Document:

brne_ex101.htm

 

EXHIBIT 10.1

 

DEBT RESTRUCTURING AGREEMENT

 

This DEBT RESTRUCTURING AGREEMENT (this "Agreement") is made and entered into as of the 17th day of December 2013 by and among Borneo Resource Investments Ltd. a Nevada corporation ("Borneo"), PT Puncak Kalabat, a limited liability company organized in Indonesia and a subsidiary of Borneo ("Kalabat"), and Sanding Longdong, an individual living in Indonesia (the "Seller" and together with Borneo and Kalabat, the “Parties”).

 

WHEREAS, Kalabat purchased the Talawaan Property from the Seller, pursuant to a Purchase Agreement, dated March 22, 2013 (“Talawaan Agreement”), for a total purchase price of $5,000,000;

 

WHEREAS, Kalabat and Borneo have made payments to the Seller and, as of December 17, 2013, Kalabat owes the Seller an aggregate amount of $4,650,000 (the “Principal Balance”) under the Talawaan Agreement; and

 

WHEREAS, the Parties have agreed to restructure the Principal Balance due under the Talawaan Agreement on the terms set forth herein.

 

NOW, THEREFORE, in consideration of the promises and of the mutual covenants herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agrees as follows:

 

1.           The Parties agree that the Principal Balance is hereby converted and restructured to a new debt obligation, to be memorialized and paid in accordance with an Unsecured Promissory Note in the form annexed hereto as Exhibit A (the "Note") and 100,000 shares of Borneo’s common stock (the “Shares”).  As of the date of this Agreement, Kalabat shall execute and deliver the Note and Borneo shall deliver the Shares to the Seller.  Upon the issuance of the Shares, the Shares shall be duly and validly issued, fully paid and nonassessable.

 

2.           Upon execution and delivery of the Note and delivery of the Shares, the Principal Balance is hereby deemed cancelled and the payment obligations of Kalabat under the Talawaan Agreement shall thereafter be evidenced and governed solely by this Agreement and the Note.

 

3.           This Agreement and the Note, together with the exhibits and schedules hereto and thereto, contain the entire understanding of the parties with respect to the subject matter hereof supersede all prior agreements and understandings, written or oral, among the parties with respect to the subject matter of this Agreement.  This Agreement shall replace and supersede Kalabat’s obligations under the Talawaan Agreement.

 

4.           No provision of this Agreement may be waived, modified or supplemented except by an instrument in writing signed by the Parties.

 

5.           This Agreement shall be governed by and construed in accordance with the laws of the state of Washington  and shall be enforced exclusively by the state and federal Courts located in the State of Washington.

 

6.           The Companies represent and warrant, jointly and severally, that this Agreement has been duly authorized, executed and delivered by the Companies and constitutes the legal, valid and binding obligation of the Companies, their successors and permitted assigns, enforceable against the Companies in accordance with its terms.

 

7.           The Seller may not assign, pledge or otherwise transfer this Agreement or any interest therein without the prior written consent of Kalabat.  Kalabat may not assign this Agreement and the obligations arising out of this Agreement to a third party without the prior written consent of the Seller, except that such assignment may be made freely to any affiliate of the Seller.

 

8.           This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and, all of which taken together shall constitute one and the same Agreement.  In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a ".pdf" format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or ".pdf" signature page were an original thereof

 

  

1

  

 

IN WITNESS WHEREOF the parties have signed this Agreement as of the day and year first above written.

 

	
BORNEO RESOURCE INVESTMENTS LTD.

	
 

	
 

	
 

	
By:

	
/s/ Nils A. Ollquist

	
 

	
 

	
Name: Nils A. Ollquist

	
 

	
 

	
Title: President

	
 

	
 

	
 

	
PT PUNCAK KALABAT

	
 

	
 

	
By:

	
/s/ Nils A. Ollquist

	
 

	
 

	
Name: Nils A. Ollquist

	
 

	
 

	
Title: President

	
 

	
 

	
 

	
SANDING LONGDONG

	
 

	
 

	
By:

	
/s/ Sanding Longdong

	
 

	
 

	
Name: Sanding Longdong

	
 

 

  

2

  

EXHIBIT A

PROMISSORY NOTE

 

	
$1,650,000

	
Bothell, Washington

December 17, 2013

 

FOR VALUE RECEIVED, PT Puncak Kalabat, a limited liability company organized in Indonesia ("Maker"), promises to pay to Sanding Longdong, a resident of Indonesia (“Holder”) or its assigns, the principal sum of $1,650,000, all as hereinafter provided and upon the following terms, agreements, and conditions:

 

1.          Payment.  All payments shall be payable in lawful money of the United States of America.  Payments should be made in the following amounts on the indicated dates:

 

	
On or before December 25, 2013

	 	$	20,000	 
	
On or before December 31, 2013

	 	 	30,000	 
	
On or before January 31, 2014

	 	 	500,000	 
	
On or before March 31, 2014 

	 	 	1,100,000	 
	
Total Balance of Payments

	 	$	1,650,000	 

 

Whenever any payment to be made hereunder shall be due on a day other than a business day, such payment shall be made on the next succeeding business day. The term “business day” as used herein shall mean any day other than a Saturday, Sunday, or federal holiday.

 

2.          Prepayment. Maker may, at any time or times prior to the Maturity Date, prepay this Note, in whole or in part, without premium or penalty; provided, however, that any such prepayment will be applied first to the payment of expenses due under this Note, second to interest accrued on this Note, and third, to the payment of unpaid principal on this Note.

 

3.          Applicable Law. This Note shall be governed by and construed in accordance with the laws of the State of Washington.

 

  

3

  

 

IN WITNESS WHEREOF, the undersigned Maker has caused this instrument to be executed as of the day and year first above written.

 

	 	Maker:

 

PT Puncak Kalabat

	 
	 	 	 	 
	
 

	
By: 

	/s/ Nils A. Ollquist 	 
	 	 	By: Nils A. Ollquist	 
	 	 	Its: President	 
	 	 	 	 

 

 

4EXHIBIT 10.1

 

AGREEMENT

 

THIS
AGREEMENT (the “Agreement”) is made and entered into this 12th day of December 2013, but is intended to be
effective as of September 1, 2013 (the “Effective Date”), by and between Osage Exploration & Development,
Inc. (“Osage”), Slawson Exploration Company, Inc. (“Slawson”) and U.S. Energy Development Corporation
(“US Energy”), MBI Oil & Gas, LLC (“MBI”) and Stewart Geological, Inc. (“S GI”).
Slawson, US Energy, MBI and SGI are sometimes collectively referred to as the “Slawson Group.”

 

WHEREAS,
Osage, Slawson and US Energy, are all parties to that certain Participation Agreement (and the Joint Operating Agreement (the
“JOA”) attached thereto as Exhibit “C”) dated April 21, 2011, which provides for the purchase of participation
interest by Slawson and US Energy from Osage in leasehold interests on the lands described on Exhibit “A” attached
thereto and for the exploration and development of those leases (the “Nemaha Ridge Project”) by the parties;

 

WHEREAS,
Slawson has conveyed a five percent (5%) interest in the Nemaha Ridge Project to MBI and a five percent (5%) interest to SGI,
who have each signed Participation Agreements and Operating Agreement in form essentially identical to those signed by Osage,
Slawson and US Energy; and

 

WHEREAS,
a conflict has arisen between Osage and Slawson, Operator of the Nemaha Ridge Project, which impacts all of the parties hereto
and the various agreements among them and, therefore, the parties desire to resolve that conflict on the terms and conditions
contained herein.

 

NOW
THEREFORE, for and in consideration of the sum of one dollar and other good and valuable consideration, the parties agree as follows:

 

1.
Acknowledgement of Non-Participation Status. On August 22, 2013, Slawson formally notified Osage of its election
to declare Osage to be a non-participating party under the Participation Agreement in the following five wells. Additionally Osage
elected not to participate in the drilling of the Wood Duck #1-6H well and is therefore a non-participant in the Wood Duck #1-6H.
The six following wells are herein collectively referred to as the “Non-Participation Wells.”

 

Canvasback
1-24H

House
Wren 1-36H

Jane
1-23H

Redhead
1-27H

Begonia
1-30H

Wood
Duck 1-6H

 

Osage
agrees that it is a non-participating party under the Participation Agreement in the foregoing six wells and is subject to the
penalties set forth in the Participation Agreement with respect to each of these six wells. The locations of the penalty wells
have not been determined as of the date hereof. Slawson will notify Osage of the locations in accordance with the Participation
Agreement. The parties agree that penalty wells cannot be drilled on Osage Partitioned Acreage as hereinafter defined.

 

    	 

    	 

    

 

2.
Revocation of Non-Consent Status. On August 22, 2013, Slawson formally notified Osage of its election to declare
Osage to be a non-consenting party under the JOA in the completion of the following wells (the “Non-Consent Wells”):

 

Ruffed
Grouse 1-20H

Ruddy
Duck 1-17H

Mallard
1-16H

Canvasback
1-25H

Witt
1-15H

McPhail
2-19H

Blue
Jay 1-13H

Rooster
1-2H

Snipe
1-19H

Snipe
1-30H

Peacock
1-9H

 

Slawson,
as Operator hereby revokes its election to declare Osage to be a non-consenting party under the Participation Agreement and JOA
in the foregoing wells and reinstates Osage as a consenting party with the same force and effect as though Slawson had never declared
Osage to be a non-consenting party in those wells.

 

3.
Accounting Reconciliation. At the Initial Closing, as hereinafter defined, Osage shall pay Slawson an amount equal
to the Net Due on 10/11/2013 as shown on the Accounts Receivable and Revenue Offset Worksheet attached hereto as Exhibit “B”.
The Net Due on 10/31/2013 represents Osage’s share of invoices processed through Slawson’s joint interest billing
system through the October 15, 2013 joint interest billing, with credit given to Osage for its share of revenue received by Slawson
from the sale of oil and gas as reflected on Slawson’s October 15 revenue check write, together with various other adjustments
between the parties as set forth therein.

 

4.
Osage’s Election to Participate in the Crow 1-35Hand the Toucan 1-24H Wells. Osage elected to participate
in the drilling of the Crow 1-35H and the Toucan 1-24H wells and paid its proportionate share of dry hole costs in the amount
of $390,146.00 and $336,196.00, respectively. Osage hereby revokes its election to participate in these two wells and Slawson
agrees to accept the revocation of Osage’s election to participate. Osage shall have no interest in the Crow 1-35H wellbore
or the Toucan 1-24H wellbore, but shall retain its leasehold interest in the balance of acreage associated with the units in which
these wells were drilled. This acreage shall not be subject to the partition and will continue to be controlled by the Participation
Agreement and the JOA, except that there shall be no penalty wells associated with Osage’s election not to participate in
the Crow 1-35H and the Toucan 1-24H wells. Slawson has credited the $390,146.00 and $336,196.00 paid for the dry hole costs on
the Crows 1-35H and Toucan 1-24H to Osage on the Accounts Receivable and Revenue Offset Worksheet attached hereto as Exhibit “B”.

 

5.
Osage’s Election as to the Fuxa 1-15 SWD and the Spoonbill J-34H. Osage has elected to participate in the
drilling of the Fuxa 1-15 SWD and the Spoonbill 1-34H, but has not made any payments of its proportionate share of dry hole or
other costs on these wells. Osage hereby revokes its election to participate in these two wells and Slawson agrees to accept the
revocation of Osage’s election to participate in the Fuxa 1-15 SWD and the Spoonbill 1-34H. Since the Fuxa 1-15 SWD and
the Spoonbill 1-34H are both located on oil and gas leases which comprise part of the Slawson Partitioned Acreage, Osage will
have no further interest in the these two wells or the spacing units in which they are located.

 

6.
Interest Accrual on Overdue Account Balances. Osage shall pay to Slawson upon the execution of this Agreement the
sum of $151,624.58 for interest due Slawson on Osage’s overdue account, accrued to the date hereof. The interest accrual
on overdue account balances has been credited to Slawson on the Accounts Receivable and Revenue Offset Worksheet attached hereto
as Exhibit “B”.

 

    	 

    	 

    

 

7.
Payment of Future Drilling, Completion and Operating Expenses. On future wells drilled on lands covered by oil and
gas leases and spacing units on which Osage, Slawson, US Energy, MBI and SGI have drilled wells in the Nemaha Ridge Project, as
shown on Exhibit “C” hereto (the “JV Lands” ), in which Osage elects to participate, Osage agrees to pay
its proportionate share of all future: (i) dry hole costs, as reflected in any approved AFE, (ii) estimated completion costs,
and (iii) lease operating expenses, in accordance with the terms and conditions of the Participation Agreement and the JOA.

 

8.
Revenue Distribution. Notwithstanding the agreement between Slawson and Osage dated December 12, 2012, which agreement
is hereby terminated, the parties agree that all revenue to be distributed by Slawson to Osage on wells operated by Slawson shall
be distributed in accordance with the terms and conditions of the Participation Agreement and the JOA.

 

9.
Partition of Undeveloped Acreage.

 

A.
Slawson, US Energy, MBI and SGI agree to assign all of their right, title and interest in and to the oil and gas leases and force-pooled
acreage which are part of the Nemaha Ridge Project and covering lands within the sections described on Exhibit “D”
(the “Osage Partitioned Acreage”) to Osage at the Second Closing as defined in Section 22. The assignment shall be
effective as of the Effective Date and each assignor shall warrant for itself that its title is free and clear of any and all
liens, encumbrances and adverse claims, arising by, through or under it.

 

B.
Osage agrees to assign all of its right, title and interests in and to the oil and gas leases which are part of the Nemaha Ridge
Project and covering lands within the sections described on Exhibit “E” (the “Slawson Partitioned Acreage”)
to Slawson and U.S. Energy at the Second Closing. Slawson shall thereafter assign to SGI and MGI their proportionate share of
the interest assigned to Slawson.

 

The
assignment shall be effective as of the Effective Date and shall warrant that title is free and clear of any and all liens, encumbrances
and adverse claims, arising by, through or under Osage.

 

C.
As of the Effective Date, the parties agree to terminate the Participation Agreement and the JOA as to all lands within the Nemaha
Ridge Prospect, except for the JV Lands which shall continue to be controlled by the Participation Agreement and JOA. Notwithstanding
the foregoing, the Participation Agreement and the JOA shall remain in full force and effect as between Slawson, US Energy, MBI
and SGI.

 

D.
Notwithstanding Section 9.C., if a well is proposed that includes partitioned and non- partitioned acreage, the Participation
Agreement and the JOA shall apply to that well and the unit in which it is located, provided that any penalty well may only be
located in the spacing unit in which the proposed well giving rise to the penalty well is located. If the proposed well is on
a 1,280 acre unit, then the penalty well shall be on a proposed 1,280 acre unit. Similarly, if the proposed well is on a 640 acre
unit then the proposed penalty well shall be a 640 acre unit. Notwithstanding provisions of this Section 9.D., Osage shall have
and retain the right to protest and challenge any application, request or effort to space, pool or otherwise create any unit which
includes or affects all or any portion of the Osage Partitioned Acreage. Likewise, any member of the Slawson Group shall have
and retain the right to protest and challenge any application, request or effort to space, pool or otherwise create any unit which
includes or affects all or any portion of the Slawson Partitioned Acreage

 

    	 

    	 

    

 

10.
Partial Assignment of CREC Contract. Upon payment of the Net Due as reflected on Exhibit “B”, Osage
will have paid $747,283.00 as its estimated proportionate share of the Contribution- in-aid of Construction and other fees shown
on Exhibit H to the April 12, 2013, Contract Agreement for Purchase of Power between Central Rural Electric Cooperative (“CREC”)
and Slawson (the “CREC Contract”). The parties recognize that the Slawson Group’s and Osage’s proportionate
share of such costs may increase or decrease based upon CREC’s final allocation of costs for all wells in the area covered
by the CREC Contract. Slawson shall deliver to Osage at the Second Closing a partial assignment of the CREC Contract which covers
and assigns all of Slawson’s rights thereunder relating to the Osage Partitioned Acreage, including rights to obtain electrical
service to the wells shown on Exhibits “A” and “B” of the CREC Contract located upon the following lands:

 

A.
Section 18, Township 17N, Range 2 W

B.
Section 19, Township 17N, Range 2 W

C.
Section 20, Township 17N, Range 2 W

D.
Section 29, Township 17N, Range 2 W

 

In
addition, Slawson shall deliver to Osage at the Second Closing the express written consent of CREC to the partial assignment from
Slawson to Osage as required by the CREC Contract.

 

11.
Payment of Well Costs on the Osage Partitioned Acreage. Slawson has incurred but has not invoiced any of the working
interest owners for their proportionate share of well costs incurred on future wells to be drilled on the Osage Partitioned Area.
Set forth on Exhibit “F” is a listing of these expenses which have been credited to Slawson on the Accounts Receivable
and Revenue Offset Worksheet attached hereto as Exhibit “B”. Slawson shall provide Osage all work product associated
with such costs, including without limitation all landman and attorney title research, information and opinions.

 

12.
Osage’s Access to Salt Water Disposal Wells. Osage is a joint owner with Slawson and US Energy in the following
salt water disposal wells and owns the interest in each well set across the well’s name:

 

	SWD Well Name	 	Osage’s Interest	 
	Cat in the Hat 2-19 SWD	 	 	25	%
	Davis Farms 1-5 SWD	 	 	25	%
	Krittenbrink 1-36 SWD	 	 	25	%
	Morrisette #2 SWD	 	 	20	%

 

Osage
shall retain its ownership interest in the foregoing salt water disposal wells and shall have the right to dispose of water from
Osage operated wells in which Osage owns an interest and which are located on the Osage Partitioned Acreage. Osage shall also
have the right to use any existing and associated rights-of-way or easements which allow the installation of pipelines to connect
producing wells or equipment to the salt water disposal wells. If the capacity of the disposal is exceeded, then access to the
disposal by third party operators shall be curtailed. If after such curtailment the capacity of the disposal is still exceeded,
then Osage’s daily volume allowance shall be reduced to that number of barrels equal to the product of the capacity of the
disposal well multiplied by Osage’s percentage ownership interest therein. For instance, if a disposal well capacity is
2,000 bbl/day and Osage has a 25% interest in the disposal well, and if the disposal well is unable to take all of the water which
the parties desire to dispose of in the disposal then Osage shall have the right to dispose of 500 bbl of water per day into such
disposal well from Osage operated wells in which Osage has an interest and which are located on the Osage Partitioned Acreage.
In such event, Osage’s 500 bbl/day allowance will be reduced by the number of barrels of water owned by Osage that are being
disposed into the disposal well from wells operated by Slawson and in which Osage is a participating owner.

 

    	 

    	 

    

 

Osage
shall pay Slawson, as Operator of the disposal wells, an amount per barrel of Osage water delivered into the disposal wells from
Osage operated wells, equal to that which Slawson is charging its partners for the disposal of water from wells operated by Slawson.
Osage shall have the ongoing right to dispose of water into the disposal wells that belong to Osage from wells operated by Slawson.
Osage shall pay the same amount per barrel as Slawson is charging the joint account for the disposal of such water into that disposal.
Osage shall receive and be credited with its ownership percentage interest in any revenues generated from the operation of the
salt water disposal wells and shall bear its ownership percentage interest of all expenses associated with owning and operating
the salt water disposal wells.

 

13.
Osage Overriding Royalties on Newly Acquired Acreage. Notwithstanding the ongoing operation of the Participation
Agreement as to the JV Lands, Osage shall not be entitled to receive or retain any overriding royalties on any oil and gas leases
acquired within the geographical confines of the Nemaha Ridge Prospect after September 1, 2013, or on any forced pooled acreage
acquired within the Nemaha Ridge Prospect after that date, except for leases acquired by Osage within the Osage Partitioned Acreage
or leases acquired by Osage within the Slawson Partitioned Acreage where the Slawson Group has elected not to exercise its right
of first refusal to purchase such acreage from Osage pursuant to Section 20.1.

 

14.
Nemaha Gas Gathering’s Right of First Refusal to Take Osage’s Gas. Osage grants to Nemaha Gas Gathering
Systems, LLC, a right of first refusal to transport Osage’s natural gas produced from the Osage Partitioned Area. Nemaha
Gas Gathering Systems, LLC is intended to be a third party beneficiary of this covenant.

 

15.
Slawson-Arnold Trade Agreement. Osage shall perform Slawson’s duties and obligations under the Slawson-Arnold
trade agreement which is attached hereto as Exhibit “G”, insofar as such agreement covers Sections 7 & 18, Township
17 North, Range 2 West, including but not limited to well timing and disposing of produced water from Arnold’s wells. Osage
agrees to indemnify, defend and hold Slawson harmless from any claims which may arise from Osage’s breach of this provision,
which shall survive the closing of this Agreement.

 

16.
Apollo and Bootlibav Mortgage Releases. Osage shall deliver to Slawson at the Second Closing, fully executed and
notarized mortgage releases of all mortgages in favor of Apollo and Boothbay, including but not limited to the mortgages recorded
in Book 2314, Page 367-479, and Book 2312, Page 087-122, respectively, and all supplements and amendments thereto, as well as
UCC-1 Termination Statements covering all financing statements filed in favor of Apollo and Boothbay, to the extent that those
mortgages and financing statements encumber oil and gas leases and related interests within: (i) the confines of the Slawson Partitioned
Acreage, (ii) the Non-Participation well bores, and (iii) the Crow and Toucan wellbores. Further, Osage shall subsequently deliver
releases of applicable mortgages and financing statements covering the penalty wellbores as the penalty wellbores are identified
by Slawson.

 

17.
Apollo and Boothbay Mortgage Releases Covering Acreage Previously Assigned to Slawson and U.S. Energy. Set forth
on Exhibit H is a list of oil and gas leases which were assigned by Osage to Slawson and US Energy after the recording of the
Apollo and Boothbay mortgages. At the Second Closing Osage shall deliver to Slawson fully executed and notarized releases of the
Apollo and Boothbay mortgages covering the oil and gas leases described on Exhibit “H”.

 

18.
Impact on Existing Producing Properties. Except as provided herein, this Agreement shall have no effect on any of
the producing properties on the JV Lands in which the parties own an interest which properties shall remain subject to the Participation
Agreement and JOA.

 

    	 

    	 

    

 

19.
Overriding Royalty Assignments Due to Osage. There are currently a number of leases and forced pooled acres which
Slawson acquired prior to September 1, 2013 for which the assignments of overriding royalties due Osage have not been made by
Slawson. Slawson shall deliver all assignments of overriding royalties due Osage at the Second Closing.

 

20.
Right of First Refusal on Acreage Acquired After the Effective Date in the Partitioned Areas.

 

20.1.
Lease Acquisitions in the Slawson Partitioned Acreage by Osage. Osage grants to Slawson a right of first refusal
to purchase, at Osage’s actual out-of-pocket cost, without any reimbursement for brokerage costs, all acreage acquired by
Osage after the Effective Date within a section containing Slawson Partitioned Acreage. Such offer shall be made in writing by
Osage to Slawson within thirty days after the date the acreage is acquired and shall be accompanied by a copy of the leases acquired
and evidence of the actual out-of-pocket costs paid by the acquiring party for the leases. The obligations contained in this Section
20.1 shall last for five (5) years from September 1, 2013, and shall terminate automatically thereafter.

 

Slawson
shall have ten business days after receipt of Osage’s offer within which to notify Osage of its election to purchase the
acquired acreage. Failure to notify Osage of its election to purchase the acquired acreage within ten business days of receipt
of the offer shall constitute an election by the Slawson Group not to purchase the acquired acreage, in which event Osage shall
hold the acquired acreage free and clear of the Participation Agreement, the JOA, this Agreement and any claim of the Slawson
Group. Should Slawson elect to purchase the acquired acreage, Slawson shall pay Osage its actual out-of-pocket costs for the acreage
within twenty business days of receipt of Osage’s offer and Osage shall cause the acquired acreage to be assigned to Slawson
without any overriding royalty interests or other burdens attached by Osage within ten days of receipt of payment. Slawson shall
thereafter offer the acquired acreage to the other Members of the Slawson Group in accordance with the Participation Agreement
and JOA.

 

20.2.
Lease Acquisitions in the Osage Partitioned Acreage by the Slawson Group. The Slawson Group grants to Osage a right
of first refusal to purchase, at the Slawson Group’s actual out-of- pocket cost, without any reimbursement for brokerage
costs, acreage acquired by any member of the Slawson Group after the Effective Date within (i) a section containing Osage Partitioned
Acreage, or (ii) within Township 17 North, Range 2 West, Logan County, Oklahoma, except for Section 30 thereof. Such offer shall
be made in writing by the acquiring party to Osage within thirty days after the date the acreage is acquired and shall be accompanied
by a copy of the leases acquired and evidence of the actual out-of- pocket costs paid by the acquiring party for the leases. The
obligations contained in this Section 20.2 shall last for five (5) years from September 1, 2013, and shall terminate automatically
thereafter.

 

Osage
shall have ten business days after receipt of the acquiring party’s offer within which to notify Slawson of its election
to purchase the acquired acreage. Failure to notify Slawson of its election to purchase the acquired acreage within ten business
days of receipt of the offer shall constitute an election by Osage not to purchase the acquired acreage, in which event the acquired
acreage shall be held free and clear of any claim of Osage or the rights of Osage under the Participation Agreement, the JOA or
this Agreement. Should Osage elect to purchase the acquired acreage, Osage shall pay the acquiring party its actual out-of-pocket
costs for the acreage within twenty business days of receipt of the acquiring party’s offer and the acquiring party shall
cause the acquired acreage to be assigned to Osage without any overriding royalty interests or other burdens attached by the Slawson
Group within ten days of receipt of payment.

 

    	 

    	 

    

 

20.3.
Billing to Slawson Group. The Slawson Group agrees among themselves that any acreage acquired by Slawson pursuant
to this Section 20, or through direct leasing or through an acquisition will be billed to such parties and assumed and accepted
unless Slawson receives written notification to the contrary from a party within 30 days from receipt of an invoice for such acreage.

 

20.4.
Application of Previous Agreements between Slawson, MBI and SGI. Any acreage acquired by the Slawson Group pursuant
to Section 20.1 shall, as to the interest acquired by MBI or SGI, be subject to and burdened by the overriding royalty interest
of Slawson as previously agreed to between the parties.

 

20.5.
Notice to Slawson Group. Notice to Slawson by Osage shall satisfy the notice requirement to Slawson, US Energy,
MBI and SGI. The obligations created by this paragraph shall last for five (5) years from September 1, 2013, and shall terminate
automatically thereafter.

 

21.
Data and Information Sharing. Notwithstanding the partition of acreage, the parties agree to continue to exchange
and share with one another drilling and production information, reports and data pertaining to each party’s partitioned
lands and wells, i.e., Osage will share information pertaining to its partitioned acreage with Slawson and Slawson will share
such information pertaining to its partitioned acreage with Osage. For convenience, Osage will provide such information to Slawson,
and Slawson shall then provide such information to US Energy, MBI and SGI. The information that is intended to be shared includes
but is not limited to the identical information which the parties currently exchange and share in connection with the non-partitioned
JV Lands.

 

22.
Closings. The “Initial Closing” as referenced herein shall occur at 10:00 a.m. on October ___, 2013,
in the office of ____________________ in Oklahoma City, Oklahoma. At the Initial Closing, the signatures of all of the parties
to this Agreement shall be exchanged, the net payment as described in Paragraph 3 shall be wire-transferred by Osage to Slawson
on or before 2:00 p.m. (CDT), and upon Slawson’s receipt of the wire transfer, all of the provisions of this Agreement shall
become immediately effective except those provisions pertaining to the partition of properties and the release of mortgages. The
“Second Closing” shall occur forty-five (45) days after the Initial Closing at 10:00 a.m. in the offices of in Oklahoma
City, Oklahoma. If for any reason difficulties should arise which render the parties unable to have the Second Closing within
forty-five (45) days, the parties agree to extend the Second Closing date for a reasonable time not to exceed an additional forty-five
(45) days. At the Second Closing the release of mortgages required in Sections 16 and 17 shall be delivered and the executed partition
assignments required by Sections 9.A. and 9.B. shall be exchanged. The purpose of the Second Closing is to allow adequate time
to allow for obtaining and/or preparing the necessary mortgage releases, partition assignments, partial assignment of CREC Contract
and assignments of overriding royalty interests as described above.

 

23.
Resolution of Existing Disputes and Subsequent Duty to Account. All of the parties agree to and accept all of the
terms and provisions hereof, and agree that this Agreement resolves any and all known disputes among them as of the Effective
Date, provided that this provision shall not alter or amend the parties ongoing duties and obligations to pay for their proportionate
share of expenses attributable to periods prior to the Effective date, to account for revenue received on behalf of the other
from sales of oil or gas prior to the Effective Date, or to account for refunds or credits attributable to periods prior to the
Effective Date.

 

24.
Miscellaneous.

 

24.1
Entire Agreement. This Agreement constitutes the entire agreement between the parties as to the subject matter hereof.
There are no verbal understandings, agreements, representations or warranties which are not expressly set forth herein.

 

    	 

    	 

    

 

24.2.
Amendments. This Agreement may not be amended except in writing signed by the parties hereto.

 

24.3.
Severability, hi the event that any provision of this Agreement is deemed by a court of competent jurisdiction to
be unenforceable under either state or federal law, then that provision shall be deemed amended to the minimum extent required
to comply with such state or federal law.

 

24.4.
Construction of Agreement. The parties acknowledge that each party and its counsel have had the opportunity to review
and negotiate the terms and conditions of this Agreement and that the normal rule of construction to the effect that any ambiguities
are to be construed against the drafting party shall not be employed in the interpretation of this Agreement or any exhibits or
amendments hereto.

 

24.5.
Further Assurances. Each party hereto shall execute and deliver all such further instruments and documents as may
reasonably be requested by the other party in order to fully carry out the intent and accomplish the purposes of the Agreement
and the transactions referred to therein.

 

24.6.
Choice of Law and Forum Selection. This Agreement shall be construed, governed, interpreted and enforced in accordance
with the laws of the state of Oklahoma. Any suit or proceeding hereunder shall be brought exclusively in state or federal courts
located in Oklahoma City, Oklahoma. Each party consents to the personal jurisdiction of said state and federal courts and waives
any objection that such courts are an inconvenient forum.

 

24.7.
Waiver. Any waiver on the part of any party of any term or condition of this Agreement shall not constitute a precedent
or bind any other party to a waiver of any succeeding breach of the same or any other term or condition of this Agreement.

 

24.8.
Counterparts. This Agreement may be executed in one or more counterparts and delivered via facsimile or email, each
of which shall be deemed an original, but all of which together shall constitute but one and the same instrument. Any signature
delivered via facsimile or email shall be deemed to be an original signature hereto.

 

IN
WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives as of the date
set forth above.

 

 

	SLAWSON
    EXPLORATION COMPANY, INC. 	 	OSAGE
    EXPLORATION & DEVELOPMENT, INC.
	 	 	 
	/s/
    Stuart Kowalski	 	/s/
    Kim Bradford
	Stuart
    Kowalski, Vice President	 	Kim
    Bradford, President

 

    	 

    	 

    

 

	U.S.
    ENERGY DEVELOPMENT CORPORATION	 	MBI
    OIL & GAS, LLC
	 	 	 
	/s/
    Doug Walch	 	/s/
    Jim Arthaud
	Doug
    Walch, President	 	Jim
    Arthaud, President
	 	 	 
	STEWART
    GEOLOGICAL, INC.	 	 
	 	 	 
	/s/
    Carter Stewart	 	 
	Carter
    Stewart, President	 	 

 

    	 

    	 

    

 

EXHIBIT
A 

NEMAHA
RIDGE PROJECT AREA

 

Township
16 North, Range 3 West—All

Township
16 North, Range 4 West—Sections 1-3, 10-15, 22-27, 34-36

Township
17 North, Range 2 West—All

Township
17 North, Range 3 West—All

Township
17 North, Range 4 West—Sections 1-3, 10-15, 22-27, 34-36

Township
18 North, Range 3 West—All

Township
18 North, Range 4 West—All

Township
19 North, Range 3 West—All

Township
19 North, Range 4 West—All

Township
20 North, Range 3 West— All

Township
20 North, Range 4 West— All

 

    	 

    	 

    

 

EXHIBIT
B

ACCOUNTS
RECEIVABLE AND REVENUE OFFSET WORKSHEET

 

	Invoice #	 	Invoice Date	 	Amount	 
	130910	 	10/10/2013	 	$	5,004,760.63	 
	130911	 	10/11/2013	 	$	8,121.63	 
	130811	 	09/11/2013	 	$	(3,153,411.47)	(1)
	130812	 	09/12/2013	 	$	(1,358,434.16	)
	130813	 	09/12/2013	 	$	(597.64	)
	330902	 	10/02/2013	 	$	95,890.82	 
	330918	 	09/18/2013	 	$	(2,475.00	)
	330804	 	09/04/2013	 	$	26,335.00	 
	130712	 	08/12/2013	 	$	2,216,099.71	 
	330702	 	08/02/2013	 	$	44,854.71	 
	130610	 	07/10/2013	 	$	1,645,999.66	 
	330601	 	07/01/2013	 	$	122,180.69	 
	130511	 	06/11/2013	 	$	1,198,159.54	(2)
	330502	 	06/04/2013	 	$	41,640.32	 
	330130	 	01/30/2013	 	$	13,727.50	 
	330127	 	01/25/2013	 	$	(15,251.95	)
	221126	 	11/28/2012	 	$	(38,870.47)	(3)
	Revenue Applied	 	09/16/2013	 	$	(1,078,224.50	)
	Total	 	 	 	$	4,770,505.02	 
	 	 	 	 	 	 	 
	Interest Accrual to SECI	 	 	 	$	151,624.58	 
	Electric Grid	 	 	 	$	747,283.00	 
	Partitioned well costs	 	 	 	$	167,707.53	 
	Less Crow Payment	 	 	 	$	(390,146.00	)
	Less Toucan Payment	 	 	 	$	(336,196.00	)
	Less 10/15/2013 Revenue	 	 	 	$	(843,733.79)	(4)
	 	 	 	 	 	 	 
	Net Due on 10/11/2013	 	 	 	$	4,267,044.34	 

  

Notes:

 

(1)
Net of Crow and Electric Grid charges

(2)
Net of Snipe 1-19 payment on 6/18/2013

(3)
Osage paid the actual well completion costs on Chambers 1-5 billed on 12/10/12 and 1/11/13 and then the entire prebill on
3/7/2013 therefore double paying $38,870.47

(4)
Does not include the Snipe 1-19, Snipe 1-30, McPhail 2-19, Blue Jay 1-13 as those revenues will be payable on the 11/15/2013
check write.

 

    	 

    	 

    

 

EXHIBIT
C 

JOINT
VENTURE LANDS

 

Sec-Twp-Rge

 

05-16N-03W

05-17N-03W

06-17N-03W

08-17N-03W

09-17N-03W

15-17N-03W

16-17N-03W

17-17N-03W

19-17N-03W

20-17N-03W

21-17N-03W

23-17N-03W

24-17N-03W

25-17N-03W

26-17N-03W

27-17N-03W

28-17N-03W

29-17N-03W

30-17N-03W

36-17N-03W

24-17N-04W

18-18N-03W

19-18N-03W

30-18N-03W

01-18N-04W

02-18N-04W

13-18N-04W

35-19N-04W

36-19N-04W

 

    	 

    	 

    

 

EXHIBIT
D

OSAGE
PARTITIONED ACREAGE

 

EXHIBIT
“D”

 

OSAGE
PARTITIONED LANDS

 

	Sec-Twp-Rge	 	County, State	 	Net Acres	 
	01-16N-03W	 	Logan County, OK	 	 	79.88	 
	02-16N-03W	 	Logan County, OK	 	 	251.14	 
	03-16N-03W	 	Logan County, OK	 	 	239.70	 
	10-16N-03W	 	Logan County, OK	 	 	12.36	 
	11-16N-03W	 	Logan County, OK	 	 	173.96	 
	12-16N-03W	 	Logan County, OK	 	 	30.00	 
	01-16N-04W	 	Logan County, OK	 	 	56.28	 
	02-16N-04W	 	Logan County, OK	 	 	40.25	 
	03-16N-04W	 	Logan County, OK	 	 	125.11	 
	10-16N-04W	 	Logan County, OK	 	 	288.17	 
	04-17N-02W	 	Logan County, OK	 	 	4.50	 
	05-17N-02W	 	Logan County, OK	 	 	0.01	 
	07-17N-02W	 	Logan County, OK	 	 	129.67	 
	08-17N-02W	 	Logan County, OK	 	 	94.41	 
	09-17N-02W	 	Logan County, OK	 	 	275.66	 
	18-17N-02W	 	Logan County, OK	 	 	424.32	 
	19-17N-02W	 	Logan County, OK	 	 	386.09	 
	20-17N-02W	 	Logan County, OK	 	 	429.98	 
	27-17N-02W	 	Logan County, OK	 	 	190.90	 
	28-17N-02W	 	Logan County, OK	 	 	74.20	 
	29-17N-02W	 	Logan County, OK	 	 	285.27	 
	31-17N-02W	 	Logan County, OK	 	 	26.46	 
	03-17N-03W	 	Logan County, OK	 	 	20.56	 
	07-17N-04W	 	Logan County, OK	 	 	3.00	 
	08-17N-04W	 	Logan County, OK	 	 	3.32	 
	16-17N-04W	 	Logan County, OK	 	 	1.50	 
	17-17N-04W	 	Logan County, OK	 	 	1.38	 
	30-17N-04W	 	Logan County, OK	 	 	6.76	 
	34-18N-03W	 	Logan County, OK	 	 	7.50	 
	13-19N-03W	 	Logan County, OK	 	 	98.57	 
	 	 	 	 	 	 	 
	 	 	 	 	 	3.760.91	 

 

    	 

    	 

    

  

EXHIBIT
E 

SLAWSON’S
PARTITIONED ACREAGE

 

	Sec-Twp-Rge	 	County, State	 	Net Acres	 
	04-16N-03W	 	Logan County, OK	 	 	65.00	 
	06-16N-03W	 	Logan County, OK	 	 	64.90	 
	08-16N-03W	 	Logan County, OK	 	 	142.48	 
	09-16N-03W	 	Logan County, OK	 	 	151.19	 
	30-17N-02W	 	Logan County, OK	 	 	155.50	 
	04-17N-03W	 	Logan County, OK	 	 	42.09	 
	10-17N-03W	 	Logan County, OK	 	 	38.20	 
	14-17N-03W	 	Logan County, OK	 	 	102.38	 
	18-17N-03W	 	Logan County, OK	 	 	104.45	 
	22-17N-03W	 	Logan County, OK	 	 	55.75	 
	34-17N-03W	 	Logan County, OK	 	 	58.96	 
	35-17N-03W	 	Logan County, OK	 	 	123.34	 
	01-17N-04W	 	Logan County, OK	 	 	20.13	 
	03-17N-04W	 	Logan County, OK	 	 	11.13	 
	09-17N-04W	 	Logan County, OK	 	 	28.28	 
	10-17N-04W	 	Logan County, OK	 	 	111.40	 
	11-17N-04W	 	Logan County, OK	 	 	22.31	 
	12-17N-04W	 	Logan County, OK	 	 	145.64	 
	13-17N-04W	 	Logan County, OK	 	 	26.29	 
	14-17N-04W	 	Logan County, OK	 	 	6.36	 
	15-17N-04W	 	Logan County, OK	 	 	28.49	 
	18-17N-04W	 	Logan County, OK	 	 	7.77	 
	25-17N-04W	 	Logan County, OK	 	 	51.18	 
	27-17N-04W	 	Logan County, OK	 	 	55.00	 
	34-17N-04W	 	Logan County, OK	 	 	31.50	 
	06-18N-03W	 	Logan County, OK	 	 	20.01	 
	07-18N-03W	 	Logan County, OK	 	 	38.22	 
	10-18N-03W	 	Logan County, OK	 	 	7.50	 
	31-18N-03W	 	Logan County, OK	 	 	6.25	 
	03-18N-04W	 	Logan County, OK	 	 	25.30	 
	10-18N-04W	 	Logan County, OK	 	 	38.40	 
	11-18N-04W	 	Logan County, OK	 	 	159.23	 
	12-18N-04W	 	Logan County, OK	 	 	76.71	 
	14-18N-04W	 	Logan County, OK	 	 	54.43	 
	15-18N-04W	 	Logan County, OK	 	 	63.76	 
	22-18N-04W	 	Logan County, OK	 	 	87.78	 
	23-18N-04W	 	Logan County, OK	 	 	31.96	 
	24-18N-04W	 	Logan County, OK	 	 	16.78	 

 

    	 

    	 

    

 

	25-18N-04W	 	Logan County, OK	 	 	38.18	 
	27-18N-04W	 	Logan County, OK	 	 	40.01	 
	30-18N-04W	 	Logan County, OK	 	 	2.25	 
	32-18N-04W	 	Logan County, OK	 	 	2.50	 
	34-18N-04W	 	Logan County, OK	 	 	46.67	 
	35-18N-04W	 	Logan County, OK	 	 	45.88	 
	36-18N-04W	 	Logan County, OK	 	 	42.75	 
	09-19N-04W	 	Logan County, OK	 	 	154.37	 
	10-19 N-04W	 	Logan County, OK	 	 	100.00	 
	15-19N-04W	 	Logan County, OK	 	 	160.00	 
	16-19N-04W	 	Logan County, OK	 	 	158.44	 
	21-19N-04W	 	Logan County, OK	 	 	77.05	 
	27-19N-04W	 	Logan County, OK	 	 	53.33	 
	34-19N-04W	 	Logan County, OK	 	 	101.71	 
	02-20N-03W	 	Garfield County, OK	 	 	40.00	 
	10-20N-03W	 	Garfield County, OK	 	 	20.00	 
	11-20N-03W	 	Garfield County, OK	 	 	80.00	 
	14-20N-03W	 	Garfield County, OK	 	 	120.00	 
	15-20N-03W	 	Garfield County, OK	 	 	120.00	 
	22-20N-03W	 	Garfield County, OK	 	 	79.99	 
	 	 	 	 	 	 	 
	 	 	 	 	 	3,759.18	 

 

    	 

    	 

    

 

EXHIBIT
F

WELL
COSTS ON OSAGE PARTITIONED ACREAGE

 

	Benelli sbe 1-27H	 	$	2,419.72	 
	Browning 1-18H	 	$	49,468.14	 
	Lily 1-3H	 	$	26,679.26	 
	LL Tontz 1-19H (Winchester 1-19H)	 	$	43,654.80	 
	Mossberg 1-31H	 	$	6,321.73	 
	Pansy 1-11H	 	$	693.57	 
	Peony 1-2H	 	$	8,277.89	 
	Peony 1-1 OH	 	$	3,218.15	 
	Remington 1-29H	 	$	12,065.49	 
	Rose 1-1 OH	 	$	3,056.30	 
	Titmouse 1-20H	 	$	11,852.48	 
	Total:	 	$	167,707.53	 

 

 

    	 

    	 

    

 

EXHIBIT
G

SLAWSON-ARNOLD
TRADE AGREEMENT

 

    	 

    	 

    

 

EXHIBIT
G

 

PARTICIPATION
AGREEMENT

LOGAN
COUNTY, OKLAHOMA

 

THIS
PARTICIPATION AGREEMENT (“Agreement”), entered into effective the 1st day of November, 2012, is by and between Slawson
Exploration Company, Inc., a Kansas corporation, whose principal place of business is 727 North Waco, Suite 400, Wichita, Kansas,
67203 (hereafter “SECI”), and Arnold Oil Properties, L.L.C., with an address of 5600 N. May Avenue, Suite 125, Oklahoma
City, OK 73112 (hereafter “AOP”). SECI and AOP shall sometimes be referred to herein individually as a “Party”
and collectively as the “Parties.’1

 

WHEREAS,
AOP has acquired, or is in the process of acquiring, certain leasehold and force pooled interests covering Covington working interest
owners within Sections 7 and 18 of Township 17 North, Range 2 West, Logan County Oklahoma, said interests being limited to the
Mississippi and Woodford formations and excluding existing wellbores (“Covington Leases”), all described on Exhibit
A ; and,

 

WHEREAS,
AOP and SECI wish to acquire the Covington Leases pursuant to the provisions of this Agreement and the agreements through which
AOP acquires leasehold rights.

 

NOW
THEREFORE, the Parties, for the mutual promises contained herein and other good and valuable consideration, the sufficiency which
is hereby acknowledged, do hereby contract and agree as follows:

 

	1.	In
    the consideration of the mutual benefits of this acquisition SECI and AOP shall jointly acquire all right, title and interest
    in and to the Covington Leases in the percentages set forth herein. It is the intent herein that any interest in the Covington
    Leases acquired by either SECI or AOP will be shared and assigned as stated herein.
	 	 
	2	AOP
and SECI do jointly agree that the Covington Leases shall be segregated into sections 7 and 18 and be owned by each Party in the
percentages set forth below:

 

	 	Section
    7, T17N, R2W:	Slawson
    Exploration Company, Inc. 0%
	 	 	 
	 	 	Arnold
    Oil Properties, L. L. C. 100%
	 	 	 
	 	Section
    18, T17N, R2W:	Slawson
    Exploration Company, Inc. x %
	 	 	 
	 	 	Arnold
    Oil Properties, L. L. C. y %

 

The
calculations for percentage interest of SECI and AOP in Sections 7 and 18 shall be based on the number of net leasehold acres
the Covington group assigns to SECI and AOP, and that the Covington group percentage interest assigned is uniform in both Sections
7 and 18, recognizing the number of total acres owned by the Covington group are different in Sections 7 and 18. The calculations
for Section 18 percentage interest, shown above as “x” and “y” shall be based on the following example:

 

    	 

    	 

    

 

If
the Covington group has a total of 780 acres in Sections 7 (320 acres) and 18 (460 acres) and they elect to assign 75% of their
position to SECI and AOP, then in Section 7, SECI gets 0 acres and AOP would get 240 acres (320 x 75%) and in Section 18, where
Covington group has 460 acres in this example, SECI would get 187,5 acres (250 acres x 75%) and AOP would get 157.5 acres (210
acres x 75%). The constant factor in this formula for Section 18 is that SECI would get 250 acres, less the proportionate Covington
election to participate, in Section 18. The formula will be calculated on the actual number of acres owned by the Covington group
in Sections 7 and 18.

 

	3.	The
    cash consideration for the leasehold and force pooled interest shall be at cost actually paid by AOP or SECI, being no more
    than $1,000.00 per net acre. Payment for Assignee’s proportionate share of cash consideration due shall be made by Assignee
    to Assignor by U.S. Mail or wire transfer within five (5) days of receipt of the Assignment by Assignee.
	 	 
	4.	The
    acquiring party shall make assignment to the other party in an assignment on the form of assignment attached hereto as Exhibit
    “B”. Each party will support AOP as Operator of Section 7 and SECI as Operator of Section 18.
	 	 
	5.	SECI
    shall endeavor to drill a Horizontal Mississippian or Woodford well in Section 18, T17N, R2W on the Covington Leases or lands
    pooled therewith prior to December 31, 2013. AOP shall endeavor to drill a Horizontal Mississippian or Woodford well in Section
    7, T17N, R2W on the Covington Leases or lands pooled therewith within six months after SECI fracs its initial well in Section
    18, T17N, R2W.
	 	 
	6.	Net
    Revenue Interest: AOP and SECI shall be entitled to the net revenue interest assigned in the Covington Leases.
	 	 
	7.	Force
    Pooled Leases to be acquired: AOP and SECI shall share prorate on any oil and gas leases acquired in the Force Pooling proceedings
    for Section 7 and 18 based on the working interest of each party in each section. Covington’s existing force pooled
    rights do not include Woodford rights. AOP’s agreement with Covington group requires AOP to assign the same overriding
    royalty retained by the parties as in their Mississippi rights and SECI agrees to make any necessary assignments of overriding
    royalty in accordance with said agreement.
	 	 
	8.
    	SECI
    agrees to dispose of 100% of AOP’s share of water recovered from or produced by wells drilled in Sections 7 or 18, T17N,
    R2W delivered by AOP a Disposal well drilled by SECI. SECI will be responsible for all costs associated with drilling and
    operating said Disposal well and will charge AOP $ 1.00 per barrel for said water delivered by AOP to the disposal well. Said
    fee shall remain $1.00 per barrel for a term of five years. At the end of said five year period, SECI has the option to escalate
    the fee by five percent annually.

 

    	 

    	 

    

 

	9.	Notices:
    All notices required hereunder shall be considered given when delivered personally or when sent by e-mail, facsimile, or US.
    Mail properly addressed as follows:

 

Slawson
Exploration Company, Inc,

727
North Waco, Suite 400

Wichita,
KS 67203

Attn:
Coni Stokes

Phone:(316)263-3201

Fax:
(316) 268-0702

 

Arnold
Oil Properties, L.L.C.

5600
N. May Avenue, Suite 125

Oklahoma
City, OK 73112

Attn:
Blake Arnold

Phone:
405/842-1488, ext. 202 Fax:

405/842-1670

 

Notwithstanding
the foregoing, notices or deliveries by U. S. Mail shall be deemed given or made only upon receipt by the addressee. Any Party
to this Agreement may change its mailing address, telephone number, facsimile number, or email address for notice hereunder effective
the thirtieth (30th) day after the giving of notice of such change in accordance with the provisions of this paragraph,

 

	10.	Miscellaneous
    Provisions:

 

Subject
to the other provisions of this Agreement, this Agreement and all provisions hereof shall inure to the benefit of and be binding
upon not only the Parties, but their respective heirs, successors, and assigns. The Parties may assign their rights, duties, and
obligations hereunder, so long as any assignment by a Party hereto is expressly made subject to the terms and conditions herein
contained.

 

	 	A	The
    paragraph headings of this Agreement are inserted for convenience only and should not be considered a part of this Agreement
    or used in its interpretation.
	 	 	 
	 	B	This
    Agreement shall be governed by and construed in accordance with the laws of the State of Oklahoma,
	 	 	 
	 	C	The
    provisions of this Agreement are intended to be severable. If any term or provision hereof is illegal or invalid for any reason
    whatsoever, such illegality or invalidity shall not affect the legality or validity of the remainder of this Agreement
	 	 	 
	 	D	This
    Agreement constitutes the entire understanding of the Parties in respect to the subject matter hereof, in lieu of any prior
    agreement, and no amendment, modification, or alteration of the terms hereof shall be binding unless the same be in writing
    and signed by the Party(ies) against whom/which it is sought to be enforced.

 

    	 

    	 

    

 

	 	E	This
    Agreement may be signed in counterparts, which, when taken together, shall have the effect of a single instrument This Agreement,
    however, shall not be binding on any Party unless and until a single original or counterparts, of this Agreement have been
    signed by all Parties named therein. A printed faxed or scanned copy shall be deemed to be the equivalent of an original,
	 	 	 
	 	F.	This
    Agreement shall be binding on the parties hereto, their successors and assigns.

 

EXECUTED
as of the day and year first above written.

 

Slawson
Exploration Company, Inc.

 

	/s/
    F. David King	 
	F.
    David King	 
	Agent
    and Attorney-in-Fact	 

 

	Arnold
    Oil Properties, L. L. C.	 
	 	 
	/s/
    Blake Arnold	 
	Blake
    Arnold, Manager	 

 

    	 

    	 

    

 

Exhibit
“A”

 

Attached
to and made a part of that certain Participation Agreement dated November 1, 2012, by and between Slawson Exploration Company,
Inc. a Kansas corporation, and Arnold Oil Properties, L.L.C.

 

LOGAN
COUNTY, OKLAHOMA

 

	Lessor	 	Lessee	 	Lease
    Date	 	Book	 	Page	 	Legal
    Description
	Norval
    R. Gooch and Etta Dusa Gooch, husband and wife	 	Eugene C. Covington	 	8/20/2004	 	1814	 	314	 	Lots
    3 and 4 and the E/2 SW/4 of Section 7- 17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Robert
    Ray Gooch	 	Eugene
    C. Covington	 	8/20/2004	 	1814	 	312	 	Lot
    4 and the SE/4 SW/4 of Section 7-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Lou
    Ellen Daniels	 	Eugene
    C. Covington	 	8/20/2004	 	1814	 	316	 	Lot
    4 and the SE/4 SW/4 of Section 7-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Doyle
Ray Gooch
	 	Eugene
    C. Covington	 	9/10/2004	 	1819	 	513	 	Lot
    4 and the SE/4 SW/4 of Section 7-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Susan
    Jean Lawrance	 	Eugene
    C. Covington	 	10/6/2004	 	1821	 	742	 	Lot
    4 and the SE/4 SW/4 of Section 7-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Betty
    Abell	 	Eugene
    C. Covington	 	4/8/2005	 	1857	 	7	 	SE/4
    of Section 7-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Norval
    R. Gooch and Etta Dusa Gooch, husband and wife	 	Eugene
    C. Covington	 	4/8/2005	 	1857	 	9	 	SE/4
    of Section 7-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Ralph
    James McCracken	 	Eugene
    C. Covington	 	4/25/2005	 	1857	 	11	 	SE/4
    of Section 7-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Jack
    D. McCracken, Jr.	 	Eugene
    C. Covington	 	4/25/2005	 	1860	 	387	 	SE/4
    of Section 7-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Mary
    Agnes McCracken	 	Eugene
    C. Covington	 	4/25/2005	 	1868	 	239	 	SE/4
    of Section 7-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Helene
    Dunmire	 	Eugene
    C. Covington	 	4/15/2005	 	1868	 	237	 	SE/4
    of section 7-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Eugene
    E. McCracken	 	Eugene
    C. Covington	 	4/15/2005	 	1857	 	5	 	SE/4
    of Section 7-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Patricia
    A. Sherwin	 	Eugene
    C. Covington	 	4/15/2005	 	1874	 	708	 	SE/4
    of Section 7-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Donald
    L. McCracken	 	Eugene
    C. Covington	 	4/15/2005	 	1864	 	234	 	SE/4
    of Section 7-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Helena
    Pond Bayer	 	Eugene
    C. Covington	 	6/27/2005	 	1874	 	699	 	SE/4
    of Section 7-17N-2W

 

    	 

    	 

    

 

Exhibit
“A”

 

Attached
to and made a part of that certain Participation Agreement dated November 1, 2012, by and between Slawson Exploration Company,
Inc., a Kansas corporation, and Arnold Oil Properties, L.L.C.

 

LOGAN
COUNTY, OKLAHOMA

 

	Lessor	 	Lessee	 	Lease
    Date	 	Book	 	Page	 	Legal
    Description
	Nancy
    Pond Spicer	 	Eugene C. Covington	 	7/7/2005	 	1874	 	706	 	SE/4
    of Section 7-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Charley
    Pond	 	Eugene
    C. Covington	 	7/7/2005	 	1874	 	704	 	SE/4
    of Section 7-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Jack
    Hetrick and Paulyne Hetrick, husband and wife	 	Eugene
    C. Covington	 	7/28/2005	 	1885	 	45	 	SE/4
    of Section 7-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Josephine
    Leta Maue	 	Eugene
    C. Covington	 	7/29/2005	 	1911	 	379	 	SE/4
    of Section 7-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Richard
    A. Lybarger	 	Eugene
    C. Covington	 	7/28/2005	 	1952	 	386	 	SE/4
    of Section 7-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Edmund
    J. Cook	 	Eugene
    C. Covington	 	7/29/2005	 	1942	 	91	 	SE/4
    of Section 7-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Bryan
    R. Lybarger	 	Eugene
    C. Covington	 	7/28/2006	 	1953	 	85	 	SE/4
    of Section 7-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Hagood
    Morris and Maijorie Morris, husband and wife	 	Eugene
    C. Covington	 	8/5/2005	 	1885	 	43	 	SE/4
    of Section 7-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Force
    Pooling Order No. 544740	 	Applicant:
    Covington Oil
    CO., Inc.	 	9/27/2007	 	 	 	 	 	SE/4
    of Section 7-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Frank
    G. Gatchell and Carol F. Gatchell, Co- Trustees of the Gatchell 1990 Revocable Trust dated 8/21/90	 	Eugene
    C. Covington	 	8/26/2004	 	1814	 	318	 	Lots
    1 and 2 and E/2 NW/4 of Section 18-17N- 2W
	 	 	 	 	 	 	 	 	 	 	 
	Claudette
    G.L. Landess	 	Eugene
    C. Covington	 	8/29/2004	 	1816	 	427	 	Lots
    1 and 2 and E/2 NW/4 of Section 18-17N- 2W
	Agnes
    L. Bittman, Trustee of the Claudia and Claire Trust No. 1	 	Eugene
    C. Covington	 	8/29/2004	 	1816	 	425	 	Lots
    1 and 2 and E/2 NW/4 of Section 18-17N- 2W
	 	 	 	 	 	 	 	 	 	 	 
	Oklahoma
    State University Foundation	 	Eugene
    C. Covington	 	10/8/2004	 	1821	 	248	 	Lot
    1 and the E/2 NW/4 of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Janice
    M. Waters, Trustee	 	Eugene
    C. Covington	 	9/13/2004	 	1819	 	524	 	Lot
    1 and the E/2 NW/4 of Section 18-17N-2W

 

    	 

    	 

    

 

Exhibit
“A”

 

Attached
to and made a part of that certain Participation Agreement dated November 1, 2012. by and between Slawson Exploration Company,
Inc., a Kansas corporation, and Arnold Oil Properties, LLC.

 

LOGAN
COUNTY, OKLAHOMA

 

	Lessor	 	Lessee	 	Lease
    Date	 	Book	 	Page	 	Legal
    Description
	Larry
    A. Morgan	 	Eugene C, Covington	 	9/13/2004	 	1819	 	515	 	Lot
    1 and the E/2 NW/4 of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Gary
    Morgan	 	Eugene
    C. Covington	 	9/13/2004	 	1821	 	559	 	Lot
    1 and the E/2 NW/4 of Section 16-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Robert
    H. Seeds and Patricia A. Seeds, husband and wife	 	Eugene
    C. Covington	 	8/29/2004	 	1819	 	518	 	Lot
    2 of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Loretta
    Ann Oliver	 	Eugene
    C. Covington	 	9/28/2004	 	1819	 	520	 	Lot
    2 of the NW/4 of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	William
    H. Martin	 	Eugene
    C. Covington	 	9/28/2004	 	1819	 	522	 	Lot
    2 of the NW/4 of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Justin
    Brawley and Tonya Evatt Brawley, husband and wife	 	Eugene
    C. Covington	 	2/10/2006	 	1911	 	375	 	Lot
    1 and the E/2 NW/4 and the NE/4 of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Susan
    Jean Lawrence	 	Eugene
    C. Covington	 	4/11/2005	 	1857	 	14	 	NE/4
    of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Doyle
    Ray Gooch	 	Eugene
    C. Covington	 	4/11/2005	 	1857	 	20	 	NE/4
    of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Lou
    Ellen Oaniels	 	Eugene
    C. Covington	 	4/11/2005	 	1857	 	22	 	NE/4
    of Section 10-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Ralph
    James McCracken	 	Eugene
    C. Covington	 	4/25/2005	 	1857	 	28	 	NE/4
    of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Jack
    D. McCracken. Jr.	 	Eugene
    C. Covington	 	4/25/2005	 	1860	 	389	 	NE/4
    of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Robert
    Ray Gooch	 	Eugene
    C. Covington	 	4/11/2005	 	1857	 	32	 	NE/4
    of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Jacquelyn
    Gooch, wife of Robert Ray Gooch	 	Eugene
    C. Covington	 	8/17/2006	 	1952	 	396	 	NE/4
    of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Betty
    Abell	 	Eugene
    C. Covington	 	4/8/2005	 	1857	 	34	 	NE/4
    of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Eugene
    E. McCracken	 	Eugene
    C. Covington	 	4/15/2005	 	1857	 	38	 	NE/4
    of Section 18-17N-2W

 

 

    	 

    	 

    

 

Exhibit
“A”

 

Attached
to and made a part of that certain Participation Agreement dated November 1. 2012, by and between Slawson Exploration Company.
Inc., a Kansas corporation, and Arnold Oil Properties, LLC.

 

LOGAN
COUNTY, OKLAHOMA

 

	Lessor	 	Lessee	 	Lease
    Date	 	Book	 	Page	 	Legal
    Description
	Donald
    L. McCracken	 	Eugene C. Covington	 	4/15/2005	 	1864	 	236	 	NE/4
    of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Helene
    L Dunmire	 	Eugene
    C. Covington	 	4/15/2005	 	1868	 	245	 	NE/4
    of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Patricia
    A. Sherwin	 	Eugene
    C. Covington	 	4/15/2005	 	1885	 	47	 	NE/4
    of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Mary
    Agnes McCracken	 	Eugene
    C. Covington	 	4/25/2005	 	1864	 	238	 	NE/4
    of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Billy
    Eugene Bradford	 	Eugene
    C. Covington	 	5/26/2005	 	1864	 	242	 	NE/4
    of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Hagood
    Moms and Marjorie Morris, husband and wife	 	Eugene
    C. Covington	 	8/5/2005	 	1885	 	51	 	NE/4
    of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Edward
    J. Slattery, Bishop of the Roman Catholic Diocese of Tulsa, Oklahoma	 	Eugene
    C. Covington	 	5/2/2005	 	1860	 	379	 	NE/4
    of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Judy
    Lee Carson and Bettye Jo Dorough, Co- Trustees of the Judy Lee Carson Revocable Living Trust dated 9/1/95	 	Eugene
    C. Covington	 	5/3/2005	 	1864	 	240	 	NE/4
    of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Kenneth
    Gene Oliver and Marion R. Oliver, Co-Trustees of the Oliver Trust	 	Eugene
    C. Covington	 	6/1/2005	 	1868	 	247	 	NE/4
    of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Nancy
    Pond Spicer	 	Eugene
    C. Covington	 	7/7/2005	 	1874	 	816	 	NE/4
    of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Charley
    Pond	 	Eugene
    C. Covington	 	7/7/2005	 	1874	 	718	 	NE/4
    of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Helena
    Pond Bayer	 	Eugene
    C. Covington	 	7/27/2005	 	1874	 	720	 	NE/4
    of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Jack
    K. Hetrick and Paulyne Hetrick	 	Eugene
    C. Covington	 	7/28/2005	 	1885	 	49	 	NE/4
    of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Josephine
    Leta Maue	 	Eugene
    C. Covington	 	7/29/2005	 	1911	 	381	 	NE/4
    of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Carolyn
    Savage	 	Eugene
    C. Covington	 	8/22/2005	 	1878	 	63	 	NE/4
    of Section 18-17N-2W

 

 

    	 

    	 

    

 

Exhibit
“A”

 

Attached
to and made a part of that certain Participation Agreement dated November 1. 2012, by and between Slawson Exploration Company.
Inc., a Kansas corporation, and Arnold Oil Properties, LLC.

 

LOGAN
COUNTY, OKLAHOMA

 

	Lessor	 	Lessee	 	Lease
    Date	 	Book	 	Page	 	Legal
    Description
	Midfirst
    Trust Company, Successor Trustee of the Mildred Louise McCracken Revocable Trust dated 3/25/96	 	Eugene
    C. Covington	 	6/3/2005	 	1878	 	598	 	NE/4
    of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Fred
    E. Garrett and E. Sue Garrett	 	Eugene
    C. Covington	 	5/5/2005	 	1911	 	383	 	NE/4
    of Section 1&-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Richard
    A. Lybarger	 	Eugene
    C. Covington	 	7/28/2005	 	1952	 	392	 	NE/4
    of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Bryan
    R. Lybarger	 	Eugene
    C. Covington	 	7/28/2006	 	1953	 	87	 	NE/4
    of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Edmund
    J. Cook	 	Eugene
    C. Covington	 	7/29/2005	 	1942	 	93	 	NE/4
    of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Kenton
    Bradford Duncan, Jr.	 	Eugene
    C. Covington	 	7/20/2006	 	1947	 	441	 	NE/4
    of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Thomas
    Walter Duncan	 	Eugene
    C. Covington	 	7/20/2006	 	1947	 	443	 	NE/4
    of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Dana
    Lynn Huffman, formerly Dimsdale	 	Eugene
    C. Covington	 	7/20/2006	 	1947	 	437	 	NE/4
    Of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Kimalea
    Moore	 	Eugene
    C. Covington	 	7/20/2006	 	1958	 	353	 	NE/4
    Of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	C.
    Allen Walter	 	Eugene
    C. Covington	 	7/20/2006	 	1952	 	394	 	NE/4
    of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	John
    Edward Walter	 	Eugene
    C. Covington	 	7/22/2006	 	1952	 	398	 	NE/4
    of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Dana
    Lynn Huffman and Kenton Bradford Duncan, Jr.. Co-Trustees of the Betty Walter Duncan Loving Trust, for the benefit of Lisa
    Germaine Duncan	 	Eugene
    C. Covington	 	7/20/2006	 	1947	 	439	 	NE/4
    of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Chas.
    A. Neal & Company	 	James
    C. Endicott	 	9/5/2006	 	1951	 	451	 	NE/4
    of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Arthemise
    Poyner Jackson. Trustee of the Arthemise Poyner Jackson Revocable Trust	 	Eugene
    C. Covington	 	9/5/2006	 	1952	 	390	 	NE/4
    of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Pleasant
    P. Mann, a/k/a P.P. Mann	 	Eugene
    C. Covington	 	7/5/2006	 	1942	 	95	 	NE/4
    of Section 1&-17N-2W

  

    	 

    	 

    

 

Exhibit
“A”

 

Attached
to and made a part of that certain Participation Agreement dated November 1.2012. by and between Slawson Exploration Company.
Inc., a Kansas corporation, and Arnold Oil Properties, L.L.C.

 

LOGAN
COUNTY, OKLAHOMA

 

	Lessor	 	Lessee	 	Lease
    Date	 	Book	 	Page	 	Legal
    Description
	PEC
    Minerals, LP (formerly known as Sempra Energy Production Company)	 	Covington
    Oil Co., Inc.	 	10/1/2006	 	1978	 	241	 	NE/4
    of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	ECC,
    LLC and JFC Minerals, LLC	 	Eugene
    C. Covington	 	11/15/2006	 	1978	 	239	 	NE/4
    of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Lou
    Ellen Daniels	 	Eugene
    C. Covington	 	4/11/2005	 	1857	 	24	 	SE/4
    of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Robert
    Ray Gooch	 	Eugene
    C. Covington	 	4/11/2005	 	1857	 	30	 	SE/4
    of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Ron
    Plagg and Juanita Plagg, husband and wife	 	Eugene
    C. Covington	 	4/13/2005	 	1857	 	26	 	SE/4
    of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Susan
    Jean Lawrence	 	Eugene
    C. Covington	 	4/11/2005	 	1857	 	16	 	SE/4
    of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Doyle
    Ray Gooch (Charlie W. Biggs and Imogene Biggs, husband and wife)	 	Eugene
    C. Covington	 	4/11/2005	 	1857	 	18	 	SE/4
    of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Marjorie
    E. Welch	 	Eugene
    C. Covington	 	7/10/2005	 	1874	 	710	 	W/2
    SE/4 of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Roberta
    S. Hollen	 	Eugene
    C. Covington	 	7/10/2005	 	1874	 	712	 	W/2
    SE/4 of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Daryl
    M. Reeser	 	Eugene
    C. Covington	 	7/10/2005	 	1874	 	714	 	W/2
    SE/4 of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Raymond
    J. Roberts	 	Eugene
    C. Covington	 	7/10/2005	 	1878	 	601	 	W/2
    SE/4 of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Deborah
    Kay Barton	 	Eugene
    C. Covington	 	8/25/2005	 	1911	 	377	 	W/2
    SE/4 of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Loyce
    Lynn Reid	 	Eugene
    C. Covington	 	9/5/2006	 	1957	 	244	 	W/2
    SE/4 of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Linda
    L Roberts	 	Eugene
    C. Covington	 	10/14/2006	 	1967	 	229	 	W/2
    SE/4 of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Larry
    Allison	 	Eugene
    C. Covington	 	1/9/2007	 	1975	 	288	 	W/2
    SE/4 of Section 18-17N-2W
	 	 	 	 	 	 	 	 	 	 	 
	Force
    Pooling Order No. 515612	 	Applicant
    Covington Oil Company, Inc.	 	11/29/2005	 	 	 	 	 	NW/4
    Section 18-17N-2W

 

    	 

    	 

    

  

Exhibit
“A”

 

Attached
to and made a part of that certain Participation Agreement dated November 1.2012. by and between Slawson Exploration Company.
Inc., a Kansas corporation, and Arnold Oil Properties, L.L.C.

 

LOGAN
COUNTY, OKLAHOMA

  

	Lessor	 	Lessee	 	Lease
    Date	 	Book	 	Page	 	Legal
    Description
	Force
    Pooling Order No. 529518	 	Applicant:
    Inc. Covington Oil Co.,	 	9/11/2005	 	 	 	 	 	NE/4
    Section 18-17 ‘N-2W
	Force
    Pooling Order No. 535457	 	Applicant:
    Inc. Covington Oil Co,,	 	2/13/2007	 	 	 	 	 	SE/4
    Section 18-17 N-2W

 

 

    	 

    	 

    

  

ADDENDUM
TO EXHIBIT G

  

	Stuart
    Kowalski
	 
	From:	Joe
    Vaughan
	Sent:	Monday,
    September 30, 2013 11:02 AM
	To:	David
    King
	Subject:	FW:
    Browning 1-18H, Section 18-17N-2W, Logan Co., OK

 

Joseph
C. Vaughan

Senior
Landman

Slawson
Exploration Company, Inc.

204
N. Robinson, Suite 2300

Oklahoma
City, OK 73102

jvaughan@slawsoncompanies.com

	Direct:	(405)609-1651
	Office:	(405)232-0201
	Cell:	(405)
    312-8527

 

From:
Diana Wickham [mailto:dwickham@arnoldoil.net]

Sent:
Monday, July 29, 2013 8:31 AM

To:
Joe Vaughan

Cc:
David King; Blake Arnold

Subject:
RE: Browning 1-18H, Section 18-17N-2W, Logan Co., OK

 

Joe,

 

It
is acceptable with Arnold to postpone drilling the first well in Section 18-17N-2W in the 2nd Quarter of 2014.

 

Diana
Wickham, CPL

Land
Manager, Arnold Oil Properties, L.L.C.

5600
N. May Avenue, Suite 125, Oklahoma City, OK 73112

Ph:
405/842-1488, ext. 202 / Fax: 405/842-1670

dwickham@arnoldoil.net

 

From:
Joseph Vaughan [mailto:jvauqhan@slawsoncompanies.com]

Sent:
Friday, July 26, 2013 9:06 AM

To:
Diana Wickham

Cc:
David King

Subject:
Browning 1-18H, Section 18-17N-2W, Logan Co., OK

 

Diana:

 

I
am advised by Steve Slawson that he had a conversation with Mr. Arnold regarding the timing of our plans to drill the Browning
1-18H. It is my understanding that if Slawson was not planning to drill the well by the end of this calendar year, that Arnold
Oil Properties, L.L.C. would prefer that we put off drilling until at least the 2nd Quarter of 2014. Given our current rig schedule,
we don’t anticipate drilling this well before the 2nd Quarter of next year. Please advise whether or not this is acceptable
to your company.

 

    	 

    	 

    

 

Joseph
C. Vaughan

Senior
Landman

Slawson
Exploration Company, Inc.

204
N. Robinson, Suite 2300

Oklahoma
City, OK 73102

jvaughan@slawsoncompanies.com

	Direct:	(405)609-1651
	Office:	(405)232-0201
	Cell:	(405)
    312-8527

 

From:
Diana Wickham [mailto:dwickham@arnoldoil.net]

Sent:
Monday, June 03, 2013 10:17 AM

To:
David King; Joe Vaughan

Subject:
Browning 1-18H; Section 18-17N-2W, Logan Co., OK

 

Good
morning David and Joe,

 

We
are updating our budget for the remainder of 2013. Do you have any updated information regarding Slawson’s plans to drill
a Miss horizontal in the referenced Section?

 

I
know from speaking to Joe a couple of weeks ago that you have a drilling opinion on the Section and plan to start Commission work.

 

We
would prefer Slawson drill the well this year. I realize you have a big drilling program in the area and this is just one well
in your inventory. But we would appreciate if you can give us an idea of your estimated timing for the well at this point.

 

Thanks!
I look forward to hearing from you.

 

Diana
Wickham, CPL

Land
Manager, .Arnold Oil Properties, L.L.C.

5600
N. May Avenue, Suite 125, Oklahoma City, OK 73112

Ph:
405/842-1488, ext. 202 / Fax: 405/842-1670

dwickham@arnoIdoil.net

 

    	 

    	 

    

  

EXHIBIT
H

 

APOLLO
AND BOOTHBAY MORTGAGE RELEASES NEEDED COVERING ACREAGE PREVIOUSLY ASSIGNED TO SLAWSON

 

EXHIBIT
“H”

 

	County/State:
    LOGAN, OKLAHOMA
	 	 
	Lease
    #:	OK
    10375 C
	Lease
    Date:	1/26/2011
	Lessor:	BRANDENBURG,
    R DEAN
	Lessee:	OSAGE
    EXPLORATION/DEVELOPMENT
	Lands:	TOWNSHIP
    16 NORTH, RANGE 3 WEST
	 	SECTION
    5: LOTS 1 AND 2, AND THE S/2 NE/4
	Recording:	2237
    516
	 	 
	Lease
    #:	OK
    10502 C
	Lease
    Date;	3/1/2012
	Lessor:	BRANCH,
    MARILYN SMITH TRUST
	Lessee:	OSAGE
    EXPLORATION/DEVELOPMENT
	Lands:	TOWNSHIP
    17 NORTH, RANGE 3 WEST
	 	SECTION
    3: E/2 SE/4, W/2 SE/4
	Recording:	2306
    283
	 	 
	Lease
    #:	OK
    10502 D
	Lease
    Date:	3/1/2012
	Lessor:	SMITH
    FAMILY TRUST
	Lessee:	OSAGE
    EXPLORATION/DEVELOPMENT
	Lands:	TOWNSHIP
    17 NORTH, RANGE 3 WEST
	 	SECTION
    3: E/2 SE/4, W/2 SE/4
	Recording:	2306
    286
	 	 
	Lease
    #:	OK
    10606 C
	Lease
    Date:	2/20/2012
	Lessor:	GOOCH,
    EDDIE LEON
	Lessee:	OSAGE
    EXPLORATION/DEVELOPMENT
	Lands:	TOWNSHIP
    17 NORTH, RANGE 3 WEST
	 	SECTION
    14: SE/4 NE/4, S/2 SW/4 NE/4
	Recording:	2306
    298
	 	 
	Lease
    #:	OK
    10626 A
	Lease
    Date:	1/20/2012
	Lessor:	KLEIN,
    CARL B
	Lessee:	OSAGE
    EXPLORATION/DEVELOPMENT
	Lands:	TOWNSHIP
    17 NORTH, RANGE 3 WEST
	 	SECTION
    14: N2/3 NE/4 NE/4 & N2/3 E/2 NW/4 NE/4
	Recording:	2306
    295
	 	 
	Lease
    #:	OK
    10626 B
	Lease
    Date:	3/1/2012
	Lessor:	BRANCH,
    MARILYN SMITH TRUST
	Lessee:	OSAGE
    EXPLORATION/DEVELOPMENT
	Lands:	TOWNSHIP
    17 NORTH, RANGE 3 WEST
	 	SECTION
    14: N2/3 NE/4 NE/4 & N2/3 E/2 NW/4 NE/4
	Recording:	2306
    289
	 	 
	Lease
    #:	OK
    10626 C
	Lease
    Date:	3/1/2012
	Lessor:	SMITH
    FAMILY TRUST
	Lessee:	OSAGE
    EXPLORATION/DEVELOPMENT
	Lands:	TOWNSHIP
    17 NORTH, RANGE 3 WEST
	 	SECTION
    14: N2/3 NE/4 NE/4 & N2/3 E/2 NW/4 NE/4
	Recording:	2306
    292
	 	 
	Lease
    #:	OK
    10629 A
	Lease
    Date:	3/6/2012
	Lessor:	SMITH
    FAMILY TRUST
	Lessee:	OSAGE
    EXPLORATION/DEVELOPMENT
	Lands:	TOWNSHIP
    17 NORTH, RANGE 3 WEST
	 	SECTION
    19: LOT 1, LOT 2 & E/2 NW/4
	Recording:	2306
    304
	 	 
	Lease
    #:	OK
    10629 B
	Lease
    Date:	3/6/2012
	Lessor:	BRANCH,
    MARILYN SMITH TRUST
	Lessee:	OSAGE
    EXPLORATION/DEVELOPMENT
	Lands:	TOWNSHIP
    17 NORTH, RANGE 3 WEST
	 	SECTION
    19: LOT 1, LOT 2 S E/2 NW/4
	Recording:	2306
    301
	 	 
	Lease
    #:	OK
    10630 A
	Lease
    Date:	3/15/2012
	Lessor:	GATCHELL
    JOINT REV TR
	Lessee:	OSAGE
    EXPLORATION/DEVELOPMENT
	Lands:	TOWNSHIP
    17 NORTH, RANGE 3 WEST
	 	SECTION
    23: NW/4
	Recording:	2306
    311

 

    	 

    	 

    

  

	Lease
    #:	OK
    10630 B
	Lease
    Date	3/15/2012
	Lessor:	WATERS,
    JANICE M REV TR
	Lessee:	OSAGE
    EXPLORATION/DEVELOPMENT
	Lands:	TOWNSHIP
    17 NORTH, RANGE 3 WEST
	 	SECTION
    23: NW/4
	Recording:	2306
    309
	 	 
	Lease
    #:	OK
    10630 C
	Lease
    Date	3/8/2012
	Lessor:	LANDESS,
    CLAUDETTE G
	Lessee:	OSAGE
    EXPLORATION/DEVELOPMENT
	Lands:	TOWNSHIP
    17 NORTH, RANGE 3 WEST
	 	SECTION
    23: NW/4
	Recording:	2309
    641
	 	 
	Lease
    #:	OK
    10630 D
	Lease
    Date;	3/14/2012
	Lessor:	MORGAN,
    GARY L
	Lessee:	OSAGE
    EXPLORATION/DEVELOPMENT
	Lands:	TOWNSHIP
    17 NORTH, RANGE 3 WEST
	 	SECTION
    23: NW/4
	Recording:	2306
    307
	 	 
	Lease
    #:	OK
    10612 B
	Lease
    Date:	3/23/2012
	Lessor:	MEEKER,
    MARLO MARIE
	Lessee:	OSAGE
    EXPLORATION/DEVELOPMENT
	Lands:	TOWNSHIP
    17 NORTH, RANGE 3 WEST
	 	SECTION
    26: N/2 NE/4
	Recording:	2309
    652
	 	 
	Lease
    #;	OK
    10485 C
	Lease
    Date:	8/28/2011
	Lessor:	LOWDER,
    FLORENCE
	Lessee:	OSAGE
    EXPLORATION DEVELOPMENT
	Lands:	TOWNSHIP
    17 NORTH, RANGE 3 WEST
	 	SECTION
    29: NE/4
	Recording:	2272
    641
	 	 
	Lease
    #:	OK
    10617 C
	Lease
    Date:	3/12/2012
	Lessor:	CLAYTOR,
    SHARON M
	Lessee:	OSAGE
    EXPLORATION/DEVELOPMENT
	Lands:	TOWNSHIP
    17 NORTH, RANGE 3 WEST
	 	SECTION
    34: S/2 S/2 NE/4 AND LOT 4 (29.90 ACRES), INCLUDING ALL ACCRETION AND
	 	RIPARIAN
    RIGHTS THERETO
	Recording:	2309
    661
	 	 
	Lease
    #:	OK
    10617 D
	Lease
    Date:	2/13/2012
	Lessor:	PEAVY,
    HOWARD
	Lessee:	OSAGE
    EXPLORATION/DEVELOPMENT
	Lands:	TOWNSHIP
    17 NORTH, RANGE 3 WEST
	 	SECTION
    34: S/2 S/2 NE/4 AND LOT 4 (29.90 ACRES), INCLUDING ALL ACCRETION AND
	 	RIPARIAN
    RIGHTS THERETO
	Recording:	2306
    313
	 	 
	Lease
    #:	OK
    10617 E
	Lease
    Date:	3/14/2012
	Lessor:	PEAVY,
    ALDF.N DENNIS
	Lessee:	OSAGE
    EXPLORATION/DEVELOPMENT
	Lands:	TOWNSHIP
    17 NORTH, RANGE 3 WEST
	 	SECTION
    34: S/2 S/2 NE/4 AND LOT 4 (29.90 ACRES), INCLUDING ALL ACCRETION AND
	 	RIPARIAN
    RIGHTS THERETO
	Recording:	2309
    664
	 	 
	Lease
    #:	OK
    10617 F
	Lease
    Date:	3/2/2012
	Lessor:	CLAYTON,
    DELIA CHRISTINE
	Lessee:	OSAGE
    EXPLORATION/DEVELOPMENT
	Lands:	TOWNSHIP
    17 NORTH, RANGE 3 WEST
	 	SECTION
    34: S/2 S/2 NE/4 AND LOT 4 (29.90 ACRES), INCLUDING ALL ACCRETION AND
	 	RIPARIAN
    RIGHTS THERETO
	Recording:	2306
    316
	 	 
	Lease
    #:	OK
    10617 G
	Lease
    Date:	2/16/2012
	Lessor:	WILLIAMS,
    LORETTA
	Lessee:	OSAGE
    EXPLORATION/DEVELOPMENT
	Lands:	TOWNSHIP
    17 NORTH, RANGE 3 WEST
	 	SECTION
    34: S/2 S/2 NE/4 AND LOT 4 (29.90 ACRES), INCLUDING ALL ACCRETION AND
	 	RIPARIAN
    RIGHTS THERETO
	Recording:	2306
    319
	 	 
	Lease
    #:	OK
    10596 C
	Lease
    Date:	3/14/2012
	Lessor:	BOWERS,
    STEVE
	Lessee:	OSAGE
    EXPLORATION/DEVELOPMENT
	Lands:	TOWNSHIP
    17 NORTH, RANGE 3 WEST
	 	SECTION
    36: N/2
	Recording:	2306
    322

 

    	 

    	 

    

 

 

	Lease
    #:	OK
    10598 E
	Lease
    Date:	
    1/5/2012
	Lessor:	PINES,
    MICHAEL
	Lessee:	OSAGE
    EXPLORATION/DEVELOPMENT
	Lands:	TOWNSHIP
    17 NORTH, RANGE 4 WEST
	 	SECTION
    Is SE/4
	Recording:	2306
    325
	 	 
	Lease
    #:	OK
    10599 B
	Lease
    Date:	3/2/2012
	Lessor:	BUZACH,
    CAROLYN ANN
	Lessee:	OSAGE
    EXPLORATION/DEVELOPMENT
	Lands:	TOWNSHIP
    17 NORTH, RANGE 4 WEST
	 	SECTION
    2: SW/4
	Recording:	2309
    643
	 	 
	Lease
    #:	OK
    10599 C
	Lease
    Date:	3/2/2012
	Lessor:	VORNEHM,
    DAVID B
	Lessee:	OSAGE
    EXPLORATION/DEVELOPMENT
	Lands:	TOWNSHIP
    17 NORTH, RANGE 4 WEST
	 	SECTION
    2: SW/4
	Recording:	2306
    328
	 	 
	Lease
    #:	OK
    10599 D
	Lease
    Date:	3/2/2012
	Lessor:	VORNEHM,
    MARITA
	Lessee:	OSAGE
    EXPLORATION/DEVELOPMENT
	Lands:	TOWNSHIP
    17 NORTH, RANGE 4 WEST
	 	SECTION
    2: SW/4
	Recording:	2309
    646
	 	 
	Lease
    #:	OK
    10374 E
	Lease
    Date:	2/23/2012
	Lessor:	HASTIE,
    MARGARET C
	Lessee:	OSAGE
    EXPLORATION/DEVELOPMENT
	Lands:	TOWNSHIP
    17 NORTH, RANGE 4 WEST
	 	SECTION
    10: SW/4
	Recording:	2303
    747
	 	 
	Lease
    #:	OK
    10516 N
	Lease
    Date:	2/27/2012
	Lessor:	HAWKINS,
    PAMELA K
	Lessee:	OSAGE
    EXPLORATION/DEVELOPMENT
	Lands:	TOWNSHIP
    17 NORTH, RANGE 4 WEST
	 	SECTION
    10: W/2 SE/4
	Recording:	2306
    332
	 	 
	Lease
    #:	OK
    10516 O
	Lease
    Date:	2/29/2012
	Lessor:	WHITCOMB,
    MARGARET
	Lessee:	OSAGE
    EXPLORATION/DEVELOPMENT
	Lands:	TOWNSHIP
    17 NORTH, RANGE 4 WEST
	 	SECTION
    10: W/2 SE/4
	Recording:	2311
    10
	 	 
	Lease
    #:	OK
    10623 A
	Lease
    Date:	2/29/2012
	Lessor:	MISENHIMER,
    WANDA
	Lessee:	OSAGE
    EXPLORATION/DEVELOPMENT
	Lands:	TOWNSHIP
    17 NORTH, RANGE 4 WEST
	 	SECTION
    10: NE/4 SE/4 & N/2 SE/4 SE/4, LESS AND EXCEPT A TRACT OF LAND IN THE
	 	NE/C
    OF THE SE/4 MORE PARTICULARLY DESCRIBED IN BOOK 822 PAGE 878
	 	IN
    LOGAN COUNTY, OKLAHOMA
	Recording:	2309
    658
	 	 
	Lease
    #:	OK
    10367 A
	Lease
    Date:	10/4/2010
	Lessor:	MURPHY,
    ROSEMARY SWART
	Lessee:	LOWRY
    LAND CO., INC
	Lands:	TOWNSHIP
    17 NORTH, RANGE 4 WEST
	 	SECTION
    12: NW/4
	Recording:	2228
    311
	 	 
	Lease
    #:	OK
    10625 A
	Lease
    Date:	3/16/2012
	Lessor:	DAVISON,
    RODNEY
	Lessee:	OSAGE
    EXPLORATION/DEVELOPMENT
	Lands:	TOWNSHIP
    17 NORTH, RANGE 4 WEST
	 	SECTION
    12: NE/4
	Recording:	2311
    16
	 	 
	Lease
    #:	OK
    10625 B
	Lease
    Date:	3/21/2012
	Lessor:	BATCHELOR,
    DONALD & PATRICIA FAM TR
	Lessee:	OSAGE
    EXPLORATION/DEVELOPMENT
	Lands:	TOWNSHIP
    17 NORTH, RANGE 4 WEST
	 	SECTION
    12: NE/4
	Recording:	2311
    13

    	 

    	 

    

 

	Lease
    #:	OK
    10631 A
	Lease
    Date:	3/1/2012
	Lessor:	EGELSTON,
    C J & VINA
	Lessee:	OSAGE
    EXPLORATION/DEVELOPMENT
	Lands:	TOWNSHIP
    17 NORTH, RANGE 4 WEST
	 	SECTION
    25: SE/4 SW/4, N/2 SW/4 SW/4
	Recording:	2306
    335 2447 109
	 	 
	Lease
    #:	OK
    10550 C
	Lease
    Date:	2/29/2012
	Lessor:	SMITH
    FAMILY TRUST
	Lessee:	OSAGE
    EXPLORATION/DEVELOPMENT
	Lands:	TOWNSHIP
    17 NORTH, RANGE 4 WEST
	 	SECTION
    34: NE/4
	Recording:	2306
    341
	 	 
	Lease
    #:	OK
    10550 D
	Lease
    Date:	2/29/2012
	Lessor:	BRANCH,
    MARILYN SMITH TRUST
	Lessee:	OSAGE
    EXPLORATION/DEVELOPMENT
	Lands:	TOWNSHIP
    17 NORTH, RANGE 4 WEST
	 	SECTION
    34: NE/4
	Recording:	2306
    338
	 	 
	Lease
    #:	OK
    10624 A
	Lease
    Date:	3/21/2012
	Lessor:	MCKAIG,
    JACK A REVOCABLE TRUST
	Lessee:	OSAGE
    EXPLORATION/DEVELOPMENT
	Lands:	TOWNSHIP
    18 NORTH, RANGE 3 WEST
	 	SECTION
    10: E/2 NE/4
	Recording:	2309
    671
	 	 
	Lease
    #:	OK
    10624 B
	Lease
    Date:	3/19/2012
	Lessor:	MCKAIG,
    MICHAEL REV TR
	Lessee:	OSAGE
    EXPLORATION/DEVELOPMENT
	Lands:	TOWNSHIP
    18 NORTH, RANGE 3 WEST
	 	SECTION
    10: E/2 NE/4
	Recording:	2309
    675
	 	 
	Lease
    #:	OK
    10624 C
	Lease
    Date:	3/19/2012
	Lessor:	SMITH,
    PATRICIA E REV TR
	Lessee:	OSAGE
    EXPLORATION/DEVELOPMENT
	Lands:	TOWNSHIP
    18 NORTH, RANGE 3 WEST
	 	SECTION
    10: E/2 NE/4
	Recording:	2309
    667
	 	 
	Lease
    #:	OK
    10553 C
	Lease
    Date:	2/28/2012
	Lessor:	SMITH
    FAMILY TRUST
	Lessee:	OSAGE
    EXPLORATION/DEVELOPMENT
	Lands:	TOWNSHIP
    18 NORTH, RANGE 4 WEST
	 	SECTION
    35: SE/4
	Recording:	2306
    344
	 	 
	Lease
    #:	OK
    10553 D
	Lease
    Date:	2/29/2012
	Lessor:	BRANCH,
    MARILYN SMITH TRUST
	Lessee:	OSAGE
    EXPLORATION/DEVELOPMENT
	Lands:	TOWNSHIP
    18 NORTH, RANGE 4 WEST
	 	SECTION
    35: SE/4
	Recording:	2306
    347

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