ASSET SALE AND PURCHASE AGREEMENT


BETWEEN


CHEVRON U.S.A. INC.


AND


 


EAST SLOPE VEDDER AREA


KERN COUNTY, CALIFORNIA


Effective Date: JULY 1, 2010


Chevron U.S.A. Inc./         ASPA

GUG Asset Sale and Purchase Agreement Dom Ltr (Rev4 May 2009)

Execution Version 





ASSET SALE AND PURCHASE AGREEMENT

TABLE OF CONTENTS


	
  

 	
  

 	
  

 	
  

 
	
 SECTION

 	
  

 	
 PAGE

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 AGREEMENT

 	
  

 	
 1

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 DEFINITIONS,
 INTERPRETATION AND EXHIBITS

 	
  

 	
 1

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 SALE AND
 PURCHASE OF ASSETS

 	
  

 	
 10

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 CONDITIONS
 PRECEDENT TO CLOSING

 	
  

 	
 13

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 CLOSING

 	
  

 	
 15

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 REPRESENTATIONS
 AND WARRANTIES

 	
  

 	
 18

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 DISCLAIMERS,
 WAIVERS AND ACKNOWLEDEGMENTS

 	
  

 	
 19

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 PREFERENTIAL
 RIGHTS AND CONSENTS

 	
  

 	
 22

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 TERMINATION

 	
  

 	
 23

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 OBLIGATIONS
 AND BENEFITS AFTER EFFECTIVE DATE

 	
  

 	
 24

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 INTERIM
 PERIOD

 	
  

 	
 25

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 FINAL
 SETTLEMENT AND POST CLOSING MATTERS

 	
  

 	
 28

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 OIL AND GAS
 IMBALANCES

 	
  

 	
 31

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 CLAIMS,
 LIABILITIES AND INDEMNITIES

 	
  

 	
 31

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 TAXATION

 	
  

 	
 35

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 DECOMMISSIONING

 	
  

 	
 36

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 ENVIRONMENTAL
 MATTERS

 	
  

 	
 37

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 TITLE
 MATTERS

 	
  

 	
 42

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 TERMINATION
 FOR AGGREGATE ALLEGED DEFECTS

 	
  

 	
 45

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 RIGHT OF
 FIRST REFUSAL ON PRODUCTION

 	
  

 	
 45

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 ANNOUNCEMENTS
 AND CONFIDENTIALITY

 	
  

 	
 47

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 ADDITIONAL
 OBLIGATIONS

 	
  

 	
 49

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 NOTICES

 	
  

 	
 50

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 GOVERNING
 LAW AND RESOLUTION OF DISPUTES

 	
  

 	
 50

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 THIRD PARTY
 RIGHTS

 	
  

 	
 53

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 GENERAL
 PROVISIONS

 	
  

 	
 53

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 EXHIBIT A – DESCRIPTION OF ASSETS

 	
  

 	
 57

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 EXHIBIT B – ASSIGNMENT DOCUMENTS

 	
  

 	
 58

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 EXHIBIT C – ACCOUNTING
 ADJUSTMENTS

 	
  

 	
 80

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 EXHIBIT D – ALLOCATION OF PURCHASE PRICE

 	
  

 	
 82

 	
  

 



Chevron U.S.A. Inc./         ASPA

GUG Asset Sale and Purchase Agreement Dom Ltr (Rev4 May 2009)

Execution Version









	
  

 	
  

 	
  

 	
  

 
	
 EXHIBIT E – SEISMIC DATA AND FORM OF DATA LICENSE

 	
  

 	
 83

 	
  

 



Chevron U.S.A. Inc./         ASPA 

GUG Asset Sale and Purchase Agreement Dom Ltr (Rev4 May 2009)

Execution Version 





ASSET SALE AND PURCHASE AGREEMENT


This ASSET SALE AND PURCHASE
AGREEMENT (“Agreement”) dated 1 July 2010 is made between CHEVRON
U.S.A. INC., a Pennslyvania corporation, with its principal offices at 9525
Camino Media, Bakersfield, California (“Seller”) and with its principal offices at                        (“Buyer”). 


RECITALS


	
  

 	
  

 
	
 A.

 	
 Seller desires to sell, and Buyer desires to purchase, the Assets
 described below on the terms and conditions set out in this Agreement. 

 
	
  

 	
  

 
	
 B.

 	
 In consideration of the mutual promises set out in this Agreement,
 and other good and valuable consideration, the receipt and sufficiency of
 which is acknowledged, Seller and Buyer agree to be bound by the terms of
 this Agreement. 

 


AGREEMENT


	
  

 	
  

 	
  

 	
  

 
	
  

 	
 DEFINITIONS, INTERPRETATION AND EXHIBITS

 
	
  

 	
  

 
	
  

 	
 1.1

 	
 Definitions. As
 used in this Agreement, these words or expressions have the following
 meanings: 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Accounting Adjustments” means the adjustments to the Purchase
 Price calculated in accordance with Exhibit C – Accounting Adjustments.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Accrual Basis” means the basis of accounting under which
 costs and benefits are regarded as attributable to the period in which the
 liability for the costs is incurred, or the right to the benefits is earned,
 regardless of when invoiced, paid or received.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Additional Assets” means all of the following, to the extent
 that these items are transferable and pertain to the property(s) being sold:

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 All Operations Contracts.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 Asset Documents. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 All permits, authorizations, well license or other rights under which
 the Assets are operated. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (D)

 	
 All Data.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 The term “Additional Assets” does not include agreements,
 documents or data to the extent any of the following apply:

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 The agreements, documents or data constitute Seller’s proprietary
 technology or interpretations.

 






	
  

 	
  

 
	
 Chevron U.S.A. Inc./         ASPA 

 	
  

 
	
 GUG Asset Sale and Purchase
 Agreement Dom Ltr (Rev4 May 2009)) 

 	
  

 
	
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 (B)

 	
 The agreements, documents or data are owned with, or licensed from
 third parties with contractual or legal restrictions on their deliverability
 or disclosure by Seller to any assignee that is not an affiliate of Seller. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Adjusted Purchase Price” has the meaning given in Section
 2.3. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Affiliate” means any legal entity which controls, is
 controlled by, or is under common control with, another legal entity. An
 entity is deemed to “control” another if it owns directly or indirectly at
 least fifty percent of either of the following: 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 The shares entitled to vote at a general election of directors of such
 other entity. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 The voting interest in such other entity if such entity does not have
 either shares or directors. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Affiliates of Seller expressly include Chevron Corporation. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Agreement” means this Asset Sale and Purchase Agreement,
 including all attached Exhibits and Schedules. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Alleged Environmental Defects” has the meaning given in
 Section 16.2. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Alleged Title Defects” has the meaning given in Section
 17.2. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Areas” means the geographical area or areas described in
 Exhibit A – Description of Assets. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Assets” means Seller’s undivided fifty percent interest in
 all of the following:

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 Rights to Petroleum Substances.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 Facilities. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 Wells.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (D)

 	
 Additional Assets.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (E)

 	
 Assigned Petroleum Substances.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (F)

 	
 Production and Pipeline Imbalances. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 The term “Assets” does not include any Excluded Assets or
 Retained Interests identified in Exhibit A – Description of Assets. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Asset Documents” means the agreements and documents through
 which the Rights to Petroleum Substances and all other rights related to the
 development and exploitation of the Rights to Petroleum Substances are
 derived, including the Leases, as set forth in Exhibit A – Discription of
 Assets. 

 






	
  

 	
  

 
	
 Chevron U.S.A. Inc./         ASPA 

 	
  

 
	
 GUG Asset Sale and Purchase
 Agreement Dom Ltr (Rev4 May 2009)) 

 	
  

 
	
 Execution Version

 	
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 “Assigned Petroleum Substances” means all Petroleum Substances
 produced and severed from, or allocable, after severance, to the Leases,
 Units, Wells or the Areas on and after the Effective Date. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Assignment Documents” means the documents listed in Exhibit B – Assignment Documents, which provide for the assignment, transfer or other
 conveyance of the Assets to Buyer. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Benefits” has the meaning given in Section 9.1. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Business Day” means a day other than Saturday or Sunday on
 which banks in Bakersfield California are generally open for the transaction
 of business in Dollars. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Buyer Account” means the Buyer’s account with                           ,
 or such other bank account for which Buyer provides to Seller all relevant
 details in writing at least three Business Days prior to the Closing Date. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Buyer Parties” means Buyer, Buyer’s Affiliates, and the
 directors, officers, employees, contractors, and representatives of each of
 them. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Casualty Loss” means damage to any of the physical Assets
 that results in a loss that meets all of the following conditions: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 The loss occurs during the Interim Period. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 The loss is not the result of normal wear and tear; mechanical
 failure; gradual structural deterioration of materials, equipment or
 infrastructure; wellbore downhole failure; or normal production decline
 mechanism, including all of the following: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (1)

 	
 Wellbore failures arising or occurring during drilling or completion,
 or reworking or re-completion or production operations. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (2)

 	
 Junked or lost holes or wellbores.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (3)

 	
 Sidetracking or deviating a well.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (4)

 	
 Production profile or reservoir changes.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 The value of the loss exceeds US$50,000.00. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Claim” means any claim, liability, loss, demand, damages,
 Encumbrance, cause of action of any kind, obligation, costs, judgment,
 penalty, interest and award (including recoverable legal counsel fees and
 costs of litigation of the Person asserting the Claim), whether arising by
 law, contract, tort, voluntary settlement or otherwise.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Closing” means the consummation of the sale and purchase of
 the Assets in accordance with Section 0.

 






	
  

 	
  

 
	
 Chevron U.S.A. Inc./         ASPA 

 	
  

 
	
 GUG Asset Sale and Purchase
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 “Closing Date” means the date on which the Closing occurs,
 which shall occur on 1 August 2010, or such other date as the Parties may
 agree in writing. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Conditions Precedent” has the meaning given in Section 0. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Confidential Information” means all Data and all other
 agreements, documents, reports and information pertaining to the Assets that
 Seller has furnished or disclosed to Buyer in connection with this Agreement,
 or acquired by Buyer in connection with the inspection, testing, inventory or
 sale of the Assets. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Data” means all files, records, documentation and data in
 possession of Seller or its Affiliates that specifically relates to Seller’s
 ownership or rights in the Assets, including any correspondence, information
 and reports (including petroleum engineering, reservoir engineering,
 drilling, geological and all other kinds of technical data and samples,
 well-logs, and analyses in whatever form) lease files, land files, wells
 files, division order files, title opinions and abstracts, any environmental
 assessments, safety records, governmental filings, production reports,
 production logs, core materials and core sample reports and maps as such data
 is assembled in the normal course of business. The term “Data” does not
 include any of the following:

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 Any files, records, documentation or data that Seller may not sell,
 transfer or otherwise dispose of as a result of confidentiality obligations
 by which it is bound or which cannot be provided to Buyer because such
 transfer is prohibited by the agreement under which it was acquired. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 Any corporate, financial, and tax records of Seller.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 Engineering forecasts, evaluations and reserve estimates.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (D)

 	
 Interpretations of seismic data. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (E)

 	
 Any files, records, documentation or data that have been archived or
 managed pursuant to Seller’s record management policies, provided that Seller
 shall use reasonable efforts to make available to Buyer upon request any
 records in Seller’s possession that relate to the Assets and are required by
 Buyer for the purpose of responding to or defending any litigation or Claim
 relating to the Assets.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Decommissioning Obligations” means any and all existing and
 future claims, costs, charges, expenses, liabilities and obligations
 associated with, and liability for, abandoning, decommissioning, removing or
 making safe all Wells and Facilities, whether such claims, costs, charges,
 expenses, liabilities and obligations are incurred under or pursuant to any
 of the Asset Documents or under statutory, common law, regulation, order,
 permit, judgment, decree or other obligation, and including any residual
 liability for anticipated or necessary continuing insurance, maintenance and
 monitoring costs. Decommissioning Obligations include all of the following: 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 The plugging, replugging and abandonment of all Wells, either active
 or inactive, situated on or in any of the Areas, Leases or Units. 

 






	
  

 	
  

 
	
 Chevron U.S.A. Inc./         ASPA 

 	
  

 
	
 GUG Asset Sale and Purchase
 Agreement Dom Ltr (Rev4 May 2009)) 

 	
  

 
	
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 (B)

 	
 The removal, abandonment and disposal of structures, facilities,
 foundations, wellheads, tanks, pipelines, flowlines, pumps, compressors,
 separators, heater treaters, valves, fittings, platforms and equipment and
 machinery of any nature and all materials contained therein, located on or
 used in connection with the Assets. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 The clearance, restoration and remediation of the lands, groundwater
 and waterbottoms covered or burdened by the Leases, Units, or otherwise
 affected by the Assets. The removal, remediation and abatement of any
 petroleum material, any contamination or pollution (including spilling,
 leaking, pumping, pouring, emitting, emptying, discharging, leaching,
 dumping, disposing or other release of any chemical substance, pollutant,
 contaminant, toxic substance, radioactive material, hazardous substance,
 NORM, waste, saltwater, cuttings, muds, crude oil, or petroleum product) of
 surface soils and water, subsurface soils, air, groundwater, or any vessel,
 piping, equipment, tubing or subsurface structure or strata associated with
 the Assets. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Dispute” means any dispute or controversy arising out of this
 Agreement, including a dispute or controversy regarding the existence,
 construction, validity, interpretation, enforceability, termination or breach
 of this Agreement, whether based in contract, tort or otherwise. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Dollars” or “US$” means United States Dollars. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Effective Date” means the effective date of the sale of the
 Assets, which is 1 July 2010 as of 7:00 a.m. local time where the Assets are
 located. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Encumbrances” means any charges, liens, mortgages, pledges,
 royalties or other security interests whatsoever, any agreement or
 arrangement to create any of the foregoing or any agreement or arrangement
 that would affect Seller’s ability to freely dispose of the Assets to Buyer. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Environmental Laws” means all of the following: 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 The Occupational Safety and Health Act, 29 U.S.C.A. §651, et seq.;
 the Resource Conservation and Recovery Act, 42 U.S.C.A. §6901, et seq.; the
 Comprehensive Environmental Response, Compensation, and Liability Act, 42
 U.S.C.A. §9601, et seq.; the Clean Water Act, 33 U.S.C.A. §1251 et seq.; the
 Clean Air Act, 42 U.S.C.A. §7401, et seq.; the Safe Drinking Water Act, 42
 U.S.C.A. §3001, et seq.; the Toxic Substances Control Act, 15 U.S.C.A. §2601
 et seq.; the Oil Pollution Act of 1990, 33 U.S.C.A. §2701 et seq. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 All rules, regulations and orders adopted, amended or enacted under
 the foregoing statutes or applicable state statutes addressing similar
 matters, or state or federal statutes after the Effective Date and applicable
 to any waste material, produced water, tank bottoms, sludge, or constituents
 thereof, radioactive materials (including NORM) or hazardous substances on or
 included with the Assets or the presence, disposal, release or threatened
 release of all waste material, produced water, tank bottoms, sludge, or
 constituents thereof, radioactive materials (including NORM), or hazardous
 substances on, included 

 






	
  

 	
  

 
	
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 with, or emanating from or through the Assets into the atmosphere or
 in or upon land or any water course or body of water, whether above or below
 the ground. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 All other federal, state and local environmental and oil and gas laws
 and regulations, as well as any amendments or supplements to such laws and
 regulations. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Environmental Obligations” means any and all claims, costs,
 charges, expenses, liabilities and obligations incurred in respect of the
 Assets and in connection with removing and disposing of debris and cleaning
 up and decontaminating any joint property or any other property (including
 platforms, pipelines, plant, machinery, wells, facilities and all other
 offshore and onshore installations and structures) and for reinstating any
 area of land, foreshore or seabed, wherever situated, whether such claims,
 costs, charges, expenses, liabilities or obligations are incurred under or
 pursuant to any of the Asset Documents or under statutory, common law or
 other obligation. Environmental Obligations include any residual liability
 for anticipated or necessary continuing insurance, maintenance and monitoring
 costs. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Excluded Assets” means the items listed as “Excluded Assets”
 in Exhibit A – Description of Assets. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Exhibit” means a document referred to in Section 1.3(A). 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Facilities” means all of the following: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 All physical assets that are used for production, mechanical
 separation, handling, gathering, storage, treatment, sale, disposal or other
 operations relating to Petroleum Substances within the Areas, including all
 of the following: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (1)

 	
 All buildings, structures, facilities, foundations. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (2)

 	
 All platforms, gathering lines, gas lines, water lines, flowlines and
 production and storage facilities. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (3)

 	
 All equipment, machinery, fixtures, materials and improvements. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 Any additional items, whether located within or beyond the Areas,
 that are identified as Facilities in Exhibit A – Description of Assets. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Final Settlement Statement” means that statement referred to
 in Section 11.1. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Government Entity” means any department, authority,
 commission, board, instrumentality or agency of any municipal, local, state,
 federal or other governmental authority (including regulatory authorities and
 administrative bodies) and any subdivision of the foregoing. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Interim Period” means the period from and including the
 Effective Date until and including the Closing Date. 

 






	
  

 	
  

 
	
 Chevron U.S.A. Inc./         ASPA 

 	
  

 
	
 GUG Asset Sale and Purchase
 Agreement Dom Ltr (Rev4 May 2009)) 

 	
  

 
	
 Execution Version

 	
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 “JOA” means any and all joint operating agreements or similar
 agreements relating to the Assets. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Leases” means the leases, licenses, deeds, operating rights,
 working interests, permits, authorizations, net revenue interests and mineral
 interest, and other documents of title as set forth in Exhibit A – Discription
 of Assets, through which the holder is entitled to drill for, own or remove
 Petroleum Substances within, upon or under the Areas or through which that
 holder is (or is deemed to be) entitled to a share of Petroleum Substances
 removed from the Areas, and includes, if applicable, all renewals and
 extensions of those documents and all documents issued in substitution
 therefore. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “NORM” means naturally occurring radioactive materials. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Obligations” has the meaning given in Section 9.1. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Operations Contracts” means all contracts, agreements and
 documents other than Asset Documents. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Operator” means the operator of the Assets appointed pursuant
 to the relevant Asset Documents, Operations Contracts or applicable laws,
 rules or orders of a Government Entity. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Party” means each of Seller and Buyer and “Parties”
 means both of them. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Permitted Encumbrances” means any of the following: 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 Encumbrances arising by operation of law, including any Claim by a
 Government Entity or Tax Authority arising by operation of law. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 Any Encumbrance listed on Schedule 1.1(C). 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 Any encumbrances, non-participating royalties, overriding royalties,
 net profits interests, production payments or other burdens applicable to the
 Areas not disclosed on Schedule 1.1(C) if the net cumulative effect of such
 burdens does not operate to reduce the net revenue in any Asset to an amount
 less than the net revenue interest set forth in Exhibit A – Description of
 Assets or increase the working interest of any Asset from that set forth in
 Exhibit A – Description of Assets without a corresponding increase in the
 revenue interest. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (D)

 	
 The terms and conditions of any agreements with third parties
 governing the Areas and operations being conducted with respect thereto,
 including any preferential rights of purchase or any similar restriction
 applicable to any of the Assets which prior to Closing waivers or consents
 are obtained from the appropriate parties or the appropriate time period for
 asserting such rights has expired without an exercise of such rights. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (E)

 	
 Encumbrances granted or created in connection with the operations
 relating to the Asset Documents. 

 






	
  

 	
  

 
	
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 (F)

 	
 Easements, rights of way, servitudes, permits, surface leases or
 other similar rights, provided they do not materially interfere with the
 operation or use of the Assets. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (G)

 	
 The right of a Government Entity to levy taxes on Petroleum
 Substances or the income or revenue therefrom. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (H)

 	
 Agreements for the sale of Petroleum Substances that are terminable
 on not more than thirty days’ notice, without an early termination penalty or
 other cost. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (I)

 	
 Regulations and any rights reserved to or vested in any Government
 Entity to control or regulate any of the Assets in any manner. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (J)

 	
 Undetermined or inchoate liens incurred or created as security in
 connection with the development or operation of any of the Assets for
 Seller’s share of the costs and expenses of those operations, which costs and
 expenses are not delinquent as of the Closing Date or liens which have
 expired as a matter of law. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (K)

 	
 Liens granted in the ordinary course of business to a public utility,
 municipality or Government Entity in respect of operations pertaining to any
 of the Assets. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (L)

 	
 Encumbrances associated with approvals, consents, notices or waivers
 routinely or customarily given after a conveyance or asset sale. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (M)

 	
 Alleged Title Defects or other deficiencies or irregularities that
 have been waived by Buyer in writing or not asserted on or before the Defect
 Notice Date. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Person” means any person, company, consortium, association,
 entity, government, independent governmental organization, or any agency or
 subdivision of the government. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Petroleum Substances” means any mineral, oil, hydrocarbon or
 natural gas existing in its natural condition in strata, including gas, well
 gas and any condensate, but not including coal, bituminous shale or other
 stratified deposits from which oil must be extracted by distillation. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Preliminary Settlement Statement” means the statement
 referred to in Section 0. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Prime Rate” means the Prime Rate in effect at Citibank, New
 York, New York, on the Effective Date. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Production and Pipeline Imbalances” have the meaning given
 in Section 0. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Purchase Price” means the amount payable by Buyer to Seller
 under Section 2.2, as adjusted pursuant to Section 2.3. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  “Rights to Petroleum
 Substances” means Seller’s interest in and to the Leases and the Units,
 insofar as they pertain to the Areas. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  “Seller Account” means
 the Seller’s account with                                  . 

 






	
  

 	
  

 
	
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 Further credit to Client Account No.                           , or such
 other bank account for which Seller provides to Buyer all relevant details in
 writing at least three Business Days prior to the Closing Date. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Seller Parties” means Seller, Seller’s Affiliates, and the
 directors, officers, employees, contractors and representatives of each of
 them. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  “Taxes” means (unless
 specifically provided otherwise) all income, capital, corporate, franchise,
 gross receipts, margins, turnover, production or severance, windfall profits,
 sales, use, value added, goods and services, other excise, ad valorem,
 occupation, real or personal property taxes, customs and other import or
 export duties, stamp duties, fees, assessments, withholdings or charges
 imposed by any Tax Authority and any penalties, interest and fines or
 additions attributable to or imposed on or with respect to any such
 assessments. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Tax Authority” means any revenue, customs or fiscal
 governmental, state, community, municipal or regional authority, body or
 Person competent to impose, administer or collect any Taxes in connection
 with the Assets, this Agreement or actions contemplated by this Agreement. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Third Party” means any Person other than Seller Parties or
 Buyer Parties. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Units” means any unitization, pooling, communitization
 agreements, declarations, designations or orders relating to the Leases, and
 all of Seller’s interest in and to the properties covered or units created
 thereby, to the extent attributable to the Leases. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Wells” means any Petroleum Substance wells, salt water
 disposal wells, injection wells and other wells and wellbores, including
 wellheads and well equipment located on the Leases and within the Areas or
 Units, whether or not abandoned or plugged to which Seller has right, title
 and interest as of the Effective Date. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 1.2

 	
 Interpretation.
 Unless the context expressly requires otherwise, all of the following apply
 to the interpretation of this Agreement: 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 The plural and singular words each include the other. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 The masculine, feminine and neuter genders each include the others. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 The word “or” is not exclusive. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (D)

 	
 The words “includes” and “including” are not limiting. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (E)

 	
 References to the Parties include their respective successors and
 permitted assignees. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (F)

 	
 References to matters “arising” (or which “arise” or “arises”) “out
 of this Agreement” include matters which arise in connection with this
 Agreement or have a causal connection with or which flow from this Agreement
 or which 

 






	
  

 	
  

 
	
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 would not have arisen or occurred but for the entering into this
 Agreement or the performance of or failure to perform obligations under this
 Agreement. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (G)

 	
 The headings in this Agreement are included for convenience and do not
 affect the construction or interpretation of any provision of, or the rights
 or obligations of a Party under, this Agreement. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (H)

 	
 If a conflict exists between any provisions of this Agreement as they
 apply to a Party, the provision that imposes the more onerous obligation on
 that Party prevails to the extent of the conflict. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 1.3

 	
 Exhibits. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 All of the Exhibits that are attached to the body of this Agreement
 are an integral part of, and are incorporated by reference into, this
 Agreement, including: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (1)

 	
 Exhibit A – Description of Assets. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (2)

 	
 Exhibit B – Assignment Documents. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (3)

 	
 Exhibit C – Accounting Adjustments. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (4)

 	
 Exhibit D – Allocation of Purchase Price. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (5)

 	
 Exhibit E – Seismic Data and Form of Data License. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 If a conflict exists between the body of this Agreement and the
 Exhibits , the body prevails to the extent of the conflict. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 If a conflict exists between the Exhibits or within an Exhibit as
 they apply to a Party, the provision that imposes the more onerous obligation
 on that Party prevails to the extent of the conflict. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (D)

 	
 If a conflict exists between this Agreement and any provision of the
 Assignment Documents, the provisions of this Agreement shall prevail. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 SALE AND PURCHASE OF ASSETS 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 2.1

 	
 Agreement to Sell and Purchase.
 Seller agrees to sell the Assets to Buyer, and Buyer agrees to purchase the
 Assets from Seller, subject to the terms and conditions of this Agreement. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 2.2

 	
 Purchase Price Amount.
 Buyer shall pay to Seller the amount of US$1,450,000.00 (the “Purchase
 Price”), adjusted as set forth in Section 2.3, as consideration for the sale
 for the Assets. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 2.3

 	
 Adjustment to Purchase Price. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 The Purchase Price shall be adjusted in accordance with the following
 provisions of this Agreement: 

 






	
  

 	
  

 
	
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 (1)

 	
 The Accounting Adjustments set forth in Exhibit C – Accounting
 Adjustments, accomplished through the Preliminary Settlement Statement and
 the Final Settlement Statement. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (2)

 	
 Section 7.2, with respect to the exercise of preferential rights by
 third parties. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (3)

 	
 Section 10.4, with respect to Casualty Loss of Assets. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (4)

 	
 Section 10.5, with respect to insurance matters.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (5)

 	
 Section0 0, with respect to certain post-Closing adjustments.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (6)

 	
 Section 0, with respect to Taxes. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (7)

 	
 Section 16.2, with respect to Alleged Environmental Defects agreed
 upon by Seller and Buyer. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (8)

 	
 Section 17.2, with respect to Alleged Title Defects agreed upon by
 Seller and Buyer. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (9)

 	
 Any other amount agreed upon by Seller and Buyer. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 The Purchase Price, as adjusted by the items set forth above, is the
 “Adjusted Purchase Price.” The Adjusted Purchase Price shall be identified in
 the Preliminary Settlement Statement pursuant to Section 10.1 and the Final
 Settlement Statement pursuant to Section 11.1. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 Notwithstanding anything to the contrary in this Agreement, no item
 taken into account in calculating an adjustment under this Agreement will be
 taken into account in calculating any other adjustment so as to result in a
 Party making or receiving a payment twice in respect of any such item. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (D)

 	
 No adjustments to the Purchase Price will result from any of the
 following: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (1)

 	
 Actual or projected changes in production rates.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (2)

 	
 Alternate interpretations of reserves. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (3)

 	
 Normal wear and tear on facilities or equipment.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 2.4

 	
 Allocation of Purchase Price. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 Buyer has submitted to Seller an allocation of the Purchase Price
 among the Assets as set forth in Exhibit D – Allocation of Purchase Price.
 Buyer represents it has made reasonable allocations, in good faith, and
 Seller may rely on the allocations for all purposes hereunder, including all
 of the following: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (1)

 	
 To notify holders of preferential rights of Buyer’s offer. 

 






	
  

 	
  

 
	
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 (2)

 	
 As a basis for adjustments to the Purchase Price for any Alleged
 Environmental Defects, Casualty Losses or Alleged Title Defects. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (3)

 	
 As otherwise provided in this Agreement. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 In the event any Claims are brought against Seller arising from or
 under or attributable or relating to Exhibit D – Allocation of Purchase Price,
 Buyer shall indemnify and defend Seller against any such Claims. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 Seller and Buyer agree to be bound by this allocation of the Purchase
 Price for all purposes (including all tax purposes), and each further agrees
 to consistently report and submit its returns to each applicable Tax
 Authority for all relevant years on the basis of this allocation. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (D)

 	
 Seller and Buyer further agree as follows: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (1)

 	
 The Purchase Price shall be further allocated for tax purposes among
 intangibles and tangibles comprising the Assets as follows: Twenty Five (25%)
 percent of the Purchase Price shall be attributed to the Leases, Units, and
 Contracts and Seventy Five (75%) percent of the Purchase Price shall be
 attributed to the Wells and Facilities. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (2)

 	
 To timely file all reports required by the United States Internal
 Revenue Code of 1986, as amended, concerning the Purchase Price allocations. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 2.5

 	
 Method of Payment.
 All payments under this Agreement shall be made in the following manner,
 unless otherwise agreed in writing between Seller and Buyer: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 Payments shall be in Dollars. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 Payments shall be made by bank wire transfer, in immediately
 available funds, paid without set-off, withholding or any deduction of any
 kind, including for any Taxes, banking, transfer or other costs or Claims. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 Payments shall be made directly into Seller’s Account or Buyer’s
 Account, as the case may be. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 2.6

 	
 Tax-Deferred Exchange.
 Seller shall have the right to elect to effect a tax-deferred exchange under
 Internal Revenue Code §1031, as amended, at any time prior to the date of
 Closing. If Seller elects to do so, the following shall apply: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 The Parties shall cooperate to effect the tax-deferred exchange and
 Buyer shall execute escrow instructions, documents, agreements or instruments
 necessary to effect the exchange. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 Seller shall ensure that Buyer does not incur additional costs,
 expenses, fees or liabilities as a result of the requested exchange. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 Seller may assign any of its rights and delegate performance of any
 of its obligations under this Agreement in whole or in part to a Third Party
 in order to 

 






	
  

 	
  

 
	
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 effect such exchange. If such Third Party is used, Seller may return
 the Deposit to Buyer and instruct Buyer to pay the Deposit to such Third
 Party. Seller shall remain responsible to Buyer for the full and prompt
 performance of the respective delegated obligations. Seller shall indemnify
 and defend Buyer from and against all claims, costs (including reasonable
 attorney’s fees) and liabilities resulting from any exchange undertaken under
 this Section 2.6. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 2.7

 	
 Seismic Data License.
 Seller shall grant to Buyer a non-exclusive license to use the seismic data
 identified on Exhibit E – Seismic Data and Form of Data License, , in
 substantially the form set forth in Exhibit E – Seismic Data and Form of Data
 License, (the “Data License”), subject to each of the following conditions: 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 Seller shall grant the Data License at no additional cost or
 consideration. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 Seller shall only license to Buyer seismic data for which Seller has
 a right to grant a license and for which Seller is able to obtain all
 necessary Third Party consents and waivers within sixty days after Closing
 without additional cost to Seller, using reasonable commercial efforts. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 The seismic data shall be licensed “AS IS, WHERE IS” with the express
 conditions and limitations set forth in the Data License. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (D)

 	
 Any use of such seismic data by Buyer shall be at Buyer’s sole risk. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 2.8

 	
 Buyer Guarantee. On or before the Effective Date, Buyer shall provide
 to Seller a guarantee to cover the Seller’s well and facilities abandonment
 liability for the eight existing wells and surface facilities. The guarantee
 shall be in the form of a bond, irrevocable letter of credit or such other
 form acceptable to Seller in the amount of $100,000.00 to guarantee its ability
 to pay for abandonment liability assumed under the terms of this Agreement. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 CONDITIONS PRECEDENT TO CLOSING 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 3.1

 	
 Conditions Precedent to Seller’s
 Obligations. The following are the Conditions
 Precedent to Seller’s obligation to sell the Assets to Buyer pursuant to this
 Agreement, unless waived in writing by Seller: 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 Buyer shall have performed and complied in all material respects with
 the terms and conditions of this Agreement required to be performed or
 complied with by it at or prior to Closing. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 No action or proceeding by or before any Government Entity shall have
 been instituted or threatened (and not subsequently dismissed, settled or
 otherwise terminated) which might restrain, prohibit or invalidate any of the
 transactions contemplated by this Agreement, other than an action or
 proceeding instituted or threatened by Seller or any of its Affiliates. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 Buyer’s representations and warranties set forth in Section 5.2 are
 true and correct in all material respects on the Closing Date. 

 






	
  

 	
  

 
	
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 (D)

 	
 The Buyer Guarantee shall have been duly executed and delivered and
 shall remain in full force and effect. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 3.2

 	
 Conditions Precedent to Buyer’s Obligations.
 The following are the Conditions Precedent to Buyer’s obligation to purchase
 the Assets from Seller pursuant to this Agreement, unless waived in writing
 by Buyer: 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 Seller shall have performed and complied in all material respects
 with the terms and conditions of this Agreement required to be performed or
 complied with by it at or prior to Closing. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 No action or proceeding by or before any Government Entity shall have
 been instituted or threatened (and not subsequently dismissed, settled or
 otherwise terminated) which might restrain, prohibit or invalidate any of the
 transactions contemplated by this Agreement, other than an action or
 proceeding instituted or threatened by Buyer or any of its Affiliates. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 Seller’s representations and warranties set forth in Section 5.1 are
 true and correct in all material respects on the Closing Date. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 3.3

 	
 Conditions Precedent to Both Parties’ Obligations.
 The following are the Conditions Precedent to both Seller’s and Buyer’s
 respective obligation to consummate the transactions contemplated by this
 Agreement, unless waived in writing by both Parties:

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 The receipt of all material approvals, consents, waivers or the
 execution of any necessary agreement or document (on terms reasonably
 satisfactory to Seller and Buyer) which may be required under the Asset
 Documents or by any applicable laws, regulations or Government Entity prior
 to the transfer of the Assets to Buyer, except for any consents and approvals
 of any Governmental Entity or authority customarily obtained subsequent to
 transfer of title. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 The execution of the Assignment Documents by all parties (if any) to
 those documents other than the Parties. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 3.4

 	
 Fulfillment of Conditions Precedent.
 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 Each Party shall, and shall procure that each of its Affiliates
 shall, use reasonable endeavors to satisfy the Conditions Precedent,
 including the execution of all such other documents, acts and things as may
 be reasonably required in order to satisfy the Conditions Precedent. Each
 Party shall keep the other fully informed of its progress with regard to the
 satisfaction of the Conditions Precedent. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 Each Party shall promptly provide to the other Party all such
 information and documentation concerning that Party as may be necessary to
 enable the other Party to prepare and submit all necessary filings required
 by any Government Entity in connection with the transactions contemplated by
 this Agreement and otherwise to satisfy the Conditions Precedent. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 3.5

 	
 Right to Terminate for Failure to Satisfy
 Conditions Precedent. 

 






	
  

 	
  

 
	
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 (A)

 	
 If Buyer has not satisfied one or more of the Conditions Precedents
 set forth in Section 3.1 by the Closing Date, and Seller has not waived such
 unsatisfied Condition Precedent(s), then Seller may terminate this Agreement.
 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 If Seller has not satisfied any of Conditions Precedent set forth in
 Section 3.2 by the Closing Date, and Buyer has not waived such Condition
 Precedent, then Buyer may terminate this Agreement. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 If any of the Conditions Precedent set forth in Section 3.3 are not
 satisfied by the Closing Date, either Party may terminate this Agreement. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (D)

 	
 Either Party may terminate this Agreement under this Section 3.5 by
 giving notice to the other Party. Following such termination, if a Party used
 reasonable endeavors to satisfy the Conditions Precedent applicable to it in
 accordance with Section 3.4(A), it shall have no further rights or
 obligations to the other under this Agreement, except that both of the following
 applies: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (1)

 	
 This Section 3.5 and Section 25.5 shall continue to apply. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (2)

 	
 Any accrued rights or liabilities of a Party shall not be affected,
 except as may be provided in this Agreement. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 CLOSING 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 4.1

 	
 Place of Closing.
 The Closing shall take place at 9525 Camino Media, Bakersfield, California or
 such other place as the Parties may agree in writing. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 4.2

 	
 Date of Closing.
 The Closing shall occur on the Closing Date. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 4.3

 	
 Effective Date of Transfer.
 The transfer and assignment of the Assets from Seller to Buyer shall be
 effective as of the Effective Date, provided that the Closing occurs.
 Possession of the Assets shall not pass to Buyer until the Closing occurs. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 4.4

 	
 Closing Procedure.
 At Closing, the following shall take place in the following order: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 Seller shall deliver to Buyer the Assignment Documents validly
 executed by all the parties to those documents other than the Seller and
 Buyer, if applicable. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 Unless previously provided, the Parties shall provide each other with
 copies of the consents, approvals or waivers required to be obtained by them
 or their respective Affiliates prior to Closing in fulfillment of the
 Conditions Precedent. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 Each Party shall deliver to the other Party copies or, if requested,
 certified copies of a power of attorney or other appropriate corporate
 authorization authorizing the execution of this Agreement, the Assignment
 Documents and all other documents delivered in connection with the Closing. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (D)

 	
 Buyer and Seller shall execute the Assignment Documents. 

 






	
  

 	
  

 
	
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 (E)

 	
 Buyer and Seller shall execute and acknowledge any such other
 instruments as are reasonably necessary to effectuate the transfer, sale or
 conveyance of the Assets to Buyer. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (F)

 	
 Buyer shall deliver to Seller the Decommissioning Guarantee. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (G)

 	
 If Buyer is to become operator, Seller shall supply Buyer with an
 appropriate governmental form as required by the Government Entity having
 jurisdiction and authority to change the name of operator from Seller to
 Buyer, for each Seller-operated Well (whether dry, inactive, injector or
 producing), Lease or any other well or Facilities, as may be required or
 defined by said agency, board or commission, located on the premises that
 form a part of the subject matter of this Agreement. All such forms shall be
 executed by Buyer or Seller as may be required prior to or during Closing.
 Buyer shall be responsible for any fee that is required by the Government
 Entity. At Seller’s option, either Buyer shall deliver its check payable to
 the Government Entity to Seller at Closing or this fee shall be credited to
 Seller in the applicable Final Settlement Statement. Seller shall mail the
 completed form and fee to the proper Government Entity after Closing.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (H)

 	
 Buyer shall pay the Adjusted Purchase Price based upon the Preliminary
 Settlement Statement to Seller in accordance with Section 2.5. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (I)

 	
 Seller shall deliver Buyer’s share of the Assignment Documents and
 other closing documents, retaining its share for Seller’s records. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 4.5

 	
 Transfer of Title to Assets.
 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 Title to the Assets shall not pass until the Closing occurs. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 Neither Seller nor Buyer shall be obliged to complete the transfer of
 the Assets unless all those items set out in Section 4.4 are accomplished.
 This Section shall not prejudice any rights or remedies available to a Party
 in respect of any default by the other Party. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 Once the items set out in Section 4.4 are accomplished, the Assets
 shall be conveyed “AS IS, WHERE IS,” without warranty of title, unless
 otherwise specified in this Agreement, and subject to the express conditions
 and limitations contained in this Agreement. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (D)

 	
 The Assets to be transferred to Buyer pursuant to this Agreement
 shall be transferred pursuant to the Assignment Documents. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 4.6

 	
 Third Party Invoices After Closing.
 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 Seller is responsible for and required to pay only that portion of
 any charge or invoice received that is applicable to work performed or
 material received in the period prior to the Effective Date. 

 






	
  

 	
  

 
	
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 (B)

 	
 Buyer is responsible for and required to pay only that portion of any
 charge or invoice received that is applicable to work performed or material
 received in the period after the Effective Date. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 Each Party shall return charges and invoices to the billing party for
 rebilling to the other Party if such invoices are outside each Party’s
 applicable time period. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 4.7

 	
 Post-Closing Procedures.
 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 Following Closing, the Parties shall execute, acknowledge and
 deliver, or cause to be executed, acknowledged and delivered, such
 instruments, and take such other action, as may be necessary or advisable to
 carry out their obligations under this Agreement, and under any document,
 certificate or other instrument delivered pursuant to this Agreement. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 If applicable, Seller shall deliver to Buyer copies of any Asset
 Documents and Data in the possession or control of Seller that was not
 delivered to Buyer prior to the Closing, no later than sixty days after the
 Closing Date, subject to all of the following: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (1)

 	
 Seller is not required provide any document or Data that Seller
 determines, in its absolute discretion, was generated for Seller’s or
 Seller’s Affiliates’ internal purposes. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (2)

 	
 Seller may require that Buyer execute a Data License in accordance
 with Section 2.7. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (3)

 	
 Seller and its Affiliates shall not be required to provide any
 document or Data that would cause Seller or its Affiliates to breach any
 confidentiality or other contractual obligations. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 Buyer shall notify all pertinent operators, non-operators, oil or gas
 purchasers, Government Entities, lessors and royalty owners that it has
 purchased the Assets immediately after Closing. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (D)

 	
 After Closing, Buyer shall notify the appropriate Tax Authorities
 that it owns the Assets in a timely manner, and shall promptly provide copies
 of such notices to Seller. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (E)

 	
 Prior to Closing, Seller shall designate which Party is responsible
 for filing and recording of the Assignment Documents and any other instrument
 required to convey title of the Assets to Buyer in the appropriate government
 records. Regardless of which Party files, Buyer shall bear all costs and fees
 associated with such filing and recording, either directly or via credit to
 Seller in the Final Settlement Statement. The Party responsible for filing
 shall supply the other Party with a true and accurate photocopy of the
 recorded and filed Assignment Documents within a reasonable period of time
 after such documents are available. 

 






	
  

 	
  

 
	
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 (F)

 	
 Buyer shall be responsible for timely obtaining all consents and
 approvals of Government Entities customarily obtained subsequent to transfer
 of title and all associated costs and fees. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 4.8

 	
 Costs and Expenses.
 Seller and Buyer shall each pay their own costs and expenses in relation to
 the preparation, negotiation and execution of this Agreement and the
 documents contemplated or executed pursuant to this Agreement. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 REPRESENTATIONS AND WARRANTIES 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 5.1

 	
 Seller Representations and Warranties.
 Seller represents and warrants to Buyer that, except as disclosed on Schedule
 5.1, as of the date hereof and as of Closing, the following statements are
 accurate: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 Formation. Seller is
 a corporation or company (as the case may be) duly organized, validly
 existing and in good standing under the laws of the jurisdiction of its
 organization, and is duly qualified to carry out its business in California. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 Authorization. Seller
 has full corporate or company power and authority to enter into and perform
 this Agreement, and has taken all actions necessary to authorize its
 execution, delivery and performance of this Agreement and the transactions
 contemplated by this Agreement have been duly and validly authorized by
 Seller. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 Valid and Binding Obligation. This
 Agreement has been duly executed and delivered by its authorized officer or
 other representative and constitutes its legal, valid and binding obligation
 enforceable in accordance with its terms, and no consent or approval of any
 other Person is required in connection with its execution, delivery and
 performance of this Agreement. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (D)

 	
 No Conflict with Governing Documents. Neither
 this Agreement nor the performance of this Agreement constitutes a default,
 violation or conflict with the articles of incorporation, by-laws or
 governing documents of Seller. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (E)

 	
 No Litigation or Arbitration Proceedings.
 Seller is not a party to any litigation or arbitration or administrative
 proceedings in relation to the Assets that might reasonably be expected to
 delay, prevent or materially hinder the consummation of the transactions
 contemplated hereby or materially adversely affect the title to or value of
 any of the Assets, except as disclosed in Schedule 5.1. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (F)

 	
 No Brokers. Seller
 is not a party to, or in any way obligated under, nor does Seller have any
 knowledge of, any contract or outstanding claim for the payment of any
 broker’s or finder’s fee in connection with the origin, negotiation,
 execution, or performance of this Agreement for which Buyer will have any
 liability. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 For the purposes of this Section 5.1, Seller shall be deemed to be
 aware of matters within the knowledge of its senior supervisory employees
 responsible for the management and daily operation of the Assets and who
 could reasonably be expected to have knowledge of the relevant subject
 matter. 

 






	
  

 	
  

 
	
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 5.2

 	
 Buyer Representations and Warranties.
 Buyer represents and warrants to Seller that, except as disclosed on Schedule
 5.2, as of the date hereof and as of Closing, the following statements are
 accurate: 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 Formation. Buyer
 is a corporation or company (as the case may be) duly organized, validly
 existing and in good standing under the laws of the jurisdiction of its
 organization, and is duly qualified to carry out its business in California. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 Authorization.
 Buyer has full corporate or company power and authority to enter into and
 perform this Agreement, and has taken all actions necessary to authorize its
 execution, delivery and performance of this Agreement and the transactions contemplated
 by this Agreement have been duly and validly authorized by Buyer. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 Valid and Binding Obligation.
 This Agreement has been duly executed and delivered by its authorized officer
 or other representative and constitutes its legal, valid and binding
 obligation enforceable in accordance with its terms, and no consent or
 approval of any other Person is required in connection with its execution,
 delivery and performance of this Agreement. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (D)

 	
 No Conflict with Governing Documents.
 Neither this Agreement nor the performance of this Agreement constitutes a
 default, violation or conflict with the articles of incorporation, by-laws or
 governing documents of Buyer, or any license, permit or consent granted to or
 by Buyer, or any material provision of any agreement or instrument to which
 Buyer is a party and, to the best of Buyer’s knowledge, will not violate or
 be in conflict with any judgment, decree, order, statute, rule or regulation.
 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (E)

 	
 Conflict of Interest.
 No event has occurred prior to the Effective Date which, had it occurred
 after the Effective Date, would constitute a violation of Section 21.1. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (F)

 	
 No Brokers. Buyer
 is not a party to, or in any way obligated under, nor does Buyer have any
 knowledge of, any contract or outstanding claim for the payment of any
 broker’s or finder’s fee in connection with the origin, negotiation,
 execution, or performance of this Agreement for which Seller will have any
 liability. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (G)

 	
 Buyer has sufficient technical and financial capacity to own and
 operate (as may correspond) the Assets and can provide sufficient evidence in
 this regard if so required by any Government Entity or third party. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 DISCLAIMERS, WAIVERS AND ACKNOWLEDEGMENTS
 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 6.1

 	
 DISCLAIMER. Except as otherwise expressly
 provided in this Agreement, the Seller makes all of the following
 disclaimers: 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  (A)

 	
 All of the Assets are being sold “AS IS,
 WHERE IS” and with all faults. 

 






	
  

 	
  

 
	
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  (B)

 	
 Neither Seller nor any Seller Parties makes
 any warranty or representation, express or implied in fact or by law, with
 respect to any matter or thing and disclaims all liability and responsibility
 for any representation, warranty, collateral contract, statement, assurance,
 opinion or information made or communicated (orally or in writing) to Buyer
 (including those by any officer, director, employee, agent, adviser,
 consultant or representative of Seller or any Affiliate of Seller), including
 any representation or warranty relating to any of the following: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  (1)

 	
 The quantity, existence, quality, value or
 deliverability of Petroleum Substances or other minerals, or other reserves
 attributable to the Assets. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  (2)

 	
 The physical state, origin, quantity,
 quality, safety, title, compliance with government regulations,
 merchantability, fitness for any particular purpose or condition of any of
 the Assets including any property, plant and equipment used in the operation
 of any of the Assets or the production, transportation or sale of Petroleum
 Substances by or on behalf of Seller. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  (3)

 	
 Any geological, geophysical, technical, or
 engineering (including petroleum engineering) data, cost estimates, economic
 or other interpretations, forecasts or evaluations concerning the Assets. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  (4)

 	
 The amount of any future costs associated
 with Decommissioning Obligations or Environmental Obligations relating to the
 Assets, or the extent of any liability related to Decommissioning Obligations
 or Environmental Obligations. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  (5)

 	
 The accuracy or completeness of any Data,
 reports, records, projections, information or materials furnished or made
 available to Buyer at any time in connection with the sale of the Assets,
 including the quality, quantity or environmental condition of the Assets or
 any other matters contained in the Data or any other materials furnished or
 made available to Buyer by Seller or any Seller Parties. All such Data,
 records, reports, projections, information and other materials furnished by
 Seller or otherwise made available to Buyer are provided to Buyer as a
 convenience, and shall not create or give rise to any liability of or against
 Seller. Any reliance on or use of the same shall be at Buyer’s sole risk to
 the maximum extent permitted by law. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  (6)

 	
 The ability of Buyer to claim or recover
 any costs incurred by it or by Seller in accordance with the terms of the
 Asset Documents. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 6.2

 	
 BUYER ACKNOWLEDGEMENTS, WAIVERS AND
 AGREEMENTS. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  (A)

 	
 Buyer acknowledges and agrees that at
 Closing, it shall accept all Assets in its then “AS IS, WHERE IS” condition
 and with all faults, with an expressed 

 






	
  

 	
  

 
	
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 acceptance and understanding of the
 disclaimers contained in this Agreement. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  (B)

 	
 Buyer further acknowledges each of the
 following: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  (1)

 	
 That the Assets have been used for oil and
 gas exploration, drilling and producing operations, pipeline, transportation
 or gathering operations, and other related oilfield operations, including,
 possibly the injection, storage or disposal of produced water or waste
 materials incidental to or occurring in connection with such operations. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  (2)

 	
 That physical changes in the land,
 groundwater or subsurface may have occurred as a result of any such uses and
 that Buyer has entered into this Agreement on the basis of Buyer’s own
 investigation of, or right to investigate, the physical condition of the
 Assets, including the Facilities and equipment, and the surface and
 subsurface conditions. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  (3)

 	
 That Buyer assumes the risk that adverse
 physical conditions, including the presence of unknown, abandoned or
 unproductive oil wells, gas wells, equipment, pits, landfills, flowlines,
 pipelines, water wells, injection wells and sumps, which may or may not have
 been revealed by Buyer’s investigation, are located thereon or therein, and
 whether discovered, discoverable, hidden, known or unknown to Buyer as of
 Closing. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  (C)

 	
 Buyer acknowledges each of the disclaimers
 set forth in Section 6.1, and acknowledges and affirms that it has not relied
 upon any representation, warranty, statement, opinion or information in
 entering into or carrying out the transactions contemplated by this Agreement
 and Buyer waives all rights and remedies which but for this Section 0 would
 or might have been available to it in respect of such representation,
 warranty, collateral contract, statement, assurance, opinion or information. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  (D)

 	
 Buyer agrees to assume full responsibility
 for compliance with all obligations attributable, in any way, to the Assets
 and all laws, orders, rules and regulations concerning all of such
 conditions, discovered, discoverable, hidden, known or unknown, and further
 agrees to indemnify and defend, the Seller Parties for same, including
 defense, indemnification and hold harmless for any liability, attorney’s
 fees, fines, penalties or costs under all Environmental Laws, as defined in
 this Agreement or otherwise asserted. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  (E)

 	
 Buyer agrees to comply with all covenants,
 terms, and provisions, express or implied, contained in the Leases and
 Operations Contracts ; and this Agreement is made expressly subject to all
 agreements, leases, easements, permits, commingling authorizations and other
 contracts relating to the Assets, whether or not specifically identified in
 this Agreement. Effective upon Closing, Buyer shall assume and be responsible
 for all obligations and liabilities of Seller accruing under such agreements
 after the Effective Date 

 






	
  

 	
  

 
	
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 and agrees to execute any instrument or
 document required by Seller to evidence such assumption. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  (F)

 	
 Buyer has made, or arranged for others to
 make, or has been afforded the opportunity to make, an inspection and
 inventory of the Assets and, if not performed, waives such right at and with
 Closing. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  (G)

 	
 Buyer affirms that it is relying on its own
 independent investigation, analysis and evaluation of the geological,
 geological engineering, economic or other interpretations, the costs of and
 prospects for further development in relation to the Assets including any
 future and current Taxes in relation to the Assets, except as expressly
 provided in this Agreement. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  (H)

 	
 Buyer acknowledges and agrees that Seller
 cannot and does not covenant, warrant or guarantee that Buyer shall become
 successor operator of the Assets or portions of the Assets which Seller may
 presently operate, since same may be subject to unit, pooling,
 communitization or operating agreements or other agreements which control the
 appointment of a successor operator. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  (I)

 	
 Buyer agrees to indemnify and defend Seller
 and its Affiliates from any liabilities in relation to Claims made by Buyer
 or any of its Affiliates in relation to the matters described in this Section
 6.2. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 PREFERENTIAL RIGHTS AND CONSENTS 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.1

 	
 Notice of Preferential Right of Purchase.
 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 If any portion of the Assets is subject to a preferential right of
 purchase or similar restriction, Seller shall promptly serve all notices that
 are required under the respective preferential purchase provisions. Unless
 otherwise agreed by Buyer, each such notice shall include a request for the
 timely exercise or waiver of any preferential or similar right to purchase
 any of the Assets. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 Seller shall use Buyer’s allocations set forth in Exhibit D – Allocation of Purchase Price to ascertain the value placed by Buyer on any of
 the Assets for which Seller is required to give a preferential right of
 purchase notice pursuant to this Section 7.1. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.2

 	
 Exercise of Preferential Rights. If
 a Third Party gives notice of its intent to exercise a preferential right to
 purchase all of the Assets, all of the following apply: 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 The Assets shall not be sold to Buyer and the Agreement shall be
 terminated if such Third Party purchases and closes on all of the Assets. 

 






	
  

 	
  

 
	
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 (B)

 	
 Any preferential purchase right must be exercised in the manner
 prescribed in the JOA or any other document concerning preferential purchase
 rights. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.3

 	
 Third Party Failure to Purchase.
 If a Third Party gives notice of its intent to exercise a preferential right
 to purchase any of the Assets, but does not purchase any or all of the Assets
 impacted by the preferential purchase rights for any reason, either before or
 within a reasonable time after Closing, there shall promptly be an additional
 Closing between Seller and Buyer for that portion of the Assets. Such
 additional Closing shall take place pursuant to the terms of this Agreement,
 by which Seller shall transfer the affected portion of the Assets to Buyer
 and Buyer shall promptly pay Seller that portion of the Purchase Price
 attributable thereto (or in the case of a negative allocation, Seller shall
 refund the absolute value of the negative amount to Buyer, without interest).
 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.4

 	
 Consents. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 If the sale of any portion of the Assets requires the consent of any
 Third Party, Seller shall promptly service all notices that are required
 under the respective consent provision. Unless otherwise agreed by Buyer,
 each such notice shall include a request for the granting of any consent that
 may be required. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 If a Third Party required to give, prior to Closing, a necessary
 material consent refuses to give that consent, then the failure to give
 consent shall be considered an Alleged Title Defect for the purposes of Section
 0. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 TERMINATION 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 8.1

 	
 Termination of Agreement.
 This Agreement may be terminated only under any of the following provisions
 of this Agreement: 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 Pursuant to Section 3.5, by Seller or Buyer if the Conditions
 Precedent to such Party’s obligations have not been satisfied or waived. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 Pursuant to Section 10.4(D), by either Party in the event of a
 Casualty Loss of Assets. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 Pursuant to Section 0, by either Party in the event of Aggregate
 Alleged Defects in excess of the specified amount. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (D)

 	
 Pursuant to Section 21.1(C), by Seller in the event of a violation by
 the other Party of the provisions that prohibit conflicts of interest in
 Section 21.1(A). 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (E)

 	
 Pursuant to Section 7.2 (A). 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 8.2

 	
 Remedies Upon Termination.
 In addition to any other specific provision in this Agreement, the following
 applies in the event of a termination of this Agreement: 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 Buyer shall promptly return to Seller all original documents, data or
 materials delivered to Buyer by Seller, and destroy all copies and
 reproductions (both written and electronic) in its possession and in the
 possession of persons to whom it was disclosed. 

 






	
  

 	
  

 
	
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 (B)

 	
 If this Agreement is terminated by either Party under the provisions
 of Section 8.1, the Parties shall be released from their respective
 obligations under this Agreement and Seller shall return the Deposit,
 exclusive of interest, to Buyer. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 If Buyer, through no fault of Seller, fails, refuses, or is unable
 for any reason not permitted by this Agreement to close on this transaction,
 Seller may assert its right to specific performance, retain the Deposit and
 pursue any other right or remedy to which it might be entitled at law or in
 equity. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 OBLIGATIONS AND BENEFITS AFTER EFFECTIVE
 DATE 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 9.1

 	
 Certain Definitions.
 In this Section 0, the following terms have the following meanings: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 “Obligations” means all costs, charges, and expenses arising
 out of or in respect of the Assets, except those that relate to: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (1)

 	
 Claims, Liabilities and Indemnities (Section 0). 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (2)

 	
 Taxes (Section 0). 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (3)

 	
 Decommissioning Obligations (Section 0). 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (4)

 	
 Environmental Obligations (Section 0). 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 “Benefits” means all sales invoices, receivables, revenue,
 receipts, rebates and any benefits arising out of or in respect of the Assets
 except those that relate to Taxes. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 9.2

 	
 Allocation of Obligations and Benefits.
 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 Buyer and Seller agree to allocate certain Obligations and Benefits
 in respect of the Assets that arise after the Effective Date in accordance
 with the following provisions, subject to the Closing taking place: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (1)

 	
 Seller shall be liable for all Obligations which relate to the period
 prior to the Effective Date on an Accrual Basis. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (2)

 	
 Buyer shall be liable for all Obligations which relate to the period
 after the Effective Date on an Accrual Basis. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (3)

 	
 Seller shall be entitled to all Benefits which relate to any period
 prior to the Effective Date on an Accrual Basis. If Buyer receives any
 Benefits which relate to such period, Buyer shall account to and reimburse
 Seller in respect of such Benefits. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (4)

 	
 Buyer shall be entitled to all Benefits which relate to the period on
 or after to the Effective Date on an Accrual Basis. If Seller receives any
 Benefits in respect of such period, Seller shall account to and reimburse
 Buyer in respect of such Benefits. 

 






	
  

 	
  

 
	
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 (B)

 	
 This allocation of Obligations and Benefits shall be accomplished by
 the Accounting Adjustments set forth in Exhibit C – Accounting Adjustments. For
 amounts not captured by Exhibit C – Accounting Adjustments, Section 9.3 shall
 apply. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 9.3

 	
 Payments in Respect of Obligations and
 Benefits. Any amount to be paid or reimbursed
 pursuant to Section 9.2 in respect of Benefits or Obligations that is not
 otherwise addressed by Accounting Adjustments shall be paid or reimbursed
 within ten Business Days of receipt of notification from the other Party. Any
 such payments shall be made to the Seller Account or Buyer Account, as
 appropriate. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 INTERIM PERIOD 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 10.1 

 	
 Preliminary Settlement Statement.
 No later than five Business Days prior to Closing Date, Seller shall prepare
 and deliver to Buyer a preliminary settlement statement (the “Preliminary
 Settlement Statement”) that sets forth all of the following:

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 The Adjusted Purchase Price. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 The Accounting Adjustments. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 Any other adjustments pursuant to Section 2.3 estimated in good faith
 by Seller in respect of the Assets. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 The Preliminary Settlement Statement shall contain reasonable
 estimates where actual amounts are not known at the time. As actual costs and
 revenues are known, these amounts shall be taken into account in the Final
 Settlement Statement. The Preliminary Settlement Statement shall be prepared
 in accordance with generally accepted accounting principles generally used in
 the oil and gas industry.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 10.2

 	
 Operations During Interim Period.
 During the Interim Period Seller, in its sole discretion, shall use, operate
 and maintain the Assets in substantially the same manner in which they have
 been used, operated and maintained prior to the Effective Date. In addition,
 to the extent Seller is permitted to do so under the Asset Documents and
 applicable confidentiality obligations, and to the extent that the following
 are reasonably within Seller’s control, Seller shall to do the following: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 Keep Buyer informed of all material acts, matters and things relating
 to the Assets. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 Not commit to any operation reasonably anticipated by Seller to
 require future capital expenditures by the owner of the Assets, for its
 proportionate share, in excess of US$50,000 without prior written consent of
 Buyer. In the event that an Authority for Expenditure (“AFE”) in excess of
 US$50,000 (for Seller’s proportionate share) is proposed or contemplated,
 Seller shall provide such AFE proposal to Buyer for Buyer’s election, with Seller’s
 recommendation. Buyer will independently evaluate any required AFE election
 and shall assume the cost and risk of any consequences resulting from Buyer’s
 election to participate or Buyer’s election to not participate in or not
 approve an operation. In the event that Buyer fails to communicate its
 election decision to Seller’s designated AFE 

 






	
  

 	
  

 
	
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 representative 48 hours prior to the AFE deadline (or 24 hours in the
 case of a 48-hour AFE), Buyer shall be deemed to have concurred with Seller’s
 recommendation. For the purposes of this Section 10.2 (B), electronic mail
 communication and facsimile notice to Buyer’s and Seller’s designated AFE
 recipients shall be permitted.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 Seller’s Designated AFE recipient:

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
           Ilia
 Lambert 661-654-7225 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 Buyer’s Designated AFE recipient: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
                           

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 Give Buyer, or any Person properly authorized by Buyer, reasonable
 access to all Data reasonably requested by Buyer, upon at least two Business
 Days’ prior written notice, subject to all of the following: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (1)

 	
 Such information relates to the Assets or all material operations
 carried out in respect of the Assets. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (2)

 	
 Reasonable access means access between the hours of 9:00 a.m. and
 5:00 p.m. on any Business Day. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (D)

 	
 Not sell, transfer, assign or encumber any of the Assets in any
 manner that would have a material adverse affect on the Assets, or agree to
 do the same, without Buyer’s prior written consent, except in respect of
 Permitted Encumbrances. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (E)

 	
 Pay all expenses related to the Assets as they become due, where such
 expenses would be paid by a reasonably prudent party. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (F)

 	
 Not propose, approve or participate in any material sole risk
 operation in respect of the Assets without Buyer’s prior written consent. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (G)

 	
 Continue to maintain the Insurance Policies in full force and effect.
 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 10.3

 	
 Exceptions to Seller’s Actions During
 Interim Period. The provisions set forth in Section
 10.2(A) through 10.2(G) do not apply, and Seller is entitled to act, or
 refrain from acting, in such a manner as Seller elects without reference to
 Buyer or the provisions of this Section 10.2(A) through 10.2(G), in respect
 of any of the following circumstances: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 An act, omission or other matter expressly contemplated by this
 Agreement, including the taking of any steps necessary to satisfy the
 Conditions Precedent. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 An act, omission or other matter to be undertaken pursuant to any
 work program or budget approved, or deemed to have been approved, under and
 in accordance with the Asset Documents or as otherwise required by the Asset
 Documents. 

 






	
  

 	
  

 
	
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 (C)

 	
 An act, omission or other matter undertaken in the event of emergency
 or where otherwise necessary, in the opinion of Seller, to safeguard any
 assets of Seller, including the Assets. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 10.4

 	
 Casualty Loss of Assets.
 In the event of a Casualty Loss of any of the Assets, all of the following
 applies: 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 Seller shall promptly notify Buyer of all instances of Casualty Loss
 that occur and become known to Seller during the Interim Period. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 Seller and Buyer shall meet to negotiate an adjustment to the
 Purchase Price that would reflect the “Reduction in Value” of the Assets
 directly arising from such Casualty Loss. For this purpose, “Reduction in
 Value” is based on the principle that Seller should generally bear the costs
 of repairing the Assets to the state existing immediately prior to the
 Casualty Loss, but if such repair results in equipment or facilities that are
 newer than or upgraded or superior to that which existed immediately prior to
 the Casualty Loss, Buyer should bear a portion of such costs that is
 equitable under the circumstances because of the benefit to Buyer of such
 newer or upgraded or superior equipment or facilities. Except as to those
 Assets with a negative Buyer’s Allocation, no adjustment associated with a
 Casualty Loss shall exceed Buyer’s Allocation for the affected Asset. For any
 Asset with a negative Buyer’s Allocation, Buyer may give Seller written
 notice at least five business days prior to Closing and exclude from this
 Agreement the Asset subject to the Casualty Loss and increase the Purchase
 Price by an amount equal to Buyer’s negative Allocation for such Asset. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 If the Parties are unable to agree on an adjustment to the Purchase
 Price that reflects the Reduction in Value resulting from the Casualty Loss,
 the Parties shall proceed to Closing with the Purchase Price being reduced by
 Seller’s estimate of the Reduction in Value of the Assets as a result of the
 Casualty Loss. Either Party may, within sixty days after the Closing Date,
 initiate binding arbitration in accordance with Section 23.5 to resolve the
 Dispute, without being required to first engage in negotiations or mediation.
 Any claim for a Casualty Loss not referred to arbitration within sixty days
 after Closing shall be deemed waived. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (D)

 	
 If the aggregate Casualty Losses and Asset exclusions, if any, under
 this Section 10.4 exceed fifty percent of the Purchase Price, either Party
 may, by written notice to the other at least five days prior to the Closing
 Date, terminate this Agreement. If either party exercises its option to
 terminate this Agreement pursuant to this Section 10.4(D), this Agreement
 shall become void and have no effect. Seller shall promptly return the
 Deposit to Buyer (exclusive of any interest earned), and neither party shall
 have any further right or duty to or claim against the other party under this
 Agreement, except as expressly provided to the contrary in this Agreement. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 10.5

 	
 Insurance Matters.
 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 Buyer acknowledges and agrees to all of the following: 

 






	
  

 	
  

 
	
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 (1)

 	
 Prior to Closing, insurance covereage under and the rights to the
 Insurance Policies is for the sole benefit of Seller. After the Closing Date,
 no insurance coverage is provided under the Insurance Policies in respect of
 the Assets. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (2)

 	
 After the Closing Date, no Claims regarding any matter whatsoever,
 whether or not arising from events occurring prior to the Closing Date, shall
 be made against or with respect to the Insurance Policies by the Buyer or its
 successors, or any Person subrogated to their rights. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 Seller shall retain and be entitled to any and all insurance proceeds
 and other payments associated with or attributable to any Casualty Loss which
 has been remedied by Seller or for which a Purchase Price adjustment has been
 made. With the acceptance by Buyer of a Purchase Price adjustment, Seller is
 to be fully subrogated, to the full extent of such Purchase Price adjustment,
 to any right or claim held or which may be held by Buyer or persons claiming
 under Buyer for such Casualty Loss. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 In the event that, at any time during the Interim Period, any
 circumstances arise in relation to the Assets which could found a Claim under
 the Insurance Policies, Seller shall, in consultation with Buyer, pursue such
 Claim. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (D)

 	
 Any monies received or receivable by Seller under any Insurance
 Policy in relation to the Assets during the Interim Period or after Closing,
 where no Purchase Price adjustment was made, shall be applied in the
 following manner: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (1)

 	
 If received prior to Closing, such proceeds shall be applied by
 Seller in making good the subject matter of the Claim and if and to the
 extent not so applied, shall be paid to Buyer at Closing. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (2)

 	
 If received after Closing, such proceeds shall be paid to Buyer
 within twenty Business Days following receipt thereof as an adjustment by
 means of a reduction to the Purchase Price, net of any tax chargeable to
 Seller on the receipt. Seller is to be fully subrogated, to the full extent
 of such Purchase Price adjustment, to any right or claim held or which may be
 held by Buyer or persons claiming under Buyer for such Casualty Loss. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 FINAL SETTLEMENT AND POST CLOSING MATTERS 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 11.1 

 	
 Final Settlement Statement.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 On or before the Business Day following one hundred eighty days after
 Closing, Seller shall prepare and deliver to Buyer a statement (the “Final
 Settlement Statement”). The Final Settlement Statement shall include: 

 






	
  

 	
  

 
	
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 (1)

 	
 Any additional adjustments under Section 2.3 and any changes to the
 Accounting Adjustments that were set forth in the Preliminary Settlement
 Statement, showing the calculation of such changes. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (2)

 	
 As a set-off, any resulting amount due to Buyer against any amount or
 sum that Buyer may otherwise owe to Seller under the terms of this Agreement
 or any other agreement between Buyer and Seller. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (3)

 	
 Copies of Third Party vendor invoices in excess of US$10,000.00 each,
 or other evidence of expenses agreed to by Buyer and Seller. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 Within sixty days of receipt of the Final Settlement Statement, Buyer
 shall deliver to Seller a written notice, either agreeing to the amounts due
 as set out in the Final Settlement Statement or setting out any changes that
 Buyer proposes be made to the Final Settlement Statement. If no written
 notice is delivered within that period, Buyer shall be deemed to have agreed
 to the Final Settlement Statement and each Party shall pay in accordance with
 Section 11.1(C). If such a written notice is delivered within that period
 that proposes changes to the Final Settlement Statement, then the following
 shall apply: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (1)

 	
 Any amount which is not subject to dispute shall be paid in
 accordance to Section 11.1(C). 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (2)

 	
 The Parties shall negotiate in good faith and use their reasonable
 endeavors to agree upon any disputed amounts due pursuant to the Final
 Settlement Statement no later than thirty days after Buyer’s submission of
 its written notice to Seller. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (3)

 	
 In the event the Parties fail to agree upon the amounts due within thirty
 days after Buyer’s submission of its written notice to Seller, then the
 disputed amounts shall be resolved pursuant to Section 0. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 The payment owed by a Party to the other Party pursuant to the Final
 Settlement Statement shall be made within a period of ten Business Days after
 agreement by the Parties or determination pursuant to this Section 11.1, as
 the case may be. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 11.2

 	
 Final and Binding.
 Subject to Section 11.1, the Final Settlement Statement shall be final and
 binding upon the Parties as to those Accounting Adjustments included therein.
 Buyer and Seller are not prohibited from settling additional accounting
 matters that may arise after the Final Settlement Statement as provided
 elsewhere is this Agreement, including but not limited to those provided in
 Sections 4.6 and 9. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 11.3

 	
 Certain Payments After Final Settlement
 Statement. After the Final Settlement Statement has
 been agreed or determined, the following apply: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 If any refund or reduction of Taxes is received by a Party and if
 such receipts would have resulted in an adjustment being made to the Final
 Settlement Statement if they had been identified at the time at which the
 Final Settlement Statement was agreed or determined, then the Party receiving
 the refund or reduction shall reimburse the Party entitled to the amount. 

 






	
  

 	
  

 
	
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 (B)

 	
 If any payments of Taxes are paid by one Party which were not
 included in the Final Settlement Statement but which would have resulted in
 an adjustment being made to that Final Settlement Statement if such payments
 had been identified at the time at which the Final Settlement Statement was
 agreed or determined, then the Party which should have paid the Taxes shall
 reimburse the Party for that amount. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 Any payment under this Section 11.3 shall be treated as an adjustment
 to the Purchase Price. Any payments due shall be made in accordance with
 Section 9.3. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 11.4

 	
 Audits.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 Any revenues, receipts, costs, charges, expenses, liabilities or
 obligations (including the cost of any audit) accruing in respect of the
 Assets that results from an audit pursuant to any Asset Document or
 Operations Contract or from any other subsequent adjustment in relation to
 the operation of, and expenditure attributable to, the Assets in the period
 prior to the Effective Date shall accrue to Seller. Any such adjustment in
 respect of the Interim Period shall represent a further adjustment to the
 Purchase Price in accordance with the principles of this Section 0 and
 Exhibit C – Accounting Adjustments. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 Where any such audit takes place after Closing, Buyer shall use all
 reasonable endeavors to enable Seller to make representations directly to any
 relevant Operator or failing that, shall itself make such representations on
 Sellers’ behalf in connection with such audit, and to notify Seller of any
 audit adjustment as soon as practicable after the results of such audit are
 known. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 If as a result of any audit adjustment, either Buyer or Seller is
 liable to pay any amount to the other, then, to the extent that the Purchase
 Price has not otherwise already been adjusted pursuant to the provisions of
 this Section 0and Exhibit C – Accounting Adjustments in respect thereof, or the
 amount has not otherwise been paid, such amount shall be paid to Buyer or
 Seller (as appropriate) within thirty days after the amount receivable or
 payable as a result of such an audit or other subsequent adjustment has been
 taken into account by the relevant Operator in the Operator’s billing
 statement. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 11.5

 	
 Calculating Adjustments.
 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 No payment shall be made under this Section 0 in respect of any item
 to the extent that the Purchase Price has already been adjusted under Section
 2.3 or Exhibit C – Accounting Adjustments in respect of that item. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 All of the calculations to be made pursuant to this Section0 shall be
 made on an Accrual Basis and in accordance with accounting principles
 currently generally accepted in the oil and gas industry in the United States
 and such principles shall be consistently applied for the purposes of any and
 all disputes between the Parties. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 Where responsibility for any liability or Asset has been allocated to
 a Party by adjustment to the Purchase Price under this Section 0 and Exhibit
 C –

 






	
  

 	
  

 
	
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 GUG Asset Sale and Purchase
 Agreement Dom Ltr (Rev4 May 2009)) 

 	
  

 
	
 Execution Version

 	
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 Accounting Adjustments, no indemnity shall operate so as to give a
 Party multiple credits or multiple liability for such Asset or liability or
 to reallocate responsibility for such liability.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 OIL AND GAS IMBALANCES 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 12.1

 	
 Buyer’s Acknowledgement.
 Buyer acknowledges that any imbalance amounts are derived from either
 Operator’s statements or Seller’s estimates based upon current production,
 prior sales history or contract information and such statements or estimates were
 provided to Buyer and were taken into consideration in Buyer’s Allocation of
 the Purchase Price. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 12.2

 	
 Production Imbalances.
 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 “Production Imbalances” means any over-production or
 under-production with respect to oil or gas produced from or allocated to the
 Assets, where Seller as of the Effective Date is out of balance with: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (1)

 	
 The Operator. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (2)

 	
 Other working interest parties in the Assets. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (3)

 	
 Third parties pursuant to a production handling agreement. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 Regardless of whether Seller is over-produced or under-produced as to
 its share of total oil, condensate or gas production, any balancing
 obligation or credit arising from such over- or under-production balance as
 of the Effective Date shall transfer to Buyer on the Effective Date, and
 Seller shall have no further liability therefore nor benefit therefrom
 (whichever the case may be), and as of the Effective Date, Buyer expressly
 assumes any such obligation or credit. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 If Seller is a party to an oil or gas balancing agreement, a
 production handling agreement or other reconciliation obligations pursuant to
 any operating agreement or commingling authority covering all or a portion of
 the Assets, Buyer shall assume all rights and duties of Seller pursuant
 thereto. If the Assets are not covered by a balancing agreement, a production
 handling agreement or other reconciliation obligations pursuant to any
 operating agreement or commingling authority, Buyer shall fulfill its
 obligations under this provision in accordance with applicable law. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (D)

 	
 Buyer shall indemnify and defend Seller and Seller Parties against
 any and all Claims arising directly or indirectly out of Buyer’s failure to
 fulfill its obligations under this provision. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 CLAIMS, LIABILITIES AND INDEMNITIES 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 13.1

 	
 INTENT OF INDEMNITY PROVISIONS. The Parties
 agree to allocate between them certain risks and responsibility for all
 Claims as set out below. 

 






	
  

 	
  

 
	
 Chevron U.S.A. Inc./         ASPA 

 	
  

 
	
 GUG Asset Sale and Purchase
 Agreement Dom Ltr (Rev4 May 2009)) 

 	
  

 
	
 Execution Version

 	
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 13.2

 	
 BUYER ASSUMPTION OF RISK. Buyer accepts and
 assumes the risk of all of the following as of the Effective Date: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  (A)

 	
 Damage to all or any part of the Assets
 including obligations arising out of any latent physical or design defect in
 the field facilities existing or attributable to the period prior to Closing
 and which is not discovered until after the Closing Date. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  (B)

 	
 Any change in the condition of the Assets
 during the Interim Period resulting from the production of Petroleum
 Substances through normal depletion (including the watering out, sand
 infiltration, breakdown, or other loss or reduction of utility of any well). 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  (C)

 	
 Any change in the value of the Assets
 resulting from the outcome of any pending exploration, development and
 production operations. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 13.3

 	
 RELEASE AND DISCHARGE BY BUYER. Buyer
 releases and discharges Seller and Seller Parties from each Claim relating to
 the Assets or this Agreement of the nature described in Section 13.2,
 regardless of whether relating to periods before or after the Effective Date
 or whether the Claim is foreseeable or unforeseeable. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 13.4

 	
 BUYER’S GENERAL INDEMNIFICATION. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  (A)

 	
 Buyer shall indemnify and defend Seller and
 Seller Parties against all Claims (except for those Claims identified on
 Schedule 5.1) whether relating to periods prior to or after the Effective
 Date, in any way arising out of, related to, or connected with any of the
 following: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  (1)

 	
 The Assets. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  (2)

 	
 Buyer’s or Seller’s ownership, operations
 or activities related to the Assets and the contracts and agreements
 pertaining thereto. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  (3)

 	
 Any of the obligations, responsibilities or
 liabilities assumed by Buyer under this Agreement, including Decommissioning
 Obligations in accordance with Section 15.2 and Environmental Obligations in
 accordance with Sections 16.4, 16.5 and 16.6. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  (B)

 	
 Buyer’s indemnity does not include the matters
 for which Seller agrees to indemnify Buyer pursuant to Section 13.5. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 13.5

 	
 SELLER’S INDEMNIFICATION WITH REPECT TO
 CERTAIN ITEMS. Seller indemnifies Buyer and Buyer Parties against all Claims
 relating to periods prior to the Effective Date that relate to: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  (A)

 	
 The payment, underpayment or nonpayment of
 royalties, overriding royalties, production payments, net profits payments or
 other payments on production or the proper accounting or payment to parties
 for their interests therein. 

 






	
  

 	
  

 
	
 Chevron U.S.A. Inc./         ASPA 

 	
  

 
	
 GUG Asset Sale and Purchase
 Agreement Dom Ltr (Rev4 May 2009)) 

 	
  

 
	
 Execution
 Version

 	
 32

 












	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  (B)

 	
 The payment, underpayment or nonpayment of
 property, ad valorem, windfall profit, severance or other similar taxes
 relating to the Assets or the Seller. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  (C)

 	
 Claims identified on Schedule 5.1. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 13.6

 	
 CONFLICT OF INTEREST. Buyer indemnifies
 Seller against Claims that arise out of or in connection with any inaccuracy
 of the representations set out in Section 5.2(E) or any violation of Section
 21.1. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 13.7

 	
 INDEMNITY OBLIGATIONS REGARDLESS OF CAUSE.
 The release and indemnity obligations set out in this Agreement apply
 regardless of the cause, notwithstanding the active, passive, contributory,
 concurrent, gross, sole or joint negligence of any Person indemnified,
 regardless of whether liability of any kind is imposed or sought to be
 imposed on any person indemnified, and whether any Claim is in tort, under
 contract, or otherwise at law. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 13.8

 	
 LIMITATION ON CLASSES OF DAMAGES. Buyer and
 Seller mutually waive and release to the fullest extent permitted by
 applicable law, all of the following Claims for damages arising out of this
 Agreement, whether such Claims are made in connection with an indemnity
 specified in this Section 0, a breach of any obligation under this Contract
 or otherwise, except for Claims arising from the obligation of a Party to
 indemnify the other Party for Third Party Claims: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  (A)

 	
 Indirect or consequential loss, including
 all of the following: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  (1)

 	
 Loss of production, including production of
 petroleum or petroleum products. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  (2)

 	
 Loss of prospective economic advantage or
 benefit. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  (3)

 	
 Loss of business opportunity. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  (B)

 	
 Punitive or exemplary damages. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  (C)

 	
 Lost profits. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 The waiver and release under this Section
 13.8 applies regardless of the active, passive, contributory, concurrent,
 gross, or sole negligence, intentional, wanton, or willful misconduct, strict
 liability without fault, regulatory liability, or other fault or
 responsibility of either Party. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 13.9

 	
 DEFENSE OF CLAIMS. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  (A)

 	
 Whenever a Party (“Indemnifying Party”)
 indemnifies an indemnified party under this Agreement (“Indemnitee”) against
 Claims, the Indemnifying Party shall defend and hold the Indemnitee harmless
 against those Claims and against all reasonable costs, expenses and fees of
 any kind (including attorneys’ fees) incurred by the Indemnitee in defending
 those Claims. 

 






	
  

 	
  

 
	
 Chevron U.S.A. Inc./         ASPA 

 	
  

 
	
 GUG Asset Sale and Purchase
 Agreement Dom Ltr (Rev4 May 2009)) 

 	
  

 
	
 Execution Version

 	
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  (B)

 	
 If any Third Party notifies an Indemnitee
 of any Claim that the Third Party intends to bring or has brought (a “Third
 Party Claim”) which gives rise to a Claim for indemnification against the
 Indemnifying Party, then the Indemnitee shall promptly, and in any event
 within thirty Business Days after receiving notice of the Third Party Claim,
 notify the Indemnifying Party of the Third Party Claim in writing, giving
 reasonably detailed information concerning the Third Party Claim. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  (C)

 	
 The Indemnifying Party shall have the right
 to, if requested in writing by the Indemnitee, conduct the defense of the
 Third Party Claim at its sole cost. An Indemnitee has the right to reasonably
 object to counsel selected by the Indemnifying Party and select alternative
 counsel at the cost of the Indemnifying Party. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  (D)

 	
 Unless and until an Indemnifying Party
 assumes the defense of the Third Party Claim as provided in Section 13.9(C)
 the Indemnitee may defend against the Third Party Claim in any manner it
 reasonably deems appropriate at the cost of the Indemnifying Party. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  (E)

 	
 The Indemnifying Party shall not consent to
 the entry of any judgment or enter into any settlement with respect to the
 Third Party Claim without the prior written consent of the Indemnitee, which
 consent shall not be unreasonably withheld or delayed. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  (F)

 	
 Notwithstanding Section 13.9(D), the
 Indemnitee shall not consent to the entry of any judgment or enter into any
 settlement with respect to the Third Party Claim without the prior written
 consent of the Indemnifying Party, which consent shall not to be unreasonably
 withheld or delayed. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  (G)

 	
 If a Third Party Claim is made, each Party
 agrees to provide to the other Party and its authorized employees and its
 professional advisers all material technical, legal and financial information
 necessary or conducive to the proper defense of the Third Party Claim. Each
 Party shall keep all such information confidential and only use the
 information in connection with the Third Party Claim. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 13.10

 	
 INDEMNIFICATION LIMITATION. If Seller is an
 Indemnifying Party under this Agreement, Seller’s indemnification obligation
 shall be limited by the following: 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  (A)

 	
 Seller shall not be liable for any Claim
 for which the amount of such Claim does not exceed $10,000.00 (excluding
 interest, costs and expenses). 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  (B)

 	
 The maximum aggregate liability of Seller’s
 indemnification obligation to Buyer and the Buyer Parties under this
 Agreement shall not exceed twenty-five percent of the Purchase Price.. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 13.11

 	
 INDEMNITY PAYMENTS. Indemnity payments
 shall be treated as an adjustment to the Purchase Price. All indemnity
 payments shall be made on an after tax basis, which for the purpose of this
 Section 13.11 means that in calculating the amount of an indemnity there
 shall be taken into account each of the following: 

 






	
  

 	
  

 
	
 Chevron U.S.A. Inc./         ASPA 

 	
  

 
	
 GUG Asset Sale and Purchase
 Agreement Dom Ltr (Rev4 May 2009)) 

 	
  

 
	
 Execution Version

 	
 34

 













	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  (A)

 	
 The amount by which any liability for Taxes
 of the Indemnitee is actually increased as a result of the indemnity payment
 being received. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  (B)

 	
 If any withholding tax is suffered on the
 payment of an indemnity payment, the Indemnifying Party shall pay such
 additional sum to the Indemnitee as will, after the deduction or withholding
 has been made, leave the Indemnitee with the same amount as it would have
 been entitled to receive in the absence of any such requirement to make a
 deduction or withholding. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  (C)

 	
 If the Indemnitee becomes entitled to a
 credit or repayment in respect of such withholding tax, it shall pay to the
 Indemnifying Party such amount as will leave the Indemnitee in no worse or
 better position than if the withholding had not been suffered. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 TAXATION 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 14.1

 	
 Tax Obligations.
 The Parties agree to allocate their respective responsibilities and
 obligations for certain types of Taxes with respect to this Agreement as
 described in this Section 0. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 14.2

 	
 Payment of Taxes. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 All real estate, use, occupation, ad valorem, personal property taxes
 and similar charges on any of the Assets shall be prorated as of the
 Effective Date.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (1)

 	
 Seller is responsible for and shall pay all such taxes for all
 periods prior to the Effective Date and is entitled to all refunds,
 recoupments, rebates and credits for such items with regard to such periods. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (2)

 	
 Buyer is responsible for and shall pay all such taxes for all periods
 on or after the Effective Date and is entitled to all refunds, recoupments,
 rebates and credits for such items with regard to such periods. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 Oil and gas production and severance taxes, windfall profits taxes,
 and any other similar taxes applicable to Petroleum Substances produced from
 or attributable to the Leases or Units. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (1)

 	
 Seller is responsible for and shall pay all such taxes prior to the
 Effective Date and is entitled to all refunds, recoupments, rebates and
 credits for such items with regard to such periods. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (2)

 	
 Buyer is responsible for and shall pay for all such taxes applicable
 to Assigned Petroleum Substances on and after the Effective Date and is
 entitled to all refunds, recoupments, rebates and credits for such items with
 regard to such periods. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 Sales, use and similar taxes arising out of the sale of the Assets. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (1)

 	
 Buyer is responsible for and shall pay all such taxes. 

 






	
  

 	
  

 
	
 Chevron U.S.A. Inc./         ASPA 

 	
  

 
	
 GUG Asset Sale and Purchase
 Agreement Dom Ltr (Rev4 May 2009)) 

 	
  

 
	
 Execution Version

 	
 35

 













	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (2)

 	
 At the Closing, Buyer shall pay Seller all state and local sales or
 use taxes applicable to that portion of the Assets which is tangible personal
 property, and Seller shall remit such amount to the appropriate taxing authority
 in accordance with applicable law. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (3)

 	
 However, if Buyer holds a direct payment permit or other tax
 registration which is valid at the time of the Closing, Buyer shall assume
 all responsibility for remitting to the appropriate taxing authority the
 state and local sales and use taxes due, and shall provide Seller with any
 exemption certificates or other documentation required under applicable law
 in lieu of paying Seller the taxes due. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (4)

 	
 Both parties shall reasonably cooperate to eliminate or reduce the
 assessment of such taxes with respect to any of the Assets. Any reasonable
 legal or other expenses incurred by Seller to reduce or avoid any of such
 taxes attributable to Buyer shall be paid or reimbursed by Buyer. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (D)

 	
 Buyer shall indemnify and defend Seller and the Seller Parties with
 respect to any Claims for Taxes which are the obligation of Buyer under this
 Agreement, including any court costs and attorney’s and other advisor fees.
 In the event that the Effective Date is not within the same calendar month as
 the Closing Date, Buyer shall reimburse Seller for any interest and penalties
 due and owing on any late reported sales or other Taxes.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 DECOMMISSIONING 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 15.1

 	
 Buyer Assumption of Decommissioning Obligations.
  As additional consideration for the sale and transfer of the Assets, Buyer
 shall assume and shall timely and fully satisfy all Decommissioning
 Obligations associated with the Assets. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 15.2

 	
 Buyer Indemnity for Decommissioning
 Obligations. Buyer shall indemnify and defend Seller
 and its Affiliates against any and all Claims, whether based on any theory of
 liability, including tort, breach of contract (express or implied), breach of
 warranty (express or implied), strict liability, regulatory liability, or
 statutory liability, regardless of the sole, joint or concurrent negligence,
 strict liability, regulatory liability, statutory liability, breach of
 contract, breach of warranty, or other fault or responsibility of Seller or
 any other person or party, whether arising from, resulting from or related to
 Buyer’s failure to timely and fully satisfy the Decommissioning Obligations
 as set forth in this Agreement or as may be imposed by any applicable
 statutes, laws, rules, regulations, or orders. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 15.3

 	
 Further Actions. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 Buyer further agrees to take whatever actions are necessary to
 protect Seller from being subjected to any such Claims, including removal,
 remediation and restoration, and shall comply with reasonable requests by
 Seller that Buyer take such actions. 

 






	
  

 	
  

 
	
 Chevron U.S.A. Inc./         ASPA 

 	
  

 
	
 GUG Asset Sale and Purchase
 Agreement Dom Ltr (Rev4 May 2009)) 

 	
  

 
	
 Execution Version

 	
 36

 













	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 Buyer shall provide to Seller such assistance as Seller may
 reasonably request in order to have Seller released from any notice issued to
 Seller in relation to the Assets pursuant to any applicable law. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 15.4

 	
 Decommissioning Guarantee. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 Buyer shall furnish to Seller at Closing a duly executed
 decommissioning guarantee (the “Decommissioning Guarantee”) guaranteeing the
 performance by Buyer of the Decommissioning Obligations. The Decommissioning
 Guarantee shall meet the following criteria: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (1)

 	
 The Decommissioning Guarantee must be in a form reasonably acceptable
 to Seller, subject to Seller’s prior approval. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (2)

 	
 The Decommissioning Guarantee may be issued by a Third Party with a
 credit rating satisfactory to Seller in its sole discretion. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (3)

 	
 The Decommissioning Guarantee may be an irrevocable standby letter of
 credit or performance bond that has no expiration or termination date. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (4)

 	
 The Decommissioning Guarantee shall be in the amount of
 US$200,000.00. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 Buyer’s assumption of the Decommissioning Obligations is not limited
 by the amount of the Decommissioning Guarantee. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 Buyer shall maintain the Decommissioning Guarantee in full force and
 effect at all times and at Buyer’s sole cost, until Seller is satisfied that
 all Decommissioning Obligations, whether of Buyer or of its successors and
 assigns, have been fully performed. Seller in its sole discretion may reduce
 the amount of the Decommissioning Guarantee when Buyer has sufficiently
 satisfied all or part of the Decommissioning Obligations to warrant such a
 reduction, or as otherwise provided for in the Decommissioning Guarantee. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 Buyer shall not alter or replace any agreements relating to the
 provision of security or finance for decommissioning liabilities with respect
 to the Assets already existing at the Effective Date without the consent of
 the Seller, which consent shall not be unreasonably withheld or delayed. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 Buyer shall, whenever requested to do so by Seller, exercise and
 enforce its rights under all abandonment security arrangements with respect
 to the Assets to ensure that the funds or financial instruments comprised
 therein are called or applied in exclusively meeting the costs of
 decommissioning the field facilities as agreed, thereby providing assurance
 to Seller that such funds and instruments will be so applied. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 ENVIRONMENTAL MATTERS 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 16.1

 	
 Environmental Review. 

 






	
  

 	
  

 
	
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 (A)

 	
 During the Interim Period, Buyer may request access to the Assets (if
 operated by Seller) and the non-privileged environmental data in Seller’s
 files pertaining to the Assets. Buyer may request Seller’s assistance in
 gaining access to Assets operated by others, but Buyer shall be responsible
 for contacting the operators of such Assets to arrange for review and
 inspection, at Buyer’s sole cost, risk and expense. In respect of these
 rights, Buyer acknowledges each of the following: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (1)

 	
 Any access to Seller-operated Assets or Seller’s data is given as an
 accommodation only, at Buyer’s sole cost, risk and expense, that Seller makes
 no representations whatsoever as to the accuracy, completeness, or
 reliability of any such environmental information so, or otherwise, disclosed
 to or obtained by Buyer. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (2)

 	
 Buyer relies and depends on and uses any and all such environmental
 information, review or inspection exclusively and entirely at its own risk
 and without any recourse to Seller whatsoever. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 Seller shall cooperate with Buyer to facilitate the performance by
 Buyer of any environmental testing that Buyer wishes to conduct at Buyer’s
 sole cost and risk during the Interim Period, which testing shall be
 conducted in a reasonable manner so as not interfere with Seller’s or
 operator’s operation of the Assets. Buyer acknowledges each of the following:
 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (1)

 	
 Results of any such tests shall be kept strictly confidential, and
 shall not be disclosed to any other party, except to the extent disclosure is
 required under applicable law. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (2)

 	
 At Seller’s sole option, Buyer shall either destroy the results of
 such tests for any of the Assets that Buyer does not purchase or deliver the
 results to Seller. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 Seller and Buyer shall cooperate to ensure that such testing is
 performed on an expedited and confidential basis before Closing. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 16.2

 	
 Alleged Environmental Defects. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 Buyer shall notify Seller in writing by 15 July 2010 (the “Defect
 Notice Date”) if Buyer believes that the environment associated with the
 Assets contains an Alleged Environmental Defect, as defined below. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 An “Alleged Environmental Defect” is a violation of Environmental
 Laws to the extent that, as to each individual Alleged Environmental Defect,
 at least one of the following conditions applies: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (1)

 	
 Prosecution, if instituted, would be reasonably likely to result in a
 penalty, fine or damage payment of US$25,000.00 or more. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (2)

 	
 Performance of corrective work in respect of such Alleged
 Environmental Defect required by Environmental Laws would be 

 






	
  

 	
  

 
	
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 reasonably likely to result in expenditures of US$25,000.00 or more,
 net to Seller’s interest in the affected Asset. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 Such notification (the “Notice of Alleged Environmental Defect”) must
 include all of the following information: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (1)

 	
 A detailed description of such claims. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (2)

 	
 A copy of any environmental assessments, reports, data and
 information pertaining to such claims. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (3)

 	
 Buyer’s calculation of the amount by which such claims have
 diminished the value of the Assets, which amount shall be determined by Buyer
 in good faith and in a commercially reasonable manner. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (D)

 	
 The aggregate value of all Alleged Environmental Defects must exceed
 US$50,000.00 (“Alleged Environmental Defect Minimum Threshold”) before there
 shall be any Purchase Price Adjustment or further action required of Seller
 under this Section with respect to an Alleged Environmental Defect. Buyer
 shall in any event bear the cost of the first US$50,000.00 of Alleged
 Environmental Defects. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 16.3

 	
 Remedies for Alleged Environmental Defect. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 With respect to each Alleged Environmental Defect asserted by Buyer
 in a Notice of Alleged Environmental Defect, if Seller requests, Seller and
 Buyer shall discuss and determine whether a particular matter constitutes an
 Alleged Environmental Defect. As to each claim of an Alleged Environmental
 Defect made by Buyer on or prior to the Defect Notice Date (and upon
 satisfaction of the Alleged Environmental Defect Minimum Threshold set forth
 in Section 16.2 above), Buyer and Seller shall endeavor to agree upon one of
 the following options: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (1)

 	
 On or before the Closing, Seller and Buyer shall agree in writing
 whether Seller shall correct or make arrangements for the correction of such
 Alleged Environmental Defect. The Closing shall take place and the Purchase
 Price shall not be reduced in these circumstances. Seller shall indemnify and
 defend the Buyer and the Buyer Parties against all Claims attributable to
 such Alleged Environmental Defect. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (2)

 	
 Buyer shall correct or make arrangements for the correction of such
 Alleged Environmental Defect after the Closing occurs. The Closing shall take
 place, provided that the Purchase Price shall be reduced by an amount
 mutually agreed by the Parties. Buyer shall indemnify and defend the Seller
 and the Seller Parties against all Claims attributable to such Alleged
 Environmental Defect. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (3)

 	
 Buyer shall accept the Assets subject to such Alleged Environmental
 Defect and the Closing shall take place without any adjustment of the
 Purchase Price. Seller shall indemnify and defend Buyer and the Buyer 

 






	
  

 	
  

 
	
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 Parties against all Claims incurred by Buyer with respect to such
 Alleged Environmental Defect, up to, but in no event to exceed, the sum of
 US$50,000 (such amount being cumulative for any and all claims of Alleged
 Environmental Defect made by Buyer). Seller’s obligation to pay up to the
 aforementioned sum applies only after such Claims exceed US$50,000, which
 amount shall be borne by Buyer. In the event of a claim of an Alleged
 Environmental Defect and a demand for indemnification by Buyer hereunder,
 Seller reserves the right to jointly negotiate with Buyer and the agency or
 party, if any, making such claim the right of access to the affected site,
 the use of temporary storage and resources at such site, to the full extent
 held by Buyer, and the right to perform assessment, removal and remedial
 operations for such Alleged Environmental Defect, at its cost and risk, and
 any sums so expended by Seller shall be a credit against Seller’s indemnity
 obligation, if any, under this Section 16.3(A)(3). 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 If Buyer and Seller are not able to agree on the selection of one of
 the remedies set forth in Section 16.3(A) above, then the remedies set forth
 in Section 16.3(A)(3) shall apply. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 Each Party shall cooperate with the other Party’s reasonable corrective
 work, and any operations unreasonably interfering with the corrective work
 shall cease until correction is completed. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 16.4

 	
 Indemnity Provisions. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 The indemnities for Alleged Environmental Defects and for Claims
 related thereto, as provided for in this Section 16.4 by Buyer and Seller, as
 the case may be, shall include the obligation to indemnify and defend Buyer
 or Seller, as the case may be, and the Buyer Parties and Seller Parties,
 respectively, against any and all Claims (including expenses associated with
 investigation of claims, testing and assessment), whether based on any theory
 of liability, including negligence, tort, breach of contract (express or
 implied), breach of warranty (express or implied), strict liability, regulatory
 liability, or statutory liability, regardless of the sole, joint or
 concurrent negligence, strict liability, regulatory liability, statutory
 liability, breach of contract, breach of warranty, or other fault or
 responsibility of Buyer or Seller or any other person or party, arising under
 any obligations under this Agreement or imposed by any applicable statutes,
 laws, rules, regulations, or orders. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 The indemnities shall further include an agreement by the party
 providing the indemnification to take whatever actions are necessary to
 protect the party being indemnified from being subjected to any such Claims
 and to comply with reasonable requests by the party being indemnified to take
 such actions. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 16.5

 	
 Post-Closing Environmental Indemnification
 by Buyer. As of the Closing, but subject to the
 provisions of Sections 16.3 and excluding any Claims identified in Schedule
 5.1, Buyer specifically assumes and shall be responsible for all
 Environmental Obligations of Seller and the Seller Parties with respect to
 the Assets and shall indemnify and defend Seller and the Seller Parties from
 and against any and all Claims under any 

 






	
  

 	
  

 
	
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 Environmental Law with respect to the Assets, including any
 Environmental Obligations existing prior to or as of the Effective Date or
 relating to periods arising before the Effective Date. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 Furthermore, all future assignees and successors of Buyer shall
 indemnify and defend Seller and the Seller Parties from and against any and
 all Claims under any Environmental Law with respect to the Assets. Any
 conveyance, transfer or assignment of all or part of the Assets by Buyer, its
 successors or assigns, in which the grantee, transferee or assignee fails to
 expressly assume this obligation, shall be deemed null and void. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 Buyer further agrees to cause the provisions of this clause to be
 included in all subsequent sales or transfers of any interest in the Assets,
 and to cause all purchasers or transferees of the Assets to expressly
 acknowledge and assume all such obligations. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 16.6

 	
 Buyer Indemnification Regarding NORM and
 other Hazardous Substances. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 It is expressly recognized by Buyer that the lands or water bottoms,
 along with surface facilities and production equipment located on the lands
 or water bottoms, having been used in connection with oil, gas, and water
 production, treatment, storage, and disposal activities, may contain NORM,
 asbestos and other hazardous substances as a result of these operations. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 After the Effective Date, the generation, formation, or presence of
 NORM, asbestos or other hazardous substances in or on the Assets shall be the
 sole responsibility of Buyer. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 Buyer and all future assignees and successors of Buyer shall
 indemnify and defend Seller and the Seller Parties from any and all Claims
 (including expenses associated with investigation of claims, testing and
 assessment), whether based on any theory of negligence, tort, breach of
 contract, breach of warranty, strict liability, regulatory liability or
 statutory liability, regardless of the sole, joint or concurrent negligence,
 breach of contract, breach of warranty, strict liability, regulatory
 liability, statutory liability, or other fault or responsibility of Seller or
 any other person or party, in any way arising from, resulting from or related
 to the presence of NORM, asbestos or other hazardous substances, whether such
 NORM, asbestos or other hazardous substance was in place before or after the
 Effective Date. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (D)

 	
 Any conveyance, transfer or assignment of all or part of the Assets
 by Buyer, its successors or assigns, in which the grantee, transferee or
 assignee fails to expressly assume this obligation, shall be deemed null and
 void. Accordingly, lands or water bottoms, the Wells, and the Facilities
 transferred pursuant to this Agreement are transferred with the restriction
 that they shall be used only in connection with oil and gas producing
 activities associated with the Leases, and shall not be subsequently
 transferred by Buyer or Buyer’s assignee for unrestricted use unless the
 concentrations of NORM, asbestos or other hazardous substances associated
 therewith are independently determined by a competent laboratory and are
 found below the levels specified as allowable for unrestricted 

 






	
  

 	
  

 
	
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 transfer as set forth in any and all applicable laws, orders, rules
 or regulations of any Government Entity or court having jurisdiction. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (E)

 	
 Buyer agrees to comply with all provisions of such laws, orders,
 rules or regulations applicable to said lands or water bottoms, the Wells,
 and the Facilities. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (F)

 	
 Buyer further agrees to cause the provisions of this clause to be
 included in all subsequent sales or transfers of any interest in the Assets,
 and to cause all purchasers or transferees of the Assets to expressly
 acknowledge and assume all such obligations. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 16.7

 	
 Waiver. Buyer
 waives for all purposes all objections associated with the environmental and
 physical and other condition of the Assets (including environmental
 contamination and Alleged Environmental Defect), unless raised by proper
 notice within the applicable time period set forth in Section 16.2 and made
 Seller’s responsibility under Section 16.3. Buyer, acting on behalf of itself
 and the Buyer Parties and their successors and assigns, irrevocably waives
 any and all claims, except Claims covered under Seller’s indemnities pursuant
 to Section 16.3, that they may now or hereafter have against Seller and the
 Seller Parties associated with the same. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 TITLE MATTERS 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 17.1

 	
 Asset Title Review. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 During the Interim Period, Buyer shall have reasonable access,
 without express or implied warranty of any kind regarding the accuracy of
 such information, to copies of non-privileged information in Seller’s
 possession regarding Seller’s title to the Assets, which information Buyer
 may copy at its sole cost and expense, unless prohibited by agreement between
 Seller and a Third Party. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 Except as otherwise provided in this Agreement, Seller shall not be
 required to perform any additional title work. Any existing abstracts and
 title opinions have not been made, and will not be made, current by Seller. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 Buyer specifically agrees that any conclusions made from any
 examination done or caused to be done from Seller-furnished information
 regarding title have resulted and shall result from its own independent
 review, skill, knowledge and judgment only. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 17.2

 	
 Alleged Title Defects. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 An “Alleged Title Defect” is any defect or deficiency in title,
 except for Permitted Encumbrances, that results in any of the following: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (1)

 	
 Creates a lien, claim, encumbrance or other obligation affecting the
 interests of Seller in the Assets. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (2)

 	
 Diminishes Seller’s net revenue interest (defined as Seller’s share
 of the proceeds from the sale of Petroleum Substances produced from and 

 






	
  

 	
  

 
	
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 allocable to the Assets, net of all royalties, overriding royalties,
 and other burdens on production) from that set forth on Exhibit A – Description
 of Assets. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (3)

 	
 Increases Seller’s working interest (defined as Seller’s share of the
 costs of operation, development or production borne by the owner of such
 interest) from that set forth in Exhibit A – Description of Assets without a
 corresponding increase in Seller’s net revenue interest, or which creates an
 obligation to pay costs or expenses in an amount greater than such interest. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 If, prior to Closing, Buyer becomes aware of any matter Buyer
 considers to be an Alleged Title Defect as defined in Section 17.2(A), Buyer
 shall notify Seller in writing as soon as reasonably practicable after Buyer
 becomes aware of such Alleged Title Defect, but, in any event, by 15 July
 2010 (the “Defect Notice Date”).

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 Such notice (“Notice of Alleged Title Defect”) shall include all of
 the following information:

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (1)

 	
 A specific description of the matter Buyer asserts as an Alleged
 Title Defect. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (2)

 	
 A specific description of the Asset or portion of the Assets that is
 affected by the Alleged Title Defect. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (3)

 	
 Buyer’s calculation of the amount by which each Alleged Title Defect
 has diminished the value of the Assets, such amount to be determined by Buyer
 in good faith and in a commercially reasonable manner. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (4)

 	
 All necessary and desirable supporting documentation, including any
 abstracts and title opinions or updates thereto that describe or explain the
 Alleged Title Defect. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (D)

 	
 No adjustment to the Purchase Price for Alleged Title Defects shall
 be made unless and until, and only to the extent that both of the following
 occur:

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (1)

 	
 With respect to each Lease or parcel of land, the individual value of
 each Alleged Title Defect exceeds US$50,000.00. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (2)

 	
 The value of all Alleged Title Defects exceeds US$50,000.00. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (E)

 	
 Buyer shall in any event bear the cost of the first US$50,000.00 of
 all Alleged Title Defects.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 17.3 

 	
 Remedies for Title Failures.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 With respect to each Alleged Title Defect asserted by Buyer in a
 Notice of Alleged Title Defect, if Seller requests, Seller and Buyer shall
 discuss and determine whether a particular matter constitutes an Alleged
 Title Defect.

 






	
  

 	
  

 
	
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 (B)

 	
 Prior to Closing, Seller shall have the right but not the obligation
 to cure any Alleged Title Defect asserted in such Notice at its own expense
 and by any reasonable means, including Seller indemnification, in which case
 the Closing shall take place without adjustment of the Purchase Price. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 If Seller fails to cure any Alleged Title Defect on or prior to
 Closing, it shall be deemed to be a title failure (“Title Failure”) as to the
 relevant Asset. Buyer and Seller shall negotiate in good faith to reach
 agreement regarding the value of any Title Failure, and, unless waived by
 Buyer, shall mutually agree to one of the following options with respect to
 each Title Failure, subject to the provisions of Section 0: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (1)

 	
 If the Title Failure results from a difference in the net revenue
 interest for a Lease from that shown on Exhibit A – Description of Assets, the
 Closing shall take place, provided that the Purchase Price shall be reduced
 by an amount (the “Defect Amount”) determined by multiplying the amount of
 the Purchase Price allocated to the affected Lease by a fraction, the
 numerator of which shall be the difference between the actual net revenue
 interest being conveyed and the net revenue interest shown on Exhibit A – Description of Assets and the denominator of which shall be the net revenue
 interest shown on Exhibit A – Description of Assets. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (2)

 	
 If the Title Failure results from a difference in the working
 interest for a Lease from that shown on Exhibit A – Description of Assets, the
 Closing shall take place, provided that the Purchase Price shall be reduced
 by a Defect Amount determined by multiplying the amount of the Purchase Price
 allocated to the affected Lease by a fraction, the numerator of which shall
 be the difference between the actual working interest being conveyed and the
 working interest shown on Exhibit A – Description of Assets and the denominator
 of which shall be the working interest shown on Exhibit A – Description of
 Assets. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (3)

 	
 If the Title Failure is one other than described in Sections
 17.3(C)(1) or 17.3(C)(2), the Defect Amount shall be an amount determined in
 good faith by the mutual agreement of Buyer and Seller, taking into account
 the portion of the Purchase Price to be allocated by agreement of Seller and
 Buyer to the portion of the Assets affected by the Title Failure, the legal
 effect of the Title Failure, and the potential economic effect of the Title
 Failure over the life of the Assets. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 17.4

 	
 Waiver. Buyer
 waives for all purposes all objections associated with the title to the
 Assets (including Alleged Title Defects), unless raised by proper notice
 within the applicable time period set forth in Section 17.2 and not cured or
 settled under Section 17.3; and Buyer, acting on behalf of the Buyer Parties
 and their successors and assigns, irrevocably waives any and all claims they
 may have against Seller and the Seller Parties associated with the same.

 






	
  

 	
  

 
	
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 TERMINATION FOR AGGREGATE ALLEGED DEFECTS 

 
	
  

 	
  

 	
  

 
	
  

 	
 18.1

 	
 “Aggregate Alleged Defects” means the total amount of Alleged
 Environmental Defects and Title Failures (if applicable). 

 
	
  

 	
  

 	
  

 
	
  

 	
 18.2

 	
 If the total amount of Aggregate Alleged Defects is equal to or
 greater than US$50,000.00, then either Buyer or Seller may terminate this
 Agreement by giving notice to the other Party prior to Closing. 

 
	
  

 	
  

 
	
  

 	
 RIGHT OF FIRST REFUSAL ON PRODUCTION 

 
	
  

 	
  

 	
  

 
	
  

 	
 19.1

 	
 Right of First Refusal.
 Seller reserves the option and right (Seller’s “Right of First Refusal”) to
 purchase or designate the purchaser of all or any part of the Petroleum
 Substances produced from or allocated to the Assets, except Petroleum
 Substances used for operating purposes for the Assets. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 Seller may exercise its Right of First Refusal at Closing by giving
 notice to Buyer prior to Closing. After the Closing, Seller may exercise its
 Right of First Refusal at any time during the term of the Leases by giving
 notice to Buyer in accordance with Section 19.3. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 For the Right of First Refusal for gas, Seller or its designee shall
 have the right to purchase the full stream of gas at or near the wellhead, if
 the gas is not processed, or the residue gas at the tailgate of the
 applicable processing plant, if the gas is to be processed. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 For the Right of First Refusal for oil, Seller also reserves the
 right to designate the transporter and mode of transportation. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (D)

 	
 If Seller does not exercise its Right of First Refusal or elects to
 purchase part but not all of the Petroleum Substances (e.g. elects to
 purchase gas but not oil) the election will not constitute a waiver of
 Seller’s right to purchase Petroleum Substances at a later time and from time
 to time. Except to the extent of Seller’s election to purchase Petroleum
 Substances under this article, Seller will have no obligation to purchase or
 to furnish a market for all or any part of the Petroleum Substances. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (E)

 	
 Seller may assign, at any time and from time to time, its
 preferential right to purchase to any subsidiary or affiliate or any
 partnership of which it is a partner. Upon assignment, the assignee will have
 the same rights as Seller under this article. 

 
	
  

 	
  

 	
  

 
	
  

 	
 19.2

 	
 Effect of Pre-Existing Contract Obligations.
 Seller’s Right of First Refusal shall not apply to any oil or gas production
 that is covered by a Supply Contract which Buyer assumed from Seller or which
 Buyer was required by Seller to execute contemporaneously with this
 Agreement. Upon expiration of the original term or upon early termination of
 any such Supply Contract, Seller’s Right of First Refusal shall become fully
 applicable and Buyer shall notify Seller of such event in advance.

 






	
  

 	
  

 
	
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 19.3

 	
 Notification. If
 Seller exercises its Right of First Refusal prior to Closing, Seller and
 Buyer shall enter into the necessary purchase agreements. If Seller does not
 exercise its Right of First Refusal prior to or at Closing, Buyer shall
 notify Seller as soon as possible following a determination by Buyer that
 Buyer will have any Petroleum Substances produced from the Assets available
 for sale. Such notice shall include Buyer’s best estimate as to the quanity
 and quality of Petroleum Substances that will be available and the location
 at which Buyer proposes to sell such Petroleum Substances. Notices pertaining
 to Seller’s Right of First Refusal shall be given both by mail and
 electronically and addressed as follows, unless Seller has provided Buyer
 written notice of a change of address for production notices: 

 






	
  

 	
  

 
	
  

 	
 For Oil Production: 

 
	
  

 	
  

 
	
  

 	
 Chevron
 Products Company, 

 
	
  

 	
 a division
 of Chevron U.S.A. Inc. 

 
	
  

 	
 Attention:
 Equity/Lease Crude Team 

 
	
  

 	
 Leader

 
	
  

 	
 1500
 Louisiana St. 

 
	
  

 	
 Houston, TX
 77002

 
	
  

 	
 Facsimile:
 (832) 854-4866 

 
	
  

 	
 cc:
 drle@chevron.com

 






	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 19.4

 	
 Notification Procedure and Price Determination for Right of First
 Refusal for Gas. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 Buyer will include in its notice of available gas production either a
 request for an offer by Seller or Seller’s designee to purchase the gas
 production, or a bona fide offer from a Third Party that Buyer is willing to
 accept, and offer Seller or Seller’s designee an opportunity to match such
 bona fide Third Party offer and purchase the gas production on substantially
 equivalent terms as defined below. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 If Buyer requests a purchase offer from Seller, Buyer may in its
 notice establish a reasonable deadline for Seller or its designee to make a
 purchase offer, not less than twenty-one days from delivery of Buyer’s
 notice. If Seller or its designee elects not to submit an offer or fails to
 do so within this deadline, or if an offer submitted by Seller or Seller’s
 designee is unacceptable to Buyer, Buyer may seek Third Party offers. If
 Buyer seeks Third Party offers, the right of first refusal procedure
 described in Section 19.4(C) shall apply. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 If Buyer receives and is willing to accept a good faith Third Party
 offer to purchase the gas production, either before or after requesting an
 offer from Seller, then the following applies: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (1)

 	
 Buyer shall submit a copy of the bona fide Third Party offer to
 Seller. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (2)

 	
 Seller or Seller’s designee may elect to purchase gas production on
 substantially equivalent terms as the Third Party offer, by giving written
 notice to Buyer within twenty-one days after Seller’s receipt of Buyer’s
 submission of such offer. “Substantially equivalent terms” in this context
 means terms that are equal to price and length of term. Upon Seller electing
 to purchase the gas production under terms substantially 

 






	
  

 	
  

 
	
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 equivalent to the bona fide Third Party offer, Buyer shall accept the
 terms of Seller’s offer for the length of the term and cannot submit
 additional Third Party offers during that term.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (3)

 	
 If Seller or Seller’s designee elects not to match the Third Party
 offer or fails to respond within the allotted time, Buyer may sell the gas
 production under the Third Party offer. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (4)

 	
 Upon expiration of the original term of the Third Party offer,
 Seller’s Right of First Refusal is reinstated and the procedure set forth in
 this Section 19.4(C) shall be followed prior to any subsequent sale of gas
 production. Evergreen contracts shall supersede Seller’s Right of First
 Refusal only during the initial term of the Third Party offer.

 
	
  

 	
  

 	
  

 
	
  

 	
 19.5

 	
 Notification Procedure and Price
 Determination for Right of First Refusal for Oil. 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 Seller may elect to purchase or designate the purchaser of the oil
 production at agreed upon terms, provided the price is market value in the
 field. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 Buyer shall notify Seller if Buyer receives a good faith offer from a
responsible Third Party to purchase oil on an outright basis at the Lease.
Seller may waive its Right of First Refusal or elect to purchase the oil on
terms substantially equivalent to those offered to Buyer. “Substantially
equivalent terms” in this context means terms that are equal to price and
length of term.  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 Upon Seller electing to purchase the oil under terms substantially equivalent
 to the good faith Third Party offer, Buyer shall accept the terms of the
 offer for the length of the term and cannot submit additional Third Party
 offers during that term. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (D)

 	
 If Seller fails to exercise its Right of First Refusal, Buyer shall
 notify Seller if the then current oil sales arrangement is changed or
 terminated. In these circumstances, Seller has the Right of First Refusal on
 any subsequent Third Party offers. Failure of Seller to reply to such notice
 shall be construed to be a waiver. Following such waiver by Seller, if Buyer
 accepts such Third Party offer, the preferential right provided in this
 Section 0 will not be enforceable for the term of the Third Party offer (with
 the exception of evergreen contracts which shall supersede Seller’s Right of
 First Refusal only during the initial term of the Third Party offer).
 Seller’s Right of First Refusal shall be reinstated and the procedure set
 forth herein shall apply upon expiration of the term of the Third Party
 purchase. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 ANNOUNCEMENTS AND CONFIDENTIALITY 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 20.1

 	
 Confidentiality. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 The terms of this Agreement shall be held confidential by the Parties
 and shall not be divulged in any way to any Third Party by any Party without
 the prior written approval of the other Parties, except as permitted by
 Section 20.2 or by 

 






	
  

 	
  

 
	
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 Seller in connection with serving preferential right to purchase
 notices pursuant to Section 7.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 Buyer shall keep all Confidential Information furnished or disclosed
 by Seller or acquired by Buyer in connection with the inspection, testing,
 inventory or sale of the Assets strictly confidential prior to Closing.
 Confidential Information subject to any JOA shall remain subject to those
 terms, after Closing. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 Buyer shall not disclose, trade or otherwise divulge the Confidential
 Information prior to Closing to any Person, except as permitted by Section
 20.2, provided that prior to being given access to such information, such
 recipients have agreed to maintain the confidentiality of such Confidential
 Information. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (D)

 	
 Prior to Closing, nothing in this Agreement shall terminate, modify
 or supersede the terms and provisions of the confidentiality agreement
 previously entered into between the Parties. Upon Closing, such
 confidentiality agreement shall terminate as to the Assets purchased by
 Buyer, except for those terms or provisions expressly surviving termination.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (E)

 	
 If the Closing does not occur for any reason, the confidentiality
 agreement previously entered into between the Parties shall remain in full
 force and effect. Additionally, both of the following shall apply: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (1)

 	
 Buyer agrees that all Confidential Information shall remain
 confidential, except to the extent such information is available in the
 public domain other than through a breach of Buyer’s confidentiality
 obligations, with Seller a Third Party beneficiary of any privilege held by
 Buyer. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (2)

 	
 Buyer and any Person to whom Buyer has disclosed Confidential
 Information shall promptly return to Seller all Confidential Information and
 related materials and information, including any notes, summaries,
 compilations, analyses or other material derived from the inspection or
 evaluation of such material and information, without retaining copies, and
 destroy any information relating to the Assets and independently acquired by
 Buyer. 

 
	
  

 	
  

 	
  

 
	
  

 	
 20.2

 	
 Permitted Disclosures.
 Each Party may disclose the terms of this Agreement, and Buyer may disclose
 the Confidential Information, to any of the following parties: 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 Any Affiliate of such Party. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 Any legal, accounting, tax or other professional advisers of such
 Party. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 Any bank or financial institution or party providing equity funding
 from whom such Party is seeking or obtaining finance in connection with this
 Agreement. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (D)

 	
 To the applicable authority to the extent required by any applicable
 statute, the Asset Documents or the requirements of any recognized stock
 exchange in compliance with its rules and regulations. 

 






	
  

 	
  

 
	
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 (E)

 	
 To any Government Entity lawfully requesting such information. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (F)

 	
 To any court of competent jurisdiction acting in pursuance of its
 powers. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (G)

 	
 To any party to any Asset Documents, if required to do so by such
 Asset Document. 

 
	
  

 	
  

 
	
  

 	
  

 	
 Prior to making any such disclosures to Persons under Sections
 20.2(B), 20.2(C) or 20.2(G), the receiving Person must first sign an
 undertaking of confidentiality that is substantially the same as the
 confidentiality obligations in this Agreement.

 
	
  

 	
  

 	
  

 
	
  

 	
 20.3

 	
 Announcements. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 Except for mandatory notices or announcements required under
 applicable law, by the stock exchange upon which a Party’s or its Affiliate’s
 shares are quoted or any similar regulatory body of any other jurisdiction,
 any announcements regarding the consummation of the transaction contemplated
 by this Agreement shall be made pursuant to a text prepared jointly by Seller
 and Buyer, to which effect the Parties shall cooperate in good faith. Any press
 release in connection with the consummation of the transaction contemplated
 by this Agreement shall be made only after all mandatory notices have been
 properly given, and shall be released with the prior consent of the other
 Party. Except as required by any mandatory notice or announcement, the
 release of reserve estimates in any announcement is expressly prohibited. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 In the event a Party is required to make any mandatory notice or
 announcement, if practicable in the circumstances, it shall use its
 reasonable best efforts to allow the other Party reasonable time to comment
 on such notice or announcement in advance of its issuance. 

 
	
  

 	
  

 	
  

 
	
  

 	
 20.4

 	
 Continuing Confidentiality Obligations.
 Notwithstanding the termination of this Agreement, the provisions of this
 Section 0 will continue to apply. 

 
	
  

 	
  

 	
  

 
	
  

 	
 ADDITIONAL OBLIGATIONS 

 
	
  

 	
  

 	
  

 
	
  

 	
 21.1

 	
 Conflict of Interest.
 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 Prohibition. No
 director, employee or agent of Buyer or any Buyer Party may engage in any of
 the following activities without Seller’s prior written consent: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (1)

 	
 Give to or receive from any director, employee or agent of Seller or
 its Affiliates in connection with this Agreement, either of the following: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 (a)

 	
 Any gift, entertainment or other benefit of significant cost or
 value.

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 (b)

 	
 Any commission, fee or rebate.

 






	
  

 	
  

 
	
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 (2)

 	
 Enter into any business arrangement with any director, employee or
 agent of Seller or any Affiliate of Seller (other than as a representative of
 Seller or any Affiliate of Seller). 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 Reporting Violations and Reimbursement.
 Buyer shall immediately notify the Seller of any violation of Section 21.1(A)
 or of the occurrence of any event prior to the Effective Date which, if it
 had occurred after the Effective Date, would constitute a violation of
 Section 21.1(A). In addition to any other remedies to which Seller may be
 legally entitled, Buyer shall reimburse or issue a credit to Seller equal to
 the value of the benefit received by or given to the director, employee or
 agent of Seller or any Affiliate of Seller as a consequence of that violation
 or event. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 Termination. Prior
 to Closing, Seller may, at its sole option, terminate this Agreement with
 immediate effect for any violation of Sections 21.1(A) or 21.1(B) or breach
 of the warranty set out in Section 5.2(E). 

 
	
  

 	
  

 	
  

 
	
  

 	
 21.2

 	
 Audit Rights.
 Seller may audit relevant records of Buyer and any Buyer Party for the
 purpose of determining whether they have complied with Sections 21.1. 

 
	
  

 	
  

 	
  

 
	
  

 	
 21.3

 	
 Data Privacy.
 Buyer will comply with all reasonable requests of Seller with respect to
 protecting personal data of Seller’s employees, customers, and suppliers it
 receives in connection with this Agreement, including the following Seller’s
 instructions in connection with processing such personal data; implementing
 adequate security measures to protect such personal data; not disclosing such
 personal data to any third party without Seller’s written permission; and
 complying with all applicable data privacy laws. 

 
	
  

 	
  

 	
  

 
	
  

 	
 NOTICES 

 
	
  

 	
  

 	
  

 
	
  

 	
 22.1

 	
 Notices. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 All notices required or permitted under this Agreement must be in
 writing and delivered by mail (postage prepaid) or by hand delivery to the
 address of the receiving Party set out in the signature page to this
 Agreement, unless otherwise specified in this Agreement. Notice may also be
 delivered by facsimile sent to the facsimile number of the receiving Party
 set out in the signature page to this Agreement provided that the original
 notice is promptly sent to the recipient by mail (postage prepaid) or by hand
 delivery. Notices sent by email are ineffective, except as otherwise
 specified in this Agreement. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 Notices are effective when received by the recipient during the
 recipient’s regular business hours. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 Notices which do not comply with the requirements of this Agreement
 are ineffective, and do not impart actual or any other kind of notice. 

 
	
  

 	
  

 	
  

 
	
  

 	
 GOVERNING LAW AND RESOLUTION OF DISPUTES 

 
	
  

 	
  

 
	
  

 	
 23.1

 	
 Governing Law.
 This Agreement is governed by and interpreted under the laws of the State of
 California, without regard to its choice of law rules. The United Nations

 






	
  

 	
  

 
	
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 Convention on Contracts for the International Sale of Goods, 1980
 (known as “the Vienna Sales Convention”) does not apply to this Agreement.

 
	
  

 	
  

 	
  

 
	
  

 	
 23.2

 	
 Resolution of Disputes.
 The Parties shall exclusively and finally resolve any Dispute between them
 using direct negotiations, mediation and arbitration as set out in this Section 0, except as permitted in
 Section 10.4(C). 

 
	
  

 	
  

 	
  

 
	
  

 	
 23.3

 	
 Direct Negotiations.
 If a Dispute arises, a Party shall initiate the resolution process by giving
 notice setting out in writing and in detail the issues in Dispute and the
 value of the Claim to the other Party. A meeting between the Parties,
 attended by individuals with decision-making authority, must take place
 within thirty days from the date the notice was sent in an attempt to resolve
 the Dispute through direct negotiations. 

 
	
  

 	
  

 	
  

 
	
  

 	
 23.4

 	
 Mediation. If the
 Dispute cannot be settled by direct negotiations within thirty days of
 initiation of the resolution process, either Party may initiate mediation by
 giving notice to the other Party. The place of mediation is Houston, Texas. 

 
	
  

 	
  

 	
  

 
	
  

 	
 23.5

 	
 Arbitration. If
 the Dispute is not resolved by mediation within thirty days from the date of
 the notice requiring mediation, or if the Dispute is unresolved within sixty
 days from the date requiring direct negotiations, then the Dispute shall be
 finally settled by binding arbitration and either Party may initiate such
 arbitration by giving notice to the other Party. The arbitration shall be
 conducted in accordance with the Institute for Conflict Prevention and
 Resolution Rules for Non-Administered Arbitration (“CPR”) Rules, except to
 the extent conflicts between the CPR Rules at present in force and the
 provisions of this Agreement, in which event the provisions of this Agreement
 prevail. The CPR is the appointing authority. The Place of arbitration is
 Houston, Texas. 

 
	
  

 	
  

 	
  

 
	
  

 	
 23.6

 	
 The following provisions shall apply to any arbitration proceedings
 commenced pursuant to Section 23.5: 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 The number of arbitrators shall be one if the monetary value of the
 Dispute is US$5,000,000 (or its currency equivalent) or less. The number of
 arbitrators shall be three if the monetary value is greater than US$5,000,000
 or its currency equivalent. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 The arbitrator or arbitrators must remain neutral, impartial and
 independent regarding the Dispute and the Parties. If the number of
 arbitrators to be appointed is one, that arbitrator or the presiding
 arbitrator if the arbitrators are three, must be a lawyer experienced in the
 resolution of disputes with experience relating to the issues in dispute. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 The Parties shall submit true copies of all documents considered
 relevant with their respective statement of Claim or defense and any
 counterclaim or reply. Neither Party may compel the other to produce
 additional documents. However, the arbitrator or arbitrators may decide to
 require the submission of additional documents limited to specific, narrow
 and well-defined classes of documents that the arbitrator considers or
 arbitrators consider necessary for the arbitrator’s or arbitrators’
 understanding and resolution of the Dispute. The maximum number of witnesses
 each Party may call to give evidence on its behalf, including by oral 

 






	
  

 	
  

 
	
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 testimony, declaration or witness statement, is three witnesses of
 fact and one expert witness.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (D)

 	
 The Parties waive any Claim for, and the arbitrator has or
 arbitrators have no power to award, the damages waived and released under
 Section 13.8. The arbitrator has or arbitrators have no authority to appoint
 or retain expert witnesses for any purpose unless agreed to by the Parties.
 The arbitrator has or arbitrators have the power to rule on objections
 concerning jurisdiction, including the existence or validity of this
 arbitration clause and existence or the validity of this Agreement. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (E)

 	
 All arbitration fees and costs (with the exception of translation
 costs as specified above) shall be borne equally regardless of which Party
 prevails. Each Party shall bear its own costs of legal representation and witness
 expenses. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (F)

 	
 The arbitrator is or arbitrators are authorized to take any interim
 measures as the arbitrator considers or arbitrators consider necessary,
 including the making of interim orders or awards or partial final awards. An
 interim order or award may be enforced in the same manner as a final award
 using the procedures specified below. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (G)

 	
 The arbitrator or arbitrators must render a reasoned award in
 writing. The award is final and binding. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (H)

 	
 The Dispute should be resolved as quickly as possible. The
 arbitrator’s or arbitrators’ award must be issued within three months from
 the completion of the hearing, or as soon as possible thereafter. 

 
	 
	
  

 	
  

 	
  

 	
  

 
	 
	
  

 	
 23.7

 	
 Enforceability.

 
	 
	
  

 	
  

 	
  

 	
  

 
	 
	
  

 	
  

 	
 (A)

 	
 The Parties waive irrevocably their right to any form of appeal,
 review or recourse to any court or other judicial authority, to the extent
 that such waiver may be validly made. 

 
	 
	
  

 	
  

 	
  

 	
  

 
	 
	
  

 	
  

 	
 (B)

 	
 Except for proceedings to preserve property pending determination by
 the arbitrator or arbitrators or to enforce an award, the mandatory exclusive
 venue for any judicial proceeding permitted in this Agreement is the court of
 competent jurisdiction in Bakersfield, California. The Parties consent to the
 jurisdiction of these courts and waive any defenses they have regarding
 jurisdiction. Proceedings to confirm an award may be filed as provided in
 this Section 23.7(B) at any time within one year after the award is made. 

 
	 
	
  

 	
  

 	
  

 	
  

 
	 
	
  

 	
  

 	
 (C)

 	
 Proceedings to enforce judgment entered on an award may be brought in
 any court having jurisdiction over the person or assets of the non-prevailing
 Party. The prevailing Party may seek, in any court having jurisdiction,
 judicial recognition of the award, or order of enforcement or any other order
 or decree that is necessary to give full effect to the award. 

 
	 
	
  

 	
  

 	
  

 	
  

 
	 
	
  

 	
 23.8

 	
 Confidentiality.

 








	
  

 	
  

 
	
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 (A)

 	
 The Parties agree that any Dispute and any negotiations, mediation
 and arbitration proceedings between the Parties in relation to any Dispute
 shall be confidential and shall not be disclosed to any Third Party. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 The Parties further agree that any information, documents or
 materials produced for the purposes of, or used in, negotiations, mediation
 or arbitration of any Dispute shall be confidential and shall not be
 disclosed to any Third Party. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 Without prejudice to the foregoing, the Parties agree that disclosure
 may be made: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (1)

 	
 In order to enforce any of the provisions of this Agreement,
 including without limitation, the Parties agreement to arbitrate, any
 arbitration order or award and any court judgment. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (2)

 	
 To the auditors, legal advisers, insurers and Affiliates of that
 Party to whom the confidentiality obligations set out in this Agreement shall
 extend. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (3)

 	
 Where that Party is under a legal or regulatory obligation to make
 such disclosure, but limited to the extent of that legal obligation. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (4)

 	
 With the prior written consent of the other Party. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (D)

 	
 The Parties agree to submit to the jurisdiction of the courts of
 Bakersfield, California, for the purposes of any proceedings to enforce this
 Section 23.8 and shall prevent any information, documents or materials
 belonging to a Party from being used or disclosed by that Party for any
 purpose. 

 
	
  

 	
  

 
	
  

 	
 THIRD PARTY RIGHTS 

 
	
  

 	
  

 	
  

 
	
  

 	
 24.1

 	
 Except for Seller Parties or Buyer Parties, no Third Party has any
 rights under this Agreement or may enforce any provision in this Agreement. 

 
	
  

 	
  

 
	
  

 	
 GENERAL PROVISIONS 

 
	
  

 	
  

 	
  

 
	
  

 	
 25.1

 	
 Prior Agreements.
 This Agreement comprises the complete and exclusive agreement between the
 Parties regarding the subject matter of this Agreement, and supersedes all
 oral and written communications, negotiations, representations or agreements
 in relation to that subject matter made or entered into before the Effective
 Date. 

 
	
  

 	
  

 	
  

 
	
  

 	
 25.2

 	
 Amendment. No
 amendment to this Agreement is effective unless made in writing and signed by
 authorized representatives of both Parties. 

 
	
  

 	
  

 	
  

 
	
  

 	
 25.3

 	
 Waiver. No waiver
 by either Party of this Agreement’s terms, provisions or conditions shall be
 effective unless specifically evidenced in writing and signed by or on behalf
 of the Party granting such waiver. A Party’s failure to pursue remedies for
 breach of this Agreement does not constitute a waiver by such Party of any
 breach of this Agreement or raise any defense against Claims against a Party
 for breach of this Agreement. The waiver or failure to require the
 performance of any covenant or obligation contained in 

 






	
  

 	
  

 
	
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 this Agreement or to pursue remedies for breach of this Agreement
 does not waive a later breach of that covenant or obligation. 

 
	
  

 	
  

 	
  

 
	
  

 	
 25.4

 	
 Severability. Each
 provision of this Agreement is severable and if any provision is determined
 to be invalid, unenforceable or illegal under any existing or future law by a
 court or arbitrator of competent jurisdiction or by operation of any
 applicable law, this invalidity, unenforceability or illegality does not
 impair the operation of or affect those portions of this Agreement that are
 valid, enforceable and legal, so long as the economic or legal substance of
 the transactions contemplated hereby is not affected in any manner adverse to
 any Party. Upon such determination that any term or other provision or part thereof
 is invalid, illegal or unenforceable, the Parties shall negotiate in good
 faith to modify this Agreement so as to effect the original intent of the
 Parties as closely as possible in an acceptable manner to the end that
 transactions contemplated hereby are fulfilled to the extent possible. 

 
	
  

 	
  

 	
  

 
	
  

 	
 25.5

 	
 Survival. Despite
 consummation of the Closing or the termination of this Agreement for any
 reason, all provisions in this Agreement containing representations,
 warranties, releases, defense obligations and indemnities, and all provisions
 relating to audit, confidentiality, conflicts of interest, insurance,
 disclaimer of certain remedies, limitations of liability, ownership or use or
 return of Confidential Information, dispute resolution and governing law, and
 all causes of action which arose prior to completion or termination, survive
 indefinitely until, by their respective terms, they are no longer operative
 or are otherwise limited by an applicable statute of limitations. Subject to
 Section 0, each of the obligations and undertakings set out in this Agreement
 which is not fully performed at Closing shall continue in force after
 Closing. 

 
	
  

 	
  

 	
  

 
	
  

 	
 25.6

 	
 Interest. Without
 prejudice to any other rights available to a Party hereunder or at law, if
 any amount payable hereunder is not paid when due, the defaulting Party shall
 pay interest on such amount from the due date of payment (after as well as
 before judgment) until the date of payment (both dates inclusive) at a rate
 equal to Prime Rate plus one percent calculated on a daily basis using simple
 interest. 

 
	
  

 	
  

 	
  

 
	
  

 	
 25.7

 	
 Assignments. This
 Agreement shall be binding on and inure for the benefit of the rightful
 successors and permitted assigns of the Parties, but the rights, duties and
 obligations of Buyer under this Agreement shall not be assigned without
 Seller’s prior written consent to the assignment, which consent, in the event
 of an assignment by Buyer to an Affiliate, shall not be unreasonably delayed
 or withheld provided that if such Affiliate ceases to be an Affiliate of
 Buyer, it shall without delay assign this Agreement back to Buyer.
 Notwithstanding anything herein to the contrary, Buyer shall remain
 responsible to Seller for all obligations, indemnities and liabilities due
 Seller under this Agreement, unless and until expressly released by Seller. 

 
	
  

 	
  

 	
  

 
	
  

 	
 25.8

 	
 Nominations and Accounting Responsibilities.
 From the first day of the first production month following Closing, Seller is
 relieved of all responsibility for, and Buyer shall (a) bear, and commence
 payment of, all burdens, fees and taxes on or relating to the Assets, and (b)
 perform all nomination, marketing, accounting, royalty payment, reporting,
 and other administrative responsibilities relating to the Assets. 

 
	
  

 	
  

 	
  

 
	
  

 	
 25.9

 	
 Counterparts. This
 Agreement may be executed in any number of counterparts, each of which will
 be deemed an original of this Agreement, and which together will constitute 

 






	
  

 	
  

 
	
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 one and the same instrument; provided that neither Party shall be
 bound to this Agreement unless and until both Parties have executed a
 counterpart. 

 
	
  

 	
  

 	
  

 
	
  

 	
 25.10

 	
 Drafting.
 Preparation of this Agreement has been a joint effort of the Parties and the
 resulting Agreement must not be construed more severely against one of the
 Parties than against the other. 

 


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IMPORTANT NOTICE: THIS AGREEMENT CONTAINS
PROVISIONS REGARDING INDEMNITIES AND WARRANTIES THAT EXPRESS THE AGREEMENT OF
THE PARTIES CONCERNING CLAIMS ARISING OUT OF THIS AGREEMENT. 


The Parties have executed this Agreement in triplicate as evidenced by
the following signatures of authorized representatives of the Parties: 


	
  

 	
  

 	
  

 	
  

 	
  

 
	
 SELLER:

 	
  

 	
 BUYER:

 
	
 CHEVRON U.S.A. INC.

 	
  

 	
                    

 
	
  

 	
  

 	
  

 
	
 Signature:

 	
  

 	
 Signature:

 
	
  

 	
  

 	
  

 
	

 


 	
  

 	

 


 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Name: 

 	

 /s/ Lewis F. Bogan


 	
  

 	
 Name: 

 	

  


 
	
  

 	

 


 	
  

 	
  

 	

 


 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Title:

 	
 Assistant
 Secretary

 	
  

 	
 Title:

 	
  

 
	
  

 	

 


 	
  

 	
  

 	

 


 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 ADDRESS FOR NOTICES:

 	
  

 	
 ADDRESS FOR NOTICES:

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Chevron U.S.A. Inc.

 	
  

 	
              

 
	
 9525 Camino Media

 	
  

 	
              

 
	
 Bakersfield, CA 93311

 	
  

 	
              

 
	
  

 	
  

 	
  

 	
  

 
	
 Attention: Land
 Manager

 	
  

 	
 Attention:              

 
	
  

 	
  

 	
  

 	
  

 
	
 Facsimile: 66-1
 654-7392

 	
  

 	
 Facsimile:              

 






	
  

 	
  

 
	
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EXHIBIT A – DESCRIPTION OF ASSETS


	
  

 	
  

 	
  

 	
  

 
	
 1.

 	
 DESCRIPTION OF ASSETS 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 1.1

 	
 Rights to Petroleum Substances.
 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 Leases: All of Seller’s Leases listed on Exhibit “B”

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 Operations Contracts: The Operating Agreement dated September 1, 2008
 

 
	
  

 	
  

 	
  

 	
  

 
	
 2.

 	
 DESCRIPTION OF ANY EXCLUDED ASSETS 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 2.1

 	
 All rights, titles, claims and interests of Seller related to the
 Assets for all periods prior to the Closing Date (i) under any policy or
 agreement of insurance or indemnity, (ii) under any bond, or (iii) to any
 insurance or condemnation proceeds or awards. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 2.2

 	
 Claims of Seller for any refund of or loss carry forwards with
 respect to (i) production, windfall profit, severance, ad valorem or any
 other Taxes attributable to the Assets for any period prior to the Effective
 Date, and (ii) income, capital, occupational, margin or franchise taxes. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 2.3

 	
 All amounts due or payable to Seller as adjustments to insurance
 premiums related to the Assets for all periods prior to the Closing Date. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 2.4

 	
 All of Seller’s intellectual property rights, patents, trade secrets,
 copyrights, names, marks and logos. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 2.5

 	
 All rights, obligations, benefits, awards, judgments, settlements, if
 any, applicable to any litigation pending in which Seller is a named claimant
 or plaintiff or holds beneficial rights or interests, to the extent related
 to periods prior to the Effective Date, to the extent, and only to the
 extent, that such claims, rights and other matters do not cause a material
 impairment in the value of the Assets to occur after the Effective Date. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 2.6

 	
 All of Seller’s mineral and surface fee covered by the Leases. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 2.7

 	
 Seller’s interest, if any, in any gas processing plant, separation
 facility or gas treating plant serving the Assets. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 2.8

 	
 All Third Party owned equipment and property located on or used in
 connection with the Assets, including contractor equipment and leased
 equipment. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 2.9

 	
 Unless specifically licensed to Buyer pursuant to Exhibit E, any and
 all proprietary or licensed raw or processed or re-processed geophysical data
 (including magnetic tapes, field notes, seismic lines, analyses and similar
 data or information) and all Seller’s proprietary software and any
 derivatives therefrom, data licensing agreements and seismic licenses between
 Seller and Third Parties, if any. 

 


END OF EXHIBIT A


	
  

 	
  

 
	
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EXHIBIT B – ASSIGNMENT DOCUMENTS


	
  

 	
  

 
	
 1.

 	
 LIST OF ASSIGNMENT DOCUMENTS 

 
	
  

 	
  

 
	
  

 	
 Assignment of Operating Agreement dated September 1, 2008 among
 Chevron U.S.A. Inc, California Oil and Gas Corporation, Calstar Oil and Gas,
 LTD., Daybreak Oil and Gas, Inc, Consolidated Beacon Resources, LTD., Nomad
 Hydrocarbons, LTD and Nomad Hydrocarbons LLC. 

 
	
  

 	
  

 
	
  

 	
 Assignment of Oil and Gas Leases listed on attached List of Leases to
 Asset Purchase and Sale Agreement between Chevron U.S.A. Inc. and              . 

 






	
  

 	
  

 
	
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