The Independent Third Quarter 2010

PA I Independent Petroleum Association of

President's Report John Thompson

INSIDE THIS ISSUE Well let‟s get started! After becoming President of IPANM Legislative & Governmental 2 at the annual meeting on Au- Update gust 4th I‟m glad to report Past President Message 3 that the “I” in Independent is justified! In just a short Southeast Regional Report 4 amount of time I have re- Northwest Regional Report 5 ceived a tremendous amount of information, New Members 6 ideas, and suggestions which all seem to point me in different directions! Seriously, the sup- Project NEED Update 7 port and encouragement that I have received Oil & Gas Day at the Capitol 8 are greatly appreciated.

The annual meeting was another success and af- ter totaling the income and expenses, the 2010 meeting will become the most financially suc- cessful meeting that IPANM has ever had. We can thank past President Robert Armstrong and the tremendous effort of Pam Garlinger and her staff for this achievement.

Review of Annual Meeting

TO CONTACT US Karin Foster, our Executive Director, kicked things off at the annual convention with a great P.O. Box 1836 presentation that included a review of the cur- Roswell, New Mexico 88202 rent petitions filed by the New Energy Economy (NEE) and the New Mexico Environmental De- Phone: 575/ 622-2566 partment (NMED) to address green house gases Fax: 575/ 622-8996 and how the proposals will affect industry in E-Mail: [email protected] New Mexico, particularly the oil and gas busi- Web: www.ipanm.org ness. Karin also showed a recent study released by the Fraser Institute that surveyed oil and gas executives and their opinions of regulatory com- pliance, environmental regulations, and political stability. Sadly, the composite score showed (Continued on page 9) 1 The Independent Third Quarter 2010

Legislative & Governmental Update by Karin Foster

A New Mexican Tale with a hundred New Mexicans in strong opposition Twist—Just in Time for Hal- to a GHG program. The formal hearing lasted loween eight days with the examination of nine NEE witnesses and 14 witnesses in opposition to She was called the “Indian Prin- the petition. The NEE witnesses included sev- cess” and the name was appropri- eral attorneys who had little or no oil and ate. She sat in the witness chair and gas experience, but had either been on a glared at the lady oil and gas attor- well site as a guest or had learned about the ney. Her back was straight. Her industry from the internet. The main witness attitude was certain, for in her mind she was right. for the petition was Steven Michal, who is She smiled to herself as she looked to the back of married to Sandra Ely, climate policy advisor the poorly lit hearing room. One of her many sup- to the Governor. Mr. Michal is the general porters was costumed in a nine foot tall puppet of counsel for Western Resource Advocates, her, holding the whole world in her hands. That which is also a client of the Coalition for puppet had been created for the national conven- Clean Affordable Energy, which employs En- tion in 1996 when she had been Ralph Nader’s run- vironment Improvement Board Member ning mate. Such wonderful memories! But now, she Green. Although Mr. Michal had never had a task at hand. She had come to New Mexico worked for either the oil and gas industry or to hammer the nail in the coffin of the fossil fuel a utility, he was able to profess his “expert industry in the Land of Enchantment . . . qualifications” of both industries.

On August 18 Winona LaDuke, former Green In a nutshell, the NEE petition sought to do Party Candidate for Vice President, testified the following: Operations with CO2 emissions in support of the NEE petition to cap GHG greater than 25,000 metric tons would be re- emissions from oil and gas sources in New quired to establish a baseline with the NMED Mexico. She was cross-examined for four by mid 2011, based on the average emissions hours by several oil and gas lawyers. Al- of the past three years. During 2011 those though she admitted that even with eliminat- operators would be required to closely moni- ing all the emissions from the state, there tor emissions and determine how to reduce would be little impact on the global climate; CO2 emissions by three percent per year from nevertheless, she felt strongly that this was a 2012 until 2020. If a federal program that vital first step toward supporting wind devel- the NMED determines is as stringent as the opment in the state. Under cross- state program is implemented, the NEE pro- examination it also became clear that she gram would sunset. If the NMED cap and believed the fossil fuel industry had robbed trade petition was able to begin due to the the Native American people of their birth- participation of other states, the NEE peti- right to the minerals in “their earth.” tion would also sunset.

The New Energy Economy (NEE) petition was Mr. Larry Scott, President of Lynx Petroleum heard by the Environment Improvement and past President of IPANM, testified Board (EIB), who is the ultimate fact finder against the NEE petition. He explained that in this case. Ms. Orth, the NMED-appointed this petition would have indirect impacts on hearing officer, had travelled the state and (Continued on page 11) had also heard comments from over three 2 The Independent Third Quarter 2010

Past President Farewell by Bob Armstrong

During my recently com- industry and I know that he will devote his pleted term as President of time to work on the behalf of our member- IPANM, I gained a much ship. If John calls on you for assistance, I greater appreciation of the would ask that you make a commitment to work which IPANM and its him. That is what makes IPANM so effective. members do on behalf of the The fact that the membership takes the ini- oil and gas industry in New tiative to become personally involved makes Mexico. In addition to the a difference. I cannot tell you the number of paid staff of Karin Foster and times legislators have commented to me that Pam Garlinger, the Association members go it is meaningful that individual members out of their way to respond to challenges rather than lobbyists call upon them. which our industry faces. I cannot tell you how many times throughout the years that At the annual meeting we had several Direc- volunteers have stepped up to the plate tors whose terms in office were con- on behalf of all oil and gas produc- cluded. I want to thank Peter Court- ers in New Mexico. I want to sincerely ney, Frank Gorham, Gerri Harrington, thank the membership for all that and Johnny Knorr for their service as they do. Directors. Frank and Johnny both served as President of the I also want to recognize our Ex- Association. Gerri was recog- ecutive Director, Karin Foster, nized at the annual meeting and our Director of Opera- with the Member of the Year tions, Pam Garlinger, for all Award. their fine work. As an attor- ney, Karin has been leading the Lastly, because the chal- battle on many issues that the lenges to our Association industry faces. Whether it is the keep mounting, the cost to pit rule, greenhouse gas emissions hearings, address all of these issues becomes greater or working with our legislators, Karin is al- and greater. I would ask that when member- ways on point and dedicates 110% of her ship renewals are mailed out in the next few time on our behalf. As President of IPANM, I weeks that you consider increasing your level appreciated all the support which Pam gave of membership. We do have a corporate to me and to our Board of Directors. She membership level of $2,000 which many takes the initiative on many matters, and the members pay. Even if you are not able to in- work that she does in handling all the details crease to that level, any additional amount with regard to the annual meeting is admira- that you can give will be meaningful to the ble. We are indeed fortunate to have both Association. I can assure you that it is money Karin and Pam working on our behalf. well spent. If we are not able to maintain our level of involvement on many complex At the annual meeting in August, John issues, all our membership would be nega- Thompson with Walsh Engineering in Farm- tively impacted. Any additional support you ington succeeded me as President. John is can give will be appreciated. extremely knowledgeable with regard to the

3 The Independent Third Quarter 2010

Southeast Regional Report by

A little over two months ago, their concerns and questioned the authority we concluded a successful an- of the Environment Department to even en- nual meeting in Albuquerque at gage in this rule making. IPANM will continue the Sandia Resort. I again ex- to be an active participant in objecting to press my appreciation to our the proposal and being engaged in the law- sponsors and the members who suit filed by the New Energy Economy. attended, making the annual meeting a great success. I also extend my Second, some significant sales of assets are appreciation to Bob Armstrong for his strong being made by some stalwart oil and gas leadership this past year, and his continuing companies in southeastern New Mexico. BP's involvement, particularly on the task force decision to sell its Permian Basin assets to concerning the OCD regulations. Although Apache, Marbob Energy Corporation's sale to not much time has gone by since my compre- Concho, and Yates Drilling Company's sale to hensive report at the annual meeting, there Occidental Petroleum all appear to be mov- are several items worthy of reporting affect- ing forward. We certainly hope that as these ing oil and gas operators in southeast New and future acquisitions are finalized, that Mexico. the acquiring companies will become active participants in IPANM and will devote time, First, and covered in more detail by Karin energy, and resources to help us to stay on Foster, is the Environment Department's pro- top of issues and, when necessary, engage posal on green house gas programs in New the regulatory agencies and legislature to Mexico. The Environment Department con- help New Mexico retain its position as a top ducted several open houses and formal hear- producing oil and gas state. ings which were greatly attended by repre- sentatives from our organization, expressing Third, a lawsuit has been filed in the United their objections to the State of New Mexico States District Court for the District of Colo- embarking upon a program that would regu- rado by WildEarth Guardians against Ken Sa- late CO2 emissions, particularly creating lazar, as Secretary of the Interior, challeng- standards that would be more restrictive ing the department's refusal to currently list than any federal standards. Karin Foster is the lesser prairie chicken as an endangered actively engaged in the proceedings and the species. The Secretary determined that the continued lawsuit by the New Energy Econ- species listing is warranted but precluded. A omy group, and I will not repeat the matters number of oil and gas producers in southeast that are more fully described in her report. New Mexico have contributed substantial dol- The meetings in Artesia and Carlsbad and the lars to assist the BLM in keeping the lesser open house in Roswell can best be character- prairie chicken off of the endangered species ized as the Environment Department at- list. As reported at the annual meeting, a tempting to create standards that are not prairie chicken corridor has been proposed supported by virtually everyone in southern by BLM and it is our desire to make this part New Mexico. Not only representatives from of the Carlsbad RMP process that recently the oil and gas industry, but representatives commenced. We will be monitoring this liti- from every walk of life echoed their concerns gation, and may possibly attempt to inter- regarding the Environment Department's pro- vene as more facts are developed.  posal. A number of legislators also echoed

4 The Independent Third Quarter 2010

Northwest Regional Report by Gary Brink

The clouds are still gray erator produces. Second, is a review of over the San Juan Basin. bonding amounts required for an operator This is not to mean the on federal lands. It is felt that current bond- small amounts of much ing amounts are obsolete considering cur- needed rain we have re- rent liabilities on federal lands since current ceived during the past few levels were set in the 1960‟s. And last but weeks in the area. It means not least, new BOP standard requirements that the low commodity and testing procedures are being developed. price for natural gas has limited the amount Now seriously, who did not see that one of activity in the Basin. Drilling activity has coming! been flat for the past two quarters with 12 rigs running in the Basin out of 32 available. Horizontal Drilling The latest data from the BLM on permits re- ceived shows a reduction of 25 percent from In coordination with industry, the NMOCD the previous year and wells spudded to be had requested that rules be investigated to half of the previous year and 2009 was noth- address horizontal drilling needs. During the ing to brag about. On a little brighter side, past year, a group working with NMOGA has well servicing has picked up with 80 rigs developed statewide rules pertaining to now in operation with a 65 percent utiliza- horizontal drilling, spacing requirements and tion rate. The scary part is that P&A‟s have combination of pooled acreage. The group exceeded new drills for the last quarter. of both north and south operators came to With seasonal closures right around the cor- agreement on specific rules and is in the ner it does not appear too promising for the process of presenting the case to the near future. NMOCD. The targeted deadline is to have the rules reviewed, presented at hearing, BLM News and adopted by year end. This will benefit all operators currently drilling sideways or Jim Stoval has been in Farmington assisting are looking at prospects to apply this im- the local field office as the acting Manager proved technology to develop reserves. of the Farmington Field office since May when Steve Henke retired. He announced that Dave Evans currently in the Carlsbad BLM office has been named as replacement and will soon take over the duties as Man- ager of Farmington. In other news, after two months of solid news coverage on the disas- ter in the Gulf of Mexico, many industry folks are awaiting the fallout of new regula- tions on the Federal front. Well it has started! Under consideration are inspection and enforcement fees to supplement addi- tional inspection work at well sites which will be tied to the number of wells each op-

5 The Independent Third Quarter 2010

New Members

Kyle Armstrong Finem International, LLC Albuquerque NM John Connally Breck Operating Corp. Breckenridge TX Steve Daugherty Bank of Oklahoma Tulsa OK Pat Ellis COG Operating LLC Midland TX Leon Hanhardt Maverick Coil Tubing Aztec NM John Hentges ConocoPhillips Farmington NM Mark Jacoby Burnett Oil Co., Inc. Fort Worth TX Paula Jourde Enertia Software Dallas TX

Robbie Lutner Shell Energy North America Houston TX Randy Maxey Chesapeake Energy Corp. Oklahoma City OK Kim Moss D.W. Turner, Inc. Albuquerque NM Sheryl Olson San Juan Resources, Inc. Denver CO Glen Papp Synergy Operating, LLC Farmington NM Bill Reimann BOPCO, L.P. Fort Worth TX Kyle Rhodes Pesco Farmington NM Dave Shea Pacer Energy Marketing, LLC Tulsa OK Paul Sikora CBM Partners Corp. Flora Vista NM Darrick Stallings Yates Petroleum Corporation Artesia NM Mitch Walker Pacer Energy Marketing, LLC Tulsa OK Heather Wilson Albuquerque NM

Save the Dates! IPANM Annual Meeting August 11-12, 2011 Sandia Resort & Casino, Albuquerque, NM

6 The Independent Third Quarter 2010

Project NEED Update

September in New Mexico means back NEED has been fortunate to host several to school excitement and a kick-off for workshops in 2010 thanks to PNM, energy education ef- IPANM, Roswell Climate forts in the state. Change Committee, Plans for the 2010- and company partners 2011 school year are in Roswell, as well as underway including ConocoPhillips. workshops in Albu- querque, Roswell, Great things are hap- and Farmington. A pening! NEED is hon- workshop may be of- ored to be part of fered in Dulce, with IPANM‟s outreach ef- ConocoPhillips and forts and looks forward EnerVest support. to reaching more teachers in 2010-2011 IPANM members than ever before. funded six teachers to attend the NEED En- Any ideas or energy ergy Conference for Roswell teachers participate in an enhanced education needs in your Educators in Dallas, oil recovery activity using carbon capture local area? Just let us Texas in July. The know! 1-800-875-5029 teachers received training in all as- or [email protected]. pects of energy and toured an Encana natural gas drilling operation.

Armstrong Energy Corporation David Petroleum Corporation David Sorenson Desk and Derrick Club of Roswell E.M.G. Oil Properties First Roswell Company Gerri Harrington IPANM New Mexico Landmen‟s Association Roswell Geological Society Yates Petroleum Corporation

7 The Independent Third Quarter 2010

Oil & Gas Day at the Capitol

Join us at an event that will show our legislators and the public how important the development of do- mestic oil and natural gas is to the people of New Mexico!

Oil & Gas Day at the Capitol!

Planned events include:  Press conference and presenta- tions from state and industry leaders  Exhibits by organizations that are impacted by the industry throughout the state displayed in the Halls of History  “We are Oil and Gas”—a photo exhibit of the faces impacted by our industry  Young Ambassador Program--an educational opportunity for col- lege students to learn advocacy skills and work with legislators and industry spokespersons  Evening cocktail reception NEED Project students demonstrating how they’ve learned to generate electricity using a bicycle

8 The Independent Third Quarter 2010

President’s Report, continued

(Continued from page 1) BLM activities including the leasing reform that New Mexico is now ranked 54th in 2010, and issues pertaining to the sand dune lizard falling from 28th in 2008 (out of 145 govern- along with an update on the potash issue. ments) and is now behind countries like Mr. Juen also updated the status of the RMP Yemen, Egypt, Iran, and Iraq! update taking place in the Carlsbad BLM of- fice. Tom Clifford, Chief Economist for the New Mexico Legislative Finance Committee, re- The keynote speaker was Joel Noyes who is ported that while oil production has been the Director of Government Relations & In- relatively steady during the past decade, dustry Affairs for the Independent Petroleum natural gas output has declined steadily, fal- Association of America. Mr. Noyes gave fasci- ling ten percent to 1.3 tcf a year. “For every nating presentation on the relationship be- one percent this gas volume drops in a year, tween policy and politics in Washington and the state general fund decreased $5 million.” how their impacts would reach the state‟s oil Clifford went on to report that during the and gas operations. boom years of 2006 through 2008, the indus- try contributed more than $1 billion a year in After lunch we were treated to a very enter- taxes and royalties—seven percent of the taining and informative presentation by Dr. general fund. Despite the downturn, produc- Barry Ramo about healthy lifestyles and then ers still put $800 million into state coffers in watched a video presentation for this year‟s fiscal 2010. He went on to point out that “Wildlife in the Oilfield” photo contest. when income taxes, gross receipts taxes, payments in lieu of taxes, and payments The afternoon session was highlighted by a from federal mineral leasing royalties are question and answer forum from the candi- added to those contributions, the oil and gas dates for the State Land Office, Matt Rush industry‟s revenue footprint topped $2.2 bil- and Ray Powell, and then a presentation by lion in state and local revenues in FY 2010. the Republican nominee for Governor, Su- sana Martinez. (Note: Democratic nominee, After regional reports from Greg Nibert and Diane Denish, was invited to participate in myself, we heard from Bruce Gantner who the candidate forum, but was not able to at- shared his insights into air quality issues of tend due to a conflict.) concern to oil and gas operators in New Mex- ico. Mr. Gantner also pointed out that EPA Also at the annual meeting, the following deadline for SPCC plans has been pushed were elected to serve on the IPANM Board of back (again) to November 2011. Directors:

Cynthia Case, President of Kase and Com-  John Alexander (Dugan Production Corp) pany, Inc., gave a presentation about techni-  Richard Gilliland (Hunt Cimarron Limited cal hedging and trading. Partnership)  Frank McCreight (BOPCO, L.P.) She was followed by Jesse Juen, who was ap-  Glen Papp (Synergy Operating, LLC) pointed Associate State Director for the BLM  Kyle Rhodes (Pesco) State Office. Mr. Juen reviewed the latest (Continued on page 10)

9 The Independent Third Quarter 2010

President’s Report, continued

(Continued from page 9) that everyone is able to keep up with the  Dwayne Taylor (Lucky Rental Tool) hearings as reported upon by Karin. To date there have been two public comment I would like to personally recognize the fol- “events,” one in Artesia and the other in lowing resigning Board members for their Carlsbad. Our industry was very well repre- time and commitment to IPANM: sented and hopefully the comments will not fall upon deaf ears which, with the make up  Peter Courtney (H.L. Brown Operating) of the Environmental Improvement Board  Frank Gorham (Sandstone Properties) (EIB), is a very real and sad possibility.  Johnny Knorr (Mack Energy Corp.)  Gerri Harrington (Llano Land & Explora- Pit Rule Task Force tion) After five meetings with the stakeholders in I would also like to congratulate Gerri Har- Santa Fe, the NMOCD (New Mexico Oil Con- rington for receiving the “Member of the servation Division) is currently writing their Year” award at the awards dinner. His work final draft document for review. This docu- and involvement in the NEED Project is truly ment is intended to clarify, section by sec- commendable. tion, Rule 17—better known as the “Pit Rule.” At this point, it is not clear as to GHG Issue whether or not the Task Force will be meet- ing again because of the fall elections and The latest “greatest threat” to our industry, possible change of NMOCD staff, including and the state of New Mexico for that matter, the Energy & Minerals Secretary. But as al- is the two petitions addressing GHG—one ways we will make ourselves available to from the New Mexico Environmental Depart- help provide technical and practical insight ment (NMED) and the other from the New to a very difficult rule. Energy Economy (NEE). Please know and un- derstand that IPANM through the efforts of I encourage everyone to visit our website Karin Foster, our Executive Director, are (www.ipanm.org) to gain further information front and center on this issue, and I hope regarding the annual meeting, the GHG peti- tions, and the latest activities at IPANM.

400 N. Penn., Suite 1000 P. O. Box 1518 Roswell, NM 88202

Tel 575/622-3770 Fax 575/622-8643

10 The Independent Third Quarter 2010

Legislative and Governmental Update, continued

(Continued from page 2) the desire to push a full cap and trade peti- the small oil and gas producer since electric tion was just was strong. The hearing lasted generation, pipeline compression, and refin- eight days due to the unreasonable restric- ing costs would increase dramatically. He tions on fair and full cross examination by all also testified that for small producers, in- parties to the case. In addition, the hearing creases in the costs of regulations have had a officer unfairly excluded the testimony of very negative impact on the levels of produc- several witnesses on newly found standards tion in the state. After Mr. Scott‟s testimony, for “expertness” that were nonexistent for the NEE submitted a new petition to the the NEE case. She also limited industry‟s Board that effectively eliminated the small ability to submit rebuttal testimony contra- producer from the potential direct impacts vening the Department‟s late and unfair sub- of the rule. By prohibiting the aggregation of missions attacking industry. sources, only facilities at one site with emis- sions over the threshold amount would be The claims that New Mexico must be a leader required to participate in this program. in the world to reduce our emissions, how- Thank you, Larry, for your testimony in sup- ever small, was repeated by most, if not all, port of IPANM‟s efforts. of the witnesses. Cataclysmic disaster could be avoided, claimed Nobel Peace Prize win- Much to the disappointment of the NEE and ner Jonathan Overpeck, with the elimination its environmental supporters, the EIB will not of all New Mexican emissions. He stated that deliberate on the petition until the Decem- the solution to the climate change issue was ber 6th hearing date. This will effectively kill to send tons of pollution into the atmos- the petition since it cannot be final by the phere, effectively creating a man-made vol- time our new Governor comes to office. It is canic eruption, to avert the direct rays of expected that candidate Martinez will move the sun. Another solution was to send a three to dissolve any unfinished business by the trillion dollar giant mirror into the atmos- prior administration if she takes office. Simi- phere to deflect the sun‟s warming rays. He larly, candidate Denish has stated that she admitted, however, that these solutions opposes any climate petition that has a nega- would effectively destroy the world‟s recent tive impact on the New Mexico economy. successes in agriculture that feed the world‟s population. He also admitted that the overall The Real Battle Began September 20th with total impact of the mirror-in-the-sky solution the NMED was unknown.

Unfortunately, the NMED hearing was not The NMED petition requires New Mexico be nearly as colorful as the NEE petition, but (Continued on page 12)

11 The Independent Third Quarter 2010

Legislative and Governmental Update, continued

(Continued from page 11) port under the current proposal. the first state in the nation to have a GHG cap and trade program that is beyond limit- Mr. Ed Hasely of Energen Resources testified ing utility emissions. The rule calls for all on behalf of IPANM on the NMED petition. He stationary sources emitting 25,000 metric carefully described the impacts on small oil tons of CO2e to reduce emissions by two per- and gas producers of increasing regulatory cent per year, beginning in 2012. The pro- costs on refining, pipeline, and utilities. He gram is to be in effect only until 2020, re- noted that the public perception that New sulting in an emissions reduction of 16 per- Mexico, as a place to invest oil and gas dol- cent from 2010 levels. The 16 percent level lars, is falling in rank according to the Fraser would continue after 2020 unless the Depart- Institute. He also alleged that further regula- ment takes action to sunset the rule. The tions against our industry with no scientific NMED claims that this program will target 65 benefit will further erode the investment op- large emissions sources in the state. In its portunities in our state. Thank you, Ed, for economic analysis, the Department only con- your time on this very important issue. sidered the impacts of the GHG cap and trade program in conjunction with other The NMED petition will be considered by the “complementary policies” like energy effi- EIB at the November EIB hearing date. The ciency and clean cars programs. The Depart- rule is expected to be final by November 15. ment opted not to look at the economic im- Notice of the final rule will be published in pacts of the proposed rule alone and did not the New Mexico Register by December 1 and do an impact study on the small businesses the rule will be final by December 31. that will be directly impacted by the ex- pected cost increases in electric generation, Note that any member of the EIB may add midstream pipeline, or refining. provisions they feel necessary for the rule during deliberations. Therefore, the final The proposed New Mexico GHG cap and trade rule could be substantially different than program is also dependent on other states currently proposed—aggregation could be within the Western Climate Initiative region added. Member Green has made statements participating in the program. A threshold of that he believes methane reductions should 100 million metric tons of CO2e must be met be part of both petitions. He has also stated for emissions from a combination of member he believes aggregation is necessary to WCI states in order for the program to begin. “catch all sources.” Mr. Green was also a Unlike the NEE program, the emitters will be member of the EIB for the first version of the given free allowances by the Department up mandatory reporting rule. At the hearing, to the prescribed limit and will have to pur- the NMED cut back on their proposal to moni- chase additional offsets or allowances on the tor all GHG gases to only carbon. The entire regional market. In response to IPANM‟s tes- hearing was focused on the CO2 emissions, timony, the NMED amended the proposal to but during deliberations Mr. Green pushed not allow for aggregation—in other words, the board to re-insert monitoring and report- companies reaching the 25,000 metric ton ing of methane emissions over the Depart- total because of multiple wells under owner- ment‟s objection. ship or in the same basin will not need to re- (Continued on page 13)

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Legislative and Governmental Update, continued

(Continued from page 12) and “misrepresentations.” Therefore, he Mark Fesmire, in the Role of the Ogre, Seeks claimed that any costs alleged in this case to Cook Industry were also misrepresentative of the facts.

Former OCD Director, now Attorney, Mark Karin Foster, IPANM‟s attorney and Executive Fesmire, submitted written testimony on the Director, made the motion before the Board NMED case to rebut statements made by that Mr. Fesmire‟s testimony was factually IPANM that burdensome regulations have led flawed and completely irrelevant to the GHG to severe financial impacts to oil and gas op- hearing. Further, if Mr. Fesmire wished to erations, and, therefore, the state. Mr. testify about the pit rule, she was prepared Fesmire claimed that under his tenure at the to aggressively cross-examine him for about OCD, he has adopted the “objective and the four hours to question his wildly inaccurate motto of „no new water contamination due assertions about the industry. Ms. Foster ar- to oil and gas operations in the state.‟” gued that as a petroleum engineer, Mr. Fesmire has used this statement as justifica- Fesmire should know the difference between tion for passing the surface waste manage- impact and contamination and that he also ment rule, the enforcement rule, and the pit knows the difference between a legacy pit rule—although it is contrary to law and the and a drilling pit; therefore, he should un- subject of IPANM‟s case on appeal. In his derstand the cost differences in drilling a GHG testimony, Fesmire alleged that there well. All these facts must be highlighted for are several “thousand releases of contami- the record, Ms. Foster asserted, for the nate and over 800 cases of ground water con- Board to understand the cost determinations tamination caused by releases and reported made by industry in response to the pit rule. by oil and gas operators.” He further con- Mr. Fesmire‟s unreasonable statements to tended that the costs estimated by IPANM for the media aside, his testimony in this case the impacts of the pit rule were incorrect (Continued on page 14)

ANTELOPE SALES & SERVICE, INC.

 API-6A Wellhead Equipment  Installation and Service  Gate Valve 5637 US Hwy 64  Lubrication and Maintenance Farmington, NM 87401  Rental Equipment Telephone (505) 327-0918  Well Fracturing and Drilling Facsimile (505) 327-3484  BOP Testing  MIT Testing  Sound Barrier Buildings  Manufacturing, Installation and Repair  Cavitation Muffler Systems

Servicing the San Juan Basin Since 1993

13 The Independent Third Quarter 2010

Legislative and Governmental Update, continued

(Continued from page 13) However, Professor James Lillywhite of NMSU was irrelevant and bordering on unethical as testified that he was able to do a pure eco- a professional engineer. nomic analysis of the cap and trade only pro- gram. Dropping out the impacts of the com- Member Green agreed with IPANM that the plementary policies, he estimated that the pit rule is very controversial and should not direct economic impact to the state of these be part of this case. The NMED withdrew the proposals would be in the range of $144 mil- testimony but then stated that Mr. Fesmire lion to $730 million. With the multiplier ef- intended to submit his testimony as public fect, the impacts to the State were esti- comment for the record. While parties to the mated to be closer to $1.02 billion. Professor case cannot oppose any public comment, Mr. Lillywhite was able to further extrapolate Fesmire‟s unchecked hostility towards the that the impact of a cap on emissions to the industry he is supposed to be working with San Juan area would be in the range of a di- must be addressed by the next administra- rect cost of $94 million and a total cost in- tion. cluding indirect impacts of $633 million.

What are the Expected Costs of a Cap and Which Companies Have to Report Starting Trade Program in New Mexico? January 1?

The main concerns with both the NEE and On November 8 through 10 the EIB will con- the NMED programs are the lack of scientific duct its final hearing to fully implement a basis for eliminating NM emissions and the cap and trade program in New Mexico. The lack of economic data. The NEE did not pro- NMED has petitioned the Board to hear a vide economic data in support of their pro- third petition to impose mandatory green- posal. The NMED hired two economists, but house gas reporting by all sources emitting both their models are refuted by very quali- 10,000 metric tons CO2e to being recording fied witnesses for industry and the utilities. emissions levels January 1, 2011. The report- In the NMED program, the value of allow- ing by sources of less than 25,000 tons but ances was estimated to be zero since the De- greater than 10,000 tons CO2e will be by cer- partment would be giving free allowances to tification of the operator. The reporting by parties who are registered as emitters. The sources of greater than 25,000 tons will be NMED witnesses claimed that the cap and by a third party verifier who will be certified trade program along with complementary by the NMED. Prior work history with the oil policies would result in a positive net impact and gas industry will effectively disqualify on the state. Industry experts stated that the any consultant who could officially verify the zero allowance valuation was unrealistic and emissions levels. IPANM has filed a notice of completely distorted the modeling. Even appearance on this petition with the illogically inconsistent analysis by the NMED witnesses, the parameters of the The Multiple-Headed Dragon: The EIB NMED proposal were so fluid and dependent on the participation of other states, that a The Environmental Improvement Board (EIB) true economic modeling was impossible. is a board created by the Legislature to be (Continued on page 15)

14 The Independent Third Quarter 2010

Legislative and Governmental Update, continued

(Continued from page 14) the social and economic value of the sources the “judge” or fact-finding entity when the and subjects of air contaminants, and techni- New Mexico Environment Department is cal practicability and economic reasonable- seeking to change its rules. The intention be- ness of reducing or eliminating air contami- hind creating this seven member politically nants from the sources involved and previous appointed board was to limit the power of experience with equipment and methods the NMED Secretary from pushing rules available to control the air contaminants in- through without public input. The current volved.”—§74-2- 5 (E) NMSA 1997. seven member board includes a lobbyist for the Coalition for Clean Affordable Energy, Next Steps: Who Will be the White Knight in which receives money from Western Re- Shining Armor? source Advocates and NRDC; a Board member of the Rain Forest Action Net- An aggressive three-pronged approach work; the Executive Director of the will be needed to reverse the very nega- WildEarth Guardians; a small business tive impacts of the GHG propos- owner with a consulting als. Karin Foster has rep- business to capture resented IPANM on both methane emissions from GHG cases and will also repre- an Albuquerque landfill; a sent IPANM on the mandatory re- board advisor to porting case. She is in the process Ecotech, which is a col- of drafting and filing legal briefs lege dedicated to the on all three cases. The primary development of jobs in issue for the appeal will be the au- the renewable industry; thority of the NMED to regulate and the President and General enforce a greenhouse gas rule, given Manager of the Lodge that no ambient standards have been at Chama; and the established in the Air Quality Act. Sec- Director of Governmental and Legislative Af- ond, since neither NEE nor NMED conducted fairs for Western Refining and immediate adequate impact analyses on the small busi- past Chairman of the Board for the New Mex- nesses of the state, IPANM will allege that a ico Oil and Gas Association. violation of the Small Business Regulatory Relief Act occurred. The court process is EIB is to be “responsible for environmental lengthy, but it will result in a finding on the management and consumer protection in this authority under the AQA as well as estab- state in order to ensure an environment that lished the requirements under the SBRRA. will confer optimum health, safety, comfort and economic and social well-being on its On the legislative front, Karin will be work- inhabitants”—§74-1-2 NMSA 1997. In making ing with our new Governor to ensure that the its regulations, the EIB is to “give weight it GHG proposals do not get implemented in deems appropriate to all facts and circum- the state. The poison pen will need to be stances, including but not limited to, ... in- used to kill the current proposals as well as terference with health, welfare, visibility those in the future. Executive orders can be and property, the public interest, including (Continued on page 16)

15 The Independent Third Quarter 2010

Legislative and Governmental Update, continued

(Continued from page 15) Will There be a Happy Ending? imposed, but they ultimately need to be sup- ported by the legislature or the courts by Nine foot puppets, trillion dollar mirrors, rule of law. IPANM is working on several bills ogres, and true believers, Indian Princesses, to withdraw NM from participation in the and white knights with poison pens and Western Climate Initiative and to limit the golden swords—it all sounds like a New Mexi- scope of the Environmental Improvement Act can tale during Halloween but it‟s all in a and the AQA. The legislature and our new day‟s work with IPANM! Through aggressive Governor could also use the golden sword to advocacy and always being at the table, cut off the head of the multi-headed Dragon IPANM can, and has been, effective on this and dissolve the EIB. The recent hearings issue and many others. It is my hope that clearly indicate that no member of the Board with the new administration, we will be able has the technical expertise needed to create to work in a positive way with new leader- a fair and balanced rule—effectively render- ship at NMED, OCD, and EMNRD. IPANM will ing the board a rubberstamp for the Depart- need the help of our newly elected Governor ment. The Board has also allowed its mem- and our Legislature to make the needed bers to become policy-makers on issues changes to achieve the happy ending we all where they clearly have conflicts of inter- need for the Land of Enchantment.  ests. Who our new Governor will appoint as Secretary of Energy and Minerals, OCD Direc- tor, and Secretary of the Environment will set the tone for the next four to eight years.

Legislative Voting Records

With the election just around the corner, this IPANM analysis of the legislative voting record is be- ing provided for your information and convenience. New Mexico House Votes

Environmental Issues To add a new section to the Natural Resources Trustee Act to substantially expand HB 27: Recovery of Damages to the authority of the trustee to litigate in state court. Suit could be brought on joint Natural Resources (Egolf) and several liability grounds for an expanded list of constituents. Bill killed in IPANM Vote: NO HENRC. Votes weighted 2x. HB 78: Environmental Board Cli- The bill would give the EIB authority to adopt rules prepared by WCI for allowances mate Change Policies (Madalena) and offsets and mandatory reporting by all sources with emissions greater than IPANM Vote: NO 10,000 mt CO2e; Governor priority bill. Votes weighted 2x. SB 145: Ownership of Pore Space The bill would define pore space as owned by the surface owner; allowed for sever- (Harden) ance of the pore space and transfer thereof for purposes of carbon sequestration; IPANM Vote: NO until Governor priority. Votes weighted 2x. amended, then YES on House vote

16 The Independent Third Quarter 2010

Legislative Voting Records for Your Information, Continued

Tax Issues

HB 119: Temporary Gross Receipts Raised the GRT and the Compensating Rate from 5% to 5.5% for a one year period; Tax Increase (Lujan, B) Governor priority. Bill killed on House Floor.  IPANM Vote: NO

Narrowed the definition of oil and gas proceeds to exclude amounts for expenses related to production or cessation of production; redefined pass-through entity; HB 120: Tax Withholding Changes sets de minimus amounts below which no withholding necessary; negotiated (Lujan, B) amendment to waive liability with certification of responsibility to pay withhold- / IPANM Vote: NO until ing out of state entities; Governor priority. Note: after the Session, this matter amended, YES in Senate has gone into rulemaking by the TRD. The negotiation on the amendment has not been included in the rulemaking. Votes weighted 2x.

Expands cap on Reclamation Fund to $5 million from $2.5M; additional proceeds HB 208: Oil and Gas Tax to Recla- of increase from .0019 to .0022 to be deposited into the fund. Purpose of addi- mation Fund (Heaton) tional monies was to start reclamation of expected Carlsbad sinkhole. IPANM ob-

jected on grounds that the legislation did not specifically direct the funds to  IPANM Vote: NO Carlsbad problem.

HB 282: Natural Gas Vehicles Tax Would allow for a 40% tax credit for conversion of vehicles to CNG in addition to Credit (Lujan, B) the tax credits available with the Federal government; allowed for a 50% tax  IPANM Vote: YES credit for conversion of gas stations.

Regulatory Issues

Created a taskforce to study the way state agencies, boards, and commissioners HB 237: Government Restructur- are using state resources; will also review laws including constitutional provisions, ing Taskforce (Varela) rules and court decisions governing state process; will recommend consolidation of agencies and reduction of programs, boards and commissioner with duplicative  IPANM Vote: YES missions; must make a report by 12/1/2010. This is the result of a multi-year process that IPANM has worked towards regulatory reforms.

HB 259: Private Actions to Enforce Allows private citizens to bring suits under the Oil and Gas Act; the Environmental Enviro Statutes (Lujan, B) Improvement Act, and the Water Quality Control Act; affects private settlements with agency, forcing public review; this provision in law exists for Waste Manage-  IPANM Vote: NO ment already. Votes weighted 2x.

HB 276: Air Quality Permit Denial (Bad Actor)(Egolf) Expanded NMED authority to deny or revoke permits based on out-of-state allega- tions of bad conduct. Votes weighted 2x.  IPANM Vote: NO

SB 186: Natural Heritage Conser- Allows for state funding of purchases of land, including conservation easements; vation Act (Cisneros) during the Special Session $5 million was set aside for this fund. Votes weighted  IPANM Vote: NO 2x.

17 Environment Tax Regulatory Percentages

2x 2x 2x 2x 2x 2x 2x 2x % 2010 House % Votes with Votes % Votes Voting Record Conservation HB HB SB HB HB HB HB HB HB HB SB with with ACI Voters 27 78 145 119 120 208 282 237 259 276 186 IPANM

Eliseo Lee Alcon n/a n/a * * * 1 1 1 * * a 27% 40% 67% Thomas Anderson n/a n/a 1 1 1 1 1 1 1 1 a 87% 100% 30% Janice Arnold- n/a n/a 1 1 1 a 1 1 1 1 * 73% 100% 50% Jones 1 1 1 1 1 * * 1 1 1 * 74% 100% 38% Elias Barela n/a n/a 1 1 * 1 1 1 a * * 47% 56% 82% Andrew Barreras n/a n/a 1 * * * 1 1 1 1 1 67% 67% 25% Ray Begaye n/a n/a 1 * * e 1 1 1 e a 60% 50% 25% Donald Bratton 1 1 1 1 1 1 1 1 1 1 1 100% 100% 23% Jose Campos n/a n/a 1 * e * e 1 e * * 30% 50% 78% Joseph Cervantes n/a n/a 1 1 * * 1 1 1 * * 40% 80% 70% n/a n/a 1 * * * 1 1 * * * 27% 40% 100% Eleanor Chavez n/a n/a 1 * * * 1 a * * * 20% 40% 100% Ernest H. Chaves n/a n/a a * * * 1 1 * a * 13% 38% 82% n/a n/a 1 1 1 1 1 1 1 1 1 100% 100% 20% Nathan Cote n/a n/a * * * * 1 1 * * * 13% 40% 100% Anna Marie Crook n/a n/a 1 1 1 1 1 1 1 1 1 100% 100% 27% * * * * * * 1 1 * * * 11% 40% 100% n/a n/a 1 1 1 1 1 1 1 1 1 100% 100% 27% 1 1 1 1 1 1 e 1 1 1 1 100% 100% 23% Mary Helen Garcia n/a n/a 1 * * * 1 1 1 * * 40% 70% 80% Miguel P. Garcia a a 1 * * * 1 a * * * 11% 25% 100% Thomas A. Garcia n/a n/a 1 * * * 1 1 * 1 * 40% 60% 58% Keith Gardner n/a n/a 1 1 1 1 1 1 1 1 * 87% 100% 42% Karen Giannini n/a n/a 1 e * * 1 1 * * * 29% 44% 100% n/a n/a 1 * 1 e 1 1 * * * 46% 40% 100% William Gray 1 1 1 1 1 * * 1 1 1 e 94% 100% 15% Joni Gutierrez n/a n/a * * * 1 1 1 * * * 27% 40% 100% Jimmie Hall n/a n/a 1 1 1 * 1 1 1 1 1 87% 100% 30% n/a n/a 1 1 1 a 1 1 1 1 1 87% 100% 27% John Heaton n/a n/a 1 1 * * 1 1 1 1 * 60% 80% 46% Dona Irwin n/a n/a 1 1 * * 1 1 1 e 1 69% 100% 25% Sandra Jeff n/a n/a 1 * e 1 1 1 1 1 1 85% 88% 33% Rhonda King n/a n/a 1 1 * * 1 1 1 * * 47% 80% 67% Dennis Kintigh n/a n/a 1 1 1 1 a 1 1 1 1 87% 100% 17% 18 Environment Tax Regulatory Percentages

2010 House 2x 2x 2x 2x 2x 2x 2x 2x % % Votes with Voting Record Votes % Votes Conservation HB HB SB HB HB HB HB HB HB HB SB with with ACI Voters 27 78 145 119 120 208 282 237 259 276 186 IPANM Larry Larranaga n/a n/a 1 1 1 1 1 1 1 1 1 100% 100% 30%

Antonio Lujan * * 1 * * * 1 1 * * * 21% 40% 100%

Ben Lujan n/a n/a 1 * * e 1 1 * * * 45% 40% 100%

Patricia Lundstrom n/a n/a 1 * * * 1 e * * a 21% 33% 78%

James Roger Mada- * * 1 * * a 1 1 * * * 21% 33% 92% lena

Antonio Maestas n/a n/a 1 * * * 1 1 * * * 27% 40% 100%

Rudy Martinez n/a n/a 1 * * * 1 1 * 1 * 40% 50% 82%

W. Ken Martinez n/a n/a 1 * * * 1 1 * * * 20% 33% 100%

Kathy McCoy n/a n/a 1 1 1 1 1 1 1 a a 73% 100% 20%

Rick Miera n/a n/a 1 * * * 1 1 * * * 20% 40% 100%

Andy Nunez 1 1 e 1 * e 1 1 1 1 e 85% 90% 17%

Bill O’Neill n/a n/a 1 * * * 1 1 * * * 20% 50% 100%

Al Park n/a n/a 1 1 * * 1 1 * * e 55% 70% 90%

Danice Picraux n/a n/a a e * * 1 1 * * * 15% 44% 100%

Jane Powdrell- n/a n/a 1 a 1 1 1 1 1 1 1 93% 100% 15% Culbert

Bill Rehm n/a n/a 1 1 1 * 1 1 1 * 1 73% 90% 50%

Dennis Roch n/a n/a 1 a e 1 1 1 1 1 1 92% 100% 30%

Benjamin Rodefer * * * 1 * * 1 e a * * 11% 43% 83%

Debbie Rodella n/a n/a 1 * * * 1 1 * 1 1 53% 60% 45%

Henry “Kiki” n/a n/a 1 * * e e 1 e e * 38% 50% 50% Saavedra

Nick Salazar e e 1 * * * 1 1 * 1 a 40% 50% 58%

Edward Sandoval n/a n/a 1 * * * 1 1 * * * 27% 40% 100%

Sheryl Stapleton- n/a n/a 1 * * * 1 1 * * * 27% 40% 88% Williams

Jeff Steinborn * * 1 1 1 * 1 1 * * * 37% 60% 100%

Mimi Stewart n/a n/a * * * 1 1 1 * * * 27% 40% 100%

James Strickler 1 1 1 1 1 1 1 1 1 1 1 100% 100% 23%

Thomas Taylor n/a n/a 1 1 1 1 1 1 1 1 1 100% 100% 25%

Jack Thomas n/a n/a 1 * * * 1 1 * 1 * 40% 50% 82%

19 Legislative Voting Records, Continued

Environment Tax Regulatory Percentages

2x 2x 2x 2x 2x 2x 2x 2x % 2010 House % Votes with Votes % Votes Voting Record Conservation HB HB SB HB HB HB HB HB HB HB SB with with ACI Voters 27 78 145 119 120 208 282 237 259 276 186 IPANM

Don Tripp n/a n/a 1 1 1 1 1 1 1 1 a 87% 100% 27% n/a n/a 1 * * * 1 1 * 1 * 40% 50% 78% Shirley Tyler n/a n/a 1 1 1 1 1 1 1 1 1 100% 100% 27% Luciano “Lucky” n/a n/a 1 * * * 1 1 * * * 27% 40% 100% Varela Gloria Vaughn n/a n/a 1 1 1 1 1 1 1 1 * 87% 100% 36% Richard Vigil n/a n/a 1 * * * 1 1 * * * 27% 40% 90% Jeannette Wallace n/a n/a 1 1 1 e 1 1 1 1 * 85% 100% 36% James White n/a n/a 1 1 1 1 1 1 1 1 1 100% 100% 27% Votes Bills voted on by the Senate other than listed above:

SB 90: Corporate Tax Reporting This bill has been introduced by the sponsor for 5 years now; requires unitary cor- porations to file a combined return as though one single legal entity; many ex- and Distribution (Wirth) emptions allowed for companies and industries other than oil and gas. Votes  IPANM Vote: NO weighted 2x.

SB 259: Net Taxable Income De- After Corporate Withholding bill was killed in committee, the sponsor attempted termination Changes (Wirth) to revive it with this bill; requires add-back of intangibles and interest costs; no additional revenues would be generated with this add back; reaction to Jeffery IPANM Vote: NO ToysRUs trademark case.

SB 310: Bad Actor (Nava) See discussion above on HB 276. Votes weighted 2x. IPANM Vote: NO

New Mexico Senate Votes Environment Tax Bills Regulatory % votes % % votes with votes 2010 Senate Voting with Conser- with Record SB HB HB SB SB HB IPANM vation ACI 145 SB186 120 208 90 259 237 SB 310 voters 2x 2x 2x 2x 2x

Rod Adair 1 1 1 1 n/a n/a 1 n/a 100% 86% 38%

Vernon Asbill 1 1 1 * n/a n/a 1 n/a 75% 86% 38%

Sue Wilson Beffort 1 1 1 1 n/a n/a 1 n/a 100% 86% 25%

Mark Boitano * 1 1 e 1 1 a 1 73% 75% 25% Pete Campos * * 1 * n/a n/a 1 n/a 38% 71% 100% Carlos Cisneros * * 1 * n/a n/a e n/a 29% 67% 100% 20 Environment Tax Bills Regulatory % votes % % votes with votes 2010 Senate Voting with Conser- with Record SB HB HB SB SB HB IPANM vation ACI 145 SB186 120 208 90 259 237 SB 310 voters 2x 2x 2x 2x 2x Kent Cravens 1 1 a 1 e 1 1 1 82% 86% 33% Dianna Duran 1 1 1 1 1 1 1 1 100% 83% 38% Tim Eichenbert 1 * 1 1 n/a n/a 1 n/a 87% 67% 88% Dede Feldman * * 1 * n/a n/a e n/a 29% 40% 100% Stephen Fischmann * e 1 * n/a n/a 1 n/a 43% 60% 100% Mary Jane Garcia * * 1 e n/a n/a 1 n/a 50% 67% 100% Eric Griego * * 1 * n/a n/a e n/a 29% 40% 100% Phil Griego * * 1 * 1 e 1 1 64% 67% 70% Clint Harden * 1 1 a n/a n/a 1 n/a 50% 86% 38% 1 1 1 1 n/a n/a 1 n/a 100% 83% 33% Timothy Jennings e 1 1 * n/a n/a 1 n/a 66% 86% 64% Tim Kellers * * 1 * * * e * 17% 60% 100% Gay Kernan 1 1 1 1 n/a n/a 1 n/a 100% 86% 38% Carroll Leavell 1 1 1 e n/a n/a 1 n/a 100% 86% 25% Linda Lopez * * 1 * n/a n/a 1 n/a 38% 67% 100% Lynda Lovejoy * * 1 * * * 1 * 23% 60% 100% Richard Martinez * * 1 e n/a n/a e n/a 40% 80% 80% Cisco McSorley * * 1 * n/a n/a 1 n/a 38% 67% 100% * * 1 * n/a n/a 1 n/a 38% 67% 100% George Munoz * * 1 1 1 1 1 1 77% 67% 63% Cynthia Nava * * 1 * n/a n/a e n/a 29% 67% 100% Steven Neville 1 1 1 1 n/a n/a 1 n/a 100% 83% 38% Gerald Ortiz y Pino * * 1 * n/a n/a 1 n/a 38% 50% 100% 1 * 1 1 n/a n/a 1 n/a 88% 67% 100% William Payne 1 1 1 1 n/a n/a 1 n/a 100% 83% 38% John Pinto * * 1 * n/a n/a 1 n/a 38% 71% 90% Nancy Rodriguez * * 1 * n/a n/a 1 n/a 38% 71% 100% Sander Rue 1 * 1 1 n/a n/a 1 n/a 88% 86% 63% John Ryan 1 * * 1 n/a n/a 1 n/a 63% 86% 50% Bernadette San- * * 1 e n/a n/a 1 n/a 50% 71% 50% chez Michael Sanchez * * 1 * n/a n/a 1 n/a 38% 57% 100% John Sapien 1 * 1 * 1 1 1 1 69% 71% 75% William Sharer 1 1 1 1 e 1 1 1 100% 86% 18% John Arthur Smith 1 * 1 1 n/a n/a 1 n/a 88% 67% 75% David Ulibarri * * 1 e 1 1 1 1 80% 86% 50% * * 1 * n/a n/a 1 n/a 38% 71% 100% 21 Independent Petroleum Association of New Mexico IP A

P.O. Box 1836 Roswell, NM 88202-1836

575/622-2566 www.ipanm.org

IPANM Board of Directors Officers Gary Brink, North VP Francisco Olvera, Treasurer Energen Resources John Thompson, President Ritter & Company, LLC Walsh Engineering Greg Nibert, South VP Bob Armstrong, Past-president Hinkle, Hensley, Shanor & Martin, LLP Armstrong Energy Corporation

Board Members John Alexander Randall Hudson Kyle Rhodes Dugan Production Corp. Hudson Oil Company of Texas Pesco Tom Blair Knute Lee Jr. Victoria Sanchez CBM Partners Corp. K.H.L., Inc. Devon Energy Corporation John Byrom Kevin Leonard Larry Scott D.J. Simmons, Inc. EnerVest, Ltd. Lynx Petroleum Consultants, Inc. Steve Dunn Kevin McCord Dwayne Taylor Merrion Oil & Gas Corporation Robert L. Bayless, Producer LLC Lucky Rental Tools Richard Gilliland Frank McCreight Paul Thompson Hunt Cimarron Limited Partnership BOPCO, L.P. Walsh Engineering Dan Girand Chuck Moran Larry Van Ryan Mack Energy Corporation Yates Petroleum Corporation McElvain Oil & Gas Tim Green Mark Murphy Frank Yates Nearburg Producing Company Strata Production Company Yates Petroleum Corporation Jeff Harvard Glen Papp Betty Young Harvard Petroleum Corp. Synergy Operating, LLC Read & Stevens, Inc.