ESCROW AGREEMENT


 


THIS AGREEMENT is made and entered into as of the Effective
Date, as defined in Paragraph 7(e) hereof, by and among the following:


 


E & P CO, LLC, 2500 Tanglewilde,
Suite 260, Houston, TX 77063, (“Operator”) represented herein by Osman Kaldirim, Jr., President and duly authorized
to execute this Agreement on behalf of Operator; and,


 


JUSTISS OIL COMPANY, INC., P.O.
Box 2990, Jena, Louisiana 71342, (“Contractor”) represented herein by J. F. Justiss, III, Vice President, Operations
and duly authorized to execute this Agreement on behalf of Contractor; and,


 


BANK OF JENA, P.O. Box 1440, Jena,
Louisiana 71342 (“Escrow Agent”), represented herein by W. Paul Tweedy, President being and duly authorized to execute
this Agreement on behalf of Escrow Agent;


 


WHEREAS, the Operator and Contractor
have entered into and executed a Model Form IADC Daywork Drilling Contract-U.S. (the “Contract”) providing for the
drilling of IP CO SWD #2, located in Section 35-T14N-R5E, Caldwell Parish, Louisiana (the “Project”);


 


WHEREAS, the Operator and Contractor
have agreed to enter into and execute an Escrow Agreement for the purpose of assuring payment to the Contractor of all sums due
and to become due to the Contractor under the terms of the Contract; and,


 


IT IS THEREFORE AGREED:


 


		1)	Required Escrow Payment



 


(a)      Concurrently
with the execution of this Escrow Agreement the Operator will deposit by wire transfer with the Escrow Agent the sum of $225,325.00
in cash plus the Escrow Fee provided in Paragraph 5(j) below, the receipt of which will be acknowledged to each of Operator and
Contractor in writing by the Escrow Agent (the “Initial Escrow Fund” and, together with the “Supplemental Escrow
Funds”, herein together the “Escrow Fund”).


 


The amount of the Initial Escrow Fund is
based upon a mobilization and demobilization fee of $54,325.00, and 12 days at the operating daywork rate of $14,250.00.


 


(b)      It is the intent
hereof that the Escrow Fund shall, at all times, contain an amount not less than an amount necessary to cover the amount that may
reasonably be due to Contractor as calculated in accordance with the Contract (in excess of the amount then on deposit in the Escrow
Fund), as provided by written agreement of Operator and Contractor (“Supplemental Escrow Agreement”).


 


(c)      If it is anticipated
that additional work is to be conducted on a Daywork Basis, as provided in the Contract, Contractor shall notify Operator in
writing (in accordance with Section 6 hereof) that an additional escrow deposit (each a “Supplemental Escrow Deposit”)
is required as specified by the relevant Supplemental Escrow Agreement. Each Supplemental Escrow Deposit shall be in an amount
not more than (10) days of daywork per each Supplemental Escrow Deposit at the operating day rate, with drill pipe, all calculated
in accordance with the Contract. Each Supplemental Escrow Deposit shall be wired to the Escrow Fund within 48 hours following execution
of the Supplemental Escrow Agreement. The receipt of each Supplemental Escrow Deposit shall be acknowledged by Notice in writing
provided to each of the Operator and Contractor by Escrow Agent. Thereafter, from time to time, as required and set forth in a
Supplemental Escrow Agreement, the Contractor may require, and the Operator shall deposit, one or more Supplemental Escrow Fund
Deposits in increments of not more than (10) days, until the job is complete. 


 


		2)	Appointment and Acceptance



 


Operator and Contractor
hereby appoint Bank of Jena as Escrow Agent and Bank of Jena accepts such appointment pursuant to the terms hereof.


 




    	 



    	 



    

 


		3)	Release of Escrow Funds



 


The Escrow Fund and
shall be held by the Escrow Agent and deposited into a Special Escrow Fund to be released by the Escrow Agent to the Contractor
in incremental payments (“Incremental Payments”) in the following manner:


 


The Contractor shall
invoice Operator, as provided by Paragraph 5 of the Contract, notwithstanding any contrary provision of said Paragraph 5. Contractor
shall be permitted to request and receive incremental payments from the Escrow Fund as hereinafter provided. (together “Incremental
Payments” and, each, an “Incremental Payment”) calculated in accordance with the work properly completed as determined
under the Contract. The Operator shall have the right to approve the invoice for each Incremental Payment and, if so approved,
shall forward the invoice to the Escrow Agent for payment (“Approved Payment”). If the invoice(s) are not approved
and released for payment to Escrow Agent within 30 days of receipt thereof by Operator, then the Contractor shall furnish the following
to each of Escrow Agent and the Operator:


 


		1)	A copy of the relevant invoice(s) certified to be true, correct, and complete (“Certified
Invoice(s)”); and,



 


		2)	The Contractor’s affidavit (executed by a duly authorized officer of Contractor) certifying
that the Mobilization and Daywork provisions of the contract have been fulfilled, that the amount invoiced is due, and that there
is no dispute as to payment (the “Contractor’s Certification” and, together with the Certified Invoice(s), the
(“Contractor’s Documents”).



 


Upon receipt of the applicable a) Approved
Payment from the Operator or b) the Contractor’s Documents, whichever is first received, the Escrow Agent shall release and
pay to the Contractor the amount of the subject invoice(s) in the following manner:


 


		A)	Incremental Payment and a description of the job progress point at which incremental payment was
earned, and the due date thereof.



 


		B)	The Balance of Payments due/ and total due upon completion of the obligations.



 


In the event either of the Operator or
the Escrow Agent shall not have duly received all of the Contractor’s Documents, the i) Operator shall give Notice of “a)”
above to the Escrow Agent and the Operator and “i)” the balance of the Escrow Fund shall be released by the Escrow
Agent and paid to the Operator.


 


		4)	Disputed Payment



 


In the event of a
dispute as to the disposition and release of all or a part of the Escrow Fund, the disputing Party (“Disputing Party”)
shall notify the other Parties hereto, in writing, as to the basis for the dispute within thirty (30) days of the date of receipt
of the subject Invoice by Disputing Party. If the dispute cannot be resolved by agreement, the Escrow Agent may, subject to the
provisions of Paragraph (5)(b), commence an action in the nature of an interpleader and deposit the disputed portion of the Escrow
Fund with a Court of competent jurisdiction for disposition and shall pay the undisputed portion to the Contractor.


 


		5)	Rights, Privileges, Immunities, and Liabilities of Bank



 


a)      Depository
Only. The Escrow Agent is not a party to and is not bound or charged with notice of any other agreement out of which this escrow
arises, and acts hereunder as a depository only. Except in the event of a loss occasioned by gross negligence or willful misconduct,
the Bank is not responsible or liable in any manner whatsoever for the sufficiency, correctness, genuineness, or validity of any
document, instrument, certificate, check, or agreement, or for the identity or authority of any person executing or depositing
the same, and may assume any person purporting to give any written notice, advice, or instruction in connection with the provisions
hereof has been duly authorized to do so. The Escrow Agent shall not be deemed to have any knowledge of any documents other than
this Escrow Agreement. The Escrow Agent shall not be liable for anything that it may do or refrain from doing in connection herewith,
except on account of its own gross negligence or willful misconduct. The Escrow Agent’s only duty, liability, and responsibility
shall be to hold the Escrow Fund as herein directed, to invest the same in a Federal Deposit Insurance Corporation insured account,
and to pay and deliver the same to such persons and under such conditions as are herein set forth.


 




    	2



    	 



    

 


b)      Indemnity.
The Contractor and Operator hereby agree, jointly and severally, to indemnify and save Escrow Agent harmless from all loss, cost,
damage, expense, and attorney’s fees suffered or incurred by Escrow Agent as a result of any action or inaction taken or
failed to be taken by the Escrow Agent in connection herewith, other than losses, costs, damages, expenses, and attorney’s
fees resulting from the Escrow Agent’s gross negligence or willful misconduct. All protections and indemnities contained
in this Escrow Agreement, benefiting the Escrow Agent, shall survive the termination of this Escrow Agreement or the resignation
or removal of the Escrow Agent.


 


c)      Actions Protected. The Escrow
Agent shall be protected in acting on any written notice, request, waiver, consent, certificate, receipt, authorization, power
of attorney or other paper or document which the Escrow Agent in good faith believes to be genuine.


 


d)      Good Faith Action. Except
for acts of gross negligence or willful misconduct, the Escrow Agent shall not be liable for anything that it may do or refrain
from doing in connection herewith, provided that it acts in good faith.


 


e)      Legal Counsel. The Escrow
Agent may confer with legal counsel in the event of any dispute or questions as to the construction of any of the provisions of
this Escrow Agreement, or its duties hereunder, and except for acts of gross negligence or willful misconduct, it shall incur no
liability and shall be fully protected in acting in accordance with the opinion and instructions of its counsel.


 


f)      Event of Dispute. In the event
of any disagreement involving the parties resulting in adverse claims or demands being made in connection with the matters covered
by this Escrow Agreement or in the event that Bank, in good faith, shall be in doubt as to what action it should take hereunder,
the Escrow Agent may, at its option, refuse to comply with any claims or demands on it and institute a concursus proceeding in
a Court of competent jurisdiction and all of the parties to resolve their conflicting claims judicially. The rights of Escrow Agent
under this subparagraph are cumulative of all other rights which it may have by law or otherwise.


 


g)      Discharge. The Escrow Agent,
having duly delivered all of the documents, instruments, funds, certificates, agreements, and otherwise duly performing each of
its other obligations pursuant to the terms of this Agreement, shall be, ipso facto, discharged from
any further obligation hereunder except as otherwise provided herein, without the necessity of any formal documentation.


 


h)      Bond. The Escrow Agent shall
not be required to post a bond in connection with the providing of its services hereunder.


 


i)      Resignation. The Escrow Agent
and any successor to it hereafter appointed (“Successor”), may at any time resign by giving prior Notice in writing
to Contractor and Operator (“Notice of Resignation”) and shall be discharged from its duties hereunder upon the appointment
of a Successor, compliance with the requirements of Sub-Section 5(c) hereof, and the assignment of this Agreement to, and assumption
of this Agreement by, the Successor, together with any agreements, undertakings, and other obligations of Escrow Agent under, or
in connection with, this Agreement (“Ancillary Documents”). In the event of any such resignation, a successor Escrow
Agent shall be appointed by the written consent of Contractor and Operator. In the event that Contractor and Operator fail to appoint
a Successor within thirty (30) days of the receipt of the Notice of Resignation by the last of the Contractor or Operator to so
receive the Notice of Resignation, the Escrow Agent shall have the absolute right to appoint another federally chartered bank or,
if agreed in writing by Contractor and Operator, another entity, which is willing to serve as the Successor. Any Successor shall
deliver to Contractor and Operator a written instrument accepting the appointment hereunder, and thereupon it shall succeed to
all the rights and duties of the Escrow Agent hereunder and shall be entitled to receive all of the Escrow Fund then held by the
predecessor Escrow Agent hereunder.


 


j)      The Escrow Fee. The Escrow
Agent shall charge a fixed fee in the amount of Two Thousand Dollars ($2,000) as a fee for the services rendered and to be rendered
as Escrow Agent. The escrow account will be non-interest bearing.


 


k)      Final Release of Escrow Funds
Balance. At the conclusion of the drilling operation to be performed by the Contractor for the Operator and after the Contractor
has been paid in full for all invoices submitted for the work performed, including any final billing for the demobilization fee,
any and all excess funds remaining in the Escrow Fund and Supplemental Escrow Fund, shall be paid and delivered to the Operator,
pursuant to the authorization to the Escrow agent, in writing, signed by Operator and Contractor.


 




    	3



    	 



    

 


6)      Notice. All notices, requests, demands, claims,
and other communications that are required to be, or which may be, given by any Party (“Notifying Party”) under this
Agreement (each, a “Notice”) shall be in writing addressed to the each of the other Parties (“Intended Recipients”
or, each, an “Intended Recipient”), at the relevant Intended Recipient’s address set forth following. Any Notice
shall be delivered (i) in person; (ii) by same day or overnight courier; (iii) by electronic facsimile or email transmission, or
(iv) mailed, certified first class mail, postage prepaid, return receipt requested, to the Intended Recipient.


 


	Operator:	
        E & P Company, LLC 2500

	 	Tanglewilde, Suite 260
	 	Houston, TX  77063
	 	Attn: Osman Kaldirim, Jr., President
	 	 
	Contractor:	Justiss Oil Company, Inc.
	 	P.O. Box 2990
	 	Jena, LA 71342
	 	Attn: Wayne Pritchard
	 	 
	Escrow Agent:	William B Higdon, Jr., Senior Vice-President & CFO
	 	P.O. Box 1440
	 	Jena, LA 71342
	 	Attn: Paul Tweedy


 


By Notice given in accordance with this Section, any Party may
provide, at any time, a different address or other information for notice under this Section.


 


A Notice shall be effective (“Notice Effective Date”)
(i) if delivered in person or by courier, upon actual receipt by the Intended Recipient, (ii) if sent by electronic facsimile or
email transmission, when the Notifying Party receives facsimile or email confirmation that such notice was received at the facsimile
number or email address, as the case may be, of the Intended Recipient, or (iii) if mailed, upon the earlier of five (5) business
days after deposit in the mail or the date of delivery as shown by the return receipt.


 


7)      Miscellaneous


 


a)      This Agreement
may not be altered, amended, revised or modified, in whole or in part, except by written agreement signed by all of the Parties
hereto.


 


b)      This Agreement
is an ancillary to and shall be read and considered with the Daywork Drilling Contract-U.S., between Justiss Oil Company, Inc.
and E & P Co, LLC., with an effective date of January 31, 2014, except as herein provided.


 


c)      This Agreement
shall be binding upon and inure to the benefit of the Parties hereto and their successors and permitted assigns.


 


d)      This Agreement
may be executed in multiple counterparts, each of which shall be deemed an original.


 


e)      This Agreement
shall not take effect until the latter to occur of i) all Parties having signed the Agreement; or, ii) the amount of the Initial
Escrow Fund has been delivered to the Escrow Agent


 


{Signature
Page Next}


 




    	4



    	 



    

 


IN WITNESS WHEREOF, this Agreement has been entered into
and executed as of the Effective Date.


 


	E & P Co, LLC
	 
	By: 	 	 
	 	Osman Kaldirim, Jr., President


 


	JUSTISS OIL COMPANY, INC.
	 
	By: 	 	 
	 	James F. Justiss III, Vice-President


 


	William B Higdon, Jr., Senior Vice-President & CFO
	 
	By: 	 	 
	 	William B Higdon, Jr., Senior Vice-President & CFO


 




    	5