Exhibit 10.82
NOTICE OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR
STRIKE ANY OF THE FOLLOWING INFORMATION FROM THIS INSTRUMENT BEFORE IT IS FILED
FOR RECORD IN THE PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER'S
LICENSE NUMBER.
CONVEYANCE OF TERM
OVERRIDING ROYALTY INTEREST
FROM
BARON PRODUCTION LLC
AS GRANTOR
TO
PCEC SUB 1, LLC
AS GRANTEE
JULY 28 2014
TABLE OF CONTENTS
Article I CONVEYANCE..........................................................2
Section 1.1 Conveyance..................................................2
Section 1.2 Non-Operating, Non-Expense-Bearing Interest.................2
Section 1.3 Royalties; Taxes............................................3
Section 1.4 Termination.................................................3
Section 1.5 Delivery to Royalty Owner...................................4
Section 1.6 Certain Limitations.........................................4
Section 1.7 Measurement.................................................5
Section 1.8 No Mortgage, Assignment or Pooling by Working Interest
Owner.......................................................5
Section 1.9 Title.......................................................5
Section 1.10 No Proportionate Reduction..................................7
Section 1.11 Government Regulation.......................................7
Section 1.12 Partial Release and Replacement.............................7
Article II DEFINITIONS........................................................8
Section 2.1 Definitions.................................................8
Section 2.2 Rules of Construction; Monthly and Daily Equivalents;
Publications...............................................15
Article III MISCELLANEOUS....................................................16
Section 3.1 Nature of Production Payment; Intentions of the Parties....16
Section 3.2 Governing Law..............................................17
Section 3.3 Successors and Assigns.....................................17
Section 3.4 Counterpart Execution......................................17
Section 3.5 Further Assurances.........................................17
Section 3.6 No Subordination to Permitted Encumbrance..................17
Section 3.7 Partial Invalidity.........................................18
Section 3.8 Waiver of Jury Trial and Special Damages...................18
Section 3.9 Consent to Jurisdiction....................................18
Section 3.10 Partition..................................................18
Section 3.11 Addresses..................................................18
Section 3.12 Amendments and Waivers.....................................19
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CONVEYANCE OF TERM OVERRIDING ROYALTY INTEREST
This Conveyance of Term Overriding Royalty Interest (this "Conveyance"),
dated for reference purposes as of July 28, 2014, is made by Baron Production
LLC, a Texas limited liability company ("Working Interest Owner" and a "Party"),
to PCEC Sub 1, LLC, a Texas limited liability company ("Royalty Owner" and a
"Party").
Working Interest Owner is the owner of the Subject Interests (defined
below), and Working Interest Owner has agreed to convey to Royalty Owner the
following described term overriding royalty interest in such Subject Interests.
Capitalized terms used herein have the meanings given to them in Article II
hereof unless otherwise defined herein.
Accordingly, Working Interest Owner hereby makes the following conveyance
and assignment to, and the following agreements for the benefit of, Royalty
Owner:
ARTICLE I
CONVEYANCE
Section 1.1 Conveyance. For and in consideration of One Thousand Dollars
($1,000.00) and other good and valuable consideration paid by Royalty Owner to
Working Interest Owner, the receipt and sufficiency of which are hereby
acknowledged, Working Interest Owner hereby GRANTS, BARGAINS, SELLS, CONVEYS,
ASSIGNS, TRANSFERS, SETS OVER AND DELIVERS unto Royalty Owner a term overriding
royalty interest in and to the Subject Interests and in and to the Subject
Hydrocarbons attributable thereto that is equal to the Production Payment
Percentage with respect to each Subject Interest and the Subject Hydrocarbons
attributable thereto (but not to exceed during any Month the Scheduled
Quantities plus any Adjustment Quantity of the Subject Hydrocarbons produced and
saved that Month), together with all and singular the rights and appurtenances
thereto in anywise belonging thereto (the "Production Payment") insofar as and
limited to the Subject Wells described in the Property Exhibit.
TO HAVE AND TO HOLD the Production Payment unto Royalty Owner, its
successors and assigns until the Termination Time.
Section 1.2 Non-Operating, Non-Expense-Bearing Interest. The Production
Payment conveyed hereby is a non-operating, non-expense-bearing limited term
overriding royalty interest, free of all cost and expense of production,
operations and delivery to the applicable Delivery Points. The Production
Payment and the Production Payment Hydrocarbons will be free and clear of, and
in no event will Royalty Owner ever be liable or responsible in any way for
payment of, any and all (a) costs, expenses and liabilities associated with
acquiring, exploring, developing, drilling, redrilling, maintaining, producing,
operating, reworking, repairing, recompleting, and remediating the Subject
Interests, or (b) cash balancing obligations or Delivery Point Charges. All
costs and expenses associated with acquiring, exploring, developing, drilling,
redrilling, maintaining, producing, operating, reworking, repairing,
recompleting, and remediating the Subject Interests and all cash balancing
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obligations and Delivery Point Charges will be borne by the Retained Interests
and paid by Working Interest Owner promptly, on or before the dates the same
become delinquent.
Section 1.3 Royalties; Taxes. The Production Payment will be free and clear
of (and without deduction of) any and all royalties, overriding royalties, other
production payments, and other burdens on production and will bear no part of
the same; the Retained Interests will be burdened with, and Working Interest
Owner will timely pay, all such royalties, overriding royalties, other
production payments, and other burdens on production. WORKING INTEREST OWNER
WILL DEFEND, INDEMNIFY AND HOLD ROYALTY OWNER HARMLESS FROM AND AGAINST ANY LOSS
OR CLAIM WITH RESPECT TO ANY SUCH ROYALTIES AND OTHER BURDENS ON PRODUCTION OR
ANY CLAIM BY THE OWNERS OR HOLDERS OF SUCH ROYALTIES AND OTHER BURDENS ON
PRODUCTION. WORKING INTEREST OWNER WILL BEAR AND PAY ALL TAXES WITH RESPECT TO
THE PRODUCTION PAYMENT AND THE PRODUCTION PAYMENT HYDROCARBONS, AND THE
PRODUCTION PAYMENT HYDROCARBONS WILL BE FREE OF TAXES AND DELIVERED WITHOUT
DEDUCTION FOR TAXES.
Section 1.4 Termination.
(a) The Production Payment will remain in full force and effect until the
Termination Time. At the Termination Time, all rights, titles and interests
hereby conveyed to Royalty Owner in the Subject Interests will automatically
terminate and vest in Working Interest Owner and, upon request by Working
Interest Owner, Royalty Owner (at Working Interest Owner's expense) will execute
and deliver such instruments (in recordable form) as may be reasonably necessary
to evidence the termination of the Production Payment, provided that,
notwithstanding the foregoing or anything herein to the contrary, any
obligations which any Person may have to indemnify, reimburse, or compensate
Royalty Owner, or to make payments to Royalty Owner on account of Production
Payment Hydrocarbons produced before the Termination Time, or to give reports or
take other actions with respect to such Production Payment Hydrocarbons or such
payments, will survive any termination of the Production Payment.
(b) No pipeline company or other Person purchasing, taking or processing
Production Payment Hydrocarbons will be required to take notice of or to keep
informed concerning termination of the Production Payment until actual receipt
of a termination instrument signed by Royalty Owner as contemplated in the
preceding subsection.
(c) If any individual Subject Interest (or portion thereof, as applicable)
should by its terms terminate before the Termination Time and not be extended,
renewed or replaced, then the Production Payment will no longer apply to that
particular Subject Interest (or such portion thereof, as applicable), but the
Production Payment will remain in full force and effect and undiminished as to
all remaining Subject Interests (and all remaining portions of such Subject
Interest, as applicable), as well as to any new lease referred to in the last
sentence of the definition of "Lease" in Section 2.1. No Scheduled Quantity,
Adjustment Quantity or Monthly Adjustment Amount will ever be reduced or
diminished by reason of the termination of all or any portion of a Subject
Interest.
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Section 1.5 Delivery to Royalty Owner. Working Interest Owner will cause
the Production Payment Hydrocarbons to be delivered each Day to Royalty Owner,
or to the credit of Royalty Owner, into the facilities of the Delivery Point
Recipient at the applicable Delivery Point, in a condition satisfactory to meet
or exceed all specifications and requirements of such Delivery Point Recipient
and free of all Delivery Point Charges. Such delivery will be made on a first
priority basis (along with the other Subject Hydrocarbons), to the extent
permitted by applicable Law and by any contracts existing on the date hereof,
and Working Interest Owner hereby dedicates to the Subject Hydrocarbons all
gathering, transportation, processing, treating and compression plants and
equipment (whether owned or possessed by contract right) and all contract rights
and other rights useful in making such delivery and agrees that the same will be
used to deliver the Subject Hydrocarbons in such condition prior to being used
for other Hydrocarbons belonging to Working Interest Owner or its Affiliates.
Although the Production Payment Hydrocarbons are owned by Royalty Owner when and
as produced at the wellhead, Working Interest Owner will be solely responsible
for causing delivery thereof to occur at the Delivery Points and for the
handling, management and care of the Production Payment Hydrocarbons until such
delivery has been completed and solely responsible for any damage, injury or
loss that may occur in connection therewith. To the extent it has the right to
do so, Working Interest Owner hereby grants to Royalty Owner and its purchasers
and agents easements and rights-of-way over and across the Leases and all lands
subject thereto or pooled, communitized and/or unitized therewith, together with
rights of ingress and egress to go on or about such lands and all related
production, processing, handling and other facilities, for the purposes of
receiving, accepting and taking Production Payment Hydrocarbons at the
applicable Delivery Points and for the further transportation thereof.
Section 1.6 Certain Limitations. The Production Payment will be subject to
the following provisions:
(a) Royalty Owner will look solely to the Production Payment Hydrocarbons
for satisfaction and discharge of the Production Payment, and Working Interest
Owner will not be personally liable under this Conveyance for the payment and
discharge thereof (although Working Interest Owner will be personally liable for
the performance of its representations, warranties, agreements and indemnities
in the Production Payment Documents (as defined in the Purchase and Sale
Agreement)).
(b) The Oil produced from the Subject Interests will be allocated first to
the Production Payment.
(c) Neither the occurrence of an event of force majeure nor any other event
or condition reducing or eliminating production or delivery of Subject
Hydrocarbons will suspend the calculation and increase of any Monthly Deficiency
or other component of the Monthly Adjustment Amount.
Section 1.7 Measurement. Measurement of Subject Hydrocarbons will be
determined under the applicable agreement with the Delivery Point Recipient (or
under the applicable marketing agreement with any Person purchasing such Oil at
the Delivery Point) and, if such agreement does not specify measurement
procedures, in accordance with generally accepted industry practices in effect
at the time and place of delivery using then current testing methods of the
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American Society for Testing Materials or the American Petroleum Institute. All
measurements of Oil will be subject to the rights of Working Interest Owner and
Royalty Owner to audit and confirm such measurements. Working Interest Owner
hereby represents, warrants and covenants to Royalty Owner that, with respect to
the Subject Hydrocarbons, production of Oil from each Subject Well is and will
continue to be measured at a point prior to any point where Oil from such
Subject Well is commingled with Oil from any other well or wells that are not
Subject Wells.
Section 1.8 No Mortgage, Assignment or Pooling by Working Interest Owner.
During the term of the Production Payment, (a) Working Interest Owner will not
mortgage, pledge or hypothecate the Subject Interests or create or allow to
remain any lien or security interest thereon or on any Hydrocarbons produced
therefrom, other than Permitted Encumbrances, and (b) Working Interest Owner
will not assign, sell, convey or otherwise transfer the Subject Interests or any
part thereof, unless in each case Royalty Owner expressly consents thereto in
writing, the transferee expressly agrees to assume and perform all of Working
Interest Owner's obligations under this Conveyance and the other documents
executed in connection herewith (contingent, in the case of a mortgagee, upon
taking possession), and, except for the Security Documents (as defined in the
Credit Agreement), such mortgage, pledge, hypothecation, lien, security
interest, assignment, sale, conveyance or other transfer is made and accepted
expressly subject and subordinate to this Conveyance. Any purported mortgage,
pledge, hypothecation, lien, security interest, assignment, sale, conveyance, or
other transfer in violation hereof will be null and void. During the term of the
Production Payment, Working Interest Owner will not (except as may be required
by the terms of any existing or new Lease or by the terms of any Law or any
order of a court or regulatory authority having jurisdiction, or unless Working
Interest Owner and Royalty Owner have the same or larger Net Revenue Interest in
each affected Subject Interest both before and after pooling or unitization)
pool, communitize or unitize the Production Payment or the Subject Interests (or
amend any presently existing pooling, communitization or unitization agreement
with respect thereto) without the express written consent of Royalty Owner, and
any purported pooling, communitization, unitization or amendment in
contravention of the preceding clause will be null and void as to Royalty Owner
and will not have the effect of pooling or otherwise affecting the Production
Payment.
Section 1.9 Title. Working Interest Owner hereby binds itself and its
successors and assigns to WARRANT and forever DEFEND all and singular title to
the Production Payment and the Production Payment Hydrocarbons unto Royalty
Owner, its successors and assigns, against every Person lawfully claiming or who
may claim the same or any part thereof, including any Person claiming under a
Permitted Encumbrance. In addition, and without limitation of the foregoing,
Working Interest Owner warrants and represents to Royalty Owner that:
(a) each Lease is a valid and subsisting oil, gas and/or mineral lease,
deed or other instrument covering the lands and depths described in such Lease
(subject to any limitations as to depth or areal extent set forth in the
Property Exhibit with respect to such Lease).
(b) the ownership of Working Interest Owner of the Subject Interests does
and will, with respect to each Lease, unit, formation, or well identified in the
Property Exhibit, (i) entitle Working Interest Owner and Royalty Owner
collectively to receive and retain a percentage Net Revenue Interest share of
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the Hydrocarbons produced from (or, to the extent pooled or unitized, allocated
to) such Lease, unit, formation or well equal to (or exceeding) the Warranted
Net Revenue Interest Percentage set forth in the Property Exhibit, determined
after taking all Non-Consent Provisions, if any, into account, and (ii) cause
Working Interest Owner to be obligated to bear a percentage share of the costs
associated with operations on such Lease, unit, formation, or well that is no
more than the Warranted Working Interest Percentage set forth in the Property
Exhibit, which share of costs is not subject to increase (except as specifically
described in such Exhibit) without either a corresponding proportional increase
in the associated Net Revenue Interest or the right to receive immediate
reimbursement for such increased costs from another owner of interests in such
Lease, unit, formation or well.
(c) such shares of production, as reflected on the Property Exhibit, which
Working Interest Owner and Royalty Owner are entitled to receive and retain, and
such shares of expenses, as reflected on the Property Exhibit, which Working
Interest Owner is obligated to bear, are not subject to change upon Working
Interest Owner's or any other Person's achievement of payout or some other
measure of recovery of costs incurred with respect to any of the Subject
Interests prior to the Effective Time, except as expressly described in the
Property Exhibit.
(d) Working Interest Owner's title to the Subject Interests, the Subject
Hydrocarbons and the facilities, equipment, and all related contractual rights
needed for the operation of the Subject Interests and the production of the
Subject Hydrocarbons is free and clear of (i) any encumbrances, liens, mortgages
or pledges, other than Permitted Encumbrances and any liens and security
interests being released concurrently with the grant of the Production Payment,
(ii) any preferential purchase rights (other than those that have been waived or
the time period for exercise of which has expired without exercise) or
requirements for consents to assignment (other than those that have been
obtained or waived) that would be applicable to or exercisable as a result of
this Conveyance, and (iii) any other defects that would materially and adversely
affect or interfere with the operation, use, possession, ownership or value
thereof as currently owned, operated, conducted and used by Working Interest
Owner or, if not Working Interest Owner, the current operator of the applicable
Lease.
This Conveyance is made with full substitution and subrogation of Royalty
Owner in and to all covenants, representations and warranties by others
heretofore given or made with respect to the Subject Interests.
Section 1.10 No Proportionate Reduction. It is understood and agreed that
the Production Payment Hydrocarbons and the Production Payment Percentages will
be determined based on 100% of the full Warranted Net Revenue Interest
Percentages of the Hydrocarbons produced from (or, to the extent pooled or
unitized, allocated to) the Subject Lands and will not be reduced for any reason
except to the extent expressly provided in Section 1.11. Among other things, the
Production Payment Hydrocarbons and the Production Payment Percentages will not
be reduced due to (a) the undivided interest owned by Working Interest Owner in
a Lease being less than the entire interest in such Lease, or (b) the interest
in Hydrocarbons or other minerals underlying any portion of the Subject Lands
which is covered by a particular Lease (or group of Leases) being less than the
entire interest in the Hydrocarbons and other minerals underlying such portion
of the Subject Lands.
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Section 1.11 Government Regulation. The obligations of Working Interest
Owner hereunder will be subject to all applicable Laws. Working Interest Owner
will timely make all filings with all applicable agencies, boards, officials and
commissions having jurisdiction with respect to the Subject Interests, the
operation thereof or the Production Payment prior to or at the time any such
filing becomes due. Should any Laws, any Leases or any presently existing
provisions in presently existing private contracts (including those limiting the
size of overriding royalties and similar interests but excluding any contracts
directly entered into by Royalty Owner) be applicable to the Subject Interests
so as to limit the portion of the Hydrocarbons produced from a particular
Subject Interest which may be attributable to the Production Payment, the
Production Payment will, as to such Subject Interest and for the period of time
during which such Law, Lease or contractual provision is applicable, be limited
to the maximum amount of production from such Subject Interest which can be
attributed to the Production Payment under such Law, Lease or contractual
provision; provided, however, should such limitation be in effect as to any one
or more Subject Interests, then (without prejudice to other rights Royalty Owner
may have) the portion of production from (or, to the extent pooled or unitized,
allocated to) the other Subject Interests which would be attributable to the
Production Payment in the absence of the provisions of this subsection will be
increased to the maximum extent permitted (up to 90%) to cause Royalty Owner to
receive, by virtue of ownership of the Production Payment, the same aggregate
amount of Oil that Royalty Owner would have received had such Law, Lease or
contractual provision not reduced the share of production from such Subject
Interest with respect to which the Production Payment could be paid.
Section 1.12 Partial Release and Replacement. Working Interest Owner and
Royalty Owner agree that in the event that the Subject Interests located in
Taylor County, Texas, are to be sold by Working Interest Owner, Royalty Owner
will agree to reconvey to Working Interest Owner its remaining term overriding
royalty interest in such Subject Interests in exchange for either (at the
election of Royalty Owner) (a) the conveyance to Royalty Owner by Working
Interest Owner, upon substantially the same terms as this Conveyance, of a term
overriding royalty interest in additional Leases that will serve to replace the
Production Payment Hydrocarbons attributable to the Subject Interests being
sold, such additional Leases, term overriding royalty interest and all related
documents to be satisfactory in form and substance to Royalty Owner in its sole
discretion or (b) a reconveyance payment to Royalty Owner, in an amount to be
determined by Royalty Owner, and corresponding reductions in the Aggregate
Quantity and Scheduled Quantities as evidenced by a duly executed amendment to
this Conveyance, such reconveyance payment, such reductions and such amendment
to be satisfactory in form and substance to Royalty Owner.
ARTICLE II
DEFINITIONS
Section 2.1 Definitions. As used herein and in the exhibits hereto, the
following terms have the respective meanings ascribed to them below:
"Adjustment Quantity" means, during each Month, the quantity of Oil
determined by dividing the Monthly Adjustment Amount as of the commencement of
such Month by the Field Price of Oil for such Month.
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"Affiliate" means, with respect to any Person, any other Person that either
directly or indirectly controls or manages, is controlled or managed by or is
under common control or management with such first Person. For the purposes
hereof, "control" means the right or power to direct the policies of another
through management authority, equity ownership, delegated authority, voting
rights or otherwise.
"Aggregate Quantity" means 90,000 Barrels of Oil.
"Bankruptcy Code" means Title 11 of the United States Code,ss.101, ET SEQ.,
as amended.
"Barrel" means 42 United States standard gallons at 60 degrees Fahrenheit.
"Business Day" means any day other than a Saturday, a Sunday or a holiday
on which national banking associations in the State of Texas are closed.
"Calculation Date" has the meaning specified in the definition of "Monthly
Adjustment Amount".
"Central Time" means Central Standard Time or Central Daylight Savings Time
in effect in Dallas, Texas on the date in question.
"Credit Agreement" means the Credit Agreement, dated as of the date hereof,
among Working Interest Owner, the Parent, the lenders from time to time party
thereto, and Petro Capital Energy Credit, LLC, as administrative agent for such
lenders, as amended restated, supplemented or otherwise modified from time to
time.
"Day" means a period of 24 consecutive hours beginning at 9:00 a.m. Central
Time, on each calendar day, and "Daily" has the correlative meaning.
"Delivery Point" means the meter at each point of delivery of Subject
Hydrocarbons into a pipeline or gathering system or other transportation
facilities (including vehicles) of a Delivery Point Recipient, or any other
point or points mutually agreed to in writing by Working Interest Owner and
Royalty Owner.
"Delivery Point Charges" means all costs and charges associated with the
delivery of the Production Payment Hydrocarbons into the facilities of a
Delivery Point Recipient in a condition and at pressures sufficient to satisfy
all requirements in the applicable contract with such Delivery Point Recipient,
including all gathering, transportation, marketing, treating, compression,
dehydration, fuel and handling costs and charges.
"Delivery Point Recipient" means, at any time with respect to any Subject
Interest, the owner of the gathering system or transporting vehicles immediately
downstream of each applicable Delivery Point.
"Effective Time" means 9:00 a.m., Central Time, on August 1, 2014.
"Field Price" means with respect to Oil the price per Barrel of Oil for
each Month that is determined in accordance with Schedule 2.
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"Gas" means natural gas and other gaseous hydrocarbons, including
casinghead gas and the liquid products of gas processing, but excluding
condensate and other liquid hydrocarbons removed by conventional mechanical
field separation at or near the wellhead.
"Hydrocarbons" means Oil and Gas.
"Index Rate" means the rate of seventeen percent (17.0%) per annum,
calculated on the basis of actual days elapsed and a year of 360 days.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as amended
from time to time.
"Law" means any statute, law, regulation, ordinance, rule, treaty,
judgment, order, decree, permit, concession, franchise, license, agreement or
other governmental restriction of the United States or any state or political
subdivision thereof, of any Indian nation or tribal authority, or of any foreign
country or any department, province or other political subdivision thereof. Any
reference to a Law includes any amendment or modification to such Law, and all
regulations, rulings, and other Laws promulgated under such Law.
"Lease" means (subject to the depth limitations described in Exhibit A) any
oil, gas and/or mineral lease described, referred to or identified in the
Property Exhibit and any other deed, assignment, order, contract or instrument
creating or evidencing ownership of a Subject Interest, in each case as to all
lands and depths described in such lease, deed, assignment, order, contract or
instrument (or the applicable part or portion of such lands and depths if
specifically limited in depth or areal extent in the Property Exhibit), together
with any renewal, amendment, ratification or extension of such lease, deed,
assignment, order, contract or instrument. This Conveyance will also apply to,
and the term "Lease" will include, any new lease to the extent that such new
lease covers any interest covered by any oil, gas and/or mineral lease
described, referred to or identified in the Property Exhibit if such new lease
is acquired by Working Interest Owner or its Affiliates during the term of or
within one (1) year after expiration of the predecessor lease (provided that no
such new lease will be subject to this Conveyance if such new lease is executed
and delivered after the Termination Time).
"Lease Use Hydrocarbons" means any Hydrocarbons that are unavoidably lost
in the production thereof or that are used by Working Interest Owner or the
operator of the Subject Interests or any unit in which the Subject Interests are
pooled or unitized in compliance herewith for drilling and production operations
conducted prudently and in good faith for the purpose of producing Hydrocarbons
from the Subject Interests or from such unit, but only for so long as and to the
extent such Hydrocarbons are so used.
"Month" means the time period beginning at 9:00 a.m., Central Time, on the
first day of each calendar month and ending at 9:00 a.m., Central Time, on the
first day of the next succeeding calendar month, and "Monthly" has the
correlative meaning.
"Monthly Adjustment Amount" means zero dollars as of the Effective Time. As
of the commencement of each succeeding Month after the Effective Time (a
"Calculation Date"), such term means an amount of dollars equal to the sum of
the following:
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(a) the Monthly Adjustment Amount as of the commencement of the immediately
preceding Month, plus
(b) any Monthly Deficiency for the immediately preceding Month, minus
(c) any Monthly Credit for the immediately preceding Month, plus
(d) an amount equal to the notional interest that would accrue at the Index
Rate on a principal amount equal to the Monthly Adjustment Amount (if any) as
determined as of the end of the immediately preceding Month for the period from
and including the first Calculation Date to but not including the first Monthly
Settlement Date following such Calculation Date. For a Calculation Date that is
the first Day in September, 2014, for example, such notional principal amount
would be the Monthly Adjustment Amount as of the end of the preceding Month of
August 2014 (i.e., as of 9:00 a.m. on September 1, 2014) and the period for
which such notional interest would be calculated would be the period from and
including the first Business Day of September 2014 to but not including the last
Business Day of September 2014.
"Monthly Credit" means for each Month the product obtained by multiplying
(a) the aggregate amount, if any, by which the quantity of Production Payment
Hydrocarbons actually received by, or sold on behalf of, Royalty Owner during
such Month exceeds the Scheduled Quantity for such Month, times (b) the Field
Price of Oil for such Month.
"Monthly Deficiency" means for each Month the product obtained by
multiplying (a) the aggregate amount, if any, by which the quantity of
Production Payment Hydrocarbons actually received by, or sold on behalf of,
Royalty Owner during such Month is less than the Scheduled Quantity for such
Month times (b) the Field Price of Oil for such Month.
"Monthly Settlement Date" means, for each Month, the last Business Day of
the following Month. The Monthly Settlement Date for production during August
2014 will be the last Business Day of September 2014, and so forth.
"Mortgage" means the Second Lien Deed of Trust, Assignment of As-Extracted
Collateral, Security Agreement, Fixture Filing and Financing Statement from
Working Interest Owner for the benefit of Royalty Owner, dated as of the Closing
Date.
"Net Revenue Interest" means a percentage share of the Hydrocarbons (and
the proceeds thereof) produced and saved from or attributable to a particular
Lease, Subject Interest or Subject Well, after deducting all royalties,
overriding royalties, non-participating royalties, net profits interests,
production payments, and other burdens on or payments out of production, other
than the Production Payment itself.
"Non-Affiliate" means any Person other than Working Interest Owner and its
Affiliates.
"Non-Consent Hydrocarbons" means those Hydrocarbons produced from a Subject
Interest during the applicable period of recoupment or reimbursement pursuant to
a Non-Consent Provision covering that Subject Interest, which Hydrocarbons have
been relinquished to the consenting party or participating party under the terms
of such Non-Consent Provision as the result of an election by Working Interest
Owner not to participate in the particular operation, provided that such
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election by Working Interest Owner has been made in good faith and as a prudent
operator and in compliance with the terms of this Conveyance and any other
agreements made in connection herewith by Working Interest Owner and Royalty
Owner.
"Non-Consent Provision" means a contractual provision contained in an
applicable Non-Affiliate third-party operating agreement, unit agreement,
contract for development or other similar instrument that is a Permitted
Encumbrance, which provision covers so-called non-consent operations or sole
benefit operations and provides for relinquishment of production by
non-consenting or non-participating parties during a period of recoupment or
reimbursement of costs and expenses of the consenting or participating parties.
"Oil" means crude oil, condensate and other liquid hydrocarbons, including
liquid hydrocarbons removed by conventional mechanical field separation at the
wellhead but excluding casinghead gas and the products of gas processing.
"Parent" means Baron Energy, Inc., a Nevada corporation.
"Parties" means Working Interest Owner and Royalty Owner.
"Permitted Encumbrance" means the following with respect to any Subject
Interest:
(a) lessors' royalties, overriding royalties, reversionary interests and
similar burdens that (i) are of record on the date hereof, (ii) do not at any
time reduce the share of production from (or, if pooled or unitized, allocated
to) any Lease, unit, formation, or well set forth on the Property Exhibit to
which Working Interest Owner is entitled by virtue of its ownership of the
Subject Interests (as calculated before giving effect to this Conveyance) below
the Warranted Net Revenue Interest Percentage for such Lease, unit, formation,
or well, and (iii) do not at any time increase Working Interest Owner's Working
Interest in any Lease, unit, formation or well set forth on the Property Exhibit
without a corresponding increase in Working Interest Owner's Net Revenue
Interest for such Lease, unit, formation or well;
(b) operating agreements and unitization, pooling and communitization
agreements described in Section 3.1(m) of the Disclosure Schedule to the
Purchase and Sale Agreement that (i) are in existence on the date hereof, (ii)
do not at any time reduce the share of production from (or, if pooled or
unitized, allocated to) any Lease, unit, formation, or well set forth on the
Property Exhibit to which Working Interest Owner is entitled by virtue of its
ownership of the Subject Interests (as calculated before giving effect to this
Conveyance) below the Warranted Net Revenue Interest Percentage for such Lease,
unit, formation, or well, and (iii) do not at any time increase Working Interest
Owner's Working Interest in any Lease, unit, formation, or well set forth on the
Property Exhibit without a corresponding increase in Working Interest Owner's
Net Revenue Interest for such Lease, unit, formation, or well;
(c) contracts and other matters that (i) specifically affect such Subject
Interest, (ii) do not at any time reduce the share of production from (or, if
pooled or unitized, allocated to) any Lease, unit, formation, or well set forth
on the Property Exhibit to which Working Interest Owner is entitled by virtue of
its ownership of the Subject Interests (as calculated before giving effect to
this Conveyance) below the Warranted Net Revenue Interest Percentage for such
Lease, unit, formation, or well, and (iii) do not at any time increase Working
11
Interest Owner's Working Interest in any Lease, unit, formation, or well set
forth on the Property Exhibit without a corresponding increase in Working
Interest Owner's Net Revenue Interest for such Lease, unit, formation, or well;
(d) Oil sales contracts on normal market terms that provide for an initial
term of one year or less or are terminable without penalty upon no more than
thirty (30) days' notice to the purchaser or are not binding on the Production
Payment;
(e) liens for Taxes or governmental assessments that are not yet delinquent
or are being contested in good faith by appropriate proceedings which
effectively delay any enforcement thereof;
(f) materialman's, mechanic's, repairman's, employee's, contractor's,
operator's and other similar liens or charges arising by Law or contract in the
ordinary course of business to the extent securing current accounts payable
(owing with respect to goods or services provided with respect to the Subject
Interests) that are not more than 30 days past the invoice or due date,
whichever is earlier, unless being contested in good faith by appropriate
proceedings which effectively delay any enforcement thereof;
(g) easements, rights-of-way, restrictions, servitudes, permits, surface
leases and other rights in respect of surface operations that do not interfere
materially with the operation, value or use of such Subject Interest or
adversely affect the value of the Production Payment;
(h) liens and security interests in favor of Royalty Owner;
(i) liens and security interests created pursuant to the requirements of
the Credit Agreement;
(j) liens under any mortgage, pledge or security agreement entered into
pursuant to the requirements of any indenture, loan agreement or similar
document for borrowed money, provided that liens under any such mortgage, pledge
or security agreement are made and accepted expressly subject and subordinate to
this Conveyance and the Mortgage; and
(k) All other charges, encumbrances, title defects and irregularities
(other than liens and security interests) affecting the Subject Interests which
taken individually or together: (i) do not reduce the value of the Production
Payment or interfere with the operation, value or use of any of the Subject
Interests; (ii) do not prevent Working Interest Owner from receiving the
unencumbered proceeds of production from any of the Subject Interests or Royalty
Interest Owner from receiving Production Payment Hydrocarbons, or the proceeds
thereof; (iii) do not reduce the share of production from (or, if pooled or
unitized, allocated to) any Lease, unit, formation, or well set forth on Exhibit
A to which Working Interest Owner is entitled by virtue of its ownership of the
Subject Interest (as calculated before giving effect to this Conveyance) below
the Warranted Net Revenue Interest Percentage for such Lease, unit, formation,
or well and (iv) do not increase Working Interest Owner's Working Interest in
any Lease or unit set forth on Exhibit A without a corresponding increase in
Working Interest Owner's Net Revenue Interest for such Lease, unit, formation,
or well.
12
"Person" means an individual, corporation, partnership, limited liability
company, association, joint stock company, pension fund, trust or trustee
thereof, estate or executor thereof, unincorporated organization or joint
venture, court or governmental unit or any agency or subdivision thereof, or any
other legally recognizable entity.
"Production Payment" has the meaning given such term in Section 1.1.
"Production Payment Hydrocarbons" means the Subject Hydrocarbons conveyed
and assigned to Royalty Owner pursuant to Section 1.1.
"Production Payment Percentage" means, with respect to each Subject
Interest and the Subject Hydrocarbons produced therefrom (or, to the extent
pooled or unitized, allocated thereto), ninety percent (90%) of the Warranted
Net Revenue Interest Percentage specified in the Property Exhibit for such
Subject Interest.
"Property Exhibit" means Exhibit A attached hereto.
"Purchase and Sale Agreement" means the Purchase and Sale Agreement dated
as of the Closing Date between Working Interest Owner and Royalty Owner.
"Retained Interests" means the rights and interests retained by Working
Interest Owner in the Subject Interests after conveyance of the Production
Payment hereunder, including both the rights and interests in the Subject
Interests that are retained by Working Interest Owner during the term of the
Production Payment and the entire Subject Interests at any time when the
Production Payment has terminated or is otherwise not in effect.
"Royalty Owner" refers to Baron Production LLC, a Texas limited liability
company, as well as to its successors and assigns hereunder.
"Scheduled Quantity" means with respect to each Month the aggregate
quantity of Hydrocarbons that is set forth for such Month on Schedule 1.
"Subject Hydrocarbons" means the Oil in and under and that may be produced
after the Effective Time from (or, to the extent pooled or unitized, allocated
to) the Subject Lands that are attributable to the Subject Interests (determined
after deducting all royalties, overriding royalties, production payments and
similar burdens, excluding only the Production Payment, which both burden the
Subject Interests on the date hereof and are reflected in the Warranted Net
Revenue Interest Percentages set out on the Property Exhibit). The Subject
Hydrocarbons will not be deemed to include any Lease Use Hydrocarbons or
Non-Consent Hydrocarbons attributable to the Subject Interests, and no Lease Use
Hydrocarbons or Non-Consent Hydrocarbons will be included in the determination
of Production Payment Hydrocarbons.
"Subject Interests" means:
(a) all of the interests set forth in the Property Exhibit in and to the
Leases, units and wells described therein and the other property interests (if
any) described in the Property Exhibit, limited in each instance to each subject
Well described on the Property Exhibit.
13
(b) all other right, title, interest or claim (of every kind and character,
whether legal or equitable and whether vested or contingent) of Working Interest
Owner in and to (i) any Lease or any such unit or other property interest, (ii)
the lands and estates covered by the Leases or by such units and other property
interests, and (iii) all other lands and estates now or hereafter pooled,
communitized or unitized therewith, or in and to the oil, gas and other minerals
that may be produced therefrom or allocated thereto, even though Working
Interest Owner's interest be incorrectly or incompletely described in, or
omitted from, the Property Exhibit, and
(c) all rights, titles and interests of Working Interest Owner in and to,
or otherwise derived from, all presently existing or hereafter created oil, gas
or mineral unitization, pooling, or communitization agreements, declarations or
orders and in and to the properties covered and the units created thereby
(including all units formed under orders, rules, regulations, or other official
acts of any federal, state, or other authority having jurisdiction, voluntary
unitization agreements, designations or declarations, and so-called "working
interest units" created under operating agreements or otherwise) relating to the
properties described in paragraphs (a) or (b) above in this definition, all as
the same may be enlarged from time to time by the discharge of any burdens or by
the removal of any charges or encumbrances to which any of the same may be
subject on the date hereof, and any and all renewals and extensions of any of
the same, but limited in each instance to each Subject Well on the Property
Exhibit.
"Subject Lands" means all lands described, referred to or identified in the
Property Exhibit and all lands subject to each Lease or other property interest
that is described in the Property Exhibit, but limited in each instance to each
Subject Well on the Property Exhibit.
"Subject Wells" means all wells identified in the Property Exhibit.
"Taxes" means all ad valorem, property, gathering, transportation, pipeline
regulating, gross receipts, severance, production, excise, heating content,
carbon, environmental, occupation, sales, use, value added, fuel, franchise, and
other taxes and governmental charges and assessments imposed on or as a result
of all or any part of the Subject Interests, the Hydrocarbons produced from
Subject Interests or the proceeds thereof, the Production Payment, the
Production Payment Hydrocarbons or the proceeds thereof, regardless of the point
at which or the manner in which or the Person against whom such taxes, charges
or assessments are charged, collected, levied or otherwise imposed. Interest,
penalties and withholding obligations owing to governmental authorities with
respect to any Taxes also constitute Taxes. The only taxes which are not Taxes
are federal and state income and franchise taxes imposed on Royalty Owner's
income or business generally (provided that "windfall profits" taxes and other
taxes imposed on Oil production or the revenues or income therefrom do
constitute "Taxes").
"Termination Time" means 9:00 a.m., Central Time, on July 31, 2017,
provided that if at such time the Royalty Owner has not received the Aggregate
Quantity, the Termination Time will not occur until the time and date that the
Royalty Owner shall have received and realized, out of the Production Payment
Hydrocarbons, the Aggregate Quantity.
"Warranted Net Revenue Interest Percentage" means the percentage set forth
on the Property Exhibit indicating Working Interest Owner's claimed Net Revenue
14
Interest in a particular Lease, unit, formation, or well, generally by reference
to "Net Revenue Interest," "NRI," "NRI Percentage" or words of similar import.
"Warranted Working Interest Percentage" means the percentage set forth on
the Property Exhibit indicating Working Interest Owner's claimed Working
Interest in a particular Lease, unit, formation, or well, generally by reference
to "Working Interest," "WI," "WI Percentage" or words of similar import.
"Working Interest" means the interest owned in oil and gas leases,
leaseholds, contracts or other oil and gas interests (including leasehold
interests, operating rights interests or other cost-bearing interests, and
mineral fee or ownership interests) that determines the percentage share of
costs borne by the owner of such interest.
"Working Interest Owner" refers to Baron Production LLC, a Texas limited
liability company, as well as to its successors and assigns hereunder.
Section 2.2 Rules of Construction; Monthly and Daily Equivalents;
Publications.
(a) All references in this Conveyance to articles, sections, subsections
and other subdivisions refer to corresponding articles, sections, subsections
and other subdivisions of this Conveyance unless expressly provided otherwise.
Titles appearing at the beginning of any of such subdivisions are for
convenience only, do not constitute part of such subdivisions, and are to be
disregarded in construing the language contained in such subdivisions. The words
"this Conveyance", this instrument", "herein", "hereof", "hereunder" and words
of similar import refer to this Conveyance as a whole and not to any particular
subdivision unless expressly so limited. Unless the context otherwise requires,
"including" and its grammatical variations mean "including without limitation";
"or" is not exclusive; words in the singular form include the plural and vice
versa; words in any gender include all other genders; references herein to any
instrument or agreement refer to such instrument or agreement as it may be from
time to time amended, restated, or supplemented; and references herein to any
Person include such Person's successors and assigns. All references in this
Conveyance to exhibits and schedules refer to exhibits and schedules to this
Conveyance unless expressly provided otherwise, and the Property Exhibit and all
other exhibits and schedules to this Conveyance are hereby incorporated herein
by reference and made a part hereof for all purposes. This Conveyance has been
drafted with the joint participation of Working Interest Owner and Royalty Owner
and is to be construed neither against nor in favor of either Party but rather
in accordance with the fair meaning hereof.
(b) To the extent that this Conveyance refers to information or data
measured or based upon Daily production or deliveries of Hydrocarbons and such
information or data is instead provided or available only with respect to
Monthly production or deliveries of Hydrocarbons, such Monthly Hydrocarbons will
be deemed produced or delivered in equal quantities on each Day during such
Month. To the extent that this Conveyance refers to Daily price information for
production or deliveries of Hydrocarbons and such information or data is instead
provided or available only on a Monthly basis, then such Monthly price
information will be deemed to apply on each Day during such Month.
15
(c) To the extent that this Conveyance incorporates prices, rates,
adjustments to prices or rates or other information from a specific source or
publication and that source or publication for any reason temporarily fails or
permanently ceases to publish such information, or ceases publication
altogether, or changes the heading or format under which such information is
published, or changes the source of information which it publishes under such
heading or format, and in any such case this Conveyance does not otherwise
specify how to deal with such event, then for so long as such situation
continues Royalty Owner will designate, in good faith, a reasonable alternative
source for the same or equivalent information and the Parties will thereafter
use such designated alternative source.
ARTICLE III
MISCELLANEOUS
Section 3.1 Nature of Production Payment; Intentions of the Parties. This
Conveyance is an absolute conveyance of an interest in real property. The
Production Payment constitutes a "production payment" as defined in Section
101(42A) of the Bankruptcy Code and referred to in Section 541(b)(4)(B)(i) of
the Bankruptcy Code. The Parties intend for the Production Payment to at all
times be treated for federal income tax purposes (and for the purpose of any
similarly calculated state income or franchise taxes, but for no other purposes)
as a mortgage loan (and not a "royalty" or other "economic interest" in
Hydrocarbons) within the meaning of the Internal Revenue Code and the
regulations and judicial authority relating thereto, and the Parties agree to
report the Production Payment accordingly on all applicable tax returns. Nothing
in this Conveyance may be construed to constitute either Party (under state Law
or for tax purposes) in partnership with the other Party or to constitute an
assignment by Working Interest Owner to Royalty Owner of an interest in any tax
partnership burdening the Subject Interests. The Production Payment does not
include any ownership interest in and to any of the fixtures, structures,
equipment or other tangible personal property now or hereafter placed on, or
used in connection with, the Subject Interests or any right to conduct
operations with any of the foregoing.
Section 3.2 Governing Law. THIS CONVEYANCE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCEWITH THE LAWS OF THE STATE OF TEXAS.
Section 3.3 Successors and Assigns. The covenants, provisions and
conditions contained in this Conveyance are agreed and acknowledged to be
covenants running with the land and the respective interests of Working Interest
Owner and Royalty Owner and will be binding upon and (subject to the
restrictions in Section 1.8) inure to the benefit of Working Interest Owner and
Royalty Owner and their respective successors and permitted assigns. Royalty
Owner and its successors and assigns may, and nothing contained in this
instrument will in any way limit or restrict the right of Royalty Owner, or
Royalty Owner's successors and assigns to, sell, convey, assign, mortgage or
otherwise transfer the Production Payment or its rights and obligations under
this Conveyance in whole or in part. If at any time Royalty Owner, or Royalty
Owner's successors and assigns, execute a mortgage, pledge or deed of trust
covering all or any part of the Production Payment as security for any
obligation, the mortgagee, the pledgee or the trustee therein named or the
holder of the obligation secured thereby will be entitled, to the extent such
mortgage, pledge or deed of trust so provides, to exercise all of the rights,
remedies, powers and privileges herein conferred upon Royalty Owner and to give
16
or withhold all consents herein required or permitted to be obtained from
Royalty Owner. All references herein to either Working Interest Owner or Royalty
Owner include their respective successors and permitted assigns.
Section 3.4 Counterpart Execution. This Conveyance is executed in multiple
originals all of which constitute one and the same Conveyance; provided,
however, in order to facilitate recording of this Conveyance in the public
records of each of the jurisdictions in which the Subject Interests are located
(or in each of the jurisdictions adjacent to any offshore Subject Interests),
the exhibits attached to a counterpart recorded in a single jurisdiction may
contain only those pages (or portions thereof) which apply to Subject Interests
that are located in (or are adjacent to) such jurisdiction. Complete
counterparts of this Conveyance have been retained by each of the Parties, and a
complete counterpart of this Conveyance is recorded in Harrison County, Texas.
Section 3.5 Further Assurances. Working Interest Owner will take all such
further actions and will execute, acknowledge and deliver all such further
documents that may reasonably be requested by Royalty Owner to effectuate this
Conveyance or to carry out the purposes of this Conveyance.
Section 3.6 No Subordination to Permitted Encumbrance. Certain agreements,
contracts and other documents are listed in the Property Exhibit and included in
the definition of Permitted Encumbrances. References herein or in the Property
Exhibit to Permitted Encumbrances are made solely for the purpose of modifying
Working Interest Owner's warranties and representations as to the Subject
Interests, and without regard to whether or not any Permitted Encumbrance is
valid, subsisting, legal or enforceable or affects or is senior to the
Production Payment. Such references are not intended to constitute and do not
constitute any express or implied recognition or acknowledgment by any Party as
to the validity, legality, enforceability or priority of the same or of any
term, provision or condition thereof or the applicability or seniority thereof
to the Production Payment and do not revive or ratify the same or create any
rights in any third Person. No provision in this Conveyance may be construed as
an agreement or expression of intent by Royalty Owner to acquire the Production
Payment subject to any unrecorded Permitted Encumbrance.
Section 3.7 Partial Invalidity. Except as otherwise expressly stated
herein, in the event any term or provision contained in this Conveyance is for
any reason held invalid, illegal or unenforceable to any extent by a court or
regulatory agency of competent jurisdiction, such term or provision will
otherwise remain effective and be enforced, and all other terms and provisions
hereof will nevertheless remain effective and will be enforced, to the fullest
extent permitted by applicable Law.
Section 3.8 Waiver of Jury Trial and Special Damages. EACH PARTY HEREBY
RATIFIES AND CONFIRMS ITS WAIVERS OF JURY TRIAL AND SPECIAL DAMAGES MADE IN
SECTION 7.9 OF THE PURCHASE AND SALE AGREEMENT.
Section 3.9 Consent to Jurisdiction. EACH PARTY HEREBYRATIFIES AND CONFIRMS
ITS CONSENT TO AND AGREEMENTS CONCERNING JURISDICTION, FORUM AND VENUE MADE IN
SECTION 7.10 OF THE PURCHASE AND SALE AGREEMENT.
17
Section 3.10 Partition. Each Party acknowledges and agrees that neither
Party has any right or interest that would permit it to partition any portion of
the Subject Interests as against the other Party and each Party hereby waives
any such right.
Section 3.11 Addresses. The addresses of Royalty Owner and Working Interest
Owner are as follows:
PCEC Sub 1, LLC
3710 Rawlins Street, Suite 1000
Dallas, TX 75219
Attention: Rosser C. Newton
Fax No.: 214-661-7760
Phone No.: (214) 661-7761
Baron Production LLC
300 S. CM Allen Pkwy, Suite 400
San Marcos, Texas 78666
Attention: Lisa P. Hamilton
Fax No.: (512) 392-7238
Phone No.: (512) 392-5775
All notices, requests, demands, instructions and other communications
required or permitted to be given hereunder must be in writing and must be given
as provided in the Purchase and Sale Agreement.
Section 3.12 Amendments and Waivers. This Conveyance may not be amended or
modified, and no rights hereunder may be waived, except by a written document
signed by the Party to be charged with such amendment, modification or waiver.
Provisions of this Conveyance that refer to any consent, approval, amendment or
waiver by either Party require such consent, approval, amendment or waiver to be
in writing.
IN WITNESS WHEREOF, Working Interest Owner and Royalty Owner have each
executed this Conveyance on the dates set forth in their respective
acknowledgments below and Working Interest Owner has delivered this Conveyance
to Royalty Owner as the transfer and conveyance to Royalty Owner of a presently
vested property interest, to be effective with respect to production of Subject
Hydrocarbons as of the Effective Time.
[SIGNATURES ON NEXT PAGE]
18
EXECUTED this 28th day of July, 2014, to be effective as of the 28th day of
July, 2014.
BARON PRODUCTION LLC
By:
--------------------------------------------
Name:
--------------------------------------------
Title:
--------------------------------------------
STATE OF TEXAS ss.
ss.
COUNTY OF _______ ss.
This instrument was acknowledged before me on July ___, 2014 by
__________________________, the _______________________ of Baron Production LLC,
a Texas limited liability company, on behalf of said company.
-----------------------------------
Notary Public
Printed Name:
----------------------
Seal:
19
PCEC SUB 1, LLC
By:
--------------------------------------------
Rosser C. Newton
Vice President
STATE OF TEXAS ss.
ss.
COUNTY OF DALLAS ss.
This instrument was acknowledged before me on July ____, 2014 by Rosser C.
Newton, the Vice President of PCEC Sub 1 LLC, a Texas limited liability company,
on behalf of said company.
-----------------------------------
Notary Public
Printed Name:
----------------------
Seal:
20
EXHIBIT A
PROPERTY EXHIBIT
EAST PEARSALL (STEWART) PROSPECT
TRACT 1 - 1985 ACRES
Lease 1: Oil and Gas Lease dated August 13, 2009, from Federal Royalty LLC, as
General Partner for Federal Royalty Partners, Ltd., as Lessor, to Sien Energy
Company, as Lessee, recorded by Memorandum of Oil and Gas Lease in Volume 66,
page 502, Official Public Records, Frio County, Texas, as amended, covering
1,985 acres of land, more or less, out of the A.B.&M. Survey 5, A-29, the
A.B.&M. Survey 7, A-30, the A.B.&M. Survey 9, A-31, the R.H. Adcock Survey 10,
A-1341 and the B.S.&F. Survey 1, A-111, Frio County, Texas.
Lease 2: Oil and Gas Lease dated March 26, 2009, from Cimarron Texas Minerals,
Ltd., as Lessor, to Sien Energy Company, as Lessee, recorded by Memorandum of
Oil and Gas Lease dated March 31, 2009 in Volume 67, page 831, Official Public
Records, Frio County, Texas, as amended, covering 1,985 acres of land, more or
less, being the same land described above in Lease 1.
Lease 3: Paid Up Oil and Gas Lease dated March 6, 2009, from Joseph M. Dawson,
Jr., as Lessor, to Sien Energy Company, as Lessee, recorded in Volume 66, page
504, Official Public Records, Frio County, Texas, as amended, covering 1,985
acres of land, more or less, being the same land described in Lease 1.
Lease 4: Paid Up Oil and Gas Lease dated March 6, 2009, from Dorothy D. Burlage,
as Lessor, to Sien Energy Company, as Lessee, recorded in Volume 66, page 508,
Official Public Records, Frio County, Texas, as amended, covering 1,985 acres of
land, more or less, being the same land described in Lease 1.
Lease 5: Paid Up Oil and Gas Lease dated January 16, 2009, from Hager Oil & Gas,
as Lessor, to Sien Energy Company, as Lessee, recorded in Volume 66, page 512,
Official Public Records, Frio County, Texas, covering 1,985 acres of land, more
or less, being the same land described in Lease 1.
Lease 6: Paid Up Oil and Gas Lease dated September 28, 2009, from Bill Bishop,
as Lessor, to Sien Energy Company, as Lessee, recorded in Volume 66, page 528,
Official Public Records, Frio County, Texas, covering 1,985 acres of land, more
or less, being the same land described in Lease 1.
Lease 7: Paid Up Oil and Gas Lease dated September 28, 2009, from Robert L. Dow,
Jr., as Lessor, to Sien Energy Company, as Lessee, recorded in Volume 66, page
524, Official Public Records, Frio County, Texas, covering 1,985 acres of land,
more or less, being the same land described in Lease 1.
21
Lease 8: Paid Up Oil and Gas Lease dated September 28, 2009, from Wesley K.
Winn, as Lessor, to Sien Energy Company, as Lessee, recorded in Volume 66, page
517, Official Public Records, Frio County, Texas, covering 1,985 acres of land,
more or less, being the same land described in Lease 1.
Lease 9: Paid Up Oil and Gas Lease dated September 28, 2009, from Tolar N.
Hamblen, III, as Lessor, to Sien Energy Company, as Lessee, recorded in Volume
67, page 828, Official Public Records, Frio County, Texas, covering 1,985 acres
of land, more or less, being the same land described in Lease 1.
Lease 10: Paid Up Oil and Gas Lease dated September 28, 2009, from Ginger
Busboom, as Lessor, to Sien Energy Company, as Lessee, recorded in Volume 66,
page 521, Official Public Records, Frio County, Texas, covering 1,985 acres of
land, more or less, being the same land described in Lease 1.
Lease 11: Paid Up Oil and Gas Lease dated August 24, 2009, from Mark E. McCourt
and wife, Susan McCourt, as Lessor, to Sien Energy Company, as Lessee, recorded
in Volume 66, page 536, Official Public Records, Frio County, Texas, covering
1,985 acres of land, more or less, being the same land described in Lease 1.
Lease 12: Paid Up Oil and Gas Lease dated August 24, 2009, from A.L. Furnace and
wife, Pauline Furnace, as Lessor, to Sien Energy Company, as Lessee, recorded in
Volume 66, page 532, Official Public Records, Frio County, Texas, covering 1,985
acres of land, more or less, being the same land described in Lease 1.
Lease 13: Paid Up Oil and Gas Lease dated August 10, 2009, from Dickerson
Resources, Arthur J. Milbarger and Joseph E. Stewart, as Lessor, to Sien Energy
Company, as Lessee, recorded in Volume 66, page 540, Official Public Records,
Frio County, Texas, covering 1,985 acres of land, more or less, being the same
land described in Lease 1.
Lease 14: Paid Up Oil and Gas Lease dated March 20, 2009, from Douglas C. Koch,
as Lessor, to Sien Energy Company, as Lessee, recorded in Volume 66, page 544,
Official Public Records, Frio County, Texas, as amended, covering 1,985 acres of
land, more or less, being the same land described in Lease 1.
Lease 15: Paid Up Oil and Gas Lease dated March 20, 2009, from Wayne A. Bissett,
as Lessor, to Sien Energy Company, as Lessee, recorded in Volume 66, page 550,
Official Public Records, Frio County, Texas, as amended, covering 1,985 acres of
land, more or less, being the same land described in Lease 1.
Lease 16: Paid Up Oil and Gas Lease dated December 3, 2007, from Clarence J.
Fraser, as Lessor, to Sien Energy Company, as Lessee, recorded in Volume 66,
page 556, Official Public Records, Frio County, Texas, covering 1,985 acres of
land, more or less, being the same land described in Lease 1.
Lease 17: Paid Up Oil and Gas Lease dated August 12, 2009, from Dorothy L.
Hardin, as Lessor, to Sien Energy Company, as Lessee, recorded in Volume 66,
page 559, Official Public Records, Frio County, Texas, covering 1,985 acres of
land, more or less, being the same land described in Lease 1.
22
Lease 18: Paid Up Oil and Gas Lease dated August 12, 2009, from Anne L. Madigan,
as Lessor, to Sien Energy Company, as Lessee, recorded in Volume 66, page 563,
Official Public Records, Frio County, Texas, covering 1,985 acres of land, more
or less, being the same land described in Lease 1.
Lease 19: Paid Up Oil and Gas Lease dated September 2, 2009, from Jessica
Stansell, as Lessor, to Sien Energy Company, as Lessee, recorded in Volume 66,
page 567, Official Public Records, Frio County, Texas, covering 1,985 acres of
land, more or less, being the same land described in Lease 1.
Lease 20: Paid Up Oil and Gas Lease dated March 24, 2009, from Thornton Davis
Minerals, L.P., as Lessor, to Sien Energy Company, as Lessee, recorded in Volume
66, page 570, Official Public Records, Frio County, Texas, covering 1,985 acres
of land, more or less, being the same land described in Lease 1.
Lease 21: Paid-Up Oil and Gas Lease dated September 1, 2009, from Stewart
Information Services Corporation, as Lessor, to Sien Energy Company, as Lessee,
recorded by Memorandum of Oil and Gas Lease in Volume 66, page 574, Official
Public Records, Frio County, Texas, as amended, covering 1,985 acres of land,
more or less, being the same land described in Lease 1.
Lease 22: Paid-Up Oil and Gas Lease dated September 2, 2009, from Nathan Weaver,
as Lessor, to Sien Energy Company, as Lessee, recorded in Volume 70, page 249,
Official Public Records, Frio County, Texas, covering 1,985 acres of land, more
or less, being the same land described in Lease 1.
Lease 23: Paid-Up Oil and Gas Lease dated September 2, 2009, from Jesse Walker,
as Lessor, to Sien Energy Company, as Lessee, recorded in Volume 73, page 621,
Official Public Records, Frio County, Texas, covering 1,985 acres of land, more
or less, being the same land described in Lease 1.
Lease 24: Paid-Up Oil and Gas Lease dated March 23, 2011, from Wanda Weaver, as
Lessor, to Ricochet Energy, Inc., as Lessee, recorded in Volume 91, page 773,
Official Public Records, Frio County, Texas, covering 1,985 acres of land, more
or less, being the same land described in Lease 1.
Lease 25: Paid Up Oil and Gas Lease dated June 23, 2011, from Charles McClain,
as Receiver for Mineral Interests in Cause No. 11-03-00095CVF, for Nancy Brown
et al., as Lessor, to Ricochet Energy, Inc., as Lessee, recorded in Volume 92,
page 996, Official Public Records, Frio County, Texas, covering 1,985 acres of
land, more or less, being the same land described in Lease 1.
23
TRACT 2 - 640 ACRES
Lease 1: Paid Up Oil and Gas Lease dated November 6, 2009, from Roxana Kelfer,
Individually and as Trustee of the Louis A. Michael Trust, as Lessor, to Sien
Energy Company, as Lessee, recorded in Volume 68, page 237, Official Public
Records, Frio County, Texas, covering 640 acres of land, more or less, out of
the E.A. Mudd Survey 8, A-1333, Frio County, Texas.
Lease 2: Paid Up Oil and Gas Lease dated November 6, 2009, from Lynn Kendrick,
as Lessor, to Sien Energy Company, as Lessee, recorded in Volume 68, page 242,
Official Public Records, Frio County, Texas, covering 640 acres of land, more or
less, out of the E.A. Mudd Survey 8, A-1333, Frio County, Texas, being the same
land described in Lease 1.
Lease 3: Paid Up Oil and Gas Lease dated November 6, 2009, from Caroline J.
Wanke, as Lessor, to Sien Energy Company, as Lessee, recorded in Volume 68, page
247, Official Public Records, Frio County, Texas, covering 640 acres of land,
more or less, out of the E.A. Mudd Survey 8, A-1333, Frio County, Texas, being
the same land described in Lease 1.
Lease 4: Paid Up Oil and Gas Lease dated November 6, 2009, from Diana Morawski,
as Lessor, to Sien Energy Company, as Lessee, recorded in Volume 68, page 251,
Official Public Records, Frio County, Texas, covering 640 acres of land, more or
less, out of the E.A. Mudd Survey 8, A-1333, Frio County, Texas, being the same
land described in Lease 1.
Lease 5: Paid Up Oil and Gas Lease dated November 6, 2009, from Claudia Davis,
as Lessor, to Sien Energy Company, as Lessee, recorded in Volume 68, page 255,
Official Public Records, Frio County, Texas, covering 640 acres of land, more or
less, out of the E.A. Mudd Survey 8, A-1333, Frio County, Texas, being the same
land described in Lease 1.
INSOFAR AS, AND ONLY INSOFAR AS, THE LEASES DESCRIBED ABOVE COVER THE FOLLOWING
WELLS:
Wells WI NRI
----- -- ---
Ricochet - Stewart No. 1 Well 89.100000% 66.825000%
(API #42-163-33411 / RRC ID #15635)
Ricochet - Stewart No. 2 Well 89.100000% 66.825000%
(API #42-163-33455 / RRC ID #15635)
Ricochet - Stewart-Michael Unit No. 1 Well 89.100000% 66.907685%
(API #42-163-33535 / RRC ID #16563)
Ricochet - Stewart-Michael No. 2H Unit Well 89.100000% 66.825000%
(API #42-163-33550 / RRC ID #16379)
Ricochet - Stewart No. 4RE Well 95.466809% 71.600107%
(API #42-163-33585 / RRC ID #17349)
24
BREAZEALE PROSPECT (NEAL TRUST UNIT)
Lease 1: Paid Up Oil and Gas Lease dated July 25, 2011, from Iven A. Neal and
Ruby Neal, as Trustees of the Iven A. Neal and Ruby Neal Living Trust, as
Lessor, to Ricochet Energy, Inc., as Lessee, recorded by Memorandum of Paid Up
Oil and Gas Lease in Volume 95, page 113, Official Public Records, Frio County,
Texas, insofar as and only insofar as said lease covers 148.37 acres of land,
more or less, out of the B.S.&F. Survey No. 3, A-112, Frio County, Texas, being
the lands pooled in the Ricochet Energy, Inc. - Neal Trust No. 1H Unit as
described in a Declaration of Unit dated October 10, 2012, recorded in Volume
122, page 855, Official Records, Frio County, Texas.
Lease 2: Paid Up Oil and Gas Lease dated July 25, 2011, from James P. Neal and
Coleen F. Neal, as Trustees of the James P. Neal and Coleen F. Neal Living
Trust, as Lessor, to Ricochet Energy, Inc., as Lessee, recorded by Memorandum of
Paid Up Oil and Gas Lease in Volume 95, page 110, Official Public Records, Frio
County, Texas, insofar as and only insofar as said lease covers 148.37 acres of
land, more or less, out of the B.S.&F. Survey No. 3, A-112, Frio County, Texas,
being the lands pooled in the Ricochet Energy, Inc. - Neal Trust No. 1H Unit as
described in a Declaration of Unit dated October 10, 2012, recorded in Volume
122, page 855, Official Records, Frio County, Texas, and being the same land
described in Lease 1.
Lease 3: Oil and Gas Lease dated July 18, 2011, from Providence Minerals, LLC,
as Lessor, to Ricochet Energy, Inc., as Lessee, recorded by Memorandum of Oil
and Gas Lease in Volume 95, page 116, Official Public Records, Frio County,
Texas, insofar as and only insofar as said lease covers 127.9 acres of land,
more or less, out of the B.S.&F. Survey No. 3, A-112, Frio County, Texas, being
the lands pooled in the Ricochet Energy, Inc. - Neal Trust No. 1H Unit as
described in a Declaration of Unit dated October 10, 2012, recorded in Volume
122, page 855, Official Records, Frio County, Texas, and being part of the same
land described in Lease 1.
Lease 4: Oil and Gas Lease dated August 16, 2011, from Texas Osage Royalty Pool,
Inc., as Lessor, to Ricochet Energy, Inc., as Lessee, recorded by Memorandum of
Oil and Gas Lease in Volume 95, page 819, Official Public Records, Frio County,
Texas, insofar as and only insofar as said lease covers 127.9 acres of land,
more or less, out of the B.S.&F. Survey No. 3, A-112, Frio County, Texas, being
the lands pooled in the Ricochet Energy, Inc. - Neal Trust No. 1H Unit as
described in a Declaration of Unit dated October 10, 2012, recorded in Volume
122, page 855, Official Records, Frio County, Texas, and being part of the same
land described in Lease 1.
Lease 5: Paid Up Oil and Gas Lease dated September 30, 2011, from Vicki Lee
Gates and Sherri Lynn Tope, as Lessor, to Ricochet Energy, Inc., as Lessee,
recorded by Memorandum of Paid Up Oil and Gas Lease in Volume 99, page 37,
Official Public Records, Frio County, Texas, insofar as and only insofar as said
lease covers 65.59 acres of land, more or less, out of the B.S.&F. Survey No. 3,
A-112, Frio County, Texas, being the lands pooled in the Ricochet Energy, Inc. -
Neal Trust No. 1H Unit as described in a Declaration of Unit dated October 10,
2012, recorded in Volume 122, page 855, Official Records, Frio County, Texas.
Lease 6: Paid Up Oil and Gas Lease dated October 14, 2011, from The Collis and
Lucille Woodward Family Trust dated August 29, 1990, as Lessor, to Ricochet
Energy, Inc., as Lessee, recorded by Memorandum of Paid Up Oil and Gas Lease in
25
Volume 100, page 20, Official Public Records, Frio County, Texas, insofar as and
only insofar as said lease covers 88.02 acres of land, more or less, out of the
Frio County School Land League No. 1, A-310, Frio County, Texas, being the lands
pooled in the Ricochet Energy, Inc. - Neal Trust No. 1H Unit as described in a
Declaration of Unit dated October 10, 2012, recorded in Volume 122, page 855,
Official Records, Frio County, Texas.
Lease 7: Paid Up Oil and Gas Lease dated October 14, 2011, from The Clyde E. and
Valerie V. Woodward Family Trust dated November 12, 1996, as Lessor, to Ricochet
Energy, Inc., as Lessee, recorded by Memorandum of Paid Up Oil and Gas Lease in
Volume 100, page 18, Official Public Records, Frio County, Texas, insofar as and
only insofar as said lease covers 88.02 acres of land, more or less, out of the
Frio County School Land League No. 1, A-310, Frio County, Texas, being the lands
pooled in the Ricochet Energy, Inc. - Neal Trust No. 1H Unit as described in a
Declaration of Unit dated October 10, 2012, recorded in Volume 122, page 855,
Official Records, Frio County, Texas, and being the same land described in Lease
6.
INSOFAR AS, AND ONLY INSOFAR AS, THE LEASES DESCRIBED ABOVE COVER THE FOLLOWING
WELL:
Wells WI NRI
----- -- ---
Ricochet - Neal Trust No. 1H Unit Well 100.000% 75.000%
(API #42-163-33643 / RRC ID #17593)
FRIO AUSTIN CHALK PROSPECT
(CULPEPPER AREA)
JANE T. CULPEPPER ET AL., LEASES
Lease 1: Oil and Gas Lease dated January 18, 2010, from Jane Culpepper, as
Lessor, to Ricochet Energy, Inc., as Lessee, recorded in Volume 70, page 672,
Official Public Records, Frio County, Texas, as amended by Amendment of Oil and
Gas Lease recorded in Volume 73, page 441, Official Public Records, Frio County,
Texas, covering 718 acres of land, more or less, out of the J. E. Roberts Survey
No. 4, A-903, the L.I.M. & C. Co. Survey No. 112, A-754 and the B.S. & F Survey
No. 3, A-109, Frio County, Texas.
Lease 2: Oil and Gas Lease dated January 18, 2010, from John Culpepper, as
Lessor, to Ricochet Energy, Inc., as Lessee, recorded in Volume 70, page 675,
Official Public Records, Frio County, Texas, as amended by Amendment of Oil and
Gas Lease recorded in Volume 73, page 444, Official Public Records, Frio County,
Texas, covering 593 acres of land, more or less, being a portion of the same
land described above in Lease 1.
Lease 3: Oil and Gas Lease dated January 18, 2010, from Jim Culpepper, as
Lessor, to Ricochet Energy, Inc., as Lessee, recorded in Volume 70, page 678,
Official Public Records, Frio County, Texas, as amended by Amendment of Oil and
Gas Lease recorded in Volume 73, page 446, Official Public Records, Frio County,
Texas, covering 593 acres of land, more or less, being a portion of the same
land described above in Lease 1.
26
Lease 4: Oil and Gas Lease dated January 18, 2010, from Bill Culpepper, as
Lessor, to Ricochet Energy, Inc., as Lessee, recorded in Volume 70, page 681,
Official Public Records, Frio County, Texas, as amended by Amendment of Oil and
Gas Lease recorded in Volume 73, page 448, Official Public Records, Frio County,
Texas, covering 593 acres of land, more or less, being a portion of the same
land described above in Lease 1.
Lease 5: Oil and Gas Lease dated January 18, 2010, from Nancy C. Flores, as
Lessor, to Ricochet Energy, Inc., as Lessee, recorded in Volume 70, page 684,
Official Public Records, Frio County, Texas, as amended by Amendment of Oil and
Gas Lease recorded in Volume 73, page 450, Official Public Records, Frio County,
Texas, covering 593 acres of land, more or less, being a portion of the same
land described above in Lease 1.
INSOFAR AS, AND ONLY INSOFAR AS, THE LEASES DESCRIBED ABOVE COVER THE FOLLOWING
WELLS:
Wells WI NRI
----- -- ---
Ricochet - Culpepper No. 1H Unit Well 100.000% 80.000%
(API #42-163-33480 / RRC ID #16214)
Ricochet - Culpepper No. 2H Unit Well 100.000% 80.000%
(API #42-163-33494 / RRC ID #16115)
JAMES W. CULPEPPER ET AL., LEASES - (3C LEASES)
Lease 1: Oil and Gas Lease dated February 3, 2010, from James Culpepper and
wife, Kat Saunders, as Lessor, to Ricochet Energy, Inc., as Lessee, recorded in
Volume 70, page 765, Official Public Records, Frio County, Texas, covering
657.28 acres of land, more or less, out of the J. E. Roberts Survey No. 2, A-904
and the James Cummings Survey No. 105, A-269, Frio County, Texas.
Lease 2: Oil and Gas Lease dated February 3, 2010, from John Culpepper and wife,
Andrea M. Culpepper, as Lessor, to Ricochet Energy, Inc., as Lessee, recorded in
Volume 70, page 770, Official Public Records, Frio County, Texas, covering
657.28 acres of land, more or less, being the same land described above in Lease
1.
Lease 3: Oil and Gas Lease dated February 3, 2010, from Joe Culpepper, as
Lessor, to Ricochet Energy, Inc., as Lessee, recorded in Volume 75, page 590,
Official Public Records, Frio County, Texas, covering 104.14 acres of land, more
or less, out of the J. E. Roberts Survey No. 2, A-904 and the James Cummings
27
Survey No. 105, A-269, Frio County, Texas, being a portion of the same land
described above in Lease 1.
Lease 4: Oil and Gas Lease dated October 31, 2010, from Tommy J. Muston and
wife, Deborah A. Muston, as Lessor, to Ricochet Energy, Inc., as Lessee,
recorded by Memorandum of Oil and Gas Lease in Volume 83, page 692, Official
Public Records, Frio County, Texas, covering 224.14 acres of land, more or less,
out of the J. E. Roberts Survey No. 2, A-904 and the J. E. Roberts Survey No. 6,
A-905, Frio County, Texas, being a portion of the same land described above in
Lease 1.
INSOFAR AS, AND ONLY INSOFAR AS, THE LEASES DESCRIBED ABOVE COVER THE FOLLOWING
WELLS:
Wells WI NRI
----- -- ---
Ricochet - 3C No. 1H Unit Well 100.000% 79.715823%
(API #42-163-33508 / RRC ID #16225)
Ricochet - 3C No. 2H Unit Well 100.000% 79.715823%
(API #42-163-33563 / RRC ID #16225)
KOTZEBUE LEASE
Oil and Gas Lease dated August 26, 2010, from David W. Kotzebue and wife,
Deborah R. Kotzebue, as Lessor, to Ricochet Energy, Inc., as Lessee, recorded by
Memorandum of Oil and Gas Lease in Volume 79, page 752, Official Public Records,
Frio County, Texas, originally covering 527.33 acres of land, more or less, out
of the J. E. Roberts Survey No. 4, A-903, Frio County, Texas, insofar as and
only insofar as said lease covers 400 acres of land, more or less, being the
retained acreage allocated to the Kotzebue No. 1 Well, as described in that
certain Partial Release of Oil and Gas Lease and Designation of Well Tract dated
effective January 1, 2014, executed by Ricochet Energy, Inc. et al., recorded in
Volume 150, page 793, Official Public Records, Frio County, Texas.
INSOFAR AS, AND ONLY INSOFAR AS, THE LEASE DESCRIBED ABOVE COVERS THE FOLLOWING
WELL:
Wells WI NRI
----- -- ---
Ricochet - Kotzebue No. 1 Well 100.000% 75.000%
(API #42-163-33589 / RRC ID #17063)
EXPRESS RE-ENTRY PROSPECTS
CANTU-HENDERSON UNIT
Ricochet Energy, Inc. - Cantu-Henderson No. 1H Unit, being the pooled unit of
495.17 acres out of the J. Poitevent Survey No. 5, A-559 and the R.M. Harkness
Survey No. 6, A-890, Frio County, Texas, as more particularly described in that
certain Declaration of Unit dated September 24, 2010, executed by Ricochet
Energy, Inc., recorded in Volume 81, page 174, Official Public Records, Frio
County, Texas, pooling the acreage covered by the following described leases.
Lease 1: Oil, Gas and Mineral Lease dated September 17, 2008, from Herlinda G.
Cantu, as Lessor, to Express Oil & Gas, as Lessee, recorded in Volume 57, page
798, Official Public Records, Frio County, Texas, (and also recorded by
Memorandum of Oil and Gas Lease in Volume 57, page 796, Official Public Records,
28
Frio County, Texas), as amended, covering 177.45 acres, more or less, out of the
J. Poitevent Survey No. 5, A-559, Frio County, Texas, all of the 177.45 acres
covered by said lease, as more particularly described therein, being included in
this unit.
Lease 2: Oil, Gas and Mineral Lease dated October 28, 2008, from Winfred
Henderson and wife, Alice A. Henderson, as Lessor, to Express Oil & Gas, Co., as
Lessee, recorded in Volume 60, page 193, Official Public Records, Frio County,
Texas, covering 317.72 acres, more or less, out of the R. M. Harkness Survey No.
6, A-890 in Frio County, Texas and A-1014 in LaSalle County, Texas, all of the
317.72 acres covered by said lease, as more particularly described therein,
being included in this unit.
Lease 3: Oil, Gas and Mineral Lease dated October 28, 2008, from Jimmy
Henderson, as Lessor, to Express Oil & Gas, Co., as Lessee, recorded in Volume
60, page 200, Official Public Records, Frio County, Texas, covering 317.72
acres, more or less, out of the R. M. Harkness Survey No. 6, A-890 in Frio
County, Texas and A-1014 in LaSalle County, Texas, all of the 317.72 acres
covered by said lease, comprising the same lands described above in Lease 2,
being included in this unit.
Lease 4: Oil, Gas and Mineral Lease dated October 28, 2008, from Selfa A. Garza,
joined pro forma by her husband, Tino Garza, as Lessor, to Express Oil & Gas,
Co., as Lessee, recorded in Volume 60, page 180, Official Public Records, Frio
County, Texas, as ratified and amended, covering 317.72 acres, more or less, out
of the R. M. Harkness Survey No. 6, A-890 in Frio County, Texas and A-1014 in
LaSalle County, Texas, all of the 317.72 acres covered by said lease, comprising
the same lands described above in Lease 2, being included in this unit.
Lease 5: Oil, Gas and Mineral Lease dated November 17, 2008, from Linda Green,
joined pro forma by her husband, Ken Green, as Lessor, to Express Oil & Gas,
Co., as Lessee, recorded in Volume 60, page 173, Official Public Records, Frio
County, Texas, covering 317.72 acres, more or less, out of the R. M. Harkness
Survey No. 6, A-890 in Frio County, Texas and A-1014 in LaSalle County, Texas,
all of the 317.72 acres covered by said lease, comprising the same lands
described above in Lease 2, being included in this unit.
Lease 6: Oil, Gas and Mineral Lease dated November 17, 2008, from Larry Myrick,
as Lessor, to Express Oil & Gas, Co., as Lessee, recorded in Volume 60, page
187, Official Public Records, Frio County, Texas, covering 317.72 acres, more or
less, out of the R. M. Harkness Survey No. 6, A-890 in Frio County, Texas and
A-1014 in LaSalle County, Texas, all of the 317.72 acres covered by said lease,
comprising the same lands described above in Lease 2, being included in this
unit.
Lease 7: Oil, Gas and Mineral Lease dated July 10, 2009, from Donna Myrick, as
Lessor, to Express Oil & Gas, as Lessee, recorded by Memorandum of Oil, Gas and
Mineral Lease in Volume 63, page 76, Official Public Records, Frio County,
Texas, covering 317.72 acres, more or less, out of the R. M. Harkness Survey No.
6, A-890 in Frio County, Texas and A-1014 in LaSalle County, Texas, all of the
317.72 acres covered by said lease, comprising the same lands described above in
Lease 2, being included in this unit.
29
Lease 8: Oil, Gas and Mineral Lease dated November 17, 2008, from Janice
Hemphill, as Lessor, to Express Oil & Gas, Co., as Lessee, recorded in Volume
63, page 70, Official Public Records, Frio County, Texas, covering 317.72 acres,
more or less, out of the R. M. Harkness Survey No. 6, A-890 in Frio County,
Texas and A-1014 in LaSalle County, Texas, all of the 317.72 acres covered by
said lease, comprising the same lands described above in Lease 2, being included
in this unit.
INSOFAR AS, AND ONLY INSOFAR AS, THE LEASES DESCRIBED ABOVE COVER THE FOLLOWING
WELL:
Wells WI NRI
----- -- ---
Ricochet - Cantu-Henderson No. 1H Unit Well 100.000% 77.042448%
(API #42-163-33426 / RRC ID #12392)
HARRIS LEASE
Oil, Gas and Mineral Lease dated January 13, 1976, from William Donald Harris
and wife, Mary Ann Harris, as Lessor, to Charles R. Stubblefield, as Lessee,
recorded in Volume 342, page 485, Deed Records, Frio County, Texas, covering
735.00 acres, more or less, out of the William Webber Survey, A-668 and the G.B.
Pilant Survey, A-540, Frio County, Texas, insofar as and only insofar as said
lease covers 281.4 acres of land, more or less, around the Ricochet Energy, Inc.
- Harris No. 2 and Harris No. 3 Wells (but expressly excluding the well and
wellbore for the Express Oil & Gas - Harris #4 Well [API # 42-163-32691]) in
Frio County, Texas.
INSOFAR AS, AND ONLY INSOFAR AS, THE LEASE DESCRIBED ABOVE COVERS THE FOLLOWING
WELLS:
Wells WI NRI
----- -- ---
Ricochet - Harris No. 2 Well 90.000% 67.500%
(API #42-163-32604 / RRC ID #15063)
Ricochet - Harris No. 3 Well 90.000% 67.500%
(API #42-163-32647 / RRC ID #15063)
W.S. SHAFFER AND W.S. SHAFFER -B- LEASES
Oil, Gas and Mineral Lease dated September 9, 1958, from W.S. Shaffer and wife,
E.S. Shaffer, as Lessors to J.R. McLean, as Lessee, recorded in Volume 574, page
186, Deed Records, Taylor County, Texas, covering the following tracts:
Tract 1
Being 314.80 acres of land situated in Taylor County, Texas, and being the North
Half of Survey No. 12, Certificate No. 17/368, Block No. 3, S. P. RR Company
Lands, and being the same land described by metes and bounds in a Patent from
30
the State of Texas to J. L. Pierce, dated April 12, 1951, recorded in Volume
G-2, Page 143, of the Patent Records of Taylor County, Texas.
Tract 2
Being 167.5 acres, more or less, out of Survey No. 6, Certificate No. 4508, G.
C. & S. RR Company Lands in Taylor County, Texas being described as follows,
to-wit:
BEGINNING at the Northwest corner S. F. 15185, W. S. Shaffer Survey No. 1;
THENCE South 15(degree)East with the West line S.F. 15185, 2,293 varas, to
fence;
THENCE in a westerly direction with said fence to an inner corner of said G. C.
& S. RR Company Survey No. 6;
THENCE North 15(degree)West with a west line of said G. C. & S. RR Company
Survey No. 6, 2,152.2 varas to the South line of a tract owned by Sayles;
THENCE North 75o 25' East 425.6 varas with a fence to the place of beginning.
INSOFAR AS, AND ONLY INSOFAR AS, THE LEASE DESCRIBED ABOVE COVERS THE FOLLOWING
WELLS:
Wells WI NRI
----- -- ---
Baron - W.S. Shaffer -B- #3 75.000% 56.250%
(API #42-441-81191 / RRC ID #11127)
Baron - W.S. Shaffer -B- #4 75.000% 56.250%
(API #42-441-81192 / RRC ID #11127)
W.S. SHAFFER -C- LEASE
Oil, Gas and Mineral Lease dated April 30, 1970, from M.C. Shaffer, et al, as
Lessors to J.D. Tompkins, as Lessee, recorded in Volume 880, page 501, Deed
Records, Taylor County, Texas, covering all of the W.S. Shaffer Survey No. 1,
S.F. 15185, Patented to W.S. Shaffer by the State of Texas on June 11, 1951, by
Patent No. 475, Volume 17-B, and containing 136.55 acres, more or less.
INSOFAR AS, AND ONLY INSOFAR, AS THE LEASE DESCRIBED ABOVE COVERS THE FOLLOWING
WELL:
Wells WI NRI
----- -- ---
Baron - W.S. Shaffer -C- #1 75.000% 56.250%
(API #42-441-30235 / RRC ID #11495)
31
SCHEDULE 1
SCHEDULED QUANTITIES (IN BARRELS)
VPP Delivery Period VPP Scheduled Quantities, in Barrels
------------------- ------------------------------------
August 2014 2,500
September 2014 2,500
October 2014 2,500
November 2014 2,500
December 2014 2,500
January 2015 2,500
February 2015 2,500
March 2015 2,500
April 2015 2,500
May 2015 2,500
June 2015 2,500
July 2015 2,500
August 2015 2,500
September 2015 2,500
October 2015 2,500
November 2015 2,500
December 2015 2,500
January 2016 2,500
February 2016 2,500
March 2016 2,500
April 2016 2,500
May 2016 2,500
June 2016 2,500
July 2016 2,500
32
VPP Delivery Period VPP Scheduled Quantities, in Barrels
------------------- ------------------------------------
August 2016 2,500
September 2016 2,500
October 2016 2,500
November 2016 2,500
December 2016 2,500
January 2017 2,500
February 2017 2,500
March 2017 2,500
April 2017 2,500
May 2017 2,500
June 2017 2,500
July 2017 2,500
33
SCHEDULE 2
FIELD PRICE FOR OIL
The "Field Price" of Oil for each Month means the final settlement price per
Barrel on the date of expiry of the applicable West Texas Intermediate Crude Oil
Futures Contract for Cushing, Oklahoma Delivery traded on the New York
Mercantile Exchange for such Month. For example, the Field Price for the Month
of September 2014 will be the final settlement price on August 21, 2014 of the
contract that expires on August 30, 2014
34