OPERATING AGREEMENT
This OPERATING AGREEMENT is made and entered into this 8th day of
January, 1988, to be effective as of January 1, 1990, by and between MESA
OPERATING LIMITED PARTNERSHIP, a limited partnership organized under the
laws of the State of Delaware with its principal place of business in
Amarillo, Texas (hereinafter referred to as "Mesa" or as "Operator"), and
COLORADO INTERSTATE GAS COMPANY, a corporation organized under the laws of
the State of Delaware with its principal place of business in Colorado
Springs, Colorado (hereinafter referred to as "CIG").
W I T N E S S E T H:
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WHEREAS, Mesa and CIG are the current parties in interest to an
agreement, as amended and supplemented, initially entered on January 3,
1928, between Canadian River Gas Company and Amarillo Oil Company, which
agreement is commonly referred to as the "B" Contract; and
WHEREAS, disputes arose between Mesa and CIG regarding their
respective actions under the "B" Contract which resulted in the filing of
lawsuits in Texas and Colorado; and
WHEREAS, Mesa and CIG have resolved such disputes, dismissed their
pending lawsuits and established a framework for future operations in an
Agreement of Compromise and Settlement (the "Settlement Agreement") dated
June 1, 1987; and
WHEREAS, such Settlement Agreement provided in part that on January 1,
1990, Mesa should become operator of the wells subject to the "B" Contract,
and further required the parties to enter into good faith negotiations and
reach agreement as to the terms and conditions of an operating agreement to
be effective January 1, 1990.
NOW, THEREFORE, it is agreed as follows:
ARTICLE I
Definitions
As used in this Operating Agreement, the following words and terms
shall have the following meanings:
"Acidize" shall mean a technique for increasing the production
from a well by introducing acid into the well under pressure in
order to enlarge and reopen pores in producing formations.
"Administrative Fee" shall mean the payments and charges which
CIG will be authorized to charge and collect from Mesa.
"AFE" shall mean an authorization for expenditure.
"British Thermal Unit" means the amount of heat required to
raise the temperature of one pound of water one degree
Fahrenheit at 60 degrees Fahrenheit.
"CIG" shall mean Colorado Interstate Gas Company and/or its
successor in interest under the "B" Contract.
"Contract Area" shall mean all of the Gas Leases (as defined
below) intended to be operated for gas purposes under this
Operating Agreement.
"Exploratory Well" shall mean a well drilled to test a
geologic zone or formation the depth of which is below
mean sea level
"Frac" shall mean an operation designed to crack or break
up formations which contain oil and gas by pumping liquids
and/or gases with proppants into the formation under high
pressure, in order to increase the formation's permeability
and to achieve greater production.
"FERC" means the Federal Energy Regulatory Commission, and
any successor agency.
"Gas" shall mean natural gas and all other gaseous
hydrocarbons produced therewith.
"Gross Heating Value," when applied to a cubic foot of gas,
means the number of British thermal units produced by
combustion, at a constant pressure, of the amount of gas
which would occupy a volume of one cubic foot at a temperature
of 60 degrees Fahrenheit if saturated with water vapor and
under a pressure equivalent to that of 30 inches of mercury at
32 degrees Fahrenheit and under standard gravitational force
(980.665 c.m. per sec.) with air of the same temperature and
pressure as the gas, when the products of combustion are cooled
to the initial temperature of gas and air and when the water
formed by combustion is condensed to the liquid state.
"Lease" or "Gas Lease" shall mean any one or more of the gas
leases now or hereafter subject to the "B" Contract on which
one or more of the wells listed and described on Exhibit "A"
hereto are located, or which are included in the proration
unit for any such well or wells.
"Mesa" shall mean Mesa Operating Limited Partnership and/or
its successor in interest under the "B" Contract.
"Operations and Maintenance Fee" shall mean the charges which
Mesa will be authorized to charge and collect from CIG for
performance of its duties as Operator under this Operating
Agreement.
"Proration Unit" shall mean the acreage assigned to a well
for the purpose of allocating allowable gas production thereto
by order or rule of the Texas Railroad Commission, or any
other state or federal body having authority.
"Replacement Well" shall mean any gas well drilled on a Gas
Lease subject to this Operating Agreement to replace an
existing gas well which is accepted by the Railroad Commission
of Texas as a replacement for such well.
"Rework" means an operation performed on a well after it has
been completed in an effort to secure production where there
has been none, to restore production that has ceased, or to
increase production. Cleaning out a well bore that has silted
up is a typical Rework operation. Deepening or Side Tracking
will be treated as an "Exploratory Well" if the objective depth
of said well satisfies the definition of Exploration Well
contained in Article I. Depending on the context, the term
Rework may also include Acidizing or a Frac.
"Side Tracking" means a drilling operation involving the use
of a portion of an existing well bore to drill a second hole,
resulting in a well that is partly old and partly new. Such an
operation will be treated hereunder as an "Exploratory Well" if
the objective depth of said well satisfies the definition for
Exploratory Well contained in Article I.
ARTICLE II
Exhibits
The following exhibits, as indicated below and attached hereto, are
incorporated in and made a part of this Operating Agreement:
EXHIBIT Description
"A" is a list of all wells on the Contract Area in which CIG has a
working interest, their location, CIG's meter number, and
CIG's working interest therein.
"B" is a list of other operating agreements to which CIG is a
party which affect wells on the Contract Area.
"C" is the accounting procedure to be used by the parties hereto
for the purposes hereof.
"D" is a list of the insurance requirements.
"E" is the Non-Discrimination and Certification of Non-Segregated
facilities.
ARTICLE III
Interests of the Parties
3.1 Ownership: Exhibit "A" lists the fractional working interest of
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CIG in existing gas wells on the Gas Leases covered by this Operating
Agreement. Except as provided elsewhere herein, all equipment and all
material acquired for operations on such wells, or on any additional gas
wells drilled on the Gas Leases during the term of this Operating Agreement
shall be owned by CIG to the full extent of its interest in such well (or
to the extent of CIG's interest in the proration unit for such well, as the
case may be).
3.2 Allocation of Costs: Except as provided elsewhere herein, all
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costs and expenses incurred in operations under this Operating Agreement
will be borne and paid by the parties hereto as provided in the accounting
procedure attached as Exhibit "C."
3.3 Subsequently Created Interests: Neither party hereto shall create
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any additional overriding royalty, production payment or other burden
payable out of production attributable to the Gas Leases subject to this
Operating Agreement without the prior written consent of the other party
hereto; provided, however, that CIG reserves the right in its sole
discretion to negotiate and settle disputes with its royalty owners.
However, subsequent to that point in time when CIG does not take delivery
of at least two (2) BCF of gas for the immediately preceding twelve (12)
month period pursuant to the terms and conditions of the "B" Contract, as
amended, CIG shall not enter into a settlement with any of its royalty
owners that would or may have the effect of reducing or diminishing Mesa's
rights or benefits (including any adverse economic impact to Mesa) under
the "B" Contract and to the delivery of gas volumes pursuant to the "B"
Contract without first obtaining Mesa's prior written consent.
ARTICLE IV
Operator
4.1 Designation and Responsibilities of Operator: Mesa shall become
Operator of the existing gas wells on the Gas Leases subject to this
Operating Agreement, and of any additional gas wells drilled on the
Contract Area on January 1, 1990, and shall operate and maintain the well
bores, wellhead and surface equipment of such wells. Mesa's authority and
responsibility for such wells shall extend and be limited to operations up
to the check valve downstream of the side valve (i.e., up to the inlet of
CIG's metering facility) on the wellhead of such wells which do not have
surface production equipment, and to the first check valve downstream of
surface production equipment (i.e., up to the inlet of CIG's metering
facility) on wells having pumps, tanks or other such surface production
equipment. As so limited, Mesa shall conduct, direct and have full control
of the operation of, and of the maintenance operations on, such wells
thereafter as permitted and required by, and within the limits of, this
Operating Agreement.
4.1.1 As soon as practical after signing this Operating Agreement,
CIG shall deliver copies or make available to Mesa at CIG's office all of
CIG's original well, geological, production and seismic files and records
concerning CIG's wells on the Contract Area and any related production
information requested by Mesa.
4.2.2 Mesa shall cooperate fully with CIG to ensure that CIG is able
to fulfill its obligations under various agreements and other instruments
involving the West Panhandle Field including but not limited to:
That certain Agreement dated July 1, 1967, by and between The
Capital National Bank, Austin, Texas, as Trustee for Mary Lewis
Scott Kleberg Trusts Nos. 1, 2 and 3, et al., and CIG; and
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That certain Operating Agreement dated August 18, 1949, between
Mary E. Bivins, et al., and CIG.
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In addition, Mesa shall administer (and, if necessary, serve as "operator"
under) the other operating agreements listed on Exhibit "B" hereto which
affect wells on the Contract Area, and CIG will execute any forms required
by the Texas Railroad Commission necessary to effectuate the change of
operator under this Operating Agreement and under the operating agreements
listed in Exhibit "B".
4.1.3 In performance of its obligations hereunder, Mesa shall be held
to the standard of a reasonably prudent operator, giving consideration to
the needs and interests of both parties hereto. Mesa shall operate the
wells on the Contract Area in accordance with prudent operating practice,
and Mesa shall be solely responsible for all operational means, methods,
techniques, procedures and coordination of its operations hereunder.
4.1.4 Mesa shall take all steps reasonably necessary to maintain and
improve the gas deliverability from the wells on the Contract Area at or
near their maximum potential in light of their respective degrees of
depletion and of other mechanical and operating conditions.
4.1.5 Mesa shall obtain all necessary permits and licenses which are
required by the state, county, city or other political subdivision, or any
other duly constituted public authority for operations hereunder on wells
on the Contract Area.
4.1.6 Mesa shall have the right to install standard mechanical
separators at or near all well(s) and all separated liquids, if any and in
whatever volume, shall be owned in accordance with the "B" Contract, as
amended.
4.2 Removal of Operator: CIG may remove Mesa as Operator upon the
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occurrence of any one or more of the following circumstances:
(a) If Mesa becomes bankrupt or insolvent, or commits or
suffers any act of bankruptcy or insolvency, or makes
any assignment for the benefit of creditors;
(b) If Mesa, subject to 4.2(c) below, terminates its legal
existence, or is no longer capable of serving as Operator,
or if it fails or refuses to carry out its duties as
Operator hereunder; or
(c) If Mesa assigns or purports to assign its general powers
and responsibilities of supervision and management as
Operator hereunder, provided that a change of limited
partnership name or structure of Mesa, or the transfer
of Mesa's interest to any single subsidiary, affiliate
or successor (whether individual, corporate, general or
limited partnership) shall not be a basis for removal
of Mesa as Operator hereunder.
Mesa may resign as Operator at any time after January 1, 1990, on giving
CIG one hundred twenty (120) days' notice of its intention to resign.
4.3 Compensation: As compensation for the performance of its duties
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and responsibilities hereunder, Mesa shall be entitled to bill and to
collect from CIG an Operations and Maintenance Fee as provided in the
accounting procedure attached hereto as Exhibit "C."
4.4 Personnel: Mesa shall conduct its operations hereunder, or cause
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them to be conducted, in a skillful, thorough and workmanlike manner by
qualified, careful and efficient workers.
4.4.1 The number of employees used by Mesa in conducting operations
hereunder, their selection, and the hours of labor and the compensation for
services performed shall be determined solely by Mesa, and such employees
shall be the employees of Mesa.
4.4.2 Mesa shall give adequate personal supervision to the wells on
the Contract Area and to operations hereunder, and shall keep continuously
available a competent superintendent or foreman with authority to act for
Mesa.
4.4.3 Mesa shall be responsible for the acts and omissions of its
employees and subcontractors.
4.5 Drilling and Rework Contracts: All drilling or rework operations
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authorized in Article VI hereinbelow, shall be performed on a competitive
contract basis at the usual rates prevailing in the area. Mesa shall
request bids for all such operations, and shall have a service contract
with each contractor performing work on any well in the Contract Area;
provided, however, that Mesa shall have the right to reject the lowest bid
received for any such work and/or to negotiate changes in any such
agreements if in Mesa's sole judgment conditions warrant. If it desires,
Mesa may employ its own tools and equipment in the conduct of operations on
wells on the Contract Area, but its charges therefor shall not exceed the
prevailing rates in the area. The rate of such charges shall be agreed
upon by the parties in writing before drilling or reworking operations are
commenced, and such work shall be performed by Mesa under the same terms
and conditions as are customary and usual in the area in contracts of
independent contractors who are doing work of a similar nature.
4.6 Liens: Mesa shall take all reasonable measures to keep the Gas
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Leases subject to this Operating Agreement free and clear of all liens,
claims and encumbrances arising from the performance of operations
hereunder either by Mesa or by any of Mesa's contractors or subcontractors.
4.7 Books and Records: Mesa shall keep records and books of account,
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which shall be subject to audit by CIG (as provided in paragraph 1.5 of the
accounting procedure attached hereto as Exhibit "C") showing the actual
cost to Mesa of all items of labor, materials, equipment, supplies,
services and all other expenditures of whatever nature for which payment is
authorized under the provisions of this Operating Agreement, and of the
number of employees used by Mesa for performance of its duties hereunder,
their selection, and the hours of labor and the compensation for their
services.
4.8 Production and Operations Records: Mesa shall keep production
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and operations records including, but not by way of limitation, blow
tickets, unofficial tests, tank gauges and well inspection reports, which
shall be subject to inspection by CIG at Mea's offices during normal
business hours upon reasonable request and at mutually convenient times.
ARTICLE V
Gas Gathering, Payments, Metering and Tests
5.1 Delivery of Production: Subject to the other provisions hereof,
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Mesa shall deliver to CIG, and CIG will receive all gas produced from wells
on the Contract Area.
5.1.1 CIG shall not deny Mesa the right to deliver "B" Contract gas
from wells on the Contract Area into the CIG gathering system; provided,
however, that CIG shall not be required to install facilities to take gas
from wells which cannot be economically produced into CIG's existing
facilities.
5.1.2 For delivery of gas hereunder Mesa shall use existing points of
delivery on CIG's gathering system and any additional points as may be
agreed to from time to time.
5.1.3 Mesa shall not, without CIG's prior consent, attempt to deliver
gas through any such delivery points in quantities which interfere with
other uses of the gathering system or which exceed CIG's ability to
transport gas in the system from the field. In the event CIG is not a
participant in a well or CIG's rights to its portion of "B" Contract gas
terminates, CIG agrees that it shall not deny Mesa the right to deliver all
of its "B" Contract gas to and utilize CIG's gathering system or facility.
5.1.4 Gas shall be delivered hereunder at each such point of delivery
at pressure sufficient to enter the CIG gathering system against the
pressure existing therein from time to time; provided, however, that CIG
shall not be required in any event to reduce its line pressure below
thirty-five (35) pounds per square inch gauge. Mesa shall not, under any
circumstances, have any obligation to install compression facilities at any
particular well or wells; provided, however, that Mesa shall have the right
to install any compression or other facility which a reasonably prudent
operator would install under the same or similar circumstances.
5.1.5 For the purpose of measurement, the average absolute
atmospheric (barometric) pressure shall be assumed to be 13.2 pounds per
square inch, irrespective of the actual elevation or location of the
delivery points above sea level or of variation in such barometric pressure
from time to time.
5.1.6 Gas delivered hereunder shall be gas as delivered in its
natural state from the wells, or compressors, including hydrocarbon and
nonhydrocarbon substances in a vaporous state. Gas shall be commercial in
quality and be reasonably free from any foreign materials such as dirt,
dust, iron particles and other similar matter. It shall be reasonably free
from objectionable liquids; and it shall contain no more than seven (7)
pounds of water in the vapor phase per million cubic feet. It will be
delivered at a temperature sufficient to prevent freezing in the gathering
system, but in no event shall the gas exceed a temperature of 120 degrees
Fahrenheit at the point of delivery. However, and notwithstanding anything
in this Operating Agreement to the contrary, Mesa shall have no obligation
to install dehydration or other facilities or perform any other operation
to dehydrate or treat gas delivered to CIG's gathering facility.
5.2 Nominations: Gas nominations required by the Texas Railroad
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Commission under 16 TAC Section 30 shall be handled as follows:
5.2.1 CIG shall continue to make the pipeline nominations as the
initial nominator.
5.2.2 CIG shall provide Mesa with its nomination for production in
the month preceding the month in which such production is to occur, and
Mesa shall make the producer nomination.
5.3 Scheduling: The dispatching of gas to be delivered hereunder to
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CIG shall be handled as follows:
5.3.1 In addition to the written nominations described in section 5.1
above, CIG shall give Mesa more frequent periodic nominations by telephone;
and subject to compliance with any valid orders of the Texas Railroad
Commission to restrict or curtail production from such wells, Mesa in the
good-faith exercise of its obligations as a prudent operator, will give
reasonable consideration to such nominations and CIG's well scheduling
requests.
5.3.2 By the 15th of each month preceding the month in which
scheduled deliveries are to occur, Mesa shall prepare and deliver to CIG a
"well schedule" showing Mesa's proposed allocation of production among the
wells subject to this Operating Agreement.
5.3.3 CIG shall operate its gathering system during the succeeding
month using such well schedule as a guide subject, however, to regulatory
or operational constraints and requirements and daily fluctuations in
demand; and CIG agrees to cooperate with Mesa in the operation of the
gathering system in order to avoid, to the extent reasonably possible, any
unnecessary shutting-in or curtailment of wells delivering gas from the
Contract Area.
5.3.4 Either party may at any time request a change in the monthly
well schedule. Notwithstanding Article XV hereinbelow, Mesa and CIG will
cooperate in carrying out the necessary scheduling including, if needed,
the holding of ad hoc meetings. Any such meeting may be called by either
party hereto by the furnishing of a meeting agenda to the other party at
least ten (10) days prior to the date scheduled for such meeting. The site
of such meetings shall alternate between the offices of the parties unless
otherwise required by the subject matter of the meeting, e.g., a meeting
involving an inspection of the wells would not normally be held in
Colorado.
5.4 Rents and Royalties: As the owner of the production facilities
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from which gas from wells on the Contract Area is delivered, CIG shall
perform the following operations:
5.4.1 CIG shall pay or deliver, or cause to be paid or delivered, all
leasehold royalties, overriding royalties and other payments out of
production which are due on gas produced from wells on the Contract Area
and delivered into its gathering system.
5.4.2 All rentals, shut-in well payments and minimum royalties which
may be required under the terms of any Gas Lease subject to this Operating
Agreement shall be paid by CIG.
5.5 Taxes: CIG shall render and pay the following taxes:
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5.5.1 CIG shall render for ad valorem taxation all property subject
to this Operating Agreement which by law should be rendered for such taxes,
and it shall pay all such taxes assessed thereon before they become
delinquent. In the event that CIG considers any tax assessment to be
improper, CIG may, at its sole discretion, protest within the time and in
the manner prescribed by law, and prosecute its protest to a final
determination, or abandon the protest prior to final determination. During
the pendency of any such administrative or judicial proceeding, CIG may
elect to pay, under protest, all such taxes and any interest and penalty.
When any such protested assessment shall have been finally determined, CIG
shall pay the tax and any interest and penalty accrued.
5.5.2 CIG shall pay, or cause to be paid, all production, severance
and other taxes imposed upon or with respect to gas produced from the wells
on the Contract Area and delivered into its gathering system.
5.6 Gas metering: CIG shall meter the gas produced from the wells on
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the Contract Area and delivered into its gathering system; provided,
however, that Mesa shall have the right to set check meters upstream of
CIG's metering facilities.
5.7 Well Qualifications under the NGPA: CIG shall continue to file
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the applications required by the Natural Gas Policy Act ("NGPA") for
determination of the well classification of all wells on the Contract Area
subject to this Operating Agreement. CIG shall also be responsible for
administering the Section 108 (Stripper) well classifications for any wells
which qualify until January 1, 1990. Thereafter, until the occurrence of
the Set Point Date (as defined in Article XIII), Mesa shall have the right
to jointly participate with CIG in the preparation, analysis and subsequent
filing of well qualifications filed under the NGPA. The parties agree to
cooperate fully in the reaching of mutual agreement as to the proper well
qualification selected; provided, however, if a dispute occurs, the parties
agree to utilize an independent consultant to make such determination with
such determination to be fully binding upon both CIG and Mesa. Upon the
occurrence of the Set Point Date, CIG agrees that the responsibilities and
functions contained within this paragraph 5.7 shall also be transferred
within sixty (60) days to Mesa pursuant to the same standards of
performance applicable to the other transferred responsibilities set forth
in paragraph 13.2.2 hereinbelow.
5.8 Well Testing: CIG shall annually test, or cause to be tested, all
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gas wells on the Contract Area as required by the Texas Railroad
Commission, and shall file any forms required by such activities, in
accordance with the following procedures:
5.8.1 CIG shall provide Mesa a written testing schedule at least
twenty (20) days prior to the commencement of such tests, and Mesa shall
have the right to have a representative present during all phases of the
well test, to meter any gas and to take any samples which it may desire.
CIG shall conduct all tests in accordance with customary and usual
standards for testing operations normally expected of a reasonable prudent
operator of wells in the Texas West Panhandle and Texas West Panhandle (Red
Cave) fields.
5.8.2 The wells shall be tested in groups behind a field compressor
with the cooperation of CIG's gathering system so as to maximize the
producing ability of the individual wells during the test.
5.8.3 Each well shall be flowed at its maximum allowable rate on the
test to avoid any reduction in allowable which could result from the use of
a reduced rate during the test.
5.8.4 CIG and Mesa shall jointly interpret all such test data and CIG
shall prepare the appropriate Railroad Commission form(s) for Mesa's
execution and filing with the Commission. In the event, for whatever
reason, Mesa and CIG are unable to agree on an interpretation of the test
data pertaining to any well or wells, then Mesa shall engage the services
of THURMOND-MCGLOTHLIN, Inc., 921 West Harvester, Pampa, Texas (or, in the
event such firm is unavailable, another mutually agreeable and competent
reservoir engineering company) for the purpose of making an independent
interpretation of such test data. Mesa shall then prepare and file the
appropriate form(s) with the Railroad Commission using the consultant's
interpretation of the test data. The fees for any such services shall be
an Allowable Cost charged and shared as provided in the accounting
procedure attached hereto as Exhibit "C".
5.8.5 Notwithstanding the provision of paragraph 5.8.4 above, in the
event disagreement as to the interpretation of test data does occur, and
such disagreement rests upon the good faith belief by either party that the
test data is unreliable or inaccurate, then in such event either party may
request a retest of the well by CIG, and such retest will be conducted
within thirty (30) days of such request in accordance with all other
procedures set forth above.
5.8.6 Mesa shall also keep CIG apprised of any and all material
communications with the Railroad Commission, and especially of any requests
for retesting of any well which may be received from the Commission.
5.8.7 CIG will also furnish Mesa with copies of all information and
reports related to its tests of the wells on the Contract Area.
5.9 Compensation: CIG shall be entitled to bill and to collect an
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Administrative Fee as specified in the accounting procedure attached hereto
as Exhibit "C".
5.10 Personnel: The number of employees used by CIG for performance
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of its duties hereunder, their selection, and the hours of labor and the
compensation for their services shall be determined by CIG, and all such
employees shall be the employees of CIG.
5.11 Books and Records: CIG will keep records and books of account,
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which shall be subject to audit as provided in paragraph 1.5 of the
accounting procedure attached hereto as Exhibit "C" showing the
expenditures and payments authorized to be made by CIG pursuant to the
provisions of this Operating Agreement, if any, and the number of employees
used by CIG in the performance of its duties hereunder, their selection,
and the hours of labor and the compensation for their services.
ARTICLE VI
Drilling and Reworks
6.1 Reworks and Redrills: Prior to that point in time when CIG does
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not take delivery of at least two (2) BCF of gas for the immediately
preceding, twelve (12) month period pursuant to the terms and conditions of
the "B" Contract, as amended, either party hereto may at any time and from
time to time, propose to Rework or otherwise repair, to deepen or Side
Track into a zone or formation the depth of which is above mean sea level,
to Acidize, to "Frac" or otherwise stimulate, or to plug back any dry hole
or existing well on the Contract Area, or to drill a Replacement Well by
giving the other party written notice of the proposed operation specifying
the work to be performed, the location, proposed depth of completion and
the objective formation. In the event a proposal is made as described
herein, it is stipulated that neither party shall have any right not to
participate in such proposal. Subsequent to that point in time when CIG
does not take delivery of at least two (2) BCF of gas for the immediately
preceding twelve (12) month period pursuant to the terms and conditions of
the "B" Contract, as amended, and for all periods subsequent thereto, CIG
shall no longer have the right to submit any further proposals and/or AFE's
to Mesa. Notwithstanding the above provisions, CIG and Mesa stipulate and
agree that nothing herein contained shall in any way modify, change or
otherwise diminish CIG's right to take delivery of gas pursuant to the "B"
Contract, as amended.
6.1.1 If Mesa makes any such proposal, it shall accompany the
proposal with an AFE specifying the work to be performed and the estimated
cost of the operation. If the proposal is made by CIG, Mesa shall have
thirty (30) days in which to prepare and submit such an AFE to CIG.
Provided, however, that in either event, if drilling or reworking equipment
is on location, CIG may waive preparation of an AFE and request that the
operation commence immediately. CIG reserves the right to contest the
reasonableness and amount of costs incurred in any such project,
notwithstanding the receipt and acceptance of an AFE and completion of the
project.
6.1.2 Mesa shall, within ninety (90) days after work is proposed,
actually commence the proposed operation and complete it with due diligence
at the cost and expense of CIG, as a Capital Expenditure as set forth in
the accounting procedure attached as Exhibit "C". If Mesa has not
commenced the actual operation within the time provided and further fails
to do so within thirty (30) days of receipt of written demand from CIG
following such period for performance of the operation, CIG may elect to
have the operation performed by an independent contractor.
6.2 Exploratory Drilling: Beginning on January 1, 1990, Mesa shall
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have the exclusive right at any time and from time to time, to conduct the
drilling of Exploratory Wells, or to conduct the deepening (or Side
Tracking) of existing wells not then producing in paying quantities, into
geologic formations the depths of which are below mean sea level. Mesa
shall nevertheless give CIG written notice at least two weeks in advance of
the commencement of any such operation specifying the nature of the
operation, the location, proposed depth and objective formation.
6.2.1 The cost and expense of any such operation which is drilled and
completed, or abandoned, into a formation the depth of which is below mean
sea level will not be treated as a Capital Expenditure (as otherwise
provided in paragraph 6.1.2 for Reworks and Redrills). The costs,
liabilities and expenses of any such operation shall be borne entirely by
Mesa, and Mesa shall receive all gas produced from any such completion
subject to the terms and provisions of the "B" Contract.
6.2.2 Any such operation which is plugged back and completed in a
formation the depth of which is above mean sea level shall be regarded as a
Rework or Redrill, and the cost and expense of the completion operation
following the plugging back of the well shall be treated as a Capital
Expenditure as provided in subparagraph 6.1.2 above. All other costs,
liabilities and expenses involved in the drilling of the test, in the
abandonment of the bottom of the well bore, and of plugging back shall be
borne entirely by Mesa. Provided, however, that all mutually agreeable
costs and expenses incurred from the surface down to that depth at which
completion of the plugback was accomplished shall be deemed a Capital
Expenditure to be accounted for pursuant to the provisions of the attached
Exhibit "C".
6.3 Access to Wells and Information: CIG shall have access to the
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drillsite of any well where an operation is in progress at all reasonable
times, at its sole cost, risk, and expense to inspect or observe
operations, and shall have access during working hours to information
pertaining thereto.
6.4 Abandonment of Wells: No well shall be plugged and abandoned by
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Mesa without mutual consent. The cost and expense of such operation shall
be considered an Allowable Cost for purposes of the accounting procedure
attached hereto as Exhibit "C" and included in computation of the
Operations and Maintenance Fee.
ARTICLE VII
Expenditures and Liabilities of the Parties
7.1 Liability of the Parties: Liability of Mesa and CIG shall be
-------------------------
several, not joint or collective. Each party shall be responsible only for
its obligations and shall be liable only for its proportionate share of the
Operations and Maintenance Fee and of the Administrative Fee, as set forth
in the accounting procedure attached hereto as Exhibit "C." It is not the
intention of the parties to create, nor shall this Operating Agreement be
construed as creating, a joint venture, mining or other partnership or
association, or to render the parties liable as partners.
7.2 Payments and Accounting: Except as herein otherwise specifically
-----------------------
provided, Mesa shall promptly pay and discharge expenses incurred in its
operations on the wells on the Contract Area, and shall charge CIG with its
share of Allowable Costs as provided in the accounting procedure attached
hereto as Exhibit "C".
7.3 Limitation on Expenditures: Except as otherwise provided in
---------------------------
paragraph 6.1 hereof, without prior written consent of CIG, Mesa shall
undertake no single project reasonably estimated to require an expenditure
in excess of $25,000; provided, however, that in case of explosion, fire,
flood, or other sudden emergency, whether of the same or different nature,
Mesa may take such steps and incur such expenses as in its opinion are
required to deal with the emergency to safeguard life and property. In the
event of any such emergency, Mesa shall as promptly as possible report the
emergency to CIG. In any event, if Mesa prepares an AFE for its own use
for any single project estimated to require an expenditure in excess of
$10,000, it shall furnish an informational copy of such AFE to CIG.
7.4 Insurance: At all times while operations are conducted hereunder,
----------
Mesa shall comply with the Workers' Compensation and Occupational Disease
Insurance including Employer's Liability Insurance covering its employees
engaged in operations hereunder in compliance with all applicable State
laws. Such policies shall contain underwriters waiver of subrogation in
favor of CIG. Mesa and CIG shall carry for their sole interest, but not
for the benefit nor cost of one another, insurance coverage as outlined in
Exhibit "D". Mesa shall require all contractors engaged in work on the
wells to comply with the applicable State laws and to maintain such other
insurances as Mesa may require.
ARTICLE VIII
Maintenance and Surrender of Leases
8.1 Right of First Refusal: Prior to its surrender to the Lessor, or
-----------------------
the Lessor's successors and assigns, of any interest in any lease, or in
any portion of a lease, subject to this Operating Agreement, and subject to
any other preferential rights in favor of third parties originating prior
to the effective date of this Operating Agreement, CIG shall first tender
the interest to be surrendered to Mesa; and if Mesa does not consent to the
surrender, CIG shall assign to Mesa, without warranty of title, express or
implied, subject to CIG's obtaining of any necessary regulatory approval,
all of CIG's interest in such lease, or portion thereof, and in any well,
material and equipment which may be located thereon together with all of
CIG's further rights to production therefrom. CIG shall not create any
rights as to the subject matter of this paragraph in favor of third parties
subsequent to May 29, 1987 (the date of the Settlement Agreement).
8.2 Effect of Assignment: Following such an assignment as described
---------------------
in paragraph 8.1, CIG shall be relieved from all obligations thereafter
accruing, but not theretofore accrued, with respect to the acreage assigned
and with respect to the operation of any well thereon; CIG shall have no
further interest in the lease assigned or in its equipment or production;
and the acreage assigned or surrendered, and subsequent operations thereon,
shall not thereafter be subject to the terms and provisions of this
Operating Agreement. Any assignment or surrender made under this provision
shall not reduce or change CIG's interest, as it was immediately before the
assignment, in the balance of the leases subject to this Operating
Agreement, or in the remaining wells subject to this Agreement on the
Contract Area.
8.3 Payment for Equipment: In connection with any such assignment as
----------------------
described in Paragraph 8.1, Mesa shall pay, subject to paragraph 6.4 to CIG
the remaining net book value of CIG's interest in any wells and in the
salvable casing, well and surface equipment on the assigned acreage.
ARTICLE IX
Internal Revenue Code Election
9.1 This Operating Agreement is not intended to create, nor shall it
be construed to create, a relationship of partnership or an association for
profit between or among the parties hereto. Notwithstanding any provision
herein that the rights and liabilities hereunder are several and not joint
or collective, or that this Operating Agreement and operations hereunder
shall not constitute a partnership, if, for Federal income tax purposes,
this Operating Agreement and/or the operations hereunder are regarded as a
partnership, each party hereto hereby elects to be excluded from
application of all provisions of Subchapter "K" of Chapter 1, Subtitle "A"
of the Internal Revenue Code of 1954 as permitted and authorized by Section
761 of the Code and the regulations promulgated thereunder. Operator is
hereby authorized and directed to execute on behalf of CIG such evidence of
this election, as may be required by the Secretary of the Treasury of the
United States or the Federal Internal Revenue Service, specifically
including, but not by way of limitation, all of the returns, statements,
and the data required by Federal Regulations 1.761. Should there be any
requirement that each party hereby affected give further evidence of this
election, each such party shall execute such documents and furnish such
other evidence as may be required by the Federal Internal Revenue Service
or as may be necessary to evidence this election. Neither party shall give
any notices or take any other action inconsistent with the election made
hereby.
9.2 If any present or future income tax laws of the State of Texas or
any future income tax laws of the United States contain provisions similar
to those in Subchapter "K", Chapter 1, Subtitle "A" of the Internal Revenue
Code of 1954, under which an election similar to that provided by Section
761 of the Code is permitted, each party hereto shall make such election as
may be permitted or required by such laws.
9.3 In making the foregoing election, each party hereby states and
agrees that the income derived by such party from operations hereunder can
be adequately determined without computation of partnership taxable income.
ARTICLE X
Claims and Lawsuits
10.1 Claims for Personal Injury or Property Damages: Mesa may settle
-----------------------------------------------
any third-party personal injury or property damage claim or suit arising
from or related to Mesa's operations hereunder subsequent to January 1,
1990 if the expenditure does not exceed Twenty-Five Thousand Dollars
($25,000) and if the payment is in complete settlement of such claim or
suit; provided, however, CIG's permission to settle shall not be required
in any claim or suit for which CIG would be indemnified pursuant to
paragraph 10.1.1. If the amount required for settlement exceeds the above
amount, Mesa shall immediately notify CIG. The costs and expenses of
handling, settling, or otherwise discharging such claim shall be allocated
in accordance with the following two paragraphs:
10.1.1 Mesa's Indemnity: Mesa agrees to protect, indemnify and hold
-----------------
harmless CIG, its officers, agents and employees from every kind and
character of damages, losses, expenses, demands, claims and causes of
action which arise from any cause growing out of or incident to operations
conducted by Mesa, its employees or by Mesa's contractors or subcontractors
under this Operating Agreement.
10.1.2 CIG's Indemnity: CIG agrees to protect, indemnify and
----------------
hold harmless Mesa, its officers, General Partner, agents and employees
from every kind and character of damages, losses, expenses, demands, claims
and causes of action which arise from any cause growing out of or incident
to operations conducted by or the actions of CIG, its employees or by CIG's
contractors or subcontractors under this Operating Agreement (including for
illustration and not limitation, well testing), or growing out of or
incident to CIG's operation of its gathering system.
10.2 Claims Concerning Royalty Payments: CIG may settle any
-----------------------------------
single third party claim or suit concerning the payment of royalty,
overriding royalty or other interest in production from wells on the
Contract Area arising out of CIG's payments with respect to production from
such wells if the expenditure does not exceed Twenty-Five Thousand Dollars
($25,000) and if the payment is in complete settlement of such claim or
suit. If the amount required for settlement exceeds such amount, CIG shall
immediately notify Mesa. Costs and expenses of handling, settling, or
otherwise discharging such claim or suit shall be allocated between the
parties based on their respective takes of the volume of gas produced on
which the claim for such underpayment is based. In the event that the
respective takes cannot be precisely determined, they shall be presumed to
be equal to the ratio of the total volumes delivered by CIG from the
gathering system to each party during the period in question, to the total
delivered by CIG to the parties during such period.
10.3 Claims or Lawsuits Concerning Drainage by Third Parties: Either
--------------------------------------------------------
Mesa or CIG may take action to defend the gas reserves in and under the Gas
Leases in the Contract Area from drainage by third parties, including, but
not by way of limitation, the reporting of improper activities to the Texas
Railroad Commission, and the filing of lawsuits; provided, however, that
neither Party hereto may be joined as a co-plaintiff in any such lawsuit
without its prior consent. The cost and expense of any such activities
shall be shared by Mesa and CIG on a sliding scale as follows: For any
actions taken in the first year (1990), Mesa shall bear 80% of the costs
and expenses and CIG 20%. For actions commenced in the second year, Mesa
shall bear 82% and CIG 18%, and for each year thereafter, Mesa's percentage
will continue to increase by two percent per year and CIG's percentage will
decrease by the same amount.
ARTICLE XI
Force Majeure
11.1 Suspension of Obligation to Perform: In the event that either
------------------------------------
party is rendered wholly or in part by force majeure unable to carry out
its obligations under this Operating Agreement other than to make payments
of amounts due thereunder, it is agreed that upon such party's giving
notice and full particulars of such force majeure in writing or by
telegraph to the other party as soon as possible after the occurrence of
the cause relied on, then the obligations of such party, insofar as they
are affected by such force majeure, shall be suspended during the
continuance of the disability so caused, but for no longer period. Any
such cause shall, so far as possible, be remedied with all reasonable
dispatch; provided, however, that this requirement of remedy with all
reasonable dispatch shall not require the settlement of strikes, lockouts,
or other labor difficulty by the party involved, contrary to its wishes and
the handling of any such difficulties shall be entirely within the
discretion of the party concerned.
11.2 Definition: The term "force majeure" as employed herein shall
mean acts of God, strikes, lockouts or other industrial disturbances, acts
of the public enemy, wars, blockades, insurrections, riots, epidemics,
landslides, lightning, earthquakes, fires, storms, floods, washouts, arrest
and restraint of rulers and peoples, civil disturbances, explosions,
breakage or accident to machinery or lines of pipe, freezing of wells or
lines of pipe, shutdowns for necessary maintenance, alterations or repairs,
sudden partial or sudden entire failure of wells, failure to obtain
materials and supplies due to governmental regulations, and causes of like
or similar kind, whether herein enumerated or not, and not within the
control of the party claiming suspension, and which by the exercise of due
diligence such party is unable to overcome.
ARTICLE XII
Notices
All notices or other communications required or permitted to be given
pursuant to this Agreement (other than nominations, which may be made by
telephone) shall be given in writing and shall be considered as properly
given or made if hand delivered, or telecopied, if mailed from within the
United States postage prepaid, or if telegraphed, by a prepaid telegram,
and addressed to the party to whom the notice is given as follows:
Colorado Interstate Gas Company
(telecopy) (719) 520-4317
(telephone) (719) 473-2300
2 North Nevada
P. 0. Box 1087
Colorado Springs, CO 80944
Mesa Operating Limited Partnership
(telecopy) (806) 378-1030
(telephone) (806) 378-1000
One Mesa Square
P. 0. Box 2009
Amarillo, TX 78189-2009
Either party may change its address by giving notice to the other.
ARTICLE XIII
Term of Agreement
13.1 Term: This Operating Agreement shall become effective January 1,
-----
1990, and shall remain in full force and effect as to the gas wells and
leases subject hereto, and as to operations thereon, for so long as any of
the leases now or hereafter subject to the "B" Contract, as amended, remain
in full force and effect unless cancelled by the mutual consent of the
parties prior to that time. It is agreed, however, that the termination of
this Agreement shall not relieve any party hereto from any liability which
has accrued or attached prior to the date of such termination. In the
event that Mesa resigns or is removed as Operator under the provisions of
this Agreement, Mesa and CIG agree to meet and discuss, if appropriate, the
amendment or termination of this Agreement.
13.2 Set Point Date: For the purpose of this Operating Agreement, it
---------------
is necessary to describe and define the point in time when, due to
depletion, the volume of gas produced or producible from the "B" Contract
acreage is not sufficient to allow the delivery of any volume of natural
gas to CIG in excess of Mesa's takes under the "B" Contract, as amended, if
such lack of deliverability cannot be remedied or overcome by reasonable
and prudent operations.
13.2.1 Subject to the other provisions of this Operating Agreement,
when, during a period of three hundred sixty-five (365) consecutive days
there is not sufficient deliverability from the wells subject to this
Operating Agreement from which CIG is otherwise entitled to take gas to
permit delivery of any volume of natural gas to CIG for CIG's downstream
purchasers, the Set Point Date shall be deemed to have occurred as of the
last day of such 365-day period.
13.2.2 Within sixty (60) days after occurrence of the Set Point Date,
CIG and Mesa agree that all of the functions and responsibilities contained
in paragraphs 5.4, 5.4.1, 5.4.2, 5.5, 5.5.1, 5.5.2, 5.7 and 5.8 shall be
transferred to Mesa. CIG and Mesa further agree to cooperate fully each
with the other party to insure, to the extent reasonably possible, that the
transfer of the enumerated responsibilities shall be accomplished in a
timely and efficient manner. Upon Mesa's assumption of such
responsibilities and the functions associated therewith, Mesa shall perform
all such responsibilities in a reasonable and prudent manner, and shall
further communicate with CIG as to each referenced item in the event
reasonable and relevant information and/or data is required by CIG.
13.2.3 Subsequent to the Set Point Date, CIG shall if appropriate and
feasible in its sole judgment and subject to compliance with any applicable
regulatory approvals or limitations, consider and discuss with Mesa the
transfer to CIG's interest in the leases, wells, wellhead and downhole
equipment.
ARTICLE XIV
Compliance with Laws and Regulations
14.1 General: This Operating Agreement shall be subject to the
--------
conservation laws of the State of Texas, to the valid rules, regulations
and orders of any duly constituted regulatory body of said state, and to
all other applicable Federal, state and local laws, ordinances, rules,
regulations and orders. Attached hereto and made a part hereof is Exhibit
"E" which provides for Equal Employment Opportunity and Certification of
Nonsegregated Facilities.
14.2 Choice of Law: This Operating Agreement and all matters which
--------------
pertain thereto, including, but not limited to, matters of performance,
nonperformance, breach, remedies, procedures, rights, duties and
interpretation or construction, shall be governed and determined by the law
of the State of Texas.
14.3 Regulatory Approval: In the event the terms of this Operating
--------------------
Agreement or the accounting procedure attached as Exhibit "C" are involved
in a proceeding of any kind whatsoever before the Federal Energy Regulatory
Commission, or its successor agency (FERC), CIG shall provide Mesa with
notice and the opportunity to participate in such proceeding. In the event
that the FERC disapproves of this Agreement, or parts hereof, or conditions
its approval on terms which are not acceptable to both Mesa and CIG, unless
otherwise agreed, this Operating Agreement and its exhibits shall terminate
upon issuance of a final, unappealable order.
ARTICLE XV
Engineering Committee
An Engineering Committee shall be established to discuss various
operational matters pertaining to the production, gathering and delivery of
gas produced from wells on the Contract Area. The purpose of this
Committee is to exchange current operating information and future operating
plans with respect to such wells so that the leases, wells and gathering
system may be operated in a manner that maximizes, to the extent possible,
the goals of both parties hereto; provided, however, that the Committee
shall have no authority to authorize operation, maintenance or
construction. Operator and CIG shall each be allowed three representatives
on the Committee and such representatives may be changed from time to time
at the will of the parties. The Committee shall meet at least twice
annually during the first and third quarters of each year. A Chairman
shall be selected for the coming year during the first quarterly meeting.
The chairmanship shall rotate between Operator and CIG each year. More
frequent meetings can be called by the Chairman and information can be
exchanged between the Committee members at will. The existence of the
Committee shall in no way restrict contact between other employees of
Operator and CIG, but is intended to ensure the exchange of information and
plans necessary for efficient management of the remaining gas reserves and
for operation of the wells and gathering system.
ARTICLE XVI
Miscellaneous
16.1 Headings: The headings of the several articles and sections in
---------
this Operating Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any provision hereof.
16.2 Counterparts: This Operating Agreement may be executed in
-------------
duplicate, and each such copy shall be considered as an original.
16.3 Delegation of Duties by Mesa: Mesa may not delegate its
-----------------------------
duties as Operator hereunder without the prior written consent of CIG,
except in case of merger, consolidation, or assignment to a wholly owned
subsidiary or parent company, and then only upon condition that the
successor operator shall accept and agree to perform the continuing
covenants of this Operating Agreement; provided, however, that Mesa shall
remain responsible for compliance with and performance of the terms of this
Operating Agreement. Any attempted assignment or delegation in violation
of this clause shall be in all respects null and void.
IN WITNESS WHEREOF this Agreement is executed to be effective as of
January 1, 1990.
Attest: MESA OPERATING LIMITED PARTNERSHIP
By: Pickens Operating Co., the
General Partner
By: (s) Richard W. Petrie By: (s) Paul W. Cain
----------------- ---------------------------
Assistant Secretary Paul W. Cain, President and
Chief Operating Officer
Attest: COLORADO INTERSTATE GAS COMPANY
By: (s) Donna M. Foos By: (s) Kenneth M. O'Connell
---------------- --------------------------
Assistant Secretary Kenneth M. O'Connell
Senior Vice President
EXHIBIT "A"
Attached to and made a part of that certain Operating Agreement by and
between MESA OPERATING LIMITED PARTNERSHIP ("MESA"), as Operator, and
COLORADO INTERSTATE GAS COMPANY ("CIG"), as Nonoperator, and dated January
8, 1988.
NAME OF WELL, COUNTY, LOCATION, AND WORKING INTEREST
WEST PANHANDLE FIELD, TEXAS
CIG Location Location
Meter ------------------------ Working Meter ----------------------- Working
Well Name Number County Sur-Blk-Sec Interest Well Name Number County Sur-Blk-Sec Interest
- --------- ------ ------ ----------- -------- --------- ------- ------- ------------- --------
Allison 1R 02210 Potter WTPalmer 1 1.0 Bivins A-37 10760 Moore ELRR PMc., 15 1.0
Allison A-2 02320 Potter WTPalmer 1 1.0 Bivins A-38 10770 Potter D&P 0-18, 10 1.0
Bivins A-39 10780 Potter G&M M-20, 40 1.0
Baker A-1 03220 Moore D&P 0-18, 39 1.0 Bivins A-40 10790 Potter G&M M-20, 32 1.0
Bivins 2R 09070 Potter D&P 0-18, 21 1.0 Bivins A-41 10800 Potter G&M M-20, 16 1.0
Bivins 4R 09220 Potter G&M M-20, 15 1.0
Bivins 6R 09270 Potter G&M M-20, 40 1.0 Bivins A-42 10810 Potter H&TC 46, 97 1.0
Bivins 7R 09320 Hutchinson G&CNG Y-2, 11 1.0 Bivins A-43 10820 Potter D&P 0-18, 12 1.0
Bivins A-44 10830 Potter G&M M-20, 41 1.0
Bivins 8R 09370 Hutchinson H&TC 46, 88 1.0 Bivins A-46 10840 Potter G&M 5, 11 1.0
Bivins 9R 09420 Moore H&TC 46, 93 0.670619 Bivins A-47 10850 Potter H&TC 46, 101 1.0
Bivins 11R 09520 Potter G&M M-20, 41 1.0
Bivins 12R 09570 Potter G&M M-20, 32 1.0 Bivins A-49 10870 Potter H&TC 46, 105 1.0
Bivins 13R 09620 Potter G&M M-20, 33 1.0 Bivins A-50 10880 Potter D&P 0-18, 28 1.0
Bivins A-51 10890 Potter G&M M-20, 14 0.908250
Bivins 15R 09720 Potter H&TC 46, 108 1.0 Bivins A-52 10900 Moore ELRR PMc, 25 1.0
Bivins 17R 09820 Hutchinson H&TC 46, 90 1.0 Bivins A-53 10910 Potter H&TC 46, 107 0.937500
Bivins 18R 09870 Hutchinson GBCNG Y-2, 13 1.0
Bivins 19R 09920 Moore WTPalmer 4 1.0 Bivins A-54 10920 Moore ELRR PMc, 14 1.0
Bivins 20R 09960 Potter H&TC 46, 97 1.0 Bivins A-55 10930 Moore G&M 2, 75 1.0
Bivins A-56 10940 Hartley CSS 21, 5 1.0
Bivins 23R 09980 Potter D&P 0-18, 12 1.0 Bivins A-57 10950 Potter G&M M-20, 46 1.0
Bivins 24R 09990 Moore ELRR PMc, 25 1.0 Bivins A-58 10960 Hartley G&M 2, 12 1.0
Bivins 25R 10000 Potter DP 0-18, 27 1.0
Bivins 26R 10010 Potter G&M 2, 81 1.0 Bivins A-60 10980 Hartley ELRR 25, 3 1.0
Bivins 28R 10029 Moore ELRR PMc, 33 1.0 Bivins A-61 10990 Hartley ELRR 25, 2 1.0
Bivins A-62 11000 Hartley ELRR 25, 1 1.0
Bivins 29R 10039 Potter G&M 2, 57 1.0 Bivins A-63 11010 Hartley CSS 21, 10 1.0
Bivins 30R 10049 Potter D&P 0-18, 31 1.0 Bivins A-64 11020 Hartley CSS 21, 11 1.0
Bivins 31R 10050 Potter D&P 0-18, 10 1.0
Bivins 32R 10060 Potter D&P 0-18, 11 1.0 Bivins A-65 11030 Hartley G&M 2, 16 1.0
Bivins 33R 10070 Potter D&P 0-18, 2 1.0 Bivins A-66 11040 Moore G&M 2, 72 1.0
Bivins A-67 11050 Moore G&M 2, 74 1.0
Bivins 34R 10080 Potter D&P 0-18, 15 1.0 Bivins A-68 11060 Moore H&TC 44, 99 1.0
Bivins 35R 10090 Potter D&P 0-18, 16 1.0 Bivins A-69 11070 Potter D&P 0-18, 5 1.0
Bivins 37R 101110 Potter D&P 0-18, 26 1.0
Bivins 38R 10120 Potter D&P 0-18, 22 1.0 Bivins A-70 11080 Potter D&P 0-18, 9 1.0
Bivins 39R 10130 Potter D&P 0-18, 14 1.0 Bivins A-71 11090 Hartley CSS 21, 9 1.0
Bivins A-72 11100 Hartley CSS 21, 14 1.0
Bivins 41R 10140 Potter D&P 0-18, 44 1.0 Bivins A-73 11110 Potter ELRR 22, 5 1.0
Bivins 43R 10150 Potter D&P 0-18, 13 1.0 Bivins A-74 11120 Potter G&M 5, 18 1.0
Bivins 44R 10160 Potter D&P 0-18, 28 1.0
Bivins 46R 10170 Potter D&P 0-18, 9 1.0 Bivins A-76 11140 Hartley CSS 21, 13 1.0
Bivins 47R 10180 Moore ELRR PMc, 23 1.0 Bivins A-77 11150 Moore G&M 2, 71 1.0
Bivins A-78 11160 Hartley G&M 2, 20 1.0
Bivins A48R 10300 Potter D&P 0-18, 23 1.0 Bivins A-79 11170 Potter G&M M-20, 5 1.0
Bivins 49R 10310 Potter D&P 0-18, 5 1.0 Bivins A-80 11180 Potter G&M M-20, 6 1.0
Bivins 52R 10320 Potter D&P 0-18, 36 1.0
Bivins 53R 10330 Potter G&M 2, 58 1.0 Bivins A-81 11190 Potter G&M M-20, 13 1.0
Bivins 63R 10340 Potter D&P 0-18, 33 1.0 Bivins A-82 11200 Moore ELRR 1, 1 1.0
Bivins A-83 11210 Potter D&P 0-18, 45 1.0
Bivins 64R 10341 Potter G&M M-20, 31 1.0 Bivins A-84 11220 Potter G&M M-20, 7 1.0
Bivins 72R 10344 Potter G&M 2, 55 1.0 Bivins A-85 11230 Potter G&M M-20, 12 1.0
Bivins 75R 10347 Moore H&TC 46, 95 0.750585
Bivins 76R 10348 Potter H&TC 46, 101 1.0 Bivins A-86 11240 Potter G&M M-20, 18 1.0
Bivins A-87 11250 Potter G&M M-20, 19 1.0
Bivins 77R 10349 Potter H&TC 46, 103 1.0 Bivins A-88 11260 Potter D&P 0-18, 21 1.0
Bivins 80R 10352 Potter D&P 0-18, 34 1.0 Bivins A-89 11270 Potter G&M 2, 21 1.0
Bivins 82R 10354 Potter D&P 0-18, 7 1.0 Bivins A-90 11280 Hartley CSS 21, 21 1.0
Bivins 85R 10356 Moore H&TC 47, 54 1.0
Bivins 86R 10357 Potter ELRR B-11, 29 1.0 Bivins A-91 11290 Potter G&M 2, 58 1.0
Bivins A-92 11300 Potter ELRR B-11, 34 1.0
Bivins A2R 10470 Potter D&P 0-18, 13 1.0 Bivins A-95 11320 Potter D&P 0-18, 37 1.0
Bivins A-3 10480 Potter G&M M-20, 30 1.0 Bivins A-96 11330 Potter D&P 0-18, 16 1.0
Bivins A-5 10500 Potter D&P 0-18, 25 1.0 Bivins A-97 11340 Hartley G&M 2, 19 1.0
Bivins A-7 10520 Hartley ELRR 25, 7 1.0
Bivins A-8 10530 Hartley ELRR 25, 4 1.0 Bivins A-98 11350 Potter G&M 2, 59 1.0
Bivins A-99 11360 Potter D&P 0-18, 44 1.0
Bivins A-9 10540 Hartley CSS 21, 6 1.0 Bivins A-100 11370 Potter D&P 0-18, 36 1.0
Bivins A-13 10560 Potter D&P 0-18, 7 1.0 Bivins A-101 11380 Potter D&P 0-18, 34 1.0
Bivins A-16 10590 Potter G&M M-20, 33 1.0 Bivins A-102 11390 Potter D&P 0-18, 31 1.0
Bivins A-18 10610 Potter G&M M-20, 17 1.0
Bivins A-19 10620 Potter G&M M-20, 29 1.0 Bivins A-103 11400 Potter G&M 2, 81 1.0
Bivins A-104 11410 Potter G&M 2, 57 1.0
Bivins A-20 10630 Potter G&M M-20, 35 1.0 Bivins A-105 11420 Potter D&P 0-18, 38 1.0
Bivins A-21 10640 Moore ELRR PMc, 33 1.0 Bivins A-106 11430 Potter ELRR B-11, 30 1.0
Bivins A-23 10660 Potter ELRR 22, 8 1.0 Bivins A-108 11440 Potter D&P 0-18, 17 1.0
Bivins A-24 10670 Moore ELRR PMc, 23 1.0
EXHIBIT "A"
(Continued)
NAME OF WELL, COUNTY, LOCATION, AND WORKING INTEREST
WEST PANHANDLE FIELD, TEXAS
CIG Location Location
Meter ------------------------ Working Meter ----------------------- Working
Well Name Number County Sur-Blk-Sec Interest Well Name Number County Sur-Blk-Sec Interest
- --------- ------ ------ ----------- -------- --------- ------- ------- ------------- --------
Bivins A-25 10680 Potter D&P 0-18, 2 1.0 Bivins A-109 11450 Potter G&M 2, 70 1.0
Bivins A-110 11460 Potter D&P 0-18, 8 1.0
Bivins A-29 10690 Moore H&TC 47, 55 1.0 Bivins A-111 11470 Oldham G&M 2, 22 1.0
Bivins A-33 10720 Potter D&P 0-18, 35 1.0 Bivins A-112 11480 Potter ELRR 22, 6 1.0
Bivins A-34 10730 Hartley ELRR 25, 5 1.0 Bivins A-113 11490 Potter ELRR 22, 7 1.0
Bivins A-35 10740 Potter D&P 0-18, 40 1.0
Bivins A-36 10750 Potter D&P 0-18, 43 1.0
Bivins A-114 11500 Potter ELRR 22, 3 1.0 Bost 3R 14440 Hutchinson TTRR Y-2, 9 1.0
Bivins A-115 11510 Potter AB&M 22, 10 1.0 Bost A-2 15075 Hutchinson TTRR Y-2, 6 1.0
Bivins A-116 11520 Potter AB&M 22, 9 1.0 Bost B-1 15160 Hutchinson TTRR Y-2, 9 1.0
Bivins A-117 11530 Potter BS&F 22, 11 1.0 Bost C-3 15340 Hutchinson TTRR Y-2, 10 1.0
Bivins A-118 11540 Potter BS&F 22, 12 1.0 Bost C-4 15350 Carson TTRR Y-2, 10 1.0
Bivins A-119 11550 Potter G&M M-20, 20 1.0 Bost D-2 15440 Hutchinson BS&F 1 1.0
Bivins A-120 11560 Potter G&M M-20, 11 1.0 Bradley A-1 20120 Potter ELRR B-11, 8 1.0
Bivins A-122 11570 Potter ELRR 22, 2 1.0
Bivins A-124 11580 Potter G&M 5, 23 1.0 Cooper A-1 27040 Moore ELRR PMc, 16 1.0
Bivins A-125 11590 Hartley CSS 21, 20 1.0 Coughlin 1R 27300 Potter D&P 0-18, 77 1.0
Coughlin 2R 27310 Potter D&P 0-18, 1 1.0
Bivins A-128 11600 Potter D&P 0-18, 6 1.0 Coughlin A-1 27340 Potter D&P 0-18, 1 1.0
Bivins A-129 11610 Potter D&P 0-18, 32 1.0 Coughlin A-2 27390 Potter D&P 0-18, 77 1.0
Bivins A-130 11620 Potter D&P 0-18, 33 1.0
Bivins A-131 11630 Hartley CSS 21, 8 1.0 Crawford 1R 27640 Moore ELRR PMc, 24 1.0
Bivins A-132 11640 Potter G&M M-20, 36 1.0 Crawford 2R 27650 Potter ELRR PMc, 34 1.0
Crawford 3R 27660 Potter D&P 0-18, 68 1.0
Bivins A-133 11650 Potter G&M M-20, 4 1.0 Crawford 4R 27670 Potter D&P 0-18, 78 1.0
Bivins A-134 11660 Potter G&M M-20, 3 1.0 Crawford 5R 27680 Potter D&P 0-18, 4 1.0
Bivins A-135 11670 Potter H&TC 46, 108 1.0
Bivins A-136 11680 Potter G&M 5, 20-1/2 0.781250 Crawford 6R 27690 Potter D&P 0-18, 80 1.0
Bivins A-137 11690 Moore G&M 3, 48 1.0 Crawford 7R 27700 Moore ELRR PMc, 26 1.0
Crawford A-2 27890 Moore ELRR PMc, 34 1.0
Bivins A-139 11710 Potter D&P 0-18, 14 1.0 Crawford A-3 27891 Moore ELRR PMc, 26 1.0
Bivins A-143 11720 Potter G&M 2, 55 1.0 Crawford B-1 27940 Potter D&P 0-18, 78 1.0
Bivins A-144 11730 Hartley G&M 2, 14 1.0
Bivins A-145 11740 Hartley CSS 21, 2 1.0 Crawford B-2 28090 Potter D&P 0-18, 80 1.0
Bivins A-146 11750 Hartley CSS 21, 16 1.0 Crawford C-2 28190 Moore ELRR PMc, 32 1.0
Crawford C-3 28195 Moore ELRR PMc, 24 1.0
Bivins A-148 11770 Hartley CSS 21, 7 1.0 Crawford D-2 28290 Potter D&P 0-18, 4 1.0
Bivins A-149 11780 Potter D&P 0-18, 20 1.0 Crawford D-3 28340 Moore ELRR PMc, 32 1.0
Bivins A-150R 11790 Potter D&P 0-18, 18 1.0
Bivins A-151 11800 Potter D&P 0-18, 11 1.0 Crawford D-4 28341 Potter D&P 0-18, 68 1.0
Bivins A-152 11810 Moore D&P 0-18, 41 1.0
Dunaway 1R 30900 Hutchinson TTRR Y-2, 5 1.0
Bivins A-153 11820 Potter ELRR B-11, 33 1.0 Dunaway A-3 31000 Hutchinson TTRR Y-2, 5 1.0
Bivins A-154 11830 Moore D&P 0-18, 46 1.0 Dunaway A-4 31055 Hutchinson TTRR Y-2, 5 1.0
Bivins A-155 11840 Potter D&P 0-18, 19 1.0 Dunaway A3R 31050 Hutchinson TTRR Y-2, 5 1.0
Bivins A-157 11860 Potter G&M M-20, 31 1.0 Dunaway B-1 31100 Hutchinson TTRR Y-2, 5 1.0
Bivins A-158 11870 Potter WTPalmer 5 1.0
Fee 2R 33830 Moore G&M 3, 51 1.0
Bivins A-159 11880 Potter D&P 0-18, 13 1.0 Fee 3R 33840 Moore H&TC 47, 53 1.0
Bivins A-160 11890 Hutchinson H&TC 46, 90 1.0 Fee A-1 33870 Moore G&M 3, 76 1.0
Bivins A-160R 11900 Hutchinson H&TC 46, 90 1.0 Fee A-2 33920 Moore H&TC 47, 53 1.0
Bivins A-161 11910 Hutchinson GBCNG Y-2, 13 1.0 Fee A-3 33970 Moore G&M 3, 50 1.0
Bivins A-162 11920 Potter D&P 0-18, 24 1.0
Fee A-4 34020 Moore G&M 3, 51 1.0
Bivins A-163 11930 Potter H&TC 46, 103 1.0 Fee A-5 34070 Moore D&P B-12, 10 1.0
Bivins A-164 11940 Hutchinson H&TC 46, 88 1.0 Fee A-6 34120 Moore G&M 3, 79 1.0
Bivins A-165 11950 Potter H&TC 46, 99 1.0
Bivins A-166 11960 Potter H&TC 46, 106 0.910156 Gage 1R 37100 Potter ELRR B-11, 7 1.0
Bivins A-167 11970 Potter G&M M-20, 15 1.0
Johnson 1R 50160 Hutchinson TTRR Y-2, 3 1.0
Bivins A-168 12100 Moore WTPalmer 4 1.0 Johnson 2R 50170 Hutchinson TTRR Y-2, 3 1.0
Bivins A-169R 12110 Potter D&P 0-18, 23 1.0 Johnson A-2 50410 Hutchinson TTRR Y-2, 3 1.0
Bivins A-170 12120 Potter D&P 0-18, 22 1.0 Johnson A-3 50420 Hutchinson TTRR Y-2, 4 1.0
Bivins A-171 12130 Potter D&P 0-18, 23 1.0
Bivins A-172 12140 Moore WRBouldin N-1, 1.0 Killgore 1-R 52830 Moore ELRR PMc, 18 1.0
Killgore 3-R 52832 Moore ELRR PMc, 21 1.0
Bivins A-173 12150 Moore G&M 2, 73 1.0 Killgore A-2 52920 Moore ELRR PMc, 20 1.0
Bivins A-174 12160 Hartley ELRR 25, 6 1.0 Killgore A-5 53070 Moore H&TC 44, 12 1.0
Bivins A-175 12161 Hartley ELRR 25, 8 1.0 Killgore A-6 53120 Moore H&TC 44, 13 1.0
Bivins A-176 12162 Potter ELRR 22, 4 1.0
Bivins A-177 11979 Hartley G&M 2, 18 1.0 Killgore A-7 53170 Moore G&M 2, 77 1.0
Killgore A-10 53270 Moore H&TC 44, 11 1.0
Bivins A-178 12164 Moore G&M 2, 76 1.0 Killgore A-11 53320 Moore ELRR PMc, 17 1.0
Bivins A-179 12165 Potter D&P 0-18, 15 1.0 Killgore A-12 53370 Moore ELRR PMc, 19 1.0
Bivins A-180 12166 Hartley G&M 2, 13 1.0 Killgore A-13 53420 Moore ELRR PMc, 11 1.0
Bivins A-182 11973 Hartley CSS 21, 15 1.0
Bivins A-183 11974 Potter D&P 0-18, 26 1.0 Killgore A-13 53320 Moore ELRR PMc, 13 1.0
Killgore A-16 53570 Moore H&TC 44, 31 1.0
Bivins B-1 11980 Hutchinson B&B Y-2, 11 1.0 Killgore A-17 53580 Moore ELRR PMc, 21 1.0
Bivins B-3 11990 Carson GBCNG Y-2, 15 1.0 Killgore A-18 53581 Moore ELRR PMc, 18 1.0
Bivins B-6 12000 Hutchinson H&TC 46, 90 1.0 Killgore A-19 53582 Moore ELRR PMc, 12 1.0
Bivins E-1 12010 Potter D&P 0-18, 27 1.0
Bivins G-1 12020 Moore H&TC 46, 93 0.670619 Killgore A-20 53583 Moore ELRR PMc, 7 1.0
Killgore A-21 53584 Moore ELRR Pmc, 6 1.0
Bivins H-1 12030 Moore H&TC 46, 95 0.750585 Killgore B-1 53620 Moore ELRR Pmc, 22 1.0
EXHIBIT "A"
(Continued)
NAME OF WELL, COUNTY, LOCATION, AND WORKING INTEREST
WEST PANHANDLE FIELD, TEXAS
CIG Location Location
Meter ------------------------ Working Meter ----------------------- Working
Well Name Number County Sur-Blk-Sec Interest Well Name Number County Sur-Blk-Sec Interest
- --------- ------ ------ ----------- -------- --------- ------- ------- ------------- --------
Bivins J-1 12050 Moore H&TC 47, 54 1.0
Bivins 81R 12890 Potter D&P 0-18, 8 1.0 Lubberstedt 1R 57430 Moore ELRR PMc, 27 1.0
Bost 1R 13900 Hutchinson TTRR Y-2, 10 1.0 Lubberstedt A2 57441 Moore ELRR PMc, 27 1.0
Bost 2R 14170 Hutchinson TTRR Y-2, 6 1.0
EXHIBIT "A"
(Continued)
NAME OF WELL, COUNTY, LOCATION, AND WORKING INTEREST
WEST PANHANDLE FIELD, TEXAS
CIG Location Location
Meter ------------------------ Working Meter ----------------------- Working
Well Name Number County Sur-Blk-Sec Interest Well Name Number County Sur-Blk-Sec Interest
- --------- ------ ------ ----------- -------- --------- ------- ------- ------------- --------
Masterson 1R 58710 Moore D&P 0-18, 76 1.0 Masterson 85R 59573 Potter H&TC 47, 64 1.0
Masterson 2R 58760 Moore D&P 0-18, 85 1.0 Masterson 86R 59574 Potter ELRR B-10, 34 1.0
Masterson 3R 58810 Moore D&P 0-18, 86 1.0 Masterson 91R 59579 Potter D&P 0-18, 72 1.0
Masterson 5R 58860 Potter H&TC 47, 65 1.0 Masterson 92R 59580 Potter ELRR B-11, 5 1.0
Masterson 6R 58910 Moore G&M 3, 40 1.0 Masterson 93R 59581 Potter ELRR B-11, 9 1.0
Masterson 7R 58960 Potter D&P 0-18, 65 1.0 Masterson 95R 59583 Potter G&M 3, 30 1.0
Masterson 9R 59020 Potter D&P 0-18, 64 1.0 Masterson 97R 59585 Potter H&TC 47, 60 1.0
Masterson 10R 59030 Potter D&P 0-18, 104 1.0 Masterson 99R 59587 Moore G&M 3, 36 1.0
Masterson 11R 59040 Potter D&P 0-18, 67 1.0 Masterson 100R 59588 Moore ELRR B-10, 30 1.0
Masterson 12R 59050 Potter ELRR B-10, 35 1.0 Masterson 101R 59589 Moore G&M 3, 37 1.0
Masterson 13R 59070 Potter D&P 0-18, 63 1.0 Masterson 102R 59590 Moore ELRR B-10, 13 1.0
Masterson 15R 59090 Potter D&P 0-18, 103 1.0 Masterson 103R 59591 Moore ELRR 8-10, 29 1.0
Masterson 16R 59100 Potter G&M 3, 24 1.0 Masterson 104R 59592 Potter H&TC 47, 58 1.0
Masterson 19R 59130 Potter G&M 3, 33 1.0 Masterson 105R 59593 Potter H&TC 47, 61 1.0
Masterson 20R 59140 Potter D&P 0-18, 110 1.0 Masterson 106R 59594 Potter G&M 3, 81 1.0
Masterson 21R 59150 Potter D&P 0-18, 107 1.0 Masterson 107R 59595 Potter ELRR B-11, 14 1.0
Masterson 22R 59160 Potter G&M 3, 10 1.0 Masterson A-1 59660 Moore G&M 3, 46 1.0
Masterson 23R 59170 Potter D&P 0-18, 71 1.0 Masterson A-2 59670 Moore G&M 3, 49 1.0
Masterson 24R 59180 Potter D&P 0-18, 69 1.0 Masterson A-3 59680 Moore G&M 3, 45 1.0
Masterson 25R 59190 Potter D&P 0-18, 106 1.0 Masterson A-4 59690 Moore ELRR B-10, 33 1.0
Masterson 27R 59200 Potter G&M 3, 27 1.0 Masterson A-5 59700 Moore D&P 0-18, 76 1.0
Masterson 28R 59210 Potter D&P 0-18, 3 1.0 Masterson A-6 59710 Moore D&P 0-18, 73 1.0
Masterson 29R 59220 Potter G&M 3, 22 1.0 Masterson A-7 59720 Moore D&P B-12, 11 1.0
Masterson 30R 59230 Potter D&P 0-18, 92 1.0 Masterson A-9 59730 Potter ELRR B-10, 36 1.0
Masterson 31R 59240 Moore D&P 0-18, 84 1.0 Masterson A-10 59740 Moore D&P B-12, 13 1.0
Masterson 32R 59250 Potter D&P 0-18, 74 1.0 Masterson A-11 59750 Moore D&P B-12, 12 1.0
Masterson 33R 59260 Potter D&P 0-18, 72 1.0 Masterson A-12 59760 Moore ELRR B-10, 27 1.0
Masterson 34R 59270 Potter D&P 0-18, 94 1.0 Masterson A-13 59770 Potter D&P 0-18, 74 1.0
Masterson 35R 59280 Potter D&P 0-18, 101 1.0 Masterson A-14 59780 Moore D&P 0-18, 60 1.0
Masterson 36R 59290 Potter ELRR B-11, 10 1.0 Masterson A-15 59790 Moore D&P 0-18, 62 1.0
Masterson 37R 59300 Potter ELRR B-11, 1 1.0 Masterson A-16 59800 Moore G&M 3, 41 1.0
Masterson 38R 59310 Potter D&P 0-18, 100 1.0 Masterson A-17 59810 Moore R B Newcombe 1 1.0
Masterson 39R 59320 Potter D&P 0-18, 90 1.0 Masterson A-18 59820 Moore G&M 3, 40 1.0
Masterson 40R 59330 Moore G&M 3, 39 1.0 Masterson A-19 59830 Potter D&P 0-18, 3 1.0
Masterson 41R 59340 Potter D&P 0-18, 79 1.0 Masterson A-20 59840 Moore ELRR B-10, 32 1.0
Masterson 42R 59350 Potter D&P 0-18, 70 1.0 Masterson A-21 59850 Moore ELRR B-10, 17 1.0
Masterson 43R 59360 Potter G&M 3, 20 1.0 Masterson A-22 59860 Moore D&P 0-18, 83 1.0
Masterson 44R 59370 Potter H&TC 47, 65 1.0 Masterson A-23 59870 Potter G&M 2, 84 1.0
Masterson 46R 59390 Potter D&P 0-18, 96 1.0 Masterson A-25 59880 Potter ELRR B-11, 12 1.0
Masterson 47R 59400 Potter D&P 0-18, 89 1.0 Masterson A-26 59890 Potter G&M 2, 83 1.0
Masterson 48R 59410 Potter G&M 3, 33 1.0 Masterson A-29 59920 Potter G&M 3, 13 1.0
Masterson 49R 59420 Potter G&M 3, 36 1.0 Masterson A-31 59930 Moore D&P 0-18, 61 1.0
Masterson 50R 59430 Moore D&P 0-18, 87 1.0 Masterson A-32 59940 Moore G&M 3, 48 1.0
Masterson 51R 59440 Moore G&M 3, 40 1.0 Masterson A-37 59941 Potter D&P 0-18, 94 1.0
Masterson 53R 59460 Potter D&P 0-18, 91 1.0 Masterson A-40 59944 Potter G&M 3, 9 1.0
Masterson 54R 59470 Moore G&M 3, 39 1.0 Masterson B-1 59950 Moore G&M 3, 43 1.0
Masterson 55R 59480 Potter ELRR B-11, 4 1.0 Masterson B-3 59970 Potter G&M 3, 42 1.0
Masterson 56R 59490 Potter G&M 3, 32 1.0 Masterson B-6 59980 Potter G&M 3, 19 1.0
Masterson 57R 59500 Potter D&P 0-18, 109 1.0 Masterson B-8 59990 Potter D&P 0-18, 89 1.0
Masterson 58R 59510 Potter G&M 3, 28 1.0 Masterson B-11 60010 Potter H&TC 47, 56 1.0
Masterson 60R 59530 Potter G&M 3, 21 1.0 Masterson B-13 60020 Potter H&TC 47, 58 1.0
Masterson 62R 59550 Potter H&TC 47, 68 1.0 Masterson B-14 60030 Potter H&TC 47, 59 1.0
Masterson 63R 59551 Potter D&P 0-18, 81 1.0 Masterson B-15 60040 Moore ELRR B-10, 19 1.0
Masterson 68R 59556 Potter G&M 3, 29 1.0 Masterson B-16 60050 Potter D&P 0-18, 71 1.0
Masterson 69R 59557 Potter D&P 0-18, 98 1.0 Masterson B-17 60060 Potter D&P 0-18, 72 1.0
Masterson 70R 59558 Potter D&P 0-18, 97 1.0 Masterson B-18 60070 Moore G&M 3, 37 1.0
Masterson 71R 59559 Moore G&M 3, 85 1.0 Masterson B-19 60080 Potter G&M 3, 35 1.0
Masterson 72R 59560 Potter D&P 0-18, 83 1.0 Masterson B-20 60090 Potter G&M 3, 33 1.0
Masterson 73R 59561 Potter G&M 3, 14 1.0 Masterson B-21 60100 Potter D&P 0-18, 63 1.0
Masterson 74R 59562 Potter G&M 3, 15 1.0 Masterson B-22 60110 Potter D&P 0-18, 64 1.0
Masterson 75R 59563 Potter G&M 3, 15 1.0 Masterson B-23 60120 Potter H&TC 47, 61 1.0
Masterson 76R 59564 Potter D&P 0-18, 99 1.0 Masterson B-24 60130 Potter G&M 3, 30 1.0
Masterson 77R 59565 Potter D&P 0-18, 88 1.0 Masterson B-25 60140 Potter H&TC 47, 60 1.0
Masterson 78R 59566 Potter G&M 3, 83 1.0 Masterson B-26 60150 Potter H&TC 47, 63 1.0
Masterson 79R 59567 Potter G&M 3, 31 1.0 Masterson B-27 60160 Potter G&M 3, 27 1.0
Masterson 80R 59568 Potter G&M 3, 84 1.0 Masterson B-29 60180 Potter G&M 3, 28 1.0
Masterson 81R 59569 Potter G&M 3, 35 1.0 Masterson B-30 60190 Moore D&P 0-18, 87 1.0
EXHIBIT "A"
(Continued)
NAME OF WELL, COUNTY, LOCATION, AND WORKING INTEREST
WEST PANHANDLE FIELD, TEXAS
CIG Location Location
Meter ------------------------ Working Meter ----------------------- Working
Well Name Number County Sur-Blk-Sec Interest Well Name Number County Sur-Blk-Sec Interest
- --------- ------ ------ ----------- -------- --------- ------- ------- ------------- --------
Masterson 82R 59570 Potter G&M 2, 84 1.0 Masterson B-31 60200 Potter H&TC 47, 65 1.0
Masterson 83R 59571 Potter G&M 3, 19 1.0 Masterson B-32 60210 Potter H&TC 47, 64 1.0
Masterson 84R 59572 Potter G&M 3, 17 1.0 Masterson B-33 60220 Potter G&M 3, 18 1.0
EXHIBIT "A"
(Continued)
NAME OF WELL, COUNTY, LOCATION, AND WORKING INTEREST
WEST PANHANDLE FIELD, TEXAS
CIG Location Location
Meter ------------------------ Working Meter ----------------------- Working
Well Name Number County Sur-Blk-Sec Interest Well Name Number County Sur-Blk-Sec Interest
- --------- ------ ------ ----------- -------- --------- ------- ------- ------------- --------
Masterson B34R 60235 Potter G&M 3, 15 1.0 Masterson G-4 60870 Potter D&P 0-18, 79 1.0
Masterson B-37 60240 Potter H&TC 47, 66 1.0 Masterson G-5 60880 Moore D&P 0-18, 86 1.0
Masterson B-39 60260 Potter D&P 0-18, 107 1.0 Masterson J-1 60900 Moore D&P 0-18, 59 1.0
Masterson B-40 60270 Potter D&P 0-18, 90 1.0 Masterson J-3 60920 Potter ELRR B-11, 10 1.0
Masterson B-42 60290 Potter G&M 3, 32 1.0 Masterson J-4 60930 Potter ELRR B-11, 9 1.0
Masterson B-43 60300 Potter ELRR B-10, 35 1.0 Masterson J-5 60940 Potter G&M 3, 11 1.0
Masterson B-44 60310 Potter G&M 3, 81 1.0 Masterson J-6 60950 Potter G&M 2, 80 1.0
Masterson B-45 60320 Potter D&P 0-18, 91 1.0 Masterson J-7 60960 Potter G&M 3, 9 1.0
Masterson B-46 60330 Potter D&P 0-18, 88 1.0 Masterson J-10 60963 Potter D&P 0-18, 69 1.0
Masterson B-47 60340 Potter D&P 0-18, 92 1.0 Masterson M-2 60980 Moore ELRR 8-10, 13 1.0
Masterson B-48 60350 Potter G&M 3, 34 1.0 Masterson M-3 60990 Moore G&M 3, 39 1.0
Masterson B-49 60360 Potter G&M 3, 83 1.0 Masterson M-4 61000 Moore G&M 3, 38 1.0
Masterson B-50 60370 Potter D&P 0-18, 109 1.0 Masterson M-5 61010 Moore ELRR B-10, 14 1.0
Masterson B-51 60380 Potter G&M 3, 25 1.0 Masterson N-1 61020 Potter G&M 3, 17 1.0
Masterson B-52 60390 Potter G&M 3, 24 1.0 Masterson A35R 61202 Potter H&TC 47, 77 1.0
Masterson B-53 60400 Potter D&P 0-18, 98 1.0 Masterson 791R 61208 Potter H&TC 47, 79 1.0
Masterson B-54 60410 Potter G&M 3, 23 1.0 McBride 1R 62810 Potter H&TC 46, 98 1.0
Masterson B55R 60420 Potter G&M 3, 26 1.0 McBride A-2 62880 Potter H&TC 46, 98 1.0
Masterson B-57 60430 Potter H&TC 47, 68 1.0
Masterson B58R 60445 Potter H&TC 47, 67 1.0 Poling 1R 77060 Carson TTRR Y-2, 12 1.0
Poling A-2 77120 Carson TTRR Y-2, 12 1.0
Masterson B-59 60450 Potter G&M 3, 16 1.0
Masterson B-60 60460 Potter D&P 0-18, 106 1.0 Read 3R 78955 Moore ELRR B-10, 18 1.0
Masterson B-61 60470 Potter D&P 0-18, 70 1.0 Read A-2 78670 Moore G&M 3, 47 1.0
Masterson B-62 60480 Potter G&M 3, 31 1.0 Read A-3 78710 Moore D&P B-12, 15 1.0
Masterson B-63 60490 Potter D&P 0-18, 110 1.0 Read A-4 78750 Moore ELRR B-10, 18 1.0
Masterson B64R 60500 Potter D&P 0-18, 95 1.0
Masterson B-65 60510 Potter D&P 0-18, 99 1.0 Read A-6 78830 Moore ELRR B-10, 20 1.0
Masterson B-66 60520 Potter D&P 0-18, 104 1.0 Read A-7 78870 Moore Ozier M-3, 1 1.0
Masterson B-67 60530 Potter D&P 0-18, 100 1.0 Read A-8 78880 Moore D&P B-12, 14 1.0
Masterson B-68 60540 Potter D&P 0-18, 101 1.0 Read B-1 78910 Moore ELRR B-10, 16 1.0
Masterson B-69 60550 Potter G&M 3, 21 1.0 Sanford A-1 81510 Carson AB&M 3, 11 1.0
Masterson B-70 60560 Potter ELRR B-11, 4 1.0 Sanford A-3 81570 Carson AB&M 3, 9 0.875000
Masterson B-72 60580 Potter ELRR B-11, 5 1.0 Sanford A-4 81630 Carson AB&M 3, 10 1.0
Masterson B-73 60590 Potter ELRR B-10, 38 1.0 Sanford A-5 81690 Carson AB&M 3, 8 1.0
Masterson B-74 60600 Potter D&P 0-18, 97 1.0 Sanford A-6 81570 Carson AB&M 3, 16 1.0
Masterson B75R 60610 Potter D&P 0-18, 93 1.0 Sanford A-7 81810 Carson AB&M 3, 4 1.0
Masterson B76R 60620 Potter D&P 0-18, 66 1.0 Seay A-2 84100 Moore G&M 2, 85 1.0
Masterson B-77 60630 Potter D&P 0-18, 103 1.0 Sneed 1R 86550 Moore M.Johnson,Tr.7 1.0
Masterson B78R 60640 Potter D&P 0-18, 105 1.0 Sneed 2R 86610 Moore ELRR B-10, 5 1.0
Masterson B-79 60650 Potter G&M 3, 22 1.0 Sneed 3R 86620 Moore H. Hall 1.0
Masterson B-80 60660 Potter H&TC 47, 62 1.0 Sneed 4R 86630 Moore T&NO 6-T, 51 1.0
Masterson B-81 60670 Potter D&P 0-18, 95 1.0 Sneed 8R 86631 Moore ELRR B-10, 11 1.0
Masterson B-82 60680 Potter D&P 0-18, 66 1.0 Sneed 9R 86632 Moore ELRR B-10, 10 1.0
Masterson B-83 60690 Potter D&P 0-18, 93 1.0 Sneed 11R 86634 Moore T&NO 6-T, 56 1.0
Masterson B-84 60700 Potter D&P 0-18, 105 1.0 Sneed A-2 86730 Moore T&NO 6-T, 54 1.0
Masterson B85R 60710 Potter D&P 0-18, 108 1.0 Sneed A-3 86790 Moore T&NO 6-T, 53 1.0
Masterson B-86 60720 Potter G&M 3, 82 1.0 Sneed A-4 86850 Moore T&NO 6-T, 52 1.0
Masterson B86R 60730 Potter G&M 3, 82 1.0 Sneed A-5 86910 Moore ELRR B-10, 3 1.0
Masterson B87R 60740 Potter G&M 3, 16 1.0 Sneed A-6 86970 Moore ELRR B-10, 7 1.0
Masterson B-88 60750 Potter ELRR B-11, 1 1.0 Sneed A-7 87030 Moore H. Hall 1.0
Masterson B-89 60760 Potter D&P 0-18, 85 1.0 Sneed A-8 87090 Moore H. Hall 1.0
Masterson B-90 60770 Potter G&M 3, 10 1.0 Sneed A-9 87150 Moore ELRR B-10, 8 1.0
Masterson B-91 60780 Potter D&P 0-18, 108 1.0 Sneed A-10 87160 Moore T&NO 6-T, 51 1.0
Masterson B92R 60800 Potter G&M 3, 26 1.0 Sneed B-1 87212 Moore T&NO 6-T, 58 1.0
Masterson B-93 60790 Potter H&TC 47, 58 1.0 Sneed B-2 87270 Moore T&NO 6-T, 57 1.0
Masterson B-94 61030 Potter D&P 0-18, 67 1.0 Sneed B-3 87330 Moore ELRR B-10, 11 1.0
Masterson B-95 61040 Potter G&M 3, 20 1.0 Sneed B-4 87390 Moore T&NO 6-T, 56 1.0
Masterson B-96 61050 Potter D&P 0-18, 96 1.0 Sneed C-1 87450 Moore T&NO 6-T, 46 1.0
Masterson B-98 61052 Potter G&M 3, 15 1.0 Sneed D-7 87510 Moore T&NO 6-T, 47 1.0
Masterson B-99 61053 Potter H&TC 47, 67 1.0 Sneed E-1 87570 Moore M.Johnson,Tr.7 1.0
Masterson B100R 60808 Potter H&TC 47, 65 1.0 State
Masterson B-101 60809 Potter H&TC 47, 70 1.0 Riverbed 1 90330 Potter Canadian River 8 1.0
Masterson B-102 60811 Potter G&M 3, 29 1.0
Masterson B-104 60814 Potter G&M 3, 34 1.0 Thompson 1R 92510 Moore ELRR 26, 26 1.0
Masterson B-105 60815 Moore G&M 3, 44 1.0 Thompson 2R 92520 Moore ELRR 26, 25 1.0
Thompson 5R 92550 Moore ELRR 26, 24 1.0
Masterson C-1 60810 Potter D&P 0-18, 65 1.0 Thompson 8R 92558 Moore ELRR 26, 26 1.0
Masterson C-3 60820 Potter D&P 0-18, 102 1.0 Thompson A-1 92570 Moore ELRR 26, 24 1.0
EXHIBIT "A"
(Continued)
NAME OF WELL, COUNTY, LOCATION, AND WORKING INTEREST
WEST PANHANDLE FIELD, TEXAS
CIG Location Location
Meter ------------------------ Working Meter ----------------------- Working
Well Name Number County Sur-Blk-Sec Interest Well Name Number County Sur-Blk-Sec Interest
- --------- ------ ------ ----------- -------- --------- ------- ------- ------------- --------
Masterson D4R 60830 Potter D&P 0-18, 108 1.0
Masterson F-1 60840 Potter G&M 3, 14 1.0 Thompson A-2 92600 Moore H&TC 44, 19 1.0
Masterson G-3 60860 Moore D&P 0-18, 84 1.0 Thompson A-3 92630 Moore H&TC 44, 21 1.0
Thompson A-4 92660 Moore ELRR 26, 25 1.0
Thompson A-5 92690 Moore ELRR 26, 23 1.0
Thompson A-6 92720 Moore ELRR 26, 26 1.0
EXHIBIT "A"
(Continued)
NAME OF WELL, COUNTY, LOCATION, AND WORKING INTEREST
WEST PANHANDLE FIELD, TEXAS
CIG Location Location
Meter ------------------------ Working Meter ----------------------- Working
Well Name Number County Sur-Blk-Sec Interest Well Name Number County Sur-Blk-Sec Interest
- --------- ------ ------ ----------- -------- --------- ------- ------- ------------- --------
Thompson B-2 92750 Moore H&TC 44, 17 1.0
Thompson B-3 92780 Moore D&P 0-18, 75 1.0
Thompson B-4 92810 Moore H&TC 44, 58 1.0
Thompson B-5 92840 Moore H&TC 44, 26 1.0
Thompson B-6 92870 Moore ELRR 26, 19 1.0
Thompson B-7 92900 Moore D&P 0-18, 57 1.0
Thompson B-8 92930 Moore ELRR 26, 17 1.0
Thompson B-9 92960 Moore D&P 0-18, 58 1.0
Thompson B-11 92990 Moore ELRR B-10, 1 1.0
Thompson B-12 93020 Moore ELRR 26, 22 1.0
Thompson B-13 93050 Moore J.T. Sneed, Z 1.0
Thompson B-14 93080 Moore G&M 3, 73 1.0
Thompson C-1 93110 Moore ELRR B-10, 2 1.0
Warrick 1R 95610 Potter GBCNG Y-2, 16 1.0
Warrick 2R 95660 Moore H&TC 46, 92 1.0
Warrick 3R 95710 Potter H&TC 46, 96 1.0
Warrick 4R 95760 Moore H&TC 46, 94 1.0
Warrick A-2 95860 Moore H&TC 46, 92 1.0
Warrick A-3 95910 Moore H&TC 46, 96 1.0
Warrick A-5 96010 Moore H&TC 46, 94 1.0
Warrick A-6 96020 Potter GBCNG Y-2, 16 1.0
Warrick A-7 96040 Carson B&B Y-2, 12 1.0
EXHIBIT "B"
Attached to and made a part of that certain Operating Agreement by and
between MESA OPERATING LIMITED PARTNERSHIP ("MESA"), as Opeator, and
COLORADO INTERSTATE GAS COMPANY ("CIG"), as Nonoperator, and dated January
8, 1988.
LIST OF OPERATING AGREEMENT WITH
WORKING INTEREST PARTNERS
GROSS
LOCATION WORKING
SUR-BLK-SEC INTEREST
WELL WORKING INTEREST PARTNER COUNTY PERCENT
- ----------- ------------------------------------- ----------- --------
Bivins A-51 Jewell E. Park, Independent Executrix
of the Estate of David Ayers Park, Jr. G&M-M20-14 2.3437
Virginia Sherrill Potter 7.0313
Bivins A-53 Jewell E. Park, Independent Executrix
of the Estate of David Ayers Park, Jr. H&TC-46-107 1.5625
Virginia Sherrill Potter 4.6875
Bivins A-136 Jewell E. Park, Independent Executrix
of the Estate of David Ayers Park, Jr. G&M-5-20-1/2 5.4687
Virginia Sherrill Potter 16.4063
Bivins A-166 Jewell E. Park, Independent Executrix
of the Estate of David Ayers Park, Jr. H&TC-46-106 2.2461
Virginia Sherrill Potter 6.7383
Bivins G-1 Exxon Corporation H&TC-46-93 32.9381
& Bivins 9-R Moore
Bivins H-1 Exxon Corporation H&TC-46-95 24.9415
Moore
Sanford A-3 PanEastern Exploration Co. AB&M-3-9 12.5000
Carson
Bivins 75R Coastal Oil & Gas Corporation H&TC-46-95 21.8234
Exxon Corporation Moore 3.1177
EXHIBIT "C"
Accounting Procedure
Attached to and made a part of that certain Operating Agreement by and
between MESA OPERATING LIMITED PARTNERSHIP, as Operator, and COLORADO
INTERSTATE GAS COMPANY, as Nonoperator, and dated
January 8, 1988.
---------------
I. GENERAL PROVISIONS
1.1 Definitions. As used in this Accounting Procedure, the
-----------
following words and terms shall have the following meanings:
"Acidize" shall mean a technique for increasing the production from a
well by introducing acid into the well under pressure in order to
enlarge and reopen pores in producing formations.
"Administrative Fee" shall mean the Authorized Payments and Charges
which CIG will charge and collect from Mesa.
"AFE" shall mean an authorization for expenditure.
"Allowable Costs" shall mean those costs and expenses listed and
described in paragraph 2.1 of this Accounting Procedure which Mesa is
authorized to use in computing its "Operations and Maintenance Fee."
Allowable Costs do not include "Capital Expenditures" as that term is
defined below.
"Authorized Payments and Charges" shall mean those payments and
charges listed and described in paragraph 3.1 of this Accounting
Procedure which CIG is authorized to use in computing its
"Administrative Fee."
"British Thermal Unit" means the amount of heat required to raise the
temperature of one pound of water one degree Fahrenheit at 60 degrees
Fahrenheit.
"Capital Expenditures" shall mean all monies expended for all projects
undertaken after January 1, 1990, for the drilling, redrilling,
repair, deepening, Reworking, Acidizing, Frac or other stimulation of
any well subject to the Operating Agreement (except for the costs,
expenses and liabilities excluded from such treatment in Article VI of
the Operating Agreement), or any other projects clearly discernible as
a fixed asset which are required for the development and operation of
the leases subject to the Operating Agreement and which are reasonably
estimated to require an expenditure in excess of $25,000.
"CIG" shall mean Colorado Interstate Gas Company, and/or its successor
in interest under the "B" Contract.
"Contract Area" shall mean all of the Gas Leases (as defined below)
intended to be operated for gas purposes under the Operating
Agreement.
"Controllable Material" shall mean Material which at the time is so
classified in the Material Classification Manual as most recently
recommended by the Council of Petroleum Accountants Societies of North
America.
"COPAS" shall mean the Council of Petroleum Accountants Societies of
North America.
"Exploratory Well" shall mean a well drilled to test a geologic zone
or formation the depth of which is below mean sea level.
"First Level Supervisors" shall mean those employees whose primary
functions in operation under the Operating Agreement is the direct
supervision of other employees and/or contract labor directly employed
on wells subject to the Operating Agreement in a field operating
capacity.
"Frac" shall mean an operation designed to crack or break up
formations which contain Oil and gas by pumping liquids and/or gases
with proppants into the formation under high pressure, in order to
increase the formation's Permeability and to achieve greater
production.
"Gas" shall mean natural gas and all other gaseous hydrocarbons
produced therewith.
"Gross Heating Value," when applied to a cubic foot of gas, means the
number of British thermal units produced by combustion, at a constant
pressure, of the amount of gas which would occupy a volume of one
cubic foot at a temperature of 60 degrees Fahrenheit if saturated with
water vapor and under a pressure equivalent to that of 30 inches of
mercury at 32 degrees Fahrenheit and under standard gravitational
force (980.665 c.m. per sec.) with air of the same temperature and
pressure as the gas, when the products of combustion are cooled to the
initial temperature of gas and air and when the water formed by
combustion is condensed to the liquid state.
"Lease", or "Gas Lease" shall mean any one or more of the gas leases
now or hereafter subject to the "B" Contract on which one or more of
the wells listed and described on Exhibit "All are located, or which
are included in the proration unit for any such well or wells.
"Material" shall mean personal property, equipment or supplies
acquired or held for use on the wells subject to the Operating
Agreement.
"Mesa" shall mean Mesa Operating Limited Partnership and/or its
successor in interest under the "B" Contract.
"Operations and Maintenance Fee" shall mean the charges which Mesa
will be authorized to charge and collect from CIG for performance of
its duties as Operator under the Operating Agreement.
"Personal Expenses" shall mean travel and other reasonable
reimbursable expenses of a party's employees incurred in connection
with operations on the wells subject to the Operating Agreement.
"Proration unit" shall mean the acreage assigned to a well for the
purpose of allocating allowable gas production thereto by order or
rule of the Texas Railroad Commission, or any other state or federal
body having authority.
"Replacement Well" shall mean any gas well drilled on a Gas Lease
subject to the Operating Agreement to replace an existing gas well
which is accepted by the Railroad Commission of Texas as a replacement
for such well.
"Rework" or "Reworking" shall mean any operation performed on a well
after it has been completed in an effort to secure production where
there has been none, to restore production that has ceased, or to
increase production. Cleaning out a well bore that has silted up is a
typical Reworking operation. "Reworks" shall include deepening of an
existing well and Side Tracking if the resulting well is to be
completed in a zone or formation the depth of which is above mean sea
level.
"Side Tracking" means a drilling operation involving the use of a
portion of an existing well bore to drill a second hole, resulting in
a well that is partly old and partly new. Such an operation may be
treated hereunder as an "Exploratory Well" if the objective depth of
said well satisfies the definition for Exploratory Well contained in
Article 1.
"Technical Employees" shall mean those employees which have special
and specific engineering, geological or other professional skills, and
whose primary function in operations is the handling of specific
operating conditions and problems for the benefit of the wells subject
to the Operating Agreement.
1.2 Statements and Billings.
-----------------------
1.2.1 Mesa shall bill CIG on or before the twentieth day of the month
following the month of production for its Operations and Maintenance Fee.
1.2.2 CIG shall bill Mesa on or before the twentieth day of the month
following the month of production for its Administrative Fee.
1.2.3 Costs Of Capital Expenditures will be billed monthly.
1.2.4 All such bills will be accompanied by statements which identify
the AFE, and the well, lease or facility on which the charges being billed
were incurred; and all charges and credits will be summarized by
appropriate classifications of investment and expense except that items of
Controllable Material and unusual charges and credits shall be separately
identified and fully described in detail.
1.3 Payments. All bills are to be paid within fifteen (15) days after
--------
receipt. If the obligations prescribed in preceding Section 1.2 above have
been satisfied and payment is not made within such time, the unpaid balance
shall bear interest monthly at a rate equal to the sum of the prime rate in
effect at Texas Commerce Bank in Amarillo on the first day of the month in
which delinquency occurs plus one percent, or the maximum contract rate
permitted by the applicable usury laws in the State of Texas, whichever is
the lesser, Plus attorneys fees, court costs, and other costs in connection
with the collection of unpaid amounts.
1.4 Adjustments. Payment of any such bills shall not prejudice the
-----------
right of either party to protest or question the correctness thereof;
provided, however, that all bills and statements rendered hereunder during
any calendar year shall conclusively be presumed to be true and correct
after twenty-four (24) months following the end of any such calendar year,
unless within the said twenty-four month period the recipient of the bill
takes written exception thereto and makes Claim on the other party for
adjustment provided, however, that the provisions of this paragraph shall
not prevent:
(a) refunds from Mesa if any portion of the Operations and
Maintenance Fee or costs of Capital Expenditures billed to CIG are
disallowed by the Federal Energy Regulatory Commission, or its successor
agency; and
(b) additional appropriate billings to Mesa for any royalties,
overriding royalties, production related payments, rentals, shut-in well
payments or minimum royalties determined to have been due previously and
paid following said twenty-four month period; and
(c) adjustments resulting from a physical inventory of controllable
material as provided in Article VI.
1.5 Audits. Either party hereto shall have the right, upon notice in
writing to the other, to audit the other's accounts and records relating to
operations under the Operating Agreement to which this Accounting Procedure
is attached, and to examine the data supporting the charges billed by such
party for any calendar year within the 24-month period following the end of
such calendar year; provided, however, that the making of such an audit
shall not extend the time for the taking of written exception to and the
adjustments of accounts as provided for in paragraph 1.4 above. Both
parties shall make every reasonable effort to conduct audits in a manner
which will result in a minimum of inconvenience to the other party.
Neither party shall bear any portion of the other party's audit costs
incurred under this paragraph unless agreed to by the other party; and the
party undergoing the audit shall reply in writing to an audit report within
180 days of receipt of such report.
II. OPERATIONS AND MAINTENANCE FEE
2.1 Allowable Costs. Mesa is hereby authorized to include the
following items in the computation of its Operations and Maintenance Fee:
2.1.1 Ecological and Environmental
Costs incurred for the benefit of the leases and wells subject to the
Operating Agreement to which this Accounting Procedure is attached as
a result of governmental or regulatory requirements to satisfy
environmental considerations applicable to such leases and wells.
Such costs may include surveys of an ecological or archaeological
nature and pollution control procedures as required by any applicable
laws and regulations.
2.1.2 Labor
A. (1) Salaries and wages of Mesa's field employees directly employed
in the conduct of operations on wells subject to the Operating
Agreement.
(2) Salaries of First Level Supervisors in the field.
(3) Salaries and Wages of Technical Employees directly employed
on wells subject to the Operating Agreement, if such charges
are excluded from the overhead rates in Section 2.2 below.
(4) Salaries and wages of Technical Employees either temporarily
or permanently assigned to and directly employed in the
operation of wells subject to the Operating Agreement if such
charges are excluded from the overhead rates in Section 2.2
below.
(5) Salaries and wages of Technic al Employees either temporarily
or permanently assigned to and directly employed in
preparation of producer nominations or in well scheduling if
such charges are excluded from the overhead rates in Section
2.2 below.
B. Mesa's cost of holiday, vacation, sickness and disability benefits
and other customary allowances paid to employees whose salaries
and Wages are authorized to be charged under subparagraph A above.
Such costs under this subparagraph B will be charged on (i) a
"when and as paid basis" or (ii) a percentage assessment on the
amount of salaries and wages authorized to be charged under
subparagraph A above. if percentage assessment is used, the rate
shall be based on Mesa's recent calendar year cost experience.
C. Expenditures made pursuant to assessments imposed by governmental
authority which are applicable to those Mesa costs which are
chargeable under subparagraphs A and B above.
D. Personal Expenses of those employees whose salaries and wages are
chargeable under subparagraph A above.
2.1.3 Employee Benefits
Mesa's current costs of established plans for employee group life
insurance, hospitalization, pension, retirement, stock purchase,
thrift, bonus and other benefit plans of a like nature, applicable to
Mesa's labor costs as herein authorized under paragraphs 2.1.2.A and
2.1.2.B above shall be Mesa's actual cost not to exceed the percentage
most recently recommended by COPAS.
2.1.4 Transportation
Transportation of employees and Material necessary for operations
under the Operating Agreement subject to the following limitations:
A. If Material is moved to the jobsite from Mesa's warehouse or from
other properties, no charge shall be Made for a distance greater
than the distance from the nearest reliable supply store or
railway receiving point where like Material is normally available
unless agreed to by the parties.
B. If surplus Material is moved to Mesa's warehouse or other storage
point, no charge shall be made for a distance greater than the
distance to the nearest reliable supply store or railway receiving
point unless agreed to by the parties. No charge shall be made
for moving Material to other properties belonging to Mesa or to
any subsidiary or affiliate unless agreed to by the parties.
C. In the application of paragraphs A. and B. above, the option to
equalize or charge actual trucking cost is available when the
actual charge is $400 or less excluding accessorial charges. The
$400 will be adjusted to the amount most recently recommended by
COPAS.
D. No charge shall be made for transportation of Mesa's
representatives on the Engineering Committee (Article XV,
Operating Agreement).
2.1.5 Services
The cost of contract services, equipment and utilities provided by
outside sources, except as otherwise provided for legal services in
paragraph 2.1.8 hereinbelow or as excluded under Section 2.2 below.
The cost of professional consulting services and contract services of
technical personnel directly engaged in operations on wells subject to
the Operating Agreement, if such charges are excluded from the
overhead rates in Section 2.2 below. The cost of professional
consulting services or contract services of technical personnel not
directly engaged in operations on such wells shall not be charged
unless previously agreed to by the parties hereto.
2.1.6 Equipment and Facilities Furnished by Mesa
Mesa shall charge CIG for the use of Mesa's owned equipment and
facilities at rates commensurate with costs of ownership and
operation. Such rates shall include costs of maintenance, repairs,
other operating expense, insurance, taxes, depreciation and interest
on gross investment less accumulated depreciation not to exceed twelve
percent (12%) per annum. Such rates shall not exceed average
commercial rates currently prevailing in the immediate area of the Gas
Leases subject to the Operating Agreement.
2.1.7 Damages and Losses
Except as otherwise provided in Article X of the Operating Agreement
to which this Accounting Procedure is attached, all costs or expenses
necessary for the repair of the wells subject to the Operating
Agreement which are made necessary because of damages or losses
incurred by fire, flood, storm, theft, accident or other cause, except
those resulting from Mesa's gross negligence or willful misconduct.
Mesa shall furnish CIG written notice of damages or losses incurred as
soon as practicable after a report thereof has been received by Mesa.
2.1.8 Legal Expense
Except as otherwise provided in Article X of the Operating Agreement
to which this Accounting Procedure is attached, the costs and expenses
of handling, investigating and settling litigation or claims, payment
of judgments and amounts paid for settlement of claims incurred in
or resulting from operations under the Operating Agreement or
necessary to protect or recover the Gas Leases, and the costs and
expenses incurred in connection with hearings and other matters before
governmental bodies and/or regulatory agencies and costs and expenses
incurred in examining and curing title; provided, however, that there
shall be no charge for Mesa's in-house legal staff.
2.1.9 Insurance
Net premiums paid for insurance required to be carried for operations
under the Operating Agreement as shown in Exhibit "D" thereto for the
protection of both the parties. In the event that Mesa elects to act
as a self-insurer under the workers' compensation laws of the State of
Texas, it may include the risk under its self-insurance program and in
that event, it shall include a charge at its actual cost not to exceed
the rates authorized or recommended by COPAS.
2.1.10 Communications
Costs of acquiring, leasing, installing, operating, repairing and
maintaining communication systems, including radio and microwave
facilities directly serving wells subject to the Operating Agreement.
2.1.11 Other Expenditures
Any other expenditure not covered or dealt with in the foregoing
provisions of this Section 2.1 and Section 2.2 and which is of direct
benefit to the Contract Area and is incurred by Mesa in the necessary
and proper conduct of operations on the Contract Area.
2.2 Overhead. As compensation for administration, for maintenance and for
--------
operation of the wells subject to the Operating Agreement, for supervision
of additional drilling or Reworks, and for administrative, supervisory and
office services and warehousing costs, Mesa shall include with its other
Allowable Costs (which are allocated to CIG based on the ratio of the
volume of gas taken by CIG for redelivery to third parties to the total
volume of gas delivered to CIG from wells subject to the Operating
Agreement) a rate of 3.5 cents per Mcf. Unless otherwise agreed to by the
parties, such charge shall be in lieu of costs and expenses of all offices
and salaries or wages plus applicable burdens and expenses of all
personnel; provided, however:
The salaries, wages and Personal Expenses of Technical Employees
and/or the cost of professional consulting services and contract
services of technical personnel directly employed on wells
subject to the Operating Agreement ( ) shall ( X ) shall not
--- ---
be covered by the overhead rates.
The salaries, wages and Personal Expenses of Technical Employees
and/or costs of professional consultant services and contract
services of technical personnel either temporarily or permanently
assigned to and directly employed in operation of wells subject
to the Operating Agreement ( X ) shall ( ) shall not be covered
--- ---
by the overhead rates.
The salaries, wages and Personal Expenses of Technical Employees
directly employed in the nomination and dispatching of gas under
section 5.3 of the Operating Agreement to which this Accounting
Procedure is attached ( ) shall ( X ) shall not be covered by
--- ---
the overhead rates.
2.3 Adjustments to Overhead Rate. The foregoing rate shall be
----------------------------
adjusted as of the first day of April, 1991 and each April 1 thereafter
following the effective date of the Operating Agreement to which this
Accounting Procedure is attached. The adjustment shall be computed by
multiplying the rate currently in use by the percentage increase or
decrease in the average weekly earnings of Crude Petroleum and Gas
Production Workers for the last calendar year compared to the calendar year
preceding as shown by the index of average weekly earnings of Crude
Petroleum and Gas Production Workers as published by the United States
Department of Labor, Bureau of Labor Statistics. The adjusted rate shall
be the rates currently in use, plus or minus the computed adjustment.
2.4 Computation of Operations and Maintenance Fee. The rate at which
---------------------------------------------
Mesa may recover that portion of its Allowable Costs and overhead, as
provided above, which is due from CIG will be computed as follows: For all
natural gas produced from wells subject to the Operating Agreement and
delivered into CIG's gathering system for redelivery to third parties
(other than Mesa) on and after January 1, 1990, Mesa shall be entitled to
bill CIG at a rate per Mcf determined by dividing the total Allowable Costs
actually incurred by Mesa in the preceding year plus the overhead charge
described above by the total volume of gas which is estimated to be
produced and delivered from such wells into CIG's gathering system in the
current year. CIG shall then pay Mesa at this rate per Mcf for gas
delivered to CIG for redelivery to parties other than Mesa until the rate
is redetermined as provided in paragraph 2.4.2 below.
2.4.1 By November 30 of each year, Mesa will make an estimate of the
total Allowable Costs (including overhead) to be incurred during such year
and furnish this estimate to CIG as the cost basis for the succeeding year.
For the year 1990, Mesa shall make such estimate as soon as practicable
after the effective date of the Operating Agreement. Also on or before
November 30 of each year, the Engineering Committee shall make an estimate
of the total volume of gas to be produced and delivered from such wells
during the succeeding year, and thereby determine the rate per Mcf to be
billed to CIG as the Operations and Maintenance Fee for the succeeding
year. For the year 1990, the estimate shall be the same as the volume of
gas delivered in 1989, unless by January 20, 1990, the Engineering
Committee agrees to another figure.
2.4.2 On or about April 30 of the succeeding year, Mesa shall furnish
an accounting to determine the Operations and Maintenance Fee for the
previous calendar year based on the actual total of Allowable Costs and
actual total volume of gas produced and delivered from wells subject to the
Operating Agreement. All necessary adjustments to billings or payments
shall be made within thirty (30) days of receipt of the actual totals by
CIG.
2.5 Catastrophe Overhead. To compensate Mesa for overhead costs
--------------------
incurred in the event of expenditures resulting from a single occurrence
due to oil spill, blowout, explosion, fire, storm, tornado or other
catastrophes as agreed to by the parties, which are necessary to return
wells subject to the Operating Agreement to the condition that existed
prior to the event causing the expenditures, Mesa shall charge the same
rates as set forth for Capital Expenditures (Article IV) hereinbelow.
III. ADMINISTRATIVE FEE
3.1 Authorized Payments and Charges. CIG is hereby authorized to
-------------------------------
include the following items to the extent indicated in the computation of
its Administrative Fee:
A. Royalties, Overriding Royalties and Production Related Payments
All leasehold royalties, overriding royalties and other payments
out of production from wells subject to the Operating Agreement.
Those certain royalty Payments under paragraph 2 (a) of that
certain "Compromise and Settlement Agreement" dated December 31,
1981, by and between Amarillo Oil Company ("AOC"), CIG and the
royalty owners identified as "Lessor" therein and the
contemporaneous letter agreement between AOC and CIG shall be
billed in full to Mesa without allocation.
B. Rentals, Shut-In Well Payments and Minimum Royalties
All rentals, shut-in well payments and minimum royalties which may
be required under the terms of any Gas Lease subject to the
Operating Agreement.
C. Taxes
All property taxes assessed or levied (i) upon wells subject to
the Operating Agreement, (ii) upon any leases subject to the
Operating Agreement and/or (iii) upon the gas reserves associated
with such leases; all production or severance taxes levied or
assessed at the wellhead on the value of gas produced from such
wells; and all other taxes of a similar nature now in force or
enacted in the future.
D. Depreciation and Return
Depreciation on the original cost of any Capital Expenditures
undertaken after January 1, 1990, at the applicable depreciation
rate computed on a unit of production basis based on remaining
recoverable reserves attributable to the Contract Area; and a
return of twenty percent (20%) on net book value (original cost
less accumulated depreciation) of the Capital Expenditures.
3.2 Computation of Administrative Fee. The rate at which CIG may
---------------------------------
recover that portion of its Authorized Payments and Charges, as provided
above, which is due from Mesa will be computed as follows: For all natural
gas produced from wells subject to the Operating Agreement and delivered
into CIG's gathering system for redelivery to Mesa on and after January 1,
1990, CIG shall be entitled to bill Mesa at a rate per Mcf determined by
dividing the total Authorized Payments and Charges actually incurred by CIG
in the preceding year by the total volume of gas which is estimated to be
produced and delivered from such wells into CIG's gathering system in the
current year. Mesa shall then pay CIG at this rate per Mcf for all gas
redelivered to Mesa by CIG until the rate is redetermined as provided in
paragraph 3.2.2 below.
3.2.1 By November 30 of each year, CIG will make an estimate of the
total Authorized Payments and Charges to be incurred during such year and
furnish this estimate to Mesa as the cost basis for the succeeding year.
For the year 1990, CIG shall make such estimate as soon as practicable
after the effective date of the Operating Agreement to which this
Accounting Procedure is attached. Also on or before November 30 of each
year, the Engineering Committee shall make an estimate of the total volume
of gas to be produced and delivered from such wells during the succeeding
year, and thereby determine the rate per Mcf to be billed to Mesa as the
Administrative Fee for the succeeding year. For the year 1990, the
estimate shall be the same as the volume of gas delivered in 1989, unless
the Engineering Committee agrees to another figure by January 20, 1990.
3.2.2 On or about April 30 of the succeeding year, CIG shall furnish
an accounting to determine the Administrative Fee for the previous calendar
year based on the actual total of Authorized Payments and Charges and
actual total volume of gas produced and delivered from wells subject to
the Operating Agreement. All necessary adjustments to billings or payments
shall be made within thirty (30) days of receipt of the actual totals by
Mesa.
IV. CAPITAL EXPENDITURES
4.1 Definition. Capital Expenditures shall include expenditures on
----------
all projects undertaken after January 1, 1990, for the drilling,
redrilling, repair, deepening, Reworking, Acidizing, Frac or other
stimulation of any well subject to the Operating Agreement (except for the
costs, expense and liabilities excluded from such treatment in Article VI
of the Operating Agreement), or any other projects clearly discernible as a
fixed asset which are required for the development and operation of the
leases subject to the Operating Agreement and which are reasonably
estimated to require an expenditure in excess of $25,000.
4.2 Not Part of Operations and Maintenance Fee. Capital Expenditures
------------------------------------------
and overhead as provided below shall be billed to CIG separate and apart
from the Operations and Maintenance Fee and shall not be subject to
allocation based on the respective volumes Of gas taken by Mesa and CIG.
All such costs shall be treated by CIG as capital expenditures, and all
billings from Mesa relating thereto will be accompanied by statements which
identify the AFE, and the well, lease or facility on which the charges were
incurred. Such billings will be made ona monthly basis.
4.3 Overhead. To compensate Mesa for its overhead costs, Mesa shall
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either negotiate a rate prior to the beginning of such operation or
construction, or charge CIG for overhead based on the following rates:
5% of the first $100,000, or total cost if less, plus
---
3% of costs in excess of $100,000, but less than $1,000,000, plus
---
2% of costs in excess of $1,000,000.
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Total cost shall mean the gross cost of any one project. For the
purpose of this paragraph, the component parts of a single project shall
not be treated separately and the cost of drilling and workover wells and
of artificial lift equipment shall be included.
V. PRICING OF MATERIAL PURCHASES, TRANSFERS AND DISPOSITIONS
Mesa is responsible for Material, defined to mean all personal
property, equipment or supplies acquired or held for use on the wells
subject to the Operating Agreement, and Mesa shall make proper and timely
charges and credits for all Material movement. Mesa shall provide all
Material for use on such wells, and make timely disposition of idle and/or
surplus Material.
5.1 General. Only such Material shall be purchased, or transferred,
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for use on wells subject to the Operating Agreement as is reasonably
practical and consistent with efficient and economical operations.
5.2 Purchases. Material purchased shall be charged at the price paid
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by Mesa after deduction of all discounts received. In case of Material
found to be defective or returned to vendor for any other reasons, credit
shall be passed to CIG when the adjustment has been received by Mesa.
5.3 Transfers and Dispositions. Material furnished for operation of
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the wells subject to the Operating Agreement and Material transferred from
such wells or disposed of by Mesa, unless otherwise agreed to by the
parties, shall be priced on the following basis exclusive of cash
discounts:
A. New Material
(1) Tubular Goods Other than Line Pipe
(a) Tubular goods, sized 2 3/8 inches 00 and larger, except
line pipe, shall be priced at Eastern mill published
carload base prices effective as of date of movement
plus transportation cost using the 80,000 pound carload
weight basis to the railway receiving point nearest the
Contract Area for which published rail rates for tubular
goods exist. If the 80,000 pound rail rate is not
offered, the 70,000 pound or 90,000 pound rail rate may
be used. Freight charges for tubing will be calculated
from Lorain, Ohio and casing from Youngstown, Ohio.
(b) For grades which are special to one mill only, prices
shall be computed at the mill base of that mill plus
transportation cost from that mill to the railway
receiving point nearest the Contract Area as provided
above in paragraph 5 3.A(l)(a). For transportation cost
from points other than eastern mills, the 30,000 pound
Oil Field Haulers Association interstate truck rate
shall be used.
(c) Special end finish tubular goods shall be priced at the
lowest published out-of-stock price, f.o.b. Houston,
Texas, plus transportation cost, using the Oil Field
Haulers Association interstate 30,000 pound truck rate,
to the railway receiving point nearest the Contract
Area.
(d) Macaroni tubing (size less than 2 3/8 inch 00) shall be
priced at the lowest published out-of-stock prices
f.o.b. the supplier plus transportation costs, using the
Oil Field Haulers Association interstate truck rate per
weight of tubing transferred, to the railway receiving
point nearest the Contract Area.
(2) Line Pipe
(a) Line pipe movements (except size 24 inch OD and larger
with walls 3/4 inch and over) 30,000 pounds or more
shall be priced under provisions of tubular goods
pricing in paragraph A(l)(a) hereinabove. Freight
charges shall be calculated from Lorain, Ohio.
(b) Line pipe movements (except size 24 inch 00 and
larger with walls 3/4 inch and over) less than 30,000
pounds shall be priced at Eastern mill published carload
base prices effective as of date of shipment, plus 20
percent, plus transportation costs based on freight
rates as set forth under provisions of tubular goods
pricing in Paragraph A(l)(a) hereinabove. Freight
charges shall be calculated from Lorain, Ohio.
(c) Line pipe 24 inch 00 and over and 3/4 inch wall and
larger shall be priced f.o.b. the point of manufacture
at current new published prices plus transportation cost
to the railway receiving point nearest the Contract
Area.
(d) Line pipe, including fabricated line pipe, drive pipe
and conduit not listed on published price lists shall be
priced at quoted prices plus freight to the railway
receiving point nearest the Contract Area or at prices
agreed to by the parties.
(3) Other Material shall be priced at the current new price, in
effect at date of movement, as listed by a reliable supply
store nearest the Contract Area, or point of manufacture,
plus transportation costs, if applicable, to the railway
receiving point nearest the Contract Area.
(4) Unused new Material, except tubular goods, moved from the
Contract Area shall be priced at the current new price, in
effect on date of movement, dS listed by a reliable Supply
store nearest the Contract Area, or point of manufacture,
plus transportation costs, if applicable, to the railway
receiving point nearest the Contract Area. Unused new
tubulars will be priced as provided above in paragraph
5.3.A(l) and 5.3.A(2) above.
B. Good Used Material (Condition B) - Material in sound and
serviceable condition and suitable for reuse without reconditioning
(1) Material moved to the Contract Area
At seventy-five percent (75%) of current new price as
determined by paragraph 5.3.A above.
(2) Material used on and moved from the Contract Area
(a) At seventyfive percent (75%) of current new price as
determined by paragraph 5.3.A above, if material was
originally charged to CIG as new Material, or
(b) At sixty-five percent (65%) of current new price, as
determined by paragraph 5.3.A above, if Material was
originally charged to CIG as used Material.
(3) Material not used on and moved from the Contract Area
At seventy-five percent (75%) of current new price as
determined by paragraph 5.3.A above.
The cost of reconditioning, if any, shall be deducted from the proceeds
received for the property being transferred.
C. Other Used Material
(1) Condition C
Material which is not in sound and serviceable condition and
not suitable for its original function until after
reconditioning shall be priced at fifty percent (50%) of
current new price as determined by paragraph 5.3.A above.
The cost of reconditioning shall be deducted from the
proceeds received for the Material being transferred,
provided Condition C value plus cost of reconditioning does
not exceed Condition B value.
(2) Condition D
Material, excluding junk, no longer suitable for its original
purpose, but usable for some other purpose shall be priced on
a basis commensurate with its use. Mesa may dispose of
Condition D Material under procedures normally used by it
without prior approval of CIG.
(a) Casing, tubing or drill pipe used as line pipe shall be
priced as Grade A and B seamless line pipe of comparable
size and weight. Used casing, tubing or drill pipe
utilized as line pipe shall be priced at used line pipe
prices.
(b) Casing, tubing or drill pipe used as higher pressure
service lines than standard line pipe, e.g., power oil
lines, shall be priced under normal pricing procedures
for casing, tubing or drill pipe. Upset tubular goods
shall be priced on a non upset basis.
(3) Condition E
Junk shall be priced at prevailing prices. Mesa may dispose
of Condition E Material under procedures normally utilized by
it without prior approval of CIG.
D. Obsolete Material
Material which is serviceable and usable for its original
function but condition, and/or value of such Material is not
equivalent to that which would justify a price as provided
above.
Such material shall be priced as agreed to by Mesa and CIG.
E. Pricing Conditions
(1) Loading or unloading costs may be charged at the rate of
twenty-five cent (25 cents) per hundred weight on all
tubular goods movements in lieu of actual loading or
unloading costs sustained at the stocking point. The
above rate shall be adjusted as of the first day of
April each year following January 1, 1991 by the same
percentage increase or decrease used to adjust the
overhead rate as established in paragraph 2.3 above.
Each year, the rate calculated shall be rounded to the
nearest cent and shall be the rate in effect until the
first day of April next year.
(2) Material involving erection costs shall be charged at
applicable percentage of the current knocked-down price
of new Material.
5.4 Warranty of Material Furnished by Mesa. Mesa does not warrant
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the Material furnished. In case of defective Material, credit
shall not be passed on to CIG until adjustment has been received
by Mesa from the manufacturers or their agents.
VI. INVENTORIES
Mesa shall maintain detailed records of Controllable Material.
6.1 Periodic Inventories, Notice and Representation. Mesa shall take
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inventories of Controllable Material at reasonable intervals. Written
notice of Mesa's intention to take inventory shall be given by Mesa at
least thirty (30) days before any inventory is to begin so that CIG may be
represented when any inventory is taken. Failure of CIG to be represented
at an inventory following receipt of proper notice shall bind CIG to accept
the inventory taken by Mesa.
6.2 Reconciliation and Adjustment of Inventories. Adjustments
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resulting from the reconciliation of a physical inventory shall be made
within six months following the taking of the inventory. Inventory
adjustments shall be made by Mesa for overages and shortages, but Mesa
shall be held accountable only for shortages due to lack of reasonable
diligence.
6.3 Special Inventories. A special inventory may be taken whenever
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there is a change of Operator, and all parties shall be governed by such
inventory.
6.4 Expense of Conducting Inventories. The expense of conducting
---------------------------------
periodic inventories shall not be charged to CIG. The expense of
conducting a special inventory required due to change of Operator shall be
charged to CIG.
EXHIBIT "D"
Insurance Requirements
Attached to and made a part of Operating Agreement dated January 8, 1988,
by and between MESA OPERATING LIMITED PARTNERSHIP ("Mesa"), as Operator,
and COLORADO INTERSTATE GAS COMPANY ("CIG"), as Nonoperator.
I. Mesa shall at all times while operations are conducted by it on the
Contract Area, carry or cause to be carried and pay for, in accordance
with Exhibit "C" to the Operating Agreement, Worker's Compensation and
Occupational Disease Insurance including Employer's Liability
Insurance covering the employees of Mesa engaged in operations
hereunder in compliance with all applicable State and Federal Laws.
Such policies shall contain underwriters waiver of subrogation in
favor of CIG.
II. Mesa and CIG shall each carry for their own respective interests the
following types and limits of insurance:
(A) Comprehensive General Liability covering operations conducted
hereunder:
Combined Bodily Injury and Property Damage
$1,000,000 per occurrence
$1,000,000 Aggregate
(B) Automobile Liability covering all vehicles owned, non-owned, or hired
and used in connection with operations conducted hereunder:
Combined Bodily Injury and Property Damage
$1,000,000 per occurrence
$1,000,000 Aggregate
III. Each party hereto may acquire at its own expense, any additional
insurance it desires to protect itself. Each such policy shall
provide for underwriters waiver of subrogation in favor of the other
party hereto.
IV. Mesa shall have the right, but not the obligation, to require
satisfactory evidence of insurance or self-insurance from CIG.
V. Mesa shall have the right, but not the obligation, to require
satisfactory evidence of adequate insurance or self-insurance for cost
of control of well and pollution liability from CIG. Mesa shall not
provide this coverage for the benefit of CIG. In the event that CIG
fails to provide evidence of insurance as required herein ("failing
party"), Mesa may, at its sole discretion, provide such insurance for
and at the direct expense of the failing party. Such expense shall be
an Allowable Cost charged and shared as provided in the Accounting
Procedure attached to the Operating Agreement as Exhibit "C." Mesa is
under no obligation to provide such insurance for the party so failing
to provide satisfactory evidence of its own insurance and nothing
contained herein shall be construed to alter the obligations of any
party hereunder.
EXHIBIT "E"
Attached to and made a part of that certain Operating Agreement
by and between MESA OPERATING LIMITED PARTNERSHIP ("Mesa"), as
Operator, and COLORADO INTERSTATE GAS COMPANY, as Nonoperator, and
dated January 8, 1988.
EQUAL EMPLOYMENT OPPORTUNITY PROVISION
During the performance of this contract, the Operator (meaning and
referring separately to each party hereto) agrees as follows:
1. Mesa will not discriminate against any employee or applicant for
employment because of race, color, religion, sex, or national
origin. Mesa will take affirmative action to ensure that
applicants are employed and that employees are treated during
employment without regard to their race, color, religion, sex, or
national origin. Such action shall include, but not be limited
to, the following: employment, upgrading, demotion, or transfer;
recruitment or recruitment advertising; layoff or termination;
rates of pay or other forms of compensation; and selection for
training, including apprenticeship. Mesa agrees to post in
conspicuous places, available to employees and applicants for
employment, notices to be provided setting forth the provisions of
this nondiscrimination clause.
2. Mesa will, in all solicitations or advertisements for employees
placed by or on behalf of Mesa, state that all qualified
applicants will receive consideration for employment without
regard to race, color, religion, sex, or national origin.
3. Mesa will send to each labor union or representative of workers
with which Mesa has a collective bargaining agreement or other
contract or understanding, a notice to be provided, advising the
said labor union or workers' representatives of Mesa's commitments
under Section 202 of Executive Order 11246 of September 24, 1965,
and shall post copies of the notice in conspicuous places
available to employees and applicants for employment.
4. Mesa will comply with all provisions of Executive Order 11246 of
September 24, 1965, and of the rules, regulations, and relevant
orders of the Secretary of Labor.
5. Mesa will furnish all information and reports required by
Executive Order 11246 of September 24, 1965, and by the rules,
regulations, and orders of the Secretary of Labor, or pursuant
thereto, and will permit access to Mesa's books, records, and
accounts by the administering agency and the Secretary of Labor
for purposes of investigation to ascertain compliance with such
rules, regulations, and orders.
6. In the event of Mesa's noncompliance with the nondiscrimination
clauses of this contract or with any of the said rules,
regulations, or orders, this contract may be canceled, terminated,
or suspended in whole or in part and Mesa may be declared
ineligible for further Government contracts or federally assisted
construction contracts in accordance with procedures authorized in
Executive Order 11246 of September 24, 1965, and such order
sanctions may be imposed and remedies invoked as provided in
Executive Order 11246 of September 24, 1965, or by rule,
regulation, or order of the Secretary of Labor, or as otherwise
provided by law.
7. Mesa will include the provisions of Paragraphs (1) through (7) in
every subcontract or purchase order unless exempted by rules,
regulations, or orders of the Secretary of Labor issued pursuant
to Section 204 of Executive Order 11246 of September 24, 1965, so
that provisions will be binding upon each subcontractor or vendor.
Mesa will take such action with respect to any subcontract or
purchase order as the administering agency may direct as a means
of enforcing
such provisions, including sanctions for noncompliance: Provided,
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however, that in the event Mesa becomes involved in, or is
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threatened with, litigation with a subcontractor or vendor as a
result of such direction by the administering agency, Mesa may
request the United States to enter into such litigation to
protect the interests of the United States.
Mesa acknowledges that Mesa may be required to file Standard Form 100 (EEO-
1) promulgated jointly by the Office of Federal Contract Compliance, the
Equal Employment Opportunity Commission, and Plans for Progress with the
appropriate agency within 30 days of the date of contract award if such
report has not been filed for the current year and otherwise comply with or
file such other compliance reports as may be required under Executive Order
11246, as amended, and Rules and Regulations adopted thereunder.
Mesa further acknowledges that Mesa may be required to develop a written
affirmative action compliance program as required by the Rules and
Regulations approved by the Secretary of Labor under authority of Executive
Order 11246 and supply each other party hereto with a copy of such program
if so requested.
CERTIFICATION OF NONSEGREGATED FACILITIES
By entering into this contract, Mesa certifies that Mesa does not and will
not maintain or provide for Mesa's employees any segregated facilities at
any of Mesa's establishments and that Mesa does not and will not permit
Mesa's employees to perform their services at any location, under Mesa's
control, where segregated, facilities are maintained. Mesa agrees that a
breach of this certification is a violation of the Equal Opportunity clause
in this contract. As used in this certification, the term "segregated
facilities" means, but is not limited to, any waiting rooms, work areas,
rest rooms and washrooms, restaurants and other eating areas, time clocks,
locker rooms, and other storage or dressing areas, parking lots, drinking
fountains, recreation or entertainment areas, transportation, and housing
facilities provided for employees which are segregated by explicit
directive or are in fact segregated on the basis of race, color, religion,
or national origin, because of habit, local custom, or otherwise. Mesa
further agrees that (except where Mesa has obtained identical
certifications from proposed contractors and subcontractors for specific
time periods) Mesa will obtain identical certifications from proposed
contractors and subcontractors prior to the award of contracts or
subcontracts exceeding $10,000 which are not exempt from the provisions of
the Equal Opportunity clause; that Mesa will retain such certifications in
Mesa's files; and that Mesa will forward the following notice to such
proposed contractors and subcontractors (except where the proposed
contractors or subcontractors have submitted identical certifications for
specific time periods): Notice to prospective contractors and
subcontractors of requirement for certifications of nonsegregated
facilities. A Certificate of Nonsegregated Facilities must be submitted
prior to the award of a contract or subcontract exceeding $10,000 which is
not exempt from the provisions of the Equal Opportunity clause. The
certification may be submitted either for each contract and subcontract or
for all contracts and subcontracts during a period (i.e., quarterly,
semiannually, or annually).