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This is an exhilarating time at Dallas-based Reef Exploration Inc., a 15-year-old privately owned oil and gas company. Over the past six years, Reef has grown from a company primarily engaged in drilling onshore oil and gas wells in Texas to a company that has drilled some deep wells in Argentina, Canada and the bayous of south Louisiana. Now Reef is poised to plunge into offshore drilling in the Gulf of Mexico. Reef and its affiliates own an interest in or operate more than 160 oil and gas wells in 11 states, from Mississippi to Texas to Utah to North Dakota. Since 1996, Reef and its affiliates have sponsored 28 private partnerships and raised more than $113 million. Twenty-two of the partnerships were drilling ventures, and six were income funds. The company recently announced a $100 million international oil and gas investment program, structured to provide investors with the opportunity to participate in selected domestic and international oil and gas projects. The Reef Global Energy Ventures program, as it is called, will consist of limited partnerships formed to explore and drill for oil and gas worldwide. It will be managed by an affiliate, Reef Partners LLC. Mike Mauceli, the founder, president, CEO and half-owner of Reef, believes the new program will contribute greatly to the international growth of his company. In 1997, Mauceli decided to hire an in-house lawyer to help him implement his plans for Reef’s growth rather than solely rely on Reef’s long-time outside counsel, Baker & McKenzie. Mauceli and his general counsel, Dan Sibley, recently described to Texas Lawyer reporter Erica Lehrer Goldman how Reef’s ambitious agenda and regulatory requirements these past few years have kept them plenty busy. Texas Lawyer: What did you look for when hiring a general counsel? Mike Mauceli: A creative self-starter with a background in the domestic and international oil and gas business, who could help me with much more than just Reef’s legal affairs. TL: Describe the role the GC plays in key business decisions. Mauceli: Dan has been very instrumental in assisting me in the company’s day-to-day legal and financial challenges. He handles the dual roles of general counsel and chief financial officer. He is also the driving force behind the Reef Partners Income Fund Programs — where his work falls much more in the “business” arena than the “legal” arena. TL: How is that? Dan Sibley: Three years ago, when oil and gas prices were extremely low, I went to Mike with the idea that — in addition to our exploration activities — we should buy interests in already-producing oil and gas wells. The concept led to the formation of what we call “income funds” — where the funds buy proven, producing properties and pay dividends each month to the partners of the funds. Once Mike approved the concept, I brought in two consulting petroleum engineers to perform the technical due diligence work. After they complete their technical reviews, the engineers and I prepare a financial analysis for each potential acquisition. After we weed out the properties that don’t meet our standards, we present the final recommendations to Mike, and with his approval, we proceed to attempt to acquire the properties at auctions and private negotiations. So far, we’ve purchased more than $15 million of producing interests, and we have been extremely happy with the income that they have generated. TL: I see from Reef’s Web site that you are also responsible for Reef’s legal, tax and accounting matters — in addition to working with Reef’s petroleum engineers to implement the company’s acquisition strategies. Dan, given all that you do, how much autonomy do you feel you have? Sibley: I have a lot of responsibility, but we operate as a closely knit team rather than autonomous individuals. The geology, drilling, land, legal and financial departments engage in stimulating give and take discussions every day. We play devil’s advocate for each other, and then we present our recommendations to Mike. He has the final say about how we proceed. But the really fun thing about working with Mike is that he is always willing to listen to new ideas. He supports you when you’ve done your homework, and he encourages everyone to implement their ideas — like with the income funds. TL: What is the best thing about your job? Sibley: What I like most about my job is that I wear many hats and do a lot of different things: I’m CFO and head tax guy and chief legal officer. These are areas I really enjoy, so it’s fun to have so many aspects to my job. “Boredom” is not a word I have used in the last few years. And Mike has provided the resources for me to engage the services of outside professionals whenever we need them, so I don’t get overwhelmed with so many different areas of responsibility. I may be Reef’s only in-house lawyer, but — in addition to working with Reef’s long-time lawyers at Baker & McKenzie — I have hired law firms in Dallas, New York, Buenos Aires, Calgary, New Orleans and Houston to take the frontline in many different matters. We also make extensive use of Ernst & Young to fill in the gaps regarding tax matters and tricky financial reporting issues. TL: Dan, how long have you been at Reef, and what did you do prior to joining the company? Sibley: I’ve been at Reef a little less than five years. Prior to joining Reef, I did a three-year stint in public accounting before practicing law for about 14 years. Then I worked for three years as a legal, tax and financial consultant to a Saudi-owned oil company that was based in Bermuda, had its main office in London and a CEO operating out of Dallas, although he traveled the world. I handled some of the legal, tax and finance issues for the company in regard to its projects in Russia, Colombia and Azerbaijan. The Saudi company used the same auditors, Ernst & Young, as Reef. I met Mike after the CEO of the Saudi company retired and the company shut down its Dallas operations. I went back to practicing as a solo lawyer. And then one day an Ernst & Young partner called and asked if I would be interested in meeting Mike and considering a return to working for a closely held oil company. Mike and I hit it off, and I have thoroughly enjoyed my return to the oil business. CONSTANT CONTACT TL: Mike, is Dan a member of the board? Mauceli: No, at this time I am the only member of Reef’s board. TL: As CEO, what is your weekly interaction with the legal department, on average? Mauceli: At least 20 times a week. In fact, we talk all the time. I guess that Dan, as well as several other people in Reef, act as a sounding board for me to bounce ideas off of. Sibley: Our offices are not far apart, and we are in and out of each other’s offices continually. TL: Mike, are you an attorney? Mauceli: No. TL: What is your background? Mauceli: I’m a businessman. I’ve hired a great team of engineers, geologists and landmen to help me build my company, and Dan is a great addition to that team. I take a lot of pride in having put together a team of experts and specialists and using their advice to guide me in the decisions that I have to be responsible for. TL: How do you attract and motivate your legal staff? Mauceli: Well, to be frank, pay and bonuses. Plus, I don’t second-guess my people a lot. I try to let Reef’s people be creative and do their jobs without imposing a rigid structure or environment. But if I disagree with them, I tell them why, and we move on to the next project. TL: What has been the company’s greatest legal challenge in the past three years? Mauceli: Definitely the development of our Argentina project and the litigation that resulted. Dan played a very important role in the development of our Argentine operations, and when we were defrauded by our Argentine partner … . Dan did extensive work on the case, including interviewing numerous trial lawyers throughout Texas. Dan recommended that we hire Joe Jamail to represent us. I agreed with Dan’s choice, and we were extremely pleased with the job that Jamail and his office did for us. Jamail obtained a $154 million judgment … and is pursuing a related suit against an affiliate of Shell Oil Co. Dan also hired a law firm in New York to handle some international bankruptcy claims. … And he worked extensively with our Argentine law firm, which I had engaged prior to bringing Dan on board. So I’ve got to say that the Argentina affair has been our greatest legal challenge. Sibley: Definitely.

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