1. RAILROAD COMMISSION OF TEXAS Horizontal Drilling Permit Applications Lorenzo Garza

2. Presentation overview Penetration Point Differences between horizontal and vertical wells Learn how to determine if your in need of a SWR exception Learn how to resolve these SWR 37 & 38 exceptions

3. Vertical Well in Productive Zone Penetration Point Drilling Permits and Online Filing - Advanced

4. Horizontal Well Productive Zone Penetration Point Drilling Permits and Online Filing - Advanced To be considered a horizontal well the displacement of the well must be at least 100 feet.

5. Horizontal Well Productive Zone Horizontal Drainhole Containing the Productive Portions of the Well Bore Drilling Permits and Online Filing - Advanced

6.  Surface location  Penetration point  Terminus location 6 Drilling Permits and Online Filing - Advanced TERMS YOU SHOULD BE FAMILIAR WITH Statewide Rule that covers horizontal drilling is SWR 3.86

7. Drilling Permits and Online Filing - Advanced 7 SWR 86 PLAT

8. Where to find out more information concerning horizontal well: 8 Drilling Permits and Online Filing - Advanced

9. Where to find out more information concerning horizontal well: 9 Drilling Permits and Online Filing - Advanced

10. Where to find out more information concerning horizontal well: 10 Drilling Permits and Online Filing - Advanced

11. Where to find out more information concerning special horizontal field rules. What you can find:  Information concerning dual lease line distances  Off lease penetration point information  As-drilled tolerance box rule  Acreage assignment based on length of lateral  Stacked lateral rules 11 Drilling Permits and Online Filing - Advanced

12. Where to find out more information concerning horizontal well: 12 Drilling Permits and Online Filing - Advanced

13. Where to find out more information concerning horizontal well: 13 Drilling Permits and Online Filing - Advanced

14. Where to find out more information concerning horizontal well: 14 Drilling Permits and Online Filing - Advanced Located in Rule 2

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16. Drilling Permits and Online Filing - Advanced 16 PENETRATION POINTS Defined as the point your well penetrates the top of the regulatory field’s correlative interval as defined in Rule 1 of the field rules.

17. Drilling Permits and Online Filing - Advanced 17 STANDARD SWR 86 FIELD

18. Drilling Permits and Online Filing - Advanced 18 SWR 86 PLAT

19. Drilling Permits and Online Filing - Advanced 19 SPECIAL HORIZONTAL FIELD RULES

20. Drilling Permits and Online Filing - Advanced 20 OFF LEASE PENETRATION POINTS If the well is in a standard SWR 86 field then the penetration point must be on lease or an exception to rule is needed. If the well is in a field approved for special horizontal rules then application can be processed as long as proper notification to affected parties is done prior to the submission of the Drilling Permit application.  If you are proposing to drill a vertical pilot hole to log the formation you will need to follow the rules for off lease penetration and provide notice to affected parties prior to submission of the application.

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22. Drilling Permits and Online Filing - Advanced 22 SPECIAL HORIZONTAL FIELD RULES

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24. Drilling Permits and Online Filing - Advanced 24 Determining if you are a SWR 37 lease line or between well exception. HORIZONTAL WELL: What is the distance to nearest lease line? Look at the entire length of your wellbore’s productive portion Use the shortest distance to a lease line from any point in the productive portion

25. Drilling Permits and Online Filing - Advanced 25 Out of compliance SWR exception needed

26. Drilling Permits and Online Filing - Advanced 26 Un-leased mineral interests

27. Drilling Permits and Online Filing - Advanced 27 330’ halo around wellbore

28. Drilling Permits and Online Filing - Advanced 28 Multiple terminus locations can be applied for at the same time

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30. Drilling Permits and Online Filing - Advanced 30 MAIN POINTS 1.SWR 3.86 MUST BE ADHERED TO UNLESS THERE ARE SPECIAL HORIZONTAL RULES FOR THE FIELD YOU ARE APPLYING FOR. 2.KNOW HOW TO DETERMINE DISTANCE TO NEAREST LEASE LINE AND WELL FOR THE TYPE OF FIELD RULES (STANDARD OR SPECIAL) YOU ARE WORKING UNDER. 3.ONCE YOUR WELL HAS PENETRATED THE FORMATION YOU CANNOT CROSS INTO A TRACT THAT IS NOT LEASED. THIS IS MINERAL TRESSPASS.

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