LOGALOUISIANA OIL 6z GAS ASSOCIATION

July 24, 2014

FEDEX OVERNIGHT DELIVERY

Mr. Pete Peters, ChairnlanMr. Charles Carrico, MemberMr. Kenneth Naquin, MemberMr. Joey Vercher, MemberMs. Kay Kellogg Katz, MemberLouisiana Tax Commission5420 Corporate Blvd. #107Baton Rouge, Louisiana 70808

Re: 2015 Rules and Regulations Rebuttal — Chapters 3, 9

Dear Mr. Chairman and Members:

DON G. BRIGGS, President

The Louisiana Oil &Gas Association (LOGA) respectfully submits the enclosed rebuttal for tl~e 2015 Rules andRegulations. Copies, as required by the Louisiana Tax Commission, are provided to assist in the process.

We look forward to verUally elaborating on these important issues at the upcoming hearuig. If you have anyquestions please do not hesitate to contact our offices.

Respectfully,

Don G. BriggsPresident

LOGA is Louisiana's Oil ~ Gas IndustryPO BOX 4069 BATON ROUGE, LA 70821-4069 ZZ5.388.95Z5 300.443.1433 FAX: 225.338.9561

Cha ters 3 & 9p

Rebuttal Presented to the Louisiana TaxCommission Related to the 2015 Louisiana

Assessors Association Proposal

L~QLtISIANA OiL Sc GA$ r1S&O~CLAI'IQN

Table of Contents

Rebuttal of Pivach Letter Presented to the Louisiana Tax Commission

II. LOGA Rebuttal of Chapters 3 & 9

III. Exhibit A — Instructions and Definitions for Drilling Costs

IV. Exhibit Al —Fair Market Value Explained

V. Exhibit B — Comparison of Texas &Louisiana

VI. Exhibit C — Comparison of Current to Proposed LTC Assessments

VII. Exhibit D — Louisiana Parishwide Millages

VIII. Exhibit E1 — Impact on Haynesville Well 1

IX. Exhibit E2 — Impact on Haynesville Well 2

Rebuttal of Pivach Law Firm Letter

BEFORE THE

LOUISIANA TAX COMMISSION

LTC DOCKET NO. RR-2015

IN RE: IN CONSIDERATION OF AMENDINGAND/OR ADOPTING PERSONAL PROPERTY

RULES AND REGULATIONS FOR CHAPTER 9, OIL AND GAS

MEMORANDUM IN REBUTTAL OF PROPOSAL OF THE LOUISIANA ASSESSORSASSOCIATION ON BEHALF OF THE LOUISIANA OIL AND GAS ASSOCIATION

Pursuant to the Commission's Notice regarding its annual Rules and Regulations

Sessions, the Louisiana Oil and Gas Association ("LOGA") submits this response in rebuttal to a

proposal submitted by the Oil and Gas Committee of the Louisiana Assessors Association

("LAA") regarding the calculation of the value of oil and gas wells for purposes of ad valorem

property taxation. In their Memorandum, the LAA argues that the answer to the historical debate

regarding the proper cost structure of oil, gas and other wells for taxation purposes can be found

in basic principles of appraisal. The LAA proposes that the Commission use one hundred

percent (100%) of the drilling costs as gathering by the American Petroleum Institute ("API") in

its Joint Annual Survey of drilling costs ("JAS"). This approach, the LAA contends, focuses on

the proper calculation of "replacement cost —new" of a well.

While the LAA represents that this approach is different, the reality is it is the same

proposal that has been promoted by the LAA for many years. ~ As such, the current proposal

suffers from the same deficiencies as the prior ones. Simply stated, the drilling cost data

~ See, for example, Submission on Behalf of the LAA by Pritchard &Abbott on July 9, 2010 forthe Tax Year 2011. In that proposal, the LAA also proposed that the Commission adopt 100% ofthe drilling costs determined by the API's JAS as it purportedly more accurately reflected the"replacement cost —new" of oil, gas and other wells under appraisal principles.

{N2853661.7}

gathered by the API in the JAS captures, and thus reflects, costs that are not subject to ad

valorem taxation under the Louisiana Constitution, the relevant statutes and the applicable case

law. Thus, for the reasons set forth below, and in many prior rebuttal memoranda submitted to

the Commission by LOGA and other taxpayers, if the Commission determines to use the API's

JAS as the source of drilling cost data for determining the fair market value of the table

portion of a well, the Commission should only use a percentage of those costs (which reflect the

property that is taxable) to construct Tables 907.A-1, 2 and 3, and that percentage should most

likely be less than the 40%used in 2014.

A. THE LOUISIANA CONSTITUTION IS THE PROPER STARTING POINT.

While the LAA has focused on definitions relating to appraisal techniques, the obvious

starting place for any analysis of the proper method of determining what property is subject to ad

valorem property taxes and how to value that property is the Louisiana Constitution. Article VII,

Section 18 of the Louisiana Constitution of 1974 limits what ad valorem taxes may be imposed

on property and defines how property is to be valued for ad valorem tax purposes. Specifically,

in Subsection A of Section 18, the Constitution provides that:

Property subject to ad valorem taxation shall be listed on theassessment rolls at its assessed value, which, except as provided inParagraphs (C) and (G), shall be a percentage of its fair marketvalue.

See La. Const. Article VII, Section 18(A). In Subsection B, the Constitution classifies the

property that is subject to ad valorem taxation and the percentage of fair market value applicable

to each classification. Under the Constitution, land, improvements for residential purposes,

electric cooperative properties, associated service properties and "other" property are defined to

be subject to ad valorem taxation. The determination of where a particular type of property falls

{N2853661.7} 2

within those classifications is typically a routine matter for most types of property. The same

conclusion cannot be so simply reached for oil and gas properties.

As shown by the annual filings by both the LAA and taxpayers regarding the

Commission's Rules and Regulations, the continuous debate about the proper methodology of

valuing the part of the well that is subject to ad valorem taxation must be resolved considering

the prohibition in Article VII, Section 4(B) of the Louisiana Constitution of 1974, The relevant

portion of that section of the Constitution permits the levy of a severance tax on natural

resources, but also imposes a significant restriction by declaring that "no further or additional tax

or license shall be levied or imposed upon oil, gas, or sulphur lease or rights."z This

Constitutional prohibition limits the ability of the Legislature, this Commission and Assessors to

impose any taxes on oil and gas "leases or rights." This clear prohibition must have meaning,

and its breadth has been explained by the Louisiana Supreme Court.

In Bel Oil Corp. v. Fontenot,3 the Court considered a challenge to a gas gathering tax

which levied "upon every person engaged in gathering gas produced in the State an excise

license or privilege tax, for the privilege of engaging in such business."4 The statute defined

"gathering gas" to mean "transporting gas, after its severance, from the well to the first. meter at

or near the well." The Supreme Court, in affirming the district judge's decision, found that the

gas gathering tax was clearly prohibited by Article X, Section 1 of the Louisiana Constitution of

1921 (which contained the same prohibition on additional tomes on "oil and gas lease or rights"

that exists in the current Constitution, see La. Const. Art. VII, § 4(B)). The Court concluded

2 Emphasis added.

3 238 La. 1002, 117 So. 2d 571 (1959).

4 La. R.S. 47:671 (repealed by Acts 1998, No. 27).

{N2853661.7} 3

that, although labeled as a "gas gathering" tax, the activities to be taxed involved a process which

formed "an integral part of the severing of the natural resource or reducing it to possession and

as such must be struck down."5

In their proposal, the LAA very clearly describe the scope of the costs that they seek to

have included in the value of a "well" for tax purposes. In their proposal, the LAA state as

follows:

Considering the taxable property composing the well, then, whatcosts would be incurred to construct property of the same utility?In regards to the well's sub-surface equipment, these costs wouldinclude all costs incurred in getting the sub-surface equipmentinstalled below the ground such that it is capable of serving thewell. In addition to the cost of materials, these costs wouldnecessarily include cost related to planning, site preparation,transportation, drilling, logging the hole, running and cementing,casing, installing any piping or tubing, hauling materials orequipment, etc.

See LAA Proposal at 4 (Emphasis in original).

Under Louisiana law, many, if not most, of the activities that the LAA seeks to include in

determining the "cost" of a well are necessary, and required for the owner of the land, or an

operator, to explore for and hopefully produce minerals. Because, under Louisiana law,

ownership of land does not include ownership of any oil and gas below the land,6 all a property

owner possesses is "the right to explore and develop one's property for the production, of

minerals, and to reduce minerals to possession and ownership...."~ Indeed, under Louisiana law,

"the vesting of title to fugitive minerals, such as oil or gas, occurs when the minerals are reduced

5 See 117 So, 2d at 573.

6 See Frey v. Amoco Production Company, 603 So. 2d 166, 171 (La. 1992).

~ Id.

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to possession at the wellhead."8 If the right to gather, measure and produce gas is protected

from additional taxation as the Supreme Court specifically concluded in Bel Oil, all of the

activities that allow an operator, or property owner, to exercise the only true right that they have

with respect to minerals (i.e. the exploration and possible development of their production) must

also be protected by the same Constitutional prohibition.

The Commission has looked to the API's JAS as a starting point for determining the

appropriate cost basis for valuing oil, gas and associated wells. However, recognizing that the

JAS survey (just like the LAA's proposal) includes cost items that do not lead to the creation of

taxable property and are so closely tied to the rights associated with the exploration for oil and

gas that their taxation is prohibited by the Constitution, the Commission has found it appropriate

to only use a percentage of the total drilling costs reported in the JAS to construct the cost

schedules in Section 907.9

B. THE ONLY PARTS OF AN OIL AND GAS WELL THAT ARE TAXABLE ARE THECORPOREAL MOVABLES.

In its proposal, the LAA agrees that only the corporeal movable property related to an oil,

gas or associated well is subject to ad valorem taxation. The LAA, however, proposes that the

Commission use one hundred percent (100%) of the JAS drilling costs to create the tables in

Section 907. A review of the cost components of the JAS survey, as shown by the instructions,

clearly reveals that the majority of costs gathered in the JAS survey do not relate to corporeal

movable property, but instead encompass many activities that are directly tied to, and are a part

8 Id. (Emphasis added}. See also La. R.S. 31:7 ("Minerals are reduced to possession when theyare under physical control that permits delivery to another." )

9 In Section 907(A), the Commission's Rules provide that "[t]he Cost-New Schedules belowcover only that portion of the well subject to ad valorem taxation."

{N2853661.7) 5

of, the rights to explore for and develop oil and gas properties. The instructions and definitions

that accompany the JAS survey instruct each operator as follows:

10. TOTAL COST. Report the TOTAL (tangible and intangible)of each well completed by you as operator in the survey year(whether actually drilled by you or drilled for you by contractors).The TOTAL of such costs should be reported even though you asoperator had only a part of a working interest in the well.

Do not report costs of wells drilled by others in which you had aworking interest regardless of the size of such interest. The coststo be reported are those associated with wells which are completedduring the survey year and tlae dollar aurora:t to be reported is tlaerrcc~in:ttlated cost of such wells from the tinge locatio~zs weremade «ntil the wells were completed as prod«ctive wells oraba~tdo~zed after drilling was tertni~zated because they were iaon-productive.

In general, the elements contributing to reported costs are theexpenditures for drilling dry holes and productive wells andequipping new productive wells through the "Christmas tree"installation. More specifically, these costs elements are the costsof Cabor, materials, supplies, water, filets, power, and directoverhead (i.e. field, district, and regio~tal), for s~sch operatza:s assight preparation, road building, erecting astd dismantlingderricks and drilling rigs, drilli~tg hole, rrcnr~irag and cementingcasir:g, haulm:g tnaterials, etc. Include the total cost of water, ifpurchased, or cost of water well, if drilled and chargeable to oil orgas well drilling operations. Well costs also include machineryand tool charges and rentals, and depreciation charges, whereappropriate, for rigs and other equipment and facilities which willbe used in drilling more than one well. Deduct the condition valueof materials salvaged after use where appropriate.

Do not report the cost of leased equipment such as artificial liftequipment and downhole lift equipment, flowlines, flow tans,separators, etc., that are required for production.

Do not reduce the cost by test well, bottomhole, or dryholecontributions.

{N2853661.7} 6

See "Instructions and Definitions for Drilling Costs" for the API's JAS, attached as Exhibit "A"

(Emphasis added). A simple review of the types of costs that are included in the JAS survey

establishes that the LAA is overreaching in its proposal. While the LAA has postured its

proposal as one based upon appraisal principles, it overlooks the fundamental interplay between

the two sections of the Constitution cited above.

In addition, the LAA's proposal specifically seeks to include some notion of value related

to the "utility" oil and gas wells. The LAA once again points to appraisal principles to support

its position. In fact, the LAA contends that it is the "utility" of the downhole equipment that

gives it its value, and that value is best determined by the total cost of putting that equipment in

place. In their proposal, the LAA represents that "the utility of the well's taxable property is

obvious —all of the property together serves to operate the well and produce oil and gas to the

satisfaction of the owner." See LAA Proposal at 4. Without doubt, when viewed against the

backdrop of the competing Constitutional issues, one can hardly dispute that the result of the

LAA's proposal is the inclusion of costs directly related to the right to explore for and develop

oil and gas rights. Undoubtedly, associating any costs related with an operator's exercise of that

right, and the resulting utility of the oil and gas well, is not permitted.

The decision of the Supreme Court in Meyers v. Flournoy10 does not provide otherwise.

In that case, producing gas wells and equipment located on an oil and gas lease were assessed

for ad valorem takes on the piping, tubing, gathering the lines, derricks, pumps and other

equipment used by the owner of the wells in operating them. In concluding that the

Constitutional prohibition did not reach the property at issue, the Supreme Court stated:

All that tlrey have done, or attempted to do, followi~zg thei►tstructions of the Louisiafta Tiix Commission, is to levy and

10 25 So.2d 601, 209 La. 812 (La. 1946).

{N2853661.7} 7

attempt to collect a tax on the pipi~ag, tubing, gathering tlae lines,derricks, pumps and otJter equipment used by plai~atiff inoperating his gas wells.I 1

In the Meyers case, the Supreme Court found that the taxation of oil and gas equipment

(i.e, corporeal movable property) was taxable. It is of note that the Assessor painstakingly

avoided any attempt to tax the well bore or the cost of drilling the well.lZ As instructed by the

Supreme Court in Meyers, only corporeal movables associated with an oil and gas well are

subject to ad valorem taxation under the Louisiana Constitution. Under the Louisiana Civil

Code, corporeal movables are "things, whether animate or inanimate, they normally move and

can be moved from one place to another." See La.C.C. Article 471.13 A review of the

instructions of the JAS clearly indicates that the majority of the costs that are to be included do

not qualify as corporeal movable property. Instead, they are directly related to the exercise of the

rights of the operator or leaseholder to explore for and develop oil and gas production.

CONCLUSION

For the reasons set forth above, LOGA opposes the proposal made by the LAA to use

one hundred percent (100%) of the JAS in creating the cost tables in Section 907 of the

Commission's Rules and Regulations. Over the years, the LAA, LOGA, other taxpayers and the

Commission have sought to find the best, and most equitable, method of determining the fair

11 See 209 at 821-22, 25 So. 2d at 603-04. (Emphasis added).

12 See Silurian Oil Company, Inc. v. Fuselier, 230 So. 2d 121(La. App. 3 Cir. 1969) (finding thatthe only thing that could be sold at a tax sale of an oil and gas well was the movable equipmentas the well itself nor the lease or any of the interest could have been sold because this type ofproperty is exempt from ad valorem taxation).

13 "Corporeal movable property" as defined in the Civil Code is synonymous with the term"tangible personal property" as used in the Tax Code. See Sommers v. Secretary, Department ofRevenue and Taxation, 593 So. 2d 689, 692 (La. App. 1 Cir. 1991), writ denied, 594 So. 2d 877(La. 1992).

{N2853661.7} g

market value of the corporeal movable property that is subject to ad valorem taxation, With

respect to the cost approach, LOGA believes that the current Rules and Regulations adopted by

the Commission, and in place for prior years, results in a value in excess of fair market value for

the corporeal moveable property that is subject to ad valorem taxation under the Louisiana

Constitution. Furthermore, if any portion of the LAA proposal is adopted, the result would be a

movement further away from fair market value.

Respectfully Submitted,

J .ADAMS, III (#23617)A DRE B. BURVANT (#23982)J nes Walker LLP201 St. Charles Avenue, Suite 5100New Orleans, Louisiana 70170-5100Telephone: (504) 582-8000Facsimile: (504) 582-8012

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LOGA Rebuttal of Chapters 3 & 9

LOGA Rebuttal to the 2015 LAA Proposals

For many years, the Louisiana Oil and Gas Association (LOGA) has presented rebuttalcomments related to the Louisiana Assessors' Association (LAA) proposals. Whilenormally kept as brief as possible, LOGA has been very clear in its position that neitherthe current system of assessment nor the proposed changes by the LAA reflect themarket value of the oil &gas wells or surface equipment. There must be a significantchange in the approach to assess the oil &gas assets to move towards fair marketvalue. The LOGA proposal to change the methodology, to open the idea of doingsomething different, is one possibility to end the years of arguing over the existingsystem.

The assertion by the LAA that industry has special exemptions, or possibly even omittedproperty, is not accurate. The wells are currently assessed, in most instances, at avalue in excess of the fair market value. If any portion of the LAA proposal is adoptedby the Louisiana Tax Commission (LTC), the assessments will move even further fromfair market value.

The rebuttal that follows is presented for Chapter 3 (Forms) and Chapter 9 (Oil &GasProperties).

Chapter 3

The changes suggested in Chapter 3 by the LAA alter the LAT 12 form and adapts it tothe proposal submitted for Chapter 9. LOGA feels the changes requested by the LAAfor Chapter 9 are unwarranted, thus the changes to the LAT 12 are opposed.

Chapter 9

Oil &Gas Wells (Subsurface Equipment)

As both LOGA and the LAA recognize, the debate over the assessment of oil &gaswells has been a divisive issue for over 20 years. Central to the debate is the issue ofthe taxability of the hole drilled on leased land to produce the oil &gas. The LAAcontinues to take the position that all costs to develop wells result in taxable personalproperty, now deemed "the stufF'. For 2015, LOGA has been asked by the LAA toignore the hole and consider it part of the value of the stuff in use. LOGA is notprepared to accept that all costs result in taxable personal property.

Page 1 of 6

What seems to get lost every time the calculation is discussed is the end goal, fairmarket value. The entire discussion shifts to the so called 60% exemption in thecalculation, or the treatment of the lateral portion of horizontal wells. The simple truth isthat there is no exemption, underassessment, or omitted property since the valuesassessed currently exceed the market value of the personal property in most, if not all,cases.

Rather than go into specific detail on every parameter of the LAA proposal, LOGAwould like to focus on two things: Fair Market Value and Common Sense. Those twosimple ideas should be the measurement of the assessment, not the philosophicaldifference of the makeup of a calculation.

Fair Market Value —Any discussion of ad valorem assessment has to begin with fairmarket value and its application to the properties in question. Exhibit Al provided inthis rebuttal presentation explains fair market value in Louisiana. Upon a completereading, it is clear that the standard in Louisiana is similar to that of most other states.Summarized, it is what a willing buyer and willing seller would agree to as value forsome asset.

Common Sense —The concept of common sense is familiar to us all. The end result ofall the calculations and analysis of the assessment of the oil &gas wells should makecommon sense to someone in the business or someone familiar with the business.

The exhibits discussed below have been prepared by LOGA to look at the currentsystem and the 2015 LAA proposal to see if the ideas of fair market value and commonsense are apparent in the end result.

Exhibit B is an analysis comparing wells assessed in Texas, using the incomeapproach to assess 100% of the mineral value and all equipment, to the LAA proposalfor the value of equipment only. Over the years, there has been a hesitation to acceptthese comparisons from LOGA by the LAA. However, with the request that LOGAaccept the use value of the stuff and recent comments by members of the LAA that theywish to assess wells as in other states, it seems reasonable to compare the results.

The blue highlighted column shows the 100% fair market value for minerals andequipment in Texas. The total value for these wells, minerals and equipment, isapproximately $34MM. The current LTC guidelines for Region 1 on the same wellsvalue the equipment only at $21 MM, or about two-thirds of the value in Texas. That is avery high percentage of equipment to minerals on producing properties. If you followthe highlighted purple totals, you will see that if Region 2 or Region 3 schedules wereapplied, the resulting equipment values would exceed the Texas total values. The basic

Page 2 of 6

Texas calculation would not change by well geographic location, so the comparison stillapplies reasonably. Following over to the highlighted blue totals, you will see that the2015 LAA proposal values the Region 1 equipment at $121 MM, $87MM more than theTexas value of both minerals and equipment. The Region 2 and Region 3 schedulesproposed would also greatly exceed the Texas values.

While it may be simple to say it is done differently in Texas, the income approach tovalue is the methodology used by companies to purchase wells, not the cost to drill.The fair market value is tied to the ability of the well to produce income, which is nottaxable for ad valorem purposes in Louisiana. It does not make common sense that thecost approach to value should be so much higher than the income approach onproducing wells.

Exhibit C is an analysis to show the comparison of the 2014 assessments on a sampleof wells from across Louisiana to the 2015 LAA proposal. These wells were randomlyselected to provide an appreciation for the impact of the proposed calculation changes.The values calculated are not meant to tie directly or signify in any way the actualassessments on the parish tax rolls. Actual data was not requested from theoperators. The comparison is to show a resulting change from a static data setonly.

The increases in these wells vary, but most were significant. In fairness, there is onewell that stays flat and two with slight reductions in value. Using the parish widemillages from the LTC (Exhibit D), the taxes were estimated to show the bottom lineresult. The taxes on the sample would be three times higher for 2015 than 2014. Whilevalue, not taxes, is the focus of the LOGA rebuttal, the fiscal impact to taxpayers shouldbe considered in any rule changes.

Exhibits E1 & E2 (4 pages each with support) were created to show the dramaticimpact the 2015 LAA proposal would have on the Haynesville wells. The issue of theassessment of these horizontally drilled wells has become one of or possibly the mostaggressively debated issue for the last few years. The LAA suggests that since thecalculation in the LTC Rules &Regulations does not specifically include the footage inthe lateral that fair market value is not achieved for the well. Again, the end result is thetest, not the philosophical differences over the makeup of the calculation.

Exhibit E1 is an actual well pulled from SONRIS. The 2015 LAA proposal was appliedto the well to measure the accuracy of the end result across any given year of the well'slife. Since the well was completed in 2009, that is the year highlighted for the 2015schedule.

A very simple test of the assessment is the measurement of ad valorem taxes as apercentage of gross income. Typically, the percentages of ad valorem taxes to gross

Page 3 of 6

income would be 2% to 6% in producing states. Variances in appraisal methodologiesand millage rates impact the final result. The highlighted row for this well shows that theassessment for 2015 using the LAA proposal would be over 24% of the 100% gross

income, and over 32% of the WI gross income.

Exhibit E2 is another well pulled from SONRIS to test the result again. This well, drilled

in 2010 could expect to pay 44% of the 100% gross income and over 58% of the WIgross income to ad valorem taxes.

Does it seem reasonable or make common sense that any operator would drill a well orbuy an existing well with ad valorem taxes in the range of 24% to 44% of the 100%gross income? The fair market value is clearly overstated for the horizontal wells in theLAA proposal.

The exhibits above show that the LAA proposal will succeed in raising assessments, butwill not begin to approach a reasonable fair market value for wells. LOGA does notbelieve that any tweaking of the current system, including the sweeping changesproposed by the LAA, can result in fair market value assessments for wells.

Oil &Gas Surface Equipment

Though the debate over the assessment of the oil &gas surface equipment has beenless contentious than the wells, it has nonetheless been going on as long. Based on areview of the current LAA proposal, the debate will continue. The LAA proposal for2015 recommends changes to the current LTC Rules &Regulations regarding themethod of depreciation, the depreciation floor, the inclusion of additional installationcost, and the trending of additional installation costs, which LOGA will address in thisrebuttal.

Method of Depreciation — Currently, the surface equipment is depreciated based onthe age of the wells served. Recently, there has been a lot of public criticism of thecurrent approach by the LAA and their representatives.

The history of the approach may not be fully understood by participants newer to theLTC hearing process. Additional knowledge of the origin might add some insight that isuseful to fully appreciate the issue.

Until the early 1990's, the wells and equipment were not depreciated over time as theyare now. When the depreciation of the wells and equipment began to be part of theLTC Rules &Regulations, there was a great deal of discussion over how to determine

Page 4 of 6

the depreciation of the surface equipment in a fair and simple manner. The idea ofindividual item depreciation by actual age was dismissed quickly as a reasonableapproach due to the detail and added work it would cause both the assessors and thetaxpayer. The idea to depreciate based on the age of the wells served was advanced,since the well had a definite identifiable age, tied to the serial number. The thought wasthat some new wells would have old equipment, some old wells would have newequipment, but in the end it would balance out. The approach was not an industry ideato reduce assessed values, but an agreed-upon approach by industry and theassessors.

The 2015 LAA proposal asks the LTC to adopt rules that would require the operator toreport actual age on the equipment, if known, and use the average age of the wellsserved, if not known. There are several problems with what has been presented as asimple, matter-of-fact request.

• The change would complicate the filing of the LAT 12 forms as well as the reviewand assessment by the parish assessors' staff.

• Many operators have no idea of the actual age or original purchase date of theequipment on their sites. Equipment acquired in field wide purchases, or in theused equipment markets may be impossible to identify in that manner.

• The "either/or" methodology will create an inequality in the assessment of wellequipment.

• While it has been presented as optional, there is significant concern that it will bedeemed mandatory by some parishes. Companies in those parishes may beunable to comply adequately and deemed to be filing incomplete forms.

• The LAA seems willing to accept the actual age, when known, in cases whereassessments increase. Will it be optional for the assessors to accept the data ifvalues decrease?

In addition, much has been made about the equipment that had to be replaced afterhurricane Katrina in particular and how it is getting some unfair discount under thecurrent methodology. The equipment that was replaced on the platforms was done soafter an act of nature, not by choice of the operators to enhance value. The operatorsof those platforms had to bear considerable loss in revenue while rebuilding, cleanupcosts to remove the damaged equipment, and the cost of replacing equipment. Does itmake common sense to stack additional ad valorem taxes on the equipment, withoutsome consideration for those significant lost dollars?

The alternate side of the discussion that has not been addressed by the LAA is theparishes with new wells and the potential loss in value. Some equipment has significantlead times when ordered. To make sure that the equipment is ready when the wells aredrilled, the equipment is purchased in advance and brought to site when needed. That

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difference in time will result in accelerated depreciation for that equipment compared tothe wells, reducing assessed values.

As was understood by all involved when the current methodology was put in place,there are instances where assessments would be higher or lower if actual age wereused.

Depreciation Floor— Over the years, the depreciation floor for the wells and surfaceequipment has been continually discussed. The LAA has requested the floor be raisedfrom 20% to 30%. The premise discussed over time to support this position is that oil &gas equipment is somehow maintained to a higher standard than most other types ofequipment.

Most, if not all, other personal property in Louisiana is depreciated to a 20%floor. It isdifficult to accept that a piece of equipment on a well site is better maintained thanmachines in a hospital, keeping people alive.

Additional Installation Costs and Trending of Those Costs — Included in the LAAproposal for 2015 is the addition of installation costs to the LTC Rules and Regulationsfor surface equipment. The LAA position is that the costs used in the guidelines areexclusive of installation.

As was discussed in the LAA presentation in July, the starting point for many of thecurrent costs related to surFace equipment in the rules was provided by industry in 2006.It was also stated that nobody currently participating in the presentation for LAA was inthe room during the data exchange or discussion in 2006. Current members of theLOGA Tax Committee were participants in providing the data submitted. The dataprovided by industry was inclusive of all costs. Any additional costs added would be adouble assessment.

The trending of additional installation costs would merely be increasing the level ofdouble assessment to current dollars.

Conclusion

The proposals submitted by the LAA for Chapters 3 & 9 do nothing to move theassessment of oil &gas assets closer to market value. LOGA respectfully requests thatnone of the LAA proposed changes be adopted.

Page 6 of 6

Exhibit A — Instructions and Definitions forDrilling Costs

INSTRUCTIONS RND DEFINITIONS FOR DRILLING COSTS

WELLS TO BE REPORTED. ReporC each tlomesgc wellcompleted by you as OPERATOR (whether equally drilled by youor drilled for you by a contractor), In the survey year. Report eachwell completed by you as operator regardless of the size of yourworking interest fn the well. Do not report wells dulled by others- inwhich you may have had only a part of a working interest regardlessof the size•of sugfi interest. Do not report wells started In trio surveyyear or In prier years,. but not completed as of December 31 of thesurvey year. Do not ~aport wells raenlered for oompleUon atshallower depths, old well. drilled deeper, old wells worfced over,stretigraphic tests, core test, or service wells (Inoluding Input wells),

SH. Enter "SW"' IF well Is located in state offshore waters; enter"FW" if well Is located in federal offshore waters; ent~t "ON" (t it Isonshore. An offshore well is one which Is bottomed at, or producesfrom, a point which Iles seaward of the coastline, If a state agencyuses a different basis for classifying onshore and offshore wells, thestate classification should be used. In goneral, the tams "coesUine"means the pne of ordinary low water along that podion of the coastwhich Is in direct contact with the: open sea or the Ilne marking theseaward limit of Inland waters. For the purp6ses of the JAS, CookInlet (Alaska) Is classified as "offshore,

3. WHLL IDENTIFICATION NUMBER, Enter the STA'f~DESIGNATED API NUMBER If it is evallable. Where states do notassign APl well numbers, or If you do not know the number, leavethis Item blank,

4. TYPE.. Insert the classlficatlon for each well reported as either anexploratory (EXP) or a development (DES well. Exploratory wellsinclude new•fleld wildcats, deeper-pool tests, shallower-pool tests,and outposts (extensions). Develapmelit wells Include all wellsdrilled to produce aU and gas iPom pools discovered by previousdrilling.

Subclasslty all wells either oil, .gas or dry holes, e.g, "EXP-Oil","DEV•GAS", "EXP-DRY". An oIl weld Is a well completed for theproduction of crude oil from et least one.oil zone or reservoir, A gaswell Is one wi~ich can produce hydrocarbons existing initially in agaseous phase in the reservoir. So-called gas condensate wailsshould be reported as gas. walls, A dry' hots fs en exploratory ardevelopment well found to bs Incapable of producing either oA orgas In sufficfertt quantities to Justify completion as an oil or gas wail.The stete.regulatory classlflcatfbn should be used, If available; fPnotavailable, use a ciasslficatlon by company engineers.

Count MULTIPLE COMPLETIONS as one well,. (See Item 5 fordefinitlon,)

5. OIL ZONES, GAS ZONES. .Enter the {oral number. of separatelyproducing oil zones and. gas zones (reservoirs).

As noted under (item 4, a multiple completion should be repotted asone well, A multiple completion. well Is a we11 equlpp~d to produceail and/or gas separately from more than one reservoir, SUCHWELLS CONTAIN MULTIPLE STRINGS OF TUBINC3 OR OTHEREQUIPMENT WHICH PERMIT PRODUCTION FROM THEVARIOUS COMPLETIONS TO BE MEASURED ANDACCQUNTED FOR SEPARATELY,.

Report a multiple completion well as an oil Well if oil Is producedfrom at least one of several zones, even though gas and gascondensate may be produced from one or more zones (n the slimewell. Report a multiple completion well as a gas well if oil is notproduced from any of the several zones,

For a dry hole enter fhe word "DRY".

6. DEPTH. Report-for each well the total feet of penetration measureddown the: well bore. Include afi plugged beck footage, but excludebypassed footage resulUnB from remedial sidetrack d~fllingopergtlons. For OFFSHaRE WELLS drilled. from a plaUorm or eharge overwater and the reference point fs above Water, the depthof iha water (s Included in the total length of the wall hors:

7, COMPLETION DATE, Enter the month end year of compleflon.

8. SECTION, TWP, RANGE. Enter location data if appropriate forarea.

9, COUNTY NAME AND LOCATION, For each onshore well reportedprovide the country name, end for state and federal offshore watersprovide pseudo-county names. Under location antes the. designatedblock numbers For state end federal offshore walls and any otheravailable information that would ba helpNl In Identifying welllocations.

t0. TOTAL .005T. Report the-TOTAL cost (tangible and Intangible) ofeach wail completed by you as operator In the survey year (Whetheractually tlriilad by you or drilled for you by contractors), The TOTALof such oosls should be reported even though you as aperetor hadonly a part of e working Interest In the well.

Do not report .costs of wells drilled by others to which you had aworking Interest regardless of the size of such InlBresL The costs tobe reported are those assoclAted with wells which are completeddur(ng the survey year and the dollar amount to be reported Is theaccumulated cost of such wells from the time locations were madeuntil lha wells- were' completed as praductWe wells or abandonedotter dr1111ng was terminated because they were non•productive.

PLEASE -ROUND OFF TOTAL COSTS TO THE NEARESTDOLLAR.

In general, the elements contributing to repoAed .cost are theexpenditures for drilling dry. holes and producilve wells andequlppMg new productive wells through the "Christmas tree"Installation, More sp9ciflaally, these cosi.elements are the costs oflabor, materials, supplies; water, fuels, power; end direct overhead(I.e., field, district, and regional), Cor such operetlons as sitepreparation, road. bu.flding, erecting and dismantling derrfcics anddrll~ing rigs, drilling hole, running and cementing Cesing, haulingmaCeriais, etc, Include the total cost of water, if purchased, or costof water wall, If drilled and chargeable to oil of gas Well drillingoperations. Welt costs also Inolude machinery and tool charges andrentals, and depreclatlon charges, where appropriate, for r(gs endother equipment and facflRfea which will be used In drilling morethan one well, Deduct the condition value of meterials.salvsgedafter use where appfopriate.

Oo not report .the cost of lease equipment such as artificial Ilkequipment and downhole lift equipment, flow Ilnes, flow lens,separators, etc., that are required for production. Do not reduce thecosts by test welt; bottom hole, or dry. hole contributions.

For•: OFFSHORE WELCS,~ Include~'cosfs; on ~f(xed' platfoRris andislands:. Y!1Re~e'faollities~s~rve'more than one'well, tfie costs should6'e allocated to'each wetl.on'the ti'asis:'of ~Fi~'o'perators, best~cUYrent~sGmat~ o(;the uitimefe number of wells .thef wll[ use the;fec~lty.Also, ,Include.,;cosR•;'expirailoNs'.~(c~epreclaklon..or'; nmortlzetlorij. forcompany:owned'mobile~Platfomis•'barges and Genders,

Exhibit "A"

Exhibit Al -Fair Market Value Explained

FAIR MARKET VALUE

In Article VII, Section 18 of the Louisiana Constitution of 1974, all property subject to

ad valorem taxation is to be taxed at a percentage of its fair market value. The Constitution

specifically provides that fair market value "shall be determined in accordance with criteria

which shall be established by law and which shall apply uniformly throughout the state."' Based

upon the mandate contained in the Constitution, the Legislature has defined fair market value as

follows:

Fair market value is the price for property which would be agreedupon between a willing and informed buyer and a willing andinformed seller under usual and ordinary circumstances; it shall bethe highest price estimated in terms of money which property willbring if it is exposed for sale on the open market with reasonabletime allowed to find a purchaser who is buying with knowledge ofall the uses and purposes to which the property is best adapted andfor which it can be legally used.

La. R.S. 47:2321 (Emphasis added). The Legislature understanding the role of the Louisiana

Tax Commission (the "Commission") in the determination of fair market value also established

the criteria for determining the fair market value of property in La. R.S. 47:2323. In that statute,

the Legislature provided:

A. The criteria for determining fair market value shall applyuniformly throughout the state. Uniform guidelines, proceduresand rules and regulations as are necessary to implement saidcriteria s/tall be adopted by the Louisiana Tax Commission onlyafter public hearings held pursuant to the AdministrativeProcedures Act.

B. Each assessor shall follow the uniform guidelines,procedures, and rules artd regulations in determining the fairmarket value of a[I property subject to taxntiort within hisrespective parish or district. Any manual or manuals used by an

1 See La. Const. Article VII, Section 18(D).

{N2855226.1}

Assessor shall be subject to approval by the Louisiana TaxCommission or its successor agency.

C. Criteria. The fair market value of real and personal propertyshall be determined by the following generally recognizedappraisal procedures: the market approach, the cost approach,and/or the income approach.

1) In utilizing the market approach, the assessor shall use anappraisal technique in which the market value is predicated uponprices paid in actual market transactions and current listings.

2) In utilizing the cost approach, the assessor shall use a methodin which the value of a property is derived by estimating thereplacement or reproduction costs of the improvements; deductingfrom the estimated depreciation; and then adding the market valueof the land, if any.

3) In utilizing the income approach, the assessor shall use anappraisal technique in which the anticipated net income isprocessed to indicate the capital amount of the investment whichproduces the net income.

La. R.S. 47:2323 (Emphasis added).

In its Rules and Regulations, the Commission states in Chapter 9 that "[t]he assessment

of an oil and gas property shall be made in accordance with the Louisiana Constitution of 1974,

Article VII, Section 18, and in accordance with guidelines adopted by the Tax Commission and

applied uniformly throughout the State." See Section 901(A). In Subsection B of Section 901,

the Commission specifically defines the "well" and its components and specifically provides that

"each well is a assessed in accordance with guidelines establishing "fair market value." In

Section 907, the Commission has promulgated Rules and Regulations regarding the proper

method of valuing oil, gas and other wells. The Rules and Regulations specifically direct that

{N2855226.1 }2

functional and/or economic obsolescence "shall" be considered in the analysis of the fair market

value of each oil, gas and other well. See Section 907(A).2

2 Louisiana courts have specifically acknowledged that assessors must follow the guidance of theCommission as set forth in its Rules and Regulations when determining fair market value. See,e.g. Warren Energy Resources, Inc. v. Louisiana Tax Commission, 2002-115 (La. App. 3 Cir.8/28/02), 825 So. 2d, 572, 575 ("Each assessor must follow uniform guidelines, procedures, andrules and regulations established by the Commission when determining the fair market value ofall property.") See also Dow Chemical Company v. Petry, 468 So. 2d 747 (La. App. 1 Cir. 1985)(affirming use of Commission's guideline tables in its Rules and Regulations for determining fairmarket value).

{N2855226.1 } 3

Exhibit B — Comparison of Texas &Louisiana

Comparison of Texas As

sess

ment

s to

Proposed LAA 2015 Ass

essm

ents

189682

Gas

-H

2002

9,i30

34,220

275%

67,135

635%

266,400

2818%

214,

807

2253%

268,

925

2846%

687,241

7427%

226405

Gas

-H

2007

6,94

020,501

195%

44,499

541%

239,600

3352h

138,020

1889Y

204,387

2845

1,69

1,52

124273%

230856

Gas

-H

2007

.:6,940

21,593

215%

47,520

585%

255,

868

3557%

142,

313

1951%

210,744

2937%

1,74

4,13

425032%

237439

Gas

-H

2008

B,440

20,750

199%

45,040

549%

242,514

3394%

140,

106

1919%

207,476

2840%

1,717,086

24642%

254406

Gas

24,022

H2009

36,354'

1,010,312

2679%

1,83

0,02

44933%

4,23

5,94

311550%

4,955,050

13528%

1,79

6,23

44840%

5,30

7,73

714498%

246181

Gas

30,003

H2009

30;47tR

140,172

360%

304,255

899%

1,63

8,24

15277%

894,814

2837%

938,602

2980%

7,767,954

25394%

256836

Gas

41,555

H2010

85,166

1,08

3,80

41173%

2,29

1,31

02591%

7,050,577

8179Y

4,491,738

5174%

2,24

4,08

02535%

4,45

4,46

95131%

254339

Gas

42,767

H2009

-212,$$0.

367,245

73%

927,584

336%

4,07

2,41

51813%

1,474,159

592%

1,26

1,36

1493%

7,32

1,02

33339%

258002

Gas

53,453

H2011

161,970

397,085

145%

1,00

2,95

4519%

4,40

3,31

72619%

1,53

7,77

4849%

1,31

5,79

3712%

7,63

6,94

74615%

260774

Gas

62,069

H2011

153,220.

380,099

148Y

960,049

527N

4,214,950

2651k

1,99

9,51

91205%

1,660,565

984%

9,638,025

6191%

257366

Gas

67,453

H2010

301,520

361,775

20%

913,767

203%

4,01

1,75

51231%

1,94

7,64

0546%

1,61

7,48

0436%

9,387,956

3014%

255889

Gas

71,323

H2009

194;750

336,029

73%

848,739

336

3,72

6,26

01813%

1,86

8,08

7859%

1,55

1,41

3697k

9,00

4,50

04524%

258149

Gas

82,450

H2011

327,750

390,751

19%

986,956

201%

4,333,078

1222%

2,03

1,40

5520k

1,687,045

415%

9,79

1,72

12888%

257367

Gas

88,426

H2011

378,280'

389,830

3%

984,629

160%

4,32

2,86

21043%

2,028,648

436%

1,684,755

345%

9,778,429

2485%

256920

Gas

93,332

H2010

320,160

380,428

19h

960,880

200%

4,21

8,59

61218%

2,004,681

526%

1,66

4,85

1420%

9,66

2,90

42915

258427

Gas

98,660

H2011

324;21p

398,122

23%

1,005,572

210/

4,414,810

1262%

2,05

3,46

7533%

1,705,367

426%

9,898,063

2953%

264002

Gas

101,674

H2012

258,100

634,006

146%

1,243,826

382%

4,93

5,67

71812%

2,50

9,24

2872%

2,159,721

737%

5,519,188

2035%

262604

Gas

104,429

H2011

399,210

627,215

57%

1,230,502

208%

4,85

2,80

71123%

2,48

7,06

2523%

2,14

0,63

0436%

5,470,401

1270%

263553

Gas

121,298

H2012

.403,210

614,517

52%

1,205,590

199%

4,78

3,95

41086Y

3,077,

492

663%

2,60

0,65

7545Y

6,64

6,00

41548%

256206

Gas

122,602

H2011

600,574

1,79

5,95

8199%

3,25

3,09

9442%

7,52

9,92

51154°

k14,593,585

2330k

3,570,924

495%

10,551,814

1657%

259378

Gas

124,

625

H2011

579,160

397,546

-31~

1,004,118

73~

4,40

8,42

5661%

2,56

4,67

9343%

2,091,194

261%

12,1

37,4

261996%

258553

Gas

135,904

H2010

692,610.

409,370

31%

1,03

3,98

149%

4,53

9,53

7555%

2,616,484

278%

2,133,434

208%

12,382,591

1688Y

260887

Gas

138,683

H2011

5$8,130

420,003

-29%

1,06

0,83

980%

4,65

7,45

2692%

2,645,704

350k

2,159,70

6267%

12,535,074

2031%

261149

Gas

140,

945

H2011

431,180'

428,871

-1%

1,083,237

151%

4,75

5,78

61003%

2,68

1,883

522%

2,15

6,75

9407%

12,692,094

2844%

263961

Gas

142,468

H2012

472,14Q.

670,338

42%

1,31

5,10

4179%

5,21

8,51

91005%

3,246,654

588%

2,743,608

481%

7,01

1,31

91385%

261946

Gas

177,

905

H2011

636,360

585,457

-8%

1,14

5,58

0SOY

4,557,730

616%

3,57

7,16

0462%

2,985,584

369%

7,62

9,69

01099Y

263086

Gas

195,923

H2011

717,930

428,295

-40%

1,08

1,78

351%

4,74

9,40

1562k

3,215,674

348%

2,58

9,63

3261%

15,0

30,3

971994%

263680

Gas

263,692

H2012

1,06

1,17

0432,099

-59%

1,09

1,39

13%

4,79

1,58

7352%

4,32

2,75

3307%

3,50

8,37

8231%

20,3

62,5

561819%

263055

Gas

264,560

H2012

1,16

3,39

0:634,407

-45%

1,244,612

7%

4,938,799

325%

5,020,429

332%

4,22

2,90

8263%

10,791,684

828%

262826

Gas

336,894

H2011

1,600,600

587,708

-63%

1,152,996

-28%

4,57

5,25

2186%

5,97

5,71

7273%

5,04

9,52

2215%

12,9

04,8

70706

263176

Gas

360,572

H2012

1,38

9,94

0434,598

-69%

1,09

7,70

4-21%

4,819,299

247%

5,42

1,95

0290%

4,42

0,96

2218%

25,6

59,5

481746%

266984

Gas

380,248

H2012

1,06

9,76

0.395,922

-63%

1,000,016

-7%

4,39

0,41

8310Y

5,13

5,51

7380%

4,187,410

291%

24,3

03,9

962172%

265978

Gas

385,206

H2012

1,43

2;53

0:444,773

-69%

1,123,4W

-22%

4,93

2,12

8244%

5,497,304

2S4%

4,48

2,40

4213%

26,0

16,1

621716%

270452

Gas

995,640

H2013

5,35

6,09

0:375,963

-93%

949,604

-82%

4,169,089

-22k

6,21

3,30

816%

7,50

5,51

340Y

43,562,485

713%

179347

Gas

-V

2000

8,400

49,978

495%

105,

661

1158%

325,130

3771%

153,953

1733%

SS5,

971

2114%

1,079,390

12750%

222552

Gas

4,749

V2006

10;700

460,056

4200%

972,622

8990%

2,992,848

27871%

677,880

6235%

818,861

7553%

4,752,720

44318h

225177

Gas

5,02

8V

2006

9,930

344,279

3367%

675,423

6702%

2,680,176

26891

479,528

4729

710,109

7051Y

5,87

6,92

559084Y

217952

Gas

13,5

48V

2005

51,680

485,495

494%

1,02

6,40

41157%

3,15

8,34

03767%

738,413

804%

891,983

992Y

5,177,128

6238Y

242487

Gas

22,358

V2008

33,090

516,746

1462%

1,09

2,47

33202%

3,361,641

10059%

733,170

2116%

855,650

2576k

5,140,368

15435%

190935

Gas

25,6

39V

2002

151;000

390,781

159%

826,165

447%

2,542,188

1584%

656,056

334%

792,498

425%

4,599,709

2946

242688

Gas

35,530

V2008

319;320

514,758

61~

1,08

8,33

3241

3,345,902

949%

1,25

2,09

9292

1,51

2,50

3374%

6,218,221

1847%

229670

Gas

49,437

V2007

50,040

608,182

1115%

1,193,162

2284%

4,73

4,63

69362%

855,312

1609%

1,26

6,59

02433Y

7,425,037

14738Y

217642

Gas

195,

711

V2005

1,513,900

832,277

-45%

1,75

9,54

916%

5,414,297

258%

4,340,058

187Y

3,14

5,60

6108%

12,171,534

704%

765

Oil

-V

1993

3;000

4,730

58%

12,7

97327%

57,704

1823%

27,421

814

25,963

765Y

281,423

9281%

12093

Oil

520

V1993

97,430

102,180

5%

171,998

77%

720,761

640%

214,

925

121%

272,730

180%

2,304,598

2265%

13102

Oil

900

V1993

171,990

30,492

-82%

82,494

-52%

371,977

116%

103,114

~0%

97,631

~3%

1,058,250

515%

13171

Oil

1,OS

6V

1993

?51,400

30,492

-88%

52,494

-67%

371,977

48°

k103,114

-59%

97,631

-61%

1,058,250

321°

/a

13145

Oil

1,108

V1993

216,410

30,027

-86%

81,2

36-62%

366,305

69%

101,

541

-53%

96,143

-56%

1,04

2,11

1382%

13049

Oil

1,35

1V

1993

180,430

30,492

-S3%

82,494

-54%

371,977

106Y

103,114

~3Y

97,631

-46Y

1,058,250

487%

12888

Oil

1,87

0V

1993

441,900

20,910

-95%

48,692

-89%

602,701

36%

88,8

71-80%

120,928

-73k

524,868

19 °

h

13025

Oil

3,94

9V

1993

913,700

49,609

-95%

134,213

-85%

605,183

-34%

309,157

-66%

217,538

-76%

1,62

3,32

178Y

13068

Oil

5,05

2V

1993

1,457,570

50,820

-97%

137,

491

-91%

619,962

-57%

316,707

-78%

223,158

-85%

1,66

2,96

414%

12941

Oil

5,336

V1993

1,421,490

50,820

-96%

137,

491

-90%

619,962

-56~

316,707

-78%

223,158

-84%

1,66

2,96

417%

12923

Oil

5,515

V1993

1,466,900

50,776

-97k

137,370

-91%

619,419

-58%

316,429

-78%

222,962

-85%

1,661,506

13%

761

Oil

7,46

9V

1993

961,470

46,322

-95%

125,320

-87%

565,084

-41%

409,512

-57%

254,255

-74%

1,86

0,25

193Y

12912

Oil

12,8

10V

1993

3,30

7,90

0.64

,351

-98%

174,098

-95%

785,032

-76%

932,633

-72%

565,150

-83%

4,11

5,76

524%

3a,9~8,420

20,!314,667.

` ~'

' 8 -

:._

'...

" ` .

..:I

121.957535

9~,~3;275

449,D52856.

s~

1993 is the ol

dest

day pro

duct

ion available on RRC website

"• Dai

ly pro

duct

ion

is the

annual pr

ojec

ted rate div

ided

by 365.

""" Assumed lateral length

is 5,0

00'

Exhibit C — Comparison of Current to ProposedLTC Assessments

Comparison of

Current LTC Assessments to LAA Proposal

Propose)

Parish

Region

Oil /Gas

Age

ND

Tota

l De

pth

H/V

curr

ent LTC

Curr

ent LTC

Prop

osed

LAA

Prop

osed

lAA

Parishwide

Taxes at Cur

rent

Taxes at LAA

Increase

Valu

eAs

esse

d Va

lue

Valu

eAs

sess

ed Val

ueMillage

lTC

Prop

osed

2014 to

2015

Acad

ia2

Gas

29

9,274

9,45

0V

188,

255

28,2

3826

1,45

339,218

74A

$

2,089.63

$

2,902.13

39%

Acad

ia2

Oil

44,

875

5,220

V36

9,82

055,473

3,28

7,26

719

3,09

074.0 S

4,105.01 $

14,288.66

248%

Allen

2Gas

57

9,246

9,500

V187,686

28,153

160,

664

39,100

156.2

$

4,39

7.49

$

6,10736

39%

Allen

2Gas

29

9,528

9,626

V19

3,41

329

,012

268,614

40,292

156.2 $

4,531.61 $

6,293.63

39%

Alle

n2

Gas

32

9,500

9,600

V19

2,84

228,926

267,

825

40,174

156.

2

$

4,518.30

$

6,27

5.13

39%

Bien

vill

e1

Gas

57

7,57

27,

643

V78,361

31,7

54144,154

21,623

IQ5.5 $

1,24

0.06

$

2,28

1.24

84%

Bien

vill

e1

Gas

19

9,148

9,300

V104,138

15,6

2117

4,15

726,124

105.5 $

1,64

7.98

$

2,75

6.04

67%

Bossier

1Gas

38,

785

13,387

H68

1,&5

7102,278

6,363,102

954,

465

102.1 5

10,442.63 $

97,450.91

833%

Bossier

1Gas

411,312

36,1

68H

1,01

7,68

015

2,65

217

,750

,538

2,662,581

102.1 $

15,585.76 $

277,849.49

1644%

Bossier

1Gas

41

7,86

99,000

V81,435

12,2

15256,814

38,522

102.1

$

1,24

7.17

$

3,93

3.11

215%

Bossier

1Gas

18

2,40

82,

600

V31,573

4,736

74,886

11,233

102.

1 $

483.53 $

1,14

6.88

337%

Gddo

1Gas

311,158

15,903

H1,

050,

515

157,

577

17,8

84,5

012,682,675

137.7

$

21,6

98.3

8

$

369,404.38

1602%

Caddo

1Gas

511,089

16,0

35H

951,

217

142,682

17,1

37,3

432,570,571

137.7

$

19,6

47.3

8

$

353,967.69

1702%

Caddo

1Gas

l5

1,700

4,614

V31,406

4,711

45,849

6,877

137.7 $

648.74 $

947.00

46%

Caddo

1Oi

l31

3,675

3,775

V12,079

1,811

70,865

30,630

137.7

$

249.

49

$

1,463.72

487%

Caddo

1Oi

l59

1,485

2,212

V6,

210

932

17,363

2,60

4137.7

$

12817 5

358.62

180%

Caddo

1Oi

l66

1,517

1,517

V6,344

952

17,737

2,66

1137.7

$

131.04

$

366.35

180%

Calcasieu

2Oi

l6

6,770

9,858

V38

1,78

757,268

564,

721

84,708

109.

3

$

6,25

9.40

$

9,258.60

48%

Cameron

2Gas

413,142

13,818

V3,233,763

4&5,

064

3,053,844

458,077

131.

0 $

63,5

43.4

3 $

60,0

08.0

3-G%

Cameron

2Gas

48

12,800

15,622

V73

2,46

7109,870

987,

070

148,061

131.0 $

14,392.96 $

19,3

95.9

335%

Cameron

2Oi

l27

7,71

58,700

V253,654

38,048

551,599

ffi,740

131.0

$

4,984.30

$

10,838.92

117%

Claiborne

1Gas

17

8,851

9,300

V123,656

18,548

216,246

32,4

3775

.3 $

1,396.70 $

2,44

2.50

75%

Clai

born

e1

Gas

16

8,830

9,095

V109,656

16,448

178,

750

26,8

1275

.3 $

1,23

8.56

$

2,018.98

63%

Clai

born

e1

Gas

30

8,53

29,600

V88,2%

13,244

162,

430

24,3

6575

.3 S

997.30 S

1,634.65

84%

Clai

born

e1

Gas

17

7,05

59,450

V73,323

10,969

190,

649

28,597

75.3

$

825.93 S

2,753.39

161%

Clai

born

e1

Gas

31

6,984

7,694

V53

,620

8,043

147,

063

22,059

75.3

$

605.64 S

1,66

1.08

174%

Clai

born

eI

Gas

37

9,32

012,010

V96,451

14,468

177,

432

26,6

15753 $

1,08

9.41

$

2,000.09

84%

Claiborne

1Gas

13

8,45

89,

700

V196,943

29,5

41313,116

48,467

75.3

$

2.22

4.47

$

3,649.60

64%

Dewto

1Gas

18

2,870

2,92

5V

27,186

4,078

44,769

6,735

112.8 $

459.98 $

757.49

65%

Deso

to1

Gas

30

2,87

53,005

V22

,694

3,40

442,176

6,32

6112.8 $

383.98 $

713.

6186%

Deso

to1

Gas

32

6,116

7,574

V46,956

7,04

312

8,78

519,316

112.8 $

794.50 $

2,179.05

174%

EBR

2Gas

819,218

20,950

V7,299,650

1,094,947

12,3

75,2

781,856,292

113.1 $

123,

838.

56 $

209,

946.

607036

Evan

geli

ne2

Gas

38

11,108

14,072

V49

1,32

973,699

749,

262

332,

389

73.6 $

5,42

4.27

$

8,271.85

SZ%

Iber

ia2

Oil

20

11,705

12,7

41V

551,

021

82,653

3,207,509

481,126

69.7

$

5,76

0.93

$

33,534.51

482%

Wfourche

2Oi

l14

13,167

13,800

V1$48,755

232,

313

7,29

2,03

81,093,806

325.

5

$

29,1

55.3

2 $

137,

272.

61371%

Linc

oln

1Gas

17

9,059

9,23

2V

126,562

18,984

383,386

27,508

86.4 $

1,640.25 $

2,376.68

45%

Linc

oln

1Gas

62

9,137

9,196

V94,557

14,184

298,

197

04,729

86.4 5

1,22

5.46

$

3,86

4.63

2]5%

Natchitoches

1Oi

l54

1,36M1

1,227

V5,

392

809

17,356

2,604

90.3

$

73.0

3 $

235.12

222%

Natchitoches

1Oi

l55

1,21

71,

293

V5,

637

846

18,149

2,72

390

.3 $

76.36 $

245.82

222%

Natchitoches

1Oi

l57

1,185

1,305

V5,489

823

17,6

712,

651

90.3

$

74.3

5 $

239.36

222%

Plaquemines

2Gas

S795

1,03

0V

74,662

11,202

84,556

12,683

62.5 $

700.15 $

792.

7113%

Plaquemines

2Gas

812,066

12,4

35V

1,867,962

280,194

5,391,966

808,

795

62.5

$

17,5

12.1

4

$

50,549.68

189%

Plaquemines

2Oi

l10

10,272

30,502

V1,381,605

207,241

2,728,505

409,276

62.5 $

11,9

52.5

4 $

25,579.73

97%

Pointe Coupee

2Gas

14

18,266

19,193

V3,964,599

594,690

6,557,267

983,

590

55.0

$

32,707.94

$

54,0

97.4

565%

Poin

te Coupee

2Gas

12

18,977

21,032

V5,146,650

772,

297

7,95

6,12

31,

193,

418

55.0 $

42,47636 $

65,638.01

5576

Poin

te Coupee

ZGas

819,260

22,553

V7,

335,

603

1,09

7,34

09,921,859

1,48

8,27

955.0 $

60,3

53.7

2 $

81,555.34

36%

Red Riv

er1

Gas

23

3,011

3,&50

V23,768

3,565

44,371

6,62

693.7

$

334.

05

$

620.82

86%

Red Riv

er1

Gas

Z6

2,79

67,

485

V22,071

3,311

41,017

6,15

293.7

$

310.20

$

576.49

86%

St James

2Oi

l38

30,8

2611,735

V291,224

43,684

415,

329

62,299

107.6

$

4,700.35

$

6,70

3.42

43%

St Landry

2Gas

51

10,444

10,703

V27

7,17

541,576

308,

207

46,2

3159

.5

$

2,473.79

$

2,75

0.75

11%

7errebonne

2Gas

30

14,166

15,200

V486,381

72,957

477,

929

71,689

97.5 5

7,133.32

$

6,98

9.71

-2%

Terrebonne

2Gas

713,570

13,849

V2,

873,

160

430,

974

2,877,735

431,

660

97.5

$

4Z,0

19.9

6 $

42,0

86.8

70%

Terrebonne

2Gas

313,160

13,3

75V

3,388,805

508,

321

9,78

8,89

91,468,335

97.5

$

49,561.28

$

143,

161.

64189%

Terrebonne

2Oi

l27

7,126

7,92

5V

103,071

15,4

6120

9,11

531

,367

97.5

$

1,50

7.41

$

3,0.58.31

103%

Terrebonne

2Oi

l27

6,042

6,308

V14

5,61

221,842

590,850

88,627

97.5

$

2,129.58 $

8,641.18

306%

Unio

n1

Gas

19

8,311

8,500

V94,610

14,1

9115

8,22

323,733

71.8

$

1,018.95

$

1,70

4.06

67%

WBft

2Gas

820

,235

22,2

89V

11,5

38,%8

1,730,845

22,910,213

3,436,532

84.5

$

146,256.42

$

290,

386.

9599%

WBR

2Oi

l29

10,356

13,900

V27

8,58

343,787

397,298

59,595

84.5

$

3,53

1.01

$

5,035.75

43%

WBR

2Oi

l29

10,368

15,763

V27

8,90

341,836

681,872

102,281

84.5

$

3,535.10

$

8.64

2.73

144%

Webster

1Gas

33

11,0

4511,500

V13

8,65

020,798

269,

826

40,474

103.

3 $

2,148.38 $

4,18

0.96

95%

Webster

1Gas

51

6,34

96,

950

V48,7

457,

312

229,186

30,378

1033

$

75531

$

3,55

1.23

370%

Webster

1Gas

34

11,300

11,500

V23

6,41

935,463

847,886

127,

183

103.

3

$

3,663.31

$

13,1

37.9

9259%

$

797,018.87 $

2.47

6.43

811

Exhibit D -Louisiana Parishwide Millages

Louisiana Parishwide MillagesTax Year 2013 (Orleans 2014)

Rank PARISH

1 GRANT 172.62 LASALLE 160.93 ALLEN 156.24 ST. TAMMANY 150.05 ORLEANS 148.86 CALDWELL 146.37 CADDO 137.78 ST. BERNARD 135.19 ST. HELENA 131.910 CAMERON 131.011 EAST CARROLL 130.612 LAFOURCHE 125.513 VERNON 123.014 ST. JOHN 117.615 RAPIDES 116.516 WASHINGTON 116.017 BEAUREGARD 114.418 ST. CHARLES 113.419 EAST BATON ROUGE 113.120 DESOTO 112.821 LIVINGSTON 111.722 CALCASIEU 109.323 ASCENSION 108.924 ST. JAMES 107.625 MADISON 106.526 BIENVILLE 105.527 WINN 105.028 JEFFERSON DAVIS 104.529 CONCORDIA 104.530 IBERVILLE 104.031 WEBSTER 103.332 TENSAS 102.933 JEFFERSON 102.634 BOSSIER 102.135 ST. MARTIN 101.336 ASSUMPTION 101.137 JACKSON 100.138 TERREBONNE 97.539 VERMILION 96.740 ST. MARY 96.6

Louisiana Parishwide MillagesTax Year 2013 (Orleans 2014)

Rank PARISH

41 CATAHOULA 94.542 OUACHITA 94.343 RED RIVER 93.744 FRANKLIN 92.245 MOREHOUSE 91.446 NATCHITOCHES 90.347 SABINE 87.748 LINCOLN 86.449 WEST BATON ROUGE 84.550 LAFAYETTE 82.951 WEST FELICIANA 79.652 TANGIPAHOA 78.753 CLAIBORNE 75.354 ACADIA 74.055 EVANGELINE 73.656 UNION 71.857 AVOYELLES 70.258 IBERIA 69.759 RICHLAND 69.260 WEST CARROLL 69.061 PLAQUEMINES 62.562 ST. LANDRY 59.563 PT. COUPEE 55.064 EAST FELICIANA 50.2

Statewide Weighted Average 107.8Statewide Simple Average 102.8

Exhibit E1 — Impact on Haynesville Well 1

Impact of LAA on a Hay

nesv

ille

Well

2015 Rules Proposed by

LAA

This

spreadshe

et shows the impact of the 2015 LAA pro

posa

l on a Haynesville well. Based on the age of the well, you can tell the impact exp

ecte

d.

~00~ Gross

Taxes as % of

WI Gross

Taxes as

Tota

l Vertical

Production

Assessment

Obsolescence

Assessed Wel

lEstimated

Estimated Tax

Tota

l Estimated

Age

Tota

l Depth

Depreciation

Income @ $4

100 % Gross

Income @ $4

of WI Gross

Depth

Per Day (mcn

Rate (E per ft

)(off good)

Value

Surface EQ

Rate (mils)

Taxes

Gas

Income

Gas

Income

1 15,857

11,710

12,361

182.17

0.984

1.00

2,842,451

355,306

0.120

$383

,730

.88

$18,

047,

060

2.13%

$13,

535,

295

2.84%

2

15,857

11,710

5,274

182.17

0.96

61.

002,

790,

455

348,807

0.120

$376,711.41

$7,700,040

4.89%

$5,775,030

6.52%

3

15,857

11,710

1,328

182.17

0.947

1.00

2,735,570

341,946

0.120

$369

,301

.98

$1,938,880

19.05°~

$1,454,160

25.40%

4

15,857

11,710

681

182.17

0.926

0.64

1,71

1,94

1213,993

0.120

$231

,112

.06

$994,260

23.24%

$745,695

30.99%

5

15,857

11,710

558

182.17

0.904

0.48

1,25

3,45

2156,681

0.120

$169

,215

.96

$814,680

20.77%

$611,010

27.69%

6

15,857

11,710

463

182.17

0.880

0.48

1,220,174

152,522

0.120

$164,723.50

$675,980

24.37%

$506,985

32.49%

7

15,857

11,710

395

182.17

0.853

0.40

985,614

123,202

0.120

$133

,057

.90

$576,700

23.07%

$432,525

30.76°h

8

15,857

11,710

344

182.17

0.825

0.40

953,

261

119,158

0.120

$128,69023

$502,240

25.62%

$376,680

34.16%

9

15,857

11,710

305

182.17

0.795

0.40

918,597

114,825

0.120

$124

,010

.59

$445,300

27.85%

$333,975

37.13%

10

15,857

11,710

274

182.17

0.762

0.32

704,373

88,047

0.120

$95,

090.

38$400,040

23.77%

$300,030

31.69%

11

15,857

11,710

248

182.17

0.727

0.32

672,020

84,003

0.120

$90,722.72

$362,080

25.06%

$271,560

33.41%

12

15,857

11,710

227

182.17

0.688

0.32

635,970

79,496

0.120

$85,855.89

$331,420

25.91%

$248,565

34.54%

13

15,857

11,710

209

182.17

0.647

0.32

598,070

74,759

0.120

$80,

739.

475305,140

26.46%

$228,855

35.28%

14

15,857

11,710

194

182.17

0.602

0.32

556,473

69,559

0.120

$75,123.90

$283,240

26.52%

$212,430

35.36%

15

15,857

11,710

181

182.17

0.554

0.32

512,103

64,013

0.120

$69,

133.

95$264,260

26.16%

$198,195

34.88%

16

15,857

11,710

170

182.17

0.502

0.32

464,036

58,004

0.120

$62,

644.

85$248,200

2524%

$186,150

33.65%

17

15,857

11,710

159

162.17

0.446

0.32

412,

271

51,534

0.120

$55,

656.

58$232,140

23.98%

$174,105

31.97%

18

15,857

11,710

151

182.17

0.385

0.32

355,884

44,486

0.120

$48,

044.

35$220,460

21.79%

$165,345

29.06%

19

15,857

11,710

143

182.17

0.319

024

221,157

27,645

0.120

$29,

856.

13$208,780

14.30%

$156,585

19.07%

20

15,857

11,710

135

182.17

0.300

0.24

207,984

25,998

0.120

$28,077.87

$197,100

14.25%

$147,825

18.99%

21

15,857

11,710

129

182.17

0.300

D.24

207,984

25,998

0.120

$28,

077.

87$188,340

14.91%

$141,255

19.88%

22

15,857

11,710

122

182.77

0.300

0.24

207,984

25,998

0.120

$28,

077.

87$178,120

15.76%

$133,590

21.02%

23

15,857

11,710

116

782.

170.300

024

207,984

25,998

0.120

$28,

077.

87$169,360

16.58%

$127,020

22.11

24

15,857

11,7

1D110

182.17

0.300

0.24

207,984

25,998

0.120

$28,

077.

87$160,600

17.48%

$120,450

23.31

25

15,857

11,710

105

182.17

0.300

0.24

207,984

25,998

0.120

$28,

077.

87$153,300

18.32%

$114,975

24.42%

Equipment Val

ue is 12.5 k of the we

ll val

ue for thi

s ex

ampl

e.

This

wel

l was com

plet

ed in 2009. The highlighted row emphasizes tha

t ye

ar.

WI is assumed to be .750000

Prod

ucti

on after 2013 is pr

ojec

ted.

A rate of 120 mils was use

d, whi

ch is within a reasonable range of the Haynesville pa

rish

es with the hi

ghes

t we

ll pop

ulat

ion.

Wells

Well Infc~rm~~ic~nReview Well Information

WELLS

SERIAL WELL NAME WELL NUM ORG ID FIELD PARISH PROD TYPE SEC TWN RGE EFFECTIVE DATE API NUM

240013 HA RA SU64;GARLAND 25H~001 G104 1464 16 20 025 14N 16W 11/10/2009 17031248420000

PRMT DATE SPUD DATE STAT DATE ST CD

07/20/2009 08/24/2009 11/10/2009 10

WELL SURFACE COORDINATES

Surface Lon itude Surface Latitude Lambert X Lambert Y Ground Elevation Zone Datum

0-0-0 0-0-0 1549418 553605 290 N~ NAD-27

WELL SURFACE COORDINATES GENERATED BY DNR

UTMX 83 UTMY 83 LOh1GITUDE 83 LATITUDE 83

409821.6360746 3560838.12984851 -93.95657838 32.18044715

BOTTOM HOLE COORD

Page 1 of 3

EFDATEVE END DATEP TOTAL KDEPTH

V R71CALDEPTH

MDEPTH D EG MIN SEC DEG `M NG L ECG CO50 RCETE LAMXERT LAMYERT ZONE COOP D E(ATE

11/10/2009 16291 11626 16291 ~~~~~~02 2830101 609473002

09/30/2009 11/09/2009 11626 16291 ~

11683 16406 0~~00~

09/29/2009 11683 16406 00

0~00~0~00 U2 2830101 609473 N~02

07/20/2009 02 1549315 548764 ~C1

07/20/2009 0~~~0~0~ U2, 2830101 609473 N~02WELL HISTORY

SERIAL WELL NAME WELL NUM ORG ID FIELD ST CD PT WELL CLASS Ef F DATE END DATE STAT DATE

240013 HA RA SU64;GARLAND 25H 001 G104 1464 10 20 11/10/2009 11/10/2009

240013 HA RA SU64;GARLAND 25H 001 G104 1464 01 00 07/20/2009 11/09/2009 07/20/2009SCOUT INFO

RDA~TET STATUS MDEPTHED TRDEPTHRT DETAIL

03/11/2010 ~ 1I 0 1

u16291

110,710- SE85TMD~09; 5

SET 5 1 /2 TO 16,291' Wi

TD 10-3-09 _

DRILLING

SET 7 5/8 TO 11,150' Wi

SET 10 3/4 TO 1925' W/

SPUD 8-24-09; DRILLING

215' FNL & 1649' FEL OF

LpWER PERF SANDS RESERVOIR

10/29/2009 _ 09 16291

tOR3/2009 09 16291

10/02/2009_

09/25/2009

09/04/2009-

05 15441

OS 11989

05 x5176 ~

08/28/2009 OS 750

07/20/2009 01 16406

PERFORATIONSSERIAL NUM COMPLETION DATE UPPER PERF

240013 11/10/2009 ~ 11710 15857 HA r~~WELL TESTS

DRILLING

16,145'

24/64 CHOKE; 7500# CP; PERFS

SEC 25.

TYPTEST DATE RPT DATE OOIT CONQ

DEL WATER BSW°lu

PRE`S SPRESN CHOKE

pERF`PERFR BOP SOLE

DT-1 03/28/2014 05/01/2014 ~1293 ~

755

858 14

2701 13

2326 60

1846 ~

2217 11

3624 11

18750 450

18826 475

1200 4200 10 14349 16145

16145

16145

16145

16145

16145

16145

16145

16145

15857

DT-1 10/08/2013 11/01/2013

04/03/2013 05/01/2013

550 2250 17 14349DT-1 500 4400 14 14349DT-1 _ 10/06/2012 11/01/2012 0 3000 4400 14 14349DT-1 101/04/2012 05/01/2012 1600

7500

7500

7500

7500

14 14349DT-1 10/11/2011 11/01/2011 0 24 ,14349DT-1 03/31/2011 05/01/2011

10/06/2010 11/01/2010

03/10/2010 05/01/2010

12/16/2009 12/16/2009

24 14349DT-1 24 14349DT-1 24 14349SDM2G 24 11710WELL ALLOWABLES

EFFECTIVE DATE END DATE LUW CODE LUW TYPE CODE ALLOWABLE ESTIMATED POTENTIAL CURRENT ALLOWABLE TYPE07/01/2014 12/31/2014 615874~1293 1293 301/01/2014 06/30/2014 615874~755 755 ~~—~~07/01/2013 12/31/2013 615874~858 858 ~301/01/2013 06/30/2013 615874~2701 2701 ~307/01/2012 12/37/2012 615874~2326 2326 —~301/01/2012 06/30/2012 615874 ~~1846 1846 ~307/01/2011 12/31/2011 61587402217 217 ~301/01/2011 06/30/2011 615874 ~~3624 3624 ~307/01/2010 12/31/2010 615874 ~~18750 18750 ~303/16/2010 06/30/2010 615874 ~~18826 18826 ~~~3LEASE~UNITWELL PRODUCTIONRPT DATE LUW CODE S70RAGE FAC pOC USE WELL CNT OPENING STK OIL PROD(BBL) GAS PRQD(MCF) DISPOSITION CLOSING STK PARISH~-i~ r ~~ -.r ter- -~~ ~r ~

http://sonlite.dnr.state.la.us/sundown/cart~rod/cart_con wellinfo2 7/22/2014

Wells

CASING

Page 2 of 3

~1 (~6 ~~0 ~~15653 ~~~~~DESOTO

10~_~~0 ~ 29047 ~~~60DE 50T0

10~0039692 ~6~DE SOTO10 600010 00~DE SOTO

10~000000~DE SOTO

000 0 0~DE SOTO

~~~950 0~DE SOTO

10C~~17969 006~DE SOTO

~~~[0~21708 ~~60DE 5070

60f0~27831 ~60DE SOTO1060~24624 0~6~DE SOTO60~17834 ~~~~DE SOTO

600027614 ~~~DE SOTO

~~~22599 ~~DE SOTO1060C~28887 ~~DE SOTO

10~~26878 ~60DE SOTO

O0~31829 ~~~DE SOTO10600 34937 00~DESOTO

0~~4033.1 ~~DE 5070

~~~~~60062 ~~~DE SOTO

~~~ 60 C~~DE SOTOf, ~~6 -~IO ~~37547 _~~~~DE SOTO

—~0027342 —~006~DE SOTO

0~~0033727 ~~6~DE SOTO

10~0045898 ~~DE SOTO

10~~44826 ~~~DE SOTO

10~~~47259 ~~~~DE SOTO

[~~~~51081 ~~~~DE SOTO

~~~—~61698 ~60DE SOTO

~~0 51&47 00~DE SOTO

~~0047377 ~6~DE SOTO

~~~55974 0060DE SOTO

~~~~44768 ~~DE SOTO

10~~~58904 C~~DE SOTO

10~C—~67962 ~~6~DE 5070

10~~ ~r55904 ~~6 ~DE SOTO

0~060795 00DE SOTO

60~~66245 ~6~DE SOTO

0~~70197 ~~DE SOTO

~~~70524 ~~~DE SOTO

10~~~83667 ~~DE SOTO

OC~~ 7325 ~ 0 6 DE SOTO

10~~~102682 00~DE SOTO

1060~103518 ~6~DE SOTO

00~113773 ~~DE SOTO

~~60127086 ~~~~DE SOTO

~~~144744 C~C_~DE SOTO

0~~~135112 ~~~DESOTO',

~~~~167046 ~~O~DESOTO

10~~0183234 O~~LDESOTO

00~_~218237 ~~0~DE SOTO.

~~~232381 ~~JDE SOTOJ

0~0

_

300039 ~~~DE SOTO

10~~~~383217~~~DE SOTO

10~~u~310707 0~00DE SOTO

COMDATE'ONCSIZEG w~5 ZE RE WEIGHT uSET R

DEPTHSET EPTH S CKS PRESSURE H PRES

URE~R TEST DATEBULLED PROCESS

09/30/2009 0512 0634 23 ~16291 784 165010/03/2009HISTORY

09/30/2009 1034 1312 45.5 ~1923 964 150008/25/2009HISTORY

09/30/2009 0758 1100 26 ~~10564 1761 3000~~07/27/2009HISTORY._______

PLUG AND ABANDON

P and A DATE LOCdTION TYPE CASING CUT TYPE CASING CUT DEPTH MUD WEIGHT LEFT COMMENTSPLUGS

PLUG TYPE UPPER PLUG DEPTH LOWER PLUG DEPTH SACKS OF CEMENT SLURRY WEIGHTTUBING AND PACKERS

http://sonlite.dnr.state.la.us/sundown/cart~rodlcart_con wellinfo2 7/22/2014

Wells Page 3 of 3

COMPLETION DATE ~ TUBING SIZE TUBING LOWER DEPTH TUBING UPPER. DEPTH ~ PACKER DEPTH

11/10/2009___ 02&03/08 11369 ~~ _ ~ 11359

WORK PERMITS

RNUMBERE APPDATEION

EXDATE'ON ER ET EAMIS STOAT USEDATIE DEPTH WORK_PERFORMED

ORECEIPTOATE~ SAND DESCRIPTION

http://sonlite.dnr.state.la.us/sundown/cart~rod/cart_con_wellinfo2 7/22/2014

Exhibit E2 — Impact on Haynesville Well 2

Impa

ct of LAA on a Haynesville Wel

l2015 Rul

es Proposed by LAA

This

spreads

heet

sho

ws the

impact of

the

2015 LAA proposal on a Haynesville well. B

ased on th

e age of

the

well, you

can te

ll the

impact expected.

~OOk Gro

ssTaxes as

k of

WI Gro

ssTaxes as

k

Age

Total Depth

Total Ve

rtic

alProduction

Assessment

Depreciation

Obso

lesc

ence

Asse

ssed

Well

Esti

mate

dEstimated Ta

xTotal Estimated

income @ 54

100k Gross

Income @ $4

of WI Gross

Depth

Per Day (mcf)

Rate (S pe

r ft)

(~ good)

Value

Surface EQ

Rate (mils)

Takes

Gas

Income

Gas

Income

1 16,701

12,580

5,03

8182.17

0.984

1.00

2,993,742

374,218

0.120

$404,15523

$7,3

55,4

805.49

°k$5

,516

,610

7.33%

2

16,701

12,580

909

182.17

0.96

60.80

2,351,183

293,898

0.120

$317

,409

.72

$1,3

27,1

4023.92k

$995,355

31.89%

3

16,701

12,580

282

182.17

D.947

0.32

921,975

115,

247

0.120

$124,466.67

$411,720

3023%

$308,790

40.31

4

16,701

12,580

145

182.17

0.926

024

676,148

84,518

0.120

$91,

279.

94$211,700

43.12

$158,775

57.49h

5

16,701

12,580

185

182.17

0.904

0.32

880,112

110,014

0.120

$118,815.07

$270,100

43.99%

$202,575

58.65h

6

16,701

12,580

153

182.17

0.880

0.32

856,746

107,093

0.120

$115

,660

.68

$223,279

51.80h

$167,459

69.07%

7

16,701

12,580

130

182.17

0.853

024

622,844

77,856

0.120

$84,

084.

00$190,316

44.18%

$142,737

58.91%

8

16,701

12,580

114

182.17

0.825

024

602,399

75,300

0.120

$81,323.92

$165,844

49.04%

$124,383

65.38%

9

16,701

12,580

101

182.17

0.795

0.24

580,494

72,562

0.120

$78,

366.68

$146,955

53.33%

$110,216

71.10%

10

16,701

12,580

90

182.17

0.762

0.24

556,398

69,550

0.120

$75,113.73

$131,932

56.93%

$98,949

75.91

11

16,701

12,580

82

182.17

0.727

024

530,842

66,355

0.120

$71,663.62

$119,697

59.87%

$89,772

79.83%

12

16,701

12,580

75

182.17

0.688

024

502,365

62,796

0.120

$67,819.22

$109,539

61.91%

$82,154

82.55%

13

16,701

12,580

69

182.17

0.647

0.14

275,583

34,448

0.120

$37,

203.

64$100,972

36.85°k

$75,729

49.13%

14

16,701

12,580

64

182.17

0.602

0.14

256,415

32,052

0.120

$34,616.06

$93,648

36.96%

$70,236

4929%

15

16,701

12,580

60

182.17

0.554

0.14

235,970

29,496

0.120

$31,

855.98

587,315

36.48%

$65,486

48.65%

16

16,701

12,580

56

182.17

0.502

0.14

213,821

26,728

0.120

$28,865.88

$81,784

35.30%

$61,338

47.06%

17

16,701

12,580

53

182.17

0.44

60.14

189,969

23,746

0.120

$25,

645.

79$76,912

33.34%

$57,684

44.46%

18

16,701

12,580

50

182.17

0.385

0.14

163,987

20,498

0.120

$22,

138.18

$72,588

30.50%

$54,441

40.66%

19

16,701

12,580

47

182.17

0.319

0.14

135,875

16,9

840.120

$18,343.06

$68,725

26.69%

$51,544

35.59%

20

16,701

12,580

45

182.17

0.300

0.14

127,782

15,973

0.120

$17,

250.

53$65,238

26.44%

$48,929

35.26%

21

16,701

12,580

42

182.17

0.3D0

0.14

127,782

15,973

0.120

$17,

250.

53$61,976

27.83%

$46,482

37.11%

22

16,701

12,580

40

182.17

0.300

0.14

127,782

15,973

0.120

$17,250.53

$58,877

29.30°6

$44,158

39.07%

23

16,701

12,580

38

182.17

0.300

0.14

127,782

15,973

0.120

$17,250.53

$55,934

30.84%

$41,950

41.12°k

24

16,701

12,580

36

182.17

0.300

0.14

127,782

15,973

0.120

$17,250.53

$53,136

32.46%

$39,852

4329%

25

16,701

12,580

35

182.17

0.300

0.14

127,782

15,973

0.120

$17,

250.

53$50,480

34.17%

$37,860

45.56%

Equipment Val

ue is 12.5 % of the well val

ue for thi

s example.

This

wel

l was completed in 2010. The highlighted row emphasizes that ye

ar.

WI is assumed to be .750000

Prod

ucti

on after 2013 is pr

ojec

ted.

A rate of 120 mils was use

d, whi

ch is wi

thin

a reasonable range of the Haynesville par

ishe

s wi

th the hig

hest

well po

pula

tion

.

Wells

Well InformationReview Well Information

Page 1 of 3

WELLS

SERIAL ~ _ WELL NAME ~ WELL NUM ORG ID FIELD PARISH PROD TYPE SEC TWN RGE EFFECTIVE DATE API NUM

240372 HA RA SUSS;SUSTAINABLE fOR 3HZ 001 C332 2872 43 20 010 08N 13W [04/13/2010 ~ 17085221430000

PRMT DATE SPUD DATE STAT DATE ST CD

10/23/2009 11/21/2009 03/16/2010 10

WELL SURFACE COORDINATES

Surface Lon itude Surface Latitude Lambert X Lambert Y Ground Elevation Zone Datum

93-41-12.5 31-41-59.8 1630906 377871 288 NO NAD-27

WELL SURFACE COORDINATES GENERATED BY DNR

UTMX 83 UTMY 83 LONGITUDE 83 LATITUDE 83

434899.2195986 3507401.58802204 -93.68698881 31.70011507

BOTTOM HOLE COORD

EF DATE~E END DATEP

DEP HL KvDEPTHL M DEPTH D DEG MIN SEC LDEG

LSO NG LONG COOQURCETE LAMXER7 LAMBER~ ZONE COO $D EN~ATE

01/16/2010 03/15/2010 12250 16838 31

03/16/2010 12250 16838 31

10/23/2009 01/15/2010 12600 17600 31

42 48.58 93 41 15.94 02 ,_1630663 ,~8280d~ ND 01

41 15.94 02 1b30663 38Z~04_~ N~ 01

41 15.94 02 ~ 1630663 j382804~ N~] pt__

42 48.58 93

42 48.58 93

WELL HISTORY

SERIAL WELL NAME

240372 HA RA SUSS;SUSTAINABLE FC

240372 SUSTAINABLE FORESTS 3 HZ

240372 SUSTAINABLE FORESTS 3 HZ

SCOUT INFO

WELL NUM ORG ID FIELD ST CD PT WELL CLASS EFF DATE END DATE STAT DATE

iR 3HZ 001 C332 2872 10 20 04/13/2010 03/16/2010

001 C332 2872 10 20 03/16/2010 04/12/2010 03/16/2010

001 C332 2672 01 0 10/23/2009 03/15/2010 10/23/2009

TRUE VERT pETAiLDEPTH

COMPLETED 3.16-10; GAS; NON-UNIT HAYNESVILLE;PERFS 12,580.16.701' MD

KE; 7246# CP;

WAITING ON POTENTIAL

PERF 12,580.16,701' (16 STGS); WAITING ON PIPELINE

FRACING_._..—..._,_—..._._.___...........__ .............___._..__..—___....._.l

WAITING ON FRAC

PERF 16,506-16,700'

WAITING ON COMPLETION

SET 5" TO 16,824' W/ 650 SX

TD 1-10-10• PREP TO RUN CASING

DRILLING

DRILLING

PLUG BACK FROM 12,150.11,350' PREP TO DRILL LATERAL

SET 7 5/8 TO 11,550' W/ 1690 SX

DRILLING

DRILLING

11-21-09

SPUD 11.21-09' SET 10 3/4 TO 1917' W/ 821 SX; DRILLING

330' FNL 8 2616' FWL OF SEC 10. PBHL: 330' FNL 8 2240' FWL OF SEC 3.PERFORATIONS

SERIAL NUM COMPLETION DATE UPPER PERF LOWER PERT SANDS RESERVO{R

240372 03/16/2010 12580 16701 HA

WELL TE5T5

TYPTEST DATE RPT DATE PqT CONn GAEL WATER BSW% ~RDW SPRESN CNOKE

PERF LP RFC BOp SOLE

DT-1 04/20/2014 05/01/2014 233

11/01/2013 ~0 __~ 374

9~ 40

15 40

~ 40

~ 40

~ 40

15 40

15 ~

50 40

.244 40

24 12254 16731

24 12254 16731

24 12254 16731

24 12254 16731

24 12254 16731

24 12254 16731

24 12254 16731

24 12254 16731

24 ~ 72254 16731

26 12580 16701

DT-1 10/25/2013

DT-1 04/25/2013 05/01/2013 203

11/01/2012 171

05/01/2012 302

11/01/2011 570

05/01/2011 1126

11/01/2010 2728

05/01/2010 10823

03/21/2010 19714

DT-1 10/26/2012

DT-1 04/27/2012

DT-1 10/27/2011

DT-1 04/27/2011

DT-1 10/27/2010

DT-1 04/27/2010

SDMZG 03/21/2010 946

WELL AILOWABLES

EFFECTIVE DATE END DATE LUW CODE LUW TYPE CODE ALLOWABLE ESTIMATED POTENTIAL CURRENT ALLOWABLE TYPE07/01/2014 12/31/2014 616100 ~ 233 233 3

http://sonlite.dnr.state.la.us/sundown/cart~rod/cart_con wellinfo2 7/22/2014

Wells

~O1/01/2014 06/30/2014 616100 ~2 374 L374 ~~3

07/01/2013 ___~ 12/31/2013 616100 _~~ ~ 203 203 ]3

01/01/2013 06/30/2013 6161000171 x171 307!01/2012 12/31/2012 6161000302 ~02 301/01/2012 06/30/2012 6161000570 570 307/01/2011 12/31/2011 616100~1126 1126 ~301/01/2011 06/30/2011 61610002728 2728~~3

_ -__l

07!01/2010 12/31/2010 616100019714 19714 -~3

04/13/2010 06/30/2010 616100 C~19714 19714 ~303/16/2010 04/12/2010 306353019714 3LEASEIUNIT~WELL PRODUCTIONRPT DATE LAW CODE STORAGE FAC DOC USE

05/01/2014 616100

04/01/2014 616100

CASING

Page 2 of 3

COMP EIONCS ZEG WESI ZE RE USETR H

TEST DATEWEIGHT SET EPTH SACK4 PRESSURE PRES

UREERPULL D PROCEOS

DEPTN

01/16/2010 0512 0612 23 ~~ ~

16824 650 8000~

02/15/2010 WELL

http://sonlite.dnr.state.la.us/sundown/cart~rod/cart_con wellinfo2 7/22/2014

Wells Page 3 of 3

L, uuu~JU UL Iu~~HISTORY01/16/2010 0758 0978 29.7

~

11550 --

1689 300012/15/2009HISTORY

01/16/2010 1034 1312 45.5 ~1917 821 1000~~11/24/2009_J

HISTORYPLUG AND ABANDONP and A DATE LOCATIQN TYPE CASING CUT TYPE ~ASING CUT DEPTH MUD WEIGHT LEFT COMMENTSPLUGS

PLUG TYPE ~ UPPER PLUG DEPTH LOWER PLUG DEPTH SACKS OF CEMENT SLURRY WEIGHTTUBING AND PACKERS

COMPLETION DATE TUBING 51ZE TUBING LOWER DEPTH TUBING UPPER DEPTH PACKER DEPTH

03/16/2010 02803/08 11595 ~~0 11575WORK PERMITS

RNUMBERE APPDATEION

EXPDATEON ERPE S gMls STATUS DATIE UOT~H WORK_PERFORMED

~RECEIPTDAT'EN SAND DESCRIPTION

http://sonlite.dnr.state.la.us/sundown/cart~rod/cart_con wellinfo2 7/22/2014