JERRY L . CANFIELD, P .A .

THOMAS A. DAILY, P .A .

WYMAN R. WADE, JR . , P .A .

DOUGLAS M. CARSON, P .A .

ROBERT R . BRIGGS, P.A. † *

C. MI CHA EL D AILY , P.A. †

COBY W. LOGAN

L. MAT THEW DAV IS

* Fayetteville Office

† Al so L icensed in Oklahoma

DAILY & WOODSA PROFESSIONAL LIMITED LIABILITY COMPANY

ATTORNEYS AT LAW

KMW BUILDING58 SOUTH SIXTH STREET

P.O. BOX 1446FORT SM ITH, AR 72902

TELEPHON E (479) 782-0361FAX (479) 782-6160

______________

COMMERCE PARK I I BUILDING2049 EAST JOYC E BOULEV ARD, STE. 301

FAYETTEV ILLE, AR 72703TELEPHON E (479) 582-0361

FAX (479) 251-8111

JAMES E. WEST

PHILLIP J . NORVELL *

DALE CARLTON *

OF COUNSEL

_______

HARRY P . DAILY (1886-1965)

JOHN P. WO ODS (1886-1976)

JOHN S. DAILY (1912-1987)

July 7, 2009

Arkansas Oil and Gas Commission301 Natural Resources Drive, Suite 102Little Rock, Arkansas 72205

Re: ORDER REFERENCE NO. 512-2009-07

Application of SEECO, Inc. for Integration of All Unleased Mineral Interests andNon-consenting Working Interests in a unit described as Section 26, Township 8North, Range 17 West, Conway County, Arkansas

Commissioners:

SEECO, Inc., 2350 N. Sam Houston Parkway E, Houston, TX 77032, hereby applies tothe Arkansas Oil and Gas Commission for the integration of all unleased mineralinterests and non-consenting working interests in its proposed drilling unit which isdescribed above.

1. The proposed drilling unit is an established unit as defined in paragraph (f) ofArkansas Oil and Gas Commission General Rule B-43. Applicant proposes to drill ahorizontal well from a non-exceptional surface location in the Southeast Quarter downto a non-exceptional bottom hole location in the Southwest Quarter of the above-described unit. The proposed well will be drilled to a total vertical depth of 5,812 feet totest the Fayetteville Shale Formation. Applicant has obtained one or more oil and gasleases covering its proposed drill site.

2. Applicant owns oil and gas leases covering a substantial part of the proposedunit. Applicant should be named as operator of the well. The person or persons to beintegrated are shown in Exhibit "A" attached hereto and made a part hereof.

3. Applicant has made diligent efforts to negotiate with the non-participatingleasehold working interest owners, each of said parties owning an oil and gas leaseholdinterest in the proposed unit, but applicant has been unable to secure an assignment ofthe leasehold interest on an equitable basis or to secure participation by said parties inthe drilling of the proposed well.

4. Applicant states that it has made repeated efforts to negotiate with the owners ofthe unleased mineral interests in order to agree on a plan of development of said drillingunit; that those owners have been offered an opportunity to participate in the proposedwell; that they have been offered a fair and reasonable bonus consideration for theexecution of an oil and gas lease covering their interests; that they have been furnishedwith a proposed oil and gas lease and a copy of the AAPL operating agreement formwhich applicant proposes to use in connection with the drilling of said well; but that all ofthe efforts of the applicant have produced no agreement by said parties.

5. Applicant states that it is in the best interest of conservation and the protection ofcorrelative rights of all interested parties that the proposed unit be developed for oil andgas production without undue delay.

6. In order that applicant may proceed with the orderly development of said unit,applicant hereby requests that the Arkansas Oil and Gas Commission issue its order, inthe alternative, that:

(a) The owners of non-consenting oil and gas leasehold workinginterests indicated above shall participate in the cost of drilling,testing and completion of the test well to be drilled by applicant onthe captioned unit, subject to the terms of an Operating Agreementwhich substantially employs the terms of the AAPL Operatingagreement, with a COPAS attached.

(b) All of the non-consenting oil and gas leasehold working interestswithin the proposed unit shall be force pooled and integrated intosaid unit, and a reasonable risk factor shall be established andassessed as a penalty against said integrated interest.

7. Applicant further states that due to the risks and costs inherent in the drilling ofthe proposed well, the Commission should fix a reasonable risk factor to be assessedas a penalty against the integrated interests within the unit. The risk factor should beapplied to the proportionate cost and expense of drilling, completing and equipping thewell, which would have been borne by the interest of said parties had they participated. Applicant requests that if the integrated parties do not elect within 15 days afterissuance of the Commission's order as between alternatives (a) and (b), it shall beassumed that the integrated parties elected alternative (b) in lieu of the right toparticipate in the working interest in said unit.

8. Applicant requests that the Arkansas Oil and Gas Commission set this matter forpublic hearing, and after same, issue its order, in the alternative, that:

(a) Each of the owners of the unleased mineral interests indicatedabove execute and deliver to applicant a one year oil and gaslease, on an AAPL lease form, for a bonus consideration of

$1,250.00 per net mineral acre to be paid as fair and reasonablecompensation in lieu of the right to participate in the workinginterest in said unit, and that said oil and gas lease provide for a3/16 royalty on oil and gas.

(b) Each of the owners of unleased mineral interests indicated abovebe force pooled and integrated into the captioned unit withassessment of a reasonable risk factor penalty against theirinterest.

(c) The owners of unleased mineral interests shall participate in thecost of drilling, testing and completion of the test well to be drilledby applicant on the captioned unit, subject to the terms of anoperating agreement which substantially employs the terms of theAAPL Operating Agreement.

Applicant further requests that said mineral owners be required to elect within fifteen(15) days after issuance of the Commission's order which method will be pursued in thedevelopment of the above described unit, and, in the event no election is made, that itshall be assumed that the owner of said unleased mineral interest has elected to accepta bonus of $1,250.00 per net mineral acre as compensation in lieu of the right toparticipate in the working interest in said unit, and with the royalty to be 3/16.

9. Applicant further states that due to the risks and costs inherent in the drilling ofthe proposed well, the Commission should fix a reasonable risk factor to be assessedas a penalty against the integrated interests within the unit. The risk factor should beapplied to the proportionate cost and expenses of drilling, completing and equipping thewell, which would have been borne by the interest of said parties had they participated.

10. Applicant further requests that this Commission's order specifically provide thatany party electing either to participate or be force pooled subject to recoupment of a riskfactor penalty be bound by the terms of the attached AAPL Operating Agreement for thelife of commercial production within the unit so that all future unit operations might beproposed pursuant to the provisions of such agreement without the necessity of futureaction by this Commission.

11. Applicant also requests that said order be made applicable to any unknownspouse, heir, devisee, personal representative, successor or assign of said parties.

12. The names and addresses of parties interested in this proceeding are set forth inExhibit "A" attached hereto and made a part hereof.

13. Please note the appearance of Thomas A. Daily of Daily & Woods, P.L.L.C., P.O.Box 1446, Fort Smith, Arkansas, 72902, on behalf of applicant.

Very truly yours,

Thomas A. Dailyjmt

Beck, Catherine 08-17 #1-26H Section 26 – T8N – R17W Conway County, Arkansas

EXHIBIT A

INTERESTED PARTIES MINERAL OWNERS

Sponer, Robert L. and Diana Sponer See Page 1 of Exhibit B

Sponer, Warren M. and Alice Sponer See Page 2 of Exhibit B

Wells, James W. and Janis Wells See Page 3 of Exhibit B WORKING INTEREST OWNERS:

BP America Production Company See Page 4 of Exhibit B

Chesapeake Exploration, L. L. C. See Page 5 of Exhibit B

Page 1 of 1

Beck, Catherine 08-17 #1-26H Section 26 – T8N – R17W Conway County, Arkansas

EXHIBIT B

RESUME OF EFFORTS TO LEASE

Robert L. Sponer and Diana Sponer April 15, 2009 Searched office records. Located owner’s contact information. Called, no

answer. Left a message. Mailed lease proposal letter. April 29, 2009 Spoke with owner. He said he was not interested in leasing at any price. May 8, 2009 Spoke with owner again. No change in status. He is not interested in

leasing. May 20, 2009 No change in status. Owner is unwilling to lease. June 3, 2009 Spoke with owner again. Terms still unacceptable. June 17, 2009 No change in status. Terms still unacceptable. July 7, 2009 Well proposal letter and AFE mailed.

Page 1 of 5

Beck, Catherine 08-17 #1-26H Section 26 – T8N – R17W Conway County, Arkansas

EXHIBIT B

RESUME OF EFFORTS TO LEASE

Warren M. Sponer and Alice Sponer April 15, 2009 Located owner’s contact information from office files. Mailed lease

proposal letter. April 29, 2009 Talked to owner. Discussed lease terms. Terms unacceptable. May 7, 2009 Spoke with owner again. Terms still unacceptable. May 21, 2009 Spoke with owner. He does not want to lease at this time. June 4, 2009 Spoke with owner again. Terms still unacceptable. June 18, 2009 Owner does not want to lease at this time. July 7, 2009 Well proposal letter and AFE mailed.

Page 2 of 5

Beck, Catherine 08-17 #1-26H Section 26 – T8N – R17W Conway County, Arkansas

EXHIBIT B

RESUME OF EFFORTS TO LEASE

James W. Wells and Janis Wells April 15, 2009 Located owner’s contact information from office files. Mailed lease

proposal letter. April 28, 2009 Spoke with owner. Discussed lease terms. Terms unacceptable. Mr.

Wells said to call back when our offer increased. May 7, 2009 Terms still unacceptable. May 21, 2009 Spoke with owner. No change in status. Owner is not interested in

leasing. June 4, 2009 Terms still unacceptable. June 18, 2009 Owner still refuses to lease. Terms are unacceptable. June 25, 2009 Owner agreed to lease. Lease and related documents being prepared. June 29, 2009 Lease and related documents mailed. July 7, 2009 Well proposal letter and AFE mailed.

Page 3 of 5

Beck, Catherine 08-17 #1-26H Section 26 – T8N – R17W Conway County, Arkansas

EXHIBIT B

RESUME OF EFFORTS TO LEASE

BP America Production Company BP America Production Company owns a working interest in the following Oil & Gas leases recorded in Conway County, Arkansas:

1) Cassandra D. Chapman fka Cassandra D. Stobaugh & Jeffrey Chapman to Strata Minerals, Inc. dated January 18, 2006 and recorded in Oil & Gas book 116 at page 223.

2) Lindsay D. Stobaugh to Strata Minerals, Inc. dated January 18, 2006 and recorded in Oil

& Gas book 116 at page 219. Chesapeake Exploration, L. L. C. assigned an undivided interest to BP America Production Company. Said assignment is effective July 1, 2008 and recorded in Oil & Gas book 171 at page 610. June 23, 2009 Well proposal letter and AFE sent via Federal Express.

Page 4 of 5

Beck, Catherine 08-17 #1-26H Section 26 – T8N – R17W Conway County, Arkansas

EXHIBIT B

RESUME OF EFFORTS TO LEASE

Page 5 of 5

Chesapeake Exploration, L. L. C. Chesapeake Exploration, L. L. C. owns a working interest in the following Oil & Gas leases recorded in Conway County, Arkansas:

1) Cassandra D. Chapman fka Cassandra D. Stobaugh & Jeffrey Chapman to to Strata Minerals, Inc. dated January 18, 2006 and recorded in Oil & Gas book 116 at page 223.

2) Lindsay D. Stobaugh to Strata Minerals, Inc. dated January 18, 2006 and recorded in Oil

& Gas book 116 at page 219. Chesapeake Exploration Limited Partnership, by Affidavit of Identity and Corporate Successorship, is now Chesapeake Exploration, L. L. C. effective August 6, 2007 and recorded in Oil & Gas book 151 at page 239. June 23, 2009 Well proposal letter and AFE sent via Federal Express.

EXHIBIT “C”Applicant’s statement regarding Operating Agreement

The applicant requests incorporation of the Model Form Joint Operating Agreement

approved by the Arkansas Oil and Gas Commission on October 24, 2006, with Paragraph

III.1.A.(1) of the COPAS providing for a drilling well rate of $7,500.00 and a producing

well rate of $750.00 , and with the following proposed revisions, deletions and/or

insertions, if applicable:

NONE