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~Y Snell & Wilmer <br />L.L.¢ <br />Mr, Michael Long <br />Director, Division of Minerals and Geology <br />January 1Q 2001 <br />Page 2 <br />with Frontier's commitment to serve as surety. Frontier has several potential options available to it that <br />we believe can result in an outcome satisfactory to the State. Frontier may be able to obtain a Letter of <br />Credit in favor of Powderhom, provide a surety from one of its reinsurers or establish a cash bond. Our <br />greatest opportunity for a speedy resolution of the NOV is for Frontier to act in a responsible manner and <br />fulfill its obligations. I j <br />Second, concurrently with Powderhorn's effort to have Frontier abate the NOV, Powderhom will <br />contact sureties who are qualified to issue a replacement bond. A list of these contacts along with the <br />status will be maintained. The status of Powderhom as a Chapter I 1 debtor-in-possession will complicate <br />its efforts to obtain the replacement bond. We anticipate that a group of Powderhom's lenders (the <br />"Lender Group") will insist on approving any arrangement by which Powderhom obtains a replacement <br />bond. <br />Finally, in the event the two primary options are unsuccessful, Powderhom will explore other <br />means to address [he State's concerns In the event that Powderhom must seek bankruptcy court <br />involvement in this process, the Lender Group can be expected to actively participate. <br />We will keep the State fully briefed as we undertake to abate the NOV. Powderhom has agreed <br />to designate Mike Jamison and me to remain in ongoing contact with the State representatives concerning <br />its progress. <br />Although your letter requests a reply by January 12, 2001, we have submitted our reply ahead of <br />schedule in hopes of receiving a 90 day extension until March 14, 2001, to avoid any issues posed by the <br />January 16, 2001 NOV abatement deadline. In the event the Division of Minerals and Geology is unable <br />to grant this 90 day extension, or we do not reach an alternative <br />plan by [he 12th, we respectfully request a hearing before [he MLRB at its January 24, 2001 meeting, <br />along with a 30 day extension to abate the NOV, to and including February 26, 200E ~ <br />Very (rely yours, <br />Snel~~l,&~jWilme <br />RDC:mjp <br />Robert D. Comer <br />cc: MLR13 (Via Hand Delivery) <br />e~a~.i <br />