Common use of Adjustments for Revenues and Expenses Clause in Contracts

Adjustments for Revenues and Expenses. Adjustments shall be made between Buyer and Seller so that (i) Buyer will bear all expenses which are incurred in the operation of the Properties from and after the Effective Date, including, without limitation, all drilling costs, all capital expenditures, and all overhead charges due third party operators under applicable operating agreements and Buyer will receive all proceeds (net of applicable production, severance, and similar taxes) from sales of oil, gas and/or other minerals which are produced from (or attributable to) the Properties from and after the Effective Date, and (ii) Seller will bear all expenses which are incurred in the operation of the Properties before the Effective Date (provided, however, that Seller shall not be liable for the Agreed Payables), and Seller will receive all proceeds (net of applicable production, severance, and similar taxes) from the sale of oil, gas and/or other minerals which were produced from (or attributable to) the Properties and which were produced before the Effective Date. It is agreed that in making such adjustments, (A) ad valorem and similar taxes assessed for periods prior to the Effective Date shall be borne by Seller and ad valorem taxes assessed for periods on or after the Effective Date shall be borne by Buyer, (B) ad valorem and similar taxes assessed with respect to a period which the Effective Date splits shall be prorated based on the number of days in such period which fall on each side of the Effective Date (with the day on which the Effective Date falls being counted in the period after the Effective Date), (C) for the period between the Effective Date and Closing, Buyer shall bear only those expenses which are chargeable under the applicable operating agreement as direct costs or as third party operator overhead charges (or, in the absence of such an agreement, under the AAPL 610 Form (1989) Operating Agreement, with the XXXXX (1984) Accounting Procedure (with the election “shall” in Article III having been elected and with no overhead fee being provided for) attached), (D) Buyer shall not bear any expenses which result from the operation of the Properties in a manner which is not in accordance with Seller’s covenants contained herein, and (E) no consideration shall be given to the local, state or federal income tax liabilities of any party.

Adjustments for Revenues and Expenses. Adjustments Appropriate adjustments shall be made between Buyer and Seller so that (i) Buyer will bear all expenses which are incurred in the operation of the Properties from and after the Effective Date, Date (including, without limitation, all drilling costs, all capital expenditures, and all overhead charges due third party operators under applicable operating agreements computed in accordance with Seller’s existing accounting practices (regardless of whether such operating agreements are with third parties or related entities and regardless of whether Seller is the operator or a non-operator)), and all other overhead charges actually charged by Seller (and for which Seller bills third parties for their respective shares) or charged to Seller by third parties, and operating expenses, and Buyer will receive all proceeds (net of applicable production, severance, and similar taxes) from sales of oil, gas and/or other minerals which are produced from (or attributable to) the Properties from and which are produced after the Effective Date, and (ii) Seller will bear all expenses which are incurred in the operation of the Properties before the Effective Date (provided, however, that Seller shall not be liable for the Agreed Payables), and Seller will receive all proceeds (net of applicable production, severance, and similar taxes) from the sale of oil, gas and/or other minerals which were produced from (or attributable to) the Properties and which were produced before the Effective Date. It is agreed that that, in making such adjustments: (i) oil which was produced from the Oil and Gas Properties and which was, on the Effective Date, stored in tanks located on the Oil and Gas Properties (or located elsewhere but used by Seller to store oil produced from, or attributable to, the Oil and Gas Properties prior to delivery to oil purchasers) and above pipeline connections shall be deemed to have been produced before the Effective Date, (Aii) ad valorem and similar taxes assessed with respect to production for periods prior to the Effective Date shall be borne by Seller and ad valorem taxes assessed with respect to production for periods on or after the Effective Date shall be borne by Buyer, (Biii) ad valorem and similar taxes assessed with respect to production with respect to a period which the Effective Date splits shall be prorated based on the number of days in such period which fall on each side of the Effective Date (with the day on which the Effective Date falls being counted in the period after the Effective Date), (Civ) for the period between the Effective Date and Closing, Buyer casualty losses shall bear only those expenses which are chargeable under the applicable operating agreement as direct costs or as third party operator overhead charges (or, in the absence of such an agreement, under the AAPL 610 Form (1989) Operating Agreement, with the XXXXX (1984) Accounting Procedure (with the election “shall” in Article III having been elected and with no overhead fee being provided for) attached), (D) Buyer shall not bear any expenses which result from the operation of the Properties in a manner which is not be handled in accordance with Seller’s covenants contained hereinSection 14, and (Evi) no consideration shall be given to the local, state or federal income tax liabilities of any party.

Adjustments for Revenues and Expenses. Adjustments Appropriate adjustments shall be made between Buyer and Seller so that (i) Buyer will bear all operating expenses which are incurred in the operation of the Properties from and after the Effective Date, includingincluding Seller operated overhead charges equal to $100,000.00 per month for the months of January through March, without limitation2002, all drilling costs, all capital expenditures, and (ii) Buyer will bear all overhead charges due actually charged by third party operators under applicable operating agreements and parties, (iii) Buyer will receive all proceeds (net of applicable production, severance, and similar taxes) from sales of oil, gas and/or other minerals which are produced from (or attributable to) the Properties and which are produced after the Effective Date and all other proceeds or revenues allocable or attributable to the Properties from and after the Effective DateDate including the third party share of operated overheads, (iv) except as provided in clauses (C) and (D) below, Section 12(d) below, and (ii) Section 13 below Seller will bear all expenses which are incurred in the operation of the Properties before the Effective Date (provided, however, that Seller shall not be liable for the Agreed Payables), and Seller will receive all proceeds (net of applicable production, severance, and similar taxes) from the sale of oil, gas and/or other minerals which were produced from (or attributable to) the Properties and which were produced before the Effective Date, (v) Buyer will bear any single capital expenditure not exceeding $25,000 net to the Seller's interest incurred on or after the Effective Date; before the Closing Date, Buyer will bear capital expenditures exceeding $25,000 net to the Seller's interest incurred prior to the Closing Date only if (i) those capital expenditures are set forth on the AFEs listed on Exhibit 12(a)(iii) whether paid by Buyer or Seller before or after the Effective Date, (ii) such expenditures are incurred by Buyer in accordance with Section 6(b), or (iii) in connection with a third party operated property, Seller is required to incur such expenditures as a result of the approval of such expenditures by working interest owners in such property other than Seller in accordance with the terms of the applicable operating agreement governing such property, and (vi) Buyer will bear all lease bonuses set forth on Exhibit 12(a)(iv) whether paid before or after the Effective Date. It is agreed that that, in making such adjustments: (A) oil which was produced from the Oil and Gas Properties and which was, on the Effective Date, stored in tanks located on the Oil and Gas Properties (or located elsewhere but used by Seller to store oil produced from, or attributable to, the Oil and Gas Properties prior to delivery to oil purchasers) and above pipeline connections shall be deemed to have been produced before the Effective Date, (AB) ad valorem and similar taxes assessed for periods prior to the Effective Date shall be borne by Seller and ad valorem taxes assessed for periods on or after the Effective Date shall be borne by Buyer, (BC) ad valorem and similar taxes assessed with respect to a period which the Effective Date splits shall be prorated based on the number of days in such period which fall on each side of the Effective Date (with the day on which the Effective Date falls being counted in the period after the Effective Date), (CD) for the period between provisions of Section 20(b) shall be given effect as if the same had taken effect on the Effective Date and Closing, Buyer shall bear only those expenses which are chargeable under the applicable operating agreement as direct costs or as third party operator overhead charges (or, in the absence of such an agreement, under the AAPL 610 Form (1989) Operating Agreement, with the XXXXX (1984) Accounting Procedure (with the election “shall” in Article III having been elected and with no overhead fee being provided for) attached)Date, (DE) Buyer casualty losses shall not bear any expenses which result from the operation of the Properties in a manner which is not be handled in accordance with Seller’s covenants contained herein, Section 15 and (EF) no consideration shall be given to the local, state or federal income tax liabilities of any party.

Adjustments for Revenues and Expenses. Adjustments Appropriate adjustments ------------------------------------- shall be made between Buyer and Seller so that (i) Buyer will bear all expenses which are incurred in the operation of the Properties from and after the Effective Date, including, without limitation, all drilling costs, all capital expenditures, and all overhead charges due third party operators under applicable operating agreements (regardless of whether such operating agreements are with third parties or related entities and regardless of whether Seller is the operator or a non-operator), all other overhead charges actually charged by third parties, and, where Seller is the operator of a well and there is no operating agreement, overhead at the rate of $550 per well per month (prorated for any period less than one month) for each month or part thereof between the Effective Date and Closing, and Buyer will receive all proceeds (net of applicable production, severance, and similar taxes) from sales of oil, gas and/or other minerals which are produced from (or attributable to) the Properties from and which are produced after the Effective Date, and (ii) Seller will bear all expenses which are incurred in the operation of the Properties before the Effective Date (provided, however, that Seller shall not be liable for the Agreed Payables), and Seller will receive all proceeds (net of applicable production, severance, and similar taxes) from the sale of oil, gas and/or other minerals which were produced from (or attributable to) the Properties and which were produced before the Effective Date. It is agreed that that, in making such adjustments: (i) oil which was produced from the Oil and Gas Properties and which was, on the Effective Date, stored in tanks located on the Oil and Gas Properties (or located elsewhere but used by Seller to store oil produced from, or attributable to, the Oil and Gas Properties prior to delivery to oil purchasers) and above pipeline connections shall be deemed to have been produced before the Effective Date, (Aii) ad valorem and similar taxes assessed for periods prior to the Effective Date shall be borne by Seller and ad valorem taxes assessed for periods on or after the Effective Date shall be borne by BuyerBuyer (ad valorem and similar taxes shall be considered assessed for the period for which they are stated to be assessed, even if the same are based on production or other activities occurring in prior periods), (Biii) ad valorem and similar taxes assessed with respect to a period which the Effective Date splits shall be prorated based on the number of days in such period which fall on each side of the Effective Date (with the day on which the Effective Date falls being counted in the period after the Effective Date), (Civ) prepaid expenses attributed to periods after the Effective Date, but paid prior to the Effective Date, shall be treated as expenses for the period between after the Effective Date and Closing, Buyer shall bear only those expenses which are chargeable under the applicable operating agreement as direct costs or as third party operator overhead charges (or, in the absence of such an agreement, under the AAPL 610 Form (1989) Operating Agreement, with the XXXXX (1984) Accounting Procedure (with the election “shall” in Article III having been elected and with no overhead fee being provided for) attached)Date, (Dv) Buyer the provisions of Section 18(c) shall not bear any expenses which result from be given effect as if the operation of same had taken effect on the Properties in a manner which is not Effective Date, (vi) casualty losses shall be handled in accordance with Seller’s covenants contained hereinSection 15, and (Evii) no consideration shall be given to the local, state or federal income tax liabilities of any party.

Adjustments for Revenues and Expenses. Adjustments shall be made between Buyer and Seller so that (i) Buyer will bear all expenses which are incurred in the operation of the Properties from and after the Effective Date, including, without limitation, all drilling costs, all capital expenditures, and all overhead charges due third party operators under applicable operating agreements and Buyer will receive all proceeds (net of applicable production, severance, and similar taxes) from sales of oil, gas and/or other minerals which are produced from (or attributable to) the Properties from and after the Effective Date, and (ii) Seller will bear all expenses which are incurred in the operation of the Properties before the Effective Date (provided, however, that Seller shall not be liable for the Agreed Payables), and Seller will receive all proceeds (net of applicable production, severance, and similar taxes) from the sale of oil, gas and/or other minerals which were produced from (or attributable to) the Properties and which were produced before the Effective Date. It is agreed that in making such adjustments, (A) ad valorem and similar taxes assessed for periods prior to the Effective Date shall be borne by Seller and ad valorem taxes assessed for periods on or after the Effective Date shall be borne by Buyer, (B) ad valorem and similar taxes assessed with respect to a period which the Effective Date splits shall be prorated based on the number of days in such period which fall on each side of the Effective Date (with the day on which the Effective Date falls being counted in the period after the Effective Date), (C) for the period between the Effective Date and Closing, Buyer shall bear only those expenses which are chargeable under the applicable operating agreement as direct costs or as third party operator overhead charges (or, in the absence of such an agreement, under the AAPL 610 Form (1989) Operating Agreement, with the XXXXX CXXXX (1984) Accounting Procedure (with the election “shall” in Article III having been elected and with no overhead fee being provided for) attached), (D) Buyer shall not bear any expenses which result from the operation of the Properties in a manner which is not in accordance with Seller’s covenants contained herein, and (E) no consideration shall be given to the local, state or federal income tax liabilities of any party.

Adjustments for Revenues and Expenses. Adjustments Appropriate adjustments shall be made between Buyer and Seller so that (i) Buyer will bear all expenses which are incurred in the operation of the Properties from and after the Effective Date, Date (including, without limitation, all drilling costs, all capital expenditures, and all overhead charges due third party operators under applicable operating agreements (regardless of whether such operating agreements are with third parties or related entities and regardless of whether Seller is the operator or a non-operator)), and all other overhead charges actually charged by Seller (and for which Seller bills third parties for their respective shares) or charged to Seller by third parties, and operating expenses), and Buyer will receive all proceeds (net of applicable production, severance, and similar taxes) from sales of oil, gas and/or other minerals which are produced from (or attributable to) the Properties from and which are produced after the Effective Date, and (ii) Seller will bear all expenses which are incurred in the operation of the Properties before the Effective Date (provided, however, that Seller shall not be liable for the Agreed Payables), and Seller will receive all proceeds (net of applicable production, severance, and similar taxes) from the sale of oil, gas and/or other minerals which were produced from (or attributable to) the Properties and which were produced before the Effective Date. It is agreed that that, in making such adjustments: (i) oil which was produced from the Oil and Gas Properties and which was, on the Effective Date, stored in tanks located on the Oil and Gas Properties (or located elsewhere but used by Seller to store oil produced from, or attributable to, the Oil and Gas Properties prior to delivery to oil purchasers) and above pipeline connections shall be deemed to have been produced before the Effective Date, (Aii) ad valorem and similar taxes assessed for periods prior to the Effective Date shall be borne by Seller and ad valorem taxes assessed for periods on or after the Effective Date shall be borne by Buyer, (Biii) ad valorem and similar taxes assessed with respect to a period which the Effective Date splits shall be prorated based on the number of days in such period which fall on each side of the Effective Date (with the day on which the Effective Date falls being counted in the period after the Effective Date), (Civ) for the period between the Effective Date and Closing, Buyer casualty losses shall bear only those expenses which are chargeable under the applicable operating agreement as direct costs or as third party operator overhead charges (or, in the absence of such an agreement, under the AAPL 610 Form (1989) Operating Agreement, with the XXXXX (1984) Accounting Procedure (with the election “shall” in Article III having been elected and with no overhead fee being provided for) attached), (D) Buyer shall not bear any expenses which result from the operation of the Properties in a manner which is not be handled in accordance with Seller’s covenants contained hereinSection 15, and (Ev) no consideration shall be given to the local, state or federal income tax liabilities of any party.

Adjustments for Revenues and Expenses. Adjustments shall be made between Buyer and Seller so that (i) Buyer will bear all expenses which are incurred in the operation of the Properties from and after the Effective Date, including, without limitation, all drilling costs, all capital expenditures, and all overhead charges due third party operators under applicable operating agreements and Buyer will receive all proceeds (net of applicable production, severance, and similar taxes) from sales of oil, gas and/or other minerals which are produced from (or attributable to) the Properties from and after the Effective Date, and (ii) Seller will bear all expenses which are incurred in the operation of the Properties before the Effective Date (provided, however, that Seller shall not be liable for the Agreed Payables), and Seller will receive all proceeds (net of applicable production, severance, and similar taxes) from the sale of oil, gas and/or other minerals which were produced from (or attributable to) the Properties and which were produced before the Effective Date. It is agreed that in making such adjustments, the Base Purchase Price shall be adjusted upward by an amount equal to the value of all oil, gas and natural gas liquids attributable to the Oil and Gas Properties that were in storage or pipelines as of the Effective Date and such value shall be based on the price Seller received for such production in February of 2006 if sold, or, in the case where such production was not sold during that month, such production shall be valued at a value based upon the average market price posted in the area for oil, gas or natural gas liquids of similar quality and grade in effect as of the Effective Date less all applicable royalties, taxes, gravity adjustments and transportation expenses necessary to market such production. It is further agreed that in making such adjustments, (A) ad valorem and similar taxes assessed for periods prior to the Effective Date shall be borne by Seller and ad valorem taxes assessed for periods on or after the Effective Date shall be borne by Buyer, (B) ad valorem and similar taxes assessed with respect to a period which the Effective Date splits shall be prorated based on the number of days in such period which fall on each side of the Effective Date (with the day on which the Effective Date falls being counted in the period after the Effective Date), (C) for the period between the Effective Date and Closing, Buyer shall bear only those expenses which are chargeable under the applicable operating agreement as direct costs or as third party operator overhead charges (or, in the absence of such an agreement, under the AAPL 610 Form (1989) Operating Agreement, with the XXXXX (1984) Accounting Procedure (with the election “shall” in Article III having been elected and with no overhead fee being provided for) attached), (D) Buyer shall not bear any expenses which result from the operation of the Properties in a manner which is not in accordance with Seller’s covenants contained herein, and (E) no consideration shall be given to the local, state or federal income tax liabilities of any party.

Adjustments for Revenues and Expenses. Adjustments Appropriate adjustments shall be made between Buyer and Seller so that (i) Buyer will bear all expenses which are incurred in the operation of the Properties from and after the Effective Date, including, without limitation, all drilling costs, all capital expenditures, and all overhead charges due third party operators under applicable operating agreements (regardless of whether such operating agreements are with third parties or related entities and regardless of whether Seller is the operator or a non-operator), all other overhead charges actually charged by third parties, and, where Seller is the operator of a well and there is no operating agreement, overhead at the rate of $250 per well per month (prorated for any period less than one month and proportionately reduced to Seller's working interest in any such well) for each month or part thereof between the Effective Date and Closing, and Buyer will receive all proceeds (net of applicable production, severance, and similar taxes) from sales of oil, gas and/or other minerals which are produced from (or attributable to) the Properties from and which are produced after the Effective Date, and (ii) except as provided in subsection 7.1(d) and 8.1 below Seller will bear all expenses which are incurred in the operation of the Properties before the Effective Date (providedincluding, howeverwithout limitation, that all liabilities of Seller shall not be liable for related to employee benefits owed, earned or accrued prior to the Agreed Payables), Effective Date and Seller will receive all proceeds (net of applicable production, severance, and similar taxes) from the sale of oil, gas and/or other minerals which were produced from (or attributable to) the Properties and which were produced before the Effective Date. It is agreed that that, in making such adjustments: (i) oil which was produced from the Oil and Gas Properties and which was, on the Effective Date, stored in tanks located on the Oil and Gas Properties (or located elsewhere but used by Seller to store oil produced from, or attributable to, the Oil and Gas Properties prior to delivery to oil purchasers) and above pipeline connections shall be deemed to have been produced before the Effective Date, (Aii) ad valorem and similar taxes assessed for periods prior to the Effective Date shall be borne by Seller and ad valorem taxes assessed for periods on or after the Effective Date shall be borne by Buyer, (Biii) ad valorem and similar taxes assessed with respect to a period which the Effective Date splits shall be prorated based on the number of days in such period which fall on each side of the Effective Date (with the day on which the Effective Date falls being counted in the period after the Effective Date), (Civ) for the period between provisions of Section 12.2 shall be given effect as if the same had taken effect on the Effective Date and Closing, Buyer shall bear only those expenses which are chargeable under the applicable operating agreement as direct costs or as third party operator overhead charges (or, in the absence of such an agreement, under the AAPL 610 Form (1989) Operating Agreement, with the XXXXX (1984) Accounting Procedure (with the election “shall” in Article III having been elected and with no overhead fee being provided for) attached)Date, (Dv) Buyer casualty losses shall not bear any expenses which result from the operation of the Properties in a manner which is not be handled in accordance with Seller’s covenants contained hereinSection 9.1, and (Evi) no consideration shall be given to the local, state or federal income tax liabilities of any party.