NOTICE OF VIOLATION

Via Certified Mail#

To: Prime West Energy, Inc. Prime West Energy, Inc.

Kent MacIntyre, President John Alden, Env. Health & Safety Manager

1600 530 8^th Avenue 1600 530 8^th Avenue Sw

Calgary, AB T2P3S8 Calgary, AB T2P3S8 Sw

Via Certified Mail# Via Certified Mail#

Yockey Oil, Inc. CT Corporation System, R.A.

Carolyn S. Leadtka, President Yockey Oil, Inc.

P.O. Drawe 70 36 S. Pennsylvania Street Suite 700

Olney, IL 62450 Indianapolis, IN 46204

Case Nos. 2001-11088-S and

2001-11090-S

Based on investigation by designated representatives of the Indiana Department of Environmental Management (IDEM) on October 3, 2001, a crude oil well and tank battery owned by Prime West Energy, Inc. (2001-11088-S) and managed by Yockey Oil, Inc. (2001-11090-S), Located at Sec. 1, Twp. 6S, Range 12 W., otherwise known as North Huesler Lease, Evansville, Posey County, Indiana ("Site") was in violation of the following environmental rule and statute:

A. Pursuant to 327 IAC 2-6.1-7, any person who operates, controls or maintains any mode of transportation or facility from which a spill occurs shall, upon discovery of a reportable spill to the soil or surface waters of the state, contain the spill, if possible, to prevent additional spilled material from entering the waters of the state; undertake or cause others to undertake activities needed to accomplish a spill response; and as soon as possible, but within two (2) hours of discovery, communicate a spill report to the Department of Environmental Management, Office of Environmental Response. During the above noted investigation, IDEM observed that Prime West Energy, Inc. and Yockey Oil, Inc. allowed the discharge of crude oil from the Site and failed to adequately report, contain, and respond to the spill.

Pursuant to IC 13-30-2-1(1), no person may discharge, emit, cause, allow, or threaten to discharge, emit, cause, or allow any contaminant or waste, including any noxious odor, either alone or in combination with contaminants from other sources, into the environment or into any publicly owned treatment works in any form which causes or would cause pollution which violates or which would violate rules, standards, or discharge or emission requirements adopted by the appropriate board under the environmental management laws. During the above noted investigation, IDEM observed that Prime West Energy, Inc. and Yockey Oil, Inc., allowed the discharge of crude oil into the environment.

In accordance with IC 13-30-3-3, the Commissioner is required to notify an alleged violator in writing that a violation may exist and offer an opportunity to enter into an Agreed Order providing for the actions required to correct the violations and for the payment of a civil penalty. The Commissioner is not required to extend this offer for more than sixty (60) days.

Entering into an Agreed Order will prevent the issuance of a Notice and Order of the Commissioner under IC 13-30-3-4, or the filing of a civil court action under IC 13-14-2-6. IDEM encourages settlement by Agreed Order, thereby saving time and resources. Timely settlement by Agreed Order may result in a reduced civil penalty. Settlement discussions will also allow the opportunity to present any mitigating factors that may be relevant to the violations. In addition, as provided in IC 13-30-3-3, an alleged violator may enter into an Agreed Order without admitting that the violation occurred.

If settlement is not reached within sixty (60) days of receipt of this Notice of Violation, the Commissioner may issue a Notice and Order containing the actions that must be taken to achieve compliance, the required time frames, and an appropriate civil penalty. Pursuant to IC 13-30-4-1, the Commissioner may assess penalties of up to $25,000 per day for each violation.

Please contact Dirk Andres at 317/233-5534 within fifteen (15) days after receipt of this Notice regarding your intent to settle this matter. If you are willing to resolve this matter as provided for in the enclosed Agreed Order, please sign and return it to the Office of Enforcement at the above address within the sixty (60) day settlement period.

For the Commissioner:

Signed on June 7, 2002

Date: _______________ _________________________

Felicia A. Robinson

Deputy Commissioner

for Legal Affairs

cc: Posey County Health Department

Jim Smith, Office of Land Quality/IGCN

Enforcement File

http://www.state.in.us/idem