Common use of Parties’ Interests Clause in Contracts

Parties’ Interests. (a) At any point in the development program outlined above, if total drilling, completion, and any other necessary costs incurred equal Torchlight’s contributions under Section 2.2 (e), (g), and (h), Torchlight and Ring will become equal owners in the Subject Acreage, this Agreement will terminate in accordance with Article VI, and further development and operation of the Subject Acreage will be according to the terms of the JOA. (b) If, after the Second Program is concluded, total drilling, completion, and any other necessary costs incurred are less than Ring’s Costs, then the parties will drill additional xxxxx until Torchlight’s payments to Ring are exhausted. At that point, Torchlight will become an equal owner with Ring in the Subject Acreage, this Agreement will terminate in accordance with Article VI, and any further development and operation will be according to the terms of the JOA. (c) If Torchlight fails to make payment according to Section 2.2 (e), (g), and (h), then Torchlight will earn only a 50% interest in the proration unit attributable to each well drilled and completed. (d) Unless and until Torchlight becomes an equal owner in the Subject Acreage, the Subsequent Operations provisions of the JOA with respect to Operations by Less than All Parties, Article VI, will not apply. (e) For each lease included in the Subject Acreage, Ring will assign 50% of its interest in the lease. (Ring owns approximately 80% Net Revenue Interest (“NRI”) in each lease.)