cOLU?JBUS SECTION

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cOLU?JBUS SECTION "3" FIELD-, ST. CLAIR COUNTY, MICHIGAN -

MINUTES OF WRKXMG INTFJfEST OWNERS MEEZ‘INC $3.1 ’

A meeting of the Worldng Interest Owners in the Columbus Section "3" field,St. Clair County, Hchigan, was held at the Holiday Inn, Mt. Pleasant,Michi.gan on Thursday, January 6, 1972, from 9~30 to 11:30 a.m. 'Ihe followingwere present: 1 /

.M ., : -NC,.atom Csley .\.. ' BashOil Company

Joe.DeardJames M. HarmonJames M. Harmon, Agent

Adolph Hovsek self'Cass Rosy& ',' : Adolph RovsekG. D; Simon . -.Patrick Petroleum CompanyR a y Butterfield Grace Ferguson

~- John W. Sutherland sun oil companyR.'D. Qpher SUlOilcO~Cordon C. Van Zelfden SunOil Company

JerryVaughan sun oil companyG e o r g e E. Haas' Sun Oil CompanyFhnk Lebo Sun Oil CompanyRruce F. Walker Sun Oil Company

Donald D. Barrett Sun Oil Company

LOCATION

Metamora

Dearborn .’

DearbornJacksonMt. PleasantTulsaTulsaTulsa

Mt. PleasantMt. PleasentMt. PleasantMt. Pleasant'Mt. Pleasant

Mr. Sutherland with Sun opened the meeting by stating that Sun called the meetingto review its pressure maintenance feasibility study of the Columbus Section "3"F?.eld end to determine if the working interest owners wished to unitize thisNiagaran Brown Dolondte reservoir.

Nr; Van Zelfden reviewed Sun's study and presented the geology, engineering andecononbcs. An oblique 3 dimensional section and gas and oil isopachous maps.showed there were two gas caps (the North one nine times the size of the Southone) but that the oil section was continuous throughout the field. The porosity

,acre feet data was calculated core analysis work by Msness PetroleumLaboratories. He used a porosity indetermining productive sections.

Sun used both the Pressure Restoration Model and 1-D Beta Numerical Modelin its studies and determined that the best way to produce this field wasby injecting @J of the produced gas plus 500 barrels of water per day.Set out below is information presented at the meeting:

Estimated CurmiLative Production l/1/72

Present ‘Neld Production ” 1,150 BOPD “’ .‘,1

575 McFPD

Estimated Ultimate Production byNatural Depletion 3,275,700 80 (28.79k) . . .

Estimated Ultimate Production withUnitization 5~379,000 ~0 (47.27%)

Increase with Unitization

Oil ProductionLease Investment

ProfitRate of Return

2,103,300 Dbls.$305,400

$4,060,67015@

Plant ProductsPlant Investment

795,010 Dbls.$375,000

Profit $856,451Rate of Return 34%

Total Lease and Plant InvestmentTotal Lease and Plant Profit

Total Lease and Plant Rate of Return$4,917,122

125%

It was estimated that the field would reach its economic limit in 12 yearsby natural depletion and 15 years with unitization.

There was a general discussion of Sun’s work. All present agreed thatunitization was economically feasible and that the owners should proceedtowardsforming a unit with Sun as operator.

Mr. Sutherland reported that Mr. Bruce Gorden had called and said he repre-sented nine of the owners in the Sun operated leases (‘7 in Florida plusGrace Ferguson and himself), and that they were in favor of unitization ifsurface acres were not included in the participation formula.

Mr. Simon with Patrick brought up the possibility of obtaining a pre-payment from a gas company for the reservoir and its gas around loe6, atwhich time it is estimated the operators. will. have stripped~ the gas ofmost of the liquids and be ready to sell the gas. Sun agreed to contactseveral gas companies and see if ary would be interested.

‘Ibe unit area was discussed. The Romanow Lease, E& W$ NW& Section 3, hasa few feet of gas sand underlying its SE corner, but it was the consensus

------of the Group that it should not be included.Section 3, has oil acre feet under it.

The Wronski Lease, & W$ ?R&Since the Sun dry hole could possibly

have some value it was agreed that this tract should be brought into the Unit.The b&f%% S&Section 34 is not part of Patrick’s Cu.rzydlo,I.ease, and a

decision will have to be made later on to include or delete it from the unitarea. Rovsek’s lease is shown in the Report as covering the W$- NW$ Section 34,but is. actually three leases.

The question of what parameters should be tabulated was discussed. It wasdecided that these four would be used. :

1. Current~Production (a representative 3 or 6 month period)2. Usable Wells

3. Total equivalent porosity acre-feet (equate gas to oil ondollar. value basis)

A. Cumulative Production

It was agreed that Sun would send copies of its large scale isopachous mapsto the owners to be reviewed. A meeting can be held in the Detroit area to.discuss and revise any of the maps if necessary.

There being no further business the meeting was adjourned.

J. W. SutherlandManager, Unitizationand Joint Operations

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This';just happens to be a rathor sore point due to experience inthe Petersreef. Our group, with approximately 50% of the gescap in~i,p$ice,:'hes provided the energy t'or flank wells to keepproducing beautifully, most notably Sun's Kaminski end Wolf-Schrank, end, to compound the inequity, our group has sold lessthen 10% of the total gas sold, besides the GOR penalty we'vehad on oil.from'day number one..

In Columbus '3' we had the opportunity to be on the receiving endfor a change, and now even that will be denied under this formula.I am certain that if we stall for the remainder of the year, ondthen~essent.to use of current production for the &th Qunrter of,1972, instead of 1971, our participation factor would show avery materiel change.

So'we assent' at. this time so es not to be the only SOB in thegroup, but fair warning that if this gets re-opened, we'll bein~.there'scrapping..~

I.., verftmly yOUrB,‘., BASIN OIL COMPANY

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.,, 5.5~ ra oli COMP*NY, oD7 SOUTH OL,SOIT AYL..~POST 0vnc.t mx 7~. 1uks4. cw~m3.m 74~~2 (an) LILTED.,.. ., ._ :. ..i- _a.,’ ‘..‘.. . :.. . ,._. .

-' (. ,..'(:.. Noveaher .l, 1973,; . *. T : : . ! .:. .;;. .:,..'. . .. ._'

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:. '.. _' .- :'.. .~ :::' ._. . : '. . .iPatrick' Oily 6: Gas Corp. . '. ..'.' '; :.. . .' . . .

. . . . . . . .. :: .

_.'. ::.. 744 West Kichigan Avenue .. .' ::‘: .. :::':I ' . . . .. .'Jackson, Michigan 49201 ..'.

._.:: :,! . 7.: ._ I -.: ; _,. (_, .. -., . ". . :_ ._. .: .: ,. , . . . .: ':... . ; . . . . .. .United Kesources, "Inc.* " . : '~ ; : ..:. 3: .I.;.. ‘.:-.I:... ::; ': .,~ .,

; 1,561 Lincoln ‘Avenue .‘:’ :’ ..‘.‘:;:..,.:. : : ..’ ;~~:.:.C.:. :;“s . .~... Evansville, Indiana~ 47714: 1 -:.: . .'.; .: :,i.. : j.':;. . '_ ,. . ..-: .:.: ::.-_ :' . * '."L :. .' :'.-. ,..I.. .': .T. :. -. . '.: : .:. __ . . - . . ..'a . .:-: . ..: ;&z: 'Tractc~No.3 -of'the proposed Cal'

: '. ..,. .' .~: ,. ': :i : . ._..; : ' . . .i umbus Three, Unit, being the e#.' ..:.., : .:::‘ . . . . . ..‘L. : :.::.,-I. .2X% SW% and NW% SW% of Section 34,_._. _:. .. . . ..Township 6 North, Range 15 East,.., ; .'.. '... :.. ::'.. , . :. . . St, Clair County, Michigan..:. ., ‘:'. . .;' : __ .: . .

Gentlemen: ' : ... '. .:' .. -1: -'.. :m ',, . :,.', ,.:.... ::_

... , .: : ._ . . i -: . ,, : - _. _, . .'.. You are'the owners of';h& oil and'gas lease that corn--.

prises Tract No. 5,. .described above, bfthd gropos,&'Columbus.:.J ~: Three Unit. The‘royalty on oil'under your said -lease is pay- .'.

Able~bn the following sliding scale:.: When the daily.average~I -_.. production per well.per calendarmonth is more.than 4O'barrels,

: . 'the royalty payable is 25%; when the daily-average: prbductimI . . . per well per calendar month is between 20 and 40 barrels; the *_.

._ : royalty payable.is .18.7X; and when 'the daily average produc-.. ‘. 'tion per well per calendar month is 20 barrels or less, the_. .royalty payable is 12.50X. . :

. . . ,.. : .._ You and'Sun $L C'r&any (Delaware), hereinafter referred

to as Sun, have heretofore executed the proposed Unit Agreementfor the Columbus Thfee Unit, dated July'l., 1972; however, asyet, the royalty 'owners under your lease on said Tract No, 5,of said proposed ~Unit, have not:executed the same. In order

-to complete the formation of said proposed Unit, y&u ~~11 at-tempt to obtain the execution of said proposed Unit bgre&entby said royalty owners.

In consideration of the premises and'the mutual co,,-nants and agreements hereinafter contained, it is hereby

~.i agreed as follows:.

.,D^r ‘--VWOICP.UlDLWII.-,~I-l~~,,.TT,7

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L <Id i,-'United Resources, Inc. .' -3-. 1Jwember 1, 1973.

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below, and.retkrn the original of this letter to Sun Oil C'&-pany (Delaware), P. 0. EOX 203,9, Tulsa, Oklahoma: 74102; at-tention of Mr. J. W. Sutherland. _. ..i: :

..-.. : ,.._., . V e r y truly,yours,

__ -.: .r _ _ :_. :SUk OIL COKPANY (DELMIARE).:. ._ . . , .: .: _.: .‘:~ ._~;' .,..- ._.. ..

. . . . _ :_ _ _ _ ,_ - -,: .,:.' : . .

_. .'A&W TO ANjJ ACCEpTF.Ll this '-* 'i '. ' .' _ ..; . : . .x day of November, 1973. _..

:PATRICK OIL & GAS CORPP. A T T E S T ; .',

: -. --.._ ;:I: .., President. . 1;: '_. . ...; _ IT -... . _'. .- . __--.:._ . ',.~ . ._ i . . . . .., .:.'. AGKEELI TO AXD‘A%EFTED this ._. :‘ . . . : ._ . _, _

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Thomas X. Nolan8817 Smit!xs Creek RoadKemphis, Elichip.itn

Walter Curzydlo d Agnes Curzydlo8928 Yoeger Road,cdmiths Creek., Michigan

Dietrich h Shrauger, aProfessional Plichigan Corporation12tn Floor Griswold Building

,-?i4 Gz-isuold Stre.atrtmit, Elichigan 4822fi

Walter F. & E;ennor J. Wronsbl.8628 Yeager Rd.Smiths Creek, flj.chigan 4RG7lr

T . Romanoti8980 ~Yeager RoadSmiths Creek, Nichigaq 48074

Zi. H. Winn & PI. I.. Winn8791 Battla Run Rd.Richmond, Michigan

Charles F. Winn8791 Snttle Run Rd.Richmond, Michigan

Walter Holovitz t Madeline Scoby,.JTs , 241 CLeveland StreetTrenton, Xichigan 48183

F. J. Winn t Pauline'C. WinnRural Route #2~I,chmond, Michigan 48062

Xike Lippstreuer8805 Frith ?.oadRichmond, Michigan

1. .l. ?ra1cy.~ '. ._ /. _,., i

Tracts 1, 2 & 6, L4.80274% ",:_,:;,;

Tracts 3 t 4.~.

Tract 4

Tract 5

Tract 6

Tract 7 6 13

Tract 8 & 1Cl

Tract 9, 12 & 15

Tract 9 & 12

Tract 11

Tract 14 & 16

Tract 17

Tract 19

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,1.94525%,1.94525%

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2.60356%

Columbus 3

No. gas to be flared after July 1 this yearL A N S I N G - “...unless t h e

produced.gas in the Columbus 3 Salina-Niagara” Formation Pool is recycledfor pressure maintenance or marketedprior to J~uly 1, 1974, all wells in the poolare to be. immediately closed in andremain closed in unti l such t ime the gasis either utilized in pressure main-tenance of the reservoir. or gas con-nections and market facilities havebeen achieved.”

The quotation is from the deter.mination of Supervisor of WeUs, A.Gene Gazlay, signed April 30, 1974,regarding the disposition of a “neflare” order for the Columbus 3. St,Clair county pool, and arises from ahearing in late March during which SunOil Company, and Patrick PetroleumCompany representatives outlineddifficulties they have encountered inunitizing the field for pressure main-tenance and conservation of naturalgas .

Adolph Rovsek. another workinginterest ,holder in the area. was notpresent at the March hearing, butforwarded written support of Sun’spos i t ion .

The Supervisor’s findings of factarising from the session are as fol lows:

-The Columbus 3 pool wasdiscovered in December, 1968, and was

fully developed by early 1970 with thecomplet ion of 21 producing oi l wel ls andtwo shut-in gas wells.

-Cumulative oil production for thepool as of January I, 1974! was 1,751,001barrels with average dally productionof 1,,060 barrels. An estimated 5W.ooOcubic feet of natural gas is vented andflared daily.

-Reservoir performance has been“exceptional and efficient.” However,this performance wil l not continue overthe liicof the depletion-type reservoirwithout early introduction of a pressuremaintenance program.

Sun Oil Company has petitionedthe Supervisor of Wells for an order forunitized management, operation andpressure management 01 the pool, anda p!an of unit operation was approvedfollowing a public hearing May, 1973.However, approval of a final order wassubject to Sun’s obtaining writtenapproval of the plan from at least 75percent of the interests free of cost . Sunwas. however, unable to obtain therequired approval within the time limitestablished, and an extension of timewas granted to June 20. 1974.

-As of the date of the Marchhearing, 97.7 percent of the workinginterest ownership had approval theagreement for unitization, and 71

Northern development

Traverse area planning group discusses oilT R A V E R S E CITY Oil

development in northern Michib;an wasa topic on the agenda of the TraverseBay Regional Planning Commissionmeeting in Traverse City, May 23, andShell Oil Company representativesannexed to orovide a review of theircbinpany’s &tivities-past, presentand future-before the group.

The planning commission iscomposed of representatives of eachtownship in Grand Traverse county,plus eight citizens at large, a memberfrom Elmwood township I” Leelanaucounty and the mayor of Traverse’City.

Also present were Department ofNatural Resources (DNR) spokesmen,Sid Dyer, Region II geologist, and DanBanner, local DNR forester. DonBateman, of the Michigan PublicService Commission (PSC) attended torepresent his agency in the meeting.

Shell’s people in attendance in-cluded Bill Terry, senior landman inTraverse City; Bob Howard, Shell’sMichigan Division operationsmanager; Bill Baute, productionsuperintendent; and Don Schubert ofthe company’s land department.

MAY “,I974

percent of the owners, representing 54.1percent of cast free interests, had alsoapproved the agreement.

‘-The’ unit agreement and unitoperating agreement for all partiesexpires July !, 1974.

-1mmedmte initiation of unitoperation, recycling of gas andpressure maintenance would result inrecovery of an additional 2,278,wObarrels of oil.

-If gas sales were to be com-menced at this date and a unitoperation were to be agreed upon later,construction of unnecessary pi elinand facilities would result in 0~s oP 7approximately $34,OW.

-The produced gas should not bewasted-i t is both in demand and has anavailable market.

Gazlay’s determination began: “Inrecognition of the advantages anddesirable conservation measures~leading to the maximum ultimaterecovery of the hydrocarbons from thereservoir, the supervisor urges allinterested persons to join in furthernegotiations and agree to the unitizedmanagement and operation of theColumbus Section 3 Salina-NiagaranPool as previously approved andrecommended. However, the venting,flaring and unwarranted waste of gas isto be eliminated.”

Baute presented a slideillustratedsynopsis of Shel l ac t iv i t ies in thefirandTraverse area since 1965, noting that by1980, the county could be producing asmuch as 20 percent of al l of Michigan’sheat and light energy needs. He alsoexplained that the reef trend in the areais now producing only five percent ofthe state’s needs due to shut-in wellswhich are awaiting pipeline con-nections for marketing of natural gas.

Quoting DNR statistics, Bautenoted that as of the end of March, thisyear, 70 of the 450 Niagaran prospectsdrilled since 1965 have been in GrandTraverse, and of the 229 suc&sses. 35have been located in the county. Thenorthern Niagara” “fairway” nowextends from Mason county throughManistee. into Wexford and GrandTraverse, across Kalkaska, nips thenorthwest corner of Crawford andcrosses O&go. While attempts havebeen made, the trend has not yet beenpushed east into Montmorency county,though wells are pushing against theOtsego-Montmorency line. By mostdescriptions, the reef belt, “goldenlane” or, most commonly, “iairway”-

as it is called-varies in width from sixto 10 miles and trends northeast-southwest .

Fifteen of the Grand Traverse wellsat the end of Me&h, Baute said, havebeen classified as 011 producers, while20 have ootential for natural eas.product ion.

Baute attributed the high successrates in Niagaran exploration in thenorth-approaching 50 percent- toimproved seismic technique withcomputer backup which allows pin-pointing structures of only 150 to 170acres in size which lie at depthsranging from 5,000 to 8,000 feet belowtheearth’s surface. Healsonoted that itnow requires about 25 days to drill theaverage Niagaran prospect in thenor th .

Extending today’s productionfigures, he also noted that northernfields should provide heat and light forsome 148,OW Michigan homes. GrandTraverse county alone will servicesome 18,OW homes from its production.

- Continued On Page 22 -

5

h~FsAS, Firs: Tar-tie8 ikc tlla o&rc! of cha royeltg fn-tcrast fn the Ezst PLlf of tha.Soutimeat Qusrtcr of tha South-voet ~r;ereor (6% Sk sW4) and the X<orthwesc Qurter of tbnsouch~sc Qu~ner (W-k S'&) of S octim 34, i-ccmhip 6 North,&Jqje I3 Eect; St:. clnir camty, Zilch&m, which lnrrd is altodeel.gnctcd 88 TrecC No. 5 in the proposed CO~IZ&US 'LIE@! Unit,St. CLnFr County, Michipx; And,

'LXCWS, sun in formIng snd will b.2 the UnFt CQomtor oft&o c01mzbu0 Thme Unit, st. Chair County, Mic?Llgan, the UnixAgroejcnt,of enid Unit bcLog dated July 1, 1972; snd,

WHXWS, Firet Perties clod Sun QaFro Co BEI-ce smorqt3leaBQ1va.9 ncc to the particulPrs horol.nafrsr sot i'orth.

No;d, l-tZ.RETO~, far and in cons‘idoration of! Ton Dollnrn($10.00) and other gccd and veluabls cowidorztion, thn receipt8,113 sufficiency of whkh is hersby ockncmlsd~ed 6y Fix-m Partiesnd sue, C-,4 partian kmreta do hereby ngree among thmaeelvaa aafsllorrs!

1. It is agreed Chst tb Unit A~rcanent for the ebovedescribed Unit does not nffcct any interest which Pirat Portiaonay hw,a in nod to gns etorngs ri&Ka Fn arid under Tract No. 5of said tlnlt and.deocrFbd nbova. It ie i+efwr agreed t&tany gns storrgo rights which Pirut Partf~s miiy have in saLdlnnd will ccatlnue lraaffectcd by caid Unit after the mid UoltbL?cmca ELFfectFve.

Pemeability Gas Zone, ild

Permeability Oil Zone, Ed

ReservZr Poroiify, Average, Gas, Perient --

Reservoir Porosity, Average, Oil, Fercent

Interstitial !!ater Saturation, Oil, Fercent

Interstitial biater Saturation, Gas, Percent

Original Reservoir Pressure, psig

Bubble Point Pressure, psig

Reservoir Temperature, F

Original Oil Foniation Volwe Factor %/ST3

Original Gas Fonaation Volume Factor RL/ilCF

Original Solution Gas-Oil Ratio Cu. Ft./STG

Original Reservoir Oil Viscosity, Cp

Oil Gravity, API at GOoF

Original Oil in Place STS/AF

Grigirki Gas Cap Gas In Place !,%CF/AF __

Original Oil in Place ST6

Original Gas Cap Gas in Place KCF

-lO-

80

150

10

1 2

14

12

1,432

1,432

72

1.281

1.40

! 6 1 5

-95

40.2

.625

497

12,6'X,CCO

5,752,OOC

COLCXCS SECTIOi: "3" FIELDST. CL/',IR CGC::TY, l.iICliIc;%:

ilIkG,Wi;i tRi$! CaLcJ;:ITE

ROCK K'iC FLUID PROXETIES

Permeability Gas Zone, i:d

Permeability Oil Zone, Ild

ReservZr Poro;i?y, Average, Gas, Per&nt --

Reservoir ?orosity, Average, Oil, Percent

Interstitial iiater Saturation, Oil, Fercent

Interstitial i,iater Saturation, Gas, Percent

Original Reservoir Pressure, psig

Eubble Point Pressure, psig

Reservoir Temperature, F

Original Gil Fomation Volme Factor %/ST3

Original Gas Fonzation Volume Factor Rb/iICF

Original Solution Gas-Oil Ratio Cu. Ft./STG

Original Reservoir Oil Viscosity, Cp

Oil Gravity , API at GOoF

Original Oil in Place STb/AF

Originti Gas Cap Gas In Place :!SCF/AF __

Original Oil in Place ST6

Original Gas Cap Gas in Place KSCF

EO

150

10

12

1 4

1 2

1,432

1,432

72

1.281

1.40

615

.95

40.2

.625

497

l2,6c3,cco

5,752,OGG

COLUMDIJS SECTIOI: "3" FIELDST. CLAIR COUIITY. MICIIIGA~:

iIIAGARAR L(RDii4 DOLOl4ITEROCK AND FLUID PROPERTIES

hmealrility Cas Zone. iId

l'enwal;ility Oil Zone, Ild

rVOir Poros!t.v. Averaoe. Gas. Percent

Reservoir Porosity, Average, Oil, Percent

Interstitial Llatcr Saturation, Oil, Percent

Interstitial Water Saturation, Gas, Percent

lwighal Reservoir hesswe, pslg

hblrle Point Pressure, pslg

Reservoir Temperature, F

co150

JQ

IL

E

12

1,432

1,432

72

&iclinal Oil Formation Volulne Factor RB/STL(

tiriyinal Gas Fonnatiorl Volurnc Factor Rli/f~lCF

Original Solution Gas-Oil Ratio Cu. Ft./STD

Uriginal Ikservbir Oil Viscosity, Cp

Oil Gravity, API at GOOF

Original Dil in Place STL;/AF

Urigirlal Gas Cap Gas In Flace MSCF/AF

Uriginal Uil in Place STU = 625 x 20160 AF = 12,600,OOO

Urigitml Gas Cap Gas in Place IiSCF = 1497 x 11573.44 AF = &752.0OC

Pore Volume - Gas Zone'- Bbls 8,131,005

Pore Volume - 011 Zone - 8blr .16,152,621

Total Hydro-carbon Pore volume - 8bls 24.283.626

Total Reservoir Pore Volume - Bbls 28,012,896

20160 OIL AF x .12 Porosit~r = 2421 Poros~ity AF OIL-

1157?.U GAS A? x .10 Porosity = 1157.344 Porosi%y AF GAS

1157.344 Porosity AF GAS x .1286 econonic factor = 148.83443Rh EconomicPorosity AF

COLLNHUS SECTION "3" F1Ll.DST. CLAIR COUNTY. MICHIGAN

EXPECTED RESUl.'(S UNDER DIFFERENT METIlODS OF PKODUCT:~II

PresentMethod-._I-

*Oil Recovery 8/8 STU 3,876,297

Oil Recovery % 30.76

Gasirr Reservoir at Blow-Down MU 5,Y7o,DDD

Plant Recovery 8/8 STB 0

Investment - Field $ 40,000

Inve5tmnt - Plant $ 0

Total hvestinent $ 40,000

Unitized8o"d Gas + !&ter-_I_

6,154,697

48.99

9,794,ooo

776,238

305,400

375,5x

680.4OD

*Additional minor amounts of oil will be recovered at blow-down ur.dzt~both methods of production

COLUMBUS "3" UNIT

.f"Computation of Tract Unit Participation

Formula (from Unit Agreement)

40% x Tract Equivalent Oil and Gas Acre-feetTotal Unit Equivalent Oil and Gas Acre-feet

plus 60% x Tract Oil Production during Fourth Quarter 1971Total Unit Oil Production during Fourth Quarter 1971

Application of Formula

Tract No. 6 - Koziara

f--7-

.40 x 353.5 =2,574.l

.60 x 13,782 =101,793

Total or TractParticipation

Tract No. 7 - Wronski

.40 x 129.5 =2,574.l

.60 x 6,893,. =101,793

Total or TractParticipation

.0549318

.0812354

I.a1361672

.0202135

.0406295

.0607530

R15E _

EXHIBIT # i0mw3 25, 1974

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COLUMBUS SECTION “3” FIELQ ,.:

PROPOSED TRACT ‘MAP ‘;. ~ ‘:, .

coLlJMEius "3" FIELD

.09324

3.03803

6.:6666

.3201X

13.34844

13.61672

6.07530

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X0.5478,

.W622

.70834

.X7093’

.009x

lO.UUS

.4X.51

LKOLU

.10877

100.00000

6

95

149

20

286

340

129

1

35s

0

18

782

11

0

138

1s

93

I

-

2.421

Cm ACICI*ecua

0

7.232

14.916

3.164

28.568

17.326

1.9%

1.205

32.643

2.109

28.626

76.234

0

2.712

0

11.490

,.466

0

1‘1.809

Item 2

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OWEFiSHIP OF INTEREST FREE OF COST

COLUMBUS THfEE UNIT

st. Clair county, Michigan

OWNER

Eugene H. Koaiara,Frank Koziara andAniela Koziara, J/T

Joseph Adair

Sam M. Myers

A. C. Martin

Petroleum Reserve Corporation

Petroleum Resources Company

Helen Spalter

Kzuzice Shanahan &X!daleine Shanehsn

Thomas E. Nolan

iklter Curzydlo &Agnes Curzydlo

Jack Whitney &Benice X. Whitney

Patrick Petroleum Corporationand/or Patrick Oil .and GasCorporation

&ritey, Bennett, IWbnaldand Company

Walter F. Wronski &Eleanor J. Wronski

Tatianna Romonor

Basin Oil company

INTEREST

17.33183

.X618

.49849

.49849

.X618

.66467

2.99243

4.55878

.10846

18.08744

3.39141

1.69568

.56521

4.23190

.01789

1.78657

ECUTED AGPEEKENTS

Ez !?L!X

X

X

X

X

X

X

X

X

u x

X

X

”,e

X

X

X

Page 3

COLUMBUS THRFE UNIT

st. Clair County, Michigan

OWNER

Floyd J. Winn kPauline C. VXnn

EXEZCtlTED AOFEBENTS

INTEREST YE8- No

.32846 X

Mike Lippetreuer 1.76391 X

E. J. Fraley .07372 X

TOTAL 1oo.oomo I 76.65132 I 23.34868 %

,

In re: NON-USRRLE WDLLColumbus Three UnitSt.. Cla.ir County, Michigan

Gentlemen:

” %&.mnt~ to Article 10.7, Pa.ge 9, of the lhlit Operating ASreafent,Sum considers Tract 5, Well No. 3 (previously Patrick’s No, 3Curzydlo) to be a non-usable well due to an apparent casing leak

at less than 1,000 feet.

Although we have no problems operating the well now, some troublewould.be expected when it is necessary to install a bottom hole

~‘~xnap. This well also represents a definite pollution hazard,

Since the Unit 0pcrati.n~ Apre&ent provides ,that the Working InterestGwners will make this determination, will you’please vote and returnone -copy of this letter to Sum in Tulsa.

Will Patrick please advise us if ,they wish to repair ‘this well orhave Sun do it and invoice Patrick for the cost.

.~’ J. 1:‘. Sutherland6.. Chainnan, (Joerating ~Coamittee

,,’considered a weil in non&usablephysical condition: YES ~NO- -

CC - R. E. LivingstonI’!. C.~ Chronister/ File

S U N P R O D U C T I O N C O M P A N Y .,I’: !.o~is:, I,/ GIJI,/( “Y,. !I ,, ~t,.rr >,I_., ic,,‘in ,;,~a. ,d:o:

918-586-6419

January 18, 1977

TO: ALL WORKING INTEREST OWNERS(Addressee List Attached!

Re: 'Columbus Three Unit LawsuitSt. Clair County, Michigan

Gentlemen:

On May 3, 1976 I advised you that the lawsuit against SunOil Company and others by Wronski and ~Koziara had beenset for trial in Port Huron, Michigan, on July 13, 1976.The trial finally commenced on August 24th and lasted mostof three weeks until September 30th. Oral arguments wereheld before Judge Streeter on November 18 and 19th.

A Judgement against Sun for $171,616.50 was entered onJanuary 17i 1977. Sun intends to 'file a Claim of 'Appealin the Mic,higan Court of Appeals ~within the 20 day-appealperiod.

J. W. Sutherland, M.&agerUnitization and Joint Operations.~~~.

::JWS/kb ~.

cc - Rodger EdererV. L. SmithB. E. LivingstonGranville DuttonW. C. Chronister/T. J. LaBenske/File

f

STATE OF MICHIGAN

BEFORE THE MICHIGAN DEPARTMENT OF NATURAL RESOURCESSUPERVISOR OF WELLS

On Remand from the Ingham County Circuit Court

WALTER F. WRONSKI, ELEANOR J.W'RONSKI, EUGENE H. KOZIARA,and ANIELA KOZIARA,

Court of Appeals DocketNo. 51523

Plaintiffs,V.

SUN EXPLORATION AND PRODUCTIONCOMPANY, PATRICK PETROLEUMCOPPORATIOM, SUPERVISOR OFWELLS and OIL AND GAS ADVISORYBOARD,

Ingham County CircuitCourt No. ?P-22915-AA(Honorable Carolyn Stell)

Supervisor of WellsCause No. (A)~ l-5-73

Defendants./

OFFER OF PROOF BY PLAINTIFFS WRONSKI

Plaintiffs Wronski hereby offer into evidence atthe hearing in the above-captioned remanded case the December 13,1975, 46-page deposition of Donald S. Tennant, and state as thebasis and foundation for such Offer of Proof the following:

1. That Donald S. Tennant, at the time of theoccurrences referenced in the deposition, was the field personoperating the three Curzydlo wells in the Columbus 3 Field ownedby Defendant Patrick Petroleum Company during the time period ofapproximately the end 'Of 1968 to January, 1972 and fromapproximately April, 1973 to July, 1974.

2. That the testimony of Mr. Tennant is relevantand material to the issues in this case for the reason that itshows over-production of certain of the Curzydlo wells during thefirst 21 days of each month and further shows relatively equalproduction from the Curzydlo.-&and~wells, even though the No. 2well was prorated at 75 barrels per day and the No. 3 well wasprorated at 56 barrels per day (deposition page 38) and, further,that the Cursydlo No. 1 well did not make its allowable and thatproduction from the Curzydlo No. 2 and/or No. 3 wells wasallocated to the No. 1 well, contrary to state regulations (seedeposition pages 24, 25, 45).

A 3. That the deposition of Donald S. Tennant Was

taken under circumstances where Rodger T. Ederer, counsel forDefendant Sun Oil Company was present.

4 . That the deposition of Donald S. Tennant wastaken under circumstances where Mr. John C. McDonald, counsel for __ii Defendant Patrick Petroleum Company was present.

5. That although counsel John C. McDonald statedthat he was present at the deposition representing Mr. Tennant,Plaintiffs believe that counsel was being retained and paid forby Defendant Patrick Petroleum Company.

6. That the December 13, 1975 deposition ofDonald S. Tennant shows that Mr. Tennant, during the periods oftime that he was operating the three Curzydlo wells in theColumbus 3 Field, was doinq so as the. emploree and~~~~.~agent,..of,Patrick Petroleum Company, andTxn-s;pTort thereof, PlaintiffsWronski po<iit?iit the following:

Q

A

Q

A

Q

A

Q

A

Q

A

Q

A

Q

So from roughly 1969 or the start of those wells untilJanuary 1, 1972, and then again from approximatelyApril of 1973 to July of 1974, y~weredtlctc-tn~man involved with the thr-~.~--~.~rzy.dlo~._We.~lsin-~.theColumbus 3 Fi&%~$+~~_that correct?

Yes

While YOU were_woy~~q.~.~qr~~~Mrt~~~Mills~. did YOU also have,in this approximate 1969 to January 1, 1972 period anyconnection with any individuals of Patrick Petroleum.

I wouldn't say if I did or not.

Did you file any reports or records with anyone fromPatrick Petroleum?

I sent weekly reports into the Patrick Petroleum.-gffice.

Did anyone from Patrick Petroleum ever come out to thefield and talk with you regarding the operation of thewells?

Yes, once in a while, supposed to come out every monthand once,in a while, yes.

Did they normally come out once a month during thatperiod of 1969 to 19721

Somewhere in that.

Who would come out to the wells during that period?_--,Roy Cline

Is that C L I N E?

-2-

.$ .

A(, - Q

A

Q

A

Q

A

QA

,

Yes.

What was his position with Patrick Petroleum7_~ -..... -..-_ -...._ ~_._ ..- ~_-. _..., ~. ~~. ~....~ .._. .~fSuperintendent I think-1..^...... _, .t.He would come out more or less on a monthly basis, isthat correct, during that period of time?

Yes.

What would be,the purpose of his coming out to thewells on a monthly basis during that period?

I imagine to check if it was doing -- if I was keepingit up in any kind of shape or not.

Would you go out to the wells with him?

Tf I was there,himzif.

if I wasn't there he went out by..~. . _.

Mr. Tennant further stated at pages 11 and 12 ofthe deposition as follows: ._._ ..-. ~-

Q

A

Q

A

Q

A

Q

A

Q

You indicated you came back in the field between April1973 and July 1974. For whom were you employed orworking during that period?

Well I worked for Hall, a fellow by the name of Halland Patrick and Sullivan Company.'

so you were working for two or three petroleumproducing companies at the same time?

Certainly.

Would you receive your compensation for the work hat Ehrc*you did on the Patrick Petroleum-Curzydlo wells in theColumbus 3 Field directly from Patrick Petroleum duringthat period?

No I carried my own insurance: I had a contract.

Were you paid by Patrick Petroleum Company during thatperiod of April 1973 to July 19741

They paid me for labor..---... ._.. .~.You would bill them on an hourly basis or somethinglike that?

-3-

;: .

A

Q

A

Q

A

No

On a well basis, would that be it?

Yes

So that each week orstatement?

month you would submit a

Month

And how would that be determined, how would youdetermine what your statement, for your services wouldbe for the month with Patrick Petroleum?

Let's see,, we'll say services rendered for operatingwells No. 1, 2 and 3, for Curzydlo, Curzydlo lease.

thereafter~.~.~ ~.

-Certainly.ve.s,

Mr.deposition:

Tennant further stated at pu of the

Q

A

Q

A

During the period approximately 1969 to January 1972were you pretty much the sole person in charge ofoperating the three Patrick Petroleum-Cursydlo wells orwere others involved during that period?

I was.

Do you recall anyone else being involved as theproduction man or operator of those wells during thatperiod?

No, I would think not; the only thing was they wouldcome out, Roy would and took G.O.R.'s, gas oil rations,that's the only time anybody would be there.

Mr. Tennant further stated at pace 16 of then:depositio

Q During the period of approximately April 1972'to June36, 1974, when you were working directly with PatrickPetroleum Company, would you still report directly toMr. Cline?

A When do you mean, now?

Q During approximately April of 1973 to July Of 19747

A Yes, it was directly to Cline.

-4-

.

;: ./

Q You would report directly to Mr. Cline during thatperiod, would you not?

A Yes.

Nr. Tennant further stated at page 3s_and.,,.36 ofthe deposition as follows: ---.--._ ~..

h

Q

A

Q

‘2

Q

A

Q

A

And the only change that you recall as far as the No. 2and No. 3 Currydlo wells is that you reduced the No. 2to eleven flows from twelve flows? ,...-

yes.

About the last year that you worked there?.Something like that.

When Mr. Cline would be out on one of his monthlyvisits would he review with you the procedure that youwere going through as far as' the production isconcerned?

He could look at the intermeter and know what it wasdoing. He could look at it anytime he wanted to andthere was no change and it must have been suiting himso he made no changes and never made no comment oranything.

so, he was aware, when you say the intermeter, he wasaware of the number of flows and so forth that were ---

On, yes, before I change it I would tell him whatshould be done, it should be done and he agreed and sowe took one flow out.

Mr. Tennant further stated at paaes 36-37 of thedeposition as follows:

Q With respect to the total production from the threeCurzydlo wells for a month, ~would ~~..,nopnally~~producean extra approximate 150 barrels in.,.,_hh-Ed tank so as toallow for shrinkage prior to going into the pipeline?

A Yes.

Q That was a mont~_ly_fY~-p_f..~~~~~~.~~,~~~.~~...~~~ it?

A Oh, yes.

Q So that, in effect, was done at Mr. Cline's reau=t orhow did that come about?

-Yes.

-5-

.

. *

A,

-.

r

I. Michigan Court Rule No. 2.308 states in partherein applicable as follows:

Rule 2.308 Use of depositions in court proceedings.a. In General1. At the trial, or the hearing on a motion, or apreliminary proceeding, a part or all of a depositionSO far as admissible under the rules of evidence may beused against a party who was present or represented atthe taking of the deposition or had reasonable noticeof it, in accordance with any of the fol1owin.gprovisions:(b) The deposition of a party or anyone who at thetime of the transaction or occurrence out of which theaction arose or at the time of taking the depositionwas an officer, director , employee or agent of a party,may be used by an adverse party for any purpose."

Any fair reading of the statements of Donald TennaD.uuz.Fng-t_hetime he was OP~.~a.~bW ._.._ the .-_ t.bx+--Curzydlo . wells$2twtrickPe.trolVLCy!!paeY, from-r969_.t_o_Jalluary 1, 1972 and April, 1973 toJuly, 1974 is that he was doing so as an employee and/or agent ofPatrick Petroleum Company. In this regard, Mr. Tennant ' sstatements verify that he was reporting production and othermatters directly to Patrick Petroleum Company. Mr. Tennant alsotook orders, consulted with and obtained the consent of Mr.Cline, the Superintendent of Patrick Petroleum Company, withrespect to changes in the production of the Curzydlo.1, 2 and 3wells. All of Mr. Tennanl s-actl:yitie~s_2?r:jng-hm~..well..wjthin-.the.~.definition of _an-a_gent-"_of_...Patric)Z ,?e.troleum_Co~~an~, ifn.ca. _.- . . .._ .._.technicallv an ewloyeesf ?atrick.~~ P=trolew~.Company ._.. W&w..tetimes stated..----.-- _..-_ ..~. _ Accordingly, the use of Mr. Tennant's depositionconsistent with MCR 2.308 is proper for the reason t&&..&%trickPetrolwE coun~sel was pr,"e_nt_qf....fhedeposition, Mr. Tennant'was at alltimes-actirg-as the agent and/or employee of PatrickPetroleum Company, and Plaintiffs Wronski, therefore, inaccordance with MCR 2.308 have the right to use all or anyportion of said deposition in the hearings on this matter.

8. It should further be noted that at the timeof his deposition in 1975, Mr. Tennant was 63 years of age (seedeposition page 4). Plaintiffs Wronski do not know the presentwhereabouts of Donald S. Tennant.

9. MCLA 24.275, $75 of the MichiganAdministrative Procedures Act states in part herein applicable:

"24.275 Rules of Evidence.s75. In a contested case, the rules as evidence asapplied in a non-jury civil case in Circuit Court shallbe followed as far as practicable, but an agency mayadmit and give probative effect to evidence of a typecommonly relied upon by reasonable prudent men in theconduct of their affairs."

. .., :

, .

c /

10. Plaintiffs Wronskis submit that the sworndeposition of Donald S. Tennant under circumstances where counselfor both Defendants Sun Oil Company and Patrick Petroleum Companywere both present with the opportunity to cross-examine, whichdeposition verified that said Donald S. Tennant was producing theCurzydlo No. 1, 2 and 3 wells during period of time pertinent tothe issues in this case and which a_eEo..~~-~qn_elic~~~-~. .swornstatements that_ind~i,c,~ted.p.~oauc_tion from the Curzydlo wells werecontrary to the pr.o&afipn qrders and rules andregulations-of the_Suoervisor..qf We~lls Office and which testimony-is'~probative andrelevant to the issued involved in this case, j,ncJsdi.ng-.i.l~legalproduction from-t_he~.~-~u.r.zydlo wells ,~durinq the--f.o.urth quarter of.lJLL_ all constitute evidence of~~a type~~commonly relied upon byreasonablv prudent rnrinthe conduct of their affairs.

WHEREFORE, Plaintiffs Wronski request a rulingthat the said deposition of Donald S. Tennant is admissible inthe hearing before the Supervisor of Wells in this case.

Respectfully submitted,

O'SULLIVAN,, BEAUCHAMP,/I(ELLY & WHIPPLE

Port Huron,Telephone 313-987L4111

Dated: March 19, 1985

-7-

ANALYSIS OF DONALD TENNANT’s DEPOSITION Page I

1. The PATRlCK/CUKZYDLO 5-1 well by record (andobservation) was a pumping well. It was anticipatedthat it could produce between 10 and 15 barrels ofoil per day. This antxtpation was neveraccomplished due to the fact that the pump wasrarely ever observed to operate (pump).

Note: There is a high paraffin content in the field.

2. The PATRICK/CUKZYDLO 5 - 2 w e l l i s a f l o w i n gwell, which was allowed by the State of Michigan toproduce only 75 barrels per day, but was flowed at .12 flows per day by Donald Tennant.

3. T h e PATRICK/CURZYDLO 5 - 3 w e l l i s a l s o aflowing well. The State of Michigan indicated thatthis well would be allowed to producer 56.25 barrelsof oil per day.

a. This well had a casing leak which was notrepaired until January, 1976.

b. This well was considered to be anoff-pattern well and was flowed for 12 flowsper day by Donald Tennant.

4. ~April 13, 1971 test by the State of Mich.‘s D.N.R.

The 5-2 well was determined to flow at a rate ofIO.44 barrels of oil per hour during this test. With12 flows per day of one hour each in duration, the5-2 well produced 125.28 barrels of oil per day,n o t w i t h s t a n d i n g t h e f a c t t h a t t h e D . N . R . o f t h eState of Michigan only allowed 75 barrels of oil perday to be produced from the 5-2 well.

a. Thus, 50.28 barrels of oil were beingoverproduced each day. The D.N.R. of theState of Michigan only allowed the 5-2 wellto be flowed at less than 7.2 flows per day.

b. 7 . 2 f l o w s t i m e s I O . 4 4 b a r r e l s p e r f l o w :75.168 barrels of oil per day.

5. N o t e t h a t 1 2 f l o w s m e a n s t w e l v e h o u r s o f o i lflowing from a well per day. Each flow equals onehour of oil production from a particular well.

ANALYSIS OF DONALD TENNANT’S DEPOSITION Page 2

6. October 25, 1971, test by the State of Mich. D.N.R.

The 5-2 well was determined to flow at a rate of10.85 barrels of oil per hour. By setting the 5-2well to flow at a rate of 12 flows per day, PatrickPetroleum Company was producing 130.2 barrels ofo i l f r o m t h e 5 - 2 e a c h d a y . Again, a maximumproduction rate of 75 barrels of oil a day is whatthe 5-2 well was allowed by the Michigan’s D.N.R.Thus, from October 25, 1971 through December 31,1971, Patrick Petroleum Company overproduced theCurzydlo’s 5-2 well at a rate of 55.2 barrels of oilper day.

7. The 5-3 well had a casing leak, which is documentedin correspondence to the Working Interest O’wners.On January 8, 1971, there was a test observed andrecorded by the State of Michigan’s D.N.R., whichindicated that 7.44 barrels of oil per hour flowedfrom the 5-3 well. Donald Tennant testified thatPatrick Petroleum Company produced the Curzydlo5-3 well at a rate of 12 flows per day. Themaximum number of barrels of oil that the D.N.R. ofthe State of Michigan allowed Patrick PetroleumCompany to produce from the 5-3 well was 56.25barrels of oil per day. Thus, Patrick PetroleumCompany was allowed to flow the 5-3 well for nomore than 7 hours and 34 minutes each day byMichigan’s D.N.R., to obtain the maximum allowable56.25 barrels of oil per day. Notwithstanding thatrestriction, 89.28 barrels of oil were produced perday (i.e., 12 flows per day times 7.44 barrels of oilpe r f l ow) . Thus, 3 3 . 0 3 b a r r e l s o f o i l w e r eoverproduced each day the 5-3 well was allowed tof l ow du r i ng t he f ou r t h qua r t e r o f 1971 f r om t hePATRICKICURZYDLO 5-3 well.

8. For the 5-3 well in October of 1971, 83.31 barrelsof oil per day were produced. In November, 88.23barrels of oil per day were produced. In December,88.23 barrels of oil per day were produced. By thatrate, it took 22.5 days in October to achieve themaximum production from the 5-3 well; 21.25 daysto achieve maximum production in November, 1971;and 21.75 days in December, 1971.

a. Overproduction of wells to compensate forlower production wells, is and was contrary to theMichigan’s D.N.R. Rule 299.1506, effective in 1951.

ANALYSIS OF DONALD TENNANT’s DEPOSITION Page 3

9 . Note that the 5-2 and 5-3 wells were overproducedfor additional days after the first 22 days eachmonth to obtain the oil production for rather thanfrom the 5-1 well located on the same tract andconnected to the same tank battery.

10. Based on production and total production in oilflows per day, normally it took the first 22 days ofeach month to achieve the maximum production forthe 5-2 and 5-3 wells. For the remaining days eachmonth, the overproduced oil was reallocated tothe non-producing 5-1 well.

iNTEROFFICE CORRESPONDENCE -~

-7SUBJECT: Columbus III Unit - Crude Oil Sales

DATE: July 1, 1961

OFFICE: Northern District/Tulsa

FROM: Jesse J. Allen

TO: P. E. Robinson

The pipeline connection at the Columbus III Unit will be severedaround July 1, 1981. It will then be necessary to truck the crudefrom the unit. Plans and the necessary arrangements have alreadybeen made to temporarily truck the crude from the present facility.

To insure a better and safer trucking operation, construction of a5000 Bbl. tank and loading rack facility is proposed. The tank isto be located away from the central facility just off Wales CenterRoad. This will isolate-the trucking from our other operationsand will also cost less to pave the necessary road and turnaround.

At present, the land department is trying to lease l-1/2 acres ofland on the Winn or Holowitz properties. When a surface lease isobtained, construction will begin immediately. It is hoped thatthe facility will be completed before winter arrives.

This expenditure was not budgeted for 1981, since it could not beanticipated. However, maintaining production (the unit hasconsistently been 60-100 EOPD over budget) and avoiding having toshut the unit in because the trucks cannot haul the oil more thanoffsets the expense of building the facility. With this in mind,the attached AFE for $153,500 is submitted for your approval.

fiesse d Allen

JJA/rmc

cc: Vie Whiteside-Marketing, Dallas

/

SUN PRODUCTION COMPANY CAMPBELL CENTRE II. PO. eox 2880. DALLAS. TEXAS 75221

July 24, 1981

WORKING IXEREST CWZRS

Be: COLUMBUS III Unit (OHF)AF.F, No. 80561Sk Clair County, Michigan

Gentlemen:

AccacSed for yourproper ty in which

approval is a copy of a work proposal on a Sun-operatedyou own a working interest.

Please sign below and return one copy of this letter to Sun ProductionCompany, T. 0. Box 2880, Dallas, Texas 75221, Attention - Lee Lisby.

Yours very truly,

Attachment

cc : Jesse J. Allen - Northern District - Tulsa

I -JOINT O W N E R AFP.SOVAL

;. . ‘, ., ,: ., ; v: :,>,, . i, :,.,:.: j

April 27, 1989

Mr. Jack C. ChilingirianAttorney at LawP. 0. Box 319St. Clair Shores, MI 48080

Dear Mr. Chilingirian:

As requested, I h a v e f i n a l i z e d m y r e p o r t .Dietrich a n d E . H .

I was asked by Messrs. EdgarK o z i a r a t o u n d e r t a k e i n d e p e n d e n t e v a l u a t i o n o f t h e

C o l u m b u s - 3 F i e l d f r o m t h e p e r s p e c t i v e w h e t h e r K o z i a r a T r a c t s w e r e f a i r l yr e p r e s e n t e d i n t h e u n i t p a r t i c i p a t i o n s . Based on my evaluation, the unitparticipations determinations for the Koziara Tracts are as follows:

Tract Participation %

Koziara-1 1.3109

Koziara-2 4.5495

Koziara-6 19.2770

T h e p a r t i c i p a t i o n s t h a t I d e t e r m i n e d a r e m a r k e d l y d i f f e r e n t t h a n t h eassignments by Sun Oil Company when the Columbus-3 Unit went into effect in1974.f a c t o r s :

T h e d i f f e r e n c e s t o a g r e a t d e g r e e a r e a t t r i b u t a b l e t o t h e f o l l o w i n g

(1) S u n u s e d a u n i t p a r t i c i p a t i o n f o r m u l a b a s e d 4 0 % o n v o l u m e t r i c s(Reservoir pore volume) and 60% on production (Last Quarter 1971).I b a s e d t h e p a r t i c i p a t i o n s o n 1 0 0 % v o l u m e t r i c s , p r i m a r i l y t o d oaway with any bias created by Sun’s fraudulent production activityf o r t h e e n t i r e p r o r a t i o n p e r i o d p r e c e d i n g u n i t i z a t i o n , a f a c te s t a b l i s h e d b y S t . Clair County Circuit Court. I a l s o f i n d S u n ’ sf o r m u l a a s arbitrary c h o i c e . P a r t i c i p a t i o n determinationsexclusively on volumetrics are the only fair representation in thiscase. Sun gained substantially in Tracts 9 and 12 at the expenseof some other tracts, including those of Koziara.

( 2 ) I n v o l u m e t r i c d e t e r m i n a t i o n s , S u n a r t i f i c i a l l y p r o j e c t e d o i l a n dgas p a y s t o f ixed levels of gas, oil, and water (at somes t a t i s t i c a l a v e r a g e v a l u e s ) i r r e s p e c t i v e o f o v e r w h e l m i n g e v i d e n c et o t h e c o n t r a r y . Koziara Tracts 1 and 6 have substantial pay belowS u n ’ s a r t i f i c i a l l y p r o j e c t e d ( m i s r e p r e s e n t e d ) o i l - w a t e r l e v e l , a n dwere severely penalized with r e d u c e d p a r t i c i p a t i o n s . In mya n a l y s i s , I considered the levels of gas, oil, and water asi n d i c a t e d b y s c i e n t i f i c e v i d e n c e i n the o i l and gas payd e t e r m i n a t i o n s i n e a c h w e l l , s o a s t o g i v e f a i r a n d e q u i t a b l er e p r e s e n t a t i o n o f v o l u m e t r i c s . T w o o i l - w a t e r l e v e l s a r e g e n e r a l l yrecognized, o n e a t t r a n s i t i o n t o w a t e r , and one a t 100% water

2

(3)

(4)

(5)

(6)

saturation, and I made participation determinations on those bothlevels. In the final analysis, however, I am recommendingparticipations based on 100% water level in order to correspond toSun's work.

In the net pay analysis, Sun arbitrarily assumed 5% porositycut-off level as minimum significant for production. In myanalysis, I assumed 3% porosity cut-off level commonly accepted inMichigan Niagaran Reefs, which I found as significant to productionas the 5% porosity level for the Columbus-3 Field. Koziara Tract 6has substantial pay in 3-5% porosity range and was, therefore,disproportionately underrepresented i n the participationdeterminations by Sun.

There was no core analysis performed for Koziara Tract 2-1 Well,and Sun arbitrarily assigned a porosity value of 5.5% for thatwell. Based on scientific analysis of available estimates andevidence, I estimated a porosity value of 11% as minimum forKOZiZL!X 2-l Well. Sun's arbitrary decision grosslyunderrepresented Koziara tract 2 participation in the unit.

Sun used incorrect procedure in the volumetric determinations ofreservoir pore volume. Sun drew isopachs for the net pay as wellas porosity. However, instead of basing pore volume determinationson these two representations, Sun represented another isopach forporosity-net feet and based pore volume determinations on thishybrid product, which is going to give disparity results. In myanalysis, I drew isopachs for the net pay and made the net payvolumetric determinations. I then estimated average porosity foreach tract corresponding to wells within the tract and those 330'away from the tract boundary lines. This procedure gives muchfairer representation of porosity and thereby pore volume.

Sun made measurement errors in Koziara Tract 6 underrepresentingits participation by as much as 15% (compared to what was assigned)based on volumetrics. Analysis of the error suggests that theerroc should not have occurred in the first place or should havebeen rectified soon. Sun either had knowledge of the error or elseacted irresponsible.

Included with this report are participation determinations for theColumbus-3 unit by tract, and backup analysis for each well in the unit asregards to oil and gas net pay and porosity assignments. The copies ofisopachs were furnished to Sun in my earlier depositions. All the work isbackdated (completed before Fall of 1988), and this report is a recollectionsummary.

Very truly yours,

_M. Y. Joshi

ECONONIC PORJX VOLUHEOIL TO 100% WATEB 6 OIL EQUIVALENT GAS* TOTALS

-___-- ---- --___ - - - - - -

Oil + Oil Equivalent Gas = Total Oil EquivalentTRACT Ah x POROSITY Ah x POROSITY x .1286* Ah x POROSITY Pet.

7

8

9

10

11

12

13

14

15

16

17

18

36.862

120.764

144.228

17 .a63

369.382

515.198

142.249

0.730

367.990

0.000

27.524

680.116

41.184

0.010

101.409

15.096

29.814

0.524

2610.943

0.104 36.966 1.3109

7.532 128.296 4.5495

15.880 160.108 5.6776

0.698 18.561 0.6582

27.125 396.507 14.0606

28.410 543.608 19.2770

1.461 143.710 5.0961

0.015 0.745 0.0264

42.728 410.718 14.5645

0.264 0.264 0.0094

lb.311 43.835 1.5544

56.025 736.141 26.1045

0.000 41.184 1.4604

1.965 1.975 0.0700

0.875 102.284 3.6271

4.951 20.047 0.7109

4.700 34.514 1.2239

0.000 0.524 0.0186

209.044 2819.987 100.0000%

*Note: .1286 Oil Porosity Acre Feet = 1 Gas Porosity Acre Foot.

OIL PAY TO 100% SW

- - - - - - - - - - - -

TRACT Ah* POROSITY Ah x POROSITY PERCENTAGE

1 223.977 .16458

2 953.522 .12665

3 1354.000 .10652

4 158.500 .11270

5 3638.516 .10152

6 4537.593 .11354

7 1091.032 .13038

a 6.544 .11155

9 3689.121 .09975

10 0.000 .ooooo

11 322.292 .08540

12 6544.610 .10392

13 310.679 .13256

14 0.134 .07400

15 1008.640 .10054

16 204.000 .07400

17 315.495 .09450

ia 5.438 .09635

36.862 1.4118

120.764 4.6253

144.228 5.5240

17.863 0.6842

369.382 14.1474

515.198 19.7322

142.249 5.4482

0.730 0.0280

367.990 14.0940

0.000 0.0000

27.524 1.0542

680.116 26.0487

41.184 1.5774

0.010 0.0004

101.409 3.8840

15.096 0.5782

29.814 1.1419

0.524 0.0201

2610.943 100.0000

* Note: Ah = Acre Feet

GAS PAP

TRACT Ah POROSIT!t Ah x POROSITY PERCENTAGE__---e-w _I____-__---------------___

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

8.200 .09820

606.000 .09665

1298.460 .09510

57.100 .09510

3723.24 .05665

2209.60 .09998

80.940 .14040

2.600 .04600

4059.800 .08184

40.000 .05130

1984.860 .06390

8378.000 .0520039% .06390 N61% .04407 s

0 .ooo .ooooo

292.000 .0523342% .05130 N58% .05285 S

162.000 .04200

596.000 .06460

808.000 .045233

0.000 .ooooo

0.80524 0.0495

58.56990 3.6031

123.48355 7.5965

5.43021 0.3341

210.92155 12.9755

220.91581 13.5903

11.36398 0.6991

0.11960 0.0074

332.25403 20.4396

2.052 0.1262

126.83255 7.8025

435.65600 26.80071

0.00000

15.28036

6.80400 0.4186

38.50160 2.3685

36.54826 2.2484

0.00000 0.00000

1625.53864 100.00000

0.0000

0.9400

ANALYSIS OF DATA

Data relied on by any competent geologist with regard tothe cores from each individual well is derived from threereports.

A. On-site Geology Logs.

1 . Logs prepared by the geologist at eachindividual well site as reported to the State ofMichigan and on file with the Department of NaturalResources. (D.N.R.)

8.

C .

Electric Logs (Schlumberger)

1 . Information is taken after coring the well inthe field.2 . Report of the findings are made to theState of Michigan’s D. N. R.3 . Shows information with regard to porosityand permeability, which can be analyzed andcompared with the Maness Core Laboratoriesreports, for verification of both reports.4 . If the cores from the geology are present,there should be a one to one relationship betweenthe results of the electr ic logs and the corelaboratory analysis.5 . The problem with electric logs is that theydo not show a void or voids if they are present.6 . It is beneficial to have core data to comparewith Schlumberger data, especially where voids areencountered, as on Kotiara’s tract 6.

Maness Core Lab Reports

1. Well 6-1 and 6-2 reports with regard to thecore lab findings were never made available to theD. N. R. while all other wells in the field had theircore lab findings reported to the D.N.R.2 . Koziara had a right to have this informationreported to the D. N. R. prior to the fraudulentunitization.3 . This information was supposed to be filedwith the Michigan’s D. N. R. and should have beenmade available to the D. N. , R. prior to thefraudulent unitization.4 . The Maness Core Lab Report for the Koziara6-I well’s gas zone for porosities exceeding 3%shows 74 feet of missing core or voids, and 21 feetof missing core or voids in the oil zone forporosities exceeding 4.2%

ANALYSIS OF DATA PAGE 2

D. 6-3 WELL1 . Information shows through statements madeto Eugene H. Koziara at the 6-3 well site by Mt.George Gunn, the Sun Oil Company Geologist andMr. Victor Heinzelman, the Toolpusher forMcLachlan Drilling Company’s Rig I/ 2, and a weeklater Michigan’s Oil & Gas News, and six monthslater the on-site log supplied to Michigan’s D. N. R.that there are caverns inside the 6-3 well’s gas andoil bearing zones.2. The data will substantiate that between 32%and 58% of all the oil and gas in the Columbus “3”Field was originally at the discovery of the fieldlocated under the Koziara (tracts 6, 2 and I)property, depending on the method of extrapolationof data used.

E. Fraudulent Reallocation of Voids1 . The reallocation of voids were based on theCore Lab Reports (per Gordon Van Zelfden of SunOil Company).

a . T h e r e a l l o c a t i o n w a s d e t e r m i n e darbitrarily by the working interest owners,i.e. Sun Oil Company and Patrick PetroleumCompany, the two major working interestowners in the Columbus “3” Field.b . It was supposedly based on thefragments that were missing as well asmissing footage of cores for each well in theColumbus “3” Field.c. The cores were not secured at eachcoring site. There was no fence erectedaround each coring site, where the coreswere laid after each trip out of the well.There was no guard present while the coreswere laid out from the well.d . With regard to the 6-1 well, Sun OilCompany’s field foreman, Mt. Mielke gaveEugene H. Koziata a l/2 foot long sample ofoil bearing core for a souvenir.

The core analysis data on the ManessEore Lab Reports for the, 6-1 and 6-2 wellsdo not compare with the unfavorable on-sitelogs of Sun Oil Company’s geologists.f. S u n O i l C o m p a n y b e n e f i t s a t t h eexpense of the Koziaras by reallocation ofthe voids from Koziata’s multi-cavernoustract 6 to the other Sun Oil Co. propertieswhich had many wells which went dry priorto and the first few years after thebeginning of the fraudulent unitization, on?une 25, 1974.

MISREPRESENTATION OF OIL-WATER CONTACT AND GROSS PAY- - -

Page I of 6

Sun has assumed a fixed oil-water contact (OWC) at -2464 feet throughout theColumbus “3” Field. Sun’s oil-isopachs also show the zero line coincident with theOWC at -2464 feet. However, in the western part of the structure, the OWC isremoved from the zero isoline of the isopach, presumably because of pinching out insome wells. The result of this fixed OWC assumption is that, irrespective of what thecore and other data may depict the actual OWC in individual wells to be, the grossoil pay attributed by Sun always constitutes, from gas-oil contact (GOC) as depictedby the core analysis, or from the top of the reef (if below GOC), to the fixed depthat -2464 feet. It is interesting to note that although Sun has treated OWC to befixed irrespective of evidence to the contrary, it has treated GOC to be varying(even within the same structure;) as evidenced. The direct consequences of the fixedOWC assumption are that, tracts possessing wells with actual OWCs higher than -2464feet were assigned higher oil pay and thereby inflated tract participations, at theexpense of some other tracts possessing wells with actual OWCs below -2464 feetwhich were assigned lower oil pay and thereby deflated tract participations. Thefixed OWC is a misrepresentation, since all available data points to the contrary, andt h i s m i s r e p r e s e n t a t i o n h a s c a u s e d unequitable a n d u n f a i r p a r t i c i p a t i o n s i n t h eColumbus “3” Unit agreement which went into effect on June 30, 1974.

In oil f ields, two distinct oil-water contacts (OWCs) are recognized, one attransition from oil to water, and the other at 100% water saturation. Above theOWC at transition, t h e w a t e r a l t h o u g h p r e s e n t a l o n g w i t h o i l i s a t irreducable(minimum) saturation, permitting water-free oil production. Below the OWC at 100%water saturation mostly water is found, and no commercial oil production occurs.Within the oil-water transition zone, the water saturation changes from irreducible tomaximum, and commercial production of oil with water can occur. The same analogyapplies to gas-oil or gas-water contacts depending upon the type of the system. Thetransit ion zone itself may or may not exist. The position of the reservoir fluidcontacts in the same field may vary from well to well, or may be approximatelyconstant (with reference to the fixed datum), depending upon the interplay of MotherNature’s highly complex forces and their governing mechanisms.

In the Columbus “3” Field, the Maness Petroleum Laboratories’ core data clearlydepicts the two distinct oil-water contacts, although in some wells there are notransition characteristics, but rather an abrupt change in water saturation from theirreducible level to almost 100%. The variation in oil-water contacts (in reference tothe fixed datum) is also remarkably wide from well to well. Based on the core dataof the well for which the OWC can be estimated with a high degree of certainty, andexcluding a few wells which do not go with the surroundings, the average values ofthe oil-water contacts are estimated at -2450 feet for the transition, and -2465 feetfor the 100% water saturation. Sun’s fixed OWC at -2464 feet is almost identical tothe estimated average value of the OWC at 100% water saturation. In estimatinggross oil pay for the purpose of the unitization, Sun assumed OWC at 100% watersaturation as the base, rather than the OWC at transition. There is nothingunjustified about Sun’s treating OWC at 100% water saturation as the base (i.e. thestarting point) of oil pay, although Sun would have been equally justified in treatingOWC at transition as the base, or even much more so by considering some weightedaverace as the base, depending uoon expected recovery from the transition zone.What -is totally - ,unjustified, unreasonable and unacceptable is that Sun considered theOWC qs fixed (constant) throughout the Columbus “3” Field at some avera~lue.Average is the statisticsof a parameter derived from its several possible values,However, that does npt make all those values (used in determin.ing the average) equalto the average.

MISREPRESENTATION OF OIL-WATER-CONTACT AND GROSS PAY

Page 2 of 6

Sun’s use of estimated average OWC statistics, to represent it at that valuethroughout the Columbus “3” Field (even the OWC varies markedly from well to well)in determining the gross oil pay, constitutes a total misrepresentation Qf oil-watercontact, resulting in total misrepresentation of all tract participation percentages.

The possible motives behind Sun’s misrepresentation of oil-water contact, andthereby gross oil pay within the Columbus “3” unit, may be as follows:

(I) Sun believes in only a fixed oil-water contact within a field ratherthan a variable one as may be depicted by actual data. Theoreticalconsiderations as well as field evidence dictate that the oil-water contact(OWC) or contact between reservoir fluids in general, need not beconstant and can vary markedly, and should be treated as such. Moreoveralthough Sun has assumed a fixed oil-water contact it has treated thegas-oil contact (GOC) as being variable (even within its representation ofthe two separate gas structures) throughout the Columbus “3” Field (i.e.,structure), in arriving at oil and gas pays. If the GOC can vary withinthe same structures, there is more reason to believe that the OWC shouldbe varying even more markedly rather than being constant within theColumbus “3” Field. If there is any truth about Sun’s belief in .a fixedOWC, then it has no validity due to -the clear-cut evidence to thecontrary, and has no credibility and authenticity because of Sun’s owncontradiction in treating GOC to be varying within the same structure.

(2) The second possible motive behind Sun’s assumption of a fixedOWC in the Columbus “3” Field may be that even though Sun recognizedthe OWC to be varying, Sun thought that the variation to be statisticallyinsignificant, in order to presume a fixed OWC. In the Columbus “3”Field there were approximately 23 wells completed to be successful atthe time of unitization, of which a conclusive core analysis was availablefor almost 21 wells. Excluding 2 wells to be gas producers, 2 wells whichdo not go with the surroundings, and a few other wells in the westernpart of the field due to pinching out (Sun’s isopach shows OWC below thezero pay line), there are 15 wells on which the average OWC statisticcan be based or Sun must have based its OWC. The average value ofOWC at 100% water saturation, based on core data of these 15 wells isestimated at -2465 feet, (or very similar to Sun’s OWC at -2464 feet).The standard variation is estimated at 15 feet. The treatment of a fixedOWC by Sun has caused a normal error of + or - 15 feet in the gross oilpay assignments. The average gross oil pay for these wells is on theorder of 78 feet. Thus Sun’s fixed OWC has caused a normal error of

MISREPRESENTATION OF OIL-WATER CONTACT AND GROSS PAY

Page 3 of 6

(3) The third possible motivation behind Sun’s treatment of a fixed OWC for theColumbus “3” Field may be that Sun felt uncertain as regards to estimates of OWC,and therefore decided to fix it at some average value. Such a situation can typicallyarise in the treatment of gas-oil contact (not oi l-water contact) when thedeterminations are based on (indirect) electric logs. In such cases, the existance ofgas-oil contact (free gas) is known from other sources such as production tests orreserves analysis. However, the GOC is indicated on the electric logs of only a fewof several wells. In such cases, it is prudent engineering practice to treat constantGOC as the weighted average of the few estimable values. However, such is not thecase with the Columbus “3” Field. Unlike the reliance on the indirect techniques, thetools available for the Columbus “3” reservoir evaluation were the direct type, i.e.,the actual reservoir core sample analysis, with indirect techniques, i.e., the electriclogs essentially acting as a backup. Almost all the wells in the Columbus “3” unitwere cored and logged. Of the approximately 23 wells completed to be producers atthe time of unitization, 22 have laboratory core analyses, with data as regards tofluids saturation (for GOC and OWC picks) for 20 wells. Of these 20 wells, OWC at100% saturation is estimable with a high degree of certainty for 18 wells, and withalmost absolute certainty for 13 wells. For the remaining 4 wells, the OWC at 100%water saturation can be ascertained with reasonable certainty with the aid of thefield core sample report, or based on the field report alone if the laboratorymeasurements were not performed. The picture is even brighter as regards to theOWC at transition. Of the 20 wells for which laboratory core analysis is available,OWC at transition is estimable with amost absolute certainty for 16 wells, and with ahigh degree of certainty for the remaining 4 wells. If Sun decided in favor of thefixed OWC treatment because of the uncertainty factor, then Sun can only beconstrued to be an incompetent and imprudent operator pertaining to the Columbus“3” unitization. If Sun felt a degree of uncertainty as regards to OWC at 100% watersaturation, then it should have used OWC at transition for oil pay determinations orelse considered some weighted average of the two contacts.

(4) The fourth possible motive behind Sun’s treatment of the fixed OWC may besimply because of the resulting ease of computations. Once the OWC is fixed at someaverage value, based in part on discretion (individual choice or judgment) and in parton arbitration, and additional arbitrary decisions as regards to minimum porosity andtreatment of missing data are made, then the net pay determinations become merely acounting process. Such determinations can be delegated to someone not qualified forthe job, or coded into a computer even by an amateur. But such an approach defeatsthe main purpose of a unitization, which is the equitable and fair distribution ofresources according to its esteemed producible value under each tract, and notsomething centered around an average or any other abstraction. If Sun had such amotivation in mind then Sun should be construed to be irresponsible in the task ofunitization, and insensitive to the task as well which resulted in gross inequities in atleast 6 of the 18 tracts comprising the Columbus “3” Unit.

(5) The fifth and final possible motive (but by no means the least because of itsorder amongst the five separate and distinct motives) behind Sun’s representation offixed OWC is that it gives Sun favorable (not equitable or its just fair share, butmore than irs fair share) unit participation, than without such representation. Or therepresentation for the oil-water contact parameter, was made to be fixed at -2464feet throughout the reservoir, not because of its actual depiction or scientific merits,

MISREPRESENTATION OF OIL-WATER CONTACT AND GROSS PAYPage 4 of 6

but it happened to give Sun a better (inflated) participation in theColumbus “3” Unit. It is a well known fact that the common practice inmost businesses is to select parameters at values to meet certainobjectives which is usually profit maximization or cost minimization. Butunitization by law is not to be handled just as any ordinary business, andthe objectives should be equitable in order to insure a fair distribution ofresources (according to estimated producible values under each tract), andnot maximum share at minimum cost for any company at the expense ofothers forced to join the unitization. In unitization, representing aparameter for the sake of extraordinary gain, is gain at the expense ofsome other interest owners and constitutes misrepresentation. If Sun hadsuch a motivation in mind, then the misrepresentation of OWC can beconstrued to be intentional to profit at the expense of other interestowners.

Sun’s misrepresentation of OWCs in the Columbus “3” unit can only be ascribedto one or more of the five separate and distinct possible motives. The implication ofthe misrepresentations are straightforward. Tracts having wells with actual OWCshigher than Sun’s fixed misrepresentation at -2464 feet were assigned inflated oil paysand thereby gained in unit participations (got more than their equitable and/or fairshare) at the expense of some other tracts having wells with actual OWCs lower thanSun’s misrepresentations at -2464 feet which were assigned deflated oil pays andthereby lost in unit participations (received less that their equitable and/or fair shareas dictated by the unitization law).

An exhibit to this effect shows losses (-1 and gains (+) in terms of net oil payand corresponding porosities for all wells in the Columbus “3” Unit, as the result ofSun’s misrepresentation of the OWCs. Or in other words, the exhibit shows inreverse, what should have been gains/losses in net oil pay for all individual wells inthe Columbus “3” Unit, had Sun correctly represented the actual OWCs at 100% watersaturation in individual wells estimable from all available data, as opposed to Sun’smisrepresentation of the OWCs to be fixed at an average value of -2464 feet basedon some wells. In arriving at losses/gains in terms of net oil pay, a minimum porositylevel of 5% is used in order to be consistent with Sun’s work. The exhibit also showslosses/gains in terms of net oi l porosity-feet (not to be confusedporosity-acre-feet). The message from the exhibit is to the following effect:

(a) Overall, the total disposition in terms of net oil feet for all thewells in the Columbus “3” unit, due to Sun’s misrepresentation of OWCs,is on the order of 174 feet. This disposition when compared to Sun’stotal net oil pay assignment (combined for all wells) of approximately1180 feet, is on the order of 15%, or too significant to ignore.

W Of the total losses in terms of oil porosity-feet suffered byaffected tracts as a result of Sun’s misrepresentations of the OWCs,Curzydlos’ tract 5 accounts for 38%, followed by Koziaras’ tracts I and 6on the order of 26% and 15% respectively.

(c) Of the total gains in terms of oil porosity-feet rewarded as theresult of Sun’s misrepresentation of OWC, Sun-Winns’ tract 15 accountfor 36%, followed by 31% for Sun-Winns’ tract 12 and 22% forSun-Shanahans’ tract 3.

with

MISREPRESENTATION OF OIL-WATER CONTACT AND GROSS PAY

Page 5 of 6

In conclusion, Sun misrepresented oil-water contact at 100% water saturation inthe Columbus “3” Unit (by treating it as fixed throughout the unit at an average valueof -2464 feet, though the overwhelming evidence shows to the contrary). The directconsequences were misrepresentations in net pay assignments and thereby unitparticipations that took effect on June 30, 1974. The tracts that receiveddisproportionally lower participations (as a result of misrepresentation of OWCs) areCurzydlos’ tract 5, and Koziaras’ tracts I and 6. The tracts that benefited withdisproportionately higher participations are Sun-Winns’ tract 15, Sun-Winns’ tract 12,and Sun-Shanahans’ tract 3. (Please note that tracts 15, 12 and 3 were the onlybenefactors of the 881,071 barrels of oil “so called error of overcredit to tracts 15,12 and 3” as admitted by Sun Oil Company over a six month time period in 1984 and1985.)

Sun was not a working interest owner in tracts 5 and 1 at the time ofunitization. Even though Sun was the major working interest owner in tract 6, itslosses there (by short-changing tract 6’s participation percentage) was far outweighedby the total resulting gains (by over-crediting participation percentages) in tracts 12,15 and 3, where Sun was the major working interest owner, and paid the land-ownersa lesser royalty (12.5% for each Sun tract instead of 18.75% as on tract 6.)

MISREPRESENTATION OF OIL-WATER CONTACT AND GROSS PAY

Page 6 of 6

NET OIL PAY LOSSES/GAINS IN COLUMBUS “3” UNITDUE TO SUN’S MISREPRESENTATION OF A FIXED OWC AT -2464 FEET

Tract Well-__

6

79

II12

15

Koz-2KOZ-IShan-ICWZ-ICurz-2Curz-3KOZ-IKoz-2Wron-2Winn-1CWink2CHolo-lWinn-1

-2-3-4-5-6-7-8

Winn-18Winn-2B

owe NET OIL PAY % %@ Losses (-)/Gains (+) Total Total

100% SW FT POR POR-FT LOSSES GAINS- -

-24

( -2453 ) +I 1(-2454) + 3-2483 -19

c-2489+) - 2 5( -2493 ) -28-2465

( -2467 ) - 3-2478 -14

C-2457)(-2446)-2437 + 5

( - 2 4 5 3 ) +I0-2421 + 3-2443-2470 - 6-2358

-2468 - 4-2450 +I3

.I644 -3.9456

.0725 +0.7975

.0547 to.1641.I183 -2.2477.1660 -4.1500.0822 -2.3016

.I097 -0.3291

.0762 -I .0668

.0638 +0.3190

.0773 +0*7730.0690 +0.2070

.1060 -0.6360

.0957 -0.3828.1091 +I.4183

-26.20

-14.93-27.56-15.28

- 2.19- 7.08

+21.68+ 4.46

+ 8.67

+21.01+ 5.63

- 4.22

- 2.54+ 38.55

1 6 F . Winn-18 -240517 Lipp-2 -2463

-100.00 - +100.00

Note: This analysis is based on estimated losses & gains in terms of net oilporosity-feet in Sun Oil Company’s pay assignments for the Columbus “3” unitdue to Sun’s misrepresentation of a fixed OWC at -2464 feet.

Coring the complete Brown Niagaran interval in the 6-3 well was attemptedbecause core together with logs provides the most accurate and detailedinformation of the well and the reservoir. While coring this well, thecavernous and vugular nature of the Brown Niagaran created lost circulationproblems and caused the core barrel to jam during four of the seven coringruns. The following review of the coring log and the 6-3 well drillingsunmary verifies the recurring problems during the coring of the BrownNiagaran.

DateBeginning End

Core Y Depth Depth Recovered

8-26-83 1 2900

8-26-83 2 2901

8-26-83 3 2960

8-27-83

8-28-83 4

8-28-83 5 3021

8-29-83 6 3025

8-29-83

8-29-83 7

3000

3004

3034

3044

3065

Coring too slow, TOH

Cored 10.5 hrs., TOH

Cored 7 hrs. at 2996 drillstring dropped 5', lost cir-culation, gas to surf. in 30min., close well in, flaregas, kill well with 9.0 PPGwater, pmpg LCM, TOH

Drilled out 4'

Cored 2 hrs., barrel jammed,TOH

Cored 1 hr., barrel jamned,TOH

Cored 1.5 hrs., barreljamned. TOH

Drilled out 10'

Cored 2.5 hrs.; barreljammed, TOHOrllled to TOLogged well

2901 1'

2960 59'

2996 36'

3004

3021 15'

3025 4'

3034 9'

3044

3065 20'

3221

After 31 days and five unsuccessful attempts to core a full 60' barrel, itwas concluded that more coring was not cost effectfve and a waste of drillingrig time. After attempting the seventh coring run, a decision was made tnterminate coring.

Coring the complete Brown Niagaran fnterval in the 6-3 well was attemptedbecause care together with logs provides the most accurate and detailedlnformatlon of the well and the reservoir. While coring this well, the

L_~~~.~ cavernous and vugular nature of the Brown Nlagaran created lost circulationroblems and caused the core barrel to jam dur1n.g four of the seven coringuns. The following review of the coring log and the 6-3 well drillingumary verifies the recurring problems during the coring of the Brownliagaran.

late Core #-

3-26-83 1

B-26-83 2

8-26-83 3

Gas ZoneCavern

8-27-83

8-28-83 4

8-28-83 5

8-29-83 6

8-29-83

8-29-83 7

BeginningDepth

2900

2901

2960

3 0 0 0

3 0 0 4

3021

3 0 2 5

3 0 3 4

3 0 4 4

3 0 6 5

Endoepth Recovered

Coring too slow, TOH

Cored 10.5 hrs., TOH

Cored 7 hrs. at 2996 drillstring dropped 5', lost cir-culatlon, gas to surf. in 30min., close well in, flaregas, kill well with 9.0 PPGwater, pmpg LCM. TOH

Drilled out 4' of cement

Cored 2 hrs., barrel jamned,TOH

2901 1'

2960 59'

2996 36’

%xcausedblowout

3 0 0 4

3021 15’ Allthesecores

Cored 1 hr., barrel jamned, 3 0 2 5 4’ hadTDH cement

imbeddedCored 1.5 hrs., barrel 3 0 3 4 gt injaned, TOH their

vwsDrilled out 10' Of cement 3044 Cavern

Cored 2.5 hrs.; barrel 3 0 6 5 20’jammed, TOHOrtlled to TD 3221Logged well

After 31 days and five unsuccessful attempts to core a full 60' barrel, Itwas concluded that more coring was not cost effective and a waste of drillingrig time. After attempting the seventh coring run, a decision was made toterminate coring. because well was TOO POROUS TO CORE

AND THE PERCOLATING PHENOMENON OCCURED One huge..-_-A.-..__ _- at, FL2 S-2 W~elYF'location. or multi--ecavernsincludingpercolatingcavern

QUESTIONS 2 & 3COLUMBUS III

ST. CLAIR COUNTY. MICHIGAN

lie11

Shanahan IIWronski I1Wronski 1-ACurzydlo PlCurzydlo #2Curzydlo 12Currydlo Y2Curzydlo Y2Curzydlo 13Koziara (E6L) 11Koziara I1Koziara #2Columbus 3 Ut 6-3c01umlxJs 3 ut 6-3Columbus 3 Ut 6-3Wronski 12Winn C-lWinn C-2Uinn C-ZHolowitz I1Holowitr 12H. Winn I1H. Winn 12H. Winn #3H. Winn 14H. Winn 14

K.

705691

T.Top

ReefCored Interval Interval Not Cored

T o pInterval Not Recovered

Bottom T o p Bottom From 0T

696699

3180 29243199 31623199 '31863171 28633196 2920

2900 3180

299428292886

319931713197

705 3198 3098 3095 3196701 3155 3147 3108 3156697 3199 2900 2875 3200703 3195 3025 3020 3190707 3225 2911 2900 3065

695 3225696 3213693 3207

308030142878

286130842856283731182833

3046 31872990 31862855 3178

698 3225696 3225697 3249698 3224693 3218692 3141

2835 31823010 31552850 31512815 31503118 31612800 3180

2996 30073034 30453065 3225

2999 30023071 30773079 30803132 3133

3025 3025.5

3118294529753035

314428593039

1014/762 - ( 1 )

QUESTIONS 2 6 3

Uell

H. Uinn 15H. Winn #6H. Winn 17H. Winn #7H. Winn 17H. Winn YBF. Winn XlF. Winn #2H. H. Winn B-lH. H. Winn B-2F. J. Winn B-lF. J. Winn B-2Lippstreuer 12E. J. Fraley

K. T.Top Cored Interval Interval Not Cored

Ree f toP- Bottom Tpp B o t t o mInterval Not Recovered

from 0T

697 3202 2888 2875 3160695 3229 3033 2992 3172697 3 1 9 1 2838 2800 3146

708 3176698 3231699 3217693 3226702 3208697 3205696 3 2 1 6705 32097cil 3218

COLUMBUS II,1ST. CLAIR COUNTY, MICHIGAN

2860 2 8 3 1 31753044 2 8 9 5 3 1 6 53183 3 0 7 5 32273124 3 0 7 1 31703144 3 126 31752 9 7 8 2 9 6 4 3 2 0 33 2 1 2 3 0 6 4 32163161 3 1 5 8 31783167 3 0 4 3 3215

29612 9 8 32 9 9 9

2 9 6 6 ‘,.-2 9 8 63 0 1 5

I 1014/762 - (2)

CONCEPTS OF PETROLEUM GEOLOGY AND BASIC ROCK PROPERTIES Khnp. 1

I (4 (6)‘(_ F&.2.4. Corer

(C)ample8 of various producing formations. Courtesy Core Laboratories, Inc.,

D&.8, Texas. (& Ellenburaer dolomite, Triple “N” Field. Andrew County, Texas.3=2w2.?Ld- 850 md. for this sample. Excellent exam& of secondarv Doronitv.(8) Pennsylvaoian reef, Dawaon County, Texrs. + = 570, k = 1136 md. Note the lowporosity value despite presence of a few large voida. (C) Cardium canplomerate and aand,Pembina Field, Alberta. Conglomerate:k = 9.0 md.

4 - S.S%, t - 3.0 md. Band: + - lS.O%,Note that the send is twice ill M~UB 88 the conglomerate which illustrates the

l?Eect of grain size uniformity.

other organic acids. This is also called vugular poros-ity and the individual holes are called vugs. mf-mimentsrv rocks are excellent targets

cm :non in many sedimentary rocks and are formedby structural failure of the rock under loads causedby various forms of diastrophism such as folding andfaulting. This form of porosity ia extremely hard toevaluate quantitatively due to its irregularity.

3,.&hitizalim: This is the process by which limestone (C&O,) is transformed into dolomite CaMg(CO,),. The chemical reaction explaining thischange is:

2 C&o, + MgCl, --) CaMg(C0,) f + CsCI,

observed that dolomite is normallyThis is the reverse of

what might normally be expected since dolomite isleas soluble than calcite. The best explanation ofthis aeeme to be that of Hohlt’ who has shown thatunder pressure calcite crystals tend to orient their“C” axes in the plane of bedding while dolomitecrystals are always in a random packing. w

solution effects enhanced bv a mevimchanne in lime&

It should be realized that primary and secondaryporosity often occur in the same reservoir rock. Figure2.4 shows actual examples of various porosity forma.

Typical Porosity Magnitude

A typical value of porosity for a clean, consolidated,and reasonably uniform sand is 20%. The carbonaterocks (limestone nnd dolomite) normally exhibit lowervalues with B rough average near 6 to 8%. Thesevaluea are approximate nnd certainly will not fit allsituations. The principal factors which complicateintergranular porosity magnitudes are1. Uniformity of grain size: The presence of small

particles such as clay, silt, etc. which may Iit in thevoids between larger grains greatly reduces theporosity. Such rocks are called dirty or shaly.

21 Degree of cementation: Cementing material de-posited around grain junctions reduces porosity.

3. Packing: This effect is illustrated in the systems ofspheres of Figure 2.3. Geologically young rocks are

TRAGI

TRACT 8

VOID & CAVERN GEOLOGYBASED ON LOGS SUBMITTED TOTHE STATE OF MICHIGAN AT THEIR

WELL'S COMPLETION

- ..--...?-- .-t;EIGHBOR ACRES - &O

:, THE KOZIARA 6-1w&&::.IS ,Xi$B$&&

i AND IS AT.&EAS!5 TIMES AS GOCI

ADJU'STED SURFACPRODUCTIVEEIGHBOR ACRES

THEREFORE 71 e&3OF ALL 'PHE OILCOMIN$.@OM T&

-KOZ%iti WELLS ATHE 3-1, 5-2, :AND 9-l WELIS

:: ORIGINATEi PRO)KOZIARA PROPER

"I iXJE TO THE YCID7 '-/. AND @VERNS

~_.. ..--.-.

-

a*TRICKPETS. . 2

/////

//

/,//I

SUN

S U N

e’TA

*2TA

7’ SUN

l 6

43l 4

03?I-

1-A;

+/I

GJ/: T/SUN

:’ 5; N

0 PAOOUCE.;1

/I Q DRYHOLE/

l 2-B //

t/,/1

COLUMBUS THREE UNITREVISED 8-8-84

DERIVATION OF VOLUMETRIC EQUATION OF OIL IN PLACE

Consider a Koziara Oil Cavern located under tract 6 around the Koziara 6-3 wellwith a surface area of one acre and a height of one foot, or a bulk volume of“Ellenburger Dolomite” found in the gas zone of the Koziara 6-3 well, with a surfacearea of one acre and a thickness of one foot. This constitutes the basic oil bearingformation volume measurement, expressed in Acre-feet.

It is also standard practice to express all liquid volumes in terms of barrels. Thefollowing conversion factors are useful:

I ACRE = 43,560 square feet

1 ACRE FOOT = 43,560 cubic feet

1 BARREL = 42 gallons : 5.614583 cubic feet

Thus:

I ACRE FOOT = (43560 cubic feet)/(5.614583 cubic feet per barrel)

= 7758.3678 barrels

So there are 7758.3678 barrels of oil in one acre foot of surface tank space.

It follows then, that for a cavern with a surface area expressed in acres = A, andwith a height expressed in feet = h, that the number of barrels of oil (volume = VP),the cavern contains can be expressed by the fol:swing formula:

V =P

7758 x A x h

If the oil bearing formation is other than a cavern or a very vugular formation asexists in the zone around the 6-3 well, the above equation has to be modified by aporosity factor = 4, expressed as a decimal fraction for the purposes of the aboveequation, but otherwise expressed as a percentage of the content of the semi-solidoil bearing formation. Thus, for semi-solid oil bearing formations:

V =P

7758 x A x h x ‘$

where 0 = 1 for any cavern such as those that exist in the Niagaran oil and gasformations of the Koziara property designated by Sun Oil Company as tract 6, orthose that exist in the caverns of the Mexican ‘Golden Lane”. As cited in “PetroleumExploration Handbook” by Moody, MCGRAW-HILL, 1982 Reissue, page 6-57:

“Another spectacular example of oil accumulation in a series ofreef traps is afforded by the Golden Lane trend. -- Here production isfrom the El Abra reef limestone of Cretaceous age and is expected toreach over a billion barrels of oil. A similar reeflike structure accountsfor the Poza Rica field shown several miles to the west of the GoldenLane trend. This field itself is expected to produce more than a billionbarrels of oil.”

See pages one and two of my March 9, 1984 letter to Mr. Beier for furtherenlightment on the cavernous Mexican wells.

-2-

For oil bearing formations other than caverns, porosity Q range from .20 to .07according to the “Petroleum Exploration Handbook”, page 25-11, and since the Koziara6-3 well site provided cores better in porosity than that of “Ellenburger Dolomite”which had an average porosity 0 of .202 according to Carl Catlin of the Departmentof Petroleum Engineering of the University of Texas on page 22 of his text entitled“PETROLEUM ENGINEERING Drilling and Well Completions”, Prentice-Hall, Inc. (19thprinting) the average porosity of the Koziara’s non-cavernous portions of the oilbearing formation exceed .202. The Columbus 3 Field had an average porosity $according to Sun Oil Company = .12, based on extracted non-cavernous cores.

For oil bearing formations other than caverns as found in the Koziara 6-3 well, orvery vuggy oil bearing zones as seen in the Shanahan I/ I well and Curzydlo # 2 wellcores by Eugene H. Koziara, at the time of coring of both wells, water is usuallyfound to occur in the semi-solid rock containing oil upon coring. This water is termedinterstitial water and is expressed as a decimal fraction = SW. SW subtracted from 1gives the oil bearing content of the Koziaras’ “Ellenburger Dolomite” oil bearingformation. The formula for VP above upon inclusion of the S factor becomes:

W

v =P

7758 x A x h x 0 x (1 - SW)

Crude oil in the reservoir , whether cavernous or otherwise, depending to aconsiderable degree upon the subsurface temperature and pressure as well as thegravity of the oil, contains dissolved gas. Producing this oil at the surface permitsmuch of the gas to escape, thus reducing the volume of the remaining oil. Oil whichyields income to the producer is the oil in the stock tank, and it has been customaryin speaking of oil reserves to mean stock-tank oil in barrels (STB). The ratio of thevolume of original or initial reservoir oil to the shrunken volume of stock tank oil istermed formation volume factor (FVF) or (Boi). Boi = 1.281 according to Sun Oil Co.

A reasonable prediction of FVF can be made from gas/oil ratio of well effluent.Where there is a reasonable assurance that the ratios being determined are solutiongas ratios (not including a large amount of free gas from the gas cap), the followingtabulation from Moody, p, 25-8, gives a sufficiently accurate estimate for general use:

Gas/Oil ratio, cubic feet per barrel FVF1 0 0 1.10300 I .20400 1.264 5 0 1.2855 0 0 1.316 0 0 1.36700 1.42900 1.52

1000 1.591500 1.852000 2.00

For a Gas/Oil ratio of 450, note that FVF or B = 1.285. Frequently used for closerestimates is a correlation of formation v01um~ factors with gas/oil ratio, specificgravity of the gas, API gravity of the oil, and the reservoir temperature (Standing, M.0.: “A Generalized Pressure-Volume-Temperature Correlation for Mixtures ofCalifornia Oils and Gases”, Oil and Gas Journal, Vol. 46, NO. 2, pp. 95-101, 1947.1

Including the formation volume factor (FVF) o r (Boil in the equation for thedetermination of volumetric oil in place (Vo) gives:

Upon substitution of three appropriate values of rock land fluid properties asdetermined by Sun Oil Company into the above formula for (STB) tank oil in place (inbarrels), the fraudulent Total Unit Equivalent Oil Acre - Feet = (A x h x 0) for theColumbus 3 field can be determined. Since:

and

‘oi

sW

VP

= 1.28 1 (barrels reservoir space)/(STB)

= 14% = .I4

= 12,600,OOO STB

Upon substitution of these three values into the above oil in place equation:

12,600,OOO STB : 7758 x A x h x 4 x (1 - .14) Stock Tank Barrels1.281

From algebra:Axhxf = 12,600,OOO x 1.281 Porosity Acre Feet

.86 x 7758

Axhxf = 16,140,600 = 2.419.2 Porositv Acre Feet6,671.88

Likewise upon substitution of three appropriate values of rock and fluid properties asdetermined by Sun Oil Company into the following gas volume equation, the fraudulentTotal Unit Equivalent Gas Acre - Feet : (A x h x 6) can be determined:

vS= 7758 x A x h x 0 x (1 - Swg)

BSince: .F

B =@

1.40 (barrels reservoir space)/(MCF)

S 2 12% = .I2and %

vS: 5,752,OOO MCF

Upon substitution of these three values into the above gas in place equation:

5,752,OOO MCF = 7758 x A x h x $ x (I - .12) MCF, and1.40

A x h x + = 5,752,OOO x 1.40 = 8,052,800 = 1179.55 Porositv Acre Feet7 7 5 8 x .88 6,827.04

-4-

In reference to the BRIEF OF SUN EXPLORATION AND PRODUCTION COMPANYdated September 10, 1984 as submitted to the STATE OF MICHIGAN - BEFORE THEMICHIGAN DEPARTMENT OF NATURAL RESOURCES SUPERVISOR OF WELLS onremand from the lngham County Circuit Court - Court of Appeals Docket No. 51523,specifically, page 14 where SUN OIL claims:

“The claim that Sun used oil and gas acre feet in the formula isincorrect. Gas and oil porosity maps were prepared and used in theformula. See exhibits II through I4 and the testimony of GordonVanZelfden, pp 10 and II of the transcript of the May 15, 1973unitization hearing.”“Finally, the claim that the economical factors were not applied toweight the values of oil as against gas is also incorrect. A porosity acrefoot was weighed at I, economically, and a porosity acre foot of gas wasweighed at 0.1286 economically.”

As calculated on the bottom of the previous page the unweighed fraudulent Total UnitEquivalent Gas Acre - Feet = (A x h x 0) was:

A x h x 4 = 1179.55 Porositv Acre Feet

Multiplying this quantity by the economic gas weight = 0.1286, gives the EconomicTotal Unit Equivalent Gas Acre - Feet as:

Economic A x h x 4 = 1179.55 x 0.1286 = -Economic Gas Porositv Acre Feet

Since per Sun Oil Company the economic oil weight = 1 then it follows that theunweighed fraudulent Total Unit Equivalent Oil Acre - Feet = (A x h x 4) is equal tothe Economic Total Unit Equivalent Oil Porosity Acre - Feet:

Economic A x h x $ = 2419.2 x 1.0 q 2419.2 Economic Oil Pozsitv Acre Feet

Adding the two Economic Porosity Acre - Feet figures gives:

2,419.2 Unit Equivalent Oil Porosity Acre - Feet151.7 Unit Equivalent Gas Porosity Acre - Feet

2,570.9 Total Unit Equivalent Porosity Oil and Gas Acre - Feet

In our pre-hearing in Lansing, Michigan on 3uly 26, 1984, Mr. Ederer, the Sun OilCompany attorney, handed out the sheet of paper entitled “Computa?ion of Tract UnitParticipation”, where the Total Unit Equivalent Oil and Gas Acre-Feet was defined bySun Oil Company personnel as equalling 2574.1 Comparing this number with the onecalculated above shows only a discrepancy of 3.2 oil and gas acre - feet.

Nevertheless, the computations which provided Sun Oil Company with lower thanactual Oil and Gas porosity acre - feet for the Koziara and Wronski tracts, as well asthe incomplete information used to calculate the gas volumes for each tract (theheight h was missing from the the gas acre feet used to calculate the individual tract

-5-

gas porosity acre feet figures), both indicate to the impartial observer the extent thatSUN OIL COMPANY management went to - to defraud the Koziaras and Wronskis oftheir rightful share of oil and gas in the Columbus “3” Field. Using the computationsbased on SUN OIL COMPANY data, as presented in their June 25, 1974 white paperentitled “Columbus Section “3” Field, St. Clalr County, Michigan, Niagaran BrownDolomite Rock and Fluid Propert?&; as shown on the next page - the Unit EquivalentGas Porosity Acre - Feet based on the June 25, 1974 figures gives 148.8 UnitEquivalent Gas Porosity Acre - Feet, which when added to the 2421 Unit EquivalentOil Porosity Acre - Feet gives:

2421.0 Unit Equivalent Oil Porosity Acre - Feet148.3 Unit Equivalent Gas Porosity Acre - Feet

2569.3 Total Unit Equivalent Porosity Oil and Gas Acre - Feet

In our pre-hearing in Lansing, Michigan on July 26, 1984, Mr. Ederer, the Sun OilCompany attorney, handed out the sheet of paper entitled “Computation of Tract UnitParticipation”, where the Total Unit Equivalent Oil and Gas Acre-Feet was defined bySun Oil Company personnel as equalling 2574.1 Comparing this number with the onecalculated above shows a discrepancy of 4.8 oil and gas acre - feet.

In addition to the above fraudulent discrepancies (3.2 as compared with 4.8 oil andgas acre feet in the three SUN OIL COMPANY computations), the SUN OIL COMPANYgas isopach of June 25, 1974 used to calculate the gas acres by Sun Oil Company wasand is fraudulent as admitted by SUN OIL COMPANY in their July 13, 1983communication to all Working Interest owners. See the following exhibit of their July13, 1983 letter to all Columbus “3” Unit Working Interest Owners.

Given that one of the oil caverns between the Koziara 6-3 and the 6-2 well site isfifteen acres in area and averages twentyfive feet in depth, it follows then that theamount of oil in place in that cavern is according to the all recoverable oil in placeformula as derived above (See pages one through three, specifically top of pagethree):

: 7758 x A x h = 7758 x 15 x 25 = 2,271,077 barrels of oil“Pl

~. Boi 1.281

Given further that another the connecting oil cavern between the Koziara 6-3 and the6-2 well site has an average depth of twenty feet and covers twenty acres in area,this second cavern’s all recoverable oil in place is calculated as:

V = 7758 x A x h : 6056.21 x 20 x 20 = 2,422,482 barrels of oil.P2 1.281

Thus just two caverns in the multicaverned Koziara tract 6 had over 4,500,OOO barrelsof completely recoverable oil in place.

4,500,OOO barrels of oil times $38.00 per barrel = m

As the Carlsbad Caverns are multilayered, so are the Koziara Brown NiagaranDolomite caverns, and thus many more caverns most likely exist under the diamondcoring bit busring - (The first new diamond coring bit was worn out while coring thefirst one foot section of the Koziara’s Niagaran formation caprock and had to bereplaced with another new diamond coring bit) caprock of the Koziara 6-3 well site.

POROSITY*

Porosity is a measure of the void space within a rock expressed as a fraction (orpercentage) of the bulk volume of that rock. In actual rocks porosity is classified as:

A. ABSOLUTE POROSITY: ‘ T o t a l p o r o s i t y o f a r o c k , r e g a r d l e s s o fwhether or not the individual voids are connected, and

8. EFFECTIVE POR O S I T Y: Only that porosity due to voids which areinterconnected.

It is the effective porosity which is of interest to the oil industry. In most petroleumreservoir rocks the absolute and effective porosity are, for practical purposes, thesame.

Geologically, porosity has been classified in two types, according to the time offormation:

1. PRIMARY POROSITY (intergranular): Porosity formed at the time thesediment was deposited. The voids contributing to this type are thespaces between individual grains of the sediment.

2. SECONDARY POROSITY: Voids formed after the sedimentwas deposited. The magnitude, shape, size, and interconnection of thevoids bear no relation to the form of the original sedimentary particles.

Secondary porosity has been subdivided into three classes based on the mechanism offormation. One subclass of secondary porosity is called solution porosity.

SOLUTION POROSITY: Voids formed by the solution of the moresoluble portions of the rock in percolating surface and subsurface waters containingcarbonic and other organic acids. This is also called vugular porosity and theindividual holes are called vugs. Unconformities in sedimentary rocks are excellenttargets for zones of solution porosity. Voids of this origin may range from small vugsto cavernous openings. An extreme example is Carlsbad Cavern. (*Source:PETROLEUM ENGINEERING Drilling and Well Completions, Carl Catlin, Dept. ofPetroleum Engineering, Univ. of Texas, Prentice-Hall, 1960, pp. 20-22)

CARLSBAD CAVERNS**

The Carlsbad Caverns were declared a national monument in 1925 and a national parkin 1930. The caverns are located in the arid foothills of the Guadalupe Mountains ofsoutheastern New Mexico. The national park covers an area of 46,753.07 acres and isthe site of Carlsbad Caverns, largest subterranean known labyrinth in the world. Alabyrinth is an intricate structure or enclosure containing a series of winding passageshard to follow without losing one’s way; in other words a labyrinth is a maze. Thecaverns were first explored in 1924 by a National Geographic Society party, and arebelieved to have been formed some 60,000,OOO years ago by the action of water onoriginal beds principally of l imestone, but also containing rock salt and gyr;sum. Thefull extent of Carlsbad Caverns is not yet known, although 37 miles of connectingunderground corridors and chambers have been explored. The deepest known level isthe third, at 1100 feet below the surface of the earth. On the first level, 750 feetdown, is the principal cavern, the Big Room, which is about 4000 feet long, 625 feetwide and reaches a height of 285 feet, and is the most impressive of the manychambers. It contains a superb variety of stalactites and stalagmites, the mostnotable being Crystal Spring Dome and Rock of Ages. On the second level 829 feetdown includes King’s Palace, Green Lake Room, Papoose Room and Queen’s Chamber.(**Sources: (I) Funk and Wagnalls Standard Reference Encyclopedia, Volume 5, pp.1806-1807; and (2) Funk and Wagnalls New Encyclopedia, Volume 5, page 163.1

Analytical Associates, Inc.Analytical Chemists

19380 Mt. Elliott

To:~

LAttention:

Sample No

Detroit, Mich. 48234(313) 369-9400

Eugene H. Koziara 1Date: Aug. 28, 1986

11406 Savage Dr-ive Report No. : u-9671

Sterling H&s., MI 48077

J P. 0. No.

LABORATORY REPORT

Description: Two Granular Samples.

# 1 - Pure Dolmite.#2 - Foreign Substance.

Si T as SiO 2 ............ 0.78% . . . . . . . . . . . . . 1.91%

Al as A1203 . . . . . . . . . . . . 0.13% ............. 0.35%

Fe as~Fe203 ............ 0.14% ............. 0,32%

Ca as CaO ............ 29 .O% ............. 2 6 . 5 %

Mg as MgO ............ 16‘5% ............. l&,.9%

Analyses performed on dry basis.

JAnalytical Chemists

19380 Mt. ElliottDetroit, Mich. 40234

(313) 369.9400

To: r Eugene H. Koziara11406 Savage Drive

Sterling H&s., MI 48077

L

1Date: tit. 1, 1986

Repor t No. : D-9902

--I P. 0. No.

Attention:

LABORATORY REPORT

Sample No. RE: D-9671.

Sample 8: # 3.

Other Ident.: :*Fope,ign substance".

Moisture .............. 19.7%Si T as SiO 2 ............. 2.14%

Al as A1203 ............. 0.43%Fe aa Fe203 ............. 0.26%

Ca as CaO ............. 24.9%I% as M@ ............. 15.9%

AM~YS~S performed on dry basis.

We certify the above analysis to be the true result obtained on the described sample(s).

Analytical Associates, Inc.

Sworn and subscribed before me a Notary Public in and for Wayne

198h.ELLA LOU!SE NASHAR

Notary PIdiG, Oakland couniy. Ml~1 Commission Expires June 9, 1981

Acting I” Wayne co.

CORING CUTTINGS ANALYSESPage I of 4

Description: Two Granular Samples.

# I - Pure Dolomite (a) Brown Dolomite cuttings as shown onPolaroid picture.

(b) Sample bag of Brown Dolomite cuttingsas shown in Polaroid picture.

(cl Core sample of brown dolomite.

// 2 - Foreign Substance (a) Grayish Cuttings mixed with LostCirculation material as shown on KodakPicture.

(b) Sample pail (bags) of foreign substanceas shown in Kodak picture.

------------------------------------------------------------------------------------------------Pure Dolomite Foreign SubstanceSample iI I Sample # 2Percentages Percentages

Content, wt. Without CO2, Content, wt. Without C02,

CO, & minor CO, & minorconstituents constituents

Lime, CaO 29.00

Silica, SiO2

0.78

Alumina,*‘2Q3

0.13

Iron Oxide,Fe203

0.14

Magnesia, M@ 16.50

Carbon Dioxide, CO2 (46.37)and

Carbon Monoxide CO (6.92)

Other Constituents (0.16)

Totals 100.00

62.299% 26.50 57.634%

1.676% 1.91 4.154%

0.279% 0.35 0.761%

0.301% 0.32 0.696%

35.446% 16.90 36.755%

(46.37)

(7.49)

(0.16)

100.000% 100.00 100.000%

Sample iI 2 is composed of 77% of sample U I and 23% of a Quick-hardening Cementwhose composition is:

42.000% Lime, CaO12.500% Silica, SiO2.375% Alumina, A l ?I2.000% Iron Oxide, Fe2 O3

41.125% M a g n e s i a , Mga 3Total Constituents 100.000%__-___-_____________------------------------------------------ ____________________-------------

CORING CUTTINGS ANALYSESPage 2 of 4

Pure Dolomite Foreign SubstanceSample I/ 1 Sample II 2Percentages Percentages

Original Sample 77% Weight + 23% Cement = Sample # 2- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -Lime, CaO 62.299% 47.970% 9.660% 57.630%

Silica, SiO2

1.676% 1.291% 2.875% 4.166%

Alumina,A’203 0.279% 0.215% 0.546% 0.761%

Iron Oxide,Fe203

0.301% 0.232% 0.460% 0.692%

Magnesia, M@ 35.446% 27.292% 9.459% 36.751%

Totals 100.000% 77.000% + 23.000% = 100.000%

Thus, sample /I 2 is composed of 77% of sample B 1 and 23% of the Quick-hardeningCement whose composition is:

42.000% Lime, CaO12.500% Silica,2.375% Alumina, 2%2.000% Iron Oxide, Fe203

41.125% Magnesia, Mg?J 3Total Constituents 100.000%

The o the r m ino r constitutents o f b o t h s a m p l e s a r e t h e o x i d e s o f t h e f o l l o w i n gelements which due to their very minor contribution in the makeup of dolomite havebeen ignored both in the chemical analysis as well as the above analyses.

PotassiumK2°

Manganese MnOSodiumPhospherousStrontiumTotal Other Constituents

0.10300.01600.02900.00440.00760.1600

____--____--________----------------------------------------------------------------------------There is over l/2 of a percent more Carbon Monoxide in the Foreign Substance(Sample /I 2) due to the presence of fibrous lost circulation material made from paper,cottonseed husks, etc. A chemical quantitative analyses of Carbon Oxides mixed withhydrogen (Organic Chemistry) is difficult to perform, and of academic interest only.________________________________________------------------------------------------------- __-- -- -

T h e Q u i c k - h a r d e n i n g C e m e n t i s a M a g n e s i a b a s e d (MgO) r a t h e r t h a n t h e lessexpensive Alumina based (A1203) ,quick hardening cement due to the fact thatDolomite contains Mg which permits better cohesion and thereby binding of theQuick-hardening cement to the Dolomite iri the cavernous reservoir under Koziara’stract # 6.

CORING CUTTINGS ANALYSESPage 3 of 4

Description: Two Granular Samples.

# I - Pure Dolomite (a) Brown Dolomite cuttings as shown onPolaroid picture.

Co) Sample bag of Brown Dolomite cuttingsas shown in Polaroid picture.

# 3 - Foreign Substance 19Core sample of brown dolomite.

a Grayish Cuttings mixed w i t h L o s tCirculation material as shown on KodakPicture.

(b) Sample pail (bags) of foreign substance# 3 as shown in Kodak picture.

Pure Dolomite Foreign SubstanceSample II I Sample il 3Percentages

Content. wt. Without CO,.Percentages

Content. wt. Without CO,.L’

CO, & minorconstituents

Hpi4~~ L’

constituents

Lime, CaO 29.00

Silica, SiO2

0.78

Alumina,A’203

0.13

Iron Oxide,Fe203

0.14

Magnesia, %O 16.50

M o i s t u r e H20 (0.00)including

Carbon Dioxide CO2 (46.37)and

Carbon Monoxide CO (6.92)

Other Constituents ( 0 . 1 6 )

Totals 100.00

62.299% 24.90

1.676% 2.14

0.279% 0.43

0.30 I % 0.26

35.446% 15.90

19.70

(31.77)

(4.74)

(0.16)

100.000% 100.00

57.071%

4.905%

0.985%

0.596%

36.443%

( 2.35)

(46.37)

( 7.49)

100.000%

Sample I/ 3 is composed of 74.25% of sample I/ 1 and 25.75% of a Quick-hardeningCement whose composition is:

42.0% Lime, CaO14.2% Silica, SiO

3.0% Alumina, A I 61.5% Iron Oxide, Fe2 O3

39.3% Magnesia, Mg& 3Total Constituents 100.0%-----_--__-_---_____--------------------------------------------------------------------------

CORING CUTTINGS ANALYSESPage 4 of 4

Pure Dolomite Foreign SubstanceSample I/ I Sample i/ 3Percentages Percentages

Original Sample 74.25% Weight + 25.75% Cement = Sample # 3_---___________---------------------------------------------------------------------------------Lime, CaO 62.299% 46.257% 10.815% 57.072%

Silica, SiO2

1.676% 1.244% 3.657% 4.901%

Alumina,A’203

0.279% 0.207% 0.772% 0.979%

Iron Oxide,Fe203

0.30 I % 0.223% 0.386% 0.609%

Magnesia, M@ 35.446% 26.319% 10.120% 36.439%

Totals 100.000% 74.250% + 25.750% = 100.000%

Thus, sample Il 3 is composed of 74.25% of sample i/ 1 and 25.75% of theQuick-hardening Cement whose composition is:

42.0% Lime, CaO14.2% Silica,3.0% Alumina, 2%1.5% Iron Oxide, Fe2 O3

39.3% Magnesia, Mg?J 3Total Constituents 100.0%

The o the r m ino r constitutents o f b o t h s a m p l e s a r e t h e o x i d e s o f t h e f o l l o w i n gelements which due to their very minor contribution in the makeup of dolomite havebeen ignored both in the chemical analysis as well as the above analyses.

Potassium K2°0.1030

Manganese MnO 0.0160Sodium Na 0

Ph0.0290

Phospherous 0.0044Strontium srs.3 5 0.0076Total Other Constituents 0.1600

Sample # 3 waos also analyzed for moisture content, H 0drying at 110 for 2 hours as was done for sample3

(which was not removed by// 1 and /I 21. A chemical

quantitative analyses of Carbon Oxides (i.e., CO, C02) mixed with Hydrogen (H), isdifficult to perform, and in this case of academic interest only.________________________________________--------------------------------------------------------T h e Q u i c k - h a r d e n i n g C e m e n t i s a M a g n e s i a b a s e d (MgO) r a t h e r t h a n t h e l e s sexpensive Alumina based (A1203) ,quick hardening cement due to the fact thatDolomite contains Mg which permrts better cohesion and thereby binding of theQuick-hardening cement to the Dolomite in the cavernous reservoir under Koziara’st r a c t I/ 6 . Note that the final cement (as found in Sample # 2) used to seal thecaverns had more Magnesia than the init ial cement (as found in Sample 11 3). SampleI/ 2 had 41.125% Magnesia, while Sample Il 3 had 39.3% Magnesia in their cements.

sec. 14.21 PRIMARY OIL WELL CEMENTING TECHNIOUES 273

5. Oil-in-Water Emulsion Cements:” LOW water loss,low density cements of adequate strength andthickening time have been prepared from kerosene,water, cement, and 2 to 4% hentonite. Calciumlignosulfonate is used as emulsifying agent and re-tarder. Such cements have applicability in bothprimary and remedial cementing.

6. Resin Cements:‘z~13 Proper combination of syntheticresins, water, and portland cement are often used toprovide an improved formation-cement bond incertain remedial operations. Cost prohibits use ofthis material for routine cementing of casing.

7. Gypsum Cements:lzI’” These are special mixtureswhich have high early strength and easily controlledsetting times. Gypsum is the basic ingredient.Their principal use is to provide temporary plugsduring testing and remedial work.

The selection of the proper cement for a specific jobis a matter of conjecture, and differences of opinion

exist among oil operators. In very deep, high pressurerells a special mixture may be custom tailored for theparticular job. For shallower, moderate temperatureu&s a number of cement types may be satisfactorymd the choice will depend on cost and personal prefer-ence based on experience. The following discussion liststhe usual factors on which selection of cement type isbased. Table 14.1 lists&number of additives, some ofwhich are referred to in the discussion.

1. Slurry Density: Normally, the slurry densityshould be the same as that of the mud in the hole at thetime of cementing. This minimizes chances of eitherblowouts or lost circulation occurring during cementing,The most common material used to decrease density isbentonite, although the reduction is primarily due to theincreased water content of the slurry made possible bythe presence of the clay. A special diatomaceous earth(Diacel D) of lower density than bentonite hns alsobeen developed and works on the same principle.Expanded perlite is often used for the same purposewhen the addition of a bridging agent is desirable. Thisis B volcanic ore material which has been expanded byheating to its fusion point and subsequent cooling. Ithas a cellular, thin-walled texture which breaks downunder high pressures, allowing water to be forced into thepores. Again, it is the additional water capacity whichyields the bulk of the density reduction. Two to G%bcntonitc i s used with perlite slurries to preventbuoyant segregation of the perlite particles.

Coffer, Reynolds, and Clark” have proposed the useof small, hollow clay spheres (bubbles) to reduce slurrydensity. Laboratory tests indicated slurry densities aslow as 10 lb/gal could be obtained while satisfactorystrength was still maintained. This is an interestingdeparture from standard density reduction measuresand offers some promise.

As a rule, the amount of a particular additive used in

TABLE 14.1CEMENT ADDITWES

Common Name Descriprim Function(s)

Gel ICI6 Bentanite Reduce density, improve suspending qdities (gelstrength), reduce fi l tration loss, improve perforatingcharncteristics

Clay Bubbles ” Reduce deneity

Diacel D ‘-’ Speoisl distimaeeous Reduce densityonrth

Expanded Perlite I8 Voloanic ore expanded Reduce density, act as bridging material for lost circu-(made cellular) by lationheating ta fusion point

POZZ&.!l8~ (See special cements) Reduce density, improve perforating characteristics,increase thickening time, furnish eementitious proper-ties by combining with lime

Hydrocarbons” Diesel oil, kerosene Reduce density, also used in special eementz

BlXit.2” BeSO< Increase density

Calcium Chloride CaCI, Accelerate setting (reduce thickening time), decreasehezing temperatllre oi mixing water’

Sodium Chloride ‘9 NaCl Ssme as above

Dincel A’-’ Special sodium aiiicate Accelerate Betting

Dincel LWL’-’ Carboxymethyl Reduce Bltiation loss. retard settinghydroxyethyl celluloseC&ium lignosulhnates Retarder, dispersanl, emulsifier

Nut shells, cellophane Prevenr loat eilC”la‘ion“nkos. cte.

sun RodUoti”~ ;vit

. .July 13, 1983

WORKING INTEREST OWNERS

Re: Columbus III UnitWell No. 6-3, AFE 81252St. Clair County, Michigan

Sun Exploration andProduction CompanyCampbell Care II815ONotthCentralExpyPost Office Box 2880D a l l a s T e x a s2147399100

Gentlemen:

Attached is Sun's AFE 81252 for the drilling and completion of a 3500'Niagaran Brown Oolomite IR oil well at a location in the NW NE SWofSection 34-T6N-R15E. A study of the Columbus 3 Unit recomnended'the drill-ing of a well at'the,prbposed.location; which wells-is anticipated.to.produce138,000 BO of which 62 870 BO was calculated as an incremental increase inrecovery,in the areaofell. The proposed well is expected to encounterapproximately 110' of net pay in the Niagaran Brown Dolomite with initialproduction of 65OPD and average first year's production of 55 BOPD. Basedon a 100% successcompletion and oil price of economic eval-uation of this drilling indicates a payout of 1.1

Please approve and return one copy of this letter, along with the drillinginformation you will need on this well to Sun Exploration & Production Company,Attention Lee Lisby, P; 0. Box 2880, Dallas, Texas 75221.

ns

OLL/g:Attachment

JCI?IT 0!'1;'1!3 AFFXIVAL i

NA?AFBY

I DATF Ii. ..-.__ - .-J

I

R 15E.

IORlntRN

WIILO - UP

,

CLNTRALWILO-UP

. SOUTWERNBUILD-UP

12.l

12.l

-

4�

,

76

s N

T5N

T R A C T NUMBER

- CDCUMSUS 3 UNIT OUTLINLCOLUMBUS 3 - BASE OF OIL ZONE

UNIT - DASE O F 6AS ZONE

@a PERYLABILIYY 8AIIRILR

?CC;ilON'iNDWELlRECOMMEND~ IKa.TE

; --.--

NU NE SU Sec.34-6N-15E

,

-I4MEl.ES GmLLINtTI*IE -l--10' intervals from base surface casinq to TdCOSLS ,LSTIUATEO,

Geoloqraph 1' intervaliCORE POlNTs

34_$- FT~ TOTAL+ WC’S

OPLN SIOLL TESTS

- -

,CcmE AM4LIS15: &ES A.0

As directed by wellsite geologist

Schlumberger: Dual Laterolog, LDT-CNL-GR w/Caliper

This well 3s Dart of an infill proqram to develop the Niagaran reef reservoir. Well was

presented and approved by the Coordinating Comnittee July.1. 1982.

l Thfs Locrtlon and Well Recomendaiion was revised from the original recommendation dated

Il’m~“r,:+:0%l Northern Disttlct- -

;29D,OOO I',..~, . i. ; ., 1983TTe+Z.i.~YTj*.'~ r'v-7 n .,‘

: 983 -.,-:tr.i. ,c ..V.,LCL

~,-:-~P:.h:l*~L,ICI cn;r:;#...;, .

'$53616. Columbus III Unit.-. .-.. '.lV,C, * . . . . --l-.. - ..--. -. ,_FI.

Ii 064-380;74;

JOIL clG4S

Iwra~xxxm~Kunrx :=“I.’ *St. c1air

MMCF O RY BBLS:

XIN WI; 0.718041 S""'NC.'. 0.60811264 T Y P E . TYPE TYPE:>o* D”I‘LtH‘ P*o,ccI DLIC”,PIIO*

8

IDrill 6 Complete *

INTANtl0LELOCATION

RIG HOVE

FOOT AGE

DAY WORK

FUELWATER

MUD AND CHEH

CUT AND C M T G SER

DIRECTIONAL SER -__

RENTALS 6.000 4.oooYLID LOGGING

-- -DST AND TSTG EOPT

CORING

COYPLEllON R IG - 10,000PERFORAT ING 4,000 -.^ ^^^SY1YULATtON IU,UUU

SUPERV IS ION 4 000 ---cm-.-L. _ _ L.--TRANSPORTAlION -- 5 1-.. 000 -*-- 3 000Yl5C/CONTlNCENCY ~.iw!x! 7,000

TANGIBLEP I P E 16”P,PE 11-314"

m~tz6R DRykl

P I P E B-5/8”

P I P E 5-l/2"T!%% +T

P,PE 2-3/a" 3%F.PIPE

PIPEWELLHEAO --yg-xOTHER 8 *

T O T A L T*HG,BLE I 84,000 S 41*0@

TOTEM D R I L L I N G COST ~29otoOO s 196.00

206,000 , 155.000

ii

rl I-ae

-12-Sun Oil is of the opinion that the well encountered geologic

reservoir conditions reasonably within the range that their contour maps

predicted. The plaintiff Koziara views the well as clear evidence of

the presence of much greater reserves of oil than those credited to him

by Sun's calculation. The compelling aspect of the 6-3 well, from the

point of view of this Agency, is that the well did not exist at the time

of unitization. The well could not have contributed any data to the

original calculations. As previously discussed, this Niagaran Reef is

Of biological origin with porosity and permeability being random and not

uniform. Each well drilled gives accurate data as to the well bore

location. Between well bores data must be interpretative. Therefore,

were each of the owners of a tract within the unit given the oppor,tunity

to drill a well, they too would have additional data which may improve

01: depreciate the relative value of their tr,acts. It would both be

unfair and inequitable to utilize the 6-3 data to alter the

interpretations of the productive reservoir.

The testimony concerning the 6-3 well was both long and involved.

Every aspect of the 6-3 well was examined in great detail including the

drilling, logging, and core analysis. Without exception every component

of the data concerning the 6-3 well is in dispute. Drilling on the well

commenced on August 1'9, 1983. On August 27, 1983, at a depth of 2,996

feet a lost circulation zone was encountered, and the drill bit dropped

approximately five feet. At that time gas came to the surface and was

flared until the well could be killed. It is the contention of the

Plaintiff Koziara that Sun Oil Company pumped cement down the well to

close off the loss of circulation zone. Mr. Koziara testified that he

saw something pumped down the well. He further: testified that during

coring operations, following the resumption of drilling, part of the

core was a cement plug drilled out from the lost circulation zone. He

further: testified that he saw an employee on the rig take a piece of

core from the core rack and put it in his truck. Mr. Koziara also took

samples from the shale shaker that he-had analyzed; Plaintiff's Exhibits

35 and 36. He believes these analyses show that the material drilled

was cement.

-13-

In contrast, the records of Sun Oil Company of the drilling and of

the materials placed in the hole do not reveal any cement was placed in

the lost circulation zone. The records of Sun Oil show that brine gel,

cotton hulls, and Quick Seal were added to the well. These are the

types of materials that would be expected to be placed in a lost

circulation zone. The use of cement in lost circulation zones would be

highly unusual. The purpose of lost circulation material is to fill the

pores of the rock close to the well bore. The materials placed in the

hole are specifically designed for that purpose. There is no indication

in the record that there was anything unusual about the lost circulation

zone that would require extraordinary measures. While the encountering

of lost circulation zones is not particularly common, it also is not

that unusual. There are many places in the state where lost circulation

zones are routinely encountered. The standard oil field practice is to

treat these zones with lost circulation material. Additionally, if the

loss zone is severe, a liner or casing may be placed over the zone to

secure it. This was not necessary in this case. Open hole electric

logs were run by Schlumberger on the 6-3 well; Sun Exhibits C and B.

Those logs are consistent with a lost circulation zone or washout in the

well bore. The response of the logs from 2,996 to 3,002 feet is

inconsistent with the presence of cement in the bore hole which was

drilled out. For example, the purpose of a caliper log is to show the

condition of the hole. A caliper log is a tension device that rides

along the edges of the hole and expands and contracts with the size of

the hole. The caliper log shows a marked difference in hole size at the

2,996 foot depth. ~If the well had been filled with cement and drilled

out, the side of the hole should be smooth. In light of the foregoing,

it now becomes necessary to address Mr. Koziara's contention that the

laboratory anaylsis reveals the presence of cement. It is interesting

to note that the Laboratory report in addition to the chemical

composition identifies sample #1 as pure dolomite and sample #2 a

foreign substance. This is highly unusual. Dolomite is carbonate

sedimentaly rock that may vary considerably as to mineral content within

a reef. The conclusion that the cuttings are pure dolomite is

suspicious.

-

-14-

There is nothing in the record to indicate the composition of

cement used for oil field purposes. There also is nothing in the record

to indicate the chemical composition of Quick Seal. The conclusion that

the well was cemented is not credible for a number of reasons. First,

it is not a typical oil field practice to cement lost circulation zones.

Second, the records made contemporaneous with the event all indicate the

type of material that was placed in the hole. This material was the

material expected to be used in a lost circulation zone. The electric

log responses are entirely consistent with a lost circulation zone. The

Laboratory reports are inconclusive. In order to agree with the

proposition that cement was placed in the well it would be necessary to

find that Mr. Gunn had lied under oath. I make no such finding. As tothe cor;e that Mr. Koziara claimed was removed, I find this testimony to

be highly speculative in view of the fact I have just found there was no

cement placed in the well bore. A review of the description of cores

will show that some are light tan to white as Mr. Koziara described.

Had Sun Oil used cement to block off this zone of less than six feet it

probably would have made a minimal amount of difference. Because there

was no core recovered and the logs are unreliable in the washed out

zone, if that zone had been cemented, there would be no more available

data than in the absence of the cement. There was no reason to cement

the well bore and no benefit to be gained by concealing it.

RESULTS OF REPLANIMETERINGTRACTS 3, 6. 9 OF COLUMBUS 3 UNIT

Koziara Interest

Original Oil Replanimetering OriginalPorosity Oil Porosity Participation

Acre-Feet Acre-Feet* Factor

Tract 1 6.18 6.18 .0009324

Tract 2 94.76 94.76 .0303803.

Tract 6 339.81 390.98 .1361672

-1674799

NewParticipation

Factor

.0009174

.0301320

.1430832

.1741326

Difference in Participation Factor = 0.0066527

* Tract 6 Only

INTANGIBLES

TransportationLabor/Supervision

TOTAL INTANGIBLES

TANGIBLES

Z-lb stage Vapor Recovery UnitMisc. Materials

TOTAL TANGIBLES

Total Cash Required-

Less Transfer of Existing VRU

TOTAL

GROSS

$ 1,5001,500

$ 3 , 0 0 0

$20,0001,000

$21,000

$24,000

$ 6 , 8 2 5

$17,175

h453616”DSPECT NIUE I

4-u’: 71.7% SUN INC. I: 60.7% iTYPE: TYPE. TYPC~,,,ORILLINC p~o,cc, DESCR,p,,O,I: mpuce exlstlng v a p o r ltecovery unit with a t w o s t a g e unit. Ihe

p r e s e n t suction pressure on the DPC 230s is higher thnn the dischnrge pressure of the VW.Therefore, a two stage unit needs to be installed to continue to eLi.~inate,th$.,~e-~ting of?A__.~,.. l..,,^l -.SQ:1,OO,~MCFD ~b~f v e r y ric,h ~68s.

SUN NET

$ 2,151 ./

$15,057

$17,208

$ 4,894

$12,315

-S U N O I L C O M P A N Y 901 SOUTH DETROIT AYE POST OFFICE BOX 2039. IULSA. OLLAHOHA ,,I02 (0111, S83.,300

October 31, 1977 Re: Columbus Three UnitSt. Clair County, MichiganAFE #7112

Non-Operating Owner

Attached are two copies of a Sun Oil Company ExpenditureRequest covering cost of a proposed project on our jointlyowned property. Kindly approve and return one copy, retain-ing the other for your information and file.

J. W. SutherlandManager, Unitizationand Joint Operations

_ ._ . .._.

-__

sUwECT. COLUMBUS III UNIT

D*TL: October 21, 1981

OFFICE: Northern District/Tulsa

FROM Jesse J. Allen

TO. P. E. Robinson

.b.FTE3 So-cA%LED’~U?~IITIZATiON

UNJUSTIFIED’ FLARING OF KOZIATA GASF??ObI KOZIh3.k CAS CAVEYN.3

EXCUSE g 1

INTRODUCTION

Over the last several weeks production at the Columbus III Unit has droppedconsiderably. The main reason is the amount of gas being handled by theColumbus III Gas Plant.

DISCUSSION .

On June 28, 1981 modifications were made that increased the gas handlingcapacity of the Columbus III Gas Plant. Previous to these modifications thecapacity of the plant was z 2.5 WKF/D at a 38-40 psi suction pressure.After the modifications, the capacity of'the plant was% 3.0 MMCF/D at a50-52 psi suction.

Production before the modification was 610 BOPD. After the modificationswere made production averaged 770 BOPD.to handle the gas.

NO wells were shut-in due to inability

But a problem has developed. The vapor recovery unit (WRU) is tied into thesuction of the DPC 230 compressors. The VRU kept going down on high dischargepressure. The unit is rated to 45 psi and could not "buck" the 50 psi pressurethat the plant had been operating at.to atmospt,ere of the stock tanks.

The Michigan DNR does not allow ventingThus, to be in compliance and keep the VRU

in operation, the suction pressure to the plant was lowered to 42 psi. Theproducti.on is down and wells are again shut-in due to inability to handlethe gas.

RECOMMENDATION

It is recommended that a larger VRU as per attached requisition be purchasedand installc: at the Columbus III Unit. The present unit could be surplusedand used elsewhere in the company. The new VRU would be capable of bucking60 psi and handle approximately 300 MCFD. The present VRU is capable of

'handling only 150 MCFD at 45 psi.

JUSTIFlCATIOIi

The new VRU would allow the plant to handle more gas - thus increase oilproduction. At present, 150-175 BOPD isshut-in. The VRU can be justifiedfor this reason only.

Also the operator has informed me that the present VRU operates continuously.This means that not all the gas is being pulled off the stock tanks. Uhilethe VRU was down for repairs, August 14-20, it was noticed that the hydro-carbon product fell off ~700 gals/day. If the larger VRU was capable ofpulling more gas off the tanks then more product could be made. To deter-mine how much more product could be made cannot be accurately calculated.But if more product can be made, this would be "gravy" on top of the increasedoil production.

Assuming a price of $45,000 for delivery and installation of a new VRUand increased production of 100 BOPD, simple payout would occur in 30 days.This payout does not include increases that could result from the hydrocarbonproduct sales and an equipnlent surplus of S13,OOD.

JJA:dj

cc: D. J. VanOrdenL. Sue TrolingerS. R. PylesJ. D. SeydlerK. F. Deines,'. D. RichardsonR. K. Bassett --Dallas

@TE? SO-CALLED IJYITIZ :,TIsUNJUSTIFIED FLARING OF

Subjecl KOZIARA GAS FROM KOZIARA GASCAVERNS EXCUSE # 2

Columbus III Gas Plant Modification

LCKEhnNorthern District -Tulsa -FromMike GettelToL. 5. lrolinger

At the present time, the Columbus III gas plant cannot process all ofthe gas that the field can produce. One or two productive wells havebeen shut in every day during the wanner months of the year because ofthe gas handling problem. During ?he last 23 months, the shut in wellshave accumulated an average 10s~~ of 59.2 GBOPD. This dailv loss hasnecessitated a modification of the gas plant so that we ca'n produce~allof our wells at Columbus III.

A number of alternative designs for the modification of the gas planthave been studied. The most cost effective design for the modificationinvolves the exchan9e of the Xl DPC 230 compressor for a DPC 280, anincrease in the flow line pressure for the field and the installation ofa new inlet separator. The proposed modification will increase theactual gas handling capability of the gas plant from 2.8 MMSCFD at aninlet pressure of 60 psig to 3.6 MYSCFD at an inlet pressure of 155psig. The proposed modification will enable us to produce all of ourwells year around at Columbus and add an additional net present valueto Columbus III of $470,077 for the next five years. Gross estimatedprice of the'modification less the value of the salvagable equipment is$68,000.

,

Mike Gettel

MG:dj

AFT% SO-CALLEIJ ~~ITIzAT~C~JUNJUSTIQED~ FLARING OF

KCUURA GAS FROM KOZIARAGAS CA'CRNS EXCUSE #A

EunExploration~n~Production CompanyFour NorthPark East5656Blackwet1P 0 Box 2880Dal laSTX75221-2880214890&3X3

December 7,, 1984

WORKING INTEREST OWNERS

Re: Columbus III Gas PlantAFE V-0509St. Clair Co., MI

Gentlemen:

Attached for your approval is a copy of a work.proposal on a,Sun opera-ted Property in which you own a working interest.

Please sign below and return one copy of this letter to Sun Explorationfi Production Company, Attention: Mr. Lee Lisby, P. 0. Box 2880, Dallas,Texas 75221-2880.

LL/ gAttachmentcc: M R McGregor - N Dist

JOINT OWNER APPROVAL

NAI&F

EY

DATE1

Columbus III I St r1air

Upgrade obsolete Roiline engine driving refrigeration compressor to more current andfuel efficient Superior engine.fuel use and maintenance costs.

This will better match operating loads and decrease(Present engine needs major overhaul.)

Intangible .

Equipment 'RentalWelding &,Electrical

2,000- 600

TransportationCompany Labor

2 0 , 0 0 05,200

20% Contingencies 5,600Sub Total Em-@J

Tangible

Superior 66510 Engine "B" conditionShim Pack Kit -:

85,5001.000

Flywheel AdaptorMiscellaneous Wiring, Tubing & Piping

2,0003,100

Sub Total 391,600

TOTAL $125,000

Sun's Cost 9 .718041 WI = $89.755

April 11, 1983

SunProductionDivision

SunExploretionandProduction CompanyCampbell Centre II8150Norih Central ExpyPost Office Box 2880DallasTexas 7 5 2 2 12147399100

WORKING INTEREST OWNERS

Re: Columbus III UnitAFE #81150Columbis County, Michigan

Gentlemen:

Atcached for your approval is a copy of a work proposal on a Sun-operated property in which you own a working interest.

Please sign below and return one copy of this letter to Sun Exploration& Production Company, Attention: Lee Lisby, Joint Operations, P. 0.

.d Box 2880, Dallas, Texas 75221.

Very truly yours.

Joint Ctp&ati&

0~: sm

Attachment

CC: M. A. GettelNorthern District

TANGIFLES

- 2 5 ’ John Zink F l a r e w / A u t o m a t i cInspiratiny System

INTANGIBLES

-Foundation & Dirt Work-Labor & Welding-10% Contingencies

Total Intangibles

TOTAL COST

GRCS.5 :;j.;p

-.c_--

~10,150.00 s 7,ii&.cc

1,CGO.OO 7 1 8 . 0 01,ooo.oo 718.001,215.oo 8 7 2 . !?G

s 3,215.oo S 2.308.00

313,365.OO $ 9,596.OO

WORKING INTEREST OWNERS

UNJUSTIFIED FLARING OFKOZIARA GASEXCUSE # 5

AFTER EXPANSION OF GASPLANT - GAS from KOZIARACAVERNS after SO-Called UNITIZATION

March 4. 1985

Re: Columbus III Gas PlantAFE V-0558St. Clair County, MI

.

Gentlemen:

Attached for your approval is a copy of a work proposal on a Sun opera-ted property in which you own a working interest.

Please sign below and return one copy of this letter to Sun Exploration8 Production Company, Attention: Mr. Lee Lisby, P. 0. Box 2880, Dallas,Texas 75221-2880.

LL/gAttachmentcc: A S Johnson - N Oist I JOINT OWNER APPROVAL I

DA J

I

.?

J

?

-

#;ITHORITY FOR EXPENDITURE ~un--969z.n

Replace two vertical separators at Columbus III Gas Plant to increase the inlet separationcapacity to protect the inlet gas compressors from liquid carryover. Field productionis currently limited in an effort to prevent more compressor downtime because of liquidcarryover problems. Payout: 2 cylinder repairs and 2.6 days downtime.

ECONOMICS: DETA!L COST- lTEMlZED ,NEW MONEY INVESTMENT & EXPENSE--100% e. SUN'S NETI,COMPANY LABOR & STOCKI: GIVE STATEMENT OF ECONOMCS.

New Money Investment

100%

Tangible IntangibleReplace Weukesha & AJAX 280 $11,800

inlet scrubber$ 5,500

Sun Net

Replace AJAX 230inlet scrubber

10,700 5,409 16,lO’l 7,683 3,877 11,560

Install by-pass around 1,000 500 718 359existing 42" inlet

1,500 1,077

separator

Sub Total $23,500 $11,400 $34,900 $16,874Contingency @ 15%

$ a,185 $25,0593,525 1,575 5.100 2,531 1,131 3,662

Total $27,025 $12,975 $40,000 $19,405 $ 9,316 $28,721

Economics: Economics are based on the cost of repairs and lost oil and plant productiondue to a cylinder repair caused by liquid carryover to a compressor. At a repair cost of$10,000 per occurrence and a downtime of 1.3 days per occurrence, payout is the avoidanceof two cylinder repairs.plant product per day.

This is based on a loss of 330 barrels oil per day and 90 barrels7 -,c.- A.S. Johnson:

*ET2? L JOINT OPERATIONS 0l"lSlON HEAOO"ARTERS P&CTG. USE

APPRO"E0 POST

-. ‘,.,I’. COLUMBUS III FIELD

EXISTING

I -

INLET SEPARATION

I I 1 7042 17042I

1rPR!MFY

EPiRATOR (TOGAS

‘ROCESSINtä

2 3 0SEPARATOR

1WA;ER

PROPOSED

n

1 WAUKI I7 0 4 2

COLUMEuJS III II r

15OPSI J

- -1

FLARE AJAX

I A L-J2 8 0

I ITOGAS

“ROCESSING7 ‘

AFFIDAVIT.’

STATE OF MI(‘1~11GAPi ))Sfi.

CQ\!NTY 01: ST. CLAIR)

(1) That he residrn at 1140fi Savage Drive. SterlingFlrights, Michigan.

(2) That he is a joints owner of Ihe following dl%crilmdproperty with Anirln K;lziara:

Land situated in the Township of Wales, St. Clan County, ,Alichigan, tIcscriber as the Southwest l/4 of thr North-IVI~S~ l/-l of Section 34; ancrthe Northcast l/4 of the South- ’\\‘r;it 1!4 nl’ Srction 34, Town 6 North, Hnngc.~ 15 Eafit.

(3) That deponent is familiar with the Columbus 3 Fieldin St. Clair County, !Michigan. and the boundaries of said Field as set forth inthe June 25, 1874 Order of the Supervisor of Wells for the State of Michigan.

(4) That depon&tt is also familiar with the April 30, 1974No-Flare Order of the Supervisor of Wells with respect to +aid Field, as amended.prohibiting venti% ,and_I._-_ -.a- flaring of gas after October I, llli4.~“,-~~,“L.i~\....-^,~~ ^__~_. _.-- n_l”,_.- ..--.I I.,~ , , ~(

(5) That deponent personally witnessed the flaring ofpas in the (‘olumhus 3 Field and on property within said l’ield owned by 11. winnon Saturdav October 12 1074 at aEP,r-~,~~~~~,~.ery~PIf5.a..,n! ..an.d,..a,~p.r.oxjrl).r\t,e)y~L.-.zI.-~-e.^l_l. __.“x~_ _......l~-p~.

(9) That deponent further personally witnessed theflaring of gas in said Columbus 3 Field and on proprrty wlthln said Pieid ownedhy il. \V~!-,II on Sunday, October 13, 1974 at approximately 9; 45 p:m. anti 9: 30 p:m

Further deponent saith not.

i:

,./ ,:’’ . ‘us--“’ ”‘ -.; _. _ ..,,

L’ _.._ Su’gene H. Kozi?ra~J

Subscribed and sworn to before mc this day of

.