y:commission 0aprilready to printconway - seeco ---- 268 ... applications...

JERRY L. CANFIELD, P.A.THOMAS A. DAILY, P.A.WYMAN R. WADE, JR., P.A.DOUGLAS M. CARSON, P.A.ROBERT R. BRIGGS, P.A. † *C. MICHAEL DAILY, P.A. †COBY W. LOGANL. MATTHEW DAVIS †COLBY ROE

* Fayetteville Office

† Also Licensed in Oklahoma

DAILY & WOODSA PROFESSIONAL LIMITED LIABILITY COMPANY

ATTORNEYS AT LAW

KMW BUILDING58 SOUTH SIXTH STREET

P.O. BOX 1446FORT SMITH, AR 72902

TELEPHONE (479) 782-0361FAX (479) 782-6160

______________

COMMERCE PARK II BUILDING2049 EAST JOYCE BOULEVARD, STE. 301

FAYETTEVILLE, AR 72703TELEPHONE (479) 582-0361

FAX (479) 251-8111

JAMES E. WESTPHILLIP E. NORVELL *

DALE CARLTON *

OF COUNSEL

_______

HARRY P. DAILY (1886-1965)JOHN P. WOODS (1886-1976)JOHN S. DAILY (1912-1987)

April 6, 2010

Arkansas Oil and Gas Commission301 Natural Resources Drive, Suite 102Little Rock, Arkansas 72205

Re: ORDER REFERENCE NO. 268-2010-04Application of SEECO, Inc. for Integration of All Unleased Mineral Interests andNon-consenting Working Interests in a unit described as Section 26, Township 9North, Range 15 West, Conway County, Arkansas

Commissioners:

SEECO, Inc., 2350 N. Sam Houston Parkway E, Houston, TX 77032, hereby applies tothe Arkansas Oil and Gas Commission for the integration of all unleased mineralinterests and non-consenting working interests in its proposed drilling unit which isdescribed above.

1. The proposed drilling unit is an established unit as defined in paragraph (f) ofArkansas Oil and Gas Commission General Rule B-43. Applicant proposes to drill ahorizontal well from a non-exceptional surface location in the Southeast Quarter ofSection 26 down to a non-exceptional bottom hole location in the Southeast Quarter ofSection 23, Township 9 North, Range 15 West. The tentative proposed allocation ofthis well is 85.47% to Section 26 and 14.53% to Section 23, subject to revision inaccordance with General Rule B-43. Applicant states that it will seek the authority todrill and produce the shared well in a separate, administrative application. Theproposed well will be drilled to a total vertical depth of 3,836 feet to test the FayettevilleShale Formation. Applicant has obtained one or more oil and gas leases covering itsproposed drill site.

2. Applicant owns oil and gas leases covering a substantial part of the proposedunit. Applicant should be named as operator of the well. The person or persons to beintegrated are shown in Exhibit "A" attached hereto and made a part hereof.

3. Applicant has made diligent efforts to negotiate with the non-participatingleasehold working interest owners, each of said parties owning an oil and gas leasehold

interest in the proposed unit, but applicant has been unable to secure an assignment ofthe leasehold interest on an equitable basis or to secure participation by said parties inthe drilling of the proposed well.

4. Applicant states that it has made repeated efforts to negotiate with the owners ofthe unleased mineral interests in order to agree on a plan of development of saiddrilling unit; that those owners have been offered an opportunity to participate in theproposed well; that they have been offered a fair and reasonable bonus considerationfor the execution of an oil and gas lease covering their interests; that they have beenfurnished with a proposed oil and gas lease and a copy of the AAPL operatingagreement form which applicant proposes to use in connection with the drilling of saidwell; but that all of the efforts of the applicant have produced no agreement by saidparties.

5. Applicant states that it is in the best interest of conservation and the protection ofcorrelative rights of all interested parties that the proposed unit be developed for oil andgas production without undue delay.

6. In order that applicant may proceed with the orderly development of said unit,applicant hereby requests that the Arkansas Oil and Gas Commission issue its order, inthe alternative, that:

(a) The owners of non-consenting oil and gas leasehold workinginterests indicated above shall participate in the cost of drilling,testing and completion of the test well to be drilled by applicant onthe captioned unit, subject to the terms of an Operating Agreementwhich substantially employs the terms of the AAPL Operatingagreement, with a COPAS attached.

(b) All of the non-consenting oil and gas leasehold working interestswithin the proposed unit shall be force pooled and integrated intosaid unit, and a reasonable risk factor shall be established andassessed as a penalty against said integrated interest.

7. Applicant further states that due to the risks and costs inherent in the drilling ofthe proposed well, the Commission should fix a reasonable risk factor to be assessedas a penalty against the integrated interests within the unit. The risk factor should beapplied to the proportionate cost and expense of drilling, completing and equipping thewell, which would have been borne by the interest of said parties had they participated.Applicant requests that if the integrated parties do not elect within 15 days afterissuance of the Commission's order as between alternatives (a) and (b), it shall beassumed that the integrated parties elected alternative (b) in lieu of the right toparticipate in the working interest in said unit.

8. Applicant requests that the Arkansas Oil and Gas Commission set this matter forpublic hearing, and after same, issue its order, in the alternative, that:

(a) Each of the owners of the unleased mineral interests indicatedabove execute and deliver to applicant a one year oil and gaslease, on an AAPL lease form, for a bonus consideration of$2,400.00 per net mineral acre to be paid as fair and reasonablecompensation in lieu of the right to participate in the workinginterest in said unit, and that said oil and gas lease provide for a1/5 royalty on oil and gas.

(b) Each of the owners of unleased mineral interests indicated abovebe force pooled and integrated into the captioned unit withassessment of a reasonable risk factor penalty against theirinterest.

(c) The owners of unleased mineral interests shall participate in thecost of drilling, testing and completion of the test well to be drilledby applicant on the captioned unit, subject to the terms of anoperating agreement which substantially employs the terms of theAAPL Operating Agreement.

Applicant further requests that said mineral owners be required to elect within fifteen(15) days after issuance of the Commission's order which method will be pursued in thedevelopment of the above described unit, and, in the event no election is made, that itshall be assumed that the owner of said unleased mineral interest has elected to accepta bonus of $2,400.00 per net mineral acre as compensation in lieu of the right toparticipate in the working interest in said unit, and with the royalty to be 1/5.

9. Applicant further states that due to the risks and costs inherent in the drilling ofthe proposed well, the Commission should fix a reasonable risk factor to be assessedas a penalty against the integrated interests within the unit. The risk factor should beapplied to the proportionate cost and expenses of drilling, completing and equipping thewell, which would have been borne by the interest of said parties had they participated.

10. Applicant further requests that this Commission's order specifically provide thatany party electing either to participate or be force pooled subject to recoupment of arisk factor penalty be bound by the terms of the attached AAPL Operating Agreementfor the life of commercial production within the unit so that all future unit operationsmight be proposed pursuant to the provisions of such agreement without the necessityof future action by this Commission.

11. Applicant also requests that said order be made applicable to any unknownspouse, heir, devisee, personal representative, successor or assign of said parties.

12. The names and addresses of parties interested in this proceeding are set forth inExhibit "A" attached hereto and made a part hereof.

13. Please note the appearance of Thomas A. Daily of Daily & Woods, P.L.L.C.,P.O. Box 1446, Fort Smith, Arkansas, 72902, on behalf of applicant.

Very truly yours,

Thomas A. Dailyjmt

Guinn, Jim 9-15 #1-26H23 Section 26 – T9N – R15W Conway County, Arkansas

EXHIBIT A

INTERESTED PARTIES

Page 1 of 2

MINERAL OWNERS ; Beverage, Vernon Joseph, Heirs See Page 1 of Exhibit B; Campbell, Meda Lynn Stobaugh, Heirs See Page 2 of Exhibit B; Carr, J. W. and Minnie Lee Carr, Heirs See Page 3 of Exhibit B; Cooper, Penzel, Heirs See Page 4 of Exhibit B; Guinn, Donald Joe See of Exhibit B; Guinn, Eddie Joe See Page 6 of Exhibit B; Guinn, Edith S. See Page 6 of Exhibit B; Guinn, Joe, Heirs See Page 6 of Exhibit B; Lewis, Kathy a/k/a Kathy Smith See Page 7 of Exhibit B; Lewis, Wayne See Page 7 of Exhibit B; Oliger, Darrell and Carol Oliger, Co-Trustees of the Darrell and Carol Oliger Revocable Trust dated June 19, 2007 See Page 9 of Exhibit B; Pack, Norman, Heirs See Page 10 of Exhibit B; Prince, Allene aka Mary Allene Prince See Page 3 of Exhibit B; Smith, William, Heirs See Page 11 of Exhibit B; WORKING INTEREST OWNERS: ; BP America Production Company See Page 12 of Exhibit B; Chesapeake Exploration, L. L. C. See Page 13 of Exhibit B; Petrohawk Properties, LP See Page 14 of Exhibit B;


EXHIBIT A

INTERESTED PARTIES

Page 2 of 2


EXHIBIT B

RESUME OF EFFORTS TO LEASE

Page 1 of 14

Vernon Joseph Beverage, Heirs The known heirs of Vernon Joseph Beverage have leased their interest to SEECO, Inc. (See Below) Heirship was determined by heirship affidavit and not by judicial probate. Therefore, this interest is being named for protection purposes. Anthony Joseph Beverage Maria Beverage Deborah Smith April 6, 2010 Well proposal letter and AFE mailed to Vernon Joseph Beverage, Heirs in

care of Maria Beverage.


EXHIBIT B


Page 2 of 14

Meda Lynn Stobaugh Campbell, Heirs The known heir of Meda Lynn Stobaugh Campbell has leased her interest to SEECO, Inc. (See below). Heirship was determined by heirship affidavit and not by judicial probate. Therefore, this interest is being named for protection purposes. Terri L. White April 6, 2010 Well proposal letter and AFE mailed to Meda Lynn Stobaugh Campbell,

heirs in care of Terri L. White.


EXHIBIT B


Page 3 of 14

J. W. Carr and Minnie Lee Carr, Heirs Allene Prince aka Mary Allene Prince November 22, 2009 Searched office records for contact information for owner. Nothing found.

Checked local phone directories. Nothing found. November 28, 2009 Spoke with a long time local resident. He did not know owner. Searched

internet. Located a possible phone number. Called, the number was disconnected.

December 1, 2009 Checked the SSDI death index. Found a Minnie Car in Center Ridge, AR

who passed in 1995. Nothing found for J. W. Carr. December 4, 2009 Checked courthouse probate records. Nothing found. December 23, 2009 Expanded internet search for any information on owners. Nothing found. January 13, 2010 Located a possible heir of owner. January 20, 2010 Spoke with Allene Prince, heir of owner. Discussed lease terms. She

agreed to lease, however she disagreed with the amount of her interest. Having title confirmed.

February 3, 2010 Title verified. Allene Prince still disagreed with the interest. February 15, 2010 Spoke with Mrs. Prince. She wants her attorney to handle the lease. February 19, 2010 Called owner’s attorney. He was out of the office. Left a message for him

to call. February 24, 2010 Spoke with owner’s attorney. He requested a copy of the lease for review.

Sent requested copy. March 4, 2010 Called to check status of lease review. Left a message for attorney to call. March 18, 2010 Called again to check the status. Left another message. No change in

status. Lease documents under review by owner’s attorney. April 6, 2010 Well proposal letter and AFE mailed.


EXHIBIT B


Page 4 of 14

Penzel Cooper, Heirs The known heirs of Penzel Cooper have leased their interest to SEECO, Inc. (See Below) Heirship was determined by heirship affidavit and not by judicial probate. Therefore, this interest is being named for protection purposes. Terry Bill Cooper Sherry Cooper Monroe April 6, 2010 Well proposal letter and AFE mailed to Penzel Cooper, Heirs in care of

Terry Bill Cooper.


EXHIBIT B


Page 5 of 14

Donald Joe Guinn November 17, 2009 Searched office records for contact information. Located a phone number.

Called. Owner was not available. Left a message with a family member. November 25, 2009 Called again, no answer. Left a message. November 30, 2009 Spoke with owner. Discussed lease terms. Terms unacceptable. December 6, 2009 Status unchanged. Terms still unacceptable. December 16, 2009 No change in status. Terms still unacceptable. December 20, 2009 Spoke with owner. Increased offer. He will consider the new offer. January 3, 2010 Called owner to discuss the new offer. No answer, left a message. January 15, 2010 Called again, owner still considering offer. He wants to discuss it with

other mineral owners in the section before making a decision. February 2, 2010 No change in status. Owner wants to see what his brother decides to do.

His brother’s interest will be open in July after the settlement of the lawsuit with Arkana.

February 15, 2010 No change in status. Awaiting the outcome of the Arkana settlement. February 25, 2010 Spoke with owner. He has decided to participate. March 19, 2010 No change in status. Owner wishes to participate. April 6, 2010 Well proposal letter and AFE mailed.


EXHIBIT B


Page 6 of 14

Joe Guinn, Heirs Edith S. Guinn Eddie Joe Guinn January 20, 2010 Located a phone number for owner’s widow, Edith S. Guinn. She said

that her son, Eddie Guinn would handle her interest. Obtained Eddie Guinn’s phone number. Called, no answer. Left a message.

January 24, 2010 Called again, still no answer. Left a message. February 5, 2010 Called again, still no answer. Left another message. Mailed lease

proposal letter. February 8, 2010 Spoke with Edith Guinn, owner’s wife. Discussed the lease offer. She

will consider offer. Asked for another phone number for Eddie. She said he has been in the hospital for heart surgery. She will have him call in a few days.

February 15, 2010 Spoke with Eddie Guinn’s spouse. Discussed lease offer. She said she

would discuss the offer with her husband. February 27, 2010 Spoke with Charlotte Guinn, Eddie Guinn’s spouse, again. She said they

had leased their interests to a third party. No third party leases found of record to date.

March 13, 2010 Still no third party leases found of record to date. April 6, 2010 Well proposal letter and AFE mailed.


EXHIBIT B


Page 7 of 14

Kathy Lewis a/k/a Kathy Smith Wayne Lewis Wayne Lewis and Kathy Lewis aka Kathy Smith owned this interest as tenants by entirety. The Lewis’ are divorced by virtue of the Decree of divorce appearing in the records of Conway County, Arkansas. In said Decree, Wayne Lewis agreed to relinquish all claim to tract 20 and to execute a Quit Claim deed in favor of Kathy Lewis of same. No Quit claim deed has been found of record. Therefore, Wayne Lewis, is being named for protection purposes. December 1, 2009 Searched office records for owner’s contact information. Located a phone

number. Called, discussed lease terms. Terms unacceptable. She said that her sister, Linda R. Stracner, who is leased to SEECO, Inc., would handle her interest. Called Linda Stracner. She also said terms are unacceptable.

December 7, 2009 Spoke with Linda Stracner. Discussed lease terms. She said she was

going to wait and see what other offers they received. December 21, 2009 Spoke to Linda Stracner. No change in status. Terms still unacceptable. January 4, 2010 Called owner’s sister, Linda Stracner with a higher offer. She said they

are wanting to make some ownership changes before they lease. They are working on the conveyances.

January 18, 2010 No change in status. Owners have not filed conveyances to date. February 1, 2010 Spoke with owner’s sister, Linda Stracner again. No conveyances have

been executed. February 3, 2010 Located a phone number for Wayne Lewis. Called, no answer. Left a

message. February 12, 2010 Spoke with owner’s sister, Linda Stracner again. No conveyances have

been executed. Their father, Weldon Polk, is in the hospital. He is unable to execute the conveyances at this time.


EXHIBIT B


Page 8 of 14

Kathy Lewis a/k/a Kathy Smith and Wayne Lewis continued from Page 7 of Exhibit B February 22, 2010 Spoke with Linda Stracner. She said the family was ready to move

forward. Discussed the offer. They requested a copy of the lease for review. Owner is considering participating. Tried to call Wayne Lewis again, still no answer. Left another message.

February 23, 2010 Emailed a copy of the lease for review. March 3, 2010 Called Linda Stracner and increased offer. They will consider the new

offer. March 16, 2010 Called Wayne Lewis again, still no answer. Left another message. March 18, 2010 Linda Stracner agreed to lease, but said her sister, Kathy Lewis aka Kathy

Smith, will participate with her interest. March 30, 2010 Spoke with Wayne Lewis about the Quit Claim deed. He agreed that he

needed to execute the deed, but he said he wasn’t real concerned about it at the time. He claims no ownership in the interest. Spoke with Kathy Lewis. Explained that the title issue must be cleared up in order for her to participate with the full interest. She said she would talk with Wayne and decide what to do.

April 6, 2010 Well proposal letter and AFE mailed to both parties.


EXHIBIT B


Page 9 of 14

Darrell Oliger and Carol G. Oliger, Co-Trustees of the Darrell and Carol Oliger Revocable Trust dated June 19, 2007 November 23, 2009 Located owner’s contact information in office files. Called, spoke with

Darrell Oliger. Discussed lease terms. Terms unacceptable. December 4, 2009 No change in status. Terms still unacceptable. December 18, 2009 Called owner with a higher offer. He said he cannot lease until a decision

is made with the Arkana lawsuit, after February 15, 2010. January 2, 2010 No change in status. January 16, 2010 Called, no answer. Left a message for owner. January 29, 2010 No change in status. February 12, 2010 No change in status. Still waiting for the settlement of the lawsuit. February 18, 2010 Spoke with owner regarding the Arkana lawsuit. Arkana did not exercise

lease. Discussed the lease offer again. He said he wanted to seek legal advice. He did not want to make the same mistake again.

March 3, 2010 Owner had decided to lease with a third party. March 17, 2010 No third party lease found of record to date. April 6, 2010 Well proposal letter and AFE mailed.


EXHIBIT B


Page 10 of 14

Norman Pack, Heirs The assumed heirs of Norman Pack have leased their interest to SEECO, Inc. (See below) Heirship has not been confirmed. Therefore, this interest is being named for protection purposes. Ernest Pack Michael L. Pack aka Mike Pack Yvonne Gusten aka Yvonne Pack Gusten Shawn Crider Dorothy Pack Lisa Anderson aka Lisa Marie Pack Anderson Cheryl Patrick aka Cheryl Pack Patrick April 6, 2010 Well proposal letter and AFE mailed in care of Earnest Pack.


EXHIBIT B


Page 11 of 14

William Smith, Heirs William Smith came in to title to the SE/4 of this section, pursuant to a Deed recorded in Book Y, Page 532, recorded in 1883. January 18, 2010 Searched office for contact information for heirs of owner. Nothing

found. Searched internet, nothing found. The name is a very common name.

January 21, 2010 Discussed owner with other mineral owners in the section. No one knew

anything about owner. January 25, 2010 Received a name and phone number for a possible relative of owner.

Called, no answer. Left a message. January 27, 2010 Spoke with another mineral owner in the section. He did not know owner. February 4, 2010 Found a lead on the heirs. Located a phone number for a possible heir.

Called, no answer. Left a message. February 6, 2010 Spoke with possible heir. She said she was a 4th generation family

member and had limited knowledge of the family. She had no knowledge of William Smith.

February 17, 2010 Spoke with another possible family member. She had no knowledge of

owner, but said she would do some research. February 26, 2010 Expanded internet search for other possible heirs. Spoke with a few

people. They had no knowledge of the family. March 10, 2010 Expanded internet search again. Found some information, but not enough

to locate a living heir. March 25, 2010 Status remains unchanged. No new sources have surfaced and no new

knowledge of the owner’s heirs has been obtained. Unable to determine heirship.


EXHIBIT B


Page 12 of 14

BP America Production Company BP America Production Company owns a working interest in the following Oil & Gas leases recorded in Conway County, Arkansas:

1) Louie Prince and Judy E. Prince to Strata Minerals, Inc. dated June 26, 2006 and recorded in Oil & Gas Book 129 at page 93.

2) Panhandle Royalty Company to Chesapeake Exploration Limited Partnership dated June

1, 2005 and recorded in Oil & Gas book 117 at page 48. Chesapeake Exploration, L. L. C. assigned an undivided interest to BP America Production Company. Said assignment is effective July 1, 2008 and recorded in Oil and Gas book 171 at page 610. April 6, 2010 Well proposal letter and AFE mailed.


EXHIBIT B


Page 13 of 14

Chesapeake Exploration, L. L. C. Chesapeake Exploration, L. L. C. owns a working interest in the following Oil & Gas leases recorded in Conway County, Arkansas:

1) Louie Prince and Judy E. Prince to Strata Minerals, Inc. dated June 26, 2006 and recorded in Oil & Gas Book 129 at page 93.

2) Panhandle Royalty Company to Chesapeake Exploration Limited Partnership dated June

1, 2005 and recorded in Oil & Gas book 117 at page 48. Chesapeake Exploration Limited Partnership, by Affidavit of Identity and Corporate Successorship, is now Chesapeake Exploration, L. L. C. effective August 6, 2007 and recorded in Oil and Gas book 151 at page 239. April 6, 2010 Well proposal letter and AFE mailed.


EXHIBIT B


Page 14 of 14

Petrohawk Properties, L. P. Petrohawk Properties, L. P. owns a working interest in the following Oil & Gas lease recorded in Conway County, AR.

1) Bobby and Nancy Dixon to Griffith Land Services, Inc. dated March 7, 2005 and recorded in Oil and Gas book 100 at page 128.

Through various assignments the above named lease is now owned by Petrohawk Properties, LP. Said lease expired March 7, 2010. The lease contains an option to extend. However, no extension was found of record. April 6, 2010 Well proposal letter and AFE mailed.

EXHIBIT “C”Applicant’s statement regarding Operating Agreement

The applicant requests incorporation of the Model Form Joint Operating Agreement

approved by the Arkansas Oil and Gas Commission on October 24, 2006, with Paragraph

III.1.A.(1) of the COPAS providing for a drilling well rate of $7,500.00 and a producing

well rate of $750.00 , and with the following proposed revisions, deletions and/or

insertions, if applicable:

NONE

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