RAILROAD COMMISSION OF TEXAS OIL & GAS DIVISION

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1 API No Drilling Permit # SWR Exception Case/Docket No (R37) 4. Lease Name GENERAL INFORMATION 6. Purpose of filing (mark ALL appropriate boxes): APPLICATION FOR PERMIT TO DRILL, RECOMPLETE, OR RE-ENTER This facsimile W-1 was generated electronically from data submitted to the RRC. A certification of the automated data is available in the RRC's Austin office. 1. RRC Operator No. 2. Operator's Name (as shown on form P-5, Organization Report) 3. Operator Address (include street, city, state, zip): 5. Well No. X New Drill Recompletion Reclass Field Transfer Re-Enter Amended Amended as Drilled (BHL) (Also File Form W-1D) Permit Status: FORM W-1 07/2004 Approved 7. Wellbore Profile (mark ALL appropriate boxes): X Vertical X Horizontal (Also File Form W-1H) Directional (Also File Form W-1D) Sidetrack 8. Total Depth 9. Do you have the right to develop the 4950 minerals under any right-of-way? X Yes No 10. Is this well subject to Statewide Rule 36 (hydrogen sulfide area)? X SURFACE LOCATION AND ACREAGE INFORMATION 11. RRC District No. 12. County ANDREWS 13. Surface Location X Land Bay/Estuary Inland Waterway 14. This well is to be located 6 miles in a NE direction from FRANKEL CITY which is the nearest town in the county of the well site. 15. Section 16. Block Survey UNIVERSITY LAND 23. Is this a pooled unit? Yes X No 24. Unitization Docket No: 18. Abstract No. A-U Distance to nearest lease : 385 ft. 21. Lease Perpendiculars: 385 ft from the S and 2654 ft from the E. 22. Survey Perpendiculars: 10 ft from the E and 2260 ft from the N. Yes Offshore No 20. Number of contiguous acres in lease, pooled unit, or unitized tract: Are you applying for Substandard Acreage Field? Yes (attach Form W-1A) X No FIELD INFORMATION List all fields of anticipated completion including Wildcat. List one zone per. 26. RRC District No. 27. Field No. 28. Field Name (exactly as shown in RRC records) 29. Well Type 30. Completion Depth 31. Distance to Nearest Well in this Reservoir 32. Number of Wells on this lease in this Reservoir SHAFTER LAKE (SAN ANDRES) Oil Well WILDCAT Exploratory Test Well BOTTOMHOLE LOCATION INFORMATION is required for DIRECTIONAL, HORIZONTAL, AND AMENDED AS DRILLED PERMIT APPLICATIONS Remarks [FILER Feb 6, :41 PM]: DRILLING EXPLORATORY PILOT HOLE, LOGGING & THEN DRILL HORIZONTAL. WELLS 1505, 1506, 1507 & 15 WILL BE SHUT IN, OR CONVERTED TO INJECTION & WILL NEVER BE PRODUCED CONCURRENTLY FROM THE SAME RESERVOIR AS WELL. NEAREST PRODUCING WELL IS #1604 WHICH IS 961' AWAY. WAIVERS ATTACHED FROM ONLY AFFECTED OPERATORS (WESTERN RESERVES & LANEXCO) WITHIN 400' OF WELL. RRC Use Only Page 1 of 2 Certificate: I certify that information stated in this application is true and complete, to the best of my knowledge. Name of filer (512) Phone Jerry Russell (see W-1H attachment) Feb 06, 2012 Date submitted swenergy@texasrrc.com Address (OPTIONAL)

2 Permit Status: Approved The RRC has not approved this application. Duplication or distribution of information is at the user's own risk. APPLICATION FOR PERMIT TO DRILL, RECOMPLETE, OR RE-ENTER This facsimile W-1 was generated electronically from data submitted to the RRC. A certification of the automated data is available in the RRC's Austin office. Form W-1H 07/2004 Supplemental Horizontal Well Information Permit # Approved Date: Feb 16, RRC Operator No. 2. Operator's Name (exactly as shown on form P-5, Organization Report) 3. Lease Name Lateral Drainhole Location Information 5. Field as shown on Form W-1 6. Section 7. Block 8. Survey 9. Abstract 10. County of BHL UNIVERSITY LAND 455 ANDREWS 11. Terminus Lease Line Perpendiculars 467 ft. from the W. and 385 ft. from the S 12. Terminus Survey Line Perpendiculars 467 ft. from the W. and 2260 ft. from the N 13. Penetration Point Lease Line Perpendiculars SHAFTER LAKE (SAN ANDRES) (Field # , RRC District ) 385 ft. from the S. and 2974 ft. from the E 4. Well No. Page 2 of 2

3 FIELD NAME ACRES DEPTH WELL # DIST LEASE NAME NEAREST LEASE NEAREST WE ** SHAFTER LAKE (SAN ANDRES) , WELLBORE PROFILE(s) FOR FIELD: Horizontal, Vertical RESTRICTIONS: This well cannot be produced concurrently from the same reservoir as: 1505, 1506, 1507 & 15 This is a hydrogen sulfide field. Hydrogen Sulfide Fields with perforations must be isolated and tested per State Wide Rule 36 and a Form H-9 filed with the district office. Fields with SWR 10 authority to downhole commingle must be isolated and tested individually prior to commingling production. Lateral: TH1 Penetration Point Location Lease Lines: PERMIT TO DRILL, DEEPEN, PLUG BACK, OR RE-ENTER ON A REGULAR OR ADMINISTRATIVE EXCEPTION LOCATION PERMIT NUMBER DATE PERMIT ISSUED OR AMENDED DISTRICT Feb 16, 2012 API NUMBER FORM W-1 RECEIVED COUNTY Feb 06, 2012 ANDREWS TYPE OF OPERATION OPERATOR LOCATION NEW DRILL LEASE NAME Section, Block and/or Survey WELLBORE PROFILE(S) Horizontal, Vertical DISTANCE TO SURVEY LINES 10 ft. E 2260 ft. N DISTANCE TO LEASE LINES 385 ft. S 2654 ft. E F S L F E L ACRES Terminus Location BH County: ANDREWS Section: 15 Block: 14 Abstract: 455 Survey: UNIVERSITY LAND NOTICE This permit and any allowable assigned may be revoked if payment for fee(s) submitted to the Commission is not honored. District Office Telephone No: (432) DISTANCE TO NEAREST LEASE LINE 385 ft. DISTANCE TO NEAREST WELL ON LEASE See FIELD(s) Below FIELD(s) and LIMITATIONS: * SEE FIELD DISTRICT FOR REPORTING PURPOSES * ** THIS PERMIT IS GRANTED PURSUANT TO STATEWIDE RULE 37(h)(2)(B) ** CASE NO Lease Lines: F W L F S L Survey Lines: F W L F N L WILDCAT , TOTAL DEPTH 6 miles NE direction from FRANKEL CITY 4950 SECTION 15 BLOCK 14 ABSTRACT SURVEY UNIVERSITY LAND WELL NUMBER U455 * Page 3 of 4

4 FIELD NAME ACRES DEPTH WELL # DIST LEASE NAME NEAREST LEASE NEAREST WE WELLBORE PROFILE(s) FOR FIELD: Vertical RESTRICTIONS: PERMIT TO DRILL, DEEPEN, PLUG BACK, OR RE-ENTER ON A REGULAR OR ADMINISTRATIVE EXCEPTION LOCATION PERMIT NUMBER DATE PERMIT ISSUED OR AMENDED DISTRICT Feb 16, 2012 API NUMBER FORM W-1 RECEIVED COUNTY Feb 06, 2012 ANDREWS TYPE OF OPERATION OPERATOR LOCATION NEW DRILL LEASE NAME Section, Block and/or Survey WELLBORE PROFILE(S) Horizontal, Vertical DISTANCE TO SURVEY LINES 10 ft. E 2260 ft. N DISTANCE TO LEASE LINES 385 ft. S 2654 ft. E ACRES NOTICE This permit and any allowable assigned may be revoked if payment for fee(s) submitted to the Commission is not honored. District Office Telephone No: (432) DISTANCE TO NEAREST LEASE LINE 385 ft. DISTANCE TO NEAREST WELL ON LEASE See FIELD(s) Below FIELD(s) and LIMITATIONS: * SEE FIELD DISTRICT FOR REPORTING PURPOSES * ** THIS PERMIT IS GRANTED PURSUANT TO STATEWIDE RULE 37(h)(2)(B) ** CASE NO For exploratory test only This is a hydrogen sulfide field. Hydrogen Sulfide Fields with perforations must be isolated and tested per State Wide Rule 36 and a Form H-9 filed with the district office. Fields with SWR 10 authority to downhole commingle must be isolated and tested individually prior to commingling production TOTAL DEPTH 6 miles NE direction from FRANKEL CITY 4950 SECTION 15 BLOCK 14 ABSTRACT SURVEY UNIVERSITY LAND WELL NUMBER U455 * ' ** ' PRECEDING FIELD NAME INDICATES RULE (R37) THE FOLLOWING RESTRICTIONS APPLY TO ALL FIELDS This well shall be completed and produced in compliance with applicable special field or statewide spacing and density rules. If this well is to be used for brine mining, underground storage of liquid hydrocarbons in salt formations, or underground storage of gas in salt formations, a permit for that specific purpose must be obtained from Environmental Services prior to construction, including drilling, of the well in accordance with Statewide Rules 81, 95, and 97. Page 4 of 4

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