April 2020 Wellhead

N AT I V E OKLAHOMA

A Message from Our Chairman | 38 Democrats Fight Relief Sought

by Reps. Cole and Hern | 40

B ROO K A .

SIMMONS NAMED PETROLEUM ALLIANCE PRESIDENT

Health and Benefits | 54

APRIL 2020

David D. Le Norman Chairman

TABLE OF CONTENTS

Brook A. Simmons President

08

Natalie Kinmonth Senior V.P. - Membership & Development

14

Teresa Yoder V.P. - Finance

Point of View: Oklahoma’s Oil Industry Caught in Crossfire

Ellis Ebel Director of Operations/HR

32

Bud Ground Director of Regulatory Affairs Madison Miller Committee Coordinator & Policy Analyst

Contact the Petroleum Alliance of Oklahoma office at 405-942-2334 or you can find a BITCO agent near you by visiting BITCO.com today.

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38 A Message from Our Chairman: Stronger, Together

44 Oklahoma Native, Brook A. Simmons, Named Petroleum Alliance President

46

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April | 3

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STATE ROUNDUP 1 | WYOMING Governor Approves Mineral Tax Break for Oil and Gas In the midst of unprecedented volatility in the global oil market, shale producers in Wyoming received a small boost in April in the form of tax relief. Gov. Mark Gordon signed into law a bill providing reductions in state mineral taxes amidst certain price environments.

The tax break would kick in if the 12-month rolling average of oil prices falls below $50 per barrel. For natural gas, the 12-month rolling average would need to be less than $2.95 per thousand cubic feet. In these scenarios, the state’s mineral production tax — known as a severance tax — would be reduced by 2% under the new act.

Oil prices have plunged in response to the spread of COVID-19 and a global price war. And several major oil and gas companies have started trimming their workforces or reeling in expenses. According to a report by the Energy Information Administration, the oil market has never been this volatile, with a glut in supply and a shortage of fuel demand causing “extreme” price fluctuations.

The U.S. Department of Energy initially floated the idea of purchasing 30 million barrels of oil to fill the Strategic Petroleum Reserve and ease the demand drought facing producers. But the stimulus bill passed by the U.S. Congress did not provide such a provision. However, Randall Luthi, chief energy advisor for the governor, said the idea hasn’t been entirely pitched and could be introduced in financial aid packages down the road.

As for Wyoming’s new legislation: “House Bill 243 is the least we can do in the worst of times,” Luthi said. He added lawmakers may have considered extending even

4 | thepetroleumalliance.com

more relief to producers had energy markets taken a turn for the worse during Wyoming’s Legislature session this year.

There are also limits to the bill. Oil operators will not be able to reap the benefits of the relief until the act goes into effect July 1. Eligible operators would see 2% chipped off their severance tax rate for the first six months of production and 1% for the six months after that. Ultimately, the relief only applies to a well for one year. The bill was also meant to be temporary and includes a provision to sunset the relief at the end of 2025.

In the meantime, West Texas Intermediate, the U.S. benchmark, fell to $21 a barrel in March — a drop of over 65% from the beginning of this year. The realized price for oil in Wyoming plunged even lower.

“Oil prices have been murdered,” University of Wyoming economist Rob Godby said.

While larger oil and gas companies may be more poised to weather the downturn, mid-size operators with debt could be hit the hardest by the brutal price environment.

Firms of all sizes have announced drastic plans to slash spending.

“At this challenging time for the energy industry in Wyoming, our top priority is the health and safety of our employees and families,” said Ryan McConnaughey, communications director for the Petroleum Association of Wyoming. “Beyond that, as a critical fuel supplier to the nation, we must make sure all aspects of the industry are considered to be essential by federal, state and local governments. Despite recent calls by activist groups to shut down all state activity, critical work must continue to provide reliable, abundant energy that heats and

April | 5

lights our homes and keeps as many Wyoming people working as possible in these challenging times.”

been inundated with requests for help, seeing spikes in demand for emergency food boxes.

production and supply chain expertise, too,” Sink said.

“Things snowballed from there.”

The downturn in oil also has sweeping implications for the state’s budget, which continues to heavily rely on revenue from minerals. State economists had anticipated a loss in revenue from natural gas and coal. But the state had forecast rosier conditions for oil, even considering it a commodity to lean on as the state diversified its economy.

The New Mexico Oil and Gas Association (NMOGA) donated a combined $50,000 to eight New Mexico nonprofits to help to fill the immediate gap in providing much-needed food resources. They include grants to The Food Depot, Rio Grande Food Project and Northwest New Mexico Seniors.

To trap the COVID-19 virus before it infects others, especially critical care physicians, nurses, and support staff, PPE gear of the highest quality must be available, and with so many governments across the world and medical workers clamoring for such gear — not to mention the broader public’s demand as well — a mask shortage quickly developed in the first part of 2020.

“This (current price of oil) is going to hammer the one revenue stream from minerals that the state has become more dependent on because of the ongoing declines in coal and gas,” Godby, the economist, said. “Obviously, oil is now potentially the worst of the three legs because of its price.”

Critics of House Bill 243 considered the cuts in severance taxes just another loss of revenue for the state at a time when revenue streams are drying up.

But Luthi said he hopes the bill could incentivize operators to drill in Wyoming. Relaxing severance taxes for operators could make the state a more attractive place to stay and continue drilling when the economy mends, he said.

Originally published in the Casper Star Tribune.

Analysts’ Memo to Lawmakers Predicts Staggering Revenue Drops Wyoming state government revenues could plummet anywhere between $555 million and nearly $2.8 billion over the next two years as a result of the COVID-19 pandemic and an oil price war, according to a memo the Legislative Service Office (LSO) sent to lawmakers on April 10.

Though what will unfold in the coming months remains anyone’s guess, the revenue decline could be so dire that, as one lawmaker put it, it would require the most “painful change the state has had to ever deal with.”

LSO fiscal analysts drew up revenue predictions for three scenarios: optimistic, intermediate and pessimistic. They looked at impacts across sales and use taxes, oil, gas and coal severance taxes and only some of the state’s investments, leading some lawmakers to predict the realities could be even worse in a time of stock market turmoil.

The analysts urged lawmakers to view the estimates as “informed guesses,” given deep uncertainty about what the future holds.

Originally published on WyoFile.

2 | NEW MEXICO Oil and Gas Industry Helps to Battle Food, Protective Equipment Shortages Amidst COVID-19 Crisis Oil and gas companies and industry trade associations continue to lean in with support for communities struggling to combat the coronavirus crisis in states across the West.

With economic conditions deteriorating and jobless claims in the tens of millions, food scarcity has quickly become an issue for many families. Local food banks have

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“Through the funding generously provided by NMOGA, it is a brighter day for many homebound seniors in San Juan County,” said Susan Steinhoff Smith, interim executive director of Northwest New Mexico Seniors.

“With nearly 60 homebound seniors on a waiting list for close to a year, the gift has made our work easier and lifted our community. Being on the other side of the phone and letting a senior know we can deliver a meal to their door every day makes my heart happy.”

Companies are also contributing. Chevron donated to efforts combating the fallout of the COVID-19 crisis, with $230,000 going to nonprofits within the Permian Basin in New Mexico and Texas in late March.

“The COVID-19 pandemic is an unprecedented and evolving crisis that necessitates a community-wide response. Whether it’s an individual doing their part to social distance, a teacher facilitating telelearning from their home or a healthcare worker on the front lines, we want to say thank you to our Permian heroes. Chevron is proud to do our part,” said Nathan Carroll, Chevron operations superintendent based in Carlsbad, New Mexico.

The money will go to the West Texas Food Bank and the Eddy and Lea County United Ways for food and housing security.

“This donation comes at a time when our agency is going full-throttle to fulfill our mission of meeting community needs, whether they be senior citizen meals, food for children and families, housing insecurity and more. We see a long road ahead, and we can’t thank Chevron enough for this vital support,” said Linda Dodd, executive director of the Eddy County United Way. ExxonMobil has helped to provide personal protective equipment (PPE) research and prototyping after employee Justin Sink came upon a plea from a friend on social media.

“In fairness, this has all come together faster than I anticipated. About a week ago, we were nowhere. In a short time, we went from zero to a network of willing partners. This initiative quickly went from design to prototype to being on the cusp of mass production,” Sink said.

Sink heard the call by medical professionals, including his friend, for PPE like face shields and reusable masks, critical not only to help those suffering from the virus by enabling medical staff to continue their care, but to reassure that the same medical employees would have adequate protection to prevent their own infection.

Marathon donated nearly 10,000 coveted N95 masks to University Medical Center of El Paso and El Paso County Children’s Hospital and nearly 500,000 masks and gloves in total since late March. The company also donated $1 million to the Red Cross disaster relief fund.

ExxonMobil has also given $100,000 to the Carlsbad Municipal School District to aid with online learning as schools in the region have shut down and remote learning relying on internet connectivity has hit lowincome students without internet access. The company will also provide laptops to students.

“Carlsbad’s schools and teachers need support and encouragement during these difficult times,” said Staale Gjervik, senior vice president at ExxonMobil Upstream Oil and Gas Company and president of XTO Energy. “We hope our contribution will help facilitate the transition to online learning during this period and ease the burden on families and the schools.”

Originally published on Western Wire.

As Oil Prices Suffer Amid Coronavirus Outbreak, New Mexico Offers Relief to Shut-In Wells New Mexico’s State Land Office announced it plans to take emergency rulemaking steps to allow oil operators to temporarily stop production without penalty for at least 30 days.

Commissioner Garcia Richard said companies will have a possible extension of up to 120 days in light of the COVID-19 pandemic and the Russian and Saudi Arabian price war.

“Here in New Mexico, the ripples of this situation hit hard, not only when thinking about the state budget, but within communities where people rely on the boom for jobs to support their families,” Commissioner Richard said. “Due to these factors, I’ve determined that it is in the best interest of the beneficiaries of state trust land — our public schools, hospitals and universities — as well as the employees dependent on this industry, that we allow companies to apply for these temporary shut-ins until we can better predict the future of the Permian Basin.”

3 | LOUISIANA Louisiana Snags $155.7 million in GOMESA Money Louisiana on March 30 snagged $155.7 million in Gulf of Mexico Energy Security Act (GOMESA) revenue-sharing funds for coastal restoration efforts, derived from offshore energy production.

Plaquemines Parish gets the largest disbursement in the state, with more than $3 million. Rounding out the top five: Jefferson Parish, nearly $2.6 million; Terrebonne Parish, nearly $2.4 million; Orleans Parish, more than $2.1 million; and Cameron Parish, just under $2.1 million.

In the Capital Region, Livingston Parish gets close to $1.3 million.

All told, U.S. Department of the Interior Secretary David Bernhardt announced that the Department disbursed almost $353 million in FY 2019 energy revenues to the four Gulf oil and gas producing states — Alabama, Louisiana, Mississippi and Texas, and their coastal political subdivisions — an increase of 64.2% over the prior year.

The funds will be used to support coastal conservation and restoration projects, hurricane protection programs and activities to implement marine, coastal or conservation management plans.

Examples of Louisiana projects previously funded with GOMESA dollars: • $50 million for a permanent gate structure that will prevent flooding to portions of six parishes on Bayou Chene. Once complete, the project will feature a 40foot barge gate to provide protection against storm surge up to 10 feet, along with a series of flood-walls and levees to support additional protection.

• In Ascension Parish, GOMESA will fund $65 million for a project that includes a pump station to be constructed on the Mississippi River at Donaldsonville with a minimum pumping capacity of 1,000 cubic feet-per-second alongside the existing 500 cfs station, tripling the capacity for fresh water entering Bayou Lafourche to combat saltwater intrusion and provide fresh drinking water to over 300,000 residents in Assumption, Ascension, Lafourche and Terrebonne Parishes.

Originally published on 10/12 Industry Report.

The overproduction of oil in the world market has drastically reduced the price of oil and created a situation where some U.S. companies are being forced to scale back production because pipelines and storage facilities are at holding capacity.

Originally published on OKEnergyToday.com. Source: New Mexico Land Office.

“When I first saw the call for help, I knew our plastics business had the right manufacturing contacts to help get things going. We forged connections between manufacturers and medical professionals who’d never have found each other on their own and brought in our

April | 7

Activity in the state’s oil and natural gas sector continued to contract in February with the Oklahoma Energy Index down 1.4% from January. The February drop marks the 16th consecutive month of declining activity. The worst of the COVID-19 news didn’t hit markets until March, suggesting a further and more dramatic drop in activity is yet to come.

All index components were down in February except for primary industry employment. These estimates, however, are subject to revision and are likely to be revised lower with the release of March employment estimates. Importantly, the data through February does not yet reflect the outright collapse in oil prices that we will begin to be seen in the March index release.

“It is important to remember that Oklahoma was already heading into a mild oil cycle recession before COVID-19 restrictions were put into place,” explained Dr. Russell Evans, executive director of the Steven C. Agee Economic Research and Policy Institute at Oklahoma City University. “These restrictions will constrain the flow of goods and services through the economy and create one of the most abrupt and severe recessions ever experienced in a developed economy.”

According to Kyle McElvaney, IBC Bank’s Oklahoma City market president, the recession will “obscure the Oklahoma reality” that our economic weakness is part policy (COVID-19 restrictions) and part structural (oil contraction). McElvaney predicts that a “tremendous amount” of monetary and fiscal stimulus will hit the economy this spring and summer and will linger in the system through 2021.

“It is most likely that Oklahoma will experience a short but abrupt disruption before enjoying a stimulus-fueled recovery. But this recovery will likely obscure the reality that structural weakness remains in the oil and natural gas sector. It is difficult to see a path back to prices sufficient to support robust drilling and production in the state anytime soon. Further, the collapse in prices will disrupt cash flow and already existing strategies to strengthen challenged balance sheets,” McElvaney said.

Russell agreed, saying, “Oklahoma, like most states, is headed into unknown economic territory. The economic floor is dropping out from underneath us, but the promise of stimulus efforts gives reason to hope for an abrupt recovery. Through it all, however, the state’s energy industry will struggle as it continues to transition to what may be a new global oil reality.”

OKLAHOMA ENERGY INDEX SUMMARY

OKLAHOMA ENERGY INDEX ENERGY INDEX

Base Year, 2000

100.0

Feb-19

200.2

Jan-20

153.6

Feb-20

151.5

1 Month Change

-2.1

1 Month % Change

-1.4%

1 Year Change

-48.7

1 Year % Change

-24.3%

NATURAL GAS PRICE/MMBTU (Monthly Avg.)

BAKER-HUGHES RIG COUNT (Monthly Avg.)

ENERGY PROD. EMPLOYMENT (Thousands)

ENERGY PROD. OK WTI SUPPORT EMPLOYMENT SPOT PRICE (Thousands) (Monthly Avg.)

OK ENERGY PORTFOLIO (Monthly Avg.)

Feb-19

$2.69

120

52.1

32.8

$54.95

463.6

Jan-20

$2.02

52

42.1

25.1

$57.52

405.2

Feb-20

$1.92

50

42.7

25.1

$50.67

388.9

1 Month Change

-$0.10

-2

0.60

0.00

$6.85

-16.2

1 Month % Change -5.0%

-3.8%

1.4%

0.0%

-11.9%

-4.0%

1 Year Change

-$0.77

-70

-9.40

-7.70

-$4.28

-74.6

1 Year % Change

-28.6%

-58.3%

-18%

-23.5%

-7.8%

-16.1%

Source: Steven C. Agee Economic Research and Policy Institute

OKLAHOMA ENERGY INDEX 300 250 200 150 100

Feb 20

Feb 19

Feb 18

Feb 17

Feb 16

Feb 15

Feb 14

Feb 13

Feb 12

Feb 11

Feb 10

Feb 09

Feb 08

Feb 07

Feb 06

Feb 05

Feb 04

Feb 03

Feb 02

0

Feb 01

50 Feb 00

ENERGY INDEX, BASE = 100 IN YEAR 2000

STATE HEADED INTO ‘UNKNOWN ECONOMIC TERRITORY’

DATE

DATE

*The commentary expressed reflects the opinions and perspective of Dr. Russell Evans, Ph.D., Executive Director of the Steven C. Agee Economic Research and Policy Institute at Oklahoma City University.

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April | 9

PRODUCTION CUTS MANDATING PRODUCTION CUTS IN OKLAHOMA IS THE WRONG ANSWER BY: DAVID D. LE NORMAN Oklahoma has been hit hard. America has been hit hard. Our planet has been hit hard.

Battling the COVID-19 crisis has resulted in an unprecedented drop in demand for oil and natural gas, and the ongoing price war between Russia and Saudi Arabia has led to a massive oversupply of crude oil. It is a double black swan event that has significantly impacted our oil and natural gas producers and challenged our national security.

As Oklahoma’s oil and natural gas producers struggle to adjust to this new reality, some have desperately proposed the radical idea of having our state’s regulatory authority, the Oklahoma Corporation Commission (OCC), intervene by implementing mandatory cuts to Oklahoma oil production. The role of the OCC is a balancing act between weighing the economic benefits to the state and the prosperity derived from development of its resources versus wasting or squandering the state’s natural resources as suggested recently by the Oklahoma Energy Producers Alliance (OEPA) in a letter to the OCC’s commissioners.

12.97

REAL ESTATE SALES • CONSTRUCTION • EXCAVATION • PASTURE MANAGEMENT • WILDLIFE MANAGEMENT

MILLION BARRELS will decline rapidly without arbitrary proration or mandated production cuts

The OEPA letter is naïve. The position they have taken does not consider the many reasons an operator might develop resources in a low-price environment. It does not consider the strategic nature of protecting leasehold, drainage boundaries infringement by offset operations, sunk capital costs in infrastructure, etc.

The OCC should remain diligent and monitor the macro environment but should not involve itself in picking winners at the expense of other industry participants. It should also not deem product prices either wasteful or imperative for an operator’s criteria to determine its development plans.

Natural market forces dictate pace of development. The headlines are littered with capital cutbacks, production shut-ins and, unfortunately, lost jobs. The native decline of the horizontal wells predominantly producing out of shale horizons is much higher than conventional reservoirs produced in the past. The result is the U.S. production of 12.97 million barrels of crude oil will decline rapidly without arbitrary proration or mandated production cuts. The lack of storage capacity, refinery run rates and transportation costs that manifest in regional price depression will all play a role in curtailing our production.

The prices for our products are constantly oscillating, and we all know from experience that what goes up can go down, and vice versa. Unfortunately, the COVID-19 pandemic, along with very unfortunate timing by some bad actors to grab market share (or worse) and utilize the weakening demand to punish other producers, has served to significantly damage American oil and natural gas producers. This damage could create a dependency on these same culprits, and that is NOT in our country’s best interest.

The Petroleum Alliance of Oklahoma fully supports Sen. Jim Inhofe’s efforts to expose these perpetrators by launching a 232 investigation into their activities. The Alliance and many of its members are fighting for the rights of the producers in our state, including those associated with the OEPA. All of Oklahoma’s oil and natural gas producers likely have varying views of future prices, which ultimately determine their activity. Whether a producer determines to keep producing their wells or shut them in is that individual’s decision. Only that producer understands the cost structure to operate their wells. A regulatory body cannot fully understand the fixed and variable costs, purchase contracts and many other considerations that individuals know about their own production. Whether to produce, what development activity to focus on, and at what speed it’s pursued is determined by that producer for his/her own account. Full Stop.

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232 INVESTIGATION into perpetrator activities

THREE RANCHES $2,172,200 Francis, Oklahoma

The Land Doctors have listed three contiguous ranches that offer a unique blend of features. These three ranches are located just north of Ada, OK, 90 miles from OKC, 120 miles from Tulsa and 180 miles from Dallas, making it an easy drive from metro areas. In total, the three ranches contain 1195 acres of land with no public roads passing through it. The ranches can be accessed by paved road frontage along the south boundary and for a very short distance on the eastern edge. There are no major transmission lines crossing the properties while a major pipeline runs along the eastern edge of the ranches. Mostly hidden from view and shielded from the world by other ranches, these properties feel much more remote than they are.

• The 28 acre Eagles Nest provides over one mile of frontage on the South Canadian River.

• The South Canadian River Ranch offers 591 acres of forest, trophy deer and 7300 feet of the crystal clear Factory Creek.

• Boulder Ranch is a very affordable 576 acre tract of timber that brings the average cost of the three ranches down to less than $1820/ac.

• Located near the prosperous Chickasaw Nation Headquarters of Ada, OK.

For more information, please call Kelly Hurt at 580-421-7512 www.landdoctors.com

Kelly@LandDoctors.com

WE ARE COMMITTED BY: MIKE MCDONALD, CHAIRMAN OF THE OKLAHOMA ENERGY RESOURCES BOARD (OERB)

COVID-19 ENERGY INDUSTRY IS ESSENTIAL The challenge presented by the COVID-19 pandemic highlights something Oklahomans already know — the oil and natural gas industry is essential, in multiple ways.

When Gov. Kevin Stitt expanded the protections he put in place to slow the coronavirus’s spread, he wisely followed federal guidelines and industry advice by designating the oil and natural gas industry as critical infrastructure.

Exempting the energy industry from shutdown orders makes every American more secure. This decision means the dedicated people in the oil field will continue to provide the fuel and raw materials Americans rely on for transportation, manufacturing and electricity.

The lights will stay on, and delivery trucks will keep rolling because of the oil and natural gas industry.

Remember, the energy industry doesn’t just keep the economy functional in times of crisis. As we have shown time and time again, the people of oil and natural gas will always step up to the plate and help others.

For example, the Petroleum Alliance of Oklahoma, the state’s industry group, launched the Petroleum Pandemic Response, which allows companies to donate equipment frontline medical workers need to protect themselves and treat patients. Alliance members are providing masks, disinfectants and other personal equipment critical to protecting the people treating patients.

We are living through unprecedented times. COVID-19 and the chaos in the economy is affecting every one of us. We are all adjusting our personal and professional lives to this new reality. Medical professionals and first responders are playing a heroic role in this crisis. The people of Oklahoma’s oil and natural gas industry remain committed to providing the resources and energy our state needs.

These are hard days for our nation and our industry. No matter what the future might bring, I encourage the tens of thousands of Oklahomans who work in oil and natural gas to remember that what we do is essential.

We may not be on the front lines, but what we do is supporting those that are.

EXEMPTING THE ENERGY INDUSTRY FROM SHUTDOWN ORDERS MAKES EVERY AMERICAN MORE SECURE.

Even though business conditions are extremely difficult right now, energy companies are leveraging their collective strength for the good of their communities.

Our industry has answered the call after hurricanes, tornadoes and other tragedies, and we are proud to lead the way once again.

We will remain committed to Oklahoma. To our communities. To our schools and universities. And to our country. This is a great moment in time to live up to our promise and mission. People depend on us. We are the key ingredient in virtually every medicine and medical device. We are woven into the day-to-day routines of our friends and neighbors. We are the people whose products will help deliver life’s needs, from fuel to food to the technology we all depend on.

We will persevere as a nation and as an industry. While stock market volatility can be discouraging, our industry remains vital to this state. As we’ve shown time and time again, the people of Oklahoma oil and natural gas won’t quit.

To all of the essential personnel still going to work each day, never doubt how important your work is now and will be in the months to come. And, never doubt that the people of Oklahoma oil and natural gas will remain committed to supporting your efforts.

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April | 13

POINT OF VIEW

OKLAHOMA’S OIL INDUSTRY CAUGHT IN CROSSFIRE B Y : D AV I D D . L E N O R M A N

Oil and natural gas have been Oklahoma’s lifeblood since before statehood. Our state’s natural resources have allowed Oklahoma to grow into the nation’s third-largest gas producer and fourth-largest oil producer. Generations of Oklahomans have prospered thanks to the industry.

All of this is now at risk due to a war on American oil interests precipitated by a market share battle involving Russia, Saudi Arabia and U.S. producers. The result is a world market flooded with more crude than it can handle, causing oil prices to plummet.

These prices stand to decimate Oklahoma’s oil and natural gas industry — and by extension the government services funded by its tax payments — unless the federal government acts.

It is time for the U.S. Department of Commerce to look into the impact of discounted oil imports into U.S. markets, as requested by Sen. Jim Inhofe, chairman of the Senate Armed Services Committee. We must protect our national interests from predatory practices, initiated by those who wish to gain an advantage during a global pandemic.

Inhofe requested the Secretary of Commerce investigate the national security implications of this unfair grab for market share at the expense of American producers.

A Section 232 investigation will shine a bright light on whether other world producers are selling crude oil below their marginal cost of production, when considering all costs, including transportation. The national security implications of losing our energy independence status, simply stated, would suggest that we would be dependent on foreign sources for our energy needs, which could put our country’s varied interests at risk.

It won’t be enough to undo the damage caused by the price war, but it will give Oklahoma producers a fighting chance to overcome another artificial drop in oil prices caused by those seeking to halt the American energy renaissance.

Oklahoma’s oil and natural gas industry has long mirrored our state’s general economy. When the industry struggles, so does Oklahoma.

Hundreds of thousands of Oklahomans rely on the oil and natural gas industry for their jobs, accounting for nearly a third of the earned income in the state, according to a report recently published by the Oklahoma Energy Resources Board. Those jobs are at risk as long as the current oil price war continues unabated.

From the royalty owner to the teacher to the local diner — all Oklahomans are affected.

Oklahoma’s red earth holds petroleum resources that can help fuel our society for decades to come, but only if there is a fair market for its oil and natural gas. American producers are not asking for a handout, but they do require a level playing field.

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April | 15

Arvine Pipe and Supply Company

Helping Oklahoma’s Energy Firms control their True Cost of Risk since 1948.

Super market of new and used oilfield equipment CELEBRATING OUR 40TH YEAR Centrally located in Norman, we offer a wide range of new and used oil related tubulars, pumping units and production equipment.

The company’s facilities includes 30 acres of pipe storage, a 10,000-square-foot production repair shop and a 3,000-square-foot machine shop.

 Specialty Property & Casualty Insurance Programs  Employee Benefit Programs

T.J. Riley

www.arvinepipe.com • 405-364-1950 1708 Topeka Drive • Norman, OK 73069

Official IT Provider of Best IT Outsourcing Firm (2019 Journal Record Reader Rankings)

8th Fastest-Growing Company in Metro

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amshot.com | 405.418.6282 | 428 Dean A McGee Ave., OKC, OK 73102

TULSA, OK OFFICE: 918.584.2111

ASSOCIATED-RESOURCES.COM

Brandon Ward | bward@associated-resources.com

HOUSTON, TX OFFICE: April | 17 832.725.2236

Michael Gibson | mgibson@associated-resources.com

INDUSTRY APPLAUDS EFFORTS TO PROTECT SMALL REFINERS There was a time, not long ago, when Americans lived in a world of energy scarcity. Faced with increasing gasoline costs and a reliance on foreign nations to fuel our transportation system, elected officials sought new methods to provide Americans with an affordable way to power their lives. The creation of the renewable fuel standard (RFS) required taxpayer payouts for the ethanol industry and forced U.S. refiners to comply with biofuel blending requirements.

The RFS is now an antiquated rule created at time when the United States faced an uncertain energy future after three decades of crude oil production declines. Just 15 years after the RFS was enacted, Americans now live in a world of energy abundance thanks to the vast new oil and natural gas resources unlocked by the combined technologies of horizontal drilling and hydraulic fracturing.

Oklahoma’s oil and natural gas producers have led the industry resurgence that erased 30 years of crude oil declines in one decade. The U.S. is the largest oil and natural gas producer in the world, giving our nation a stable, abundant and affordable supply of transportation fuels. Increased crude oil production has given Oklahoma refiners an ample supply of light, sweet crude oil, which yields a large percentage of high-valued petroleum products like gasoline.

The RFS remains, however, and now refiners are facing a regulatory and economic strain that could become detrimental.

Under the law that created the RFS, small refineries were given exemptions from the ethanol blending requirements, but a federal court has sided with “Big Corn” on their demand that the Trump administration deny those exemptions and force all refiners to meet the ethanol mandate. If this decision stands, small refiners like those in our home state will be disproportionally harmed, and the negative impact could even force some refineries to shut down.

U.S. senators from oil- and natural gas-producing states, including our own Sens. Jim Inhofe and James Lankford, have urged President Trump to defend his administration’s decision to issue the exemptions. We hope that the president will comply with the senators’ request, and we applaud their efforts to ensure Oklahoma’s refiners are able to continue providing the affordable transportation fuels we need.

OKLAHOMA’S OIL AND NATURAL GAS PRODUCERS HAVE LED THE INDUSTRY RESURGENCE THAT ERASED 30 YEARS OF CRUDE OIL DECLINES IN ONE DECADE.

JOIN US FOR MORNING FUEL WEBINARS

During this period when we can’t gather in large groups, the Alliance is still dedicated to giving you access to leaders and experts to help you understand our complicated economic environment and manage your teams.

Join us for our weekly Morning Fuel webinars in which we invite guest speakers to discuss how the COVID-19 pandemic affects our industry and state government.

The webinars are a free benefit for our members! Visit ThePetroleumAlliance.com for the latest schedule and to register.

18 | thepetroleumalliance.com

A special “Thanks” to friends and customers that have made our success possible over the last 40+ years.

You know who you are... again “Thank You”

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Ft Worth Basin 817-594-8073 April | 19

“Kickin up Dust since ‘77”

POWERING OKLAHOMA’S ECONOMY At IBC Bank, we do more than provide commercial loans. We offer face-to-face service, and that means our loan officers are as much a part of your project as the rest of your team. The fact is, we value relationships, and we believe that your success leads to the success of our community. It’s the reason we’ve been your hometown bank. We Do More, so you can do more.

By Supporting Organizations That Power Our State

(405) 841-2253 Kyle McElvaney President, Oklahoma City

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Offering the Alliance-endorsed Safety Group Dividend Program for liability, auto, workers’ compensation, property and group benefit plans.

To discuss a tailored oil and gas program, call one of our branches below:

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April | 21

JUNE 29, 2020 | OAKTREE GOLF & COUNTRY CLUB

WHO CAN PLAY:

This is an open tournament, and Alliance members and non-members alike are encouraged to participate! If you are an Alliance member, feel free to invite industry colleagues to join us! Slots are limited and will be reserved on a first-come, first-served basis.

WHEN: June 29, 2020 WHERE: Oak Tree Golf & Country Club

700 W. Country Club Drive, Edmond, OK

COST: $350 for individual participants or $1,400 per

foursome. Entry fees include golf, cart, range balls, sleeve of golf balls, breakfast (for morning flight), lunch and complimentary beverages.

22 | thepetroleumalliance.com

FORMAT Morning and afternoon rounds AM 7:30 a.m. Flight: Four–player scramble (Max 20 handicap) Player registration and breakfast begin at 6:30 a.m. Awards luncheon immediately following morning round.

PM 1:30 p.m. Flight: Four-player scramble (Max 20 handicap) Player registration and lunch begin at Noon. Awards reception immediately following afternoon round.

Our state hat.

The people of Oklahoma Oil & Natural Gas are building a better Oklahoma.

We hope you will follow the OERB, @oerbok, on social media and share the news with associates, friends, and family. Because our story is an extraordinary one, and it needs to be told across our great state. Thank you for all you do.

To learn more, go to oerb.com.

April | 23

SPECIAL LETTER

OKLAHOMA’S RIG COUNT DROPS TO 20 WHILE US DECLINES BY 64 With oil prices less than $20 following Monday, April 20, when prices fell into the negative range, the nation’s rig count continues to dwindle, losing 64 in a week according to the Baker Hughes figures released on Friday, April 24.

Oklahoma lost four more rigs, leaving only 20 actively drilling for oil or gas in the state, compared to 102 reported a year ago.

Nationally, the count dropped to 465, including 60 more oil rigs and four more gas rigs. Only 378 oil rigs are still seeking new energy, while the number of gas rigs is down to 85.

A year ago, the U.S. had 991 rigs, but has lost 526 in the past year, including 427 oil rigs and 101 gas rigs.

The count in Texas dropped by 31 to 231, compared to 491 reported a year ago. Colorado dropped one to total 15 rigs, while Louisiana’s count slipped by one to total 40 rigs. New Mexico is down 14 rigs to total only 70. North Dakota dropped by seven to total 27. Wyoming remained at only six rigs compared to the 32 it had a year ago.

Only four active rigs are reported in Kansas by the Red Top Rig Report, a decline of one in a week and 27 fewer than late April 2019.

The Mississippian play in Oklahoma and Kansas lost the one remaining rig and has no drilling activity. The Granite Wash remained at two, while the Permian Basin in West Texas and southeast New Mexico declined by 37 to total 246 rigs. A year ago, there were 460 rigs in the Permian.

The Ardmore Woodford remained at four, while the Arkoma lost its only rig and has no activity. The D-J Basin in Colorado slipped by one to total 15 rigs, while the Eagle Ford in South Texas declined by 7 to total 35 rigs.

In March, David Le Norman, Petroleum Alliance chairman, wrote a letter to Wilbur Ross, U.S. Secretary of Commerce, expressing the Alliance’s support of the Section 232 investigation into Saudi Arabia’s and Russia’s dumping of crude oil. In his letter, he wrote:

Dear Secretary Ross, On behalf of the Petroleum Alliance of Oklahoma and our more than 1,300 member companies and their hundreds of thousands of employees, I write in support of Sen. Jim Inhofe’s March 18, 2020 request that you initiate a Section 232 investigation into the excessive dumping of crude oil by the Kingdom of Saudi Arabia and the Russian Federation.

The Petroleum Alliance of Oklahoma represents every segment of the oil and natural gas industry in the state that ranks number three in natural gas production and number four in crude oil production. Our members are being disproportionality harmed by Russia and Saudi Arabia’s manipulation of the oil markets, and we support Sen. Inhofe’s call for our government to respond with “swift, decisive action.”

Russia and Saudi Arabia’s decision to flood an already over-supplied market has hurt our economic health and weakened our national security.

We hope that you will seriously consider Sen. Inhofe’s request to take immediate action in pursuing a Section 232 investigation into these actions meant to deliberately undercut American security.

Sincerely,

David D. Le Norman, Chairman Petroleum Alliance

Originally published on OKEnergyToday.com.

April | 25

DIDYOU

PANDEMIC RESPONSE

KNOW

PETROLEUM ALLIANCE ORGANIZES DONATIONS TO MEDICAL WORKERS Oklahoma’s oil and natural gas industry is helping medical workers get the equipment they need to fight the ongoing COVID-19 outbreak.

PETROLEUM PRODUCTS HAVE A MAJOR IMPACT ON THE HEALTH CARE INDUSTRY? Here are some of the many products which are crucial to fighting the worldwide COVID-19 pandemic.

The Petroleum Alliance of Oklahoma, the state’s oil and natural gas trade association, organized the Petroleum Pandemic Response.

“In times of crisis, the oil and natural gas industry will always come together to leverage our collective strength for the good of our communities,” said David Le Norman, chairman of the Alliance. “Our members are pooling their resources and working with state officials to deliver desperately needed items to save lives.”

Alliance members are asked to donate items which are in limited supply, including:

Companies wishing to offer donations should email relief@okpetro.com so the Alliance can efficiently coordinate the effort.

• N95 Masks • Safety Goggles • Gowns • Gloves • Hand Sanitizer • Beds • Ventilators • Face Shields • Procedure Masks • PAPR Ensembles • PAPR Batteries • PAPR Filters • PAPR Tyvek Coveralls

26 | thepetroleumalliance.com

April | 27

OIL & GAS PROFESSIONAL DEVELOPMENT COURSES 2020 PETROLEUM ENGINEERING FOR NON-ENGINEERS IN-HOUSE/SPRING 2020

FLOW DYNAMICS OF HORIZONTAL WELL PRODUCTION IN-HOUSE/SPRING 2020 NORMAN, OKLAHOMA

NORMAN, OKLAHOMA

J. MIKE STICE,

DEAN AND LESTER A. DAY FAMILY

HAMIDREZA KARAMI PH.D.

CHAIR, MEWBOURNE COLLEGE OF EARTH AND

ASSISTANT PROFESSOR

ENERGY AT THE UNIVERSITY OF OKLAHOMA

OF OKLAHOMA

MACHINE LEARNING FOR PETROLEUM ENGINEERING AND GEOSCIENTISTS

AT THE UNIVERSITY

WELL INTEGRITY CERTIFICATE IN-HOUSE/SPRING 2020 NORMAN, OKLAHOMA

IN-HOUSE/SPRING 2020 NORMAN, OKLAHOMA

DEEPAK DEVEGOWDA, PH.D.

CATALIN TEODORIU, PH.D.

MEWBOURNE CHAIR IN PETROLEUM

ASSOCIATE PROFESSOR & DRILLING SIMULATION

ENGINEERING | GRADUATE LIAISON

CENTER DIRECTOR AT THE UNIVERSITY OF OKLAHOMA

MACHINE LEARNING APPLICATIONS FOR SUBSURFACE IMAGING IN GEOPHYSICS SUMMER 2020 NORMAN, OKLAHOMA KURT J. MARFURT, PH.D.

HEATHER BEDLE, PH.D.

RESEARCH PROFESSOR AT THE MEWBOURNE

ASSISTANT PROFESSOR AT THE MEWBOURNE

COLLEGE OF EARTH AND ENERGY SCHOOL OF

COLLEGE OF EARTH AND ENERGY SCHOOL OF

GEOSCIENCES AT THE UNIVERSITY OF OKLAHOMA

GEOSCIENCES AT THE UNIVERSITY OF OKLAHOMA

Each participant will receive a certificate of attendance and the course is eligible for Continuing Education Units (CEUs) SPECIAL DISCOUNT FOR MULTIPLE PEOPLE FROM THE SAME COMPANY

INTERESTED IN IN-HOUSE COURSES? ASK FOR OUR DISCOUNTS Yoana Walschap | Executive Director | (405) 325-4753 | ywalschap@ou.edu Luis Vergara | Marketing & Communications | (405) 640 - 7391 | luifer@ou.edu

http://link.ou.edu/eiaoklahoma

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LIFE-SAVING PRODUCTS AMERICAN ENERGY IS HELPING FIGHT THE CORONAVIRUS — IN WAYS YOU MAY NEVER HAVE REALIZED Life in America and around the world has been upended by the coronavirus pandemic. As terms like “social distancing” and “flatten the curve” become part of our daily lives, researchers race to develop treatments and vaccines to fight the virus.

In the meantime, doctors and nurses are on the front lines treating patients. And while they may not realize it, every single patient they treat will be cared for with an array of life-saving products made possible by America’s energy industry.

How is that possible? Well, you may not know it, but natural gas and petroleum-based products are ubiquitous in hospital settings. Oil and natural gas provide the feedstock for advanced plastics which are used to make countless essential medical supplies. One estimate found that an average hospital emergency room has 90 products that are derived from petroleum and natural gas products.

From respirators, gloves and personal protective equipment (PPE) to sterilization trays, IV lines and ventilation tubes, the battle we are waging against coronavirus is being fought with natural gas- and petroleum- based products. The list goes on and on.

Life-saving pharmaceuticals. Sanitary, single use plastic medical supplies, devices and other products that limit the spread of infection by reducing contamination.

Personal hygiene products such as soaps, detergents, antiseptics and disinfectants that are vital to keeping homes and health care facilities sanitary and safe.

Without these energy-derived products, it is not hyperbole to say that it would be impossible — not just difficult, but impossible — to maintain the modern health care standards we too often take for granted.

new molecules that create a substance called ethylene.

This ethylene is then transported — usually by pipeline — to a different facility for a process called polymerization. In this process, the ethylene gets converted from a gas to a resin, which can then be engineered and molded into many other plastic products, including medical products.

Thanks to our newfound energy abundance, in the last decade alone, more than 300 new chemical and plastics manufacturing facilities have been announced in the United States. Given the sudden uncertain supply chain from overseas, the timing of the energy revolution which fueled this manufacturing boon may prove to be particularly fortuitous to our ability to ease potential disruptions.

Combating the coronavirus will require the U.S. to marshal all of its will and resources. America’s energy industry is doing its part, not only by fueling the transport of food, supplies and essential workers, but also by helping to produce the life-saving materials and equipment our healthcare system relies on.

Originally published by the Global Energy Institute.

How exactly does it work? For many plastics, it begins at what is known as a cracker plant. The rise in domestic energy production has spurred the construction of more than a dozen such new plants, mostly in the Gulf Coast and mid-Atlantic. These plants convert oil and natural gas into the building blocks for chemicals that become plastics, pharmaceuticals and advanced materials for use in medical devices, disinfectants and so much more.

For example, one of the most common types of feedstock is ethane, a liquid found in natural gas. At a cracker plant, ethane is heated to 1,500 degrees, which “cracks” it into

30 | thepetroleumalliance.com

April | 31

OILMAN HAMM PICKED BY PRESIDENT FOR HIS ECONOMIC REOPENING COMMITTEE Oklahoma oilman Harold Hamm is among 200 executives and industry leaders named by President Donald Trump to his Great American Economic Revival Industry Groups committee to reopen the nation’s economy amid the COVID-19 pandemic.

Hamm, founder and chairman of Continental Oil, was included on a list of energy leaders including Darren Woods of ExxonMobil, Vicki Hollub of Occidental Petroleum, Tom Fanning of Southern Company, Mike Wirth of Chevron, Mark Crosswhite of Alabama Power, Ryan Lance of ConocoPhillips, Steven Kean of Kinder Morgan, John Hess of Hess Corporation, Rich Nolan of the National Mining Association, Joseph Gorder of Valero and Ross Perot Jr. of the Perot Group and Hillwood.

Hamm recently attended a White House meeting along with other oil and gas industry leaders to discuss ways to help the struggling industry. He also has been a political advisor to President Trump regarding energy issues.

The President announced his list on April 14 and read off dozens of names of executives and companies in technology, agriculture, banking, financial services, defense, energy, transportation, sports and health care.

“Now, we have a list of people that I’ll be speaking to over the next very short period of time, in many cases, tomorrow,” Trump said. “We have a list of different

OKLAHOMA OILMAN HAROLD HAMM IS AMONG 200 EXECUTIVES AND INDUSTRY LEADERS NAMED BY PRESIDENT DONALD TRUMP TO HIS GREAT AMERICAN ECONOMIC REVIVAL INDUSTRY GROUPS COMMITTEE 32 | thepetroleumalliance.com

industries that I’ll be discussing by, meeting by telephone, because we don’t want people traveling right now.”

In an announcement from the White House Rose Garden, the President said the people on the list would advise the administration in the coming weeks about how to reopen the economy from the coronavirus-induced shutdown.

“These bipartisan groups of American leaders will work together with the White House to chart the path forward toward a future of unparalleled American prosperity,” the White House said in a statement. “The health and wealth of America is the primary goal, and these groups will produce a more independent, self-sufficient, and resilient Nation.”

At no point did President Trump or the White House explain the way the committees would work, the types of suggestions they sought or the benchmarks the White House would use to determine whether it was safe to reopen shuttered businesses, send children back to school, reopen stadiums or resume work in offices.

The President also did not explain who will lead the effort of the various industry groups.

Originally published on OKEnergyToday.com.

CONTINENTAL CEO BILL BERRY BRINGS HARD TRUTHS, OPTIMISM TO WILDCATTERS LUNCHEON Continental Resources CEO Bill Berry was the featured speaker at the Alliance’s March Wildcatters Wednesday luncheon, which was held just one day after a historic drop in oil prices sent Oklahoma’s oil and natural gas industry reeling.

In a conversation with Alliance Vice Chairman and Continental SVP of Government and Regulatory Affairs Blu Hulsey, Berry asserted that recent actions by Russia and Saudi Arabia have “put a crosshair on this industry and on this state,” noting that Oklahoma’s publicly traded oil and gas companies have already lost a combined $22 billion in market share in 2020.

’ WE RE ALL IN THIS TOGETHER.

Amid the real concerns for the future, however, Berry was optimistic that industry organizations would work together closely to get through the downturn. “We’re all in this together. We’re going to have to work together to solve this.”

Berry also encouraged companies to work together on improving the industry’s image by better communicating what it does for the world, especially for people in developing nations and those living below the poverty level.

“It’s going to take help from everybody, and I encourage the government to take a look at what can be done to make this industry be more efficient and effective in the future,” Berry said.

April | 33

WILDCATTERS WEDNESDAY RECEPTIONS

WILDCATTERS WEDNESDAY RECEPTION WEDNESDAY, AUGUST 19 | 5:30 The Mayo Hotel | 115 W 5th St | Tulsa, OK 74103

WILDCATTERS WEDNESDAY RECEPTION T U E S DAY, S E P T E M B E R 1 5 | 5 : 3 0 P. M .

S k i r v i n H i l t o n | 1 P a r k A v e | O k l a h o m a C i t y, O K 7 3 1 0 2

PETROLEUM ALLIANCE PAC

PETROLEUM ALLIANCE PAC

For information about donating, contact Jon Bargas at 405.601.2244 or jon@okpetro.com.

For information about donating, contact Jon Bargas at 405.601.2244 or jon@okpetro.com.

REGISTRATION*

REGISTRATION*

$50 | In advance, members $65 | In advance, non-members $65 | Day of the event

$50 | In advance, members $65 | In advance, non-members $65 | Day of the event

HOW TO REGISTER

HOW TO REGISTER

Online: www.ThePetroleumAlliance.com Phone: Contact Ellis Ebel at 405.601.2272

Online: www.ThePetroleumAlliance.com** Phone: Contact Ellis Ebel at 405.601.2272

*Please note there is no reserved seating for this event.

*Please note there is no reserved seating for this event. **Online registration closes at noon on September 14.

Alliance PAC contributions support candidates who support Oklahoma’s oil and natural gas industry.

STEVE ANTRY

Alliance PAC contributions support candidates who support Oklahoma’s oil and natural gas industry.

DAVID M. WOOD

“Pamela Anderson, Cow Patties, and Resource Plays”

President, CEO and Director of Gulfport Energy

Antry founded the Eagle Energy series of companies, whose focus

Antry has over 40 years of industry experience and is from a third-

David Wood joined Gulfport in December 2018 from Arsenal

David holds a bachelor’s degree in geology from the University

has always been in the Mid-Continent region of the United States.

generation Oklahoma oil family. He holds a bachelor’s of business

Resources LLC, a West Virginia-focused natural gas producer,

of Nottingham in England and completed Harvard University’s

Eagle sold substantially all of its assets in late 2012 in a transaction

administration and an MBA from Texas Christian University.

and First Reserve Corporation portfolio company, where he

Advanced Management Program. He previously served on the

valued at $650 million. This was the fifth largest transaction of any

Additionally, he was a nominee for Entrepreneur of the Year for

most recently served as Chairman of its Board of Directors and

Board of Directors and as an Executive Committee Member of

kind in Oklahoma that year. More recently, Eagle sold its remaining

2011 by the accounting firm of Ernst and Young and was one of

previously held the role of CEO. From 2013 to 2016, he served as a

the American Petroleum Institute. He was also a member of the

STACK and SCOOP assets in central Oklahoma in 2019. Eagle

three Oklahoma finalists for that honor for 2012. Additionally, he

Senior Advisor to First Reserve, a premier energy-focused private

National Petroleum Council and is a member of the Society of

was named in the top five of the Journal Record’s “Fast 40” list of

is a Lifetime VIP of the International Blues Foundation. In 2017

equity firm, serving on several portfolio company boards. Prior

Exploration Geophysicists. His past board affiliations include

Tulsa’s fastest growing companies in 2011 and earned the top spot

he produced and performed vocals, harmonica and guitar for his

to that, he spent more than 17 years at Murphy Oil Corporation,

Crestwood Midstream GP LLC, Crestwood Equity GP LLC, Deep

in 2012. Prior to founding Eagle in 2009, Antry founded Beta Oil &

debut album, which earned critical acclaim and reached the No. 5

including as CEO, President and Director from 2009 until his

Gulf Energy LP and Berkana Energy, when it was majority owned

Gas. He led Beta through its initial public offering and onto growth,

Blues/Rock worldwide ranking in the roots music charts.

retirement in 2012. From 1980 to 1994, David held various senior

by Murphy Oil.

eventually ranking as No. 125 in the Oil and Gas Journal’s list of

positions with Ashland Exploration and Production. He began his

the top 200 oil and gas producers in the U.S. before merging with

career as a well-site geologist in Saudi Arabia. He currently serves

PetroHawk Energy.

on the board of Lilis Energy Inc., an exploration and development company operating in the Delaware Basin.

34 | thepetroleumalliance.com

April | 35

36 | thepetroleumalliance.com

A MESSAGE FROM OUR CHAIRMAN

STRONGER, TOGETHER FELLOW “OILYS,” We are in the midst of unparalleled times – in our industry, our nation, and our world. We’re caught in the crossfire between an oil price war and an unprecedented drop in demand are the people who literally fuel our economy.

The people I call family. We are all cut from the same cloth — resilient, stubborn, sometimes downright abrasive — but the same. The best people on the planet belong to this fraternity, “Oilfield Trash,” and we are all very proud of our title.

The challenge presented by the COVID-19 pandemic highlights something Oklahomans already know — the oil and natural gas industry is essential, in multiple ways. When Gov. Kevin Stitt put in place protections to slow the coronavirus’s spread, he wisely followed federal guidelines and industry advice by designating the oil and natural gas industry “critical infrastructure.”

Exempting the energy industry from shutdown orders makes every American more secure.

This decision means the resilient people of the oilfield will continue to provide the fuel and raw materials Americans rely on for transportation, manufacturing and electricity. The lights will stay on, and delivery trucks will keep rolling because of the oil and natural gas industry.

Remember, the energy industry does not just keep our country operational in times of crisis. Individuals and companies leverage their collective strength for the good of their community as well. Our industry has answered the call after hurricanes, tornadoes and other tragedies, and we will honor the legacy of previous generations by leading the way once again. Through the Petroleum Pandemic Response, Alliance members are providing masks, disinfectants, and other equipment critical to protecting the medical workers on the front lines and for treating patients. Oil and natural gas is also critical to Oklahoma’s

38 | thepetroleumalliance.com

economy through countless good-paying jobs and hundreds of millions of dollars poured into our schools and towns each year.

Now is the time for our industry to unite. Now is the time to find common ground and collaborate. We cannot lose all our wisdom and divide our voices over petty “nonissues” or egos. The Petroleum Alliance was put together differently than its predecessors, OIPA and OKOGA. It is designed to provide equal weight to the largest and smallest producers in Oklahoma while more than tipping our hats to midstream providers and our beloved oil and gas service sector, people who act as the “canary in the coal mine,” running out of oxygen first while the rest of us fight for breath.

The founders of OEPA felt like they had been brushed aside. They were promised relevancy under a new flag.

The truth is, they have never been anything but relevant in my eyes. The men that we have lost set the standard for all of us — men that had a personal impact on me, like Bob Waller and Lew Ward. Many others continued the mission, proved to be visionaries and carried the torch, like Pete Brown, Ronnie Irani, Harold Hamm, and others too numerous to name. Our past leadership developed the idea and implemented the founding of the Oklahoma Energy Resource Board to provide the public service of education and the restoration of long-forgotten and abandoned orphaned well sites.

We all know folks like those mentioned above. After midnight in the little town of Alice, Texas a man received a call on a party line. “Hey, we have lost pressure on #6, truck will be by in 20 minutes.” The man knew exactly what to do.

He put on his work clothes and boots and walked outside, had a smoke of a cigarette he rolled himself without a filter, jumped into the truck and rode out to the country. He told the driver, “Stop here at the section line,” and got out, slung a clamp over his right shoulder with a shovel in one hand, a lantern in the other and proper wrench sticking long out of his pocket, and began to walk the line. After hours of walking, he found where the leak was, set the lantern down a safe distance, and began to dig. He dug the leak out and clamped it, noting and estimating how far from the nearest section line he had walked to complete a permanent repair to tell the crew. Then he walked to the nearest section line and waited for the truck to come by and pick him up.”

That man was my grandfather. He would always find chores for my brother and me to keep us busy and mostly stay out of trouble. He used to tell me when I was doing any job, “Make a game out of your work. Enjoy it. But most of all, take care of your job.”

I am sharing this story with you because we all had parents, grandparents and mentors that showed us the way and guided us in this industry and life. I could tell you countless stories of riding in the front seat, standing up without a seatbelt on lease roads at night with my Dad when he was a young petroleum engineer, just “checking on a few things,” as he would say.

The vast majority of the regulatory, legislative and macrorelated headwinds for our industry in Oklahoma are not divisive. We will, together, find solutions.

My personal goal is that we all ultimately unite under the Petroleum Alliance Flag and once again speak with one voice to represent and advocate for the tremendous people of Oklahoma’s oil and natural gas industry. We govern by consensus and have a committee structure in place to ensure we draw on each member’s expertise and experience. We provide opportunities for smaller companies to save money through programs like the Alliance Health and Benefits plan (see page 54). Strength and bargaining power is created through our collaborative numbers and voices.

So spread the word — the Petroleum Alliance of Oklahoma was created for ALL constituents of our oil and gas community. I love this quote from American author Patrick Lencioni, who said: “If you could get all the people in an organization rowing in the same direction, you could dominate any industry, in any market, against any competition, at any time.” Let us pick up the phone and mend our fences because we are stronger TOGETHER. Sincerely,

CHAIRMAN, PETROLEUM ALLIANCE OF OKLAHOMA

April | 39

CONGRATS! Congratulations on being recognized as one of the 90 most successful producers in the nation by Insurance Business America.

Dave Deardeuff Sr. Vice President INSURICA

DEMOCRATS FIGHT RELIEF SOUGHT BY REPS. COLE AND HERN Democrats in the U.S. House have come out against a request made by 30 Republican Representatives, including Oklahoma Reps. Tom Cole and Kevin Hern, to provide royalty relief for oil and gas producers drilling on federal lands during the coronavirus crisis.

Led by Natural Resources chairman, Rep. Raul Grijalva of Arizona, Democrats have urged the Interior Department to reject the plea of Republicans. They sent their own letter to Secretary David Bernhardt, claiming a 1986 decision by the Interior Board of Land Appeals requires case-by-case determinations that royalty cuts are financially necessary.

And they added that royalty cuts now are not in the public interest because they would be “padding the profits” of fossil fuel companies. The Democratic response comes

40 | thepetroleumalliance.com

after groups of House and Senate Republicans pushed for royalty relief last week.

Reps. Cole, Hern and others asked the Interior Department to temporarily pause or suspend royalty fees from oil, gas, coal and other minerals produced on federal land.

“We ask your support in providing relief within your existing authority to essential industries impacted as a result of the COVID-19 pandemic until our nation gets back on track,” wrote the Representatives.

“Ideally, any reduction would allow producers working on the federal estate to forgo the federal portion of required royalty payments while preserving the portion that is returned to the states so as not to negatively impact state revenues.”

Specializing in you.

5100 N. Classen Boulevard, #300 Oklahoma City, Oklahoma 73118

P 405.556.2378 | M 405.850.3080 Dave.Deardeuff@INSURICA.com INSURICA.COM | @INSURICA

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CM

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The Petroleum Alliance of Oklahoma announced that after an extensive nationwide search, Brook A. Simmons has been chosen as its next president.

“After a collaborative and exhaustive search, we are pleased to have found a new leader for the Alliance whose background and experience so perfectly fits with our goals and mission,” said David Le Norman, Alliance Chairman.

“Brook served as an active member in both of our predecessor organizations and was instrumental in uniting the oil and natural gas industry under the single banner of the Petroleum Alliance,” Le Norman said. “It is fitting that he is coming home to Oklahoma in order to oversee the organization where he has such deep roots.”

N AT I V E

Simmons served as the federal lobbyist for the Oklahoma Independent Petroleum Association (OIPA) from 2008-2015. He served on the executive committee of the board of directors for the Oklahoma Oil & Gas Association (OKOGA) from 20152019 and helped merge the organizations into the Petroleum Alliance of Oklahoma.

From 2015 until its acquisition by Encana (now Ovintiv) in 2019, Simmons managed federal, state and local government affairs for Newfield Exploration and frequently worked in Oklahoma. Since then, Simmons has represented private clients on federal issues in Washington, D.C.

OKLAHOMA

Simmons serves on the board of directors for the Domestic Energy Producers Alliance (DEPA) and previously served on the boards of directors for the Western Energy Alliance (WEA), North Dakota Petroleum Council (NDPC), Royalty Owners & Producers Educational Coalition (ROPE) and the Utah Petroleum Association (UPA). He also served on Utah Governor Gary Herbert’s Energy Advisory Council.

Simmons said his priority at the Alliance will be to ensure it emerges even stronger from the economic storm while continuing to deliver powerful results for members of every size.

“The petroleum industry is the life blood of Oklahoma. Every sector of the economy depends on its vitality and the petroleum products our hard-working men and women deliver daily to enable human progress,” said Simmons. “The Alliance will remain focused on sound public policies to maximize Oklahoma’s role in this global business and deliver effective services so members are well-prepared for the next chapter in our extraordinary story.

B ROO K A .

SIMMONS NAMED ALLIANCE

44 | thepetroleumalliance.com

PETROLEUM PRESIDENT

Simmons is a graduate of Ardmore High School and the University of Oklahoma.

A former journalist, he worked in Congress from 1991-2004 — serving U.S. Senator Don Nickles, R-Okla., and U.S. Rep. Ed Whitfield, R-Ky. — while working on campaigns and serving as spokesman for the American Sportfishing Association.

New Head of State Oil and Gas Trade has Deep Roots in State’s Industry, Government April | 45

DISCRETIONARY ENFORCEMENT

BY DEQ IN OKLAHOMA CORPORATION COMMISSIONER HIETT SEEKS ANOTHER TERM Oklahoma Corporation Commissioner Todd Hiett filed as a candidate for re-election in early April, seeking another six years on the state regulatory board.

So far, he has one challenger in the Republican primary: Harold D. Spradling of Cherokee, who previously ran for the commission.

Hiett, who has chaired the Corporation Commission since March 2019, is serving his first term as Commissioner. He was elected in fall 2014 and took office in January 2015.

In the 2014 primary, Hiett defeated challenger Cliff Branan with a 52% to 48% margin and won the general election with no challenger from an opposing political party.

Hiett previously served 12 years in the Oklahoma House, where he was chosen to be Speaker. He also runs a ranch south of Kellyville.

While the state of Colorado promises to be aggressive in its enforcement of environmental rules after the EPA announced suspension of enforcement of air quality rules, the state of Oklahoma is handling matters on a case-by-case basis.

Robert D. Singletary, General Counsel for the Oklahoma Department of Environmental Quality (DEQ), addressed the issue in a recent memo written after the governor’s declaration of an emergency health crisis.

“Consistent with our mission and statutory responsibilities, the DEQ will continue to ensure compliance with regulatory obligations necessary to protect health and safety,” he wrote in the March 30 memo. “However, the DEQ understands that the COVID-19 pandemic presents numerous potential challenges to the ability of regulated entities to comply with certain regulatory requirements.”

Singletary said the DEQ would continue to work with the regulated communities on “a case-by-case basis to determine the most effective and reasonable approach to ensure compliance with applicable environmental requirements.”

His only opponent to date, Spradling, once ran for the state house in 1994 and was a 2018 candidate for the Corporation Commission against incumbent Bob Anthony. He lost in the June primary in a threeway race where Anthony successfully defended his candidacy after a serious challenge by former State Sen. Brian Bingman.

Anthony received more than 47% of the votes, while Bingman received 38% and Spradling received 14%.

Originally published on OKEnergyToday.com.

HIETT PREVIOUSLY SERVED 12 YEARS IN THE OKLAHOMA HOUSE, WHERE HE WAS CHOSEN TO BE SPEAKER.

He added that enforcement discretion might not be appropriate in all situations. The DEQ will exercise discretion “while focusing its enforcement efforts on compliance issues directly impacting human health.”

In Colorado, environmental advocates have called on the state to stop issuing new emissions permits.

Officials with the Colorado Department of Public Health and Environment sent a letter to companies on April 3 stating their plans to continue enforcement of laws aimed at preventing emissions of planet-warming greenhouse and toxic gases and water pollution.

Originally published on OKEnergyToday.com. Source: DEQ Oklahoma.

46 | thepetroleumalliance.com

April | 47

CRUDE OIL NO PLACE TO GO: OIL STORAGE FILLING UP AMID COLLAPSING DEMAND, EXCESS PRODUCTION Permian Basin shale oil drillers staring down the worst bust in a generation now face a once-unimaginable threat: there could soon be no place to put their crude.

“The only thing [producers] can do is try to sell their oil at $5 to $10 per barrel in West Texas or shut their wells in and hope that they can open them back up when the price is higher,” Kirk Edwards, the CEO of Odessa, Texas-based Latigo Petroleum, said in an interview. “Everything is coming to a screeching halt in the Permian on the drilling side too. The question everyone is having to ask themselves is: Why in the world would you drill a well at these prices? And the well you are currently drilling — why would you complete it?”

Concerns are mounting that the U.S. soon may not have enough oil storage to absorb a collapse in demand caused by the coronavirus that has started to ripple through the supply chain, with consequences for producers, pipelines, refiners and consumers.

Oil market experts do not expect international prices to move into negative territory, but they said an overflowing storage situation could shut down pipelines, shut in wells and destroy billions of dollars in value that would take years to recover.

At the heart of the problem is evaporating transportation fuel demand. People across the world are sheltering in place at the same time that Russia and Saudi Arabia have launched an oil price war and are increasing supply into an oversaturated market.

“In our base case, transport fuel demand could fall as much as 70% in affected regions. Further, a recession would follow over the rest of the year even as containment measures ease for 2H’20,” Citi Global Head of Commodities Research Ed Morse said during a March 31 webinar. With global oil demand averaging nearly 100 million barrels per day in 2019, Morse projected a worst-case scenario of 20% of that demand drying up in the second quarter.

Oil market expert and former BP Statistical Modeler Mark Finley envisioned a similar drop. Finley told S&P Global Market Intelligence that even if Russia and Saudi Arabia agree to cut back production, the lack of demand could still overwhelm global storage.

“We’re looking at potentially a 20% decline in worldwide oil demand in two to three months. Both the size and the pace are without precedent,” said Finley, a fellow in energy and global oil at Rice University’s Baker Institute for Public Policy. “If storage fills, there’s another shoe to drop on the price of oil. Because when that happens, then it’s not the economics of storage that sets the price, it’s the economics of stopping somebody from producing a barrel of oil.”

The largest decline of demand on record had been a 10% drop from the start of the global oil crisis in 1979 to 1982.

Originally published by S&P Global.

WE’RE LOOKING AT POTENTIALLY A 20% DECLINE IN WORLDWIDE OIL DEMAND IN TWO TO THREE MONTHS.

48 | thepetroleumalliance.com

April | 49

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A SENSIBLE EFFORT TO THWART LOCAL NATURAL GAS BANS B Y: DAV I D H O LT

Oklahomans should strongly applaud legislation approved by the state House which is pending in the Senate that would prohibit local governments from barring the use of natural gas in homes and businesses.

The bill would provide Oklahoma families and business owners, as well as cities and counties, consistent and transparent rules for the future use of much-needed, lower-cost and reliable natural gas.

Berkeley, California, has banned new natural gas connections. A few other radically minded cities in California and elsewhere are considering similar connections for homes and business, raising concerns for energy users everywhere.

While no such restrictions on natural gas have been proposed in Oklahoma, it’s commendable that the House overwhelmingly passed a bill by Rep. Terry O’Donnell, R-Catoosa, chairman of the House Energy and Natural Resources Committee, and co-authors Reps. Ken Luttrell of Ponca City and Ryan Martinez of Edmond, against such ill-conceived prohibitions to give all Oklahomans a certain piece of mind.

These actions to restrict natural gas are ill-advised and, if adopted, would curtail the our worldleading environmental progress while creating an unnecessary cost burden for consumers that also risks our energy security.

The proposed bans run counter to new research from the Department of Energy that shows we must increase our generation from natural gas and other sources to complement the important and growing addition of wind and solar power to our grid. Failure to do so puts our access to affordable, reliable energy at risk, the DOE’s National Energy Technology Laboratory said in a report released in February.

If municipalities are allowed to embrace this overzealous fad, we will generate a crazy patchwork of confusing energy policies — and higher energy prices. A recent Consumer Energy Alliance report found that Oklahoma families and businesses saved

52 | thepetroleumalliance.com

about $8 billion from natural gas in their energy bills between 2006 and 2016.

Our best solutions come when our governments and private sectors work together to offer environmentally sound solutions to meet our energy and environmental needs.

At a time of record oil and gas production, the United States leads the world in environmental standards and emissions reductions. That’s largely due to the use of natural gas, advances in technology and ongoing progress in renewable energy.

In 2019, U.S. greenhouse gas emissions fell a whopping 2.1%, according to the Energy Information Administration. The decline largely reflected the increased use of natural gas, wind and solar by utilities in Oklahoma and across the country. And it’s a longterm trend: our overall greenhouse gas emissions fell by 12% from 2005 to 2017.

By 2025, we’ll be two-thirds of the way toward meeting our Paris agreement targets of a 25-28% reduction in emissions from 2005 levels, according to Bloomberg Philanthropies.

Eliminating natural gas from our energy mix is eliminating immediate, tangible emissions reductions. Worse, this would interfere with a long, successful American tradition of government, businesses and citizens working together to solve our biggest challenges, as we are seeing now with the unprecedented mobilization to stop the coronavirus outbreak.

Please urge the Oklahoma Senate to approve the prohibition on local bans of natural gas hookups and Gov. Stitt to sign it.

Originally published in The Oklahoman.

Holt currently serves as President of Consumer Energy Alliance, a trade association that focuses on expanding the dialogue between the energy sector and the rest of the economy.

$8 BILLION SAVED A recent Consumer Energy Alliance report found that Oklahoma families and businesses saved about $8 billion from natural gas in their energy bills between 2006 and 2016.

2.1% EMISSION DROP In 2019, U.S. greenhouse gas emissions fell a whopping 2.1%, according to the Energy Information Administration. And it’s a long-term trend: our overall greenhouse gas emissions fell by 12% from 2005 to 2017.

2/3 EMISSION REDUCTION By 2025, we’ll be two-thirds of the way toward meeting our Paris agreement targets of a 25-28% reduction in emissions from 2005 levels.

April | 53

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THE QUOTING PERIOD FOR THE NEW PETROLEUM ALLIANCE OF OKLAHOMA ASSOCIATION HEALTH & BENEFITS PLAN IS NOW OPEN!

WITH THE

ALLIANCE

As a reminder, the Alliance has partnered with Blue Cross and Blue Shield of Oklahoma to help our members provide affordable benefit plans for their employees.

The new Petroleum Alliance of Oklahoma Association Health & Benefits Plan offers:

@petroallianceOK

The Petroleum Alliance of

• Access to the state’s largest preferred provider organization (PPO)

Oklahoma is your go-to source

• Providers you can trust

for industry news and reports.

• No medical underwriting • Multiple plan options with nationwide access

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• Dental, vision and prescription drug coverage

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keep our members informed.

Alliance member companies are eligible for these plans if they: • Have between 2 and 50 employees and are headquartered in Oklahoma

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• Elect medical, dental, vision and basic life coverage For more information, please contact benefits@okpetro.com.

FOLLOW US ON SOCIAL MEDIA FOR MORE EXCITING INITIATIVES!

The Petroleum Alliance of OKlahoma

April | 55

ANNUAL MEETING

TIMELINE OF 2020 EVENTS JUNE

6/29: THE ALLIANCE OPEN GOLF TOURNAMENT

JULY

7/18 : STACK SUMMER CLASSIC LIVESTOCK SHOW

AUGUST

Oak Tree Country Club, Edmond, OK (original date: 4/20)

8/19: WILDCATTERS WEDNESDAY RECEPTION The Mayo Hotel, Tulsa, OK

9/15: WILDCATTERS WEDNESDAY RECEPTION

As our industry navigates these unprecedented times, rest assured that the Alliance is continuing to work on your behalf. While circumstances beyond our control have forced us to reschedule our Annual Meeting, we hope to see you all in Las Colinas in November! Now more than ever, we are grateful for your support.

Featured Speaker: David Wood, CEO, Gulfport Energy

Please see below for important information regarding the date change for our Annual Meeting:

Featured Speaker: Steve Antry, CEO, Eagle Exploration

SEPTEMBER

Skirvin Hotel, Oklahoma City, OK

9/23: DUG MIDCON HAPPY HOUR Oklahoma City, OK (Location TBD)

OCTOBER

10/7: WILDCATTERS WEDNESDAY LUNCHEON Tulsa Country Club, Tulsa, OK Featured Speaker: TBD

10/22: WILDCATTERS INVITATIONAL GOLF TOURNAMENT Gaillardia Country Club, Oklahoma City, OK

NOVEMBER

11/5-8: ANNUAL MEETING

Four Seasons Resort & Club Dallas at Las Colinas, Irving, TX

TBD: WILDCATTERS WEDNESDAY LUNCHEON Oklahoma City, OK

DECEMBER

NOVEMBER 5-8

Kingfisher County Fairgrounds, Kingfisher, OK

TBD: WILDCATTERS WEDNESDAY LUNCHEON Oklahoma City, OK

56For | thepetroleumalliance.com sponsorship opportunities,

please contact Natalie Kinmonth at natalie@okpetro.com

Existing Reservations: • If you have an existing reservation, no action is necessary. The Four Seasons will automatically shift your reservation to the new dates.

• If you need to modify your existing reservation, you may do so through the Petroleum Alliance Group Reservation Website. For any questions, please contact Lauren Burnett at lauren@okpetro.com.

New Reservations: • If you wish to make a new reservation at the hotel, please contact Lauren Burnett at lauren@okpetro.com.

Registration: • If you made a reservation previously, your registration has been moved to the new dates, and no other action is required.

• If you are a sponsor and have not yet received your comp codes from Ellis Ebel, you will soon.

• Sponsorships are still available, so please contact Natalie Kinmonth at natalie@okpetro.com if you are interested.

April | 57

HEATHER POWELL

P R E S I D E N T & C E O AT V E N TA N A E X P L O R AT I O N A N D P R O D U C T I O N L L C

1

2 3 4 5 6 7 8

Who’s your favorite Oklahoman?

Aubrey McClendon. No other Oklahoman has had a bigger impact on my career. He was the first to recognize the disparity in the age gap in the industry and started recruiting young people just as I was getting out of college. He helped transform OKC to a place we can all be proud to live and work. Love him or hate him—there has yet to be another voice that compares to the charismatic, fearless visionary championing for our industry.

If you could eat one food the rest of your life, what would it be?

Definitely enchiladas from Chelino’s! I already eat it so often they know me by name, and my order!

Mountains or beach?

Something about warm sun on my face, sand in my toes and the sound of waves crashing just fills my soul.

Have you met anyone famous?

Sam Zell-American, billionaire & founder of Equity Group Investments in Chicago.

What’s your favorite drink?

Unsweet tea. After 5, I love sipping an “Ice Pick” iced tea, vodka and Splenda by the pool.

Favorite college team?

I’m in it for the tailgate when it comes to football but I do love Mike Gundy, cheese fries and small towns. So OSU might have an edge in my heart.

In one sentence, what do you actually do all day in your job?

I am an entrepreneur, landman, A&D guru, HR, IT, regulatory expert, counselor and leader tackling a new set of challenges and opportunities from sunup to sun down each day.

Favorite band in junior high?

Alanis Morissette & Joan Osborne

58 | thepetroleumalliance.com

9 10 11 12 13 14 15 16 17 18 19 20

Name of your pet?

Only taxidermy pets in my house!

What was your first job?

I was a hostess and waitress at Goldies Patio Grill in Claremore.

What was your first car?

A red Mustang

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If you could have dinner with one person, alive or dead, who would it be?

My Grandma Kay. When I was a child, she took me to her office and showed me what hard work and determination looked like. I would love to tell her about my career and my family, hug her and soak up all of her words of wisdom.

What was your favorite TV show as a child?

Quantum Leap hands down! I watched it every night with my dad and dreamed of where I would time travel to with Ziggy.

What’s the number one item you would save from your burning house?

A jar of flash drives I keep by my bed with all of our family photos.

What is your favorite thing about working in the oil and gas industry?

Being a part of such a resilient industry full of the brightest, hard-working people I have ever known working together to produce clean, affordable energy for our nation.

What is your favorite holiday?

Christmas. Celebrating the birth of Christ, watching every Hallmark movie ever made with my family, decorating my house like Clark Griswald, attending 842 parties and eating Patti Benton’s famous cookies.

What is the best gift you have ever received?

My children. I love having a big family.

What is the first thing you would do if you won the lottery?

Buy 40 acres near Arcadia and develop a neighborhood so all of our friends and family could live next door.

Are you looking for affordable health coverage for your employees?

Last movie you saw at the theater?

Frozen 2. I dressed up in an Olaf snuggie to be the “cool mom” and ran into way too many people that I know!

This inclusive package is only available to Petroleum Alliance members.

What’s your favorite app?

YouVersion Bible app & Kindle App. I love physical books but really like having all my favorite books with me when I travel.

The Petroleum Alliance Health & Benefits Plan through Blue Cross and Blue Shield of Oklahoma offers a variety of packages to meet your employees needs, including medical, pharmacy, dental, vision and life coverage.

For more information, contact benefits@okpetro.com

Blue Cross and Blue Shield of Oklahoma, a Division of Health Care Service Corporation, a Mutual Legal Reserve Company, an Independent Licensee of the Blue Cross and Blue Shield Association

April | 59

THE PETROLEUM ALLIANCE OF OKLAHOMA 500 N.E. FOURTH ST. OKLAHOMA CITY, OK 73104

Prsrt Std U.S. Postage Paid Permit No. 1541 Okla. City, OK