county: harding legal location: api no: …sddenr.net/ogfiles/harding/4006320641.pdfspyglass cedar...

COUNTY: HARDING

LEGAL LOCATION: SENE 8-17N-4E

API NO: 40 063 20641

PERMIT NO: 1866

WELL NAME: STATE 8-8

OPERATOR: SPYGLASS CEDAR CREEK,

LP.

PERMIT ISSUED: 05/22/2008

PERMIT CLOSED:

FILE LOCATION: 17N-4E-8 SENE

TARGET CODES:

WELL HISTORY / CHECKLIST

PERMIT TO DRILL / INTENT TO DRILL

WELL INSPECTION / SCOUT REPORTS

OPERATOR’S TECHNICAL REPORTS / MAPS

ADMINISTRATIVE / SUNDRY REPORTS

CORRESPONDENCE

MISCELLANEOUS

WELL HISTORY / CHECKLIST

l'ERMIT and BOND RELEASE CHECK

WELL NAME: Spyglass: 8-8 State LOCATION: 17N-4E-8 SENE, Harding County

PERMIT NO: /fib A

API NO: 11 0 0 6 3 00

FORMS/R CEIVED I Application (Form 2) VPla Map

--P it Fee of $100.00 -ganization Report (Form 1) if not on file & Gas Leasing Agreement k_i--L:etificate of Negotiation (Form 9)

Pe omission to Inspect Form ertification of Applicant & P Bond aSurface Restore Bond ‹t . /4.A41 . C7. rkk:4-1, -

NOTIFICATION OF PENDING APPLICATION vState Archaeologist 1/13 Dept. of Game, Fish Parks arding County Zoning Adm.

Fax 605-375-3318 REVIEW OF PERMIT APPLICATIO

Surface casing program: through Fox Hills Vadequate as stated Spacing requirements:

SHL:Wrmeets statewide spacing4Sxception granted (Case conforms to 12,--kar,"..._ — 5-7(

BHL: conforms to Order Nei conforms to

REVIEW OF PIT LINER VARIANCE walans and specifications sent to staff engineer I rApproved Disapproved _Variance granted _Variance denied V12 mil liner to be used as required by ARSD 74:10:03:13

PERMIT APPROVED i,eansmit check to Treasurer's Office with copy to our accounting personnel ipype Permit #, API # and date on Application for Permit, have supervisor sign two forms.

epare conditions to permit (O:\O&G\Reports\Apd\Conditions\ .doc) ail cover notice (O:\O&G\Reports\Misc Letters & Notices\OperPermitNote.doc), operator

/application, conditions, fee receipt, and pit liner application - if applicable Fax application copies to Harding Co. 605-375-3318 and the Anderson Reports

VAdd to New Permits List (010&G/New Permits/NewPermit.doc) Add to API and Permit No. Lists (O:/O&G/Permits/API & Permit No.s/) _Add to Bond Lists (O:\O&G\Reports\Bonds\Bondbalance.xls & BondList.doc) 'Add to database and Web site /Prepare file folder following established labeling and order of material. File.

PLUGGIIVy AND PERFORMANCE BOND RELEASE 11 Logs

V_Geologist's Report MIDST Chart and Reports faResults of coring and core analyses

50 of 10-foot sample cuttings-Vermillion •VCompletion/Recompletion Report _Plugging Report

SURFACE RESTORATION BOND RELEASE Approved Scout Report Approved letter from Surface Owner

BOND RELEASE NOTIFICATION _Letter to bond carrier to release liability with copy to operator (O:\O&G\Reports\Bonds

\BondRelease.doc) _Enter information in Bond Lists (O:\O&G\Reports\Bonds\BondList.doc and Bondbalance.xls) and

database.

6772,6Vield spacing

Field spacing

PERMIT TO DRILL / INTENT TO DRILL

-'ARTMENT of ENVIRONMENT and NATURAL REr 'RCES FORM 2 & Mining Program - Oil & Gas Section

2050 West Main, Suite #1, Rapid City, SD 57702-2493 Telephone: -394-2229, FAX: 605-394-5317

jsEk i , bREATPLACES.cia.tok% A52

61/4 osAp

ti's

IlLUEIVED APR ? 2 2008

OF ENVIRONMENT ei ATION FOR PERMIT TO DRILLEsouRCES - RAPID CITY

NATURAL

e of wo v 0 N

i Dril w e ,41 nter Well ❑Drill Directional Well

th p6

e of well: Oil Well 1 Gas Well Injection

Other

Name an..: ddr: of Operator:

Spyglass . dar Creek, LP.

Name and Address of Surface Owner:

State of South Dakota

Name and Address of Drilling Contractor

Elenburg Exploration Rig 8

Telephone

595 S. Castel! Ave., New Braunfels, Texas 78130 (830) 626-7100

and Rig Number:

1910 N. Loop, Casper, WY 82602

Surface Location of well: Qtr-Qtr, Sec, Twp, Rge, County, feet from nearest lines of section, and latitude and longitude (if available): 1900' fivt... j g to ' f-EL, cc. • 7 SE NE Sec 8 T17N R4E Harding County SD Lat. = 45.453368609 Long. = -103.650663955

If Directional, top of pay and bottom hole location from nearest lines of section:

Acres in Spacing (Drilling) Unit Description of Spacing Unit

32-0 -.Sec -.Sec 8 T17N R4E) id/ 2

Well Name and Number

State 8-8

Elevation

4esafk 3t 1/4"6

Field and Pool, or Wildcat

Widcat

Proposed Depth and Formation

2200 Eagle/Shannon

Size of Hole 1) 9 7/8 2) 6 1/4 3) 4)

Size of Casing 7 4 1/2

Weight per Foot 17 10.5

Depth 430 2200

Cementing Program (amount, type, additives) Depth 200 sks, Class g 2% CaC12 Surf .25#SK Celloflake, 100% excess 2200 105 SKS, Lite 1500, 2%CaCI. .25 to 125 SKS G 1% CaCi, .7%CFL, .25#/sk surf

Describe Proposed Operations (Clearly State all Pertinent Details, and Give Pertinent Dates, Including Estimated Date of Starting any Proposed Work). Use additional page(s) if appropriate.

Drill with Fresh Water mud to 2200', 12 mil pit liner in place. Anticipated Spud date May 15, 2008.

I hereby certify that

Signature

the for , g as to any work or operation performed is a true and correct report of such work or operation.

Kevin Sellers General Partner 04/14/2008

-------) Name (Print) Title Date

OR OFFICE USE ONLY

Approved By:

Title: Oil and

Permit No. 1866 API No. 40 063 20641 Conditions, if any, on attached page.

Date Issued: May 22 , 2008

Pas= „3/4)

GREATFACES.GREATPLACES

DEPARTMENT of ENVIRONMENT and NATURAL RESOURCES

Minerals & Mining Program Oil & Gas Office

2050 West Main Street, Suite #1 Rapid City, SD 57702-2493

Telephone: 605-394-2229 Fax: 605-394-5317

PERMIT CONDITIONS

Spyglass 8-8 State Permit: #1866 I7N-4E-8 SENE. Harding County API: 40 063 20641

Approval has been given to drill this location as detailed on the attached Application for Permit to Drill (Form 2) with the following additional conditions:

1. A 12-mil woven, reinforced high-density polyethylene liner will be used. 2. Surface runoff will he diverted around the drill site. 3. The surface hole will be drilled with fresh water. 4. Cement will be circulated to the ground surface on the surface casing. 5. Cement will he circulated back into the surface casing on the long string. 6. A cement bond log is to be tiled if production casing is set. 7. If abandoned:

A. With long string, sufficient cement will be circulated to: 1. Squeeze approximately five sacks of cement into the perforations. 2. Place 100 feet of cement above perforations. 3. Fill casing with heavy mud. 4. Repair casing, if necessary, to hold a column of fluid. 5. Set 100-foot plug in the top of the casing. 6. Squeeze approximately five sacks of cement into the casing annulus.

B. Without long string, sufficient cement will be circulated to: 1. Set a 100-foot plug across the top of the Eagle formation. 2. Set a 100-foot plug across the base of the surface casing. 3. Fill the top 25 feet of the casing.

C. Heavy mud laden fluid will be used between all plugs. 8. A washed set of sample cuttings (or cores, if cut) is to he shipped to the state free of charge. 9. Please notify this office prior to plugging so that a witness can be on location. After hours,

call Fred V. Steece at 605.343.8617 or Mack McGillivray! at 605.341.0207.

GHUI FACES. Gli

PLACES.

O




Telephone: 605-394-2229 Fax: 605-394-5317

NOTICE

I. Please notify this office with the SPUD DATE of the well as soon as possible. Our office hours are Monday through Friday, 8:00 a.m. to 5:00 p.m. MT. We can be contacted during office

hours at (605) 394-2229.

2. Please notify this office 24 hours BEFORE proceeding to plug and abandon your test hole so that a witness can be present on location.

After hour telephone numbers are:

Fred V. Steece - (605) 343-8617 Gerald (Mack) McGillivray — (605) 341-0207

SPYGLASS STATE 8-8 ELEVATION 3145.3' LAT. = 45' 27' 12.10" LONG. = 103' 39' 05.03"

19e0'

STONE

WELL LOCATION PLAT SPYGLASS, LP.

SPYGLASS STATE 8-8 SECTION 8, T17N, R4E HARDING COUNTY, S.D. 1900' FNL & 840' FEL

STONE N 89' 47' 48"W 2626.25' ol vi STONE

SCALE 1" = 1000'

I CERTIFY THAT THIS PLAT CORRECTLY REPRESENTS WORK PERFORMED BY ME OR UNDER MY RESPONSIBLE CHARGE, AND IS TRUE AND CORRECT TO THE BEST OF MY KNOWLEDGE AND BELIEF

JOHN PAULSON R.L.S. 5014

DATE STAKED: 4-25-2008

BASIS OF VERTICAL DATUM: NAVD 1988

PERSON AUTHORIZING SURVEY; KAREN CHRISTENSEN

EXPLANATION AREA: NAD83(1996)

BASIS OF BEARING: ROTATED STATE PLANE

BROSZ ENCINETRINC BOX 357

BOWMAN, N.D. 58623 PHONE: 701-523-3340

FAX: 701-523-5243 PROJECT NO. 08-82

Name of company, organization or individual : Spyglass Cedar Creek, LP.

Address : 595 S. Castell Ave., New Braunfels, Texas 78130

COMPANY

Telephone number: (830) 626-7100 Fax Number: (830) 626-7107

Signature Title Q (Act 5e{" Date 1-/ - 1 5 -Q00

State of e xa5

Date Title Approved:

Signature

(Cei

My Commission expires 1- 041 -RI 0

County of Subscribed and

Notary Public

day I otary Public, State of Texas

My Commission Expires -L—Lanuory 24, 2010

,eforemi4)44t

DO NOT WRITE BELOW THIS LINE

IP •

DEPARTMENT of ENVIRONMENT and NATURAL RESOURCES Minerals & Mining Program - Oil & Gas Section

2050 West Main, Suite #1, Rapid City, SD 57702-2493 Telephone: 605-394-2229, FAX: 605-394-5317

FORM 1

RECEIVED APR 2 2 2008

DEPT OF ENVIRONMENT rt RESOURCES Pr) r

ORGANIZATION REPORT

ORGANIZATION

If re-organization. list previous name:

Type of organization: Limited Partnership State of incorporation: Texas

Date of registration with Secretary of State to do business in South Dakota: 03/14/2006

Name/Address of Registered South Dakota Agent: Bennet, Main & Grubbrud, PC. Belle Fourche, SD

OFFICERS/PARTNERS/DIRECTORS (Use extra sheet if necessary)

Name Title

Address

Kevin Sellers, General Partner 595 S. Castell Ave. New Braunfels, Texas 78130 March Kimmel, General Partner 595 S. Castell Ave. New Braunfels, Texas 78130 Karen Christensen, 1447 Crestline Drive Santa Barbara, CA 93105

SIGNATURE

ArtAtiLsr C.;:n► tal Yb1 vs

Meld Run Convol Vtivi

PPO Aux Comes YolVi

Adjustsiblo Clako

1110111.1.1111°=—

.1.11Nr-0,00

I1"11=.

To Pit

2" 24o03ina4

\Bueo. Line To Pit

" Nominal

A4julta015 Owlets (or Positive)

To Pit

2" Ncriminal

11 I ow oy t Prosiontor Stack 0

Apr 20 2007 11:49AM ■826710kEcEI

1fEL p.9

APR 200E

ATTACHMENT 2 EXHIBIT "A' BOP DIAGRAM OEPT OF ENVIRONMENT NATIiR

r4"1"il RESOURCES

KYDRA LAIC CI.OSIN 0 UN! (Aotrualiiryri

FEO-Up Lino

3000 psi WP

ial4No

1ITIN111W cri SPOOL DPILD

W oiDrfaling SpoDi Opdonil if BOP hu ou

Owl= Lin* (3'' Ni4Aitrauca)

Kill Lim (2" Norcdnai)

Choke Mifold Requirement (3000 psi WP)

w-mn:ei 9002 62 Da(

S 34' 52' 01" W 16971'

......... .... .. .... ...... .

STATE OF SOUTH DAKOTA SE1/4NE1/4 SECTION 8 459.3' OR 27.84 RODS

1 - 2 S 05' 59' 31" W 220.5' 2 - 3 S 17 23' 19" E 238.8'

1

4-

SPYGLASS STATE 8-8

SCALE 1" = 500'

ROAD LOCATION PLAT SPYGLASS, LP.

SPYGLASS STATE 8-8 SECTION 8, T17N, R4E HARDING COUNTY, S.D.

I CERTIFY THAT THIS PLAT CORRECTLY REPRESENTS WORK PERFORMED BY ME OR UNDER MY RESPONSIBLE CHARGE, AND IS TRUE AND CORRECT TO THE BEST OF MY KNOWLEDGE AND BELIEF

JOHN PAULSON R.L.S. 5014

DATE STAKED: 4-25-2007

PERSON AUTHORIZING SURVEY,• KAREN CHRISTENSEN

BASIS OF BEARING:

ASSUMED

BROSZ INCINTERINC INC BOX 357

BOWMAN, N.D. 58623 PHONE: 701-523-3340

FAX: 701-523-5243 PROJECT NO. 08-82

SPYGLASS, LP. 1447 CRESTLINE DR.

SANTA BARBARA, CA 93105

DRILLING RIG LAYOUT SPYGLASS STATE 8-8 SECTION 8, T17N, R4E

HARDING COUNTY, SOUTH DAKOTA

ESTIMATED EARTH QUANTITIES

TOP—SOIL 425 CUBIC YARDS SUB—SOIL: 987 CUBIC YARDS

TOTAL CUT:

1,412

CUBIC YARDS

TOTAL FILL:

1,058

CUBIC YARDS

Use excess materials in acess road fill

Ground Elevation at Well Head: 3145.3 ft. ASL Finished Rig Grade Elevation: 3143.0 ft. ASL

ALL INDICATED CUTS & FILLS ARE STAKED GRADE ELEVA-TIONS. BACKSLOPES ASSUMED AT 1 1 2 : 1 %

DRAFT: HEDGE SCALE 1 = 30 DATE: APRIL 25, 2008 PROJECT NO. 08-82

a +3 /

SPYGLASS STATE 8-8 3/rax

_

3128x%

SPYGLASS, LP. WELL LOCATION

SPYGLASS STATE 8-8 SECTION 8, T17N, R4E

HARDING CO., SOUTH DAKOTA

06-096

'TH DA "')7A A OFFICE OF SCHOOL AND PUBLIC I •

OIL AND GAS LEASE

7.c—)

5 -110 7 Lc

35SL061833 Lsrfrr 30-- hi-Nr

County of HARDING, Township 017N, Range 04E, Section 08: S2N2, N2SW4, SE4

Total number of acres. more or loss, 400, for :he sole and only purposes of: exploring by geophysical end other methods; mining. producing and operating for oil, gas and casinghood gas; 'eying of pipeline; building tanks. power stations, and other structures necessary to produce, save, care for, dispose of, and remove oil and eras, all in accordance with SDCL chs. 5-7 and 45-9 and ARSD ch, 4:01:01 and article 74"10,

2. Term. This lease Is granted for a primary term of.five years from the dote of this agreement, and as long thereafter as oil, gas eatingliend gen, or any of them, is being commercially produced firm the land, subject to the terms and conditions set forth in !his lease, If oil, gas or casinghead gas Is not helix) commercially produced on the leased premises at the expiration of the primary term of this lease, but Lessee IS Actively engaged In drilling a well for 7N or gas. then this lease shall continue in force so long es the drilling operations are being continuously pursued on the leased premises. If oil or gas i$ discovered and produced from a well which was being drilled at the expiration of the primary term, the tense shell continue in fora so long as oil, gas, or casinghead gas is commercially produced.

3. Royalties The Lessee shell pay In money to the Lessor during the full term of this lease, a royalty of one-eighth, free of all costs end deductions. on the oil produced from the wells under this lease, The Lessee Shall also pay in money to the Lessor during the full term of this Tense, a royalty of One-eighth, free of costs and deductions, on the gas produced from the wells under this lease, whether the wells produce oil and casinghead gee or gas alone. All royalties shall be calculated upon the total amount produced, sevod and marketed under (his lease based on the fair market value of oil or gas or caelngheed gas of like quality prevailing on tho day the substance is sold

4. Annul; Rental. this lease shall automatically terminate if a well is not commenced on the leased properly on or before one

year from the date cf this agreement. unless the Lessee on or before that date pays or tenders to the Lessor the sum of $400.00 dollars, which shall operate as annual rental And Allow Lessee the pnvilege of deferring the commencement of a well for twelve months The commencement of o well may he further deferred for successive annual periods during the primary term of the lease upon payment of the ennui"! rental.

5. Dry hole Provision. If, during the primary term of this loose, Lessee drills or abandons o dry hole, or if after the discovery of oil or gee the production ceases due to any cause, this lease shall not terminate so long as Lessee commences additional drilling or reworking operations within 12 months after abandonment or cessation, or commences or resumes the payment and tender of annual rentals in the amount and Monner provided above. Upon the resumption of payment of annual rentals, this lease shall continue in force as if there hod been no interruption in the rental payments.

6. Shut-in Gas Royalty. Upon ennuot written approval of Lessor, this /case shall not expire at the end of its primary term if there is a well capable of producing gas in paying quenelles upon the lensed lands, which has teen shulen due to the inobillty of Lessee to obtain a pipeline connection or to merket the gas from the well. However, in this event, the Lessee shall pay a shut-in gas royalty equal to the annual rental paid by the owner under the terms of this lease in the same manner and date on which the annual rental payment is due. The payment of the shut-in gas royalty shell be considered fo.- all purposes the same as if gas was being produced in paying quantities from the well, and upon the commencement of marketing of the gas from the shut-in well, the shut-In gas royalty paid for the lease year in which the gas is first marketed Melt he Credited egeinst the gas royalty paid to the Lessor for that year. The provisions of this section shell also apply where gas is being marketed tinder the forme end. through no fault of the Lessee, the pipeline connection or market is lost or ceases, in which case this tense shall not expire so long as the shut-in gas royalty is paid.

7 Pooling and Unitization. Upon receiving the written consent of the Lessor, the Lessee shall have the right to commit the lands herehy leased to a unit, pooling unit, cooperative or other plan of development or operation. This commitment Mee not change the percentage of royalties to be paid to the Lessor ae fixed in this lease. Oil or gas or casinghead gas produced from leased lands included in a Peeling or unitization commitment are considered to be produced under this lease

Due diegeme. Upon completion of a commercially produced oil or gas well upon the leased premises, the Lessee shall proceed with reasonable diligence to drill such ridditionel wells to the depth of the formation found commercially productive, or to such depth as may he necessary, to economically test, develop and produce the deposits drscoverod

9. Waste Prohibited. In conducting all exploration, mining or drilling operations under this lease, the Lessee shell exercise all reesonahle care and precautions in order to prevent the waste of oil and gas The Lessee shall also at all times use reasonable cam and preoeutione to prevent the entrance of water into the oil or gas beanng strata, or any destruction or Injury thereto.

10. Logs Required The Lessee agrees to keep a correct log of each well drilled under this lease, showing the formations passed through. the depth at which the formations were reached. the thickness of each formation, the water bearing formations, the number of feet of easing ”t in the well and whore placed its size coo the total depth to which the well was drilled, Upon request, a cope of this leg 'shall be provkled to the Lessor

11 Prooross Reports Revered Upon request, the Lessee shall file progress reports with the Lessor before the:completion or. Abandonment of any well.

12. CoMelefion Reports Required. When the Le ssee is required by the rules of the Board of Minerals and Environment of the Department of Environment and Natural Resources, to file a well completion report with that Department, the Lessee shall also file one copy of that report with the Lessor.

13 Lessor's Ritter, laspeece Representatives of the Lessor shall at all times have the right to enter upon the leased premises for the purpose of inspecting and exemlnIng activities conducted under this lease RepresentativeS of the Lessor shall at all reasonable hours and upon reasonable notice have free access to end the right to cooy all books. accounts, records and papers of the Lessee insofar as they may (=Min informetkm rotating to the production obtained under this lease, the price obtained therefore, and the fair market value of the production Lessor shall also have free access to agreements relating to production under this lease.

14. Surface Owners or Surface LesseesReghts. The Lessee agrees to provide the surface owner or surface lessee with a plan for the !motion of ell far ernes, and to consult with the surface owner or surface lessee regarding a reasonable location for access roads. Lessee agrees to Interfere as little as possible with the use of the surface of the leased eremites. The Lessee Shell not drill any well upon the leased lands within 200 feet of a residence or barn now or hereafter erected, without the written consent of the owner of the building. The Lessee hereby agrees to make entisfoctory adjustment with the surface owner or surface lessee for damages sustained to them by reason of Lessee's entry upon. use. and occupancy of the surface of the lend.

15. Pite2line Burial. Upon request by the Lessor, the Lessee shell bury Its pipelines below plow depths. 16 Arctli Materiel!. The Lessor hereby reserves and retains title to any end all historical, archeological, and

paleontological materials found upon the leases premises. if the Lessee discovers a historical. archeological, or poleontological resource during its operation on the leased premises, the Lessee shall not disturb or otter the resource. The Lessee Shall notify the Lessor and underteke protective measures, if any, Lessor requires to preserve or protect the resource.

17 Assignments, The Lessee may assign this loose, either in whole or as to any regular sub-division thereof embracing forty acres or more, to any queered assignee, with the prior written opproval of Lessor

18. Amendments. The provisions of this lease may be amended only by written agreement, executed by Lessor and Lessee, to

the extent provided by law. 19 Relinquishments. The Lessee shell have the right during any rental year, upon thirty days written notice to the Lessor, to

surrender end relinquish the whole or any legal sub-division of the lends hereby leased, and teereupon be discharged from any further

obligation under this lease as to those lands. 20 Cencellation. It is understood nod agreed that the Lessor reserves the right to declare this lease forfeited and to cancel It

upon failure of the Lessee to fully discharge all 'he obligations provided in the lease. The Lessor shall provide Lessee with written notice of the cancellation, specifying a reasonable time for Lessee to perform the undertaking or obligation with which Lessee is in default. Upon written request, the Lessee may have a hearing before the Commissioner of School & Public Lends on the alleged default. The provisions of this cancellation retailee shoe not in any way apply to an automatic termination of this lease caused by Lessee's failure to pay annual rental

when due. 21, Surrender Possession. Upon the termination of this lease for any cause, the Lessee Shell surrender possession of the leased

This Agreement is made rind enterecr into this 25th day of October, 2005, by and between the State of South Dakota, acting

through its Commissioner of School and Puhlic Lands. Pierre. South Dakota, hereinafter referred to as Lessor, and 107 GPE ENERGY INC.,

0&G

9800 MT PYRAMID CT STE 400, ENGLEWOOD, CO 80B1

c;c2),k_Page—&AE

CEIVED whoee address

hereinafter coiled Lesson, plerSUOM to the provisions of SDCL ch, 5-7. WITNEeSETH•

1 Granting Clause. In consideration of a bonus of $800.00 dollars, end the annual rental of $400.00 dollars, the receipt Of which for the eref year of this lease is hereby acknowledged and in consideration of the covenants fo be kept and performed by the Lessee which are hereinafter eel forth; the Lessor hereby le0S3S to the Lessee, the mineral lands described as follows JE.1)1 NF''

RFS011 PrFQ 1" - *

APR c' 1 ?008

107

Beek °M3 Pagttla., Signed this 18h-cg-na of kl2dare-S-LS— 2005.

Stale of S th Ccokota r;arnraissioner S..0,oci/Public Lands

ores:aver to the Lessor. Sr '0 Lessee' h: to re-enter the leased premises at any time ly,bh:, outdo after the date of termination for the PubRetze of mmOvilo a Mier/ fist . improvements, buildings end equipment belenginc rases Any property of the Leszee not tr"ovrri rem Lhc leneederami'me within sly months of the ternhnehen date of Me lease the sae opt ion of ! essor. be deemed forte'teo M Lcboor Solid, hazardous or other waste plod:Jots will remain the PrOft:S*13 properly of Lessee at all tones.

72 Compliance with Laws Rules :rid Regulationb Tim lessee names to comply with ell analicat le laws. rules and mgmetions in effect el the date of this loose TIC which may from time It time be adoprea whIch (to not impair The obligation of this contract or deprive the Lessee of an exIstMLI property right reCt9r170il bylaw

23 LeeatF0es In the event Lesr chapInstitute and nmvail in any action or suit for the eaforrement of any of the pmvmons or sa Lece roll'pey to Levnir ell attorney's fees and tega' co* 'ICU"' inThe colic"

74, In&TUOPVIOn. Lessee agrees to Indemnify Lessor from any and or' lawful alarms against Lessor for loss, Injury or damage Tsai/Pry from .00todiles nt Lessee under this lease.

25 net-Oiling Rerties Baum. Al! cavonarra and adreerrenr: ilOrOO set forth brawasa the padres, seal! extend to and bind ma, successor:, heirs, PreCti:GrS, end Assigns

, Cloor third divot' -0-1----3214- 2005

leee

STA TE OC :LAU( a ci-) I SS

"2210N2Y rAF 6.?x f 0,1

On fhIs= (Inv of 'R670 shtsY0' :10.125.-1. herons me, (ltiL2ej542-. the underhand offroer. personeev

COPeer* SQ: known to me Orcl tf,GtOnly proven to be the parson whose name Is subscribed to the

haaite hist met and pobnovvIcdoe that he exe'mled the sarao for the nomose therein contained

In witness whereof I hereunto set my hand sec' oRcial seal

SEAU

Vy commisamr exmrca. 9 2316±

rrASE PLUM,AER 35SLC5183)

Document prepared b- : South Dakota Dept of School 7, Public Lands 500 E. Capitol Avenue Pierre, SD 57501 75■05` 773-3303 7.- 4000SC,1e

ebn-ip9. under Laantee Lt■Itimerical

(,40 06-096

Record 2/3/06 2:30 P

Book sk_Page±=72"8

Register ofreal Harding County

FEFA $12.00 pc:-(2k


0 West Ma;n, Suite #1, Rapid City, SD 57702-2493 ephone: 605-394-2229, FAX: 605-394-5317

EAT FACES. GREAT PEACES.

FORM 9

RECEIVED APR ? ?me

DEPT OF ENVIRONMENT t'x' RESOURCES RAPID CITY

CERTIFICATE OF NEGOTIATION WITH SURFACE OWNER/LESSEE

Surface owner/lessees

Well Name 5 —tA.e

Township Ai Range ;--ke Section County ' - (A.Ckm&-ii

In accordance with SDCL 45-5A, I hereby certify that to the best of my knowledge and belief, an agreement regarding compensation for damages to livestock and surface land resulting from drilling operations on the described property has been or is being negotiated with the surface landowners or lessees, as listed above.

Operator Name: liA(Lc5 Ce_CVG--( Cie e.,L

ri(lar\4e LI tdS Title Date

Signature

State of

e

riVA

(Seal)

County of

Subscribed and sworn to before me this /5 day of

, 20 OE

Notary Public TONY M SELLERS

a Public, State of Texas xpires

January 24, 2010

My Commission expires -11-0)4sto

f ts

TREE& DRAINAGES.

DEPARTMENT of ENVIRONMENT and NATURAL RESOURCES FORM 8 Minerals & Mining Program - Oil & Gas Section

2050 West Main, Suite #1, Rapid City, SD 57702-2493 Telephone: 605-394-2229, FAX: 605-394-5317 RECEIVED

APR ? ? 2008

APT OF ENVIRONMENT & IqATUI-o RESOURCES - RAM TITS'

PERMISSION TO INSPECT

Well Name State 8-8

Township 17N

Range 4E

Section 8 County Harding

In compliance with ARSD 74:10:11:05 and SDCL 45-9, I do hereby grant the Secretary of the Department of Environment and Natural Resources, or his designated agent, permission to inspect all facilities, upon notification, at any time during the life of the permit or project.

Operator Name: Spyglass Cedar Creek, LP.

Kevin Sellers

Signa e Name (print)

Manager 4/15/2008

Title Date

State of

te‘“t5 )

eCrY16(J

(Seal)

County of

Subscribed and sworn to before me this 15- day of

Notary Publ

?;.%;;.4. TONY M SELLERS

- . "ublic, State of Texas ommission Expires My Commission expires

Texas ) ) SS )

STATE OF

COUNTY OF Comal


2050 West Main, Suite #1, Rapid City, SD 57702-2493 Telephone: 605-394-2229, FAX: 605-394-5317

FORM 13

t' EC"

APR 2 2008 GREAT FACES. GREAT PLACES.

OEPTOFENVIRONMEtusi STATE OF SOUTH DAKOTA RrsoliRcFs BEFORE THE SECRETARY OF

THE DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES

)

)

)

IN THE MATTER OF THE APPLICATION OF Spyglass Cedar Creek, LP.

CERTIFICATION OF APPLICANT

I, Spyglass Cedar Creek, LP. , the applicant in the above matter after being duly sworn upon oath hereby certify the following information in regard to this application:

South Dakota Codified Laws Section 1-40-27 provides:

"The secretary may reject an application for any permit filed pursuant to Titles 34A or 45, including any application by any concentrated swine feeding operation for authorization to operate under a general permit, upon making a specific finding that:

(1) The applicant is unsuited or unqualified to perform the obligations of a permit holder based upon a finding that the applicant, any officer, director, partner, or resident general manager of the facility for which application has been made:

(a) Has intentionally misrepresented a material fact in applying for a permit;

(b) Has been convicted of a felony or other crime of moral turpitude;

(c) Has habitually and intentionally violated environmental laws of any state or the United States which have caused significant and material environmental damage;

(d) Has had any permit revoked under the environmental laws of any state or the United States;

(e) Has otherwise demonstrated through clear and convincing evidence of previous actions that the applicant lacks the necessary good character and competency to reliably carry out the obligations imposed by law upon the permit holder; or

e,"x Y M SELLERS ublic, State of Texas

My commission expires: — aC)

CERTIFICATE OF APPLICATE — FORM 13 PAGE 2

(2) The application substantially duplicates an application by the same applicant denied within the past five years which denial has not been reversed by a court of competent jurisdiction. Nothing in this subdivision may be construed to prohibit an applicant from submitting a new application for a permit previously denied, if the new application represents a good faith attempt by the applicant to correct the deficiencies that served as the basis for the denial in the original application.

All applications filed pursuant to Titles 34A and 45 shall include a certification, sworn to under oath and signed by the applicant, that he is not disqualified by reason of this section from obtaining a permit. In the absence of evidence to the contrary, that certification shall constitute a prima facie showing of the suitability and qualification of the applicant. If at any point in the application review recommendation, or hearing process, the secretary finds the applicant has intentionally made any material misrepresentation of fact in regard to this certification, consideration of the application may be suspended and the application may be rejected as provided for under this section.

Applications rejected pursuant to this section constitute final agency action upon that application and may be appealed to circuit court as provided for under chapter 1-26."

Pursuant to SDCL 1-40-27, I certify that I have read the forgoing provision of state law, and that I am not disqualified by reason of that provision from obtaining the permit for which application has been made.

Dated this 15 day of April

, 20 08 .

Applicant

Subscribed and sworn before me this ' day of 20 () .

(SEAL)

PLEASE ATTACH SHEET DISCLOSING ALL FACTS PERTAINING TO SDCL 1-40-27 (1)(a) THROUGH (e).

ALL VIOLATIONS MUST BE DISCLOSED, BUT WILL NOT AUTOMATICALLY RESULT IN THE REJECTION OF AN APPLICATION.

SIII0da2l IflODS / NIOIIMASNI IrlaM

Well: Location:

API #: Permit #: Operator:

Type of Inspection:

OtherMIT

Final

Routine Oil Well Routine Gas Well

Date:

Comments

New Drill

Inspection Date: Time In: Time Out:

Accompanied by:

Equipment on Site:

Adequate Sign in Place?

Tanks Adequately Bermed?

Evidence of Spills?

Evidence of Improper Waste Disposal?

Weed Problems at Site?

Drill Pit Adequately Lined?

Blowout Preventer Used?

Erosion or Settling Problems?

Reclamation

Terrain Suitable/Protects Surface Water?

New Drill

Other Problems?

Top Soil Replaced?

Adequate Vegetation Present?

Protects Ground/Surface Water?

Routine Inspection Items

South Dakota DENR Minerals & Mining Program 523 East Capitol Pierre, SD 57501 Phone: 605-773-4201 Oil & Gas Well Inspection Report

Inspector:

Mechanical Integrity TestTime

(Minutes)

0

5

10

15

Pressure in Production Casing

Pressure in Tubing

Pressure in Surface Casing

Pass MIT

Production Casing Maintains 90% of Initial Pressure after 15 minutes?

Fail MIT

Yes No NA

Yes No NA

Yes No NA

Yes No NA

Yes No NA

Yes No NA

Yes No NA

Yes No NA

Yes No NA

Yes No NA

Yes No NA

Yes No NA

Yes No NA

Area Adequately Reshaped & Sloped Yes No NA

Landuse:

Signature:

State 8-8 SENE 8-17N-4E, Harding County

40 063 20641 1866 Spyglass Cedar Creek LP

Site is fenced off with a barbed wire fence which is loose. One pressure gauge was disconnected and the other read 198 psi.

Aug 2, 2017

7-18-17 8:38 AM MDT 8:42 AM MDT

Lucy Dahl (DENR)

well house

Jeff Klenner

Oil & Gas Well Inspection Report Photos—State 8‐8, Page 1 of 1

Photo 1. State 8‐8 well site.

Photo 2. Inside the well house.

Well: Location:


Type of Inspection:

OtherMIT

Final


Date:

Comments

New Drill


Accompanied by:

Equipment on Site:



Evidence of Spills?






Reclamation


New Drill

Other Problems?

Top Soil Replaced?





Inspector:


(Minutes)

0

5

10

15


Pressure in Tubing


Pass MIT


Fail MIT

Yes No NA

Yes No NA

Yes No NA

Yes No NA

Yes No NA

Yes No NA

Yes No NA

Yes No NA

Yes No NA

Yes No NA

Yes No NA

Yes No NA

Yes No NA


Landuse:

Signature:



Site is fenced off with a barbed wire fence. Once pressure gauge was disconnected and the other read 190 psi.

Jul 6, 2016

6-28-16 2:02 PM MDT 2:07 PM MDT

Lucy Dahl (DENR)

well house

Jeff Klenner

Oil & Gas Well Inspection Report Photos—State 8‐8, Page 1 of 1


Photo 2. State 8‐8 well head.

Well: Location:


Type of Inspection:

OtherMIT

Final


Date:

Comments

New Drill


Accompanied by:

Equipment on Site:



Evidence of Spills?






Reclamation Bond Release


New Drill

Other Problems?

Top Soil Replaced?





Inspector:


(Minutes)

0

5

10

15


Pressure in Tubing


Pass MIT


Fail MIT

Yes No NA

Yes No NA

Yes No NA

Yes No NA

Yes No NA

Yes No NA

Yes No NA

Yes No NA

Yes No NA

Yes No NA

Yes No NA

Yes No NA

Yes No NA


Landuse:

Signature:



No change from last inspection on 06/16/2015.

Jul 21, 2015

07/14/2015 5:12 PM MDT 5:17 PM MDT

Tristan Farel (New Frontier Energy)

Gated well house, barb wire site fence

Lucy Dahl

Well: Location:


Type of Inspection:

OtherMIT

Final


Date:

Comments

New Drill


Accompanied by:

Equipment on Site:



Evidence of Spills?








New Drill

Other Problems?

Top Soil Replaced?





Inspector:


(Minutes)

0

5

10

15


Pressure in Tubing


Pass MIT


Fail MIT

Yes No NA

Yes No NA

Yes No NA

Yes No NA

Yes No NA

Yes No NA

Yes No NA

Yes No NA

Yes No NA

Yes No NA

Yes No NA

Yes No NA

Yes No NA


Landuse:

Signature:



Pressure gauge on well read 174 psi. Well needs both casing and tubing pressure gauges as required by ARSD 74:12:02:16.

Jun 29, 2015

6/16/2015 4:59 PM MDT 5:04 PM MDT

Mike Lees

well house - gated off with barb wire fence around site perimeter

Jeff Klenner

Oil & Gas Well Inspection Report Photo—State 8‐8, Page 1 of 1


Well: Location:


Type of Inspection:

OtherMIT

Final


Date:

Comments

New Drill


Accompanied by:

Equipment on Site:



Evidence of Spills?








New Drill

Other Problems?

Top Soil Replaced?





Inspector: Signature:


(Minutes)

0

5

10

15


Pressure in Tubing


Pass MIT


Fail MIT

Yes No NA

Yes No NA

Yes No NA

Yes No NA

Yes No NA

Yes No NA

Yes No NA

Yes No NA

Yes No NA

Yes No NA

Yes No NA

Yes No NA

Yes No NA


Landuse:



Well is shut in. Well house is surrounded by weeds.

Sep 24, 2013

9/18/2013 2:07 PM MST 2:10 PM MST

Mike Lees

Jeff Klenner

Oil & Gas Well Inspection Report Photo—State 8‐8, Page 1 of 1


SaVW / S1110(1111 IVDINIIIDII

S GROIVIlad0

GEOLOGIC AND DRILLING REPORT

SPYGLASS CEDAR CREEK LP

Spyglass State 8-8 1900' fn, 840' fe, Section 8, T17N-R4E

Harding County, South Dakota

RECEIVED JUL :3 1 2008

DEPT OF ENVIRONMENT & NATURAL RESOURCES - RAPID CITY

Spyglass State 8-8 CONTENTS

We l Summary YAM •■•• MaIMIMOIMIMMI NYMMIMMYMIM1 010.11.••■••■■• ■■■•■••MM

Chronological Penetration Record ------------ 2

Time Distribution Summary --- IMMIMYIMMIMIMMIMMIMMINIIMM•IIMMIN=M11110•11■MIMIMI■ 2

Bit Record -------

Log Tops

Sample Description 4

Geologic Log ------------- In Pocket

Discovery Energy, Inc. M.K. Jones, Petroleum Geologist P.O. Box 21194 Billings, Montana 59104 406-652-4505

3

3

Spyglass State 8-8 WELL SUMMARY

OPERATOR: Spyglass Cedar Creek LP LEASE AND WELL NO: Spyglass State 8-8 LOCATION: 1900' fn, 840' fe, Sec. 8, T17N-R4E, Harding County, South Dakota

ELEVATION: 3143 Ground, 3147 K.B. HOLE SIZE: Surface 7.875" to 465, Main Hole 6.25" to Total Depth TOTAL DEPTH: 2000 Driller, 2000 Logger

SPUD DATE: July 12, 2008, 6:30AM CASING POINT DATE: July 14, 2008 COMPLETION DATE: Unknown WELL STATUS: Awaiting Completion

SURFACE CASING: 7" 20# at 436.4 K.B. w/ 190 sx PRODUCTION CASING: 4.5". 11.6 # at 1934 w/ 180 sx

MUD PROGRAM: GM, Not Engineered

LOGS: Schlumberger Platform Express Plus BHC Sonic CORES AND DRILL STEM TESTS: None

DRILLING CONTRACTOR: Elenburg Exploration, Inc., Rig No. 8

DRILLING EQUIPMENT:

DRAW WORKS, Walker Neer 2000; MAST, Walker Neer 57'; POWER, 60 Series GMC Diesel; PUMP Emsco D 375 Powered by 60 Series Gmc Diesel; BLOWOUT PREVENTER, Ragan Taurus 9", 2000# Donut; DRILL PIPE, .5" IF; DRILL COLLARS, 18 4.5"x2.25"

1

Spyglass State 8-8 CHRONOLOGICAL PENETRATION RECORD

Daily Depth at 6:00AM

DATE

2008

PENETRATION

DEPTH FOOTAGE

TIME DISTRIBUTION REMARKS

DRILL REPAIR OTHER

07-12 Move in, Rig Up Spud 9:15PM

07-13 465 465 4 6 Rn & Cmt 7" Csg, WOC, Hp! up

07-14 1687 1222 12.5 - 11.5 Wait on Loggers

07-13 2000 313 3.5 - 9 Logging, Rn & Cmt 4.5" Prod Csg Rig Dn

Rig Released 6:30PM, 07-12-08

TIME DISTRIBUTION SUMMARY

Rotating Hours

Rig Repairs

Days on Location from Spud

20 Hours

0 Hours

2.5 Days

2

Spyglass State 8-8 BIT RECORD

NO SIZE MAKE TYPE JETS OUT FT HRS WT RPM SPM PRESS

lA 9.875 Retip FDS Op 465 465 4 10M 110 60 400

1 6.25 Trenden TX613 6)04 2000 1535 16 7M 100 60 1150

LOG TOPS

Elevations: 3143 Ground, 3147 K.B.

FORMATION

DEPTH ELEVATION THICK STRUCTURAL COMPARISON

Claggett Bentonite 1140 2007 320

Eagle 1460 1687 134 35 Feet Low

Shannon 1594 1553 106 37 Feet Low

Base of Shannon 1700 1447 300+

Total Depth 2000

COMPARISON WELL

Spyglass State 16-8 1/2 Mile Southwest

3

Spyglass State 8-8 SAMPLE DESCRIPTIONS

Samples caught from flow line; Not Lagged; Samples examined at the well; Sample quality is good unless otherwise noted.

Samples begin at 470 in Pierre Shale.

0-470 No samples

Begin 30 Foot Samples

470-500 Shale-medium gray, blocky to lumpy, locally gritty to sandy, massive pyrite.

500-530 Shale-medium gray, lumpy to blocky, partly gritty to sandy; Clay-light gray, soft.

530-590 No change

590-620 Siltstone-sandy, shaly, bentonitic, soft; Shale-as above.

620-650 Shale-medium gray, fissile to blocky, firm; Clay-light gray, soft, mushy.

650-680 No change

680-710 Shale-light to medium gray, lumpy to fissile, soft, gritty to silty.

710-800 No change

800-830 Shale-medium gray, fissile to blocky, gritty to silty; Fossil fragments.

830-890 No change

890-920 Shale-medium to dark gray, fissile, locally gritty.

920-950 As above; Some Clay-light gray, soft.

950-980 Shale-dark gray, fissile, locally gritty to silty.

980-1010 As above; Clay-buff, light gray, waxy.

1010-1040 Shale-medium gray, soft, lumpy.

1040-1070 Shale-as above; Concretion fragments; tan to yellowish tan, hard brittle.

1070-1100 Shale-medium gray, lumpy to blocky, to sandy; Fossil fragments.

1100-1130 No change

4

Log Top, Claggett Bentonite 1140 (+1687)

1130-1160 No change

1160-1190 Shale-as above; Clay-light gray, soft.

1190-1220 No change

1220-1250 Shale-medium to dark gray, fissile, gritty; Clay-as above

1250-1280 No change

1280-1310 Shale-medium to dark gray, lumpy to fissile, gritty to silty.

1310-1370 No change

1370-1400 Shale-medium to dark gray, fissile to lumpy, firm.

Start 20 Foot Samples

1400-1440 No change

1440-1460 Shale-as above; Shale-dark gray, firm, fissile to blocky.

Log Top, Eagle 1460 (+1617)

1460-1480 Dark gray Shale-as above, fissile to blocky, firm; Many fossil fragments.

1480-1500 Shale-as above, locally silty to sandy, calcareous, firm.

1500-1520 Shale-medium to dark gray, fissile to blocky, firm, fossiliferous; Trace of Siltstone-dark gray.

1520-1540 Shale-as above; Some Siltstone-tan, light gray; Clay-tan, micaceous, waxy.

1540-1560 No change

1560-1580 As above; Trace of Sandstone-tan, very fine grained, silty, angular, poor porosity.

Log Top, Shannon 1594 (+1553)

1580-1600 As above; Trace of Limestone-tan fragmental; Massive Pyrite.

1600-1620 Shale-dark gray, blocky to fissile, firm, locally gritty to silty.

1620-1640 No change

1640-1660 As above; Some Sandstone-medium gray, salt and pepper, green and black accessory grains, angular, shaly, calcareous, tight.

5

1660-1680 Shale-medium gray, fissile, firm; Siltstone-medium gray, shaly; Trace of Sandstone.

1680-1700 No change

Resume 30 Foot Samples

Log Top, Base of Shannon, 1759 (+1449)

1700-1730 Shale-dark gray, fissile to blocky, firm. Still a trace of Shannon Sandstone.

1730-1760 Shale-as above; Fossil fragments

1760-1790 Shale-as above; Clay-light gray, waxy.

1790-1820 No change

1820-1850 Shale-dark gray, fissile, gritty, slightly micaceous; Clay-as above.

1850-1880 Shale-as above; Trace of Limestone and fossil fragments.

1880-1910 No change

1910-1940 Shale-as above; Massive Pyrite; Trace of Limestone.

1940-1970 Shale-as above;; Fossil fragments.

1970-2000 No change

DRILLER TOTAL DEPTH 2000 LOGGER TOTAL DEPTH 2000

July 14, 2008

M.K. Jones, Petro m Geologist

6

PI/DWIGHTS PLUS DRILLING WIRE TM ROCKY MOUNTAIN REGION - DAILY ACTIVITY

Section I - 05/05/2009

PAGE 2_

COMPLETIONS SOUTH DAKOTA-HARDING COUNTY CONTINUED

OPER: SPYGLASS CEDAR CREEK S-T-R: 8-17N-4E; FIELD: JUMPOFF; PROJ DEPTH: 2200; PROJ FM: SHANNON /BENTONITE/; DG LP; SPOT: N2 SE SE; PERMIT: 1863 (PMT APP'D 20080522) (FR:20080523 FARM KMS) LEASE STATUS: WELL: 16-8 STATE; FOOTAGE: 850 FSL 660 TYPE:STATE TARGET OBJ: GAS: OPER ADD: 595 S CASTELL AVE, NEW GAS; API: 40-063-20638; FEL SEC; BRAUNFELS, TX 78130, (830)626-7100 EL: 3208 KB, 3204 GR; LOCATION

DATA: 10.9 MI SW BUFFALO, SD ;VERTICAL; L&L Surf: 45.446495575 -103.650179179 ;

CONTR: ELENBURG EXPLORATION, RIG # 8; SPUD:20080710 CSG: 7 IN @ 440 W/190 SACK,4 1/2 IN @ 1914 W/180 SACK; LOG TYPES: PLEX, CCL,

CBL, GR, VD, SONL; ; LOG TOPS: EAGLE 1486, SHANNON /BENTONITE/ 1629; TD: 1914; (SHANNON /BENTONITE/) (TD REACHED:20080712) 1881 PBTD PRODUCING INTERVALS DATA: # 01 PERF (SHANNON /BENTONITE/) 1618-1652 W/ 6 PF: GAS: 128.7 MCFD WELL PRODUCED 5194 MCFG/ 24 DAYS -

AUGUST 2008 DTD: 1914; 1881 PB COMPDATE: 20080809; # 01 IPF GAS: 128.7 MCFD PROD ZONE: PERF (SHANNON /BENTONITE/) 1618-1652 W/ 6 PF ; NO CORES CUT , NO DST RUN SS

OPER: SPYGLASS CEDAR CREEK S-T-R: 8-17N-4E; FIELD: JUMPOFF; PROJ DEPTH: 2200; PROJ FM: SHANNON /BENTONITE/; DG LP; SPOT: NW SE NE; PERMIT: 1866 (PMT APP'D 20080522) (FR:20080523 FARM KMS) LEASE STATUS: WELL: 8-8 STATE; FOOTAGE: 1900 FNL 840 TYPE:STATE TARGET OBJ: GAS; OPER ADD: 595 S CASTELL AVE, NEW GAS; API: 40-063-20641; FEL SEC; BRAUNFELS, TX 78130, (830)626-7100 EL: 3147 KB, 3145 GR; LOCATION


CONTR: ELENBURG EXPLORATION, RIG # 8; SPUD:20080712 CSG: 7 IN @ 440 W/190 SACK,4 1/2 IN @ 1926 W/180 SACK; LOG TYPES: PLEX, CCL,

CBL, GR, VD, SONL; ; LOG TOPS: EAGLE 1460, SHANNON /BENTONITE/ 1605; TD: 1932; (SHANNON /BENTONITE/) (TD REACHED:20080715) 1632 PBTD PROD TEST(S): # 01 PERF (SHANNON /BENTONITE/) 1635-1651 W/ 6 PF; BRIDGE PLUG 1632 FT 1635-1651; PRODUCING INTERVALS DATA: # 01 PERF (SHANNON /BENTONITE/) 1592-1629 W/ 6 PF; GAS: 530 MCFD WELL PRODUCED 8320 MCFG/ 24 DAYS - AUGUST 2008 DTD: 1932; 1632 PB COMPDATE: 20080809; # 01 IPF GAS: 530 MCFD PROD ZONE: PERF (SHANNON /BENTONITE/) 1592-1629 W/ 6 PF ; NO CORES CUT , NO DST RUN $S

OPER: SPYGLASS CEDAR CREEK S-T-R: 9-17N-4E; FIELD: JUMPOFF; PROJ DEPTH: 2200; PROJ FM: SHANNON /BENTONITE/; DG LP; SPOT: SW NW SE; PERMIT: 1827 (PMT APP'D 20070508) (FR:20070508 FARM KMS) LEASE STATUS: WELL: 10-9 GILBERT; FOOTAGE: 1780 FSL 2140 TYPE:FEE TARGET OBJ: GAS; OPER ADD: 595 S CASTELL AVE, NEW GAS; API: 40-063-20622; FEL SEC; BRAUNFELS, TX 78130, (830)626-7100 EL: 3106 KB, 3100 GR; LOCATION


CONTR: ELENBURG EXPLORATION, RIG # 8; SPUD:20070515 CSG: 7 IN @ 438 W/210 SACK,4 1/2 IN @ 2085 W/185 SACK: LOG TYPES: DI, GR, VD, SFD, SP, GR, CNL, FDC, SONL, CBL, CCL; ; LOG TOPS: EAGLE 1438, SHANNON /BENTONITE/ 1570; TD: 2085; (SHANNON /BENTONITE/) (TD REACHED:20070519) 2042 PBTD PRODUCING INTERVALS DATA: # 01 PERF (SHANNON /BENTONITE/) 1574-1608 W/ 6 PF; GAS: 377 MCFD SICP 205; 16/64 CK WELL PRODUCED 5256 MCFG/ 11 DAYS - JUNE 2008 DTD: 2085; 2042 PB COMPDATE: 20080621; # 01 IPF GAS: 377 MCFD 16/64 CK SICP 205 PROD ZONE: PERF (SHANNON /BENTONITE/) 1574-1608 W/ 6 PF ; NO CORES CUT , NO DST RUN $S

OPER: SPYGLASS CEDAR CREEK S-T-R: 15-17N-4E; FIELD: JUMPOFF; PROJ DEPTH: 2200; PROJ FM: SHANNON /BENTONITE/; WOE LP; SPOT: NE SW SW; PERMIT: 1867 (PMT APP'D 20080522) (FR:20080523 FARM KMS) LEASE STATUS: WELL: 13-15 GILBERT; FOOTAGE: 700 FSL 940 TYPE:FEE TARGET OBJ: GAS; OPER ADD: 595 S CASTELL AVE, NEW GAS; API: 40-063-20642; FWL SEC; BRAUNFELS, TX 78130, (830)626-7100 EL: 3141 GR; LOCATION DATA:

11.4 MI S BUFFALO, SD .5 MI W OF JUMPOFF FLD (SHANNON); ;VERTICAL; L&L Surf: 45.431599795 -103.623473553 ;

CONTR: ELENBURG EXPLORATION, RIG # 8; SPUD:20080719 CSG: 7 IN @ 440 W/190 SACK,4 1/2 IN @ 1980 W/180 SACK; DR LG COMMENTS: ELEV CHGD FROM 3000 GR; LOG TYPES: CCL, CBL, GR, VD, PLEX, SONL; ; LOG TOPS: EAGLE 1484, SHANNON /BENTONITE/ 1625; TD: 1980; (SHANNON /BENTONITE/) (TD REACHED:20080721) 1938 PBTD PRODUCING INTERVALS DATA: # 01 PERF (SHANNON /BENTONITE/) 1617-1652 W/ 6 PF; GAS: 540 MCFD WELL PRODUCED 7314 MCFG/ 13 DAYS - AUGUST 2008 DTD: 1980; 1938 PB COMPDATE: 20080819; # 01 IPF GAS: 540 MCFD PROD ZONE: PERF (SHANNON /BENTONITE/) 1617-1652 W/ 6 PF ; NO CORES CUT , NO DST RUN ; SHANNON EXTENSION - JUMPOFF FIELD $$

OPER: SPYGLASS CEDAR CREEK S-T-R: 16-17N-4E; FIELD: JUMPOFF; PROJ DEPTH: 2200; PROJ FM: SHANNON /BENTONITE/; DG LP; SPOT: NE NW SE; PERMIT: 1864 (PMT APP'D 20080522) (FR:20080523 FARM KMS) LEASE STATUS: WELL: 10-16 STATE; FOOTAGE: 2040 FSL 1880 TYPE:STATE TARGET OBJ: GAS; OPER ADD: 595 S CASTELL AVE, NEW GAS; API: 40-063-20639; FEL SEC; BRAUNFELS, TX 78130, (830)626-7100 EL: 3144 KB, 3140 GR, LOCATION

DATA: 11.3 MI S BUFFALO, SD ;VERTICAL; L&L Surf: 45.435273405 -103.63442871 ;

CONTR: ELENBURG EXPLORATION, RIG # 8; SPUD:20080707 CSG: 7 IN @ 455 W/190 SACK,4 1/2 IN @ 1963 W/180 SACK; LOG TYPES: PLEX. SONL, CCL, CBL, GR, VD; ; LOG TOPS: EAGLE 1153, SHANNON /BENTONITE/ 1581; TD: 1963; (SHANNON /BENTONITE/) (TD REACHED:20080709) 1938 PBTD PRODUCING INTERVALS DATA: # 01 PERF (SHANNON /BENTONITE/) 1582-1616 W/ 6 PF; GAS: 208 MCFD 16/64 CK WELL PRODUCED 11516 MCFG/ 24 DAYS - AUGUST 2008 DTD: 1963; 1938 PB COMPDATE: 20080809; # 01 IPF GAS: 208 MCFD 16/64 CK PROD ZONE: PERF (SHANNON /BENTONITE/) 1582-1616 W/ 6 PF ; NO CORES CUT , NO DST RUN SS

ADMINISTRATIVE / SUNDRY REPORTS

Spyglass Cedar Creek, LP

110 Broadway, Suite 215

San Antonio, TX 78205

RECEIVED MAR 2 8 2097

DEPT OF ENVIRONMENT & NATURAL RESOURCES - RAPID CITY

March 27, 2017

SUBJECT: Issues Identified During 2016 Well Inspections and Plans to Remedy Issues

Lucy Dahl

Environmental Scientist II, Minerals and Mining Program

523 East Capitol Avenue

Pierre, SD 57501

Dear Ms. Dahl-

Per our previous conversations, the other associated parties on our call/ communication chain are aware; there are still conflicted legal positions with Spyglass Cedar Creek, LP and New Frontier Energy/ Samyak Verra/ Tristan Farel et-al, and whose operational responsibility it is to provide remedies to all of the well/ field issues that have been identified in your December 14, 2015 inspection report. In spite of the legal questions, it is as discussed Spyglass' goal to bring the 40 wells into compliance, rehabilitate the field and bring the project back on-line as soon as is feasible. Understanding that we feel there are legal question regarding New Frontier; In order to try and move forward we intend to try and do the following in response to your assessment of issues:

1. Gilbert 1-2H: address well status, provide cement bond log, fix sign, replace fence around wellhead, fix reclaim pit, remove all unused equipment.

2. Price 13-24R: address well status, fix sign. 3. State 4-16: provide cement bond log, address well status, fix sign, rebury or remove pit liner at

surface, remove debris. 4. Gold Point State 32-1: address well status, provide cement bond log, fix sign, rebury or remove

pit liner at surface, re-set gates around wellhead. 5. State 10-27: address well status, provide cement bond log. 6. Peterson 6-5: address well status, install working gauges, remove all unused equipment. 7. !lett 8-24: address well status, install working gauges, fix sign. 8. State JO 6-27: address well status. 9. State 14-36: address well status, install working gauges, provide cement bond log, fence

wellhead, fix sign, remove unused equipment. 10. State 10-35: address well status, install working gauges. 11. State 13-23: address well status, install working gauges, provide cement bond log, correct

erosion issues. 12. State 11-30: address well status, install working gauges, provide cement bond log, fix sign. 13. Spyglass State 7-35: address well status, install working gauges, provide cement bond log. 14. State 2-27: address well status, install working gauges, provide cement bond log. 15. State 12-4: address well status, install working gauges, provide cement bond log. 16. Heairet-Henderson 10-15: address well status, install working gauges, provide cement bond log,

fix sign. 17. Gilbert 12-16: address well status, install working gauges. 18. Gilbert 13-10: address well status, install working gauges, provide cement bond log. 19. Gilbert 1-34: address well status, install working gauges, provide cement bond log, file

completion report. 20. Gilbert-State 3-16: address well status, install working gauges, rebury or remove pit liner at

surface. 21. State 16-22: address well status, install working gauges, correct erosion issues. 22. State 3-30: address well status, install working gauges, provide cement bond log, remove

unused equipment and refuse, berm tanks, repair building. 23. State 4-35: address well status, install working gauges, rebury or remove pit liner at surface.

24. Spyglass 16-24 Hett: address well status, install working gauges. 25. Gilbert 10-9: address well status, install working gauges, fix sign. 26. Gilbert 5-26: address well status, install working gauges. 27. State 16-8: address well status, install working gauges. 28. Gilbert 10-9: address well status, install working gauges, fix sign. 29. Gilbert 5-26: address well status, install working gauges. 30. State 16-8: address well status, install working gauges. 31. State 10-16: address well status, install working gauges, provide cement bond log. 32. State 8-8: address well status, install working gauges. 33. Gilbert 13-15: address well status, install working gauges. 34. Gilbert 5-15: address well status, install working gauges, provide cement bond log, rebury or

remove pit liner at surface. 35. Questar 9-27: address well status, provide cement bond log. 36. Peterson 10-5: address well status, install working gauges. 37. Gilbert 7-9: address well status, install working gauges. 38. State 1-21: address well status, provide cement bond log, rebury or remove pit liner at surface,

enable access to well house. 39. Fox 6-22: address well status, install working gauges, provide cement bond log, remove unused

equipment. 40. Gilbert 12-9: address well status, install working gauges, provide cement bond log. 41. State 2-16: address well status, install working gauges. 42. Heairet-Henderson 2-22: address well status, provide cement bond log, rebury or remove pit

liner at surface, correct erosion issues. 43. Acton 11-22: address well status, install working gauges, provide cement bond log, rebury or

remove pit liner at surface, correct erosion issues.

Understanding that this is the beginning of the wet season and not looking to cause further road or surface site damage; it is our intention to have the majority of this completed by early June.

Additionally, Spyglass Cedar Creek is currently in discussion with a well-financed, experienced operator to potentially bring in as a partner to get the project rehabilitated, bring the wells into compliance and get the field back on-line. They are in the due-diligence portion of the potential partnership and once the partnership is formed, they/we will move quickly to start rebuilding the project and start to again develop and produce the minerals. Concurrently, we will continue to try and clear up the legal issues with New Frontier Exploration, who has caused so many legal and financial issues for us, the land owners and the State.

We expect this partnership to be made in the next 30 days or so and then our work will begin. As soon as we memorialize our agreements I would like to schedule a meeting to see how we can work together to get this project back on track.

Although mostly created by groups/ people not under our control I do sincerely regret that this situation has caused so much trouble for everyone. I look forward to trying to rebuild this project and having a long-lasting, good relationship with you, and the State of South Dakota.

Manager

Xanthus Capital LLC

(General Partner to)

Spyglass, Cedar Creek, LP

Well Name API Location

Date of last

production

Necessary

Compliance

Actions

Gilbert 1-2H 40-063-20715 NENE-02-17N-01E

Never

Produced

Address well

status1; provide

cement bond

log; fix sign;

fence wellhead;

reclaim pit;

remove unused

equipment

Price 13-24R 40-063-20542.01 SWSW-24-19N-04E

Never

Produced

Address well

status1; fix sign

State 4-16 40-063-20605 NWNW-16-19N-04E

Never

Produced

Provide cement

bond log;

address well

status1; fix sign;

rebury or

remove pit liner

at surface;

remove debris

Gold Point State 32-1 40-063-20604 NWNW-32-19N-02E

Never

Produced

Address well

status1; provide

cement bond

log; fix sign;

rebury or

remove pit liner

at surface; re-set

gates around

wellhead

10-27 State 40-063-20609 NWSE-27-19N-04E

Never

Produced

Address well

status1; provide

cement bond log

Peterson 6-5 40-063-20621 SENW-05-17N-04E March 2010

Address well

status1; install

working

gauges2; remove

unused

equipment

Hett 8-24 40-063-20644 SENE-24-18N-03E

Never

Produced

Address well

status1; install

working

gauges2; fix sign

State JO 6-27 40-063-20657 SENW-27-17N-04E

Never

Produced

Address well

status1

State 14-36 40-063-20658 SESW-36-18N-01E

Never

Produced

Address well

status1; install

working

gauges2; provide

cement bond

log; fence

wellhead; fix

sign; remove

unused

equipment

State 10-35 40-063-20640 NWSE 35-18N-04E June 2012

Address well

status1; install

working gauges2

State 13-23 40-063-20659 SWSW 23-18N-04E

September

2011

Address well

status1; install

working

gauges2; provide

cement bond

log; correct

erosion issues

State 11-30 40-063-20692 NESE 30-18N-04E

Never

Produced

Address well

status1; install

working

gauges2; provide

cement bond

log; fix sign

Spyglass State 7-35 40-063-20693 SWNE 35-18N-04E June 2012

Address well

status1; install

working

gauges2; provide

cement bond log

State 2-27 40-063-20694 NWNE 27-18N-04E

December

2011

Address well

status1;

install

working

gauges2; provide

cement bond log

State 12-4 40-063-20701 NWSW 04-17N-04E May 2011

Address well

status1; install

working

gauges2; provide

cement bond log

Heairet-Henderson

10-15 40-063-20703 NWSE 15-17N-04E June 2012

Address well

status1; provide

cement bond

log; fix sign

Gilbert 12-16 40-063-20705 NWSW 16-17N-04E June 2012

Address well

status1;

install

working gauges2

Gilbert 13-10 40-063-20711 SWSW 10-17N-04E

September

2010

Address well

status1; install

working

gauges2; provide

cement bond log

Gilbert 1-34 40-063-20714 NENE 34-18N-04E July 2012

Address well

status1; install

working

gauges2; provide

cement bond

log; file

completion

report

Gilbert-State 3-16 40-063-20623 CNW 16-17N-04E July 2012

Address well

status1; install

working

gauges2; rebury

or remove pit

liner at surface

State 16-22 40-063-20660 SESE 22-18N-04E January 2012

Address well

status1; install

working

gauges2; correct

erosion issues

3-30 State 40-063-20611 NENW 30-18N-04E July 2012

Address well

status1; install

working

gauges2; provide

cement bond

log; remove

unused

equipment &

refuse; berm

tanks; repair

building

State 4-35 40-063-20614 NWNW 35-18N-04E July 2012

Address well

status1; install

working

gauges2; rebury

or remove pit

liner at surface

Spyglass 16-24 Hett 40-063-20620 SESE 24-18N-03E July 2012

Address well

status1; install

working gauges2

Gilbert 10-9 40-063-20622 NWSE 09-17N-04E July 2012

Address well

status1; install

working

gauges2; fix sign

Gilbert 5-26 40-063-20624 SWNW 26-18N-04E July 2012

Address well

status1;

install

working gauges2

State 16-8 40-063-20638 SESE 08-17N-04E June 2012

Address well

status1; install

working gauges2

State 10-16 40-063-20639 NWSE 16-17N-04E July 2012

Address well

status1; install

working

gauges2; provide

cement bond log

State 8-8 40-063-20641 SENE 08-17N-04E July 2012

Address well

status1; install

working gauges2

Gilbert 13-15 40-063-20642 SWSW 15-17N-04E July 2012

Address well

status1; install

working gauges2


Address well

status1; install

working

gauges2; provide

cement bond

log; rebury or

remove pit liner

at surface

Questar 9-27 40-063-20650 NESE 27-18N-04E July 2012

Address well

status1; provide

cement bond log

Peterson 10-5 40-063-20651 NWSE 05-17N-04E June 2012

Address well

status1; install

working gauges2

Gilbert 7-9 40-063-20662 SWNE 09-17N-04E July 2012

Address well

status1; install

working gauges2

State 1-21 40-063-20698 NENE 21-17N-04E July 2012

Address well

status1; provide

cement bond

log; rebury or

remove pit liner

at surface;

enable access to

well house

Fox 6-22 40-063-20699 SENW 22-17N-04E July 2012

Address well

status1; install

working

gauges2; provide

cement bond

log; remove

unused

equipment

Gilbert 12-9 40-063-20702 NWSW 09-17N-04E July 2012

Address well

status1; install

working

gauges2; provide

cement bond log

State 2-16 40-063-20704 NWNE 16-17N-04E July 2012

Address well

status1; install

working gauges2

Heairet-Henderson 2-

22 40-063-20706 NWNE 22-17N-04E July 2012

Address well

status1; provide

cement bond

log; rebury or

remove pit liner

at surface;

correct erosion

issues

Acton 11-22 40-063-20708 NESW 22-17N-04E July 2012

Address well

status1; install

working

gauges2; provide

cement bond

log; rebury or

remove pit liner

at surface;

correct erosion

issues

1: Well statuses should be addressed by: requesting temporary abandonment status from the

DENR based on the performance of a successful mechanical integrity test, returning the well to

production, or plugging and abandoning the well in accordance with Administrative Rules of

South Dakota requirements.

2: Valves and gauges must be installed and maintained in good working order to permit pressure

readings to be obtained on both casing and tubing.

December 14, 2015

March Kimmel


110 Broadway, Ste. 215


Dear Mr. Kimmel:

It has come to our attention that Spyglass Cedar Creek, LP (Spyglass) is addressing Bureau of

Land Management compliance issues concerning eight wells in Harding County, South Dakota,

that produce federal minerals. We want to remind you that Spyglass is the operator of record of

32 additional gas wells in South Dakota in addition to those eight that produce federal minerals.

As such, Spyglass is responsible for maintaining all 40 wells and ensuring they are in compliance

with South Dakota requirements. As we have advised you, or attempted to, on numerous

occasions over the past three years, all 40 wells are out of compliance and have been for quite

some time (see attached table).

We have been more than patient waiting for Spyglass to come to some kind of resolution on

these issues. However, our patience is worn thin and we now need to see some action on your

part. Failure to bring all 40 of Spyglass Cedar Creek’s Harding County wells into compliance

will force us to seriously consider enforcement. Possible enforcement actions include, but are not

necessarily limited to: requiring Spyglass Cedar Creek to permanently plug and abandon all

wells; revoking drilling/operating permits pursuant to SDCL 45-9-73; requiring additional bonds

sufficient to plug and reclaim each well site (which could amount to one million dollars or

more); levying monetary penalties up to $500 per day per violation (potentially tens of millions

of dollars); filing a lien against Spyglass Cedar Creek for costs associated with well plugging,

removal of equipment, and surface restoration; shutting down and sealing property by the

Secretary pursuant to 45-9-70; and requesting the Board of Minerals and Environment to act on

Spyglass’ bonds. To avoid enforcement we are requesting that you respond by January 31, 2016

with a plan outlining how and when you intend to bring wells into compliance.

If you have any questions or concerns you would like to discuss, please feel free to contact me at

605.773.4201.

Sincerely,

Lucy Dahl

Environmental Scientist II

Minerals and Mining Program

1

Well Name API Number Location

Date of last

production

Necessary

Compliance

Actions

State 1-2H 40-063-20715 NENE-02-17N-01E

Never

Produced

Fence wellhead;

reclaim pit;

remove unused

equipment;

provide cement

bond log;

address well

status1

Price 13-24R 40-063-20542.01 SWSW-24-19N-04E

Never

Produced

Address well

status1

State 4-16 40-063-20605 NWNW-16-19N-04E

Never

Produced

Provide cement

bond log;

address well

status1

Gold Point State 32-1 40-063-20604 NWNW-32-19N-02E

Never

Produced

Provide cement

bond log;

address well

status1

State 10-27 40-063-20609 NWSE-27-19N-04E

Never

Produced

Provide cement

bond log;

address well

status1

Peterson 6-5 40-063-20621 SENW-05-17N-04E March 2010

Install working

gauges2; weeds;

remove unused

equipment;

address well

status1

Hett 8-24 40-063-20644 SENE-24-18N-03E

Never

Produced

Install working

gauges2; repair

small leak at

wellhead;

address well

status1

State Jo 6-27 40-063-20657 SENW-27-17N-04E

Never

Produced

Address well

status1

State 14-36 40-063-20658 SESW-36-18N-01E

Never

Produced

Install working

gauges2; fence

wellhead;

remove unused

equipment;

provide cement

bond log;

2

address well

status1

State 10-35 40-063-20640 NWSE 35-18N-04E October 2011

Install working

gauges2; remove

weeds; repair

small leak at

wellhead;

address well

status1

State 13-23 40-063-20659 SWSW 23-18N-04E

September

2011

Install working

gauges2; correct

erosion issues;

provide cement

bond log;

address well

status1

State 11-30 40-063-20692 NESE 30-18N-04E

Never

Produced

Install working

gauges2; provide

cement bond

log; address well

status1

State 7-35 40-063-20693 SWNE 35-18N-04E October 2011

Install working

gauges2; remove

weeds; provide

cement bond

log; address well

status1

State 2-27 40-063-20694 NWNE 27-18N-04E

December

2011

Install working

gauges2; provide

cement bond

log; address well

status1

State 12-4 40-063-20701 NWSW 04-17N-04E May 2011

Install working

gauges2; remove

weeds; provide

cement bond

log; address well

status1

Heairet-Henderson

10-15 40-063-20703 NWSE 15-17N-04E April 2011

Provide cement

bond log;

address well

status1

State 12-16 40-063-20705 NWSW 16-17N-04E

November

2011

Install working

gauges2; address

well status1

3

Gilbert 13-10 40-063-20711 SWSW 10-17N-04E

September

2011

Install working

gauges2; provide

cement bond

log; address well

status1

Gilbert 1-34 40-063-20714 NENE 34-18N-04E October 2011

Install working

gauges2; remove

weeds; file

completion

report; provide

cement bond

log; address well

status1

Gilbert-State 3-16 40-063-20623 CNW 16-17N-04E

November

2011

Install working

gauges2; remove

weeds; address

well status1


Install working

gauges2; address

well status1

State 3-30 40-063-20611 NENW 30-18N-04E July 2012

Install working

gauges2; remove

unused

equipment &

refuse; repair

small leak at

wellhead; berm

tanks; repair

building;

provide cement

bond log;

address well

status1

State 4-35 40-063-20614 NWNW 35-18N-04E July 2012

Install working

gauges2; remove

weeds; repair

small leak at

wellhead;

address well

status1

Hett 16-24 40-063-20620 SESE 24-18N-03E July 2012

Install working

gauges2; address

well status1

4

Gilbert 10-9 40-063-20622 NWSE 09-17N-04E July 2012

Install working

gauges2; remove

weeds; address

well status1


Gauges; repair

small leak at

wellhead;

address well

status1

State 16-8 40-063-20638 SESE 08-17N-04E June 2012

Install working

gauges2; remove

weeds; address

well status1


Install working

gauges2; repair

small leak at

wellhead

provide cement

bond log;

address well

status1

State 8-8 40-063-20641 SENE 08-17N-04E July 2012

Install working

gauges2; remove

weeds; address

well status1

Gilbert 13-15 40-063-20642 SWSW 15-17N-04E July 2012

Install working

gauges2; remove

weeds; address

well status1


Install working

gauges2; repair

small leak at

wellhead;

provide cement

bond log;

address well

status1


Remove weeds;

provide cement

bond log;

address well

status1


Install working

gauges2; remove

weeds; address

well status1

5

Gilbert 7-9 40-063-20662 SWNE 09-17N-04E July 2012

Install working

gauges2; remove

weeds; address

well status1


Enable access to

well house;

provide cement

bond log;

address well

status1

Fox 6-22 40-063-20699 SENW 22-17N-04E July 2012

Install working

gauges2; reseed

site; remove

unused

equipment;

provide cement

bond log;

address well

status1


Install working

gauges2; provide

cement bond

log; address well

status1

State 2-16 40-063-20704 NWNE 16-17N-04E July 2012

Install working

gauges2; remove

weeds; address

well status1

Heairet-Henderson 2-

22 40-063-20706 NWNE 22-17N-04E July 2012

Provide cement

bond log;

address well

status1


Install working

gauges2; provide

cement bond

log; address well

status1

1: Well status should be addressed by: requesting temporary abandonment from the DENR based

on the performance of a successful mechanical integrity test, returning the well to production, or

plugging and abandoning the well in accordance with Administrative Rules of South Dakota

requirements.

2: Valves and gauges must be installed and maintained in good working order to permit pressure

readings to be obtained on both casing and tubing.

Enclosures

cc via email: Rich Williams, Assistant Attorney General

Ryan Brunner, Deputy Commissioner, Office of School and Public Lands

Donald Herauf, Bureau of Land Management

Shari Mills, Spyglass Cedar Creek

Kelsey Newling, Ground Water Quality Program

March 19, 2014

March Kimmel


1919 NW Loop 410, Suite 200


Dear Mr. Kimmel:

Spyglass Cedar Creek, LP is the operator of record of forty (40) wells in South Dakota and as such, is responsible

for the maintenance of the wells and ensuring they are in compliance with the Administrative Rules of South Dakota

(ARSD 74:12). All forty wells are out of compliance. We have made several unsuccessful attempts to contact you in

regard to these issues over the past two years and were forced to recover your surface restoration bond from the

Texas unclaimed properties department.

On February 16 and August 23, 2012, I sent you letters warning Spyglass Cedar Creek to bring certain of its Harding

County wells into compliance by temporarily abandoning the wells. On June 6, 2012, I sent you a letter outlining

well site problems documented during routine inspections. In September, 2013, department inspectors documented

weed control and equipment cleanup problems at 14 Spyglass well sites.

The 40 wells listed in the table below have not produced since July, 2012. Therefore, Spyglass must either

temporarily abandon (TA) the wells, return the wells to production, or permanently plug and abandon the wells.

ARSD 74:12:03:03 requires operators to obtain written approval from the secretary for the temporary abandonment

of a well. A successful mechanical integrity test (MIT) must be conducted before temporary abandonment status will

be approved for any Spyglass well. Notify us in advance of any MIT’s so we can have an inspector on site to verify

results. If you intend to temporarily abandon these wells, you must file a sundry notice including a request for such

status and information on the current condition of each well. If you intend to plug any of these wells, a plugging plan

must be submitted for approval.

On March 13, 2014 a follow up inspection was performed on the 5-26 Gilbert, to confirm a leak from this well had

been properly fixed. Pursuant to ARSD 74:12:04:11 a written follow-up report is required and must include any

procedures used to remedy the situation. A very small leak still exists on this well and should be monitored.

The well site problems identified in 2012-2014 are listed in the table below. See South Dakota’s Oil and Gas Map-

Based Data Source at http://www.sdgs.usd.edu/sdoil/oilgas_app.html to access inspection reports for details

regarding how these well sites fail to comply with the interim reclamation requirements of ARSD 74:12:03:07.

http://www.sdgs.usd.edu/sdoil/oilgas_app.html

Well Name API Location

Date of last

production

Well Site Compliance

Issues

State 1-2H 40-063-20715 NENE-02-17N-01E Never Produced

13-24R Price 40-063-20542.01 SWSW-24-19N-04E Never Produced

State 4-16 40-063-20605 NWNW-16-19N-04E Never Produced

Gold Point State

32-1 40-063-20604 NWNW-32-19N-02E Never Produced

10-27 State 40-063-20609 NWSE-27-19N-04E Never Produced

6-5 Peterson 40-063-20621 SENW-05-17N-04E March 2010

Unused equipment on

ground, weeds

Hett 8-24 40-063-20644 SENE-24-18N-03E Never Produced

State Jo 6-27 40-063-20657 SENW-27-17N-04E Never Produced

State 14-36 40-063-20658 SESW-36-18N-01E Never Produced

State 10-35 40-063-20640 NWSE 35-18N-04E October 2011 Weeds

State 13-23 40-063-20659 SWSW 23-18N-04E September 2011 No well sign

State 11-30 40-063-20692 NESE 30-18N-04E Never Produced

State 7-35 40-063-20693 SWNE 35-18N-04E October 2011 No lease information on sign

State 2-27 40-063-20694 NWNE 27-18N-04E December 2011

State 12-4 40-063-20701 NWSW 04-17N-04E May 2011 Unused equipment on site

Heairet-

Henderson 10-15 40-063-20703 NWSE 15-17N-04E April 2011

State 12-16 40-063-20705 NWSW 16-17N-04E November 2011

Well sign obscured by

vegetation

Gilbert 13-10 40-063-20711 SWSW 10-17N-04E September 2011

Gilbert 1-34 40-063-20714 NENE 34-18N-04E October 2011 Weeds

3-16 Gilbert-

State 40-063-20623 CNW 16-17N-04E November 2011

Weeds


3-30 State 40-063-20611 NENW 30-18N-04E July 2012

Unused equipment & refuse

on site

4-35 State 40-063-20614 NWNW 35-18N-04E July 2012

Weeds, no lease information

on sign

16-24 Hett 40-063-20620 SESE 24-18N-03E July 2012

10-9 Gilbert 40-063-20622 NWSE 09-17N-04E July 2012 Weeds

5-26 Gilbert 40-063-20624 SWNW 26-18N-04E July 2012

Well has a very small leak at

wellhead

State 16-8 40-063-20638 SESE 08-17N-04E June 2012 Weeds, debris at well site


State 8-8 40-063-20641 SENE 08-17N-04E July 2012 Weeds

Gilbert 13-15 40-063-20642 SWSW 15-17N-04E July 2012 Weeds




Weeds, unused equipment on

site

Gilbert 7-9 40-063-20662 SWNE 09-17N-04E July 2012 Weeds


Fox 6-22 40-063-20699 SENW 22-17N-04E July 2012

Ground needs to be reseeded,

unused equipment on site


Weeds, sign has fallen and is

obscured

State 2-16 40-063-20704 NWNE 16-17N-04E July 2012 Weeds

Heairet-

Henderson 2-22 40-063-20706 NWNE 22-17N-04E July 2012


Failure to bring all 40 of Spyglass Cedar Creek’s Harding County wells into compliance by requesting temporary

abandonment (TA) of the wells and addressing well site reclamation problems may result in enforcement action.

Possible enforcement actions the DENR may pursue include requiring Spyglass Cedar Creek to permanently plug

and abandon all wells, permit revocation pursuant to SDCL 45-9-73, monetary penalties up to $500 per day per

violation, and/or filing a claim against Spyglass Cedar Creek for costs associated with plugging, removal of

equipment, and surface restoration. You must respond by April 21, 2014 with a plan outlining how and when you

intend to bring wells into compliance with ARSD 74:12 in order to avoid possible enforcement action.

It has also come to our attention that Max Main is no longer your attorney or resident agent. Spyglass must designate

a new resident agent through the South Dakota Secretary of State’s office.

If you have any questions or concerns you would like to discuss, please feel free to contact me at 605.773.4201.

Thank you for your attention to these issues.

Sincerely,

Lucy Dahl

Oil and Gas Geologist

Minerals and Mining Program

cc via email: Roxanne Giedd, Deputy Attorney General

Ryan Brunner, Deputy Commissioner, Office of School and Public Lands

Donald Herauf, Bureau of Land Management

Shari Mills, Spyglass Cedar Creek

Tristan Farel, New Frontier Energy

April 24, 2012 Shari Mills Spyglass Cedar Creek, LP 1919 NW Loop 410, Suite 200 San Antonio, TX 78213 Dear Ms. Mills: The Minerals and Mining Program is in the process of updating oil and gas maps for the state. The Jumpoff Field has been defined as T17N, R3-5E and T18N, R3-5E for the purposes of tracking production data only. Please note that this determination has been made only for administrative purposes, and does not affect any board orders issued for the area. If you have any questions or concerns you would like to discuss, please feel free to contact me at 605.773.4201. Thank you for your attention to these issues. Sincerely,

Lucy Dahl Oil and Gas Geologist Minerals and Mining Program

SD Li-orm - 0442 V1

DEF 'MENT of ENVIRONMENT and NATURAL RESOUF -s Minerals /lining Program - Oil & Gas Section 2050 West Main, Suite #1, Rapid City, SD 57702-2493 Telephone: 605-394-2229, FAX: 605-394-5317

FORtV/ 6 RL- LJLIV'ED

JUL 2 0 2009

gli EAT FACES. GREAT PLACES. DEPT OF ENVIRONMENT & NATURAL RESOURCES - RAPID CITY

SUNDRY NOTICE AND REPORT ON WELLS Operator Name Telephone

Spyglass Cedar Creek, LP (830) 626-7100

Address

595 S. Castel! Ave., New Braunfels, Texas 78130

Permit ri API No. Well Name and Number Location (Qtr-Qtr. Sec. .I ■■ p. Re, County)

,:- y , 4006320641 State #8-8 SE NE Sec. 8, T17N-R4E, Harding

Notice

❑ Temporarily Plug Pull, Perforate Acidize Fracture Squeeze

of Intention

Other

To: Subsequent

Abandon I

and Abandon Alter, or Test Casing

Treatment Cement

Report of :

Drilling Progress BOP Pressure Test/Program Gas/Oil Ratio Work-Over (Perf, Frac, Acidize)

Shut-In Pressure Spill Mechanical Integrity Test Other install tubing

Request for change of:

Location Elevation Producing Method Producing Formation Injection Pressure Injection Volume Injection Fluid Other

I I I

- -

Describe Proposed or Completed Operations (clearly state all pertinent details, and give pertinent dates, including estimated date of starting any proposed work). Use additional page(s) if appropriate.

6/22/2009 - Installed 1.75" OD X 1.52" ID coil tubing, end of tubing @ 1610'

I hereby certify that the foregoing as to a vork or operation performed

,

S

Key ilek 3o

is a true and correct

I

I

le(s

report of such \N ork or operation.

r ly- r0_:_a_421.03 Signature Name (Print) Title Date

FOR OFFICE USE ONLY

Approved by: Title:

Date:

Conditions, if any:

Spyglass Cedar Creek LP

Well: State #8-8 Field: Jumpoff

Location: SE NE Sec. 8, T17N-R4E 1900' FNL, 840' FEL

County, State: Harding County, South Dakota

RECEIVED

JUL 2 0 2009

DEPT OF ENVIRONMENT & NATURAI. RESOURCES - RAPID CITY

GL: 3145' KB: 3151'

I API#: 40-063-20641

SD permit #: 1866

acct#: 122

Spud: 7/12/2008 RREL: 7/14/2008

First sales: 8/8/2008

Surface casing: 7" 20# SA 440' Cement w/ 190 sx Class G (to surface)

Production casing: 4-1/2" 11.5# SA 1926' Cement w/ 180 sx Class G

TOC: Approximately 200' Top of Class G, approximately 675'.

1.75" X 1.52" steel coil, EOT 1610'

Completion: Shannon 7/23/08 - IPF 530 MCFD, FTP 58.7 psi

Perfs: 1592' - 1629' & 1635' - 1651', 6 SPF CIBP SA 1632', 8/28/08

PBTD: 1880' (est) TD: 1926' 1926' A

fa,

DE' 'TMENT of ENVIRONMENT and NATURAL RED 01 'ES FORM 4 Miner Mining Program - Oil & Gas Section

2050 West Main. Suite #1, Rapid City, SD 57702-2493 RECEIVED Telephone: 605-394-2229, FAX: 605-394-5317

DEC 0 4 2008 EAT FAMS. GREATrime.

OFPT OF,E

nRCES - RAPID CITYNVIRONMENT & NATURAL

WELL COMPLETION OR RECOMPLETION REPORT A

Type of Completion: 5 Oil Well X Gas Well 1 Injection r Worko\ er ❑ Deepen ❑ Plug Back ❑ Other:

Name and Address of Operator: Telephone Spyglass Cedar Creek, LP 595 S. Castell Ave., New Braunfels, Texas 78130 830-626-7100

Name and Address of Drilling Contractor and Rig No: Elenburg Exploration Rig 8 1910 N. Loop, Casper, Wyoming 82602

Surface Location of well: Qtr-Qtr, Sec, Twp, Rge, County, feet from nearest lines of section, and latitude and longitude (if available): SE NE Section 8, T17N R4E, Harding Cnty, 1900'FNL 840'FEL, lat=45.45368609 Ion= -103.650663955

If Directional, top of pay and bottom hole location from nearest lines of section:

Well Name and No. Field and Pool, or Wildcat Permit No. API No. Date Issued

State 8-8 Wildcat 1866 40 063 20641 05/22/2008

Spud Date TD Date Compl Date Elevation Total Depth (MD & TVD) Plug Back TD (MD & TVD)

07/12/2008 7/14/2008 7/23/2008 3145 1932 1897

Producing Interval(s), this Completion, Top, Bottom, Name (MD & TVD) Shannon 1592'-1629' Shannon 1635'-1651'

No. of DST's Run 0

Was Well cored? X No ❑ Yes List Intervals: (see page 2)

Type Electric and Other Logs Run: l'EX with Sonic, CCL, CBL, GR, VDL

Date Directional Survey Submitted

CASING RECORD Re ort all strings set in well Hole Size Casing Size Weight (1b/ft) Depth Set Amount Pulled Sacks and Type of Cement Top of Cement 9 7/8" 6 1/4"

7" 4 1/2"

20# 1 I.5#

440' 1926'

190 sks `G' 180 'G'

surface surface

TUBING RECORD

LINER RECORD Size Weight (1b/ft) Depth Set Packer Type & Depth Size Depth Interval Sacks and Type

of Cement

PERFORATION RECORD Interval/Depth Holes Per Ft. Formation

Isolated

Shannon Shannon

Amount and Type of Cement used (indicate if squeeze cemented). Amount and Type of Acid and/or Sand used. Use additional page(s) if needed.

CIPB set @ 1632'. 1592' — 1629' 1635-- 1651'

6spf 6spf

Continued on Next Page -3

1 hereby certify that the information herein provided is true, complete, and correct as determined from all available records.

c,

.>Plte(3 Pa (6e K. (1-7)(0-ok Date Signature

Name (Print)

Title

Drill Stem Test Results Attached If not attached, list Depth Interval Tested, Cushion Used, Time Tool Open, Flowing and Shut-in Pressures, and Recoveries.

Use additional page(s) if needed.

Well Completior Recompletion Report — Form 4 Page 2

PRODUCTION Date First Production

08/09/2008

Producing Method (Flowing, gas lift, pumping - size and type of pump) Flowing

Well Status (Producing or shut-in) Producing

Date of Test 07/23/2008

Hours Tested 24

Choke Size na

Production For Test —>

Oil (Bbls) Gas (Mcf) Water (Bbls & %)

Oil Gravity - API (Corr.)

Flowing Tbg Pressure 58.7

Casing Pressure

Calculate 24 Hour Rate —>

Oil (Bbls) Gas (Mcf) 530

Water (Bbls & %)

Gas-Oil Ratio

Disposition of Oil (Purchaser and Transporter), and Gas (sold, used for fuel vented, etc.) Sold

Test Witnessed By WBI

List of Attachments/Comments

GEOLOGIC MARKERS FORMATION NAME AND BRIEF DESCRIPTION MEASURED DEPTH TRUE VERTICAL DEPTH

Eagle Shannon

Use addit anal page(s) if needed.

1460' 1605'

1460' 1605'

DRILL STEM TEST DATA

FOR OFFICE USE ONLY

Approved By: Title:

Date:

CORRESPONDENCE

GR ITFACES.GREATPLACES

DEPAhIMENT of ENVIRONMENT and NATURAL RESOURCES



Telephone: 605-394-2229 Fax: 605-394-5317

April 28, 2008

Michael Fosha Archaeological Research Center P. 0. Box 1257 Rapid ('ity, South Dakota 37709

Dear Mr. Fosha:

The Department of Environment and Natural Resources has received six applications from Continental Resources, Inc., Enid, OK; three applications from Zenergy Operating Company, LLC, Tulsa, OK; and ten applications from Spyglass Cedar Creek, LP, New Braunfels, "IX; to drill new oil and gas wells (one reentry for Continental) in Ilarding County..l'he legal descriptions for the wells are as follows:

Continental Resources, Inc. SWSW Section 1, Township 22 North, Range 6 East NENE Section II, Township 22 North, Range 6 East SENE Section 14, Township 20 North, Range 4 East (reentry) NENE Section 16, Township 22 North, Range 7 East SWSW Section 31, Township 23 North, Range 7 East SWSW Section 36, Township 23 North, Range 6 East

Zenergy Operating Company, LLC SWSE Section 15, Township 22 North. Range 2 East NWNE Section 26, Township 23 North, Range 2 East NWNE Section 36, Township 23 North, Range 2 Fast

Spyglass Cedar Creek, LP NESE Section 5, Township 17 North. Range 4 East SENE Section 8, Township 17 North, Range 4 East SESE Section 8, "Fownship 17 North. Range 4 East SWSW Section 15, Township 17 North, Range 4 Fast SWNW Section 13, Township 17 North, Range 4 East

Michael Fosha Page Two April 28. 2008

NWSE Section 16, Township 17 North, Range 4 East SENT Section 24, Township IS North. Range 3 Last NESE Section 27, Township 18 North, Range 4 East SWSW Section 32, Township 18 North, Range 4 East NWSE Section 35, Township 18 North. Range 4 Fast

Please direct your regulatory requirements to the operators at the following addresses:

Continental Resources, Inc. P. 0. Box 1032 Enid, Oklahoma 73702

/energy Operating Company, 1.1.( One Warren Place 6100 South Yale Avenue, Suite 1700 Tulsa, Oklahoma 74136

Spylgass Cedar Creek, LP 585 S. Castel) Avenue New Braunfels, Texas 78130

I plan to issue the permits after May 12, 2008. If you have any questions, please do not hesitate to contact me.

Sincerely,

Fred V. L'teeee Oil and Gas Supervisor




Telephone: 605-394-2229 Fax: 605-394-5317

April 28, 2008

Stan Michals Department of Game, Fish and Parks 3305 West South Street Rapid City, South Dakota 57702

Dear IV1r. Michals:

.1-he Department of Environment and Natural Resources has received six applications from Continental Resources, Inc., Enid, OK: three applications from /energy Operating Company, Elk, Tulsa, OK; and ten applications from Spyglass Cedar Creek, LP, New Braunfels, TX; to drill new oil and gas wells (one reentry for Continental) in Harding County. The legal descriptions for the wells are as follows:

Continental Resources, Inc. SWSW Section I, Township 22 North, Range 6 East NENE Section 11, Township 22 North, Range 6 East SENE Section 14, Township 20 North, Range 4 Fast (reentry) NENE Section 16, Township 22 North, Range 7 Fast SWSW Section 31, Township 23 North, Range 7 East SWSW Section 36, Township 23 North, Range 6 East

Zenergy Operating Company, LLC SWSE Section 15, Township 22 North, Range 2 Fast NWNE Section 26, Township 23 North, Range 2 East NWNE Section 36, Township 23 North, Range 2 East

Spyglass Cedar Creek, LP NESE Section 5, Township 17 North, Range 4 East SENE Section 8, Township 17 North, Range 4 Last SESE Section 8, Township 17 North, Range 4 East SWSW Section 15, Township 17 North, Range 4 East SWNW Section 15, Township 17 North, Range 4 East

erely,

Fred V. Steece Oil and Gas Supervisor

Stan Michals Page Two April 28, 2008

NWSE Section 16, Township 17 North, Range 4 Fast SENT Section 24, Township 18 North, Range 3 East NESE Section 27, 'township 18 North, Range 4 East SWSW Section 32, Township 18 North, Range 4 East NWSF Section 35, Township 18 North, Range 4 East

Please direct your regulatory rem ments to the operators at the following addresses:

Continental Resources, Inc. P.O. Box 1032 Enid, Oklahoma 73702

Zenergy Operating Company, TLC One Warren Place 6100 South Yale Avenue, Suite 1700 Tulsa, Oklahoma 74136

Spylgass Cedar Creek, LP 585 S. Castel' Avenue New Braunfels, Texas 78130

plan to issue the permits after May 12, 2008. If you have any questions, please do not hesitate to contact me.

GEATEACES.GREATPLACES.




Telephone: 605-394-2229 Fax: 605-394-5317

April 28, 2008

Kathy (dines I larding County Auditor P. 0. Box 26 Buffalo, South Dakota 57720

Dear Ms. (dines:

The Department of Environment and Natural Resources has received six applications from Continental Resources, Inc., Enid, OK; three applications from /energy Operating Company, LLC, Tulsa, OK; and ten applications from Spyglass Cedar Creek, LP, New Braunfels, TX; to drill new oil and gas wells (one reentry Ibr Continental) in Harding County. The legal descriptions for the wells are as follows:

Continental Resources, Inc. SWSW Section 1, Township 22 North, Range 6 East NENE Section 11, Township 22 North, Range 6 East SENE Section 14, Township 20 North, Range 4 East (reentry) NENE Section 16, Township 22 North, Range 7 East SWSW Section 31, Township 23 North, Range 7 East SWSW Section 36, Township 23 North, Range 6 East

Zenergy Operating Company, LLC SWS k Section 15, Township 22 North, Range 2 East NWNE Section 26, Township 23 North, Range 2 East NWNE Section 36, Township 23 North, Range 2 East

Spyglass Cedar Creek, LP NESE Section 5, Township 17 North, Range 4 East SENE Section 8, "lownship 17 North. Range 4 East SESE Section 8, Township 17 North, Range 4 East SWSW Section 15, Township 17 North, Range 4 East SWNW Section 15, Township 17 North, Range 4 East

Sincerely.

)

Kathy Clines Page "two April 28, 2008

NWSF Section 16, Township 17 North, Range 4 East SENE Section 24, Township 18 North. Range 3 East NESE Section 27, Township 18 North, Range 4 East SWSW Section 32, Township 18 North, Range 4 East NWSE Section 35. - township 18 North, Range 4 East

I plan to issue the permits after May 12, 2008. II you have any questions, please do not hesitate

to contact me.

Fred V. Steece Oil and Gas Supervisor

MISCELLANEOUS

NO MISCELLANEOUS INFORMATION FOR THIS WELL

AS OF 8/1/2011

county: harding legal location: api no: …sddenr.net/ogfiles/harding/4006320641.pdfspyglass cedar...

Documents