Common use of Well Proposals, Recompletions, and Workovers Clause in Contracts

Well Proposals, Recompletions, and Workovers. after receipt of the supplemental AFE each Participating Party has the right to make an Election as to its further participation in the approved activity or operation. If a proposed supplemental AFE is approved by Election, the Operator shall continue to conduct the approved activity or operation associated with the supplemental AFE at the sole Cost and risk of the Participating Parties in the supplemental AFE. Any Participating Party making an Election not to participate in an approved supplemental AFE becomes a Non-Participating Party in the activity or operation associated with the original AFE once the Costs expended on the activity or operation exceed the permitted over-expenditure amount of the last AFE in which the Non-Participating Party Elected to participate, without regard to whether all the activities or operations (including plugging and abandonment) in the original AFE have been conducted at the time of its Election not to participate. A Non-Participating Party in a supplemental AFE is subject to the same Hydrocarbon Recoupment premium, Underinvestment, or acreage forfeiture provision in Article 16 (Non‑Consent Operations) that would apply to a Party Electing or Voting not to participate in the originally approved activity or operation, except a Hydrocarbon Recoupment premium or an Underinvestment shall apply only to the Costs of the approved activity or operation not borne by the Non-Participating Party. If a supplemental AFE is not approved by Election, the Operator shall conclude the activity or operation as soon as practical, and each Participating Party will be responsible for its Participating Interest Share of the Costs of the activity or operation, including Costs in excess of the permitted over-expenditure amount.

Well Proposals, Recompletions, and Workovers. after receipt of the supplemental AFE each Participating Party has the right to make an Election as to its further participation in the approved activity or operation. If a proposed supplemental AFE is approved by Election, the Operator shall continue to conduct the approved activity or operation associated with the supplemental AFE at the sole Cost and risk of the Participating Parties in the supplemental AFE. Any Participating Party making an Election not to participate in an approved supplemental AFE becomes a Non-Participating Party in the activity or operation associated with the original AFE once the actual Costs expended on the activity or operation exceed the permitted over-expenditure amount of the last AFE in which the Non-Participating Party Elected to participate, without regard to whether all the activities or operations (including plugging and abandonment) in the original AFE have been conducted at the time of its Election not to participate. A Non-Participating Party in a supplemental AFE is subject to the same Hydrocarbon Recoupment premium, Underinvestment, or acreage forfeiture provision in Article 16 (Non‑Consent Operations) that would apply to a Party Electing or Voting not to participate in the originally approved activity or operation, except a Hydrocarbon Recoupment premium or an Underinvestment shall apply only to the Costs of the approved activity or operation not borne by the Non-Participating Party. If a supplemental AFE is not approved by Election, the Operator shall conclude the activity or operation as soon as practical, and each Participating Party will be responsible for its Participating Interest Share of the Costs of the activity or operation, including Costs in excess of the permitted over-expenditure amount.

Well Proposals, Recompletions, and Workovers. after receipt of the supplemental AFE each Participating Party has the right to make an Election as to its further participation in the approved activity or operation. If a proposed supplemental AFE is approved by Election, the Operator shall continue to conduct the approved activity or operation associated with the supplemental AFE at the sole Cost and risk of the Participating Parties in the supplemental AFE. Any Participating Party making an Election not to participate in an approved supplemental AFE becomes a Non-Participating Party in the activity or operation associated with the original AFE once the Costs expended on the activity or operation exceed the permitted over-expenditure amount of the last AFE in which the Non-Participating Party Elected to participate, without regard to whether all the activities or operations (including plugging and abandonment) in the original AFE have been conducted at the time of its Election not to participate. A Non-Participating Party in a supplemental AFE is subject to the same Hydrocarbon Recoupment premium, Underinvestment, or acreage forfeiture provision in Article 16 (Non‑Consent Operations) that would apply to a Party Electing or Voting not to participate in the originally approved activity or operation, except a Hydrocarbon Recoupment premium or an Underinvestment shall apply only to the Costs of the approved activity or operation not borne by the Non-Participating Party. If a supplemental AFE is not approved by Election, the Operator shall conclude the activity or operation as soon as practical, and each Participating Party will be responsible for its Participating Interest Share of the Costs of the activity or operation, including Costs in excess of the permitted over-expenditure amount. Permitted Over-expenditures on Well Operations The permitted over-expenditure for an Exploratory Operation, an Appraisal Operation, or a Development Operation is an amount equal to ____________ percent (____%) of the estimated Costs in the original AFE for that operation or its approved supplemental AFEs. Permitted Over-expenditures on the Feasibility AFE, a Post-Production Project Team AFE, or an Enhanced Recovery Project Team AFE The permitted over-expenditure for the Feasibility AFE, a Post-Production Project Team AFE, or an Enhanced Recovery Project Team AFE is an amount equal to ____________ percent (____%) of the estimated total Costs in the original AFE for that activity or its approved supplemental AFEs. Permitted Over-expenditures on a Selection AFE or Define AFE The permitted over-expenditure for the Selection AFE or the Define AFE is an amount equal to ____________ percent (____%) of the estimated total Costs in the original AFE for that activity or its approved supplemental AFEs. Permitted Over-expenditures on an Execution AFE The permitted over-expenditure for the Execution AFE is an amount equal to ____________ percent (____%) of the estimated total Costs in the original AFE for that activity or its approved supplemental AFEs. The “estimated total Costs in the original AFE for that activity” is the total dollar amount of the Execution AFE and all approved Long Lead Development System AFEs. Permitted Over-expenditures on All Other AFEs The permitted over-expenditure for all other AFEs is an amount equal to _________ percent (____%) of the estimated total Costs in the original AFE for that activity or operation or its approved supplemental AFEs. Further Operations During a Force Majeure or Emergency No Party is permitted to make an Election not to participate in further activities or operations under Article 6.2.2 (Supplemental AFEs) during a Force Majeure or during an emergency that poses a threat to life, safety, property, or the environment, but may make an Election not to participate in further activities or operations that are to be conducted after the termination of the Force Majeure or emergency. Notwithstanding the foregoing, no Party is permitted to make an Election not to participate in activities or operations related to the (i) cleanup of oil spills and pollution, (ii) debris removal, and/or (iii) any other activities or operations required to be undertaken by the Operator and/or the Parties under any environmental law, to the extent such activities or operations directly arise from an emergency; provided however that once the emergency has terminated the Parties have a right to review and/or comment within a reasonably practical time on any plans or Costs associated with the foregoing activities or operations prior to their implementation. The Operator shall notify the Parties when, in the Operator’s sole discretion, the Force Majeure or emergency has terminated. There shall be a presumption that the Force Majeure or emergency terminated as of the date specified by Operator, which presumption may be overturned by an arbitration decision pursuant to the Dispute Resolution Procedures set forth in Exhibit “H.” The non-prevailing Party in any such arbitration proceeding shall be responsible for all the Costs and attorney’s fees incurred by the prevailing Party in such proceeding. However, a Non-Operator’s provision of notice under the Dispute Resolution Procedures of a dispute regarding the existence or duration of a Force Majeure or emergency shall not constitute a defense of the Parties’ obligations to timely reimburse the Operator for expended Costs in accordance with the provision of the Accounting Procedures set forth in Exhibit “C” during the pendency of such procedures. Notwithstanding any contrary provision of this Agreement, if Costs arising as a result of Force Majeure or emergency cause the amount of an original AFE and its approved supplemental AFEs to exceed their permitted over-expenditure in Article 6.2.2 (Supplemental AFEs), no supplemental AFE will be required; however, once stabilization takes place and Force Majeure or emergency expenditures are no longer being incurred, the Operator shall submit to the Participating Parties a supplemental AFE for the activities or operations that are to be conducted after termination of the Force Majeure or emergency in order for them to make an Election under Article 6.2.2 (Supplemental AFEs) as to their participation in those activities or operations.