Exhibit 10.2

PARTICIPATION AGREEMENT
 

[REDACTED]

This Participation Agreement (“Agreement”) is made and entered into effective as
of the 1st day of July, 2008 (the "Effective Date"), by and between Newfield
Exploration Company (“Newfield”) and Ridgewood Energy Corporation (“Ridgewood”).
Newfield and Ridgewood are also sometimes hereinafter referred to collectively
as the “Parties” or individually as a “Party”.

WITNESSETH:

WHEREAS, Newfield owns 100% record title interest in [REDACTED] and Ridgewood
would like to participate in the drilling of the [REDACTED] No. 1 Well.

WHEREAS, the Agreement covers the following oil and gas lease and area,
hereinafter referred to as the “Contract Area”:

Oil and Gas Lease effective March 1, 2008 by and between the United States of
America as Lessor, and Newfield Exploration Company, as Lessee, covering all of
[REDACTED], containing approximately 4963.08 acres.

           WHEREAS, Ridgewood agrees to bear a disproportionate share of
drilling costs associated with the Test Well (defined in Article 4 hereinbelow)
in order to earn an interest in the Contract Area, pursuant to the terms and
conditions of this Agreement.

WHEREAS, the Parties desire to enter into this Agreement to set forth the manner
in which the cost of drilling, producing and operating wells, and the production
from the Contract Area and interest in the Contract Area shall be shared and/or
owned.

NOW, THEREFORE, for the consideration, being the mutual benefits and advantages
accruing hereunder, the sufficiency of which is hereby acknowledged, the Parties
agree as follows:

Article 1 – Interest of the Parties

The costs, risk and liabilities associated with the exploration and development
of the Contract Area (including all wells, platforms, pipelines, facilities and
equipment associated directly with the specified operations herein) and all oil
and gas produced from wells drilled pursuant to the terms hereof, shall be borne
and owned, subject to the terms and conditions set out herein, and unless
otherwise agreed, by the Parties in accordance with the following percentage
working interests (“Working Interests”):

 

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  Party   Working Interests     Newfield   60.00000%     Ridgewood  40.00000%*  

* Subject to an obligation to pay a disproportionate share of Test Well costs,
as further described in Article 3.

                    

Article 2 - Operating Agreement

2.1     Newfield is designated as the Operator of the Contract Area, and all
operations conducted on the Contract Area shall be performed in accordance with
and shall be subject to the terms and provisions of this Agreement, and the
Operating Agreement attached hereto as Exhibit “A” (“Operating Agreement”). The
Parties shall execute the Operating Agreement simultaneously with this
Agreement.

2.2     Notwithstanding anything herein to the contrary, the non-consent
penalties set forth in Article 13 of the Operating Agreement shall not be
applicable to drilling operations on the Test Well, or substitute therefore,
prior to the Parties drilling an Earning Well (as hereinafter defined).

Article 3 - Test Well

3.1      Newfield will commence drilling operations for the [REDACTED] No. 1
Well (“Test Well”) on or before December 1, 2008. The Test Well is planned to be
drilled in accordance with Newfield’s AFE No. 16964 attached hereto as Exhibit
“B” (“AFE”). The Test Well will be drilled to an approximate depth of 17,254’ MD
17,000 TVD, or a depth sufficient to test the “Cib Op Sands”, whichever depth is
shallower (“Contract Depth”).

            3.2     As additional consideration for the opportunity to earn its
Working Interest in the Contract Area, the Parties will pay the following
percentages of the costs to drill the Test Well to Casing Point (as described in
Article 3.3 below):

  Newfield   40.00000%     Ridgewood 60.00000%  

 

The dry hole well cost for the Test Well is estimated to be $30,227,466.00 (“Dry
Hole Cost”) as outlined on the above referenced drilling AFE. Ridgewood’s
disproportionate cost sharing will cease once cumulative costs and expenses for
the Test Well, and if drilled, the substitute well therefore, exceeds 110% of
$23,500,000.00 as outlined in Letter Agreement dated February 12, 2008 or upon
reaching Casing Point, whichever occurs first. Thereafter Newfield will bear its
60% and Ridgewood will bear its 40% share of subsequent costs, subject to the
non-consent rights set out in the Operating Agreement.

 

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Additionally, within 10 days prior to spud, but no earlier, Newfield shall
invoice Ridgewood and Ridgewood shall timely pay its proportionate share of
lease sunk costs equal to $1,611,560.00 ($4,028,900.00 x 40.00% Working
Interest).

3.3     Casing Point is defined as that point in time when the Test Well, or
substitute well therefor, has been drilled to the Contract Depth, and all
open-hole logs and all appropriate tests have been performed and delivered to
the Parties, and a recommendation is made to (i) set casing and complete the
well, (ii) plug and abandon the well or (iii) conduct other operations as
provided within the priority of operations outlined within the Operating
Agreement.

3.4     If the Test Well is either, i) unable to reach the Contract Depth due to
encountering domal material, heaving shale, saltwater, salt or other
impenetrable substance, or suffers any adverse condition (mechanical,
structural, stratigraphic or otherwise) in drilling said well, which substance
or condition cannot be overcome at a reasonable cost by means considered
customary or ordinary in the industry; or, ii) plugged and abandoned as a dry
hole, then any Party shall have the right to propose a substitute well in the
same manner as provided for hereinabove. Ridgewood shall have the option, but
not the obligation, to participate in such substitute well; however, if
Ridgewood elects not to participate in a substitute well, it shall forfeit its
rights under this Agreement. If actual drilling operations are commenced on the
substitute well within ninety (90) days from the date of rig release of the Test
Well, then said well shall be considered the Test Well for purposes of this
Agreement.

Article 4 - Assignment and Assumption of Rights

            4.1     Upon Ridgewood’s participation pursuant to the terms and
conditions set forth herein and upon the Parties drilling the Test Well or its
substitute, reaching Contract Depth, Ridgewood will have earned under the
Agreement and shall receive from Newfield an assignment of an undivided 40%
working interest in the Contract Area, in the form attached hereto as Exhibit C.

4.2     The interest assigned to Ridgewood pursuant hereto will be subject to
its proportionate share of the federal 1/6th royalty and a proportionately
reduced 2% ORRI in favor of Newfield Exploration Company. The interest shall be
free and clear of any other overriding royalty interest, production payments, or
other burdens on production.

Article 5 - Ownership of Production

Production from each well drilled on the Contract Area will be owned pursuant to
the terms of this Agreement and the Operating Agreement.

Article 6 - Insurance

In connection with any drilling and/or production operations on the Contract
Area, the Operator shall carry the type and amount of insurance required by the
Operating Agreement. No other insurance shall be required of the Operator
hereunder.

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Article 7 - Confidentiality

Except for required disclosures, including but not limited to disclosures to
governmental agencies and/or stock exchanges, as provided in the Operating
Agreement, no Party shall release any geological, geophysical, or reservoir
information or any logs or other information pertaining to the progress, tests,
or results of any well drilled pursuant to this Agreement, without the prior
approval of the other Party.

Article 8 - Conflicts

In the event of any conflict between the terms and conditions as set forth
herein and the terms and conditions set forth in the Operating Agreement, the
terms and condition set forth herein shall control.

Article 9 - Notices

          All notices, requests or demands to be given under this Agreement
shall be in writing and shall be deemed to have been given (i) three (3)
business days after being sent by registered mail or certified mail, postage
prepaid, or (ii) on the day sent, if hand delivered or sent by facsimile, with
receipt confirmed and verbal confirmation, in each case addressed as follows or
to such other address as may have been furnished in writing to the other Parties
hereto in accordance herewith:

  If to Newfield:   If to Ridgewood:     Newfield Exploration Company  
Ridgewood Energy Corporation     363 N. Sam Houston Pkwy. E., Suite 2020   11700
Old Katy Road, Suite 280     Houston, Texas 77060   Houston, Texas 77079    
Attention:  Ms. Christina Linscomb   Attn:  Mr. W. Greg Tabor     Office Phone:
 (281) 847-6074   Office Phone:  (281) 293-8449     Fax Number:    (281)
405-4207   Fax Number:    (281) 293-7705  

Article 10 - Topical Headings

Topical headings appearing at the top of each numbered article have been
inserted for convenience only and are to be given no force or affect whatsoever
in the interpretation of this Agreement.

Article 11 - Successors and Assigns

This Agreement shall be binding upon each Party and their successors and
assigns. An assignment by a Party of any lands affected by this Agreement shall
be made expressly subject to, and the assignee shall expressly agree to assume
and comply with, the terms and provisions of this Agreement and the Operating
Agreement.

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Article 12 - Counterpart Execution

This Agreement may be executed by signing the original or a counterpart thereof.
If this Agreement is executed in counterparts, all counterparts taken together
shall have the same effect as if all the Parties had signed the same instrument.
However, this Agreement shall not be effective as to any Party, until it has
been executed by all Parties.

IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the
Effective Date hereinabove first written.

WITNESSES: NEWFIELD EXPLORATION COMPANY           By:  

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    Name: W.M. Blumenshine

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  Title: Vice President - Land         WITNESSES:   RIDGEWOOD ENERGY CORPORATION
        By:  

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    Name: W. Greg Tabor

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  Title: Executive Vice President

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