Common use of PROSPECT EVALUATION Clause in Contracts

PROSPECT EVALUATION. 4.1 Primary Prospect Well Cost Sharing. ----------------------------------- Chevron shall have the sole right and obligation to propose to Company the operations for the drilling of an Initial Test Well on the Primary Prospect listed on Exhibit "A". It is anticipated drilling operations will commence on or before December 1, 2006 for said Primary Prospect (Mussel Beach), subject, however, to receipt of all regulatory and permitting approvals, weather delay, delivery of materials, (e.g. pipe) and rig availability. When proposing an Initial Test Well for the Primary Prospect, Chevron shall provide Company, a formal AFE detailing the specifications of the well to be drilled for Company's information on or before thirty (30) days prior to commencement of actual drilling operations. The Parties will have and each undertakes, by the execution of this Agreement, the obligation to participate in the proportions provided for herein, but subject to those certain provisions of the applicable Operating Agreement and this Agreement, for the drilling of an Initial Test Well of the Primary Prospect listed on Exhibit "A" and further subject to Company's receipt of a formal Chevron AFE to drill the Initial Test Well for the Primary Prospect. For the Primary Prospect listed in Exhibit "A", Company will have and undertakes the obligation of paying a disproportionate share of the Well Costs for the Initial Test Well based on the Company BCP Interest for that Prospect as listed on Exhibit "A" until Casing Point or until one hundred twenty percent (120%) of the estimated funds to drill the Initial Test Well, whichever occurs first, as stated in the AFE provided by Chevron under this Article 4.1, have been spent in the drilling of the Initial Test Well. Upon the earlier of the two conditions stated directly above being met by Company, Company will have and will undertake the obligation of paying and bearing its share of any additional or further cost, risk or expense associated with the Initial Test Well to Casing Point, based on the Company ACP Interest for the Primary Prospect, upon which the Initial Test Well is located, and subject to Company retaining all of its Company BCP Interest obligations for that Prospect, including the obligation of Company to bear its share of the plug and abandonment costs at the Company BCP Interest if the Initial Test Well is not completed for production. The Parties will each have the option and election to participate in the drilling of a Substitute Well(s) for the Primary Prospect. Either Party may timely propose such Substitute Well. Should Company elect to participate in the drilling of a Substitute Well, Company's disproportionate spending obligation for that Prospect, as described in Article 4.1 above, will continue until Casing Point or until the cumulative and combined costs of the Initial Test Well and Substitute Well exceed one hundred twenty percent (120%) of the estimated funds to drill the Initial Test Well, whichever occurs first, as stated in the AFE provided by Chevron. The cost of any operation conducted thereafter will be shared by the participating Parties in the Substitute Well in accordance with the respective Company ACP Interest in the Substitute Well, except for the obligation of Company to bear its share of the plug and abandonment costs at the Company BCP Interest if the Substitute Well is not completed for production. Upon Company earning an Operating Rights interest assignment as described in Article 3.1 in the Primary Prospect, the provisions of the applicable Operating Agreement will control the rights, obligations, options and elections of the Parties thereafter for that particular Prospect. Should Company elect not to participate in the drilling of a Substitute Well for the Primary Prospect before earning rights in and to the Primary Prospect, as provided herein, Company's rights to earn an interest in that Prospect and this Agreement will terminate, effective with such election, and without the obligation of Chevron to drill such well, and Company will forfeit all unearned rights. Should Chevron or Company propose and should Chevron and Company elect to participate in a Substitute Well for the Primary Prospect, Chevron shall bear and pay only its Chevron BCP Interest share of the Well Cost of the Substitute Well for the Primary Prospect until Casing Point or until the Company's cumulative and combined costs of the Initial Test Well and Substitute Well exceed one hundred twenty percent (120%) of the estimated funds to drill the Initial Test Well, whichever occurs first, as stated in the AFE provided by Chevron. Thereafter Chevron's costs and risks will be borne in accord with the Chevron ACP Interest. Should Chevron elect not to participate in the drilling of a Substitute Well for the Initial Test Well for the Primary Prospect for a Substitute Well in which Company elects to participate, it shall offer to farmout as applicable, all of its interest in the Primary Prospect, as specified in Article 5, for that Primary Prospect. Failure by Chevron to timely make an election pursuant to the response periods provided in the applicable Operating Agreement will be deemed an election by Chevron to not participate in such operation and to farmout under Article 5.

PROSPECT EVALUATION. 4.1 Primary Prospect Well Cost Sharinga. Following the execution of the LOI, EPL executed a confidentiality agreement for itself and any consultant covering Farmoutor's North Flank of Bay Marcxxxx Xxxck 2 Field data and Farmoutee has committed a petroleum geologist and petroleum engineer ("evaluation team") and commenced evaluation, at Farmoutor's offices during Farmoutor's business hours, for the prospect generation of certain portions of the North Flank of Bay Marcxxxx Xxxck 2 Field within the Farmout Premises. ----------------------------------- Chevron FARMOUTEE agrees that the evaluation team will diligently pursue the prospect opportunities of the North Flank of the Bay Marcxxxx 0 Xield during Phase I but may terminate prospect generation after the earlier of two months of good faith prospecting or by August 31, 2000, whichever is the later, with notice to Farmoutor. Such termination shall have also terminate this Agreement as to any unearned rights or interests. b. During the sole field evaluation process, FARMOUTEE agrees that the evaluation team will interact and maintain regular and frequent discussions with and communicate its progress to Farmoutor, advising Farmoutor of its prospect generation efforts and identification of those prospect areas under evaluation. At the conclusion of prospect generation at the end of Phase I, Farmoutee shall, at no charge or cost to Farmoutor, provide originals of all notes, materials, prospect maps or other information generated of any kind to Farmoutor for any work or area or prospect not made subject to this Agreement. c. No assignment of interest or transfer of rights in the Agreement or the Farmout Premises or any Earned Area (as defined hereafter) may be made by Farmoutee without the prior consent of Farmoutor, which consent shall not be unreasonably withheld, however no further assignment may be made during Phase I. d. Following the acceptance of the LOI by Farmoutee, and in order to commence the technical evaluation and prospect generation process in Phase I, FARMOUTEE agrees to make its own arrangements to gain access or obtain a use license to certain speculative 3D seismic data covering certain areas of the North Flank of Bay Marcxxxx Xxxck 2 Field and that it shall be denied access to such data by Farmoutor until Farmoutor is satisfied that Farmoutee has obtained rights to such license or the right of use to the data. Failure by FARMOUTEE to conclude arrangements to gain access to the data will not effect the Phase I two-well farmout obligation undertaken by Farmoutee and shall not extend FARMOUTEE's prospecting rights period defined above or effect the rights and obligation to propose to Company the operations for the drilling of an Initial Test Well on the Primary Prospect listed on Exhibit "A". It is anticipated drilling operations will commence on or before December 1, 2006 for said Primary Prospect (Mussel Beach), subject, however, to receipt of all regulatory and permitting approvals, weather delay, delivery of materials, (e.g. pipe) and rig availability. When proposing an Initial Test Well for the Primary Prospect, Chevron shall provide Company, a formal AFE detailing the specifications of the well to be drilled for Company's information on or before thirty (30) days prior to commencement of actual drilling operations. The Parties will have and each undertakes, by the execution of this Agreement, the obligation to participate in the proportions provided for herein, but subject to those certain provisions of the applicable Operating Agreement and this Agreement, for the drilling of an Initial Test Well of the Primary Prospect listed on Exhibit "A" and further subject to Company's receipt of a formal Chevron AFE to drill the Initial Test Well for the Primary Prospect. For the Primary Prospect listed in Exhibit "A", Company will have and undertakes the obligation of paying a disproportionate share of the Well Costs for the Initial Test Well based on the Company BCP Interest for that Prospect as listed on Exhibit "A" until Casing Point or until one hundred twenty percent (120%) of the estimated funds to drill the Initial Test Well, whichever occurs first, as stated in the AFE provided by Chevron under this Article 4.1, have been spent in the drilling of the Initial Test Well. Upon the earlier of the two conditions stated directly above being met by Company, Company will have and will undertake the obligation of paying and bearing its share of any additional or further cost, risk or expense associated with the Initial Test Well to Casing Point, based on the Company ACP Interest for the Primary Prospect, upon which the Initial Test Well is located, and subject to Company retaining all of its Company BCP Interest obligations for that Prospect, including the obligation of Company to bear its share of the plug and abandonment costs at the Company BCP Interest if the Initial Test Well is not completed for production. The Parties will each have the option and election to participate in the drilling of a Substitute Well(s) for the Primary Prospect. Either Party may timely propose such Substitute Well. Should Company elect to participate in the drilling of a Substitute Well, Company's disproportionate spending obligation for that Prospect, as described in Article 4.1 above, will continue until Casing Point or until the cumulative and combined costs of the Initial Test Well and Substitute Well exceed one hundred twenty percent (120%) of the estimated funds to drill the Initial Test Well, whichever occurs first, as stated in the AFE provided by Chevron. The cost of any operation conducted thereafter will be shared by the participating Parties in the Substitute Well in accordance with the respective Company ACP Interest in the Substitute Well, except for the obligation of Company to bear its share of the plug and abandonment costs at the Company BCP Interest if the Substitute Well is not completed for production. Upon Company earning an Operating Rights interest assignment as described in Article 3.1 in the Primary Prospect, the provisions of the applicable Operating Agreement will control the rights, obligations, options and elections of the Parties thereafter for that particular Prospect. Should Company elect not to participate in the drilling of a Substitute Well for the Primary Prospect before earning rights in and to the Primary Prospect, as provided herein, Company's rights to earn an interest in that Prospect and this Agreement will terminate, effective with such election, and without the obligation of Chevron to drill such well, and Company will forfeit all unearned rights. Should Chevron or Company propose and should Chevron and Company elect to participate in a Substitute Well for the Primary Prospect, Chevron shall bear and pay only its Chevron BCP Interest share of the Well Cost of the Substitute Well for the Primary Prospect until Casing Point or until the Company's cumulative and combined costs of the Initial Test Well and Substitute Well exceed one hundred twenty percent (120%) of the estimated funds to drill the Initial Test Well, whichever occurs first, as stated in the AFE provided by Chevron. Thereafter Chevron's costs and risks will be borne in accord with the Chevron ACP Interest. Should Chevron elect not to participate in the drilling of a Substitute Well for the Initial Test Well for the Primary Prospect for a Substitute Well in which Company elects to participate, it shall offer to farmout as applicable, all of its interest in the Primary Prospect, as specified in Article 5, for that Primary Prospect. Failure by Chevron to timely make an election pursuant to the response periods provided in the applicable Operating Agreement will be deemed an election by Chevron to not participate in such operation and to farmout under Article 5Phase II wellx.

PROSPECT EVALUATION. 4.1 Primary Package Prospect Well Cost Sharing. ----------------------------------- ------------------------------------------ Chevron shall will have the sole right and obligation to propose to Company the operations for Ridgewood the drilling of an Initial Test Well on the Primary Prospect Package Prospects listed on Exhibit "A". A." It is anticipated drilling operations will commence on or before December 1by November 30, 2005 for the Bristol Prospect and in the IS` quarter 2006 for said Primary Prospect (Mussel Beach), subject, however, the Satellite Prospect; however Chevron is only obligated to receipt propose such wells during the term of all regulatory the Leases and permitting approvals, weather delay, delivery of materials, (e.g. pipe) and rig availabilityis not committed to any ordex xx exact date. When proposing an Initial Test Well for the Primary Prospecta well, Chevron shall will provide CompanyRidgewood, a formal an AFE detailing the specifications of the well to be drilled for Company's information on or before thirty (30) days prior to commencement of actual drilling operationsinformational purposes only. The Parties will have and each undertakes, by the execution of this Agreement, the obligation to participate in participate, pursuant to the proportions provided for herein, but subject to those certain provisions of the applicable Operating Agreement and this Agreement, for in the drilling of an Initial Test Well on each of the Primary Prospect Package Prospects listed on Exhibit "AA." and further subject to Company's receipt of a formal Chevron AFE to drill the Initial Test Well for the Primary Prospect. For the Primary Prospect listed in each Exhibit "A"" Prospect drilled, Company Ridgewood will have and undertakes the obligation of paying a disproportionate contribution towards Chevron's share of the Well Costs for (pursuant to Section 3.2) plus a share of the Initial Test Well based on the Company Ridgewood BCP Interest for that Prospect as listed on Exhibit "A" until Casing Point or until one hundred twenty percent (120%) % of the estimated funds to drill the Initial Test Well, whichever occurs first, Well as stated in the original AFE provided by Chevron under this Article 4.1, have been spent in the drilling of to drill the Initial Test Well, as required for the Ridgewood ACP Interest assignment pursuant to Section 3.1. Upon earning an interest assignment for the earlier of the two conditions stated directly above being met by CompanyProspect, Company Ridgewood will have and will undertake the obligation of paying and bearing its a share of any additional or further cost, risk or expense cost associated with the Initial Test Well to Casing Point, based on the Company Ridgewood ACP Interest for the Primary Prospect, Lease upon which the Initial Test Well is located, and subject to Company retaining all of its Company BCP Interest obligations for that Prospect, including the obligation of Company to bear its share of applicable provisions stated in the plug and abandonment costs at the Company BCP Interest if the Initial Test Well is not completed for productioncontrolling Operating Agreement. The Parties will each shall have the option and election to participate in the drilling of a Substitute Well(s) for the Primary Prospect. Either Party may timely propose such Substitute Well). Should Company Ridgewood elect to participate in the drilling of a Substitute Well, Companyupon Ridgewood earning an interest assignment as described in Article 3.1 herein, Ridgewood's disproportionate spending obligation will have been satisfied for that Prospect, as described in Article 4.1 above, will continue until Casing Point or until particular Prospect and the cumulative and combined costs of the Initial Test Well and Substitute Well exceed one hundred twenty percent (120%) of the estimated funds to drill the Initial Test Well, whichever occurs first, as stated in the AFE provided by Chevron. The cost of any operation conducted thereafter will shall be shared by the participating Parties in the Substitute Well in accordance with the respective Company Ridgewood ACP Interest in the Substitute Well, except for the obligation of Company to bear its share of the plug and abandonment costs at the Company BCP Interest if the Substitute Well is not completed for production. Upon Company Ridgewood earning an Operating Rights interest assignment as described in Article 3.1 in the Primary each Prospect, the provisions of the applicable Operating Agreement will shall control the rights, obligations, obligations and options and elections of the Parties thereafter for that particular Prospect. Should Company Ridgewood elect not to participate in the drilling of a Substitute Well for the Primary Prospect before earning rights in and to the Primary Prospect, a Prospect as provided herein, CompanyRidgewood's rights to earn an interest in that Prospect or the remaining Prospect area shall terminate if such well is drilled as proposed. In addition, should Ridgewood fail to participate in a Substitute Well before earning all the interest in a Prospect as described herein, the non-consent provisions of the applicable Operating Agreement shall not apply to the non-jointly owned interest in such Substitute Well and this Agreement Ridgewood will terminatehave no right to use of such Substitute Well as to the unearned, effective with such election, and without non jointly owned interest unless mutually agreed upon by the obligation of Chevron to drill such well, and Company will forfeit all unearned rightsParties. Should Chevron or Company propose and should Chevron and Company elect to participate in a Substitute Well for the Primary ProspectWell, Chevron shall bear and will pay only its Chevron BCP Interest a share of the Well Cost of the Substitute Well for based on the Primary Prospect until Casing Point or until the Company's cumulative and combined costs residual portion of the Initial Test Well and Substitute Well exceed one hundred twenty percent (120%) of the estimated funds to drill the Initial Test Well, whichever occurs first, as stated in the AFE provided Cost not being paid by Chevron. Thereafter Chevron's costs and risks will be borne in accord with the Chevron ACP InterestRidgewood or any Co-Working Interest Owner. Should Chevron elect not to participate in the drilling of a Substitute Well for the Initial Test Well for the Primary Prospect for a Substitute Well in which Company elects to participateWell, it shall offer to will farmout as applicable, all a portion of its interest in the Primary Prospectto Ridgewood, as specified in Article 5, for that Primary Prospectas to all depths not previously earned by Ridgewood pursuant to the drilling of the Initial Test Well. Failure by Chevron to timely make an election pursuant to the response periods provided in the applicable Operating Agreement will shall be deemed an election by Chevron not to not participate in such operation and to farmout under Article 5. As to any depths previously earned by Ridgewood, a Party's election not to participate in such Substitute Well shall be in accordance with the provisions of the applicable Operating Agreement. The provisions of Article 5 shall apply to any farmout. Notwithstanding anything herein to the contrary, on any Substitute Well being proposed on a Prospect where the Initial Test Well discovered a Reservoir, a Party will have the right and option to limit its participation in the drilling of any Substitute Well to those depths in the Available Acreage for that Prospect previously drilled in the original Initial Test Well.