1.          Prior to spudding well. . .

Plan drilling program, prepare AFE, select drilling contractor, negotiate special provisions in drilling contract, file Notice of Intent to Drill with the Oklahoma Corporation Commission, supervise staking of location, settle damages with landowner.

Field supervision charged at current per diem rate.

Engineering charged at current hourly rate.

2.         During drilling of well. . .

Supervise drilling operation, including mud program, setting of conductor and surface pipe, drill stem testing of any shows encountered during drilling, supervision of coring operations, should they be required, and electric logging upon reaching total depth.

Field supervision charge at current per diem rate.

Engineering evaluation of drill stem test, cores, or

electric logs, if requested, at current hourly rate.

3.         Completion of well. . .

A.        Dry Hole.  Obtain state approval and plug well in accordance with existing state rules and regulations.  Restore location to original contours.

B.        Producing Well.  Supervise running of production casing and cementing, perforating, stimulation and completion testing.   Preparing and filing of completion records with the Oklahoma Corporation and Tax Commissions.

Field supervision charged at current per diem rate.

Engineering interpretation and evaluation of completion tests, stimulation designs, etc., at current hourly rate.

4.         Placing well on production. . .

Locating and contracting for purchase of  surface equipment (including tanks, separation equipment and pumping equipment, if necessary).  Supervising installation of surface equipment, locating and hiring pumper and placing well on production.

Field supervision charged at current per diem rate.

Engineering charged at current hourly rate.

                                                                   COMMENT

Direct expenses will be billed at cost.  These will include such items as personal expense, (meals, motels, etc.), long distance telephone calls, and commercial travel.  Transportation by company vehicles is billed at current mileage rate.  Any unusual clerical or accounting burden, should they occur, will be billed for the excessive time, while normal time will be included in our facility expenses and is included in the per diem rate.