BEFORE THE BOARD OF OIL, GAS AND MININGDEPARTMENT OF NATURAL RESOURCES

STATE OF UTAH

FILEDsEP 2 3 2016

SECNENRY, BOARDOFOll- GAS & lvllNlNG

IN THE MATTER OF THE REQUEST FORAGENCY ACTION OF AXIA ENERGY II,LLC FOR AN ORDER MODIFYING THEBOARD'S ORDERS ENTERED IN CAUSENOS. l3t-14, 139-42, 139-90 TO ESTABLISH1,280-ACRE (OR SUBSTANTIALEQUIVALENT) DRILLING UNITS FOR THEPRODUCTION OF OIL, GAS ANDASSOCIATED HYDROCARBONS FROMTHE LOWER GREEN RIVER.WASATCH(coLToI$ FORMATIONS COMPRTSED OFSECTIONS 25 THROUGH 36 OF TOWNSHIP2 SOUTH, RANGE 2 WEST, USM ANDSECTIONS 25 THROUGH 28 AND 33THROUGH 36, OF TOWNSHIP 2 SOUTH,RANGE 3 WEST, USM, ALL IN DUCHESNECOUNTY, UTAH

MOTION FOR LEAVE TOSUBSTITUTE, REPLACE AND/ORSUPPLEMENT RESPONDENT'S

EXHIBITS

Docket No. 2016-018

Cause No. 139-140

COMES NOW, EP Energy E&P Company, L.P. ("E1"), by and through its attomeys Fox

Rothschild LLP, and pursuant to Utah Admin. Code Rule R641-105-500, hereby files its Motion

for Leave to Substitute, Replace and/or Supplement Respondent's Exhibits ("Motion")

concerning the exhibits originally filed (collectively, "Original EP Exhibits") with Ep's

Response to Amended Request for Agency Action dated September 12, 2016 ("Response"), filed

with respect to the Amended and Restated Request for Agency Action dated August 16, 2016

("4¡nertded-R¡{4") frled in the above-captioned matler by Axia Energy II, LLC ("Axia").

EP respectfully requests that the State of Utah Board of Oil, Gas and Mining ("Board")

enter an order permitting the substitution, replacement and/or supplementation of EP's Original

Exhibits in the manner set forth more fully below.

AC IIVD 423857 t 6v | 09/23 120 t 6

CONFERRAL CERTIFICATION

Counsel for EP hereby certifies that he contacted: (i) Steve Alder, Counsel for the Utah

Division of Oil, Gas and Mining ("Division"); (ii) Michael Johnson, counsel for the Board; (iii)

and David Bolda, counsel for Axia, prior to the filing of this Motion. Axia has no objection to

the granting of the relief sought in this Motion. The Division had not had an opportunity to

respond at the time of the filing of this Motion.

HEARING DATE AND LEGAL STANDARD

The hearing in the above-captioned matter is scheduled for September 28, 2016. See

Board September 2016 Hearing Agenda. Exhibits filed less than thirty (30) days before a

scheduled hearing date may be allowed by the Board upon good cause shown. See Utah Admin.

Code Rule R641-1 05-500.

SUBSTITUTION, REPLACEMENT AND/OR SUPPLEMENTATION OF ORIGINAL EP EXHIBITS

The exhibits originally filed on August 29, 2016 by Axia with respect to its Amended

RAA are currently subject to that certain Motion for Leave to File Substitute and Additional

Exhibits dated September 21, 2016 ("Axia Motion"). Based upon the content and exhibits

offered in the Axia Motion, EP wishes to substitute, replace and/or supplement the Original EP

Exhibits, in order to facilitate its presentation of evidence to the Board at the hearing, so that

such presentation is more responsive to the matters raised in the exhibits associated with the

Axia Motion. EP believes that such substitutions, replacements and/or supplementation will aid

in the Board's decision in the above~captioned matter, and will provide all parties with additional

information necessary to understand the positions of both EP and Axia. EP also believes that the

timing of this Motion provides all parties to the above-captioned matter to with the opportunity

to review and formulate opinions about EP's exhibits proffered herewith.

2 ACTIVE 42385716vl 09/23/2016

Specifically, EP respectfully requests that the Board grant its leave for EP to substitute,

replace and/or supplement its Original EP Exhibits with the exhibits attached hereto and

incorporated herein as Exhibit "A," as follows:

Land Exhibits

SUPPLEMENTAL EXHIBIT "L-2" - EP Energy's current 640-acre vertical development program in and adjacent to the Amended RAA lands

SUPPLEMENTAL EXHIBIT "L-3" - Selected portion of RAA 139-140 showing the existing and proposed spacing and setbacks

Geology Exhibits

SUPPLEMENTAL EXHIBIT "G-1" - Induced and natural fractures orientation

REPLACEMENT EXHIBIT "G-5" - EP Energy Petrophysical Model Comparison

REPLACEMENT EXHIBIT "G-6" - Area of Preferred Geologic Facies

SUPPLEMENTAL EXHIBIT "G-7" - Stranded Resources - x-sections showing prospective intervals

SUPPLEMENTAL EXHIBIT "G-8" - EP Energy Wells that will be affected by 139-EP Energy Wells that will be affected by 139-140140

Engineering Exhibits

SUPPLEMENTAL EXHIBIT "E-6" - Development Economics

CONCLUSION

Based on the foregoing, EP requests that the Board grant its leave for EP to substitute,

replace and/or supplement its Original EP Exhibits as set forth above.

Respectfully submitted this 23rd day of September, 2016.

FOX ROTHSCHILD LLP

3 ACTIVE 42385716vl 09/23/2016

Respondent's Address: EP Energy E&P Company, L.P. 1 001 Louisiana St. Houston, TX 77002

P. 0. Box 4660 Houston, TX 77210-4660

ACTIVE 42385716vl 09/23/2016 4

1225 1 ih Street Suite 2200 Denver, CO 80202 Phone: (303) 446-3843 Email: bchicken@foxrothschild.com

Attorneys for Respondent EP Energy E&P Company, L.P.

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EPE's Vertical, Well Development Program In and Adjacent to 139-140

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139-140: EPE owns "'1,333 net acres in I 139-138: EPE owns "'2

net acres in and "'708 net and "'4,390 net acres adjacent acres adjacent

-

EPE Operated Wells -e Producing Wells 0 5 5

() APD's submitted 7 8 15

0 Preparing for Permitting 5 12 17

Supplemental Exhibit ul-2" 37 EP ENERGY• l1

Overlapping Proposed 1,280 Hz Spacing on Existing 640 Spacing­

Effect on Correlative Rights

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~ 660'' ' C) ,Cl 1~~--~- ~ ~~~--~~·~_)1~~~-----,!3~~------, 560' I 330'_.~ 1- .. ., .. ,.T' . .. () • () · I () (), ,~

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~1_1~-~-~=--- 139-90 : 1 139-90 1 ~1~9-9o l i 1 ~ I l 1 ___:._ I • • I 660'~ l ll

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.· \ Al6a - Butcher Butte 32-144H-22, 32-34H-22

Legend

e Producing Vert. Wells 0 locations Being Prepared

C) APD's submitted ........ Potential LLHW

Current Spacing: 139-84: 640 spacing, 4 wells/unit, 1,320' /640' setbacks, 12/31/2008

139-90: 640 spacing, 4 wells/unit- HZ, vert or combo, 1,320' /640' setbacks, 05/09/2012

Proposed Spacing: 139-140: stand up 1,280 spacing, 32 wells/unit- LLHW, SLHW, vert, direct or combo. (lay down option in 2S-3W) Effective as to all future wells after pt LLHW is completed 330' "heel to toe" and 560' lateral HZ unit line setbacks 330' lateral interwell setbacks for HZ wells 100' vertical setbacks between HZ wellbores 330' setbacks between vert/direct and HZ wellbores 660' unit line setbacks for vertical/direct wells

Supplemental Exhibit ~~L-3" EP ENERGYA- 11

Induced & Natural Fracture Orientations

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SUPPLEMENTAL EXHIBIT "G-1" 1 i EP Ef'.lERGYA

EP Energy Petrophysical Model Comparison

Reference (FT)

1:1000

Gamma Ray Resistivity Poros1ty + Sw Lithology Porosity+ Sw Net ~ =:=

cv I I _,....,;7, E- 10050 c cu 0 c

N 0 v N I I -----,--s.,_ E-· 10100 !U v ... !U u. ...

Ln u.. I • =d E- 10150

o::t b .... 0 "'C M I · ~ E- 10200 Qj !U

;: ·x 3: <( I I -c"" F- 10750

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Target Interval Net Avg Eft Por

Axia castle Peak Target 222.5 7.1%

EP Castle Peak Target 106.3 5.3%

Axia Uteland Butte Target 282.5 7.00%

I EP Uteland Butte Target Net 91.75 8 .3%

REPLACEMENT EXHIBIT "G-5"

Bo So Area RF Reserves, BO

1.4 79.1% 1280 10% 88,633,226

1.4 28% 1280 10% 11,189,196

1.4 74.8% 1280 10% 104,917,951

1.4 28.5% 1280 10% 15,394,328

EP WI SA 10-22-22 Well Axia Uteland Butte Frac Zone

~-.1• Multi-variable Statistical

Wells

8

8

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Model by EP Petrophysicist Axia Data from Cause 139-140

• Axia 300' UB Frac Zone • Newfield UB Frac Zone 145'

based on Microseismic Cause 139-134 EP + Axia Reserves Very Different

Recoverable Reserves, BO

1,107,915

139,865

1,311,474

192,429 I

EP EN ERG'" .._ ]2

Area of Preferred Geologic Facies (Pay) -

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Application Lands with Maximum North and South Sourced Geologic Facies (Pay) Vertical Wells Can Best Access All "'4,700' of Wasatch+ Lower Green River

REPLACEMENT EXHIBIT"G-6" EP ENERGY.~ j3

Axia Frac Zone Interva ls, Production Logs, Stranded Resource

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SUPPLEMENTAL EXHIBIT "G-7" EP ENERGYA 14

EP Energy Well Locations Within/Surrounding Axia Proposed 1280 Acre Spacing

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• ·,:I • • • 0 7 • 1! • • • 16 sf • 1~ 16 15 13 18 '17 16 15 13 • 18 17 0 0 . • • •

0 0 • - -- 0 2~ 'JW 0 • 0 0 0 20

2S 2' rv 2 ~ 1W 0 • ".. 'O I , 24 1 19 24 19 • 0 20 21 22 23 20 21 22 23

0 0 • 0 0 • o , • A ( a 1280 • e Spac- g

0 29 • 1• 1 • •

261 28 27 26 25 . 30 2g 28 27 26 25 30 29 28 27 •

0 __ !. • • I • ---. ~~~~ - ---- ---- .._ __ 32 33 34 35 36 . 3 . 32 33 34 35 ~~6 31 32 33 3.!1 35 • •

'\ Ill • r ... I • Axia Bd 32-34H 22 ~i BB 32 44H-22 I

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6 I 5 139-140 1 • r\.. 4 4 3 2 1

II 4 3 6 5 3 • 2 • J I

• I 139-138 t"' I '>C" ~I.A, "=t Q ..,,.,

• EP Locations Directly Effected By Cause 139-40

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fl 0 EP Other Locations Adjacent To Cause 139-40

1 \ ,r • 12 8 • • I 10 11 9 9

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• Natural Fracture Orientation East West • 16 EP Well Locations Directly Effected By Cause 139-40 • 28 EP Total Well Locations Within Or Sections Surrounding Cause 139-40 • Proposed 330' Between Well Setback Is Not Adequate To Protect Correlative Rights

Supplemental Exhibit "G-8" EP ENERGY ... Is

Development Economics Verticall Horizontal

·' [ :-~:::::::: :=:::: :: :!;:; :=: ==[-· ·····=:~::::::.: ·r:·:::::-::: :r :·:: ::::::f ::: ::=:::: :f::::: :::: :[:::::::::: :: ···-- .............. ...... ---------- ... .................. , .... ...... -----·-···------ ··-·· ......... . 6 ::=::::: :::::::::: :::::::~: ::::~~::: : :~:::: : : --::::~:+= :~::: ~: :::::::::::::::::::: ::::::::~

········· ·I ............. ~4 t. 6· .. ·--·t- --~ ~ · ----~~ ....... -... J..-.... ~ .... -r· · ·· ······ • ········~t-T"·•······ .. ··········

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---------- -~---"' >~•••··- -- --~--- -- ---------- -- - -- --· - -- ---- - - .................. ~-· --· -----·-···-~-- ····---~-- ---- · - ---· -~---··· • •••• ~-· ~~ .,. ___ ~&·&~· • • •• -~---- ~ -- - - ~ - ~ ·oo. ... ,, .. ........... .

'· · - - ---- ... ---- ·----- --~ ~ ... - ·-.. &••····· -·--~ -&&~~ - ~ && -~- ----·· · - -----·· &&&&-­

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------··'"• - - ·- ~ ~ ·----··· ---- - - ~ ···-~ ............... .. ------~·· -~·&· -- ---------- ------ - ·~ . ----------

·····-...__,. --~· .. ••• ~~ ...... ........ -- -- ~~- · · - ----&· - ~ -~ ------ ---- ................. -~---~-- ...................... ..-. .. ~----1

--··--··---·----------a.--- .... ........ -~ -- -- ........... -.. . -· -·.----1·· -----.... - ~--. -----··' .... ....... .... ... - ~----- ........ , . --- -~~. ~ ·

10 " .. .....

Vertical Typewell Economics

Production Start Nov 2016 D&C Capital $4,292 M Future Capital, 2 Recompletions, $740 M and Plug Drill Out

~: , --- - -- ---·r:--------~-- ------ --r··-------·r··---. -----§-- ---- ---1-~------ ---· ~- -------- ~ --~------· ~. ·-.-- ·---· h1m~~~t~m~1~~ mm~~~~ ~~~~~~~~ 1~~~:1:: ;=:~~~1:: ~m:m~I ~1~m~m 11~~{1l~~mmmm

···········-·- ···· ···! ··· - -- - --~ ~----······& .. ...... _ ............ ~~---·~~ ~~-~~-

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Horizontal Typewell Economics Production Start Nov 2016 D&C Capital $11,800 M

'I Reserves

BTAXROR

425 MBO 715 MMCF

25%

Reserves

BTAXROR

423 MBO 860MMCF

6% I

NRI: 85% before Severance Taxes

Pricing: Strip Price less deducts and differentials

Supplemental Exhibit "E-6"

NRI: 85% before Severance Taxes

Pricing: Strip Price less deducts and differentials

5 Yr STRIP, 9/12/16

$45.50- $54.35, $3.02- $2.96 EP ENERGYA ll