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Lower Iatham Reservoir Company Agenda Item 26a January 19, 2010 (UPDATED February 4, 2010) Page 2 of 7 well pumping and usage. The wells provide supplemental irrigation water supplies to farms owned by Company stockholders. Of the 84 wells operating, 39 were formerly in the Groundwater Appropriators of the South Platte (GASP) augmentation plan, and the remaining 45 were covered in the augmentation plan of the Groundwater Management Sub-District (GMS) of the Central Colorado Water Conservancy District. In 2003, the Company elected to pursue an independent plan for augmentation and filed an application in District Court, Water Division 1(Case No. 2003CW047) for a change of water rights and approval of its plan for augmentation to ensure a means of continued legal operation of the wells. The wells have operated under annual State Engineer Office (SEO) approved substitute water supply plans (SWSPs) since 2003. From 2003 on, the Company has pursued additional water rights acquisitions to support its plan for augmentation. In 2007, the Company purchased six shares of the LLDC and installed measurement devices to record flows within its system. This was the first phase of the project financed through the CWCB. In 2008, the Company purchased an additional two shares of the LLDC. This second phase of the project was also financed through the CWCB. The Project being financed through this CWCB loan is the purchase of an additional five shares of LLDC, the construction of two new groundwater recharge facilities, the land required for these sites, and system improvements. Loan Feasibility Study Doug Seely, P.E., prepared the Loan Feasibility Study titled "Feasibility of the Lower Latham Reservoir Company Well Augmentation Project — Phase III, November 2009." The study was prepared in accordance with the CWCB guidelines. The study references the Water Rights Valuation that was performed in conjunction with the loan approval in July 2007. Lower Latham Reservoir Company The Company is registered as a Colorado non-profit mutual ditch company located in Kersey, Colorado. It was established in 1898. There are 47 shareholders that own 156 shares of stock. The Company is managed by a five-member Board of Directors. The Board has the power to levy annual assessments, cease delivery of water to shareholders whose assessments are not paid in full, sell stock of delinquent shareholders, and enter into loan agreements. The Company does not currently levy a shareholder assessment. Approximately 90% of the Company revenues are from oil and gas royalties from wells that are located on Company property. The remaining 10% comes from leases, fees and interest. Water Rights On average the Company delivers 5,705 AF annually. The Company the water rights as summarized in Table 1.