EXHIBIT 10.1

SPECIFIC TERMS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST TO THE
SECURITIES AND EXCHANGE COMMISSION. THE OMITTED INFORMATION HAS BEEN SEPARATELY
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THE OMITTED TERMS HAVE BEEN
MARKED AT THE APPROPRIATE PLACE WITH TWO ASTERISKS (**).
 
CARBON DIOXIDE SALE & PURCHASE AGREEMENT
Effective February 1, 2008

BETWEEN

EXXONMOBIL GAS & POWER MARKETING COMPANY
(a division of Exxon Mobil Corporation)

AND

RANCHER ENERGY CORP.
 

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CARBON DIOXIDE SALE & PURCHASE AGREEMENT
 
ARTICLE 1 - DEFINITIONS
 
3
ARTICLE 2 - COMMITMENTS BY SELLER AND BUYER
 
7
ARTICLE 3 - NOMINATIONS, EARLY VOLUMES AND EXCESS VOLUMES
 
9
ARTICLE 4 - PRICE
 
10
ARTICLE 5 - BILLING AND PAYMENT
 
13
ARTICLE 6 - TERM
 
17
ARTICLE 7 - ROYALTY
 
17
ARTICLE 8 - TAXES
 
18
ARTICLE 9 - DELIVERY POINT, TITLE, RATE AND PRESSURE
 
19
ARTICLE 10 - MEASUREMENT AND COMPUTATION OF VOLUMES
 
20
ARTICLE 11 - MISCELLANEOUS
 
21
EXHIBIT A - DAILY CONTRACT QUANTITY
 
34
EXHIBIT B - EXPERT PROCEDURES
 
35

 
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CARBON DIOXIDE SALE AND PUCHASE AGREEMENT
 
THIS CARBON DIOXIDE SALE AND PURCHASE AGREEMENT ("Agreement") is made and
entered into effective as of the 1st day of February, 2008, ("Effective Date")
by and between ExxonMobil Gas & Power Marketing Company (a division of Exxon
Mobil Corporation) ("Seller"), and Rancher Energy Corp., as operator of the Big
Muddy, South Glenrock, and Cole Creek South fields located in Converse County,
Wyoming ("Buyer").

WHEREAS, Buyer desires to purchase Carbon Dioxide from Seller for use in
tertiary oil recovery projects ("Project") including, but not limited to the Big
Muddy, South Glenrock, and Cole Creek South fields; and

WHEREAS, Seller is undertaking a CO2 Expansion Project and anticipates it will
have Carbon Dioxide available for sale after the Start-Up Date; and

WHEREAS, Seller desires to sell Carbon Dioxide to Buyer from the LaBarge field
in Wyoming;

NOW THEREFORE, for and in consideration of the premises and the mutual benefits
and covenants herein contained, Buyer and Seller agree as follows:
 
ARTICLE 1 - DEFINITIONS

Defined Words and Terms: As used in this Agreement, the following words and
terms shall have the meanings indicated:

(a)
"Affiliate" with respect to a Party means any entity that directly or indirectly
(through one or more entities) controls, is controlled by, or is under common
control with such Party. For the purposes of this definition and the definition
of “Controlling Party” set forth below in this Article 1, the term “control”
means the right to cast more than 50% of the votes exercisable at an annual
general meeting (or its equivalent) of the entity concerned or, if there are no
such rights, ownership of more than 50% of the equity share capital of or other
ownership interests in such entity, or the right to direct the policies or
operations of such entity.

(b)
"Annual Contract Quantity" or "ACQ" means the total sum of all DCQ for a
Contract Year.

(c)
"BCF” means one billion Standard Cubic Feet.

(d)
"Business Day” means a day when banks are open for business in the United
States.

(e)
"Buyer's Facilities" means the pipelines transporting the CO2 from the Delivery
Point to the Buyer’s fields, the CO2 distribution and injection facilities in
the Buyer’s fields, Buyer’s CO2 compressors, and any metering related to the
aforementioned Buyer’s pipelines, injection and distribution facilities, or CO2
compressors.

 
3

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(f)
"Contract Price" means the amount per MCF payable by Buyer to Seller for Carbon
Dioxide sold under this Agreement as set forth in Article 4, which price is
exclusive of any royalty or tax reimbursement, if any, paid by Buyer pursuant to
Articles 7 and 8.

(g)
"Contract Year" means each successive twelve (12) Month period during the Term,
commencing on the first Day of the Month following the Start-Up Date of this
Agreement.

(h)
"Carbon Dioxide" or "CO2" means a substance primarily composed of molecules
containing one atom of carbon and two atoms of oxygen and secondarily of the
other substances identified in the definition of Quality Specifications.

(i)
"CO2 Expansion Project" means Seller's project at its Shute Creek plant whereby
Seller will install or cause to be installed approximately 23,000 horsepower of
additional compression facilities, increasing the Carbon Dioxide sales capacity
from the Shute Creek plant.

(j)
"Controlling Party" means with respect to a Party, any parent company or
corporation of such Party or any of the companies constituting such Party which
directly or indirectly owns more than fifty percent (50%) of the shares carrying
voting rights of such Party.

(k)
"Daily Contract Quantity" or "DCQ" means for each Day during the Term, the
volume of Carbon Dioxide as set forth on Exhibit A, attached hereto and made a
part hereof.

(l)
"Day" means a period beginning at 7:00 a.m. Mountain Standard Time on a calendar
day and ending at 7:00 a.m. Mountain Standard Time on the next succeeding
calendar day.

(m)
"Deficiency Price" means the simple average Contract Price in effect as of the
first (1st) Day of each Month during the relevant Contract Year.

(n)
"Deficiency Volumes" has the meaning ascribed to it in Article 2.2(b).

(o)
"Delivery Point" has the meaning ascribed to it in Article 9.1.

(p)
"Early Volumes" has the meaning ascribed to it in Article 3.2.

(q)
"Effective Date" means the date upon which this Agreement came into force, which
is the date specified as such in the preamble of this Agreement.

(r)
"Excess Volumes" means volume in excess of Buyer's nominated volume, as
described in Article 3.3.

(s)
"Expert" shall have the meaning ascribed to it in Exhibit B, attached hereto and
made a part hereof.

(t)
"Extension Period" has the meaning ascribed to it in Article 2.2(f).

(u)
"ExxonMobil CO2 Pipeline" means the pipeline constructed for the transportation
of Carbon Dioxide and extending from Shute Creek plant to various points of
delivery including the Delivery Point.

 
4

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(v)
"Greenhouse Gas Reduction Rights" or "GHGRR" has the meaning ascribed to it in
Article 11.22.

 

(w)
"Interconnect Agreement" means that agreement between Buyer and Seller
establishing the details, terms and conditions associated with the design,
installation and construction of an alternate delivery point.

(x)
"Interest Rate" means thirty (30) day London Interbank Offered Rate, or LIBOR,
as published in the Wall Street Journal "Money Rates" table on the first date of
publication for the calendar month in which the payment is due.

(y)
"Key Terms" shall mean Daily Contract Quantity, Take-or-Pay Quantity, Quality
Specifications, Greenhouse Gas Reduction Rights and Performance Assurance.

(z)
"Make-Up Volumes" has the meaning ascribed to it in Article 2.2(c).

(aa)
"MCF" means one thousand Standard Cubic Feet.

(ab)
"MMCF" means one million Standard Cubic Feet.

(ac)
"Month" means a period beginning at 7:00 A.M. Mountain Standard Time on the
first day of a calendar month and ending at 7:00 A.M. Mountain Standard Time on
the first day of the next succeeding calendar month.

(ad)
"Oil Price Factor" has the meaning ascribed to it in Article 4, expressed in
dollars per barrel.

 

(ae)
"Parties" means the entities described in the preamble to this Agreement,
collectively, and "Party" means any of them, individually (and in each case
their successors and permitted assigns).

(af)
"Performance Assurance" means any assurance of performance of Buyer's
obligations under this Agreement by a Performance Assurance Provider in favor of
the Seller. Each Performance Assurance shall be acceptable to Seller, provided
in a form (including but not limited to cash or a letter of credit) as
determined by Seller from time to time, and each in an amount as prescribed
herein this Agreement.

(ag)
"Performance Assurance Provider" means a person or entity providing Performance
Assurance in respect of a Party's obligations under this Agreement in favor of
the requiring Party.

 

(ah)
"Primary Term" has the meaning ascribed to it in Article 6.1.

(ai)
"Project" has the meaning ascribed to it in the first "Whereas" clause, above.

(aj)
"Psia" means pounds per square inch absolute.

(ak)
"Psig" means pounds per square inch gauge.

 
5

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(al)
"Quality Specifications" means the following specifications for the Carbon
Dioxide delivered hereunder:

(i)
Water: Product shall contain no free water and shall not contain more than
thirty (30) pounds of water per 1 MMCF in the vapor phase at 14.73 Psia and 60
degrees Fahrenheit (60º F).

(ii)
Total Sulfur: Containing not more than thirty-five (35) grains of sulfur per one
hundred (100) Standard Cubic Feet of Carbon Dioxide.

(iii)
Purity: Comprised of at least ninety-five percent (95%) by volume of Carbon
Dioxide.

(iv)
Nitrogen: Containing not more than four percent (4%) by volume of nitrogen.

(v)
Temperature: Product shall not exceed a temperature of one hundred twenty (120)
degrees Fahrenheit (120º F).

(vi)
Hydrogen Sulfide: Product shall not contain more than forty (40) parts per
million, by weight, of hydrogen sulfide.

(am)
"Seller's Facilities" means the LaBarge field and associated production
facilities, the Shute Creek plant, Carbon Dioxide compression facilities, the
ExxonMobil CO2 Pipeline, associated meter stations, and any new facilities and
appurtenances upstream of an alternate delivery point.

(an)
"Standard Cubic Foot" means the amount of Carbon Dioxide which would occupy one
cubic foot of space at a base pressure of 14.73 Psia and at a base temperature
of sixty degrees Fahrenheit (60º F).

(ao)
“Start-Up Date” means the first Day of the Month following Seller's notice to
Buyer that Seller has completed the expansion of Seller's Facilities and
constructed the CO2 Expansion Project and is prepared to delivery Daily Contract
Quantities. Seller agrees to keep Buyer informed of the potential Start-Up Date,
and in no event shall Seller’s start-up notice be less than fifteen (15) Days
prior to the end of a Month. Seller anticipates, but neither warrants nor
represents, that the Start-up Date will be between (**).

(ap)
“Subsequent Term" has the meaning ascribed to it in Article 6.1.

(aq)
“Take-or-Pay Quantity" has the meaning ascribed to it in Article 2.2(b).

(ar)
"Term" means the term of this Agreement, as described in Article 6.1.

(as)
"West Texas Intermediate" or "WTI" shall mean the Mean WTI-Cushing price in US
dollars per barrel for the month in which Carbon Dioxide was delivered as
published by Platts. 

 
6

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ARTICLE 2 - COMMITMENTS BY SELLER AND BUYER

2.1
Commitments by Seller 

(a)
Subject to the terms and conditions of this Agreement Seller agrees that each
Day during the Term after the Start-Up Date it shall sell to Buyer and deliver
to the Delivery Point the volume of Carbon Dioxide nominated by Buyer in
accordance with Article 3.1, up to the DCQ, subject to the provisions of Article
2.4.

(b)
Seller may sell to the Buyer and deliver to the Delivery Point Early Volumes and
Excess Volumes as provided in Article 3.

2.2
Commitments by Buyer 

 

 
(a)
Each Day during the Term, Buyer shall purchase from Seller and receive at the
Delivery Point the volume nominated by Buyer in accordance with Article 3.1 and
any Early Volumes and Excess Volumes requested by Buyer and agreed to by Seller
in accordance with Article 3.

 
(b)
During each Contract Year of the Term after the Start-Up Date, if Buyer does not
purchase at least (**) percent ((**)%) of the ACQ for such Contract Year ((**)%
of the ACQ being the "Take-or-Pay Quantity"), then Buyer shall pay Seller for
the volume difference between the Take-or-Pay Quantity and the volume actually
purchased (such difference is hereinafter referred to as "Deficiency Volumes")
at the Deficiency Price.

The Take-or-Pay Quantity for each Contract Year shall be reduced to the extent
that:
 

(i)
Buyer does not receive volumes nominated by Buyer because of Seller's failure to
deliver, up to the DCQ (including pro-rata deliveries made pursuant to Article
2.4) other than suspension due to Buyer's default as provided in Articles 5.3
and 5.4; or

 

(ii)
Seller delivers Carbon Dioxide that does not meet Quality Specifications and
that is refused by Buyer as provided in Article 11.3; or

 

(iii)
Buyer has planned maintenance, as described in Article 11.19 or;

 

(iv)
Either Party's performance is suspended due to an event of Force Majeure;

provided, however, that should any event qualify for simultaneous consideration
under more than one of the conditions outlined above ((i), (ii), (iii) or (iv)),
volumes associated with the event will only be counted once in the Deficiency
Volume reduction.

 
(c)
Buyer shall have the right, without making further payment, to take delivery of
Carbon Dioxide and to make-up Deficiency Volumes for which it has made payment
under Article 2.2(b) (such deliveries and make-up are hereinafter referred to as
Make-Up Volumes), provided that:

 

(i)
Buyer has purchased and received one hundred percent (100%) of the ACQ for the
Contract Year in which such Make-Up Volumes are scheduled to be delivered; and

 

   
(ii)
all such Make-Up Volumes are delivered during the Term; and

 

   
(iii)
Seller, in its sole judgment, has sufficient volumes to provide Make-Up Volumes
to Buyer on the Day(s) on which Buyer requests delivery.

 
7

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(d)
Buyer’s requested Make-Up Volumes shall be given scheduling priority over
Seller's other buyers' requests for volumes in excess of their contracted
volumes unless such other buyers’ requests for excess volumes are also for their
make-up volumes (howsoever named in Seller's agreements with other buyers), in
which case Seller shall schedule Make-Up Volumes and other buyers' make up
volumes pro-rata among Buyer and all other such buyers based on the DCQ and the
other buyers' contracted volumes. However, Seller shall have no obligation to
reserve delivery capacity for Buyer's Make-Up Volumes by foregoing the
opportunity to enter into new sales agreements or renew existing sales
agreements with other buyers committing to take-or-pay obligations.

 
(e)
Promptly after written request from Buyer to Seller for delivery of Make-Up
Volumes, Buyer and Seller shall cooperate and use commercially reasonable
efforts to schedule delivery of Make-Up Volumes. Seller shall never be obligated
to provide any volume that exceeds the DCQ for a Day. It is recognized that
Deficiency Volumes result from Buyer's Take-or-Pay obligation under this
Agreement, and that upon termination or cancellation of this Agreement for any
reason, Seller shall have no obligation to provide any Make-Up Volumes to Buyer.

 
(f)
Buyer may extend the Term for the purpose of taking Make-Up Volumes (“Extension
Period”) by providing notice to the Seller at least six (6) months in advance of
the expiration of the Primary Term, or if the Term has been extended, then at
least six (6) months in advance of the expiration of the Subsequent Term. The
term of the Extension Period shall be the lesser of (i) the time necessary for
Buyer to take all Make-Up Volumes or (ii) twelve (12) Months. Any provisions
hereof to the contrary notwithstanding, during the Extension Period one hundred
percent (100%) of all volumes received by Buyer shall be considered Make-Up
Volumes. At expiration of the Extension Period, Seller shall retain all amounts
paid by Buyer pursuant to Article 2.2(b).

 

2.3
DCQ and Take-or-Pay Reduction 

(a)
Buyer shall have the right with notice as outlined below, to offer to release
back to Seller portions of the DCQ, and to reduce Take-or-Pay obligations
accordingly, if Buyer estimates, in good faith, its future requirements for
Carbon Dioxide will be less than the DCQ. In its notice to release a portion of
the DCQ, Buyer shall provide verification, satisfactory to Seller, that the
release is a result of Buyer's reduced Carbon Dioxide requirements and not
because Buyer may purchase Carbon Dioxide from a third party seller at more
favorable terms, including more favorable pricing terms. Seller shall have the
right but not the obligation, in its sole discretion, to accept the offer of
permanent release.

(b)
If Buyer elects to offer permanent release of DCQ, Buyer shall provide Seller
with at least twenty-four (24) Month's notice of its request. Buyer's request
shall specify the amount of proposed DCQ reduction and the proposed effective
date of the reduction. Any proposed DCQ reductions shall only be effective on an
anniversary of the Start-Up Date.

(c)
Seller shall respond to Buyer's offer of release with notice within ninety (90)
Days of Buyer's offer to release. If Seller agrees to accept Buyer's offer of
release of portions of DCQ, the Parties shall amend this Agreement to reflect
the reduction, in quantity and term, of the DCQ.

 
8

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2.4
Other Contracts 

Subject to Article 11.6 (Force Majeure), if Seller is unable to satisfy its
daily delivery obligations under all of Seller's LaBarge field / Shute Creek
plant Carbon Dioxide sales agreements, including this Agreement, Seller shall
use commercially reasonable efforts to deliver Carbon Dioxide hereunder on such
Day(s), on a pro-rata basis based on the DCQ and the other buyers' contracted
volumes. Any volumes delivered pro-rata by Seller pursuant to this Article 2.4
shall be deemed to satisfy Seller's obligation to sell Carbon Dioxide to Buyer
on such Day(s), and Seller shall have no liability to Buyer for any undelivered
volumes. Buyer's Take-or-Pay Quantity shall be reduced proportionally, via the
DCQ for such Day being deemed to be the actual quantity delivered by Seller.
Seller agrees to provide notice to Buyer within a reasonable time after Seller
has determined that it will make pro-rata deliveries as described in this
Article 2.4, specifying to the extent practicable the prorata volume to be
delivered to Buyer on the affected Day(s).

ARTICLE 3 - NOMINATIONS, EARLY VOLUMES AND EXCESS VOLUMES

3.1
Nominations 

No later than five (5) days prior to the beginning of each Month, Buyer shall
provide Seller with notice of Buyer's nominations for each Day of such Month.
Such nomination shall specify daily deliveries at uniform rates not in excess of
the applicable DCQ, unless otherwise agreed in advance by Seller pursuant to
Article 3.3.

If Buyer fails to provide such nomination within the prescribed period, Buyer's
nomination shall be deemed to be the quantities which were nominated during the
immediately preceding Month. Buyer shall use its best efforts to submit
nominations which accurately reflect Buyer's anticipated daily requirements.

Buyer may increase or decrease its nomination at any time during the Month with
two (2) days advance notice subject to Article 3.3.

3.2
Early Volumes

(a)
If after June 30, 2008 but prior to the Start-Up Date, Buyer has the ability and
the desire to take Carbon Dioxide from Seller, Buyer shall provide Seller with
notice specifying its proposed purchase quantity ("Early Volumes") and the
proposed delivery commencement date. Seller shall have the right, but not the
obligation, in its sole discretion, to elect to supply all or any portion of the
proposed Early Volumes and shall notify Buyer of its election, specifying with
notice the quantity of Early Volumes it agrees to supply, within thirty (30)
days after receipt of Buyer's notice. If Seller has elected to supply only a
portion of the Early Volumes requested by Buyer, then Buyer may accept or reject
Seller's lesser proposed Early Volumes within three (3) days of receipt of
Seller's proposal.

(b)
Buyer shall have no take-or-pay obligation with respect to Early Volumes, and no
Early Volumes purchased and sold shall affect, impact, offset, accrue or count
towards ACQ, Take-or-Pay Quantity, Deficiency Volumes or Make-up Volumes.

 
9

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(c)
Either Party may interrupt the purchase or sale of Early Volumes at any time,
provided that the interrupting Party shall make commercially reasonable efforts
to provide at least two (2) days prior notice to the other Party of the
interruption.

3.3
Excess Volumes

(a)
If on any Day Buyer determines that it requires more Carbon Dioxide for the
Project than the DCQ that Buyer has nominated for any Day, Buyer shall make a
written request to Seller for delivery of such volume ("Excess Volumes"), up to
30 MMCF per Day. Seller shall have the right, but not the obligation to supply
all or any portion of such Excess Volumes requested by Buyer subject to (i) that
within two (2) Business Days after such request is made, Seller confirms in
writing the amount (if any) of Excess Volumes it agrees to deliver and (ii)
Seller can make such deliveries within Buyer’s requested delivery schedule.

(b)
Excess Volumes supplied pursuant to this Article 3.3 shall be counted first
toward current Contract Year ACQ and then toward Make-Up Volumes attributable to
previous Contract Years' Deficiency Volumes if one hundred percent (100%) of the
current Contract Year ACQ has been delivered. If the current Contract Year ACQ
has already been achieved and all previous Contract Years’ Deficiency Volumes
have been made up, Buyer may still request other Excess Volumes. Other Excess
Volumes shall not affect, impact, offset, accrue or count towards ACQ,
prospective Take-or-Pay Quantity, Deficiency Volumes or Make-up Volumes.

(c)
Either Party may interrupt the purchase or sale of Excess Volumes at any time,
provided that the interrupting Party shall make commercially reasonable efforts
to provide at least two (2) days prior notice to the other Party of the
interruption.

ARTICLE 4 - PRICE

4.1
Contract Price

The Contract Price to be paid by Buyer for all volumes purchased shall be
calculated as follows: (**)

4.2
Oil Price Factor

The "Oil Price Factor" shall be WTI. Should Platts cease to publish a Mean
WTI-Cushing price, the Parties shall mutually agree upon an alternative Oil
Price Factor within thirty (30) days of the last day of the Month that there
exists a Platts Mean WTI-Cushing published price. In selecting an alternative
Oil Price Factor, the Parties shall strive to select the published price that is
most comparable to the Mean WTI-Cushing published price.
If the Parties fail to agree on an alternative Oil Price Factor within the
thirty (30) day period, then a provisional Oil Price Factor shall be used to
determine a provisional Contract Price until such time as the Parties settle on
an alternative Oil Price Factor. The provisional Oil Price Factor shall be the
last published Mean WTI-Cushing price. Within thirty (30) days of agreement
between the Parties or issuance of an Expert decision regarding the alternative
Oil Price Factor, the Contract Price shall be recalculated using the alternative
Oil Price Factor for the relevant Months, and the Seller shall issue an invoice
or credit notice to the Buyer reflecting any sum which becomes owing as a result
of an adjusted Contract Price becoming effective. Such sum shall be paid by the
Buyer or the Seller (as the case may be) ten (10) days after receipt of said
invoice or credit notice by the Buyer. Interest will be payable on such amount
calculated at an annualized rate equivalent to Interest Rate plus one per cent
(1%) (compounded monthly) from the effective date of the adjusted Contract Price
until payment is made.
 
10

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4.3
Redetermination of Contract Price

 

(a)
Scheduled Contract Price Redetermination.

Either Party may request that the Contract Price for Months beginning on or
after May 1, 2012 be redetermined by giving notice to the other Party between
November 1, 2011 and February 1, 2012.

Either Party may also request that the Contract Price for Months beginning on or
after September 1, 2015 be redetermined by giving notice to the other Party
between March 1, 2015 and June 1, 2015.

If the Parties agree to extend the Agreement for a Subsequent Term pursuant to
Article 6.1, (i) either Party may request that the Contract Price for Months
beginning on or after May 1, 2022 be redetermined by giving notice to the other
Party between November 1, 2021 and February 1, 2022; and (ii) either Party may
also request that the Contract Price for Months beginning on or after September
1, 2025 be redetermined by giving notice to the other Party between March 1,
2025 and June 1, 2025.

(b)
Unscheduled Contract Price Redetermination: 

In addition to the scheduled Contract Price redeterminations pursuant to Article
4.3(a):

(i)
At any time during the Primary Term, Seller and Buyer may each, on one separate
occasion, request that the Contract Price be redetermined by giving notice to
the other Party. The effective date of a new Contract Price determined pursuant
to this Article 4.3(b) shall be the first day of the Month following one hundred
twenty (120) Days after the date of the notice.

(ii)
If the Parties agree to extend the Agreement for a Subsequent Term pursuant to
Article 6.1, then at any time during the Subsequent Term, Seller and Buyer may
each, on one separate occasion, request that the Contract Price be redetermined
by giving notice to the other Party. The effective date of a new Contract Price
determined pursuant to this Article 4.3(b) shall be the first day of the Month
following one hundred twenty (120) Days after the date of the notice.

 

(c)
Price Redetermination Basis

 
The purpose of any Contract Price redetermination shall be to determine the then
current market price for Carbon Dioxide sold and delivered under contracts
containing similar terms and conditions to those under this Agreement.
 
11

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(d)
Price Redetermination Notice

A Contract Price redetermination notice served pursuant to Articles 4.3(a) or
4.3(b) shall include the Contract Price proposed by the Party serving notice
together with substantiated reasons for the redetermination. Upon receipt of the
Contract Price redetermination notice, the Parties shall negotiate in good faith
to agree upon a new Contract Price.
 

(e)
Confidentiality of Proceedings

No Party shall be required to divulge confidential information nor to provide
information in support of the other Party's claim unless required to do so by
the laws applicable to the arbitration procedures provided for in this
Agreement.
 

(f)
Arbitration

If agreement on a new Contract Price is not reached within ninety (90) Days of
the date of the requesting Party's notice requesting redetermination, then the
requesting Party may submit the resolution of this matter to arbitration at any
time within thirty (30) Days after the end of the ninety (90) Day negotiating
period by giving the other Party notice.

(g)
Payment and Effect

For as long as no agreement has been reached between the Parties in respect of a
Contract Price redetermination and no arbitration decision has been issued or
taken effect, the rights and obligations of the Parties and the prevailing
Contract Price under the Agreement shall continue in full force and effect.

Following agreement between the Parties or issuance of an arbitral decision, any
redetermined Contract Price shall be effective from the date specified in the
redetermination notice. Within thirty (30) days of agreement between the Parties
or an arbitral decision, the Seller shall issue an invoice or credit notice to
the Buyer reflecting any sum which becomes owing as a result of an adjusted
Contract Price becoming effective. Such sum shall be paid by the Buyer or the
Seller (as the case may be) ten (10) days after receipt of said invoice or
credit notice by the Buyer. Interest will be payable on such amount calculated
at an annualized rate equivalent to Interest Rate plus one per cent (1%)
(compounded monthly) from the effective date of the adjusted Contract Price
until payment is made.

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ARTICLE 5 - BILLING AND PAYMENT

5.1
Monthly Statements 

No later than the tenth (10th) Business Day of the Month following the Month of
delivery, Seller shall furnish Buyer a monthly statement specifying the
following information with respect to the Month of delivery and Contract Year:
 
(a) Contract Price to be paid by Buyer for Carbon Dioxide purchased in the Month
of delivery
 
(b) Quantity of Carbon Dioxide delivered and purchased in the Month of delivery,
including applicable Excess Volumes. (Such quantities shall not include any
Excess Volumes counted toward Make-Up Volumes attributable to previous Contract
Years' Deficiency Volumes.)
 
(c) Total Month of delivery Excess Volumes delivered and purchased (if any)
 
(d) Month of delivery Excess Volumes counted toward ACQ (if any)
 
(e) Month of delivery Excess Volumes counted toward Make-Up Volumes attributable
to previous Contract Years' Deficiency Volumes (if any)
 
(f) Other Month of delivery Excess Volumes (if any)
 
(g) Payment due by Buyer as a result of Carbon Dioxide purchased in the Month of
delivery
 
(h) Deficiency Volumes balance at start of Month of delivery
 
(i) Deficiency Price for Contract Year
 
(j) ACQ
 
(k) Contract Year Take-or-Pay Quantity (reflecting reductions consistent with
Article 2.2(b))
 
(l) Payment due by Buyer attributable to Contract Year Take-or-Pay Quantity
 
(m) Deficiency Volumes balance at end of Month of delivery
 
(n) Cumulative volumes of Carbon Dioxide sold under this Agreement

Seller will only report Items, (i), (j), (k) and (l) above on monthly statements
for the last Month of any Contract Year.

In the event that actual delivery data is not available by the tenth (10th) Day
of the Month following the Month of delivery, then the Seller may render to the
Buyer a provisional monthly statement in which the quantity of Carbon Dioxide
shall be estimated by the Seller using the best data available to the Seller.
The Seller shall, as soon as practicable after the actual delivery data becomes
known, render to the Buyer a statement of adjustment showing the appropriate
adjustments to the monthly statement.

If any billing was based on a provisional quantity, the Seller shall, as soon as
reasonably practicable after the actual data is available, render to the Buyer a
statement of adjustment showing the appropriate adjustments to the provisional
monthly statement in the same manner as described herein. The amount resulting
from the adjustment, including interest, shall be paid by the relevant Party ten
(10) days after receipt of the statement of adjustment. Interest shall be at an
annualized rate equivalent to Interest Rate plus one per cent (1%) (compounded
monthly) for the period starting from and including the due date of the relevant
provisional monthly statement and ending on the date of the payment of said
adjustment.

5.2
Auditing

Each Party, at its own expense, shall have the right during reasonable business
hours to examine the books, records, and measurement documents of the other
Party to the extent necessary to verify the accuracy of any statement, payment,
calculation, or determination made pursuant to the provisions of this Agreement
for any calendar year within two (2) calendar years following the end of such
calendar year. If any such examination shall reveal, or if either Party shall
discover any error or inaccuracy on its own or the other Party's statement,
payment, calculation, or determination, then proper adjustment and correction
thereof shall be made as promptly as practicable thereafter. Each Party further
agrees to retain the books, records and measurement documents for the
above-stated period of time.
 
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5.3
Payments 

On or before (i) the twentieth (20th) day of a Month (or the next Business Day
in case of weekends or holidays) in which the monthly statement is issued or
(ii) ten (10) days after Buyer's receipt of such monthly statement, whichever is
later, the Buyer shall pay to Seller the amounts due under such monthly
statement. Payment shall be made by wire transfer to the bank account as
designated below, without any discount associated with the transfer of moneys
and at the expense of the Buyer, except that any expenses charged by the
Seller's bank with respect to such payments shall be borne by the Seller.

Wire Transfer Account:
Exxon Mobil Corporation
Citibank, N.A.
New York, NY ABA #021000089
Gas Marketing Remittance Account #30439217

Seller's designation of a bank account shall remain in effect during the Term
unless changed by notice to Buyer signed by a duly authorized representative of
Seller.

If the Buyer fails to make payment of any sum due hereunder which is not the
subject of a bona fide dispute, interest thereon shall accrue at an annualized
rate equivalent to the Interest Rate plus four per cent (4%) (compounded
monthly) from the date when such payment was due until payment is made in full.

When any amount included within a monthly statement is the subject of a bona
fide dispute, the Buyer shall immediately notify the Seller in writing of the
amount in dispute and the reasons therefor. The undisputed portion shall
promptly be paid and after settlement of the dispute any amount agreed, adjudged
or determined to be due shall be included in the next monthly statement to be
rendered hereunder together with interest thereon at an annualized rate
equivalent to the Interest Rate plus one per cent (1%) (compounded monthly) from
the date when such payment would, in the absence of a dispute, have been payable
until payment is made. If the dispute is later determined not to be bona fide,
interest shall instead accrue at an annualized rate equivalent to the Interest
Rate plus four per cent (4%) (compounded monthly) from the date when such
payment would, in absence of a dispute, have been payable.

If the Buyer fails to pay any sum due hereunder which is not the subject of a
bona fide payment dispute, the Seller may, immediately on giving notice to the
Buyer of its intention to do so, suspend delivery of Carbon Dioxide hereunder
until payment is duly made; provided, however, that a suspension effected by the
Seller in accordance with the provisions of this Article 5.3 shall not, in any
circumstances, relieve the Buyer of its accrued obligations under this
Agreement, or entitle the Buyer to any form of deduction from the Take-or-Pay
Quantity as described in
 
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Article 2.2.
 
If Buyer fails to pay any sum due hereunder which is not the subject of a bona
fide payment dispute within thirty (30) days after the due date thereof, then
the Seller shall have the right, at the Seller’s sole election, to cancel this
Agreement in accordance with this paragraph. The Seller's right to cancel this
Agreement shall be conditioned upon the Seller having provided the Buyer a
minimum fourteen (14) days notice, which notice may be sent at any time after
the due date; provided, however, that regardless of the timing of the notice the
Seller shall not have the right to cancel this Agreement any sooner than
thirty-one (31) days after the payment due date. Any cancellation shall be
without prejudice to any other rights and remedies that accrued to each Party
prior to cancellation, including but not limited to the right of a Party to
receive payment for all claims which arose or accrued prior to such
cancellation.

Seller's drawing on Buyer's Performance Assurance shall not effect Seller's
termination or suspension rights under this Article 5.3.

5.4
Financial Circumstances

(a)
Seller shall have no obligation to commence deliveries of Carbon Dioxide under
this Agreement until Buyer provides Seller with adequate Performance Assurances.
Before the Start-Up Date such Performance Assurances shall not be less than that
necessary to cover four (4) Months of delivery and sales of anticipated Early
Volumes. After the Start-Up Date such Performance Assurances shall not be less
than that necessary to cover four (4) Months of delivery and sales of the DCQ
plus anticipated Excess Volumes. In the event Buyer does not provide adequate
initial Performance Assurances within thirty (30) days after the Start-Up Date,
Seller shall have the right to cancel this agreement with thirty (30) days
notice.

(b)
Following the end of any Month after the Start-Up Date, if Seller determines the
cumulative quantity of Carbon Dioxide that the Buyer has purchased and received
in the current Contract Year is less than (**) percent ((**)%) of the product of
the DCQ and the number of Days since the start of the current Contract Year,
then within ten (10) Days following receipt of notice from Seller, Buyer shall
provide Seller revised or additional Performance Assurances such that all active
Performance Assurances shall not be less than that necessary to cover (i) the
amount specified in Article 5.4(a) plus (ii) the difference between (**) percent
((**)%) of the product of the DCQ and the number of Days since the start of the
current Contract Year and the amount of Carbon Dioxide that Buyer has purchased
and received in the Contract Year. If Buyer fails to provide the revised or
additional Performance Assurances within the prescribed period, Seller shall
have reasonable grounds for believing that Buyer may be unable to meet its
obligations under this Agreement.

(c)
If at any time within the Term, Seller has reasonable grounds for believing
that: (i) the Buyer or its Performance Assurance Provider may be unable to meet
its obligations under this Agreement or under any Performance Assurance; or (ii)
the financial circumstances of any or all of the Buyer, its Performance
Assurance Provider, or Buyer's Controlling Party have deteriorated to a level
unacceptable to the Seller; then the Seller may give notice to the Buyer and
request a new or replacement Performance Assurance.

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Seller may suspend its obligations under this Agreement with immediate effect of
said notice until such time as the Buyer provides such adequate Performance
Assurance if reasonably requested by the Seller; provided, however, that a
suspension effected by the Seller in accordance with the provisions of this
Article 5.4 shall not, in any circumstances, relieve the Buyer of its accrued
obligations under this Agreement, or entitle the Buyer to any form of deduction
from the Take-or-Pay Quantity as described in Article 2.2. In the event the
Buyer is unable or unwilling to provide adequate Performance Assurance within
thirty (30) days of receipt of said notice, the Seller shall have the right to
cancel this Agreement with immediate effect upon providing notice of such
cancellation to the Buyer. Such cancellation shall be without prejudice to any
other rights and remedies that accrued to each Party prior to cancellation,
including but not limited to the right of a Party to receive payment for all
claims which arose or accrued prior to such cancellation.

(d)
Either Party shall have the right to terminate this Agreement immediately, by
giving notice, in the event the other Party, its Controlling Party, or, if
applicable, its Performance Assurance Provider (collectively, the “Defaulting
Party”):

 

(i)
files a voluntary application in or for liquidation, receivership or bankruptcy;

 

(ii)
has an involuntary petition in bankruptcy filed against it;

 

(iii)
is finally and validly declared and adjudged to be liquidated, bankrupt or
insolvent;

 

(iv)
is subject to a resolution passed by its members for the purposes of placing it
in voluntary administration;

 

(v)
is subject to an order by any court of competent jurisdiction for its winding
up;

 

(vi)
is the subject of an appointment of a receiver or receiver and manager or like
officer of the whole or any part of its assets;

 

(vii)
has a secured party take possession of all or substantially all its assets or
has a distress, execution, attachment, sequestration or other legal process
levied, enforced or sued on or against all or substantially all its assets;

 

(viii)
is the subject of an appointment of an administrator, official manager or like
officer in circumstances where the Defaulting Party is or is likely to become
insolvent; or

 

(ix)
enters into a scheme of arrangement with its creditors or any of them, provided
that the foregoing shall not include any voluntary proceeding for the purpose of
amalgamation, reconstruction or reorganization not taken at the request or to
meet the requirements of the Defaulting Party’s creditors.

5.5
Greenhouse Gas Reduction Rights

At such time during the Term of this Agreement (**) as contemplated under
Article 11.22, Buyer shall promptly notify Seller.

(a)
(**) Until the actions contemplated under Article 5.5(b) are completed, Buyer
shall continue to provide Seller with revised or additional Performance
Assurances such that all active Performance Assurances shall not be less than
that necessary to cover the amounts specified in Article 5.4 (**). If Buyer
fails to provide the revised or additional Performance Assurances within the
prescribed period, Seller shall have reasonable grounds for believing that Buyer
may be unable to meet its obligations under this Agreement.

(b)
The Parties shall work together to timely revise Articles 5.1, 5.2, 5.3, 5.4 and
5.5(a) as necessary to accommodate (**), including statement details and timing,
payment details and timing, special audit considerations and Performance
Assurances quantification and timing.

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ARTICLE 6 - TERM

6.1           Term 

This Agreement shall become effective as of the Effective Date, but pursuant to
the terms of this Agreement the rights and obligations associated with the
delivery, sale, receipt and purchase of the DCQ shall commence on the Start-Up
Date. Subject to termination and cancellation as otherwise provided herein, the
Agreement shall continue for a primary term of ten (10) years from the Start-Up
Date (“Primary Term”). Seller agrees to keep Buyer informed of the potential
Start-Up Date, so as to allow Buyer to be ready to receive its DCQ on the actual
Start-Up Date.

Either Party may exercise an election to extend this Agreement for a second term
of (10) years ("Subsequent Term") by providing notice to the other Party at
least thirty-six (36) months but no more than thirty-nine (39) months in advance
of the expiration of the Primary Term. Any extension shall be subject to the
Parties agreeing to the following within six (6) months of the electing Party's
notice: (i) a Contract Price to be effective from the first Day of the
Subsequent Term until any Subsequent Term Contract Price redetermination
pursuant to Article 4.3; and (ii) amendments to any Key Terms. If the Parties
fail to agree on a new Contract Price or amended Key Terms within the prescribed
six (6) months, then this Agreement shall terminate at the end of the Primary
Term.

The Primary Term, the Subsequent Term and the Extension Period are hereinafter
collectively known as the “Term”.

6.2
Force Majeure Termination

If an event of Force Majeure affects deliveries by Seller or receipts by Buyer
for a consecutive period of twenty-four (24) months or more, then, at any time
after such period has elapsed but prior to the time such event has been
remedied, either Party may terminate this Agreement by giving thirty (30) days
notice to the other Party.
 
ARTICLE 7 - ROYALTY

7.1
Payment of Royalty

As between Seller and Buyer, Seller shall be responsible for all payments to the
owners of all working interests, mineral interests, royalties, overriding
royalties, bonus payments and production payments. Buyer assumes no liability to
Seller’s working or mineral interest, royalty, or other owners under this
Agreement except as provided for in Article 7.2.

7.2
Royalty Reimbursement 

If, due to circumstances not within Seller's control or pursuant to the terms of
a good faith settlement of a royalty dispute, Seller is required to pay excess
royalty (royalty based on a value higher than the price paid by Buyer for Carbon
Dioxide delivered by Seller under this Agreement) to any royalty owner including
the United States of America, the State of Wyoming and any overriding royalty
owner, with respect to Carbon Dioxide delivered by Seller under this Agreement,
Buyer shall reimburse Seller one hundred percent (100%) of the amount of such
excess royalty. Seller must notify Buyer of a potential claim or bring its claim
to Buyer within three (3) years of the date the Carbon Dioxide delivery in
question was made. Seller represents that as of the date of this Agreement,
Seller has not received a notice of (actual, constructive or otherwise) nor is
Seller aware of any royalty assessment requiring the payment of excess royalty
and is not aware of any royalty underpayment claim against it involving the
Carbon Dioxide.
 
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For the purposes of this Article 7.2, "excess royalty" as it applies to royalty
paid the United States of America shall be the royalty paid in excess of the
royalty calculated pursuant to any methodology in use by the Minerals Management
Service as of the date of this Agreement based on the statutes, regulations and
leases in effect on the date of this Agreement.
 
ARTICLE 8 - TAXES

8.1
Payment of Taxes 

Subject to the reimbursement provisions of Articles 8.2 and 8.3, Seller shall
pay or cause to be paid all taxes and assessments imposed on Seller with respect
to the Carbon Dioxide delivered by Seller under this Agreement prior to its
delivery to Buyer at the Delivery Point.

Buyer shall pay or cause to be paid all taxes and assessments imposed on Buyer
with respect to the Carbon Dioxide delivered hereunder at and after its receipt
by Buyer at the Delivery Point, including, but not limited to, sales taxes
imposed by any applicable state, county, municipality or other governmental
authority located therein. Neither Party shall be responsible or liable for any
taxes nor other statutory charges levied or assessed against any of the
facilities of the other Party used for the purpose of carrying out the
provisions of this Agreement.

8.2
Reimbursement of Sales Taxes 

Buyer shall reimburse Seller for one hundred percent (100%) of all sales or use
taxes paid by Seller which may be imposed or assessed currently or hereafter
with respect to the transaction between Buyer and Seller which is the subject of
this Agreement unless Buyer has previously furnished Seller with and maintained
with Seller a valid exemption certificate for such taxes.

8.3
Reimbursement of Certain Other Taxes 

Buyer shall, subject to the conditions hereinafter specified, reimburse Seller
for one hundred percent (100%) of any new, increased or additional tax paid by
Seller which is attributable to the deliveries of Carbon Dioxide made by Seller
under this Agreement. The term "new, increased or additional tax" shall mean
production and severance taxes, taxes based on extraction of Carbon Dioxide from
the ground, ad valorem taxes calculated on the basis of production or sales of
Carbon Dioxide, taxes based on gathering or transportation occurring up to the
Delivery Point, and any other tax, assessment, or fee of a similar nature or
equivalent in effect levied, assessed, or fixed by governmental authority for
which Seller may be liable in addition to or greater than those in effect on the
date of full execution hereof. For purposes of this Article 8.3, the term "new,
increased or additional tax" shall not include any income, excess profit,
capital stock, or excise tax, any sales or use tax which is covered under
Article 8.2, and any ad valorem or general property tax (to the extent such ad
valorem or general property tax may be assessed on or attributable to the value
of surface and subsurface production equipment and manufacturing and
transmission facilities utilized by Seller to deliver Carbon Dioxide hereunder).
Seller must bring its claim for such tax reimbursement within three (3) years of
the date of delivery of the Carbon Dioxide at issue.
 
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ARTICLE 9 - DELIVERY POINT, TITLE, RATE AND PRESSURE

9.1
Delivery Point

(a)
The Delivery Point shall be the flange connection between the ExxonMobil CO2
Pipeline at mile post 112 and the Anadarko CO2 pipeline near Bairoil, Fremont
County unless and until Buyer and Seller otherwise mutually agree pursuant to
Article 9.1(b). Nothing in this Agreement shall require either Party to enter
into an Interconnect Agreement and implement an alternate delivery point under
terms it determines to be unacceptable.

 
(b)
If Buyer seeks to implement an alternate delivery point other than the Delivery
Point specified in Article 9.1(a), Buyer shall provide Seller with a notice to
this effect. The Parties may then work together to develop and execute a
mutually acceptable Interconnect Agreement specifying the terms necessary to
implement the alternate delivery point. The Parties anticipate that the
Interconnect Agreement would include, but not be limited to, terms specifiying
the following:

 

 
(i)
a definitive location of the alternate delivery point;

 

 
(ii)
an engineering, procurement and construction schedule to effect CO2 deliveries
to the alternate delivery point;

 

(iii)
Buyer's and Seller's respective roles in, liabilities asscoiated with, and
financial responsibility related to the design, installation and construction of
new facilities associated with the alternate delivery point; provided however,
Buyer and Seller agree in principle under this Agreement that Buyer shall either
pay for or shall reimbuse Seller for costs and expense Seller incurs as a result
of modifications or additions to Seller's Facilities;

 

(iv)
Seller's and Buyer's respective ownership of facilities upstream and downstream
of the alternate delivery point.

 

9.2
Passage of Title 

Title to, risk of loss of or damage to, liability for injury of damage caused
by, and ownership of all Carbon Dioxide delivered hereunder shall pass to and
vest in Buyer at the Delivery Point.

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9.3
Constant Deliveries 

To the best of their abilities, Seller shall deliver and Buyer shall accept
Carbon Dioxide hereunder at a daily rate which is as reasonably constant as is
practicable.

9.4
Delivery Pressure 

Seller shall cause the delivery of Carbon Dioxide hereunder at the pressure
prevailing from time to time in ExxonMobil’s CO2 Pipeline, but not less than
1750 Psig.

ARTICLE 10 - MEASUREMENT AND COMPUTATION OF VOLUMES

10.1
Measurement Point 

The Carbon Dioxide delivered hereunder shall be measured and/or allocated at the
Delivery Point.

10.2
Procedure 

Measurement of Carbon Dioxide shall be determined on the basis of pound-mass
quantities, which shall be converted to Standard Cubic Feet quantities. The
molecular weight of the metered stream of Carbon Dioxide, calculated from
compositional analyses, shall be the basis for conversion of pound-mass
measurement units to Standard Cubic Feet. The compressibility factor of the
Carbon Dioxide shall be determined in accordance with the NIST Standard
Reference Database 14 with any subsequent amendments, revisions and additions
which are mutually acceptable to Seller and Buyer. Seller shall, if requested,
furnish a detailed explanation of the Carbon Dioxide volume calculation used by
Seller per this Article 10.2.

10.3
Meter Stations 

At or near the Delivery Point, Seller or its representative shall ensure that a
meter station for purposes of determining the volume of Carbon Dioxide purchased
and received hereunder is constructed and installed in accurate working order at
Buyer's cost and expense. Seller or its representative shall operate and
maintain the meter station in accurate working order at Seller’s risk, cost and
expense. The station shall be equipped in accordance with the standards
referenced in Article 10.5 and shall initially consist of orifice meters, an
on-line recording thermometer, and a flow computer for real-time calculation of
metered flow.

10.4
Atmospheric Pressure 

The atmospheric pressure at the Delivery Point shall be deemed to be 14.73 Psia
at sea level corrected to actual elevation.

10.5
Meter Standards 

The Carbon Dioxide delivered hereunder shall be measured with orifice meters.
Seller's computations of pound-mass shall be made in accordance with the latest
revision of American Petroleum Institute Manual of Petroleum Measurement
Standards, Chapter 14, Parts 1, 2 and 4 with any subsequent amendments,
revisions, and additions which may be mutually acceptable to Seller and Buyer.
 
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10.6
Temperature 

The temperature of the Carbon Dioxide shall be determined by an on-line
recording thermometer so installed that it will sense the temperature of the
Carbon Dioxide flowing through the meters.

10.7
Meter Tests 

Seller shall ensure that the measuring equipment is accurate and in repair, and
that such periodic tests as Seller may deem necessary are made, at least once
each calendar quarter. Seller agrees to ensure that Buyer is given reasonable
notice of each such test of the measuring equipment in order that, if Buyer
desires, Buyer may have its representative present to witness such tests. Such
representative shall comply with all relevant site access policies and
agreements. If, upon any test, any measuring equipment is found to be
inaccurate, such equipment shall be recalibrated, and, to the extent that it
affects the aggregate measurement accuracy by an amount exceeding two percent
(2%), registrations thereof shall be corrected for a period extending back to
the time such inaccuracy occurred, if such time is ascertainable, and, if not
ascertainable, then back one-half of the time elapsed since the last date of
calibration; provided no retroactive correction shall be made for recorded
inaccuracies of less than two percent (2%) in the aggregate. Either party may
request special or additional tests of the measuring equipment at the requesting
party’s’ sole expense.

10.8
Meter Out of Service 

If, for any reason, any meter is out of service or out of repair so that the
amount of Carbon Dioxide delivered cannot be ascertained or computed from the
readings thereof or corrected under Article 10.7, the Carbon Dioxide delivered
during the period such meter is out of service or out of repair shall be
estimated and agreed upon by the parties upon the basis of the best data
available, using the first listed of the following methods which is feasible:

(a)
by using the registration of any check meter, if installed and accurately
registering;

(b)
by correcting the error if the percentage of error is ascertainable by
calibration, test, or mathematical calculation;

(c)
by using other meters on the ExxonMobil CO2 Pipeline to calculate such an
estimate by use of material balance;

(d)
by estimating the quantity delivered on the basis of deliveries during preceding
periods under similar conditions when the meter was registering accurately.

 
ARTICLE 11 - MISCELLANEOUS

11.1
Warranty of Title

Notwithstanding anything herein to the contrary, at its sole option Seller may
from time to time and at any time deliver to Buyer, in lieu of Carbon Dioxide
owned by Seller, Carbon Dioxide which is attributable to other working interest
owners owning Carbon Dioxide which is produced at LaBarge field. As between the
Parties, any such Carbon Dioxide delivered to Buyer shall be deemed Carbon
Dioxide purchased by Buyer from Seller under this Agreement. Seller warrants
title to all Carbon Dioxide sold to Buyer hereunder and that it has the right to
control and to dispose of all Carbon Dioxide delivered to Buyer under this
Agreement and shall indemnify Buyer against all damages, costs, losses and
expenses arising from or out of adverse claims of ownership in or to such Carbon
Dioxide and/or sales proceeds, royalties or charges thereon.
 
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11.2
Disclaimer of Certain Warranties 

EXCEPT AS EXPRESSLY PROVIDED IN ARTICLE 11.1, SELLER MAKES NO WARRANTIES OF ANY
KIND OR CHARACTER EITHER EXPRESS OR IMPLIED UNDER THIS AGREEMENT.

SELLER EXPRESSLY DISCLAIMS ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE EITHER EXPRESS OR IMPLIED WITH RESPECT TO THE CARBON DIOXIDE
DELIVERED HEREUNDER.

SELLER AND BUYER UNDERSTAND AND AGREE THAT THE DCQ PROVIDED HEREIN IS ONLY AN
ESTIMATE OF THE VOLUME OF CARBON DIOXIDE WHICH MAY BE AVAILABLE HEREUNDER, AND
NO GUARANTEE OR WARRANTY OF ANY SPECIFIC VOLUME OF CARBON DIOXIDE TO BE
DELIVERED HEREUNDER IS MADE BY SELLER INITAILLY OR AT ANY TIME DURING THE TERM
OF THIS AGREEMENT.

11.3
Failure of Carbon Dioxide to Meet Quality Specifications 

(a)
In the event that either Party becomes aware that Carbon Dioxide actually
delivered or expected to be delivered by Seller to the Delivery Point does not
meet Quality Specifications, such Party shall promptly notify the other Party.
Buyer, upon prompt notice to or from Seller (as the case may be), shall have the
right to refuse to accept delivery of Carbon Dioxide that does not meet Quality
Specifications in whole or part and Seller, upon receipt of such notice, shall
reduce or cease deliveries of Carbon Dioxide in accordance with Buyer's
instructions. Buyer shall also have the right to waive objection to such
deliveries and to continue to accept and receive such Carbon Dioxide. Buyer's
failure to provide the above described notice to Seller within forty-eight (48)
hours of delivery of such off-specification Carbon Dioxide shall be deemed an
election by Buyer to waive its right to refuse in whole or part to accept
delivery of Carbon Dioxide that does not meet Quality Specifications.
Notwithstanding the preceding sentence, Buyer shall also have the right, at any
time except as provided for in Article 11.3 (b) (III), upon notice to the Seller
to cease accepting deliveries by Seller of Carbon Dioxide that does not meet
Quality Specifications. Seller shall provide Buyer with a copy of Seller's
monthly report of the average daily Carbon Dioxide quality data at Buyer's
request, and Buyer shall have the right to obtain samples of the Carbon Dioxide
for analysis upon request.

(b)
IF SELLER HAS REDUCED OR CEASED DELIVERIES HEREUNDER IN RESPONSE TO A NOTICE
FROM BUYER AS PROVIDED IN ARTICLE 11.3 (a), SELLER SHALL HAVE THE RIGHT TO
ELECT, BY NOTICE TO BUYER GIVEN WITHIN SIXTY (60) DAYS AFTER RECEIPT OF BUYER'S
NOTICE TO CEASE OR REDUCE DELIVERIES, TO CURE THE CAUSE OF SUCH FAILURE, AND, IF
SELLER SO ELECTS, SELLER SHALL PROCEED WITH ALL DUE DILIGENCE, TO TIMELY EFFECT
SUCH CURE. IF SELLER DOES NOT SO ELECT TO CURE SUCH FAILURE WITHIN SUCH PERIOD
OR SELLER ELECTS BUT DOES NOT THEREAFTER CURE SUCH FAILURE TO BUYER’S
SATISFACTION WITHIN THIRTY (30) DAYS OF SELLER'S DELIVERY TO BUYER OF NOTICE OF
ITS ELECTION TO CURE, THEN BUYER, UPON NOTICE TO SELLER, SHALL HAVE THE RIGHT TO
EITHER (I) ADJUST THE DCQ DOWNWARD, OR (II) CANCEL THIS AGREEMENT WITHOUT
FURTHER LIABILITY EXCEPT FOR PREVIOUSLY ACCRUED OBLIGATIONS, OR (III)
PERMANENTLY WAIVE THE NONCONFORMITY TO THE QUALITY SPECIFICATIONS THAT EXIST AT
THE TIME OF THE WAIVER.

 
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(c)
Buyer's elections under Article 11.3 (b) to adjust the DCQ, cancel the Agreement
or waive the nonconformity to the quality specifications shall be Buyer's sole
and exclusive remedy for failure of the Carbon Dioxide to meet such Quality
Specifications and Buyer waives all other rights or remedies at law or in equity
regarding such failure.

11.4
Limitation of Liability and General Indemnities

(a)
Except as otherwise expressly provided in this Agreement, including but not
limited to Article 11.4(b), each Party shall indemnify, defend and hold the
other Party harmless from all claims, demands and causes of action asserted
against the other Party by any other persons (including employees of either
Party) for personal injury, loss of or damages to property, or for alleged
violations of law resulting directly from:

(i)
the gross negligence, willful misconduct or negligent acts or omissions of the
indemnifying Party; and

(ii)
any act, omission or accident occurring while title to and risk of the Carbon
Dioxide is vested in the indemnifying Party, except to the extent such damages,
claims, demands, proceedings and causes of action are caused by the other Party;
provided that where personal injury, death or loss of or damage to property is
the result of joint negligence or misconduct of the Parties, the Parties
expressly agree to indemnify each other in the proportion to their respective
share of such joint negligence or misconduct.

(b)
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, ANY REMEDIES OR
DAMAGES ARISING FROM A BREACH OF THIS AGREEMENT BY EITHER SELLER OR BUYER SHALL
BE LIMITED TO ACTUAL DIRECT AND FORESEEABLE COSTS, LOSSES, OR DAMAGES CAUSED BY
OR RESULTING FROM THE BREACH AND INCURRED BY THE PARTY CLAIMING DAMAGES. NO
PARTY SHALL BE LIABLE TO ANY OTHER PARTY FOR ANY LOSS OF PROFIT OR ANTICIPATED
PROFIT, BUSINESS INTERRUPTION, LOSS OF REVENUE, LOSS OF USE, LOSS OF CONTRACT,
LOSS OF GOOD WILL, INCREASED COST OF WORKING OR LOSS OF BUSINESS OPPORTUNITY,
NOR FOR ANY INDIRECT LOSS, CONSEQUENTIAL LOSS, OR EXEMPLARY DAMAGES SUFFERED BY
A PARTY OR ANY OTHER PERSON, ALL OR ANY PART OF WHICH ARISE OUT OF OR RELATE TO
THIS AGREEMENT OR THE PERFORMANCE OR BREACH OF THIS AGREEMENT, OR TO ANY ACT OR
OMISSION RELATED TO THIS AGREEMENT, WHETHER IN CONTRACT, WARRANTY, TORT
(INCLUDING BUT NOT LIMITED TO GROSS NEGLIGENCE OR WILLFUL MISCONDUCT), STRICT
LIABILITY, OR ANY OTHER THEORY IN CONTRACT, LAW, OR EQUITY. FOR THE PURPOSES OF
THIS AGREEMENT, “DIRECT COSTS, LOSSES, OR DAMAGES” SHALL NOT INCLUDE ANY COST,
EXPENSE, LOSS, AWARD OR DAMAGE SUFFERED OR INCURRED BY A PARTY IN RESPECT OF ANY
ACTIONS, PROCEEDINGS, CLAIMS, OR DEMANDS MADE AGAINST THAT PARTY BY ANY OF ITS
CUSTOMERS OR ANY OTHER THIRD PARTY.

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(c)
If, for reasons other than Force Majeure or Buyer's failure to take, Seller
fails to deliver the volumes nominated by Buyer for a period of thirty (30)
consecutive Days, Buyer shall have the right to cancel this Agreement by so
notifying Seller in writing. Such election to cancel this Agreement shall be
Buyer's sole and exclusive remedy for this particular breach and Buyer waives
all other rights and remedies at law or equity with respect to this particular
breach.

(d)
This Article 11.4 shall survive termination or cancellation of this Agreement.

 

11.5
Choice of Law 

This Agreement shall be governed by and construed under the laws of the State of
Texas, excluding any choice of law that would refer a matter to another
jurisdiction. The forum of any litigation arising out of this Agreement shall be
exclusively in a state or federal court in Harris County, Texas and the Parties
hereby consent to the jurisdiction and venue of such courts.

11.6
Force Majeure

Force Majeure means acts of God, lightning, earthquakes, fires, storms, floods,
strikes, lockouts, or other industrial disturbances, acts of the public enemy,
wars, insurrections, riots, blockades, epidemics, sabotage, acts of terrorism,
embargoes or other import or export restrictions, civil disturbances,
explosions, breakage, malfunction, freezing or accident resulting in the partial
or complete shutdown to machinery, equipment, lines of pipe, facilities,
equipment or wells, reservoir failure, any laws, orders, rules, regulations,
acts, or restraints of or delays caused by any government body or authority,
civil or military, and any other cause or causes, whether of the kind herein
enumerated or otherwise, not reasonably within the control of the Party claiming
suspension and which by the exercise of due diligence such Party is unable,
wholly or in part, to prevent or overcome. Such term shall likewise include (a)
in those instances where either Party hereto is required to obtain servitudes,
right-of-way grants, permits or licenses to enable such Party to perform
hereunder, the inability of such Party in acquiring, at reasonable cost and
after the exercise of reasonable diligence, such servitudes, right-of-way
grants, permits, or licenses, and (b) in those instances where either Party
hereto is required to furnish materials and supplies for the purpose of
constructing or maintaining facilities or is required to secure permits or
permissions from any governmental agency to enable such Party to perform
hereunder, the inability of such Party to acquire, or the delays on the part of
such Party in acquiring, at reasonable cost and after the exercise of reasonable
diligence, such materials and supplies, permits and permissions, or (c) in the
event either Party is required to secure permits or permissions from any
governmental agency or is required by any governmental agency to modify or add
facilities, the, cost of such permits, permissions, modifications, or additions
render uneconomic the operation of LaBarge field, Shute Creek plant, or the
Project and results in the cessation of such operation.

In the event of any Party being rendered unable, wholly or in part, by Force
Majeure to carry out its obligations under this Agreement, such Party shall give
notice and reasonably full particulars of such Force Majeure in writing or by
facsimile to the other Party within a reasonable time after the occurrence of
the Force Majeure event; provided, however, that this Force Majeure provision
shall take effect as of the moment the Force Majeure event occurs.

The obligations of the Party claiming Force Majeure, so far as they are affected
by such Force Majeure shall be suspended during the continuance of any inability
so caused, but for no longer period, and such cause shall so far as possible be
remedied with all reasonable dispatch; provided any obligation of Buyer to make
payments for Carbon Dioxide theretofore delivered hereunder shall not be
suspended. The Term of this Agreement shall not be extended due to Force
Majeure, and the DCQ shall be adjusted proportionally to reflect all volumes
that are not delivered or purchased as a result of Force Majeure.
 
24

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11.7
Assignment 

 

(a)
Written Consent: Except as provided in Article 11.17 (c), neither this Agreement
nor any rights or obligations hereunder may be assigned to any other person,
without the prior written consent (which shall not be unreasonably withheld or
delayed) of the non-assigning Party.

(b)
Assignment: Any Party wishing to assign this Agreement or any of its rights or
obligations hereunder must give notice of its intended assignment to the
non-assigning Party, at least ninety (90) days prior to the proposed effective
date of the assignment, provided that notice of an intended assignment to an
Affiliate may be given forty-five (45) days prior to the proposed effective date
of the assignment.

(c)
Assignment to Affiliate:

(i)
A Party having satisfied the notice requirement of Article 11.7 (b) may without
the consent of the non-assigning Party, assign this Agreement or any of its
rights or obligations hereunder to an Affiliate provided that the assigning
Party shall remain jointly and severally liable with the assignee (and any
subsequent Affiliate assignees of such assignee) for the performance by the
assignee (and any subsequent Affiliate assignees of such assignee) of all such
rights, duties, liabilities and obligations so assigned.

(ii)
The Affiliate assignee shall covenant directly with the non-assigning Party (in
a document acceptable to the non-assigning Party) to observe and perform all of
the assigning Party's rights and obligations under this Agreement which have
been assigned to it and to be bound by this Agreement in every way as if the
Affiliate assignee were a Party to this Agreement.

(d)
Notice: The notice referred to in Article 11.7 (b) shall contain all particulars
relevant to the proposed assignment, including but not limited to the following
information:

 
25

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(i)
 The identity and all other relevant information in respect of the proposed
assignee for the purposes of this Agreement;

(ii)
In a case where part of the Agreement is proposed to be assigned, a clear
identification, by means of referral to the articles of this Agreement, of which
rights and obligations would be assigned to the proposed assignee and which
rights and obligations, if any, would remain with the assigning Party;

(iii)
A description of the relationship, if any, between the assigning Party and the
proposed assignee; and

(iv)
A description of the proposed assignee's financial resources and organizational
relationship to companies which would be its Affiliates if it were a Party to
this Agreement.

(e)
Release of Assigning Party: Subject to Article 11.7 (g), the assigning Party
under an assignment consented to by the non-assigning Party in accordance with
this Article 11.7 shall be relieved and released of all rights, duties,
liabilities and obligations so assigned, except with respect to any and all such
rights, duties, liabilities and obligations that have arisen or accrued prior to
the effective date of the assignment.

(f)
Deemed Consent: If the Party in receipt of a timely notice pursuant to Article
11.7 (b) above fails to provide a notice giving or refusing consent at least
thirty (30) days prior to the proposed effective date of the assignment, such
Party shall be deemed to have given prior written consent. This Article 11.7 (f)
shall not apply to assignments to Affiliates pursuant to Article 11.7 (c).

(g)
Effective Date of Assignment: Subject to the other provisions of this Article
11.7, an assignment shall be effective as of the date proposed in the notice
given pursuant to Article 11.7 (b) provided that no assignment under this
Article 11.7 (excepting assignments to Affiliates) shall be effective, unless
and until:

(i)
the proposed assignee covenants directly with the non-assigning Party (in a
document acceptable to the non-assigning Party) to observe and perform all of
the assigning Party's rights and obligations under this Agreement which have
been assigned to it and to be bound by this Agreement in every way as if the
assignee were a Party to this Agreement; and

(ii)
the assigning Party has provided to the non-assigning Party a certified copy of
the assignment document (excluding the consideration paid or payable for, and
any other commercial terms relating to such assignment which can have no effect
upon the non-assigning Party). 

 
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11.8
Notices 

All notices, statements, and other communications required or permitted to be
given hereunder shall be in writing and shall be deemed to have been given
effectively when deposited in the United States Mail, postage prepaid, sent by
mutually acceptable electronic means, delivered by courier service with charges
prepaid, or transmitted by a facsimile transmission device (telecopier), as the
case may be, and addressed as follows:

Buyer:

Rancher Energy Corp.
999 -18th Street, Suite 3400
Denver, Colorado 80202
Attention: Chief Operating Officer
Telephone: 303-629-1125
Telecopier: 303-904-5698

Seller:
ExxonMobil Gas & Power Marketing Company
800 Bell Street, CORP-EMB-3597F
Houston, Texas 77002
Attention: Manager - CO2 Business
Telephone: (713) 656-8306
Telecopier: (713) 656-7011

or, to such other address as a Party shall hereafter direct by notice to the
other Party from time to time. If an emergency affects significantly the ability
of a party to perform under this Agreement, such Party shall notify the other
Party by telephone or in person as soon as possible of the consequences and
anticipated duration of such emergency and confirm such notification in writing
as soon thereafter as is practicable.

11.9
Waiver 

(a)
No waiver by or on behalf of a Party for any breach of a provision of this
Agreement or failure to require performance of any obligation arising under this
Agreement shall occur unless expressed in writing, duly executed and delivered
by the waiving Party in accordance with the notice provisions of this Agreement.

(b)
No waiver by either Party shall operate or be construed as a waiver in respect
of any failure or default not expressly identified by such written waiver,
whether of a similar or different character, and whether occurring before or
after that waiver.

(c)
No failure to exercise or delay in exercising any right or remedy arising from
this Agreement shall operate or be construed as a waiver of such right or
remedy.

11.10
Headings 

The topical headings and table of contents used herein are inserted for
convenience only and shall not be construed as having any substantive
significance or meaning whatsoever or as indicating that all of the provisions
of this Agreement relating to any particular topic or to be found in any
particular section.
 
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11.11
Right of Ingress and Egress 

Buyer hereby grants unto Seller, to the extent it has a right to do so, full
right of ingress or egress across properties of Buyer (or those of a third
party, if applicable) for purposes of carrying out its obligations under this
Agreement.

Seller hereby grants unto Buyer right of ingress or egress across properties of
Seller for purposes of carrying out Buyer's rights under Article 10.7 subject to
Buyer's compliance with relevant site access policies and agreements of Seller
and its Affiliates.

11.12
Compliance with Laws and Regulations 

This Agreement shall be subject to all valid and applicable laws, orders, rules,
and regulations of any duly constituted governmental authority or body having
jurisdiction hereof; but nothing contained herein shall be construed as a waiver
by either party of any right to question or contest to final conclusion any such
law, order, rule, or regulation in any forum having jurisdiction in the
premises.

It is recognized that it may be necessary for Seller and/or Buyer to make
certain filings with federal or state regulatory authorities with respect to the
sale and purchase of Carbon Dioxide hereunder. Each Party hereto agrees to file
promptly with the applicable regulatory authority and to prosecute diligently to
final conclusion all such required applications, notices, or reports.

In the performance of this Agreement, the Parties hereto shall not engage in any
conduct or practice which violates any applicable law, order, or regulation
prohibiting discrimination against any person by reason of race, color,
religion, national origin, sex, or age.

If this is an Agreement subject to the rules and regulations approved by the
Secretary of Labor under Executive Order 11246, as amended to date, the
provisions of that Executive Order and the implementing rules and regulations of
the Secretary of Labor are by reference hereby incorporated in and made a part
of this Agreement.

If this is a Agreement subject to the Affirmative Action Regulations with
respect to Disabled or Vietnam Era Veterans, regulations contained in the United
States Code of Federal Regulations (41 CFR §60-741.1 et seq. and 41 CFR
§60-250.1 et seq.) are by reference hereby incorporated in and made a part of
this Agreement.

11.13
Business Practices 

(a)
Each Party shall establish precautions to prevent its employees, agents or
representatives from making, receiving, providing or offering any substantial
gifts or entertainment, or any payments, loans or other considerations to or
from the other Party's employees, agents or representatives. This obligation
shall apply to the activities, arising from the Agreement, of employees of a
Party in their relations with the employees of the other Party, their families
and/or third party representatives.

(b)
All statements rendered by a Party to the other Party under or pursuant to this
Agreement including, but not limited to, Monthly Statements, billings, notices,
reports, financial settlements and other undertakings between the Parties, shall
accurately reflect the facts about all activities and transactions between the
Parties, and those renderings may be relied upon as being complete and accurate
in any further reportings made by the other Party or its representatives for
whatever purpose.

 
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(c)
Should any Party to this Agreement discover a failure to comply with any portion
of this Article 11.13 by its company, or any employee, agent or representative
acting on behalf of its company, that Party shall promptly notify the other
Party.

 

11.14
Dispute Resolution:

(a)
Except for matters related to the replacement of the Oil Price Factor or to
technical matters related to Carbon Dioxide measurement, disputes shall be
resolved first through good-faith negotiations between the Parties and then
through arbitration as outlined in Article 11.14(b). Disputes related to
replacement of the Oil Price Factor or to technical matters related to Carbon
Dioxide measurement shall be resolved first through good-faith negotiations
between the Parties and then through the Expert procedures as outlined in
Exhibit B.

(b)
Arbitration: If a dispute has not been resolved within forty-five (45) days
after receipt of the original notice of a dispute or, in the case of Contract
Price redetermination, within ninety (90) Days of the date of the requesting
Party's notice requesting redetermination, then either Party may provide the
other Party with notice to initiate arbitration proceedings, which proceedings
shall be conducted as provided herein below.

(i)
Scope/Final and Binding -- Any dispute, controversy or claim, of any and every
kind or type, whether based on contract, tort, statute, regulations, or
otherwise, arising out of, connected with, or relating in any way to this
Agreement, the relationship of the Parties, the obligations of the Parties or
the operations carried out under this Agreement, including without limitations,
any dispute as to the existence, validity, construction, interpretation,
negotiations, performance, non-performance, breach, termination, or
enforceability of this Agreement, shall be settled through final and binding
arbitration, it being the intention of the Parties that this is a broad form
arbitration agreement designed to encompass all possible disputes among the
parties relating to the Agreement. Initiation of arbitration shall toll the
running of all statutes of limitation relating to the matters in dispute.

(ii)
Institutional Arbitration -- The arbitration shall be conducted in accordance
with the Commercial Arbitration Rules of the American Arbitration Association
("AAA") as in effect on the date of commencement of the arbitration proceeding,
except as modified herein.

(iii)
Number of Arbitrators -- If the amount in dispute involves less than $1 million,
exclusive of interest and costs, then the arbitration shall be conducted and
finally settled by a sole arbitrator. If the amount in controversy, exclusive of
interest and costs, is $1 million or more, if the amount in dispute is unknown,
or if relief other than damages is sought, then the arbitration shall be
conducted and finally settled by the majority vote of three (3) arbitrators.

 
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(iv)
Method of Selecting Arbitrators -- If the arbitration is to be conducted by a
sole arbitrator, then the arbitrator will be jointly selected by the Parties. If
the Parties fail to agree on the arbitrator within thirty (30) days after the
initiation of the arbitration, then the AAA shall appoint the arbitrator. If the
arbitration is to be conducted by three (3) arbitrators, each Party shall within
fifteen (15) days after initiation of the arbitration select one arbitrator, and
these two arbitrators shall select a third presiding arbitrator. If the two
party-appointed arbitrators fail to agree on the third arbitrator within fifteen
(15) days after the appointment of the later of the two, then the third
arbitrator shall be appointed by the AAA.

(v)
Place of Arbitration -- Unless otherwise agreed by all Parties to the
arbitration, the situs of the arbitration under this Agreement shall be Houston,
Texas.

(vi)
Qualifications and Conduct of the Arbitrators -- The arbitrators selected to act
hereunder shall be qualified by education, experience, and training to decide
upon the particular question in dispute, and shall not be an employee or former
employee of either Party or an affiliate of either Party. All arbitrators, no
matter how selected, shall be and remain at all times wholly independent,
unbiased and impartial and shall provide the parties with a statement that they
can and shall decide the case impartially.

(vii)
Decision -- The arbitrators so appointed, after giving the Parties due notice of
hearing and responsible opportunity to be heard, shall promptly hear and
determine the question submitted and shall render their decisions within one
hundred twenty (120) days after the appointment of the third or sole arbitrator.
The decision of the arbitrators, or of a majority thereof, made in writing,
shall be final and binding upon the Parties hereto as to the questions
submitted, and the Parties will abide by and comply with such decisions.

(viii)
Interim Measures -- The arbitrators, or in an emergency the presiding arbitrator
acting alone in the event one or more of the other arbitrators are unable to be
involved in a timely fashion, may grant interim measures including injunctions,
attachments and conservation orders in appropriate circumstances, which measures
the parties agree may be immediately enforced by the arbitrators or by a court
of competent jurisdiction. Notwithstanding the requirement for negotiation,
prior to the constitution of the arbitration tribunal and thereafter as
necessary to enforce the arbitrators' rulings or in the absence of the
jurisdiction of the arbitrators to rule on interim measures in a given
jurisdiction, any Party may apply to a court of competent jurisdiction for
interim measure, and the Parties agree that seeking and obtaining such measures
shall not waive the right to arbitration. Furthermore, notwithstanding the above
provisions regarding negotiation, if either Party deems that time is of the
essence in resolving the dispute, it may initiate arbitration and seek interim
measures, as provided herein, and then comply with the requirements for
negotiations as long as they are fully completed before the commencement of the
final hearing on the merits in the arbitration proceeding.

(ix)
Waiver of Appeals -- To the extent permitted by law, any right to appeal from or
to cause a review of any arbitral award by any court is hereby waived by the
Parties except for claims of actual fraud.

 
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(x)
Costs and Attorneys' Fees -- Each Party shall bear the expense of its arbitrator
and attorneys' fees and the expenses of the third arbitrator shall be borne
equally by Buyer and Seller.

(xi)
Interest -- The award may include interest from the date of any breach or
violation of this Agreement, as determined by the arbitral award, and from the
date of the award until paid in full. Interest shall be awarded at an annualized
rate equivalent to the Interest Rate plus one per cent (1%) (compounded
monthly).

(xii)
Punitive Damages -- Penal, punitive, treble, multiple, consequential, incidental
or similar damages may not be recovered or awarded.

11.15
Severability 

If any provision (or part thereof) of this Agreement is or becomes unlawful or
void, the legality, validity, or enforceability of any other part of that
provision or any other provision of this Agreement shall not be affected, but
shall continue in force and effect. The unlawful or void provision shall be
deleted from this Agreement by written consent of the Parties or final court
order, but only to the extent of any invalidity so as to preserve the Agreement
to the maximum extent.

The Parties agree to negotiate in good faith to replace those provisions (or
parts thereof) deleted from the Agreement pursuant to the paragraph above within
ninety (90) Days of such deletion, so as to restore the original economic value
of each Party's obligations. The Agreement shall continue in force with the
deletion of the unlawful or void provisions (or part thereof) notwithstanding
that agreement cannot be reached between the Parties on replacement provisions
within such ninety (90) Day period.

11.16
Variations to Agreement 

Any variations or additions or amendments to this Agreement shall be in writing
and shall not be valid unless duly signed and executed by the Parties.

11.17
Entire Agreement 

This Agreement, including its exhibits, contains the entire agreement between
the Parties relating to the subject matter hereof, and supersedes all previous
negotiations, agreements (including but not limited to the letter agreement
dated June 28, 2007), understandings, undertakings, representations, documents,
minutes of meetings, letters and notices (whether oral or written) between the
Parties and/or their respective Affiliates with respect to such subject matter.

11.18
Confidentiality

Except as required by law, regulation or order of governmental authority, Seller
and Buyer shall keep and maintain this Agreement and all the terms and
provisions hereof in confidence for the term of the Agreement and will not
transmit, reveal, disclose or otherwise communicate the substance or any of the
terms or provisions of this Agreement to any other person not an employee,
officer, director, attorney, partner, working interest owner, agent or
contractor of Seller or Buyer, provided that Seller may make such disclosures as
may be required in its lease agreements with royalty owners and taxing
authorities or any litigation or arbitration concerning Carbon Dioxide prices.
The terms of this Agreement may be disclosed in any litigation or arbitration
involving this Agreement and to the Affiliates (and their respective agents,
employees, officers, directors and attorneys), investors, auditors, counsel,
lenders or potential lenders, and other professional advisors, and agents or
contractors of Seller or Buyer, or potential purchasers of Buyer’s properties in
which Carbon Dioxide is injected; provided that, (i) in any such disclosure
other than litigation involving this Agreement, the person or party to whom such
disclosure is made agrees to be bound by this confidentiality provision and (ii)
the Party making such disclosure shall be responsible for the compliance of
persons to whom such disclosure is made.
 
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11.19
Maintenance 

Seller's Facilities and Buyer's Facilities may require periodic maintenance
shutdowns. A Party anticipating maintenance shall use commercially reasonable
efforts to give at least thirty (30) days prior notice to the other Party.
During periods of maintenance for which notice has been properly given and
maintenance was performed, the Parties shall be relieved of all volume delivery
and take obligations that otherwise would accrue during such periods; provided,
however, that Buyer shall be entitled to a maximum of five (5) Days of such
maintenance for Buyer's Facilities in a Contract Year. The DCQ shall be adjusted
to reflect only actual volume reductions resulting from such
maintenance. Subject to the foregoing, each Party shall reasonably cooperate
with the other Party to minimize interruptions in volume delivery and take
schedules.

11.20
Drug and Alcohol Policy 

Each Party agrees that its employees, personnel, and contractors shall not use,
be under the influence of, possess, distribute, or sell alcohol beverages,
illicit or unprescribed controlled drugs, drug paraphernalia, or impairment
causing drugs while performing their respective obligations under this
Agreement. Each Party has or will adopt its own policy (including testing
policy) to assure a drug and alcohol free workplace. Each Party will not use an
employee, personnel or contractor to perform the obligations under this
Agreement who either refuses to take, or tests positive in any alcohol or drug
test or who refuses to cooperate with any search. Each Party will comply with
applicable laws concerning employee alcohol and drug use and assure that its
contractors agree to do so.

11.21
Survival

Except as expressly provided otherwise in this Agreement, termination or
cancellation of this Agreement, regardless of cause, shall be without prejudice
to any rights or remedies that may have accrued to any of the Parties prior to
the date thereof. In addition, the provisions of Articles 11.4 (Limitation of
Liability and General Indemnities), 11.14 (Dispute Resolution), 11.1 (Warranty
of Title), 11.2 (Disclaimers of Certain Warranties), 5.2 (Auditing), 5.4
(Financial Circumstances) and any other Article or Exhibit either expressed to
survive termination of this Agreement or requiring either Party to indemnify the
other Party pursuant hereto, shall survive the termination of this Agreement.
 
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11.22
Greenhouse Gases 

(**) GHGRR shall mean the recognition, award, or allocation of credits,
allowances, permits, or other tangible rights or obligations, whether created
through government program or private contract now or in the future, associated
with the production, avoidance, capture, sequestration, or other control of
greenhouse gases subject to this Agreement. (**) This right includes the right
to count or claim any applicable reductions pursuant to the U.S. Department of
Energy’s Climate Challenge Program as modified from time to time, to register
all such reductions pursuant to Section 1605 of the Energy Policy Act of 1992
and other related public and private registries, and any other governmental,
public, or private program designed to encourage or reward the reduction of
greenhouse gas emissions or emission reductions. (**)

(**)

11.23
Relationship of the Parties

 
Nothing in this Agreement and no action taken by the Parties pursuant to this
Agreement shall constitute, or be deemed to constitute, a partnership,
unincorporated association or other co-operative entity. The obligations and
liabilities of the Parties to this Agreement are several and not joint, nor
joint and several. 
 
" SELLER "
EXXONMOBIL GAS & POWER MARKETING COMPANY
(a division of ExxonMobil Corporation)
 
By:

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

 
Name: ______________________
 
Title: _________________________
 
DATED this ___ day of ______, 20__
 
"BUYER"
RANCHER ENERGY CORP.
 
 
By:

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

 
Name: _______________________
 
Title: _________________________
 
DATED this ___ day of ______ 20__

 
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EXHIBIT A - DAILY CONTRACT QUANTITY
 

DCQ - MMCFD

Contract Year 1
   
70.0
           
Contract Year 2
   
70.0
           
Contract Year 3 
   
70.0
           
Contract Year 4
   
70.0
           
Contract Year 5
   
70.0
           
Contract Year 6
   
70.0
           
Contract Year 7
   
70.0
           
Contract Year 8
   
70.0
           
Contract Year 9
   
70.0
           
Contract Year 10
   
70.0
 
 
       

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EXHIBIT B - EXPERT PROCEDURES

B.1.
Appointment of Expert

"Expert means an individual selected by the Parties to resolve a dispute as
outlined in this Exhibit B.

Whenever an Article of this Agreement provides for a matter to be referred to an
Expert, or whenever the Parties agree that a disputed matter shall be resolved
by an Expert, the following procedures shall apply:

B.1.1
The Party wishing the appointment to be made shall give notice to that effect to
the other Party and with such notice shall give details of the matter which is
proposed to be resolved by the Expert.

B.1.2
The Parties shall meet in an endeavor to agree upon a single Expert to whom the
matter in dispute shall be referred for determination.

B.1.3
If within twenty-one (21) days from the service of a notice pursuant to Article
B.1.1 the Parties have either failed to meet or failed to agree upon an Expert,
then the matter may forthwith be referred by either Party, together with a copy
of this Exhibit B, to the American Arbitration Association which shall be
requested to select an Expert by notice to the Parties within thirty (30) days,
and in so doing, a Party considering referral, may take such independent advice
as it thinks fit.

B.1.4
Upon an Expert being agreed or selected under the foregoing provisions of this
Exhibit B, the Parties shall forthwith notify such Expert of the selection
together with a copy of Articles B.2 and B.4 of this Exhibit B, and shall
request advice within fourteen (14) days as to whether or not the appointment
will be accepted.

B.1.5
If such Expert shall be either unwilling or unable to accept such appointment or
shall not have confirmed willingness and ability to accept such appointment
within the said period of fourteen (14) days, then (unless the Parties are able
to agree upon the appointment of another Expert) the matter shall again be
referred (by either Party) in the aforesaid manner to the American Arbitration
Association,which shall be requested to make a further selection, and the
process shall be repeated until an Expert is found who accepts the appointment.

B.2
Qualification

B.2.1
No person shall be appointed or accept appointment to act as the Expert under
this Exhibit B unless qualified by education, experience and training to
determine the matter in dispute.

B.2.2
Any person appointed or selected as the Expert in accordance with the above
provisions shall be entitled to act as such Expert provided that before
accepting such appointment the proposed Expert shall have fully disclosed to the
Parties any relationship, interest, or duty which could, in the reasonable view
of either Party, materially conflict with performing functions required by
appointment and/ or prejudice the Expert's ability to render an independent,
impartial determination.

 
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B.2.3
No person, without the prior written agreement of both Parties, shall be
appointed as the Expert who is (or has been at any time within the preceding six
years) an employee of either Party or of an Affiliate of either Party or who is
(or has been at any time within the preceding three (3) years) a consultant to
or contractor of either Party or of an Affiliate of either Party or who has
served in a similar expert capacity for either Party or who holds any
significant financial interest in either Party.

B.3
Confidentiality

No person shall be appointed as an Expert who has not agreed to hold in
confidence any and all information furnished by each of the Parties in
connection with the dispute under this Agreement, the existence of such dispute
and his determination thereof.

B.4
Remuneration

The appointment of the Expert shall only take effect after agreement has been
reached between the Parties and the Expert as to the Expert's remuneration. The
arrangement agreed on shall be clearly set out in writing and shall be part of
the agreement between the Parties and the Expert.

B.5
Determination

B.5.1
The Expert may request data, information or submissions as the Expert thinks
fit, and the Parties shall use reasonable endeavors to comply promptly with such
requests. However, no Party shall be required to divulge confidential
information nor to provide information in support of the other Party's claim.
All information supplied to the Expert in writing by a Party shall be served by
notice simultaneously to the other Party. In the event that the Expert shall
request oral submissions to be made, the Party requested to make such
submissions shall give the other Party not less than four (4) Business Days'
notice of the time and place where such submissions are to be made and shall
promptly afford the other Party the opportunity to be present.

B.5.2
The Expert shall make a determination in writing and in such determination give
reasons for the determination, not later than thirty (30) days after acceptance
of the appointment and shall ignore data, information and submissions supplied
and made after such thirty (30) days unless the same are furnished in response
to the Expert's specific request.

B.5.3
The Expert may obtain such independent professional and/or technical advice, as
the Expert may reasonably require, from a person meeting the Qualifications
requirements of Articles B.2.2 and B.2.3, provided that disclosure required by
Article B.2.2 shall be made by the prospective advisor to the Expert who shall
promptly forward same to the Parties. Consent of both Parties must be obtained
before the advisor is engaged.

 

B.5.4
If within a reasonable period (which shall not without the prior written consent
of both Parties exceed sixty (60) days after the acceptance by an Expert of the
appointment), the Expert shall not have rendered a determination then (at the
request of either Party) a new Expert shall be appointed under the provisions of
this Exhibit B and upon the acceptance of the appointment by such new Expert the
appointment of the previous Expert shall cease. Provided however, that if the
previous Expert shall have rendered a determination prior to the date upon which
the new Expert accepts the appointment such determination shall be binding upon
the Parties and the instructions to the new Expert shall be withdrawn.

 
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B.5.5
The Expert shall be deemed not to be an arbitrator but shall render a
determination as an Expert and the law or legislation relating to arbitration
shall not apply to such Expert or the determinations or the procedure by which
such determinations are reached.

B.5.6
The determination of the Expert shall be final and binding upon the Parties save
in the event of fraud, manifest error or failure by the Expert to disclose any
relevant interest or duty in accordance with this Exhibit B.

B.5.7
Each Party shall bear the costs and expenses of all counsel, witnesses and
employees retained by it; the costs and expenses of the Expert shall be
apportioned between the Seller and the Buyer in a manner proportionate to the
determination made by the Expert. The Expert determination shall address the
proportions in which the Parties should bear the Expert's costs.

 
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