may always drill a well with more acreage than the

mmlmum.

The Railroad Commission also regulates production levels to prevent waste and

protect correlative rights. One way this is done is through specification of "prescribed"

"proration units" for a field. These units are often confused with drilling units, though

they are very different. A prescribed proration unit does not address the number of acres

25

necessary to drill a we1l It simply specifies the maximum amount of acres that an

operator may assign to a well as the proration unit for that well. In tum, the Commission

uses the well proration units designated by operators for the purpose of assigning

2216 TAC § 3.38. (Ex. A-2 to Ringuet Aff.) 23 16 TAC § 3.38(a)(2), (d)(l). (Ex. A-2 to Ringuet Aff.) 242 Smith & Weaver § 1O.1(B)(2). 25 See 2 Smith & Weaver § 1O.1(B)(2).

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production allowables that allocate total field production among individual wells

Prescribed proration units are by their nature maximum-sized units, because they

prescribe the maximum acreage that an operator may assign to a well as a proration unit

for production allowable purposes. An operator may always assign fewer acres to its

proration unit than the maximum.

C. The Leases contain a retained acreage clause limiting the amount of acreage Conoco was allowed to retain for each well.

27

The properties that are the subject of this lawsuit are a 26,622.79-acre tract and a

6,740-acre tract,28 both located in Webb County, Texas. Vaquillas is the successor-in-

interest to the original lessor(s) under both the 26,622.79-acre lease and the 6,740-acre

lease (the "Leases,,)29 Defendant Conoco is a successor-in-interest to the original

lessee(s).

The Leases have been amended and supplemented a number of times. On or about

30

November 1, 1987, the 26,622.79-acre lease was amended to include Paragraph 18 On

the same date, the 6,740-acre lease was entered into, containing the same Paragraph 18.

This paragraph provides for the release of acreage at the end of the continuous drilling

26 16 TAC § 3.38(a)(3). (Ex. A-2 to Ringuet Aff.) 27 26,622.79 acres of land, more or less, situated in Webb County, Texas more fully described in the Oil, Gas and Mineral Lease dated June 15, 1974 (as amended) between Vaquillas Ranch Company, Ltd. et aI., as Lessor, and Conoco Inc., as Lessee, a copy of which is recorded in Volume 460, Pages 324-330 of the Webb County Deed Records (hereinafter the "26,622.79-acre lease"). (Ex. B-2 to Smith Aff.). 28 6,740 acres ofland, more or less, situated in Webb County, Texas more fully described in the Oil, Gas and Mineral Lease, dated effective November 1, 1987, and entered into by and between Vaquillas Ranch Company, Ltd., Vaquillas Unproven Mineral Trust, and Vaquillas Proven Mineral Trust, as Lessor, and Conoco Inc., as Lessee, a Memorandum of which is recorded in Volume 1303, Pages 886 et seq. of the Webb County Real Property Records (hereinafter the "6,740-acre lease"). (Ex. B-3 to Smith Aff.). 29 See Ex. B Smith Aff.

30 The retained acreage clause found in Paragraph 18 was also in the original 26,622.79-acre lease. In the

original 1974 lease, the clause was found in section 12(g). (Ex. B-2 to VAQ Aff.).

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program. In order to be engaged in a continuous drilling program, after the end of the

primary term, Conoco must commence the drilling of a new well within 90 days after the

completion of each well. At the end of the continuous drilling program (i.e., when

Conoco elects to cease commencement of the drilling of new wells within the 90 day

period(s», the Leases are maintained only as to an amount of acreage for each producing

or shut-in gas well that is capable of producing in paying quantities. The Leases go on to

require Conoco to execute and deliver to Vaquillas a written release of any acreage not

retained.

Paragraph 18 states in pertinent part:

... Lessee covenants and agrees to execute and deliver to Lessor a written release of any and all portions of this lease which have not been drilled to a density of at least 40 acres for each producing oil well and 640 acres for each producing or shut-in gas well, except that in case any rule adopted by the Railroad Commission of Texas or other regulating authority for any field on this lease provides for a spacing 2.!: proration establishing different units of acreage per well, then such established different units shall be held under this lease by such production, in lieu of the 40 and 640-acre units above mentioned.

(Emphasis added)3l

Conoco and Vaquillas thus agreed to an exception to Conoco's otherwise-existing

right to retain 640 acres for each gas well. If the Commission adopts a rule for the field

providing for spacing or proration that establishes units of acreage different than 40 acres

[oil wells] or 640 acres [gas wells], Paragraph 18's "except" provision is triggered and

Conoco therefore retains only the amount of acreage per well established by the spacing

provided in the Railroad Commission's rules for the field. The expressed intent of the

31 Exs. B-2 & B-3 to Smith Aff. at ~ 18.

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parties' agreed exception is clear. In lieu of the default 640 acres, the units established by

the Railroad Commission's rules for the field were to determine the amount of acreage

that would be retained for each well.

D. The Railroad Commission adopted spacing rules for the Vaquillas Ranch (Lobo Cons.) Field.

The Railroad Commission of Texas adopted spacing rules in its special field rules

for the Vaquillas Ranch (Lobo Cons.) Field 32 Each of the wells drilled under the Leases

is in the Vaquillas Ranch (Lobo Cons.) Field 33

After the November I, 1987, amendment to the Leases, at Conoco's request, the

Railroad Commission adopted rules specifically for the Vaquillas Ranch (Lobo Cons.)

Field. These field rules, which were initially adopted on February 24, 1998, contained

spacing rules providing that no well could be drilled nearer than 467 feet to any property

line, lease line, or subdivision line (the "lease-line spacing" requirement), and that no

well could be drilled nearer than 1,200 feet from any other well (the "between-well

spacing" requirement)34 Under such rules, the established spacing unit (i.e., drilling

unit) was a minimum of 40 acres per well.

On or about November 2, 2010, and agam at Conoco's request, the Railroad

Commission held a field rule hearing for the Vaquillas Ranch (Lobo Cons.) Field.

Following the hearing, the Commission amended the rules for the field, leaving the 40-

32 Conoco MSJ at 4. 331d. 34 The 467 foot lease-line spacing and 1,200 foot between-well spacing requirements happen to be

identical to the requirements set out in Statewide Rule 37, which would apply in the absence of field rules. The Commission, through its adoption of special field rules for the field, considered the evidence presented and in its expertise concluded that this was the appropriate spacing rule for development in this particular field. (Ex. A-4 to Ringuet Aff.J.

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acre drilling unit requirement intact The 1998 field rules, as amended, remain in effect

today.

The amended field rules continue to provide for lease-line spacing of 467 feet, and

between-well spacing of 1,200 feet, with one exception. As has become common for

certain types of fields, in the 2010 amendments to the field rules, the Commission

eliminated the minimum between-well spacing requirement for wells located at least 660

feet from the nearest property line, lease line, or subdivision line. This gave the operators

36

in the field greater flexibility in locating wells. The 40-acre established drilling unit

37

requirement continued to apply for all wells drilled in the field

IV. ARGUMENT AND AUTHORITIES

A. Under the plain language of the Leases, Conoco is entitled to retain no more than the 40-acre units per well established by the Railroad Commission.

Paragraph 18 of the Leases unambiguously provides that when the Railroad

Commission adopts field rules that provide for spacing "establishing different units of

35 Ex. A-5 to Ringuet Aff. 36 Conoco sought to eliminate the between-well spacing requirement for interior wells because the area is

highly faulted. Because of the complexity of the geology, the difficulty of developing the many separate fault blocks in the field, and the desire to ensure all the "sweet spots" were produced, the between-well spacing requirement for interior wells was eliminated. See Ex. A-5 to Ringuet Aff. 37 Importantly, while the field rules were amended in 2010 to remove the between-well spacing

requirement for interior wells, the amendments did not affect the density requirement for any wells drilled on the Subject Property. As discussed above, the purpose of the elimination of the between-well spacing requirement for interior wells was to promote production in a tight formation and deal with structural anomalies. The effect was not to amend or remove the density requirement. The Commission did not amend or eliminate the acreage requirement for drilling wells, including interior wells, in the field. Where field rules are amended, but the amendments do not expressly amend, eliminate, or address an already-existing portion of the field rule, that section of the rule is unaffected by the amendments. After the 2010 amendments, the Commission continued to require standard drilling units of 40 acres per well. See, e.g., "Field Rules Display" for the field on the Commission's website. (Ex. A-I to Ringuet Aff.J. Further, the 40-acre standard drilling unit requirement is consistent with Conoco's W-l drilling permits. ~ W-l for API No. 42-479-41635. (Ex. A-6 to Ringuet Aff.J.

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acreage per well, then such established different units shall be held under this lease by

such production, in lieu of the 40 [for oil wells land 640-acre [for gas wells1 units above

mentioned.,,38 The Railroad Commission did adopt field rules providing for spacing that

established 40-acre units for the Vaquillas Ranch (Lobo Cons.) Field. Conoco, therefore,

may retain no more than 40 acres per gas well.

In Paragraph 18, the parties agreed to an exception to Conoco's otherwise existing

right to retain 640 acres for gas wells. The exception is triggered by the Railroad

Commission's adoption of spacing or proration establishing "... different units of

acreage per well ... " (the "agreed exception"). Thus, the parties clearly contemplated

that spacing rules (as well as proration rules) trigger the agreed exception, if the units of

acreage thereby established are different than 640 acres for gas wells. When triggered,

the agreed exception allowed Conoco to retain only those units of acreage per well

established by the spacing provided in the Railroad Commission rules, thus reducing the

acreage Conoco could retain. This is precisely what occurred here. It is undisputed that

the Railroad Commission, through its special field rules, provided spacing rules for the

39

Vaquillas Ranch (Lobo Cons.) Field As discussed below, these spacing rules in tum

establish 40-acre units per well.

In situations such as this one, in which the Commission adopts rules for a field

providing for spacing, but where the field rules do not explicitly set out the required

density (minimum acres required to drill a well), Railroad Commission Rule 38 operates

38 Exs. B-2 & B-3 to Smith Aff. at ~ 18. 39 Conoeo MSJ at 4.

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to prescribe the units of acreage established by the spacing provided in the rules for the

field. 16 TEX. ADMIN. CODE § 3.38 ("Rule 38")40 Rule 38 provides in pertinent part:

The standard drilling unit for all oil, gas, and geothermal resource fields wherein only spacing rules... are applicable is hereby prescribed to be the following.

Spacing Rule Acreage Requirement (1) 150 - 300 2

(2) 200 - 400 4

(3) 330 - 660 10

(4) 330 - 933 20

(5) 467 - 933 20

(6) 467 - 1200 40

(7) 660 - 1320 40

16 TEX. ADMIN. CODE § 3.38(b)(2)(A) (emphasis added)41

The Commission's special field rules provide a spacing rule - 467 feet lease-line

spacing and 1,200 feet between-well spacing - for the Vaquillas Ranch (Lobo Cons.)

Field. As is contemplated by Rule 38, these special field rules did not contain a density

rule. Nevertheless, as shown on the above table, the special field rules' designation of

40 Ex. A -2 to Ringuet Aff. 41 Ex. A-2 to Ringuet Aff.

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spacing operated to prescribe and establish 40-acre drilling units for each oil or gas well

42

in the Vaquillas Ranch (Lobo C.) Field

The agreed exception was triggered by the adoption of the Vaquillas Ranch (Lobo

Cons.) special field rules, which included spacing that established 40 acre units. Conoco

was therefore entitled to retain no more than 40 acres for each of the gas wells it drilled

on the Subject Property. Consistent with the fundamental purpose of the oil and gas lease

- to develop and produce the minerals - this allows Conoco to continue to produce the

minerals from the wells that it has drilled on the acreage that it has developed. The

remaining undeveloped acreage reverts to Vaquillas, allowing Vaquillas or another party

to develop the undeveloped reverted acreage and produce the minerals underlying that

acreage.

B. Conoco's contention that the field rules for the Vaquillas Ranch (Lobo Cons.)

field do not establish 40-acre units requires the Court to disregard or to add words to the Leases.

Conoco argues that the established 40 acre spacing/drilling units are not

"established" because they constitute a mmlmum (with no maximum) acreage

requirement for drilling each well. In advancing this argument, Conoco would have the

Court ignore well-settled rules of contract construction in order to fulfill Conoco's quest

42 Prior to 1955, the Commission relied upon spacing rules alone to govern the density of drilling. Observing that on tracts of irregular size and shape, wells could be drilled with less acreage per well (i.e., to a greater density), as compared to regularly-shaped tracts, i.e., square tracts, in 1955, the Commission first adopted the chart found in Rule 38. The chart was adopted to prescribe the required minimum number of acres per well based on the applicable spacing to remedy this "disadvantage" for regularly- shaped tracts. The chart remains the same to this date. (Exs. A-2, A-7 of Ringuet Aff.). The chart in Rule 38 effectively serves as a backstop or gap-filler when only spacing is provided for in the special field rules.

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to retain 640 acres for each well drilled under the Leases 43 Conoco's reading is at odds

with the plain language of the Leases.

Paragraph 18's agreed exception to Conoco's otherwise existing right to retain 640

acres for gas wells is triggered by the Railroad Commission's field rules providing for

spacing or proration establishing "... different units of acreage per well .... " It does not

use the words establishing " ... maximum units of acreage per well .... " The units are no

less "established" or "prescribed" because they operate as minimums. Acceptance of

Conoco's argument that because the 40 acre units are only minimums, Paragraph 18's

agreed exception is not triggered, would require that the court add words to the language

chosen by the parties, contrary to accepted rules of contract interpretation. 44

To the extent that Conoco means to imply that because the 40-acre units

established by the spacmg provided in the field rules for the Vaquillas Ranch (Lobo

Cons.) Field are the same as the statewide rules (which apply if field rules have not been

established), the exception provision of Paragraph 18 is not triggered, Conoco is . 45 mcorrect.

Where the language of Paragraph 18 refers to the Railroad Commission's adoption

of "spacing ... establishing ... different units of acreage per well ... ," the word

"different" refers back to the 40 acres for each oil well and 640 acres for each producing

43 See Am. Mfrs. Mut.lns. Co. v. Schaefer, 124 S.W.3d 154, 162 (Tex. 2003) (courts "may neither rewrite the parties' contract nor add to its language," but rather, must interpret unambiguous contract language as written). 441d. 45 Conoco MSJ at 8.

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or shut-in gas well earlier in the sentence 46 The word "different" here does not, as

Conoco suggests, mean different from the "statewide rules" for well density; had it meant

that, the parties would have referenced the statewide rules 47 Conoco's effort to add

words to the contract must again be rejected.

Conoco also appears to take the position that the reference to "units of acreage per

well" refers only to "proration units" and does not include "drilling units.,,48 The parties

chose the broader term "units of acreage," and specified that spacing rules or proration

rules could trigger the exception. Thus the provision cannot be limited to proration

units, but must include both drilling units and proration units. This is consistent with the

language of Paragraph 18' s agreed exception referring to " ... spacing or proration

establishing different units of acreage per well."

In addition, Conoco references the pooling clause in the Leases 49 Under the

Leases, however, the pooling clause has nothing to do with or effect on the acreage

limitation in the retained acreage clause. Conoco's statement that the pooling clause

somehow establishes the "normal and completely authorized block of acreage" under the

Leases would render meaningless the agreed exception 50

46 Indeed, Conoco acknowledges this on page 11 of its Motion for Summary Judgment, when it states that before Paragraph 18's exception is triggered, "the Railroad Commission must 'establish' units for gas wells of a different size than 640 acres." 47 Notably, there is no reference to statewide rules in Paragraph 18. 481d. at 4. 49 Conoco MSJ at 6.

50 Conoco MSJ at 7.

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The Commission has, through the spacing rules adopted for the field, established a

40-acre spacing/drilling unit requirement. Paragraph 18's condition was thus triggered.

Conoco is entitled to retain no more than 40 acres per well.

C. Jones v. Killingsworth, cited by Conoco, supports Vaquillas's position that the field rules "establish" or "prescribe" 40-acre units, and operators are only "permitted" to form larger units.

Jones v. Killingsworth, 403 S.W.2d 325 (Tex. 1965), dealt with a pooling clause

and proration units prescribed by the Railroad Commission, not a retained acreage clause.

Nonetheless, the case is instructive and supports Vaquillas's position that the

Commission's field rules for the Vaquillas Ranch (Lobo Cons.) Field "establish" 40-acre

units.

Jones involved a lessee's attempt to create a pooled unit for oil of 160 acres rather

than an 80-acre unit, which the lessor believed to be the maximum size allowed under the

pooling clause of the parties' oil and gas lease. Similar to the retained acreage clause in

this case, the pooling provision in Jones also created an exception to the default

maximum pooled unit size when a different one was prescribed by a governmental

authority.

Units pooled for oil hereunder shall not substantially exceed 40 acres each plus a tolerance of 10% thereof, provided that should governmental authority having jurisdiction prescribe or permit the creation of units larger than those specified, units thereafter created may conform substantially in size with those prescribed by governmental regulations.

Id. at 327 (emphasis added).

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The lessee in Jones argued that because rules adopted by the Railroad Commission

prescribed oil proration units of not less than 80 acres but merely permitted up to 160

acres for each oil unit, that by reading these rules into the lease's pooling provision the

lease would read: "the size of the units thereafter created may not be substantially less

than 80 acres nor substantially more than 160 acres. Id. at 327. The Supreme Court

disagreed with this construction, writing:

The lessors did not consent to enlarge an oil proration unit to any size permitted by governmental regulations. They gave their consent to enlarge a unit of substantially 40 acres, but only to the extent of the size of units prescribed by the regulatory authority. The fact that the Railroad Commission may permit a much larger unit cannot be read into the lease contract when, as here, the authority to create larger units is expressly limited to units the size prescribed by the Railroad Commission. The Commission prescribed a unit of 80 acres. The field rules clearly say that there must be a proration unit of at least 80 acres, and there may be larger units of not more than [160] acres. The parties obviously knew when the lease contract was executed that a permitted oil proration unit could conceivably be much larger in area than one prescribed by governmental authority. To say that a lessee can pool lessor's land with units of any size permitted by the Railroad Commission would defeat the intention of the parties to restrict the size of the units to a size prescribed by governmental authority.

Id. at 327-28 (boldface added; italics in original).

Jones stands for the proposition that when an oil and gas lease provIsIOn references

acreage prescribed by a Railroad Commission rule as a marker that will restrict or limit

the size of the units that the lessee is otherwise allowed to retain, the unit size prescribed

by the Commission rule controls over a larger-sized unit that is merely permitted or

allowed by such Commission rule.

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Like Jones, here the Vaquillas retained acreage clause clearly contemplated a

restriction in the size of the otherwise allowed 40- or 640-acre units to the size prescribed

by Railroad Commission field rules. The parties knew when the Leases were executed

that field rules could be adopted for a field on the Vaquillas Ranch providing for spacing

that established units different than 640 acres per gas well. That is what happened. The

467 -1200 spacing in the field rules established the 40-acre drilling unit requirement.

The standard drilling unit for all oil, gas, and geothermal resource fields wherein only spacing rules ... are applicable is hereby prescribed to be the following.

Spacing Rule Acreage Requirement

(6) 467 - 1200 40

16 TEX. ADMIN. CODE § 3.38(b)(2)(A) (emphasis supplied). 51 The field rules provide for

spacing establishing 40 acre units. In the Jones pooling provision, the limiting word was

"prescribed." In the Vaquillas Leases, the word of limitation is "established." As

Conoco's motion correctly states, Black's Law Dictionary defines "Establish" as "To

settle, make or fix firmly; place on a permanent footing; found; create; put beyond doubt " . ,,52 or d lspute; prove; convmce. Black's also defines "Prescribe" with an equivalent

meaning: "Prescribe"- "To dictate, ordain, or direct; to establish authoritatively (as a

ru 1e or gUl.de l'me ) .,,53 (emphasis added). The applicable rules for the field include

51 Ex. A-2 to Ringuet Aff. 52 Conoco MSJ at 1l.

th 53 Black's Legal Directory at 1373 (10 ed. 2014). Likewise, Webster's Dictionary defines "prescribe" to include "to establish rules, laws, or directions." Webster's II New College Dictionary at 874 (Houghton Mifflin Company 1999).

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spacing rules that clearly "establish" or "prescribe" 40-acre units for the Vaquillas Ranch

(Lobo Cons.) Field.

Conoco argues that because the prescribed density rule sets out only a minimum

amount of acreage required for a drilling unit (i.e., to drill a well) rather than a fixed

acreage or the maximum acreage, that this somehow means the spacing rules provided in

the special field rules do not establish units of acreage different than 640 acres. 54 This is

incorrect. The units are no less "prescribed" and "established" because they are

mmlmums. And, the prescribed and established 40-acre units are unarguably different

than 640-acre units. Conoco's argument tracks the argument made (and lost) by the lessee

in Jones. That argument was rejected by the Texas Supreme Court, and it should be

rejected by this Court.

D. Conoco's interpretation ignores the inherent role of drilling units as specifying the minimum acreage required to drill wells, and thereby renders the word "spacing" in Paragraph 18's agreed exception meaningless.

Conoco's erroneous interpretation of Paragraph 18 also fails because it would

render Paragraph l8's "except" clause meaningless as it relates to spacing.

The Texas Supreme Court has held that in construing an oil and gas lease, one

must "examine the entire document and consider each part with every other part so that

the effect and meaning of one part on any other part may be determined.,,55 This is

because the court presumes "that the parties to a contract intend every clause to have

54 Conoeo MSJ at 4, 8, 11-12. 55 Heritage Res., Inc. v. NationsBank, 939 S.W.2d ll8, 121 (Tex. 1996) (emphasis added).

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some effect. ,,56 And in construing the language of a contract, the court should consider

the surrounding circumstances as part of determining whether the language can be given

a definite meaning. E.g., Sun Oil Co. (Delaware) v. Madeley, 626 S.W.2d 726, 731 (Tex.

1981).

Conoco argues that spacing provided in the Railroad Commission's field rules do

not "establish" 40-acre units, because they "permit operators to drill wells on a minimum

of 40 acres.,,57 By their very nature, because of their purpose, the Railroad Commission's

density requirements establish only a minimum acreage requirement - they establish the

58

minimum amount of acreage required for drilling a we1l Conoco's construction,

whereby the exception applies only when the Commission establishes a precise and fixed

drilling unit size or proration unit size, ignores the fact that by their nature, prescribed

drilling units are minimum requirements 59 The agreed exception of Paragraph 18,

however, unquestionably indicates that the parties contemplated that special field rules

that provide for spacing could trigger the retained acreage clause's exception, and thereby

reduce the number of acres that Conoco could otherwise retain. 60

56 Id. (emphasis added). 57 Conoco MSJ at II. 58 This, of course, is because any other requirement would lead to absurd results (e.g., an operator with a

45 acre tract being denied a drilling permit, where the established density is 40 acres) and because the Commission's concern in establishing drilling units is to prevent waste caused by excessively dense drilling. 59 This motion concerns drilling/spacing units, and not proration units. Conoco's reference to proration

units in footnote 4, page 5 of its Motion for Summary Judgment ignores this distinction and the lease langnage that speaks to "spacing or proration establishing ... units." As noted above, proration units serve an entirely different purpose than drilling units, and establish the maximum amount of acreage that an operator may assign to a well for proration purposes. 60 It is settled law that contracts are presumed to incorporate regnlations and laws existing at the time of

execution. Amarillo Oil Co. v. Energy-Agri Products, Inc., 794 S.W.2d 20, 22-25 (Tex. 1990); Houston Lighting & Power Co. v. R.R. Comm'n, 529 S.W.2d 763, 766 (Tex. 1975).

PLAINTIFF'S CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT AND RESPONSE TO DEFENDANT'SMOTJON FOR SUMMARY JUDGMENT PAGE 23

If Conoco were correct that the Commission-established 40-acre units do not

apply because the required drilling units are always only the minimum acreage required

to drill a well, then there would be no circumstances under which the agreed "except"

provision of Paragraph 18 could apply where field rules provide for spacing alone. Thus,

Conoco's reading would render the reference to "spacing" in the parties' agreed

exception meaningless and violate the rules of construction that every provision in a

contract be given effect and that it be construed in light of the surrounding circumstances.

For this reason also, Conoco's argument fails.

E. Conoco's argument regarding a presumption against a "limitation on the grant" is not relevant to the question of whether Conoco is obligated to execute a formal release of the Reverted l\1inerals. Further, the presumption does not apply in the context of Paragraph 18's clear condition.

Whether the agreed exception constitutes a covenant or a condition is not relevant

to the issue of whether Conoco is required to execute a formal release for all acreage in

excess of 40 acres for each producing and shut-in natural gas well capable of producing

in paying quantities.

Nonetheless, the cases cited by Conoco in support of its argument regarding a

presumption against a limitation do not apply in this case because Paragraph 18 contains

a clear limitation or condition. A distinction is generally drawn between covenants and

conditions in oil and gas leases. See, e.g., Rogers v. Ricane Enterprises, Inc., 772 S.W.2d

76, 79 (Tex. 1989). Breach of a condition results in automatic termination of the

leasehold estate upon the happening of stipulated events. Id. Breach of a covenant does

PLAINTIFF'S CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT AND RESPONSE TO DEFENDANT'SMOTJON FOR SUMMARY JUDGMENT PAGE 24

224

not automatically terminate the estate, but instead subjects the breaching party to liability

for damages, or the remedy of a decree of cancellation. Id

Paragraph 18 specifies the acreage that "shall be held" by Conoco, thus

necessarily also providing for the acreage that shall not be held (i.e., shall revert to

Vaquillas). The agreed exception and the phrase "shall be held" cannot be construed to

be anything other than a condition, breach of which results in termination of the leasehold

61

estate as to the Reverted Minerals

V. CONCLUSION

Conoco has drilled some 208 wells on the leases and retains up to 40 acres for

each well capable of producing in paying quantities. This acreage allows Conoco to

operate these wells and produce them at maximum potential. This case concerns the

remaining 25,000+ acres that Conoco has not developed to the density provided by

Railroad Commission rules for the field. Yet, Conoco wants to hold that acreage and

thereby prevent Vaquillas from having it developed by another operator.

The Leases unequivocally provide in Paragraph 18 that Conoco retains only that

acreage for each well equal to the acreage per unit established by the Railroad

Commission's spacing rules for the field if those units are different than 640 acres for gas

wells. Conoco does not dispute that the applicable drilling/spacing units - the minimum

amount of acres required to drill a well - established by the Commission field rules are

40 acres per well. Instead, Conoco makes a number of arguments that simply do not fit

with the language of the Leases and would have this Court rewrite that language.

61 See, e.g., Freeman v. Magnolia Petroleum Co., 171 S.W.2d 339, 340 (Tex. 1943).

PLAINTIFF'S CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT AND RESPONSE TO DEFENDANT'SMOTJON FOR SUMMARY JUDGMENT PAGE 25

Conoco has refused to acknowledge that the undeveloped acres that it elected not

to earn by drilling additional wells has reverted to Vaquillas. And, consistent with this

refusal, Conoco has not provided the formal releases required by the Leases. Vaquillas

simply asks this Court to rectify this situation.

VI. SUMMARY JUDGMENT EVIDENCE

In support of this Motion, Vaquillas relies on the following summary

judgment evidence, which is filed with the Motion and is hereby incorporated as part of

this Motion:

Exhibit A: Affidavit of Alicia R. Ringuet.

ExhibitA-l: Field Rules Display for the Vaquillas Ranch (Lobo Cons.)

Field.

Exhibit A-2: Railroad Commission Rule 38 (16 TAC §3.38).

Exhibit A-3: Defendant ConocoPhillips Company's Response to Numbers 16 and 17 of Plaintiff Vaquillas Unproven Minerals, Ltd.'s First Set ofInterrogatories in the above-captioned case.

Exhibit A-4: Proposal For Decision and Final Order in the Texas Railroad Commission, Oil and Gas Docket No. XX-XXXXXXX.

Exhibit A-5: Proposal For Decision and Final Order in the Texas Railroad Commission, Oil and Gas Docket No. XX-XXXXXXX.

ExhibitA-6: Form W-l filed with Texas Railroad Commission for API No. 42-479-41635.

Exhibit A-7: Special Order Pertaining to Density Development in All Fields Where Standard Proration Units Have Not Been Adopted, Oil and Gas Docket Nos. 108, 124, 125, 126, 128, 129 and 146, August 15, 1955.

PLAINTIFF'S CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT AND RESPONSE TO DEFENDANT'SMOTJON FOR SUMMARY JUDGMENT PAGE 26

Exhibit B: Affidavit of Dino O. Smith.

Exhibit B-1: June 15, 1974 Oil, Gas and Mineral Lease between Vaquillas Ranch Company, Ltd., a limited partnership acting herein through its general partners, 10. Walker, Jr., Gene S. Walker, Evan B. Quiros and E. Walker Quiros (a/k/a Mary Elizabeth Quiros) and Continental Oil Company for 26,622.79 acres of land, more or less, situated in Webb County, Texas.

Exhibit B-2: November 1, 1987 Oil, Gas and Mineral Lease Amending Oil, Gas and Mineral Lease dated June 15, 1974 (As Amended) between Vaquillas Ranch Company, Ltd.; Vaquillas Unproven Mineral Trust; Vaquillas Proven Mineral Trust; acting by and through its general partners, 1 O. Walker, Jr., E. Walker Quiros, Gene S. Walker and Evan B. Quiros, and Conoco, Inc., Lessee for 26,622.79 acres, more or less, situated in Webb County, Texas.

Exhibit B-3: November 1, 1987 Oil, Gas and Mineral Lease between Vaquillas Ranch Company, Ltd.; Vaquillas Unproven Mineral Trust; Vaquillas Proven Mineral Trust; acting by and through its general partners, 10. Walker, Jr., E. Walker Quiros, Gene S. walker and Evan B. Quiros and Conoco Inc. for 6,740 acres, more or less, situated in Webb County, Texas.

Exhibit B-4: December 19, 1984 Mineral Deed from Vaquillas Ranch Co., Ltd. to 1 O. Walker, Jr., et al. a copy of which is recorded in Volume 1097, Pages 66 et seq. of the Deed Records of Webb County, Texas.

Exhibit B-5: December 19, 1984, Mineral Deed from 10. Walker, Jr., et al. to 10. Walker et aI., as Trustees of the Vaquillas Unproven Minerals Trust, a copy of which is recorded in Volume 1097, Pages 101 et seq. of the Deed Records of Webb County, Texas.

Exhibit B-6: Effective December 31, 1996, Mineral Deed from the Trustees of the Vaquillas Unproven Minerals Trust to Vaquillas Unproven Minerals, Ltd. a copy of which is recorded in Volume 471, Pages 711 et seq. of the Official Public Records of Webb County, Texas.

PLAINTIFF'S CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT AND RESPONSE TO DEFENDANT'SMOTJON FOR SUMMARY JUDGMENT PAGE 27

Pursuant to Rules 201 and 204 of the Texas Rules of Evidence, Vaquillas requests

that the Court take judicial notice of the following:

Exhibit A-2: Railroad Commission Rule 38 (16 TAC §3.38).

Exhibit A-4: Proposal For Decision and Final Order in the Texas Railroad Commission, Oil and Gas Docket No. XX-XXXXXXX.

Exhibit A-5: Proposal For Decision and Final Order in the Texas Railroad Commission, Oil and Gas Docket No. XX-XXXXXXX.

Exhibit A-7: Special Order Pertaining to Density Development in All Fields Where Standard Proration Units Have Not Been Adopted, Oil and Gas Docket Nos. 108, 124, 125, 126, 128, 129 and 146, August 15, 1955.

VI. PRAYER

For these reasons, Plaintiff Vaquillas Unproven Minerals, Ltd. asks for judgment

against Defendant ConocoPhillips Company for the following:

A. Judgment granting Vaquillas's cross-motion for partial summary judgment;

B. Judgment that Conoco has breached the Leases by failing to release all acreage in excess of 40 acres for each producing and shut-in natural gas well capable of producing in paying quantities;

C. Judgment denying Conoco's motion for summary judgment;

D. All other and further relief to which Plaintiff may be justly entitled.

PLAINTIFF'S CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT AND RESPONSE TO DEFENDANT'SMOTJON FOR SUMMARY JUDGMENT PAGE 28

Respectfully submitted,

By: Is/Gregg Owens Gregg Owens

Gregg Owens, SBN 15383500 gregg.owens@haysowens.com John R. Hays, Jr., SBN 09303300 john.hays@haysowens.com Alicia R. Ringuet, SBN 24074958 alicia.ringuet@haysowens.com HA YS & OWENS L.L.P. 807 Brazos Street, Suite 500 Austin, Texas 78701 (512) 472-3993 (512) 472-3883 Facsimile

Michael Jung, SBN 11054600 michaeljung@strasburger.com STRASBURGER & PRICE, LLP 901 Main Street, Suite 4400 Dallas, Texas 75202-3794 (214) 651-4724 (214) 651-4330 Facsimile

Armando X. Lopez, SBN 12562400 mandox@rio.bravo.net LAW OFFICES OF ARMANDO X. LOPEZ 1510 Calle Del Norte, Suite 16 Laredo, Texas 78041 (956) 726-0722 (956) 726-6049 Facsimile

Raul Leal, SBN 24032657 rleal@rl-lawfirm.com RAUL LEAL INCORPORATED 5810 San Bernardo, Suite 390 Laredo, Texas 78041 (956) 727-0039 (956) 727-0369 Facsimile

ATTORNEYS FORVAQUILLAS UNPROVEN MINERALS, LTD.

PLAINTIFF'S CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT AND RESPONSE TO DEFENDANT'SMOTJON FOR SUMMARY JUDGMENT PAGE 29

CERTIFICATE OF SERVICE

I hereby certify that a true copy of this document is being served on the following persons by the means shown on this the 8th day of September, 2014.

By: Is/Gregg Owens Gregg Owens

Mr. Michael V. Powell via Electronic Mail mpowell@lockelord.com Ms. Elizabeth L. Tiblets etiblets@lockelord.com LOCKE LORD LLP 2200 Ross A venue, Suite 2200 Dallas, Texas 75201-6776

Mr. Adolfo Campero via Electronic Mail acampero@camperolaw.com CAMPERO & ASSOCIATES, P.C. 315 Calle Del Norte, Suite 207 Laredo, Texas 78041

ATTORNEYS FOR DEFENDANT CONOCOPHILLIPS COMPANY

PLAINTIFF'S CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT AND RESPONSE TO DEFENDANT'SMOTJON FOR SUMMARY JUDGMENT PAGE 30

422

!, Filed 12/31/201410:06:04 AM Esther Degollado District Clerk .-~ Webb District 2014CVQ000438D4 CAUSE NO. 2014CVQ000438 D4

VAQUILLAS UNPROVEN MINERALS, § IN THE DISTRICT COURT LTD, § .,, § Plaintiff, § § v. § WEBB COUNTY, TEXAS :! § ., CONOCOPHILLIPS COMPANY, § § Defendant. § 406TH JUDICIAL DISTRICT

UNOPPOSED MOTION TO ALLOW INTERLOCUTORY APPEAL

TO THE HONORABLE JUDGE OF SAID COURT:

Defendant ConocoPhillips Company ("ConocoPhillips") moves pursuant to TEXAS CIVIL

PRACTICE & REMEDIES CODE § 51.014(d) for the Court to enter an Amended Order on Summary

Judgment that will allow an interlocutory appeal of the Court's November 25, 2014, Order on

Motions for Summary Judgment.

This action was filed March 7, 2014. Accordingly, the 2011 amendment to TEXAS CIVIL

PRACTICE & REMEDIES CODE § 51.0 14(d) applies to this case. Under that statute:

(d) On a party's motion or on its own initiative, a trial court· in a civil action may, by written order, permit an appeal from an order that is not otherwise appealable if:

(1) the order to be appealed involves a controlling question oflaw as to which there is a substantial ground for difference of opinion; and

(2) an immediate appeal from the order may materially advance the ultimate termination of the litigation.

On November 25, 2014, this Court signed its Order on Motions for Summary Judgment

("November 25 Order"). That Order denied ConocoPhillips' Motion for Summary Judgment

and granted Vaquillas' Cross-Motion and declared that ConocoPhillips breached both of the oil

UNOPPOSED MOTION FOR INTERLOCUTORY ApPEAL PAGEl

423

and gas leases at issue "by failing to release all acreage in excess of 40 acres for each producing

and shut-in natural gas well capable of producing in paying quantities."

The November 25 Order decided a controlling question of law. The Order determined, as

a matter of law, how the "retained acreage" clauses of the two leases should be construed with

regard to the central issue in the case: the number of acres per well ConocoPhillips retains under

the "retained acreage" clauses following the end of ConocoPhillips' continuous drillings

operations. The controlling question of law involves the two parties' competing legal

interpretations of the "retained acreage" clauses and certain Field Rules adopted by the Railroad

Commission of Texas.

Immediate, interlocutory appeal from the Court's November 25 Order will materially

advance the ultimate conclusion of this litigation. Plaintiff Vaquillas Unproven Minerals, Ltd.,

the lessor, seeks judgment ordering ConocoPhillips to execute releases of more than 15,000 acres

covered by the two leases. Plaintiff also alleges direct and consequential damages flowing from

ConocoPhillips' alleged breach of contract. It may create significant problems if ConocoPhillips

is required to release the 15,000 acres, but later convinces an appellate court that ConocoPhillips'

interpretation is correct. On the other hand, Plaintiff desires a final release of the acreage as soon

as possible. Additionally, determining whether Plaintiff has suffered damages will be an

expensive and time-consuming task.

As a consequence, the most expeditious way to advance this litigation to a final

conclusion is allow ConocoPhillips to take an immediate, interlocutory appeal from this Court's

November 25, 2014, Order. Final judgment on appeal will allow an orderly approach to any

remaining issues in the case.

!1 'I

UNOPPOSED MOTION FOR INTERLOCUTORY ApPEAL PAGE 2

In order to allow an interlocutory appeal, ConocoPhillips moves the Court to enter an

Amended Order on Cross-Motions for Summary Judgment making the necessary findings and

granting this Court's permission for an interlocutory appeal. TEX. R. CIY. P. 168 ("Permission

must be stated in the order to be appealed.") If a court, as did this Court, issues an order without

granting permission to appeal, but later determines to allow the appeal, the "order previously

issued may be amended to include such permission." TEX. R. CIY. P. 168. A proposed form of

Amended Order, which both parties have approved as to form, is attached to this motion as

Exhibit "A".l

ConocoPhillips also moves the Court to stay this action pending the interlocutory appeal,

except as the parties may agree or the Court may subsequently so order.

Counsel for Plaintiff Vaquillas Unproven Minerals, Ltd., has stated that the plaintiff is

not opposed to this motion.

WHEREFORE, PREMISES CONSIDERED, Defendant ConocoPhillips Company prays

that the Court will grant this motion and enter an Amended Order on Cross-Motions for

Summary Judgment that makes the necessary findings and grants this Court's permission for an

The attached proposed form of Amended Order copies the Court's rulings from the Courts' November 25 Order on Motions for Summary Judgment. That Order denied ConocoPhillips' motion for summary judgment and granted Plaintiffs cross-motion. ConocoPhillips continues to insist the Court erred by denying its Motion for Summary Judgment and by granting the Plaintiffs Cross-Motion, and has agreed to this Motion and is participating in I submission of the attached proposed form of Amended Order only so that ConocoPhillips may appeal from this Court's November 25 Order. ConocoPhillips disagrees with, and excepts to, the first two Ordering paragraphs and the Declaratory portion of the proposed Amended Order. ConocoPhillips' submission of this motion and the attached proposed form of Amended Order does not mean, and should not be construed to mean, that ConocoPhillips agrees with the content of the first two Ordering paragraphs or the Declaratory part of the attached proposed form of Amended Order. See First Nat'l Bank of Beeville v. Fojtik, 775 S.W.2d 632 (Tex. 1989). UNOPPOSED MOTION FOR INTERLOCUTORY ApPEAL PAGE 3

425

interlocutory appeal. ConocoPhillips requests the Court to enter an Amended Order substantially

in the form of that attached as "Exhibit A" to this Motion.

Dated: December 31, 2014 Respectfully sUb~itted, . /)

~P'Ucj-/~ Michael . Powell State Bar No. 16204400 Email: mpowell@lockelord.com Elizabeth L. Tiblets State Bar No. 24066194 Email: etiblets@lockelord.com LOCKE LORD LLP 2200 Ross Avenue, Suite 2200 Dallas, Texas 75201-6776 Tel: 214-740-8520 Fax: 214-740-8800

Adolfo Campero State Bar No. 00793454 Email: acampero@camperolaw.com CAMPERO & ASSOCIATES, P.C. 315 Calle Del Norte, Suite 207 Laredo, Texas 78041 Tel: 956-796-0330 Fax: 956-796-0399

ATTORNEYS FOR DEFENDANT CONOCOPHILLIPS COMPANY

CERTIFICATE OF CONFERENCE

I hereby certify that on December 30, 2014, I conferred with Mr. Michael Jung, counsel for PlaintiffVaquillas, regarding this motion. Mr. Jung stated that Vaquillas is unopposed to the relief requested in this motion. , / )

~~~~ Michael . Powell

UNOPPOSED MOTION FOR INTERLOCUTORY APPEAL PAGE 4

CERTIFICATE OF SERVICE

I hereby certify that on the 31st day of December, 2014, a true and correct copy of this motion was served was served via email on the following counsel of record for Plaintiff through its counsel of record listed below:

Gregg Owens Raul Leal Email: gregg.owens@haysowens.com Email: rleal@rl-Iawfirm.com Robert G. Hargrove Raul Leal Incorporated Email: rob.hargrove@haysowens.com 5810 San Bernardo, Suite 390 Hays & Owens L.L.P. Laredo, Texas 78041 807 Brazos Street, Suite 500 Tel: 956-727-0039 Austin, Texas 78701 Fax: 956-727-0369 Tel: 512.472.3993 Fax: 512.472.3883

P .. Michael Jung Armando X. Lopez Email: michael.jung@strasburger.com Email: mandox@rio.bravo.net Strasburger & Price, LLP Law Offices of Armando X. Lopez 901 Main Street, Suite 4400 1510 Calle Del Norte, Suite 16 Dallas, Texas 75202-3794 Laredo, Texas 78041 Tel: 214-651-4724 Tel: 956-726-0722 Fax: 214-651-4330 (main) Fax: 956-726-6049 Fax: 214-659-4022 (direct)

Counsel for Vaquillas Unproven Minerals, Ltd.

': ~ "

,I

UNOPPOSED MOTION FOR INTERLOCUTORY ApPEAL PAGES 812512014 Field Rules Display

Log In I

Field Rules Display Field Query Previous Querv

Field Rules for Field: VAQUILLAS RANCH (LOBO CONS.)

Field Number: 93215400 District Name: 04

Oil field Rules:

County Regular: N Salt Dome: N field Location: LAND Don't Permit: N Schedule Remarks: UNITIZED TRACT.

Comments: SEE REMARKS FOR OPTIONAL RULES Rule Lease Well Acres per Tolerance Diagonal Diagonal Max Depth Type Spacing Spacing Unit Acres Code Length Special All Corner to 467 1200 40.0 0.0 1200 Rules Depths Corner

Gas field Rules:

County Regular: N Salt Dome: N field Location: LAND Don't Permii: N Schedule Remarks: NO P-15 OR PLAT REQUIRED.

Comments: SEE REMARKS Rule Lease Well Acres per Tolerance Diagonal Diagonal Max Depth Type Spacing Spacing Unit Acres Code Length Special All Rules Depths 467 1200 40.0 0.0 0

[ Cancel I

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EXHIBIT

A-I

232 http://webapps.rrc.state.tx.us/DP/fieldSelectAction.do 111

API No.

42-479-41635 RAILROAD COMMISSION OF TEXAS FORMW-l 07/2004 Drilling Pennit # OIL & GAS DIVISION 730240 Permit Status: Approved SWR Exception CaseIDocket No.

APPLICATION FOR PERMIT TO DRILL, RECOMPLETE, OR RE-ENTER This facsimile W-J was generated electronically from data submitted to the RRC.

A certification ofthe automated data is available in the RRC's Austin office.

1. RRC Operator No. 2. Operator's Name (as shown on fonn P-5, Organization Report) 3. Operator Address (include street, city, state, zip):

172232 CONOCOPHILLIPS COMPANY 4. Lease Name

GENERAL INFORMATION VAQUILLAS RANCH A7 I 5. Well No.

249

6. Purpose of filing (mark ALL appropriate boxes): IXI New Drill D Recompletion D Reclass D Field Transfer D Re-Enter D Amended D Amended as Drilled (BHL)(Also File Fonn WolD)

7. Wellbore Profile (mark ALL appropriate boxes): D Vertical D Horizontal (Also File Fonn W-lH) IX] Directional (Also File Fonn WolD) D Sidetrack

8. Total Depth 12150 I 9. Do you have the right to develop the minerals under any right-of-way?

!XI Yes D No 110. Is this well subject to Statewide Rule 36 (hydrogen sulfide area)? DYes IXI No

SURFACE LOCATION AND ACREAGE INFORMATION 11. RRC District No. 112. County 04 WEBB 113. Surface Location [XJ Land D Bay/Estuary D Inland Waterway D Offshore

14. This well is to be located 10.9 . miles in a NE direction from Aguilares which is the nearest town in the county of the well site.

15. Section \16. Block 117. Survey 18. Abstract No. 119. Distance to nearest lease line: 20. Number of contiguous acres in 259 CCSD&RGNG RR CO A-1137 1066 ft. lease, pooled unit, or unitized tract: 640 21. Lease Perpendiculars: 1166 ft from the WEST line and 1480 ftfrom the NORTH line.

22. Survey Perpendiculars: 1166 ft from the WEST line and 1480 ft from the NORTH line.

23. Is this a pooled unit? DYes IKl No 124. Unitization Docket No: 125. Are you applying for Substandard Acreage Field? DYes (attach Fonn W-IA) IKl No

FIELD INFORMATION List all fields of anticipated completion including Wildcat List one zone per line. 26. RRC 27. Field No. 28. Field Name (exactly as shown in RRC records) 29. Well Type 30. Completion Depth 31. Distance to Nearest 32. Number of Wells on District No. Well in this Reservoir this lease in this Reservoir

04 93215400 VAQUILLAS RANCH (LOBO CONS.) Oil or Gas Well 10650 0.00 1

BOTTOMHOLE LOCATION INFORMATION is required for DIRECTIONAL, HORIZONTAL, AND AMENDED AS DRILLED PERMIT APPLICATIONS (see W-1 D attachment) Remarks Certificate: [RRC STAFF Dec 21, 2011 4:40 PM): Manual review ok for density. I certifY that infonnation stated in this application is true and complete, to the EXHIBIT best of my knowledge.

Christina Gustartis, Sr. Regulatory S~ecialist Dec 19, 2011 A-6 Name of filer Date submitted {83224 862463 christina.gustartis(Q2conocol2hillil2s.com RRCUseOnly Data Validation Time Stamp: Dec 21, 20114:44 PM( 'As Approved' Version) Phone E-mail Address (OPTIONAL)

Page 1 of2

RAILROAD COMMISSION OF TEXAS Form W-ID 07/2004 Pennit Status: Approved Supplemental Directional Well Information The RRe has not approved this OIL & GAS DIVISION app[jcation. Dup[jcation or distribution of Permit # 730240 information is at the user's own risk.

APPLICATION FOR PERMIT TO DRILL, RECOMPLETE, OR RE-ENTER Thisfacsimile W-J was generated electronically from data submitted to the RRe. Approved Date: Dec 21, 2011 A certification ofthe automated data is available in the RRe's Austin office.

I. RRC Operator No. \2. Operator's Name (exactly as shown on form P-5, Organization Report) \3. Lease Name \4. Well No.

172232 CONOCOPHILLIPS COMPANY VAQUILLAS RANCH A7 249 "lateral Drainholelhcation Information .. ." "."

5. Field as shown on Form W-I VAQUILLAS RANCH (LOBO CONS.) (Field # 93215400, RRC District 04) 6. Section 259 17. Block 18. Survey CCSD&RGNG RR CO I 9. Abstract 1137 I 10. County ofBHL WEBB II. Botton hole Lease Line Perpendiculars 1066 ft. from the West line. and 1478 ft. from the North line

12. Bottom hole Survey Line Perpendiculars # 1066 ft. from the West line. and 1478 ft. from the North line

Page 2 of2

SURVEY 36 C.C.S.D. & R.O,N.O.R.R.CO.

ABSTRACT 1036 SURVCYCD OCTOBER 20. 1879

--'x.~=;;;;;;;~;;;;;;;';;;;;';;;;;;;~~X~~~~!

!

',166' FWL LruE rv(J)X 1,166':1; FWL SURVEY

1,066' FWL LruE I,OB6';t FWL SURVEY'-~'--'

I~ CONOCOPHILLIPS COMPANY VAOUIUAS RANCH A7 249 640.00 ACRES (CALLED)

SURVEY 269 C.C.S.D. & R.O,N,O.R.R.CO.

ABSTRACT US?

SURVEYED AUGUST 25. /885

L[ASE LINE

DFiTAIL: Nor ro SCALf:

NORTH HALF SURVEY 34 R.O, BARNESLEY ABSTRACT 2m 8 SURVEYED JUL Y 12, 1922

\ W/////H/HAY/////////#/#//J'W'///dA'/#AW//AI'//Q/A¥/////////&

\ \ RevIsion Dcle 12-07-11 GRAPHlC SCALE

'or \ 'k...,.JJ.j (INFm)

I It'd! • 1000 n..

VAQUILLAS RANCH A7 249 STATE PlANE COORDINATES - TEXAS SOUTH ZONE - NAO 19:1.7, PROPOSED BOTTOM HOLE (PBHL) PROPOSED SURFACE LOCATION (PSHL) N: 697090 E: 1841021 N: 697090 E: 1841121 LEASE: 1,066' FWL & 1,478' FNL SURVEY: 1,066':1; FWL &< 1.478';t FNL ; GEOGRAPHIC NAD 27: Lo!': 27'J5'O'" Long.: 98'59'26"

GEOG!VJ'HIC NAD 83: La!.: 27'J5'02" Long.: 98'59'27" ... LrASt UN£ ELEVATION: 674' """- ....... _ ;;' SURVr:Y UIIE . L~E: 1,166' FWL &: 1,480 FNL SURVEY: I,166';t FWL & 1,480':1; FNL - - - - - - - '" PfRPEHDICUUJ/ ncs

HOWLAND ENGINEERING AND SU CONOCOPHILLIPS COMPANY . 7(i{5 N. Borl/eU Avenu9, Laredo VAQUILtAS RANCH A7 249 WISe , OrneE', (956) 722-44" fAX, ( 640.00 ACReS CALLF:O)

TOPE firm Re9Jslrotton No. F-i097 TBPlS SIWArw IN

$'".

SURYrY 259, C. C. S.D. & R.G.N.G.R.R. CO., ABSTRACr IIJ7 !hI. Plot r~priiil.nf' 0 WELt LOCATION ,UIVOY WEBB COUNTY. TEXAS glaund SUf)'~l. deeds and olher oVl1"'obfe in" (0 b~ a 'buundcuy ~urv6y. bill (or the sole p RaUroa CommissIon I~Ot. a dtifling permit. Thts FlELO DATE BOOK PAGE S 11-29-11 77 01 02 DRAWN BY: tAr.

of CON OPHIWPS CO NY. < .~ JOB No. 208J2-f/

~ 0.

J;U;~~ .' SCALE:

QUAD NAME:

f '~fOOD'

,11$ BOf1nell .P.LS. N.. 52-TEXAS