EXHIBIT 10.6(e)
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AMENDMENT NO. 5
TO PARTICIPATION AGREEMENT
This Amendment No. 5 ("Amendment") is executed the date as of each
signature below, but shall be effective as of January 1, 2005, ("Amendment
Effective Date") by and between Penn Virginia Oil & Gas, L.P. successor to Penn
Virginia Oil & Gas Corporation, ("PVOG") and GMX RESOURCES INC. and its wholly
owned subsidiaries, Expedition Natural Resources Inc. and Endeavor Pipeline Inc.
(collectively, "GMX") for purposes of amending the Participation Agreement, as
previously amended, ("Agreement") between the parties with reference to the
following circumstances:
A. PVOG and GMX (collectively, "Parties" and, individually, a "Party")
previously entered into Amendment #4 which permitted the use of multiple
rigs under certain circumstances and provided a mechanism by which PVOG
would advance the funds to GMX for second xxxxx. Pursuant to Section 2.2.9
of the Agreement, PVOG terminated the multiple rig provisions on November
19, 2004, resulting in the reinstatement of Section 2.1 of the Agreement
that prohibits the drilling of more than one well at the same time.
B. PVOG and GMX now wish to further amend the Agreement in order to
provide for the use and sharing of multiple rigs.
In consideration of the mutual covenants, promises, rights and obligations
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:
1 CAPITALIZED TERMS. Capitalized terms not otherwise defined in this
Amendment shall have the same meaning as set forth in the Agreement.
2 SIMULTANEOUS DRILLING. Section 2.2 of the Agreement as added by
Amendment #4 shall continue to govern the use of multiple rigs during
the period May 11, 2004 through November 19, 2004. For the period
beginning on the Amendment Effective Date a new Section 2.3 which
shall be added to the Agreement shall govern the use of multiple rigs
which shall read in its entirety as follows:
"2.3 USE OF MULTIPLE RIGS AFTER JANUARY 1, 2005.
Notwithstanding the provisions of Section 2.1 that prohibit the
drilling of more than one well at the same time in Phase I, Part B and
Phase II, Part B, collectively, the Parties agree that after the
Amendment Effective Date of Amendment No. 5, drilling operations with
no more than two rigs may be used in either Phase I, Phase II or both
subject to the following provisions:
2.3.1 SHARING WITH GMX. If PVOG engages an additional rig
for drilling in Part B with the concurrence of GMX, PVOG
shall: (1) declare one of the drilling rigs to be the
"Second Rig" under the terms of the Agreement, as amended,
and (2) make
the Second Rig available for use by GMX for drilling
operations in Phase III on a one to one basis, i.e. for
every well that PVOG uses the Second Rig for drilling
operations under the terms of the Agreement, if GMX is
ready, able and willing to use the Second Rig, it may make
use of the Second Rig for the drilling of one well in Phase
III. Five (5) days prior to reaching total depth on the well
preceding GMX's option to use the Second Rig, GMX shall: (1)
give PVOG written notice of its election to use the second
rig and (2) enter into a single well or a multiple well (if
GMX has elected to bank locations as provided below)
drilling contract with the rig contractor on terms
acceptable to both GMX and the rig contractor, which terms
shall be no less favorable to GMX than the terms available
to PVOG, save and except any financial requirements
prescribed by the rig contractor. During the time a rig is
used by GMX, PVOG will have no financial or other
responsibility to the rig contractor for such utilization.
Both PVOG and GMX shall have the right to bank up to three
(3) well locations to be drilled with the Second Rig at a
later date if either party elects to do so.
2.3.2 PAYMENTS OF COSTS. If GMX elects to participate in any well
drilled in Part B of either Phase I or Phase II while multiple
rigs are being used, it will be responsible for payment of its
share of costs in accordance with the terms of the Agreement
based on the size of the election it makes.
2.3.3 AFES. As long as multiple drilling rigs are being used in
Phase I and II, PVOG shall not present to GMX more than two AFEs
per drilling rig utilized in either Phase I or Phase II within
any fifteen (15) day period for any operations conducted under
this Section 2.3.
2.3.4 TERMINATION OF THE USE OF MULTIPLE RIGS. Either Party may
terminate the multiple rig provisions of this Section 2.3,
subject to the terms of the drilling contract currently in effect
for the "Second Rig", at any time by giving at least sixty (60)
days notice of such termination to the other party in which event
the provisions of Section 2.1 will be reinstated to prohibit the
drilling of more than one well at the same time."
Except as set forth above, the Agreement as previously amended will remain
in full force and effect.
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Executed effective as of the date set forth above.
GMX RESOURCES INC.
EXPEDITION NATURAL RESOURCES INC.
ENDEAVOR PIPELINE INC.
By: /s/ Xxx X. Xxxxxxxxx, Xx.
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Executive Vice President of GMX Resources Inc.
President of Expedition Natural Resources Inc.
President of Endeavor Pipeline Inc.
Date: March 2, 2005
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PENN VIRGINIA OIL & GAS, L.P.
By: Penn Virginia Oil & Gas GP LLC,
its General Partner
By: /s/ Xxxxx X. Xxx
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Xxxxx X. Xxx
Date: February 25, 2005
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