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IN THE WAYNE COUNTY, OHIO COURT OF COMMON PLEAS
DRILLERS PLACE, LTD.
Plaintiff
vs.
MORMACK INDUSTRIES, INC., et al.
Defendants
YO
Case No. 12-CV-0699
soe ee
JUDGE: Corey E. Spitler
+ MOTION TO COMPEL FURTHER
RESPONSES TO PLAINTIFF'S
DISCOVERY REQUESTS
Now comes the Plaintiff, Drillers Place, Ltd., by and through its counsel. moves the Court for an
order compelling the Defendants to provide complete responses to the supplemental discovery requests
submitted by the Plaintiff to Defendants. Plaintiff submits that the Defendants recently disclosed that there
are allegedly other working interest owners claiming an interest in the lease that is the subject of this
dispute, but the Defendants, at this point, are refusing to disclose the identity of those alleged working
interest owners. Plaintiff also submits that the Defendants have claimed that they started making certain
production payments or royalty payments at a certain time period. However, the Defendants continue to
refuse to produce the correct documentation in support of such a position
Piaintiff submits the following Memorandum in support of its position
x
Respectfully submitted,
he AW OFFICE, LLC.
By: ee
James M. Richard (#0016491)
Attorney for Plaintiff
127 East Liberty Street, Suite 100
P.O, Box 1207
Wooster. Ohio 44691
Telephone: (330) 262-0034
Fax: (330) 262-0080
Email: james@richardlawoffice.comMEMORANDUM
Article |. Definitions
1. “Drillers Place” means the Plaintiff, Drillers Place Ltd.
2. “Mormack” means the Defendant, Mormack Industries , Inc
3. “McCluskey” means the Defendant, Paul J. McCluskey, Jr., a fractional working interest
owner in the Mormack well and leasehold estate by virtue of an assignment recorded in
Volume 712, Page 129, Wayne County, Ohio Lease Records.
4. “Discovery Responses” means the responses of Mormack and McCluskey to the
supplemental discovery requests of Drillers Place.
5. “Richard Affidavit” means the Affidavit of James M. Richard. attached hereto marked as
Exhibit 1.
Article Il. Mormack and McCluskey’s Claim of Royalty and Production Payments as
of a Certain Time
At the deposition of Ed Mack, he indicated that payments evidencing production payments were
sent to Drillers Place as of a certain time. The witness also indicated he could produce his records
confirming these payments within a short period of time. The date the payments were made or received is
disputed. Drillers Place supplemental request for production of documents #1, and the response by
Mormack and McCluskey, read as foliows:
“4. True copies of all royalty checks sent to Drillers Place Ltd. since the time of
acquisition of title by Drillers Place Ltd., as well as the bank records indicating whether or
not the checks have been endorsed or negotiated
RESPONSE: See attached document labeled as MOR 000132..."
The document labeled as “MOR 000132" is attached hereto marked as Exhibit 2. That document is a
computer generated intemal document by Mormack and does not include copies of the checks. ledgers or
bank records showing whether the checks in question cleared and/or the dates of bank clearance. The
computer generated document is self serving and the dates themselves may be a date that was entered onthe computer, however, the check itself may not have been delivered, or may have been delivered al a
much later date
Drillers Place submits that this evidence is material to the issues raised in the Amended Complaint
filed by Drillers Place.
Article Ill. The Objections of Mormack and McCluskey to the Information Pertaining
to the New Working Interest Owners
The document request of Drillers Place, and the response of Mormack and McCluskey. read as
follows:
.4. True copies of the documents showing the current ownership of the working interest
and_royalty interest regarding the Hilty well. You have the title report that was marked as
an exhibit; however, it appears that there are other working interest owners, other than the
owners you previously disclosed
RESPONSE: Objection, the request calls for confidential and proprietary
information and this request is not likely to lead to the discovery of admissible
evidence. Without waiving said objection, Defendant states that there are sixteen
(16) royalty interest and working interest holders. However, Defendant will not
produce their identity without a stipulated protective order or some other
confidentiality agreement between counsel, Please see redacted copy of document
labeled as MOR 000141...” (Emphasis Added}
The response of Mormack and McCluskey is limited to a document which Mormack and licCluskey label
as MOR 000141. That document is attached hereto marked as Exhibit 3. That document contains
redactions of certain material information dealing with the identity of the people or companies in question
and the consideration paid. That document is dated May 29, 2013
The deposition of Ed Mack was previously filed with the Court. together with the exhibits. The
deposition exhibits include not only the title reports pertaining to this leasehold estale. but also confirm that
there were no other working interest owners disclosed of record other than McCluskey and Mormack. Ed
Mack, at his deposition, indicated for the first time, that there were other working interest owners and
apparently there were recent transactions dealing with working interest owners.Drillers Place indicates, immediately upon receipt of this response, that Drillers Place indicated it
would sign a confidentiality agreement. However, the information redacted has not yet been provided. In
the event there are now working interest owners that have been filed for record after the deposition of Ed
Mack, who claim an interest in this Lease, these people are necessary parties which must be included in
this litigation. This issue was addressed in the Motion for Summary Judgment filed by Drillers Place and
the page of that memorandum filed in support of that motion is attached hereto marked as Exhibit 4. The
problem was disclosed at that time through footnote #2.
Drillers Place must again note that Mormack and McCluskey continue to claim that the well was not
out of production for a substantial period of time. In fact, at one point in his deposition, the witness
indicated that there were only minor delays in the sale of gas and oil during certain months of the year.
which were caused by the weather. At other times, the deposition testimony indicated that there was a
down-hole problem that had to be repaired. In any event, Deposition Exhibit #1 confirms that Mormack
Tfeacquired all of the original working interest owners except McCluskey. The various claims of Drillers
Place address not only breach of contract, but breach of the implied covenant of continued development
lease provisions that violate public policy, lease reformation and mutual mistake of fact. If Mormack and
McCluskey are raising money through new investors to spend on this well and participate in further
development at this time, this information is material and relevant and goes to the very issues involved with
the various claims of Drillers Place. There is no dispute of fact regarding the status of the shallow well on
the property in question. At best, the production potential is nominal and will only continue for a limited
period of time. If Mormack is now contemplating drilling to deeper formations, this issue is also material
and relevant to the issues before the Court. Again, there Is no reason for Mormack to be raising money
from investors to invest in a shallow Clinton formation well. If the deep rights in question have value. as
apparently contended by Mormack and McCluskey, then the price paid by these new investors and the
information regarding the plans in question are certainly material and relevant to the issues before theCourt. These issues go directly to the public policy argument as evidenced by the summary judgment
decision in favor of landowners is Morrow County.
Regardless and irrespective of the relevancy issues. Drillers Place should not be sub:ected to
continued litigation by working interest owners who now claim an interest in this well and leasehold estate
that were not previously disclosed by Mormack, either at the Ed Mack deposition or through the title reports
that were earlier completed, as evidenced by the deposition exhibits.
Article 1V. Summary
Drillers Place submits that an order compelling discovery should be issued immediately. Crillers
Place further submits that although Drillers Place has agreed to sign a confidentiality agreement. it is the
position of Drillers Place that this claim of privilege or confidentiality is not submitted in good faith as the
identity and extent of ownership, as well as the purpose of this new ownership, must be disclosed in order
to avoid multiple claims and extended protracted litigation. Certainly, Drillers Place cannot be criticized by
disclosing to the Court and the parties the status of record title. Drillers Place secured a title report
confirming the status of record title in these proceedings. Now, Mormack and McCluskey. at their
deposition, have apparently changed the status of record title and secured new working interest owners ‘or
the specific well that is the subject of this dispute. Drillers Place submits that this Court cannot issue a fina!
order addressing all issues between the parties until all working interest owners appear and/or stioulate that
the decision of this Court will be binding upon them as well as Mormack and McCluskey and produce the
information requested.Respectfully submitted,
Attorney for Plaintiff
127 East Liberty Street, Suite 100
P.O. Box 1207
Wooster, Ohio 44691
Telephone: (330) 262-0034
Fax: (330) 262-0080
Email: james@richardlawoffice.com
CERTIFICATE OF SERVICE
| hereby certify that a copy of the foregoing Motion was mailed to Patrick E. Noser. Attorney for
Defendant, RITCHFIELD, CRITCHFIELD & JOHNSON, 225 North Market Street, Wooster, Ohio
44691, this’ fay of October, 2013, by ordinary U.S. mail
RISHARD LAW OFFICE, LLC.
James Mr Richard (#0016491)
Attorney for PlaintiffIN THE WAYNE COUNTY, OHIO COURT OF COMMON PLEAS
DRILLERS PLACE, LTD.
* — Case No. 12-CV-0699
Plaintiff *
+
JUDGE: Corey E. Spitler
VS. *
+ AFFIDAVIT
MORMACK INDUSTRIES, INC., et al.
Defendants
STATE OF OHIO )
)ss
COUNTY OF WAYNE )}
Affiant, JAMES M. RICHARD, being first duly sworn, deposes and states the following
1 That Affiant has personal knowledge of the facts and statements made herein; and
2. That the Defendant's responses to the supplemental discovery requests are attached hereto
marked collectively as Exhibit A; and
3, That Plaintiff has attempted to resolve the disputed issues by communicating with counsel for
the Defendants but a resolution has not yet been reached
FURTHER AFFIANT SAYETH NAUGHT.
JENNIFER N. SMITH
Notary Public, State of Ohio
My Commission Expires Juty 14, 2017
EXHIBIT
1; \IN THE WAYNE COUNTY, OHIO COURT OF COMMON PLEAS
DRILLERS PLACE LTD.
CASE NO. 12-CV-0699
Plaintiff
ek ee
JUDGE: Corey E. Spitler
*
vs.
MORMACK INDUSTRIES, INC., ct al.
Defendant
DEFENDANTS MORMACK INDUSTRIES, INC. AND PAUL J. McCLOSKEY, JR.’S
RESPONSE TO PLAINTIFF DRILLERS PLACE LTD.’S SECOND SET OF REQUEST
FOR PRODUCTION OF DOCUMENTS
Defendants Mormack Industries, Inc. and Paul J. McCloskey, Jr. (“Defendants”), hereby
serve their Responses to Plaintiff Drillers Place Ltd.’s Second Set of Request for Production of
Documents, originally attached as Exhibit A. Defendants reserve the right to supplement these
responses as discovery is ongoing.
GENERAL OBJECTIONS
l. Defendants object to each and every request to the extent such request seeks
information protected from discovery by the attorney-client privilege, work-product doctrine, or
other applicable privilege, protection or immunity. The inadvertent production by Defendants of
such information shall not constitute a waiver of any applicable privilege, protection or
immunity.
2. Defendants object to the definitions and instructions contained in the discovery
requests to the extent such terms are vague and ambiguous and to the extent the instructions
purport to impose burdens in excess of those provided for by the Ohio Rules of Civil Procedure.
3. Defendants object to cach and every request to the extent such request sceks the
disclosure of trade secrets or otherwise commercially-sensitive or confidential gay
EXHIBIT
A
|Defendants will defer production of such information until entry of an appropriate protective
order limiting the use and/or disclosure of such information.
4. Defendants object to each and every request to the extent such request secks
information readily available to Plaintiff through public sources or from other non-parties.
5. Defendants object to each and every request to the cxtent such request seeks
information that is in the possession of third parties and is not in the possession or under the
control of Defendants.
6. Defendants object to each and every request to the extent such request purports to
impose requirements, obligations and/or duties not required by the Ohio Rules of Civil
Procedure.
7. Defendants object to each and every request to the extent such request seeks
information that is irrelevant and not reasonably calculated to lead to the discovery of admissible
evidence, and/or is overly broad and unduly burdensome.
8. Defendants will supplement these responses in accordance with their obligations
under the Ohio Rules of Civil Procedure.
These general objections are continuing in nature and are incorporated by reference in
response to each of the interrogatories or requests set forth below. By responding to the
interrogatories or requests, Defendants do not waive any of the foregoing general objections.1. True copies of all royalty checks sent to Driller’s Place Ltd. since the time of
acquisition of title by Driller’s Place Ltd., as well as the bank records indicating whether or not
the checks have been endorsed or negotiated.
RESPONSE: See attached document labeled as MOR 000132.
2. True copies of the complete record of all royalty payments paid to the landowners
under the Hilty lease for 2009, 2010, 2011, 2012 as well as year-to-date 2013. Ed Mack testified
that he changed computer programs in 2009 and indicated it was possible that the amount due to
the landowner was so Jow that this issue was not addressed until year end, and it is possible that
with his new accounting system, he may have missed the year end accounting to make the
disbursements. We need all of the information, whether the landowners royalty was paid
quarterly, annually, or not paid at all, for a period of time specified.
RESPONSE: Sce attached documents labeled as MOR 000133 through MOR
000138.
3 True copies of the title report Ed Mack referred to at his deposition together with
any supplements, amendments or updates pertaining to that report.
RESPONSE: See attached documents labeled as MOR 000139 through 000140.
4. True copies of the documents showing the current ownership of the working
interest and royalty interest regarding the Hilty well. You have the title report that was marked
as an exhibit: however, it appears that there are other working interest owners, other than the
owners you previously disclosed.
RESPONSE: Objection, the requests calls for confidential and proprietary
information and this request is not likely to lead to the discovery of admissible evidence.
Without waiving said objection, Defendant states that there are sixteen (16) royalty interest
and working interest holders. However, Defendant will not produce their identity without
a stipulated protective order or some other confidentiality agreement between counsel.
Please sce redacted copy of document labeled as MOR 000141.
5. True copies of al! documents evidencing Mormack’s efforts to investigate or drill
a second well on the Hilty lease which resulted in the decision to not drill based upon the
problem with Dominion East Ohio and the buffer storage ficld area. [ will need all of the
documents or correspondence exchanged pertaining to this specific issue.
RESPONSE: Objection, ealls for produetion of proprietary and/or confidential
documents, vague, overbroad and burdensome. Without waiving said objection, see
documents attached including a map and an August 5, 1988 letter labeled as MOR 000142
through 000148.
26. True copies of all of the seismic records and related documents that were
examined, secured by Mormack in the decision-making in 1993 dealing with possible further
development of the Trempealcau formation.
RESPONSE: Objection, calls for production of proprictary and/or confidential
documents. Without waiving said objection, Defendant states it will only produce the
documents with a stipulated protective order or some other confidentiality agreement
between counsel.
7. True copies of all records evidencing the date of drilling and completion of the
three (3) Trempealeau wells referred to by Ed Mack at his deposition. I believe he referred to the
first well being somewhere around 1981 and was in production for six (6) years. He then
referred to another well on Pleasant Home Road two (2) or three (3) miles west, that either has
been plugged, or was in the process of being plugged. There was a third well in Baughman
Township. We will need the plugging permits, the dates of drilling, well logs and the production
records.
RESPONSE: Objection, the request is vague, overbroad and unduly burdensome.
Without waiving said objection, the documents requested by Plaintiff are matter of public
record and are identified as Wayne County Wells with the API Numbers 3416922990,
3416922991, 3416925009, and 3416925010.
8. True copies of all documents that Ed Mack relied upon in investigating the Utica
Shale and other deeper formations during the last three (3) or four (4) years, and which he further
relied upon in expressing his opinions regarding the Utica Shale, the problem with pressure and
the economic feasibility of drilling to that formation.
RESPONSE: Objection, the request is yaguc, overbroad and unduly burdensome.
Without waiving said objection, the Defendant relied on its general understanding of
drilling and geology, which is supported by materials from the ODNR some of which are
attached as MOR 000149 through 000153.
9. True copies of all documents that Ed Mack is apparently relying upon to support
his testimony that providing free gas to a landowner is sufficient “production” to classify the
well as being a commercially productive well.
RESPONSE: Objection, this request calls for the production of documents covered
by the attorney client privilege or work product doctrine. Defendant possesses no
discoverable and responsive documents.
10. True copies of all documents upon which Ed Mack is apparently relying in
support of his testimony that terminating production and the payment of rental or royalty
payments is not a problem unless and until production and payment has been terminated for
more than two (2) years.RESPONSE: Objection, this request calls for the production of documents covered
by the attorney client privilege or work product doctrine. Defendant possesses no
discoverable and responsive documents other than the lease itself.
11. True copies of the gas contract with the City of Orrville or Northeast Natural Gas
showing all of the gas sales from the Hilty well, and others, as referred to by Ed Mack at his
deposition.
RESPONSE: Objection, there is no contract with the City of Orrville. Defendant
does have a contract with Northeast Ohio Natural Gas, but objects that Plaintiff's request
is vague, overbroad, and unduly burdensome. Without waiving said objection, sce
documents relating to a November report Defendant received pursuant to that contract.
12. True copies of all delay rental payments, if any, that were paid by Mormack to the
Hilty’s after the well was initially placed in production on the Hilty lease.
RESPONSE: Objection, according to the plain language of the lease, delay rental
payments are only required for “gas only” wells, thus, Defendant possesses no such
documents. As for delay rental payments prior to production, sce attached document
labeled as MOR 000159.
13. True copies of all well logs pertaining to any and all formations that were
obtained through the well logs for the one well that was drilled on the Hilty property.
RESPONSE: See attached document labeled as MOR 000160. Defendants possess
additional, voluminous documents that can be reviewed and inspected at a mutually
agrceable time and place.
As to objections:
CRITCHFIELD, CRITCHFIELD &
JOHNSTON, LTD.
By:
Patrick E. Noser (S. Ct. # 0075144)
John H. Schaeffer (S. Ct. #0041874)
Andrew P. Lycans (S. Ct. #0077230)
225 N. Market Street
P.O. Box 599
Wooster, Ohio 44691
Telephone: (330) 264-4444
Fax: (330) 262-0080
Email: schaeffer@ccj.com
Attorneys for Defendants Mormack Industries, Inc.
and Paul J. McCloskey, Jr.CERTIFICATE OF SERVICE
I hereby certify that a true and accurate copy of the foregoing Defendants Mormack
Industrics, Inc. and Pau! J. McCloskey, Jr.'s Response to Plaintiff Drillers Place Ltd.’s Second
Set of Request for Production of Documents was sent by regular mail only this 26th day of June,
2013 to the following:
James M. Richard, Esq.
Richard Law Office LLC
127 East Liberty Street, Ste. 100
P.O. Box 1207
Wooster, OH 44691
Email: james@richardlawoffice.com
Attorney for Plaintiff Drillers Place Ltd.
CRITCHFIELD, CRITCHFIELD &
JOHNSTON, LTD.
By: _
Patrick E. Nosere+ 162
96/08/2013 Mormack Ind., Inc. Page 13
07:06:55 Check Register Report: csckreg
Uncleared Entries By Date Range
Selection Criteria’ Dates: 01/01/2000 - 06/11/2013
Sort Order, Date & Check No
Type Check# !0 Payee Date Clr Amount Balance |
Check 21993 ROB2 DRILLER'S PLACE, LTD. 0119/2012 -29.70 -29.70
Check 21256 ROB2 DRILLER'S PLACE, LTD. 02/13/2012 -868.00 -887.70
Check 21369 ROB2 DRILLER'S PLACE, LTD. 03/12/2012 12071 -1,009.41
Check 21530 ROB2 DRILLER'S PLACE, LTD. 0471212012 “132.72 23,142.13
Check 22036 ROB2 DRILLER'S PLACE, LTD. 09/1 1/2012 55.28 “1,197.41
Check 22110 ROB2 DRILLER'S PLACE, LTD. 10/17/2012 65.95 +1,263.36
Check 22196 ROB2 DRILLER'S PLACE, LTD. 1106/2012 “73.14 -1,336.50
Check 22269 ROBZ DRILLER'S PLACE, LTD 12/06/2012 67.86 -1,404.36
Check 22436 ROB2 DRILLER'S PLACE, 70. 01/09/2013 771.98 2,176.24
Check 22515 R082 ORILLER’S PLACE, LTD. 02/06/2013 “113.74 -2.290.08
Check 22615 ROB2 DRILLER'S PLACE, LTD. 03/01/2013 2118.13 +2,408.21
Check 22719 ROB2 DRILLER'S PLACE, LTO. 04/02/2013 91.75 -2,499.96
Check 22822 ROB2 DRILLER'S PLACE, LTD. 05/07/2013 58.44 -2,555.40
Number of transactions 43 Total Amount -2,555 40
+= Check not printed
MOR 000132DBré Job/tiell/Unit Operati
MORMACK IND
146 ALLEN AVE
o. BOX 191
ORRVILLE, OC 44567
phone: {330) 682-908u
ng Statement pac
R362 0 MARVIN HILTY
226 WALNUT STREET
BOX 31
RUSHSYLZANIA, OH 44347
Description
Ownership Type is Landowner Royalty Payments
WAYOOL2 HILTY, N. #1 42029 Yor. Price 4.13
Gas $$ On 30 Off 0 23.60 97.59 lz 12.2¢
+* Costs & Taxes:
a7
OH - Gas Tax
Mormack Ind. Inc.
Check# 17477 Paid 02/26/10 $12.13
DEL Cob/Hell/tnit Operating $
MORKACK IND. 78
145 ALLEN RVE
E
ORRVILLE 1
Telepnone: “9085
R360 MARVIN HELTY paged:
126 WALNUT STREET oe
BOX 1]
RUSHSYLZANTA. OH 44347
Descripticn s
Ownership Type 1s Landowner Royalty Regular Payment
WAYOO1L2 HILTY, No OWA Gas From:31/40/200%
Gas $$ On 31 Off 06 72.09 332.42
** Costs & Taxe
OW - Gas Tax
++ Revenue
Tota? Revenue
hens Expense
oe, oe
Ree _ sone
eo _ Paid ona
TT
MOR 000133DRIG Date: 4/99/2010
CRRVILLE,
Telephone: (330)
R26C 9 MARVIN HILTY
126 WALNUT STRE!
BOX 11
RUSHSYLZANIA, OH 44347
Description
Ownership Type Is Landowner Ro:
WAY0022 RILTY, N. We
Gas $$ On 31 Off
Mormack ind, Inc.
Staterent
Bis Jobs 3
INC
ALL
P.O. BOX 10>
ORRVILLE, C4 44667
Telephone: 1330) 6£2-908¢
R260 9 MARVIN HILTY
126 WALNUT STREET * Balance
BOX 31 + To Next
RUSHSYLZANIA, OH 44247
Description
Regula
From: 0
ownership Type ts, landowner Royaley
WAYOG12 il
Ownership type, 15
WAYOO12 RILTY, WN.
ain g¢ Ga'bs' ott
Gas §§ On 28 Off 0
** Costs & Taxes:
OH - O21 Tax
OH - Gas
++ “Revenue:
viandows x
L
Total Revenue
MOR 000134ing St
- Inc
AVE
R360 MARVIN HILTY Pageé 2
12€ WALNUT STREET carried ?
BOX Period * 3G
RUSHSYLZANIA, O4 44547
Description Gress $ & Owned Your Met
Ownership Type ts Landowser Ro} Regular Pays
WAYOOL2 HILTY, XN. i : 5.20
Rass On 30Off 0 20.28
++ “TOSts & AS:
OH - Gas Tax te
** 26
Toval Revenue
DB1E Sob/Weli/Unit Operati
MCRMACK XD
145 ALUE
P.O. BOX 101
CRRVILLE, 0% 4see?
Telephone: } 682-9080
R360 9 MARVIN HILT
126 WALKUT §
BOX 11 *
RUSHSYLZANIA, OH 44347
Description
ownership Type Is Land
‘0912 HILTY
3.77 Less Expense:
Prior Balance
Total Revenue:
MOR 000135Date: 9/28/2015
DB16 Jeb/Well Unit Operacing Statem
MORMACK IND. INC.
145 ALLEN AVE,
P.O. BOX 103
ORRVILLE, OH 44667
Telephone: (330) 682-9020
R360 MARVIN HILTY
126 WALNUT STREET * Carried *
BOX 12 .
RUSHSYLZANIA, OX 44347
Pericd * eo
Description
Ownership Type Is Landowner Royalty Regular Paymer
WAYOO HILTY, N. #2 as From:05/12/20:0
on 30 Off 6 25.40
* S & Taxes:
OH - Gas Tax
** “Revenue
s
To:06/29/2010 Frice
Sc00oC%
DB1E Job/Well/anit Operact
MORMACK IND.
145 ALLEN AVE.
P.O. BOX 162
ORRVILLE, OF 44667
Telephona: (330) 682-5989
g Stat
R360 MARVIN HILTY _ . . Paget ot
126 WALNUT STREET * Balance Carvi -
BOX 11, * Po Kaxc Feriod * c
RUSHSYLZANIA, OU 44347
Descriprien
Ownership Type Is Landowner Royalty equiay
HILTY, N. #1 ‘Gas..Prom:07/22
90 316.86
Wavoon2
SB .$$ On 31 Off 0 ree 98
+* Costs & Taxes
OH - Gas Tax
** “Revenue: 14.61 Less =xpense
Total Revenue:
MOR 000136DBIé Jeb/vell/Unit Operating stateier pate: 2/66/2021
MORKACK IND,
165 ALLEN Al
P BOX% 201
ORRVILLE, OW 44667
velephone o 9086
R360 MARVIN HILTY Pages 1
126 WALNUT STREET * Balance .
* To Next Fer ‘ 00
BOX 13
RUSHSYLZANIA, OH 44347
Description
Ownership Type Is Landowner Royalty Reguiar
WAYOO1L2 HILTY, N. #2 Gas Prom:10/12/2210 To:12/10/2010 Price 4.16
Gas $$ On 30'Off 6 2.60 80050% 3
** Costs & Taxes:
OH - Gas Tax
** “Revenue: a
jor Balance Cari
Less Expense oa
go/2eur
DBis Job/well/Unit Operaring Staresent
MORMACK IND, INC.
145 ALLEN AVE.
P.O. BOX 162
ORRVILLE, OH 44667
elephone: (330) 682-9986
R360 MARVIN HILTY
126 WALNUT STREET *
BOX 11 *
RUSHSYLZANIA, OH 64347
Description
Ownership Type Is Landowner Royalty
WAYOOL2 HILTY, W. #1
Gas $$ On 31 off 0
ve Costs & Taxes
OH - Gas Tax id Ao
+« Revenve :
Total Revenue 198.12-
pB16 Sob /i JUnit Operating Staterent OsOL/ 2012
MORMACK IND. INC.
165 ALLEN AVE,
F. 9, BOX 102
CRRVILLE, OH 94667
(330) 682-9080
R360 MARVIN HILTY Pages 1
126 WALNUT STREE * os
BOX 11
RUSHSYLZANTA, OH 44347
x Owned
194.22
MOR 000137CERTIFICATE OF TITLE
made by :
HENDERSON & HARPSTER
Attorneys at Law
60 West Second Street
Ashland, Ohio 44805
The undersigned hereby certifies to Mormack Industries, Inc-
that a careful examination, covering a period from APFE1 21, 1944
to the date hereot, has been made of the public indexed records of IRSESRXCounty, Ohio, relating
th lands hereinafter described in Item 1, and that such examination shows an indefeatible and
marketable fee simple title to said pre: sto be vested in
Noah E, Hilty and Elizebeth Ann Hilty
who acquired title thereto by, deed
from Philip Hilty, 2 single person
dateé April 19, 1944 filed for record April 21, 1944 at 1:12 p.m.
and recorded in Volume 254 Page 518 of Deed records of PAIReck County,
Ohio; and that said title, in the opinion of the undersigned, is a good, safe and marketable fee
simple title, except as set forth at Items 2to 5 respectively, as shown by said indexed records,
This certificate does not purport to cover matters not of record in said County, including rights
of persons in possession, Questions which a correct survey or inspection would disclose, rights to file
mechanics’ lien, special taxes or assessments not shown hy the County Treasurer's Records, or
zoning regulations.
Dated at Ashland, in Ashland County,
Obio, this 29th day of August, 1979 m 1730 pam”
Henderson & Harpster
Yo
By vn
Co youn kK. Vanosdalt
tiem 1
Situated in the Township of Milton, County of Wayne and State
of Ohio: Known as the East half of the Southeast Quarter of Section
No. 25, Township No. 18, and Range No. 12, containing eighty
(80) acres of land.
SAVE AND EXCEPT THE FOLLOWING PARCEL: .
Ttuated In thé Township of Milton, County of Wayne and
State of Ohio: Known as being a part of the Southeast Quarter
of Section 25, Township 18, Range 12, and further bounded and
described as follows: Commencing at'an ixon pin as marking
the Southeast corner of the said section; thence North 88 degrees
43" West in the south line of the said section and in public :
road a distance of 736.6 feet to an iron drive spike (witnessed o
by an iron pipe 30 feet northwardly in line), the same being .
THE TRUE PLACE OF BEGINNING of the parcel herein described;
thence continuing North 88 degrees 43' West in the said line
289.7 feet to an iron drive spike (witnessed by an iron pipe
20 feet northwardly in line); thence North 2 degrees 04' 40"
East 436,75 feet to an iron pipe; thence North 86 degrees 11'
03" East 369.15 feet to an iron pipe; thence South 10 degrees
16' West 474.9 feet to an iron drive spike in the south line
of the said section, the same being the place of beginning,
containing 3.45 acres.
MOR 000139Together with the rights and privileges vf draining surface
and other waters into an existing water course. The Grantors
reserve similar rights and privileges of draining surface and
other waters into the aforementioned water course. Such. mutual
privileges shall be extended to the heirs, successors and assigns
of the respective owners.
This description was prepared by Willard Landis, Registered
Professional Surveyor No. 4425, State of Ohio, from notes of
a field survey made as of June 11 and 12, 1969, and as recorded
in Wayne County Record of Surveys Book "'X", Page 108.
Item 2
Easement from Noah Hilty and Elizabeth Hilty to Mormack
Industries Inc., granting right of way to lay and maintain a
pipeline and to install a tap and meter, dated May 30, 1979,
filed for record June 19, 1979 at 9:54 a.m. in Vol. 547, Page
437 of Deed-Easement Records.
Item 3
Easement for highway purposes covering 3.109 acres, from
Nosh E. Hilty and Elizabeth Ann Hilty to the State of Ohio,
dated April 22, 1947, filed for record March 12, 1949 at 11:25 a.m.
in Vol. 276, Page 349 of Deed-Easement Records.
Item 4
Agreement for channel change covering 0.230 acres, from
Noah E, Hilty and Elizabeth Ann Hilty to the State of Ohio,
dated April 22, 1947, filed for record March 12, 1949 at 12:25 a-m.
in Vol. 276, Page 351 of Deed-Easement Records.
+ leem 5
Taxes for the first half of the year 1978, in the sum of $413.17
less $38.20 homestead exemption « $374.97, are paid. Taxes for the
last half of the year 1978, in the sum of §$199.87 (CaUV reduction)
less homestead exemption of $38.20 = $199.87, are paid.
Taxes for the year 1979 are a lien but not yer due and payable.
MOR 000140WELL DIVISION ORDER wie No, wavoota
Permit No. 2416922720
Hogmack Ind., Inc,
POGOX 101
145 ALLEN AVE
Oaville, OH 44667 Effective Oate
on2g72013
Each of the undersigned hereby certifes anc’ warrants a9 of the effecting date hereof he is the Tage? Ovmer ("Owner")
i the proportions cet out Lelow and Is enttled to dispose of and receive payment for the cli, gas and other products
from the wells) which isface part of the HILTY, NL #1 Lease or Lit
MILTON Township(District, WAYNE County, State of Ol
Effective 05n28/2013 and untiturthernotice — Mormack Ind., Ine.
of ts nominee, iS horeby authorized to receive, purchase and give credit for oil from said property subject to the conditions,
covenants, and directions hereinafter toltowing,
This Division Order does not amend any tease 0: operating egreement beter
of any ather contracts for the purchase of oi! or gos.
the undersigned and the lessee of operaiat
Post Office Address
Division of interest %
jp | Credit To cet No.
Royalty Working
man | DRULER'S PLACE, LTD. ee 8797 BENNER ROAD
0128000 9.0990000 Roe RITTMAN OH 44270
. 4
MORMACK IND. INC. 145 ALLEN AVE.
0.648320 °
38 2.8280090 cont ORRVILLE OH 44667
ooissara
Gorse
OORSTS
GORI!
o.urcrng3
Execution cf this document indicates acceptance of the frovisions as stated herer,
.e furnish your Socia! Security or Tax 1.D. Numbes
“In accordance wilh Fedsrat Law, pl
MOR 000141RECEIVED aug - 5 1968
MOR 000142
eeeARTER & HADDEN
ARTER & HADCEN I
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CLEVELAND. Orv canis tantow On10 e4702 ,
218696 100. 2IBLEES NES ° RA /7HV TS EY ere
VELECOPIER 716.696 2625 TELECOPIER 216453.2364 1 PIER Zia p9ai7y
tw covumeus August 5, 1988 ARTER & MADDE
ARTER @ HAODEN 1919 penngr Vania AVENUE, MW,
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cotuunus, ov a3zi9 tevecontan 202/687.0172
TELECOPIER 614/221-0479 . esoztsezeanc
PLease ResPowo To:
Canton
UNDERGROUND GAS STORAGE FIELDS
By
Bill Williams
Canton, Ohio
During the last two years, since March 28, 1986, Judge
David Dowd of the U.S. District Court, Northern District of Ohio,
Eastern Division, based in Akron, Ohio has issued at least six
orders and/or opinions in the following four separate unreported
cases. Columbia Gas Transmission Corporation is a party in each
case which involves some aspect of gas storage field law.
MAY A CORPORATION COFDEMN FOR GAS STORAGE USE FERC
DESIGNATED PROTECTIVE AREA PROPERTY?
YES. The Court in Case No. C85-661A entitled:
Columbia Gas Transmission Corp. v. An Exclusive Gas Storage
Easement in the Clinton Subterranean Geological formation in
ig.t6 acres, Clinton Township, Wayne County, Ohio, €t al.
determined on March 28, 1986, to deny defendant's motion for a
summary judgment to dismiss Columbia's action to condemn property
for use in its Wayne County storage field reservoir. The
property lies in the protective boundary area that surrounds the
storage field reservoir.
The Court held that property which is located within
the protective area as designated on the map or maps attached to
the application for certificate of public convenience and
necessity with FERC authorized the holder of such federal
certificate to acquire an easement for the underground storage of
natural gas through the exercise of the right of eminent domain,
Condemnation proceedings apply not only to the property within
the gas storage reservoir, but also property in the protective
boundary area.
MOR 000143: On August 19, 1987, the Court denied a motion by the
mineral lessees for leave to file a counterclaim action for
trespass. On August 31, 1987, the mineral lessees filed a
renewed motion to amend its answers and for a counterclaim for
trespass in that the lessees obtained a 7/8 interest in the case
from the landowners. Such was performed to overcome the Court
earlier doubts that mineral lessees had "Standing" to maintain a
trespass action. The Court on September 24, 1987 denied the
lessee's further request for a counterclaim dve to it being filed
so late in the game. The counterclaim was filed two and one-half
years after the original complaint even though the lessees now
have standing.
Furthermore, the Court denied the landowners request to
appear, answer and file a counterclaim dve to the lateness of the
request beyond the time limit of the law. The Court further
affirmed the right to trial by jury on the value the property.
RENAIN THE PERSONAL PROPERTY OF THES
INJECTOR?
DOES INJECTED STORAGE
YES. In Case No. C86~1196A, Columbia Gas
Corp. v. James R. Smail, R. Daniel Wiles and Harold
Court decided on July 18, 1986, that an injector of nacuraéi Gas
into storage facilities in the ground does not lose title to the
gas when it is in storage. The Court reaffirmed the 1897 Kelly
decision in interpreting that a mineral when it is raised from
the earth becomes personal property, subject to ownership
distinct and separate from realty. The Court scated tha
Columbia did not lese its possessory interest in the gas as
personal property upon its reinjection into the storage well.
The Court furth or cited the 1949 Ohio Supreme Court
decision of Tert cling Brothers, ine. ve Silencers which held that
they become personal property immediately vpon severance from the
land. The Court therefore held that Columbia's storage gas does
not change when it is injected into the storace formation, it
still remains the personal property of Columbia.
This case involved a request by Columbia for a
preliminary and permanent injunction against the drilling and
completing of a well on the “Kies property" located adjacent to
but outside the boundaries of the Wellington Storage Field in the
Clinton geological formation in Penfield Township, Lorain County,
Ohio.
The Court held that the defendants are entitled to
extract native natural gas, but not “extraneous gas“ which is
defined as gas produced elsewhere, acquired and then for purposes
of storage, injected into a storage reservoir.
MOR 000144/ The Court further held that the law of capture is in-
‘ applicable and if extraneous storage gag escapes from Columbia's
storage field, it still belongs to Columbia unless Columbia
abandoned the gas.
Columbia attempted to persuade the Court that no native
natural gas existed on the Kies property through the testimony of
their two expert witnesses. Professor Robert W. Chase, Chairman
of Petroleum Engineering at Marietta College and william H.
Kanes, Professor of earth sciences at the University of South
Carolina, testified that the Kies well would not be an economic
success.
The Court held that it cannot instruct a landowner (the
defendants were the landowners and not lessees) as to what is a
reasonable use of their property and found that the defendants
would more likely suffer irreparable harm if the landowners could
not drill for natural ges op their property dve to Columbia's
storage of gas on a neigh ng preperty. Columbia could be
monetarily compensated for any damage to its reservoir in an
action for conversion.
The Court further found that the public interest in
protecting a landowner's right to enjoy his property by drilling
for oil is paramount to the right of a personal. property owner
(Columbia) to be free from harm to its personal property (stored
gas) which has escaped to neighboring land.
The Court finally orcered the defendants to comply with
eight points prior to the Grilling anc fre ring of the woll
which includes notice, the ght of Columbia to e@ cbjection,
right of Columbia to moniter the ériliing pxecess, and if
drilling is successful, tie £1 ¢ of monthly reperts with the
Court and Columbia's bond of $10,000.00 can be continued.
On December 23, 1986, the Court issued a subsequent
order in this case which responded to Columbia's objection to the
defendant's drilling procedure because Columbia would not be able
to perform various tests to determine whether the well is
producing Columbia's storage gas.
Columbia had six objections which the Court addressed,
Columbia desired drilling with air and not mud. The Court held
that Columbia failed to demonstrate significant harm to storage
gas by the use of mud and defendants can drill using mud.
Second, the Court stated that Columbia, at its cost, may perform
coring operations of the Clinton formation. Third, Columbia is
entitled to have the well drilled forty feet deeper as long as
Columbia pays for the increased costs at $7.00 per foot and
assumes responsibility for loss or damage. Fourth, Columbia is
denied its request to substitute Schlumberger for Eastern Wells
Surveys as the logging contractor. Fifth, Columbia is entitled
to have representatives sample drill cuttings. Finally, the
Court denied Columbia's request for a two-week delay between the
drilling of the well and the placing of the pipe.
=3-
MOR 000145CAN A UTILITY BE SUBJECT TO A TRESPASS ACTION FOR STORING GAS
WITHOUT THE OWNER'S CONSEN?
C84-510A,
YES. In consolidated Case No.
Transmission Corp. v, An Sxclusive
Clinton Subterreneen G
Township, Asnlane Cov
Bowman v. Columbia Gi
sought to appropriate en
exclusive undergrounc netural gas stor ee casement. On October
27, 1986, a jury returned a verdict $10,021.75 be paid as just
compensation to the landowner. Columbia deposited the money with
the Clerk of Court which is to be paid to the landowners upon the
expiration of all rights of appeal. Victor Petroleun
Corporation, @ lessee, dig not present any evidence at the
trial. The jury also awarded the landowners $30,000.00 for
punitive damages against Columbia for trespass due to the gas
storage.
The Court also ordered on November 10, 19€6 that the title
to an exclusive underground natural gag storege easement in the
Clinton Formation beneath the subject tract including the right
and easement to use, inject into, store and remove gas from the
subterranean stratum underneath the subject tract known as the
Clinton Formation by means of wells located elsewhere in the
Lucas Storage Field is hereby appropriated an@ conveyed unto the
Columbia Gas Transmission Corporation.
On October 16, 1986, the Court ruled on several motions
pending before it by the parties. First, the Court held that
Columbia had been storing gas under the lan¢owners’ property
since 1964 without informing thein-or obtaining their consent or
paying any compensation. A well permit in leed wes issued to
Victor Petroleum Corporation and Columbia obtained a restraining
order,
Columbia argued that the landowners only remedy was the
federal common law action of inverse condemnation and that an
Ohio action for trespass should not be permitted.
The Court found that the federal common law respecting
condemnation is inapplicable and held that Ohio law does permit
actions for trespass against the condemning authority prior to
the commencement of the condemnation action and fixes the date of
the take as the judicial action date to condemn.
The Court on January 6, 1987, denied Columbia's motion for a
judgment notwithstanding the verdict of the jury regarding the
granting of punitive damages in the sum of $30,000.00. The Court
upheld the damages stating they were significant but not
excessive.
MOR 000146/ MAY A UPILITY STOP A PRODUCING WELL LOCATED 1N ITS DESIGNATED
’ PROTECPIVE AREA?
YES. In Case No. C87-3348A, Columb3
vs. An Exclusive Nety S ag en
Subterr n Ceol
Ripely fow
condemn the ges well as Cling Sy
Geological Formation beneath the €0 acre trect @
two million dollars against the oil and gas less
nD
her sought
e 80 acres
lie in the pretective acreage of Holmes Storage The Court
granted Columbia's Motion for a Preliminary In i enjoining
of this
production from the Hostetler well pe.ding the outccme
lawsuit. The injunction was also conditioned upon Columbia's
reactivating its Holmes Storage Field.
The Hostetler well was drilled in 1976 and has been in
operation since 1977. In 1977 Columbia ecdced five of its Holmes
storage wells which were the closest to the Rostetler well
Columbia repeated this action in 1980 and in 19832 placed the
entire southeastern portion of the storage area on continuous
withdrawal, In 1984 Columbia also placed the ten wells nearest
the Hostetler well on continuous withdrawal. In essence, the
Holmes Storage Field was virtually shut down as a storage
facility. Columbia tested the well in 1984, 1985 and 1986 and
established beyond any question, according to Columbia, that the
well was producing storage gas.
In 1986 Columbia applied for and obtained an upéated
certificate from FERC, which enlarged the boundaries of the
Holmes Storage Field, so tnat the Hostetler well was now located
within the protective acreage of the field. The Court held that
Columbia do: have the present right to condemn the Hostetier
well property, whether or not the well is producing storage ges.
An order was issued April 29, 1988 and an amended order granting
the Motion by Columbia for preliminary injunction was issued June
21, 1988. The Court also concluded that it is very probable that
the Hostetler well is producing storage gas. The Court also held
that Columbia is likely to succeed on the merits of this action
in the condemnation of the Hostetler well and the 80 acre tract.
The Court ordered the Hostetler No. 1 well to be shut in and to
stop producing gas.
SUMMARY
1. Condemnation for underground gas storage is permitted in the
FERC designated certificated boundary areas.
2. Injected storeage gas continues to be personal property owned
by the injector including the injected stored gas that migrated
outside the certificated area.
3. A producer is permitted to drill outside the certificated
area. However, an injector of stored gas has a right to
-5-
MOR 000147‘ participate and test a proposed well outside the PERC
- certificated boundaries.
, 4. The ODNR issuance of drilling permits is not a factor to
f date.
just
5, A jury was entitied to cetermine a lanGowner's
one of the
compensation for uncerc und storage
following four standards:
a. Difference in the fair market value before the taking by
deducting the fair market value immediately after the
taking.
b. Comparable sales of storage rights.
ec. Capitalization of the rental income for the right to
store the gas.
d. If commercially recoverable volumes of gas shown, then
foreseeable net income flow from the property for its
productive life reduced to a present value.
6. Injector's intentional. and deliberate actions of storing gas
without consent can result in trespass and awarc of punitive
damages.
7. A storer of storage gas can obtain an injunction to haeit a
producing well in a certificated area. No cases have decived the
measure of Gamages to the owner of such well.
MOR 000148STATE OF O10 DEPARTMENT OF NATURAL RESOURCES DIVISION OF GEOLOGICAL SURVEY
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EXPLANATION
Horizontal wall status fas of 4.20138
Producing (917
Drilled (208)
Oritting (13
© Permitted (303)
Pluggud (14)
Not Dritied (11)
Inactive (2)
Oil ant Gas Resorecas Alsager,
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MOR 000149061000 NOW
ANROAREOL & PONSHORE LC
ANADAREO EE P ONSHORE LLC
ANRDAAKOE & PONGHDRE Le
anabAeO ££ PONSHORE KC
ANADARKOE & ? ONSHORE KC
AHADHEKOE A P ONSHORE LE
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ANTERO RES APPALACHIAK CORP
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MOR 000159091000 HOWR360 MARVIN HILTY Page# 1
126 WALNUT STREET * Balance Carried *
BOX 21 * To Next Period * 00
RUSHSYLZANIA, OH 44347
Gross $ % Owned Your Net
Ownership Ly “Regular. Pa 2
WAYGCI . #2 Gas From:10/12/2010 Po: 32/20/2020 Price 4.18
On 36 “oFe o 2.60 11.02 -500000% 1.38
ae
07
** Less Expense: .O1 Net:
Job/Well/tnit Operating Statement Date: 3/09/2011
MORMACK IND. INC.
145 ALLEN AVE.
BP. So. BOX 101
ORRVILLE, OH 44667
Telephone: (330) 682-9060
HILTY Page# 1
LNUT STREET * Balance Carried *
x * To Next Period * 00
LZANIA, OCH 44347
Gross $ & Owned Your Net
Regular Payments
Gas From:11/10/2010 T0:12/10/2010 Price 3.68
15.94 12.500000% 1.99
DBLE Jeb/Neli/Unir Operating Statement Date: 9/01/2012
MORMACK IND. INC.
145 ALLEN AVE.
P. Oo. BOX 161
ORRVILLE, OK 44667
Telephone: (330) 682-9089
R260 MARVIN HILTY Page# a
125 WUT STREET * Balance Carried *
BOX 11 * Po Next Period * 00
RUSHSYLZANZA, OF 44347
eription Ooty Gross § % Owned Your Nes
MOR 000138
Preview
IN THE WAYNE COUNTY, OHIO COURT OF COMMON PLEAS DRILLERS PLACE, LTD. Plaintiff vs. MORMACK INDUSTRIES, INC., et al. Defendants YO Case No. 12-CV-0699 soe ee JUDGE: Corey E. Spitler + MOTION TO COMPEL FURTHER RESPONSES TO PLAINTIFF'S DISCOVERY REQUESTS Now comes the Plaintiff, Drillers Place, Ltd., by and through its counsel. moves the Court for an order compelling the Defendants to provide complete responses to the supplemental discovery requests submitted by the Plaintiff to Defendants. Plaintiff submits that the Defendants recently disclosed that there are allegedly other working interest owners claiming an interest in the lease that is the subject of this dispute, but the Defendants, at this point, are refusing to disclose the identity of those alleged working interest owners. Plaintiff also submits that the Defendants have claimed that they started making certain production payments or royalty payments at a certain time period. However, the Defendants continue to refuse to produce the correct documentation in support of such a position Piaintiff submits the following Memorandum in support of its position x Respectfully submitted, he AW OFFICE, LLC. By: ee James M. Richard (#0016491) Attorney for Plaintiff 127 East Liberty Street, Suite 100 P.O, Box 1207 Wooster. Ohio 44691 Telephone: (330) 262-0034 Fax: (330) 262-0080 Email: james@richardlawoffice.comMEMORANDUM Article |. Definitions 1. “Drillers Place” means the Plaintiff, Drillers Place Ltd. 2. “Mormack” means the Defendant, Mormack Industries , Inc 3. “McCluskey” means the Defendant, Paul J. McCluskey, Jr., a fractional working interest owner in the Mormack well and leasehold estate by virtue of an assignment recorded in Volume 712, Page 129, Wayne County, Ohio Lease Records. 4. “Discovery Responses” means the responses of Mormack and McCluskey to the supplemental discovery requests of Drillers Place. 5. “Richard Affidavit” means the Affidavit of James M. Richard. attached hereto marked as Exhibit 1. Article Il. Mormack and McCluskey’s Claim of Royalty and Production Payments as of a Certain Time At the deposition of Ed Mack, he indicated that payments evidencing production payments were sent to Drillers Place as of a certain time. The witness also indicated he could produce his records confirming these payments within a short period of time. The date the payments were made or received is disputed. Drillers Place supplemental request for production of documents #1, and the response by Mormack and McCluskey, read as foliows: “4. True copies of all royalty checks sent to Drillers Place Ltd. since the time of acquisition of title by Drillers Place Ltd., as well as the bank records indicating whether or not the checks have been endorsed or negotiated RESPONSE: See attached document labeled as MOR 000132..." The document labeled as “MOR 000132" is attached hereto marked as Exhibit 2. That document is a computer generated intemal document by Mormack and does not include copies of the checks. ledgers or bank records showing whether the checks in question cleared and/or the dates of bank clearance. The computer generated document is self serving and the dates themselves may be a date that was entered onthe computer, however, the check itself may not have been delivered, or may have been delivered al a much later date Drillers Place submits that this evidence is material to the issues raised in the Amended Complaint filed by Drillers Place. Article Ill. The Objections of Mormack and McCluskey to the Information Pertaining to the New Working Interest Owners The document request of Drillers Place, and the response of Mormack and McCluskey. read as follows: .4. True copies of the documents showing the current ownership of the working interest and_royalty interest regarding the Hilty well. You have the title report that was marked as an exhibit; however, it appears that there are other working interest owners, other than the owners you previously disclosed RESPONSE: Objection, the request calls for confidential and proprietary information and this request is not likely to lead to the discovery of admissible evidence. Without waiving said objection, Defendant states that there are sixteen (16) royalty interest and working interest holders. However, Defendant will not produce their identity without a stipulated protective order or some other confidentiality agreement between counsel, Please see redacted copy of document labeled as MOR 000141...” (Emphasis Added} The response of Mormack and McCluskey is limited to a document which Mormack and licCluskey label as MOR 000141. That document is attached hereto marked as Exhibit 3. That document contains redactions of certain material information dealing with the identity of the people or companies in question and the consideration paid. That document is dated May 29, 2013 The deposition of Ed Mack was previously filed with the Court. together with the exhibits. The deposition exhibits include not only the title reports pertaining to this leasehold estale. but also confirm that there were no other working interest owners disclosed of record other than McCluskey and Mormack. Ed Mack, at his deposition, indicated for the first time, that there were other working interest owners and apparently there were recent transactions dealing with working interest owners.Drillers Place indicates, immediately upon receipt of this response, that Drillers Place indicated it would sign a confidentiality agreement. However, the information redacted has not yet been provided. In the event there are now working interest owners that have been filed for record after the deposition of Ed Mack, who claim an interest in this Lease, these people are necessary parties which must be included in this litigation. This issue was addressed in the Motion for Summary Judgment filed by Drillers Place and the page of that memorandum filed in support of that motion is attached hereto marked as Exhibit 4. The problem was disclosed at that time through footnote #2. Drillers Place must again note that Mormack and McCluskey continue to claim that the well was not out of production for a substantial period of time. In fact, at one point in his deposition, the witness indicated that there were only minor delays in the sale of gas and oil during certain months of the year. which were caused by the weather. At other times, the deposition testimony indicated that there was a down-hole problem that had to be repaired. In any event, Deposition Exhibit #1 confirms that Mormack Tfeacquired all of the original working interest owners except McCluskey. The various claims of Drillers Place address not only breach of contract, but breach of the implied covenant of continued development lease provisions that violate public policy, lease reformation and mutual mistake of fact. If Mormack and McCluskey are raising money through new investors to spend on this well and participate in further development at this time, this information is material and relevant and goes to the very issues involved with the various claims of Drillers Place. There is no dispute of fact regarding the status of the shallow well on the property in question. At best, the production potential is nominal and will only continue for a limited period of time. If Mormack is now contemplating drilling to deeper formations, this issue is also material and relevant to the issues before the Court. Again, there Is no reason for Mormack to be raising money from investors to invest in a shallow Clinton formation well. If the deep rights in question have value. as apparently contended by Mormack and McCluskey, then the price paid by these new investors and the information regarding the plans in question are certainly material and relevant to the issues before theCourt. These issues go directly to the public policy argument as evidenced by the summary judgment decision in favor of landowners is Morrow County. Regardless and irrespective of the relevancy issues. Drillers Place should not be sub:ected to continued litigation by working interest owners who now claim an interest in this well and leasehold estate that were not previously disclosed by Mormack, either at the Ed Mack deposition or through the title reports that were earlier completed, as evidenced by the deposition exhibits. Article 1V. Summary Drillers Place submits that an order compelling discovery should be issued immediately. Crillers Place further submits that although Drillers Place has agreed to sign a confidentiality agreement. it is the position of Drillers Place that this claim of privilege or confidentiality is not submitted in good faith as the identity and extent of ownership, as well as the purpose of this new ownership, must be disclosed in order to avoid multiple claims and extended protracted litigation. Certainly, Drillers Place cannot be criticized by disclosing to the Court and the parties the status of record title. Drillers Place secured a title report confirming the status of record title in these proceedings. Now, Mormack and McCluskey. at their deposition, have apparently changed the status of record title and secured new working interest owners ‘or the specific well that is the subject of this dispute. Drillers Place submits that this Court cannot issue a fina! order addressing all issues between the parties until all working interest owners appear and/or stioulate that the decision of this Court will be binding upon them as well as Mormack and McCluskey and produce the information requested.Respectfully submitted, Attorney for Plaintiff 127 East Liberty Street, Suite 100 P.O. Box 1207 Wooster, Ohio 44691 Telephone: (330) 262-0034 Fax: (330) 262-0080 Email: james@richardlawoffice.com CERTIFICATE OF SERVICE | hereby certify that a copy of the foregoing Motion was mailed to Patrick E. Noser. Attorney for Defendant, RITCHFIELD, CRITCHFIELD & JOHNSON, 225 North Market Street, Wooster, Ohio 44691, this’ fay of October, 2013, by ordinary U.S. mail RISHARD LAW OFFICE, LLC. James Mr Richard (#0016491) Attorney for PlaintiffIN THE WAYNE COUNTY, OHIO COURT OF COMMON PLEAS DRILLERS PLACE, LTD. * — Case No. 12-CV-0699 Plaintiff * + JUDGE: Corey E. Spitler VS. * + AFFIDAVIT MORMACK INDUSTRIES, INC., et al. Defendants STATE OF OHIO ) )ss COUNTY OF WAYNE )} Affiant, JAMES M. RICHARD, being first duly sworn, deposes and states the following 1 That Affiant has personal knowledge of the facts and statements made herein; and 2. That the Defendant's responses to the supplemental discovery requests are attached hereto marked collectively as Exhibit A; and 3, That Plaintiff has attempted to resolve the disputed issues by communicating with counsel for the Defendants but a resolution has not yet been reached FURTHER AFFIANT SAYETH NAUGHT. JENNIFER N. SMITH Notary Public, State of Ohio My Commission Expires Juty 14, 2017 EXHIBIT 1; \IN THE WAYNE COUNTY, OHIO COURT OF COMMON PLEAS DRILLERS PLACE LTD. CASE NO. 12-CV-0699 Plaintiff ek ee JUDGE: Corey E. Spitler * vs. MORMACK INDUSTRIES, INC., ct al. Defendant DEFENDANTS MORMACK INDUSTRIES, INC. AND PAUL J. McCLOSKEY, JR.’S RESPONSE TO PLAINTIFF DRILLERS PLACE LTD.’S SECOND SET OF REQUEST FOR PRODUCTION OF DOCUMENTS Defendants Mormack Industries, Inc. and Paul J. McCloskey, Jr. (“Defendants”), hereby serve their Responses to Plaintiff Drillers Place Ltd.’s Second Set of Request for Production of Documents, originally attached as Exhibit A. Defendants reserve the right to supplement these responses as discovery is ongoing. GENERAL OBJECTIONS l. Defendants object to each and every request to the extent such request seeks information protected from discovery by the attorney-client privilege, work-product doctrine, or other applicable privilege, protection or immunity. The inadvertent production by Defendants of such information shall not constitute a waiver of any applicable privilege, protection or immunity. 2. Defendants object to the definitions and instructions contained in the discovery requests to the extent such terms are vague and ambiguous and to the extent the instructions purport to impose burdens in excess of those provided for by the Ohio Rules of Civil Procedure. 3. Defendants object to cach and every request to the extent such request sceks the disclosure of trade secrets or otherwise commercially-sensitive or confidential gay EXHIBIT A |Defendants will defer production of such information until entry of an appropriate protective order limiting the use and/or disclosure of such information. 4. Defendants object to each and every request to the extent such request secks information readily available to Plaintiff through public sources or from other non-parties. 5. Defendants object to each and every request to the cxtent such request seeks information that is in the possession of third parties and is not in the possession or under the control of Defendants. 6. Defendants object to each and every request to the extent such request purports to impose requirements, obligations and/or duties not required by the Ohio Rules of Civil Procedure. 7. Defendants object to each and every request to the extent such request seeks information that is irrelevant and not reasonably calculated to lead to the discovery of admissible evidence, and/or is overly broad and unduly burdensome. 8. Defendants will supplement these responses in accordance with their obligations under the Ohio Rules of Civil Procedure. These general objections are continuing in nature and are incorporated by reference in response to each of the interrogatories or requests set forth below. By responding to the interrogatories or requests, Defendants do not waive any of the foregoing general objections.1. True copies of all royalty checks sent to Driller’s Place Ltd. since the time of acquisition of title by Driller’s Place Ltd., as well as the bank records indicating whether or not the checks have been endorsed or negotiated. RESPONSE: See attached document labeled as MOR 000132. 2. True copies of the complete record of all royalty payments paid to the landowners under the Hilty lease for 2009, 2010, 2011, 2012 as well as year-to-date 2013. Ed Mack testified that he changed computer programs in 2009 and indicated it was possible that the amount due to the landowner was so Jow that this issue was not addressed until year end, and it is possible that with his new accounting system, he may have missed the year end accounting to make the disbursements. We need all of the information, whether the landowners royalty was paid quarterly, annually, or not paid at all, for a period of time specified. RESPONSE: Sce attached documents labeled as MOR 000133 through MOR 000138. 3 True copies of the title report Ed Mack referred to at his deposition together with any supplements, amendments or updates pertaining to that report. RESPONSE: See attached documents labeled as MOR 000139 through 000140. 4. True copies of the documents showing the current ownership of the working interest and royalty interest regarding the Hilty well. You have the title report that was marked as an exhibit: however, it appears that there are other working interest owners, other than the owners you previously disclosed. RESPONSE: Objection, the requests calls for confidential and proprietary information and this request is not likely to lead to the discovery of admissible evidence. Without waiving said objection, Defendant states that there are sixteen (16) royalty interest and working interest holders. However, Defendant will not produce their identity without a stipulated protective order or some other confidentiality agreement between counsel. Please sce redacted copy of document labeled as MOR 000141. 5. True copies of al! documents evidencing Mormack’s efforts to investigate or drill a second well on the Hilty lease which resulted in the decision to not drill based upon the problem with Dominion East Ohio and the buffer storage ficld area. [ will need all of the documents or correspondence exchanged pertaining to this specific issue. RESPONSE: Objection, ealls for produetion of proprietary and/or confidential documents, vague, overbroad and burdensome. Without waiving said objection, see documents attached including a map and an August 5, 1988 letter labeled as MOR 000142 through 000148. 26. True copies of all of the seismic records and related documents that were examined, secured by Mormack in the decision-making in 1993 dealing with possible further development of the Trempealcau formation. RESPONSE: Objection, calls for production of proprictary and/or confidential documents. Without waiving said objection, Defendant states it will only produce the documents with a stipulated protective order or some other confidentiality agreement between counsel. 7. True copies of all records evidencing the date of drilling and completion of the three (3) Trempealeau wells referred to by Ed Mack at his deposition. I believe he referred to the first well being somewhere around 1981 and was in production for six (6) years. He then referred to another well on Pleasant Home Road two (2) or three (3) miles west, that either has been plugged, or was in the process of being plugged. There was a third well in Baughman Township. We will need the plugging permits, the dates of drilling, well logs and the production records. RESPONSE: Objection, the request is vague, overbroad and unduly burdensome. Without waiving said objection, the documents requested by Plaintiff are matter of public record and are identified as Wayne County Wells with the API Numbers 3416922990, 3416922991, 3416925009, and 3416925010. 8. True copies of all documents that Ed Mack relied upon in investigating the Utica Shale and other deeper formations during the last three (3) or four (4) years, and which he further relied upon in expressing his opinions regarding the Utica Shale, the problem with pressure and the economic feasibility of drilling to that formation. RESPONSE: Objection, the request is yaguc, overbroad and unduly burdensome. Without waiving said objection, the Defendant relied on its general understanding of drilling and geology, which is supported by materials from the ODNR some of which are attached as MOR 000149 through 000153. 9. True copies of all documents that Ed Mack is apparently relying upon to support his testimony that providing free gas to a landowner is sufficient “production” to classify the well as being a commercially productive well. RESPONSE: Objection, this request calls for the production of documents covered by the attorney client privilege or work product doctrine. Defendant possesses no discoverable and responsive documents. 10. True copies of all documents upon which Ed Mack is apparently relying in support of his testimony that terminating production and the payment of rental or royalty payments is not a problem unless and until production and payment has been terminated for more than two (2) years.RESPONSE: Objection, this request calls for the production of documents covered by the attorney client privilege or work product doctrine. Defendant possesses no discoverable and responsive documents other than the lease itself. 11. True copies of the gas contract with the City of Orrville or Northeast Natural Gas showing all of the gas sales from the Hilty well, and others, as referred to by Ed Mack at his deposition. RESPONSE: Objection, there is no contract with the City of Orrville. Defendant does have a contract with Northeast Ohio Natural Gas, but objects that Plaintiff's request is vague, overbroad, and unduly burdensome. Without waiving said objection, sce documents relating to a November report Defendant received pursuant to that contract. 12. True copies of all delay rental payments, if any, that were paid by Mormack to the Hilty’s after the well was initially placed in production on the Hilty lease. RESPONSE: Objection, according to the plain language of the lease, delay rental payments are only required for “gas only” wells, thus, Defendant possesses no such documents. As for delay rental payments prior to production, sce attached document labeled as MOR 000159. 13. True copies of all well logs pertaining to any and all formations that were obtained through the well logs for the one well that was drilled on the Hilty property. RESPONSE: See attached document labeled as MOR 000160. Defendants possess additional, voluminous documents that can be reviewed and inspected at a mutually agrceable time and place. As to objections: CRITCHFIELD, CRITCHFIELD & JOHNSTON, LTD. By: Patrick E. Noser (S. Ct. # 0075144) John H. Schaeffer (S. Ct. #0041874) Andrew P. Lycans (S. Ct. #0077230) 225 N. Market Street P.O. Box 599 Wooster, Ohio 44691 Telephone: (330) 264-4444 Fax: (330) 262-0080 Email: schaeffer@ccj.com Attorneys for Defendants Mormack Industries, Inc. and Paul J. McCloskey, Jr.CERTIFICATE OF SERVICE I hereby certify that a true and accurate copy of the foregoing Defendants Mormack Industrics, Inc. and Pau! J. McCloskey, Jr.'s Response to Plaintiff Drillers Place Ltd.’s Second Set of Request for Production of Documents was sent by regular mail only this 26th day of June, 2013 to the following: James M. Richard, Esq. Richard Law Office LLC 127 East Liberty Street, Ste. 100 P.O. Box 1207 Wooster, OH 44691 Email: james@richardlawoffice.com Attorney for Plaintiff Drillers Place Ltd. CRITCHFIELD, CRITCHFIELD & JOHNSTON, LTD. By: _ Patrick E. Nosere+ 162 96/08/2013 Mormack Ind., Inc. Page 13 07:06:55 Check Register Report: csckreg Uncleared Entries By Date Range Selection Criteria’ Dates: 01/01/2000 - 06/11/2013 Sort Order, Date & Check No Type Check# !0 Payee Date Clr Amount Balance | Check 21993 ROB2 DRILLER'S PLACE, LTD. 0119/2012 -29.70 -29.70 Check 21256 ROB2 DRILLER'S PLACE, LTD. 02/13/2012 -868.00 -887.70 Check 21369 ROB2 DRILLER'S PLACE, LTD. 03/12/2012 12071 -1,009.41 Check 21530 ROB2 DRILLER'S PLACE, LTD. 0471212012 “132.72 23,142.13 Check 22036 ROB2 DRILLER'S PLACE, LTD. 09/1 1/2012 55.28 “1,197.41 Check 22110 ROB2 DRILLER'S PLACE, LTD. 10/17/2012 65.95 +1,263.36 Check 22196 ROB2 DRILLER'S PLACE, LTD. 1106/2012 “73.14 -1,336.50 Check 22269 ROBZ DRILLER'S PLACE, LTD 12/06/2012 67.86 -1,404.36 Check 22436 ROB2 DRILLER'S PLACE, 70. 01/09/2013 771.98 2,176.24 Check 22515 R082 ORILLER’S PLACE, LTD. 02/06/2013 “113.74 -2.290.08 Check 22615 ROB2 DRILLER'S PLACE, LTD. 03/01/2013 2118.13 +2,408.21 Check 22719 ROB2 DRILLER'S PLACE, LTO. 04/02/2013 91.75 -2,499.96 Check 22822 ROB2 DRILLER'S PLACE, LTD. 05/07/2013 58.44 -2,555.40 Number of transactions 43 Total Amount -2,555 40 += Check not printed MOR 000132DBré Job/tiell/Unit Operati MORMACK IND 146 ALLEN AVE o. BOX 191 ORRVILLE, OC 44567 phone: {330) 682-908u ng Statement pac R362 0 MARVIN HILTY 226 WALNUT STREET BOX 31 RUSHSYLZANIA, OH 44347 Description Ownership Type is Landowner Royalty Payments WAYOOL2 HILTY, N. #1 42029 Yor. Price 4.13 Gas $$ On 30 Off 0 23.60 97.59 lz 12.2¢ +* Costs & Taxes: a7 OH - Gas Tax Mormack Ind. Inc. Check# 17477 Paid 02/26/10 $12.13 DEL Cob/Hell/tnit Operating $ MORKACK IND. 78 145 ALLEN RVE E ORRVILLE 1 Telepnone: “9085 R360 MARVIN HELTY paged: 126 WALNUT STREET oe BOX 1] RUSHSYLZANTA. OH 44347 Descripticn s Ownership Type 1s Landowner Royalty Regular Payment WAYOO1L2 HILTY, No OWA Gas From:31/40/200% Gas $$ On 31 Off 06 72.09 332.42 ** Costs & Taxe OW - Gas Tax ++ Revenue Tota? Revenue hens Expense oe, oe Ree _ sone eo _ Paid ona TT MOR 000133DRIG Date: 4/99/2010 CRRVILLE, Telephone: (330) R26C 9 MARVIN HILTY 126 WALNUT STRE! BOX 11 RUSHSYLZANIA, OH 44347 Description Ownership Type Is Landowner Ro: WAY0022 RILTY, N. We Gas $$ On 31 Off Mormack ind, Inc. Staterent Bis Jobs 3 INC ALL P.O. BOX 10> ORRVILLE, C4 44667 Telephone: 1330) 6£2-908¢ R260 9 MARVIN HILTY 126 WALNUT STREET * Balance BOX 31 + To Next RUSHSYLZANIA, OH 44247 Description Regula From: 0 ownership Type ts, landowner Royaley WAYOG12 il Ownership type, 15 WAYOO12 RILTY, WN. ain g¢ Ga'bs' ott Gas §§ On 28 Off 0 ** Costs & Taxes: OH - O21 Tax OH - Gas ++ “Revenue: viandows x L Total Revenue MOR 000134ing St - Inc AVE R360 MARVIN HILTY Pageé 2 12€ WALNUT STREET carried ? BOX Period * 3G RUSHSYLZANIA, O4 44547 Description Gress $ & Owned Your Met Ownership Type ts Landowser Ro} Regular Pays WAYOOL2 HILTY, XN. i : 5.20 Rass On 30Off 0 20.28 ++ “TOSts & AS: OH - Gas Tax te ** 26 Toval Revenue DB1E Sob/Weli/Unit Operati MCRMACK XD 145 ALUE P.O. BOX 101 CRRVILLE, 0% 4see? Telephone: } 682-9080 R360 9 MARVIN HILT 126 WALKUT § BOX 11 * RUSHSYLZANIA, OH 44347 Description ownership Type Is Land ‘0912 HILTY 3.77 Less Expense: Prior Balance Total Revenue: MOR 000135Date: 9/28/2015 DB16 Jeb/Well Unit Operacing Statem MORMACK IND. INC. 145 ALLEN AVE, P.O. BOX 103 ORRVILLE, OH 44667 Telephone: (330) 682-9020 R360 MARVIN HILTY 126 WALNUT STREET * Carried * BOX 12 . RUSHSYLZANIA, OX 44347 Pericd * eo Description Ownership Type Is Landowner Royalty Regular Paymer WAYOO HILTY, N. #2 as From:05/12/20:0 on 30 Off 6 25.40 * S & Taxes: OH - Gas Tax ** “Revenue s To:06/29/2010 Frice Sc00oC% DB1E Job/Well/anit Operact MORMACK IND. 145 ALLEN AVE. P.O. BOX 162 ORRVILLE, OF 44667 Telephona: (330) 682-5989 g Stat R360 MARVIN HILTY _ . . Paget ot 126 WALNUT STREET * Balance Carvi - BOX 11, * Po Kaxc Feriod * c RUSHSYLZANIA, OU 44347 Descriprien Ownership Type Is Landowner Royalty equiay HILTY, N. #1 ‘Gas..Prom:07/22 90 316.86 Wavoon2 SB .$$ On 31 Off 0 ree 98 +* Costs & Taxes OH - Gas Tax ** “Revenue: 14.61 Less =xpense Total Revenue: MOR 000136DBIé Jeb/vell/Unit Operating stateier pate: 2/66/2021 MORKACK IND, 165 ALLEN Al P BOX% 201 ORRVILLE, OW 44667 velephone o 9086 R360 MARVIN HILTY Pages 1 126 WALNUT STREET * Balance . * To Next Fer ‘ 00 BOX 13 RUSHSYLZANIA, OH 44347 Description Ownership Type Is Landowner Royalty Reguiar WAYOO1L2 HILTY, N. #2 Gas Prom:10/12/2210 To:12/10/2010 Price 4.16 Gas $$ On 30'Off 6 2.60 80050% 3 ** Costs & Taxes: OH - Gas Tax ** “Revenue: a jor Balance Cari Less Expense oa go/2eur DBis Job/well/Unit Operaring Staresent MORMACK IND, INC. 145 ALLEN AVE. P.O. BOX 162 ORRVILLE, OH 44667 elephone: (330) 682-9986 R360 MARVIN HILTY 126 WALNUT STREET * BOX 11 * RUSHSYLZANIA, OH 64347 Description Ownership Type Is Landowner Royalty WAYOOL2 HILTY, W. #1 Gas $$ On 31 off 0 ve Costs & Taxes OH - Gas Tax id Ao +« Revenve : Total Revenue 198.12- pB16 Sob /i JUnit Operating Staterent OsOL/ 2012 MORMACK IND. INC. 165 ALLEN AVE, F. 9, BOX 102 CRRVILLE, OH 94667 (330) 682-9080 R360 MARVIN HILTY Pages 1 126 WALNUT STREE * os BOX 11 RUSHSYLZANTA, OH 44347 x Owned 194.22 MOR 000137CERTIFICATE OF TITLE made by : HENDERSON & HARPSTER Attorneys at Law 60 West Second Street Ashland, Ohio 44805 The undersigned hereby certifies to Mormack Industries, Inc- that a careful examination, covering a period from APFE1 21, 1944 to the date hereot, has been made of the public indexed records of IRSESRXCounty, Ohio, relating th lands hereinafter described in Item 1, and that such examination shows an indefeatible and marketable fee simple title to said pre: sto be vested in Noah E, Hilty and Elizebeth Ann Hilty who acquired title thereto by, deed from Philip Hilty, 2 single person dateé April 19, 1944 filed for record April 21, 1944 at 1:12 p.m. and recorded in Volume 254 Page 518 of Deed records of PAIReck County, Ohio; and that said title, in the opinion of the undersigned, is a good, safe and marketable fee simple title, except as set forth at Items 2to 5 respectively, as shown by said indexed records, This certificate does not purport to cover matters not of record in said County, including rights of persons in possession, Questions which a correct survey or inspection would disclose, rights to file mechanics’ lien, special taxes or assessments not shown hy the County Treasurer's Records, or zoning regulations. Dated at Ashland, in Ashland County, Obio, this 29th day of August, 1979 m 1730 pam” Henderson & Harpster Yo By vn Co youn kK. Vanosdalt tiem 1 Situated in the Township of Milton, County of Wayne and State of Ohio: Known as the East half of the Southeast Quarter of Section No. 25, Township No. 18, and Range No. 12, containing eighty (80) acres of land. SAVE AND EXCEPT THE FOLLOWING PARCEL: . Ttuated In thé Township of Milton, County of Wayne and State of Ohio: Known as being a part of the Southeast Quarter of Section 25, Township 18, Range 12, and further bounded and described as follows: Commencing at'an ixon pin as marking the Southeast corner of the said section; thence North 88 degrees 43" West in the south line of the said section and in public : road a distance of 736.6 feet to an iron drive spike (witnessed o by an iron pipe 30 feet northwardly in line), the same being . THE TRUE PLACE OF BEGINNING of the parcel herein described; thence continuing North 88 degrees 43' West in the said line 289.7 feet to an iron drive spike (witnessed by an iron pipe 20 feet northwardly in line); thence North 2 degrees 04' 40" East 436,75 feet to an iron pipe; thence North 86 degrees 11' 03" East 369.15 feet to an iron pipe; thence South 10 degrees 16' West 474.9 feet to an iron drive spike in the south line of the said section, the same being the place of beginning, containing 3.45 acres. MOR 000139Together with the rights and privileges vf draining surface and other waters into an existing water course. The Grantors reserve similar rights and privileges of draining surface and other waters into the aforementioned water course. Such. mutual privileges shall be extended to the heirs, successors and assigns of the respective owners. This description was prepared by Willard Landis, Registered Professional Surveyor No. 4425, State of Ohio, from notes of a field survey made as of June 11 and 12, 1969, and as recorded in Wayne County Record of Surveys Book "'X", Page 108. Item 2 Easement from Noah Hilty and Elizabeth Hilty to Mormack Industries Inc., granting right of way to lay and maintain a pipeline and to install a tap and meter, dated May 30, 1979, filed for record June 19, 1979 at 9:54 a.m. in Vol. 547, Page 437 of Deed-Easement Records. Item 3 Easement for highway purposes covering 3.109 acres, from Nosh E. Hilty and Elizabeth Ann Hilty to the State of Ohio, dated April 22, 1947, filed for record March 12, 1949 at 11:25 a.m. in Vol. 276, Page 349 of Deed-Easement Records. Item 4 Agreement for channel change covering 0.230 acres, from Noah E, Hilty and Elizabeth Ann Hilty to the State of Ohio, dated April 22, 1947, filed for record March 12, 1949 at 12:25 a-m. in Vol. 276, Page 351 of Deed-Easement Records. + leem 5 Taxes for the first half of the year 1978, in the sum of $413.17 less $38.20 homestead exemption « $374.97, are paid. Taxes for the last half of the year 1978, in the sum of §$199.87 (CaUV reduction) less homestead exemption of $38.20 = $199.87, are paid. Taxes for the year 1979 are a lien but not yer due and payable. MOR 000140WELL DIVISION ORDER wie No, wavoota Permit No. 2416922720 Hogmack Ind., Inc, POGOX 101 145 ALLEN AVE Oaville, OH 44667 Effective Oate on2g72013 Each of the undersigned hereby certifes anc’ warrants a9 of the effecting date hereof he is the Tage? Ovmer ("Owner") i the proportions cet out Lelow and Is enttled to dispose of and receive payment for the cli, gas and other products from the wells) which isface part of the HILTY, NL #1 Lease or Lit MILTON Township(District, WAYNE County, State of Ol Effective 05n28/2013 and untiturthernotice — Mormack Ind., Ine. of ts nominee, iS horeby authorized to receive, purchase and give credit for oil from said property subject to the conditions, covenants, and directions hereinafter toltowing, This Division Order does not amend any tease 0: operating egreement beter of any ather contracts for the purchase of oi! or gos. the undersigned and the lessee of operaiat Post Office Address Division of interest % jp | Credit To cet No. Royalty Working man | DRULER'S PLACE, LTD. ee 8797 BENNER ROAD 0128000 9.0990000 Roe RITTMAN OH 44270 . 4 MORMACK IND. INC. 145 ALLEN AVE. 0.648320 ° 38 2.8280090 cont ORRVILLE OH 44667 ooissara Gorse OORSTS GORI! o.urcrng3 Execution cf this document indicates acceptance of the frovisions as stated herer, .e furnish your Socia! Security or Tax 1.D. Numbes “In accordance wilh Fedsrat Law, pl MOR 000141RECEIVED aug - 5 1968 MOR 000142 eeeARTER & HADDEN ARTER & HADCEN I Eu a wat oo muntinevon on O16 eo crmaens savas owen owrrs CLEVELAND. Orv canis tantow On10 e4702 , 218696 100. 2IBLEES NES ° RA /7HV TS EY ere VELECOPIER 716.696 2625 TELECOPIER 216453.2364 1 PIER Zia p9ai7y tw covumeus August 5, 1988 ARTER & MADDE ARTER @ HAODEN 1919 penngr Vania AVENUE, MW, se ree eoeumns wasnimaton, 6€ 20008 3 : 202/998.100 cotuunus, ov a3zi9 tevecontan 202/687.0172 TELECOPIER 614/221-0479 . esoztsezeanc PLease ResPowo To: Canton UNDERGROUND GAS STORAGE FIELDS By Bill Williams Canton, Ohio During the last two years, since March 28, 1986, Judge David Dowd of the U.S. District Court, Northern District of Ohio, Eastern Division, based in Akron, Ohio has issued at least six orders and/or opinions in the following four separate unreported cases. Columbia Gas Transmission Corporation is a party in each case which involves some aspect of gas storage field law. MAY A CORPORATION COFDEMN FOR GAS STORAGE USE FERC DESIGNATED PROTECTIVE AREA PROPERTY? YES. The Court in Case No. C85-661A entitled: Columbia Gas Transmission Corp. v. An Exclusive Gas Storage Easement in the Clinton Subterranean Geological formation in ig.t6 acres, Clinton Township, Wayne County, Ohio, €t al. determined on March 28, 1986, to deny defendant's motion for a summary judgment to dismiss Columbia's action to condemn property for use in its Wayne County storage field reservoir. The property lies in the protective boundary area that surrounds the storage field reservoir. The Court held that property which is located within the protective area as designated on the map or maps attached to the application for certificate of public convenience and necessity with FERC authorized the holder of such federal certificate to acquire an easement for the underground storage of natural gas through the exercise of the right of eminent domain, Condemnation proceedings apply not only to the property within the gas storage reservoir, but also property in the protective boundary area. MOR 000143: On August 19, 1987, the Court denied a motion by the mineral lessees for leave to file a counterclaim action for trespass. On August 31, 1987, the mineral lessees filed a renewed motion to amend its answers and for a counterclaim for trespass in that the lessees obtained a 7/8 interest in the case from the landowners. Such was performed to overcome the Court earlier doubts that mineral lessees had "Standing" to maintain a trespass action. The Court on September 24, 1987 denied the lessee's further request for a counterclaim dve to it being filed so late in the game. The counterclaim was filed two and one-half years after the original complaint even though the lessees now have standing. Furthermore, the Court denied the landowners request to appear, answer and file a counterclaim dve to the lateness of the request beyond the time limit of the law. The Court further affirmed the right to trial by jury on the value the property. RENAIN THE PERSONAL PROPERTY OF THES INJECTOR? DOES INJECTED STORAGE YES. In Case No. C86~1196A, Columbia Gas Corp. v. James R. Smail, R. Daniel Wiles and Harold Court decided on July 18, 1986, that an injector of nacuraéi Gas into storage facilities in the ground does not lose title to the gas when it is in storage. The Court reaffirmed the 1897 Kelly decision in interpreting that a mineral when it is raised from the earth becomes personal property, subject to ownership distinct and separate from realty. The Court scated tha Columbia did not lese its possessory interest in the gas as personal property upon its reinjection into the storage well. The Court furth or cited the 1949 Ohio Supreme Court decision of Tert cling Brothers, ine. ve Silencers which held that they become personal property immediately vpon severance from the land. The Court therefore held that Columbia's storage gas does not change when it is injected into the storace formation, it still remains the personal property of Columbia. This case involved a request by Columbia for a preliminary and permanent injunction against the drilling and completing of a well on the “Kies property" located adjacent to but outside the boundaries of the Wellington Storage Field in the Clinton geological formation in Penfield Township, Lorain County, Ohio. The Court held that the defendants are entitled to extract native natural gas, but not “extraneous gas“ which is defined as gas produced elsewhere, acquired and then for purposes of storage, injected into a storage reservoir. MOR 000144/ The Court further held that the law of capture is in- ‘ applicable and if extraneous storage gag escapes from Columbia's storage field, it still belongs to Columbia unless Columbia abandoned the gas. Columbia attempted to persuade the Court that no native natural gas existed on the Kies property through the testimony of their two expert witnesses. Professor Robert W. Chase, Chairman of Petroleum Engineering at Marietta College and william H. Kanes, Professor of earth sciences at the University of South Carolina, testified that the Kies well would not be an economic success. The Court held that it cannot instruct a landowner (the defendants were the landowners and not lessees) as to what is a reasonable use of their property and found that the defendants would more likely suffer irreparable harm if the landowners could not drill for natural ges op their property dve to Columbia's storage of gas on a neigh ng preperty. Columbia could be monetarily compensated for any damage to its reservoir in an action for conversion. The Court further found that the public interest in protecting a landowner's right to enjoy his property by drilling for oil is paramount to the right of a personal. property owner (Columbia) to be free from harm to its personal property (stored gas) which has escaped to neighboring land. The Court finally orcered the defendants to comply with eight points prior to the Grilling anc fre ring of the woll which includes notice, the ght of Columbia to e@ cbjection, right of Columbia to moniter the ériliing pxecess, and if drilling is successful, tie £1 ¢ of monthly reperts with the Court and Columbia's bond of $10,000.00 can be continued. On December 23, 1986, the Court issued a subsequent order in this case which responded to Columbia's objection to the defendant's drilling procedure because Columbia would not be able to perform various tests to determine whether the well is producing Columbia's storage gas. Columbia had six objections which the Court addressed, Columbia desired drilling with air and not mud. The Court held that Columbia failed to demonstrate significant harm to storage gas by the use of mud and defendants can drill using mud. Second, the Court stated that Columbia, at its cost, may perform coring operations of the Clinton formation. Third, Columbia is entitled to have the well drilled forty feet deeper as long as Columbia pays for the increased costs at $7.00 per foot and assumes responsibility for loss or damage. Fourth, Columbia is denied its request to substitute Schlumberger for Eastern Wells Surveys as the logging contractor. Fifth, Columbia is entitled to have representatives sample drill cuttings. Finally, the Court denied Columbia's request for a two-week delay between the drilling of the well and the placing of the pipe. =3- MOR 000145CAN A UTILITY BE SUBJECT TO A TRESPASS ACTION FOR STORING GAS WITHOUT THE OWNER'S CONSEN? C84-510A, YES. In consolidated Case No. Transmission Corp. v, An Sxclusive Clinton Subterreneen G Township, Asnlane Cov Bowman v. Columbia Gi sought to appropriate en exclusive undergrounc netural gas stor ee casement. On October 27, 1986, a jury returned a verdict $10,021.75 be paid as just compensation to the landowner. Columbia deposited the money with the Clerk of Court which is to be paid to the landowners upon the expiration of all rights of appeal. Victor Petroleun Corporation, @ lessee, dig not present any evidence at the trial. The jury also awarded the landowners $30,000.00 for punitive damages against Columbia for trespass due to the gas storage. The Court also ordered on November 10, 19€6 that the title to an exclusive underground natural gag storege easement in the Clinton Formation beneath the subject tract including the right and easement to use, inject into, store and remove gas from the subterranean stratum underneath the subject tract known as the Clinton Formation by means of wells located elsewhere in the Lucas Storage Field is hereby appropriated an@ conveyed unto the Columbia Gas Transmission Corporation. On October 16, 1986, the Court ruled on several motions pending before it by the parties. First, the Court held that Columbia had been storing gas under the lan¢owners’ property since 1964 without informing thein-or obtaining their consent or paying any compensation. A well permit in leed wes issued to Victor Petroleum Corporation and Columbia obtained a restraining order, Columbia argued that the landowners only remedy was the federal common law action of inverse condemnation and that an Ohio action for trespass should not be permitted. The Court found that the federal common law respecting condemnation is inapplicable and held that Ohio law does permit actions for trespass against the condemning authority prior to the commencement of the condemnation action and fixes the date of the take as the judicial action date to condemn. The Court on January 6, 1987, denied Columbia's motion for a judgment notwithstanding the verdict of the jury regarding the granting of punitive damages in the sum of $30,000.00. The Court upheld the damages stating they were significant but not excessive. MOR 000146/ MAY A UPILITY STOP A PRODUCING WELL LOCATED 1N ITS DESIGNATED ’ PROTECPIVE AREA? YES. In Case No. C87-3348A, Columb3 vs. An Exclusive Nety S ag en Subterr n Ceol Ripely fow condemn the ges well as Cling Sy Geological Formation beneath the €0 acre trect @ two million dollars against the oil and gas less nD her sought e 80 acres lie in the pretective acreage of Holmes Storage The Court granted Columbia's Motion for a Preliminary In i enjoining of this production from the Hostetler well pe.ding the outccme lawsuit. The injunction was also conditioned upon Columbia's reactivating its Holmes Storage Field. The Hostetler well was drilled in 1976 and has been in operation since 1977. In 1977 Columbia ecdced five of its Holmes storage wells which were the closest to the Rostetler well Columbia repeated this action in 1980 and in 19832 placed the entire southeastern portion of the storage area on continuous withdrawal, In 1984 Columbia also placed the ten wells nearest the Hostetler well on continuous withdrawal. In essence, the Holmes Storage Field was virtually shut down as a storage facility. Columbia tested the well in 1984, 1985 and 1986 and established beyond any question, according to Columbia, that the well was producing storage gas. In 1986 Columbia applied for and obtained an upéated certificate from FERC, which enlarged the boundaries of the Holmes Storage Field, so tnat the Hostetler well was now located within the protective acreage of the field. The Court held that Columbia do: have the present right to condemn the Hostetier well property, whether or not the well is producing storage ges. An order was issued April 29, 1988 and an amended order granting the Motion by Columbia for preliminary injunction was issued June 21, 1988. The Court also concluded that it is very probable that the Hostetler well is producing storage gas. The Court also held that Columbia is likely to succeed on the merits of this action in the condemnation of the Hostetler well and the 80 acre tract. The Court ordered the Hostetler No. 1 well to be shut in and to stop producing gas. SUMMARY 1. Condemnation for underground gas storage is permitted in the FERC designated certificated boundary areas. 2. Injected storeage gas continues to be personal property owned by the injector including the injected stored gas that migrated outside the certificated area. 3. A producer is permitted to drill outside the certificated area. However, an injector of stored gas has a right to -5- MOR 000147‘ participate and test a proposed well outside the PERC - certificated boundaries. , 4. The ODNR issuance of drilling permits is not a factor to f date. just 5, A jury was entitied to cetermine a lanGowner's one of the compensation for uncerc und storage following four standards: a. Difference in the fair market value before the taking by deducting the fair market value immediately after the taking. b. Comparable sales of storage rights. ec. Capitalization of the rental income for the right to store the gas. d. If commercially recoverable volumes of gas shown, then foreseeable net income flow from the property for its productive life reduced to a present value. 6. Injector's intentional. and deliberate actions of storing gas without consent can result in trespass and awarc of punitive damages. 7. A storer of storage gas can obtain an injunction to haeit a producing well in a certificated area. No cases have decived the measure of Gamages to the owner of such well. MOR 000148STATE OF O10 DEPARTMENT OF NATURAL RESOURCES DIVISION OF GEOLOGICAL SURVEY HORIZON’ PAL UTICA-POINT PLEASANT WE LL ACTIVITY IN OHIO 7 pe GEAUGA i CUYAHOGA nose i BP HK emit mag sRuMeuLL 3, Lorain be i | vonon PORTAGE: i sf a MeoNA =| SUMMIT Soe Raab : vy . ‘mated -y20167 1 : asa i \ i sae g| ue sel oy tog MAHONING > coos ee BPP ow DEV as Gai min ES cane (Bie j omeg™ ‘cae i os OS higigeie, ! wan i cue 32 |, ASHLAND NE : Srane mo" 20 its sieMAn ct 5 Be 88 gt anal asa “maT 783 2 OT eos =n he, ae oS ns 3 CHK, sme age Le s ores Pe sElkowuneiana i CHK ‘pos PM an oe : "af aS i Ee - oe “ai moRkOW [OT - .. § eee niscmmunsr oe 8 i | KNOX HES fet eg nse * gosnocton | EL SMM gd ar : ems | ov! ode * wise : OV | bev ave ae 7 prt ade@ CHK et TO ET Fise { | wwe Spe a i HeSeu | : ucKING £08 DEV gpon HES sj min, oe 8 { ; | ones 1 GUERNSEY 5 Suye @® GPOR | i nave DEV peg. mp : Fn us sue sees? j MUSKINGUM ; | aergnas: ' _GPOR * | ! soe p XO i i i FAIRER PERAY Qo we 23 vals, i e MORGAN met To | $a Fence AU peers basasations WASHINGTON. EXPLANATION Horizontal wall status fas of 4.20138 Producing (917 Drilled (208) Oritting (13 © Permitted (303) Pluggud (14) Not Dritied (11) Inactive (2) Oil ant Gas Resorecas Alsager, ODNB Orwsian ot vs retain Cont Me tpt it Pega Be MOR 000149061000 NOW ANROAREOL & PONSHORE LC ANADAREO EE P ONSHORE LLC ANRDAAKOE & PONGHDRE Le anabAeO ££ PONSHORE KC ANADARKOE & ? ONSHORE KC AHADHEKOE A P ONSHORE LE AADARKO EB PONGHORE UC ANTERO RES APPALACHIAN CORP ANTERO RESAPPRLACKIAN CORP ANTERO RES APPALACHIAK CORP Cursarcace oPtonemion tue ‘SHESAPEAKE EXPLORATION AC ‘caesanraee FxoloRaTiON NLC CHISAPEAKE EXPLORATION LAC ‘oresaseant cwroRarONUc CHESAPEREE EXM,ORATIONLLC CHLSAREACE ExOLORATION ‘CHESAEREE S 90 Rerlog Anna race : Lf RI DK Kb IE 6VOS a 60 E Pee F748 hs aye Seana Aver) We [2:B Vb C6 "4050 vu SOAS PPh CB 78QB we 61279 CO” Jo/73 ae PIEEO CLT 12773 Syke kee MOR 000159091000 HOWR360 MARVIN HILTY Page# 1 126 WALNUT STREET * Balance Carried * BOX 21 * To Next Period * 00 RUSHSYLZANIA, OH 44347 Gross $ % Owned Your Net Ownership Ly “Regular. Pa 2 WAYGCI . #2 Gas From:10/12/2010 Po: 32/20/2020 Price 4.18 On 36 “oFe o 2.60 11.02 -500000% 1.38 ae 07 ** Less Expense: .O1 Net: Job/Well/tnit Operating Statement Date: 3/09/2011 MORMACK IND. INC. 145 ALLEN AVE. BP. So. BOX 101 ORRVILLE, OH 44667 Telephone: (330) 682-9060 HILTY Page# 1 LNUT STREET * Balance Carried * x * To Next Period * 00 LZANIA, OCH 44347 Gross $ & Owned Your Net Regular Payments Gas From:11/10/2010 T0:12/10/2010 Price 3.68 15.94 12.500000% 1.99 DBLE Jeb/Neli/Unir Operating Statement Date: 9/01/2012 MORMACK IND. INC. 145 ALLEN AVE. P. Oo. BOX 161 ORRVILLE, OK 44667 Telephone: (330) 682-9089 R260 MARVIN HILTY Page# a 125 WUT STREET * Balance Carried * BOX 11 * Po Next Period * 00 RUSHSYLZANZA, OF 44347 eription Ooty Gross § % Owned Your Nes MOR 000138