EXHIBIT 10.2

MANAGEMENT SERVICES AGREEMENT

This MANAGEMENT SERVICES AGREEMENT (this “Agreement”), dated as of June 1, 2020
(the “Execution Date”) but effective for all purposes as of July 1 , 2020 (the
“Effective Date”), is being entered into by and between CONTANGO RESOURCES,
INC., a Texas corporation (“Services Provider”), and MID-CON ENERGY PARTNERS,
LP, a Delaware limited partnership (“MLP”).  Services Provider and MLP may be
referred to collectively as the “Parties” or individually as a “Party.”

 

RECITALS

 

 

A.

Services Provider is a wholly owned subsidiary of Contango Oil & Gas Company, a
Texas corporation.  

 

B.

Subject to the terms hereof, MLP desires to have Services Provider perform, and
Services Provider desires to perform, the Services (as defined herein) pursuant
to and in accordance with the terms of this Agreement; and

 

C.

Services Provider represents that it is capable of performing the Services for
MLP on the terms and conditions set forth herein.

 

THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Parties agree as follows:

Article 1
definitions and principles of interpretation

 

1.1

Definitions

As used in this Agreement, the following capitalized terms have the meanings set
forth below:

“Additional Service” has the meaning set forth in Section 2.6(b).

“AFE” means an authorization for expenditure for capital expenditures with
respect to the Properties.

“Affiliate” means with respect to a Person, any Person which, directly or
indirectly, controls, is controlled by or is under common control with such
Person or such Person's members, shareholders or unit holders.  For purposes of
this definition, (i) “control” means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of
such individual or entity, whether through ownership of voting securities, by
contract or otherwise and (ii) Services Provider shall not be deemed an
Affiliate of MLP or any of its Subsidiaries, and none of MLP or any of its
Subsidiaries shall be deemed an Affiliate of Services Provider.

“Agreement” has the meaning set forth in the preamble.

“Applicable Contracts” means (a) any existing Contracts disclosed or made
available to Services Provider, (b) the Existing Arrangements disclosed or made
available to Services Provider, and (c) all other

 

 

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Contracts entered into by or on behalf of MLP pursuant to the terms of this
Agreement.

“Audit Period” has the meaning set forth in Section 3.4(b).

“Bankruptcy” means, with respect to any Person:  (a) the filing by such Person
of a voluntary petition seeking liquidation, reorganization, arrangement or
readjustment, in any form, of its debts under the U.S. Bankruptcy Code (or
corresponding provisions of future Laws) or any other insolvency Law, or a
Person’s filing an answer consenting to or acquiescing in any such petition; (b)
the making by such Person of any assignment for the benefit of its creditors or
the admission by a Person of its inability to pay its debts as they mature; or
(c) the expiration of 120 days after the filing of an involuntary petition under
the U.S. Bankruptcy Code (or corresponding provisions of future Laws) seeking an
application for the appointment of a receiver for the assets of such Person, or
an involuntary petition seeking liquidation, reorganization, arrangement or
readjustment of its debts under any other insolvency Law, unless the same shall
have been vacated, set aside or stayed within such 120-day period.

“Budget” means the estimated cost and expenses to perform the Services under
this Agreement for the Term or Renewal Term, as applicable.

“Budget Amendment” has the meaning set forth in Section 3.1.

“Business Day” means any day, other than a Saturday or Sunday, that commercial
banks in Houston, Texas and Oklahoma City, Oklahoma are open for business.

“Claims” means all claims, damages, liabilities, losses, demands, liens,
encumbrances, cause of action of any kind or nature, obligations, costs,
expenses, judgments, interest and awards (including payment of attorneys’ fees
and costs of litigation) or amounts, of any kind or character (excluding any
fines and penalties), whether created by law, contract, tort, voluntary
settlement or otherwise, or under judicial proceedings or otherwise, or
conditions in the premises of or attributable to any Person or Persons or any
Party, directly or indirectly arising out of, or incident to or in connection
with this Agreement, or the performance, defective performance or
non-performance of the Services or any obligation under this Agreement.

“Change in Control” means any direct or indirect change in control of a Person
(whether through merger, sale of shares or other equity interests, or
otherwise), resulting in a change of least 50% or more of the combined voting
power of a Person’s then outstanding securities, through a single transaction or
series of related transactions, from one or more transferors to one or more
transferees. Notwithstanding any provision to the contrary herein, a “Change in
Control” shall not be deemed to have occurred if a Person transfers or
distributes any securities of the Company or any or all of its assets to any
of its Affiliates, subsidiaries, parents, stockholders, members or other
interest holders.

“Common Units”  means common units representing limited partner interests in
MLP.

“Confidential Information” has the meaning set forth in Section 5.1.

“Conflicts Committee”  has the meaning given to such term in the Third Amended
and Restated Agreement of Limited Partnership of MLP dated June 1, 2020.

“Contango” means Services Provider or its Affiliate.

“Contract” means any written or oral: contract; agreement; agreement regarding
indebtedness; indenture; debenture; note, bond or loan; collective bargaining
agreement; mortgage; license agreement; farmin or farmout agreement;
participation, exploration or development agreement; crude oil, condensate or
gas purchase and sale, gathering, processing, transportation or marketing
agreement; operating

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agreement; balancing agreement; unitization agreement; facilities or equipment
lease; production handling agreement; or other similar contract, but in each
case specifically excluding, however, any Lease, right-of-way, permit or other
instrument (other than acquisition or similar sales or purchase agreements)
creating, evidencing or assigning any interest in any Property that constitutes
real property or any other property related to or used or held for use in
connection with the operation of any Property.  

“Default Notice” has the meaning set forth in Section 4.2(c)(i).

“Direct Charges” has the meaning set forth in Section 3.2(a).

“Due Date” has the meaning set forth in Section 3.2(b).

“Effective Date” has the meaning set forth in the preamble.

“Emergency” has the meaning set forth in Section 2.1(c).

“Excluded Charges” has the meaning set forth in Section 3.2(a).

“Execution Date” has the meaning set forth in the preamble.

“Existing Arrangements” means all gathering, processing, fractionation,
transportation, and/or marketing agreements to which MLP (or an Affiliate of
MLP) is a party and to which Hydrocarbon production from the Properties is or
will be subject.

“Force Majeure” means, with respect to the Party claiming Force Majeure under
this Agreement, any natural phenomena that such Party could not reasonably
control, or prevent or any human event or a combination of human events that
such Party could not reasonably control or prevent, which phenomena or events
prevent such Party from performing its obligations under this Agreement.  Force
Majeure events shall include the following: (a) a failure of performance of any
Third Party, (b) acts of a public enemy, war or threat of war (declared or
undeclared) occurring in or involving the United States, revolution, riot,
rebellion, insurrection, military or usurped power, state of siege, declaration
of a state of emergency or martial law (or any of the events or circumstances
that will or may result in the declaration of a state of emergency or martial
law), civil commotion, act of terrorism, vandalism or sabotage (in each case
occurring in or involving the United States), embargo or blockade, declaration
of public calamity (or any of the events or circumstances that will or may
result in the declaration of public calamity); (c) politically motivated or
otherwise widespread strikes, suspensions, interruptions, work slow-downs or
other labor disruptions; (d) explosions, chemical or radioactive contamination
or ionizing radiation; (e) air crashes, objects falling from aircraft not
otherwise attached to a parachute, pressure waves caused by aircraft or aerial
devices traveling at supersonic speed; or (f) epidemics (provided, however, that
Services Provider represents that, as of the Effective Date, its ability to
provide the Services is not currently limited in any material respect as a
result of the current novel corona virus (COVID-19)), meteorites, fire,
lightning, earthquake, cyclone, hurricane, flood, or other unusual or extreme
adverse weather or environmental condition or action of the elements.  A Party’s
inability economically to perform its obligations hereunder does not constitute
an event of Force Majeure.

“GAAP” means United States generally accepted accounting principles.

“General Partner”  means Mid-Con Energy GP, LLC, a Delaware limited liability
company.  

“Governmental Authority” means any federal, state, county, parish, municipal or
other governmental subdivision, or any court or any governmental department,
commission, board, bureau, agency or other instrumentality of any federal,
state, county, municipal or other governmental subdivision within the United
States with authority over the Parties and subject matter in question.

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“Hydrocarbons” means oil, gas, casinghead gas, drop gasoline, natural gasoline,
condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and all
products refined or separated therefrom.

“Indemnified Party” has the meaning set forth in Section 8.2(a).

“Indemnifying Party” has the meaning set forth in Section 8.2(a).

“Initial Term” has the meaning set forth in Section 4.1.

“Invoice” has the meaning set forth in Section 3.2(b).

“Law” means any applicable statute, law, principle of common law, rule,
regulation, judgment, order, ordinance, requirement, code, writ, injunction, or
decree of any Governmental Authority, including the Occupational Safety and
Health Administration, the Environmental Protection Agency, the U.S. Federal
Energy Regulatory Commission, the U.S. Department of Transportation and the
Department of Homeland Security.

“Leases” means the oil and gas leases owned by MLP, together with any overriding
royalty interests, mineral fee interests, working interests, net profits
interests, carried interests, operating interests, reversionary interests or
other estates, and all other right, title and interest of MLP in and to the
leasehold estates created thereby and subject to the terms, conditions,
covenants and obligations set forth in the applicable instruments

“Marketing Services” has the meaning set forth in Section 6.1(a).

“MLP” has the meaning set forth in the preamble.

“MLP Indemnified Party” has the meaning set forth in Section 8.1(a).

“Modification” has the meaning set forth in Section 6.1(b).

“Month” means a period of time beginning at 12:01 a.m., Central Time (adjusted
for Central Daylight Time) on the first day of a Month and ending immediately
prior to 12:01 a.m., Central Time on the first day of the next succeeding Month.

“Monthly Services Fee” has the meaning set forth in Section 3.2(a).

“Operating Agreements” means the joint operating agreements, unit operating
agreements and similar operating agreements burdening or relating to the
Properties under which Services Provider serves as the “Operator” for the
benefit of MLP and the other working interest owners party thereto.

“Overdue Rate” means the rate per annum equal to the lesser of (i) 4% plus the
prime rate specified under the caption “Money Rates” in the Wall Street Journal
on the date that the applicable payment was required to have been made and (ii)
the maximum rate permitted by applicable Laws.

“Party” or “Parties” has the meaning set forth in the preamble.

“Person” means any individual, firm, corporation, trust, partnership, limited
liability company, association, joint venture, other business enterprise or
Governmental Authority.

“Properties” means, collectively, the Leases, Units and Wells owned by MLP or
its Subsidiaries as of the Effective Date and all other Leases, Units and Wells,
or any interests therein, acquired by or on

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behalf of MLP during the Term that Services Provider has agreed in writing to
provide Services with respect thereto.

“Reasonable and Prudent Services Provider” has the meaning set forth in Section
2.2.

“Renewal Term” has the meaning set forth in Section 4.1.

“Resigning Directors” means C. Fred Ball, Jr., John W.  Brown, Peter A. Leidel,
Charles R. Olmstead, Jeffrey R. Olmstead and Cameron O. Smith.

“Resigning Directors Released Parties” has the meaning set forth in Section 8.4.

“Service Charges” has the meaning set forth in Section 3.2(a).

“Services” means the services, functions and tasks of Services Provider as set
forth in the Services Schedule, subject to the exceptions set forth on that
Services Schedule.

“Services Provider” has the meaning set forth in the preamble.

“Services Provider Indemnified Party” has the meaning set forth in Section
8.1(b).

“Services Schedule” means the schedule of services attached hereto as Exhibit A,
as amended from time to time in accordance with Section 2.6.

“Subsidiary” means, with respect to any Person, any corporation, limited
liability company, partnership, association, or business entity, whether
incorporated or unincorporated, of which (a) if a corporation, a majority of the
total voting power of shares of stock entitled (without regard to the occurrence
of any contingency) to vote in the election of directors, managers, or trustees
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more Subsidiaries of that Person or a combination thereof, (b)
if a partnership (whether general or limited), a general partner interest is at
the time owned or controlled, directly or indirectly, by that Person or one or
more Subsidiaries of that Person or a combination thereof or (c) if a limited
liability company, partnership, association, or other business entity (other
than a corporation), a majority of partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
that Person or one or more Subsidiaries of that Person or a combination
thereof.  For purposes hereof, a Person or Persons shall be deemed to have a
majority ownership interest in a limited liability company, partnership,
association, or other business entity (other than a corporation) if such Person
or Persons shall be allocated a majority of limited liability company,
partnership, association, or other business entity gains or losses.

“Surface Contracts” means all permits, licenses, servitudes, easements, fee
surface, surface leases, other surface rights and rights-of-way related to the
use or operation of the Properties owned or acquired by MLP with respect to the
operation of the Properties.

“Term” has the meaning set forth in Section 4.1.

“Termination Payment” has the meaning set forth in Section 3.2(a).

“Third Party” means any Person that is not a Party or an Affiliate of a Party.

“True-Up Statement” has the meaning set forth in Section 3.2(b).

“True-Up Statement Due Date” has the meaning set forth in Section 3.2(b).

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“TSA” has the meaning set forth in Section 2.5(c).

“Units” means all rights, interests in, under or derived from all unitization,
spacing, communitization and pooling orders, declarations and agreements in
effect with respect to any of the Leases and the units created thereby

“Well” means all oil and gas wells located on any of the Leases or Units
together with the other Hydrocarbon, water, observation, CO2, disposal and
injection wells owned or controlled by MLP or its Subsidiaries.

1.2

Certain Rules of Interpretation

In this Agreement:

 

(a)

The Article and Section headings contained in this Agreement are solely for the
purpose of reference, are not part of the agreement of the Parties and shall not
in any way affect the meaning or interpretation of this Agreement.

 

(b)

Unless otherwise specified in this Agreement or the context otherwise requires:
(i) the words “hereof,” “herein” and “hereunder” and words of similar import,
when used in this Agreement, shall refer to this Agreement as a whole and not to
any particular provision of this Agreement; (ii) any reference to the masculine,
feminine or neuter gender shall include all genders, the plural shall include
the singular and the singular shall include the plural; (iii) all Preamble,
Recital, Article, Section, clause and Exhibit references used in this Agreement
are to the preamble, recitals, articles, sections, clauses, schedules and
exhibits to this Agreement; (iv) wherever the word “include,” “includes” or
“including” is used in this Agreement, it shall be deemed to be followed by the
words “without limitation;” (v) the terms “date hereof” and “date of this
Agreement” mean the date first written above; (vi) with respect to the
determination of any period of time, the word “from” means “from and including”
and the words “to” and “until” each means “to but excluding”; (vii) (A) any
reference to “days” means calendar days unless Business Days are expressly
specified and (B) any reference to “months” or “years” shall mean Months or
calendar years, respectively, in each case unless otherwise expressly specified;
(viii) the word “extent” in the phrase “to the extent” shall mean the degree to
which a subject or other thing extends and such phrase shall not mean simply
“if”; and (ix) each accounting term not otherwise defined in this Agreement has
the meaning commonly applied to it in accordance with GAAP.

 

(c)

Unless otherwise specified in this Agreement, any deadline or time period set
forth in this Agreement that by its terms ends on a day that is not a Business
Day shall be automatically extended to the next succeeding Business Day.

 

(d)

Unless otherwise specified in this Agreement or the context otherwise requires,
all references to any (i) statute in this Agreement include the rules and
regulations promulgated thereunder and all applicable, guidance, guidelines,
bulletins or policies issued or made in connection therewith by a Governmental
Authority, and (ii) Law in this Agreement shall be a reference to such Law as
amended, re-enacted, consolidated or replaced as of the applicable date or
during the applicable period of time.

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(e)

Unless otherwise specified in this Agreement, all references in this Agreement
to (i) any contract, other agreement, document or instrument (excluding this
Agreement) mean such contract, other agreement, document or instrument as
amended, supplemented or otherwise modified from time to time in accordance with
the terms thereof and, unless otherwise specified therein, include all
schedules, annexes, addendums, exhibits and any other documents attached thereto
or incorporated therein by reference, and (ii) this Agreement mean this
Agreement as amended, supplemented or otherwise modified from time to time in
accordance with its terms.

 

(f)

With regard to each and every term and condition of this Agreement, the Parties
understand and agree that the same have or has been mutually negotiated,
prepared and drafted, and that if at any time the Parties desire or are required
to interpret or construe any such term or condition or any agreement or
instrument subject thereto, no consideration shall be given to the issue of
which Party actually prepared, drafted or requested any term or condition of
this Agreement.

Article 2
performance of services

 

2.1

Services; Procurement of Goods and Services; Meetings

 

(a)

During the Term, Services Provider shall provide (directly or through its
Affiliates) to MLP or its Subsidiaries, or, with the prior written approval of
MLP, shall cause another Person to provide to MLP or its Subsidiaries, the
Services set forth on Exhibit A hereto.

 

(b)

To the extent that Services Provider is permitted to arrange for contracts with
any Third Party for goods or services in connection with the provision of
Services, Services Provider shall use commercially reasonable efforts (i) to
obtain such goods and services at rates competitive with those otherwise
generally available in the area in which services or materials are to be
furnished, and (ii) to obtain from such Third Party such customary warranties
and guarantees as may be reasonably required with respect to the goods and
services so furnished.

 

(c)

Services Provider shall take any and all actions as appropriate for a Reasonable
and Prudent Services Provider (as defined herein) in response to an imminent
emergency relating to the Properties that may endanger property, lives or the
environment and requires immediate action to address such dangers (each such
event, an “Emergency”). In such event, Services Provider may take such steps and
incur such costs and expenses that, in Services Provider’s reasonable opinion,
are required to deal with such Emergency as a Reasonable and Prudent Services
Provider, including the safeguarding of life, property and the environment.  In
such event, Services Provider shall use commercially reasonable efforts to
notify MLP of the existence or occurrence of such an Emergency as soon as
reasonably practicable after the occurrence of such Emergency, but in any event
within twenty-four (24) hours of its being put on notice of such Emergency,
setting forth the nature of the Emergency, the corrective action taken or
proposed to be taken, and the actual or estimated cost and expense associated
with such corrective action

 

(d)

Notwithstanding anything to the contrary, nothing shall require Services
Provider to (i) other than with respect to the reports, financial information
and other information to be provided by Services Provider under the express
terms hereunder (including such reports and information identified on Exhibit B
hereto), provide records, financial information, or other information which is
not kept or reported by Services Provider in connection with its respective
assets in the ordinary course of business, (ii) except to the extent necessary
to

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perform the Services and without limiting MLP’ rights and remedies in Section
4.2, hire any new employees or retain any existing employees, or (iii) advance
its own funds in the performance of the Services.  

 

(e)

Representatives of Services Provider and MLP shall meet telephonically, or
otherwise at a mutually agreeable location, no less than once per Month on a
mutually agreeable day and time to discuss the Services performed by Services
Provider, the past, current or future operation and development of the
Properties and/or any other matters with respect to the Properties or the
business of MLP reasonably requested by MLP.

2.2

General Standard of Performance

In performing the Services, Services Provider shall provide (and, to the extent
applicable, cause another Person to provide) the Services, subject to the
limitations and restrictions set forth in this Agreement, (a) using no less than
a reasonable level of care in accordance with standards in the oil and gas
industry for performing services similar in scope and nature to the Services;
(b) in a timely manner; (c) using at least the same level of care, quality,
timeliness and skill in providing the Services as Services Provider’s past
practice in performing like services in connection with its and its Affiliates’
respective assets; (d) in accordance with the terms of this Agreement and its
obligations hereunder; (e) in material compliance with the terms of all
applicable Leases, Applicable Contracts, Surface Contracts, and similar
agreements affecting the Properties and/or this Agreement, and (f) in compliance
with all Laws (performance in accordance with clauses (a) through (f) of this
Section 2.2 is referred to herein as acting as a “Reasonable and Prudent
Services Provider”).

2.3

Limitation on Services and Services Provider’s Authority

 

(a)

Subject to MLP’s compliance with its obligations under this Agreement, Services
Provider shall not incur any liens, encumbrances or charges upon or against any
of the Properties arising from the provision of Services or materials under this
Agreement except for inchoate liens and customary liens in favor of service
providers, incurred in the ordinary course of business, or as expressly approved
or consented to in writing by MLP.

 

(b)

If Services Provider or any of its Subsidiaries or Affiliates used or licensed
intellectual property owned by any Third Party immediately prior to the
Effective Date that Services Provider deems necessary (in its sole discretion)
to perform the Services, Services Provider shall, at MLP’s cost, maintain any
such licenses and authorizations solely to the extent necessary to authorize
Services Provider’s continued use of such intellectual property (directly or
indirectly) in performing the Services; provided, however, with respect to
intellectual property not used or licensed by Services Provider or any of its
Subsidiaries or Affiliates immediately prior to the Effective Date, Services
Provider shall not be obligated to secure or otherwise obtain any such licenses
or authorizations from any Third Party.

 

(c)

Neither Services Provider nor any Affiliate of Services Provider shall be deemed
to have any direct or indirect ownership interest in the Properties (or in any
equipment, materials and other property related thereto and purchased by MLP
either directly or on behalf of MLP by Services Provider or any of its
Affiliates) by virtue of its role as “Services Provider” hereunder or as a
result of the terms of this Agreement.

 

(d)

Notwithstanding anything herein to the contrary, without the prior written
consent of MLP, Services Provider shall not:  

 

(i)

cause or direct MLP to enter into any Contract (or make any material
modifications, amendments or extensions thereto) (i) with any Affiliate of
Services

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Provider or (ii) with any Third Party, to the extent any such Third-Party
Contract is likely to result in annual obligations of MLP in excess of $100,000,
in the aggregate;

 

 

(ii)

cause or direct MLP to incur or guarantee any indebtedness for borrowed money;

 

 

(iii)

unless otherwise permitted under this Section 2.3, encumber, hypothecate,
mortgage, burden, or otherwise impair the Properties in any respect, or do any
act  that has the natural and foreseeable consequence of causing any of the
foregoing;

 

 

(iv)

sell, assign, transfer, surrender or relinquish or farm out the Properties with
a fair market value reasonably estimated by Services Provider to exceed $100,000
excluding (i) the sale of equipment no longer used or useful in connection with
the operation of the Properties, and (ii) the sale or marketing of Hydrocarbon
production attributable to Properties consistent with the terms of this
Agreement;

 

 

(v)

purchase or acquire for MLP’s account any additional interests of any kind in
oil, gas or other minerals for a cash purchase price or any other consideration
in excess of $50,000;

 

 

(vi)

propose any operation reasonably expected to cost MLP in excess of (i) $50,000
on any individual operation or (ii) $150,000 in the aggregate for all operations
proposed by Services Provider in any Month;

 

 

(vii)

approve any individual AFE or similar request under any Contract (other than
those required under the terms of any Contract) which would reasonably be
estimated to require expenditures in excess of (i) $50,000 on any individual
operation or (ii) $150,000 in the aggregate for all AFEs or similar requests in
any Month;

 

 

(viii)

terminate or voluntarily relinquish any material permit from any Governmental
Authority in respect to the Properties or participate in or acquiesce to any
material variation or cancellation of the same;

 

 

(ix)

make any regulatory or other filings of any kind with any Governmental Authority
that could reasonably be expected to materially adversely affect MLP’s ownership
or use of, and the ability to operate, the Properties, except as required by
applicable Laws;

 

 

(x)

abandon Wells, dismantle or decommission material personal property, close pits
located on the real property that comprises the Properties or restore the
surface of such Wells, personal property and pits, except as required by
applicable Laws or Contracts;

 

 

(xi)

settle any litigation or arbitration with respect to MLP or the Properties which
requires payment for which MLP is responsible in an amount greater than $50,000
or results in any ongoing adverse liability of such amount to MLP;

 

 

(xii)

unless otherwise permitted under this Section 2.3, voluntarily waive or release
any material right that could reasonably be expected to materially adversely
affect MLP’s ownership or use of, and the ability to operate, the Properties or
waive,

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release, assign, compromise, or settle any material right or claim with respect
to any of the Properties;

 

 

(xiii)

make any affirmative non-consent election with respect to the Properties
relating to any individual operation requiring expenditures in excess of
$50,000, net to MLP’s interest;

 

 

(xiv)

elect to relinquish any Lease or otherwise decline to pay lease maintenance or
shut-in payments that would maintain a Lease during the pendency of
non-production;

 

 

(xv)

enter into, modify or terminate any hedging obligations with respect to the
Properties or MLP; or

 

 

(xvi)

commit to do any of the foregoing.

 

2.4

Insurance

During the Term and for so long as Services Provider is providing the Services,
Services Provider shall carry and maintain insurance coverages for the benefit
of MLP with respect to the Services of at least the types and amounts as were
carried by Services Provider immediately prior to the Effective Date, including
designating MLP and its Subsidiaries as additional insured and loss payee so
that said insurance be made to extend to and protect MLP and its Subsidiaries to
the same extent Services Provider is covered relative to the Services provided
under this Agreement. All such insurance shall provide that Services Provider’s
insurers waive their right of subrogation against MLP and its Subsidiaries.
Notwithstanding the foregoing, nothing herein shall obligate Services Provider
to post, replace, supplement or otherwise obtain any bond, letter of credit or
guarantee with respect to any of the Properties, or incur or otherwise bear any
cost or expense in connection therewith.

2.5

Access and Information

 

(a)

With respect to each Service provided hereunder and to the extent applicable,
MLP shall grant, and cause its Subsidiaries to grant, to the personnel and
representatives of Services Provider reasonable access during normal business
hours to their respective locations, systems, records and information as
reasonably necessary for Services Provider to perform its obligations
hereunder.  When on the property owned or controlled by MLP, or when given
access to any systems, software or networks owned or controlled by MLP, Services
Provider shall: (a) comply with applicable policies and procedures concerning
health, safety, security, data privacy, confidentiality and data security; (b)
comply with MLP’s directions from time to time relating to such access; (c) not
commit waste or damage to MLP’s property or systems; (d) not make material
changes or improvements to such property or systems without MLP’s prior written
consent; and (e) permit its personnel to be appropriately supervised, directed
and/or accompanied during such access as requested by MLP; provided, however,
that in each such case: (i) the access of Services Provider shall not
unreasonably interfere with any of the business or operations of MLP; and (ii)
in the event that MLP reasonably determines that providing such access could be
commercially detrimental, violate any Law or agreement or waive any
attorney-client privilege, then the Parties shall promptly use commercially
reasonable efforts to permit such access in a manner that avoids any such harm
or consequence.

 

(b)

For each Service, if requested by MLP, Services Provider shall deliver to MLP,
to the extent reasonably available, as soon as reasonably practicable, all
information received, stored or created for the benefit of MLP in the form in
which it exists, whether in electronic and/or hard copy form as may be
reasonably requested.

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(c)

Services Provider shall grant to the personnel and representatives of MLP
reasonable access during normal business hours to its respective locations,
systems, records and information as reasonably requested by MLP to facilitate
the orderly transition of operatorship contemplated by the Transition Services
Agreement, dated as of June 1, 2020, by and between Mid-Con Energy Operating,
LLC, and MLP (the “TSA”).  When on the property owned or controlled by Services
Provider, or when given access to any systems, software or networks owned or
controlled by Services Provider, MLP shall (and shall direct its Subsidiaries
and its and their representatives to): (a) comply with applicable policies and
procedures concerning health, safety, security, data privacy, confidentiality
and data security; (b) comply with Services Provider’s reasonable directions
from time to time relating to such access; (c) not commit waste or damage to
Services Provider’s property or systems; (d) not make material changes or
improvements to such property or systems without Services Provider’s prior
written consent; (e) permit its personnel and representatives to be
appropriately supervised, directed and/or accompanied during such access as
requested by Services Provider; provided, however, that in each such case: (i)
the access of MLP shall not unreasonably interfere with any of the business or
operations of Services Provider; and (ii) in the event that Services Provider
reasonably determines that providing such access could be commercially
detrimental, violate any Law or agreement or waive any attorney-client
privilege, then the Parties shall promptly use commercially reasonable efforts
to permit such access in a manner that avoids any such harm or consequence.

2.6

Changes to Services; Additional Services

 

(a)

MLP may, upon written notice to Services Provider, request reasonable changes
and/or modifications in the manner in which a Service is performed (e.g.,
frequency, schedule, delivery methods).  Services Provider agrees that it will
not unreasonably withhold, condition or delay its consent to any such requests
for reasonable changes and/or modifications, provided that MLP agrees to pay or
reimburse Services Provider for any increase in costs attributable to such
changes and/or modifications.  To the extent the Parties mutually agree on the
scope and applicable terms of any such changes and/or modifications, and any
increase in costs relating thereto, Services Provider shall implement such
changes and/or modifications as agreed (and if the implementation timeline is
not explicitly agreed, each Party shall use commercially reasonable efforts to
implement such changes and/or modifications in a timely manner) and prepare a
Budget Amendment, if applicable, to reflect such changes.

 

(b)

During the Term, MLP may request Services Provider to perform, or cause to be
performed, a service that is not included on Exhibit A (an “Additional Service”)
by delivering to the Services Provider a written communication requesting such
Additional Service and proposing the modification to the Monthly Services Fee
for such Additional Service.  The Parties will discuss in good faith any such
request and, if following such good faith discussions, the Parties mutually
agree that such Additional Service should be provided, and agree upon the
modification to the Monthly Services Fee, the Parties shall amend the Services
Schedule and the Budget by the addition of such specification based on agreed
terms, and such Additional Service shall thereupon be a Service for all purposes
hereunder.

2.7

Cooperation; Relationship of the Parties

 

(a)

The Parties will use good faith efforts to cooperate with each other in all
matters relating to the provision and receipt of Services and payment for such
Services; provided, however, that this Section 2.7(a) shall not be construed as
limiting a Party’s rights under this

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Agreement, and, for the avoidance of doubt, shall not obligate a Party to agree
to changes to the Services or the Budget.  

 

(b)

Each Party (including its employees) shall act solely as an independent
contractor of the other Party.  Neither Party nor its representatives are an
employee, officer, agent, partner, business representative or legal
representative of, or joint venturer with, the other Party.  Except as expressly
provided herein, (i) neither Party has authority to assume any obligation on
behalf of the other Party and neither Party shall hold out to Third Parties that
it has any authority to do so or take any action that might mislead or confuse
Third Parties in this regard, and (ii) nothing in this Agreement shall be
construed to give any Party the power or authority to act for, bind or commit
any other Party.

2.8

Certain Conditions of Service

 

(a)

All personnel involved in the provision of Services by Services Provider or its
Affiliates or contractors shall be responsible to Services Provider.  The
selection of such employees and contractors, and their hours of labor, shall be
determined by Services Provider.  Subject to, and without limiting MLP’s rights
and remedies in, Section 4.2, Services Provider shall have the right to hire or
dismiss full time or part time personnel for any position with respect to the
Services.

 

(b)

Notwithstanding anything herein to the contrary, all matters pertaining to the
employment, supervision, compensation, promotion and discharge of any personnel
of Services Provider or its Affiliates are the responsibility of Services
Provider and its Affiliates.  All such employment arrangements are solely
Services Provider’s and its Affiliates’ obligations (including the payment of
salaries and employee benefits with respect to such personnel).

 

(c)

Notwithstanding anything herein to the contrary, MLP and Services Provider
acknowledge that employees of Affiliates of Services Provider may assist
Services Provider in providing the Services hereunder in accordance with the
terms hereof and the Budget.

 

2.9

Notices to Third Parties

Services Provider and MLP shall send notices as are reasonably necessary to
cause (a) buyers of Hydrocarbons from the Properties to continue to remit the
proceeds of such production and (b) co-owners of Properties on which Services
Provider provides Services or a designated successor operator takes over
operations, as applicable, to continue to remit cash calls and billings to
Services Provider for the benefit of MLP during the Term.

 

Article 3
PAYMENT; INVOICE

 

3.1

Budget; Approval of Budget Amendments

MLP shall have the right to deliver to Services Provider a proposed Budget no
later than ten (10) Business Days prior to the Effective Date. The Budget shall
be subject to Services Provider’s review and comment and, unless otherwise
expressly acknowledged by the Parties in writing, shall be non-binding on
Services Provider and any of its Affiliates and Subsidiaries; provided, however,
that the Services Provider shall deliver written notice to MLP as soon as
reasonably practicable upon its determination that the costs of the Services for
any period will exceed the Budget by five percent (5%) or more. At any time
following the approval of the Budget by the Parties, Services Provider or MLP
may propose written amendments to the Budget for approval by MLP (a “Budget
Amendment”) if either Party believes in good faith that the Budget no longer
reflects the actual costs and expenses that will be incurred by Services
Provider or

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its Affiliates or permitted contractors, as applicable, to provide the Services
in any given Month.  MLP shall have ten (10) days from receipt of a Budget
Amendment to approve or reject such Budget Amendment in whole or in part.  Any
part of any Budget Amendment which is rejected shall either be deleted or
resubmitted at the direction of MLP.  Services Provider shall then have ten (10)
days to resubmit (if it so elects) any Budget Amendment for approval.  MLP shall
have five (5) days from the date the Services Provider resubmits any such Budget
Amendment for approval to approve or reject such re-submitted Budget
Amendment.  Failure of MLP to timely respond to any proposed Budget Amendment
shall be deemed to be a rejection of such Budget Amendment. For the avoidance of
doubt, neither Party is obligated to accept a Budget Amendment such Budget
Amendment shall not bind Services Provider unless expressly agreed to in
writing.

3.2

Payment for Services; Invoice

 

(a)

During the Term, MLP shall (i) pay Services Provider a total of $333,333.00 per
Month for each Month (the “Monthly Services Fee”) for which the Services are
provided pursuant to the terms of this Agreement, with such Monthly Services Fee
covering, among other things, actual salaries, wages and employee benefits,
including discretionary bonus payments with respect to the performance of the
Properties, paid by Services Provider to employees and personnel of Services
Provider or its Affiliates or permitted contractors in proportion to the
percentage of such employee’s and personnel’s time that is dedicated to the
provision of the Services in accordance with the terms and conditions of this
Agreement, (“Service Charges”); (ii) without duplication to any amounts payable
or reimbursements for costs charged under any Operating Agreement, reimburse
Services Provider for all costs and expenses incurred by Services Provider and
solely and directly attributable to the provision of the Services for any Month
(or any portion thereof) and not otherwise Service Charges, including all
amounts incurred by Services Provider in favor of Third Parties and attributable
to Services Provider’s performance of the Services, together with any amounts
incurred by or for the benefit of MLP (whether directly by MLP or by Services
Provider on MLP’s behalf) but excluding normal lease operating expenses and
amounts payable under Operating Agreements and Applicable Contracts
(collectively, “Direct Charges”); (iii) on or prior to the expiration of ten
(10) Business Days following the Effective Date, issue in favor of Services
Provider Warrants to acquire Common Units of MLP, on terms consistent with that
certain Term Sheet on or about the date of this Agreement and in form otherwise
reasonably satisfactory to Services Provider; and (iv) upon the termination of
this Agreement an amount equal to the product of (A) the number of Months in
which the Term was in effect and (B) $166,666.66 (the “Termination Payment”),
provided, however, that (x) MLP shall have no obligation to pay the Termination
Payment in the event this Agreement is terminated by MLP in accordance with
Sections 4.2(b) or Section 4.2(c) and (y) the Termination Payment shall not
exceed $2,000,000.

 

(b)

No later than five (5) days prior to the beginning of each Month, Services
Provider shall tender to MLP an invoice setting forth a good-faith estimate of
the Direct Charges and the Service Charges for Services provided by Services
Provider to MLP for such Month (the “Invoice”).  The Invoice shall include
supporting documentation, information and good-faith estimated calculations that
substantiate the costs and expenses described in the Invoice. MLP shall pay in
full the undisputed amounts set forth in the Invoice on or before the thirtieth
(30th) day following receipt of the Invoice by MLP (the “Due Date”); provided,
however, if the Due Date is on a Saturday, Sunday or a federal holiday, the Due
Date shall be the succeeding Business Day. No later than forty-five (45) days
following the end of Month with respect to such Invoice, Services Provider shall
tender to MLP a statement (the “True-Up Statement”) reflecting the actual Direct
Charges and the Service Charges for Services provided by Services Provider to
MLP for such Month and the Parties

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shall true up the difference between the Invoice and the True-Up Statement in
accordance with the following: (i) if the true-up amount is positive, MLP shall
pay to Services Provider such difference, and (ii) if the true-up amount is
negative, Services Provider shall credit MLP such difference. All amounts due
with respect to the True-Up Statement shall be paid or credited, as applicable,
within ten (10) days’ receipt by MLP of the True-Up Statement (the “True-Up
Statement Due Date”). The Invoice and True Up Statement shall not include normal
lease operating expenses and amounts payable under Operating Agreements and
Applicable Contracts.

 

(c)

MLP may object in good faith to any Invoice or True-Up Statement (or any portion
thereof) at any point up to and including the Due Date and the True-Up Statement
Due Date, as applicable.  If MLP desires to make such an objection, it must
provide written notice of such objection to Services Provider with such notice
describing the dispute in reasonable detail, including any alleged errors in
charges and attaching written documentation to reasonably support such
objection.  The Parties shall work together in good faith to resolve any dispute
regarding an Invoice; provided, if the Parties fail to agree on the existence or
amount of any such adjustment within thirty (30) days following Services
Provider’s receipt of MLP’s written notice delivered pursuant to this Section
3.2(c), the Parties  may submit the dispute to an independent third-party
regionally or nationally recognized auditing firm that is mutually agreeable to
the Parties. The Parties shall cooperate with such auditing firm and each Party
shall provide access to its books and records as may be reasonably necessary to
permit a determination by such auditing firm. The resolution by such auditing
firm shall be final and binding on the Parties.

 

(d)

If any undisputed amount due under an Invoice or True Up Statement remains
unpaid for more than sixty (60) days following MLP’s receipt of such Invoice or
True Up Statement, Services Provider shall have the right to immediately suspend
or discontinue Services hereunder until any such undisputed past-due amount is
paid in full.

 

(e)

If MLP fails to pay the undisputed amount of any Invoice or True Up Statement
within sixty (60) days after MLP’s receipt of such Invoice or True Up Statement,
interest on such amounts will accrue from the Due Date or the True-Up Statement
Due Date, as applicable, through, and including, the date MLP actually makes
payment for the undisputed amount, at the Overdue Rate.

 

(f)

All references in this Agreement to an “undisputed amount” mean amounts that are
not disputed in good faith in accordance with the procedures set forth in
Section 3.2(c).

3.3

Limitation on Charges

The Parties acknowledge that MLP shall not be required to pay for or reimburse
Services Provider for any fees, costs or expenses except as provided in Section
3.2.

3.4

Audits

 

(a)

MLP shall have the right to audit costs, expenses and fees charged to MLP and
other accounting records prepared or maintained by Services Provider under this
Agreement.

 

(b)

Upon not less than five (5) Business Days’ prior written notice to the Services
Provider, MLP shall have the right to audit (or cause to be audited) the
Services Provider’s books and records maintained during the Term (the “Audit
Period”).  MLP shall provide Services Provider a written notice of any Claims
for all discrepancies disclosed by said audit and related to the Audit
Period.  The cost of each such audit shall be borne pro rata between

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the Parties with each Party being responsible for such cost to the extent that
the audit indicates an adjustment payable by such Party in proportion to the
aggregate adjustments resulting from such audit.  Any such audit shall be
conducted in a manner reasonably designed to limit inconvenience and disruption
to the operations of the Services Provider.  Unless otherwise mutually agreed,
any audit shall be conducted at the principal office of the Services Provider or
at such other place as the books and records of the Services Provider related to
the Services are maintained.

 

(c)

At the conclusion of an audit, the Parties shall endeavor to settle outstanding
matters expeditiously.  To this end, MLP will make a reasonable effort to
prepare and distribute a written report to the Services Provider as soon as
reasonably practicable and in any event within thirty (30) days after the
conclusion of an audit under this Section 3.4(c).  The report shall include all
Claims arising from such audit together with comments pertinent to the operation
of the accounts and records.  Services Provider shall make a reasonable effort
to reply to the report in writing as soon as possible and in any event no later
than thirty (30) days after delivery of the report.

 

(d)

All adjustments resulting from an audit agreed to between the Parties shall be
reflected promptly in Services Provider’s books and records.  If any dispute
shall arise in connection with an audit, it shall be reported to and discussed
by the Parties within thirty (30) days.

 

(e)

MLP and its Affiliates (and any of their respective representatives and agents)
shall have the right at any reasonable time to inspect and/or observe Services
Provider’s performance of the Services; provided that any such inspections or
observations shall be conducted in a manner as to not interfere with the
operations of Services Provider or its Affiliates.

Article 4

TERM AND TERMINATION

 

4.1

Term

The term of this Agreement shall commence on the Effective Date and, unless
sooner terminated as provided herein, shall remain in full force and effect for
a period of one (1) calendar year after the Effective Date (the “Initial Term”).
At the end of the Initial Term, the Agreement will automatically renew for
successive one-year terms (each, a “Renewal Term” and together with the Initial
Term, the “Term”) until terminated by either Party not less than ninety (90)
days prior to the end of the Initial Term or the Renewal Term, as applicable, in
accordance with the terms of this Article 4. Termination or cancellation of this
Agreement shall not relieve either Party from any obligation accruing or accrued
prior to the date of such termination.

4.2

Termination. This Agreement may be terminated upon written notice to the other
Party as follows:

 

(a)

by either Party, upon the Bankruptcy of such other Party;

 

(b)

by MLP, upon an action constituting gross negligence or willful misconduct on
the part of Services Provider in connection with the performance of the
Services;

 

(c)

by either Party, upon a material default by the other Party of its covenants or
obligations under this Agreement, if:

 

(i)

such material default is capable of being cured, and such material default is
not cured within fifteen (15) days after delivery by the non-defaulting Party of
written notice (a “Default Notice”); provided, however, that if such material
default

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cannot be cured within such fifteen (15) day period, the defaulting Party shall
have up to thirty (30) days from receipt of such Default Notice to cure such
material default if such material default is capable of being cured within such
period and the defaulting Party proceeds diligently to cure such material
default; or

 

 

(ii)

such material default is not capable of being cured, and such material default
resulted from a material breach by the defaulting Party in the performance of
any of its covenants or obligations under this Agreement.

 

 

(d)

by either Party upon a Change in Control or the sale of all or substantially all
of the assets of MLP or any of its Subsidiaries.

 

(e)

Notwithstanding anything herein to the contrary, the Parties may terminate any
Service by mutual written agreement at any time and this Agreement shall
terminate upon its having been terminated with respect to all Services.

4.3

Effect of Termination

Notwithstanding anything to the contrary in this Agreement, Article 1, Article
3, this Section 4.3, Article 5, Article 8 and Article 9 shall survive any
termination of this Agreement.  Termination of this Agreement (either as a whole
or with respect to any Service) for any reason by any Party shall not relieve
the Parties of any obligation which accrued prior to such termination.

Article 5

CONFIDENTIAL INFORMATION

 

5.1

Confidential Information

Each Party agrees that the specific terms and conditions of this Agreement and
any information conveyed or otherwise received by or on behalf of a Party in
conjunction herewith, whether furnished on or after the date hereof, whether
oral or written, and regardless of the manner in which it is furnished,
including all copies, reproductions, summaries, analyses or extracts that
contain such information (“Confidential Information”), shall be subject to the
confidentiality provisions (and exceptions thereto) set forth below:

 

(a)

MLP and its Affiliates, on the one hand, and Services Provider and its
Affiliates, on the other hand, shall not use (except for the purposes of
fulfilling each Party’s obligations under this Agreement) or permit the use of,
and shall keep, and shall cause their respective representatives to keep,
confidential, for a period of two years following termination of this Agreement,
all Confidential Information, whether oral or written, concerning the other
Party in their possession, their custody or under their control to the extent
such Confidential Information (i) is obtained in the course of performing
services for the other Party pursuant to this Agreement or (ii) is based upon or
is derived from information described in the preceding clause (i), and each
Party shall not (without the prior written consent of the other) otherwise
release or disclose such Confidential Information to any other Person, except
such Party’s representatives or Affiliates, in each case who have a need to know
such information and who are bound by confidentiality obligations at least as
restrictive as this Section 5.1.  Each Party shall exercise the same care with
the other Party’s Confidential Information as it takes to preserve
confidentiality for its own similar information.  This Section 5.1 shall not
apply to, and Confidential Information does not include, information (A) that
has been in the public domain other than as a result of disclosure by the
receiving Party or its Affiliates or representatives, (B) that was available to
the receiving Party on a non-confidential basis prior to its disclosure under
this Agreement, (C) that has been later lawfully acquired from other sources by
the receiving Party (provided that such source is

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not and was not bound by a confidentiality agreement), (D) the use or disclosure
of which is permitted by this Agreement or (E) that the receiving Party has
agreed in writing may be so used or disclosed.

 

(b)

If either Party or any of its Affiliates determines that it is required to
disclose pursuant to applicable Law, or receives any demand under lawful process
or from any Governmental Authority to disclose or provide, Confidential
Information of the other Party (or of its Affiliates) that is subject to the
confidentiality provisions of Section 5.1(b), such Party shall promptly notify
the other Party prior to disclosing or providing such Confidential Information
and shall cooperate at the expense of Services Provider in seeking any
reasonable protective arrangements or other remedies requested by such other
Party.  Subject to the foregoing, the Person that received such request may
thereafter disclose or provide such information if and to the extent required by
such Law or by lawful process or such Governmental Authority; provided, however,
that the Person shall only disclose such portion of the information as is
reasonably required to be disclosed or provided.

 

(c)

If a Party so requests in writing, the other Party shall, unless otherwise
required by Law, promptly return or destroy all Confidential Information of the
requesting Party in its possession and direct each of its representatives to
promptly return or destroy all Confidential Information of the requesting Party
in its possession.  Notwithstanding the foregoing, such Party and its
representatives may each retain copies of the Confidential Information for legal
retention purposes or to maintain a record of the extent of disclosure hereunder
and may retain electronically archived copies.  Confidential Information so
retained shall remain subject to the terms of this Agreement.

Article 6
marketing services

 

6.1

Marketing Services

 

(a)

At the direction of MLP, Services Provider shall gather, process, fractionate,
transport, and market all Hydrocarbon production from the Properties
(collectively, the “Marketing Services”).  In performing the Marketing Services,
Services Provider shall (i) use commercially reasonable efforts to sell and
market production from the Properties for the best available price and (ii)
perform such Marketing Services as a Reasonable and Prudent Services Provider in
accordance with prevailing industry standards and customs.

 

(b)

Subject to MLP’s prior written consent, Services Provider shall have the right
to amend, modify, or supplement the Existing Arrangements set forth on Schedule
6.1(b) hereto, to the extent necessary as determined by Services Provider in its
good faith discretion (each, a “Modification”), so long as such Modification is
consistent with (A) the reasonable and prudent operation of the Properties, (B)
prevailing industry standards and practices for processing, transportation and
marketing contracts in or around the Properties. Within five (5) Business Days
after executing any Modification to any Existing Arrangement, Services Provider
shall provide MLP with a copy of such Modification.  

 

(c)

Title to all Hydrocarbon production from the Properties will remain in MLP at
all times while Services Provider is providing Services hereunder. Services
Provider acknowledges and agrees that all funds and revenues received by
Services Provider for MLP’s production from the Properties shall remain the sole
property of MLP.

 

(d)

In addition to any information or reports described on Exhibit B, Services
Provider shall promptly upon receipt or preparation provide to MLP all reports,
notices and information

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(i) prepared in the ordinary course of business by Services Provider (as such
reports and information are produced or compiled) relating to the production
being gathered, processed, fractionated, transported, or marketed hereunder on
behalf of MLP, and (ii) received by Services Provider from any counterparty
under any Existing Arrangement.

Article 7
FORCE MAJEURE

7.1

Non-performance

If a Party to this Agreement is rendered unable, wholly or in part, by Force
Majeure to carry out its obligations under this Agreement, other than
obligations to make money payments, that Party shall give the other Party prompt
written notice of the Force Majeure with reasonably full particulars and the
obligations of the Party giving notice, so far as they are affected by Force
Majeure, shall be suspended during and to the extent of, but no longer than, the
continuance of the Force Majeure event.  

7.2

Duty to Mitigate

The Party affected by an event of Force Majeure shall:

 

(a)

use all reasonable efforts to continue to perform the Services and any other
obligations hereunder;

 

(b)

take all reasonable action to correct or cure the event or condition
constituting the Force Majeure;

 

(c)

use all reasonable efforts to mitigate or limit the adverse effects of the event
of Force Majeure and damages to the other Party; and

 

(d)

provide prompt notice to the other Party of the cessation of the event of Force
Majeure.

Article 8

INDEMNIFICATION

 

8.1

Indemnification

 

(a)

Indemnification of MLP by Services Provider. Services Provider hereby agrees to
defend, indemnify and hold harmless MLP and its respective partners and
Subsidiaries and each of their respective officers, managers, directors,
employees, representatives and agents (each, an “MLP Indemnified Party”) from
and against any and all Claims to the extent arising out of, or relating to (i)
Services Provider’s breach of any of express representation or warranty of
Services Provider contained in this Agreement (ii) a breach of Services
Provider’s express financial or administrative obligation under this Agreement
(excluding, for purposes of clarity, land and Lease maintenance Services); and
(iii) the gross negligence, willful misconduct or fraud of Services Provider;
provided, however, that Services Provider shall have no obligation to defend,
indemnify, hold harmless or release any MLP Indemnified Party from any Claims to
the extent such Claims arise out of or are related to the gross negligence
(whether sole, concurrent, active or passive), willful misconduct, fraud or any
other legal fault, including strict liability, of any MLP Indemnified Parties or
any Third Party.  Notwithstanding any other provision hereof, Services Provider
shall in no circumstances be liable to MLP Indemnified Parties pursuant to
clause (i) in this Section 8.1(a) in connection with this Agreement in excess of
the aggregate amount actually received by Services Provider from MLP pursuant to
Section 3.2 during the Term.

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(b)

Indemnification of Services Provider by MLP. MLP hereby agrees to defend,
indemnify and hold harmless Services Provider and its respective members,
partners and Affiliates and each of their respective officers, managers,
directors, employees, representatives and agents (each, a “Services Provider
Indemnified Party”) from and against any and all Claims arising out of, in
connection with, or relating to (i) MLP’s or its Affiliates’ breach of any
representation or warranty under this Agreement or (ii) breach of MLP’s express
financial or administrative obligations under this Agreement; and (iii) except
to the extent that MLP is entitled to an indemnity pursuant to Section 8.1(a),
all Claims in favor of any Third Party or any MLP Indemnified Party arising out
of Services Provider’s performance and provision of the Services in accordance
with this Agreement, including as a result of the negligence (whether sole,
concurrent, active or passive) and any other legal fault, including strict
liability, of any Services Provider Indemnified Parties, Services Provider or
any Third Party; provided, however, that MLP will not be required to release or
indemnify any Services Provider Indemnified Party from any Claims to the extent
such Claims arise out of or are related to the gross negligence, willful
misconduct or fraud of any Services Provider Indemnified Party.

8.2

Notification of Indemnification Obligation

 

(a)

For purposes of this Article 8 the term “Indemnifying Party”, when used in
connection with particular Claims, shall mean the Party or Parties having an
obligation to indemnify another Party or Parties with respect to such Claims
pursuant to this Article 8 and the term “Indemnified Party”, when used in
connection with particular Claims, shall mean the Party or Parties having the
right to be indemnified with respect to such Claims by another Party or Party
pursuant to this Article 8

 

(b)

The Indemnified Party shall promptly notify the Indemnifying Party in writing of
any claim, including a description of the claim in reasonable detail, and the
Indemnifying Party shall have the right to assume the investigation and defense
of the claim, including employing legal counsel.  If the Indemnifying Party does
not promptly assume the investigation and defense of the claim, the Indemnified
Party may do so, after providing written notice thereof to the Indemnifying
Party, including employing legal counsel of its choice, at the Indemnifying
Party’s expense.  In any case, the Indemnifying Party shall pay for or reimburse
the Indemnified Party for all court costs, reasonable attorneys’ fees, experts’
fees and other reasonable costs resulting from the investigation or defense of
any claims.  If the Indemnifying Party assumes the defense of a claim, the
Indemnified Party shall have the right to employ, at its sole expense, separate
legal counsel and participate in the defense of the claim; provided, however,
that control over the process and authority to compromise such claim shall vest
solely in the Indemnifying Party.

8.3

Waiver of Consequential Damages and Lost Profits

Notwithstanding anything to the contrary contained herein, neither MLP nor
Services Provider nor any of their respective Affiliates or representatives,
shall be entitled to consequential, special, incidental, indirect or punitive
damages, lost profits constituting indirect damages or similar items in
connection with this Agreement and the Services provided hereunder.  Services
Provider and MLP, for themselves and on behalf of their respective Affiliates
and representatives, hereby expressly waive any right to consequential, special,
incidental, indirect or punitive damages, lost profits constituting indirect
damages or similar items in connection with this Agreement and the transactions
contemplated hereby.

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8.4

Release of Directors

Contango and its Affiliates hereby forever, fully and irrevocably release and
discharge each of the Resigning Directors and their respective executors,
trustees, administrators, representatives, and assigns (the “Resigning Directors
Released Parties”), from and against any and all Claims in each case related
directly or indirectly to the ownership and/or operation of MLP and any
predecessors thereto, or the assets, business, operations conduct, services or
products of MLP and any predecessors thereto, related to any period of time
before the Execution Date, whether arising from or relating in any way to such
Resigning Director having served as a member of the board of directors of
Mid-Con Energy GP, LLC or otherwise, which Contango and its Affiliates, as the
case may be, can, shall or may have against any of the Resigning Directors
Released Parties, whether known or unknown, and that now exist or may
hereinafter accrue based on matters now known or unknown.  

 

Article 9

REPRESENTATIONS AND WARRANTIES; OTHER COVENANTS AND RESPONSIBILITIES

 

9.1

Representations and Warranties of Services Provider

Services Provider represents and warrants to MLP as follows:

 

(a)

Services Provider is a corporation duly formed, validly existing and in good
standing under the laws of the State of Texas and is duly qualified and/or
licensed to the extent and as may be required by applicable Law, and in good
standing in the State of Oklahoma.

 

(b)

Services Provider has taken all necessary action to authorize the execution,
delivery and performance of this Agreement and has adequate power, authority and
legal right to enter into, execute, deliver and perform this Agreement. This
Agreement is legal, valid and binding with respect to Services Provider and is
enforceable in accordance with its terms, except as the enforceability thereof
may be limited by bankruptcy, insolvency or similar laws affecting creditors’
rights generally.

 

(c)

Services Provider has, or before commencing activities in any state or other
jurisdiction will have, all requisite power, approvals, authorizations,
consents, licenses, orders, franchises, rights, registrations and permits of all
Governmental Authorities of such state or other jurisdiction required for
Services Provider to provide the Services in such jurisdiction; each of the
foregoing is or will be in full force and effect and has been duly and validly
issued; and at the time Services are performed, Services Provider will be in
compliance (and will cause its Affiliates to be in compliance) in all material
respects with all terms and conditions of each of the foregoing.

 

(d)

No permit, consent, approval, authorization or order of, and no notice to or
filing with, any Governmental Authority or Third Party is required in connection
with the execution, delivery or performance by Services Provider of this
Agreement or to consummate any transactions contemplated hereby.

9.2

Representations and Warranties of MLP

MLP represents and warrants to Services Provider as follows:

 

(a)

MLP is a limited partnership duly formed, validly existing and in good standing
under the laws of the State of Delaware and is duly qualified and/or licensed to
the extent and as may be required by applicable Law, and in good standing in the
State of Delaware.

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(b)

MLP has taken all necessary action to authorize the execution, delivery and
performance of this Agreement and has adequate power, authority and legal right
to enter into, execute, deliver and perform this Agreement. This Agreement is
legal, valid and binding with respect to MLP and is enforceable in accordance
with its terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting creditors’ rights generally.

 

(c)

MLP has, or before commencing activities in any state or other jurisdiction will
have, all requisite power, approvals, authorizations, consents, licenses,
orders, franchises, rights, registrations and permits of all Governmental
Authorities of such state or other jurisdiction required for MLP to commence
such activities in such jurisdiction; each of the foregoing is or will be in
full force and effect and has been duly and validly issued.

 

(d)

No permit, consent, approval, authorization or order of, and no notice to or
filing with, any Governmental Authority or Third Party is required in connection
with the execution, delivery or performance by MLP of this Agreement or to
consummate any transactions contemplated hereby.

9.3

Responsibilities of MLP

 

(a)

MLP is sophisticated in the ownership and evaluation of oil and gas properties,
and it shall exercise its own independent analysis and evaluation of operations
as may be proposed by Services Provider. MLP has access to and, as necessary,
shall seek the advice of its own legal, tax, economic, insurance, environmental,
engineering, geological and geophysical advisors.

 

(b)

MLP hereby designates and appoints Services Provider as its true and lawful
agent and attorney-in-fact with full power and authority, for and on behalf of
and in the name of MLP, for the sole and exclusive purpose of (i) executing,
acknowledging and delivering all such division orders, transfer orders,
certificates and other documents as may from time to time, be necessary or
proper in performing the Marketing Services hereunder and (ii) extending or
renewing any of the Leases for an amount less than (x) $25,000, individually,
and (y) $100,000 in the aggregate in any 30 day period, in each case, in
accordance with (and subject to the restrictions contained in) this Agreement
and performance of the Services.  The foregoing designation and appoint may be
revoked at any time by MLP upon written notice to Services Provider.

9.4

Responsibilities of Services Provider

Each Party shall keep and maintain, for and on behalf of such Party, proper and
complete books and records of its own accounts, taxes and financial information
to the extent pertaining to the Services performed under this Agreement.  MLP
shall have the right to (1) reasonably consult from time to time with the
independent accountants and advisors of Services Provider and its Affiliates
regarding the Services; (2) reasonably consult from time to time at reasonable
times and following reasonable notice, with management of Services Provider at
their respective places of business regarding operating and financial matters,
so long as such consultation does not unreasonably interfere with the operation
of the business of Services Provider, for the purposes of understanding and
monitoring the business and financial soundness of Services Provider and its
Affiliates; and (3) reasonably consult with any other personnel of Services
Provider or its Affiliates; provided, in each case (1) through (3) immediately
above, that (y) MLP shall provide reasonable advance written notice thereof to
Services Provider and (z) Services Provider shall be provided an opportunity to
participate in all meetings and calls relating thereto and shall be copied on
all correspondence and other written material relating thereto. MLP acknowledges
and agrees that Services Provider shall not have any obligation to prepare on
behalf of MLP or file any financial statement, report or filing that MLP or any
of

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its Affiliates or Subsidiaries is obligated to file or report under any Law,
rule or regulation, including the Securities Act of 1933 or the Securities
Exchange Act of 1934, as amended, with respect to its business generally or the
Services provided hereunder, or respond to any inquiries by any Governmental
Authority or other applicable regulatory authority in connection with any
financial statement, report or filing; provided, however, Services Provider
shall assist MLP in the preparation of such filings as part of the Services
provided hereunder.

Article 10

MISCELLANEOUS

 

10.1

Entire Agreement

This Agreement represents the entire understanding and agreement between the
Parties with respect to the subject matter hereof and supersedes all prior
discussions and agreements between the Parties with respect to the subject
matter hereof. There are no representations, agreements, arrangements or
understandings, oral or written, by the Parties with respect to the subject
matter hereof that are not fully expressed in this Agreement.

10.2

Amendment; Waiver

This Agreement can be amended, supplemented or changed, and any provision hereof
can be waived, only by written instrument making specific reference to this
Agreement signed by the Party against whom enforcement of any such amendment,
supplement, modification or waiver is sought; provided, however, that MLP may
not, without the prior approval of the Conflicts Committee, agree to any
amendment, modification or waiver of any provision of this Agreement that, in
the reasonable discretion of the General Partner, (i) would have a material
adverse effect on the holders of Common Units or (ii) would materially limit or
impair the rights or reduce the obligations of Parties under this Agreement. The
waiver by any Party of a breach of any provision of this Agreement will not
operate or be construed as a further or continuing waiver of such breach or as a
waiver of any other or subsequent breach. No failure on the part of any Party to
exercise, and no delay in exercising, any right, power or remedy hereunder will
operate as a waiver thereof, nor will any single or partial exercise of such
right, power or remedy by such Party preclude any other or further exercise
thereof or the exercise of any other right, power or remedy. All remedies
hereunder are cumulative and are not exclusive of any other remedies provided by
Law.

10.3

Disclaimer of Warranties

NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, Services Provider
SPECIFICALLY DISCLAIMs ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED,
(A) RELATING TO THE performance of the SERVICES, INCLUDING ANY WARRANTIES OF
MERCHANTABILITY or fitness for a particular purpose OR RESULT, (b) relating to
the results to be obtained from the services, and (c) that the services are
error-free or non-interruptible.  Services Provider is providing the services
under this agreement on an “as is” condition and on a “where is” and “with all
faults” basis without any warranty whatsoever, legal or conventional.

10.4

Notices

All notices, requests, demands or other communications provided for hereunder
shall be in writing.  Notices may be given by personal delivery, by overnight
courier, by email, or by certified or registered United Sates mail, return
receipt requested.  Except as otherwise expressly provided herein, notice shall
be deemed to have been given (a) if by personal delivery, on the date of
delivery; (b) if by overnight courier, on the date of delivery by a reputable
commercial overnight courier; (c) if by email, on the date that the email is

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received by the recipient thereof; and (d) if by certified or registered United
States Mail, on the date of delivery.  Notices shall be sent to the intended
recipient at the addresses set forth below:

 

To MLP: Mid-Con Energy Partners, LP

Attn:  

2431 E. 61st Street, Suite 850

Tulsa, OK 74136

Email:

 

With a copy to:Sidley Austin LLP

Attention: William J. Cooper

wcooper@sidley.com

 

To Services Provider: Contango Resources, Inc.

717 Texas Ave., Suite 2900

Houston, Texas 77002

Attn: Wilkie S. Colyer, Jr.

Email:wcolyer@contango.com

 

With a copy to:Haynes and Boone, LLP

1221 McKinney Street, Suite 4000

Houston, Texas 77010

Attn:Austin Elam

Chris Reagen

Email: austin.elam@haynesboone.com

chris.reagen@haynesboone.com

 

or to such other Person or addressees as may be designated in writing by the
Party to receive such notice as provided above; provided, however, that copies
to outside counsel are for convenience only and the provision of a copy to
outside counsel does not constitute notice or alter the effectiveness of any
notice, request, instruction or other communication otherwise made or given in
accordance with this Section 10.4.

10.5

Assignment; No Third-Party Beneficiaries

This Agreement will be binding upon and inure to the benefit of the Parties and
their respective successors and permitted assigns. Except as provided in Section
8.4, nothing in this Agreement will create or be deemed to create any
third-party beneficiary rights in any Person or entity not a party to this
Agreement. No assignment of this Agreement or of any rights or obligations
hereunder may be made by either MLP or Services Provider (by operation of law or
otherwise) without the prior written consent of the other Party and any
attempted assignment without the required consents will be void.  No assignment
or delegation of any obligations hereunder will relieve the Parties of any such
obligations.  Upon any such permitted assignment, the references in this
Agreement to MLP or Services Provider will also apply to any such assignee
unless the context otherwise requires.

10.6

Governing Law

This Agreement, and any instrument or agreement required hereunder (to the
extent not expressly provided for therein), shall be governed by and construed
in accordance with the Laws of the State of Texas, without reference to
conflicts of laws rules or principles that might refer construction to the laws
of another jurisdiction.

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10.7

Submission to Jurisdiction; Consent to Service of Process; Waiver of Jury Trial.

 

(a)

Each Party irrevocably consents and agrees that any action, proceeding, or other
litigation by or against the other Party or any other Person with respect to any
claim or cause of action based upon or arising out of or related to this
Agreement or the Services contemplated hereby, shall be brought and tried
exclusively in the federal or state courts located in Harris County, Texas, and
any such legal action or proceeding may be removed to the aforesaid courts.  By
execution and delivery of the Agreement, each Party irrevocably submits to the
exclusive jurisdiction of such courts and hereby submits to the jurisdiction of
such courts, and waives (a) any objection which it may now or hereafter have to
the laying of venue with respect any such action, proceeding, or litigation
arising out of or in connection with this Agreement or the Services contemplated
hereby brought in the aforesaid courts, and (b) any right to stay or dismiss any
such action, proceeding, or litigation brought before the aforesaid courts on
the basis of forum non-conveniens.  Each Party further agrees that personal
jurisdiction over it may be affected by service of process by certified mail,
postage prepaid, addressed as provided in Section 10.4 of this Agreement.  The
Parties hereby irrevocably waive, to the fullest extent permitted by applicable
Law, any objection which either Party may now or hereafter have to the laying of
venue of any such action or proceeding brought in such court or any defense of
inconvenient forum for the maintenance of such dispute. Each of the Parties
agrees that a judgment in any such dispute may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by Law.

 

(b)

Each of the Parties hereby consents to process being served by any other Party
in any action or proceeding by delivery of a copy thereof in accordance with the
provisions of Section 10.4; provided, however, that such service will not be
effective until the actual receipt thereof by the Party being served.

 

(c)

Each Party to this Agreement waives any right to trial by jury in any action or
proceeding in respect of any claim arising out of or relating to this Agreement
or the relationship of the Parties hereunder.

10.8

Severability

In the event any provision of this Agreement is determined to be invalid or
unenforceable, such provision shall be deemed severed from the remainder of this
Agreement and replaced with a valid and enforceable provision as similar in
intent as reasonably possible to the provision so severed and shall not cause
the invalidity or unenforceability of the remainder of this Agreement.

10.9

Counterparts

This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original, and all of which shall constitute one and the same
Agreement. This Agreement may be executed and delivered by facsimile, or by
email in portable document format (.pdf) and delivery of the executed signature
page by such method will be deemed to have the same effect as if the original
signature had been delivered to other the Parties.

10.10

Timing

All dates and times specified in this Agreement are of the essence and shall be
strictly enforced.  Except as otherwise specifically provided in this Agreement,
all actions that occur after the 5:00 p.m. local time on a given day shall be
deemed for purposes of this Agreement to have occurred at 9:00 a.m. on the
following day.  In the event that the last day for the exercise of any right or
the discharge of any duty under this

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Agreement would otherwise be a day that is not a Business Day, the period for
exercising the right or discharging such duty shall be extended until the 5:00
p.m. local time on the next succeeding Business Day.

10.11

Fulfillment of Obligations

Any obligation of either Party to the other Party under this Agreement, which
obligation is performed, satisfied or fulfilled completely by an Affiliate of
such Party, shall be deemed to have been performed, satisfied or fulfilled by
such Party.

[Signature page follows]

 

 

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IN WITNESS WHEREOF, the Parties have executed or caused this Agreement to be
executed as of the Execution Date.

 

 

 

MID-CON ENERGY PARTNERS, LP,

a Delaware limited partnership

By:

/s/ Charles L. McLawhorn, III

 

Charles L. McLawhorn, III

 

Vice President, General Counsel and Secretary

 

 

 

CONTANGO RESOURCES, INC.,

a Texas corporation

By:

/s/ Wilkie S. Colyer, Jr.

 

Wilkie S. Colyer, Jr.

 

President and CEO

 

 

 

[Signature Page to Management Services Agreement]

--------------------------------------------------------------------------------

 

Exhibit A

SERVICES SCHEDULE

The “Services” to be provided by Services Provider in accordance with the terms
and conditions of the Agreement shall include with following functions with
respect to Services Provider; provided, however, that, notwithstanding the
following descriptions or any other provisions hereof, (i) the Services shall
not be deemed to include any services provided by Services Provider pursuant to
the terms of the Operating Agreements and (ii) to the extent MLP, Services
Provider or their respective Affiliates hire employees of Services Provider or
its Affiliates, the Services (and corresponding Service Charges) shall be
reduced by the Services that such hired employees would have performed had they
remained employees of Services Provider or its Affiliates.  Subject to the
foregoing, Services Provider shall:

Function

Description of Service

Management

Administer and manage the Properties and advise MLP concerning operation,
maintenance, administration, management, exploration, development, production,
and marketing with respect to the Properties.  Services Provider shall provide
the following services in respect of the management of the Properties as may be
requested by MLP: (a) recommending to MLP and, at MLP’s direction, taking
actions determined to be necessary to cause MLP to satisfy its obligations under
applicable Law and permits and any applicable development plan, (b) making
recommendations relating to the development or improvement of MLP’s operations
and maintenance (including major maintenance) of its Properties, (c) the
management and administration of any existing Contracts and liaising with any
Affiliate or Third Party that is party to a material Contract with MLP and (d)
complying with the agreements to which Services Provider is a party with respect
to the Properties.  Subject to the limitations contained in this Agreement and
as otherwise instructed at any time and from time-to-time by MLP, Services
Provider shall act as operator of the operated Properties, and shall act on
MLP’s behalf as a non-operator of the non-operated Properties.  

Compliance with Existing Development Plans

Carry out or maintain any reasonable development plans as mutually agreed to by
the Parties with respect to the Properties, in accordance with any existing
budgets and approvals or authorizations required under the Agreement with
respect to such development plans, by assisting MLP with (i) entering into
Contracts and other obligations in accordance with the applicable development
plans and any other contract as approved by MLP; (ii) making expenditures for
supplies, materials, tools and equipment and contracting for services associated
with the Properties and in accordance with the applicable development plan and
budget; (iii) contracting for all services associated with title review,
obtaining environmental and other permits, surface preparation and the drilling,
completion and physical operation of the Properties, in each case, in accordance
with the applicable development plan and budget; and (iv) performing all actions
necessary or appropriate to develop, engineer, manage, supervise, operate,
maintain and repair the Properties, in each case, in accordance with any
applicable development plan and budget.

 

[Exhibit A to Management Services Agreement]

--------------------------------------------------------------------------------

Liens

Assist MLP in keeping the Properties free and clear of all liens and
encumbrances.

Lease Maintenance

Use best efforts to administer and maintain all Leases and shall use best
efforts to notify MLP not later than ninety (90) days before the scheduled
expiration of any Lease, that is not maintained in effect by production or
otherwise, and that will expire absent either payment of the next ensuing delay
rental (or advance royalty) payment or commencement of operations or other lease
maintenance activities and provide a recommendation with respect to what lease
maintenance activities should be utilized.  Services Provider shall carry out
MLP’s instructions, if any, with respect thereto.  Unless MLP otherwise directs
Services Provider within thirty (30) days of receipt of such notification from
Services Provider, Services Provider shall implement its original recommendation
with respect to such lease maintenance activities with respect to the Leases and
Properties.

Identify, pay and appropriately invoice in accordance with Section 3.2, all
rentals, shut-in payments and other payments required by the Leases or Contracts
relating to the Properties including, without limitation, lease settlement,
shut-in royalties, minimum royalties, payments in lieu of production, royalties,
overriding royalties, production payments, net profit payments and all other
burdens that are associated with the ownership and operation of the Properties.

Recommendations

On any matter proposed by any Affiliate or Third Party under any Operating
Agreement or otherwise requiring the expenditure, net to MLP’s interest in the
Properties, of an amount in excess of $50,000, and requiring MLP’s consent,
approval, participation, or election pursuant to an Operating Agreement,
promptly following receipt by Services Provider, furnish MLP with (a) a copy of
such proposal, together with all authorizations for expenditure and other
supporting material, and (b) a statement of Services Provider’s recommendation
on such matter.  Services Provider shall follow MLP’s direction with respect to
any such decision.

Routine Operations

Act for and on behalf of MLP with respect to routine day-to-day administration
and management of the Properties.

Technical Advice

Upon request, furnish qualified geologists, geophysicists, and petroleum
engineers currently on Services Provider’s or its Affiliates’ staff, or Third
Party consultants, to evaluate and analyze the results of any drilling, testing,
logging, or other operations on any lands constituting part of the Properties or
pooled, unitized, or communitized with such land, advise MLP with respect
thereto, and recommend for or against other operations based thereon.  MLP, in
its reasonable discretion, shall have the right to designate certain technical
consultants to work at Services Provider’s office.

 

[Exhibit A to Management Services Agreement]

--------------------------------------------------------------------------------

Regulatory Compliance

Prepare, apply for, submit, file, receive, hold, use, abandon, and/or
relinquish, as appropriate, all routine, non-tax registrations, permits,
reports, statements, certificates, applications, and filings with Governmental
Authorities and other persons that are contemplated by, or are required in
connection with, the activities described in the development plan and budget or
are required by applicable Law in connection with the Properties, including,
without limitation, drilling permits, and production reports.  In the case of
any of the foregoing activities that must be performed by MLP directly, Services
Provider shall notify MLP of such obligation and assist MLP in such performance.

Marketing

Upon the request of MLP and in accordance with the duties and obligations set
forth in Section 6.1, assist MLP in producing, treating, storing, transporting,
and marketing production attributable to any Property, and collecting the
proceeds thereof, including balancing receivables; solicit, negotiate, and
receive offers to purchase such production; recommend acceptance or rejection of
such offers; furnish to MLP following receipt by Services Provider proposed
purchase contracts and division or transfer orders for execution; recommend
actions with respect to production, treatment, storage, and transportation of
such production; and carry out MLP’s instructions with respect to the foregoing.

Contracts

In each case, in accordance with the terms and conditions of this Agreement,
including the limitations set forth in Section 2.3, (i) negotiate, execute,
modify, administer, and extend, on behalf of MLP, and causing MLP to enter into,
Contracts;  and (ii) maintain, materially comply with (to the extent within the
control of Services Provider) and enforce (subject to obtaining MLP’s approval
prior to instigating any suit or proceeding on behalf of MLP) on behalf of MLP,
all Contracts that (1) are entered into by MLP at Services Provider’s direction
or otherwise, if such Contract has been provided to Services Provider, and (2)
relate to the Properties or to Services Provider’s fulfillment of its
obligations under Section 2.1.

Cessation of Production

Notify MLP promptly when, in Services Provider’s opinion, any Well, including a
new Well, located on the Properties, or lands pooled or unitized therewith, has
ceased producing in paying quantities or appears likely to cease producing in
paying quantities (to the extent possible) within ninety (90) days, and
recommend to MLP whether, in Services Provider’s opinion, it is in MLP’s best
interests that any action should be taken with respect thereto (including,
without limitation, the drilling of any new well, or the reworking, deepening,
recompletion, or sidetracking of the existing well, shutting in or plug and
abandon), and carry out the instructions of MLP with respect thereto.

 

[Exhibit A to Management Services Agreement]

--------------------------------------------------------------------------------

Joint Account

Upon receipt by Services Provider and consistent with prudent industry
practices, review for accuracy all invoices, statements, charges against,
credits to, and other matters relating to the joint account under applicable
accounting procedures pertaining to the Properties; advise and assist MLP in
connection therewith; and handle and investigate any audits, claims, demands,
and other matters arising with respect to

any such joint account.  

Maintenance of Records, Etc.

Preserve, protect, and maintain books and records in accordance with best
industry practice and Section 9.4 of the Agreement; promptly and routinely enter
and/or deposit in the records all documents, billings, invoices, statements,
receipts, logs, tank tables, daily gauge and run tickets, logs, seismological
sections, correspondence, interpretations, reserve reports and other reports,
and other data, information, and instruments in any way relating to the
Properties as they are received by or become available to Services Provider; on
request by MLP, prepare and deliver to MLP copies of all or any information,
data, or materials in the records and pertaining to the Properties; on
expiration or termination of this Agreement, deliver to MLP at Services
Provider’s sole expense the original books and records.   For the avoidance of
doubt, such books and records shall also include (a) copies of all logs and
surveys furnished by the operators of the Properties; (b) regular drilling,
workover or similar operations reports furnished by the operators of Properties;
(c) copies of all plugging reports; (d) copies of all geological and geophysical
maps and reports; (e) well tests, completion and similar operations reports
furnished by the operator(s) of the Properties; (f) if prepared, engineering
studies, development schedules and annual progress reports on development
projects; (g) field and well performance reports, including reservoir studies
and reserve estimates; (h) Lease documents, contracts, agreements, title
instruments and title files; and (i) such additional information as request
would be maintained by a Reasonable and Prudent Services Provider.

Information

Use its best efforts to inform MLP regularly about the status of all
undertakings under this Agreement; furnish to MLP any data, maps, records,
files, and other information as MLP may from time to time reasonably request
with respect to the Properties; on reasonable advance notice, make available the
employees, subcontractors or agents of Services Provider to consult with MLP or
MLP’s employees, agents or representatives in periodic meetings or otherwise;
and, on request, prepare and deliver to MLP such financial, technical, or other
reports pertaining to the Properties as MLP may reasonably request, including,
without limitation, well-by-well reports of production, provided such
information is available to Services Provider.

 

Division and Transfer Orders

Prepare for MLP’s signature all division orders and transfer orders and provide
assistance in processing any of the same necessary to implement the disbursement
of gross revenues as provided in this Agreement.  Upon receipt of executed
division orders, Services Provider shall deliver such orders to the appropriate
Person distributing proceeds of production, and shall perform whatever
additional acts are necessary to transfer title.

Funds and Funds Management

Supervise all disbursements from, and to the extent of the availability of,
funds received on behalf of or provided by MLP necessary to pay its debts and
obligations with respect to operations and production and assist MLP with
depositing, withdrawing and maintaining funds provided by MLP or its members, in
banks, savings and loan associations or other financial institutions.

 

[Exhibit A to Management Services Agreement]

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Tax and Accounting Services

Services Provider shall cooperate with MLP with respect to (a) any financial and
tax reporting and cash management services, (b) MLP’s compliance with its debt
and financing documents, (c) providing information solely within the control of
Services Provider and necessary for MLP to prepare or file audited financials
with respect to the Properties and the business of MLP, (d) assisting with the
preparation of any financial statement, report or filing that MLP or any of its
Subsidiaries is obligated to prepare or report under each such Person’s
organizing documents, under any Law, rule or regulation, including the
Securities Act of 1933 or the Securities Exchange Act of 1934, as amended, and
(e) providing such other accounting services to MLP as agreed to by the Parties.

Safety

Take all customary measures consistent with the standards set forth in Section
2.2 for the protection of life, health, the environment and property in the case
of an emergency.  Services Provider shall maintain written health, safety and
environmental policies, programs and systems covering operation of the
Properties that conform in all material respects with applicable industry
standards, a copy of which will be provided MLP.

Supervision

Provide supervisory services for MLP or MLP’s contractors and operators in
connection with the operation of MLP’s business and the ownership and operation
the Properties.

IT Services

Maintain information technology that is reasonably necessary to perform the
Services including (a) the management and maintenance of computer networks and
databases and technology systems associated with the Properties and related
financial records and (b) the development and implementation of security
policies and systems for the computer databases and technology systems holding
the data of MLP.

Technical Evaluation

Provide technical, geological, petroleum engineering and related evaluations
that are necessary or appropriate to perform the Service and to evaluate
proposed acquisitions of oil and gas properties by MLP.

Releases

After providing written notice to MLP, report any spill or environmental release
to the appropriate state or federal regulatory agencies as required by Law.

Transition Matters

Provide certain services reasonably sufficient to enable MLP (or its designee)
to establish operations and assume the functions included within the “Services,”
including assisting MLP in modifying automated control equipment to allow MLP
(or its designee) to operate the Properties in a manner consistent with their
current operations.

Other Duties

Upon approval of MLP, do such other acts as are necessary or useful in carrying
out the duties set forth above or enumerated by any provision of this Agreement.

 

 

[Exhibit A to Management Services Agreement]

--------------------------------------------------------------------------------

 

Exhibit B

REPORTS

 

To the extent not prepared by Services Provider or any of its Affiliates or
Subsidiaries and provided to MLP or any of its Subsidiaries under the TSA, and
commencing from and after the Termination Effective Date (as defined in the
TSA), Services Provider shall provide to MLP:

 

 

•

Lease operating statements for the previous Month, including a consolidated
lease operating statement for all operations.

 

•

Monthly cash forecast (3 months).

 

•

Monthly financial and operating reports to MLP in respect of the most recently
ended Month in a form requested and as may be required by MLP. Services Provider
shall prepare and submit to MLP a monthly management report in respect of the
most recently ended Month with such information as MLP may request, as well as
any other information (without regard to whether relating to such Month) that
MLP may request. MLP and/or any representatives designated by MLP may at any
time during normal business hours, upon three (3) Business Days’ advance notice,
examine and/or make and retain copies of said records.  With each Month’s
financial and operating reports, Services Provider shall also provide evidence
of all payments made during such month, including evidence of all royalty
payments.

 

•

A drilling status report for the previous Month, including for each Well:
township, section and range; the spud date, online and completion dates; the
target formation; and completed lateral length; and a comparison between AFEs
issues for such Well and the actual costs of such Well.

 

•

Copies of any correspondence between Services Provider and any Governmental
Authority with respect to the ownership, operation or use of the Properties,
including copies of all material reports provided by or to any Governmental
Authority.

 

•

All plugging and abandonment reports.

 

•

Assist MLP with the preparation of any and all reports or information required
under MLP’s organizing documents including the preparation of, any financial
statement or report that MLP or any of its Affiliates or Subsidiaries is
obligated to prepare or report under any such Person’s organizing documents,
under any Law, rule or regulation, including the Securities Act of 1933 or the
Securities Exchange Act of 1934, as amended.

 

 

[Exhibit B to Management Services Agreement]