Enhanced Recovery and/or Pressure. Maintenance Program Proposals) (the “Equipment”) may propose the abandonment and disposition of that Equipment. If that proposal is unanimously agreed to by the Participating Parties, the Operator shall abandon and dispose of that Equipment at the Cost and risk of the Participating Parties. If a Participating Party fails to respond within the applicable response period, that Participating Party shall be deemed to have approved the abandonment and disposal of the Equipment. If all Participating Parties do not approve abandoning and disposing of the Equipment, the Operator shall prepare an estimate of the Costs of abandonment, removal, site clearance, and disposition of the Equipment, less the estimated salvage value of the Equipment, as determined under Exhibit “C,” and the Participating Party desiring to abandon and dispose of the Equipment shall pay the Operator, for the benefit of the non-abandoning Participating Parties, its share of that estimate within thirty (30) days of its receipt of the estimate. If an abandoning Participating Party’s respective share of the estimated salvage value is greater than its share of the estimated Costs, the Operator, on behalf of the non-abandoning Participating Parties, shall pay to the abandoning Participating Party an amount equal to the difference within thirty (30) days of the abandoning Participating Party’s receipt of the estimate. Each Participating Party desiring to abandon the Equipment shall assign to each non-abandoning Participating Party in the Equipment a portion of its Working Interest in the Equipment equal to the non-abandoning Party’s Participating Interest Share in the Equipment divided by the entire Participating Interest Share of the non-abandoning Parties in the Equipment. That assignment shall be effective as of the date of the abandoning Party’s response to the Equipment abandonment proposal. The abandoning Party shall assume and be liable for all obligations pertaining to the Equipment, except liability for payments under this Article 18.2, prior to the effective date of its assignment to the non-abandoning Parties. The abandoning Party shall not assume and be liable for any obligations pertaining to the Equipment, except liability for payments under this Article 18.2, as of the effective date of its assignment to the non-abandoning Parties.
Appears in 2 contracts
Samples: Operating Agreement, Operating Agreement
Enhanced Recovery and/or Pressure. Maintenance Program Proposals) (the “Equipment”) may propose the abandonment and disposition of that Equipment. If that proposal is unanimously agreed to by the Participating Parties, the Operator shall abandon and dispose of that Equipment at the Cost and risk of the Participating Parties. If a Participating Party fails to respond within the applicable response period, that Participating Party shall be deemed to have approved the abandonment and disposal of the Equipment. If all Participating Parties do not approve abandoning and disposing of the Equipment, the Operator shall prepare an estimate of the Costs of abandonment, removal, site clearance, and disposition of the Equipment, less the estimated salvage value of the Equipment, as determined under Exhibit “C,” and the Participating Party desiring to abandon and dispose of the Equipment shall pay the Operator, for the benefit of the non-abandoning Participating Parties, its share of that estimate within thirty (30) days of its receipt of the estimate. If an abandoning Participating Party’s respective share of the estimated salvage value is greater than its share of the estimated Costs, the Operator, on behalf of the non-abandoning Participating Parties, shall pay to the abandoning Participating Party an amount equal to the difference within thirty (30) days of the abandoning Participating Party’s receipt of the estimate. Each Participating Party desiring to abandon the Equipment shall assign to each non-abandoning Participating Party in the Equipment a portion of its Working Interest in the Equipment equal to the non-abandoning Party’s Participating Interest Share in the Equipment divided by the entire Participating Interest Share of the non-abandoning Parties in the Equipment. That assignment shall be effective as of the date of the abandoning Party’s response to the Equipment abandonment proposal. The abandoning Party shall assume and be liable for all obligations pertaining to the Equipment, except liability for payments under this Article 18.2, prior to the effective date of its assignment to the non-abandoning Parties. The abandoning Party shall not assume and be liable for any obligations pertaining to the Equipment, except liability for payments under this Article 18.2, as of the effective date of its assignment to the non-abandoning Parties.. Disposal of Surplus Material The Operator may classify material acquired under this Agreement as surplus when the Operator deems it is no longer needed in present or foreseeable activities or operations. The Operator shall determine the value and Cost of disposing of the material under Exhibit “C.” If the material is classified as junk or if the value, less the Cost of disposal, is less than or equal to ___________________________ dollars ($_________), the Operator may dispose of the surplus material in a manner it deems appropriate. If the value, less the Cost of disposal of the surplus material, is greater than __________________________ dollars ($_________), the Operator shall give written notice thereof to the Parties owning the material, and the surplus material shall be disposed of in accordance with the method of disposal unanimously approved by the Parties owning the material. Proceeds from the sale or transfer of surplus material shall be promptly credited to each Party in proportion to its ownership of the material at the time of the retirement or disposition of the material. Abandonment Operations Required by Governmental Authority The Operator shall conduct the abandonment and removal of any Equipment [as defined in Article 18.2 (Abandonment of Equipment)] required by a governmental authority, and the Costs, risks, and net proceeds of that abandonment and removal will be shared by the Participating Parties in that Equipment [as defined in Article 18.2 (Abandonment of Equipment)] according to their Participating Interest Share. RENTALS, ROYALTIES, AND MINIMUM ROYALTIES Burdens on Hydrocarbon Production If a Party has previously created or hereafter creates an overriding royalty, production payment, carried or reversionary working interest, net profits interest, mortgage, lien, security interest, or other type of burden on Hydrocarbon production, including agreements affecting the marketing, processing, or transportation of Hydrocarbon Production, other than the lessor's royalty stipulated in a Lease (a “Lease Burden”), the Party creating the Lease Burden shall assume and bear all liabilities and obligations of the Lease Burden regardless of that Party’s participation status and notwithstanding an assignment under this Agreement of all or part of that Party’s Working Interest to another party. The Party creating the Lease Burden shall indemnify, release, defend, and hold all other Parties harmless from all claims and demands for payment asserted by the owners of the Lease Burden. Subsequently Created Lease Burdens Notwithstanding any contrary provision of this Agreement, if a Party, after executing this Agreement, creates a Lease Burden, that Lease Burden shall be made specifically subject to this Agreement. If the Party owning the Working Interest from which a Lease Burden is created (a) fails to pay when due its share of Costs, (b) withdraws from this Agreement, or (c) Elects to abandon a well under Article 18.1 (Abandonment of Xxxxx), then the beneficiary of the Lease Burden will be chargeable with Costs equal to its fractional interest in gross production and the security rights created in Exhibit “F” will be applicable against that Lease Burden. The Operator has the right to enforce the security rights (and all other rights granted under this Agreement) against the beneficiary of a Lease Burden for the purpose of collecting Costs chargeable to the Lease Burden. The rights of the beneficiary of a Lease Burden are subordinate to the rights of the Parties granted by Exhibit “F.” Payment of Rentals and Royalties The Operator shall make all rental payments for the Leases on behalf of the Parties. The Operator shall use reasonable care to make proper and timely payment of the rental payments, all minimum royalties, and all other similar payments accruing under the Leases. Upon receipt of proper evidence of those payments and the Operator's invoice for its proportionate share of those payments, each Non‑Operating Party shall reimburse the Operator for the Non‑Operating Party's Working Interest share of those payments. In the event the Operator fails to make proper payment of a rental, minimum royalty, or other similar payment accruing under a Lease through mistake or oversight where that payment is required to continue that Lease in force and effect, the Operator will not be liable to the other Parties for any resulting damages or any loss that results from the non-payment, except to the extent that non-payment is due to the Gross Negligence or Willful Misconduct of the Operator. The loss of a Lease or interest therein that results from the Operator’s failure to pay, or the Operator’s erroneous payment of, a rental, minimum royalty, or other similar payments is a joint loss, and there will be no readjustment of Working Interests as a consequence thereof. For production delivered in-kind by the Operator to a Non-Operating Party or to a third party for the account of a Non-Operating Party, the Non-Operating Party shall provide the Operator with information about the proceeds or value of the production in order for the Operator to make payments of all minimum royalties due. Non-Participation in Payments
Appears in 1 contract
Samples: Operating Agreement
Enhanced Recovery and/or Pressure. Maintenance Program Proposals) (the “Equipment”) may propose the abandonment and disposition of that Equipment. If that proposal is unanimously agreed to by the Participating Parties, the Operator shall abandon and dispose of that Equipment at the Cost and risk of the Participating Parties. If a Participating Party fails to respond within the applicable response period, that Participating Party shall be deemed to have approved the abandonment and disposal of the Equipment. If all Participating Parties do not approve abandoning and disposing of the Equipment, the Operator shall prepare an estimate of the Costs of abandonment, removal, site clearance, and disposition of the Equipment, less the estimated salvage value of the Equipment, as determined under Exhibit “C,” and the Participating Party desiring to abandon and dispose of the Equipment shall pay the Operator, for the benefit of the non-abandoning Participating Parties, its share of that estimate within thirty (30) days of its receipt of the estimate. If an abandoning Participating Party’s respective share of the estimated salvage value is greater than its share of the estimated Costscosts, the Operator, on behalf of the non-abandoning Participating Parties, shall pay to the abandoning Participating Party an amount a sum equal to the difference surplus within thirty (30) days of the abandoning Participating Party’s receipt of the estimate. Each Participating Party desiring to abandon the Equipment shall assign to each non-abandoning Participating Party in the Equipment a portion of its Working Interest in the Equipment equal to the non-abandoning Party’s Participating Interest Share Interests in the Equipment divided by the entire Participating Interest Share Interests of the non-abandoning Parties in the Equipment. That assignment shall be effective as of the date of the abandoning Party’s response to the Equipment abandonment proposal. The abandoning Party shall assume and be liable for all obligations pertaining to the Equipment, except liability for payments under this Article 18.2, prior to the effective date of its assignment to the non-abandoning Parties. The abandoning Party shall not assume and be liable for any obligations pertaining to the Equipment, except liability for payments under this Article 18.2, as of the effective date of its assignment to the non-abandoning Parties.
Appears in 1 contract
Samples: Operating Agreement
