H. H. HOWELL, INC. Inland Ocean, Inc. Technik #6 Burns Channel Prospect Lavaca County, Texas

Transcription

1 H. H. HOWELL, INC. Inland Ocean, Inc. Technik #6 Burns Channel Prospect Lavaca County, Texas API # RRC Permit # GAU letter, RRC Letter #GAU Ground Elevation GL: (Rig KB to GL = ) Rig KB = Location: 2,377 FNL & 10,501 FWL of James Campbell, A-6 X: Y: Legal: 492 FWL & 1668 FSL (westernmost) of Howell-Technik No. 2 (9700) Gas Unit as designated in Designation of Gas Unit dated April 16, 1986, by Howell B Account, et al, containing acres of land, more or less, out of the James Campbell Survey, A-6 and the William Ponton Survey, A-36, Lavaca County, Texas, as recorded in Vol. 304, Page 375 of the Lease Records of Lavaca County, Texas. Permit Depth: 10,200'; Primary Objectives: Burns Channel Secondary Objectives: Technik 9700 & Golsch Channel Directions: From Intersection US Highway 90A with US Highway 77 North, proceed north on US Hwy 77 and go 2.4 miles to gravel oilfield road on left (west). Follow road west and then north into the Technik lease and then follow flagged lease road west across East Campbell Branch, and continue past Technik #3 well and facility and continue southwest to new location. Daily Drilling Reports : Receive 1 st bid from Black Creek Drilling for Technik # : Preliminary work on Technik # : Prepare updated maps and exhibits with new location : Confer with GeoFrontiers on potential geochemical survey : Confer with JIO (Sitterle) on location selection, possibility of 3-D seismic and/or Geochemistry survey, and revised drilling prognosis : Confer with Operator on revised drilling prognosis, timing : Confer with JIO (Farwell) about new well timing and possible revised costs : Confer with Operator: request updated drilling bids and rig availability : Receive La Mesa Geophysical quote for 2 square mile 3-D seismic shoot : Confer with Operator on location access, and potential new pipeline connection : Preparing Prop Loc map for Surveyor and Operator : Continue making arrangements with Drilling Contractor : Surveyor scheduled to survey and stake location on Tuesday : Surveyor and Operator met and drill site location and alternate location (40 further north) staked yesterday to avoid creek. Checking on pipeline route. There is a Copano gas pipeline line in the area : Working with location/dirt contractor for most efficient site plan : Receive Survey Plat : Confer with JIO (Migl) about location, drill timing, depth, & pipelines. Preliminary Drilling Report- Technik #6

2 Drilling Report Page 2 of : Confirmed location will not interfere with surface use with landowner and made arrangements for cattle. Tendering surface damages prior to commencement of location work as per lease : Filed Form W-1 for permit to drill : Held field meeting with Hans Helland, Black Creek Drilling Inc. representative Kevin Coufal and dirt contractors Carl A. Bozka, Inc. representative Mike Bozka, Energy Construction Inc. representative Chad Hensley and GT Oilfield Services representative to discuss construction of drilling location and pits. Original well location does not allow room for location to be constructed due to nearby creek. Will have to use alternate well location. Location requires little to no brush clearing. One large tree may need to be removed. Corner section of permanent fence must be temporarily removed in order to build location. Approximately.25 miles of new lease road must be built in order to access location. A cattle guard must be installed in cross fence. Requested bids from dirt contractors consisting of construction of location, pits and lease access road. Also requested separate bid to repair lease road where severe washout has occurred. Will assess possibility of using Technik No. 5 existing water well to supply drilling rig : Permit granted (see above) : Receive permit. Alerted drilling rig : Summary of progress to date: Several meetings w/ road and location personnel, and received bids. Selected low bidder (GT Oilfield) and ordered work to commence. Rain has delayed most work the last 2 weeks, and it is still too wet. But, Rudy with GT has Dig Tess going by there this afternoon or tomorrow morning. Weather permitting, major work resumes Monday : Summary update: GT Oilfield continues work on road and location, receiving gravel today. They plan to work over the weekend to finish for Monday. Assuming the weather holds, we will inspect Monday for conditions and then prepare to receive the Black Creek Drilling Rig : Moving in Black Creek Drilling Rig : [1] This AM, building spud 0. Summary: Moved Black Creek Rig #1 to location; Rig up; unload & strap casing; finish rigging up; drill rat hole and mouse hole; strap & caliper BHA and mix spud mud. Expect to spud and drill surface hole in next 24 hours : [2] This 7:00 AM, drilling surface 1,025. Spud and drilled 1,025 in last 24 hrs. Mud: 9.2#, Visc: 233. Bit #1-S: 12-1/4 FS2563 surface. Deviation survey: 1/2 483'; 1/2 985'. Summary: Finish build spud mud; 1600 and drill; circ & survey; drill; circ & survey : [3] This 7:00 AM, running surface 1,785. Drilled 760 in last 24 hrs. Mud: 9.3#, Visc: 198. Bit #1-S: 12-1/4 FS2563 surface, 1,785. Deviation survey: '; 3/4 1770'. Summary: Drill; circ & survey; drill; drill; circ & survey; slug & trip out (SLM) laydown stabilizers; P/U near bit stabilizer, TIH & ream lime knots as needed; circ, slug & TOOH to run casing; R/U Ciscon casing crew & begin running 9-5/8 surface casing.

3 Drilling Report Page 3 of : [4] This 7:00 AM, testing casing 1,790. Drilled 5 in last 24 hrs. Mud: 9.2#, Visc: 70. Bit #2: 8-3/4 Rock bit XR +C 1,785, Bit #3: 8-3/4 PDC D519D Deviation survey: none new. Summary: Finish running 9-5/8 casing & rig down Ciscon; Total casing was 39 jts 9-5/8 36.0# J55 ST&C casing to 1, including float shoe and 12 centralizers; Circ w/ rig pump & R/U Halliburton; mix, pump & displace cement w/halliburton; Total cement was Lead: 350 sks extendacem 11.8 ppg, 2.64 yld, and Tail: 110 sks Halcem system@ 14.8 ppg w 1.33 yld and bumped plug 500 over. Wait on cement, R/D Halliburton; Note: had 95 bbls cement returns to surface; Back-off landing jt, screw on 11 C22 wellhead; nipple up BOPs; R/U Curtis BOP testers and test blind rams, pipe rams, choke assembly to 5000 psi/annular 3000 psi/casing 900 psi; finish R/U flow line & choke vent lines; M/U rock bit, stage in 944 & 1760; drill float equipment & 5 new formation, circ; slug & trip out hole; M/U PDC bit, P/U 60 & 90, TIH; circ & test casing seat to eq 12.7 # mud wt (330 psi) : [5] This 7:00 AM, 3,443. Drilled 1,653 in last 24 hrs. Mud: 9.2#, Visc: 56, WL 8.1. Bit #3: 8-3/4 PDC D519D Deviation survey: 1/2 3686'; 1/4 4186'; 1/4 4657'. Summary: Rig service; drill; survey; drill; drill; survey; drill; survey; drill : [6] This 7:00 AM, 4,791. Drilled 1,348 in last 24 hrs. Mud: 9.3#, Visc: 57, WL 9.4. Bit #3: 8-3/4 PDC D Deviation survey: 1/4 2268'; 1/2 2744'; 1/2 3215'. Summary: Rig service; drill; survey; drill; survey; drill; survey; drill : [7] This 7:00 AM, bit 5,446. Drilled 655 in last 24 hrs. Mud: 9.5#, Visc: 62, WL 5.8. Bit #3: 8-3/4 PDC D , Bit #4: 8-3/4 PDC D Deviation survey: 1/2 5152'. Summary: Rig service; drill; survey; drill; drill; circ; POOH bit trip; change bit TIH to 1770; circ & slip and cut drill line; finish stage in hole 3579 & on bottom : [8] This 7:00 AM, 6,199. Drilled 753 in last 24 hrs. Mud: 9.6#, Visc: 57, WL 4.9. Bit #4: 8-3/4 PDC D Deviation survey: '; '. Summary: Rig service; circ, condition mud and C/O CPU in mud log trailer; drill; survey; drill; drill; survey; drill : [9] This 7:00 AM, 6,921. Drilled 722 in last 24 hrs. Mud: 9.6#, Visc: 65, WL 4.9. Bit #4: 8-3/4 PDC D Deviation survey: 1/2 6598'. Summary: Rig service; drill survey; drill : [10] This 7:00 AM, 7,434. Drilled 513 in last 24 hrs. Mud: 10.0#, Visc: 53, WL 4.9. Bit #4: 8-3/4 PDC D Deviation survey: 1/2 7069'. Summary: Drill; circ & survey; drill; level rig subs w/ smarts pole trucks; drill; drill. Mud log reports Av BG gas: units; Gas Hallettsville (7100) Bailout sand field pay had 171 Max gas units : [11] This 7:00 AM, 7,829. Drilled 395 in last 24 hrs. Mud: 10.0#, Visc: 58, WL 4.7. Bit #4: 8-3/4 PDC D Deviation survey: '. Summary: Drill; circ bottoms up; slug & trip into casing (wiper or short trip ); 1770, stage in hole, circ 3215, 4657, 6097; finish trip to bottom; circ bottoms up & 7568; drill. Mud log reports Av BG gas: units; Short trip gas 43 units; Max Gas: sand/lignite; sand/lignite. Expect to continue drilling Lower Wilcox and the Holik 8700 sand in next 48 hours; Primary objective in 4-5 days.

4 Drilling Report Page 4 of : [12] This 7:00 AM, 8,474. Drilled 645 in last 24 hrs. Mud: 10.0#, Visc: 56, WL 4.3. Bit #4: 8-3/4 PDC D Deviation survey: 1-1/4 8008'. Summary: Drill; circ & survey; drill; drill. Mud log reports Av BG gas: units; Max Gas: sand/lignite; sand/lignite; sand/lignite; sand/lignite. Expect to continue drilling Lower Wilcox and the Holik 8700 sand in next 24 hours; Primary objective in 3-4 days : [13] This 7:00 AM, 8,754. Drilled 280 in last 24 hrs. Mud: 10.5#, Visc: 60, WL 4.4. Bit #4: 8-3/4 PDC D Deviation survey: '. Summary: Drill; circ & survey; drill; slug & trip into casing (wiper or short trip ); C/O swivel packing; 1770 & stage back in hole; stage in hole, circ 3529, 5219, 6912 & bottom; drill. Mud log reports Av BG gas: units; Max Gas: (Holik sand/lignite) : [14] This 7:00 AM, 9,267. Drilled 513 in last 24 hrs. Mud: 10.7#, Visc: 57, WL 5.0. Bit #4: 8-3/4 PDC D Deviation survey: '. Summary: Drill; drill; circ & survey; drill. Mud log reports Av BG gas: units; Max Gas: : [15] This 7:00 AM, bit 9,485. Drilled 218 in last 24 hrs. Mud: 10.7#, Visc: 60, WL 5.3. Bit #4: 8-3/4 PDC D , 9485; Bit #5 8-3/4 SS Deviation survey: '. Summary: Drill; drill; circ; POOH for bit trip, SLM & drop survey; change bit, stage in hole 1770, Mud log reports Av BG gas: units; Max Gas: 625 units & 756 units in 2 shows. Show #1: Probable ; fair drill break; 756 max units gas, with CC5; cut mud weight from 10.7 to 10.4; no fluorescence. Show #2: Probable 9400 sand ; good drill break; 625 max units gas, with CC5; cut mud weight from 10.7 to 10.3; no fluorescence : [16] This 7:00 AM, 9,864. Drilled 379 in last 24 hrs. Mud: 11.2#, Visc: 60, WL 4.7. Bit #5 8-3/4 SS Deviation survey: none new. Summary: Finish stage in hole 5514, 7386; Circ & wash to bottom; drill; drill. Mud log reports Av BG gas: units; Max Gas: 635 & 1085 units in 2 shows. Show #3: Probable Burns * ; good drill break; 635 max units gas, w/ CC5; cut mud weight from 10.9 to 10.7; no fluorescence; *samples indicate gross sand may exceed 70-feet. Show #4: Probable 9800 sand *9831 ; poor drill break; 1085 max units gas, with CC5; cut mud weight from 11.1 to 10.3; no fluorescence; samples & continuing gas kicks may indicate +100-feet of gross sand interval : [17] This 7:00 AM, conditioning TD 10,200. Drilled 336 in last 24 hrs. Mud: 11.5#, Visc: 60, WL 4.5. Bit #5 8-3/4 SS Summary: Drill; drill; circ & raise mud weight from 11.2# to 11.5#; POOH for wiper trip. Mud log reports Av BG gas: units; Max Gas: 511 units.

5 Drilling Report Page 5 of 9 Show #5: Possible Hathaway 10,036-10,056 ; poor drill break; 441 max units gas, w/ CC5; cut mud weight from 11.2 to 10.9; no fluorescence : [18] This 7:00 AM, logging TD 10,200. Drilled 0 in last 24 hrs. Mud: 11.5#, Visc: 61, WL 4.7. Bit #5 8-3/4 SS , 10,200 Bit #6 8-3/4 XT-C 10,200. Deviation survey: 3/4 10,190'. Summary: Stage in hole 1760, 3881, 6002, 8123; circ & wash to bottom; POOH-drop survey; POOH-Chain out to log; rig up Baker Atlas; Run Baker Hughes- High Definition Induction Log, Compensated Z-Densilog; Compensated Neutron Log, Gamma Ray Log from 10,199 to 1,782 ; log on 0530 AM ; Turnkey complete-go on daywork; R/D Baker logging truck. Mud log reports Av BG gas: units. Log confirms multiple productive zones including Primary objective. Presently conditioning hole to run production casing and expect to run same in next 24 hours : [19] This 7:00 AM, running production TD 10,200. Mud: 10.5#, Visc: 50, WL 4.6. Bit #6 8-3/4 XT-C 10,200. Summary: R/D Baker logging truck; TIH to 1760; circ; slip & cut drill line; stage in hole 3881, 6002, 8123; unload & strap 5-1/2 casing; circ & wash to bottom; circ & wait for laydown truck; circ & R/U laydown machine from Cison; laydown Drill pipe & Collars; R/U Ciscon & run 5-1/2 casing : [20] This 7:00 AM, rigging TD 10,200 w/ casing set as per below. Summary: Finish running 10,191 of 5-1/2 17.0# P100 LT&C production casing and ; circ w/ rig pump, rig down Cison, R/U Texas Cement Services; Mix, pump and displace cement as follows: Lead-160 sks/15:poz:class 12.5 PPG w 2.16 yld and tail-1560 sks/txi 13.8 PPG w 1.19 yld. Bumped plug w/ 500# over; drop & set casing slips, nipple down; cut 5-1/2 casing, nipple up & test tubing head; clean mud tanks & rig down; rig down. Note: Rig 0600 AM : [21] This 7:00 AM, rigging TD 10,200 w/ rig released. Summary: Rig down & rig repairs; wash & clean rig. Daily Completion Reports : This AM, Meeting on location to review the flowline route to existing tank battery and design plumbing. New surface equipment needed includes a line heater, high pressure separator, meter run and Barton recorder. The tank battery and the rest of the necessary equipment are already in place as existing infrastructure. Summary of Operations since : Mobilize and move-out Black Creek Drilling rig (to Louisiana). Back drag location and prepare for completion operations. Plan is to install production flowline and facilities starting this week; and move-in completion rig mid next week to run completion logs, tubing, perforate and flowback the well down the sales line : Summary last 24 hours: Met GT Oilfield Services backhoe at lease. Using bull rock from corner edge of location, backhoe dressed and leveled location for completion rig and equipment. Held field meeting with Hans Helland and gauger, Darrell Bludau, to discuss layout and installation of production facilities. Measured distance of proposed flowline route to be approximately 750 from edge of location to edge of central tank battery. Measured distance of proposed, possible future sales pipeline route to be approximately 460 from edge of location at well to Kinder Morgan pipeline ROW. Ordered needed production equipment, pipe, fittings and supplies.

6 Drilling Report Page 6 of : Met Energy Construction lease crew and backhoe at lease. Held safety meeting. Buesing Production Services delivered reconditioned 16 x 5 x 1440 psi 2PH vertical separator with controls, 250,000 BTU line heater and 2 simplex meter run on skid. Buesing Production Services delivered fittings and supplies needed to install production facilities. Salazar JL Trucking haul truck delivered one belly dump load of post oak material, totaling 22 yards, from GT Oilfield. Hardin Tubular delivered 67 joints of 2-3/8 4.7#/ft J-55 EUE 8RD used, tested tubing, totaling Strung out pipe for flowline and future sales pipeline from well to tank battery. Using backhoe, set and leveled HP separator and 2 simplex meter run on blocks. Began tying-in HP separator. Shut down for night : Met Energy Construction lease crew and backhoe at lease. Held safety meeting. Backhoe dug ditch for flowline and future sales pipeline from well to tank battery. Strung out and made up pipe for flowline and future sales pipeline. Began coating flowline and future sales pipeline, with bitumastic, and placing in ditch. Backhoe began backfilling and dressing ditch. Tied-in HP separator gas outlet to 2 simplex meter run. Installed bypass around meter run. Tied-in meter run outlet to gas sales line at downstream of 3 simplex meter run for Technik No. 5. Shut down for night : Met Energy Construction lease crew and backhoe at lease. Held safety meeting. Finished coating flowline and future sales pipeline, with bitumastic, and placing in ditch. Backhoe continued backfilling and dressing ditch. Tied-in flowline at HP separator inlet. Installed HP separator dump valve. Installed HP separator bypass on inlet riser and tied into dump line. Installed drain on HP separator and tied into bypass and dump line. Installed riser on future sales pipeline. Tied-in HP separator dump line to existing LP separator, from Technik No. 4, inlet and bypass. Shut down until workover rig moves out in order to tie-in flowline from well to line heater. Tentatively scheduled to do same beginning Monday : Prior to arriving on lease. TripleUs delivered forklift and portable toilet to lease. Waited on Nabors workover rig and equipment to arrive on lease. Moved in Nabors workover rig No. 6. Held safety meeting with rig crew and haul truck drivers. Spotted and rigged up base beam, open top rig tank, rig pump and dual drum workover rig. Opened well. SICP = 0 psi. Pro Field Services delivered and unloaded 150 bbls of 2% KCl water into open top rig tank. MILAMORE haul truck delivered 2 sets of pipe racks and hydraulic cat walk. Unloaded pipe racks and rigged up hydraulic cat walk. MILAMORE also delivered 4-3/4" rock bit, 2-3/8" bit sub and 5-1/2" x 2-3/8" casing scraper. Nippled down 7-1/16" dry hole flange containing needle valve. Nippled up 7-1/16" 5M rig BOP's. Changed out 2-7/8" rams and blind rams to 2-3/8" rams and blind rams. ETI Trucking delivered 314 joints of 2-3/8" N-80, 4.7#/ft, EUE, 8RD tubing form Watson Pipe. Unloaded tubing onto pipe racks. Rigged up floor and 2-3/8" tubing tongs. Changed out blocks on tubing tongs. Removed thread protectors from tubing. Tallied tubing on the pipe racks. Total tubing length 10,275.69'. Rigged up kelly line and flow back iron to the open top tank. Secured well and shut down for the night. Currently expect to perforate on Monday morning : Held safety meeting with Nabors rig crew No. 6. SICP = 0 psi. M/U & RIH w/ 4-3/4" rock bit, 5-1/2" casing scraper and 2-3/8" 8RD x 2-3/8" REG bit sub. Tallied IH w/ 248 joints of 2-3/8" N-80 tubing. Texas Downhole Tools delivered 5-1/2" x 2-3/8" AS-1X 10K packer, with BX nipple, and 2-3/8" left hand release On/Off skirt. Continued rock bit and casing scraper run. RIH w/ 63 joints of 2-3/8" N-80 tubing. Tagged soft material at 10,090'. POOH w/ 1 joint of 2-3/8" N-80 tubing. Made up 1.5K BOP stripping rubber. RIH w/ 1 joint of 2-3/8" N-80 tubing. Made up 2-3/8" x 2" crossover, 2" chickson and kelly hose. Washed down to 10,127' tubing measurement. Tagged solid. Recovered a moderate amount of drilling mud in the returns for a short period of time. Pro Field Services delivered and unloaded 100 bbls of 2% KCl water into open top tank. Reverse circulated wellbore clean with 230 bbls of 2% KCl water. RD Kelly hose. POOH laying down 20 joints of 2-3/8" N-80 tubing. POOH and stood back 120 joints of 2-3/8" N-80 tubing. Secured well and shut down for the night.

7 Drilling Report Page 7 of : Held safety meeting with Nabors rig crew No. 6. Opened well. SICP = 0 psi. POOH standing back 128 joints of 2-3/8" tubing. MI PLPS electric line unit onto lease. RU 5K lubricator flange on rig BOP's. MU & RIH PLPS Case Hole Logging tools as listed: 225TECKO 2-1/4 neutron, CCL-275TECKO 2-3/4" 450 degree rare earth magnet, GR-225TECKO 2-1/4" Gamma Ray, 2BS 2' bow spring, SCBL-225TECKO 2-1/4" radial, 2BS 2' bow spring and 1-7/16" fishing neck on 3/8" electric wireline. RIH to 10,120' wireline measurement. Started cement bond logging. Logged from 10,120' to 9,620'. The log showed the cement bond to be questionable. Ran in hole to 10,120'. Pressured up 5-1/2" casing to 1000 psi. Started cement bond logging. The log showed good cement bonding. Logged from 10,120' to 7,000'. Released 5-1/2" casing pressure into open top tank. POOH w/ logging tools. RD PLPS equipment. PLPS left logging truck on lease for perforating on 6/15/15. ACME Truck Lines delivered 7-1/16" 5M upper tree assembly consisting of double 2-1/16" master valve, single 2-1/16" wing valve and 2-1/16" positive choke, 7' x 2-3/8" tubing hanger, R-46 ring gasket, /8" x 10-3/4" flange studs with nuts, 1/2" needle valve and 5K pressure gauge. MU & RIH w/: 5-1/2" x 2-3/8" AS-1X 10K packer, 2-3/8" left hand release On/Off skirt and 290 joints of 2-3/8" N-80 tubing. RD tubing tongs and rig floor. Stripped rig BOP's over tubing. Set 5-1/2" AS-1X 10K Packer at '. Packer was set in 12,000# of compression. Tested packer to 1000 psi. Good Test. Bled off pressure into open top tank. NU upper tree assembly. Secured well and shut down for the weekend : Met Energy Construction lease crew and backhoe and Buesing Production Services technician at lease. Held safety meeting. Backhoe finished backfilling and dressing ditch at central tank battery. Using leftover post oak material, backhoe rebuilt section of firewall. Rebuilt fence around central tank battery. Installed sight glass, with sight glass valves, on HP separator. Set and leveled existing fuel pot from LP separator, on concrete block at HP separator. Tied-in gas supply line from HP separator to fuel pot inlet. Buesing Production Services technician plumbed SS tubing from fuel pot to HP separator and LP separator dump valves. Installed 100 x1500 psi 3 pen Barton recorder onto 2 simplex meter run. Technician plumbed SS tubing to Barton recorder. Backhoe set and leveled 250,000 BTU line heater on concrete blocks. Installed Norseal 2200 safety valve at line heater inlet. Installed gas supply fuel bottle at line heater outlet. Tied-in gas supply line off fuel bottle to line heater. Tied-in flowline riser at line heater outlet. Began tying-in line heater bypass to flowline. Shut down for night : This AM, SITP 1650#. Prep to flow test well to sales. In last 24 hours, Held safety meeting with Nabors rig crew No. 6, PLPS wireline crew and Production Equipment well service tech. On inspection of the upper tree assembly, the 2-1/16" wing valve didn't operate properly. The Production Equipment tech contacted his office to send out a new 2-1/16" valve. Tightened the flanges on the upper tree assembly. Tested upper tree to 3500 psi. Good test. Rigged up swabbing equipment. Swabbed well as follows using dual 2-3/8" swabbing cups: Run Tagged Fluid Pulled From Recovered 1 0' 1000' 4 bbls of 2% KCl water ' 2000' 3 bbls of 2% KCl water ' 3000' 4 bbls of 2% KCl water ' 4000' 4 bbls of 2% KCl water ' 5000' 4 bbls of 2% KCl water ' 6000' 1 bbl of 2% KCl water During swabbing operations, PLPS rigged up 24' of 5K lubricator with pack off, 7' x 1-11/16' weight bar, 6' x 1-11/16" gamma gun and 1' x 1-11/16" magnet. Rigged up PLPS electric line unit on well. RIH as listed: 6' 1-11/16" evolution strip gun, 0 degree phased, decentralized and loaded with 4spf, 1' x 1-11/16" gun sub, 1' x 1-11/16" magnet, 6' x 1-11/16" gamma gun and 7' x 1-11/16" weight bar. Correlated using Baker Hughes open hole log, dated May 21, 2015, and PLPS

8 Drilling Report Page 8 of Cont: cement bond log, dated June 12, Perforated (#1 set) 5-1/2" casing from 9618' to 9624'. All shots fired. POOH w/ wireline tools. (Between perforation runs Production Equipment well tech replaced 2-1/16" wing valve). MU & RIH w/: 10' 1-11/16" evolution strip gun, rigged as above. Correlated as above. Perforated (#2 set) 5-1/2" casing from 9602' to 9612'. All shots fired. POOH w/ wireline tools. MU & RIH w/: 18' 1-11/16" evolution strip gun, rigged as above. Correlated as above. Perforated (#3 set) 5-1/2" casing from 9570' to 9588'. All shots fired. POOH w/ wireline tools. MU & RIH w/: 4' 1-11/16" evolution strip gun, rigged as above. Correlated as above. Perforated (#4 set) 5-1/2 casing from 9562' to 9566'. All shots fired. POOH w/ wireline tools. MU & RIH w/: 4' 1-11/16" evolution strip gun, rigged as above. Correlated as above. Perforated (#5 set) 5-1/2" casing from 9547' to 9551'. All shots fired. POOH w/ wireline tools. RD and released PLPS electric line unit. Opened well and began flow back into rig open top tank on a 6/64" adjustable choke with Load to recover 20 bbls. FTP = 100 psi. Well unloaded gas and trace load water. Elect to swab well in. RU & RIH w/ 2-3/8" swab and swabbed well as follows: Run Tagged Fluid Pulled From Total BBLs Rec Load to Rec Remarks ' 3100' Load water / gas ' 2200' 6 14 Load water / gas ' 1000' 9 11 Load water / gas Well kicked-off free flow on a 6/64" adjustable choke. Opened choke to a 25/64". FTP = 1100 psi. Worked choke to clear debris from choke body. Flowed well on a 12/64" choke at 1100 psi. Recovered 21 bbls total load from well w/ steady gas flow. Shut well in. Rigged down swabbing equipment, floor and dual drum workover rig. Pro Field Services vacuum truck hauled 130 bbls of fluid to disposal. ISITP = 1100 psi. Secured well and shut down for the night : This AM, resume flow test operations (shut down yesterday due to Tropical Storm Bill). SITP 1440#. Opened 7:30 on 11/64 choke and flow to facilities. At 9:00 increased to 12/64 choke with FTP 733 MCF rate, and made 1 bbl oil, ½ bbl water. Summary for last 24 hours: Met Energy Construction lease crew, backhoe and Buesing Production Services technician at lease. Held safety meeting. SITP = 1650 psi. Moved base beam, pipe racks, open top tank and pump to edge of location in order to finish digging ditch for flowline and future sales pipeline. M/O Nabors workover rig. Backhoe finished digging ditch from line heater to well. Using 6 joints of leftover 2-3/8 4.7#/ft, N-80, EUE, 8RD tubing, made up flowline from well to line heater and placed in ditch. Tied-in flowline at line heater inlet and bypass. Installed hairpin and riser on tree and tied into flowline. Coated flowline and risers with bitumastic. Backhoe finished digging ditch from well to West edge of location, closest to possible future Kinder Morgan pipeline sales tap. Finished making up future sales pipeline from central tank battery to edge of location at well. Installed temporary riser on future sales pipeline. Backhoe backfilled ditch. Opened well, purged and pressured up flowline from well to central tank battery to 1000 psi. Monitored pressure for 30 minutes to test for leaks. Test OK. No leaks. Buesing Production Services Technician installed Hi/Lo safety stick pilots on line heater fuel bottle. Safety pilot Hi kill set at 1200 psi and Lo kill set at 200 psi. Plumbed SS tubing gas supply lines for safety system. Pro Field Services filled line heater with fresh water. Lit line heater burner and set temperature at 120 degrees F. Installed 16/64 positive choke at tree and set line heater adjustable choke to 12/64. Opened well. SITP = 1650 psi. At 1700 hours, turned well to sales. Differential on Barton recorder was off the chart on a 12/64 choke. Therefore, decreased choke size on the line heater to a 10/64. At 1730 hours, FTP = 1300 psi making approximately 670 mcfd and no fluids. Reset adjustable choke on line heater to 12/64. At 1745 hours, FTP = 900 psi making approximately 635 mcfd and no fluids. At 1800 hours, well began making little fluid. FTP = 1050 psi making approximately 300 mcfd. Adjustable choke on line heater plugged up. Rocked adjustable choke back

9 Drilling Report Page 9 of Cont: and forth in order to clear trash. At 1830 hours, FTP = 1000 psi making approximately 440 mcfd. Contacted office. Decision was made to shut well in overnight due to heavy rainfall (Tropical Storm Bill) and potential access issues (creek flooding). Pending weather, gauger will resume flow test Wed morning. Released well to gauger & SD until further notice.