EXHIBIT 10.6
PARTICIPATION AGREEMENT
Portion of South Xxxxx Blocks 2 & 9
This Participation Agreement ("Agreement") is made and entered into
effective as of the 17th day of July 2006 (the "Effective Date"), by and between
Newfield Exploration Company ("Newfield") and Ridgewood Energy Corporation
("Ridgewood"). Newfield and Ridgewood are also sometimes hereinafter referred to
collectively as the "Parties" or individually as a "Party".
WITNESSETH:
WHEREAS, on June 23, 2006, Newfield and Apache Corporation ("Apache")
entered into an Option Agreement ("Option Agreement"), a copy of which is
attached hereto as Exhibit "C" and made a part hereof for all purposes; and
WHEREAS, pursuant to the Option Agreement, Newfield may, among other
things, acquire an undivided fifty percent (50%) of Apache's one hundred percent
(100%) operating rights in and to the NE/4 of OC-G02924 and the S/2 SE/4 of
OCS-G14352 (the "Contract Area") by drilling and completing the Earning Well;
and
WHEREAS, Newfield has heretofore presented the prospect to Apache as called
for in the Option Agreement and submitted to Apache Newfield's AFE No. 12109 for
drilling the Initial Test Well on OCS-G02924; and
WHEREAS, Apache has elected, pursuant to the Option Agreement, to
participate in drilling the Initial Test Well; and
WHEREAS, Ridgewood has reviewed in detail the Option Agreement and desires
to (i) acquire an undivided 33.33% of Newfield's rights and interests under the
Option Agreement and (ii) assume an undivided 33.33% of Newfield's duties and
obligations under the Option Agreement.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the sufficiency of which is hereby acknowledged,
Newfield does hereby assign to Ridgewood an undivided 33.33% of Newfield's
rights and interests in the Option Agreement and Ridgewood does hereby assume an
undivided 33.33% of Newfield's duties and obligations under the Option Agreement
subject to the following;
1) An undivided 2% of 6/6ths overriding royalty interest on all oil, gas
and other minerals produced and saved from the Contract Area in favor of
Newfield (the "Newfield ORRI"), which shall be borne entirely by the operating
rights acquired by Ridgewood hereunder. The Newfield ORRI shall be free of all
costs of acquiring, exploring, operating, developing, producing and maintaining
in force and effect the oil and gas lease(s) comprising the Contract Area,
except the proportionate share of severance, production and other like taxes
applicable to the Newfield ORRI. Newfield shall have the option to take the
Newfield ORRI in kind on the same terms and conditions provided in the
applicable oil and gas lease(s).
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(a) The Newfield ORRI shall be calculated by multiplying the Newfield
ORRI percentage by the volumes of the oil, gas, distillate, condensate,
casinghead gas and other liquid and vaporous hydrocarbons produced, saved
and sold from or allocable to the Contract Area or lands unitized or pooled
therewith, under the terms of the oil and gas lease(s) comprising the
Contract Area. The Newfield ORRI shall be calculated and paid in the same
manner and subject to the same terms and conditions as the lessor's royalty
under the oil and gas lease(s) comprising the Contract Area, except that
royalty reduction, royalty relief or royalty holidays provided by lessor
will not affect the Newfield ORRI.
(b) The Newfield ORRI may be pooled and unitized in the same manner
and under the same and identical terms, conditions and provisions as the
lessor's royalty may be pooled and unitized under the terms of the oil and
gas lease(s) to which the Newfield ORRI applies.
2) An undivided 3% proportionately reduced overriding royalty interest in
favor of Fairfield Industries, Inc. described in that certain Letter Agreement
by and between Newfield, Apache, Fairfield Industries, Inc. and Fairfield
Royalty Corp. dated June 7, 2006. A copy of the June 7, 2006 Letter Agreement is
attached hereto as Exhibit "B" and made a part hereof for all purposes.
3) All operations conducted on the Contract Area shall be performed in
accordance with and shall be subject to the terms and provisions of the Option
Agreement and the Operating Agreement attached hereto as Exhibit "D". The
Operating Agreement will be revised to include Ridgewood as a working
interest party.
4) Within five (5) business days from the execution of this Agreement and
Newfield's receipt of an approved "consent to assign" from Apache, Ridgewood
will deliver to Newfield the following:
(a) an executed original of Newfield's Authority for Expenditure No.
12109 ("AFE") for the Initial Test Well, attached hereto as Exhibit "A",
revised by Newfield to reflect Ridgewood's participation in the
Initial Test Well and each participating parties associated cost interest,
via facsimile and overnight mail, and
(b) an executed original Operating Agreement via overnight mail.
5) All notices, requests or demands to be given under this Agreement shall
be in writing and shall be deemed to have been given (i) three (3) business days
after being sent by registered mail or certified mail, postage prepaid, or (ii)
on the day sent, if hand delivered or sent by facsimile, with receipt confirmed
and verbal confirmation, in each case addressed as follows or to such other
address as may have been furnished in writing to the other Parties hereto in
accordance herewith:
If to Newfield: If to Ridgewood:
--------------- ----------------
Newfield Exploration Company Ridgewood Energy Company
000X. Xxx Xxxxxxx Xxxxxxx Xxxx, Xxxxx 0000 00000 Xxx Xxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000 Xxxxxxx, Xxxxx 00000
Attention: Land Manager GOM Attention: Mr. W. Xxxx Xxxxx
Office Phone: (000) 000-0000 Office Phone: (000) 000-0000
Fax Number: (000) 000-0000 Fax Number: (000) 000-0000
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6) This Agreement shall be binding upon each Party and their successors and
assigns. An assignment by a Party of any lands affected by this Agreement shall
be made expressly subject to, and the assignee shall expressly agree to assume
and comply with, the terms and provisions of this Agreement and the Operating
Agreement.
IN WITNESS WHEREOF, this instrument is executed by each of the Parties on
the dates noted below, but shall be effective as of the Effective Date
hereinabove first written.
WITNESSES: NEWFIELD EXPLORATION COMPANY
(MMS GOM No. 1364)
/s/ Xxxxx X. Xxxxxx By: /s/ X. X. Xxxxxxxxxxx
--------------------------- -----------------------------
/s/ Xxxxxxxx Xxxxxx Name: X. X. Xxxxxxxxxxx
--------------------------- Title: Vice President - Land
WITNESSES: RIDGEWOOD ENERGY COMPANY
(MMS GOM No. 1308)
/s/ Xxxxx Xxxxx By: /s/ W. Xxxx Xxxxx
--------------------------- -----------------------------
/s/ Xxxx Xxxxxxx Name: W. Xxxx Xxxxx
Title: Executive Vice President
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