FOR IMMEDIATE RELEASE May 7, 2012 Contact: Kelli Way (512) 477-4452 kway@tipro.

org

Oil and Gas Industry Disappointed with New Fire Code Tax in City of Arlington New Unconstitutional Fire Code Tax Results in Lawsuit Austin, TX The Texas Oil & Gas Association (TXOGA) and the Texas Independent Producers and Royalty Owners Association (TIPRO) today expressed disappointment that the City of Arlington refused to collaborate with local oil and gas operators regarding changes to the City Fire Code that would impose an additional $800,000 tax per year for oil and natural gas companies operating in the city. The City of Arlington plans to charge oil and natural gas operators $2,400 per well, per year, creating a new tax that will not enhance public safety, according to Deb Hastings, executive vice president of TXOGA. City officials have not been able to explain how the new tax will increase public safety as it relates to oil and natural gas operations. Safety is the top priority of oil and natural gas operators. In addition to maintaining their own emergency responders on call 24-hours-a-day, 365 days a year, local oil and natural gas operators have offered to provide the Arlington Fire Department with training free of charge. The City has repeatedly declined, said Hastings. Even though fires at oil and natural gas well sites are very rare, oil and gas operators routinely provide free training to local fire departments and emergency response teams across Texas. This new Fire Code tax is unnecessary because natural gas well operators are already responsible for reimbursing the City of Arlington for costs incurred in the unlikely event that an incident occurs on a gas well site, said Justin Furnace, president of TIPRO. This obligation is included in the Amended Gas Well Drilling Ordinance the City of Arlington adopted in December 2011. After months of unsuccessful industry attempts to collaborate with city officials on this issue, unfortunately, it appears the City plans to exploit an opportunity to expand its revenues by taxing a single industry. The proposed oil and gas fire code tax is up to seven-times higher than permit fees the City charges similarly situated businesses that have flammable and combustible substances on site, said Hastings. Its disheartening to see the City pursue such discriminatory conduct toward an industry that has provided enormous economic benefits to its residents, she said. Tens of thousands of North Texas residents and their families depend on high quality oil and natural gas jobs. Additionally, local mineral owners receive income from oil and natural gas operations. And the Arlington Tomorrow Foundation was created specifically to oversee an endowment fund created by

natural gas revenues generated from mineral leases on City-owned property, said Furnace. Since its inception, the Foundation has received income in excess of $75 million and distributed almost $6 million in grants to more than 200 projects serving Arlington residents, according to the Foundation. The City of Arlington already imposes the highest fees for oil and natural gas operations in North Texas. Operators paid $1.8 million in city fees in 2011 alone and the City received $2.5 million in mineral ad valorem revenues. And the City of Arlington received an additional $105 million in bonuses and royalties over a five years period ending in 2011, said Hastings. We believe the new tax is not only unnecessary from a public safety perspective, but also unconstitutional and in violation of Texas law, leaving no option but to take the issue before the court to examine. The lawsuit was filed today with the District Court of Tarrant County. Unwarranted and discriminatory taxes make the City of Arlington unattractive for oil and natural gas operators to invest and create jobs in this community, said Furnace. We are hopeful that the court will resolve this issue in a way that allows local oil and natural gas operators to continue to deliver substantial economic benefits for people of Arlington and all of North Texas. +++ ABOUT TXOGA Texas Oil & Gas Association (TXOGA) is a statewide trade association with approximately 4,000 members representing every facet of the Texas Oil and Gas Industry including small independents and major producers. Collectively, TXOGA members account for approximately 92 percent of all oil and natural gas produced in Texas; they operate a vast majority of the States pipeline mileage and gas processing capacity; and they are responsible for nearly 100 percent of the States refining capacity.

ABOUT TIPRO The Texas Independent Producers & Royalty Owners Association (TIPRO) is a trade association representing the interests of nearly 2,400 independent oil and natural gas producers and royalty owners throughout Texas. As one of the nations largest statewide associations representing both independent producers and royalty owners, our members include small mom-and-pop companies, the largest, publicly-traded independent producers, and mineral owners, estates, and trusts. Our members are responsible for producing more than 85 percent of the natural gas and 70 percent of the oil within Texas, and own mineral interests in millions of acres across the state.