Exhibit 10.5 


 



    	** Text Omitted and Filed Separately Confidential Treatment Requested Under 17 C.F.R. §§ 80(b)(4) and 240.24b-2




    




 


 





 


Execution Version







 


 


 


GAS GATHERING, PROCESSING AND PURCHASE
AGREEMENT


 


 


BETWEEN


 


 


LILIS ENERGY, INC


AS “SELLER”


 


 


and


 


 


LUCID ENERGY DELAWARE, LLC


AS “BUYER”


 


 



     


    	** Text Omitted and Filed Separately Confidential Treatment Requested Under 17 C.F.R. §§ 80(b)(4) and 240.24b-2




    




 




 


GAS GATHERING, PROCESSING AND PURCHASE
AGREEMENT


 


This Gas Gathering,
Processing and Purchase Agreement (this “Agreement”) is made and entered into this 10th day of August, 2017
(the “Effective Date”), by and between Lucid Energy Delaware, LLC, a Delaware limited liability company (“Buyer”),
and Lilis Energy, Inc., a Nevada corporation (“Seller”). Buyer and Seller are sometimes referred to in this Agreement
individually as a “Party” and collectively as the “Parties.”


 


Background:


 


Seller owns, controls,
or may acquire Interests (including oil and gas leases) in certain lands in the Dedicated Acreage (as defined in Exhibit A).


 


Seller has or contemplates
having a supply of Gas from present and future wells located in the Dedicated Acreage and desires to deliver such Gas to Buyer.


 


Buyer owns and operates,
or plans to own and operate, gathering and processing facilities capable of receiving deliveries of Committed Gas (as defined below).


 


Seller desires that
Buyer provide gathering, processing and other services as set forth in this Agreement and to sell Gas to Buyer, and Buyer desires
to provide to Seller gathering, processing and other services and to purchase Gas from Seller, all in accordance with the terms
and conditions stated in this Agreement.


 


Agreement:


 


In consideration of
the premises and of the mutual covenants set forth in this Agreement, the Parties agree as follows:


 


ARTICLE I

GENERAL TERMS AND CONDITIONS


 


Exhibit A, which is
attached to and made a part of this Agreement, contains general terms and conditions that apply to the Parties’ performance
under this Agreement. If there is any conflict between the terms and conditions contained in this Agreement and the terms and conditions
contained in Exhibit A, then the body of this Agreement will prevail. Unless otherwise defined, capitalized terms used this Agreement
will have the meanings assigned to those terms in Exhibit A.


 






    	 	1	 



    	** Text Omitted and Filed Separately Confidential Treatment Requested Under 17 C.F.R. §§ 80(b)(4) and 240.24b-2




    

 


ARTICLE II

DEDICATION


 


Article 2.1             
Dedication. Beginning on the Effective Date and continuing through the term of this Agreement, subject to the express
provisions of this Agreement, Seller does hereby (the “Dedication”): (i) dedicate and commit to deliver
all of its Gas produced from, and which is attributable to, well(s) operated by Seller or its Affiliates now or subsequently located
on Interests owned by Seller (and its successors and assigns) in the Dedicated Acreage, and (ii) commits to deliver all Gas produced
from such wells that is attributable to the interests in such wells owned by working interest, royalty and overriding royalty owners
that is not taken “in-kind” by such owners and for which Seller or is Affiliates has the right or obligation to market,
for so long as that Gas is not taken “in-kind” by the owners of that Gas (collectively, the “Committed Gas”).
If, after the Effective Date, Seller acquires additional Interests located in the Dedicated Acreage, then such Interests shall
automatically be subject to this Agreement without any further actions by the Parties; provided, however, if any such Interests
or Gas produced from such Interests is subject to a prior written dedication or commitment for gathering, processing or purchase
at the time of acquisition, then such Interests or Gas will be excluded from the Dedication (and such Gas will not be subject to
this Agreement) until the prior dedication or commitment expires. Upon the expiration or termination of that prior dedication or
commitment, such Interests and Gas will automatically be subject to this Agreement without any further actions by the Parties.
In addition, Seller shall be entitled to comply with the prior written dedications or commitments for gathering, processing or
purchase existing as of the Effective Date and set forth on Exhibit E. If, at any time in the future, Seller (or its successors
or assigns) has the right or ability to terminate any prior dedication or commitment covering Interests at no additional cost to
Seller, the prior dedication or commitment will be promptly terminated, and upon termination, the Interests subject to the prior
dedication or commitment will automatically be subject to this Agreement without any further action by the Parties; provided, however,
Seller shall have no obligation to terminate any such prior dedication or commitment to the extent that the Gas subject to such
prior dedication or commitment would not constitute Committed Gas hereunder. Seller represents and warrants to Buyer that there
are no prior assignments, dedications or commitments covering such Interests assigned and dedicated hereunder or Committed Gas
produced therefrom except as set forth on Exhibit E. For the avoidance of doubt, Seller shall not be required to deliver Gas from
any well now or subsequently located on the Dedicated Acreage if Seller would be required to install split stream connection facilities
or similar facilities to take such Gas in kind from wells operated by an operator other than Seller or its Affiliates, and such
Gas shall not be Committed Gas subject to Dedication hereunder. From time to time, and in Seller’s sole discretion, Seller
may elect to dedicate and commit hereunder additional Interests located outside of the Dedicated Acreage. Such additional Interests
shall only become dedicated and committed hereunder and subject to this Agreement at such time as Seller provides written notice
to Buyer of such election; provided, however, such dedication and commitment of the additional Interests shall be subject to the
available capacity on the Gathering System. For the avoidance of doubt, any additional Interest dedicated and committed hereunder
shall be entitled to the services provided under this Agreement on a Firm basis.





 


Article 2.2             
Sale of Committed Gas. From and after the In-Service Date, subject to Article 4.5, Seller agrees to sell and
deliver to Buyer at the Receipt Points all Committed Gas.  From and after the In-Service Date, subject to Article 4.5,
Buyer will receive and purchase from Seller at the Receipt Points each Day all Committed Gas delivered by Seller in accordance
with this Agreement, on a Firm basis.  If Buyer is unable to receive from Seller at the Receipt Points each Day all Committed
Gas delivered by Seller in accordance with this Agreement, Seller shall have the right to find an alternative market and such Committed
Gas shall be released from the Dedication as provided in Articles 2.3 and 2.4 below.


 



    	 	2	 



    	** Text Omitted and Filed Separately Confidential Treatment Requested Under 17 C.F.R. §§ 80(b)(4) and 240.24b-2




    

 





Article 2.3             
Temporary Release. Notwithstanding anything herein to the contrary, and in addition to any other remedies that Seller
may have under this Agreement, at any time after the In-Service Date when Buyer curtails or is otherwise unable to accept all of
Seller’s deliveries of Committed Gas for any reason, and there exists no uncured material breach of this Agreement on the
part of the Seller, the volumes affected will be, and are hereby, released from this Agreement for a period of time corresponding
with Buyer’s curtailment or inability to otherwise accept Seller’s deliveries, and Seller will be free to dispose of
such affected volumes under other arrangements for such period. At such time as receipts and deliveries of Committed Gas are no
longer interrupted or curtailed, Buyer may resume receipts of released volumes only upon thirty (30) days’ advance written
notice as of the beginning of a month unless otherwise agreed.


 


Article 2.4             
Permanent Release. Notwithstanding anything herein to the contrary, and in addition to any other remedies that Seller
may have under this Agreement, at any time after the In-Service Date, Committed Gas dedicated and committed to Buyer under this
Agreement shall be permanently released from the Dedication as follows:


 


(a)              
in the event that the Gathering System has insufficient capacity to receive and handle all of the Committed Gas dedicated
and committed to Buyer under this Agreement or Buyer is otherwise unable or fails to receive such Committed Gas or fully perform
the services under this Agreement and there exists no uncured material breach of this Agreement on the part of the Seller, for
a period of at least [**] Days or [**] Days [**] Day period, and such inability is not due to a Force Majeure declared by Buyer,
then at Seller’s option and upon written notice to Buyer, Seller shall be granted a permanent release from Dedication to
this Agreement of the affected Interests and wells, from which Buyer cannot receive and handle such Committed Gas or perform the
services, and all of such Committed Gas produced and producible therefrom. In the event that the Gathering System has insufficient
capacity to receive and handle all of the Committed Gas dedicated and committed to Buyer under this Agreement or Buyer is otherwise
unable or fails to receive such Committed Gas and/or fully perform the services, and there exists no uncured material breach of
this Agreement on the part of the Seller, for a period of at least [**] Days [**] Days [**] Day period and such inability is due
to a Force Majeure declared by Buyer, then at Seller’s option and upon written notice to Buyer, Seller shall be granted a
permanent release from Dedication to this Agreement of the affected Interests and wells, from which Buyer cannot receive and handle
such Committed Gas or perform the services, and all of such Committed Gas produced and producible therefrom;


 


(b)              
at Seller’s option and upon written notice to Buyer, in the event that Seller elects to exercise its rights to a permanent
release as provided in Article 6.4; and


 


(c)              
at Seller’s option and upon written notice to Buyer, in the event that Seller elects to exercise its rights to a permanent
release as provided in Section VI of Exhibit A.


 


At the request of Seller, the Parties shall
execute a release reasonably acceptable to Seller (which, in the case of a permanent release, shall be in recordable form) reflecting
the release of any Receipt Point(s), wells, Interests or Committed Gas released from Dedication hereunder.


 


Article 2.5             
Covenant. So long as this Agreement is in effect, this Agreement will: (i) be a covenant running with the Interests
now owned by Seller or hereafter acquired (that become subject to this Agreement) by Seller within the Dedicated Acreage, and (ii)
be binding on and enforceable by Buyer and its successors and assigns against Seller and all subsequent owners, successors and
assigns of all or any part of such Interests in the Dedicated Acreage. Seller will cause any conveyance by it of all or any Interests
(or Committed Gas) in the Dedicated Acreage to be made expressly subject to this Agreement, and to cause such transferee to execute
a written instrument in a form reasonably satisfactory to Buyer acknowledging such transferee’s obligations and rights under
this Agreement. Notwithstanding the foregoing, Seller shall be permitted to sell, transfer, convey, assign, grant, or otherwise
dispose of any Interest in the Dedicated Acreage free of the dedication and commitment hereunder (i) in a transaction in which
undeveloped Interests within the Dedicated Acreage are exchanged for other Interests located in the Dedicated Acreage that would
become subject to dedication and commitment hereunder, and (ii) in a sale (or a series of sales) of undeveloped Interests
within the Dedicated Acreage in which the total net acres sold does not exceed [**] percent ([**]%) of the total net acres dedicated
and committed under this Agreement.


 



    	 	3	 



    	** Text Omitted and Filed Separately Confidential Treatment Requested Under 17 C.F.R. §§ 80(b)(4) and 240.24b-2




    

 





Article 2.6             
Memorandum. Contemporaneously with the execution of this Agreement and from time to time during the term of this
Agreement, the Parties will execute, acknowledge, deliver and record a “short form” memorandum of this Agreement in
the form of Exhibit F attached hereto identifying the Dedicated Acreage and identifying the lands, leases and wells in which Seller
and its Affiliates own Interests, which will be placed of record in each county within the Dedicated Acreage.


 


ARTICLE III

QUANTITY


 


Article 3.1             
Nominations. Seller must provide Buyer written notice that Seller is prepared to flow Committed Gas at least ten
(10) Business Days prior to Seller’s estimated date of initial flow, and will include in such notice Seller’s good
faith estimate of Daily quantities (stated in both MMBtu and Mcf) of Committed Gas that will be available for sale to Buyer under
this Agreement during the initial Month of deliveries. Each Month thereafter, at least ten (10) Business Days before the end of
such Month, Seller must estimate the quantities of Committed Gas that will be available for sale to Buyer each Day during the next
Month.


 


Article 3.2             
Curtailment. Buyer will use reasonable efforts to provide timely notification to Seller by telephone, with subsequent
e-mail notification, of the potential size and duration of any unscheduled capacity disruption.


 


Article 3.3             
Objectionable Material. In order to ensure that the Gathering System is kept free of water, liquids and solids that
could impede free flow of Gas, Buyer may collect or remove from the Gas in the Gathering System any water, liquids or solids which
could accumulate in the Gathering System, and in that event Buyer will be responsible for disposal of and liable for the water,
liquids and solids so collected and removed, and will own them. The quantities of Gas attributable to the water, liquids and solids
so collected or removed from Gas will be retained by Buyer and are hereby conveyed and transferred to Buyer by Seller free and
clear of all liens, encumbrances and Claims.


 



    	 	4	 



    	** Text Omitted and Filed Separately Confidential Treatment Requested Under 17 C.F.R. §§ 80(b)(4) and 240.24b-2




    




  


ARTICLE IV

PRICE OF GAS; GAS PURCHASE PAYMENT


 


Article 4.1             
Pricing. The purchase price for Seller’s Residue Gas will be a price per MMBtu of Seller’s Residue Gas
equal to that described in Paragraph 1 of Exhibit B. The purchase price for Seller’s Plant Products will be a price per gallon
of Seller’s Plant Products equal to that described in Paragraph 2(f) of Exhibit B.


 


Article 4.2             
Gas Purchase Payment. Buyer’s monthly payment for the purchase of Seller’s Residue Gas and Plant Products
will equal the price per MMBtu determined in accordance with Article 4.1 above, multiplied by Seller’s Residue Gas
(determined in accordance with Exhibit B) plus the price per gallon determined in accordance with Article 4.1 above, multiplied
by Seller’s Plant Products for each component as determined in accordance with Paragraph 2(c) of Exhibit B (the “Gas
Purchase Payment”). The Gas Purchase Payment will be reduced by the following, if applicable: (i) the H2S Treating
Fee; (ii) the CO2 Treating Fee; (iii) the Processing Fee; (iv) the Inlet Compression Fee; (v) the Electric Power Fee; (vi) the
Gathering Fee; (vii) the Maintenance and Meter Fee and (viii) the Nitrogen Fee.


 


Article 4.3             
Low Volume at Receipt Points. If the average Daily quantity of Committed Gas delivered by Seller at a Receipt Point
over any calendar Month is less than [**] MMBtu per Day for any reason (other than Force Majeure or Buyer’s unexcused failure
to accept deliveries from Seller), then Buyer will charge Seller a “Maintenance and Meter Fee” of $[**] per Month for
each such Receipt Point for administration, maintenance and meter servicing.


 


Article 4.4             
Marketing of Gas. Notwithstanding any other provision in this Agreement to the contrary, Buyer is obligated to sell
Seller’s Residue Gas and Seller’s Plant Products but is not obligated to sell Seller’s Residue Gas and Seller’s
Plant Products at any particular downstream point or at any particular price, provided however, Buyer shall use commercially reasonable
efforts to obtain the best price and terms for the sale of Seller’s Residue Gas and Seller’s Plant Products with unaffiliated
third parties.


 


Article 4.5             
Take-In-Kind.


 


(a)              
Residue Gas. For any calendar [**] during the term of this Agreement, Seller will have the right to elect, by providing
Buyer written notice thirty (30) Days’ prior to the beginning of the calendar [**], to take Seller’s Residue Gas “in-kind”
at the Delivery Point.  For any calendar [**] that Seller elects to take Seller’s Residue Gas “in-kind”,
Buyer will not be required to pay the Gas Purchase Payment to Seller for such “in-kind” Residue Gas, Buyer will list
on its monthly statement the fees and other charges owed by Seller pursuant to this Agreement for Buyer’s processing of the
Gas related to such “in-kind” Residue Gas, and Seller will pay Buyer for any such fees and other charges pursuant to
the terms of Section 8.01 of Exhibit A.  Additionally, during any such calendar [**], the “Take In-Kind
Terms” set forth in Exhibit G, as well as the applicable Title, Possession and Responsibility provisions of Section IX
of Exhibit A, will apply.


 



    	 	5	 



    	** Text Omitted and Filed Separately Confidential Treatment Requested Under 17 C.F.R. §§ 80(b)(4) and 240.24b-2




    

 





(b)              
Plant Products. For any calendar [**] during the term of this Agreement, Seller will have the right to elect, by
providing Buyer written notice thirty (30) Days’ prior to the beginning of the calendar [**], to take Seller’s Plant
Products “in-kind” at the Plant Products Delivery Point.  For any calendar [**] that Seller elects to take Seller’s
Plant Products “in-kind”, Buyer will not be required to pay the Gas Purchase Payment to Seller for such “in-kind”
Plant Products, Buyer will list on its monthly statement the fees and other charges owed by Seller pursuant to this Agreement relating
to such “in-kind” Plant Products, and Seller will pay Buyer for any such fees and other charges pursuant to the terms
of Section 8.01 of Exhibit A.  Additionally, during any such calendar [**] that Seller takes Seller’s Plant
Products “in-kind”, the “Take In-Kind Terms” set forth in Exhibit G, as well as the applicable Title, Possession
and Responsibility provisions of Section IX of Exhibit A, will apply.


 


ARTICLE V

FEES; FUEL AND ELECTRICITY


 


Article 5.1             
Seller will pay to Buyer each of the fees and other amounts, as applicable, set forth on Exhibit C, attached hereto, for
the gathering and processing of Committed Gas and other services provided under this Agreement. Buyer shall provide dehydration
and compression services with respect to Gas delivered by Seller to the Crittendon Field Station HP and Crittendon Field Station
LP Receipt Points (the “Crittendon Receipt Points”), subject to the payment of the Inlet Compression Fee. Initially,
Gas delivered by Seller to the Prizehog BWZ Receipt Point, Wildhog BWX Receipt Point and the Crittenden North Receipt Point shall
be at high pressure (the “PWC Receipt Points”) and shall not require dehydration or compression services or be subject
to the Inlet Compression Fee. At any time prior to the beginning of the sixth (6th) Year of the Agreement Seller may
elect, by providing ninety (90) Days prior written notice to have any of the PWC Receipt Points converted to a Low Pressure Receipt
Point and Exhibit D will be amended to reflect such election by Seller. To the extent Seller elects such option, Buyer shall provide
dehydration and compression services with respect to the Gas delivered by Seller to any such Low Pressure Receipt Point(s), subject
to the payment of the Inlet Compression Fee.


 


Article 5.2             
System Fuel, Lost and Unaccounted for Gas. Subject to the terms and conditions set forth in this Article 5.2,
Buyer will deduct from the volumes of Committed Gas delivered by Seller hereunder, at no cost to Buyer, [**] percent ([**]%) of
such Gas in MMBtus delivered by Seller at the Receipt Point(s), which will be attributed to Buyer’s use as (i) Plant Fuel,
and (ii) Field Fuel (collectively, “Seller’s Fixed FL&U”). Seller’s Fixed FL&U is comprised
of, (a) [**] percent ([**]%) Field Fuel (“Seller’s Fixed Field Fuel”) and (b) [**] percent ([**]%) Plant
Fuel (“Seller’s Fixed Plant Fuel”). To the extent Buyer utilizes electric compression to compress Committed
Gas, Seller will be responsible, and pay Buyer for, its ratable share of Electrical Power Charges. Notwithstanding anything to
the contrary set forth herein, Seller shall not be subject to a deduction for Seller’s Fixed Field Fuel at the High Pressure
Receipt Points, and shall only be subject to a deduction for Seller’s Fixed Plant Fuel with respect to the Gas delivered
by Seller at the High Pressure Receipt Point(s).


 


Article 5.3             
Adjustment of Fees. On the first anniversary of the first Day of the Month following the Effective Date and on each
anniversary date thereafter, each fee set forth in this Agreement will be automatically adjusted, by multiplying the current fee
by a fraction, the numerator of which will be the [**], and the denominator of which will be [**]; provided however, no such adjustment
to any such fee shall exceed [**] percent ([**]%) for any given Year.  Notwithstanding the above, in no event will any fee
set forth in this Agreement be adjusted below the fees listed in Exhibit C.


 



    	 	6	 



    	** Text Omitted and Filed Separately Confidential Treatment Requested Under 17 C.F.R. §§ 80(b)(4) and 240.24b-2




    

 





ARTICLE VI

RECEIPT AND DELIVERY POINTS


 


Article 6.1             
Receipt Points. Each Receipt Point for Committed Gas delivered by Seller under this Agreement will be at the inlet
flange of the measurement facilities located at a mutually agreed point of interconnection between Seller’s facilities and
Buyer’s, or its designee’s, Gathering System as further described on Exhibit D attached hereto.


 


Article 6.2             
Delivery Points. Each Delivery Point for Residue Gas delivered by Buyer for its own account under this Agreement
will be at the inlet flange of the measurement facilities of each Delivery Point that is set forth on Exhibit D. The foregoing
notwithstanding, Buyer may, at its sole discretion, add a Delivery Point to Exhibit D at any time; provided that, any such addition
shall not adversely affect the price and terms for the sale of Seller’s Residue Gas and Seller’s Plant Products.


 


Article 6.3             
Plant Products Delivery Points. Each Plant Products Delivery Point for recovered Plant Products delivered by Buyer
for its own account under this Agreement will be at the inlet flange of the measurement facilities of each Plant Products Delivery
Point that is set forth on Exhibit D. The foregoing notwithstanding, Buyer may, at its sole discretion, add a Plant Products Delivery
Point to Exhibit D at any time.


 


Article 6.4             
Receipt Point Connections.


 


(a)              
Completion Deadline. Buyer, at its sole risk, cost and expense, shall construct and connect and shall cause the following
Receipt Points, each as more particularly described on Exhibit D, to be installed and fully operational for the receipt
of Committed Gas on or before the following dates (each such date, a “Completion Deadline”):


 


Prizehog BWZ:November
1, 2017;


 


Wildhog BWX:November
1, 2017;


 


Crittendon Field Station
LP:December 15, 2017;


 


Crittendon Field Station
HP: December 15, 2017; and


 


Crittendon North:April
1, 2018.


 


The Prizehog BWZ and Wildhog BWX Receipt
Point(s) shall be designed and constructed for capacities ranging from 0 Mcf/day to 10,000 Mcf/Day, and the Crittendon Field Station
LP, Crittendon Field Station HP, and Crittendon North Receipt Point(s) shall be designed and constructed for capacities ranging
from 0 Mcf/Day to 50,000 Mcf/day. Such Receipt Point(s) shall be expanded from time to time as necessary for Buyer to receive all
of Committed Gas delivered by Seller.


 



    	 	7	 



    	** Text Omitted and Filed Separately Confidential Treatment Requested Under 17 C.F.R. §§ 80(b)(4) and 240.24b-2




    

 





(b)              
Force Majeure Delay. To the extent the delay in causing any Receipt Point completion to occur by the respective Completion
Deadline is due to a properly noticed Force Majeure event, then for each Day of the Force Majeure event, Buyer shall have one additional
Day within which to cause any such Receipt Point completion to occur, and such Completion Deadline shall be extended accordingly.


 


(c)              
Receipt Point Completion Delays.


 


(i)       If
Buyer fails to cause any Receipt Point completion to occur on or before the respective Completion Deadline, but Buyer causes such
Receipt Point completion to occur on or before the [**] Day after such Completion Deadline, then for a period equal to [**] times
the number of Days after such Completion Deadline until Buyer causes such Receipt Point completion to occur, the fee(s) payable
by Seller set forth on Exhibit C shall be reduced by [**]% for such Receipt Point.


 


(ii)       If
Buyer fails to cause any Receipt Point completion to occur on or before the [**] Day after the respective Completion Deadline,
then for a period equal to [**] times the number of Days after such Completion Deadline until Buyer causes such Receipt Point completion
to occur, the fee(s) payable by Seller set forth on Exhibit C shall be reduced by [**]% for such Receipt Point.


 


(iii)       Without
limiting Seller’s rights above, if Buyer fails to cause the Receipt Point completion for any such Receipt Point to occur
on or before the [**] Day after the respective Completion Deadline, then Seller may elect to permanently release from the Dedication
any such Receipt Point, the affected Interests and all existing and future wells that would have otherwise been delivered to such
Receipt Point, and all of such Committed Gas produced or producible therefrom. Prior to Seller’s election to permanently
release under this Article 6.4(c)(iii), Seller must provide Buyer reasonable documentation evidencing the Receipt Point,
the affected Interests and all existing and future wells that would have been delivered to such Receipt Point. Seller’s right
to permanent release pursuant to this Article 6.4(c)(iii) shall expire when the Receipt Point completion for each such Receipt
Point has occurred.


 


ARTICLE VII

TERM


 


This Agreement is
effective as of the Effective Date, and, unless terminated earlier in accordance with any express provision of this Agreement,
will remain in full force and effect for a primary term of ten (10) Years following the Effective Date and, unless terminated by
either Party upon at least ninety Days’ written notice prior to the end of such primary term, will continue year to year
until ninety (90) Days’ written notice is provided by a Party prior to the end of any term extension. Termination will be
effective on the last Day of the primary term or yearly term extension, whichever is applicable. Upon final termination under this
Article VII, the Dedication hereunder shall terminate.


 



    	 	8	 



    	** Text Omitted and Filed Separately Confidential Treatment Requested Under 17 C.F.R. §§ 80(b)(4) and 240.24b-2




    

 


 


 


ARTICLE VIII

NOTICES


 


Article 8.1             
Notices. Any notice, request, demand, statement, payment or bill provided for in this Agreement, or any notice which
a Party may desire to give to the other, must be in writing and will be deemed duly made when (a) delivered personally, (b) three
business days following deposit with the U.S. Postal Service, certified mail with return receipt and prepaid postage, (c) one business
day following delivery to a recognized overnight courier service with prepaid postage, or (d) the same day if emailed, telefaxed
or wired to the other Party at the following address:


 








	BUYER:	Notices & Correspondence: 
	 	Lucid Energy Delaware, LLC 
	 	3100 McKinnon St., #800 
	 	Dallas, Texas 75201 
	 	Attention:	Contract Administration
	 	Telephone:	214-420-4950
	 	Facsimile:	214-420-4949
	 	Email:	Contract.Admin@lucid-energy.com
	 	
         

         

	 	Billing: 
	 	Lucid Energy Delaware, LLC 
	 	3100 McKinnon St., #800 
	 	Dallas, Texas 75201 
	 	Attention:  Accounting 
	 	Telephone: 	214-420-4950
	 	Facsimile:  	214-420-4949
	 	Email:	ap@lucid-energy.com
	 	 
	 	Payments By Wire: 
	 	
        [**]

         

	 	Account Name:	[**]
	 	Account Number:	[**]
	 	ABA:	[**]
	 	 
	SELLER:	Notices & Correspondence: 
	 	Lilis Energy, Inc. 
	 	300 E. Sonterra Blvd, Suite 1220 
	 	San Antonio, TX 78258 
	 	Attention: Accounting and Operations 
	 	Telephone: 210-999-5400 
	 	Facsimile   210-999-5401 




 



    	 	9	 



    	** Text Omitted and Filed Separately Confidential Treatment Requested Under 17 C.F.R. §§ 80(b)(4) and 240.24b-2




    

 








	 	Billing:
	 	Lilis Energy, Inc.
	 	300 E. Sonterra Blvd, Suite 1220
	 	San Antonio, TX 78258
	 	Attention: Patrick Tumer
	 	Telephone: 817-502-1635   
	 	Facsimile:  210-999-5401
	 	Email: AP@Lilisenergy.com
	 	 
	 	Payments By Wire:
	 	Bank Name: [**]
	 	Account Name: [**]
	 	Account Number: [**]
	 	ABA: [**]





 





Article 8.2             
Change of Address. Either Party may change one or more of its addresses or accounts by giving written notice to the
other Party in any manner provided above.


 


[End of Page. Signatures to Follow]


 




    	 	10	 



    	** Text Omitted and Filed Separately Confidential Treatment Requested Under 17 C.F.R. §§ 80(b)(4) and 240.24b-2




    


 





 


IN WITNESS WHEREOF, the Parties have caused this Agreement to
be executed in duplicate originals by their duly authorized officers effective as of the Effective Date.


 





	SELLER:	 	BUYER:
	 	 	 	 	 
	LILIS ENERGY, INC.	 	LUCID ENERGY DELAWARE, LLC
	 	 	 	 	 
	 	 	 	 	 
	By:	/s/ Jim Linville	 	By:	/s/ B. Scott Brown
	 	 	 	 	 
	Name:	Jim Linville 	 	Name:	B. Scott Brown
	 	 	 	 	 
	Title:	Chief Executive Officer	 	Title:	Executive Vice President and CCO


 







 




    	 	11	 



    	** Text Omitted and Filed Separately Confidential Treatment Requested Under 17 C.F.R. §§ 80(b)(4) and 240.24b-2




    


 


 


EXHIBIT A


to


GAS GATHERING, PROCESSING AND PURCHASE AGREEMENT


dated as of August __, 2017


between


LUCID ENERGY DELAWARE, LLC


(Buyer)


and


LILIS ENERGY, INC.


(Seller)


 


 


GENERAL TERMS AND CONDITIONS


 


Section I

Definitions


 


Section 1.01       
Definitions. Unless another definition is expressly stated or the context requires otherwise, the following terms,
when used in this Agreement to which this Exhibit A is attached and all other exhibits and attachments to this Agreement, are intended
to and will have the following meanings:


 


(a)              
“Agreement” is defined in the Preamble.


 


(b)              
“Affiliate” means any Person that directly or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with another Person. The term “control” (including its derivatives and similar
terms) means possessing the power to direct or cause the direction of the management and policies of a Person, whether through
ownership, by contract, or otherwise. Any Person will be deemed to be an Affiliate of any specified Person if such Person owns
fifty percent or more of the voting securities of the specified Person, if the specified Person owns fifty percent or more of the
voting securities of such Person, or if fifty percent or more of the voting securities of the specified Person and such Person
are under common control.


 


(c)              
“Annual Prime Rate” shall mean the fluctuating per annum lending rate of interest from time to time published
in The Wall Street Journal (New York edition) as the Prime Rate.


 


(d)              
“Base Quantity” shall mean the average daily quantity of Committed Gas for the twelve (12) months prior to Seller’s
election in Section 2.06.


 


(e)              
“Btu” means a “British Thermal Unit,” which is the amount of heat required to raise the temperature
of one avoirdupois pound of pure water from 58.5° Fahrenheit to 59.5° Fahrenheit at a constant pressure of 14.65 pounds
per square inch absolute.


 


(f)               
“Business Day” means a calendar day other than a Saturday, Sunday or other Day that federal banks are authorized
or required to close.


 



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(g)              
“Buyer” means Lucid Energy Delaware, LLC, a Delaware limited liability company.


 


(h)              
 “Claims” means any and all actions, claims, costs (including costs of investigation, litigation, and court
costs), damages, demands, fines, interest, judgments, liabilities (INCLUDING STRICT LIABILITY), losses, penalties, proceedings,
suits (including appeal), and expenses (including reasonable attorney’s fees and expert fees).


 


(i)                
“CO2 Treating Fee” is defined in Exhibit C.


 


(j)                
“Committed Gas” is defined in Article 2.1.


 


(k)              
“Commitment Period” shall mean the period starting on the first day of the Month following Seller’s election
in Section 2.06 until the termination of this Agreement.


 


(l)                
“Cubic Foot” means a volume of Gas occupying a space of one cubic foot at a temperature of 60° Fahrenheit
at 14.65 pounds per square inch absolute.


 


(m)            
“Day” (or “Daily”) means a period beginning at 9:00 a.m., Central time, on one calendar day and
ending at 9:00 a.m., Central time, on the following calendar day.


 


(n)              
“Dedicated Acreage” means all lands described on Exhibit E.


 


(o)              
 “Dedication” is defined in Article 2.1.


 


(p)              
“Delivery Points” is defined in Article 6.2.


 


(q)              
“Effective Date” is defined in the Preamble.


 


(r)               
“Electrical Power Charges” means the actual cost to Buyer for the electrical power consumed in the operation
of gathering, compression, processing or treating equipment used to gather, compress, process or treat the Committed Gas under
this Agreement.


 


(s)               
“Field Fuel” means the quantity of Gas or other hydrocarbons used or consumed as gathering, compression, treating,
dehydration or other fuel on the Gathering System upstream of the Processing Plant(s) and at points upstream of the Receipt Point(s)
to the extent allocated to Seller by Buyer with respect to the delivery by Seller of Gas at the Receipt Point(s), in order to deliver
Gas to the Processing Plant(s) or in the services performed hereunder, or used or consumed as flared, lost, unaccounted for Gas
or otherwise used or consumed in the operation on such portions of the Gathering System.


 


(t)                
“Firm” means that level of service that has the highest priority call for Similarly Situated Shippers on capacity
of all or any relevant portion of the Gathering System, which service shall not be subject to interruption or curtailment except
for a Permitted Curtailment.


 


(u)              
 “Force Majeure” is defined in Section 11.02 of this Exhibit A.


 


 



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(v)              
“Gas” means natural gas or any mixture of hydrocarbon gases or of hydrocarbon gases and noncombustible gases,
consisting predominantly of methane.


 





(w)            
“Gas Purchase Payment” is defined in Article 4.2.


 


(x)              
“Gathering Fee” is defined in Exhibit C.


 


(y)              
“Gathering System” means Buyer’s gathering facilities, related compression, dehydration, treating, processing
and other facilities, acquired or constructed by Buyer, that are utilized in conjunction with receiving, gathering, processing
and purchasing Seller’s Committed Gas from Receipt Points on Buyer’s gathering facilities and delivering Residue Gas
and Plant Products out of Buyer’s gathering facilities to the Delivery Points and Plant Products Delivery Points for sale,
including the Processing Plant(s).


 


(z)              
“GPM” is defined in Exhibit B.


 


(aa)           
“Gross Heating Value” means the number of Btus produced by the complete combustion, at constant pressure, of
the amount of dry Gas which would occupy a volume of one Cubic Foot at a temperature of 60° Fahrenheit and at a pressure equivalent
to 14.65 pounds per square inch absolute, under standard gravitational force (acceleration 980.665 centimeters per second per second),
with air of the same temperature and pressure as the Gas when the products of combustion are cooled to the initial temperature
of the Gas and air and when the water formed by combustion is condensed to the liquid state. The Gross Heating Value so determined
will be expressed on a real instead of ideal basis, and corrected to adjust for the water vapor content at the pressure and temperature
of the Gas delivered, expressed in Btu per Cubic Foot and reported at a pressure base of 14.65 pounds per square inch absolute;
provided, however, if the water vapor content of the Gas delivered is seven pounds or less per one million Cubic Feet, the Gas
will be deemed to be dry.


 


(bb)          
“H2S Treating Fee” is defined in Exhibit C.


 


(cc)           
“High Pressure Receipt Points” is defined in Exhibit D.


 


(dd)          
“Impaired Party” is defined in Section 8.04 of this Exhibit A.


 


(ee)           
“Inlet Compression Fee” is defined in Exhibit C.


 


(ff)             
 “Insecure Party” is defined in Section 8.04 of this Exhibit A.


 


(gg)          
“In-Service Date” is the first day of the Month following the Day of initial flow of Seller’s Committed
Gas at the first Receipt Point to receive Committed Gas.


 


(hh)          
“Interests” means any right, title or interest in lands (including pursuant to oil and gas leases) and any right
to produce oil and/or Gas therefrom whether arising from fee ownership, working interest ownership, mineral ownership, leasehold
ownership, or arising from any pooling, unitization, or communitization of any of those rights.


 



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(ii)             
 “Interruptible” means all obligations of Buyer to receive, gather and process Gas, that are designated as such,
as to which Buyer may interrupt its performance for any or no reason.


 


(jj)             
“Low Pressure Receipt Points” is defined in Exhibit D.


 


(kk)          
“Maintenance” is defined in Section 2.02 of this Exhibit A.


 


(ll)             
“Maintenance and Meter Fee” is defined in Article 4.3.


 


(mm)     
“Mcf” means one thousand Cubic Feet.


 


(nn)          
“MMBtu” means one million Btu.


 


(oo)          
“Month” means the period beginning at 9:00 a.m., Central time, on the first Day of a calendar month and ending
at 9:00 a.m., Central time, on the first Day of the succeeding calendar month.


 


(pp)          
“Nitrogen Fee” is defined in Section 5.03 of this Exhibit A.


 


(qq)          
“Non-Conforming Gas” is defined in Section 5.06 of this Exhibit A.


 


(rr)             
“Party” or “Parties” is defined in the Preamble.


 


(ss)            
“Permitted Curtailment” means a curtailment and/or interruption of services on the Gathering System attributable
to a Force Majeure declared by Buyer, Maintenance, or because such curtailment and/or interruption is necessary to avoid injury
or harm to Persons or property, to the environment, or to the integrity of Buyer’s System for a reason outside of Buyer’s
control.


 


(tt)             
“Person” means any individual, firm, corporation, trust, partnership, limited liability company, association,
joint venture, other business enterprise or governmental authority.


 


(uu)          
“Plant Fuel” is defined in Exhibit B.


 


(vv)          
“Plant Products” is defined in Exhibit B.


 


(ww)      
“Plant Products Delivery Point” is defined in Article 6.3.


 


(xx)          
“Processing Plant(s)” means the Red Hills I, Red Hills II, Palo Duro or any other cryogenic or refrigeration
plant and associated equipment that Buyer may install on the Gathering System.


 


(yy)          
“Receipt Points” is defined in Article 6.1.


 


(zz)           
“Potential Gallons” is defined in Exhibit B.


 


(aaa)       
“Qualified Institution” means (i) the U.S. office of a commercial bank or trust company (that is not an Affiliate
of either Party) organized under the laws of the United States (or any state or a political subdivision thereof), or (ii) the U.S.
branch of a foreign bank (that is not an Affiliate of either Party), in each case having assets of at least ten billion dollars
($10,000,000,000), and having credit ratings of at least "A-" by Standard & Poor's Financial Services LLC, a subsidiary
of The McGraw-Hill Companies, Inc. (or its successor) or at least "A3" by Moody's Investors Service, Inc.(or its successor).


 



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(bbb)      
“Residue Gas” is defined in Exhibit B.


 


(ccc)       
“Seller” means Lilis Energy, Inc., a Nevada corporation.


 


(ddd)      
“Seller’s Fixed Field Fuel” is defined in Article 5.2.


 


(eee)       
“Seller’s Fixed FL&U” is defined in Article 5.2.


 


(fff)          
“Seller’s Fixed Plant Fuel is defined in Article 5.2.


 


(ggg)      
“Shrinkage” is defined in Exhibit B.


 


(hhh)      
“Similarly Situated Shipper” means any other shipper of Buyer that has contracted for gathering and/or processing
services with Buyer pursuant to an acreage and/or lease dedication with financial commitments tied to minimum volumes of Gas less
than [**] Mcf/day.


 


(iii)           
“Taxes” means all taxes, assessments, allowances, charges or costs imposed by any law, rule, regulations or
other government authority or paid or incurred by Buyer in response to, or to comply with, any law, rule or regulation or other
government authority, including to comply with any emissions limitations (which costs include the costs of any allowances that
are required to be purchased by or on behalf of Buyer to comply with such emissions limitations).


 


(jjj)           
 “Weighted Average Sales Price” for Residue Gas means the price obtained each Month by dividing the market sales
proceeds obtained under arms-length transactions with unaffiliated third parties without marketing fees at the various Delivery
Points by the total MMBtu quantities of Residue Gas owned or controlled by Buyer and sold at the various Delivery Points.


 


(kkk)      
“Year” means a period of 365 consecutive Days, provided that any calendar year containing the date of February
29 will consist of 366 consecutive Days.


 


Section 1.02         
Interpretation.


 


(a)              
All references in this Agreement to articles, sections, subsections and other subdivisions refer to corresponding articles,
sections, subsections and other subdivisions of this Agreement unless expressly provided otherwise.


 


(b)              
Titles appearing at the beginning of any of such subdivisions are for convenience only and will not constitute part of such
subdivisions and will be disregarded in construing the language contained in such subdivisions.


 



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(c)              
The words “this Agreement,” “this instrument,” “herein,” “hereof,” “hereby,”
“hereunder” and words of similar import refer to this Agreement as a whole and not to any particular subdivision unless
expressly so limited.


 


(d)              
Words in the singular form will be construed to include the plural and vice versa, unless the context otherwise requires.
Pronouns in masculine, feminine and neuter genders will be construed to include any other gender.


 


(e)              
Examples will not be construed to limit, expressly or by implication, the matter they illustrate.


 


(f)               
Unless the context otherwise requires or unless otherwise provided herein, the terms defined in this Agreement which refer
to a particular agreement, instrument or document also refer to and include all renewals, extensions, modifications, amendments
or restatements of such agreement, instrument or document, provided that nothing contained in this subsection will be construed
to authorize such renewal, extension, modification, amendment or restatement.


 


(g)              
The word “or” is not intended to be exclusive and the word “includes” and its derivatives means
“includes, but is not limited to” and corresponding derivative expressions.


 


(h)              
No consideration will be given to the fact or presumption that one party had a greater or lesser hand in drafting this Agreement.


 


Section II.

Field Equipment


 


Section 2.01       
Seller’s Equipment; Gathering System.


 


(a)              
Seller agrees to furnish, install and maintain all equipment upstream of the Receipt Point(s) necessary for the proper,
safe and efficient operation and maintenance of Seller’s wells and to enable it to make delivery of Committed Gas in accordance
with this Agreement.  This equipment must include valves and fittings necessary to permit Buyer to make its connections at
the Receipt Points that will permit Seller to regulate deliveries from its wells according to Buyer’s requirements, including
equipment that may be necessary to prevent freezing during the varying deliveries from the wells.  Seller agrees to install
pressure control equipment at its wellhead or other appropriate location. Seller must furnish any information reasonably requested
by Buyer regarding Seller’s well equipment or any of its delivery lines for the purpose of Buyer providing the services hereunder.
Seller will operate its wells in a good and workmanlike manner.


 


(b)              
Buyer shall, at its sole risk, cost and expense, design, construct, maintain and operate the Gathering System, including
any and all facilities required to connect each Receipt Point to the Gathering System, as necessary to perform the services and
all its obligations under this Agreement in a good and workmanlike manner in accordance with standards customary in the industry.
Buyer will design and shall expand, and may add or remove components of the Gathering System, as it determines to be best in its
capacity as a prudent operator, provided that such design and structure are consistent with the full performance of Buyer’s
obligations and Services hereunder. Buyer shall use best efforts (including, but not limited to, the exercise of any eminent domain
rights) to obtain all servitudes, right-of-way grants, permits, permissions or licenses from any Person (other than a governmental
authority, whether federal, state, local, tribal or any other political subdivision) to enable Buyer to perform the services and
all of its obligations under this Agreement. Except for the service fees set forth on Exhibit C or as otherwise expressly provided
in this Agreement, Seller shall have no responsibility for the cost of the Buyer’s System or any facilities constructed or
to be constructed by Buyer.


 





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Section 2.02       
Operational Control. Buyer will be entitled to full and complete operational control of its facilities and will be
entitled to schedule deliveries and to operate and reconfigure its facilities in a manner which, in Buyer’s reasonable business
judgment, is consistent with its obligations under this Agreement. Buyer will be entitled, without liability, to interrupt its
performance under this Agreement to perform necessary or desirable inspections, maintenance, testing, alterations, modifications,
expansions, connections, repairs or replacements to its facilities as Buyer deems necessary in its sole good faith discretion (“Maintenance”),
with reasonable notice provided to Seller, except in cases of emergency where such notice is impracticable or in cases where the
operations of Seller are not expected to be affected. Buyer will exercise reasonable diligence to schedule routine repairs and
maintenance so as to minimize disruption of service hereunder. Buyer will schedule and provide reasonable prior notice (but, in
any event, no less than 15 days’ prior notice) to Seller in advance of any plant turnarounds, shut downs associated with
tie-ins of new processing or fractionation trains or other major maintenance. In all cases, Buyer will provide reasonable prior
notice (but, in any event, no less than 15 days’ prior notice) to Seller prior to the commencement of any planned maintenance
or repairs that would cause an interruption or curtailment of service hereunder. Written notice with reasonably full particulars
of the event or occurrence, as well as Buyer’s plans for addressing the reason for the interruption or curtailment, is required
within a reasonable time prior to the commencement of the event or occurrence (but, in any event, no less than 15 days’ prior
notice). In situations reasonably perceived by Buyer to be emergencies, Buyer shall use commercially reasonable efforts to provide
reasonable prior notice to Seller of such repairs or maintenance.


 


Section 2.03       
No Processing. Seller will not and will not permit others to strip liquid hydrocarbons in the field or elsewhere
from the Committed Gas to be delivered under this Agreement other than by usual separation methods.


 


Section 2.04       
Commingling. Buyer shall be entitled to commingle the Committed Gas with other Gas delivered to the Gathering System
from other shippers; provided, however, any such commingling of the Committed Gas shall not adversely affect the quality of such
Committed Gas or merchantability of such Committed Gas, or limit or reduce Buyer’s redelivery obligations hereunder with
respect to such Committed Gas. 


 


Section 2.05       
[**]. If it becomes [**], then [**]and [**]provided, however, [**].


 


Section 2.06       
[**]. At any time within the [**]. If such [**]percent ([**]%) of the [**] or [**].


 


Section 2.07       
Reduced Fees for Curtailment. Notwithstanding anything to the contrary set forth herein, without limiting any other
remedies available to Seller, including temporary or permanent releases, in the event that receipts of Committed Gas are curtailed
in whole or part or services hereunder are curtailed for any reason other than a Permitted Curtailment (including as a result of
Buyer’s failure to maintain pressures pursuant to Section VI of this Exhibit A), for a period of at least [**] Days
[**] Days [**] Day period, then for a period equal to [**] times the number of Days of curtailment, the fee(s) payable by Seller
set forth on Exhibit C shall be reduced by [**]% at the affected Receipt Point(s).


 



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Section 2.08       
Excessive Downtime. Notwithstanding anything to the contrary set forth herein, without limiting any other remedies
available to Seller, including temporary or permanent releases, commencing on the first day of the In-Service Date, in the event
that during any [**] Month period, the downtime period (excluding any downtime attributable to Force Majeure or emergency conditions
existing on the Gathering System) for all or any portion of Gathering System when receipts of Committed Gas are curtailed in whole
or part or services hereunder are curtailed during such [**] Month period is in excess of [**] percent ([**]%), then the fee(s)
payable by Seller set forth on Exhibit C shall be reduced by [**]% for the [**] Month period immediately following.


 


Section III.

Measuring Equipment and Testing


 


Section 3.01       
Measuring Equipment. Buyer, or its designee, will maintain and operate at its own expense the measuring stations
at the Receipt Points through which Committed Gas delivered to Buyer will be measured. Seller may install, maintain and operate,
at its own expense, such check measuring equipment as desired by Seller; provided, that such equipment must be installed so as
not to interfere with the operation of Buyer’s, or its designee’s, measuring equipment. Further, Buyer shall provide
Seller with real-time access to all SCADA, measurement, pressure and other measurement data with respect to Committed Gas delivered
to Buyer and generated by equipment at the Receipt Point(s) through which Committed Gas is measured.


 


Section 3.02       
Measurement Standards. The measuring equipment will be constructed, installed and operated, and have computations
for Gas measurement performed in accordance with the following standards, depending on the type of meters used:


 


(a)              
Orifice Meters - in accordance with ANSI/API 14.3.2 (American Gas Association Report No. 3), Orifice Metering
of Natural Gas and Other Hydrocarbon Fluids, Fourth Edition, dated April 2000, and any subsequent amendments, revisions or
modifications thereof, and will include the use of flange connections. Should Gas pulsation problems occur upstream of the Receipt
Point meter, Seller will promptly take all actions necessary to mitigate such pulsation upstream of the Receipt Point meter.


 


(b)              
Positive Displacement Meters - in accordance with the American Gas Association Measurement Committee Report No. 6
(American Gas Association Report No. 6) dated January 1971, and any subsequent amendments, revisions or modifications thereof.


 


(c)              
Turbine Meters - in accordance with the American Gas Association Measurement Committee Report No. 7 (American Gas
Association Report No. 7), First Revision, dated November 1984, and any subsequent amendments, revisions or modifications thereof.


 






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(d)              
Electronic Transducers and Flow Computers (solar and otherwise) - in accordance with the applicable American Gas
Association standards, including but not limited to American Gas Association Measurement Committee Report Nos. 3, 5, 7 and any
subsequent amendments, revisions, or modifications thereof.


 


(e)              
Ultrasonic Meters - in accordance with the American Gas Association Measurement Committee Report No. 9 (American
Gas Association Report No. 9), dated June 1998, and any subsequent amendments, revisions or modifications thereof.


 


Notwithstanding anything contained in this
Section 3.02 to the contrary, Buyer, or its designee, will not be required to replace or make any alterations to its existing
measuring equipment as a result of any subsequent amendments, revisions or modifications of the American Gas Association Reports
cited in Subparagraphs (a) through (e) of this Section 3.02.


 


Section 3.03       
Seller’s Representative and Right to Verify. Buyer will give reasonable notice to Seller in order that Seller
may have a representative present to observe any cleaning, changing, repairing, inspecting, testing, calibrating, or adjusting
of Buyer’s measuring equipment at the Receipt Points. The official recordings from the measuring equipment are the property
of Buyer or its designee. Within two weeks of a request from Seller, Buyer or its designee will submit its meter records, together
with calculations therefrom, to Seller for inspection and verification.


 


Section 3.04       
Meter Calibration and Adjustment. The accuracy of measuring equipment will be verified by Buyer, or its designee,
and, if requested, in the presence of a representative of Seller.  Buyer will provide Seller reasonable notice prior to any
meter testing so that Seller may have a representative present during such testing. Buyer or its designee will verify the accuracy
of such equipment once every three Months unless Seller requests a special test as described below; provided, however, that when
Daily deliveries average [**] Mcf per day or less during any Month, then the accuracy will be verified once every six Months and
when daily deliveries of Gas at any Receipt Point average [**] Mcf per Day or greater during any Month, the accuracy of the measuring
equipment at such Receipt Point will be verified once every Month.  If, upon any test, the measuring equipment is found to
be inaccurate by [**]% or less, previous readings of such equipment will be considered correct in computing the deliveries of Committed
Gas, but such equipment will immediately be adjusted to record accurately.  If, upon any test, the measuring equipment is
found to be inaccurate by more than [**]% of the average flow rate since the last test, then any previous recordings of such equipment
will be corrected for any period which is known definitely or agreed upon in accordance with the procedure set forth in Paragraph
(e) of this Section III.  If such period is not known or agreed upon, such correction will be made for a period covering
one-half of the time elapsed since the date of the latest test.  If Seller desires a special test of any measuring equipment,
at least 72 hours advance notice will be given to Buyer or its designee by Seller, and both Parties will cooperate to secure a
prompt test of the accuracy of such equipment.  If the measuring equipment so tested is found to be inaccurate by [**]% or
less, Buyer or its designee will have the right to bill Seller for the costs incurred due to such special test, including any labor
and transportation costs, and Seller will pay such costs promptly upon invoice therefor.


 



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Section 3.05       
Meter Out of Service or Repair. If, for any reason, any measurement equipment is out of adjustment, out of service,
or out of repair and the total calculated hourly flow rate through each meter run is found to be in error by an amount of the magnitude
described in Section 3.04, the total quantity of Gas delivered will be redetermined in accordance with the first of the
following methods which is feasible:


 


(a)              
By using the registration of any check meters, if installed and accurately registering (subject to testing as described
in Section 3.04); or


 


(b)              
Where parallel multiple meter runs exist, by calculation using the registration of such parallel meter runs; provided that
they are measuring Gas from upstream headers in common with the faulty metering equipment, are not controlled by separate regulators,
and are accurately registering; or


 


(c)              
By correcting the error by rereading of the official meter data, or by straight forward application of a correcting factor
to the quantities recorded for the period (if the net percentage of error is ascertainable by calibration, tests or mathematical
calculation); or


 


(d)              
By estimating the quantity, based upon deliveries made during periods of similar conditions when the meter was registering
accurately.


 


Section 3.06       
Preservation of Records. Buyer or its designee will retain and preserve for a period of at least two Years all test
data and other similar records.


 


Section 3.07       
Right to Shut-Off. In the event of an emergency, or the failure of Seller to regulate the deliveries of Gas at the
times requested by Buyer, Buyer will have the right to shut-off the flow of Seller’s Gas at the Receipt Points, and Buyer
will not be liable to Seller for any damage that may result to Seller’s equipment, facilities or wells as a result. Buyer
agrees to notify Seller as soon as reasonably practicable if it becomes necessary to take the foregoing action.


 


Section IV.

Measurement Specifications


 


The measurements of the quantity and quality
of all Gas delivered at the Receipt Points will be conducted in accordance with the following:


 


Section 4.01       
The unit of volume for measurement will be one Cubic Foot. Such measured volumes will be multiplied by their Gross Heating
Value and divided by 1,000,000 to determine MMBtu delivered hereunder.


 


Section 4.02       
The temperature of the Gas will be determined by a recording thermometer installed so that it may record the temperature
of the Gas flowing through the meters, or such other means of recording temperature as may be mutually agreed upon by the Parties.
The average of the record to the nearest 1° Fahrenheit, obtained while Gas is being delivered, will be the applicable flowing
Gas temperature for the period under consideration.


 



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Section 4.03       
The specific gravity of the Gas will be determined by a recording gravitometer or chromatographic device installed and located
at a suitable point to record representative specific gravity of the Gas being metered or, at Buyer’s or its designee’s
option, by continuous sampling using standard type methods.  If a recording gravitometer or chromatographic device is used,
the gravity to the nearest one-thousandth obtained while Gas is being delivered will be the specific gravity of the Gas used for
the recording period. The gravity to the nearest one-thousandth will be determined monthly from the continuous Gas analysis. 
The result should be applied during such Month for the determination of Gas volumes delivered.


 


Section 4.04       
Adjustments to measured Gas volumes for the effects of supercompressibility will be made in accordance with accepted American
Gas Association standards. Buyer or its designee will obtain appropriate carbon dioxide and nitrogen mole fraction values for the
Gas delivered as may be required to compute such adjustments in accordance with standard testing procedures. At Buyer’s or
its designee’s option, equations for the calculation of supercompressibility may be taken from either the American Gas Association
Manual for the Determination of Supercompressibility Factors for Natural Gas, dated December, 1962 (also known as the “NX-19
Manual”) or American Gas Association Report No. 8, dated December 1985, Compressibility and Supercompressibility for Natural
Gas and Other Hydrocarbon Gases, latest revision.


 


Section 4.05       
For purposes of measurement and meter calibration, the atmospheric pressure for each of the Receipt Points will be assumed
to be the pressure determined by Buyer and Seller, or their respective designee, for the elevation at which such point is located
pursuant to generally accepted industry practices, irrespective of the actual atmospheric pressure at such points from time to
time.


 


Section 4.06       
The Gross Heating Value of the Gas delivered at the Receipt Points will be determined from the samples obtained in the continuous
sampling as provided in Section 4.03.


 


Section 4.07       
Other tests to determine water content, sulfur, and other impurities in the Gas will be conducted whenever requested by
either Party and will be conducted in accordance with standard industry testing procedures. When requested by Seller to perform
such tests, Buyer or its designee will bear the cost of such tests only in the event the Gas tested is determined not to be within
the quality specification set forth below. If the Gas is within such quality specification, then Seller will bear the cost of such
tests.


 


Section 4.08       
New Measurement Techniques. If, at any time during the term of this Agreement a new method or technique is developed
with respect to Gas measurement or the determination of the factors used in such Gas measurement, then such new method or technique
may, at Buyer’s reasonable discretion, be substituted for the method set forth in this Section 4 when such methods
or techniques are in accordance with the currently accepted standards of the American Gas Association and are reasonably expected
to provide no less accurate and verifiable bases of measurement.


 






    	 	A-11	 



    	** Text Omitted and Filed Separately Confidential Treatment Requested Under 17 C.F.R. §§ 80(b)(4) and 240.24b-2




    

 


Section V.

Quality


 


Section 5.01       
Quality Specifications. All Committed Gas delivered by Seller to Buyer at the Receipt Points must conform to the
following specifications:


 


(a)              
Hydrogen Sulfide: Subject to the provisions of subparagraph (g) below, the Committed Gas must not contain more than
[**] of hydrogen sulfide per 100 Cubic Feet of Gas as determined by quantitative tests.


 


(b)              
Total Sulfur: Subject to the provisions of subparagraph (g) below, the Committed Gas must not contain more than [**]
of total sulfur per 100 Cubic Feet of Gas as determined by quantitative tests.


 


(c)              
Temperature: The Committed Gas must not have a temperature less than [**] Fahrenheit or more than [**] Fahrenheit.


 


(d)              
Carbon Dioxide: Subject to the provisions of subparagraph (g) below, the Committed Gas must not contain an amount
of carbon dioxide in excess of [**]% by volume of carbon dioxide at the Receipt Points.


 


(e)              
Oxygen: The Committed Gas must contain no oxygen.


 


(f)               
Nitrogen: Subject to the provisions of subparagraph (g) below, the Committed Gas must not contain an amount of nitrogen
in excess of [**]% by volume of nitrogen at the Receipt Points.


 


(g)              
Nonhydrocarbons: Notwithstanding the foregoing provisions of this Section 5 to the contrary, the Committed
Gas must not contain an amount of non-hydrocarbons in excess of such amount that, after processing the Committed Gas, results in
Residue Gas attributable to Seller containing more than [**] mole % total non-hydrocarbons. Non-hydrocarbons will include, but
not be limited to, hydrogen sulfide, sulfur, carbon dioxide, oxygen, helium and nitrogen.


 


(h)              
Objectionable Liquids and Solids and Dilution: The Committed Gas must be free of objectionable liquids and solids,
and must be commercially free from dust, gums, gum-forming constituents, and other liquids or solid matter which might become separated
from the Gas in the course of transportation through pipelines.


 


(i)                
Gross Heating Value: The Committed Gas must not have a gross heating value less than 950 Btu per Cubic Foot of Gas.


 


(j)                
Mercaptan Sulfur: Subject to the provisions of subparagraph (g) above, the Committed Gas must not contain more than
[**] of mercaptan sulfur per 100 Cubic Feet of Gas as determined by quantitative tests.


 


(k)              
Water Vapor: The Gas must not contain more than [**] pounds of water vapor per MMcf.


 



    	 	A-12	 



    	** Text Omitted and Filed Separately Confidential Treatment Requested Under 17 C.F.R. §§ 80(b)(4) and 240.24b-2




    






Section 5.02       
Additional Quality Specifications. Buyer’s downstream transporters may notify Buyer of different or additional
quality specifications required for the operation of transporter’s pipeline. Buyer will notify Seller of any such different
or additional specifications as soon as reasonably practicable after being notified by any such downstream transporters. If the
Committed Gas delivered by Seller should fail to meet any of the quality specifications specified in Section 5.01, then
Buyer will notify Seller and Seller will make a diligent effort to correct the situation. Buyer will have the right to refuse to
accept such Gas for so long as Seller does not deliver Committed Gas conforming to such specifications, and such Committed Gas
not received by Buyer will be automatically released according to Article 2.3 of this Agreement.


 


Section 5.03       
Treating; Dehydration; Nitrogen Rejection. If Committed Gas delivered contains carbon dioxide in excess of that specified
in this Section V, Seller agrees to pay Buyer the CO2 Treating Fee. If Committed Gas delivered contains hydrogen
sulfide in excess of that specified in this Section V, Seller agrees to pay Buyer the H2S Treating Fee. If Committed
Gas delivered contains nitrogen in excess of that specified in this Section V, Seller agrees to pay Buyer a nitrogen fee
per Mcf of Committed Gas received by Buyer at the Receipt Points specified in Exhibit C (the “Nitrogen Fee”). Dehydration
for the Low Pressure Receipt Points and the Crittendon Field Station HP Receipt Point will be the responsibility of Buyer to insure
all Gas complies with Section 5.01, (k) above. Seller, at Seller’s cost and expense, will dehydrate all Committed
Gas delivered to the PWC Receipt Points. Seller will not be charged a dehydration fee with respect to any dehydration services
performed by Buyer.


 


Section 5.04       
Processing. Buyer shall process or have processed the Committed Gas delivered by Seller at the Receipt Points subject
to the terms of Exhibits B and C attached hereto and made a part hereof.


 


Section 5.05       
Electrical Power Charges. In addition to any applicable compression, processing and treating fees, if Buyer installs
electrical equipment for any reason, in lieu of installing equipment that can or traditionally is operated through combustion of
fuel, then Seller will pay the Electrical Power Charges, prorated on an Mcf basis, incurred by Buyer associated with respective
gathering, compression, processing and/or treating of the Committed Gas.


 


Section 5.06       
Seller’s Liability For Delivery of Non-Conforming Gas. If, prior to Buyer’s knowledge, the Committed
Gas delivered by Seller or its designee does not comply with the Gas quality specifications set forth in Section 5.01 or
Section 5.02 (“Non-Conforming Gas”), then Seller will be responsible for, and will indemnify, defend and hold
harmless Buyer against any and all Claims arising from, related to or in any way connected with Seller’s delivery of Non-Conforming
Gas upon reasonable proof that damages were due to Seller’s Non-Conforming Gas, except to the extent attributable to the
gross negligence or willful misconduct of Buyer, or to the extent such Claims have been waived.  The provisions of this Section
5.06 will not apply if Buyer knowingly accepts Seller’s Non-Conforming Gas, or if Buyer continues to accept such Non-Conforming
Gas after a thirty (30) day period following the commencement of deliveries of such Non-Conforming Gas. Notwithstanding anything
to the contrary set forth herein, in the event that Buyer either knowingly accepts such Non-Conforming Gas or continues to accept
such Off-Specification Receipts for thirty (30) days following the commencement of deliveries of such Non-Conforming Gas, Seller
shall not be liable for any Claims or other damages caused by or resulting from such Non-Conforming Gas, and Buyer hereby waives
its claims against Seller with respect to any such Claims or damages.


 



    	 	A-13	 



    	** Text Omitted and Filed Separately Confidential Treatment Requested Under 17 C.F.R. §§ 80(b)(4) and 240.24b-2




    

 





Section 5.07       
Delivery Point Specifications. If Seller delivers Gas to Buyer at the Receipt Points that meets the quality specifications
of this Agreement, or with respect to Non-Conforming Gas that Buyer knowingly accepts following the commencement of deliveries
of such Non-Conforming Gas, then Buyer shall redeliver Gas and Plant Products that meets the most restrictive quality specifications
required from time to time at a Delivery Point or Plant Product Delivery Point by Buyer’s downstream transporters, and Buyer
shall be responsible for, and will indemnify, defend and hold harmless Seller, its Affiliates, and their respective subsidiaries,
shareholders, members, partners, officers, directors, employees, and agents against any and all Claims or damages caused by or
resulting from Buyer’s failure to meet such Delivery Point or Plant Product Delivery Point quality specifications with respect
to such Gas and Plant Products re-delivered at any such Delivery Point or Plant Product Delivery Point, except to the extent attributable
to the negligence, gross negligence or willful misconduct of any such indemnified party.


 


Section 5.08       
Additives. Seller must notify Buyer in writing at least ten Days in advance of the introduction or injection of any
chemicals, corrosive inhibitors, or other additives to well, pipelines or other equipment. Seller must include the name of the
manufacturer and trade name of the additive in the notice. Buyer may refuse to accept any Gas containing additives that Buyer believes
may have adverse effects to its equipment or operations or to the value of the Committed Gas. Seller must reimburse Buyer for all
expenses incurred by Buyer in connection with the introduction of any such additives.


 


Section VI.

Delivery Pressure


 


Buyer will endeavor to maintain, under
normal operating conditions, all Low Pressure Receipt Point pressures at approximately [**] psig, and all High Pressure Receipt
Points pressures at approximately [**] psig. Subject to Article 5.1 and Exhibit C of the Agreement, Seller will deliver
Gas at the Receipt Points hereunder at a pressure sufficient to enter the Gathering System at each such point and not to exceed
the maximum allowable operating pressure of the Gathering System at such point. Notwithstanding the above, in no event shall Seller
be required to deliver Gas hereunder at a pressure exceeding [**] psig at the Low Pressure Receipt Points and [**] psig at the
High Pressure Receipt Points, and if the average operating pressure of the Gathering System for any month at any Low Pressure Receipt
Point exceeds [**] psig or at High Pressure Receipt Point exceeds [**] psig, then those volumes of the affected Committed Gas shall
be subject to Seller’s rights under Article 2.3. Additionally, if the average operating pressure of the Gathering
System at any Low Pressure Receipt Point exceeds [**] psig or at High Pressure Receipt Point exceeds [**] psig for a period of
at least [**] consecutive Days or for [**] Days out of a consecutive [**] Day period, then at Seller’s option and upon written
notice to Buyer, Seller shall be granted a permanent release from Dedication to this Agreement of such Receipt Point(s), the affected
Interests and all existing and future wells behind such Receipt Point(s), and all of such Committed Gas produced or producible
therefrom. For purposes of this Section VI, the Parties acknowledge and agree that any deviation in pressure levels that
are of no fault of Seller and that average in excess of the levels prescribed in the foregoing sentence over a measurement day
shall be deemed to be a deviation lasting for a period of one (1) Day.


 






    	 	A-14	 



    	** Text Omitted and Filed Separately Confidential Treatment Requested Under 17 C.F.R. §§ 80(b)(4) and 240.24b-2




    

 


Section VII.

Taxes


 


Buyer will be responsible for and will
pay all Taxes assessed or levied on the Committed Gas on or after its delivery to or for the account of Buyer at the Receipt Points,
and Seller will be responsible for and will pay all Taxes assessed or levied on the Committed Gas prior to its delivery to or for
the account of Buyer at the Receipt Points. Buyer and Seller agree that the price and payments tendered hereunder are inclusive
of the reimbursement of 100% of all Taxes (including all gross production, severance or any other Taxes required by law, as of
the Effective Date, to be paid to any applicable governmental authority, by Seller, with respect to the production of Committed
Gas delivered under this Agreement), transportation charges, expenses and costs attributable to the gas prior to its delivery to
Buyer at the Receipt Points. Notwithstanding anything herein to the contrary, Seller shall have no responsibility for any income
taxes, franchise taxes, ad valorem taxes, and property taxes of Buyer, or other similar taxes, fees, or assessments imposed by
any governmental authority with respect to the Gathering System and ownership and operation thereof, the payment of such taxes
being the sole responsibility of Buyer.


 


Section VIII.

Billings and Payments


 


Section 8.01       
Invoices and Payment. On or before the twenty-fifth (25th) Day of each Month, Buyer will render to Seller
a statement setting forth (i) the total Mcf and MMBtu of Committed Gas accepted by Buyer at the Receipt Points during the preceding
Month, (ii) the amount of Seller’s Fixed FL&U, Shrinkage, Plant Products and Residue Gas allocated to Seller in accordance
with Exhibits B and C, (iii) the Gas Purchase Payment amount due Seller (as reduced in accordance with Article 4.2 of this
Agreement), and (iv) the amount due to Buyer from Seller for all fees and charges contemplated under this Agreement. Buyer will
pay to Seller the net amount due on or before the twenty-fifth (25th) Day of the Month following the Month in which
the applicable statement was delivered to Seller. However, if an invoice and payment are due on a Day that is not a Business Day,
such invoice and payment will be due on the next Business Day. It is Seller’s responsibility to provide to Buyer any information
in Seller’s, or its designee’s, possession that is necessary for Buyer’s calculation or payment of the amounts
due hereunder. If such information is not provided to Buyer on or before the tenth Day of the Month in which the statement and
payment are due, then the time for payment by Buyer will be extended for a period of time equal to the delay. Late payments shall
accrue interest at the Annual Prime Rate plus 2.0% or the maximum allowed by law, whichever is less, exclusive of the date such
late payment is made.


 


Section 8.02       
Audit. Each Party will have the right at all reasonable times during the term of this Agreement to audit the records
of the other Party to the extent necessary to verify performance under any of the terms and conditions of this Agreement, provided
that an adjustment may be made under Section 8.03 of this Exhibit A and to the extent that each Party will protect the confidentiality
of such records.


 






    	 	A-15	 



    	** Text Omitted and Filed Separately Confidential Treatment Requested Under 17 C.F.R. §§ 80(b)(4) and 240.24b-2




    

 


 


Section 8.03       
Billing Adjustments. Each Party must promptly notify the other Party of any error that is discovered after payment
has been made. Within thirty Days of such notice, Seller will refund to Buyer the amount of any error made in its favor, and Buyer
will pay to Seller the amount of any error made in its favor, as the case may be; provided, however, that (no retroactive adjustments
will be made for any error that is not submitted to the other Party in writing within twenty-four Months from the end of the production
month for which the error was made. The provisions of this Section 8.03 will survive the termination of this Agreement.


 


Section 8.04       
Adequate Assurances. When reasonable grounds for insecurity of payment or performance arise with respect to a Party
(the “Impaired Party”), including, without limitation, as a result of the occurrence of a material change in the creditworthiness
of the Impaired Party or the Impaired Party’s failure to timely pay any amounts due hereunder), the other Party (the “Insecure
Party”) may demand adequate assurance of performance, and in the absence of the provision of such assurance from the Impaired
Party within two (2) Business Days of request, suspend further performance and/or exercise its rights under Section XII,
including the right to terminate this Agreement. Adequate assurance shall mean security in the form, amount and for the term reasonably
specified by the Insecure Party, including, but not limited to, a standby irrevocable letter of credit issued by a Qualified Institution,
a prepayment or a guarantee by an entity deemed creditworthy at the sole discretion of the Insecure Party, advance cash payment
or other satisfactory security reasonably acceptable to the Insecure Party.


 


Section IX.

Title, Possession and Responsibility


 


Subject to Seller’s take “in
kind” rights pursuant to Article 4.5, title to all Committed Gas (including Plant Products contained in Committed
Gas) delivered to Buyer under this Agreement will pass to Buyer at the Receipt Points, and Seller hereby conveys the Gas (and Plant
Products in the Gas) to Buyer, free and clear of any adverse claims, liens or encumbrances of any nature. In the event that Seller
exercises its take “in kind” rights pursuant to Article 4.5, title to all Committed Gas (including Plant Products
contained therein) taken in-kind and allocated to Seller hereunder as Seller’s Residue Gas or Seller’s Plant Products
(pursuant to Exhibit B) shall remain in Seller at all times; provided, however, title to Seller’s Fixed FL&U and the
portion of such Committed Gas not allocated to Seller as Seller’s Residue Gas or Seller’s Plant Products (pursuant
to Exhibit B) shall transfer to Buyer at the Receipt Points.   Except as otherwise provided in this Agreement, as between
the Parties, Buyer will be deemed in possession of and solely liable and responsible for Gas after its delivery at the Receipt
Points and Seller will be deemed in possession of and solely liable and responsible for said Gas at all times prior to such delivery;
provided, however, in the event that Seller exercises its take “in kind” rights pursuant to Article 4.5, Seller
will be deemed in possession of and solely liable and responsible for said Gas and Plant Products recovered therefrom at all times
after re-delivery by Buyer at the Delivery Points and Plant Product Delivery Points.  Each Party will release, indemnify and
defend the other Party, its Affiliates, and their respective subsidiaries, shareholders, members, partners, officers, directors,
employees, and agents for and save such indemnified parties harmless from, any and all Claims (including with respect to any lost
Gas) incurred by such indemnified parties caused by the Gas (and Plant Products) in the indemnifying Party’s possession except
to the extent contributed to by a material breach of this Agreement, or the grossly negligent act or omission of any such indemnified
party; provided, however, each Party is responsible for any injury or damage due solely to any defect in any equipment that it
furnished or installed, regardless of where it occurs.  If both Parties are at fault, each is liable to the extent of its
degree of fault.


 






    	 	A-16	 



    	** Text Omitted and Filed Separately Confidential Treatment Requested Under 17 C.F.R. §§ 80(b)(4) and 240.24b-2




    

 


Section X.

Warranty of Title and Indemnity


 


Seller hereby warrants that it has good,
merchantable title to all Committed Gas delivered to Buyer hereunder, and that such Committed Gas is free and clear of all liens,
encumbrances and claims whatsoever. Seller agrees to indemnify and defend Buyer and its partners, officers, employees and agents
and save it and its partners, officers, employees and agents harmless from all suits, actions, debts, fines, penalties, accounts,
damages, costs, losses and expenses (including attorneys’ fees) arising from or out of: (i) any adverse claims of any and
all persons or entities to or against such Committed Gas (including Plant Products contained in Committed Gas); (ii) any taxes,
fees or charges arising from or out of the receipt and purchase of such Committed Gas (including Plant Products contained in Committed
Gas) by Buyer; and (iii) the breach of any representations made in this Agreement by Seller. Buyer may, at any time when in Buyer’s
opinion the ownership or title to all or part of said Committed Gas (including Plant Products contained in Committed Gas), or of
any lands or leases from which such Committed Gas is produced, may be in a party or parties other than Seller, or upon learning
of any regulatory requirement or any other claim, lien, taxes, royalties, fees, expenses or other adverse claims, retain as security
for the performance of Seller’s obligations with respect thereto, the entire purchase price of Seller’s Residue Gas
and Seller’s Plant Products, without interest, until Buyer has been satisfied to the amount of such ownership interest or
the claim has been finally determined and satisfied or until Seller will have furnished bond to Buyer in an amount and with sureties
satisfactory to Buyer, conditioned upon the protection of Buyer with respect to such ownership or claims.


 


In the event that Seller exercises its
take “in kind” rights pursuant to Article 4.5, Buyer represents and warrants to Seller that from the time Committed
Gas is received at the Receipt Points to the time of re-delivery of such Gas (including Plant Products contained in Gas) shall
be free and clear of all liens, encumbrances and claims arising by, through, or from any action or failure to act of Seller. Buyer
agrees to indemnify and defend Seller, its Affiliates, and their respective subsidiaries, shareholders, members, partners, officers,
directors, employees, and agents and save it and its directors, officers, employees and agents harmless from all Claims to the
extent arising from or out of: (i) any adverse claims of any and all persons or entities arising by, through, or from any action
or failure to act of Seller to or against such Gas (including Plant Products contained in Gas); (ii) any taxes, fees or charges
arising from or out of the receipt of such Gas (including Plant Products contained in Gas) by Buyer pursuant to this Agreement
allocated to Buyer hereunder; and (iii) the breach of any representations made in this Agreement by Buyer.


 


 



    	 	A-17	 



    	** Text Omitted and Filed Separately Confidential Treatment Requested Under 17 C.F.R. §§ 80(b)(4) and 240.24b-2




    







 


Section XI.

Force Majeure


 


Section 11.01   
Notice. If either Party is rendered unable, wholly or in part, by an event of Force Majeure to carry out its obligations
under this Agreement, except with respect to the obligation to pay amounts owing hereunder, the Party so affected must notify the
other Party of the Force Majeure, describing it in reasonable detail. Notice must be given orally as soon as practicable and followed
in writing within a reasonable time. The obligations of the Parties, so far as they are affected by such Force Majeure, will be
suspended during the continuance of the event of Force Majeure, but for no longer period, and such Force Majeure will be remedied
with all reasonable dispatch.


 


Section 11.02   
Definition. “Force Majeure” means occurrences not reasonably within the control of a Party that prevents
its performance under this Agreement, and includes, without limitation: acts of God; strikes, lockouts or other industrial disturbances;
acts of the public enemy or terrorism, wars, blockades, insurrections, civil disturbances and riots, and epidemics; landslides,
lightning, earthquakes, fires, storms, hurricanes and threats of hurricanes, floods and washouts; arrests, orders, requests, directives,
restraints and requirements of the government and governmental agencies, either federal, state or local, civil and military; any
application of governmental conservation or curtailment rules and regulations; failure of downstream transportation; explosions,
breakage or accident to machinery, equipment or lines of pipe; freezing of wells or lines of pipe; premature, partial or entire
failure of natural Gas wells, Gas supply or depletion of Gas reserves; and other causes of a similar nature not reasonably within
the control of the Party claiming suspension. It is understood and agreed that the settlement of strikes or lockouts will be entirely
within the discretion of the Party having the difficulty, and that the requirement of a Party claiming Force Majeure to use reasonable
dispatch will not require the settlement of strikes or lockouts by acceding to the demand of opposing party when such course is
inadvisable or inappropriate in the discretion of the Party having the difficulty. Force Majeure will also include (a) in those
instances where either Party is required to obtain servitudes, right-of-way grants, permits or licenses from any governmental authority,
whether federal, state, local, tribal or any other political subdivision to enable such Party to fulfill its obligations hereunder,
the inability of such Party to acquire, 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 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 authority,
whether federal, state, local, tribal or any other political subdivision to enable such Party to fulfill its obligations hereunder,
the inability of such Party to acquire, at reasonable cost and after the exercise of reasonable diligence, such materials, supplies,
permits and permissions.


 


Section XII.

Remedy for Breach


 


Section 12.01   
Right to Terminate. Unless another remedy is specified in this Agreement in which case that remedy will be a Party’s
sole and exclusive remedy, if either Party fails to perform any of its material covenants or obligations in this Agreement or breaches
any of its representations or warranties contained in this Agreement, then the other Party may terminate this Agreement by notifying
the breaching Party of the default in reasonable detail and its election to terminate the Agreement.


 



    	 	A-18	 



    	** Text Omitted and Filed Separately Confidential Treatment Requested Under 17 C.F.R. §§ 80(b)(4) and 240.24b-2




    

 





Section 12.02   
Opportunity to Cure. The Party in default will have three (3) Business Days with respect to the failure to post adequate
assurances hereunder, five (5) Business Days with respect to a payment default and thirty (30) Days for other defaults, from receipt
of such notice to remedy the default and to pay or indemnify the other Party for all loss or damage incurred as a result thereof,
and upon failure to do so, this Agreement may be terminated from and after the expiration of such three-Business Day, five-Business
Day or thirty-Day period, as applicable. Any such termination will be an additional remedy and will not prejudice the right of
the Party not in default to collect any amounts due it hereunder and any damage or loss suffered by it and will not waive any other
legal or equitable remedy to which the Party not in default may be entitled for breach of this Agreement.


 


Section
12.03    Anything to the contrary
contained herein notwithstanding, neither Party will be liable or otherwise responsible to the other Party for punitive, special,
consequential, or incidental damages or for lost profits which arise out of or relate to this Agreement or the performance or breach
thereof except to the extent that a Party is required to indemnify the other Party hereunder; provided, however, the foregoing
must not be construed as limiting the obligation of either Party under this Agreement to indemnify the other Party against claims
asserted by third parties, including, but not limited to, consequential, incidental, indirect, punitive or exemplary damages.


 


Section XIII.

Assignment


 


This Agreement will be binding upon and
inure to the benefit of the Parties and their respective successors and assigns.  Either Party may assign its respective rights
and obligations in whole or in part under this Agreement; provided, however, (i) this Agreement may not be transferred or assigned
by either Party without the prior written consent of the other Party, which consent will not be unreasonably withheld or delayed,
and (ii) such permitted assignee of either Party must expressly assume in writing the obligations arising under this Agreement
so assigned. Notwithstanding the foregoing, either Party will have the right to assign this Agreement, in whole or in part, upon
notice to, but without the consent of, the other Party (i) to an Affiliate and (ii) to an acquiring party, upon the sale
or other disposition of all or substantially all of the assigning Party’s interests in the Gathering System or all or any
portion of the Interests dedicated hereunder. From and after any assignment permitted by this Section XIII, the assigning
Party shall have no further liability under this Agreement with respect to the interest so assigned except for liabilities accruing
before the time of such assignment, provided, however, any assignment to an Affiliate will not relieve the assigning Party of any
of its liabilities, obligations, or duties hereunder.


 






    	 	A-19	 



    	** Text Omitted and Filed Separately Confidential Treatment Requested Under 17 C.F.R. §§ 80(b)(4) and 240.24b-2




    

 


Section XIV.

Laws and Regulations


 


Section 14.01   
Seller represents and warrants that the Committed Gas sold hereunder to Buyer is deregulated pursuant to the Natural Gas
Wellhead Decontrol Act of 1989 and that the sale of Committed Gas to Buyer, and all sales of such Gas prior thereto, are each a
“first sale” as such term is defined in Section 2(21) of the Natural Gas Policy Act of 1978.


 


Section 14.02   
Each of Buyer and Seller represent and warrant to the other that the Committed Gas delivered under this Agreement will not
have been and will not be sold or resold, transported, commingled, used or consumed in interstate commerce in such a manner that
would subject the Committed Gas, this Agreement, either Party, their designees or the facilities of either Party or their designees
to jurisdiction and/or regulation under the Natural Gas Act of 1938, as amended. If either Party should breach this warranty, the
other Party will have the right, at its option, to terminate this Agreement immediately in addition to any other remedy it may
have under the provisions hereof or at law or in equity.


 


Section
14.03   This Agreement will be governed by and construed in accordance with the
laws of the State of Texas, without regard to the principles of conflicts of laws. 


 


Section 14.04  
The Parties hereby waive a trial by jury of any and all issues arising in any
action or proceeding between the Parties or their successors or permitted assigns, arising under or related to this Agreement,
or any of its provisions.


 


Section XV.

Confidentiality


 


Except as provided below, (i) all terms
of this Agreement, including but not limited to the price paid for Seller’s Residue Gas, Seller’s Plant Products, the
fees charged by Buyer, the identity of any third-party transporting pipelines and the cost of such transportation, and the quantities
of Committed Gas purchased or sold must be kept confidential by the Parties and may not be disclosed to third parties and (ii)
all information relating to Seller’s exploration, production, operations, and related activities, plans and projections that
may be disclosed to Buyer in connection with the activities and transactions contemplated by this Agreement must be kept confidential
by Buyer and may not be disclosed by Buyer to third parties. To the extent information must be disclosed to a third party for the
purpose of (i) transporting Seller’s Residue Gas or Seller’s Plant Products purchased under this Agreement, (ii) to
a royalty owner, preferential right holder or working interest owner to fulfill a written obligation, (iii) to a Party’s
financial advisors, consultants, attorneys, banks, institutional investors, equity providers or financing sources or potential
equity providers or financing sources, or prospective purchasers, (iv) to comply with contractual obligations, or (v) as may be
required by law, regulation, securities and stock exchange rules, or order of any governmental authority of competent jurisdiction
, such information may be disclosed without violating this Section XV; provided that, the Party disclosing the information
only discloses the information that is required to be disclosed pursuant to the advice of outside legal counsel, and, in the case
of (i) – (iv) of this Section XV, such Party advises such third parties receiving the information of the confidentiality
obligations hereunder and such parties agree to keep such information confidential.


 



    	 	A-20	 



    	** Text Omitted and Filed Separately Confidential Treatment Requested Under 17 C.F.R. §§ 80(b)(4) and 240.24b-2




    




 


 


Section XVI.

Miscellaneous


  


Section 16.01   
Entire Agreement. This Agreement constitutes the entire Agreement between the Parties with respect to the subject
matter hereof, and there are no agreements, modifications, conditions or understanding, written or oral, expressed or implied,
pertaining to the subject matter hereof which are not contained herein.


 


Section 16.02   
Royalty Payments. Buyer and Seller hereby agree that, as between Seller and Buyer, Seller is responsible for the
payment of any and all proceeds (including all royalty, overriding royalty and production rights) derived from the sale of Gas
to the any and all parties and/or persons legally entitled thereto.


 


Section 16.03   
Counterpart. This Agreement may be executed in several counterparts, each of which will be deemed an original, but
all of which together will constitute one and the same instrument. This Agreement may be executed by facsimile signatures.


 


Section 16.04   
Modification. Modifications of this Agreement will be or become effective only upon the due and mutual execution
of appropriate supplemental agreements or amendments hereto by duly authorized representatives of the respective Parties.


 


Section 16.05   
Easements and Rights-of-Way. Seller agrees to grant to Buyer, upon Buyer’s written request, without warranty
of title, either express or implied, a license and right-of-use, insofar as Seller has the contractual right to grant such license
and right-of-use, to any Interests of Seller for the construction of pipelines and/or facilities necessary for the performance
of this Agreement; provided, however, Seller shall have no obligation under this Section 16.05 if doing so would violate
any existing obligations of the Interests owned by the Seller or require Seller to incur material expenses.


 


Section 16.06   
Waiver. No waiver by either Party of any one or more defaults by the other in the performance of any of the provisions
of this Agreement will operate or be construed as a waiver of any future default or defaults whether of a like or different character.


 


Section 16.07   
No Other Beneficiaries. The provisions of this Agreement will not impart rights enforceable by any person, firm,
or organization not a Party or not a successor or assignee of a Party to this Agreement.


 


Section 16.08   
 Planning Meetings. In order to facilitate the performance of each Party under this Agreement and to allow for the
planning of expansions and modifications to the Gathering System and Receipt Points, the Parties agree that they will meet in person
(unless mutually agreed otherwise) on a quarterly basis to exchange information and develop plans for the delivery and receipt
of Seller’s Gas hereunder. Each Party will ensure the attendance of personnel with appropriate technical capabilities and
expertise to address the subjects to be covered at the meetings. The meeting topics shall be developed by the participants for
each meeting, but shall contemplate at least the following: Seller’s good faith volume forecasts by Receipt Point, nominations
by Receipt Point, anticipated quality by Receipt Point, Seller’s drilling plans, planned outages, system constraints, Gathering
System expansions and expected Gathering System capacity related thereto, any operational issues on the Gathering System, historic
throughput volumes of Gathering System by level of service and priority classification, Buyer's good faith forecasts of throughput
volumes of Gathering System by level of service and priority, Buyer's Gathering System capacity and good faith forecasts of projected
Gathering System capacity and any other issues necessary to support Seller’s delivery and Buyer’s receipt or ability
to receive all of Seller’s Gas from the Receipt Points. Seller and Buyer acknowledge and agree that the information provided
by the Parties pursuant to this Section 16.08 with respect to any plans, forecasts, projections or other forward-looking
statements is only an estimate, and disclosing Party shall have no liability to receiving Party for any differences between the
estimates provided by disclosing Party in good faith and the actual results. In addition, Seller and Buyer acknowledge and agree
that the information provided by the Parties under this Section 16.08 is subject to confidentiality per Section XV of the Agreement.


 



    	 	A-21	 



    	** Text Omitted and Filed Separately Confidential Treatment Requested Under 17 C.F.R. §§ 80(b)(4) and 240.24b-2




    

 





Section 16.09   
Severability. If a court determines that any part or provision of this Agreement is illegal or unenforceable, then
the court must delete that provision and enforce the remaining provisions.


 


Section 16.10   
Maximum Volumes. In no event will the volumes of Committed Gas that Seller is obligated to sell and deliver to Buyer
or that Buyer is obligated to purchase and receive from Seller under the terms of this Agreement ever exceed the volumes of Gas
that can be legally produced or purchased under the applicable rules and regulations of the Railroad Commission of Texas.


 


Section 16.11   
Reservations by Seller. Seller reserves the following rights from its Dedication of the Committed Gas hereunder:


 


(a)               
The right to use, but not to sell to others, sufficient Committed Gas for Seller’s requirements in the development
and operation of Seller’s leases including, but not limited to, use of Committed Gas for drilling, and workover operations
and gas lift purposes, cycling, re-pressuring and/or pressure maintenance, and well production enhancement;


 


(b)              
The right to pool and unitize the Interests in the Dedicated Acreage with other lands, leases and properties of Seller or
others located in the fields in which the Dedicated Acreage is located; provided, however, the exercise of this right by Seller
may not diminish Buyer’s right or increase its obligations with respect to the Committed Gas produced from the Interests
subject to this Agreement;


 


(c)               
The right to operate the Interests and wells subject to this Agreement in a manner as Seller deems advisable in its sole discretion,
including the right to drill new wells, to repair or rework old wells, to renew in whole or in part any of the Interests covered
by this Agreement and to abandon any well or surrender, release or terminate in whole or in part any of the Interests or cease
production from any well not deemed by Seller to be capable under normal methods of operation of producing in commercial quantities;


 






    	 	A-22	 



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(d)              
The right to deliver or furnish to Seller’s lessors and holders of other existing burdens on production such Gas as is required
to satisfy the terms of the applicable Interests or other applicable instruments;


 


(e)              
The right to temporarily use facilities of third parties to gather Committed Gas from a well prior to the time that the Gathering
System facilities required to gather such Committed Gas have been completed or during periods of temporary release;


 


(f)               
The right to retain all oil, condensate and other liquid hydrocarbons separated from Committed Gas prior to delivery to Buyer hereunder
by conventional mechanical field separators;


 


(g)              
The right to construct, install, maintain, own and operate any treating, dehydration and/or conditioning facilities upstream of
the Gathering System as reasonably necessary to (i) comply with any environmental, legal, or Interest requirements, or (ii) meet
the quality specifications of the Gathering System and/or the quality specifications of any Buyer’s downstream transporters;


 


(h)              
The right to retain Gas that any of Seller’s non-operators elect to separately take and market; and


 


(i)                
The right to retain any and all Gas that is not Committed Gas dedicated and committed to this Agreement.


 


 


END OF EXHIBIT A


 






    	 	A-23	 



    	** Text Omitted and Filed Separately Confidential Treatment Requested Under 17 C.F.R. §§ 80(b)(4) and 240.24b-2




    

 


 


EXHIBIT B


to


GAS GATHERING, PROCESSING AND PURCHASE AGREEMENT


dated as of August __, 2017


between


LUCID ENERGY DELAWARE, LLC


(Buyer)


and


LILIS ENERGY, INC.


(Seller)


 


 


PRICE OF GAS; ALLOCATION METHODOLOGIES


 


		1.	Residue Gas Purchase Price. The purchase price for Seller’s Residue Gas will be a
price per MMBtu equal to [**]% of the Weighted Average Sales Price. The price stated above will be reduced by Seller’s pro-rata
share of any transportation fees, retention of fuel or other fees incurred by Buyer under arms-length transactions with unaffiliated
third parties to deliver Seller’s Residue Gas to its ultimate sales point.



 


		2.	Plant Allocation Methodology. Buyer will process or have processed Seller’s Gas according
to the following methodology.



 


		(a)	Definitions. When used in this Exhibit B, the following terms have the following meanings:



 


		(i)	“Plant Fuel” means the quantity of Gas or other hydrocarbons used or consumed as fuel,
or flared, lost, unaccounted for or otherwise used or consumed in the operation of the Processing Plant.



 


		(ii)	“Plant Products” means the mixture of ethane, propane, isobutane, normal butane, natural
gasoline, and other substances (whether or not hydrocarbons), if any, that are extracted at the processing plant.



 


		(iii)	“Residue Gas” means the volume and associated MMBtu of Gas remaining after deductions
for Plant Fuel, Field Fuel, and the thermal content of Shrinkage attributable to Plant Products.



 


		(iv)	“Shrinkage” means the MMBtus attributable to the extraction of Plant Products in the
processing of Gas.



 


		(b)	Seller’s Residue Gas. Seller’s Residue Gas will be determined each Month by
the following equation:



 


[**] 


where:


 


[**] = [**]


[**] = [**]


[**] = [**]


[**] = [**]


[**] = [**]


* [**]


 






    	 	B-1	 



    	** Text Omitted and Filed Separately Confidential Treatment Requested Under 17 C.F.R. §§ 80(b)(4) and 240.24b-2




    

 


 


		(c)	Seller’s Plant Products. The gallons of each component of Plant Products to be allocated
each Month to Seller will be designated as “Y” and determined by the following equation:



 


[**]


where:


[**]
= [**]


[**]
= [**]


[**]
= [**]


[**]
= [**]


[**]
= [**]


*
[**]


 


If Buyer is operating its plants
in recovery mode the following recovery percentage for the applicable component of Plant Product, will be applied to the equation
above:


 





	Ethane (C2)	[**]%
	Propane (C3)	[**]%
	Isobutane (iC4)	[**]%
	Normal Butane (nC4)	[**]%
	Pentanes & Heavier (C5+)	[**]%







 


Notwithstanding the foregoing,
if Buyer is operating its plants in ethane rejection mode then the following recovery percentage for the applicable component of
Plant Product, will be applied to the equation above:


 





	Ethane (C2)	[**]%
	Propane (C3)	[**]%
	Isobutane (iC4)	[**]%
	Normal Butane (nC4)	[**]%
	Pentanes & Heavier (C5+)	[**]%


 






    	 	B-2	 



    	** Text Omitted and Filed Separately Confidential Treatment Requested Under 17 C.F.R. §§ 80(b)(4) and 240.24b-2




    

 


		(d)	Allocation of Shrinkage. The quantity of Shrinkage to be allocated each Month to Seller
will be determined by converting the amount of each individual component of Seller's Plant Products allocated to Seller’s
Gas in (d) above to its respective gaseous equivalent quantity in MMBtu by using the conversion factors published in the Gas Processor's
Association (GPA) Publication 2145-09, fuel as ideal gas, or any subsequent revision thereof in effect at the time such calculation
is performed, and adjusted to a pressure base of 14.65 psia and a temperature of 60° Fahrenheit. The hexanes plus factor will
be calculated from quarterly fractional analyses of the hexanes and heavier hydrocarbons contained in a typical natural gasoline
sample obtained at the plants.



 





	 	(f)	Plant Product Purchase Price. The purchase price for Seller’s Plant Products will be equal to [**]% of the Monthly average of the weighted actual sales price for each component product sold from the Processing Plants. The actual sales price shall be reduced by [**], all under arms-length transactions to unaffiliated third parties. 


 


 


 


END OF EXHIBIT B





 






    	 	B-3	 



    	** Text Omitted and Filed Separately Confidential Treatment Requested Under 17 C.F.R. §§ 80(b)(4) and 240.24b-2




    

  


EXHIBIT C


to


GAS GATHERING, PROCESSING AND PURCHASE AGREEMENT


dated as of August __, 2017


between


LUCID ENERGY DELAWARE, LLC


(Buyer)


and


LILIS ENERGY, INC.


(Seller)


 


 


SERVICE FEES


 


		1.	Gathering Fee. Seller will pay Buyer a gathering fee equal to $[**] per MMBtu at the Receipt
Points (“Gathering Fee”).



 


		2.	Processing Fee. Seller will pay Buyer a processing fee equal to $[**] per MMBtu at the Receipt
Points (“Processing Fee”).



 


		3.	Inlet Compression Fee. Seller will pay Buyer an inlet compression fee equal to $[**] per
Mcf at the Low Pressure Receipt Points per stage of compression (“Inlet Compression Fee”).



 


		4.	CO2 Treating Fee. If Seller’s gas exceeds the CO2 quality specification
set forth in Section V of Exhibit A Seller will pay Buyer a CO2 Treating Fee per Receipt Point Mcf. The CO2
Treating Fee shall equal $[**] per Receipt Point Mcf for each [**] ([**]) mole % of CO2 that such Gas exceeds the CO2
specification; provided, however, the CO2 Treating Fee Seller will pay Buyer in this Section 3 will not
be less than $[**] per Receipt Point Mcf and no greater than $[**] per Receipt Point Mcf. For example, if Seller’s CO2 Mole
% at the Receipt Point was [**]% and the CO2 specification was [**] mole %, the Committed Gas would exceed the specification by
[**]% and the fee would be $[**] per Receipt Point Mcf.



 


		5.	H2S Treating Fee. If Seller’s gas exceeds the H2S quality specification
set forth in Section V of Exhibit A Seller will pay Buyer an H2S Treating Fee per Receipt Point Mcf. The H2S
Treating Fee shall be based upon the applicable Receipt Point H2S content from the following table:



 


Receipt Point H2S Content       $
Fee per Mcf at the Receipt Point


[**]


 


		6.	Nitrogen Fee. If Seller’s gas exceeds the nitrogen quality specification set forth
in Section V of Exhibit A for a Receipt Point, Seller will pay Buyer a Nitrogen Fee equal to $[**] per Mcf at such Receipt
Point.



 


		7.	Minimum Volume Deficit Payment. If Seller has made the election in Section 2.06 and
Seller fails to deliver the quantity in Section 2.06(i), Seller will pay Buyer a Minimum Volume Deficit Payment equal to $[**]
times the difference between the Base Quantity and the average daily quantity of Committed Gas received at the Receipt Point.



 


END OF EXHIBIT C


 






    	 	C-1	 



    	** Text Omitted and Filed Separately Confidential Treatment Requested Under 17 C.F.R. §§ 80(b)(4) and 240.24b-2




    


 


 


EXHIBIT D


to


GAS GATHERING, PROCESSING AND PURCHASE AGREEMENT


dated as of August __, 2017


between


LUCID ENERGY DELAWARE, LLC


(Buyer)


and


LILIS ENERGY, INC.


(Seller)


 


LOW PRESSURE RECEIPT POINTS


 


 


	Meter Number	Points of Delivery Name	County, State	Lat/Long
	TBD	Crittendon Field Station LP	Winkler, Texas	TBD


 


HIGH PRESSURE RECEIPT POINTS


 


	Meter Number	Points of Delivery Name	County, State	Lat/Long
	TBD	Wild Hog	Lea, New Mexico	TBD
	TBD	Prize Hog	Lea, New Mexico	TBD
	TBD	Crittendon North	Winkler, Texas	TBD
	TBD	Crittendon Field Station HP	Winkler, Texas	TBD


 


 


DELIVERY POINTS


 


	Meter Number	Points of Delivery Name	County, State	Lat/Long
	37914	El Paso/Kinder Morgan	Lea, New Mexico	32.2888°/-103.6478°
	95720	Transwestern	Lea, New Mexico	32.2111°/-103.5948°


 


PLANT PRODUCTS DELIVERY POINTS


 


	Meter Number	Points of Delivery Name	County, State	Lat/Long
	TBD	Red Hills Tailgate with redelivery to ONEOK West Texas	Lea, New Mexico	TBD
	TBD	Enterprise Pipeline	Lea, New Mexico	TBD
	TBD	DCP Sand Hills	Lea, New Mexico	TBD


 


** Exhibit D will be amended to add
meter numbers and locations of facilities if/when Buyer establishes such Plant Products Delivery Points.


 


END OF EXHIBIT D


 






    	 	D-1	 



    	** Text Omitted and Filed Separately Confidential Treatment Requested Under 17 C.F.R. §§ 80(b)(4) and 240.24b-2




    

 


 


EXHIBIT E


to


GAS GATHERING, PROCESSING AND PURCHASE AGREEMENT


dated as of August ___, 2017


between


LUCID ENERGY DELAWARE, LLC


(Buyer)


and


LILIS ENERGY, INC.


(Seller)


 


INTERESTS IN THE DEDICATED ACREAGE


 


	State	County	Description
	New Mexico	Lea	Section 21, Township 26 S, Range 35 E
	New Mexico	Lea	Section 19, Township 26 S, Range 36 E
	New Mexico	Lea	Section 20, Township 26 S, Range 36 E
	Texas	Loving	Block C24, Section 4, PSL, Cowden C C, A-1401
	Texas	Winkler	Block C24, Section 4, PSL, Cowden C C, A-1397
	Texas	Winkler	Block C23, Section 21, PSL, Cowden C C & L, A-1391
	Texas	Winkler	Block C24, Section 2, PSL, Cowden C C, A-1396
	Texas	Winkler	Block C23, Section 25, PSL, Cowden C C, A-1394
	Texas	Winkler	Block C23, Section 22, PSL, Cowden C C, A-1414
	Texas	Winkler	Block C24, Section 1, PSL, Cowden C C, A-1395
	Texas	Winkler	Block C23, Section 24, PSL, Cowden C C, A-1393
	Texas	Winkler	Block C23, Section 23, PSL, Cowden C C, A-1392
	Texas	Winkler	Block C23, Section 16, PSL, Beckham W L, A-1324
	Texas	Winkler	Block C23, Section 15, PSL, Beckham W L, A-1323
	Texas	Winkler	Block 75, Section 1, PSL, Cowden C C, A-1381
	Texas	Winkler	Block 74, Section 9, PSL, Cowden C C, A-1377
	Texas	Winkler	Block 74, Section 7, PSL, Desmond J L, A-714
	Texas	Winkler	Block 74, Section 6, PSL, Moreland R E, A-521
	Texas	Winkler	Block 74, Section 5, PSL, Moreland R E, A-614
	Texas	Winkler	Block 74, Section 5, PSL, Moreland R E, A-613


 


 


  



    	 	E-1	 



    	** Text Omitted and Filed Separately Confidential Treatment Requested Under 17 C.F.R. §§ 80(b)(4) and 240.24b-2




    




 





 


DEDICATED ACREAGE MAP


 





 


CONFLICTING DEDICATION


 


The Parties acknowledge and agree that
the Interests are, as of the Effective Date, subject to prior written dedications and commitments for gathering, processing and
purchase of Gas pursuant to the certain agreements provided below and that Seller shall be entitled to comply with such prior written
dedications or commitments in accordance with the provisions of this Agreement.


 


		1)	Gas Gathering Agreement dated July 2, 2012 by and between Regency Field Services LLC (predecessor-in-interest
to ETC Field Services LLC) and Permian Atlantis LLC (predecessor-in-interest to Lilis Energy, Inc.) with an expiration date of
February 1, 2018.



 


		2)	Gas Gathering Agreement dated August 1, 2008 by and between Regency Field Services LLC (predecessor-in-interest
to ETC Field Services LLC) and Lakehills Production, Inc. (predecessor-in-interest to Lilis Energy, Inc.) with an expiration date
of February 1, 2018.



 


		3)	Gas Gathering Agreement effective July 1, 2012 by and between Anadarko Gathering Company LLC and SWEPI
LP (predecessor-in-interest to Lilis Energy, Inc.) with an expiration date of December 31, 2017.



 


 


END OF EXHIBIT E


 






    	 	E-2	 



    	** Text Omitted and Filed Separately Confidential Treatment Requested Under 17 C.F.R. §§ 80(b)(4) and 240.24b-2




    

 


 


EXHIBIT F


to


GAS GATHERING, PROCESSING AND PURCHASE AGREEMENT


dated as of August __, 2017


between


LUCID ENERGY DELAWARE, LLC


(Buyer)


and


LILIS ENERGY, INC.


(Seller)


 





	THE STATE OF NEW MEXICO/TEXAS	§
	 	§
	THE COUNTY OF _____________ 	§







 


Lucid Energy Delaware,
LLC (“Buyer”) and Lilis Energy, Inc. (“Seller”) are parties to that certain Gas Gathering, Processing and
Purchase Agreement (the “Agreement”) dated effective August ___, 2017 (“Effective Date”).


 


Pursuant to the Agreement,
Seller dedicated to Buyer, as a covenant running with the interests owned by Seller, certain owned or controlled gas produced from
wells operated by Seller or its Affiliates within the dedicated area described in the attached Schedule A for a period of ten (10)
years from the Effective Date of the Agreement, and then year to year thereafter until terminated pursuant to the terms of the
Agreement.


 


Buyer and Seller desire
to enter into, and record in the applicable county land records, this memorandum in order to place all third parties on notice
of the Agreement and the interests of Seller dedicated thereunder.


 


The terms and conditions
referenced in this Memorandum are more particularly described in the Agreement, and are incorporated herein by reference. The Parties
have agreed that this memorandum is executed solely for the purpose of giving notice and shall not amend or modify the Agreement
in any way. In the event of a conflict between this Memorandum of Agreement and the Agreement, the Agreement shall govern.


 


This memorandum may
be executed in any number of counterparts, all of which will be considered together as one instrument.


 


[Remainder of page left intentionally
blank.]


 




    	 	F-1	 



    	** Text Omitted and Filed Separately Confidential Treatment Requested Under 17 C.F.R. §§ 80(b)(4) and 240.24b-2




    


 


SELLER:


 


LILIS ENERGY, INC.

 





	By:	 	 
	 	 	 
	Name:	 	 
	 	 	 
	Title:	 	 







 


 





	STATE OF _________	)
	 	) ss:
	COUNTY OF _______ 	)


 


 


The foregoing instrument
was acknowledged before me this _____ day of _______________, 2017, by ________________________________________________,
as _______________________________________________________ of LILIS ENERGY, INC., for and on behalf of such corporation.





 


	 	 	 
	 	Notary Public	 
	 	My commission expires: ________________________	 
	 	Commission # ________________________________ 	 


 







    	 	F-2	 



    	** Text Omitted and Filed Separately Confidential Treatment Requested Under 17 C.F.R. §§ 80(b)(4) and 240.24b-2




    


 


BUYER:


 


LUCID ENERGY DELAWARE, LLC



 


	By:	 	 
	 	 	 
	Name:	 	 
	 	 	 
	Title:	 	 





 


 





	STATE OF TEXAS	)
	 	) ss:
	COUNTY OF DALLAS 	)


 




 





This instrument was
signed and acknowledged before me on this _____ day of _______________, 2017, by _________________________________,
as __________________________________________ of LUCID ENERGY DELAWARE, LLC, for and on behalf of such
limited liability company.


 


 





	 	 	 
	 	Notary Public	 
	 	My commission expires: ________________________	 
	 	Commission # ________________________________ 	 





  


 




    	 	F-3	 



    	** Text Omitted and Filed Separately Confidential Treatment Requested Under 17 C.F.R. §§ 80(b)(4) and 240.24b-2




    


 


SCHEDULE A


to


MEMORANDUM OF AGREEMENT


 


DEDICATED AREA


 





 


 


 


END OF SCHEDULE A


 






    	 	F-4	 



    	** Text Omitted and Filed Separately Confidential Treatment Requested Under 17 C.F.R. §§ 80(b)(4) and 240.24b-2




    




 


EXHIBIT G


to


GAS GATHERING, PROCESSING AND PURCHASE AGREEMENT


dated as of August ___, 2017


between


LUCID ENERGY DELAWARE, LLC


(Buyer)


and


LILIS ENERGY, INC.


(Seller)


 


 


TAKE-IN KIND TERMS


 


For any calendar [**] during which Seller
elects under Article 4.5 of the Agreement to take its Residue Gas and/or Plant Products in-kind, the following terms (“Take
In-Kind Terms”) will apply:


 


I.                   
Nominations. Buyer and Seller agree that scheduling and commencement of service shall be consistent with the down-stream
receiving pipeline or transporter nomination requirements. Whenever Seller’s Residue Gas or Plant Products are to be scheduled
or nominated hereunder, each Party shall provide to the other Party all information required for such nominations and confirmations
with upstream and downstream pipelines or transporters.


 


(a)              
Receipt Point Nominations. Seller will not be required to provide Buyer with nominations of the Gas at the Receipt
Point(s), however, Seller will provide volume forecast information, as updates are available, or upon request by Buyer, for Buyer’s
general capacity planning purposes by Receipt Point.


 


(b)              
Operational Information. Buyer will use reasonable efforts to provide daily information related to Receipt Point
volume, Gathering System performance including, but not limited to, estimated Field Fuel, Plant Fuel, Shrinkage, Plant Product
composition and historical volume information in order to assist with Seller’s nominations below. Seller will use reasonable
efforts to make nomination changes as necessary, based on the information provide by Buyer, at the Delivery Points to minimize
imbalances.


 


(c)               
Delivery Point Nominations.


 


i.           
Seller will make all necessary arrangements with pipelines or other third parties downstream of the Delivery Points and
Plant Products Delivery Points in order to help manage Buyer’s delivery of Seller’s Residue Gas and Seller’s
Plant Products. Those arrangements must be coordinated with Buyer, and Buyer will coordinate such arrangements with Seller and
such downstream pipelines or other third parties.


 


ii.           
Residue Gas. No later than 12:00 PM on the fifth Business Day prior to the beginning of each Month, but no later
than one (1) Business Day prior to the nomination deadline each Month for the applicable downstream pipeline(s) receiving Residue
Gas at the Delivery Points, Seller will notify Buyer of the estimated quantity of Seller’s Residue Gas per Day for each Delivery
Point, and any other information relevant to Buyer’s operation of the Gathering System, provided that nominations at the
Delivery Points are subject to confirmation by the downstream pipeline at the Delivery Points. Buyer reserves the right, from time
to time, to revise its nomination procedures, subject to Seller’s consent which shall not be unreasonably withheld. At any
time, Seller may adjust its nomination prospectively for the remainder of such Month by providing Buyer notice prior to the nomination
deadline of the applicable pipeline at the Delivery Points for making such changes.


 



    		G-1	 



    	** Text Omitted and Filed Separately Confidential Treatment Requested Under 17 C.F.R. §§ 80(b)(4) and 240.24b-2




    

 





iii.           
Plant Products. No later than 12:00 PM on the fifth (5th) Business Day prior to the beginning of each
Month, but no later than one (1) Business Day prior to the nomination deadline each Month for the applicable downstream pipelines
receiving Plant Products at the Plant Products Delivery Points, Seller will notify Buyer of the estimated volumes of Seller’s
Plant Products per day (and the composition of such Plant Products) for each Plant Products Delivery Point, and any other information
relevant to Buyer’s operation of the Gathering System, provided that nominations at the Plant Products Delivery Points are
subject to confirmation by the downstream pipeline at the Plant Products Delivery Points. Buyer reserves the right, from time to
time, to revise its nomination procedures, subject to Seller’s consent which shall not be unreasonably withheld. At any time,
Seller may adjust its nomination prospectively for the remainder of such Month by providing Buyer notice and prior to the nomination
deadline of the applicable pipeline at the Plant Products Delivery Point for making such changes.


 


(d)              
Buyer and Seller will immediately inform each other of any discovered unanticipated changes in deliveries at either the
Receipt Point(s), Delivery Point(s), or Plant Products Delivery Point(s). Nominations may be made by telephone, but will be confirmed
in writing by e-mail, facsimile or other electronic means to Buyer's Gas Control Department.


 


II.                
Balancing. Subject to all of the provisions of the Agreement, Buyer will accept at the Receipt Point a Daily quantity
of Gas at the Receipt Points and redeliver Seller’s Residue Gas and Seller’s Plant Products allocated to such Gas at
the Delivery Points and Plant Products Delivery Point, respectively. All quantities received in accordance with the Agreement at
the Receipt Points and all deliveries of Seller’s Residue Gas in accordance with this Agreement at the Delivery Point will
be balanced on a Btu basis, and all such quantities referred to in the Agreement will be adjusted for the Gross Heating Value thereof.
Buyer will use its best efforts to enter into, and maintain in good standing, operational balancing agreements with the downstream
receiving pipelines at each of the Delivery Points and Plant Products Delivery Points. When operational balancing agreements are
effective between Buyer and an applicable downstream pipeline (and the applicable downstream pipeline keeps Seller whole on its
nominations each Month) and an imbalance is caused solely by Seller and Buyer incurs a cash out, penalty or settlement due to said
imbalance, then Seller will reimburse Buyer for such cash out, penalty or settlement incurred by Buyer pursuant to the terms of
the applicable operational balancing agreement, to the extent such cash out, penalty or settlement is caused by Seller. Buyer shall
provide an invoice to Seller for same, along with reasonable documentation evidencing same, and Seller will reimburse Buyer for
same in accordance with the payment terms set forth in Section 8.01 of the Agreement.


 






    		G-2	 



    	** Text Omitted and Filed Separately Confidential Treatment Requested Under 17 C.F.R. §§ 80(b)(4) and 240.24b-2




    

 


III.             
Cash Outs. Because of dispatching and other causes outside of Buyer’s reasonable control, imbalances may occur
between the total heating value of the Residue Gas delivered to downstream pipelines at the Delivery Points for Seller’s
account and the allocated quantity of Residue Gas attributable to Seller’s Gas. Similarly, imbalances may occur between the
allocated volumes of Seller’s Plant Products that are delivered to downstream pipelines at the Plant Products Delivery Points
for Seller’s account and the allocated Plant Products attributable to Seller’s Gas. For imbalance events at Delivery
Points or Plant Products Delivery Points where Buyer does not have an operational balancing agreement in place, the Parties agree
to settle cash outs and pay applicable penalties for imbalance positions according to the respective cash out and penalty policies
of such downstream pipeline and the Party causing the imbalance shall be assessed said penalty or cash out, and reimburse same
to the other Party if the other Party is required to pay same to the pipeline company. The Party to whom payment is owed hereunder
shall provide an invoice to the other Party for same, along with reasonable documentation evidencing same, and the other Party
will reimburse the invoicing Party for same in accordance with the payment terms set forth in Section 8.01 of the Agreement.
Upon the expiration of the term of the Agreement, the termination or cancellation of the Agreement, or Seller’s assignment
of all of its right, title, and interest in the Agreement, the Parties agree to settle any remaining imbalance through a final
cash out settlement, and such imbalance settlement obligation shall survive any expiration, termination or cancellation of the
Agreement. The price for final cash out settlement of Seller’s Residue Gas and Seller’s Plant Products will be as follows:


 


(a)       Residue
Gas. The arithmetic average of the daily average prices as published in Platts Gas Daily, Daily Price Survey ($/MMBtu) for
“Waha” under the West Texas – Permian Basin Area heading for the last Month Seller’s Residue Gas was delivered
to the Delivery Points less $[**].


 


(b)       Plant
Products. The OPIS average Monthly prices, using purity ethane, NON-TET propane, normal butane, iso-butane and natural gasoline,
as applicable, less Seller’s T&F Fees. “Seller’s T&F Fees” shall be the weighted average price
paid by Seller over the previous three (3) month period for transportation and fractionation of Seller’s Plant Products between
the Plant Products Delivery Points and a designated Mont Belvieu fractionation facility.


 


IV.             
Curtailment. Buyer will use reasonable efforts to provide timely notification to Seller by telephone, with subsequent
e-mail notification, of the potential size and duration of any unscheduled capacity disruption. If Seller does not adjust its nomination
within four (4) hours after receiving notification from Buyer, then Buyer may adjust Seller’s nomination and/or not confirm
the nominations requested by Seller in the next nomination cycle. If Seller does not adjust its nomination as reasonably requested
by Buyer, and such failure to adjust nominations could materially impact operations on the Gathering System, Buyer may curtail
or shut in Gas for a reasonable period of time.


 


 


 


END OF EXHIBIT G


 




 






    		G-3