PUBLIC HEARING ON PRODUCTION PERMIT APPLICATION FOR HANGING H RANCH, INC. Call to order at 12:09 a.m. the public hearing on Application for a Production Permit for Hanging H Ranch, Inc. Party representing application: Roy Jackson and Mark Holly Protestant to application: None. Public Comment: None. Board Member Recusal: Alvaro Mandujano, Jr. (He left the room also) Presiding Officer Janet Groth declared the application uncontested. Sworn in for testimony: Mark Holly and Ty Edwards and Allan Standen. Manager Ty Edwards presented the application to the Board. Hanging H Ranch Inc. has made application for a Production Permit for 1 well (#2019120555) located at Old Courtney Ranch Co on 640 acres in Survey T&P RR CO Block 48- 8 Section 8 on Property ID# 6725, approximately 4 miles West of FM 1776 and 5 miles South of Coyanosa, in Pecos County, Texas. The application request authorization to produce 400 acre-feet/year for Industrial Use from the Rustler Aquifer. Hanging H applied for and was approved for a drilling permit into the Rustler aquifer. The well is completed to 1,250 feet. Pump test were completed. The water level is around 900 feet. They wanted 500 to 1,000 gallons per minute (gpm), and ended up with 300 gpm. They have a frac tank on the location and will take about 3 months to fill at that rate, and will be pumping year round. There are not any Rustler wells within a couple of miles, and we are hoping to monitor this well. Armando Mandujano noted that a Rustler well is located on Draw #4 (MPGCD#2005092312). The well is registered as a Rustler Well. The application is complete. Middle Pecos GCD Minutes for December 17, 2019 Page 13 Mark Holly testimony: XTO will be using the water. They need 4 — 5 million barrels every quarter. There is a pending water purchase agreement. If more wells are needed, it would be economically driven. Allan Standen/MPGCD Hydrogeologist: Producing from the Rustler aquifer would be depressurizing the Rustler and cause less communication with the Edwards-Trinity aquifer. He asked if Hanging H has considered the evaporation loss. Mark Holly: In the hot summer months, there could be an evaporation loss of 1,500 to 2,500 barrels a day which is based on his past experiences. Adjourn Hearing and consider and/or act on Application for a Production Permit for Hanging H Ranch, Inc. Allan Childs, Jr. made a motion to adjourn the hearing. Motion seconded by Vanessa Cardwell. Motion passed. Presiding Officer Janet Groth adjourned the hearing at 12:24 a.m. Allan Childs, Jr. made a motion to approve the production permit for Hanging H Ranch, Inc. Motion seconded by Larry Drgac. .Motion passed. Vote: 8 For. -0- Against. 2 Absent. 4 Abstention/Mandujano. The meeting was recessed at 12:26 p.m. for lunch. The meeting reconvened at 1:30 p.m. WORKSHOP ON RULES GOVERNING WELLS ON EXEMPT AND NON-EXEMPT WELLS ON 10 ACRES OR LESS Call to Order @ 1:31 p.m. by Presiding Officer Janet Groth. Workshop to review rules regarding exempt and non-exempt wells on tracts of land that are equal to or less than 10 acres in size. Board Discussions: Rule changes are not needed at this time. Special Permit Conditions were discussed in lieu of rule changes. Dr. Bill Hutchison suggested the following conditions: pumping rates limited to 10 gallons per minute; well depth should be drilled and completed to the red bed to prevent wells drying up during droughts and regional pumping and interference from nearby wells; and surface completion is important for flooding issues. Further discussions led to not having rule changes at this time, and have Special Permit Conditions. Xil Xill

Bastiat Liberty & Property Rights Analysis

This motion is scored as EXPANDS_GOVERNMENT (Impact Weight: 4.8/10). Under the Bastiat Liberty Watchdog Index, measures that increase tax rates or fee schedules, issue new debt or Certificates of Obligation, expand regulatory/zoning restrictions on private land use, or authorize unbudgeted spending expansions reduce an official's Freedom Score when voted YES (and reward dissenting NO votes).