Common use of Operations by Less Than All Parties Clause in Contracts

Operations by Less Than All Parties. If any party receiving such notice as provided in Article VI.B.1 or VII.D.1 (Option No. 3) elects not to participate in the proposed operation, than in order to be entitled to the benefits of this Article, the party or parties giving the notice and such other parties as shall elect to participate in the operation shall, within ninety (90) days after the expiration of the notice period of thirty (30) days (or as promptly as possible after the expiration of the twenty-four (24) hour period when drilling is on location, as the case may be) actually commence the proposed operation and complete it with due diligence, Operator stall perform all work for the account of the Consenting Parties; provided, however, if no drilling rig or other equipment is en location, and if Operator is a Non-Consenting Party, the Consenting Parties shall either: (a) request Operator to perform the work required by such proposed operation for the account of the Consenting Parties, or (b) designate one (1) of the Consenting Parties as Operator to perform such work. Consenting Parties, when conducting operations on the Contract Area pursuant to this Article VI.B.2., shall comply with all terms and conditions of thus agreement. If less than all parties approve any proposed operation, the proposing party, immediately after the expiration of the applicable notice period, shall advise the Consenting Parties of the total interest of the parties approving such operations and its recommendation as to whether the Consenting Parties should proceed with the operation as proposed. Each Consenting Party, within forty-eight (48) hours (exclusive of Saturday, Sunday and legal holidays) after receipt of such notice, shall advise the proposing party of its desire to (a) limit participation to such party's interest as shown on Exhibit "A" or (b) carry its proportionate part of Non-Consenting Parties' interests and failure to advise the proposing party shall be deemed an election under (a). In the event a drilling rig is on location, the time permitted for such a response shall not exceed a total of twenty-four hours (inclusive of Saturday, Sunday and legal holidays). The proposing party at its election, may withdraw such proposal if there is sufficient participation and shall promptly notify all parties of such decision. The entire cost and risk of conducting such operations shall borne by the Consenting Parties in the proportions they have elected to bear same under the terms of the preceding paragraph. Consenting Parties shall keep the leasehold estates involved in such operations free and clear of all liens and encumbrances of every kind created by or arising from the operations of the Consenting Parties. If such an operation results in a dry hole, the Consenting parties shall plug and abandon the well and restore the surface location at t heir sole cost, risk and expense. If any well drilled, reworked, deepened or plugged back under the provisions of this Article results in a producer of oil and/or gas in paying quantities, the Consenting Parties shall complete and equip the well to produce at their sole cost and risk and the well shall then be turned over to Operator and shall be operated by it at the expense and for the account of the Consenting Parties. Upon commencement of operations for the drilling, reworking, deepening or plugging back of any such well by Consenting Parties in accordance with the provisions of this Article, each Non-Consenting Party shall be deemed to have relinquished to Consenting Parties, and the Consenting Parties shall own and be entitled to receive, is proportion to their respective interests, all of such Non-Consenting Party’s interest in the well and share of production therefrom until the proceeds of the sale of such share, calculated at the well, or market value thereof if such share is not sold, (after deducting production taxes, excise taxes, royalty, overriding royalty and other interests not excepted by Article III.D payable out of or measured by the production from such well accruing with respect to such interest until it reverts) shall equal the total of the following: (a) 200% of each such Non-Consenting party’s share of the cost any newly acquired surface equipment beyond the wellhead connections (including, but not limited to, stock tanks, separators, treaters, pumping equipment and piping), plus 100% of each such Non-Consenting Party's share of the cost of the operation of the well commencing with first production and continuing until each such Non-Consenting Party's relinquished interest shall revert to it under other provisions of this Article, it being agreed that each Non-Consenting Party's share of each costs and equipment will be that interest which would have been charitable to such Non-Consenting Party had it participated in the well from the beginning of the operation; and (b) 50% of that portion of the costs and expenses of drilling, reworking, deepening, plugging back, testing and completing after deducting any cash contributions received under Article VIII.C and 500% of that portion of the cost of newly acquired equipment in the well (to and including the wellhead connections), which would have been chargeable to such Non-Consulting Parry if it had participated therein. An election not to participate to the drifting of the deepening of a well shall be deemed as election not to participate in any reworking or plugging back operation proposed in such a well, or portion thereof, to which the initial Non-Consent election applied that is conducted at any time prior to full recovery by the Consenting Parties of the Non-Consenting Party's recoupment account. Any such reworking or plugging back operation conducted during the recoupment period shall be deemed part of the cost of operation of said well and there shall he added to the sums to be recouped by the Consenting Parties one hundred percent (100%) of that portion of the costs of the reworking or plugging back operation which would have been chargeable to such Non-Consulting Party had it participated therein. If such a re-working or plugging back operation is proposed during such recoupment period, the provisions of this Article VI.B shall be applicable as between said Consenting Parties in said well. During the period of time Consenting Parties are entitled to receive Non-Consenting Party's share of production, or the proceeds therefrom, Consenting Parties shall he responsible for the payment of all production, severance, excise, gathering and other taxes and all royalty, and other burdens applicable to Non-Consenting Party's share of production not excepted by Article III.D. In the case of any reworking, plugging back or deeper drilling operation, the Consenting Parties shall be permitted to use free of cost, all casing, tubing and other equipment in the well, but the ownership of all such equipment shall remain unchanged; and upon abandonment of a well after such reworking, plugging back or deeper drilling, the Consenting Parties shall account for all such equipment to the owners thereof, with each party receiving its proportionate part in kind or in value, less cost of salvage. Within sixty (60) days after the completion of any operation under this Article, the party conducing the operation for the Consenting Parties shall furnish each Non-Consenting Party with an inventory of the equipment in and connected to the well, and an itemized statement of the cost of drilling, deepening, plugging back, testing, completing, and equipping the well for production, or, at its option, the operating party, in lieu of an itemized statement of such costs of operation, may submit a detailed statement of monthly xxxxxxxx. Each month thereafter, during the time the Consenting Parties are being reimbursed as provided above, the party conducting the operations for the Consenting Parties shall furnish the Non-Consenting Parties with the itemized statement of all costs and liabilities incurred in the operation of the well, together with a statement of the quantity of oil and gas produced from it and the amount of proceeds realized from the sale of the well's working interest production during the preceding month. In determining the quantity of oil and gas produced during any month, Consenting Parties shall use industry accepted methods such as, but not limited to, metering or periodic well tests. Any amount realized from the sale or other disposition of equipment newly acquired in connection with any such operation which would have been owned in a Non-Consenting Party had it participated therein shall be credited against the total unreturned cost of the work done and of the equipment purchased in determining when the interest of such Non-Consenting Party shall revert to as above provided; and if there is a credit balance, it shall be paid to such Non-Consenting Party. If and when the Consenting Parties recover from a Non-Consenting Party's relinquished interest the amounts provided for above, the relinquished interest of such Non-Consenting Party shall automatically revert to it, and, from and after such reversion, such Non-Consenting Party shall own the same interest in such well, the material and equipment in or pertaining thereto, and the production therefrom as such Non-Consenting Party would have been entitled to had it participated in the drilling, reworking, deepening or plugging back of said well. Thereafter, such Non-Consenting Party shall be charged with and shall pay its proportionate part of the further costs of its operation of said well with the terms of this agreement and the accounting procedure attached hereto, Notwithstanding the provisions of this Article VI.B.2., it is agreed that without the mutual consent of all parties no xxxxx shall be completed in or produced from a source of supply from which a well located elsewhere on the contract area is producing unless such well conforms to the then existing well spacing pattern for such source of supply. The provisions of this Article shall have no application whatsoever to the drilling of the initial well described in Article VI.A., except: (a) as to Article VII.D.I. (Option No. 2), if selected, or (b) as to the reworking, deepening and plugging back of such initial well after if has been drilled to the depth specified in Article VI.A, if it shall thereafter prove to he a dry hole or, if initially completed for production, ceases to produce paying quantities.

Operations by Less Than All Parties. If Notwithstanding the foregoing, Operator shall not undertake any single project reasonably estimated to require an expenditure in excess of fifteen thousand dollars ($15,000.00) in the aggregate without the express written consent of the Drilling Parties as their respective interest appear in Annex "I". In the event Operator or other Drilling Party shall elect to drill another well on the Contract Area or to rework, deepen or plug back a dry hole or a well not producing in paying quantities reasonably estimated to require an expenditure in excess of fifteen thousand dollars ($15,000.00) in the aggregate and not otherwise agreed to by the Drilling Parties by separate agreement, shall give the other parties written notice of the proposed operation, specifying the work to be performed, the location, proposed depth, objective formation and the estimated cost of the operation. The parties so notified shall have thirty (30) days after the receipt of the notice within which to notify the party receiving such notice as provided wishing to do the work whether they elect to participate in Article VI.B.1 or VII.D.1 (Option Nothe cost of the proposed operation. 3) elects Failure of a party to reply within the period above fixed shall constitute an election by that party not to participate in the cost of the proposed operation, than . Any telephonic notice shall be confirmed in order to be entitled to the benefits of this Article, the party or parties giving the notice and such other parties as writing within seven (7) days. Operator shall elect to participate in the operation shall, within ninety (90) days after the expiration of the notice period of thirty (30) days (or as promptly as possible after the expiration of the twenty-four (24) hour period when drilling is on location, as the case may be) actually commence the proposed operation and complete it with due diligence, Operator stall perform all work for the account of the Consenting Parties; provided, however, if no drilling rig the Operator (or other equipment is en location, and if an affiliate of Operator vested with title in the Contract Area) is a Non-Consenting Party, the Consenting Parties shall either: (a) request Operator to perform the work required by such proposed operation for the account of the Consenting Parties, or (b) designate one (1) of the Consenting Parties as Operator to perform for the limited purpose of performing such work. Consenting Parties, when conducting Such operations on the Contract Area pursuant to this Article VI.B.2., shall comply be in compliance with all the terms and conditions of thus this agreement. If less than all parties approve any proposed operation, the proposing party, immediately after the expiration of the applicable notice period, shall advise the Consenting Parties of the total interest of the parties approving such operations operation and its recommendation recommendations as to whether the Consenting Parties should proceed with the operation as proposed. Each Consenting Party, within forty-eight (48) hours (exclusive of Saturday, Sunday and legal holidays) after receipt of such notice, Party shall advise the proposing party of its desire to (a) limit participation to such party's interest as shown on Exhibit Annex "AI" (4) or (b) to carry its proportionate part share of Non-Non- Consenting Parties' interests Parties interests, and failure to advise the proposing party shall be deemed an election under (a). In the event a drilling rig is on location, the time permitted for such a response shall not exceed a total of twenty-four hours (inclusive of Saturday, Sunday and legal holidays)to limit participation. The proposing party party, at its election, may withdraw such proposal if there is sufficient insufficient participation and shall promptly notify all parties of such decision. (See Annex "IV" for forfeiture provisions if operations are necessary to continue lease in force or to drill well.) The entire cost and risk of conducting such operations shall be borne by the Consenting Parties in the proportions they have elected to bear same under the terms of the preceding paragraph. Consenting Parties shall keep the leasehold estates involved in such operations free and clear of all liens and encumbrances of every kind created by or arising from the operations of the Consenting PartiesParties and shall hold Non-Consenting Parties harmless from all liabilities resulting therefrom. If such an operation results in a dry hole, the Consenting parties Parties shall plug and abandon the well and restore the surface location at t heir at. their sole cost, risk and expense. If any well drilled, reworked, deepened or plugged back under the provisions of this Article results article VI (C) result in a producer of oil and/or gas in paying quantities, the Consenting Parties shall complete and equip the well to produce at their sole cost and risk and the well shall then be turned over to Operator and shall be operated by it at the expense and for the account of the Consenting PartiesParties in accordance with this agreement, including Article VI (G) dealing with the abandonment of productive xxxxx. Upon commencement of operations for of the drilling, reworking, deepening or plugging back of any such well by Consenting Parties in accordance with the provisions of this Articlesubject well, each Non-Consenting Party shall be deemed to have relinquished to Consenting Parties, and the Consenting Parties shall own and be entitled to receive, is in proportion to their respective interests, all of such Non-Consenting Party’s interest 's Interest in the well and share of production therefrom until the proceeds of the sale of such share, calculated at the well, or market value thereof if such share is not sold, (after deducting production taxes, excise taxes, royalty, overriding royalty and other interests not excepted by Article III.D payable out of or measured by the production from such well accruing with respect to such interest until it reverts) shall equal the total of the following: (a) 200% of each such Non-Consenting party’s share of the cost any newly acquired surface equipment beyond the wellhead connections (including, but not limited to, stock tanks, separators, treaters, pumping equipment and piping), plus 100% of each such Non-Consenting Party's share of the cost of the operation of the well commencing with first production and continuing until each such Non-Consenting Party's relinquished interest shall revert to it under other provisions of this Article, it being agreed that each Non-Consenting Party's share of each costs and equipment will be that interest which would have been charitable to such therefrom. Each Non-Consenting Party had it participated shall then assign to the Consenting Party, in accordance with their respective interests therein and without warranty of any kind, as to title, or as to quantity, quality or fitness for use of the equipment and material, all of their interest in the well from and its equipment, free of mortgage or lien, together with their interest in the beginning leasehold estate as to the drilling unit of the operation; and (b) 50% well. There shall be no readjustment of that interest in the remaining portion of the costs and expenses of drillingContract Area. After the assignment, reworking, deepening, plugging back, testing and completing after deducting any cash contributions received under Article VIII.C and 500% of that portion of the cost of newly acquired equipment in the well (to and including the wellhead connections), which would have been chargeable to such Non-Consulting Parry if it had participated therein. An election not to participate to the drifting of the deepening of a well shall be deemed as election not to participate in any reworking or plugging back operation proposed in such a well, or portion thereof, to which the initial Non-Consent election applied that is conducted at any time prior to full recovery by the Consenting Parties of the Non-Consenting Party's recoupment account. Any such reworking or plugging back operation conducted during the recoupment period shall be deemed part of the cost of operation of said well and there shall he added to the sums to be recouped by the Consenting Parties one hundred percent (100%) of that portion of the costs of the reworking or plugging back operation which would have been chargeable to such Non-Consulting Party had it participated therein. If such a re-working or plugging back operation is proposed during such recoupment period, the provisions of this Article VI.B shall be applicable as between said Consenting Parties in said well. During the period of time Consenting Parties are entitled to receive Non-Consenting Party's share of production, or the proceeds therefrom, Consenting Parties shall he responsible for the payment of all production, severance, excise, gathering and other taxes and all royalty, and other burdens applicable to Non-Consenting Party's share of production not excepted by Article III.D. In the case of any reworking, plugging back or deeper drilling operation, the Consenting Parties shall be permitted to use free of cost, all casing, tubing and other equipment in the well, but the ownership of all such equipment shall remain unchanged; and upon abandonment of a well after such reworking, plugging back or deeper drilling, the Consenting Parties shall account for all such equipment to the owners thereof, with each party receiving its proportionate part in kind or in value, less cost of salvage. Within sixty (60) days after the completion of any operation under this Article, the party conducing the operation for the Consenting Parties shall furnish each Non-Consenting Party with an inventory of the equipment in and connected to the well, and an itemized statement of the cost of drilling, deepening, plugging back, testing, completing, and equipping the well for production, or, at its option, the operating party, in lieu of an itemized statement of such costs of operation, may submit a detailed statement of monthly xxxxxxxx. Each month thereafter, during the time the Consenting Parties are being reimbursed as provided above, the party conducting the operations for the Consenting Parties shall furnish the Non-Consenting Parties with the itemized statement of all costs and liabilities incurred shall have no further responsibility, liability or interest in the operation of the well, together with a statement of the quantity of oil and gas produced from it and the amount of proceeds realized or production from the sale of well or the well's working interest production during the preceding month. In determining the quantity of oil and gas produced during any month, Consenting Parties shall use industry accepted methods such as, but not limited to, metering or periodic well tests. Any amount realized from the sale or other disposition of equipment newly acquired in connection with any such operation which would have been owned in a Non-Consenting Party had it participated therein shall be credited against the total unreturned cost of the work done and of the equipment purchased in determining when the interest of such Non-Consenting Party shall revert to as above provided; and if there is a credit balance, it shall be paid to such Non-Consenting Party. If and when the Consenting Parties recover from a Non-Consenting Party's relinquished interest the amounts provided for above, the relinquished interest of such Non-Consenting Party shall automatically revert to it, and, from and after such reversion, such Non-Consenting Party shall own the same interest in such well, the material and equipment in or pertaining thereto, and the production therefrom as such Non-Consenting Party would have been entitled to had it participated in the drilling, reworking, deepening or plugging back of assigned area surrounding said well. Thereafter, All operations conducted under such Non-Consenting Party Drillsite shall be charged with and shall pay its proportionate part of the further costs of its operation of said well with remain subject to the terms of this agreement and the accounting procedure attached hereto, Notwithstanding the provisions of this Article VI.B.2agreement., it is agreed that without the mutual consent of all parties no xxxxx shall be completed in or produced from a source of supply from which a well located elsewhere on the contract area is producing unless such well conforms to the then existing well spacing pattern for such source of supply. The provisions of this Article shall have no application whatsoever to the drilling of the initial well described in Article VI.A., except: (a) as to Article VII.D.I. (Option No. 2), if selected, or (b) as to the reworking, deepening and plugging back of such initial well after if has been drilled to the depth specified in Article VI.A, if it shall thereafter prove to he a dry hole or, if initially completed for production, ceases to produce paying quantities.

Operations by Less Than All Parties. If 14.1 The Parties irrevocably agree to undertake the Minimum Work Commitment required by the terms of the Ecopetrol Contract or by the Operating Committee in accordance with this Agreement After satisfying the Minimum Work Commitment, any party receiving such notice as proposal by Operator or a Party to drill an Exploratory or Development Well shall be submitted to the Operating Committee for consideration in the manner provided in Article VI.B.1 3 hereof. Should such a proposal fail to receive the required vote of the Operating Committee then, within thirty (30) Days after the Operating Committee votes on such proposal, any Party or VII.D.1 Parties desiring to conduct such operations shall give notice in writing to all the Parties of their desire to do so, specifying the Sole Risk Program Description, and each other Party shall, within thirty (Option No30) Days after receipt of notice, give notice to all Parties, stating whether or not it desires to join in such operations. 3) elects not Each Party so giving notice that it desires to participate in such operation shall be a "Participating Party" for such purpose. If all Parties are Participating Parties, then such operation shall be conducted for the proposed Joint Account of the Parties under this Agreement and at such time as may be mutually agreed upon. If any Party receiving said notice of desire to conduct such operations shall notify the other Parties that it does not desire to join in such operation, than in order or shall fail to be entitled give notice to the benefits of this Article, the party or parties giving the notice and such other parties as shall elect to participate Parties in the operation shallmanner and within the period above provided, then such well or other operation, if drilled or conducted, shall be at the sole cost, risk and expense of the Participating Parties, in the proportion that their respective Participating Interests, bear to the sum of their Participating Interests. 14.2 Participating Parties shall arrange for the drilling by the Operator of any Sole Risk Well within ninety (90) days Days after the expiration end of the aforesaid notice period of thirty (30) days (Days, or within such longer period as promptly as possible after may be required to enable Operator to move in and rig up drilling equipment. Upon receipt of written request of Participating Parties, to be given to Operator at the expiration and of the twenty-four aforesaid notice period of thirty (2430) hour period when 30 of 112 31 Days, Operator shall drill such well at the sole cost, risk and expense of Participating Parties; provided that such drilling is on locationwill not interfere with Operator's due execution of a Program therefore adopted by the Operating Committee, in which event, Operator shall select an alternative time for drilling of said well subject to approval of Participating Parties and/or the Operating Committee, as may be required. Notwithstanding anything to the case may be) actually commence the proposed operation and complete it with due diligencecontrary in Article 14.1 herein, Operator stall perform all work shall have the option, if it is not a Participating Party therein, to elect not to act as Operator for said Sole Risk Well and the account Participating Parties shall elect one of themselves to act as Operator of the Consenting Parties; providedSole Risk Well by a majority vote of their Participating Interests. Notwithstanding any other provision of such Article 14.1, howeverit is agreed that no Party or Parties shall be entitled to drill a Sole Risk Exploratory Well until all Additional Obligatory Work shall have been completed. 14.3 If a Sole Risk Exploratory Well is drilled in accordance with the terms hereof, Operator, if no directed by Participating Parties, shall conduct appropriate tests of reasonable duration and shall furnish only the Participating Parties with a copy of all test data together with copies of all logs, analyses and other information obtained in connection with the drilling rig or other equipment is en location, and if Operator is of such well. If said Sole Risk Exploratory Well results in a Non-Consenting PartyDiscovery of Petroleum, the Consenting Participating Parties shall either: be entitled to receive One Hundred percent (a) request Operator to perform the work required by such proposed operation for the account of the Consenting Parties, or (b) designate one (1100%) of the Consenting Petroleum produced from the Sole Risk Exploratory Well and Fifty percent (50%) of the Petroleum attributable to the Non-Participating Parties produced from subsequent Joint Account wellx xx the Commercial Field associated with the Discovery until Participating Parties have received from the proceeds of sale thereof an amount equal to One Thousand percent (1000%) of the cost of drilling, completing and operating such well. 14.4 If a Sole Risk Development Well is completed as Operator to perform such work. Consenting Parties, when conducting operations on the Contract Area pursuant to this Article VI.B.2., shall comply with all terms and conditions a well producing or capable of thus agreement. If less than all parties approve any proposed operationproducing Petroleum, the proposing party, immediately after the expiration Participating Parties shall be entitled to receive one hundred percent (100%) of the applicable notice period, shall advise Petroleum produced from said well until Participating Parties have received from the Consenting Parties proceeds of sale of such Petroleum an amount equal to six hundred percent (600%) of the total interest drilling costs of such well, plus four hundred percent (400%) of the parties approving cost for surface facilities, transportation and infrastructure required to produce the Petroleum found in such operations well, plus one hundred percent (100%) of the cost of operating such facility during the reimbursement and its recommendation premium period provided for herein. Thereafter, such well shall become a jointly-owned well, as any well drilled for the Joint Account hereunder. 14.5 Prior to whether the Consenting Parties should proceed with abandonment of any Sole Risk well, each Party shall be given notice in writing of the operation as proposedintention to abandon such well. Each Consenting Party, within Party shall have a period of forty-eight (48) hours thereafter (exclusive or such additional time as any Party may reasonably request provided, that all costs attributable to such requested additional time shall be charged to the Party making such request) in which to elect to take over and deepen, plug back or rework and attempt to complete such well. If no Party elects to take over such well it shall be plugged and abandoned at the sole cost and risk of Saturdaythe Participating Parties. If any Parties elect to take over such well, Sunday all costs, expenses and legal holidaysother liabilities incurred in connection with such well from the date of such takeover shall be shared by such Parties in the proportions that their respective Participating Interests bear to the sums of their Participating Interests. All interests of any other Parties in such well shall be transferred and assigned to the Parties electing to take over such well without consideration or warranty. The Parties electing to take over such well shall promptly pay to transferors the latter's share of the salvage value of the material and equipment appurtenant to the well determined in accordance with the Accounting Procedure established as Exhibit "B" of the Ecopetrol Contract. 14.6 If any proposal for completing, deepening, plugging back, sidetracking, re-completing, or reworking a well drilled hereunder fails to receive the affirmative vote of the Parties in the Operating Committee for such proposals to proceed as set forth in Article 3 then, within thirty (30) Days after the vote on such proposal, any Party or Parties desiring to perform such work shall give notice in writing to all the Parties of their desire to perform such work, specifying the proposed work and estimated cost thereof, and each Party shall within thirty (30) Days after receipt of thereof, give notice to all Parties stating whether or not it desires to join in such notice, shall advise the proposing party of its desire work. Each Party giving notice as provided above that it desires to (a) limit participation to participate in such party's interest as shown on Exhibit "A" or (b) carry its proportionate part of Non-Consenting Parties' interests and failure to advise the proposing party work shall be deemed an election under (a)a "Participating Party" for such purpose. In If Parties holding Participating Interests sufficient to approve such work in accordance with Article 3 elect to join in such work then such work shall be done for the event Joint Account this Agreement; otherwise, the work shall be done at the sole cost, risk and expense of the Participating Parties, in the proportions that their respective Participating Interests bear to the sum of their Participating Interests. Where a drilling rig is on location, the time permitted for such a response shall not exceed a total of twenty-four hours (inclusive of Saturday, Sunday and legal holidays). The proposing party at its election, may withdraw such proposal if there is sufficient participation and shall promptly notify all parties of such decision. The entire cost and risk of conducting such operations shall borne by the Consenting Parties in the proportions they have elected to bear same under the terms of the preceding paragraph. Consenting Parties shall keep the leasehold estates involved in such operations free and clear of all liens and encumbrances of every kind created by or arising from the operations of the Consenting Parties. If such an operation results in a dry hole, the Consenting parties shall plug and abandon the well and restore the surface location at t heir sole cost, risk and expense. If any well drilled, reworked, deepened or plugged back under the provisions of this Article results in a producer of oil and/or gas in paying quantities, the Consenting Parties shall complete and equip the well to produce at their sole cost and risk and the well shall then be turned over to Operator and shall be operated by it at the expense and period for the account giving of the Consenting Parties. Upon commencement of operations for the drilling, reworking, deepening or plugging back of any such well by Consenting Parties in accordance with the provisions of this Article, each Non-Consenting Party shall be deemed to have relinquished to Consenting Parties, and the Consenting Parties shall own and be entitled to receive, is proportion to their respective interests, all of such Non-Consenting Party’s interest in the well and share of production therefrom until the proceeds of the sale of such share, calculated at the well, or market value thereof if such share is not sold, (after deducting production taxes, excise taxes, royalty, overriding royalty and other interests not excepted by Article III.D payable out of or measured by the production from such well accruing notice with respect to such interest until it reverts) shall equal the total of the following: (a) 200% of each such Non-Consenting party’s share of the cost any newly acquired surface equipment beyond the wellhead connections (including, but not limited to, stock tanks, separators, treaters, pumping equipment and piping), plus 100% of each such Non-Consenting Party's share of the cost of the operation of the well commencing with first production and continuing until each such Non-Consenting Party's relinquished interest shall revert to it under other provisions of this Article, it being agreed that each Non-Consenting Party's share of each costs and equipment will be that interest which would have been charitable to such Non-Consenting Party had it participated in the well from the beginning of the operation; and (b) 50% of that portion of the costs and expenses of drilling, reworkinga completion, deepening, plugging back, testing and completing after deducting any cash contributions received under Article VIII.C and 500% of that portion of the cost of newly acquired equipment sidetracking, recompleting or reworking operation shall be reduced to seventy-two (72) hours in each case. 14.7 If such operation results in the production of Petroleum from a well (to and including the wellhead connections)which is: a) An Exploratory Well, which would have been chargeable to such Non-Consulting Parry if it had participated therein. An election not to participate then with respect to the drifting of the deepening of a well shall be deemed as election not to participate in any reworking or plugging back operation proposed in such a well, or portion thereof, to which the initial Non-Consent election applied that is conducted at any time prior to full recovery by the Consenting Parties of the Non-Consenting Party's recoupment account. Any such reworking or plugging back operation conducted during the recoupment period shall be deemed part of the cost of operation of said well and there shall he added to the sums to be recouped by the Consenting Parties one hundred percent (100%) of that portion of the costs of the reworking or plugging back operation which would have been chargeable to such Non-Consulting Party had it participated therein. If such a re-working or plugging back operation is proposed during such recoupment periodPetroleum produced therefrom, the provisions of this Article VI.B 14.2 shall be applicable as between said Consenting Parties in said well. During the period of time Consenting Parties are entitled to receive Non-Consenting Party's share of productionapply, or the proceeds therefrommutatis mutandis, Consenting Parties shall he responsible for the payment of all production, severance, excise, gathering and other taxes and all royalty, and other burdens applicable to Non-Consenting Party's share of production not excepted by Article III.D. In the case of any reworking, plugging back or deeper drilling operation, the Consenting Parties shall be permitted to use free of cost, all casing, tubing and other equipment in the well, but the ownership of all such equipment shall remain unchanged; and upon abandonment of a well after such reworking, plugging back or deeper drilling, the Consenting Parties shall account for all such equipment to the owners thereof, with each party receiving its proportionate part in kind or in value, less cost of salvage. Within sixty operation (60including the penalty provided therein) days after the completion of any operation under this Article, the party conducing the operation for the Consenting Parties shall furnish each Non-Consenting Party with an inventory of the equipment in and connected to the well, extent that such operation and an itemized statement of the cost of drilling, deepening, plugging back, testing, completing, and equipping production relates to the well for productionas an Exploratory Well; b) Development Well, or, at its option, then with respect to the operating party, in lieu of an itemized statement of such costs of operation, may submit a detailed statement of monthly xxxxxxxx. Each month thereafter, during the time the Consenting Parties are being reimbursed as provided above, the party conducting the operations for the Consenting Parties shall furnish the Non-Consenting Parties with the itemized statement of all costs and liabilities incurred in the operation of the well, together with a statement of the quantity of oil and gas Petroleum produced from it and the amount of proceeds realized from the sale of the well's working interest production during the preceding month. In determining the quantity of oil and gas produced during any month, Consenting Parties shall use industry accepted methods such as, but not limited to, metering or periodic well tests. Any amount realized from the sale or other disposition of equipment newly acquired in connection with any such operation which would have been owned in a Non-Consenting Party had it participated therein shall be credited against the total unreturned cost of the work done and of the equipment purchased in determining when the interest of such Non-Consenting Party shall revert to as above provided; and if there is a credit balance, it shall be paid to such Non-Consenting Party. If and when the Consenting Parties recover from a Non-Consenting Party's relinquished interest the amounts provided for above, the relinquished interest of such Non-Consenting Party shall automatically revert to it, and, from and after such reversion, such Non-Consenting Party shall own the same interest in such well, the material and equipment in or pertaining thereto, and the production therefrom as such Non-Consenting Party would have been entitled to had it participated in the drilling, reworking, deepening or plugging back of said well. Thereafter, such Non-Consenting Party shall be charged with and shall pay its proportionate part of the further costs of its operation of said well with the terms of this agreement and the accounting procedure attached hereto, Notwithstanding the provisions of this Article VI.B.214.3 shall apply, mutatis mutandis, to the operation and the recovery of costs (including the penalty provided therein) to the extent that such operation and production relates to the well as a Development Well. 14.8 Any proposal by Operator or other Party, it is agreed that without the mutual consent for acquisition or construction of all parties no xxxxx Additional Major Facilities shall be completed in or produced from a source of supply from which a well located elsewhere on the contract area is producing unless such well conforms submitted to the then existing well spacing pattern Operating Committee in accordance with Article 3 hereof. Such proposal shall include, in reasonably sufficient detail, the specifications for the facilities, equipment and transportation to be acquired or constructed and the estimated cost thereof. If the Operating Committee initially fails to adopt such source proposal the Operating Committee shall meet again (not less than twenty (20) Days nor more than forty (40) Days thereafter) to reconsider and vote on such proposal. If, upon reconsideration, such proposal is adopted in accordance with Article 3.9 hereof, the acquisition or construction of supplysuch Additional Major Facilities shall be undertaken by Operator for the Joint Account. Provided, however, that any Party who voted against such proposal shall not be required to participate therein if such Party advises Operator within fifteen (15) Days after the adoption of such proposal of its intention not to participate. In such case, the Parties participating in the acquisition or construction of such Additional Major Facilities shall jointly bear the cost thereof and shall own such Additional Major Facilities in the proportion that the Participating Interest of each bears to the sums of their Participating Interests. The provisions Parties not participating in the acquisition or construction of this Article such Additional Major Facilities shall have no application whatsoever interest therein or right to the drilling of use thereof except on such terms and conditions as the initial well described in Article VI.A., except: (a) as to Article VII.D.I. (Option No. 2), if selected, or (b) as to the reworking, deepening and plugging back of such initial well after if has been drilled to the depth specified in Article VI.A, if it shall thereafter prove to he a dry hole or, if initially completed for production, ceases to produce paying quantitiesParties participating therein may specify.

Operations by Less Than All Parties. If any party receiving such notice as provided in Article VI.B.1 or VII.D.1 (Option NoVI.B.x. 3) elects not to participate in the proposed operation, than in order and the Operator nevertheless elects to be entitled to go forward with the benefits of this Article, the party or parties giving the notice and such other parties as shall elect to participate in the operation shall, within ninety (90) days after the expiration of the notice period of thirty (30) days (or as promptly as possible after the expiration of the twenty-four (24) hour period when drilling is on location, as the case may be) actually commence the proposed operation and complete it with due diligence, Operator stall perform all work for the account of the Consenting Parties; provided, however, if no drilling rig or other equipment is en location, and if Operator is a Non-Consenting Party, the Consenting Parties shall either: (a) request Operator to perform the work required by such proposed operation for the account of the Consenting Parties, or (b) designate one (1) of the Consenting Parties as Operator to perform such work. Consenting Parties, when conducting operations on the Contract Area pursuant to this Article VI.B.2., shall comply with all terms and conditions of thus agreement. If less than all parties approve any proposed operation, then the proposing partyOperator, immediately after the expiration of the applicable notice period, shall advise the Consenting Parties of the total interest of the parties approving such operations operation and its recommendation as to whether the Consenting Parties should proceed with the operation as proposed. Each Consenting Party, within fortytwenty-eight four (4824) hours (exclusive of Saturday, Sunday and legal holidays) after receipt of such notice, shall advise the proposing party Operator of its desire to (a) limit participation to such party's interest as shown on Exhibit "A" not participate in the proposed operation or (b) carry its proportionate part of Non-Consenting Parties' interests and failure ’ interest. Failure to advise the proposing party shall be deemed an election under (a). In the event a drilling rig is on location, the time permitted for such a response shall not exceed a total of twenty-four hours (inclusive of Saturday, Sunday and legal holidaysb). The proposing party Operator at its election, may withdraw such proposal if there is sufficient insufficient participation and shall promptly notify all parties of such decisiondecision in writing. The If less than all parties elect to participate in the proposed operation, and if the Operator elects to nevertheless go forward with the proposed operation, then (i) the entire cost and risk of conducting such operations shall be borne by the Consenting Parties Parties; and (ii) unless otherwise agreed to in writing by the proportions they have elected Operator, the Non-Consenting Party shall not be permitted to bear same under participate in any proposed operation located within a 640 acre block surrounding the terms of operation in which the preceding paragraph. Non-Consenting Parties shall keep the leasehold estates involved in such operations free and clear of all liens and encumbrances of every kind created by or arising from the operations of the Consenting PartiesParty declined to participate. If such an the operation results in a dry hole, the Consenting parties Parties shall plug and abandon the well and restore the surface location at t heir their sole cost, risk and expense. If any well drilled, reworked, deepened or plugged back under the provisions of this Article results in a producer of oil and/or gas in paying quantities, the Consenting Parties shall complete and equip the well to produce at their sole cost and risk and the well shall then be turned over to Operator and shall be operated by it at the expense and for the account of the Consenting Parties. Upon commencement of operations for the drilling, reworking, deepening or plugging back of any such well by Consenting Parties in accordance with the provisions of this Article, each Non-Consenting Party shall be deemed to have permanently relinquished to Consenting Parties, and the Consenting Parties shall own and be entitled to receive, is in proportion to their respective interests, all of such Non-Consenting Party’s interest in the well and share of production therefrom until the proceeds of the sale of such share, calculated at the well, or market value thereof if such share is not sold, (after deducting production taxes, excise taxes, royalty, overriding royalty and other interests not excepted by Article III.D payable out of or measured by the production from such well accruing with respect to such interest until it reverts) shall equal the total of the following: (a) 200% of each such Non-Consenting party’s share of the cost any newly acquired surface equipment beyond the wellhead connections (including, but not limited to, stock tanks, separators, treaters, pumping equipment and piping), plus 100% of each such Non-Consenting Party's share of the cost of the operation of the well commencing with first production and continuing until each such Non-Consenting Party's relinquished interest shall revert to it under other provisions of this Article, it being agreed that each Non-Consenting Party's share of each costs and equipment will be that interest which would have been charitable to such Non-Consenting Party had it participated in the well from the beginning of the operation; and (b) 50% of that portion of the costs and expenses of drilling, reworking, deepening, plugging back, testing and completing after deducting any cash contributions received under Article VIII.C and 500% of that portion of the cost of newly acquired equipment in the well (to and including the wellhead connections), which would have been chargeable to such Non-Consulting Parry if it had participated therein. An election not to participate to the drifting of the deepening of a well shall be deemed as election not to participate in any reworking or plugging back operation proposed in such a well, or portion thereof, to which the initial Non-Consent election applied that is conducted at any time prior to full recovery by the Consenting Parties of the Non-Consenting Party's recoupment account. Any such reworking or plugging back operation conducted during Parties shall have no right to any proceeds from the recoupment period shall be deemed part of the cost of operation of said well and there shall he added to the sums to be recouped by the Consenting Parties one hundred percent (100%) of that portion of the costs of the reworking or plugging back operation which would have been chargeable to such Non-Consulting Party had it participated therein. If such a re-working or plugging back operation is proposed during such recoupment period, the provisions of this Article VI.B shall be applicable as between said Consenting Parties in said well. During the period of time Consenting Parties are entitled to receive Non-Consenting Party's share of production, or the proceeds therefrom, Consenting Parties shall he be responsible for the payment of all production, severance, excise, gathering and other taxes taxes, and all royalty, overriding royalty and other burdens applicable to Non-Consenting Party's ’s share of production not excepted by Article III.D. In the case of any reworking, plugging back or deeper drilling operation, the Consenting Parties shall be permitted to use use, free of cost, all casing, tubing and other equipment in the well, but the ownership of all such equipment shall remain unchanged; and upon abandonment of a well after such reworking, plugging back or deeper drilling, the Consenting Parties shall account for all such equipment to the owners thereof, with each party receiving its proportionate part in kind or in value, less cost of salvage. Within sixty (60) days after the completion of any operation under this Article, the party conducing the operation for the Consenting Parties shall furnish each Non-Consenting Party with an inventory of the equipment in and connected to the well, and an itemized statement of the cost of drilling, deepening, plugging back, testing, completing, and equipping the well for production, or, at its option, the operating party, in lieu of an itemized statement of such costs of operation, may submit a detailed statement of monthly xxxxxxxx. Each month thereafter, during the time the Consenting Parties are being reimbursed as provided above, the party conducting the operations for the Consenting Parties shall furnish the Non-Consenting Parties with the itemized statement of all costs and liabilities incurred in the operation of the well, together with a statement of the quantity of oil and gas produced from it and the amount of proceeds realized from the sale of the well's working interest production during the preceding month. In determining the quantity of oil and gas produced during any month, Consenting Parties shall use industry accepted methods such as, but not limited to, metering or periodic well tests. Any amount realized from the sale or other disposition of equipment newly acquired in connection with any such operation which would have been owned in a Non-Consenting Party had it participated therein shall be credited against the total unreturned cost of the work done and of the equipment purchased in determining when the interest of such Non-Consenting Party shall revert to as above provided; and if there is a credit balance, it shall be paid to such Non-Consenting Party. If and when the Consenting Parties recover from a Non-Consenting Party's relinquished interest the amounts provided for above, the relinquished interest of such Non-Consenting Party shall automatically revert to it, and, from and after such reversion, such Non-Consenting Party shall own the same interest in such well, the material and equipment in or pertaining thereto, and the production therefrom as such Non-Consenting Party would have been entitled to had it participated in the drilling, reworking, deepening or plugging back of said well. Thereafter, such Non-Consenting Party shall be charged with and shall pay its proportionate part of the further costs of its operation of said well with the terms of this agreement and the accounting procedure attached hereto, Notwithstanding the provisions of this Article VI.B.2., it is agreed that without the mutual consent of all parties no xxxxx shall be completed in or produced from a source of supply from which a well located elsewhere on the contract area is producing unless such well conforms to the then existing well spacing pattern for such source of supply. The provisions of this Article shall have no application whatsoever to the drilling of the initial well described in Article VI.A., except: (a) as to Article VII.D.I. (Option No. 2), if selected, or (b) as to the reworking, deepening and plugging back of such initial well after if has been drilled to the depth specified in Article VI.A, if it shall thereafter prove to he a dry hole or, if initially completed for production, ceases to produce paying quantities.

Operations by Less Than All Parties. If any party receiving such a notice as provided in Article VI.B.1 VI.B.1. or VII.D.1 VII.D.1. (Option No. 32) elects not to participate in the proposed operation, than then, in order to be entitled to the benefits of this Article, the party or parties giving the notice and such the other parties as shall elect electing to participate in the operation shall, within ninety (90) days after the expiration of the notice period of thirty (30) days (or as promptly as possible after the expiration of the twentyforty-four eight (2448) hour period when a drilling rig is on location, as the case may be) actually commence the proposed operation and complete it with due diligence, . Operator stall shall perform all work for the account of the Consenting Parties; provided, however, if no drilling rig or other equipment is en on location, and if Operator is a Non-Consenting Party, the Consenting Parties shall either: (a) request Operator to perform the work required by such the proposed operation for the account of the Consenting Parties, or (b) designate one (1) of the Consenting Parties as Operator to perform such the work. Consenting Parties, when conducting operations on the Contract Area well pursuant to this Article VI.B.2., shall comply with all terms and conditions of thus agreementthis Agreement. If less than all parties approve any proposed operation, the proposing party, immediately after the expiration of the applicable notice period, shall advise the Consenting Parties of the total interest of the parties approving such operations the operation and its recommendation as to whether the Consenting Parties should proceed with the operation as proposed. Each Consenting Party, within forty-eight (48) hours (exclusive of Saturday, Sunday Sunday, and legal holidays) after receipt of such the notice, shall advise the proposing party of its desire to (a) limit participation to such the party's ’s interest as shown on Exhibit "“A" ” or (b) carry its proportionate part of the Non-Consenting Parties' interests ’ interests, and failure to advise the proposing party shall be deemed an election under (a). In the event a drilling rig is on location, the time permitted for such a response shall not exceed a total of twentyforty-four eight (48) hours (inclusive of Saturday, Sunday Sunday, and legal holidays). The proposing party party, at its election, may withdraw such the proposal if there is sufficient insufficient participation and shall promptly notify all parties of such that decision. The entire cost and risk of conducting such the operations shall be borne by the Consenting Parties in the proportions they have elected to bear same under the terms of the preceding paragraph. Consenting Parties shall keep the leasehold estates involved in such the operations free and clear of all liens and encumbrances of every kind created by or arising from the operations of the Consenting Parties. If such an operation results in a dry hole, the Consenting parties Parties shall plug and abandon the well and restore the surface location at t heir their sole cost, risk risk, and expense. If any the well drilled, is reworked, deepened or plugged back under the provisions of this Article and results in a producer of oil Oil and/or gas Gas in paying quantities, the Consenting Parties shall complete and equip the well to produce at their sole cost and risk risk, and the well shall then be turned over to Operator and shall be operated by it at the expense and for the account of the Consenting Parties. Upon On commencement of operations for the drilling, reworking, deepening deepening, or plugging back of any such the well by Consenting Parties in accordance with the provisions of this Article, each Non-Consenting Party shall be deemed to have relinquished to Consenting Parties, and the Consenting Parties shall own and be entitled to receive, is in proportion to their respective interests, all of such the Non-Consenting Party’s interest in the well and share of production therefrom until the proceeds of the sale of such share, calculated at the well, or market value thereof if such share is not sold, (after deducting production taxes, excise taxes, royalty, overriding royalty and other interests not excepted by Article III.D payable out of or measured by the production from such well accruing with respect to such interest until it reverts) shall equal the total of the following: (a) 200% of each such Non-Consenting party’s share of the cost any newly acquired surface equipment beyond the wellhead connections (including, but not limited to, stock tanks, separators, treaters, pumping equipment and piping), plus 100% of each such Non-Consenting Party's share of the cost of the operation of the well commencing with first production and continuing until each such Non-Consenting Party's relinquished interest shall revert to it under other provisions of this Article, it being agreed that each Non-Consenting Party's share of each costs and equipment will be that interest which would have been charitable to such Non-Consenting Party had it participated in the well from the beginning of the operation; and (b) 50% of that portion of the costs and expenses of drilling, reworking, deepening, plugging back, testing and completing after deducting any cash contributions received under Article VIII.C and 500% of that portion of the cost of newly acquired equipment in the well (to and including the wellhead connectionsi.e., “pay-to-play”), which would have been chargeable to such Non-Consulting Parry if it had participated therein. An election not to participate to in the drifting rework or deepening of the deepening of a well shall be deemed as an election not to participate in any reworking or plugging back operation proposed in such a well, or portion thereofof it, to which the initial Non-Consent election applied that is conducted at any time prior to full recovery by the Consenting Parties of the Non-Consenting Party's recoupment accountapplied. Any such reworking or plugging back operation conducted during the recoupment period shall be deemed part of the cost of operation of said well and there shall he added to the sums to be recouped by the Consenting Parties one hundred percent (100%) of that portion of the costs of the reworking or plugging back operation which would have been chargeable to such Non-Consulting Party had it participated therein. If such a re-working or plugging back operation is proposed during such recoupment period, the provisions of this Article VI.B shall be applicable as between said Consenting Parties in said well. During the period of time Consenting Parties are entitled to receive Non-Consenting Party's share of production, or the proceeds therefrom, Consenting Parties shall he responsible for the payment of all production, severance, excise, gathering and other taxes and all royalty, and other burdens applicable to Non-Consenting Party's share of production not excepted by Article III.D. In the case of any reworking, plugging back back, or deeper drilling operation, the Consenting Parties shall be permitted to use use, free of cost, all casing, tubing tubing, and other equipment in the well, but the ownership of all such that equipment shall remain unchanged; and upon on abandonment of a the well after such the reworking, plugging back or deeper drilling, the Consenting Parties shall account for all such the equipment to the owners thereofof it, with each party receiving its proportionate part in kind or in value, less cost of salvage. Within sixty (60) days after the completion of any operation under this Article, the party conducing the operation for the Consenting Parties shall furnish each Non-Consenting Party with an inventory of the equipment in and connected to the well, and an itemized statement of the cost of drilling, deepening, plugging back, testing, completing, and equipping the well for production, or, at its option, the operating party, in lieu of an itemized statement of such costs of operation, may submit a detailed statement of monthly xxxxxxxx. Each month thereafter, during the time the Consenting Parties are being reimbursed as provided above, the party conducting the operations for the Consenting Parties shall furnish the Non-Consenting Parties with the itemized statement of all costs and liabilities incurred in the operation of the well, together with a statement of the quantity of oil and gas produced from it and the amount of proceeds realized from the sale of the well's working interest production during the preceding month. In determining the quantity of oil Oil and gas Gas produced during any month, Consenting Parties shall use industry accepted methods such as, but not limited to, metering or periodic well tests. Any amount realized from the sale or other disposition of equipment newly acquired in connection with any such operation which would have been owned in by a Non-Consenting Party had it participated therein in the operation shall be credited against the total unreturned cost costs of the work done and of the equipment purchased in determining when the interest of such the Non-Consenting Party shall revert to it as above providedprovided above; and and, if there is a credit balance, it shall be paid to such the Non-Consenting Party. If and when the Consenting Parties recover from a Non-Consenting Party's relinquished interest the amounts provided for above, the relinquished interest of such Non-Consenting Party shall automatically revert to it, and, from and after such reversion, such Non-Consenting Party shall own the same interest in such well, the material and equipment in or pertaining thereto, and the production therefrom as such Non-Consenting Party would have been entitled to had it participated in the drilling, reworking, deepening or plugging back of said well. Thereafter, such Non-Consenting Party shall be charged with and shall pay its proportionate part of the further costs of its operation of said well with the terms of this agreement and the accounting procedure attached hereto, Notwithstanding the provisions of this Article VI.B.2., it is agreed that without the mutual consent of all parties no xxxxx shall be completed in or produced from a source of supply from which a well located elsewhere on the contract area is producing unless such well conforms to the then existing well spacing pattern for such source of supply. The provisions of this Article shall have no application whatsoever apply to the drilling of the initial well described in Article VI.A., excepteither: (a) as to Article VII.D.I. VII.D.1. (Option No. 2), if selected, or (b) as to the reworking, deepening and plugging back of such the initial well after if it has been drilled to the depth specified in Article VI.A, VI.A. if it shall thereafter later prove to he be a dry hole or, if initially completed for production, ceases to produce in paying quantities.

Operations by Less Than All Parties. If a project (other than the drilling of a well pursuant to Section 22) requires the consent of Participants holding a majority of the Units, Operator shall give the owners of the Working Interest written notice of the proposed project, specifying the work to be performed, the location, proposed depth, objective formation and the estimated cost of the project. The parties receiving such a notice shall have thirty (30) days (except as to reworking where a drilling rig is on location, the period shali be limited to forty-eight (48) hours exclusive of Saturday or Sunday) after receipt of the notice within which to notify the Operator whether they eiect to participate in the cost of the proposed project. Failure of a party receiving such a notice to so reply to it within the period above fixed shall constitute an election by that party not to participate in the cost of the proposed project. If the required consent is obtained, the project shali be commenced. If the required consent is not obtained, the project shall not be commenced; provided, however, if the subject Well is not then producing Products in Paying Quantities and the Operator does not reasonably believe the subject Well will produce Products in Paying Quantities absent performing the project, Operator may, in its sole discretion, plug and abandon such Well and invoice the owners of the Working interest for the costs and expenses of plugging and abandoning such Well. If any party receiving such a notice as provided in Article VI.B.1 or VII.D.1 (Option No. 3) with respect to a project elects not to participate in the proposed operationproject (such party or parties hereinafter referred to as /lNon-Consenting Party") and the required approval is obtained for commencing work on the project, than then in order to be entitled to the benefits of this ArticleSection, the party or parties giving the notice Operator and such other parties as shall elect to participate in the operation shallproject (all such parties being hereafter referred to as the "Consenting Parties") xxxxx, within ninety thirty (9030) days after the expiration of the notice period of thirty (30) days (or as promptly as possible after the expiration of the twenty48-four (24) hour period when where the drilling rig is on location, as the case may be) actually actuaily commence work on the proposed operation project and complete it with due diligence, Operator stall perform all work for the account of the Consenting Parties; provided, however, if no drilling rig or other equipment is en location, and if Operator is a Non-Consenting Party, the Consenting Parties shall either: (a) request Operator to perform the work required by such proposed operation for the account of the Consenting Parties, or (b) designate one (1) of the Consenting Parties as Operator to perform such work. Consenting Parties, when conducting operations on the Contract Area pursuant to this Article VI.B.2., shall comply with all terms and conditions of thus agreement. If less than all parties approve any proposed operation, the proposing party, immediately after the expiration of the applicable notice period, shall advise the Consenting Parties of the total interest of the parties approving such operations and its recommendation as to whether the Consenting Parties should proceed with the operation as proposed. Each Consenting Party, within forty-eight (48) hours (exclusive of Saturday, Sunday and legal holidays) after receipt of such notice, shall advise the proposing party of its desire to (a) limit participation to such party's interest as shown on Exhibit "A" or (b) carry its proportionate part of Non-Consenting Parties' interests and failure to advise the proposing party shall be deemed an election under (a). In the event a drilling rig is on location, the time permitted for such a response shall not exceed a total of twenty-four hours (inclusive of Saturday, Sunday and legal holidays). The proposing party at its election, may withdraw such proposal if there is sufficient participation and shall promptly notify all parties of such decision. The entire cost and risk of conducting such operations shall be borne by the Consenting Parties in the proportions they have elected that their respective interests in the Working Interest bear to bear same under the terms total interests in the Working Interest of the preceding paragraphall Consenting Parties. Consenting Parties shall xxxxx keep the leasehold estates involved in such operations free and clear of all liens and encumbrances of every kind created by or arising from the operations of the Consenting Parties. If such an operation results in a dry hole, the Consenting parties Operator shall plug and abandon the well and restore Well at the surface location at t heir sole cost, risk and expenseexpense of the Consenting Parties. If any well drilled, reworked, deepened or plugged back operation conducted under the provisions of this Article Section results in a producer production of oil and/or gas Products in paying quantitiesCommercial Quantities, the Consenting Parties shall Operator xxxxx complete and equip the well to produce Well or continue operation of the Well, as the case may be, at their sole the sale cost and risk of the Consenting Parties, and the well Well shall then be turned over to Operator and shall be operated by it at the expense and for the account of the Consenting Parties. Upon commencement of operations for the drilling, reworking, deepening or plugging back reworking of any such well the Well by Consenting Parties in accordance with the provisions of this ArticleSection, each Non-Consenting Party shall be deemed to have relinquished to Consenting Parties, and the Consenting Parties shall own and be entitled to receive, is in proportion to their respective interestsinterests (subject to any Operator's lien under Section 7), all of such Non-Consenting Party’s 's interest in the well Well, its leasehold operating rights, and share of production therefrom therefrom, until the proceeds of the sale of such share, calculated at the well, or market value thereof if such share is not sold, (after deducting production taxes, excise taxes, royalty, overriding royalty and other interests not excepted by Article III.D payable out of or measured by the production from such well the Well accruing with respect to such interest until it reverts) shall equal the total of the following: (a) 200100% of each such Non-Consenting party’s Party's share of the project cost of any newly acquired surface equipment Equipment beyond the wellhead well head connections (including, but not limited to, stock tanks, separators, treaters, pumping equipment and piping), pipingL plus 100% of each such Non-Consenting Party's share of the cost of the operation of the well Well commencing with first production and continuing until each such Non-Consenting Party's relinquished interest shall revert to it under other provisions of this ArticleSection, it being agreed that each Non-Consenting Party's share of each such costs and equipment will be that interest which would have been charitable chargeable to such Non-Consenting each NonConsenting Party had it participated in the well Well from the beginning of the operation; project: and (b) 50400% of that portion of the project costs and expenses of drilling, reworking, deepening, plugging back, testing and completing after deducting any cash contributions received under Article VIII.C completing, and 500400% of that portion of the project cost of newly acquired equipment Equipment in the well Well (to and including the wellhead connections), which would have been chargeable to such Non-Consulting Parry Consenting Party if it had participated therein. An election not to participate to the drifting of the deepening of a well shall be deemed as election not to participate in any reworking or plugging back operation proposed in such a well, or portion thereof, to which the initial Non-Consent election applied that is conducted at any time prior to full recovery by the Consenting Parties of the Non-Consenting Party's recoupment account. Any such reworking or plugging back operation conducted during the recoupment period shall be deemed part of the cost of operation of said well and there shall he added to the sums to be recouped by the Consenting Parties one hundred percent (100%) of that portion of the costs of the reworking or plugging back operation which would have been chargeable to such Non-Consulting Party had it participated therein. If such a re-working or plugging back operation is proposed during such recoupment period, the provisions of this Article VI.B shall be applicable as between said Consenting Parties in said well. During the period of time Consenting Parties are entitled to receive Non-Consenting Party's share of production, or the proceeds therefrom, Consenting Parties shall he responsible for the payment of all production, severance, excise, gathering and other taxes and all royalty, and other burdens applicable to Non-Consenting Party's share of production not excepted by Article III.D. In the case of any reworking, plugging back or deeper drilling operationreworking operations, the Consenting Parties shall be permitted to use use, free of cost, all casing, tubing tubing, and other equipment in the wellWell, but the ownership of all such equipment shall remain unchanged; : and upon abandonment of a well the Well after such reworking, plugging back or deeper drilling, reworking operations the Consenting Parties shall account for all such equipment Equipment to the owners thereof, with each party receiving its proportionate part in kind or in value, less cost of salvage. Within sixty (60) days after the completion of any operation under this Articlesection, the party conducing the operation for the Consenting Parties Operator shall furnish each Non-Consenting Party with an inventory of the equipment EqUipment in and connected to the wellWell, and an itemized statement of the cost of drilling, deepening, plugging backreworking, testing, completing, completing and equipping the well Well for production, ; or, at its option, the operating partyOperator, in lieu of an itemized statement of such costs of operation, may submit a detailed statement of monthly xxxxxxxx. Each month thereafter, during the time the Consenting Parties are being reimbursed as provided above, the party conducting the operations for the Consenting Parties shall furnish the Non-Consenting Parties Party with the an itemized statement of all costs and liabilities incurred in the operation of the wellWell, together with a statement of the quantity of oil and gas Products produced from it and the amount of proceeds realized from the sale of the well's working interest production Products produced from it during the preceding month. In determining the quantity of oil and gas produced during any month, Consenting Parties shall use industry accepted methods such as, but not limited to, metering or periodic well tests. Any amount realized from the sale or other disposition of equipment Equipment newly acquired in connection with any such operation which would have been owned in by a Non-Consenting Party had it participated therein herein shall be credited against the total unreturned cost costs of the work done and of the equipment purchased Equipment purchased, in determining when the interest of such Non-Consenting Party shall revert to it as above provided; and if there is a credit balance, it shall be paid to such Non-Consenting Party. If and when the Consenting Parties recover recover, from a Non-Consenting Party's relinquished interest interest, the amounts amount provided for above, the relinquished interest interests of such Non-Consenting Party shall party xxxxx automatically revert to it, and, it and from and after such reversion, reversion such Non-Consenting Party shall own the same interest in such wellthe Well, the operating rights and working interest therein, the material and equipment in or pertaining thereto, and the production therefrom as such Non-Consenting Party would have been entitled to owned had it participated in the drilling, reworking, deepening or plugging back reworking of said wellthe Well. Thereafter, such Non-Consenting Party shall be charged with and shall pay its proportionate part of the further costs of its the operation of said well the Well in accordance with the terms of this agreement Agreement and the accounting procedure Accounting Procedure schedule attached as an Exhibit "1" hereto, Notwithstanding the provisions of . All operations conducted pursuant to this Article VI.B.2., it is agreed that without the mutual consent of all parties no xxxxx Section 10 shall be completed conducted on a competitive contract basis at the usual rates prevailing in or produced from a source the area. The Operator may, if it so desires, employ its own tools and equipment at the prevailing rates in the field, and the rate of supply from which a well located elsewhere on such charges shall be agreed upon by the contract area is producing unless Consenting Parties in writing before operations are commenced, and such well conforms to work shall be performed by the then existing well spacing pattern for such source Operator under the same terms and conditions as shall be customary and usual in the field in contracts of supplyindependent contractors who are doing work of similar nature. The provisions of this Article Section 10 shall have no application whatsoever to the drilling of the any initial test well, but shall apply to a well described in Article VI.A., except: (a) as to Article VII.D.I. (Option No. 2), if selected, or (b) as to the reworking, deepening and plugging back of such initial well only after if it has been drilled to the depth specified Objective Formation and completed as a Commercial Well, and thereafter proves to be incapable of producing Products in Article VI.A, if it shall thereafter prove to he a dry hole or, if initially completed for production, ceases to produce paying quantitiesCommercial Quantities.

Operations by Less Than All Parties. If any party receiving such to whom appropriate notice is delivered as provided in Article VI.A.1 or VI.B.1 or VII.D.1 (Option No. 3) elects not to participate in the proposed operation, than in order to be entitled to the benefits of this Article, the party or parties giving the notice then Operator and such other parties as shall elect to participate in the proposed operation shall, within no later than ninety (90) days after the expiration of the notice period of thirty fifteen (3015) days (or as promptly as possible practicable after the expiration of the twentyforty-four eight (2448) hour period when a drilling rig is on location, as the case may be) actually commence the proposed operation and complete it with due diligence, . Operator stall shall perform all work for the account of the Consenting Participating Parties; provided. The term “proposed operation” shall include the drilling of any well and the completing, howeverrecompleting, if no drilling rig sidetracking, deepening or other equipment is en location, and if Operator is a Non-Consenting Party, the Consenting Parties shall either: (a) request Operator to perform the work required by such proposed operation for the account reworking of the Consenting Parties, or (b) designate one (1) of the Consenting Parties as Operator to perform such work. Consenting Parties, when conducting operations on the Contract Area pursuant to this Article VI.B.2., shall comply with all terms and conditions of thus agreementany well. If less than all parties approve any party elects not to participate in any proposed operation, the proposing party, immediately non-participating interest will be offered to the Participating Parties on a prorata basis. Immediately after the expiration of the applicable notice period, Operator shall advise the Consenting all Parties of the total interest of the parties approving such operations operation and its recommendation as to whether the Consenting Participating Parties should proceed with the operation as proposed. Each Consenting Participating Party, within forty-eight (48) hours (exclusive of including Saturday, Sunday and legal holidays) after receipt delivery of such notice, shall advise the proposing party Operator of its desire to (ai) limit participation to such party's ’s interest as shown on Exhibit "“A" ” or (bii) carry only its proportionate part (determined by dividing such party’s interest in the Contract Area by the interests of all Participating Parties in the Contract Area) of Non-Participating Parties’ interests, or (iii) carry its proportionate part [determined as provided in (ii)] of Non-Consenting Participating Parties' ’ interest together will all or a portion of its proportionate part of any Non-Participating Parties’ interests and failure that any Participating Party did not elect to take. Failure to advise the proposing party Operator within the time required shall be deemed an election under (ai). In the event a drilling rig is on location, notice may be given by telephone, and the time permitted for such a response shall not exceed a total of twentyforty-four eight (48) hours (inclusive of including Saturday, Sunday and legal holidays). IF A PARTY ELECTS NOT TO PARTICIPATE IN ANY PROPOSED OPERATION, THE NON-PARTICIPATING PARTY SHALL HAVE NO FURTHER RIGHT TO PARTICIPATE UNDER THIS AGREEMENT AS TO ANY UNDEVELOPED ACREAGE AND SHALL FURTHER HAVE NO RIGHT TO PARTICIPATE IN A SUBSEQUENTLY PROPOSED OPERATION AS TO A WELL, FOR WHICH THE COMPLETION, RECOMPLETION, REWORKING, DEEPENING OR SIDETRACKING IS PROPOSED. If such Non-Participating Party has made a prepayment for the completion and equipping of a well and then determines not to participate in the completion of the well, Operator shall promptly refund to such Non-Participating Party who relinquishes its interest at the time a proposed operation is proposed shall have no liability for the plugging of such well or for surface restoration operations and likewise shall forfeit any interest in the well or salvage value therefrom. If all or part of the non-participating interest is not assumed by the remaining Participating Parties, Operator shall be authorized to replace the Non-Participating Party with a Third Party as to any of the non participating interest not taken by participating parties and such Third Party shall be thereafter deemed a Participating Party. The proposing party Non-Participating Party shall reassign to Operator all of the remaining undeveloped acreage and shall also reassign the Operator the proration unit corresponding to the well, the completion, recompletion, reworking, deepening or sidetracking of which is proposed within fifteen (15) calendar days. In the event the Non-Participating Party fails to reassign to Operator all of the remaining undeveloped acreage and/or the proration unit mentioned in the preceding sentence within the fifteen (15) day limitation period provided for herein, Operator shall be deemed the attorney-in-fact for the Non-Participating Party with express authority to execute an assignment of such Non Participating Party’s interest in any undeveloped acreage and/or proration unit to Operator. Operator, at its election, may withdraw such its proposal for an additional operation if there is sufficient less than 100% participation and shall promptly notify all parties of such decisiondecision within ten (10) days, or within twenty four (24) hours if a drilling rig is on location, following expiration of the applicable response period. If 100% subscription to the proposed operation is obtained, either through the existing participants or by the inclusion of a third party or parties, Operator shall promptly notify the Participating Parties of their proportionate interests in the operation and Operator shall commence such operation within the period provided in Article VI.A.1, subject to the same extension right as provided therein. The entire cost and risk of conducting such operations shall be borne by the Consenting Participating Parties in the proportions they have elected to bear same under the terms of the preceding paragraph. Consenting Parties shall keep the leasehold estates involved in such operations free and clear of all liens and encumbrances of every kind created by or arising from the operations of the Consenting Parties. If such an operation results in a dry hole, the Consenting parties shall plug and abandon the well and restore the surface location at t heir sole cost, risk and expense. If any well drilled, reworked, deepened or plugged back under the provisions of this Article results in a producer of oil and/or gas in paying quantities, the Consenting Parties shall complete and equip the well to produce at their sole cost and risk and the well shall then be turned over to Operator and shall be operated by it at the expense and for the account of the Consenting Parties. Upon commencement of operations for the drilling, reworking, deepening or plugging back of any such well by Consenting Parties in accordance with the provisions of this Article, each Non-Consenting Party shall be deemed to have relinquished to Consenting Parties, and the Consenting Parties shall own and be entitled to receive, is proportion to their respective interests, all of such Non-Consenting Party’s interest in the well and share of production therefrom until the proceeds of the sale of such share, calculated at the well, or market value thereof if such share is not sold, (after deducting production taxes, excise taxes, royalty, overriding royalty and other interests not excepted by Article III.D payable out of or measured by the production from such well accruing with respect to such interest until it reverts) shall equal the total of the following: (a) 200% of each such Non-Consenting party’s share of the cost any newly acquired surface equipment beyond the wellhead connections (including, but not limited to, stock tanks, separators, treaters, pumping equipment and piping), plus 100% of each such Non-Consenting Party's share of the cost of the operation of the well commencing with first production and continuing until each such Non-Consenting Party's relinquished interest shall revert to it under other provisions of this Article, it being agreed that each Non-Consenting Party's share of each costs and equipment will be that interest which would have been charitable to such Non-Consenting Party had it participated in the well from the beginning of the operation; and (b) 50% of that portion of the costs and expenses of drilling, reworking, deepening, plugging back, testing and completing after deducting any cash contributions received under Article VIII.C and 500% of that portion of the cost of newly acquired equipment in the well (to and including the wellhead connections), which would have been chargeable to such Non-Consulting Parry if it had participated therein. An election not to participate to the drifting of the deepening of a well shall be deemed as election not to participate in any reworking or plugging back operation proposed in such a well, or portion thereof, to which the initial Non-Consent election applied that is conducted at any time prior to full recovery by the Consenting Parties of the Non-Consenting Party's recoupment account. Any such reworking or plugging back operation conducted during the recoupment period shall be deemed part of the cost of operation of said well and there shall he added to the sums to be recouped by the Consenting Parties one hundred percent (100%) of that portion of the costs of the reworking or plugging back operation which would have been chargeable to such Non-Consulting Party had it participated therein. If such a re-working or plugging back operation is proposed during such recoupment period, the provisions of this Article VI.B shall be applicable as between said Consenting Parties in said well. During the period of time Consenting Parties are entitled to receive Non-Consenting Party's share of production, or the proceeds therefrom, Consenting Parties shall he responsible for the payment of all production, severance, excise, gathering and other taxes and all royalty, and other burdens applicable to Non-Consenting Party's share of production not excepted by Article III.D. In the case of any reworking, plugging back or deeper drilling operation, the Consenting Parties shall be permitted to use free of cost, all casing, tubing and other equipment in the well, but the ownership of all such equipment shall remain unchanged; and upon abandonment of a well after such reworking, plugging back or deeper drilling, the Consenting Parties shall account for all such equipment to the owners thereof, with each party receiving its proportionate part in kind or in value, less cost of salvage. Within sixty (60) days after the completion of any operation under this Article, the party conducing the operation for the Consenting Parties shall furnish each Non-Consenting Party with an inventory of the equipment in and connected to the well, and an itemized statement of the cost of drilling, deepening, plugging back, testing, completing, and equipping the well for production, or, at its option, the operating party, in lieu of an itemized statement of such costs of operation, may submit a detailed statement of monthly xxxxxxxx. Each month thereafter, during the time the Consenting Parties are being reimbursed as provided above, the party conducting the operations for the Consenting Parties shall furnish the Non-Consenting Parties with the itemized statement of all costs and liabilities incurred in the operation of the well, together with a statement of the quantity of oil and gas produced from it and the amount of proceeds realized from the sale of the well's working interest production during the preceding month. In determining the quantity of oil and gas produced during any month, Consenting Parties shall use industry accepted methods such as, but not limited to, metering or periodic well tests. Any amount realized from the sale or other disposition of equipment newly acquired in connection with any such operation which would have been owned in a Non-Consenting Party had it participated therein shall be credited against the total unreturned cost of the work done and of the equipment purchased in determining when the interest of such Non-Consenting Party shall revert to as above provided; and if there is a credit balance, it shall be paid to such Non-Consenting Party. If and when the Consenting Parties recover from a Non-Consenting Party's relinquished interest the amounts provided for above, the relinquished interest of such Non-Consenting Party shall automatically revert to it, and, from and after such reversion, such Non-Consenting Party shall own the same interest in such well, the material and equipment in or pertaining thereto, and the production therefrom as such Non-Consenting Party would have been entitled to had it participated in the drilling, reworking, deepening or plugging back of said well. Thereafter, such Non-Consenting Party shall be charged with and shall pay its proportionate part of the further costs of its operation of said well with the terms of this agreement and the accounting procedure attached hereto, Notwithstanding the provisions of this Article VI.B.2., it is agreed that without the mutual consent of all parties no xxxxx shall be completed in or produced from a source of supply from which a well located elsewhere on the contract area is producing unless such well conforms to the then existing well spacing pattern for such source of supply. The provisions of this Article shall have no application whatsoever to the drilling of the initial well described in Article VI.A., except: (a) as to Article VII.D.I. (Option No. 2), if selected, or (b) as to the reworking, deepening and plugging back of such initial well after if has been drilled to the depth specified in Article VI.A, if it shall thereafter prove to he a dry hole or, if initially completed for production, ceases to produce paying quantities.