Exhibit 10.6

THIRD AMENDMENT TO

PURCHASE AND SALE AGREEMENT

 

BY AND BETWEEN

 

W&T OFFSHORE, INC.,

a Texas corporation

(SELLER)

 

AND

 

BLACK ELK ENERGY OFFSHORE OPERATIONS, LLC

a Texas limited liability company

(BUYER)

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TABLE OF CONTENTS

 

              Page  

ARTICLE I DEFINITIONS

     1      Section 1.01    Terms Defined in the Agreement      1      Section
1.02    Amendments to Defined Terms      1      Section 1.03    Additional
Defined Terms      1   

ARTICLE II SUBSTITUTION AND AMENDMENTS

     2      Section 2.01    ARGO Bonds      2      Section 2.02    Completion of
Funding Non-Operated Escrow      2      Section 2.03    Reduction of ARGO Bonds
     2      Section 2.04    Substitution Of Exhibit F      3   

ARTICLE III CONDITIONS TO EFFECTIVENESS

     3      Section 3.01    Conditions to Effectiveness      3      Section 3.02
   Termination      3   

ARTICLE IV MISCELLANEOUS

     3      Section 4.01    Exhibits      3      Section 4.02    Headings      3
     Section 4.03    Counterparts      3      Section 4.04    Governing Law     
4      Section 4.05    Severability      4      Section 4.06    Ratification   
  4      Section 4.07    Not Construed Against Drafter      4   

 

i

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THIS THIRD AMENDMENT TO PURCHASE AND SALE AGREEMENT (this “Amendment”), dated as
of December 19, 2012, is by and between W&T OFFSHORE, INC., a Texas corporation,
whose mailing address is Nine Greenway Plaza, Suite 300, Houston, Texas 77046
(“Seller”), and BLACK ELK ENERGY OFFSHORE OPERATIONS, LLC, a Texas limited
liability company, whose mailing address is 11451 Katy Freeway, Suite 500,
Houston, Texas 77079 (“Buyer”).

W I T N E S S E T H:

WHEREAS, Seller and Buyer are parties to that certain Purchase and Sale
Agreement executed September 14, 2009 with an effective date of August 1, 2009,
as amended (as so amended, the “Agreement”);

WHEREAS, Buyer desires to substitute Operated Other Collateral for Operated
Escrow and Seller is in agreement on the terms and conditions of this Amendment;
and

WHEREAS, Seller and Buyer desire to clarify the provisions of Exhibit “F” to the
Agreement.

NOW THEREFORE, in consideration of the mutual promises contained herein, the
benefits to be derived by each party hereunder, as well as other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Buyer and Seller agree as follows:

ARTICLE I

DEFINITIONS

 

Section 1.01 Terms Defined in the Agreement.

Terms defined in the Agreement are used herein as therein defined, unless
otherwise indicated.

 

Section 1.02 Amendments to Defined Terms.

To reflect the reorganization of the MMS after the date of the Agreement,
references in the Agreement to MMS shall mean BOEM or BSEE, as the case may be.

 

Section 1.03 Additional Defined Terms.

As used in this Amendment, the following terms shall have the following
respective meanings:

“Amendment Effective Date” means December 19, 2012.

“ARGO” means Argonaut Insurance Company.

“ARGO Bonds” shall mean those two certain Performance Bonds No. SUR0019139 in
the amount of $18,900,000.00 and No. SUR0019140 in the amount of $13,700,000.00
issued by ARGO to W&T as Obligee in the forms attached hereto as Exhibits A-1
and A-2, and any substitution, amendment, reduction, or modification thereof.

 

1

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“BOEM” means the Bureau of Ocean Energy Management of the United States
Department of the Interior.

“BSEE” means the Bureau of Safety and Environmental Enforcement of the United
States Department of the Interior.

ARTICLE II

SUBSTITUTION AND AMENDMENTS

 

Section 2.01 ARGO Bonds.

Pursuant to the provisions of Section 7.07.01(b)(iv) of the Agreement, within
one (1) business day of delivery of the ARGO Bonds to Seller, Seller shall
(a) release its right to any moneys held in the Operated Escrow, (b) release the
security interest and deposit account control agreement formerly securing
Seller’s rights in the Operated Escrow, and (c) authorize Amegy Bank as Escrow
Agent to release such funds from the Operated Escrow to or at the direction of
Buyer.

 

Section 2.02 Completion of Funding Non-Operated Escrow.

Seller and Buyer agree that until the completion of the deposits to the
Non-Operated Escrow Account as provided for in Section 7.07.02(a) of the
Agreement, and Exhibit H-2 of the Agreement, and Schedule 2 to the Non-Operated
Escrow Agreement, Buyer may not obtain reductions of the ARGO Bonds under any
circumstance without the consent of Seller.

 

Section 2.03 Reduction of ARGO Bonds.

In order to reflect the substitution of the ARGO Bonds for the Operated Escrow,
in the event Buyer has fully performed all P&A Obligations with respect to a
particular Operated Property set forth in Exhibit F (as amended by this
Amendment and as such Operated Property is related to a particular ARGO Bond),
Buyer and Seller acknowledge that Buyer may request that Seller direct ARGO to
reduce, and Seller agrees that it will promptly direct ARGO to reduce, the
applicable ARGO Bond in the amount of performed P&A Obligations with respect to
such particular Operated Property, but limited in the aggregate to an amount not
to exceed the allocated P&A Liability set forth in Exhibit F (as amended by this
Amendment) attributed to such abandoned Operated Property; provided, however,
that Buyer may not request reduction to the applicable ARGO Bond with respect to
a particular Operated Property affected thereby if the amount of the applicable
ARGO Bond has been previously reduced with respect to the allocated P&A
Liability associated with such Operated Property; and provided, further, that
Buyer may not request reduction of the applicable ARGO Bond upon the occurrence
and during the continuance of a default in making any payment under
Section 7.07.02(a) with respect to the Non-Operated Escrow Agreement, or under
the obligation of Buyer to perform P&A Obligations with regard to the Operated
Properties or the Non-Operated Properties in accordance with all notices, rules
and regulations of the BOEM and any other agency, body, or authority having
jurisdiction over Buyer. In connection with any requested reduction, Buyer shall
provide Seller

 

2

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an updated BOEM Report reflecting the then-current P&A Liability. Buyer shall
not have the right to request any reduction of the applicable ARGO Bond to
reflect the performance of P&A Obligations with regard to wells drilled after
the Effective Date or with regard to platforms, pipelines, or other facilities
installed after the Effective Date.

 

Section 2.04 Substitution Of Exhibit F.

Exhibit F to the Agreement is hereby replaced by Exhibit F attached to this
Amendment.

ARTICLE III

CONDITIONS TO EFFECTIVENESS

 

Section 3.01 Conditions to Effectiveness.

The conditions to the Effectiveness of this Amendment are:

 

  1. Delivery of the ARGO Bonds to W&T.

 

  2. Execution of this Amendment.

 

Section 3.02 Termination.

If the conditions set forth in Section 3.01 are not satisfied on or before
December 31, 2012 or such other date as Seller and Buyer may agree in writing,
this Amendment shall be null and void and of no force or effect.

ARTICLE IV

MISCELLANEOUS

 

Section 4.01 Exhibits.

The Exhibits and Schedules referred to in this Amendment are hereby incorporated
in this Amendment and the Agreement by reference and constitute a part of this
Amendment and the Agreement. Each party to this Amendment has received a
complete set of Exhibits and Schedules as of the execution of this Amendment.

 

Section 4.02 Headings.

The headings of the articles and sections of this Amendment are for guidance and
convenience of reference only and shall not limit or otherwise affect any of the
terms or provisions of this Amendment.

 

Section 4.03 Counterparts.

This Amendment may be executed by Buyer and Seller in any number of
counterparts, each of which shall be deemed an original instrument, but all of
which, together, shall constitute but one and the same instrument.

 

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Section 4.04 Governing Law.

This Agreement and the transactions contemplated hereby shall be construed in
accordance with, and governed by, the laws of the State of Texas.

 

Section 4.05 Severability.

The invalidity of any one or more provisions of this Agreement shall not affect
the validity of this Agreement as a whole, and in case any such invalidity, this
Agreement shall be construed as if the invalid provision had not been included
herein.

 

Section 4.06 Ratification.

Except as amended in this Amendment, Seller and Buyer ratify and confirm the
terms of the Agreement.

 

Section 4.07 Not Construed Against Drafter.

Buyer and Seller acknowledge that they have read this Amendment, have had the
opportunity to review it with an attorney of their respective choice, and have
agreed to all its terms. Under these circumstances, Buyer and Seller agree that
the rule of construction that a contract be construed against the drafter shall
not be applied in interpreting this Amendment and that in the event of any
ambiguity in any of the terms or conditions of this Amendment, including any
Exhibits or Schedules hereto and whether or not placed of record, such ambiguity
shall not be construed for or against any party hereto on the basis that such
party did or did not author same.

 

4

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EXECUTED effective as of the Amendment Effective Date.

 

SELLER:     BUYER: W&T OFFSHORE, INC.     BLACK ELK ENERGY OFFSHORE OPERATIONS,
LLC By:   /s/ Thomas F. Getten     By:   /s/ John Hoffman  

Thomas F. Getten

Vice President

     

John Hoffman

President

 

 

Signature Page to Third Amendment to Purchase and Sale Agreement

 

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EXHIBIT A-1

ARGO BOND NO. SUR0019139

See attached.

 

 

Exhibit A-1-1

 

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Bond No. SUR0019139

PERFORMANCE BOND

KNOW ALL MEN BY THESE PRESENTS:

That we, Black Elk Energy Offshore Operations, LLC, a Texas limited liability
company, whose mailing address is 11451 Katy Freeway, Suite 500, Houston, TX
77079 (hereinafter called the “Principal”), and Argonaut Insurance Company, with
an address of P.O. Box 469011, San Antonio, Texas 78246 (hereinafter called the
“Surety”), are held and firmly bound unto W&T Offshore, Inc., a Texas
corporation, whose mailing address is Nine Greenway Plaza, Suite 300, Houston,
Texas 77046 (hereinafter called the “Obligee”), in the sum of Eighteen Million
Nine Hundred Thousand and No/100 Dollars ($18,900,000.00), lawful money of the
United States of America, for the payment of which sum the Principal and the
Surety bind themselves, their successors and assigns, jointly, severally, and in
solido, firmly by these presents.

WHEREAS, the Principal has entered into that certain Agreement for Purchase and
Sale dated effective August 1, 2009 (the “Effective Date”), with the Obligee
(hereinafter as heretofore amended, the “Agreement”), which Agreement is by this
reference made a part hereof and which provides in part for the sale and
assignment by the Obligee to the Principal, of the interests of the Obligee in
oil and gas Leases (described in Exhibit “A” to the Agreement under the heading
“Operated”) and Rights of Way described in Exhibit “A-4” to the Agreement (in
which Principal is operator or the Obligee was operator prior to the Effective
Date)(hereinafter collectively called the “Subject Leases”), together with all
rights and obligations in connection therewith, and all wells, platforms,
facilities, equipment, pipelines (including without limitation the pipelines
described in Exhibit “A-5” to the Agreement) and personal property (both
abandoned or unabandoned) existing on or associated with the Subject Leases as
of the Effective Date of the Agreement (hereinafter called the “Subject
Equipment”; Subject Leases and Subject Equipment collectively, the “Subject
Interests”); and

WHEREAS, the Principal has agreed to plug and abandon and dismantle and remove,
restore and remediate, in accordance with the Agreement, the Subject Leases
described in Schedule A hereto and all rules and regulations of the Bureau of
Ocean Energy Management, Regulation and Enforcement (the “BOEM”) and any other
agency, body or authority having jurisdiction, all Subject Equipment existing on
or associated with the Subject Leases described in Schedule A hereto (the “P&A
Obligations”), and in accordance with the Agreement, the Principal has agreed to
furnish the Obligee this Bond; and

WHEREAS, the Principal and the Surety agree, notwithstanding the termination of
any of the Subject Leases described in Schedule A hereto, whether by operation
of law or otherwise, that this Bond shall remain in full force and effect until
the P&A Obligations have been performed and discharged as set forth below; and

WHEREAS, the Principal has promised to deliver to the Obligee a Bond
substantially in the form hereof, and

WHEREAS, the Surety represents that it is duly authorized by the proper public
authorities to transact the business of indemnity and suretyship in the state
where it executed this Bond, and represents that it is qualified to be surety
and guarantor on bonds and undertakings, which certificate has not been revoked;
and

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WHEREAS, the Surety represents that it has duly executed a power of attorney,
appointing the hereinafter named representative as its duly authorized deputy,
as the true and lawful attorney-in-fact of such Surety, upon whom may be served
all lawful process in any action or proceeding against such Surety in any court
or before any officer, arising out of or founded upon this Bond or any liability
hereunder; and does hereby agree and consent that such service, when so made,
shall be valid service upon it, and that such appointment shall continue in
force and effect and be irrevocable so long as any liability against it remains
outstanding hereunder.

NOW THEREFORE, the Principal and the Surety agree as follows:

The Principal and the Surety, jointly and severally, and in solido, bind
themselves, their successors and assigns, to the Obligee to timely perform and
discharge the P&A Obligations in accordance with the Agreement, the Subject
Leases described in Schedule A hereto and all rules and regulations of the BOEM
and any other agency, body or authority having jurisdiction.

PROVIDED, HOWEVER, if said Principal or Surety shall fully perform and discharge
the P&A Obligations (as evidenced by written documentation (reasonably
acceptable to the Obligee) as may be required by or issued by any governmental
agency, body or authority having jurisdiction to reflect completion, performance
and discharge of the P&A Obligations, evidencing that the Subject Equipment
existing on or associated with the Subject Leases described in Schedule A hereto
has been satisfactorily plugged, abandoned, removed and dismantled and the lands
subject to the Subject Leases described in Schedule A hereto restored and
remediated, all in accordance with all appropriate governmental authorities),
then this Bond shall be null and void; otherwise, it shall remain in full force
and effect in the amount hereof, reduced in the manner provided herein.

PROVIDED, THAT, to the extent the Principal may be liable for any expenses,
fees, penalties, damages (either direct, indirect or consequential) other than
the obligation described above, or to the extent the Obligee may incur any
attorney’s fees or court costs or other expenses of litigation in the event of a
contest over the Surety’s denial of the obligation (or any part thereof), the
maximum obligation of the Surety under this Bond shall be the sum of Eighteen
Million Nine Hundred Thousand and No/100 Dollars ($18,900,000.00) or the
remaining amount (reduced as provided for herein).

FURTHERMORE, it is agreed that the Surety shall not be liable for any provisions
of the Agreement or specifications respecting the procurement of or coverages
provided by any insurance, nor shall the Surety be liable under any hold
harmless and/or indemnification agreements entered into by Principal in relation
to personal injury or property damage or any other loss sustained by third
parties in any way connected to or arising out of the work and/or operations of
any party in prosecuting the work to be performed under the Agreement.

Whenever the Principal fails to timely perform the P&A Obligations with respect
to a Subject Lease described in Schedule A hereto and the Obligee has presented
to the Surety and the

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Principal a written notice that the Principal is in default of its P&A
Obligations, the Surety shall, within thirty (30) days of such presentations:
(1) to pay to Obligee an amount reasonably estimated by Obligee as necessary or
appropriate to perform the P&A Obligations in an amount up to, but not
exceeding, the lesser of (i) the penal amount of this Bond or (ii) the P&A
Amount associated with such Subject Lease set forth in Schedule A hereto (the
penal amount of this Bond shall be reduced by the amount of such payment to the
Obligee) ; or (2) commence the necessary operations to perform the P&A
Obligations.

Whenever the Principal shall fully perform and discharge the P&A Obligations
with respect to a Subject Lease described in Schedule A hereto (as evidenced by
written documentation (reasonably acceptable to the Obligee) as may be required
by or issued by any governmental agency, body or authority having jurisdiction
to reflect completion, performance and discharge of such P&A Obligations,
evidencing that the Subject Equipment has been satisfactorily plugged,
abandoned, removed and dismantled and the lands subject to such Subject Lease
restored and remediated, all in accordance with all appropriate governmental
authorities) the penal amount of this Bond shall be reduced by the P&A Amount
associated with such Subject Lease set forth in Schedule A hereto; provided,
however,there shall be no reduction in the penal amount of this Bond if (i) the
penal amount of this Bond had been previuosly reduced with respect to the P&A
Obligations associated with such Subject Lease, (ii) the Principal is in default
of its payment obligation under Section 7.07.02(a) of the Agreement, or
(iii) the Principal is in default of its obligation to perform P&A Obligations
with regard to any of the Operated Properties or the Non-Operated Properties (as
defined in the Agreement) in accordance with all notices, rules and regulations
of the BOEM and any other agency, body, or authority having jurisdiction.

FURTHERMORE, if Obligee is required by the BOEM, or other governmental
authority, to perform any of the P&A Obligations (or a demand is made upon the
Obligee by a co-obligor of Principal to contribute toward the costs of
performing any of the P&A Obligations) with respect to a Subject Lease described
in Schedule A hereto, then prior to any performance by Obligee with respect to
the P&A Obligations (or payment by Obligee to Principal’s co-obligor of a share
of the estimated costs of performing the P&A Obligations if a demand for such
payment is made on Obligee), Surety agrees to pay to Obligee an amount
reasonably estimated by Obligee as necessary or appropriate to perform the P&A
Obligations (or to pay its share of the estimated costs for the P&A Obligations
if demand is made by Principal’s co-obligor) in an amount up to, but not
exceeding, the lesser of (i) the penal amount of this Bond or (ii) the P&A
Amount associated with such Subject Lease set forth in Schedule A hereto (the
penal amount of this Bond shall be reduced by the amount of such payment to the
Obligee).

If the Surety shall decide, upon default by the Principal, to commence, or cause
to be commenced, the performance of the P&A Obligations with respect to a
Subject Lease described in Schedule A hereto, said operations shall continue
until such time as the P&A Obligations have been satisfied, with the amount of
this Bond being reduced by the costs incurred by the Surety in connection with
such operations but not to exceed the P&A Amount associated with such Subject
Lease set forth in Schedule A hereto.

Any suit under this Bond must be instituted before the expiration of two
(2) years from the date on which a default by the Principal, as detailed herein,
occurs or is discovered by the Obligee, whichever date is later.

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No amendment of or supplement to the terms or provisions of the Agreement or of
the Exhibits attached thereto shall release the Principal and the Surety or any
of them from their liability under this Bond, notice to the Surety of any such
amendment or supplement being hereby waived, except to the extent that is herein
provided.

No (i) assignment of the Agreement or of the Subject Leases by the Principal,
its successors and assigns, (ii) delay, neglect or failure of the Obligee to
proceed promptly to enforce the Agreement or to proceed promptly in the premises
in case of any default on the part of the Principal, (iii) lack of
enforceability or other defense or offset right in respect of any obligation of
Principal or right of Obligee under the Agreement or otherwise in respect of the
P&A Obligations, (iv) insolvency, bankruptcy or receivership of Principal or
(v) default by Principal in the payment or performance of any obligation owed
the Surety, shall relieve the Principal and the Surety or any of them of their
obligations under this Bond.

HOWEVER, if upon assignment of all or a part of the Subject Leases or any
Subject Equipment by the Principal, its successors or assigns, the Principal
shall cause its assignee to post security, in the form of a bond or other
security, in each case acceptable to the Obligee, in its sole discretion, in the
amount of and covering the same obligations as stated herein, proportionately
reduced based on the interest being assigned, then the Obligee will accept such
security in lieu of this Bond, in whole or in part, and issue an unconditional
partial or full release of this Bond, as applicable, within sixty (60) days of
the Obligee’s acceptance of such other security. The Obligee agrees that a bond
in the same form and by the same surety as this Bond is acceptable.

No right or action shall accrue on this Bond to or for the use of any person or
corporation other than the Principal, the Obligee, their respective successors
and assignees.

NOW, THEREFORE, if the Principal shall faithfully observe and honestly comply
with the provisions contained herein, then this Bond shall become null and void
and of no effect.

The Obligee will issue a release of this Bond within a reasonable time period,
but in no instance longer than ninety (90) days after receipt of satisfactory
evidence (a report from the proper regulatory authority) of the Principal’s full
and faithful performance and compliance with the obligation of this Bond.

No right or action shall accrue on this Bond to or for the use of any person or
corporation other than the Obligee, its successors and assigns. Any suit under
this Bond may be instituted by the Obligee against the Surety in any court in
the State of Texas, and the Surety consents to be sued in any court in the State
of Texas, hereby irrevocably submitting itself to the jurisdiction of said
court.

Notices to the Surety, the Obligee or the Principal shall be mailed or delivered
to the address shown on the signature page hereof. Actual receipt of notice,
however accomplished, shall be sufficient compliance as of the date received at
the address shown on the signature page hereof.

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IN WITNESS WHEREOF, the above bound parties have executed this instrument under
their several seals this 19th day of December, 2012, the name and corporate seal
of each corporate party being hereto affixed and those presents duly signed by
its undersigned representative pursuant to authority of its governing body.

 

      PRINCIPAL:       Black Elk Energy Offshore Operations, LLC       11451
Katy Freeway, Suite 500       Houston, TX 77079       Attention: J.D. Matthews,
Vice President-Land Witness:      

 

    By:  

 

Patrick Dolezal       J.D. Matthews, Vice President-Land       OBLIGEE       W&T
Offshore, Inc.       Nine Greenway, Suite 300       Houston, Texas 77046      
Attention: Jamie L. Vazquez Attest:      

 

    By:  

 

      SURETY:       Argonaut Insurance Comapny       P.O. Box 469011       San
Antonio, Texas 78246 Witness:      

 

    By:  

 

Candace D. Bosheers       Dan W. Burton, Attorney-in-Fact

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Schedule A

Bond Number SUR0019139

 

Block (with OCS #)

  

ROW (with OCS #)

  

Lease pipelines by Seg #

   Allocated P&A  

•   

  VR 119 OCS-00487    #3536 (OOS) OCS-G13425   

#7066 (OOS) OCS-00487

#9614 OCS-00487

#10906 OCS-00487

     Freshwater City   

Humble Oil and Refining Co. dated 1/22/1969

Dr. Martin O. Miller dated 1/6/1969

Humble Oil and Refining ROW dated6/19/1969

Leo J. Mixson et al. dated 2/6/1969

State of Louisiana ROW #1013

      $ 4,200,000.00   

•   

  HI A-571 OCS-G 02391    #5913 OCS-G02391         3,900,000.00   

•   

  HI A-370 OCS-G 02434       #9054 (OOS) OCS-G 02434      3,800,000.00   

•   

 

ST 184 OCS-G 01568

ST 185 OCS-G 01569

ST 179 OCS-G 12020

   #4128 (OOS) OCS-G 01693G    #5505 (OOS) OCS-G04059      3,600,000.00   

•   

 

ST 190 OCS-G 01261

ST 203 OCS-G 01269

   #9510 OCS-G 17722         3,400,000.00              

 

 

    Total          $ 18,900,000.00   

 

 

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EXHIBIT A-2

ARGO BOND NO. SUR0019140

See attached.

 

Exhibit A-2-1

 

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Bond No. SUR0019140

PERFORMANCE BOND

KNOW ALL MEN BY THESE PRESENTS:

That we, Black Elk Energy Offshore Operations, LLC, a Texas limited liability
company, whose mailing address is 11451 Katy Freeway, Suite 500, Houston, TX
77079 (hereinafter called the “Principal”), and Argonaut Insurance Company, with
an address of P.O. Box 469011, San Antonio, Texas 78246 (hereinafter called the
“Surety”), are held and firmly bound unto W&T Offshore, Inc., a Texas
corporation, whose mailing address is Nine Greenway Plaza, Suite 300, Houston,
Texas 77046 (hereinafter called the “Obligee”), in the sum of Thirteen Million
Seven Hundred Thousand and No/100 Dollars ($13,700,000.00), lawful money of the
United States of America, for the payment of which sum the Principal and the
Surety bind themselves, their successors and assigns, jointly, severally, and in
solido, firmly by these presents.

WHEREAS, the Principal has entered into that certain Agreement for Purchase and
Sale dated effective August 1, 2009 (the “Effective Date”), with the Obligee
(hereinafter as heretofore amended, the “Agreement”), which Agreement is by this
reference made a part hereof and which provides in part for the sale and
assignment by the Obligee to the Principal, of the interests of the Obligee in
oil and gas Leases (described in Exhibit “A” to the Agreement under the heading
“Operated”) and Rights of Way described in Exhibit “A-4” to the Agreement (in
which Principal is operator or the Obligee was operator prior to the Effective
Date)(hereinafter collectively called the “Subject Leases”), together with all
rights and obligations in connection therewith, and all wells, platforms,
facilities, equipment, pipelines (including without limitation the pipelines
described in Exhibit “A-5” to the Agreement) and personal property (both
abandoned or unabandoned) existing on or associated with the Subject Leases as
of the Effective Date of the Agreement (hereinafter called the “Subject
Equipment”; Subject Leases and Subject Equipment collectively, the “Subject
Interests”); and

WHEREAS, the Principal has agreed to plug and abandon and dismantle and remove,
restore and remediate, in accordance with the Agreement, the Subject Leases
described in Schedule A hereto and all rules and regulations of the Bureau of
Ocean Energy Management, Regulation and Enforcement (the “BOEM”) and any other
agency, body or authority having jurisdiction, all Subject Equipment existing on
or associated with the Subject Leases described in Schedule A hereto (the “P&A
Obligations”), and in accordance with the Agreement, the Principal has agreed to
furnish the Obligee this Bond; and

WHEREAS, the Principal and the Surety agree, notwithstanding the termination of
any of the Subject Leases described in Schedule A hereto, whether by operation
of law or otherwise, that this Bond shall remain in full force and effect until
the P&A Obligations have been performed and discharged as set forth below; and

WHEREAS, the Principal has promised to deliver to the Obligee a Bond
substantially in the form hereof, and

WHEREAS, the Surety represents that it is duly authorized by the proper public
authorities to transact the business of indemnity and suretyship in the state
where it executed this Bond, and represents that it is qualified to be surety
and guarantor on bonds and undertakings, which certificate has not been revoked;
and

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WHEREAS, the Surety represents that it has duly executed a power of attorney,
appointing the hereinafter named representative as its duly authorized deputy,
as the true and lawful attorney-in-fact of such Surety, upon whom may be served
all lawful process in any action or proceeding against such Surety in any court
or before any officer, arising out of or founded upon this Bond or any liability
hereunder; and does hereby agree and consent that such service, when so made,
shall be valid service upon it, and that such appointment shall continue in
force and effect and be irrevocable so long as any liability against it remains
outstanding hereunder.

NOW THEREFORE, the Principal and the Surety agree as follows:

The Principal and the Surety, jointly and severally, and in solido, bind
themselves, their successors and assigns, to the Obligee to timely perform and
discharge the P&A Obligations in accordance with the Agreement, the Subject
Leases described in Schedule A hereto and all rules and regulations of the BOEM
and any other agency, body or authority having jurisdiction.

PROVIDED, HOWEVER, if said Principal or Surety shall fully perform and discharge
the P&A Obligations (as evidenced by written documentation (reasonably
acceptable to the Obligee) as may be required by or issued by any governmental
agency, body or authority having jurisdiction to reflect completion, performance
and discharge of the P&A Obligations, evidencing that the Subject Equipment
existing on or associated with the Subject Leases described in Schedule A hereto
has been satisfactorily plugged, abandoned, removed and dismantled and the lands
subject to the Subject Leases described in Schedule A hereto restored and
remediated, all in accordance with all appropriate governmental authorities),
then this Bond shall be null and void; otherwise, it shall remain in full force
and effect in the amount hereof, reduced in the manner provided herein.

PROVIDED, THAT, to the extent the Principal may be liable for any expenses,
fees, penalties, damages (either direct, indirect or consequential) other than
the obligation described above, or to the extent the Obligee may incur any
attorney’s fees or court costs or other expenses of litigation in the event of a
contest over the Surety’s denial of the obligation (or any part thereof), the
maximum obligation of the Surety under this Bond shall be the sum of Thirteen
Million Seven Hundred Thousand and No/100 Dollars ($13,700,000.00) or the
remaining amount (reduced as provided for herein).

FURTHERMORE, it is agreed that the Surety shall not be liable for any provisions
of the Agreement or specifications respecting the procurement of or coverages
provided by any insurance, nor shall the Surety be liable under any hold
harmless and/or indemnification agreements entered into by Principal in relation
to personal injury or property damage or any other loss sustained by third
parties in any way connected to or arising out of the work and/or operations of
any party in prosecuting the work to be performed under the Agreement.

Whenever the Principal fails to timely perform the P&A Obligations with respect
to a Subject Lease described in Schedule A hereto and the Obligee has presented
to the Surety and the

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Principal a written notice that the Principal is in default of its P&A
Obligations, the Surety shall, within thirty (30) days of such presentations:
(1) to pay to Obligee an amount reasonably estimated by Obligee as necessary or
appropriate to perform the P&A Obligations in an amount up to, but not
exceeding, the lesser of (i) the penal amount of this Bond or (ii) the P&A
Amount associated with such Subject Lease set forth in Schedule A hereto (the
penal amount of this Bond shall be reduced by the amount of such payment to the
Obligee) ; or (2) commence the necessary operations to perform the P&A
Obligations.

Whenever the Principal shall fully perform and discharge the P&A Obligations
with respect to a Subject Lease described in Schedule A hereto (as evidenced by
written documentation (reasonably acceptable to the Obligee) as may be required
by or issued by any governmental agency, body or authority having jurisdiction
to reflect completion, performance and discharge of such P&A Obligations,
evidencing that the Subject Equipment has been satisfactorily plugged,
abandoned, removed and dismantled and the lands subject to such Subject Lease
restored and remediated, all in accordance with all appropriate governmental
authorities) the penal amount of this Bond shall be reduced by the P&A Amount
associated with such Subject Lease set forth in Schedule A hereto; provided,
however, there shall be no reduction in the penal amount of this Bond if (i) the
penal amount of this Bond had been previuosly reduced with respect to the P&A
Obligations associated with such Subject Lease, (ii) the Principal is in default
of its payment obligation under Section 7.07.02(a) of the Agreement, or
(iii) the Principal is in default of its obligation to perform P&A Obligations
with regard to any of the Operated Properties or the Non-Operated Properties (as
defined in the Agreement) in accordance with all notices, rules and regulations
of the BOEM and any other agency, body, or authority having jurisdiction.

FURTHERMORE, if Obligee is required by the BOEM, or other governmental
authority, to perform any of the P&A Obligations (or a demand is made upon the
Obligee by a co-obligor of Principal to contribute toward the costs of
performing any of the P&A Obligations) with respect to a Subject Lease described
in Schedule A hereto, then prior to any performance by Obligee with respect to
the P&A Obligations (or payment by Obligee to Principal’s co-obligor of a share
of the estimated costs of performing the P&A Obligations if a demand for such
payment is made on Obligee), Surety agrees to pay to Obligee an amount
reasonably estimated by Obligee as necessary or appropriate to perform the P&A
Obligations (or to pay its share of the estimated costs for the P&A Obligations
if demand is made by Principal’s co-obligor) in an amount up to, but not
exceeding, the lesser of (i) the penal amount of this Bond or (ii) the P&A
Amount associated with such Subject Lease set forth in Schedule A hereto (the
penal amount of this Bond shall be reduced by the amount of such payment to the
Obligee).

If the Surety shall decide, upon default by the Principal, to commence, or cause
to be commenced, the performance of the P&A Obligations with respect to a
Subject Lease described in Schedule A hereto, said operations shall continue
until such time as the P&A Obligations have been satisfied, with the amount of
this Bond being reduced by the costs incurred by the Surety in connection with
such operations but not to exceed the P&A Amount associated with such Subject
Lease set forth in Schedule A hereto.

Any suit under this Bond must be instituted before the expiration of two
(2) years from the date on which a default by the Principal, as detailed herein,
occurs or is discovered by the Obligee, whichever date is later.

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No amendment of or supplement to the terms or provisions of the Agreement or of
the Exhibits attached thereto shall release the Principal and the Surety or any
of them from their liability under this Bond, notice to the Surety of any such
amendment or supplement being hereby waived, except to the extent that is herein
provided.

No (i) assignment of the Agreement or of the Subject Leases by the Principal,
its successors and assigns, (ii) delay, neglect or failure of the Obligee to
proceed promptly to enforce the Agreement or to proceed promptly in the premises
in case of any default on the part of the Principal, (iii) lack of
enforceability or other defense or offset right in respect of any obligation of
Principal or right of Obligee under the Agreement or otherwise in respect of the
P&A Obligations, (iv) insolvency, bankruptcy or receivership of Principal or
(v) default by Principal in the payment or performance of any obligation owed
the Surety, shall relieve the Principal and the Surety or any of them of their
obligations under this Bond.

HOWEVER, if upon assignment of all or a part of the Subject Leases or any
Subject Equipment by the Principal, its successors or assigns, the Principal
shall cause its assignee to post security, in the form of a bond or other
security, in each case acceptable to the Obligee, in its sole discretion, in the
amount of and covering the same obligations as stated herein, proportionately
reduced based on the interest being assigned, then the Obligee will accept such
security in lieu of this Bond, in whole or in part, and issue an unconditional
partial or full release of this Bond, as applicable, within sixty (60) days of
the Obligee’s acceptance of such other security. The Obligee agrees that a bond
in the same form and by the same surety as this Bond is acceptable.

No right or action shall accrue on this Bond to or for the use of any person or
corporation other than the Principal, the Obligee, their respective successors
and assignees.

NOW, THEREFORE, if the Principal shall faithfully observe and honestly comply
with the provisions contained herein, then this Bond shall become null and void
and of no effect.

The Obligee will issue a release of this Bond within a reasonable time period,
but in no instance longer than ninety (90) days after receipt of satisfactory
evidence (a report from the proper regulatory authority) of the Principal’s full
and faithful performance and compliance with the obligation of this Bond.

No right or action shall accrue on this Bond to or for the use of any person or
corporation other than the Obligee, its successors and assigns. Any suit under
this Bond may be instituted by the Obligee against the Surety in any court in
the State of Texas, and the Surety consents to be sued in any court in the State
of Texas, hereby irrevocably submitting itself to the jurisdiction of said
court.

Notices to the Surety, the Obligee or the Principal shall be mailed or delivered
to the address shown on the signature page hereof. Actual receipt of notice,
however accomplished, shall be sufficient compliance as of the date received at
the address shown on the signature page hereof.

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IN WITNESS WHEREOF, the above bound parties have executed this instrument under
their several seals this 19th day of December, 2012, the name and corporate seal
of each corporate party being hereto affixed and those presents duly signed by
its undersigned representative pursuant to authority of its governing body.

 

      PRINCIPAL:       Black Elk Energy Offshore Operations, LLC       11451
Katy Freeway, Suite 500       Houston, TX 77079       Attention: J.D. Matthews,
Vice President-Land Witness:      

 

    By:  

 

Patrick Dolezal       J.D. Matthews, Vice President-Land       OBLIGEE       W&T
Offshore, Inc.       Nine Greenway, Suite 300       Houston, Texas 77046      
Attention: Jamie L. Vazquez Attest:      

 

    By:  

 

      SURETY:       Argonaut Insurance Company       P.O. Box 469011       San
Antonio, Texas 78246 Attest:      

 

    By:  

 

Candace D. Bosheers       Dan W. Burton, Attorney-in-Fact

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Schedule A

Bond Number SUR0019140

 

Block (with OCS #)

  

ROW (with OCS #)

  

Lease pipelines by Seg #

   Allocated P&A  

•   

  SP 86 OCS-G 05687    #10458 OCS-G 28557       $ 3,000,000.00   

•   

  ST 299 OCS-G 21683            2,900,000.00   

•   

  VR 124 OCS- 00495      

#557 OCS-00495

#584 (OOS) OCS-00487

#7132 OCS-00495

#7762 OCS-00495

#8266 OCS-00495

#8267 (OOS) OCS-00495

#18584 OCS-00495

     2,700,000.00   

•   

  HI A-443 OCS-G 03241    #10773 OCS-G 15676         2,000,000.00   

•   

  WC 370 OCS-G 21553    #13165 OCS-G 22407         1,100,000.00   

•   

  WC 142 OCS-G 13560    # 10042 OCS-G14074         900,000.00   

•   

  GA 352 OCS-G 23180    #13880 (OOS) OCS-G24257         800,000.00   

•   

 

EC 345 OCS-G 15156

EC 360 OCS-G 15158

  

#13301 OCS-G22453

#13302 OCS-G22454

#13303 OCS-G22455

        300,000.00              

 

 

    Total          $ 13,700,000.00   

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EXHIBIT F

 

Block (with OCS #)   ROW (with OCS #)    Lease pipelines by Seg #   Allocated
P&A ($MM)

 

• VR 119 OCS-00487   #3536 (OOS) OCS-G13425    #7066 (OOS) OCS-00487         
#9614 OCS-00487          #10906 OCS-00487        Freshwater City   Humble Oil
and Refining Co. dated 1/22/1969       Dr. Martin O. Miller dated 1/6/1969      
Humble Oil and Refining ROW dated 6/19/1969       Leo J. Mixson et al. dated
2/6/1969       State of Louisiana ROW #1013     $4,200 • HI A-571 OCS-G 02391  
#5913 OCS-G02391        $3,900 • HI A-370 OCS-G 02434      #9054 (OOS) OCS-G
02434     $3,800 • ST 184 OCS-G 01568   #4128 (OOS) OCS-G 01693G    #5505 (OOS)
OCS-G04059        ST 185 OCS-G 01569             ST 179 OCS-G 12020         
$3,600 • ST 190 OCS-G 01261             ST 203 OCS-G 01269   #9510 OCS-G 17722
       $3,400 • SP 86 OCS-G 05687   #10458 OCS-G 28557        $3,000 • ST 299
OCS-G 21683          $2,900

 

Exhibit F-1

 

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• VR 124 OCS- 00495      #557 OCS-00495          #584 (OOS) OCS-00487         
#7132 OCS-00495          #7762 OCS-00495          #8266 OCS-00495          #8267
(OOS) OCS-00495          #18584 OCS-00495     $2,700             • HI A-443
OCS-G 03241   #10773 OCS-G 15676        $2,000    • WC 370 OCS-G 21553   #13165
OCS-G 22407        $1,100    • WC 142 OCS-G 13560   # 10042 OCS-G14074       
$900       • GA 352 OCS-G 23180   #13880 (OOS) OCS-G24257        $800       • EC
345 OCS-G 15156   #13301 OCS-G22453           EC 360 OCS-G 15158   #13302
OCS-G22454          #13303 OCS-G22455        $300              Total   $32,600

 

 

Exhibit F-2