BEFORE THE CORPORATION COMMISSI IOF THE STATE OF OKLAHOMA

F3 2010

APPLICANT: LORI WROTENBERY, DIRECTOR AUG0

OIL AND GAS CONSERVATION DIVISION COURT CLERK'S OFFICE - OKCOKLAHOMA CORPORATION COMMISSIONCORPORATION COMMISSIQN

OF OKLqHpMARESPONDENT: ENERGY PRODUCTION SERVICES, LLC

RESPONDENT: COPPERMARK BANK

CAUSE EN NO .RELIEF SOUGHT: CONTEMPT ) 200900186

REPORT OF THE ADMINISTRATIVE LAW JUDGE

This Cause came on for hearing before Michael D . Norris, Administrative LawJudge for the Corporation Commission for the State of Oklahoma in the Commission'sCourtroom, Jim Thorpe Building, Oklahoma City, Oklahoma, pursuant to notice givenas required by law and the rules of the Commission, for the purpose of takingtestimony and reporting to the Commission .

CASE SUMMARY :

This cause involved two separate issues . The first issue involves the Bethel Unitin Seminole County and the need to remediate the pollution at the site and haverespondent Energy Production Services, LLC (EPS), pay cost and expenses . Secondlythe staff has requested an increase in the surety bond of EPS and to increase anyfuture sureties on any entities established by Dr . Agrawal .

Prior to this hearing negotiations between staff and the respondent resulted inan agreement concerning the remediation of the salt spill at the Bethel Unit inSeminole County. The issues involving the remediation, costs and expenses wasfinalized and agreed to by the parties .

Evidence was presented concerning the actions of the respondent as operator ofthe various units under their control . Staff presented evidence concerning the historyof respondent as to violations of the rules and statutes as well as directives of the

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Commission. Staff has requested an increase of the surety of Energy ProductionServices, LLC to $100,000 . Also, they are requesting that any future entitiesestablished by Dr. Agrawal have increased surety amount .

RECOMMENDATIONS :

1 . Settlement of the remediation plan for the Bethel Unit was reached duringthe trial of this matter . Therefore, no recommendation is made for this issue as it isresolved. The terms of the agreement were memorialized by the parties and areincluded in the transcript of this matter .

2 . It is recommended that the surety for Energy Production Services, LLC beincreased to $50,000 within 30 days of the date of this report . It is also recommendedthat any further violations of Oklahoma Corporation Commission rules or OklahomaStatutes, refusing to take action pursuant to Oklahoma Corporation Commissionorders or field inspector reports, complaints about operations or failure to respondwithin stated time frames should result in a further increase of the surety to $7 5,000.

HEARING DATEISI: March 31, April 1 and April 2, 2010Taken Under Advisement on June 4, 2010

APPEARANCES : Keith T . Thomas , Attorney, appearing on behalf of theApplicant, Lori Wrotenbery, Director of Oil and GasConservation Division, Oklahoma Corporation Commission .

Stephen G. Solomon , Attorney, appeared on behalf of theRespondent, Energy Production Services, LLC .

FINDINGS AND SUMMARY OF EVIDENCE .

The Applicant initiated this action seeking to determine that Energy ProductionServices, LLC had committed pollution upon the Bethel Unit site and had failed toremediate. Further the Applicant sought to increase the amount of the surety of therespondent to a total of $100,000 .

Applicant stated that respondent has demonstrated a pattern of noncompliancewith the rules of the Oklahoma Corporation Commission and the statutes of the stateof Oklahoma concerning operators . Applicant stated that the respondent has a longhistory of pollution, not conducting clean-up operations, failing to plug wells and

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complaints from land owners or tenants. Therefore, the Applicant request under theprovisions of Rule 165:10-1-10(d) (i) the surety be raised to a requested amount of$100,000 . The following numbered exhibits were accepted into evidence :

Exhibit No. 1

Exhibit No. 2

Exhibit No. 3

Exhibit No. 4

Exhibit No . 5

Exhibit No . 6

Exhibit No. 7

Exhibit No. 8

Exhibit No. 9

Exhibit No. 1 0

Exhibit No. 1 1

Exhibit No . 1 2

Exhibit No. 1 3

Exhibit No . 14

Exhibit No . 1 5

Exhibit No . 16

Cumulative return receipts for delivery of notice by certifiedmail

Internal tracking log for the Office of General Counsel forEnergy Production Services, LLC

Incident and Complaint Investigation Report from ViolaBrinsfield against Energy Production Services, LL C

Two pages of the Incident and Complaint Investigation Reportwith Exhibit No. 3 .

Correspondence dated August 13, 2009 to Ms . Viola Brinsfield

Aerial photograph of the Bethel Unit, Seminole County,Oklahoma

Cumulative Exhibit Form 1002-A

Cumulative Exhibit Form 1002-A

Cumulative exhibit of wells in the Bethel Uni t

Pictures of the pollutio n

Additional pictures of the pollution

The Soil Salinity Report

Cumulative exhibit of maps denoting the polygon of denotedgrowth

Pictures of the polluted site .

Cumulative pictures of the Guy Thomas 1-6 sit e

Additional pictures of the Guy Thomas site .

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Exhibit No . 1 7

Exhibit No. 1 8

Exhibit No. 1 9

Exhibit No . 2 0

Exhibit No. 2 1

Exhibit No. 22

Pictures of the Guy Thomas site

Oklahoma Corporation Commission query results for wells .

Cumulative correspondence concerning the transfer of wellsfrom On-Line Oil, Inc . to C .O. & G Production Group, LLC

A list of wells and equipment for the Bethel Booch Sand Unit

United States Department of the Interior Bureau of LandManagement Sundry notices and reports on wells Form3160-5

Correspondence dated November 18, 2209 from theOklahoma Corporation Commission to Energy ProductionServices, LLC

Exhibit No . 23 Correspondence dated March 31, 2010 with attachments fromthe Oklahoma Corporation Commission to Energy ProductionServices, LLC

Exhibit No . 24 Affidavit of Old Well Status

Exhibit A through L from the previous hearing for Emergency Order wereadmitted upon request of the parties .

Applicant called their first witness, Mr. Simon Winlock, a field inspector for theOklahoma Corporation Commission. His qualifications were admitted withoutobjection. Mr. Winlock testified that it was his understanding that an agreement hadbeen reached with the respondent for the remediation of the Bethel site . He testifiedthat these terms were agreeable to both parties .

Mr. Winlock testified that the pollution exists by the Bethel 44 well . Thetopography at this site slopes downward from south to north .

Mr. Winlock testified that Oklahoma Corporation Commission records indicatethat through a series of transactions the wells in the Bethel unit, except for one, weretransferred to the respondent . He stated that all wells in the Bethel unit are currentlyoperated by respondent .

Mr. Winlock identified the polluted area in the Bethel unit . The area south ofthe road has been denoted as the retention pond .

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He estimated the pollution was about 60 yards long and about 40 feet wide . Mr.Winlock testified that he had visited this site and discussed remediation withindividuals from the respondent. At the time of this hearing, he stated no remediationefforts had been made .

Upon cross examination Mr . Winlock stated that there was no ongoing pollutionat the site and there had been no further pollution since he had been involved . Hestated that he defines the pollution as excess salt beneath the soil and no grass ispresent. He agreed that the complaint by the landowner was the fact that novegetation was growing upon the site that he defined. He further agreed that thecause of the pollution would be properly reflected by the records of the OklahomaCorporation Commission .

Applicant called Jason Pryor, hydrologist for the Oklahoma CorporationCommission as the next witness . Mr. Pryor's qualifications as an expert were admittedwithout objections .

Mr. Pryor testified to the validity of the soil samples taken and the chain ofcustody to the lab for analysis at Oklahoma State University . He said the soil salinityreports were made testing the total soluble salts and they took samples at variousdepths throughout the site . Mr. Pryor validated each report and indicated the siteswhere the samples were taken. Mr. Pryor stated the depth of each probe and gave thedetails of the analysis of each contaminate. Mr. Pryor identified the polluted area asthe area within the polygon drawn on his map .

Mr. Pryor recited the terms of the remediation agreement that was entered intoby the parties and the steps and timeframes to be taken . He stated the terms andtimeframes had been established by the parties .

Upon cross examination Mr. Pryor stated the area of pollution could bedescribed as the revegetation of the area that had been described . Mr. Pryor agreedthat the first step at the site would be to improve the drainage .

A recess was taken to allow the parties to further negotiate and define someareas of the settlement of the remediation . After the recess the parties returned andMr. Pryor testified as to the further settlement factors. Mr. Pryor testified that theagreement entailed terrace work and dirt work within the area delineated by thepolygon. (The polygon is delineated in the exhibits) . Mr. Pryor further stated that theculvert will be cleaned out with the approval of the county and upon completion of thedirt work soil samples will be taken as witnessed by the Oklahoma CorporationCommission and sent to the laboratory for analysis . The expense of these samples will

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be borne by EPS . Mr. Pryor testified that EPS will apply a chemical, Actosol, to thesite which is expected to lower the TSS (total soluble salts) to less than 4,000 ppm .Mr. Pryor further stated that the TSS would be below 4,000 to a depth of 3 feet orbedrock but no deeper than 3 feet. Further a date at approximately the midpoint ofthe remediation will be chosen and further soil samples will be taken . An additionalsoil sample will occur in early October so results can be known by the end of October .All samples will be taken with Oklahoma Corporation Commission personnel aswitnesses and all costs are to be borne by EPS .

Mr. Thomas, counsel for Applicant, stated that after the remediation a timewould be set for the results of a remediation and if not satisfactory they would returnat a date set on the protest docket. He further stated that the fine of $1,000 will bepaid within 90 days as well as reimbursement of the expense of previous soil samplesin the amount of $410 .00 . Counsel further reiterated that all samples will be sharedwith the Oklahoma Corporation Commission and sent to the lab for analysis .

Applicant called Hank Barth, Oklahoma Corporation Commission field inspectoras the next witness . His qualifications were accepted without objection . Mr. Barthtestified that he was familiar with EPS and Kris Agrawal . Mr. Barth is familiar withthe Guy Thomas lease. He stated he was also familiar with GEO Exploration in whichMr. Agrawal is involved.

Mr. Barth testified about violations and his report of those violations at the GuyThomas lease. Mr. Barth stated that Order No. 556233 issued based upon thoseviolations and the lack of action by Mr . Agrawal .

Mr. Barth stated that he has had complaints in the past on wells ofresponsibility of Mr. Agrawal and he just closed one complaint. He stated his opinionis that he is not a responsible operator and his leases and well sites are in rather poorcondition . He testified that the last complaint involved pollution, junk, debris, and firehazards.

Upon cross examination Mr. Barth stated that he was aware that GEOProduction was in bankruptcy . He did not know when the bankruptcy was initiated .Mr. Barth said that he was not aware of the effect the bankruptcy had upon GEO'sability to comply.

Mr. Barth agreed that his experience with Mr. Agrawal was based upon the twowells in his area. Mr. Barth stated that he had not reviewed any of the other 47 wellsunder the operation of Mr . Agrawal or his companies . Mr. Barth stated that he did notbelieve that the work done by EPS on the Jerry No . 1 well exceeded what was requiredby the order.

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Upon redirect examination, Mr. Barth stated that the Guy Thomas well and theJerry No. 1 well both had pollution issues and were not responsibly operated . Mr.Barth testified that he was not aware of any Oklahoma Corporation Commission rulesthat exempted an operator from maintaining well sites because of a bankruptcy . Hesaid that if an operator goes out of business the State of Oklahoma then has to cleanup the well sites.

Mr. Larry Claxton, manager of the Surety Department was called as a witness .His qualifications to testify about surety requirements and the requirements of theOklahoma Corporation Commission were admitted without objection .

Mr. Claxton testified that he was familiar with Mr. Agrawal and the companiesmanaged by Mr . Agrawal . Mr. Claxton stated that EPS had an irrevocable commercialletter of credit from Coppermark Bank as posted surety. The letter of credit expired bythe terms on November 17, 2009 . He stated that prior to the expiration date the letterof credit was seized by the Oklahoma Corporation Commission and is now held ascash surety for the benefit of Energy Production Services LLC . The surety was seizedbecause of unplugged wells in the State of Oklahoma.

Mr. Claxton identified the OCC well inventory list indicating a total of 47 wellsfor EPS . These 47 wells are covered by the surety . Mr. Claxton testified that thesurety for Online Oil expired on November 16, 2006 . He stated that Online Oil is outof business . He stated that the well inventory for Online Oil indicated there were 11wells that were active . Mr. Claxton stated that the State of Oklahoma would now beresponsible for plugging those 11 wells . He stated that Mr. Agrawal signed anoperator's agreement to plug the wells but has not done so .

Mr. Claxton testified that they had been forced to seize the sureties in all threecompanies managed by Mr . Agrawal . He stated that these companies were not a goodsurety risk. He testified that based upon his prior experience he believed it isappropriate to ask for a higher surety amount for Mr . Agrawal . He believes the suretyfor EPS should be increased to $50,000 within 30 days . He also stated that he felt itwas appropriate to increase the surety to $75,000 within 6 months of the date of theInterim Order in this matter . He testified that within one year of the date of theInterim Order he believes the surety should total $100,000 . Mr. Claxton testified thatin his experience Mr . Agrawal was an operator that has not met his financialresponsibility as required by the Oklahoma Corporation Commission . He stated thatbecause of the record of the numerous entities formed or managed by Mr . Agrawal anyother entities formed or managed by Mr . Agrawal should be required to post the sameamount of surety .

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Upon cross examination Mr. Claxton stated that he did not know if Online Oilwas conducting business in the State of Oklahoma. Mr. Claxton testified that he didnot know if the State of Oklahoma had spent any monies to plug any wells operated byMr. Agrawal . He stated that he can validate the information that comes from his officebut he could not validate information from other areas .

Mr. Claxton testified that GEO Exploration still had a $25,000 bond in effect .He stated that pursuant to the rules of the Oklahoma Corporation Commission theywere still in compliance .

Mr. Claxton testified that under the rules, the parameters established forincreasing the surety of an operator is at the discretion of the Division Director . Mr.Claxton said he believes the rule gives the Director total discretion on the amount ofsurety up to $100,000 . Mr. Claxton testified that there were three operators currentlyin business and have had their surety increased to $100,000 . Mr. Claxton agreed thatretaliation would not be a proper reason for increasing surety .

Mr. Claxton stated that Deep Energy was in compliance with its $25,000 surety .He testified that to his knowledge Deep Energy had no bearing upon the action toincrease the surety of Mr . Agrawal or companies he operated .

Mr. Claxton testified that he was involved in the process of converting the letterof credit to $25,000 cash. This was the letter of credit for EPS . He testified that theincrease in surety request was not initiated by him . Mr. Claxton testified that he didnot know why the Commission moved for the emergency order prior to the normalpractice .

Upon redirect examination Mr. Claxton testified that to his knowledgeallocations of raising a surety is a common step in cases involving other issues suchas pollution and remediation . He stated he would not be consulted in matters otherthan surety.

After discussion, judicial notice was taken of Rule 165 :10-1-10(d) . Further,notice was taken of Rule 165 :10-1-10(i) .

Mr. Claxton stated that in his opinion the reasons a surety would be raised to$100,000 was because of pollution issues or failure to fulfill the responsibilitiesrequired of an operator .

Mr. Kris Agrawal was called upon direct examination . Mr. Agrawal stated thatEPS did not clean up the pollution at the Bethel site because it was not created bythem. He stated that the old operator is now in bankruptcy and assets are frozen and

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actions are controlled by the bankruptcy court . He stated that some wells could notbe transferred to EPS because of the bankruptcy . After extensive argument, questionsand objection, the parties stipulated to the facts involved in the pollution issues in theBethe144 well . They further stipulated to the actions of the operator, time frames, andremediation agreement pursuant to the record .

There was further extensive testimony by Mr . Agrawal which was mostly in theform of nonresponsive answers, objections by the attorneys and an attitude ofuncooperativeness by this witness . The pertinent facts and statements that evolvedfrom this drawn out testimony are as follows :

i(1) Mr. Agrawal believes that the 47 wells could be plugged for $25,000 .

(2) Mr. Agrawal agreed he signed the operator agreement .

(3) Mr. Agrawal agreed that he has ownership or managerial capabilitybetween he and other family members in various companies listed.

(4) Orders have been entered showing the past actions against therespondent .

(5) Mr. Agrawal believes he has grievances against actions taken by theOklahoma Corporation Commission .

(6) Mr. Agrawal believes that OnLine Company has no unplugged wells .Some of these wells were transferred to CONG Production Group .

(7) Mr. Agrawal disagrees with the Oklahoma Corporation Commission listshowing the unplugged wells. He pointed out some mistakes which lends somecredence to his allegations .

(8) GEO is in Chapter 7 bankruptcy.

(9) Some of the wells operated by GEO have security interests on theequipment . Different parties own different security interests .

(10) There are orders admitted into the record that show failure to plugactions .

Applicant rested on the case in chief. However Mr. Thomas reserved the right tocall rebuttal witnesses .

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Mr. Agrawal was presented for direct examination as the first witness for therespondent. Prior to his testimony Mr . Solomon, attorney for respondent, stated thatthey were attempting to prove a different set of facts concerning the OnLine wells andthe GEO wells. He stated they believed there are errors in the data and can show thatthere are no unplugged wells or at least fewer than stated .

Mr. Agrawal testified that he requested copies of Oklahoma CorporationCommission documents that refreshed his memory as to certain OnLine wells . Hebelieves these documents dispute the previous list of wells that were admitted . Mr.Agrawal demonstrated that some of the wells on the list were on Indian leases and theBIA required that they be plugged . He demonstrated that there were documents thatconfirmed these wells. He further demonstrated that by comparing the documents hereceived to the computer printout of Oklahoma Corporation Commission, the GroveHilltop No. 3 well is shown as plugged by the actual documents . The computer datadoes not indicate this well being plugged .

Mr. Agrawal testified that he has been in a continuing dispute with Mr. Murphy,a land developer, over plugged wells . He stated that Mr . Murphy wanted the surfaceland for its value in development . He stated that Mr. Murphy received authority fromthe Oklahoma Corporation Commission to plug certain wells . He further testified thatMr. Murphy did not file the plugging reports . He testified that these issues haveresulted in district court action .

Mr. Agrawal testified that he transferred the OnLine wells to a third party partlybecause of the surety being raised to $100,000. Further he claims that certain wellswere directed to be plugged that were producing . He stated this action cost OnLine$30,000 per month in revenue . He testified that because of this ongoing dispute withthe Oklahoma Corporation Commission he transferred the wells .

Mr. Agrawal testified that the GEO Production wells were requested to betransferred to EPS but no action was taken . He stated there was no request for theGuy Thomas well to transfer . He testified that the Guy Thomas well should berecompleted. He testified that the other wells can be produced and that there is nopotential for the bond to be insufficient to plug any wells that belong to GEOProduction. However, he said the bankruptcy trustee has not decided which wells areassets and which wells will be abandoned . Therefore neither GEO Production nor EPScan take any action on those wells. He stated that the GEO Production wells would beadvantageous to EPS for injection wells in the unit .

Mr. Agrawal stated that he believes that if the wells were plugged the salvagevalue of the equipment on the different wells would result in a gain to the owners after

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the cost of plugging was deducted. He stated that these wells are operated as a unitand that has no impact on the financial ability to plug these wells .

Mr. Agrawal testified that there is no intention to transfer any of the DeepEnergy wells to EPS . He stated that if the GEO wells were transferred to EPS it is hisopinion that the surety could be transferred to EPS. The surety is guaranteed by hisdaughter based upon her interest in GEO Production. Therefore, the surety could betransferred with the permission of his daughter .

Mr. Agrawal believes there is no need to increase the surety on the wells. Manyof the wells are producing and he does not believe that any wells need to be plugged.He stated that EPS is not running away from any of its responsibilities . He stated thatEPS does not have the ability to obtain a letter of credit to an increased value of$100,000. All cash that is available to EPS goes back into reworking the wells. Hestated if the surety is increased to these amounts EPS will go out of business .

Mr. Agrawal stated that he has a PhD from Oklahoma State University in civiland mechanical engineering . It also includes industrial, petroleum and geologyengineering. He stated he is a licensed engineer in the state of Oklahoma . Mr.Agrawal has experience in remediation issues and has applied this to his oil and gasoperations. He believes he has better knowledge and means to remediate pollutionthan the field inspectors for the Oklahoma Corporation Commission .

Mr. Agrawal stated that he had previously conducted remediation at the Bethelsite . He had filled in a pond with permission of the landowner and the OklahomaCorporation Commission. He stated they replaced a pipeline and took care of anyresultant pollution . He stated pursuant to that agreement remediation was completedat the expense of $40,000 .

He testified that he conducted extensive research and time to find a solution forthe remediation. He discovered the uses and effects of Actosol and decided that theremediation could be completed . He used his experience and expertise to formulate asolution.

Mr. Agrawal stated that he had completed a list of equipment on the differentwells for his investors. He testified that the equipment was worth at present timeabout one million dollars . He stated if he had to plug the wells now he could get theworking interest owners to do the plugging they would get money back after the sale ofthe equipment .

Mr. Agrawal stated that Deep Energy operates two wells . He has no intention totransfer the Deep Energy wells to EPS .

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Mr. Agrawal testified that his daughter owns GEO Exploration . If the GEO wellsare transferred he may ask to transfer the surety from GEO to EPS .

Upon redirect examination Mr . Agrawal stated that the Kay wells were Indianleases and were plugged upon request of the BIA. Mr. Agrawal found documentationin the records of the previous owner that shows these wells were plugged . Mr. Agrawalstated that there was one other well on the Oklahoma Corporation Commission listthat has been plugged.

Mr. Agrawal stated that the emergency order was filed before the letter of creditwas due to expire . He testified that Coppermark Bank was served with the notice andthe bank will not deal with them now. He believes that prior to the action on thesurety he had a good relationship with Coppermark Bank . Currently, he would not beable to get a letter of credit from Coppermark Bank.

Mr. Agrawal testified that he believes the state of Oklahoma has not used anystate funds to plug any wells where he has been the operator . He states that all the Kwells have been plugged either before he bought the company or plugged by the landdeveloper, Mr. Steve Murphy. He believes the Oklahoma Corporation Commissioncomputer records are not consistent with what wells have actually been plugged .

Upon recross examination, Mr. Agrawal reiterated that all of the K wells havebeen plugged. He further stated that the Coppermark Bank letter of credit expired onNovember 17, 2009 . He further testified that he does not agree with who gets noticeunder the rule on surety . He stated that the actions by the Oklahoma CorporationCommission had a chilling effect on his relationship with Coppermark Bank. Mr.Agrawal stated that he believes he did not get proper notice in the application to seizethe letter of credit from Coppermark Bank . He also believes that the actions by theOklahoma Corporation Commission against him have been inconsistent with the rulesand statutes. Mr. Agrawal believed that the actions by the legal department on thesurety were inconsistent with the procedures established in the surety department .

Mr. Ben Novosad was called as a rebuttal witness. Mr. Novosad works in the Oil8v Gas Division in charge of well records . Mr. Novosad testified that he has had recentdiscussions with Mr. Agrawal concerning the well records . He stated that during theirsearch he found records for one well that had been plugged from the list of unpluggedwells . Mr. Novosad testified that other wells on the list were unplugged.

Upon cross examination Mr. Novosad testified that prior to 1989 plugging andcompletion records were not input into the system . He stated that after 1989 if a wellwas plugged it should have been input in the system . He stated some wells could have

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been missed because of input error. He testified that there are mistakes from time totime in that the computer records may show a well unplugged but a check of the paperrecords indicates the plugging had occurred . He further stated that prior to 1989there could have been a lot of older wells where the paperwork did get input into thesystem. Mr. Novosad would not be aware of any well that was plugged and did nothave the proper paperwork filed .

Applicant recalled Mr. Simon Winlock. Mr. Winlock stated that he felt anunplugged well was a potential threat to the environment . He stated unplugged wellscan pressure up and blow out or valves etc . can be broken and everything leaks out onthe ground . He further stated that a well that fails an MIT test is a potential threat tothe environment. The MIT will test the strength of the casing. This ensures that nosaltwater leaks out because of weak casing. The MIT helps to ensure that no saltwaterfrom a disposal well will pollute the treatable water .

Mr. Winlock discussed the Guy Thomas well and stated that the packer in holewould be difficult to mill out . He stated he disagreed with Mr. Agrawal's assertion thatthe Guy Thomas well was an easy fix . He testified he disagreed with the salvagevalues stated by Mr. Agrawal . He believes that they cannot get the total amount of thepipe out of the hole .

Mr . Winlock stated that any wells to be plugged by the state are not put on a listimmediately. All wells are prioritized . He testified that he could not state whether anywells had been plugged or not .

Upon cross examination Mr. Winlock stated he had not done any study as to thevalue of any salvage equipment on the wells operated by EPS . Mr. Winlock stated thatany well producing or nonproducing has the potential for pollution . Mr. Winlockstated that a field inspector is always present at the plugging of a well . He stated thatmany operators and working interest owners supply the salvage value of a well to thecost of plugging . There were no further questions of Mr. Winlock and he was excused .No further witnesses were called and the parties rested .

RECOMMENDATIONS AND CONCLUSION S

After taking into consideration all the facts, circumstances, testimony andevidence presented in this cause, it is my opinion that the application of LoriWrotenbery, Director, Oil 8v Gas Conservation Division, Oklahoma CorporationCommission be recommended with certain variations .

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The parties have entered into an agreed upon remediation plan in this matter .Therefore the remediation shall be conducted as agreed to by the parties .

Respondent, Energy Production Services, LLC post surety in the amount of$50,000 in a form satisfactory to the Manager of the Commission Surety Departmentwithin 30 days from the date of this order . Further, the respondent shall have 6months from the date of this order to resolve the outstanding issues concerningunplugged wells and other operator violations as established in this cause . If saidissues are not resolved within this time frame the respondent, Energy ProductionServices, LLC shall be required to increase the amount of its surety to $75,000 .

The $25,000 surety that was the subject of emergency Order No . 571511 shallbe held by the Oklahoma Corporation Commission as cash surety .

The Applicant provided sufficient evidence to show the past history of therespondent, Energy Production Services, LLC . The previous violations involvingpollution, unplugged wells and the lack of responsibility by the operator warrant therecommendation in this cause. The respondent offered a multitude of testimonyconcerning these issues . However, the majority of said testimony was argumentativeand disruptive and served no useful purpose except to prolong this matter . Therespondent should not have attempted to use this matter as a forum to recitewhatever grievances it feels it has suffered from the Oklahoma CorporationCommission .

However, Dr. Agrawal consistently advocated that there are some errors in theplugging records of the Commission . The valid points established through hisattorney were considered and resulted in this somewhat more lenient suretyrecommendation .

The result in this cause will allow increased surety for the contingent proceduresthat are required for these various wells. It also gives the respondent the chance toimprove its quality of operations or suffer further surety requirements . Foremost inthis result is the protection of the environment and the ability of the Commission toperform its prescribed duties .

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It is my recommendation that the application be approved as stated above .

RESPECTFULLY SUBMITTED THIS 3rd day of August, 2010 .

Michael Nar 'sAdministrative Law Judge

MN :sc

cc: Keith T. ThomasStephen G . SolomonOil-Law RecordsCommission File