1. Legislative and Regulatory Update for the Rocky Mountain Region BEATTY & WOZNIAK, P.C. Presented by: Andrew Bremner Beatty & Wozniak, P.C. 216 Sixteenth Street, Suite 1100 Denver, CO 80202 (303) 407-4499 Colorado Bar Association Energy and Natural Resources Section May 9, 2008

2. Overview State Legislation & Regulations 2 States - No 2008 Legislature –North Dakota –Montana New Mexico Utah - Limited Colorado – Limited on Oil & Gas Wyoming – Budgetary Session Federal –Legislative –Public Land

3. North Dakota (NDPC) No 2008 Session Growing Pains SB 2397 – Bakken Oil Tax Holiday HB 1279 – 24 month Shallow Gas Tax Holiday SB 2419 – Indian Tribe & ND Gov HB 1229 – Increased Residential Setback to 500’

4. Montana (MPA) No Legislative Session Emerging Issues –Wildlife NSO for Critical Habitats (undefined) 1 mile NSO Sage Grouse leks 4 mile Timing Limitations Draft Bill – Consider Wildlife on Oil & Gas Activity Ballot Initiative – Wildlife Prioritized Over Commercial Activity

5. Montana (cont’d) –Taxes Senior Citizen Health Care Trust –Oil & Gas Production Taxes –Likely to Come From Production Tax Holidays »12 Month Vertical »18 Month Horizontal –Climate 12 Draft Bill Requests

6. Utah 2008 Session Nothing Significant Lookout For: –Split Estate Small Amount of Land Mainly Grazing Allotments Noxious Weeds –County Infrastructure Funding –Tax Commission

7. New Mexico Regulatory –Pit Rule Being To Be Issued – May 9, 2008 –Waited for Legislature to Set OCD Budget –New Permit Requirements Climate Change –Regulatory Implementation –Control GHG Emissions from Oil and Gas “Processes”

8. Colorado Legislature – Not Too Bad 2008 Voter Issues – Bad –Eliminates Property Tax Deduction –Increases Severance Taxes Some Sort of Rulemaking –Maybe You’ve Heard About It? Seriously – Significant Rewrite –Process Issues –Substantive Issues

9. Colorado (cont’d) Rule Changes –Definitions –New Form 2 and 2A Requirements –Chemical Inventories and Reporting –Consultation with CDPHE & CDOW –Wildlife Timing Restrictions Process –900 Page Staff Testimony & Exhibits –12 Hours of Industry Testimony –Confusing Process Orders

10. Wyoming HB 111 Board of land commissioners –No Conservation Easements on State Land HB 133 Taxation of Helium –Severance Tax SF 3 Game and Fish Funding –Creates Separate General Fund Budget –Sensitive Species and Nongame Programs HB 16 Special District Elections –Join Special Tax District Without Election –Could Affect Company facilities HB 21 Commercial Vehicle Fees –Oversize Permit Fees

11. Wyoming (cont’d) HB 54 Natural Gas Valuation – –Produced and Processed by Same Company –Creates a New Modified Netback Methodology –Replaces Proportionate Profits Methodology HB 89 - Pore Space Ownership –Surface Owner Owns Pore Space in Subsurface –Pore Space – Subsurface space which can be used to store Carbon Dioxide –Mineral Estate Still Dominant –Judiciary Committee Interim Meetings – June 2-3

12. Federal Climate Change Legislation –Maybe This Summer –House and Senate –Lieberman Warner Processors Bear Cap & Trade Costs Estimate: Adds $2.50 per mcf +/- Who really bears the cost? –House Energy & Commerce White Papers http://energycommerce.house.gov/Climate_Ch ange/index.shtml

13. Federal (cont’d) Greater Sage Grouse –Judge-Ordered FWS –Status Review & Data Collection – May 27, 2008 Look at Old Information New Information –Final Decision May 2009 at Latest Emerging Issue – Climate Change

14. Thank You! Andrew Bremner Beatty & Wozniak, P.C. 216 16th Street, Suite 1100 Denver, CO 80202 (303) 407-4476 abremner@bwenergylaw.com