In order to be entitled to the provisions of this Article XV.L., each Exploratory Well drilling proposal must include a plat on which the Development Block is identified. Within 30 days after receipt of the payment notice and invoice, Operator shall notify Non-Operator of its election to participate in the lease maintenance obligation payment. Such AMI shall be subject to the parties pre-existing contractual obligations as of September 1, 2005. Pursuant to its recommendation and/or upon being advised to do so by any party, Operator shall make the appropriate payment and those who elected not to participate therein shall promptly make assignment of their interest to the parties who participated in such payment. Development Well means any well proposed in an existing Development Block other than the Exploratory Well. to the extent of the costs unpaid by such party, notwithstanding any election to participate theretofore made. below, Operator shall be responsible for payment of delay rentals, royalty on all production sold by Operator on behalf of nonoperator, shut-in well payments and minimum royalties required under the terms of leases initially subjected to this agreement or of subsequently acquired leases if same are owned by all parties hereto. Dallas, Texas 75240 4100 FOSSIL CREEK BLVD., My Commission Expires:__________                             ________________________. If election is made to proceed under this provision, then the non-defaulting party may not elect to sue for the unpaid amount pursuant to this Article XV.N.2. These records are to be maintained for a minimum period of two (2) years after final cash settlement occurs pursuant to Section 6 hereof. L.            Completion. • The American Association of Petroleum (now Professional) Landmen (“AAPL”) sanctioned the drafting of a uniform joint operating agreement (“JOA”) first in 1956, known as the “Form 610.” • Form 610 was revised by AAPL in 1977, 1982 and 1989 2.3         During any month when a party fails for any reason to take its Full Share of Current Production (as such Share may be reduced by the right of the other Parties to make up for Underproduction as provided herein) the other Parties shall be entitled to take any Gas which such Party fails to take. Form 610-1982 Model Form Operating Agreement (“AAPL Form 610-1982”), less common than the Form 610-1989 but still in … Non-Judicial Foreclosure: Notwithstanding anything herein to the contrary, from time to time, the Operator shall invoice the Participating Parties for their share of costs and expenses incurred in any well drilled on the Leased Lands or for other costs and expenses relating to the Contract Area reasonably estimated to exceed $25,000.00. Any such audit shall be conducted at the expense of the Party or Parties desiring such audit, and shall be conducted, after reasonable notice, during normal business hours in the office of the Party whose records are being audited. 1.13         "Royalty" shall mean payments on production to all owners of royalties, overriding royalties, production payments and similar interests. To date, the AAPL has promulgated four versions of the AAPL Form JOA, and the 1989 form and 1982 form are the most commonly used. Further, in the event any lease and the interest affected thereby becomes owned by more than one of the parties hereto, but less than all of the parties hereto, such lease and the interest affected thereby shall thereafter be excluded from the terms of thus Agreement and shall be deemed subject to an Operating Agreement identical in terms to this Agreement but only as between the parties owning interests therein with appropriate adjustments to reflect their participating interests. Notwithstanding any provision in this Agreement or any other agreement between the Parties hereto to the contrary, and further notwithstanding any termination or cancellation of this Agreement or such other agreement, for a period of two (2) years after the date that Gas accounts are settled, any Party shall have the right to audit (i) the records of any Overproduced Party as to all matters concerning volumes, Btu content, adjustments and prices (except in the case of volumetric settlement) and disposition of Gas taken from a Well, and (ii) the records of any Underproduced Party as to all matters concerning volumes. RESTRICTIONS AS TO DEPTHS, FORMATION, SUBSTANCES AND OPERATIONS: This Operating Agreement is limited to depths below the stratigraphic equivalent of the base of the Glen Rose Formation, as shown at a depth of 8,171' feet subsurface on the electric log of the Union Producing Company E. Halsell #1 Well (API 42-323-01126) loated in Maverick County, Texas. 1.5         When used in conjunction with the term "Gas", the terms:    "take", "taking", "took", and "taken" shall be deemed to mean any method of disposition of Gas which is produced and saved from a Well, including Gas purchased or sold by a Party or third party or affiliate, or Gas used by a Party for purposes other than for joint operations hereunder. 27. november 2020. The Operator shall at all times consult freely with the other parties concerning the operations being or to be conducted on the Contract Area and shall permit any party hereto to collaborate in any litigation or hearings before any administrative body, state or federal, affecting the Contract Area and/or the production therefrom. A.A.P.L. American Association of Professional Landmen (AAPL) Form 610-AAPL Form Joint Operating Agreement ・ァSince 1956, the AAPL has provided the domestic oil and gas industry with a standardized form of operating agreement governing the development of oil and gas properties. C.            Required Wells and Operations. A Well will be considered a separate Well with respect to, but only to, each reservoir from which the Gas production is not commingled in the wellbore. 3)            A proposal to rework current completion. If after the effective date of this agreement a party or its parent, subsidiary, affiliate or other party under the control of or controlled by such party ("Acquiring Party") acquires by purchase, farmout, assignment or otherwise an oil and gas leasehold interest or Fee Interest within the AMI, then within thirty (30) days after such acquisition the Acquiring Party shall give written notice to the other parties (Non-Acquiring Parties) of such acquisition, including the actual cost (including non-cash remuneration) and all other material pertaining thereto. The parties to this Agreement are owners of certain oil and gas interests covering the land or lands described in Exhibit "A" attached hereto and they have entered into an Operating Agreement dated the 1st day of September, 2005, covering said land and the oil and gas leases described in Exhibit "A" attached hereto. shall not cause the forfeiture of any party's interest in any other portions of the Development Block which has been previously created. Notwithstanding any other provisions of this Operating Agreement and any rights or remedies or Operator thereunder and in addition thereto, if Participating Party fails to pay any properly documented invoice with twenty (20) days of Participating Party's receipt hereof, Operator, at its option, may send written notice to Participating Party by certified mail of Operator's intention to foreclose pursuant to the terms hereof. The Operator shall not be liable to any Underproduced Party for the failure of any Overproduced Party to pay any amounts owed pursuant to the terms hereof. The name of the Assignee to be billed and a written statement signed by the Assignee to be billed in which it consents to receive statements and billings for the interest credited to Assignee; and, further consents to handle any necessary sub-billings in the event it does not    own the entire interest conveyed by Selling Party. C.         Automobile combined liability each accident of $1,000,000.00 minimum coverage for bodily injury and property damage. Priority of Article XV. If at any time there is more than one location proposed for the drilling of a required well, the parties agree that the location proposed for a required well with the shallowest objective formation, which would serve to perpetuate or earn the subject lease or interest, shall take precedence. Development Block means that part of the Contract Area designated by the proposing Party for an Exploratory Well. D.         Cost of Control Extra Expense Insurance ("OEEI") covering Control of Well, Redrilling Expense, Seepage, Pollution, Clean-up and Containment and removal of Debris in the minimum limit of $5,000,000.00 per any one occurrence-combined single limit. 7)            Proposal to plug and abandon the well. Facsimile No. If any such leased or Fee Interest includes depths other than the Restricted Depths then 30% of the Acquisition Price shall be allocated to the Restricted Depths. For example, JOAs cover the terms and conditions under which the operator is to cond… In the event a proposed Development Well is not timely commenced per the terms of this Agreement, the effect shall be as if the proposal had not been made and no forfeiture of interest shall occur. We will deal more with the specific provisions of the JOA in future contributions. 14.1         Notwithstanding anything herein or in the Joint Operating Agreement to the contrary; if any Party assigns (including any sale, exchange, transfer, or other disposition) any of its interest in a Well when such Party is an Underproduced or Overproduced Party, the assignment shall, insofar as the Parties hereto are concerned, include all interest of the assigning Party in the Gas, all rights to receive or the obligation to make any monetary payment which may ultimately be due hereunder, as applicable. Notwithstanding anything to the contrary, in the event that any party hereto elects not to participate in the drilling of a Development Well, that party shall promptly relinquish and assign, upon such well reaching its Objective Depth and being either (i) plugged and abandoned as a dry hole or (ii) completed as a well capable of production, to the parties who drilled such Development Well, one hundred percent (100%) of its right title and interest in the 640 acre section in which the Development Well is located. For purposes of foreclosing such lien and conducting such non-judicial sale pursuant to the Operating Agreement, Non-Operator appointed and does hereby appoint Robert E. Lee, Jr., whose address is 500 North Loop 1604 East, Suite 250, San Antonio, Texas  78232, as Trustee. 2)            Proposals to attempt completions, first in the objective formation. The 1989 version of Form AAPL 610 could not predict these changes and was unable to take into account in advance some of the legal challenges that emerged during the industry`s maturity. The forfeited interest shall be free of any Excess Burden as described in Article III.D. 1.3         "Full Share of Current Production" shall mean the Percentage Interest of each Party in the Gas actually produced from a Well during each month. Losses not covered by insurance required by this Agreement to be carried for the benefit and at the expense of the parties hereto shall be charged to the joint account. If all such Gas is not taken by the Underproduced Parties, the portion not taken shall then be made available to the other Parties in the proportion that their respective interests in the Well bear to the total interest of such Parties. Operator and Non-Operator will alternate selection of one (1) square mile sections (other than sections on which producing wells are located) until all eight (8) non-producing sections are chosen, with the operator of the well selecting first. Deemed Non-Consent:    Operator (or any Non-Operator if the operator is the party in default) may deliver a written Notice of Non-consent Election to the defaulting party at any time after the expiration of the twenty day cure period following delivery of the Notice of Default, in which event if the billing is for the drilling of a new well or the plugging back, sidetracking, reworking or deepening of a well which is to be or has been plugged as a dry hole, or for the completion or recompletion of any well, the non-paying party will be conclusively deemed to have elected not to participate in the operation and to be a Non-consenting Party with respect thereto under Article VI.B. of this Operating agreement. hereof, (ii) elects not to pay rentals attributable to its interest in any lease and thereby is required to assign the lease or that portion or interest therein for which it elects not to pay rentals to those parties paying such rental, such assignment shall be free and clear of the subsequently created interest, in whatever form, including overriding royalties, production payments, net profits, payments, mortgage, lien or any other burden. In the event a proposed Exploratory Well is not timely commenced per the terms of this Agreement, the effect shall be as if the proposal had not been made and the creation of the applicable Development Block shall have no further force and effect. In such event, Non-Operator shall immediately assign to Operator all of its remaining interest in said lease that Non-Operator elected not to participate in the lease maintenance obligation payment. These agreements must be thoroughly reviewed before they can be approved. 4.3         As to each Well, the Operator will furnish a statement for each such month showing: (i)         the total quantity of gas produced. Drilling Well Rate:         $5,000/month                    0'- 6,000', $7,000/month                    6,001' - 10,000', $8,000/month                    greater than 10,001', Producing Well Rate:         $500/month                    0' - 6,000', $700/month                    6,001' - 10,000', $800/month                    greater than 10,001'. It is further agreed that said Trustee or any holder or holders of said obligation or Operator shall have the right to become the purchaser or purchasers at such sale if they are the highest bidder or bidders, in which    event the bid or bids of the purchaser or purchasers, less allowable costs and expenses described above, may be credited upon said indebtedness of said Participating Party. Until the delivery of such notice of Non-consent Election to the non-paying party, such party shall have the right to cure its default by paying unpaid billing plus interest at the rate set forth in Section I. shall apply only to the drilling of new wells and shall not apply to the reworking, deepening, sidetracking or plugging back of existing wells. is derived fails to pay, when due, its share of expenses chargeable hereunder, the lien and/or other rights granted the other parties hereto under the provisions of Article VII.B. 500% of that portion of the costs and expenses of drilling, reworking, deepening, plugging back, testing and completing a proposed well. Not later than October 15, 2007 or within fifteen (15) days of the completion of the fifteenth (15th) Exploratory Well drilled under the terms of this Agreement, whichever is the earlier date. As to any such "required well" or "required operation" proposed by any party in which any other party elects not to participate, the non-participating party shall release and relinquish all of the non-participating party's interest in and to the lease or leases, farmout agreements or interest therein which would be perpetuated or earned by such "required well" or "required operation". The Affidavit of any person having knowledge of the fact to the effect that such service was completed shall be prima facie evidence of the fact of service. From the proceeds    of said sale, said Trustee shall first pay all charges, costs and expenses in executing these provisions, and secondly pay all sums due by the Trustee for taxes in the preservation of the security, and thereafter, shall pay all of the remaining sums to the Operator for the satisfaction of the debts of such Participating Party hereunder, and the balance, if any, shall be paid to such Participating Party. 3.2         The first Makeup Gas taken by an Underproduced Party shall offset Underproduction in the order in which such Underproduction accrued (i.e., first in, first out). 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