STAFF REPORT 99 A 37 S 19 06/28/19 PRC 3914.1 L. Pino TERMINATION OF A GENERAL LEASE – RIGHT-OF-WAY USE LESSEE: Signal Hill Service, Inc. LAND TYPE, AND LOCATION: Approximately 13.1 acres of sovereign land in the Santa Barbara Channel, near Rincon Point, Santa Barbara and Ventura Counties. AUTHORIZED USE: The use and maintenance of four pipelines from Federal Platform Hogan to an onshore point: a 4-inch-diameter water pipeline, two 10-inch-diameter oil pipelines, a 12-inch-diameter gas pipeline; and a nonoperational 8-inch- diameter outfall pipeline from shore. LEASE TERM: 10 years, beginning March 1, 2013. CONSIDERATION: Annual rent in the amount of $57,575, with the State reserving the right to adjust the rent periodically during the lease term, as provided in the lease. SPECIFIC LEASE PROVISIONS: Insurance: No less than $1,000,000 per occurrence. Bond: No less than $50,000. STAFF ANALYSIS AND RECOMMENDATION: Authority: Public Resources Code sections 6005, 6216, 6301, and 6501.1; California Code of Regulations, title 2, sections 1906 and 2000. Background: Lease No. PRC 3914.1 was initially authorized by the Commission on February 29, 1968, to Phillips Petroleum Company for four pipelines and one outfall pipeline for a 15-year term, with three renewal periods of 10 years each (staff report not prepared). On January 27, 1983, the -1- STAFF REPORT NO. 99 (CONT’D) Commission authorized the renewal and amendment of the pipeline rightof-way lease for ten years, commencing March 1, 1983, with two renewal periods of 10 years each (Item 4, January 27, 1983). On February 12, 1997, the Commission authorized the assignment of the Lease to Signal Hill Service, Inc.; and the amendment and renewal of the Lease, for 20years beginning March 1, 1993 (Item 52, February 12, 1997). On September 20, 2013, the Commission issued a 10-year, General Lease – Right-of-Way Use, to Signal Hill Service, Inc., for the operation and maintenance of four existing submerged pipelines, crossing state sovereign lands, serving Platform Hogan in federal waters. The improvements consist of a 4-inch-diameter water pipeline, two 10-inchdiameter oil pipelines, a 12-inch-diameter gas pipeline, extending approximately 14,500 feet from shore to the easterly boundary of County of Santa Barbara’s legislative grant; and a nonoperational 8-inch-diameter outfall, extending approximately 500 feet from shore into the Pacific Ocean, near Rincon Point, Santa Barbara and Ventura Counties, beginning March 1, 2013 (Item 94, September 20, 2013). The Lease would expire on February 28, 2023, absent termination. On December 14, 2015, staff sent Invoice No. 38884 to Lessee for the 2016 – 2017 rental period of the Lease, with payment due on March 1, 2016. On January 10, 2017, staff sent Invoice No. 41466 to Lessee for the 2017-2018 rental period of the Lease, with payment due on March 1, 2017; payment was never received. Several past due notices were sent to the Lessee, as shown in the attached correspondence (see Exhibit C). On July 13, 2017, staff contacted the Lessee to discuss the unpaid rent. On August 29, 2017, the Lessee notified staff that it could not pay the rent due to the depressed crude oil market. Additionally, the Lessee informed staff that it was working to abandon its nonproducing wells with the cooperation and approval of the U.S. Bureau of Safety and Environmental Enforcement. The Lessee stated that if the crude oil market did not significantly improve within 12 months, it planned to commence abandoning all remaining producing wells. On September 14, 2017, staff sent a Notice of Default to Signal Hill covering several breaches of contract, including the non-payment of rent and failure to provide and maintain a bond as required under the Lease. On September 19, 2017, the Lessee requested a meeting with staff. On September 22, 2017, staff met with the Lessee to discuss how to bring the lease into good standing. On February 20, 2018, the Lessee submitted a formal proposal to address the unpaid rent. The Lessee proposed to make -2- STAFF REPORT NO. 99 (CONT’D) payments over several years at a rate tied to the market price for oil. The Lessee also proposed that a bond from one of its oil and gas leases be transferred to the pipeline lease. Staff was clear during various calls and meetings that regardless of whether the proposal was accepted or rejected, the Lessee needed to make a good faith effort to repay the rent in arrears to demonstrate its intent to bring the lease into compliance. During these discussions with the Lessee, interest accruals were tolled on the unpaid rent. The Lessee has not communicated with staff since these discussions and submittal of its proposal. On January 31, 2019, staff sent a notice to the Lessee that if the good faith payment previously discussed and the 20192020 lease year rental payment due March 1 were not received by March 1, 2019, interest would resume until the Lessee’s violations were cured. To date, Lessee has made no payments since 2015. The Lessee owes $282,094.34 in unpaid rent including penalties for the period from November 22, 2015, through June 28, 2019, and interest, for the period from November 22, 2015, to February 20, 2018, and March 1, 2019, to June 28, 2019, with interest accruing daily. These calculations are shown in the attached Exhibit D. The Lease requires the Lessee to provide and maintain a bond of no less than $50,000 that was to be secured upon delivery of the Lease. The only bond on file lapsed in 2013 when the company holding the bond went out of business. Staff has no record of a subsequent bond being obtained as required under the Lease. Failure to maintain the bond as required by the Lease is an additional breach of the Lessee’s obligations under the lease agreement. Public Trust and State’s Best Interest Analysis: Lease compliance is essential to ensure that Public Trust lands are being used responsibly, equitably, and in the best interests of the State. The recommended termination of Lease No. PRC 3914.1, by quitclaim or by direct action of the Commission, for Lessee’s failure to pay rent and failure to maintain the $50,000 surety bond required by the Lease is in the State’s best interests, because its purpose is to enforce the material terms of the Lease. The termination of this Lease is an administrative action that does not directly impact or interfere with Public Trust resources, uses, and values. However, the effective management and enforcement of the Commission’s leases serves the Public Trust by holding lessees accountable for all aspects of the Lease, from payment of rent to the -3- STAFF REPORT NO. 99 (CONT’D) prevention of environmental harm that may result from an uncontrolled discharge of oil. OTHER PERTINENT INFORMATION: 1. The Commission’s decision to terminate the lease is a discretionary action by the Commission. Each time the Commission approves or rejects a use of sovereign land, it exercises legislatively delegated authority and responsibility as trustee of the State’s Public Trust lands as authorized by law. 2. In addition to recommending the termination of this Lease, staff is also requesting the termination of three oil and gas leases, PRC 3133.1, PRC 4000.1, and PRC 7911.1, located offshore Carpenteria, which are held by Carone Petroleum Inc.; Carone Petroleum Inc. and Signal Hill Services, Inc. share a similar ownership group. Staff is recommending termination of these leases for failure to produce oil and gas, failure to pursue a development program, and failure to pay annual rent. The recommendation to terminate these oil and gas leases is also on the June 28, 2019 Commission meeting agenda, as Agenda Item 98. 3. This action is consistent with Strategy 1.1 of the Commission’s Strategic Plan to deliver the highest levels of public health and safety in the protection, preservation and responsible economic use of the lands and resources under the Commission’s jurisdiction, and Strategy 1.5 to ensure the highest level of environmental protection and public safety in the production and transportation of oil and gas resources. 4. Termination of the Lease is not a project as defined by the California Environmental Quality Act because it is an administrative action that will not result in direct or indirect physical changes in the environment. Authority: Public Resources Code section 21065 and California Code of Regulations, title 14, section 15378, subdivision (b)(5). EXHIBITS: A. B. C. D. Land Description Site and Location Map Invoices and Past Due Notices Current Penalty and Interest Calculation -4- STAFF REPORT NO. 99 (CONT’D) RECOMMENDED ACTION: It is recommended that the Commission: AUTHORIZATION: 1. Find that Signal Hill Service, Inc., is in default of Lease No. PRC 3914.1, because it has not complied with: • Section 3, General Provisions, paragraphs 2(a)(1) and 11(a)(1) of the lease by failure to pay the annual rent specified in Section 1, Basic Provisions, CONSIDERATION; • Section 3, General Provisions, paragraphs 9(a) and 9(c), SURETY BOND, by failure to provide evidence of a bond and maintain a bond in the amount specified in Section 1, Basic Provisions, SURETY BOND OR OTHER SECURITIES. 2. Terminate Lease No. PRC 3914.1, a General Lease – Right-of-Way Use issued to Signal Hill Service, Inc., for failure to cure or cause to be cured the defaults of the Lease set forth in Authorization paragraph 1 above. 3. Direct staff to cooperate, as needed, with federal, state, and local agencies in any activity necessary to enforce the termination of the Leases. 4. Authorize the Executive Officer or her designee, in cooperation with the Office of the Attorney General and, if reasonably necessary, retain outside counsel, to take all steps reasonably necessary, including litigation, to enforce the termination of Lease No. PRC 3914.1 against Signal Hill Services, Inc., and any agents, successors, or assigns; to access the Lease to ensure the health and safety of the people of California and the surrounding environment; to eject trespassers that occupy the Lease; to seek removal of improvements, if any, from State sovereign land overlying the Lease; to restore the sovereign land at this location to the satisfaction of the Commission; and to recover the Commission’s damages and costs. -5- . PRC 3914.1 LAND-DESCRIPTION, A strip of tide and submerged land ?fty (50) feet wide, lying' In the Pacific Ocean, Counties of Ventura and Santa Barbara, State of California, the centeriine of which is described as foliows: BEGINNING at a point having C0827, Zone 5 coordinates of East (X) - 1, 516 525 feet and North 319 420 feet; thence 8 54?30' 00" 14, 010 feet to the easterly boundary of the iands granted in trust to the County of Santa Barbara pursuant to Chapter 846, California Statutes of 1931, and the terminus of Said centerline. THEREFROM any portion lying landward or the Ordinary High water Mark of the Pacific Ocean. The sideiines of said strip shall be proionged or shortened so as to commence at the Ordinary High Water Mark of the Pacific Ocean, and terminate at the easterly line of said grant. . This description Is based on the California Coordinate System of 1927, Zone 5 All distances are grid distances. - END OF DESCRIPTION . Prepared 4/19/2012 by the California State Lands Commission Boundary Unit. EXHIBIT B Carone/Signal Hill State Leases with Associated Federal OCS infrastructure Santa Barbara County Carpinteria Ventura County PRC 3150 La Conchita % PRC 3133 ea bs u S e li P ip ne PRC 7911 40 0 % Hogan % Houchin 0 Pipeline Segments PRC 3914 Grant Federal Boundaries Granted Land Leased Land Submerged Lands Act EXhibitC: Invoices and Past Due Notices for PRC 3914.1 Billed To: Signal Hill Service, Inc. PO Box 5565 Oxnard, CA 93031 Lessee: Signal Hill Service, Inc. State of California CALIFORNIA STATE LANDS COMMISSION Attn: Accounting, 100-Howe Ave, Suite 100 South, Sacramento, CA 95825 TAX 68-0291104 . INVOICE.- Invoice .Date: Invoice Number: Due. Date: Lease Number: Rent Period: Index: PCA: . Source: 06/02/2014 35658 07/02/2014 3914 Annual 3010 880011 152200 General Lease- Right of Way Use, for four pipelines from Federal Platform Hogan to an onshore. point: one 4? inch water pipeline, two 10- inch oil pipelines, one 12? inch gas pipeline, and one 8? inch non- operational outfall pipeline from shore, on Santa Barbara Channel, near Rincon Point, Santa Barbara and Ventura Counties' In the county or counties of: Ventura Santa Barbara $4,468.00 Inv0Ice 35312 was due 5/4/ 14 for rent dIfference 2013/2014 and 2014/2015-year, was Penalty (Sacramento) postmarked 5/28/14. Interest $1,057.63 Invoice 35312 was due 5/4/14 for rent difference 2013/2014 and 2014/2015 year; was (Sacramento) postmarked 5/28/14. Total Balance Due On 07/02/2014 LATE PAYMENTS SHALL BE SUBJECT TO PENALTY AND INTEREST 2cca? 1911 $0.00 - This Invoice is sent as a courtesy reminder only. The lessee' obligation Is to pay rent according to the schedule and amount set forth within thelease. I For questions regarding the invoice call (916) 574-1943. To, make a payment by Mastercard, Visa, Discover call (916) 574-0397._ Return this stub and remittance payable to: CA STATE LANDS COMMISSION Attn: Accounting 100 Howe Ave', Suite 100-South Sacramento, CA 95825-8202 Lessee: Signal Hill Service, Inc. Change of Address - Please note changes. Please write 'your'Lease'Numberonyo'ur payment Invoice Date: Invoice Number: Due Date: Lease Number; Rent Period: Amount Due: Index:,- PCA: Source: 06/02/2014 35658 07/02/2014 3914 Annual $0.00 . 301 0 88001 152200 State of California CALIFORNIA STATE LANDS COMMISSION ,Attn: Accounting, 100 Howe Ave, Suite 100 South, Sacramento, CA 95825 TAX 68-0291104 INVOIC . Invoice Date: A 12/15/2014 Invoice Number: 36655 Billed To: Due Date: . 03/01/2015 Signal Hill Service, Inc. - Lease Number- - 3914 PO Box 5565 . I Rent Period: Annual Oxnard, CA 93031 . Index: 3010 PCA: 88001 Source: 152200 Lessee: Signal Hill Service, Inc. General Lease- Right of Way Use, for four pipelines from Federal Platform Hogan to an onshore point: one 4- inch water pipeline, two 10 inch oil pipelines, one 12 inch gas pipeline; and one inch non?operational outfall pipeline from shore, on Santa Barbara Channel, near Rincon Point, Santa Barbara and Ventura Counties' In the county or counties of: Ventura Santa Barbara $57,575.00 Annual-Rental Due Date: 03101/2015 Rental Total Balance Due On 03/01/2015 $5,525.63 LATE PAYMENTS SHALL BE SUBJECT TO PENALTY AND This invoice is sent as a courtesy reminder only. The Iessee' obligation' Is to pay rent according to the schedule and amount set forth within thelease. Forquestions regarding the invoice call (916) 574?1943. To m?ake'a payment by Mastercard, Visa, Discover call (916) 574-0397. Please write your Lease Number on your payment Return this stub and remittance payable to: . . invoice Date: I 12/15/2014? LANDS COMMISSIONInvoice-Number: - 7366557 Attn. Accounting . - - Due Date: 03/01/2015 100 Howe Ave, Suite 100- South . - . . 3914 Sacramento, CA 95825 8202 . ease 9m er- . . Rent Period: Annual . . Amount Due; - $5,525.63 Lessee: Signal Hill Service, Inc. - . . I index: 3010 PCA: 88001 El Change of Address - Please note changes. . Source: - 152200 STATE LANDS COMMISSION Receipt RECORD: 3914 LESSEE: Signal Hill Service, Inc. LOCATION DESC: Santa Barbara Channel, near Rincon Point, Santa Barbara and Ventura COunties I 12762? Paci?c Operators Check I F:rd000448 I223 . ?9/22/15 . I 3 i Penalty (Sacramento) 35656 4468.001 Interest (Sacramento) . 35658 1057,63 . Rental . 66655 23261.87 Total Paid:? $28,787.50 Record Number: 3914 Page 1 of1 CALIFORNIA STATE LANDS COMMISSION . Receipt RECORD: 3914 LESSEE: Signal Hill Service, Inc. LOCATION DESC: Santa Barbara Channel, near Rincon Point, Santa Barbara and Ventura Counties grd000502 i362 13085: E- a 5 ?O?shore LLC i i i Rental 36655 28787.50? Total Paidzg' $28,787.50; Record Number: 3914 Page .1 of 1 State of Califomia - TAX 68?0291 1 O4 Lessee: Signal Hill Service, Inc. Rental $57,575.00 Annual Rental Due Date 3I1I2016 CALIFORNIA STATE LANDS COMMISSION Attn: Accounting, 100 Howe Ave, Suite 100 South, Sacramento, CA 95825 INVOICE invoice Date: '12/14/2015 . lnvolce Number: 38884 Billed To: - - Due Date: 3/1/2016 Signal Hill Service, Inc. Lease Num er. 3914 PO Box 5565 Rent Period: Annual Oxnard,?CA 98031 Index: 3010 FDA: 88001 Source: 152200 General Lease -'Flight of Way Use, for four pipelines from Federal Platform Hogan to an onshore point: one 4-lnch water pipeline, two 10-lnch oil pipelines, one 12-inch gas pipeline; and one 8-inch non-operational outfall pipeline from shore, on Santa Barbara Channel. near Hincon Point, Santa Barbara and Ventura Counties in the county or counties of: Ventura Santa Barbara - Total Balance Due 0n :31112016 355757530 LATE PAYMENTS SHALL BE SUBJECT To PENALTY AND INTEREST 2 con :5 1911 .Thls Invoice ls sent as a courtesy reminder only. The lessee's obligation is to pay rent according to the schedule and amount set forth within the lease. . - . - 4 For questions regarding the inVoIce call (916) 574-1943. To make a payment by Mastercard, Visa. Discover call (916) 574-0397. Please write your Lease Number on your payment 12/14/2015 Return this stub and remittance payable to: - Invoice Date: CA STATE LANDS COMMISSION invoice Number: 38884 106 s? 3?15Sacramento, Lease NE'mber' 3914 - Rent Pernod: Annual . AmountDue: $57,575.00 Lessee: - Signal Hill Service, inc. index: - 3010 1 - PCA: 88001 Change oilAddress - Please note changes. Source: 152200 INVOICE Invoice Date; 01/10/2017 - Invoice Number: 41465 . Billed To?. Due Date: 3/1/2017 Signal Hill Service, Inc. - Lease Number. 3914 PO Box 5565 Rent Period: Annual Oxnard, CA 93031 Index: 3010 PCA: 88001 Source: 152200 Lessee: Signal Hill Service, Inc. General Lease Right of Way Use, for tour pipeline, two ?IO?Inch oil pipelines, one 12-Inoh gas pipeline; and one 8-Inc Santa Barbara Channel, near Rlnoon Point, Santa Barbara and Ventura 0 Barbara - State of California . CALIFORNIA STATE LANDS COMMISSION Attn: Accounting, 100 Howe Ave, Suite 100 South, Sacramento, CA 95825 TAX (SB-0291104 $57,575.00 Annual Rental Due Date 3/1/2017 pipelines from Federal Platform Hogan to an onshore point: one 4-inch water non-operational outfall pipeline-from shore; on ountles in the county or counties of: Venture Santa Total Balance Due On 3/1/2017 $57,575.00 LATE PAYMENTS SHALL BE SUBJECT TO PENALTY AND INTEREST 2ooa_? 191: This Invoice Is sent asa courtesy reminder only. The-Iassee's obligation is to pay rent according to the schedule and amount set forth within the leaseFor questions regarding the invoice. call (916) 5741943.. To make a payment by Mastercard, Visa, Discover call (916) 574-0397. I Please write yodr Lease Number on your payment Return this stub and remittance payable to: . Invoice Date: 01/10/2017 gA SXATE COMMISSION, Invoice Number: 41466 - Due Date" - *7 7? 100 Howe Ave, Sulte1DO-South seN mb . [/3914 Sacramento, CA 95825-8202 93 ig' 9" - - . Rent Period: Annual . . Amount Due: $57,575.00 Lessee: "Signal Hill Service, Inc, . Index: 4 8010, . - PCA: . 88001 . Change?of Address~Please note. changes. Source: _152200 State of California - CALIFORNIA STATE LANDS COMMISSION Attn: Accounting, 100 Howe Ave, Suite 100 South, Sacramento, CA 95825 TAX lD# 63-0291104 I I- INVOICE - lnvoioeDate: . 42/15/2014 Invoice Numberz' 36655 Billed To: I I Due ?e . 03/01/2015 Signal Hill Service, lhc. Lease en 3914 PO Box 5565 - Flent Period: - - Annual Oxnard, CA 93031 - Index: 3010 PCA: 88001 . . Source: . . . .152200 Lessee: Signal Hill Service, Inc. General Lease Flight of Way Use, for four pipelines from Federal Platform Hogan to an onshore point: one 4-inch water pipeline, two 10-inch oil pipelines, one 12-inch gas pipeline; and one 8-inch non-operational outfall pipeline from shore. on Santa Barbara Channel, near Flincon Point, Santa BarbaraIand Venture Counties in the county or counties of: Venture Santa Barbara 1 - Rental $57,575;00 Annual Rental Due Date 03/01/2015 Total Balance Due came/0112015 - $5,525.53 First Past Due Notice 3/27l201 7 LATE PAYMENTS SHALL BE SUBJECT TO PENALTY AND 2 con 5 1911 This lnvolcels sent as a courts reminder only. The lessee?s obligation is to pay rent according to the schedule and amount set forth within the lease. - - i - For questions regarding'the Invoice call (916)574-1943. To make a payment by Mastecard, Visa. Discover call (916) 5740397. Please write your lease number on your payment Return this stub?and'remittance?payable to: . 7 Vlnvoice'Date: 7? 12/15/2014 I CA STATE LANDS COMMISSION I I . . Invoice Number: 36655 Attn: Accounting . . 100 Howe Ave. Suite 100-South . Dita . 03/01/3015 Sacramento, CA 953253202 - . ease ?Rent Period: I Annual Amount Due: $5,525.63 Lessee: Signal Hill Service, inc. I - Index: 3010 PCA: 88001 1 Change of Address - Please note changes. . Source: 152200 . . State of California CALIFORNIA STATE LANDS COMMISSION Attn: Accounting, 100 Howe Ave, Suite 100 South, Sacramento, cA 95325 - TAX 53-0291104 INVOICE Invoice Date: 12/14/2015 Invoice Number: - 38884? To: Due Date: 3/1/2016 Signal Hill Service, Inc. . Lease Number: 3914 PO Box 5565 Rent Perlod: Annual Oxnard, CA 93031 - Index: 3010 A PCA: 88001 . Source: 152200 Lessee: Service, Inc. General Lease of Way Use,lfor.fom pipelines from Federal Platform Hogan to an onshore point: one 4;inoh water plpeline, two 10-lnch oil pipelines, one i2?Inch gas pipellne; and one 8-inch non-.operatlonal outfall plpeline from shore, on Santa Barbara Channel, near Point, Santa Barbara and Venture Counties In the county or counties of: Venture Santa Barbara . Rental $57,575.06 Annual Flental Due Date 3/1/2016 Total Balance Due ems/1mm $57,575,011 . First Past Due Notice 3/27/2017 LATE PAYMENTS SHALL THE SUBJECT TO PENALTY AND INTEREST ?2 cone 1911 This Involce?ls sent as a courtesy reminder only. The lessee?s obllgailon Is to pay rent according to the schedule and amount set forth within the lease. . - For the Invoice call (916) 574-1943. To make a payment by Mastecard, Visa, Dlscover call (916) 574-0397. Please write yew lease number on your payment Fleturn thle stub'and remittance payable to: it . Invoice Date: 12/14/2015 CA STATE LANDS COMMISSION I - Invoice Number: . 38884 ,Attn: Accounting . .. .190 Howe Ave. SuitetOO-South 4 - -, Lue-Daue . 3/1/2016 Sacramento,CA 95825-8202 . ease. um or. 3914 . RentPerlod: Annual Amount Due: . $57,575.00 Lessee: Signal Hill Servlce, Inc: Index: - - 3010- PCA: 88001 El Change of Address - Please note changes. Source: 152200 STATE OF CALIFORNIA CALIFORNIA STATE LANDS COMMISSIO 100 Howe Ayenue, Suite too-South . Sacramento CA 95825-8202 Subject: Third Past Due Notice URGENT Contact Fax: (916) 574-1875 Email: Beth.Pett@slc.ca.gov ?Ewe - geese/arm April 27, 2017 . Contact Phone: (916) 574-1943 Signal Hill sen/ice, lno. - PO Box 5565 - . Oxnard, CA 93031 Lease No. PRO 3914.1 invoice No. 41466, 38884 36655 Our Aocbunting records indicate that full payment for the attached invoice has not been received and is seriously past due. The records indicate you have been sent p?rior notices without response, therefore; your delinquency is being referred to our Land Management and Legal Divisions for further action. Please remit all past due amounts and reference Lease No. 3914.1 and Invoice No. 41466, 38884 8: 36655 on your payment and mail to: . California State Lands Commission Attn: Accounting . 100 Howe Ave, Suite 100 South Sacramento, CA 95825?8202 To pay by Visa, MasterCard or Discover, please contact our payment desk at (916) 574~0397. . The State-LandsCommission appreciates your prompt attention to this matter, If you have any questions, or think the billing is in error, please contact me as seen as possible; Thank you. 7 . . . Sincerely, 91% Beth Pett Accounting I cc: Land Management Division Legal Office EDMUND G. BROWN JR., Governor Jennifer Lucchesi, Executive Officer (916) 574 4800 FAX (918) 5744810 CA Relay Service from TDD phone 1-800-735-2929 from voice phone 1-800v735?2922 EXHIBIT Penalty and Interest Calculation LEASE N0. PRC: 3914.1 LESSEE NAME: Signal Hill Service, Inc. RENTAL YEARS 2015?2019 ESTIMATED AMOUNT DUE: $232,094.34 grpatd by 6/23/19 California State Lands Commission 100 Howe Ave, Suite 100 South Sacramento CA 95825-8202 . l( I. PEN-I I. TY 15V TEREST (Tl UN P.-l 1' RECEI 1 7:7) PL US E. "11111.4 TED PENAL Tl' INTEREST C4 (FL-1 TIONS 0N PA IEHENTS NUT 1?15 1" RE I '50 INVOICE NUMBER RENT AMOUNT PAID RENT AMOUNT RENT PERIOD DUE DUE DATE ESTIMATED PAYMENT DATE 5 PENALTY 18% per year INTEREST AMOUNT DUE DAILY INTEREST 2015 36655 $28,787.50 311115 11.113115 $1,439.38 $3,648.52 55,08 7.90 $0.00 2015-Balance 36655 $23,261.87 311115 91122115 $1,163.09 $2,351.68 $3,514.77 $0.00 2015-Balance Due 36655 $2,280.63 311115 2/19/18 $114.03 $1,221.42 $1,335.45 $1.12 No interest from 2/20/18 to 2/28/19 311/19 6/28/19 $133.84 $133.84 $1.12 2016 I 38884 $54,330.00 311116 2/19/18 $2,716.50 $19,290.87 $22,007.37 $26.79 No interest from 2/20/18 to 2/28/19 311119 6/28/19 $3,188.35 $3,188.35 $26.79 2017 41466 1 $54,330.00 311117 2/19/18 $2,716.50 $9,51 1.47 $12,227.97 $26.79 No interest from 2/20/18 to 2/28/19 3/1119 6/28/1 9 $3,188.35 $3,188.35 $26.79 2018 44089 $54,330.00 311118 2/28/19 $2,716.50 $0.00 $2,716.50 $0.00 311119 6/28/19 $3,188.35 $3,188.35 2019 46755 $54,330.00 3/1119 6/28/19 $2,716.50 $3,188.35 $5,904.85 $26.79 $219,600.63 Estimated Total Amount Due $282,094.34 Actual Pal Due on late payments already received Estimated P81 Due on payments not yet received Rent Due from 3/1/1510 311i19 $219,600.63 $232,094.34 TO TA LS $8602.67 amount wait not change $13,582.50 $48,911.21 $62,493.71 $27.9] $53,891.04 amount wit! change based on payment date if payment is postmarked after 6/28/2019, add deity interest of $27.91 per a day starting 6/29/2019 untii date of actual payment or postmark