Operating Procedure Applies Among Farmor Parties Sample Clauses

Operating Procedure Applies Among Farmor Parties. A. If the Farmor is comprised of more than one Party and one or more (but fewer than all) of the Farmor Parties elect to conduct additional tests for a well proposed to be Abandoned pursuant to this Article, those Farmor Parties that do not elect to participate in those tests will not be entitled to participate in the takeover and Completion of the well in the tested zone. If one or more (but fewer than all) of the Farmor Parties elect to take over a well proposed to be Abandoned pursuant to this Article, that takeover will be: (i) at the sole cost, risk and expense of those Parties taking over the well; (ii) deemed to be an independent operation under Articles IX and X of the Operating Procedure, if any; and (iii) subject to Article 10.00 mutatis mutandis, as between those Farmor Parties that take over the well and those Farmor Parties that do not elect to take over that well. In such event, the amount (if any) paid to the Farmee pursuant to Clause 7.02 will be deemed to be an Operating Cost for the purpose of determining the amount of any penalty applicable to the takeover and Completion. B. From and after the effective date referred to in Clause 7.03, the Operating Procedure will apply mutatis mutandis to the Farmor Parties respecting a well taken over pursuant to Subclause 7.04A and the applicable zone(s) of the Spacing Unit, provided that, if Article 6.00 has been selected to apply, the Overriding Royalty will not be payable for that well until such time as the production penalty prescribed by the Operating Procedure for that operation is recovered or ceases to apply. At that time, each Farmor Party that elected not to participate in the takeover of that well may elect to convert to a Working Interest in that well on the same basis as is provided in Article 6.00. The Farmor Parties will appoint one of them to be the initial Operator under the Operating Procedure. If no Operating Procedure is included in the Agreement, the term "Operating Procedure" in this Clause means the standard form 1990 CAPL Operating Procedure and as an attachment thereto the standard form 1996 PASC Accounting Procedure, with those rates and elections as the Farmor Parties taking over that well may negotiate at the required time.
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