Participation Agreement
Saltamontes Profundo-West Delta Blocks 94, 95 and 96
This Participation Agreement (this "Agreement") is made and entered into
effective as of the 14th day of April, 2005, by and between BP America
Production Company ("BP"), whose mailing address is 000 Xxxxxxxx Xxxx Xxxx.,
Xxxxxxx, Xxxxx 00000 and Ridgewood Energy Corporation ("Ridgewood"), whose
mailing address is 00000 Xxx Xxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000. BP and
Ridgewood are sometimes referred to herein individually as a "Party" and
collectively as the "Parties".
Witnesseth
WHEREAS, BP is the owner of thirty-seven and one-half percent (37.50%) of the
right, title and interest in and to the oil and gas leases (the "Leases")
covering West Delta Blocks 94, 95 and 96, South Addition, Gulf of Mexico; and
WHEREAS, subject to certain terms and conditions contained herein, Ridgewood is
willing to accept and bear sixteen and one-tenth percent (16.10%) of the cost,
risk and expense of drilling, coring and logging the Initial Test Well (as
defined below) to earn an assignment from BP of an undivided eight and five
one-hundredths percent (8.05%) operating rights interest in and to those
portions of the Leases covering and affecting the Contract Area (as defined
below) limited to the ITW Earned Depth (as defined below).
NOW, THEREFORE, for and in consideration of the premises and mutual promises and
covenants to be kept and performed by the Parties as contained herein, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged and confessed, the Parties do hereby agree as follows:
Article 1
Definitions
For purposes of this Agreement, the following terms shall have the following
definitions:
1.1 AFE: An authorization for expenditure submitted pursuant to the Operating
Agreement (as defined below).
1.2 Assignment: The form of Assignment of Operating Rights attached hereto as
Exhibit "A"
1.3 BP Response Period: The timeframe BP has to respond to a proposal under the
Operating Agreement (for example, thirty (30) days, forty-eight (48) hours,
etc.) or, if BP
1.
makes a proposal, the timeframe the Other Owners (as defined below) have to
respond to BP's proposal.
1.4 BP Response Deadline: The date and time by which BP (or the Other Owners,
as the case may be) must respond to a proposal under the Operating
Agreement (i.e., the end of the BP Response Period).
1.5 Contract Area: The aliquot portions of the blocks as set forth below:
i. West Delta Block 94: X/0, X/0X/0, X/0X/0X/0
xx. Xxxx Xxxxx Xxxxx 95: X/0, X/0XX/0, X/0XX/0XX/0, XX/0XX/0, X/0XX/0XX/0,
XX/0XX/0XX/0
iii. West Delta Block 96: XX/0, X/0XX/0, XX/0XX/0, XX/0XX/0XX/0, S/4NE/4.
INSOFAR AND ONLY INSOFAR as said lands cover those depths from and
below the stratigraphic equivalent of the Top of the OP Sand (defined
as the stratigraphic equivalent of the depth of 15,266 feet measured
depth, as seen in the induction-electric log dated 5/4/72 in the
Conoco WD 96#5 well (API# 17-719-20164-00)).
1.6 Gulf Coast Conditions: As used herein, includes, but is not limited to,
either (1) mechanical difficulties which, in the sole discretion of BP,
cannot be economically overcome after reasonable efforts to do so, or (2)
heaving shale, cavity, excess pressure or water flow, loss of circulation
or any other substance, formation, situation or condition, similar or
dissimilar, which in the sole discretion of BP, reasonably and economically
cannot be overcome by ordinary drilling methods or which renders drilling
ahead under normal drilling procedures impractical, unwarranted or
unreasonably hazardous.
1.7 ITW Earned Depth: The depths from the stratigraphic equivalent of the Top
of the OP Sand down to and including 100 feet below the stratigraphic
equivalent of the total depth drilled in the Initial Test Well.
1.8 Initial Test Well: Xxx Xxxx Xxxxx Xxxxx 00 Xx. 0 well to be drilled under
this Agreement from a surface location of X:2481386, Y:92725 in West Delta
Block 95, as further described in the AFE for the Initial Test Well (or any
Substitute Well(s) for such Initial Test Well).
1.9 Operating Agreement: That certain CATCO Operating Agreement dated January
1, 1989 (as amended), a copy of which is attached hereto as Exhibit "B."
1.10 Other Owners: Collectively, Chevron U.S.A. Inc. ("Chevron") and GOM Shelf
LLC ("Apache"), who are the owners of the remaining sixty-two and one-half
percent (62.50%) undivided interest in the Leases and are parties to the
Operating Agreement.
2.
The term "Other Owners" shall also apply to any successors or assigns of
Chevron and/or Apache in the Leases.
1.11 Ridgewood Response Deadline: The date and time by which Ridgewood must
respond to BP's notice of a proposal hereunder which shall be five (5)
business days prior to the BP Response Deadline; provided, however, in the
event BP's Response Period is forty eight (48) hours, such Ridgewood
Response Deadline shall be twelve (12) hours prior to the BP Response
Deadline.
1.12 STW Earned Depth: The depths from immediately below the base of the ITW
Earned Depth down to and including 100 feet below the stratigraphic
equivalent of the total depth drilled in the Second Test Well.
1.13 Second Test Well: The first well that is drilled subsequent to the Initial
Test Well to test objective(s) below the ITW Earned Depth (or any
Substitute Well(s) for such Second Test Well); provided, such well is not
drilled to a depth below 20,000 feet subsea. If such well is drilled below
a depth of 20,000 feet subsea, such well shall not be considered the Second
Test Well under this Agreement.
1.14 Substitute Well: A well which: (i) is undertaken subsequent to the Test
Well (as defined below) because such Test Well encounters Gulf Coast
Conditions (and otherwise drilled in the same or similar manner as the
original proposed Test Well, except that such new well may be drilled from
a different surface location); (ii) is commenced on or before the earlier
of the date occurring (x) one hundred and twenty (120) days after the
release of the drilling rig for the Test Well or (y) after the lapse of a
one hundred and twenty (120) day period without the drilling of any
additional footage in the Test Well; and (iii) prior to commencement, is
designated in writing by BP as a Substitute Well.
1.15 Test Well: Either the Initial Test Well or Second Test Well, as applicable.
Each reference to the Test Well shall apply separately to the Initial Test
Well and the Second Test Well.
List of Exhibits
----------------
Exhibit "A"- Form of Assignment of Operating Rights
Exhibit "B"- Operating Agreement (with Exhibits)
Exhibit "C" - AFE for the Initial Test Well
Exhibit "D" - Example of Well Cost Adjustment Calculation
Exhibit "E" -- Form of Operating Agreement Ratification
Exhibit "F" - Form of Tax Partnership
3.
Article 2
The Initial Test Well
---------------------
2.1 Prior to its execution hereof, Ridgewood has reviewed the AFE for the
Initial Test Well attached hereto as Exhibit "C", along with the well plan
attached thereto. The AFE is submitted and attached for informational
purposes only. Ridgewood agrees that the Initial Test Well shall constitute
an Exploratory Well under the Operating Agreement.
2.2 Ridgewood shall participate in and be obligated to bear and pay sixteen and
one-tenth percent (16.10%) of the gross costs, risks, expenses and
liabilities associated with all operations for the Initial Test Well
conducted pursuant to the Operating Agreement until such time as actual
operations for a completion of the Initial Test Well are commenced in
accordance with Article 2.3 below (the "ITW Completion Time"). By way of
example, but not limitation, if the Initial Test Well reaches its planned
total depth and a decision is made pursuant to the Operating Agreement to
postpone completion at such depth and deepen the Initial Test Well, such
deepening operation shall be deemed prior to the ITW Completion Time and
Ridgewood and BP will continue under the same promote and earning terms for
the deepening operation as are stipulated herein for the Initial Test Well
as originally proposed. Ridgewood's share of costs, risks, expenses and
liabilities incurred after the ITW Completion Time shall be an undivided
eight and five one hundredths percent (8.05%) with respect to the Initial
Test Well, subject to the terms of this Agreement and the Operating
Agreement.
2.3 If a proposal to complete the Initial Test Well at a depth below the Top of
the OP Sand ("ITW Earning Completion") is made pursuant to the Operating
Agreement, BP shall advise Ridgewood in writing of such ITW Earning
Completion proposal, along with a copy of such ITW Earning Completion
proposal, the estimated cost to conduct same, and shall advise Ridgewood of
the BP Response Deadline. On or before the Ridgewood Response Deadline,
Ridgewood shall advise BP in writing whether Ridgewood elects to
participate in such ITW Earning Completion.
(A) If Ridgewood elects to participate in such ITW Earning Completion, and
same is conducted pursuant to the Operating Agreement, Ridgewood shall
participate in same in accordance with the terms of this Agreement and the
Operating Agreement. Upon providing BP written notice of its election to
participate, Ridgewood shall have earned an assignment of a portion of BP's
operating rights interest in and to the Contract Area limited to the ITW
Earned Depth subject to the provisions of Article 5 hereof.
(B) If Ridgewood elects not to participate in such ITW Earning Completion
or fails to timely advise BP of its election regarding same, Ridgewood
shall forfeit its right to earn any interests in the Contract Area and this
Agreement shall immediately terminate and be of no further force and
effect, except that Ridgewood shall remain responsible for its
4.
proportionate share of all costs, expenses and liabilities incurred prior
to such termination date.
2.4 If, prior to the ITW Completion Time or plugging and abandoning of the
Initial Test Well, a proposal to temporarily abandon the Initial Test Well
and release the drilling rig is made pursuant to the Operating Agreement,
and same is not part of a completion proposal and is conducted pursuant to
the Operating Agreement, Ridgewood shall participate in same and any future
operations conducted on the Initial Test Well until the ITW Completion Time
or plugging and abandoning of the Initial Test Well in accordance with the
terms of this Agreement and the Operating Agreement; provided, however,
subject to Article 12 hereof, if future operations are not commenced on or
before the date occurring eighteen (18) months after the date the drilling
rig is released from the Initial Test Well, this Agreement shall
immediately terminate and be of no further force and effect, except that
Ridgewood shall remain responsible for its proportionate share of all
costs, expenses and liabilities incurred prior to such termination date,
including, without limitation, its share of plugging and abandonment
liability.
2.5 Notwithstanding anything herein to the contrary, if (i) the Initial Test
Well or a Substitute Well therefore fails to reach a depth below the Top of
the OP Sand due to Gulf Coast Conditions, but not otherwise, (ii) pursuant
to the Operating Agreement, an ITW Earning Completion is not conducted on
the Initial Test Well and the Initial Test Well is completed at a depth
above the Top of the OP Sand or (iii) pursuant to the Operating Agreement,
the Initial Test Well is plugged and abandoned, Ridgewood shall not earn
any interests in the Contract Area pursuant to this Agreement and this
Agreement shall immediately terminate and be of no further force and
effect, except that Ridgewood shall remain responsible for its
proportionate share of all costs, expenses and liabilities incurred prior
to such termination date and if applicable, its proportionate share of
plugging and abandonment costs. However, in the event of (ii) above, and if
such Initial Test Well is successfully completed at a depth above the Top
of the OP Sand, then there shall be a well cost adjustment between BP and
Ridgewood pursuant to Article 7 hereof.
Article 3
The Second Test Well
--------------------
3.1 If Ridgewood earns an assignment with respect to the Initial Test Well as
provided in Article 2.3 above and pursuant to Article 5 below, Ridgewood
shall have the option to elect to participate in the Second Test Well. If a
proposal to drill the Second Test Well is made pursuant to the Operating
Agreement on or before the date occurring three (3) years after the date
the drilling rig is released from the Initial Test Well, BP shall advise
Ridgewood in writing of such proposal, along with a copy of the proposal,
the estimated cost to conduct same (including the Shallow Depth Estimate,
as described below), and shall advise Ridgewood of the BP Response
Deadline. On or before the Ridgewood
5.
Response Deadline, Ridgewood shall advise BP in writing whether Ridgewood
elects to participate in the proposed operation.
(A) If Ridgewood elects to participate in the proposed operation, and same
is conducted pursuant to the Operating Agreement, Ridgewood shall
participate in such proposed operation in accordance with the terms of
this Agreement and the Operating Agreement.
(B) If Ridgewood elects not to participate in the proposed operation or
fails to timely advise BP of its election to participate, Ridgewood
shall forfeit its right to earn any additional interests below the,
ITW Earned Depth in the Contract Area and this Agreement shall
immediately terminate and be of no further force or effect as to all
portions of the Contract Area below the ITW Earned Depth.
If a proposal to drill the Second Test Well is not made pursuant to
the Operating Agreement on or before the date occurring three (3)
years after the date the drilling rig is released from the Initial
Test Well, this Agreement shall immediately terminate and be of no
further force or effect as to all portions of the Contract Area below
the ITW Earned Depth.
3.2 If Ridgewood elects to participate in the Second Test Well pursuant to this
Agreement and BP elects to participate in the Second Test Well pursuant to
the Operating Agreement:
(A) Ridgewood shall participate in and be obligated to bear and pay
the gross costs, risks, expenses and liabilities associated with the
sum of the following: (i) eight and five one-hundredths percent
(8.05%) of the actual gross costs and expenses of all operations for
the Second Test Well conducted pursuant to the Operating Agreement
that are attributable to drilling and logging to the base of the ITW
Earned Depth; (ii) eight and five one-hundredths percent (8.05%) of
the difference between (x) the actual gross costs and expenses of all
operations for the Second Test Well conducted pursuant to the
Operating Agreement that are attributable to drilling and logging to
the base of the ITW Earned Depth and (y) [the estimated gross cost and
expenses of all operations for a well that would be drilling utilizing
the same well bore path as the Second Test Well except that such well
would be drilled to a total depth equal to the base of the ITW Earned
Depth] (such bracketed language being referred to hereinafter as the
"Shallow Depth Estimate"), (with such difference being referred to
hereinafter as the "Shallow Promote"); and (iii) sixteen and one-tenth
percent (16.10%) of the actual gross costs and expenses of all
operations for the Second Test Well conducted pursuant to the
Operating Agreement that are not captured by (i) above. The above
calculated share of costs, risks, expenses and liabilities shall be
effective until such time as actual operations for a completion of the
Second Test Well are commenced in accordance with Article 3.2(B) below
(the
6.
"STW Completion Time"). Ridgewood's share of costs, risks, expenses
and liabilities incurred after such STW Completion Time shall be an
undivided eight and five one hundredths percent (8.05%) with respect
to the Second Test Well, subject to the terms of this Agreement and
the Operating Agreement.
In the event Ridgewood disagrees with BP's Shallow Depth Estimate,
Ridgewood shall provide BP with written notice of such disagreement
within three (3) days of Ridgewood's receipt thereof. Upon receipt of
such written notice from Ridgewood, the Parties shall enter into good
faith negotiations and attempt to agree on such Shallow Depth
Estimate. In the event the Parties cannot agree on a Shallow Depth
Estimate within two (2) days of Ridgewood's notice, the Parties shall
mutually agree on and employ a drilling consultant to resolve the
matter and determine a Shallow Depth Estimate. The determination by
the drilling consultant shall be conclusive and binding upon both
Parties. The cost of the drilling consultant shall be borne fifty
percent (50%) by Ridgewood and fifty percent (50%) by BP.
(B) If a proposal to complete the Second Test Well at a depth below the
ITW Earned Depth ("STW Earning Completion") is made, BP shall advise
Ridgewood in writing of such STW Earning Completion proposal, along
with a copy of such STW Earning Completion proposal and the estimated
cost to conduct same, and shall advise Ridgewood of the BP Response
Deadline. On or before the Ridgewood Response Deadline, Ridgewood
shall advise BP in writing whether Ridgewood elects to participate in
such STW Earning Completion.
(1) If Ridgewood elects to participate in such STW Earning
Completion and same is conducted pursuant to the Operating
Agreement, Ridgewood shall participate in same in accordance with
the terms of this Agreement and the Operating Agreement. Upon
providing BP written notice of its election to participate,
Ridgewood shall have earned an assignment of a portion of BP's
operating rights interest in and to the Contract Area limited to
the STW Earned Depth subject to the provisions of Article 5
hereof.
(2) If Ridgewood elects not to participate in such STW Earning
Completion or fails to timely advise BP of its election regarding
same, Ridgewood shall forfeit its right to earn any additional
interests in the Contract Area and this Agreement shall
immediately terminate and be of no further force or effect as to
all portions of the Contract Area below the ITW Earned Depth,
except that Ridgewood shall remain responsible for its
proportionate share of all costs, expenses and liabilities
associated with the terminated portions incurred prior to such
termination date.
3.3 If Ridgewood elects to participate in the Second Test Well pursuant to this
Agreement, but BP elects not to participate in the Second Test Well
pursuant to the Operating
7.
Agreement and the Second Test Well is proposed in a portion of the Contract
Area in which Ridgewood has earned an interest in depths below the ITW
Earned Depth from third parties:
(A) The Second Test Well shall be drilled pursuant to the Operating
Agreement and BP shall be designated as a Non-Participating Party
thereunder.
(B) If an STW Earning Completion is proposed, Ridgewood shall advise BP in
writing as to whether Ridgewood has elected to participate in such STW
Earning Completion proposal pursuant to the Operating Agreement.
(1) If Ridgewood elects to participate in such STW Earning Completion
pursuant to the Operating Agreement and same is conducted pursuant to
the Operating Agreement, Ridgewood shall be deemed to have elected to
participate in the STW Earning Completion for purposes of this
Agreement and shall pay BP by wire transfer within thirty (30) days of
Ridgewood's election to participate a sum equal to (i) eight and five
one-hundredths percent (8.05%) of the Shallow Promote (as defined in
Article 3.2(A)(ii)) plus (ii) eight and five one-hundredths percent
(8.05%) of the actual gross costs and expenses of all operations for
the Second Test Well conducted pursuant to the Operating Agreement
that are not actual gross costs and expenses of operations for the
Second Test Well conducted pursuant to the Operating Agreement
attributable to drilling and logging to the base of the ITW Earned
Depth. Upon such payment, Ridgewood shall have earned an assignment of
a portion of BP's operating rights interest in and to the Contract
Area limited to the STW Earned Depth subject to the provisions of
Article 5 hereof. To the extent any interest earned pursuant to this
Article 3.3 is subject to non-consent penalties as a result of BP's
elections pursuant to the Operating Agreement, such interest shall
remain subject to such non-consent penalties notwithstanding any
assignment made pursuant hereto.
(2) If Ridgewood elects not to participate in such STW Earning
Completion pursuant to the Operating Agreement or fails to timely make
such election pursuant to the Operating Agreement, Ridgewood shall be
deemed to have elected not to participate in the STW Earning
Completion for purposes of this Agreement and shall forfeit its right
to earn any additional interests in the Contract Area and this
Agreement shall immediately terminate and be of no further force or
effect as to all portions of the Contract Area below the ITW Earned
Depth, except that Ridgewood shall remain responsible for its
proportionate share of all costs, expenses and liabilities associated
with the terminated portions incurred prior to such termination date.
3.4 If Ridgewood elects to participate in the Second Test Well pursuant to this
Agreement,
8.
but BP does not desire to participate in the Second Test Well and the
Second Test Well is proposed in a portion of the Contract Area in which
Ridgewood has not earned an interest in depths below the ITW Earned Depth
from third parties:
(A) BP shall elect to participate in the Second Test Well for purposes of
the Operating Agreement and Ridgewood shall participate in and be obligated
to bear and pay thirty-seven and one-half percent (37.50%) of the gross
costs, risks, expenses and liabilities associated with all operations for
the Second Test Well conducted pursuant to the Operating Agreement until
Payout (as defined below).
(B) If an STW Earning Completion. is proposed, BP shall advise Ridgewood in
writing of such STW Earning Completion proposal, along with a copy of such
STW Earning Completion proposal and the estimated cost to conduct same, and
shall advise Ridgewood of the BP Response Deadline. On or before the
Ridgewood Response Deadline, Ridgewood shall advise BP in writing whether
Ridgewood elects to participate in such STW Earning Completion.
(1) If Ridgewood elects to participate in such STW Earning Completion
pursuant to the Operating Agreement and same is conducted pursuant to
the Operating Agreement:
(a) Ridgewood shall be deemed to have elected to participate in
the STW Earning Completion for purposes of this Agreement and
shall pay BP by wire transfer within thirty (30) days of
Ridgewood's election to participate a sum equal to (i) eight and
five one-hundredths percent (8.05%) of the Shallow Promote (as
defined in Article 3.2(A)(ii)) plus (ii) eight and five
one-hundredths percent (8.05%) of the actual gross costs and
expenses of all operations for the Second Test Well conducted
pursuant to the Operating Agreement that are not actual gross
costs and expenses of operations for the Second Test Well
conducted pursuant to the Operating Agreement attributable to
drilling and logging to the base of the ITW Earned Depth. Upon
such payment, Ridgewood shall have earned an assignment of a
portion of BP's operating rights interest in and to the Contract
Area limited to the STW Earned Depth subject to the provisions of
Article 5 hereof.
(b) Ridgewood shall be entitled to receive all revenues from
production attributable to BP's remaining twenty-nine and
forty-five one hundredths percent (29.45%) interest in the Second
Test Well until such time as Ridgewood has recouped the
applicable non-consent penalty as determined pursuant to Articles
10 and 12 of the Operating Agreement, which Articles are
incorporated herein by reference (such time being
9.
referred to herein as "Payout").
(c) Ridgewood's share of costs incurred after Payout shall be an
undivided twenty percent (8.05%) with respect to the Second Test
Well, subject to the terms of this Agreement and the Operating
Agreement.
(2) If Ridgewood elects not to participate in such STW Earning
Completion or fails to timely advise BP of its election regarding
same, Ridgewood shall forfeit its right to earn any additional
interests in the Contract Area and this Agreement shall immediately
terminate and be of no further force or effect as to all portions of
the Contract Area below the ITW Earned Depth, except that Ridgewood
shall remain responsible for its proportionate share of all costs,
expenses and liabilities associated with the terminated portions
incurred prior to such termination date.
3.5 If, prior to the STW Completion Time or plugging and abandoning of the
Second Test Well, a proposal to temporarily abandon the Second Test Well
and release the drilling rig is made pursuant to the Operating Agreement,
and same is conducted pursuant to the Operating Agreement, Ridgewood shall
participate in same and any future operations conducted on the Second Test
Well until the STW Completion Time in accordance with the terms of this
Agreement and the Operating Agreement; provided, however, subject to
Article 12 hereof, if future operations are not commenced on or before the
date occurring eighteen (18) months after the date the drilling rig is
released from the Second Test Well, this Agreement shall immediately
terminate and be of no further force and effect as to all portions of the
Contract Area below the ITW Earned Depth, except that Ridgewood shall
remain responsible for its proportionate share of all costs, expenses and
,liabilities incurred prior to such termination date, including, without
limitation, its share of plugging and abandonment liability.
3.6 Notwithstanding anything herein to the contrary, if (i) the Second Test
Well or a Substitute Well therefore fails to reach a depth below the ITW
Earned Depth due to Gulf Coast Conditions, but not otherwise, (ii) pursuant
to the Operating Agreement, an STW Earning Completion is not conducted on
the Second Test Well and the Second Test Well is completed at a depth
above the base of the ITW Earned Depth, or (iii) pursuant to the Operating
Agreement, the Second Test Well is plugged and abandoned, Ridgewood shall
not earn any additional interests in the Contract Area pursuant to this
Agreement and this Agreement shall immediately terminate and be of no
further force and effect as to all portions of the Contract Area below the
ITW Earned Depth, except that Ridgewood shall remain responsible for its
proportionate share of all costs, expenses and liabilities associated with
the terminated portions incurred prior to such termination date. However,
in the event of (ii) above, and if such Second Test Well is successfully
completed at a depth above the base of the ITW Earned Depth, then the cost
of drilling, completing, and equipping the Second Test Well (less any
amounts attributable to Article 3.2 (A)(ii)
10.
above) from the surface to a depth one hundred feet (100') below the base of the
completed zone, shall be allocated pursuant to the Operating Agreement.
Article 4
Drilling of the Test Well
-------------------------
4.1 BP shall commence, or cause to be commenced, the Initial Test Well on or
before July 1, 2005; provided, however, the sole consequence of BP's
failure to timely commence, or cause to be commenced, such Initial Test
Well shall be forfeiture of this Agreement.
4.2 After commencement, BP agrees to drill the Test Well in accordance with the
provisions of the Operating Agreement. 4.3 In the event BP elects to drill
a Substitute Well for the Test Well, such Substitute Well shall be
considered and treated for all purposes as though the same were the Test
Well, and all references in this Agreement to the Test Well shall also
include such Substitute Well. There shall not be a limit on the number of
Substitute Xxxxx that BP may elect to drill for the Test Well (or any
Substitute Well therefore) provided the provisions of Article 1.14 are
satisfied.
Article 5
Assignment(s) of Oil And Gas Leases
-----------------------------------
5.1 If Ridgewood satisfies its requirements in Article 2 or 3, as applicable,
then as of the ITW Completion Time or STW Completion Time, as the case may
be, Ridgewood shall be entitled to an assignment of operating rights from
BP as hereinafter set forth and subject to the conditions, exceptions,
reservations and agreements hereinafter contained effective as of ITW
Completion Time or STW Completion Time, as the case may be. If Ridgewood i
s entitled to an assignment, BP shall assign to Ridgewood an undivided
eight and five one-hundredths percent of 8/8ths (8.05% of 8/8ths) operating
rights interest in and to the Leases limited both geographically and
horizontally to the Contract Area limited to the ITW Earned Depth or the
STW Earned Depth, as the case may be, together with all rights in oil and
gas produced and marketed therefrom.
5.2 Any assignment earned by Ridgewood from BP hereunder shall be in the form
attached hereto as Exhibit "A" and shall be without warranty of title,
either express or implied, except as to claims of all persons claiming an
interest by, through or under BP, but not otherwise, and with full
subrogation and substitution in and to all actions in warranty. The
assigned interest will be transferred to Ridgewood free and clear of all
liens, encumbrances, burdens and claims arising by, through or under BP,
except for BP's proportionate share of lessor's royalties, rentals and
other obligations pursuant to the terms of the Leases and any non-consent
penalties burdening such interest pursuant to the
11.
terms of the Operating Agreement. BP does not warrant title to any portion
of the Contract Area or the Leases or agree to convey to Ridgewood any
better title thereto than BP has on the effective date of this Agreement.
5.3 In the event said Leases cover less than the entire mineral estate or the
interest owned by BP is less than the entire leasehold estate, both the
interest assigned by BP in any assignment pursuant hereto and Ridgewood's
share of costs, risks, expenses and liabilities assumed herein shall be
reduced proportionately.
5.4 Ridgewood agrees to be bound by the agreements and contracts to which the
interests assigned herein are subject and to assume the rights and
obligations of BP in such agreements and contracts, to the extent of the
interest acquired by Ridgewood, including, but not limited to, the
Operating Agreement.
5.5 Ridgewood covenants and agrees that prior to the time that it may become
entitled to an assignment pursuant to this Agreement, it shall not transfer
or assign this Agreement, or the interests assigned herein, without the
prior written consent of BP. Any assignment without BP's consent in
violation of this provision shall be, at BP's sole election, null and void
and of no force or effect. Consent by BP to any one assignment or transfer
shall not be construed as consent to any further or future assignment or
transfer, it being expressly understood that BP's prior written consent
shall be required for any assignment or transfer by Ridgewood, and any of
its successors or assigns. In the event the right to assign is granted, BP
shall nevertheless hold Ridgewood responsible for compliance with the terms
and conditions hereof. Any assignment by Ridgewood, or its subsequent
assignees, of any interest in all or any portion of the Leases shall be
made expressly subject to this Agreement and the assignee therein shall
expressly agree to be ,bound by the terms and provisions of this Agreement
and the Operating Agreement.
5.6 Except as provided in (i) and (ii) below and subject to Article 12 hereof,
at any time or times after Ridgewood has earned an assignment of operating
rights interest pursuant to this Agreement, if all production from that
portion of the Contract Area earned by Ridgewood hereunder should cease for
any cause, and a lapse of more than one (1) year without the recommencement
of production from such portion of the Contract Area occurs, BP may
terminate this Agreement and any transfer of operating rights interest
executed pursuant hereto; whereupon Ridgewood shall re-convey to BP, by
means of a recordable written instrument effective as of the end of such
one (1) year time period, the operating rights interest Ridgewood acquired
from BP pursuant to this Agreement, such operating rights interest to be
returned to BP free and clear of any lien, privilege, mortgage, other
encumbrance, overriding royalty interest, payment out of production, and/or
contract created or entered into by Ridgewood and affecting such
transferred premises. Notwithstanding anything to the contrary contained
above in this Article 5.6,
12.
the assignment from Ridgewood to BP shall not relieve Ridgewood from any
obligations or liability incurred prior to the effective date of such
assignment to BP.
The above provisions of Article 5.6 shall not be applicable if (i) a well
or well(s) exist in that portion of the Contract Area earned by Ridgewood
hereunder which are capable of producing oil and/or gas in "paying
quantities" (as defined below) from such portion of the Contract Area, or
(ii) a proposal to drill, rework, recomplete, or sidetrack a well to such
portion of the Contract Area ("Extending Operation(s)") is made pursuant to
the Operating Agreement and such Extending Operation(s) is timely commenced
and continuously prosecuted; provided, if such Extending Operation(s) fails
to result in a well capable of production in "paying quantities", then the
above provisions of Article 5.6 shall continue to not be applicable for
only so long as such Extending Operation(s) are commenced without a time
period in excess of one hundred eighty (180) days elapsing between the
commencement of actual operations for one such Extending Operation(s) and
the commencement of actual operations for the next subsequent Extending
Operation(s).
For purposes of this Article 5.6, the term "paying quantities" shall mean
in sufficient quantities such that the net revenue generated from same is
in excess of the monthly operating costs allocated to such well pursuant to
the Operating Agreement.
Article 6
Cash Calls and Performance Bonds
--------------------------------
6.1 Subject to confirmation by Ridgewood of BP having contracted a rig to drill
the Initial Test Well, then within thirty (30) days of receipt by Ridgewood
of a written notice by BP that the anticipated spud date for the Initial
Test Well will occur on a date equal to or less than thirty (30) days from
the date of said notice, Ridgewood shall advance to BP by wire transfer its
respective share of estimated expenditures associated with the AFE for the
Initial Test Well. As to subsequent operations in which Ridgewood elects to
participate, Ridgewood shall advance to BP by wire transfer its respective
share of estimated expenditures for such subsequent operations on or before
the date occurring ten (10) business days after Ridgewood's election to
participate is delivered to BP. In addition to the above, Ridgewood shall
also advance to BP by wire transfer its respective share of estimated
expenditures associated with any supplemental AFEs for operations in which
Ridgewood is obligated to participate within ten (10) days of Ridgewood's
receipt thereof. BP shall adjust each billing to give credit for advances
received from Ridgewood In the event Ridgewood fails to timely advance its
respective share of estimate expenditures, then, BP will immediately notify
Ridgewood of its advance being due, and Ridgewood shall have a twenty-four
(24) hour period from receipt of such notice by BP to advance its
respective share of estimate expenditures by wire transfer and
13.
if Ridgewood fails to do so, then, at BP's sole election, Ridgewood shall
be deemed to have elected not to participate in such operation for which it
did not timely advance its respective share of estimated expenditures and
BP may, in its sole discretion, immediately terminate all or any portion of
this Agreement.
Notwithstanding anything herein to the contrary, once the Operating
Agreement becomes applicable as to interests earned by Ridgewood pursuant
to this Agreement, the !above provisions of this Article 6.1 shall not be
applicable to such earned interests and the ability of BP to make cash
calls with respect to such earned interests shall be governed by the terms
of the Operating Agreement.
6.2 On or before the date occurring thirty (30) days after Ridgewood's election
to participate in the ITW Earning Completion, Ridgewood shall establish an
escrow account in an amount of Ridgewood's earned interest percentage of
the estimated costs of plugging and abandoning the Initial Test Well, which
estimated amount shall be provided by BP to Ridgewood in writing. The
escrow agreement (the "Escrow Agreement") establishing and governing such
escrow account shall be in a form acceptable to BP. Upon subsequent
elections to participate by Ridgewood or at payout of any operations in
which Ridgewood elected not to participate under the Operating Agreement,
BP shall provide Ridgewood with written estimates of additional costs for
plugging and abandonment associated with such elections, and within thirty
(30) days of Ridgewood's receipt thereof, Ridgewood shall increase the
escrowed amount in the amount of such estimates. In addition, BP shall have
the ability to make an annual redetermination of the required escrowed
amount and require Ridgewood to increase/decrease the escrowed amount as
necessary. In the event Ridgewood fails to establish an escrow account in a
form acceptable to BP or fails to increase the escrowed amount as required
by this Agreement, BP may establish such escrow account itself and, at BP's
sole discretion, either invoice Ridgewood for the cost to establish such
escrow account, including, without limitation, the escrowed amount or
recover the cost to establish such escrow account and the escrowed amount
from Ridgewood's share of production.
In the event Ridgewood disagrees with any of BP's estimates of the costs
associated with plugging and abandonment, Ridgewood shall provide BP with
written notice of such disagreement within ten (10) days of Ridgewood's
receipt thereof. Upon receipt of such written notice from Ridgewood, the
Parties shall enter into good faith negotiations and attempt to agree on
such estimates. In the event the Parties cannot agree on an estimate within
ten (10) days of Ridgewood's notice, the Parties shall mutually agree on
and employ a plugging and abandonment consultant to resolve the matter and
determine such estimates. The determination by the plugging and abandonment
consultant shall be conclusive and binding upon both Parties: The cost of
the plugging and abandonment consultant shall be borne fifty percent (50%)
by Ridgewood and fifty percent (50%) by BP.
14.
Article 7
Well Cost Adjustments
---------------------
7.1 For purposes of this Article 7, "Total Gross Cost" shall mean the total
gross cost incurred in the initial drilling, logging, casing of the well
down to the base of the zone which is the target of the completion
operation depreciated by an amount equal to ten percent (10%) of said total
gross cost per year from the date the well reached its total depth to the
date the completion operation is commenced (prorated to account for
fractional years). Such "total gross cost" shall include, without
limitation, intangible drilling costs, tangible drilling costs, surface
equipment and drilling overhead.
7.2 To the extent application of this Article 7 is required by Article 2.5 of
this Agreement, the depreciated well cost adjustment shall be calculated as
follows:
(A) If BP elects to participate in the completion operation provided for in
Article 2.5 (ii), BP shall remit to Ridgewood a depreciated well cost
adjustment amount which shall be calculated by multiplying twelve percent
(12%) times the Total Gross Cost. Said well cost adjustment shall be due
and payable from BP to Ridgewood by wire transfer within thirty (30) days
after the ITW completion.
(B) If BP elects not to participate in the completion operation provided
for in Article 2.5 (ii), BP shall be deemed to be a Non-Participating Party
(as defined in the Operating Agreement). Any depreciated well cost
adjustment amount shall be calculated pursuant to the formula in Article
7.2(A) above, but such well cost adjustment amount shall be recouped by
Ridgewood from BP's net proceeds, if any, from the well after the
Participating Parties (as defined in the Operating Agreement) recoup the
non-consent penalty amounts provided in the Operating Agreement.
7.3 By way of example and not of limitation, attached hereto as Exhibit "D" is
an example of a well cost adjustment calculation utilizing the above
methodology.
Article 8
Operator and Applicability of Operating Agreement
-------------------------------------------------
8.1 BP shall be the Operator of the Test Well as provided in the Operating
Agreement. Simultaneously with each assignment to Ridgewood pursuant to
Article 5 above, if made, Ridgewood shall execute a ratification of the
Operating Agreement attached hereto as Exhibit "E" as to the interests
earned pursuant to such assignment. Except as provided otherwise in this
Agreement, all operations on the Test Well and all subsequent operations on
the Contract Area shall be conducted pursuant to the terms and conditions
of the Operating Agreement.
15.
Article 9
Production Handling and Processing
----------------------------------
9.1 Ridgewood acknowledges that a formal production handling and processing
arrangement does not currently exist to handle and process production from
the Leases and the Contract Area. Therefore, BP does not represent or
guarantee that Ridgewood will have appropriate means to handle and process
its share of production from the Test Well in the event that the Test Well
is completed as a well capable of commercial production nor does BP
represent or guarantee that any production handling facilities will have
capacity to handle such production; provided, as between BP and Ridgewood,
if limited capacity is available on an existing production handling
facility and the Initial Test Well is produced at a rate less than its
maximum production rate, then the reduced production volumes will be
pro-rated between BP and Ridgewood based on their working interest
ownership of the Initial Test Well. Upon completion of the Test Well as a
well capable of commercial production, BP will endeavor to facilitate the
negotiation of a Production Handling Agreement between Ridgewood and the
owners of the applicable production handling and processing facilities.
Article 10
Liability and Insurance
-----------------------
10.1 Ridgewood shall secure and maintain the following insurance coverages for
purposes of this Agreement:
a) Comprehensive General Liability Insurance suitably endorsed for maritime
operations (including contractual coverage), excluding products, with a
minimum limit of Five Million Dollars (US$5,000,000) for each accident for
bodily injuries or death and property damage.
b) Extra Expense Insurance including Well Control Coverage, Pollution,
Extra Expense and Care, Custody and Control Coverage in the minimum amount
of Ten Million Dollars (US$10,000,000).
10.2 Ridgewood shall name BP as an additional named insured on all of the
policies hereinabove. BP shall hold the same benefit and insurance coverage
as Ridgewood and there shall be no exclusions, endorsements or other
special policy provisions which provide that BP shall have restricted or
limited insurance coverage that varies in any respect from the insurance
coverage.
16.
10.3 All of the insurance policies listed herein obtained by Ridgewood shall
also be endorsed as follows: "To eliminate controversies, the expense and
inconvenience thereto, as between Ridgewood and BP, it is agreed that the
underwriters, insurers and insurance carriers of the Party named as
additional insured shall not have any right of subrogation (equitable or by
assignment, express or implied, loan receipt of otherwise) against the
named insured Party or its insurers, and the right of subrogation is
expressly waived."
10.4 Ridgewood shall secure a certificate of insurance from its primary insurers
and shall also secure copies of the insurance policies covering the
required insurance listed hereinabove and shall furnish same to BP.
10.5 The above insurance coverages shall be in addition to any insurance
required by the Operating Agreement.
Article 11
Tax Provisions
--------------
11.1 In order to properly allocate the intangible drilling costs and other tax
benefits of the costs incurred hereunder, BP and Ridgewood hereby agree to
enter into the Tax Partnership attached hereto as Exhibit "F," with BP
acting as Tax Reporting Partner. Any costs incurred by BP in establishing
and administering the Tax Partnership will be billed by BP to Ridgewood
with Ridgewood being responsible for twenty-two percent (22%) of such costs
and BP being responsible for seventy-eight percent (78%) of such costs.
Notwithstanding any provision in this Agreement, to the effect that the
rights and liabilities of the Parties are several, not joint or collective,
and this Agreement and the activities and operations hereunder do not
constitute a partnership under state law, each Party elects not to be
excluded from the application of all or any part of the provisions of
Subchapter K, Chapter 1, Subtitle A, of the Internal Revenue Code of 1986,
as amended, or similar provisions of applicable state laws.
Article 12
Force Majeure
-------------
12.1 All obligations imposed by this Agreement on each Party, except for the
payment of money, shall be suspended and all periods of time for exercising
any rights hereunder shall be extended while compliance is prevented, in
whole or in part, by a labor dispute, fire, flood, war, civil disturbance,
or act of God; by laws; by governmental rules, regulations, or orders; by
governmental action or governmental delay; by inability to secure materials
or equipment; or by any other cause, whether similar or dissimilar, beyond
the reasonable control of the said Party; provided, however, that
performance
17.
shall be resumed within a reasonable time after such cause has been
removed; and provided further that no Party shall be required against its
will to settle any labor dispute. Whenever a Party's obligations or rights
are suspended or extended hereunder, such Party shall immediately notify
the other Party, giving full particulars of the reason for such suspension
or extension, and such Party shall thereafter diligently endeavor to remove
or correct the cause of such force majeure event as soon as reasonably
possible.
Article 13
Representations
---------------
13.1 Ridgewood represents and warrants that this Agreement and any interest
acquired hereunder (a) are being entered into and acquired for its own
account and not with a view to distribution, (b) have not and will not be
registered under the Securities Act of 1933, as amended, or the securities
laws of any state (collectively, the "Acts") in reliance on exemptions
therefrom and/or this and the other representations by Ridgewood in this
Article 13.1, and (c) will not be sold or otherwise transferred except in
accordance with the registration requirements of the Acts or pursuant to an
exemption therefrom.
13.2 BP does not make any representation or warranty, either express or implied,
as to the accuracy, completeness or materiality of any data, information,
records or materials made available in connection with this Agreement.
WITHOUT LIMITATION TO THE GENERALITY OF THE FOREGOING AND EXCEPT AS
OTHERWISE PROVIDED IN THE ASSIGNMENT, BP EXPRESSLY DISCLAIMS AND NEGATES
ANY WARRANTY, EXPRESS OR IMPLIED AS TO (1) TITLE, (2) MERCHANTABILITY, (3)
FITNESS FOR A PARTICULAR PURPOSE, OR (4) CONFORMITY OF THE DATA TO SAMPLES
OR MODELS. Ridgewood confirms that it, or its, agents or representatives,
had access to and an opportunity to inspect relevant data related to the
interests to be acquired hereunder which it deemed necessary to make an
informed investment judgment with respect to such interests and that it has
the knowledge and experience in financial and business matters in general
and in oil and gas investments in particular, including investments in the
oil and gas exploration and production industry, and that it is capable of
evaluating the merits and risks of this Agreement and any interests
acquired hereunder.
Article 14
Default
-------
14.1 If Ridgewood makes any default in any term, covenant or condition of this
Agreement, BP may give Ridgewood written notice stating the nature of such
default. If Ridgewood fails to commence to remedy such default within
thirty (30) days after receipt of such notice or fails to continue to
remedy such default, BP may, by notice, in writing to Ridgewood, cancel and
terminate all or any portion of the interest of Ridgewood
18.
hereunder, and it shall be lawful for BP to reenter upon the Contract Area
(or any part thereof in the name of the whole) and to repossess and enjoy
same.
14.2 The rights hereby granted to BP shall be in addition to and not in
substitution for any other right or remedy which BP may have hereunder and,
specifically, the existence or the exercise of such rights shall not serve
to deprive BP, either wholly or partially, of any other right or remedy at
law or in equity, including damages and indemnity.
14.3 Notwithstanding the preceding clauses of this Article, but subject to
Article 5.6, no termination or cancellation as hereinbefore provided shall
apply to any portion of the Contract Area in which Ridgewood has earned an
interest prior to the default.
Article 15
Lease Payments
--------------
15.1 If any delay rental payment, shut-in well payments or minimum royalty
payments for the Leases should become due and payable, whether before or
after Ridgewood has earned any assignments, BP shall make a bona fide
effort to pay such lease payments, but shall not be responsible to
Ridgewood for losses or damages resulting from its failure to do so.
Article 16
INDEMNIFICATION
---------------
16.1 TO THE EXTENT OF RIDGEWOOD'S PERCENTAGE SHARE OF COSTS, RISKS, EXPENSES AND
LIABILITIES ASSUMED HEREIN, RIDGEWOOD AGREES TO PROTECT, DEFEND, INDEMNIFY,
AND HOLD BP, ITS AFFILIATES, AND THEIR RESPECTIVE OFFICERS, DIRECTORS,
AGENTS, SERVANTS, AND EMPLOYEES, HARMLESS FROM AND AGAINST ANY AND ALL
CLAIMS, DEMANDS, COSTS, LOSSES, EXPENSES, INCLUDING COURT COSTS AND
ATTORNEYS FEES, SUITS AND JUDGMENTS FOR PERSONAL INJURY, PROPERTY DAMAGE OR
ENVIRONMENTAL DAMAGE RESULTING DIRECTLY OR INDIRECTLY FROM OR ARISING OUT
OF THE OPERATIONS CONTEMPLATED BY TO THIS AGREEMENT TO THE FULLEST EXTENT
WHICH THE LAW WILL ALLOW, ALSO EXPRESSLY INCLUDING ANY OF THE SAME THAT MAY
BE CAUSED IN WHOLE OR IN PART BY THE NEGLIGENCE OR OTHER FAULT OF ANY OF
THE ABOVE DESCRIBED INDEMNITEES (EXCEPTING ONLY THOSE CLAIMS CAUSED BY THE
INDEMNITEES' GROSS NEGLIGENCE OR WILLFUL MISCONDUCT); PROVIDED THAT BP
SHALL HAVE THE RIGHT, IF IT SO ELECTS, TO PARTICIPATE AT ITS OWN COST AND
EXPENSE IN THE DEFENSE OF ANY SUIT TO WHICH ANY SUCH INDEMNITEES ARE
19.
MADE A PARTY WITHOUT RELIEVING RIDGEWOOD OF THE PRIMARY OBLIGATION TO
DEFEND SUCH ACTION.
Article 17
Miscellaneous Provisions
------------------------
17.1 Relationship of the Parties. It is not the purpose or intention of this
Agreement to create, and this Agreement shall never be construed as
creating, a joint venture, mining partnership or other relationship whereby
any Party shall be held liable for the acts, either of omission or
commission, of any other Party hereto.
17.2 Choice of Law. THIS AGREEMENT, AND THE OTHER MATTERS ARISING DIRECTLY OR
INDIRECTLY OUT OF THIS AGREEMENT, SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE GENERAL MARITIME LAW OF THE UNITED STATES TO THE EXTENT
APPLICABLE, OTHERWISE BY THE LAWS OF THE STATE OF LOUISIANA WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES THAT MIGHT OTHERWISE APPLY THE LAWS OF
ANOTHER STATE OR JURISDICTION.
17.3 Authority. If any Party is a legal entity, including, but not limited to,
an association, corporation, joint venture, limited partnership,
partnership or trust, such Party represents to the other Party that the
execution and delivery of this Agreement and the completion of the
transactions contemplated herein have been duly authorized by all necessary
corporate proceedings or have received all necessary management approvals.
17.4 Conflict. Except as expressly provided in this Agreement, to the extent of
any conflict between the provisions of this Agreement and the provisions of
the Operating Agreement, the provisions of this Agreement shall supersede
and control to the extent of such conflict.
17.5 Section Headings. The section headings used herein are for convenience only
and shall not be construed as having any substantive significance or as
indicating that all of the provisions of this Agreement relating to any
particular topic are to be found in any particular section.
17.6 Entire Agreement. This Agreement, together with the instruments referenced
herein and the attachments hereto, embody the entire agreement between the
Parties with regard to the subject matter hereof, and supersedes all other
prior or contemporaneous agreements (other than the Operating Agreement),
arrangements, proposals, representations, negotiations, communications and
understandings, whether oral or written, relating to the subject matter
hereof.
20.
17.7 Exhibits and Attachments. All exhibits, attachments and the like
contained herein or attached hereto are integrally related to this
Agreement, and are hereby made a part of this Agreement for all purposes.
To the extent of any ambiguity, inconsistency or conflict between the
body of this Agreement and any of the exhibits, attachments and the like
attached hereto, the terms of this Agreement shall prevail over the
exhibits and attachments, to the extent of such conflict.
17.8 Amendment, Modification and Waiver. This Agreement may be supplemented,
altered, amended, modified or revoked in writing and any of the terms,
covenants, representations, warranties or conditions hereof may be
waived, only by a written instrument executed by all of the Parties or,
in the case of a waiver, by or on behalf of the Party waiving compliance.
The failure of any Party at any time or times to require performance of
any provisions hereof shall in no manner affect the right at a later time
to enforce the same. No waiver by any Party of any condition, or of any
breach of any term, covenant, representation or warranty contained in
this Agreement, in any one or more instances, shall be deemed to be or
construed as a further or continuing waiver of any such condition or
breach or a waiver of any other condition or of any breach of any other
term, covenant, representation or warranty.
17.9 Further Assurances. The Parties will execute and deliver or use
reasonable efforts to cause to be executed and delivered such other
instruments and take such other actions as the Parties reasonably may
request to more effectively accomplish the purposes of this Agreement.
17.10 Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the Parties and their respective heirs, successors,
representatives and permitted assigns and shall constitute a covenant
running with the Contract Area.
17.11 Notices. The Parties agree that any notices, communications or documents
that either of them desire or that may be required to be delivered to the
other Party shall be sent to the Parties at the following respective
addresses stated for each:
BP America Production Company Ridgewood Energy Corporation
000 Xxxxxxxx Xxxx Xxxx. 00000 Xxx Xxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000 Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxx Attn: W. Xxxx Xxxxx
Phone: 000-000-0000 Phone: 000-000-0000
Fax: 000-000-0000 Fax: 000-000-0000
All notices and responses thereto shall be in writing and delivered in
person or by telephone followed by United States mail, telex, telegraph,
telecopier (facsimile) or cable; however, if the drilling rig is on
location and standby charges are accumulating, such notices and responses
shall be given by telephone and immediately confirmed in writing. Notices
and responses shall be deemed given only when received by the Party to
whom
21.
such notice or response is directed, except that any notice or response
by certified United States mail or equivalent, telegraph, or cable
properly addressed, pursuant to this Article 17.11, and with all postage
and charges prepaid shall be deemed given seventy-two (72) hours after
such notice is deposited in the mail inclusive of Saturdays, Sundays, and
federal holidays, or twenty-four (24) hours after such notice or response
is sent by telecopier (facsimile), receipt confirmed and verified by
telephone, or filed with an operating telegraph or cable company for
immediate transmission inclusive of Saturdays, Sundays, and federal
holidays. Either Party may change its address for notice by notice to the
other Party.
17.12 Confidentiality, News Releases and Disclosures. This Agreement shall be
kept strictly confidential, and no press release or other public
announcement or disclosure regarding this Agreement or the Leases shall
be made by either Party without the prior written consent of the other
Party. However, either Party may make releases or public announcements
which are required in order to comply with applicable laws; provided, the
releasing, announcing and/or disclosing Party first gives the other Party
adequate notice and time for review of and comment on such release,
announcement or disclosure before it is made. BP acknowledges that
Ridgewood may desire to disclose certain terms of this Agreement in its
marketing brochures, drilling fund prospectus' or company website and BP
agrees to give appropriate attention to Ridgewood's consent requests with
respect to such disclosures, but such consent may be given or refused in
BP's sole discretion. Notwithstanding anything herein to the contrary,
the Parties acknowledge and agree they shall always be subject to Article
7.3 (Confidentiality) of the Operating Agreement even prior to
Ridgewood's earning an interest pursuant hereto and nothing in this
Agreement shall be considered an exception to or waiver of such
confidentiality obligations.
17.13 Severability. If any provision of this Agreement is held to be illegal,
invalid or unenforceable under present or future laws in effect during
the term hereof, such provision shall be fully severable; this Agreement
shall be modified, construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof and the
remaining provisions hereof shall remain in full force and effect and
shall not be affected by the illegal, invalid or unenforceable provision
or by its severance therefrom. If any provision of this Agreement is so
broad as to be unenforceable, each provision shall be interpreted to be
only so broad as is enforceable. A bankruptcy or similar trustee must
accept or, to the extent permitted by law, reject this Agreement in its
entirety.
17.14 Jointly Drafted Agreement. The Parties acknowledge that they have had an
adequate opportunity to review each and every provision contained in this
Agreement and to submit the same to legal counsel for review and comment.
Based on the foregoing, the Parties agree that the drafting of this
Agreement was a joint effort, and the rule of
22.
construction that a contract be construed against the drafter, if any,
shall not be applied in the interpretation or construction of this
Agreement.
17.15 Counterparts. This Agreement may be executed in counterparts and each
such counterpart shall have the same force and effect as the original
hereof; provided, however, that none of said counterparts shall be
effective until all the Parties hereto have executed a counterpart
hereof.
EXECUTED as of the 14th day of April, 2005, but effective as of the date first
above written.
Witnesses: BP America Production Company
[SIGNATURE ILLEGIBLE] By. /s/ Xxxxxxx Xxxxxxxxx-Xxxxx
-------------------------- ---------------------------
Xxxxxxx Xxxxxxxxx-Xxxxx
[SIGNATURE ILLEGIBLE] Its: Attorney-in-Fact
--------------------------
Witnesses: Ridgewood Energy Corporation
[SIGNATURE ILLEGIBLE] By: /s/ W. Xxxx Xxxxx
-------------------------- ----------------------------
W. Xxxx Xxxxx
[SIGNATURE ILLEGIBLE] Its: Executive Vice President
--------------------------
23