Lander Peak Area Exploratory Proposal

Sublette County, Wyoming

True Oil LLC P.O. Drawer 2360 Casper, Wyoming 82602 Phone: (307) 237-9301

December 2011 Table of Contents

1.1 Introduction...... 1 1.2 History of the Field ...... 1 1.3 The Proposed Action...... 4 1.3.1 Development – Construction, Drilling, and Completion ...... 4 1.3.1.1 Construction...... 4 1.3.1.2 Drilling and Completion...... 5 1.3.2 Production – Operation and Maintenance...... 8 1.3.2.1 Surface Facilities ...... 8 1.3.2.2 Interim Reclamation...... 8 1.3.2.3 Workovers or Recompletion ...... 9 1.3.3 Abandonment and Reclamation...... 9 1.3.3.1 Well Plugging and Abandonment ...... 9 1.3.3.2 Final Reclamation ...... 9 1.3.4 Safety ...... 9

List of Tables

Table 1 Existing Well Pads, Wells, and Well Pad Disturbance in the Lander Peak Area...... 4 Table 2 Existing and Proposed Surface Disturbance for Well Pads ...... 4 Table 3 Surface Locations of Proposed Wells...... 5

List of Maps

Map 1 General Project Location ...... 2 Map 2 Detailed Project Location ...... 3

List of Attachments

Attachment A Master Surface Use Plan Attachment B 9-Point Drilling Plan

True Oil Exploratory Proposal – Lander Peak Area – December 2011 i Lander Peak Area Exploratory Proposal

1.1 INTRODUCTION

True Oil LLC (True) proposes to drill one exploratory well per pad on two well pads (one existing and one previously reclaimed) on National Forest System (NFS) lands on existing leases located about 22 miles northwest of Big Piney in Sublette County, Wyoming (see Map 1). The exploratory wells are proposed to evaluate production potential of the Hilliard Shale in the Lander Peak Area. The Lander Peak Area has been excluded from the acreage designated for withdrawal under the Wyoming Range Legacy Act of 2007. If the exploratory wells indicate there is economic potential for further development, True may apply with the Forest Service to conduct a seismic program to further evaluate the potential for economic development. The potential for full-field development would be dependent on the success of the two proposed wells and obtaining any required federal approvals. Following completion of the Forest Service’s NEPA document for this proposal, True would submit a unit proposal to the Wyoming Oil and Gas Conservation Commission (WOGCC) and the Bureau of Land Management (BLM) to establish the Lander Peak Unit. If unit approval is obtained, wells would then be numbered as part of the Lander Peak Unit.

This proposal describes the activities associated with completing the two exploratory wells located in the Lander Peak Area within Sections 15 and 27, Township 32 North, Range 115 West in Sublette County, Wyoming (see Map 2). The Master Surface Use Plan for the Lander Peak Area is included as Attachment A and the 9-Point Drilling Plan is included as Attachment B.

The proposal consists of constructing, drilling, completing, and operating two new exploratory wells on two well pads (one well on each pad); the two well pads will require expansion, one outside the existing footprint (42-27) and the other outside the former footprint (23-15 is reclaimed). The road to well pad 23-15 will be constructed and the pipeline will be installed because they have been removed. A lined, freshwater reservoir (up to 65,000 barrels) will be constructed adjacent to existing well pad 32-22 within a previously reclaimed area.

It is estimated that beginning in 2013 the exploratory wells will be drilled and completed over a 2- to 3-year period with one drilling rig.

The capacity of True’s existing gathering pipeline which delivers gas to the existing transmission pipeline is sufficient to transport anticipated gas volumes from the two proposed wells to markets.

1.2 HISTORY OF THE FIELD

In 1978 True drilled an exploration well in the Lander Peak Area, which was subsequently plugged and abandoned. Then in August 1981, True formed the Soda Unit which encompassed approximately 22,527 acres on NFS lands. True drilled four exploration wells on four pads between 1981 and 1987, three of which are currently produced when weather conditions allow, and one that has been plugged and abandoned. In February 1988, the Forest Service and the BLM prepared an Environmental Assessment to analyze the impacts from True’s activities and any proposed activities by True in the area. In August 2001, True drilled the Klaenhammer Federal 32-22 well. Currently, there are four wells on four pads, which produce from the Frontier Formation (see Table 1). Existing disturbance associated with the four pads with producing wells totals 9.22 acres. The area for the reclaimed pad (23-15) totals 1.88 acres. Resource roads, pipelines, and tank batteries located on the pads are associated with the producing wells.

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Legend MAP 1 Lander Peak Area Surface Ownership ± Lander Peak Area Forest Service General Project Location Bureau of Land Management True Oil LLC Private 0 2 4 6 8 Miles Sublette County, WY

True Oil Exploratory Proposal - Lander Peak Area - December 2011 2 Pad 23-15

Pad 32-22 (Reservoir)

Pad 42-27

Legend MAP 2 Existing Pad/Proposed Expansion Lander Peak Area ± Lander Peak Area Detailed Project Location True Oil LLC 0 3,000 6,000 Feet Sublette County, WY

True Oil Exploratory Proposal - Lander Peak Area - December 2011 3 Table 1 Existing Well Pads, Wells, and Well Pad Disturbance in the Lander Peak Area Pad Name Depth Section and Size Well Name Spud (feet) Status Lease No. 13-16 Bear Creek Unit P&A 1 16 10/12/1980 4,582 13-16a 13-16 11/25/80 WYW16419 (NWSW) 1.74 acres Soda Unit 13-16A 10/16/1983 14,298 Prod. 23-15 15 P&A 1.88 acres Soda Unit 23-15 10/07/1981 11,847 WYW16419 (NESW) 8/31/95 (reclaimed) 22 32-22 Klaenhammer Fed 8/22/2001 12,175 Prod. 2 WYW16420-A (SWNE) 3.83 acres 32-22 22 33-22 Soda Unit 33-22 7/24/1985 11,994 Prod. WYW16420-A (NWSE) 2.16 acres 27 42-27 Soda Unit 42-27 7/17/1987 11,573 Prod. WYW16420 (SENE) 1.49 acres 1 P&A=plugged and abandoned. 2 Prod=producing.

1.3 THE PROPOSED ACTION

1.3.1 Development – Construction, Drilling, and Completion 1.3.1.1 Construction Proposed Well Pads

All drilling associated with the two exploratory wells will occur on two well pads, previously reclaimed well pad 23-15 and existing well pad 42-27. A 65,000-barrel, lined freshwater reservoir will be constructed within a reclaimed area adjacent to existing well pad 32-22, requiring 1.60 acres of disturbance (see Table 2). Well pads 23-15 and 42-27 will require disturbance to accommodate drilling and completion of the two wells; however, once the well pads have been fully developed, interim reclamation will occur, leaving the smallest possible area disturbed. The size of each drilling pad will be almost 3 acres (see Table 2). A small pipeline, most of which will be installed within the footprint of the pad, will be required for well pad 23-15. The road to well pad 23-15, which currently exists as a two-track used by hunters, will be upgraded to Gold Book standards. Estimates of new disturbance are provided in Table 2.

Table 2 Existing and Proposed Surface Disturbance for Well Pads Associated with the Proposed Action Additional Road and Additional Pad Total Pad Pipeline Existing Existing Pad Disturbance Disturbance Disturbance Pad Disturbance (acres) (acres) (acres)

23-15 0.00 1 2.89 1 2.89 2 0.18

32-22 3 3.83 1.60 5.43 0.00 42-27 1.49 1.21 2.70 2 0.00 1 The previously disturbed 1.88 acres have been reclaimed and will be re-disturbed. 2 Following interim reclamation the pads (23-15 and 42-27) will be reclaimed to approximately 2.50 acres. 3 A 65,000-barrel, lined freshwater reservoir will be constructed adjacent to the 32-22 well pad within a previously reclaimed area.

True Oil Exploratory Proposal – Lander Peak Area – December 2011 4 For all construction, True will apply for coverage under the General Permit to Discharge Stormwater Associated with Large Construction Activity under the Wyoming Pollutant Discharge Elimination System (WYPDES). True will prepare a Stormwater Pollution Prevention Plan (SWPPP) in compliance with the terms of this permit. Best Management Practices (BMPs), as required by the permit and the SWPPP, will be in place before, during, and after construction until the location has reached final stabilization. All other requirements of the permit will be followed such as inspection and reporting requirements.

Proposed Wells

True proposes to drill one well each on two well pads. The locations are provided in Table 3.

Table 3 Surface Locations of Proposed Wells in the Lander Peak Area (LPA) Surface Location Proposed Well Well Pad Lease T R Q S Klaenhammer 23-15H 23-15 WYW16419 32N 115W NESW 15 (LPU 23-15-H-1) 1 Klaenhammer 42-27H 42-27 WYW16420 32N 115W SENE 27 (LPU 42-27-H-1) 1 1 The Klaenhammer well names are associated with submitted APDs. The names will be changed to the LPA designations.

Proposed Access Roads and Pipelines

Access roads and pipelines are existing; however, the two-track road at the reclaimed well pad (23-15) will require upgrading and a short (200-foot) pipeline will be required to tie-in the location to the existing gathering pipeline. The pipeline will be buried to a minimum depth of four feet from surface to top of pipe. The pipeline trench will be excavated mechanically; pipe will then be placed into the trench, tested, and covered with excavated material.

All road work will comply with the Gold Book Standards for roads (BLM and Forest Service, 2007) as well as FP-03 Standard Specifications for Roads and Bridges. Roads will be constructed to meet standards for the anticipated traffic flow and all-weather requirements. Bulldozers, track hoes, and/or graders will first clear vegetation and topsoil. The road will then be constructed using standard equipment and techniques approved by the Forest Service.

The short pipeline will be pressure tested with fresh water to locate leaks. The water will be obtained from the Mickelson/True Water Well, located in the SE ¼ of the NW ¼ of Section 21, T. 33 N., R. 114 W. (Permit No. UW-137023) and trucked to the testing location. It is estimated that approximately 200 gallons (or 4-5 barrels) of water (1 truck) will be required for testing the 200-foot section of pipeline from the 23-15 well pad. After testing, the water will be trucked to an approved disposal facility. 1.3.1.2 Drilling and Completion Drilling. It is likely that the two proposed wells will be drilled and completed over a 2- to 3-year period with one drilling rig. Drilling operations will be conducted on a 24-hour, 7-day per week basis; therefore, night-lighting will be necessary and will be Forest Service-approved. Production results from the first two wells will help determine if a seismic program should be applied for and if there is potential for full-field development.

True Oil Exploratory Proposal – Lander Peak Area – December 2011 5 Drilling operations will be conducted in compliance with all Federal Oil and Gas Onshore Orders, as well as all other applicable rules and regulations. Drilling will target gas producing zones in the Hilliard Formation at approximately 7,400 feet true vertical depth (TVD). It is anticipated each well will contain a horizontal leg.

Surface casing will be run to a minimum depth of 10 percent of TVD and/or 50 feet below freshwater aquifers within one mile. The surface hole will be cased with steel casing and cemented in place entirely from the surface casing setting depth as determined in the individual APD (application for permit to drill) up to surface. Prior to drilling below the surface casing, a Blowout Preventer (BOP) will be installed on the surface casing and both the BOP and the surface casing will be tested for pressure integrity. The BOP and related equipment will meet the minimum requirements of Onshore Oil and Gas Order No. 2, and the BLM will be notified in advance of all pressure tests.

An 8 3/4" pilot hole will be drilled from the base of surface casing to top of the Hilliard shale core point at ±7,300 ft measured depth (MD). This portion of the hole will be directionally controlled. The Hilliard shale will be cored from 7,300 to 7,420 ft MD and the remaining 8 3/4” pilot hole will be drilled to TD (total depth) at ±7,600 ft MD. The 8 3/4” pilot hole will be logged with a Quad Combo from the pilot hole TD to the base of surface casing. A Gamma Ray log will also be run all the way up to surface. Once the evaluation of the pilot hole is completed, it will be plugged back with cement and a kick-off plug (KOP) will be set across the kick-off point at approximately 6,667 ft MD. The well will be kicked off by directionally drilling an 8 3/4” hole building a curve up to 90 degrees to intercept the Hilliard shale in the sweet spot at ±7,700 ft MD. The 7" 26# LT&C intermediate casing will be set to the end of curve at ±7,700 ft MD. The 7” casing will be cemented from the setting depth of ±7,700 ft MD to above the KOP at ±5,000 ft MD.

Once the 7” intermediate casing is set and cemented, the 6 1/8” lateral will be directionally drilled in the Hilliard shale to the bottom hole location (BHL) target with a 50-foot tolerance. Specific directional plans for each well will be included with the individual APDs. The lateral will be drilled using logging while drilling (LWD). A mud logger will also be used while drilling the lateral. The lateral hole will be prepped for the liner by reaming the hole to TD and circulating and conditioning the hole clean. If further evaluation of the Hilliard shale is needed, the 6 1/8” hole will be logged through drill pipe. If evaluation of the Hilliard shale indicates adequate hydrocarbon resources are present and recoverable, a steel production casing liner will be run in the well.

The 4 1/2” 13.5# P-110 production liner will be run with a liner hanger and packer and set on drill pipe from ±200 ft inside the 7” casing at ±7,500 ft MD to the total depth of the well. Frac port subs and swell packers will be run on the liner at predetermined intervals along the liner to provide isolation for a multi-stage frac treatment. All casing will be installed in accordance with the well design as approved by the BLM and any applicable Conditions of Approval (COAs). The proposed casing and cementing program will be designed to protect and/or isolate all usable water zones, potentially productive zones, lost circulation zones, abnormally pressured zones, and any prospectively valuable deposits of minerals. It is estimated that a well will take approximately 54 days to drill. For more thorough drilling details please refer to the 9 Point Drilling Plan (Attachment B).

Water for the drilling operations will be obtained from the Mickelson/True Water Well (Permit No. UW-137023). Water will be trucked or pumped to location; if pumped, a temporary line will be laid on the surface in borrow ditches of existing roads or within approved temporary rights-of- way. If a temporary water line is used, it will be inspected visually for leaks on a daily basis. A closed drilling fluid system will be used, negating the need for a reserve pit. This will minimize the volume of water required for drilling. The initial drilling fluid system requirement will be

True Oil Exploratory Proposal – Lander Peak Area – December 2011 6 approximately 1,600 barrels (bbls), increasing to 2,600 bbls as the well is drilled. Solids will be separated from the drilling fluid returns from the well, and the entire liquid volume will be re-used in the circulating system. Because the drill cuttings (the solids) will be dried after separation, no water or liquid phase will be discarded on location. There are two options to handle the dried drill cuttings. The dried drill cuttings could be piled with spoil dirt, mixed with the spoil dirt during final reclamation, and covered with topsoil. The other option would be to place the dried drill cuttings in an approved cuttings pit on location and bury it when the drilling operations are completed. The pits (one on each well pad) would be approximately 30x30x10 feet and the cuttings would be hauled to the pit(s) using a loader.

Rig wash and other miscellaneous water used on location will be collected and re-directed into the water storage tank for re-use in the drilling fluid. At the end of the drilling operation, the remaining surface volume will be trucked to tankage on the next drilling site for re-use or trucked to disposal.

Completion. Once the drilling rig has been moved off of location, the location will be bladed flat and graveled as necessary. Anchors will be set. Approximately six 500-barrel frac tanks will be set. A 65,000-barrel, lined freshwater reservoir (160x160x15 feet) will be built adjacent to the Klaenhammer 32-22 pad (within a previously reclaimed area) which is central to well pads 23-15 and 42-27. The reservoir will be fenced and will be used throughout drilling and completion of the two wells. The tanks and reservoir will be filled with fresh water for the frac treatment. Water will be pumped and/or trucked from the Mickelson/True Water Well to fill the tanks and the freshwater reservoir. Up to 65,000 bbl of water per well may be used. The number of truck trips required to transport water will depend on the capability of the pumping facilities, therefore, up to 250 truck trips per well may be required.

The frac treatment involves stimulating the formation to enhance the production of oil and gas. The typical method used for stimulation consists of a hydraulic fracture treatment in which sand and non-toxic fluids are pumped into the producing formation with sufficient pressure to fracture the rock formation. The sand serves as proppant to keep the created fracture propped open, thereby allowing reservoir fluids to move more efficiently into the well bore.

The frac will be scheduled no sooner than 2 weeks after the liner is run to allow enough time for the swell packers to swell and seal. A frac crew will move in and rig up on the well. A multi- stage frac treatment utilizing up to 65,000 bbls of water, 480,000 lbs 100 mesh sand, 2,080,000 lbs 30/50 mesh sand, and 320,000 lbs 20/40 resin coated sand will be pumped into the lateral section in the Hilliard shale. Temporary water lines will be utilized to move water for this operation from the reservoir on well pad 32-22 and will be placed in borrow pits and/or on approved surface rights-of-ways. Once the frac treatment pumping operation is completed, the frac equipment will be rigged down and moved off location.

The well will be flowed back into tanks to allow the well to unload frac load fluid. Once the initial flowback is completed, a service rig will be moved onto the location and rigged up. Pipe racks and a catwalk will be set up and a rental string of high strength tubing will be unloaded and racked. A 3 7/8” bit and the high strength tubing will be run in the well and the frac port subs will be drilled out inside the 4 1/2” liner and the liner will be cleaned out. The high strength rental tubing will be pulled and laid down. The production tubing will be run in the hole and the well will be swab tested or flow tested to determine the size and type of production equipment needed. The service rig will be rigged down and moved off location. It is estimated to take approximately 20 days to complete each well.

Once the well is completed, the well will be opened up to flow through a test separator while recording the amount of load water recovered as well as any oil, gas and formation water. All

True Oil Exploratory Proposal – Lander Peak Area – December 2011 7 wells will be completed using “green completions.” The volume of frac load water recovered after the frac treatment will not be known in advance. Typically, for this type of formation, up to 30 percent of the frac water may be recovered. The water will be hauled to an approved disposal facility.

The pumping equipment will be installed if needed and the production equipment and flow lines will be installed. The well will then be placed on production. 1.3.2 Production – Operation and Maintenance 1.3.2.1 Surface Facilities Surface facilities at each well pad will consist of wellheads, production units, heater/treaters, meters, dehydration units, and aboveground produced oil and water storage tanks. It is estimated that each pad will have up to four 400-barrel tanks. Production equipment will be shared to the greatest extent possible. All production equipment will be painted to match the surrounding terrain and placed on location to reasonably minimize visual impact. Colors will be Forest Service approved.

Oil from the storage tanks will be trucked off site for sale. Should water be encountered during production, it will be hauled to an approved disposal facility.

A pumper will visit the well pads on a daily basis utilizing a pickup truck, snowcat, snowmobile or 4-wheeler depending on road and weather conditions.

Tank batteries will be placed within secondary containment to prevent offsite migration of accidentally spilled produced water. Manmade dikes or earthen dikes constructed from native soil will be maintained at each well pad and will provide secondary containment for 110% of the volume of the single largest tank in the diked area with sufficient free board to contain anticipated precipitation. Heater/treaters will be located within a metal building that is surrounded by an earthen dike or a manmade dike. Glycol storage tanks will have adequate secondary containment. All loading lines will be placed inside the containment berm. True will continue to follow the Spill Prevention Control & Countermeasure (SPCC) Plans that have been prepared for each well pad.

Access roads will be maintained as necessary to prevent soil erosion. 1.3.2.2 Interim Reclamation After completion activities for the two wells, True will reduce the size of the well pads (23-15 and 42-27) to 2.50 acres. Any areas unnecessary for operation will be reshaped to blend with natural topography to the extent possible. Interim reclamation will be accomplished by grading, leveling, spreading topsoil, and seeding, as recommended by the Forest Service. Interim reclamation will reduce the disturbed area at each pad to a pad size that will allow production operations to continue in a safe environment. If interim re-vegetation is unsuccessful, additional prep and reseeding will be completed annually until standards are met. Requirements for reseeding of unsuccessful temporary seeding will be considered on a case-by-case basis.

Interim reclamation work will include: • Removing all debris, materials, and trash unnecessary to production operations. • Reshaping of all areas unnecessary to operation to blend with natural topography to the extent possible. • Reseeding with seed mixes and techniques specified by the Forest Service.

True Oil Exploratory Proposal – Lander Peak Area – December 2011 8 If the wells are not successful, the pads will be reclaimed (regraded and reseeded) to pre- exploratory construction contours as quickly as possible, leaving the well pad equipment and disturbance in place that was present prior to the exploratory activities. The freshwater reservoir will also be reclaimed to pre-exploratory construction conditions if the wells are not successful. 1.3.2.3 Workovers or Recompletion Periodically, the workover or recompletion of a well may be required to ensure that efficient production is maintained. Workovers can include repairs to the well bore equipment (casing, tubing, rods, or pump), the wellhead, or the production facilities. These repairs will usually be completed during daylight hours. The frequency of this type of work cannot be accurately projected because workovers vary from well to well. 1.3.3 Abandonment and Reclamation 1.3.3.1 Well Plugging and Abandonment Dry/non-producing wells will be plugged and abandoned. A Sundry Notice will be submitted to the BLM that describes the engineering, technical, and/or environmental aspects of final plugging and abandonment. This notice will describe final reclamation procedures and any mitigation measures associated with the final reclamation. The BLM and the WOGCC standards for plugging will be followed. A configuration diagram, a summary of plugging procedures, and a job summary with techniques used to plug the wellbore (e.g., cementation) will be included in the Sundry Notice. 1.3.3.2 Final Reclamation When the last well on an existing pad is abandoned, reclamation is considered to be final. Final reclamation work will include:

• All equipment, facilities and trash will be removed from the location. • Each borehole will be plugged, capped and its related surface equipment removed. • Subsurface pipelines will be purged and capped at specific intervals. • After the well is plugged and abandoned, the site will be reclaimed as soon as possible, weather permitting. Earthwork and seeding will be completed within one year from the date of plugging and abandonment, weather permitting. 1.3.4 Safety True will submit both the Drilling Contractor’s safety plan as well as True’s safety plan to the Forest Service for approval. The safety plans will be implemented to protect employees, contractors, and the public during development operations, maintenance, and reclamation activities.

True Oil Exploratory Proposal – Lander Peak Area – December 2011 9

Attachment A

Lander Peak Area Master Surface Use Plan

True Oil Exploratory Proposal – Lander Peak Area – December 2011 Lander Peak Area Master Surface Use Plan

Sublette County, Wyoming

Attached hereto and made a part of that certain Lander Peak Area Exploratory Proposal by and between the U.S. Forest Service and True Oil LLC.

True Oil LLC P.O. Drawer 2360 Casper, Wyoming 82602 Phone: (307) 237-9301

December 2011 Lander Peak Area Master Surface Use Plan

Introduction True Oil LLC (True) proposes to drill one exploratory well per pad on two well pads (one existing and one previously reclaimed) on National Forest System (NFS) lands on existing leases located about 22 miles northwest of Big Piney in Sublette County, Wyoming. The exploratory wells are proposed to evaluate production potential in the Lander Peak Area. If the exploratory wells indicate there is economic potential for further development, True may apply with the Forest Service to conduct a seismic program to further evaluate the potential for economic development. The potential for full-field development would be dependent on the success of the two proposed wells and obtaining any required federal approvals. The surface lands are administered by the United States Forest Service (Forest Service) and the mineral estate is administered by the Bureau of Land Management (BLM). The proposed operations will comply with federal Onshore Orders Numbers 1, 2, 6, and 7.

The proposal consists of constructing, drilling, completing, and operating two new exploratory wells on two well pads. One well pad (23-15) has been reclaimed and will require re- disturbance and the other well pad (42-27) is existing and will require expansion. The road to well pad 23-15 will be improved to Forest Service and Gold Book standards and a short pipeline will be installed connecting to the existing gathering pipeline. A lined, freshwater reservoir (up to 65,000 barrels) will be constructed adjacent to existing well pad 32-22 within a previously reclaimed area.

It is estimated that the exploratory wells would be drilled and completed over a 2- to 3-year period with one drilling rig beginning in 2013.

Topographic maps identifying the general location of the proposed development and the existing well pads (to be expanded) are provided as Maps 1 and 2 in Exhibit A. Maps 3, 4, and 5 in Exhibit A provide aerials of the three well pads with proposed surface disturbance. Exhibit B provides a list of the proposed wells covered by this Master Surface Use Plan (MSUP).

Well Site Locations

Drilling the exploratory wells will determine whether economic quantities of natural gas and oil exist and can be produced in the Lander Peak Area. The targeted formation will be the Hilliard Shale. Production results from the wells would determine if a seismic program should be applied for and if there is potential for full-field development.

If drilling results in an unproductive well, the well will be plugged and abandoned as soon as practical after the conclusion of production testing. Productive wells may be shut-in temporarily for gas and/or oil pipeline construction or for authorization from the Forest Service for production activities and facilities.

True Oil Master Surface Use Plan – Lander Peak Area – December 2011 1 Master Surface Use Plan

1. Existing Roads

A. The Lander Peak Area is accessed by exiting U.S. Highway 189 at a point approximately 12 miles north of Big Piney, Wyoming, on Sublette County Road 23-117. This road is followed for 17 miles to an intersection known as Ryegrass Junction. At this point, the route proceeds west along the McDougal Gap public road for 9.6 miles to the BLM boundary. From there, the route goes south for 1.75 miles to a junction with Forest Development Road (FDR) #10046 which forks with FDR #10050.

B. Existing roads will be maintained in as good or better condition as they exist prior to commencement of operations. All equipment and vehicles will be confined to these travel corridors and other areas specified in the Exploratory Proposal. Roads will be regularly maintained to allow pumper access to the well sites. If/when roads become rutted or impassable, they will be bladed and graveled according to Forest Service and Gold Book standards. Maintenance of the access roads will continue until abandonment and reclamation of the wells is completed.

2. New or Reconstructed Access Roads

A. No new access roads are required; however, one previously reclaimed road will be reconstructed to a total width of 30 feet which includes the running surface and ditches. The roads will be crowned, ditched, and graveled and will meet the Gold Book Standards and FP-03 Standard Specifications for Roads and Bridges.

B. After well completion, travel to the wells could consist of one light-vehicle trip per day. Well service trips could be rescheduled or postponed during periods of wet weather when vehicle travel could cause rutting. Depending on well production, winter access may be necessary; True would use snowmobiles and/or cats to access the site. True would not plow roads to access the site unless an emergency situation required plowing.

C. All equipment and vehicles will be confined to the travel corridors and other areas specified in the Exploratory Proposal.

D. Where necessary, dust will be controlled on the roads during construction, drilling, and production. During the dry part of the year, it is estimated that a maximum of two trucks per day would be required for dust abatement.

E. Vehicles (all types) will be limited to 35 mph on Forest Service roads.

F. True anticipates the following transportation requirements:

i. Construction will require 3-4 light vehicles and 3-4 large tractor-trailers to deliver equipment. The large vehicles will deliver equipment to the sites and then return to remove the equipment.

True Oil Master Surface Use Plan – Lander Peak Area – December 2011 2 ii. Drilling and completion may require multiple tractor-trailers to deliver equipment (rig) and supplies (casing, pipe, etc.), flatbeds, lowboys, fuel trucks, water trucks, as well as light vehicles. iii. Production may require 1 trip by pumper per day. iv. Reclamation activities will require 2-3 light vehicles and 2-3 tractor-trailers to deliver equipment. The large vehicles will be parked on-site until reclamation activities are completed and then will transport the equipment off-site.

3. Location of Existing Wells

All existing wells are located on existing pads shown on Map 2 in Exhibit A.

4. Location of Existing and/or Proposed Production Facilities

A. Map 2 in Exhibit A shows the location of existing pads and roads as well as the existing gathering pipeline.

B. The 2 proposed wells (see Map 2 in Exhibit A) will be located on an existing pad (42-27) and a previously reclaimed pad (23-15); each pad will be expanded to almost 3 acres. A portion of the well pad area (approximately 0.5 acre) will be reclaimed and reseeded after drilling and completion operations are completed. All areas will be reclaimed and reseeded after operations are completed.

C. Exhibit C provides figures of the proposed production facility layout configurations for well pads 23-15 and 42-27.

D. Facilities during production operations will consist of wellheads, production units, heater/treaters, meters, dehydration units, and aboveground produced oil and water storage tanks. It is estimated that each pad will have up to four 400-barrel tanks. Production equipment will be shared to the greatest extent possible. All production equipment will be painted to match the surrounding terrain and located to reasonably minimize visual impact. Colors will be Forest Service approved.

E. After a reasonable level of development, telemetry equipment would be used to remotely monitor well conditions.

F. Tank batteries will be placed within secondary containment to prevent offsite migration of accidentally spilled produced water. Manmade dikes or earthen dikes constructed from native soil will be maintained at each well pad and will provide secondary containment for 110% of the volume of the single largest tank in the diked area with sufficient free board to contain anticipated precipitation. Heater/treaters will be located within a metal building that is surrounded by an earthen or a manmade dike. Glycol storage tanks will have adequate secondary containment. All loading lines will be placed inside the containment berm.

True Oil Master Surface Use Plan – Lander Peak Area – December 2011 3 5. Location and Types of Water Supply

Water for drilling activities and well completion will be obtained from the Mickelson True Water Well (Permit No. UW-137023) and trucked or piped to the 65,000-barrel, lined freshwater reservoir, which will be constructed within a reclaimed area adjacent to existing well pad 32-22, which is centrally located between well pads 23-15 and 42-27.

Water for hydrotesting the 200-foot section of pipe from the 23-15 well pad will also be obtained from the Mickelson true Water Well. It is estimated that approximately 200 gallons of water (1 truck) would be required. After testing, the water will be trucked to an approved disposal facility.

6. Construction Materials

A. No construction materials will be needed for drilling. There are no plans to use any federally-owned material; if necessary, the required approvals would be obtained prior to use. Construction and drilling activity will not be conducted using frozen or saturated soil material or during periods when watershed damage or excessive rutting is likely to occur.

B. All trees in areas proposed for disturbance will be disposed of by one of the following methods:

1. The Forest Service shall mark all trees in the access routes and pad locations before any trees are cut. Merchantable trees shall be purchased at the appropriate stumpage fees. Trees shall be cut with a maximum stump height of six inches (6”) and cut to 4-foot lengths and stacked off location. Trees will not be dozed off the location or access road, except on private surface where trees may be dozed. Trees may also be dozed on pipeline routes and then pulled back onto the right-of- way as part of final reclamation.

2. Limbs may be scattered off location, access road, or along the pipeline, but not dozed off. Limbs shall be piled for burning by the Forest Service. Piles shall be small enough and located in an area safe to burn and not adjacent to any other trees or facilities.

3. Rootballs shall be buried or placed off location, access road, or pipeline route to be scattered back over the disturbed area as part of the final reclamation.

7. Methods for Handling Waste

A. All wastes that accumulate during the drilling operations will be contained in a trash cage that is fenced and completely enclosed with a fine wire mesh and will be removed from the location and deposited in an approved sanitary land fill. Immediately after removal of the drilling rig, all garbage and debris on the site will be removed from the site. Pits will not be utilized for trash disposal. All state laws and regulations pertaining to containment and disposal of human waste will be complied with.

True Oil Master Surface Use Plan – Lander Peak Area – December 2011 4 B. True and its contractors will ensure that all use, production, storage, transport, and disposal of hazardous and extremely hazardous materials associated with the drilling, completion, and production of wells, and project operations will be in accordance with all applicable existing or hereafter promulgated federal, state, and local government rules, regulations, and guidelines.

C. True intends to use a closed mud system, which would eliminate the need for a reserve pit. However, the need for a dry cuttings pit on location will be necessary for the storage of dry drill cuttings. The cuttings pit will be lined and fenced “stock tight” for the protection of livestock and wildlife.

D. Hazardous Materials Management:

1. Project-related activities involving hazardous materials will be conducted in a manner that minimizes potential environmental impacts. A file will be maintained containing current Material Safety Data Sheets (MSDS) for all chemicals, compounds, and/or substances that are used in the course of construction, drilling, completion, production and reclamation operations.

2. Hazardous substances, as defined by the Comprehensive Environmental Response Compensation Liability Act (CERCLA), will not be used in the construction or drilling operations associated with these wells. Commercial preparations, which may contain hazardous substances, may be used in production operations and will be transported within the Project Area. Any materials containing hazardous substances will be handled in an appropriate manner to minimize the potential for leaks and spills to the environment. Resource Conservation and Recycling Act (RCRA) hazardous wastes will not be generated by well-drilling operations. Only RCRA-exempt working pit contents (i.e., cuttings) may be buried onsite.

3. Spills of oil, gas, or any other potentially hazardous substance will be reported immediately to the Forest Service and other responsible parties. Spills will be mitigated immediately; appropriate measures for cleanup implemented; and spilled material removed to an approved disposal site.

4. Petroleum products will be stored at least 150 feet from riparian areas on impermeable surfaces within secondary containment capable of containing 110% of the volume of petroleum products being stored.

8. Ancillary Facilities

Up to seven trailers will be on site during drilling and completion. Trailers or other facilities will be removed from the site upon completion of drilling and completion operations.

9. Well Site Layout

A. Each APD will have figures attached showing the well pad and pad orientation with cuts and fills and a Master Drilling Plan. Figures showing the layout configurations for 23-15 and 42-27 are attached to this plan as Exhibit C. Well

True Oil Master Surface Use Plan – Lander Peak Area – December 2011 5 pads will be expanded to almost 3 acres (see Table 2 in Exploratory Proposal) and will include an earthen berm and/or manmade dike.

B. If additional grading occurs, the top 6 inches of soil material will be removed from the location, including areas of cuts, fill, and subsoil storage areas, and will be stockpiled at the site. If ground frost prevents the segregation and removal of the topsoil material from the less desirable subsoil material, cross-ripping to the depth of the topsoil material will be completed as necessary.

C. Soil will not be allowed to enter drainages and will be stored such that it can be replaced.

D. The freshwater reservoir will be fenced “stock tight” on all sides.

E. The freshwater reservoir will be constructed to prevent collection of surface runoff and pads will be constructed to prevent water from draining across the pads.

F. Prior to surface disturbance, any required cultural surveys will be completed and submitted to the appropriate agencies.

10. Plans for Surface Reclamation

A. Reclamation procedures for disturbed areas:

1. Rat and mouse holes, if present, will be filled immediately upon release of the drilling rig from the location.

2. All garbage, trash, and debris will be removed and disposed of as provided in Section 7, above.

3. Restoration work, including seeding, will be completed within 1 year of completion of the operation. Areas not needed for production will be recontoured and the topsoil will be replaced and seeded with the seed mixture(s) provided by the Forest Service. Approval of reseeded areas shall be approved by the Forest Service once vegetation has become established. Areas not showing adequate revegetation shall be seeded and fertilized again.

4. Invasive species will be surveyed for and treated, where necessary, as approved by the Forest Service, for 3 to 5 years after final reclamation along pipelines and roads and around pads used during production activities.

5. The freshwater reservoir will be closed 90 days after completion of unit operations or when the reservoir has dried out sufficiently to permit reclamation, but in no case longer than 1 year after completion of unit operations without an extension approved by the Forest Service.

True Oil Master Surface Use Plan – Lander Peak Area – December 2011 6

B. Reclamation procedures for wells completed as dry holes:

1. A Notice of Intent to Abandon and Subsequent Report of Abandonment will be submitted to the Forest Service for approval. A Final Abandonment Notice will be submitted when the restoration is complete and the area is revegetated.

2. An aboveground tubular metal dry-hole marker will be installed over the drill-hole location upon plugging and abandonment operations. The marker will be inscribed with the operator’s name, well number, well location (quarter-quarter, section, township, range) and federal lease number. This monument will consist of a piece of pipe not less than 4 inches in diameter and 10 feet in length, of which 4 feet shall be above the general ground level and the remainder being imbedded in cement. Upon request of the Forest Service, the casing may be cut off 3 feet below reclaimed ground surface (or below plow depth) with a metal plate affixed to the top providing the same well information as stated above.

3. All disturbed areas will be restored as reasonably as possible to blend with the surrounding terrain. Topsoil will be replaced and reseeded pursuant to Forest Service protocol.

C. Reclamation procedures for wells completed as producing wells:

1. All disturbed areas not required for production will be recontoured to resemble surrounding terrain. No depressions will remain that trap water or form ponds.

2. The backslope and foreslope will be reduced to 2:1 by pulling fill material up from the foreslope and placing it into the toe of cut slopes.

3. If/where necessary, water bars at least 1 foot deep will be constructed on the contour with approximately 2 feet of drop per 100 feet of water bar to ensure drainage and will be extended into established vegetation. All water bars will be constructed with a berm on the downhill side to prevent the soft material from silting in the trench. Water bar spacing on the location will be midway between the top and bottom of the backslope and midway between the top and bottom of the foreslope.

4. Topsoil will be replaced and reseeded, as recommended by the Forest Service, over those areas not required for production.

5. Only Forest Service-approved seed mixtures will be utilized.

D. Final reclamation:

1. All equipment, facilities, and trash shall be removed from the location.

2. Each borehole shall be plugged, capped, and its related surface equipment removed.

True Oil Master Surface Use Plan – Lander Peak Area – December 2011 7

3. Subsurface pipelines shall be purged and plugged at specific intervals.

4. After the well is plugged and abandoned, the site shall be reclaimed as soon as possible. Earthwork and seeding must be completed within 1 year from the date of plugging and abandonment, weather permitting.

11. Surface Ownership

The surface in the Lander Peak Area is under the administrative jurisdiction of the Forest Service.

12. Other Information

A. A survey of the proposed access road, short pipeline, and well pad locations either has been or will be completed by a registered professional land surveyor.

B. Cultural surveys of all areas to be disturbed will be or have been completed by a Forest Service-approved archeologist and reports filed with the regulating agencies.

13. Lessee or Operator’s Certification

True Oil LLC hereby certifies that said company is authorized to conduct operations on the above-described land under the terms and conditions of Federal Oil and Gas Leases WYW- 16419, WYW-16420, and WYW-16420A. Bond coverage, as required by 43 CFR 3104 is provided by True Oil LLC. The applicable bond number is WY-3020, a statewide oil and gas lease bond in the amount of $25,000.00.

I hereby certify that I, or persons under my direct supervision, have inspected the area and are familiar with the general area of the proposed drill site locations and access roads; that I am familiar with the conditions which presently exist; that the statements made in this plan are, to the best of my knowledge, true and correct and that the work associated with the operations proposed herein will be performed by True Oil LLC, its agents, contractors, and subcontractors in conformity with the plan and the terms and conditions under which it is approved.

True Oil LLC

Name: ______Thomas J. Walker Date Attorney-In-Fact

True Oil Master Surface Use Plan – Lander Peak Area – December 2011 8

Exhibit A

Maps 1 through 5

Attached hereto and made a part of that certain Lander Peak Area Master Surface Use Plan by and between the U.S. Forest Service and True Oil LLC.

True Oil Master Surface Use Plan – Lander Peak Area – December 2011 ¤£189

t 191 s ¤£ e r o F l a T 34 N n Daniel o T 33 N ti a N n to e -T r e g id r B

T 33 N T 32 N W W

W W W W W W

1 2 2 3 3 1 4 1 4 5 1 1 1 1 1 1 1 1 1

1 1

1 1 1 1 1

R R R R R R R R R

T 32 N T 31 N Lander Peak Area ¤£189 y y t t n n u u o o C C

T 31 N e n

t T 30 N l t o e l c b n i u L S

UV351

Marbleton ¤£189 T 30 N Big Piney T 29 N ¤£189

¤£189 UV235

Legend MAP 1 Lander Peak Area Surface Ownership ± Lander Peak Area Forest Service General Project Location Bureau of Land Management True Oil LLC Private 0 2 4 6 8 Miles Sublette County, WY

True Oil Master Surface Use Plan - Lander Peak Area - December 2011 Existing Pad/ Proposed Expansion 23-15 Existing Pad 13-16a

Existing Pad/ Proposed Expansion Existing Pad 32-22 33-22 (Reservoir) To: Gas Sales

Existing Pad/ Proposed Expansion 42-27

Legend MAP 2 Existing Pipeline Existing Roads Lander Peak Area Lander Peak Area ± Existing Pads and Existing Pad Proposed Pad Expansions Existing Pad/Proposed Expansion True Oil LLC 0 1,500 3,000 6,000 Feet Sublette County, WY

True Oil Master Surface Use Plan - Lander Peak Area - December 2011 Legend MAP 3 Klaenhammer 23-15H Pad (Reclaimed) Lander Peak Area ± Lander Peak Area Detailed Location of Klaenhammer 23-15H (Reclaimed) 0 200 400 Feet Sublette County, WY

True Oil Master Surface Use Plan - Lander Peak Area - December 2011 Legend MAP 4 Klaenhammer 42-27H Pad ± Lander Peak Area Detailed Location of Klaenhammer 42-27H 0 200 400 Feet Sublette County, WY

True Oil Master Surface Use Plan - Lander Peak Area - December 2011 Existing 32-22 Well Pad

65,000 BBL Proposed New Freshwater Reservoir Disturbance (160'x160') (1.6 Acres)

Legend MAP 5 32-22 Pad Proposed Disturbance ± Lander Peak Area 65,000 BBL Water Reservoir Location of Freshwater Reservoir

0 200 400 Feet Sublette County, WY

True Oil Master Surface Use Plan - Lander Peak Area - December 2011

Exhibit B

Surface Locations of Proposed Wells

Attached hereto and made a part of that certain Lander Peak Area Master Surface Use Plan by and between the U.S. Forest Service and True Oil LLC.

True Oil Master Surface Use Plan – Lander Peak Area – December 2011

Surface Locations of Proposed Wells in the Lander Peak Area (LPA) Surface Location Proposed Well Well Pad Lease T R Q S Klaenhammer 23-15H 23-15 WYW16419 32N 115W NESW 15 (LPU 23-15-H-1) 1 Klaenhammer 42-27H 42-27 WYW16420 32N 115W SENE 27 (LPU 42-27-H-1) 1 1 The Klaenhammer well names are associated with submitted APDs. The names will be changed to the LPA designations.

True Oil Master Surface Use Plan – Lander Peak Area – December 2011

Exhibit C

Proposed Production Facility Layout Configurations

Attached hereto and made a part of that certain Lander Peak Area Master Surface Use Plan by and between the U.S. Forest Service and True Oil LLC.

True Oil Master Surface Use Plan – Lander Peak Area – December 2011

Legend N Klaenhammer #23-15H 1. Prod. Unit w/ Dehy Section 15, T32N, R115W, 6th P.M. 2. Treater 2137’ FSL, 2522’ FWL 3. Gas Meter Production Facility Diagram 4. Water Tank 5. Oil Tank

Access Road

200 ft 4

160 ft 5 275 ft

Wellhead 5

125 ft 150 ft

1 2 3

400 ft

NOT TO SCALE

Attachment B

Lander Peak Area 9-Point Drilling Plan

True Oil Exploratory Proposal – Lander Peak Area – December 2011 Lander Peak Area 9-Point Drilling Plan

Sublette County, Wyoming

Attached hereto and made a part of that certain Lander Peak Area Exploratory Proposal by and between the U.S. Forest Service and True Oil LLC.

True Oil LLC P.O. Drawer 2360 Casper, Wyoming 82602 Phone: (307) 237-9301

December 2011

Lander Peak Area 9-Point Drilling Plan

1. ESTIMATED TOPS OF IMPORTANT GEOLOGIC MARKERS

Formation TVD MD MD in the pilot hole in the pilot hole in the build section Aspen shale 2,100’ 2,106’ Gannet Group 2,750’ 2,759’ Stump sandstone 3,430’ 3,443’ Prospect thrust 6,000’ 6,026’ Mesaverde 6,000’ 6,026’ Nugget sandstone 6,600’ 6,631’ Hilliard shale 6,900’ 6,932’ 6,932’ Hot Hilliard marker 7,200’ 7,234’ 7,290’ Hilliard silt 7,325’ 7,360’ 7,568’ Estimated TD of pilot hole 7,600’ 7,636’ *Horizontal target (Hilliard) 7,340’ 7,375’

* = Anticipated Producing Formations

2. ESTIMATED DEPTH OF ANTICIPATED WATER, OIL, OR MINERALS

All fresh water and prospectively valuable minerals encountered during drilling operations will be recorded by depth and protected with cement.

Zones of porosity in the Hilliard formation, from 7,300’ to 7,420’, TVD are expected to contain commercial amounts of oil & gas.

3. PRESSURE CONTROL EQUIPMENT – See BOP stack schematic attached.

This well will comprise the following hole sections:

A 16” diameter, 55 lb. per ft. conductor will be set at approximately 60’ prior to moving in a drilling rig.

Section A Vertical 12-1/4” hole from the surface to 780’ 9-5/8” casing will be set.

Section B Directionally controlled 8-3/4” hole from 780’ to approx 7,300’ where a 7-7/8” core will be cut, then 7-7/8” hole drilled to approx 7,600’. This section will be plugged back to approx 6,809’.

Section C Directionally controlled build section 8-3/4” hole from 6,809’ to 7,700’ MD 7” casing will be set from surface through the build section

Section D Horizontal lateral section 6-1/8” hole from 7” casing to total depth

True Oil 9-Point Drilling Plan – Lander Peak Area – December 2011 1 All BOPE (Blind rams, pipe rams, annular preventer, choke manifold & accumulator) will be installed, used, maintained, and tested in accordance with all the requirements of Sec III. A –ii of Onshore Order No. 2.

Hole section A, surface to 780’

No BOP system will be installed.

Hole section B, Pilot hole 780’ to 7,600’

5,000 PSI Rated Equipment

11”-5,000 psi Double Gate Hydraulic BOP with 11”-5,000 psi Annular Preventer.

The Blow-out preventer stack will be equipped as follows (top-down): 1. One hydraulically operated blind ram (above). 2. One hydraulically operated pipe ram (below). 3. Drilling spool with two side outlets Choke side: 3” inch minimum, kill side: 2” minimum. 4. 3” diameter choke line. 5. Two choke line valves, 3” minimum. 6. Kill line, 2” minimum. 7. Two chokes with one remotely controlled from the rig floor. 8. Two kill line valves and a check valve, 2” minimum. 9. Upper and lower kelly cock valves with handles available. 10. Full opening safety valve and subs to fit all drill string connections in use. These will be kept on the drill floor, in the open position. 11. Inside BOP or float sub will be available. 12. Pressure gauge on choke manifold. 13. Drilling nipple, flow-line and fill-up line will be above the uppermost preventer. 14. Electric pit volume totalizer and flow sensor will be utilized to monitor the mud system. 15. Mud logging equipment with gas detection will be used from 4,500' to total depth.

Hole section C, Build section from KOP to 7,700’, MD

5,000 PSI Rated Equipment

11”-5,000 psi Double Gate Hydraulic BOP with 11”-5,000 psi Annular Preventer.

True Oil 9-Point Drilling Plan – Lander Peak Area – December 2011 2 13. Drilling nipple, flow-line and fill-up line will be above the uppermost preventer. 14. Electric pit volume totalizer and flow sensor will be utilized to monitor the mud system. 15. Mud logging equipment with gas detection capability will be used to total depth.

Hole section D, Lateral section from 7,700’ (7” casing point) to TD

5,000 PSI Rated Equipment

7-1/16”-5,000 psi Double Gate Hydraulic BOP with 7-1/16”-5,000 psi Annular Preventer. Alternative: 7-1/16”-10,000 psi stack components The Blow-out preventer stack will be equipped as follows (top-down): 1. Rotating head. 2. One hydraulically operated blind ram (above). 3. One hydraulically operated pipe ram (below). 4. Drilling spool with two side outlets Choke side: 3” inch minimum, kill side: 2” minimum. 5. 3” diameter choke line. 6. Two choke line valves, 3” minimum. 7. Kill line, 2” minimum. 8. Two chokes with one remotely controlled from the rig floor. 9. Two kill line valves and a check valve, 2” minimum. 10. Upper and lower kelly cock valves with handles available. 11. Full opening safety valve and subs to fit all drill string connections in use. These will be kept on the drill floor, in the open position. 12. Inside BOP or float sub will be available. 13. Pressure gauge on choke manifold. 14. Drilling nipple, flow-line and fill-up line will be above the uppermost preventer. 15. A gas buster of sufficient capacity, with an auto-igniting flare stack. 16. Electric pit volume totalizer and flow sensor will be utilized to monitor the mud system.

A. Testing Procedure

Pressure testing will be conducted by a contract testing service, per OO#2, III., A., 2h.,ii. The BOP, choke manifold, and related equipment will be pressure tested to the approved working pressure of the BOP stack (if isolated from the surface casing by a test plug) or to 70% of the internal yield strength of the previous casing (if the BOP is not isolated from the casing by a test plug). Annular preventers will be tested to 50% of the rated working pressure or 70% of the internal yield strength of the previous casing, whichever is greater. Pressure will be maintained for a period of at least ten minutes or until the requirements of the test are met, whichever is longer. At a minimum, the above pressure test will be performed:

1. When the BOP is initially installed. 2. Whenever any seal subject to test pressure is broken. 3. Following related repairs. 4. At thirty day intervals.

In addition to the above, the pipe and blind rams will be activated each trip, but not more than once each day. All BOP drills and tests will be recorded in the IADC driller’s log.

True Oil 9-Point Drilling Plan – Lander Peak Area – December 2011 3 B. Choke Manifold Equipment

All choke lines will be straight lines unless turns are necessary and will be anchored to prevent whip and vibration. Turns will use tee blocks or will be targeted with running tees.

If equipment availability dictates, 7-1/16” 10M stack components may be paired with 5M choke manifold.

C. Accumulator

The accumulator will have sufficient capacity to open the hydraulically-controlled gate valve, close all rams plus the annular preventer, and retain a minimum of 200 psi above pre-charge on the closing manifold without the use of the closing unit pumps. The reservoir capacity will be double the accumulator capacity, and the fluid level will be maintained at the manufacturer’s recommendations.

The BOP system will have two independent power sources available for powering the closing unit pumps. Sufficient nitrogen bottles are suitable as a backup power source only, and shall be recharged when the pressure falls below manufacturer’s specifications. The accumulator pre-charge pressure test will be conducted prior to connecting the closing unit to the BOP stack and at least once every six months thereafter. The accumulator pressure will be corrected if the measured pre-charge pressure is found to be above or below the maximum or minimum limits specified in Onshore Oil & Gas Order Number 2 (only nitrogen gas may be used to pre-charge).

An automatic locking device will be installed on ram type preventers. A valve will be installed in the closing line as close as possible to the annular preventer to act as a locking device. This valve will be maintained in the open position and will be closed only when the power source for the accumulator system is inoperative.

Remote controls shall be readily accessible to the driller. Remote controls for all systems will be capable of closing all preventers. Remote controls will be capable of both opening and closing all preventers. Master controls will be at the accumulator and will be capable of opening and closing all preventers and the choke line valve.

D. Miscellaneous Information

The Blow-Out Preventer and related pressure control equipment will be installed, tested and maintained in compliance with the specifications in and requirements of Onshore Oil & Gas Order Number 2.

The choke manifold will be located outside the rig sub-structure. The hydraulic BOP closing unit will be located at least 25 feet from the well head but readily accessible to the driller. Exact locations and configurations of the hydraulic BOP closing unit will depend upon the particular rig contracted to drill this hole.

A flare line will be installed after the choke manifold, extending 125’ (minimum) from the center of the drill hole to a flare stack.

True Oil 9-Point Drilling Plan – Lander Peak Area – December 2011 4 4. PROPOSED CASING PROGRAM

Casing Program: All casing will be new.

Hole Casing Depth Size Size Wt./Ft. Grade Joint Set

24” 16” Conductor NA NA 0 – 60’ 12-1/4” 9-5/8” 36 #/ft J-55 STC 0 –780’ 8-3/4” 7” 26 #/ft N-80 LTC 0 – 7,700’ MD 6-1/8” 4-1/2” 13.5 #/ft N-80 LTC 7,500’-11,700’ MD

Depth Casing Collapse(psi)/SF Burst (psi)/SF Tension (M lbs)/SF

780’ 9-5/8” 36 #/ft 2,570/6.7 (a) 3,520/1.57 (b) 294/10.4 (c) J-55 STC

7,700’MD 7” 26# 5410/1.40 (a) 7,240/3.20 (b) 519/2.59 (c) 7,334’TVD N 80 LTC

11,700’ 4-1/2” 13.5 #/ft 8,540/2.21 (a) 9,020/3.99 (b) 270/2.59 (c) MD, (TD) N-80 LTC

Footnotes for casing design parameters: a. based on full evacuation with 9.8 ppg fluid in annulus b. based on 9.8 ppg mud wt, less a 0.22 psi/ft gradient, with no fluid in annulus c. based on dry casing string weight, to heel of curve d. SF = Safety Factor

5. PROPOSED CEMENTING PROGRAM

Cement Weight Yield Casing TOC Fill Type SXS Excess (ppg) (ft3/sx)

Surface Lead surface 580’ Varicem 120 100% 11.5 2.94 Tail 580’ 200’ Varicem 90 100% 13.5 1.80

Intermediate Lead 5,000’ 1,700’ Econocem 150 30% 11.5 2.22 Tail 6,700’ 1,000’ Econocem 150 30% 14.2 1.31

Production The 4-1/2” production liner will be installed un-cemented. The liner will be set on a liner hanger & liner packer with approximately 200’ of overlap into the 7” casing.

The above cement volumes are approximate and were calculated under the assumption that a gauge hole will be achieved. Actual cement volumes may be changed due to variations in the actual wellbore size and will be determined by running a caliper log on the drilled hole.

All waiting on cement (WOC) times will be adequate to achieve a minimum of 500 psi compressive strength at the casing shoe prior to drilling out. All casing strings will be tested to 0.22 psi/ft. or 1500 psi, whichever is greater, but not to exceed 70% of minimum internal yield pressure of the casing. This pressure test will be performed before drilling out the shoe.

True Oil 9-Point Drilling Plan – Lander Peak Area – December 2011 5

A formation integrity test (FIT) of each casing shoe shall be performed before drilling more than 20’ of new hole. Formation at the shoe shall be tested to a minimum of the mud weight equivalent anticipated to control the formation pressure to the next casing depth or total depth of the well. Mix water will be tested for compatibility with cement prior to moving cementing equipment onto location.

6. PROPOSED MUD PROGRAM

There will be sufficient mud materials on site to displace the hole at any time.

Interval Density Fluid Loss Viscosity Mud Type

0-780’ 8.4-8.8 no control 28 – 35 Freshwater Spud Mud

780’-7,600’ 8.8-9.8 <10 cc 32 – 60 LSND/PHPA

Lateral to 8.8-9.8 <7 cc 35 – 45 Potassium formate - Evergreen 11,700’ TD

A closed mud system (surface tanks only) will be used in drilling out of the 16” conductor and for the remainder of the well. Mud up will begin at approx. 2,000’, and mud will be adequate for good samples at 4,500’ After mudding up, the slow pump speed and pressure will be recorded each tour on the daily drilling report. Analysis of mud properties shall be performed every 24 hours to determine, as applicable, density, viscosity, gel strength filtration, pH, etc.

Operator will have a PVT (Pit Volume Totalizer) system for monitoring circulating system functions including pit volume, stroke counter, flow sensor, etc.

7. TESTING, LOGGING AND CORING PROGRAM

A. No drill stem tests will be run. B. Logging program in the 8-3/4” pilot hole will consist of the following: Quad Combo (N-D, Induction & Sonic) – TD to base of 9-5/8" surface casing. FMI Sonic Imager Scanner – TD to approx. 6,000' GR-caliper – TD to casing shoe, GR to surface. C. 8-3/4” full-hole core (4” diameter) will be cut from approx 7,300’ to 7,420’ in the pilot hole to diagnose fracturing and determine the horizontal trajectory. D. A portable mud logging trailer will be used on this well and is scheduled to be in operation by 4,500’. 30’ samples will be taken from 4,500’ to 5,600’ and 10’ samples from 5,600’ to total depth. E. Completion program: 4-1/2” production casing with swell packers and frac ports will be run to TD and will be landed un-cemented with a liner hanger and packer. Details of the completion program will necessarily be designed based on information gathered during the drilling of the well. Completion program will be submitted at a later date.

8. ANTICIPATED ABNORMAL PRESSURES OR TEMPERATURES

No abnormal pressures or temperatures have been reported for wells in the area that have been drilled to the equivalent depths planned for this well. However, since well control is limited

True Oil 9-Point Drilling Plan – Lander Peak Area – December 2011 6 the operator will be prepared to combat seeps and losses, and take precautions in the event that abnormal pressures are encountered.

Maximum anticipated bottom hole pressure is 3,873 psi. Maximum anticipated surface pressure is approximately 2,200 psi (maximum anticipated bottom hole pressure minus the pressure of a gas column of 0.22 psi per foot gradient).

No H2S has been encountered in, or is known to exist, from previous wells drilled to similar depths in the general area.

9. PROPOSED COMPLETION PROGRAM

Once the drilling rig has been moved off of location, the location will be bladed flat and gravel will be placed as necessary. Rig anchors will be installed. Approximately six 500-barrel temporary frac tanks will be moved onto location. A 65,000-barrel, lined freshwater reservoir (160x160x15 feet) will be built adjacent to the Klaenhammer 32-22 pad (within a previously reclaimed area) which is central to well pads 23-15 and 42-27. The reservoir will be fenced and will be used throughout drilling and completion of the two wells. Water will be pumped and/or trucked from the Mickelson/True Water Well to fill the tanks and the freshwater reservoir.

A frac crew will move in and rig up on the well. A multi-stage frac treatment consisting of up to 65,000 barrels of water, 480,000 lbs 100 mesh sand, 2,080,000 lbs 30/50 mesh sand and 320,000 lbs 20/40 resin coated sand will be pumped into the lateral through the Hilliard shale. Temporary plastic water lines will be utilized to move water for this operation from the reservoir on well pad 32-22 and will be placed in borrow pits and/or on approved surface ROWs. Once the frac treatment pumping operation is completed, the frac equipment will be rigged down and moved off location.

The well will be flowed back through a test separator while recording the amount of load water recovered as well as any oil, gas and formation water. The volume of frac load water recovered after the frac treatment will not be known in advance. True has estimated that up to 30% of the frac water may be recovered. This water would be disposed of utilizing one or more of the following methods:

1. Permitting an existing field well to be used as a water disposal well in the Frontier or the Nugget sand. 2. Treating the water and reusing it for drilling and or frac water. 3. Hauling the water to an off-site disposal facility.

A service rig will be moved onto the location and rigged up. Pipe racks & a catwalk will be set up and a rental string of high strength tubing will be unloaded and racked. A 3 7/8” bit and the high strength tubing will be run in the well and the frac port subs will be drilled out inside the 4 ½” liner. The high strength rental tubing will be pulled and laid down. The production tubing will be run in the hole and the service rig will be rigged down and moved off location. The well will be tested to determine the size and type of production equipment needed. Pumping equipment will be installed if needed and the production equipment and flow lines will be installed.

The well will then be placed on production. We estimate that approximately 20 days will be required to complete each well.

True Oil 9-Point Drilling Plan – Lander Peak Area – December 2011 7 10. ANTICIPATED STARTING DATES AND NOTIFICATION OF OPERATIONS

A. Anticipated Starting Dates

Anticipated Commencement Date: July 1, 2012 Drilling Days: Approximately 54 Days Completion Days: Approximately 20 Days

B. Notification of Operations

Bureau of Land Management Pinedale Field Office P. O. Box 768 Pinedale, WY 82941 307-367-5300

Wyoming Oil & Gas Conservation Commission P.O. Box 2640 Casper, WY 82604 307-237-7147

C. Anticipated General Conditions of Approval

1. All lease and/or unit operations are to be conducted in such a manner to ensure full compliance with the applicable laws, regulations (43 CFR, Part 3160), Onshore Orders, Notices to Lessees, and the approved plan of operations.

2. The spud date will be reported orally to the BLM Pinedale Field Office 24 HOURS PRIOR TO SPUDDING, unless otherwise required in the site specific conditions of approval.

3. All wells, whether drilling, producing, suspended or abandoned shall be identified in accordance with 43 CFR 3162.6. There shall be a sign or marker with the name of the operator, the lease serial number, the well number and the surveyed description of the well.

4. In accordance with Onshore Oil & Gas Order Number 1, this well will be reported on MMS form #3160-6, Monthly Report of Operations and Production, starting with the month in which operations commence and continuing each month until the well is physically plugged and abandoned. This report will be filed directly with the Royalty Management Program Minerals Management Service P.O. Box 17110 Denver, Colorado 80217.

5. All undesirable events (fires, accidents, blowouts, spills, discharges) as specified in NTL-3A will be reported to the BLM Pinedale Field Office. Major events will be reported verbally within twenty-four (24) hours and will be followed with a written report within fifteen (15) days. Other than major events, report in writing within fifteen (15) days. Minor events will be reported on the Monthly Report of Operations and Production (form #3160-6).

True Oil 9-Point Drilling Plan – Lander Peak Area – December 2011 8 6. No well abandonment operations will be commenced without the prior approval of the Authorized Officer. In the case of newly drilled dry holes or failures, and in emergency situations, oral approval will be obtained from the Field Office Petroleum Engineer. A Notice of Intention to Abandon (form #3160-5) will be filed with the Authorized Officer within fifteen (15) days following the granting of oral approval to plug and abandon.

7. Upon completion of approved plugging, a regulation marker will be erected in accordance with 43 CFR 3162.6. The following information will be permanently placed on the marker with a plate, cap, or beaded-on with a welding torch: Company Name, Well Name and Number, Location by Quarter/Quarter, Section, Township, Range, and the Federal Lease Number.

8. A Subsequent Report of Abandonment (form #3160-5) will be submitted within thirty (30) days following the actual plugging of the well bore. This report will indicate where plugs were placed and the current status of surface restoration operations. If surface restoration has not been completed at that time, a follow- up report on form 3160-5 will be filed when all surface restoration work has been completed and the location is considered ready for final inspection. If the location is on private surface, a Landowner Acceptance of Reclamation letter will be attached to this “Sundry Notice.”

9. Pursuant to NTL-4A, lessees and operators are authorized to vent/flare gas during initial well evaluation tests, not exceeding a period of 30 days or the production of fifty (50) MMCF of gas, whichever occurs first. An application must be filed with the Authorized Officer, and approval received, for any venting/flaring of gas beyond the initial 30 day or otherwise authorized test period.

10. Not later than the 5th business day after any well begins production on which royalty is due anywhere on a lease site or allocated to a lease site, or resumes production in the case of a well which has been off production for more than ninety (90) days, the operator shall notify the Authorized Officer by letter or sundry notice of the date on which such production has begun or resumed.

In addition to Federal Conditions of Approval, spud notification must be given to the Wyoming Oil & Gas Conservation Commission prior to spudding. This should be done by phone at 307-234-7147 Monday through Friday during business hours.

True Oil 9-Point Drilling Plan – Lander Peak Area – December 2011 9 BOP Equipment Schematics

TRUE OIL LLC Klaenhammer 23-15H Sublette County, WY

True Oil 9-Point Drilling Plan – Lander Peak Area – December 2011 10

True Oil 9-Point Drilling Plan – Lander Peak Area – December 2011 11