Common use of Operating Adjustments Clause in Contracts

Operating Adjustments. Subject to all other provisions of this Agreement, at Closing Time all benefits and obligations of any kind and nature relating to the operation of the Assets conveyed pursuant to this Agreement, excluding income taxes but otherwise including without limitation maintenance, development, operating and capital costs, government incentives, royalties and other burdens, and proceeds from the sale of production, whether accruing, payable or paid and received or receivable, shall be adjusted between the Parties as of the Effective Date on a cash and an accrual basis in accordance with generally accepted accounting principles. For greater certainty, adjustments in respect of production, if any, shall be made in favour of Vendor in respect of production beyond the wellhead at the Effective Date and in favour of Purchaser in respect of all other production. The net adjustments shall constitute an increase or decrease, as the case may be, to the Purchase Price and to the amount allocated to the Petroleum and Natural Gas Rights. Vendor shall provide to Purchaser within a reasonable time prior to the Closing Time a written statement of all such adjustments to be made at Closing, and shall cooperate with Purchaser to enable Purchaser to verify the accuracy of such statement. Adjustments not settled or incorrectly settled prior to or at Closing Time shall be settled by payment to or by Vendor and Purchaser, as the case may be, as soon as practicable after Closing Time. The intention of the Parties is that final settlement shall occur within 90 days following the Closing Time, but it is recognized that adjustments may be made after that time. No adjustments shall be made after 1 year from the Closing Time unless written notice of the requested adjustment, with reasonable particulars, is given within 1 year from the Closing Time, provided however that adjustments arising as a consequence of Crown royalty audits and joint venture audits are not subject to the 1 year limit.

Operating Adjustments. Subject to all other provisions of this Agreement, at Closing Time all benefits and obligations of any kind and nature relating to the operation of the Assets conveyed pursuant to this Agreement, excluding income taxes but otherwise including without limitation maintenance, development, operating and capital costs, government incentivesincentives and administration fees, royalties and other burdens, and proceeds from the sale of production, whether accruing, payable or paid and received or receivable, shall be adjusted between the Parties as of the Effective Adjustment Date on a cash and an accrual basis in accordance with generally accepted accounting principles. For greater certainty, adjustments in respect of production, if any, shall be made in favour of Vendor in respect of production beyond the wellhead at the Effective Adjustment Date and in favour of Purchaser in respect of all other production. The net adjustments shall constitute an increase or decrease, as the case may be, to the Purchase Price and to the amount allocated to the Petroleum and Natural Gas Rights. Vendor shall provide to Purchaser within a reasonable time prior to the Closing Time a written statement of all such adjustments to be made at Closing, and shall cooperate with Purchaser to enable Purchaser to verify the accuracy of such statement. Adjustments not settled or incorrectly settled prior to or at Closing Time shall be settled by payment to or by Vendor and Purchaser, as the case may be, as soon as practicable after Closing TimeClosing. The intention of the Parties is that final settlement shall occur within 90 180 days following the Closing Time, but it is recognized that adjustments may be made after that time. No adjustments shall be made after 1 year 12 months from the Closing Time unless written notice of the requested adjustment, with reasonable particulars, is given within 1 year 12 months from the Closing Time, provided however that adjustments arising as a consequence of Crown royalty audits and joint venture audits are not subject to the 1 year limit. During the 12-month period following the Closing Time, Purchaser may audit Vendor’s books, records and accounts respecting the Assets, for effecting adjustments pursuant to this section 7.1. Such audit shall be conducted upon reasonable notice to Vendor at Vendor’s offices during Vendor’s normal business hours, and shall be conducted at Purchaser’s sole expense. Any claims of discrepancies disclosed by such audit shall be made in writing to Vendor within thirty (30) days following the completion of such audit and Vendor shall respond in writing to any such claims of discrepancies within thirty (30) days of receipt of such claims.

Operating Adjustments. Subject to all other provisions of this Agreement, at Closing Time all benefits and obligations of any kind and nature relating to the operation of the Assets Purchased Interest conveyed pursuant to this Agreement, excluding income taxes but otherwise including otherwise, including, without limitation limitation: Production Expenditures, maintenance, development, operating and capital costs, government incentivesincentives and administration fees, royalties and other burdens, and proceeds from the sale of production, production whether accruing, payable or paid and received or receivable, shall be adjusted between the Parties as of the Effective Adjustment Date on a cash and an accrual basis in accordance with generally accepted accounting principles, between the Vendor and Purchaser in respect of the Purchased Interest. For greater certainty, adjustments in respect of production, if any, shall be made in favour of Vendor in respect of production beyond the wellhead at the Effective Date and in favour of Purchaser in respect of all other productionAdjustment Date. The net adjustments shall constitute an increase On or decrease, as before the case may be, second Business Day prior to the Purchase Price and to Closing Date, or as otherwise agreed between the amount allocated to the Petroleum and Natural Gas Rights. Parties, Vendor shall provide to Purchaser within a reasonable time prior to the Closing Time a written statement of all such adjustments to be made at Closing, and shall cooperate with Purchaser to enable Purchaser to verify the accuracy of such statement. Adjustments not settled or incorrectly settled prior to or at Closing Time shall be settled by payment to or by Vendor and Purchaser, as the case may be, as soon as practicable after Closing TimeClosing. The intention of the Parties is that final settlement shall occur within 90 one hundred and eighty (180) days following the Closing Time, but it is recognized that adjustments may be made after that time. No adjustments shall be made after 1 one (1) year from the Closing Time unless written notice of the requested adjustment, with reasonable particulars, is given within 1 one (1) year from the Closing Time, provided however that adjustments arising as a consequence of Crown royalty audits and audits, joint venture audits or thirteenth month adjustments for gas plant throughput and gas cost allowance for the Assets are not subject to the 1 one (1) year limit. Any amount owing to a Party by the other Party pursuant to any provision of this Agreement after Closing and remaining unpaid after written notice of such failure to pay shall bear compound interest, as computed monthly, from the day such amount was due to be paid until the day such amount was paid, at the rate of two (2%) percent per annum above the rate designated as the prime rate for Canadian dollar commercial loans by the main branch in Calgary of the Royal Bank of Canada, regardless of whether such Party has given the other Party prior notice of the accrual of interest hereunder.

Operating Adjustments. Subject to all other provisions of this Agreement, at Closing Time all benefits and obligations of any kind and nature relating to the operation of the Assets conveyed pursuant to this Agreement, excluding income taxes but otherwise including without limitation maintenance, development, operating and capital costs, government incentivesincentives and administration fees, royalties and other burdens, and proceeds from the sale of production, production whether accruing, payable or paid and received or receivable, shall be adjusted between the Parties as of the Effective Adjustment Date on a cash and an accrual basis in accordance with generally accepted accounting principles. For greater certainty, adjustments in respect of production, if any, shall be made in favour of Vendor in respect of production beyond the wellhead at the Effective Adjustment Date and in favour of Purchaser in respect of all other production. The net adjustments Notwithstanding the foregoing, Vendor shall constitute an increase or decrease, as not be required to provide a credit at closing for any benefits accruing to Purchaser after the case may be, Adjustment Date but not actually received at least 3 Business Days prior to the Purchase Price and to the amount allocated to the Petroleum and Natural Gas RightsClosing Time. Vendor shall provide to Purchaser within a reasonable time prior to the Closing Time a written statement of all such adjustments to be made at Closing, and shall cooperate with Purchaser to enable Purchaser to verify the accuracy of such statement. Adjustments not settled or incorrectly settled prior to or at Closing Time shall be settled by payment to or by Vendor and Purchaser, as the case may be, as soon as practicable after Closing TimeClosing. The intention of the Parties is that final settlement shall occur within 90 [90] days following the Closing Time, but it is recognized that adjustments may be made after that time. No adjustments shall be made after 1 year from the Closing Time unless written notice of the requested adjustment, with reasonable particulars, is given within 1 year from the Closing Time, provided however that adjustments arising as a consequence of Crown royalty audits and audits, joint venture audits or thirteenth month adjustments for gas plant throughput and gas cost allowance for the Assets are not subject to the 1 year limit. Petroleum substances beyond wellhead at the Adjustment Date and surplus items such as tubing and casing stored on the Lands which are not charged to the joint interest account with respect to the Lands, do not comprise part of the Assets and shall be removed by Vendor as soon as possible.

Operating Adjustments. Subject to all other provisions of Except as otherwise provided in this Agreement, at Closing Time all benefits costs and obligations of any kind and nature expenses relating to the operation of Assets (including, without limitation, Deductible Costs) and all Net Revenues relating to the Assets conveyed pursuant to this Agreement, excluding income taxes but otherwise (including without limitation maintenance, development, operating and capital costs, government incentives, royalties and other burdens, and proceeds from the sale of production, whether accruing, payable or paid and received or receivable, ) shall be adjusted between the Parties apportioned as of the Effective Adjustment Date between Vendor and Purchaser on a cash and an accrual basis in accordance with generally accepted accounting principles. For greater certainty, adjustments provided that: (a) for the purposes of this Section and notwithstanding anything else contained in respect this Agreement, costs and expenses of productionwork done, if anyservices provided and goods supplied shall be conclusively deemed to accrue in the month in which same are allocated by Cenovus Energy Inc. under the Net Royalty Agreement as Deductible Costs under the Net Royalty Agreement, regardless of when such costs and expenses were actually accrued or incurred; (b) no adjustment shall be made in favour of Vendor in respect of production beyond any tax credits, drilling credits or other similar incentives; (c) revenues from the wellhead sale of Petroleum Substances will be adjusted on the basis of the date the Petroleum Substances are produced; (d) Petroleum Substances taken in kind and attributable to the Assets which were produced, but not sold, as of the Adjustment Date shall be retained by Vendor and Vendor shall be responsible for all royalties or other encumbrances thereon. Petroleum Substances will be deemed to be sold on a first in, first out basis; and (e) an adjustment at a rate of [rate redacted] will be made for income tax payable by Vendor on Net Revenues relating to proceeds of the Effective sale of Leased Substances taken in kind by Vendor (as applicable) attributable to the period between the Adjustment Date and in favour of Purchaser in respect of all other production. The net adjustments shall constitute an increase or decrease, as the case may be, to the Purchase Price and to the amount allocated to the Petroleum and Natural Gas RightsClosing Time. Vendor shall provide to Purchaser within a reasonable time no later than 3 Business Days prior to the Closing Time a written statement of all such adjustments to be made at Closing, and shall cooperate with Purchaser to enable Purchaser to verify the accuracy of such statement. Adjustments not settled or incorrectly settled prior to or at Closing Time shall be settled by payment to or by Vendor and Purchaser, as the case may be, as soon as practicable after Closing TimeClosing. The intention of the Parties is that final settlement shall occur within 90 180 days following the Closing TimeClosing, but it is recognized that adjustments may be made after that time. No adjustments shall be made after 1 one year from the Closing Time unless written notice of the requested adjustment, with reasonable particulars, is given within 1 one year from the Closing TimeClosing, provided however that adjustments arising as a consequence of Crown royalty audits and joint venture audits the exercise of audit rights pursuant to the Net Royalty Agreement are not subject to the 1 one year limit.