Common use of Taking Production in Kind Clause in Contracts

Taking Production in Kind. Each party shall have the right to take in kind or separately dispose of its proportionate share of all Gas produced from the Contract Area, exclusive of production which may be used in development and producing operations and in preparing and treating Oil and Gas for marketing purposes and production unavoidably lost. Any extra expenditure incurred in the taking in kind or separate disposition by any party of its proportionate share of the production shall be borne by such party. Any party taking its share of production in kind shall be required to pay for only its proportionate share of such part of Operator’s surface facilities which it uses. To the extent reasonably possible, the parties will agree on the joint marketing of the oil produced from the Contract Area. Each party shall execute such division orders and contracts as may be necessary for the sale of its interest in production from the Contract Area, and, except as provided in Article VII.B., shall be entitled to receive payment directly from the purchaser thereof for its share of all production. If any party fails to make the arrangements necessary to take in kind or separately dispose of its proportionate share of the Oil produced from the Contract Area, Operator shall have the right, subject to the revocation at will by the party owning it, but not the obligation, to purchase such Oil or sell it to others at any time and from time to time, for the account of the non-taking party. Any such purchase or sale by Operator may be terminated by Operator upon at least ten (10) days written notice to the owner of said production and shall be subject always to the right of the owner of the production upon at least ten (10) days written notice to Operator to exercise at any time its right to take in kind, or separately dispose of, its share of all Oil not previously delivered to a purchaser. Any purchase or sale by Operator of any party’s share of Oil shall be only for such reasonable periods of time as are consistent with the minimum needs of the industry under the particular circumstances, but in no event for a period in excess of one (1) year without the consent of all of the parties hereto. Any such sale by Operator shall be in a manner commercially reasonable under the circumstances. The sale or delivery by Operator of a non-taking party’s share of Oil under the terms of any existing contract of Operator shall not give the non-taking party any interest in or make the non-taking party a party to said contract. No purchase shall be made by Operator without first giving the non-taking party at least ten (10) days written notice of such intended purchase and the price to be paid or the pricing basis to be used. All parties shall give timely written notice to Operator of their Gas marketing arrangements for the following month, excluding price, and shall notify Operator immediately in the event of a change in such arrangements. Operator shall maintain records of all marketing arrangements, and of volumes actually sold or transported, which records shall be made available to Non-Operator upon reasonable request. Operator shall give notice to all parties of the first sale of Gas from any well under this Agreement.

Taking Production in Kind. Each party shall have the right to take in kind or separately dispose of its proportionate share of all Gas oil and gas produced from the Contract Area, exclusive of production which may be used in development and producing operations and in preparing and treating Oil and Gas for marketing purposes and production unavoidably lost. Any extra expenditure incurred in the taking in kind or separate disposition by any party of its proportionate share of the production shall be borne by such party. Any party taking its share of production in kind shall be required to pay for only its proportionate share of such part of Operator’s 's surface facilities which it uses. To the extent reasonably possible, the parties will agree on the joint marketing of the oil produced from the Contract Area. Each party shall execute such division orders and contracts as may be necessary for the sale of its interest in production from the Contract Area, and, except as provided in Article VII.B.VII hereof, shall be entitled to receive payment directly from the purchaser thereof for its share of all production. If In the event any party fails shall fail to make the arrangements necessary to take in kind or separately dispose of its proportionate share of the Oil oil and gas produced from the Contract Area, Operator shall have the right, subject to the revocation at will by the party owning it, but not to act as such party's agent for the obligation, to purchase such Oil or sell purpose of selling it to others at any time and from time to time, for the account of the non-taking partyparty at the contract price agreed to by Operator and the purchaser thereof. Any such purchase or sale by Operator may be terminated by Operator upon at least ten (10) days written notice to the owner of said production and shall be subject always to the right of the owner of the production upon at least ten (10) days written notice to Operator to exercise at any time its right to take in kind, or separately dispose of, its share of all Oil not previously delivered to a purchaser. Any purchase or sale by Operator of any other party’s 's share of Oil oil or gas shall be only for such reasonable periods of time as are consistent with the minimum needs of the industry under the particular circumstancesneeds, but in no event for a period in excess of more than one (1) year year. Operator shall under no circumstances make a sale into interstate commerce of any other party's share of gas production without first giving such party thirty (30) days notice of such intended sale. E. Access to Contract Area and Information: Each party shall have access to the consent Contract Area at all reasonable times at it sole cost and risk to inspect or observe operations, and shall have access at reasonable times to information pertaining to the development or operation thereof, including Operator's books and records relating thereto. F. Surplus Material and Equipment: Materials and equipment acquired pursuant hereto, which in the judgment of all Operator are not necessary for the development and operation of the Contract Area, may be sold by Operator for the joint account to any of the parties hereto, to others, or to itself for operations unrelated to the Contract Area, at a price determined in accordance with the Accounting Procedure, set forth in Annex "II", attached hereto. Any such sale by Operator shall be in a manner commercially reasonable under the circumstances. The sale or delivery by Operator of a non-taking party’s share of Oil under the terms of any existing contract of Operator shall not give the non-taking party any interest in or make the non-taking party a party to said contract. No purchase Proper charges and credit shall be made by Operator without first giving as provided in such Accounting Procedure. G. Abandonment of Dry Holes and Xxxxx that have Produced. Except for any well in which a Non-Consent operation has been conducted hereunder which may be plugged and abandoned in accordance with Article VI (C) hereof, any well which has been drilled, reworked, deepened, or plugged back pursuant to this agreement on the Contract Area and, in the sole discretion of the Operator, is considered a dry hole or has been completed as a producer but has become non-taking commercial, shall be plugged and abandoned by the Operator without the prior knowledge and consent of the Drilling Parties. All such xxxxx shall be plugged and abandoned in accordance with applicable rules and regulations governing such activities and at the cost, risk and expense of the parties who participated in the cost of drilling and/or deepening such well in proportion to their ownership in the Contract Area. In the event a party at least ten (10) days written notice not subject to this agreement wishes to take over operations from the Drilling Parties of a well deemed by Operator to be a dry hole or non-commercial, such intended purchase party shall tender to the Operator on behalf of all Drilling Parties the value of the well's salvageable material and equipment, less the estimated cost of salvaging and the price estimated cost of plugging and abandoning as determined by the Operator, such funds to be paid treated as a credit to the joint account of the Drilling Parties in accordance with the provisions of Accounting Procedure attached hereto as Annex "II". At the request of Operator, each Drilling Party shall then assign to such party, 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 and its equipment, free of mortgage or lien, together with their interest in the leasehold estate as to the drilling unit of the subject well. These assignments shall have no effect upon the interest in the remaining portion of the Contract Area. After the assignment, the Drilling Party shall have no further responsibility, liability or interest in the operation of or production from the well or the pricing basis assigned area surrounding said well and the assigned area shall cease to be usedoperated in accordance with the terms of this agreement. All parties shall give timely written notice to Operator of their Gas marketing arrangements for the following month, excluding price, and shall notify Operator immediately in the event of a change in such arrangements. Operator shall maintain records of all marketing arrangements, and of volumes actually sold or transported, which records shall be made available to Non-Operator upon reasonable request. Operator shall give notice to all parties of the first sale of Gas from any well under this AgreementARTICLE VII.

Taking Production in Kind. ¨ Option No. 1: Gas Balancing Agreement Attached Each party shall have the right to take in kind or separately dispose of its proportionate share of all Oil and Gas produced from the Contract Area, exclusive of production which may be used in development and producing operations and in preparing and treating Oil and Gas for marketing purposes and production unavoidably lost. Any extra expenditure incurred in the taking in kind or separate disposition by any party of its proportionate share of the production shall be borne by such that party. Any party taking its share of production in kind shall be required to pay for only its proportionate share of such the part of Operator’s surface facilities which it uses. To the extent reasonably possible, the parties will agree on the joint marketing of the oil produced from the Contract Area. Each party shall execute such division orders and contracts as may be necessary for the sale of its interest in production from the Contract Area, and, except as provided in Article VII.B., shall be entitled to receive payment directly from the purchaser thereof for its share of all production. If any party fails to make the arrangements necessary to take in kind or separately dispose of its proportionate share of the Oil produced from the Contract Area, Operator shall have the right, subject to the revocation at will by the party owning it, but not the obligation, to purchase such the Oil or sell it to others at any time and from time to time, for the account of the non-taking party. Any such purchase or sale by Operator may be terminated by Operator upon on at least ten (10) days written notice to the owner of said the production and shall be subject always to the right of the owner of the production upon production, on at least ten (10) days written notice to Operator to exercise at any time its right to take in kind, or separately dispose of, its share of all Oil not previously delivered to a purchaser. Any purchase or sale by Operator of any other party’s share of Oil shall be only for such the reasonable periods of time as are consistent with the minimum needs of the industry under the particular circumstances, but in no event for a period in excess of one (1) year without the consent of all of the parties heretoyear. Any such sale by Operator shall be in a manner commercially reasonable under the circumstancescircumstances but Operator shall have no duty to share any existing market or to obtain a price equal to that received under any existing market. The sale or delivery by Operator of a non-taking party’s share of Oil under the terms of any existing contract of Operator shall not give the non-taking party any interest in or make the non-taking party a party to said the contract. No purchase shall be made by Operator without first giving the non-taking party at least ten (10) days written notice of such the intended purchase and the price to be paid or the pricing basis to be used. All parties shall give timely written notice to Operator of their Gas marketing arrangements for the following month, excluding price, and shall notify Operator immediately in the event of a change in such marketing arrangements. Operator shall maintain records of all marketing arrangements, and of volumes actually sold or transported, which records shall be made available to Non-Operator upon Operators on reasonable request. In the event one or more parties’ separate disposition of its share of the Gas causes split-stream deliveries to separate pipelines and/or deliveries which on a day-to-day basis for any reason are not exactly equal to a party’s respective proportionate share of total Gas sales to be allocated to it, the balancing or accounting between the parties shall be in accordance with any Gas balancing agreement between the parties, whether such an agreement is attached as Exhibit “E” or is a separate agreement. Operator shall give notice to all parties of the first sale sales of Gas from any well under this Agreementagreement.

Taking Production in Kind. Gas Balancing Terms Attached Each party Party shall have the right to take in kind or separately dispose of its proportionate share of all Oil and Gas produced from the Contract Area, exclusive of production which may be used in development and producing operations and in preparing and treating Oil and Gas for marketing purposes and production unavoidably lost. Any extra expenditure incurred in the taking in kind or separate disposition by any party Party of its proportionate share of the production shall be borne by such partythat Party. Any party Party taking its share of production in kind shall be required to pay for only its proportionate share of such the part of Operator’s surface facilities which it uses. To the extent reasonably possible, the parties will agree on the joint marketing of the oil produced from the Contract Area. Each party Party shall execute such division orders and contracts as may be necessary for the sale of its interest in production from the Contract Area, and, except as provided in Article VII.B.VII.B, shall be entitled to receive payment directly from the purchaser thereof for its share of all production. If any party Party fails to make the arrangements necessary to take in kind or separately dispose of its proportionate share of the Oil produced from the Contract Area, Operator shall have the right, subject to the revocation at will by the party Party owning it, but not the obligation, to purchase such the Oil or sell it to others at any time and from time to time, for the account of the non-taking partyParty. Any such purchase or sale by Operator may be terminated by Operator upon on at least ten (10) days days’ written notice to the owner of said the production and shall be subject always to the right of the owner of the production upon production, on at least ten (10) days days’ written notice to Operator to exercise at any time its right to take in kind, or separately dispose of, its share of all Oil not previously delivered to a purchaser. Any purchase or sale by Operator of any partyother Party’s share of Oil shall be only for such the reasonable periods of time as are consistent with the minimum needs of the industry under the particular circumstances, but in no event for a period in excess of one (1) year without the consent of all of the parties heretoyear. Any such sale by Operator shall be in a manner commercially reasonable under the circumstancescircumstances but Operator shall have no duty to share any existing market or to obtain a price equal to that received under any existing market. The sale or delivery by Operator of a non-taking partyParty’s share of Oil under the terms of any existing contract of Operator shall not give the non-taking party Party any interest in or make the non-taking party Party a party to said the contract. No purchase shall be made by Operator without first giving the non-taking party Party at least ten (10) days days’ written notice of such the intended purchase and the price to be paid or the pricing basis to be used. All parties Parties shall give timely written notice to Operator of their Gas marketing arrangements for the following month, excluding price, and shall notify Operator immediately in the event of if a change in such marketing arrangements. Operator shall maintain records of all marketing arrangements, and of volumes actually sold or transported, which records shall be made available to Non-Operator upon Operators on reasonable request. Operator shall give notice to all parties If one or more Parties’ separate disposition of its share of the first sale Gas causes split-stream deliveries to separate pipelines and/or deliveries which on a day-to-day basis for any reason are not exactly equal to a Party’s respective proportionate share of total Gas from any well under sales to be allocated to it, then the balancing or accounting between the Parties shall be in accordance with the Parties’ Gas Balancing Terms that are attached hereto as Exhibit D, approved by the Parties as to form and content, and hereby again incorporated herein by this Agreementreference.

Taking Production in Kind. oOption No. 1: Gas Balancing Agreement Attached Each party shall have the right to take in kind or separately dispose of its proportionate share of all Oil and Gas produced from the Contract Area, exclusive of production which may be used in development and producing operations and in preparing and treating Oil and Gas for marketing purposes and production unavoidably lost. Any extra expenditure incurred in the taking in kind or separate disposition by any party of its proportionate share of the production shall be borne by such party. Any party taking its share of production in kind shall be required to pay for only its proportionate share of such part of Operator’s 's surface facilities which it uses. To the extent reasonably possible, the parties will agree on the joint marketing of the oil produced from the Contract Area. Each party shall execute such division orders and contracts as may be necessary for the sale of its interest in production from the Contract Area, and, except as provided in Article VII.B., shall be entitled to receive payment directly from the purchaser thereof for its share of all production. If any party fails to make the arrangements necessary to take in kind or separately dispose of its proportionate share of the Oil produced from the Contract Area, Operator shall have the right, subject to the revocation at will by the party owning it, but not the obligation, to purchase such Oil or sell it to others at any time and from time to time, for the account of the non-taking party. Any such purchase or sale by Operator may be terminated by Operator upon at least ten (10) days written notice to the owner of said production and shall be subject always to the right of the owner of the production upon at least ten (10) days written notice to Operator to exercise at any time its right to take in kind, or separately dispose of, its share of all Oil not previously delivered to a purchaser. Any purchase or sale by Operator of any other party’s 's share of Oil shall be only for such reasonable periods of time as are consistent with the minimum needs of the industry under the particular circumstances, but in no event for a period in excess of one (1) year without the consent of all of the parties heretoyear. Any such sale by Operator shall be in a manner commercially reasonable under the circumstancescircumstances but Operator shall have no duty to share any existing market or to obtain a price equal to that received under any existing market. The sale or delivery by Operator of a non-taking party’s 's share of Oil under the terms of any existing contract of Operator shall not give the non-taking party any interest in or make the non-taking party a party to said contract. No purchase shall be made by Operator without first giving the non-taking party at least ten (10) days written notice of such intended purchase and the price to be paid or the pricing basis to be used. All parties shall give timely written notice to Operator of their Gas marketing arrangements for the following month, excluding price, and shall notify Operator immediately in the event of a change in such arrangements. Operator shall maintain records of all marketing arrangements, and of volumes actually sold or transported, which records shall be made available to Non-Operator Operators upon reasonable request. In the event one or more parties' separate disposition of its share of the Gas causes split-stream deliveries to separate pipelines and/or deliveries which on a day-to-day basis for any reason are not exactly equal to a party's respective proportionate share of total Gas sales to be allocated to it, the balancing or accounting between the parties shall be in accordance with any Gas balancing agreement between the parties hereto, whether such an agreement is attached as Exhibit "E" or is aseparate agreement. Operator shall give notice to all parties of the first sale sales of Gas from any well under this Agreementagreement.

Taking Production in Kind. Each party Party shall have the right to take in kind or separately dispose of its proportionate share of all Oil and Gas produced from the Contract Area, exclusive of production which may be used in development and producing operations and in preparing and treating Oil and Gas for marketing purposes and production unavoidably lost. Any extra expenditure expenditures incurred in the taking in kind or separate disposition by any party Party of its proportionate share of the production shall be borne by such partyParty. Any party Party taking its share of production in kind shall be required to pay for only its proportionate share of such part of Operator’s 's surface facilities which it uses. To the extent reasonably possible, the parties will agree on the joint marketing of the oil produced from the Contract Area. Each party Party shall execute such division orders and contracts as may be necessary for the sale of its interest in production from the Contract Area, and, except as provided in Article VII.B.VII.B, shall be entitled to receive payment directly from the purchaser thereof for its share of all production. If any party Party fails to make the arrangements necessary to take in kind or separately dispose of its proportionate share of the Oil and/or Gas produced from the Contract Area, Operator shall have the right, subject to the revocation at will by the party Party owning it, but not the obligation, to purchase such Oil and/or Gas or sell it to others at any time and from time to time, for the account of the non-taking partyParty. Any such purchase or sale by Operator may be terminated by Operator upon at least ten (10) days written notice to the owner of said production and shall be subject always to the right of the owner of the production upon at least ten (10) days written notice to Operator to exercise at any time its right to take in kind, or separately dispose of, its share of all Oil and/or Gas not previously delivered to a purchaser; provided, however, that the effective date of any such revocation may be deferred at Operator's election for a period not to exceed ninety (90) days if Operator has committed such production to a purchase contract having a term extending beyond such ten (10)-day period. Any purchase or sale by Operator of any party’s other Party's share of Oil and/or Gas shall be only for such reasonable periods of time as are consistent with the minimum needs of the industry under the particular circumstances, but in no event for a period in excess of one (1) year without the consent of all of the parties heretoyear. Any such sale by Operator shall be in a manner commercially reasonable under the circumstances, but Operator shall have no duty to share any existing market or transportation arrangement or to obtain a price or transportation fee equal to that received under any existing market or transportation arrangement. The sale or delivery by Operator of a non-taking party’s Party's share of Oil production under the terms of any existing contract of Operator shall not give the non-taking party Party any interest in or make the non-taking party Party a party to said contract. No purchase of Oil and Gas and no sale of Gas shall be made by Operator without first giving the non-taking party at least Party ten (10) days written notice of such intended purchase or sale and the price to be paid or the pricing basis to be used. Operator shall give notice to all Parties of the first sale of Gas from any well under this Agreement. All parties Parties shall give timely written notice to Operator of their Gas marketing arrangements for the following month, excluding price, and shall notify Operator immediately in the event of a change in such arrangements. Operator shall maintain records of all marketing arrangements, arrangements and of volumes actually sold or transported, which records shall be made available to Non-Operator Operators upon reasonable request. Operator shall give notice to all parties of the first sale of Gas from any well under this Agreement.OPERATING AGREEMENT (continued)

Taking Production in Kind. (Select One of the Two Options) o Option No. 1: Gas Balancing Agreement Attached: Each party Party shall have the right to take in kind or separately dispose of its proportionate share of all Oil and Gas produced from the Contract Area, exclusive of production which may be used in development and producing operations and in preparing and treating Oil and Gas for marketing purposes and exclusive of production unavoidably lost. Any extra expenditure incurred in the taking in kind or separate disposition by any party Party of its proportionate share of the production shall be borne by such partythat Party. Any party Party taking its share of production in kind shall be required to pay for only its proportionate share of such the part of Operator’s surface facilities which it uses. To the extent reasonably possible, the parties will agree on the joint marketing of the oil produced from the Contract Area. Each party Party shall execute such division orders and contracts as may be necessary for the sale of its interest in production from the Contract Area, and, except as provided in Article VII.B.VII.B. (Expenditures and Liabilities of Parties; Liens and Security Interests), shall be entitled to receive payment directly from the purchaser thereof for its share of all production. If any party Party fails to make the arrangements necessary to take in kind or separately dispose of its proportionate share of the Oil produced from the Contract Area, Operator shall have the right, but not the obligation, subject to the revocation at will by the party Party owning it, it but not the obligation, to purchase such the Oil or sell it to others at any time and from time to time, for the account of the non-taking partyParty. Any such purchase or sale by Operator may be terminated by Operator upon on at least ten (10) days written notice to the owner of said the production and shall be always subject always to the right of the owner of the production upon on at least ten (10) days written notice to Operator to exercise at any time its right to take in kind, or separately dispose of, its share of all Oil not previously delivered to a purchaser. Any purchase or sale by Operator of any partyother Party’s share of Oil shall be only for such reasonable periods of time as are consistent with the minimum needs of the industry under the particular circumstances, but in no event for a period in excess of one (1) year without the consent of all of the parties heretoyear. Any such sale by Operator shall be in a manner commercially reasonable under the circumstancescircumstances but Operator shall have no duty to share any existing market or to obtain a price equal to that received under any existing market. The sale or delivery by Operator of a non-taking partyParty’s share of Oil under the terms of any existing contract of Operator shall not give the non-taking party Party any interest in or make the non-taking party Party a party Party to said the contract. No purchase shall be made by Operator without first giving the non-taking party Party at least ten (10) days written notice of such the intended purchase and the price to be paid or the pricing basis to be used. All parties Parties shall give timely written notice to Operator of their Gas marketing arrangements for the following month, excluding price, and shall notify Operator immediately in the event of a change in such those arrangements. Operator shall maintain records of all marketing arrangements, and of volumes actually sold or transported, which records shall be made available to Non-Operator upon Operators on reasonable request. In the event one or more Parties’ separate disposition of its share of the Gas causes split-stream deliveries to separate pipelines and/or deliveries which on a day-to-day basis for any reason are not exactly equal to a Party’s respective proportionate share of total Gas sales to be allocated to it, the balancing or accounting between the Parties shall be in accordance with any Gas balancing agreement between the Parties, whether the agreement is attached as Exhibit “E,” or is a separate agreement. Operator shall give notice to all parties Parties of the first sale sales of Gas from any well under this Agreement.

Taking Production in Kind. Each party shall have the right to take in kind or separately dispose of its proportionate share of all Gas oil and gas produced from the Contract Unit Area, exclusive of production which may be used in development and producing operations and in preparing and treating Oil oil and Gas gas for marketing purposes and production unavoidably lost. Any extra expenditure incurred in the taking in kind or separate disposition by any party of its proportionate share of the production shall be borne by such party. Any party taking its share of production in kind shall be required to pay for only its proportionate share of such part of Unit Operator’s surface facilities which it uses. To the extent reasonably possible, the parties will agree on the joint marketing of the oil produced from the Contract Area. Each party shall execute such division orders and contracts as may be necessary for the sale of its interest in production from the Contract Unit Area, and, except as provided in Article VII.B., shall be entitled to receive payment directly from the purchaser thereof for its share of all production. If The right of NGS to take in kind is subject to Unit Operator reserving a competitive call on NGS’ share of production (but not its overriding royalty interest share of production), as follows. In the event, NGS receives a bona fide offer from a third party to purchase all or a part of its working interest share of production, NGS shall disclose such principal terms and conditions (the “Offer”) in detail to Unit Operator in a written notice. Unit Operator shall have the right to purchase NGS’ share of production on the same terms and conditions of the Offer, if within fifteen (15) days after receipt of the Offer, Unit Operator delivers to NGS a written acceptance of same. In the event any party fails shall fail to make the arrangements necessary to take in kind or separately dispose of its proportionate share of the Oil oil and gas produced from the Contract Unit Area, Unit Operator shall have the rightshall, subject to the revocation at will by the party owning it, but not the obligation, to purchase such Oil oil and/or gas, or sell it to others at any time and from time to time, for the account of the non-taking partyparty at the same price obtained by the Unit Operator for such production. Any such purchase or sale by Unit Operator may be terminated by Operator upon at least ten (10) days written notice to the owner of said production and shall be subject always to the right of the owner of the production upon at least ten (10) days written notice to Operator to exercise at any time its right to take in kind, or separately dispose of, its share of all Oil oil and/or gas not previously delivered to a purchaser. Any purchase or sale by Unit Operator of any other party’s share of Oil oil and/or gas shall be only for such reasonable periods of time as are consistent with the minimum needs of the industry under the particular circumstances, but in no event for a period in excess of one (1) year without year. In the consent event one or more parties’ separate disposition of all its share of the gas causes split-stream deliveries to separate pipelines and/or deliveries which on a day-to-day basis for any reason are not exactly equal to a party’s respective proportionate share of total gas sales to be allocated to it, the balancing or accounting between the respective accounts of the parties hereto. Any such sale by Operator shall be in a manner commercially reasonable under accordance with the circumstances. The sale or delivery by Operator of a non-taking party’s share of Oil under the terms of any existing contract of Operator shall not give the non-taking party any interest in or make the non-taking party a party to said contract. No purchase shall be made by Operator without first giving the non-taking party at least ten (10) days written notice of such intended purchase and the price to be paid or the pricing basis to be used. All parties shall give timely written notice to Operator of their Gas marketing arrangements for the following month, excluding price, and shall notify Operator immediately in the event of a change in such arrangements. Operator shall maintain records of all marketing arrangements, and of volumes actually sold or transported, which records shall be made available to Non-Operator upon reasonable request. Operator shall give notice to all parties of the first sale of Gas from any well under this Agreementgas balancing agreement attached hereto as Exhibit “G”.

Taking Production in Kind. x Option No. 2: No Gas Balancing Agreement: Each party shall have the right to take in kind or separately dispose of its proportionate share of all Oil and Gas produced from the Contract Area, exclusive of production which may be used in development and producing operations and in preparing and treating Oil and Gas for marketing purposes and production unavoidably lost. Any extra expenditure expenditures incurred in the taking in kind or separate disposition by any party of its proportionate share of the production shall be borne by such party. Any party taking its share of production in kind shall be required to pay for only its proportionate share of such part of Operator’s surface facilities which it uses. To the extent reasonably possible, the parties will agree on the joint marketing of the oil produced from the Contract Area. Each party shall execute such division orders and contracts as may be necessary for the sale of its interest in production from the Contract Area, and, except as provided in Article VII.B., shall be entitled to receive payment directly from the purchaser thereof for its share of all production. If any party fails to make the arrangements necessary to take in kind or separately dispose of its proportionate share of the Oil and/or Gas produced from the Contract Area, Operator shall have the right, subject to the revocation at will by the party owning it, but not the obligation, to purchase such Oil and/or Gas or sell it to others at any time and from time to time, for the account of the non-taking party. Any such purchase or sale by Operator may be terminated by Operator upon at least ten (10) days written notice to the owner of said production and shall be subject always to the right of the owner of the production upon at least ten (10) days written notice to Operator to exercise at any time its right to take in kind, or separately dispose of, its share of all Oil and/or Gas not previously delivered to a purchaser; provided, however, that the effective date of any such revocation may be deferred at Operator’s election for a period not to exceed ninety (90) days if Operator has committed such production to a purchase contract having a term extending beyond such ten (10) -day period. Any purchase or sale by Operator of any other party’s share of Oil and/or Gas shall be only for such reasonable periods of time as are consistent with the minimum needs of the industry under the particular circumstances, but in no event for a period in excess of one (1) year without the consent of all of the parties heretoyear. Any such sale by Operator shall be in a manner commercially reasonable under the circumstances, but Operator shall have no duty to share any existing market or transportation arrangement or to obtain a price or transportation fee equal to that received under any existing market or transportation arrangement. The sale or delivery by Operator of a non-taking party’s share of Oil production under the terms of any existing contract of Operator shall not give the non-taking party any interest in or make the non-taking party a party to said contract. No purchase of Oil and Gas and no sale of Gas shall be made by Operator without first giving the non-taking party at least ten (10) days written notice of such intended purchase or sale and the price to be paid or the pricing basis to be used. Operator shall give notice to all parties of the first sale of Gas from any well under this Agreement. All parties shall give timely written notice to Operator of their Gas marketing arrangements for the following month, excluding price, and shall notify Operator immediately in the event of a change in such arrangements. Operator shall maintain records of all marketing arrangements, and of volumes actually sold or transported, which records shall be made available to Non-Operator Operators upon reasonable request. Operator shall give notice to all parties of the first sale of Gas from any well under this Agreement.

Taking Production in Kind. ¨ Option No. 1: Gas Balancing agreement Attached Each party Party shall have the right to take in kind or separately dispose of its proportionate share of all Oil and Gas produced from the Contract Area, exclusive of production which may be used in development and producing operations and in preparing and treating Oil and Gas for marketing purposes and production unavoidably lost. Any extra expenditure incurred in the taking in kind or separate disposition by any party Party of its proportionate share of the production shall be borne by such partythat Party. Any party Party taking its share of production in kind shall be required to pay for only its proportionate share of such the part of Operator’s surface facilities which it uses. To the extent reasonably possible, the parties will agree on the joint marketing of the oil produced from the Contract Area. Each party Party shall execute such division orders and contracts as may be necessary for the sale of its interest in production from the Contract Area, and, except as provided in Article VII.B., shall be entitled to receive payment directly from the purchaser thereof for its share of all production. If any party Party fails to make the arrangements necessary to take in kind or separately dispose of its proportionate share of the Oil produced from the Contract Area, Operator shall have the right, subject to the revocation at will by the party Party owning it, but not the obligation, to purchase such the Oil or sell it to others at any time and from time to time, for the account of the non-taking partyParty. Any such purchase or sale by Operator may be terminated by Operator upon on at least ten (10) days written notice to the owner of said the production and shall be subject always to the right of the owner of the production upon production, on at least ten (10) days written notice to Operator to exercise at any time its right to take in kind, or separately dispose of, its share of all Oil not previously delivered to a purchaser. Any purchase or sale by Operator of any partyother Party’s share of Oil shall be only for such the reasonable periods of time as are consistent with the minimum needs of the industry under the particular circumstances, but in no event for a period in excess of one (1) year without the consent of all of the parties heretoyear. Any such sale by Operator shall be in a manner commercially reasonable under the circumstancescircumstances but Operator shall have no duty to share any existing market or to obtain a price equal to that received under any existing market. The sale or delivery by Operator of a non-taking partyParty’s share of Oil under the terms of any existing contract of Operator shall not give the non-taking party Party any interest in or make the non-taking party Party a party Party to said the contract. No purchase shall be made by Operator without first giving the non-taking party Party at least ten (10) days written notice of such the intended purchase and the price to be paid or the pricing basis to be used. All parties shall give timely written notice to Operator of their Gas marketing arrangements for the following month, excluding price, and shall notify Operator immediately in the event of a change in such marketing arrangements. Operator shall maintain records of all marketing arrangements, and of volumes actually sold or transported, which records shall be made available to Non-Operator upon Operators on reasonable request. In the event one or more parties’ separate disposition of its share of the Gas causes split-stream deliveries to separate pipelines and/or deliveries which on a day-to-day basis for any reason are not exactly equal to a Party’s respective proportionate share of total Gas sales to be allocated to it, the balancing or accounting between the parties shall be in accordance with any Gas balancing agreement between the parties, whether such an agreement is attached as Exhibit “E” or is a separate agreement. Operator shall give notice to all parties of the first sale sales of Gas from any well under this Agreementagreement.

Taking Production in Kind. Each party shall have the right to take in kind or separately dispose of its proportionate share of all Oil and Gas produced from the Contract Areawell, exclusive of production which may be used in development and producing operations and in preparing and treating Oil and Gas for marketing purposes and production unavoidably lost. Any extra expenditure incurred in the taking in kind or separate disposition by any party of its proportionate share of the production shall be borne by such that party. Any party taking its share of production in kind shall be required to pay for only its proportionate share of such the part of Operator’s surface facilities which it uses. To the extent reasonably possible, the parties will agree on the joint marketing of the oil produced from the Contract Area. Each party shall execute such division orders and contracts as may be necessary for the sale of its interest in production from the Contract Areawell, and, except as provided in Article VII.B., shall be entitled to receive payment directly from the purchaser thereof for its share of all production. If In the event any party fails to make the arrangements necessary to take in kind or of separately dispose of its proportionate share of the Oil produced from the Contract Areawell, Operator shall have the right, subject to the revocation at will by the party owning it, but not the obligation, to purchase such Oil that oil or sell it to others at any time and from time to time, for the account of the non-taking partyparty at the best price obtainable in the area for the production. Any such purchase or sale by Operator may be terminated by Operator upon at least ten (10) days written notice to the owner of said production and shall be subject always to the right of the owner of the production upon at least ten (10) days written notice to Operator to exercise at any time its right to take in kind, or separately dispose of, its share of all Oil not previously delivered to a purchaser. Any purchase or sale by Operator of any other party’s share of Oil shall be only for such reasonable periods of time as are consistent with the minimum needs of the industry under the particular circumstances, but in no event for a period in excess of one (1) year without year. In the consent event one or more parties’ separate disposition of all its share of the Gas causes split-stream deliveries to separate pipelines and/or deliveries which on a day-to-day basis for any reason are not exactly equal to a party’s respective proportionate share of total Gas sales to be allocated to it, the balancing or accounting between the respective accounts of the parties hereto. Any such sale by Operator shall be in accordance with any gas balancing agreement between the parties, whether such an agreement is attached as Exhibit “E,” or is a manner commercially reasonable under the circumstances. The sale or delivery by Operator of a non-taking party’s share of Oil under the terms of any existing contract of Operator shall not give the non-taking party any interest in or make the non-taking party a party to said contract. No purchase shall be made by Operator without first giving the non-taking party at least ten (10) days written notice of such intended purchase and the price to be paid or the pricing basis to be used. All parties shall give timely written notice to Operator of their Gas marketing arrangements for the following month, excluding price, and shall notify Operator immediately in the event of a change in such arrangements. Operator shall maintain records of all marketing arrangements, and of volumes actually sold or transported, which records shall be made available to Non-Operator upon reasonable request. Operator shall give notice to all parties of the first sale of Gas from any well under this Agreementseparate agreement.