Common use of OBLIGATIONS OF UNIT OPERATOR AFTER DISCOVERY OF UNITIZED SUBSTANCES Clause in Contracts

OBLIGATIONS OF UNIT OPERATOR AFTER DISCOVERY OF UNITIZED SUBSTANCES. Should unitized substances in paying quantities be discovered upon the unit area, the unit operator shall on or before six months from the time of the completion of the initial discovery well and within thirty days after the expiration ofeach twelve months period thereafter, file a report with the Commissioner and Division ofthe status ofthe development ofthe unit area and the development contemplated for the following twelve months period. It is understood that one ofthe main considerations for the approval ofthis agreement by the Commissioner of Public Lands is to secure the orderly development ofthe unitized lands in accordance with good conservation practices so as to obtain the greatest ultimate recovery of unitized substances. After discovery ofunitized substances in paying quantities, unit operator shall proceed with diligence to reasonably develop the unitized area as a reasonably prudent operator would develop such area under the same or similar circumstances. If the unit operator should foil to comply with the above covenant for reasonable development this agreement may be terminated by the Commissioner as to all lands ofthe State ofNew Mexico embracing undeveloped regular well spacing or proration units, but in such event, the basis ofparticipation by the working interest owners shall remain the same as if this agreement had not been terminated as to such lands; provided, however, the Commissioner shall give notice to the unit operator Revised web version December 2014 4 and the lessees or record in the manner prescribed by (Sec. 19-10-20 N.M. Statutes 1978 Annotated), of intention to cancel on account ofany alleged breach ofsaid covenant for reasonable development and any decision entered thereunder shall be subject to appeal in the manner prescribed by (Sec. 19-10-23 N.M. Statutes 1978 Annotated), and, provided further, in any event the unit operator shall be given a reasonable opportunity after a final determination within which to remedy any default, failing in which this agreement shall be terminated as to all lands of the State of New Mexico embracing undeveloped regular well spacing or proration units. Notwithstanding any of the provisions ofthis Agreement to the contrary, all undeveloped regular well spacing or proration unit tracts within the unit boundaries shall be automatically eliminated from this Agreement and shall no longer be a part ofthe unit or be further subject to the terms of this agreement unless at the expiration of five (5) years after the first day of the month following the effective date ofthis agreement diligent drilling operations are in progress on said tracts.

OBLIGATIONS OF UNIT OPERATOR AFTER DISCOVERY OF UNITIZED SUBSTANCES. Should unitized substances in paying quantities be discovered upon the unit area, the unit operator shall on or before six months from the time of the completion of the initial discovery well and within thirty days after the expiration ofeach of each twelve months period thereafter, file a report with the Commissioner and Division ofthe of the status ofthe of the development ofthe of the unit area and the development contemplated for the following twelve months period. It is understood that one ofthe of the main considerations for the approval ofthis of this agreement by the Commissioner of Public Lands is to secure the orderly development ofthe of the unitized lands in accordance with good conservation practices so as to obtain the greatest ultimate recovery of unitized substances. After discovery ofunitized of unitized substances in paying quantities, unit operator shall proceed with diligence to reasonably develop the unitized area as a reasonably prudent operator would develop such area under the same or similar circumstances. If the unit operator should foil fail to comply with the above covenant for reasonable development this agreement may be terminated by the Commissioner as to all lands ofthe of the State ofNew of New Mexico embracing undeveloped regular well spacing or proration units, but in such event, the basis ofparticipation of participation by the working interest owners shall remain the same as if this agreement had not been terminated as to such lands; provided, however, the Commissioner shall give notice to the unit operator Revised web version December 2014 4 and the lessees or record in the manner prescribed by (Sec. 19-10-20 N.M. Statutes 1978 Annotated), of intention to cancel on account ofany of any alleged breach ofsaid of said covenant for reasonable development and any decision entered thereunder shall be subject to appeal in the manner prescribed by (Sec. 19-10-23 N.M. Statutes 1978 Annotated), andand , provided further, in any event the unit operator shall be given a reasonable opportunity after a final determination within which to remedy any default, failing in which this agreement shall be terminated as to all lands of the State of New Mexico embracing undeveloped regular well spacing or proration units. Notwithstanding any of the provisions ofthis of this Agreement to the contrary, all undeveloped regular well spacing or proration unit tracts within the unit boundaries shall be automatically eliminated from this Agreement and shall no longer be a part ofthe of the unit or be further subject to the terms of this agreement unless at the expiration of five (5) years after the first day of the month following the effective date ofthis of this agreement diligent drilling operations are in progress on said tracts.

OBLIGATIONS OF UNIT OPERATOR AFTER DISCOVERY OF UNITIZED SUBSTANCES. Should unitized substances in paying quantities be discovered upon the unit area, the unit operator shall on or before six months from the time of the completion of the initial discovery well and within thirty days after the expiration ofeach twelve months period thereafter, file a report with the Commissioner and Division ofthe of the status ofthe of the development ofthe unit area and the development contemplated for the following twelve months period. It is understood that one ofthe of the main considerations for the approval ofthis agreement by the Commissioner of Public Lands is to secure the orderly development ofthe of the unitized lands in accordance with good conservation practices so as to obtain the greatest ultimate recovery of unitized substances. After discovery ofunitized of unitized substances in paying quantities, unit operator shall proceed with diligence to reasonably develop the unitized area as a reasonably prudent operator would develop such area under the same or similar circumstances. If the unit operator should foil fail to comply with the above covenant for reasonable development this agreement may be terminated by the Commissioner as to all lands ofthe of the State ofNew of New Mexico embracing undeveloped regular well spacing or proration units, but in such event, the basis ofparticipation of participation by the working interest owners shall remain the same as if this agreement had not been terminated as to such lands; provided, however, the Commissioner shall give notice to the unit operator Revised web version December 2014 4 and the lessees or record in the manner prescribed by (Sec. 19-10-20 N.M. Statutes 1978 Annotated), of intention to cancel on account ofany xxxxx alleged breach ofsaid of said covenant for reasonable development and any decision entered thereunder shall be subject to appeal in the manner prescribed by (Sec. 19-10-23 N.M. Statutes 1978 Annotated), and, and ♦provided further, in any event the unit operator shall be given a reasonable opportunity after a final determination within which to remedy any default, failing in which this agreement shall be terminated as to all lands of the ofthe State of New Mexico embracing undeveloped regular well spacing or proration units. Notwithstanding any of the ofthe provisions ofthis Agreement to the contrary, all undeveloped regular well spacing or proration unit tracts within the unit boundaries shall be automatically eliminated from this Agreement and shall no longer be a part ofthe of the unit or be further subject to the terms of this agreement unless at the expiration of five (5) years after the first First day of the ofthe month following the effective date ofthis of this agreement diligent drilling operations are in progress on said tracts.

OBLIGATIONS OF UNIT OPERATOR AFTER DISCOVERY OF UNITIZED SUBSTANCES. Should unitized substances in paying quantities be discovered upon the unit area, the unit operator shall on or before six months from the time of the ofthe completion of the ofthe initial discovery well and within thirty days after the expiration ofeach twelve months period thereafter, file a report with the Commissioner and Division ofthe status ofthe development ofthe unit area and the development contemplated for the following twelve months period. It U is understood that one ofthe main considerations for the approval ofthis agreement by the Commissioner of Public Lands is to secure the orderly development ofthe unitized lands in accordance with good conservation practices so as to obtain the greatest ultimate recovery of unitized ofunitized substances. After discovery ofunitized substances in paying quantities, unit operator shall proceed with diligence to reasonably develop the unitized area as a reasonably prudent operator would develop such area under the same or similar circumstances. If the Ifthe unit operator should foil to comply with the above covenant for reasonable development this agreement may be terminated by the Commissioner as to all lands ofthe State ofNew Mexico embracing undeveloped regular well spacing or proration units, but in such event, the basis ofparticipation by the working interest owners shall remain the same as if this agreement had not been terminated as to such lands; provided, however, the Commissioner shall give notice to the unit operator Revised web version December 2014 4 and the (he lessees or record in the manner prescribed by (Sec. 19I9-10-20 N.M. 20N.M. Statutes 1978 Annotated), of intention ofintention to cancel on account ofany alleged breach ofsaid of said covenant for reasonable development and any decision entered thereunder shall be subject to appeal in the manner prescribed by (Sec. 19-10-23 N.M. Statutes 1978 Annotated), and, provided furtherfarther, in any event the unit operator shall be given a reasonable opportunity after a final determination within which to remedy any default, failing foiling in which this agreement shall be terminated as to all lands of the State of New ofthe Slate ofNew Mexico embracing undeveloped regular well spacing or proration units. Notwithstanding any ofthe provisions of the provisions ofthis this Agreement to the contrary, all undeveloped regular well spacing or proration unit tracts within the unit boundaries shall be automatically eliminated from this Agreement and shall no longer be a part ofthe unit or be further subject to the terms of this ofthis agreement unless at the expiration of five (5) years after the first day of the ofthe month following the effective date ofthis agreement diligent drilling operations are in progress on said tracts.