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CARRY AND EARNING AGREEMENT




     THIS CARRY AND EARNING AGREEMENT (this “Agreement”) dated February 28, 2008 (the “Effective
Date”) is between ENCANA OIL & GAS (USA) INC., a Delaware corporation (“EnCana”) with an address of
370 17th Street, Suite 1700, Denver, Colorado 80202, and DELTA PETROLEUM CORPORATION, a Colorado
corporation (“Delta”) with an address of 370 17th Street, Suite 4300, Denver, Colorado 80202.
EnCana and Delta shall be referred to herein, individually, as a “Party” and, collectively, as the
“Parties.”



RECITALS




     A. EnCana owns leasehold and mineral interests in certain lands in Mesa and Garfield Counties,
Colorado described on Exhibits A and C  (the “Property”).



     B. Delta desires to explore, develop and acquire (i) ninety-five percent (95%) of all of
EnCana’s right, title and interest to the leases and wells described on Exhibit A (the
“Delta Properties”), (ii) all of EnCana’s right, title and interest in and to the wellbores
and all production therefrom in each of the wells listed on Exhibit B (the
”Existing Agreement Wells”), and (iii) five percent (5%) of all of EnCana’s right,
title and interest in and to the wellbores and all production therefrom in each Carry Well (as
hereinafter defined) to be located on the lands and leases depicted on Exhibit C (the
“Carry Lands”) and an interest in such leases sufficient to produce and own 5% of EnCana’s
right, title and interest in and to the Hydrocarbons from such wellbores, in each case, on the
terms and conditions set forth herein.



     C. The Parties desire to enter into this Carry and Earning Agreement (this
“Agreement”) to govern certain of their respective rights and obligations with respect to
exploration and development of the Property.



AGREEMENT




     IN CONSIDERATION OF ONE HUNDRED DOLLARS ($100.00 US) and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby
agree as follows:



Section 1. Exhibits



     The following Exhibits are attached hereto and shall be considered part of this Agreement:



	 	 	 
	1.1

	 	Exhibit A — Delta Properties
	 
	 	 
	1.2

	 	Exhibit A-1 — EnCana Wells
	 
	 	 
	1.3

	 	Exhibit B — Existing Agreement Wells






 









 





	 	 	 
	1.4

	 	Exhibit C — Carry Lands
	 
	 	 
	1.5

	 	Exhibit D — Leasehold Defect Procedures
	 
	 	 
	1.6

	 	Exhibit D-1 — Allocated Value of EnCana Wells
	 
	 	 
	1.7

	 	Exhibit D-2 — Alternative Leases
	 
	 	 
	1.8

	 	Exhibit E — Environmental Defect Procedures
	 
	 	 
	1.9

	 	Exhibit F-1 — Form of Wellbore Assignment for Carry Wells
	 
	 	 
	1.10

	 	Exhibit F-2 — Form of Partial Assignment and Bill of Sale
	 
	 	 
	1.11

	 	Exhibit F-3 — Form of Wellbore Assignment for Existing Agreement Wells
	 
	 	 
	1.12

	 	Exhibit F-4 — Quitclaim Deed with Exhibit
	 
	 	 
	1.13

	 	Exhibit G — Form of New Operating Agreement
	 
	 	 
	1.14

	 	Exhibit H — Information for APDs
	 
	 	 
	1.15

	 	Exhibit I — Intentionally Omitted
	 
	 	 
	1.16

	 	Exhibit J — Tax Partnership Provisions
	 
	 	 
	1.17

	 	Exhibit K — Defined Terms
	 
	 	 
	1.18

	 	Exhibit L — List of Surface Agreements and Contracts
	 
	 	 
	1.19

	 	Exhibit M — Letter Regarding Release of Existing Letter of Credit
	 
	 	 
	1.20

	 	Exhibit N — Form of Assignment and Bill of Sale for Gathering Assets and Pipeline Rights of Way with Exhibit
	 
	 	 
	1.21

	 	Exhibit O — Form of Agent Operator Agreement






     Certain capitalized terms used in this Agreement and not otherwise defined in this
Agreement shall have the meaning assigned such term in Exhibit K.



Section 2. Title and Disclosure of
Information




     2.1 Title Information for Delta Properties. EnCana shall make available to Delta all
title documentation material to the Delta Properties in EnCana’s files, including without
limitation all title opinions and reports, and title curative documents. Such title information
has been, and shall be, provided to Delta without warranty as to completeness or accuracy. EnCana
shall have no obligation to purchase new or supplemental abstracts nor to do any curative work in
connection with title to the lands



 









 







included in the Delta Properties. Any title examination performed by Delta with respect to
the Delta Properties pursuant to this Agreement shall be performed at the sole cost of Delta, and
Delta shall deliver to EnCana any title opinion or report acquired by Delta with respect to the
Delta Properties without warranty as to completeness or accuracy. In accordance with the procedures
set forth on Exhibit D, Delta shall have the right to assert any Leasehold Defects (as
defined in Exhibit D) with respect to the Delta Properties in writing. All asserted
Leasehold Defects shall be handled in accordance with the Leasehold Defect Procedures set out in
Exhibit D. A list of all agreements that pertain to the use of the surface of the Delta
Properties is attached as Exhibit L.



     2.2 Title Information for Carry Lands. In connection with any well on the Carry Lands
that EnCana proposes to designate as a Carry Well, EnCana shall make available to Delta all title
documentation material to the Carry Lands associated with the Carry Well in EnCana’s files,
including without limitation all title opinions and reports, and title curative documents so that
Delta can confirm the working interest held by EnCana associated with such Carry Well. Such title
information has been, and shall be, provided to Delta without warranty as to completeness or
accuracy. EnCana shall have no obligation to purchase new or supplemental abstracts nor to do any
curative work in connection with title to the lands included in Carry Lands.



     2.3 Other Information. To the extent that EnCana is not expressly prohibited pursuant
to any third-party arrangement, EnCana shall provide Delta, upon request, all data and other
information including, without limitation, drainage data, microseismic surveys, information
regarding fracing of wells and other similar information regarding the development and operation of
the Delta Properties that EnCana may possess. To the extent that EnCana provides such data or
information to Delta it will be provided to Delta without warranty as to completeness or accuracy.



     2.4 Environmental Audit. In accordance with the procedures set forth on Exhibit
E Delta shall have the right to assert in writing any Environmental Defects (as defined in
Exhibit E) with respect to the wells described on Exhibit A (the “EnCana
Wells”). All asserted Environmental Defects shall be handled in accordance with the
Environmental Defect Procedures set out in Exhibit E.



     2.5 Delivery of Files. Provided that this Agreement has not terminated pursuant to
Section 4.2, on or before April 30, 2008, EnCana shall deliver to Delta all files and
records relating to the Delta Properties not previously delivered to Delta.



Section 3. Carry Wells




     3.1 Drilling of Carry Wells. EnCana shall designate and drill 228 net wells
(hereinafter defined) on the Carry Lands (or lands spaced or pooled therewith), other than the
Delta Properties, after the date hereof as “Carry Wells.” Any well proposed by EnCana to be
a Carry Well must be designated as such prior to the time that such well is spud. Prior to
spudding a Carry Well, EnCana shall issue to Delta an Authority for Expenditure setting forth
EnCana’s best estimate of the total cost to drill, complete and equip such Carry Well. The location
of each of the Carry Wells on the Carry Lands or



 









 







lands spaced or pooled therewith shall be determined by EnCana in its sole discretion, and the
Carry Wells shall include, without limitation, any substitute or replacement wells as described in
this Agreement. EnCana shall drill the Carry Wells to a depth sufficient to test the Mesa Verde
Formation (the “Objective Depth”) and complete, equip and produce, or plug and abandon the
Carry Wells, with due diligence and reasonable dispatch in accordance with applicable laws. For
purposes of this Agreement a “net well” or “net acre” results when the sum of the
fractional ownership working interests in any well or mineral acre in which any working interest is
owned equals one. The number of net wells or net acres is the sum of the fractional working
interests in any well or mineral acre in which any working interest is owned expressed as whole
numbers and fractions. By way of example, if prior to spud of two Carry Wells, EnCana has a 60%
working interest in well #1 and a 40% working interest in well #2, the sum of the working interests
would result in one net Carry Well.



     3.2 Costs of Carry Wells. Delta agrees to be responsible for and pay 100% of the
actual costs incurred by EnCana to third parties or chargeable to the Carry Well of costs of
drilling, costs of completing (or plugging and abandoning, if not completed), and costs of
equipping each Carry Well, up to a maximum of $1,800,219.30 per Carry Well (the “Individual
Well Amount”) payable in accordance with Section 3.3, subject to adjustment as provided
in Section 4.2, and in the event that such costs exceed such amount, then EnCana shall bear
and pay 100% of such excess costs. The aggregate amount paid by Delta for all Carry Wells pursuant
to the foregoing shall not exceed $410,450,000 (the “Carry Amount”) payable in accordance
with Section 3.3, subject to adjustment as provided in Section 4.2, and in the
event that such costs exceed such amount, then EnCana shall bear and pay 100% of such excess costs.
In no event shall Delta be required to pay a greater Carry Amount in any year than the amount
provided in Section 3.3. In the event that EnCana does not own one hundred percent (100%)
of the working interest in a Carry Well, the Individual Well Amount for such well shall be
proportionately reduced to the working interest owned by EnCana and the total number of Carry Wells
shall be increased to the number of Carry Wells required to expend all of the Carry Amount. Should
the aggregate of the costs of drilling, the costs of completing (or plugging and abandoning, if not
completed) and the costs of equipping for any Carry Well be less than the Individual Well Amount,
then the number of Carry Wells shall also be increased to the number of Carry Wells required to
expend all of the Carry Amount. For purposes hereof, (a) “costs of drilling” a Carry Well
shall mean the following costs, relating to such Carry Well: costs of constructing and upgrading
access roads, obtaining and preparing the location, obtaining permits and title opinions, obtaining
drilling contractor services and consultants, obtaining mud chemicals, pipe and supplies and all
other costs and expenses associated with or incurred by moving in, rigging up, drilling, logging
and testing so that a decision can be made to either attempt to set pipe and complete such well or
to plug and abandon it as a dry hole; (b) “costs of completing” a Carry Well shall mean all
additional costs of drilling the well, including but not limited to, the costs of fracture
stimulation and the drilling out of frac plugs with respect to such Carry Well; and (c) “costs
of equipping” a Carry Well shall mean the costs of the acquisition and installation of the
initial equipment for such Carry Well, including but not limited to metering and automation
equipment, up to and including



 









 







the initial connection of such Carry Well to a gas gathering line, regardless of when such
cost is incurred and which costs are capitalized for federal income tax purposes.



     3.3 Payment of Carry Amount.



     (a) Subject to the provisions of Section 3.3(b), the Carry Amount shall be paid by
Delta to EnCana in four installments as set out in the timeframe and in the amounts described
below:



     On or before February 28, 2008: $110,450,000



     On or before November 1, 2009: $100,000,000



     On or before November 1, 2010: $100,000,000



     On or before November 1, 2011: $100,000,000


Until November 1, 2008, EnCana shall maintain $100,000,000 of the February 28, 2008 payment on
deposit in a segregated account or in an investment separate from other EnCana investments, and all
interest and other income earned on the $100,000,000 between February 28, 2008 and October 31,
2008, net of all third party charges and fees, shall be paid by EnCana to Delta promptly after the
interest or income is credited to EnCana.



The proceeds of each payment of the Carry Amount shall be used by EnCana solely and exclusively for
the costs of drilling, costs of completing and costs of equipping the Carry Wells on the Carry
Lands (collectively, “Well Costs”). The $100,000,000 payment made on February 8, 2008 and
the second through fourth payments listed above are each referred to in this Agreement as an
“Annual Payment.”



(b) EnCana will use the proceeds of each Annual Payment for the payment of Well Costs for Carry
Wells drilled prior to May 1 of the second year after the Annual Payment is made (each such date,
an “Expenditure Date”). By way of example, the Expenditure Date for the Annual Payment due
November 1, 2009 is May 1, 2011. In the event that EnCana fails to satisfy the requirement in the
first sentence of this paragraph, Delta shall have the right to delay until the next succeeding
Annual Payment Date a portion of the next Annual Payment due after the applicable Expenditure Date,
equal to the difference between (x) the aggregate amount of the Annual Payments paid to EnCana
prior to the applicable Expenditure Date less (y) the total amount of Well Costs incurred and paid
prior to the due date of the applicable Annual Payment. If the last Annual Payment is reduced due
to the application of the formula in the preceding sentence, then an additional Annual Payment
equal to the remaining Carry Amount shall be due on May 1, 2012. Notwithstanding anything stated
herein to the contrary, any portion of the Carry Amount paid by Delta which has not been used by
EnCana on or before May 1, 2013 for Well Costs shall be reimbursed to Delta by June 1, 2013.




     3.4 Delta Interest in Carry Wells. Provided Delta has paid those portions of the
Carry Amount then due and owing pursuant to Section 3.3, on or before the end of each



 









 







quarter, for each Carry Well drilled and completed as a producer in the prior quarter, EnCana
shall execute, acknowledge and deliver to Delta the wellbore assignment, in substantially the form
attached hereto as Exhibit F-1 (the “Carry Well Wellbore Assignment”), effective as
of the date of first production of each Carry Well, assigning 5% of all of EnCana’s right, title
and interest in and to the wellbore of such Carry Well and 5% of EnCana’s right, title and interest
in and to all production therefrom and an interest in such leasehold rights associated with such
wellbore as are sufficient to produce and own 5% of EnCana’s right, title and interest in and to
the Hydrocarbons from the wellbores of the Carry Wells, subject to existing burdens. With respect
to the last Carry Well drilled, if the remaining Carry Amount is less than $1,800,219.30, the
interest assigned by EnCana to Delta shall be proportionately reduced to the extent the remaining
Carry Amount is less (unless the Well Costs for the last Carry Well are less than $1,800,219.30, in
which case the proportionate reduction shall be based on the Well Costs of such Carry Well). By
way of example, if the remaining Carry Amount were $500,000, EnCana owed 100% of the working
interest in the well and the Well Costs were in excess of $1,800,219.30, the interest assigned to
Delta would be equal to $500,000 divided by $1,800,219.30, times 5% (1.3887%). From and after the
date that a Carry Well has been drilled, completed and equipped as contemplated in Section
3.2, Delta and EnCana shall each bear and pay its proportionate share of all burdens on the
Carry Wells existing as of the date of this Agreement. It is expressly agreed and understood that
the interest to be assigned to Delta in any Carry Well shall be proportionately reduced to the
extent that EnCana owns less than an undivided 100% working interest in such Carry Well.



     3.5 Operation of Carry Wells. After a Carry Well is drilled, completed and equipped
as provided in Section 3.2, EnCana and Delta shall each bear and pay its working interest
share of the working interest costs and expenses of such Carry Well in accordance with the
applicable operating agreement. Subject to Section 11, Delta shall be entitled to its net
revenue interest share of production from each Carry Well from the date of first production,
notwithstanding that the Wellbore Assignment has not yet been made.



     3.6 Replacement Wells. In the event that a Carry Well is lost due to mechanical
failure or other problems in the hole and EnCana drills or participates in the drilling of a well
in the vicinity of the Carry Well, which well is drilled to replace the well so lost, such well
will be designated a Carry Well, and the costs of drilling the original Carry Well and such
replacement Carry Well shall be aggregated in determining the Individual Well Amount attributable
to such replacement Carry Well.



     3.7 Letter of Credit. To secure its obligation to pay the Annual Payments, Delta
shall cause an irrevocable, unconditional stand-by letter of credit (the “Letter of Credit”) to be
issued on the date of this Agreement in the initial aggregate amount of $300,000,000 by JPMorgan
Chase Bank, N.A. or a financial institution acceptable to EnCana and in a form and term reasonably
acceptable to EnCana, and that is available to be drawn at sight, in full or partial draws, in the
event of a default by Delta in the payment of any of the second through fourth Annual Payments.
From and after the date of this Agreement, Delta shall maintain the Letter of Credit in favor of
EnCana until



 









 







February 28, 2012 in an amount sufficient to secure payment of each of the Annual Payments as
they become due.



Section 4. Delta Properties




     4.1 Delta Properties. In consideration, among other considerations, of Delta’s
agreement to participate in the Carry Wells as provided in Section 3, on the date of this
Agreement, EnCana shall (i) assign and convey and shall properly execute, acknowledge and deliver
to Delta an assignment conveying to Delta an undivided 95% of its right, title and interest in the
Delta Properties and the EnCana Wells, effective as of March 1, 2008, in substantially the form
attached hereto as Exhibit F-2 (the “Assignment”) and (ii) assign and convey and
shall properly execute and deliver to Delta an Assignment and Bill of Sale for 100% of EnCana’s
right, title and interest in and to the pipeline assets and rights of way listed in Exhibit
N.



     4.2 Adjustment to Delta Properties. Upon Delta’s receipt of the Assignment, the
Parties intend that Delta’s interest in the Delta Properties shall initially be equal to 17,339.46
net acres (18,250 gross acres times 95% working interest) (the “Intended Net Acres”) and
ninety-five percent (95%) of EnCana’s working interest, as shown on Exhibit A-1, in the
EnCana Wells. The Parties acknowledge that Exhibit A to this Agreement and Exhibit A to
the Assignment list 17,185.08 net acres. After the Due Diligence Period (as defined in
Exhibit D), in order to make an assignment of the Intended Net Acres to Delta, EnCana will
make an assignment of 95% of its interest in such alternative leases from the leases listed on
Exhibit D-2 as selected by Delta. If there are not sufficient alternative leases listed on
Exhibit D-2 to equal the Intended Net Acres and the Parties cannot mutually agree on
additional alternative leases by April 29, 2008, then the last Annual Payment of the Carry Amount
to be paid by Delta for all Carry Wells shall decrease by an amount equal to the product of: (i)
the difference between the Intended Net Acres less the total net acres actually assigned to Delta
pursuant to the Assignment multiplied by (ii) $22,398. If during the Due Diligence Period, it is
determined that a Leasehold Defect also applies to an EnCana Well, then the second payment of the
Carry Amount to be paid by Delta on or before November 1, 2009 shall decrease by an amount equal
to the product of: (i) the difference between the working interest in the well listed on
Exhibit A less the actual working interest to be assigned multiplied by (ii) the Allocated
Value for the EnCana Well on Exhibit D-1. If the Carry Amount is decreased pursuant to the
preceding two sentences as a result of a Leasehold Defect, Delta shall reconvey to EnCana,
effective as of the Effective Date and free of any liens, burdens or encumbrances not in existence
at the Effective Date, the affected Delta Properties or the portion of the interest in the EnCana
Well affected by the Leasehold Defect. If it is determined by EnCana during the Due Diligence
Period, that Delta’s interest in the Delta Properties is greater than the Intended Net Acres, or if
Delta selects alternative leases that result in Delta’s interest in the Delta Properties being
greater than the Intended Net Acres, then the last Annual Payment of the Carry Amount to be paid by
Delta for all Carry Wells shall increase by an amount equal to the product of: (i) the difference
between the total net acres actually assigned to Delta pursuant to such assignment(s) less the
Intended Net Acres, multiplied by (ii) $22,398. Notwithstanding anything to the contrary contained
herein, should the Carry



 









 







Amount be reduced by an amount greater than ten percent (10%) of the initial Carry Amount
($41,045,000), EnCana or Delta shall have the right to terminate this Agreement, provided such
election is made on or before April 30, 2008.



     4.3 Adjustment for EnCana Wells. Ninety-five percent of the costs and expenses
incurred by EnCana for normal and necessary operation of the EnCana Wells after the Effective Date,
including (a) taxes on or measured by production and (b) reasonable and customary fixed rate
overhead charges prescribed by applicable operating agreements or, in the absence of operating
agreements, reasonable and customary overhead charges in lieu thereof (and, in each case, excluding
any allocable general and administrative expenses) shall be borne by Delta. All such costs
incurred prior to the Effective Date shall be borne by EnCana. By June 2, 2008 (the “Final
Settlement Date”), EnCana shall prepare and deliver to Delta a Settlement Statement for the EnCana
Wells as follows:




(a) The Total Allocation for the EnCana Wells shown on Exhibit D-1 shall be adjusted
upward by the following:




	 	(1)	 	the value of all merchantable allowable oil in storage owned by EnCana
above the pipeline connection at the Effective Date, and not previously sold by
EnCana, that is credited to EnCana’s interest in the EnCana Wells, such value to be
the actual price received on the Effective Date (if this price cannot be determined,
then the contract price, or if no contract is in effect, the market price in effect
as of the Effective Date), less taxes and gravity adjustments deducted by the
purchaser of such oil;






	 	(2)	 	ninety-five percent of the amount of all expenditures made by EnCana
(including royalties, rentals and other charges and expenses billed under applicable
operating agreements, or in the absence of an operating agreement, expenses of the
sort customarily billed under such agreements, but excluding EnCana’s general and
administrative overhead expenses) with respect to the EnCana Wells which relate to
the period after the Effective Date; and






	 	(3)	 	an amount equal to ninety-five percent of all prepaid expenses attributable
to the EnCana Wells that are and that are, in accordance with generally accepted
accounting principles, attributable to the period after the Effective Date including,
without limitation, prepaid utility charges, prepaid ad valorem, property,
production, severance and similar taxes (but not including income taxes) based upon
or measured by the ownership of property or the production of hydrocarbons or the
receipt of proceeds therefrom which are Buyer’s expenses in accordance with this
Section 5.5.






(b) The Total Allocation for the EnCana Wells shall be adjusted downward by the following:



 









 






	 	(1)	 	ninety-five percent of the proceeds actually received or accrued by or on
behalf of EnCana, prior to the Final Settlement Date, attributable to the EnCana
Wells and that are attributable to the period of time from and after the Effective
Date; and






	 	(2)	 	an amount equal to all unpaid ad valorem, property, production, severance
and similar taxes and assessments based upon or measured by the ownership of the
property or production of hydrocarbons or the receipt of proceeds therefrom accruing
to the EnCana Wells in accordance with generally accepted accounting principles prior
to the Effective Date (it being agreed that any tax measured on the basis of
production shall be deemed to be a tax assessed for the period during which such
production occurred regardless of the actual year of assessment), which amount shall,
to the extent not actually assessed, be computed based upon such taxes and
assessments for the preceding calendar year, or if such taxes or assessments are
assessed on other than a calendar year basis, for the tax related year last ended
(and such adjustment on the Final Settlement Date shall be final settlement of such
taxes between EnCana and Delta).




As soon as practicable after receipt of the Settlement Statement, Delta shall deliver to EnCana a
written report containing any changes that Delta proposes to be made to the Settlement Statement.
The parties undertake to agree with respect to such amounts due no later than June 30, 2008. In
the event that (a) the final Total Allocation for the EnCana Wells is more than the allocation
shown on Exhibit D-1, Delta shall pay to EnCana the amount of such difference, or (b) the
final Total Allocation for the EnCana Wells is less than the allocation shown on Exhibit
D-1, EnCana shall pay to Delta the amount of such difference, in either event by wire transfer
of immediately available funds.




     4.4 Termination of Existing Agreement. Effective as of the date of assignment of the
Delta Properties from EnCana to Delta as provided in Section 4.1, the Carry and Earning
Agreement dated March 26, 2007, between EnCana and Delta (the “Existing Agreement”) shall
terminate and all past, present and future obligations created by the Existing Agreement shall
terminate and be of no force and effect. It is hereby acknowledged that EnCana has already paid
Delta $11,631,797.62 for its share of wells drilled under the Existing Agreement and Delta has paid
EnCana certain funds in accordance with the Existing Agreement. Neither party shall be required to
reimburse the other party for any amounts paid pursuant the Existing Agreement nor shall either
party be obligated to pay the other party any additional amounts due and payable pursuant to the
Existing Agreement. Concurrently with the assignment of the Delta Properties, EnCana shall
execute, acknowledge and deliver to Delta a Wellbore Assignment, covering the wells described on
Exhibit B (“Existing Agreement Wells”), in substantially the form attached hereto
as Exhibit F-3, effective as of the date of first production of each Delta Well, assigning
100% of all of EnCana’s right, title and interest in and to the wellbore of the Existing Agreement
Wells and production therefrom and an interest in such leasehold rights associated with such
wellbore as are sufficient to produce and own 100% of EnCana’s right, title and interest in and to
the



 









 







Hydrocarbons from the wellbores of the Existing Agreement Wells. EnCana shall also execute
and deliver to Delta a release of the existing letter of credit (the “Existing Letter of Credit”)
delivered by Delta pursuant to the Existing Agreement in substantially the form attached hereto as
Exhibit M. In the event that this Agreement terminates pursuant to Section 4.2 or for any
other reason (other than pursuant to Section 9), the Existing Agreement shall be reinstated
and ratified by the Parties, Delta shall reconvey to EnCana the Existing Agreement Wells effective
as of the date of first production, and free of any liens, burdens or encumbrances not in existence
at the date of first production, and shall cause the Existing Letter of Credit to be reissued, and
the Parties shall be entitled to all rights and shall bring current all suspended payment
obligations under the Existing Agreement.



     4.5 EnCana Participation in Delta Wells. EnCana shall pay its working interest share
of the costs of drilling, costs of completing (or plugging and abandoning, if not completed) and
costs of equipping each of the wells drilled by Delta on the Delta Properties (“Delta
Wells”) in which it elects to participate; provided that EnCana’s obligation to pay its working
interest share of such costs shall be limited to its working interest share of a gross maximum cost
(on an 8/8ths basis) of $2,300,000 per Delta Well (the “Individual Delta Well Amount”)
drilled by Delta upon the Delta Properties, and Delta will pay its and EnCana’s working interest
share of any costs exceeding the Individual Delta Well Amount for such wells. In the event that a
Delta Well is lost due to mechanical failure or other problems in the hole and Delta drills or
participates in the drilling of a well in the vicinity of the Delta Well, which well is drilled to
replace the well so lost, EnCana will be deemed a participant in such replacement well and Delta
will pay its and EnCana’s working interest share of any costs exceeding the Individual Delta Well
Amount for such replacement well. The costs of drilling the original Delta Well and such
replacement Delta Well shall be aggregated in determining the Individual Delta Well Amount
attributable to such replacement Delta Well. Costs and operations after a Delta Well has been
drilled, completed and equipped as provided for in Section 3.2, will be conducted in
accordance with the operating agreement applicable to such Delta Well.



     4.6 Consents to Assign. If a consent to assignment is required prior to the assignment
of any lease or other agreement to Delta, Delta agrees that such consent may be obtained by the
Parties after the date of this Agreement. If the Parties are unable to obtain a required consent
to assignment by April 30, 2008, Delta agrees to reassign the affected lease or agreement to
EnCana. Failure to obtain a consent to assignment of a lease shall be treated as a Title Defect
pursuant to the procedure in Exhibit D, and the Parties shall follow the procedure for
assignment of alternative leases in Section 4.2.



     4.7 Fee Parcel of Property. Upon Delta’s written request made on or before July 1,
2008, EnCana shall quitclaim to Delta and shall properly execute, acknowledge and deliver to Delta
a quitclaim assignment in the form of Exhibit F-4 of 100% of its right, title and interest
in the parcel of land listed in Exhibit F-4.



 









 





Section 5. Operations; Operating
Agreement




     5.1 Operating Agreement for Property Not Currently Subject to an Operating Agreement.
EnCana and Delta shall enter into the form of operating agreement attached hereto as Exhibit
G (“New Operating Agreement”) which shall govern all operations for the Carry Wells and
Delta Properties, excluding the Existing Agreement Wells. EnCana shall be designated as Operator
of all Carry Wells, and Delta shall be designated as operator of all Delta Properties. Upon spud
of a Carry Well, the New Operating Agreement shall be deemed amended to include the new well.



     5.2 Operations in the Buzzard Creek Unit and Termination of Gathering Agreement. The
Parties shall use their reasonable efforts to have Delta approved by the Bureau of Land Management
(“BLM”) as operator of the Buzzard Creek Federal Unit 14-08-001-6391 (the “Buzzard
Creek Unit”). Provided this Agreement is not terminated pursuant to Section 4.2, upon
approval of the BLM of Delta as operator of the Buzzard Creek Unit, EnCana shall relinquish
operatorship of the Buzzard Creek Unit to Delta. Prior to BLM approval of Delta as operator,
EnCana shall continue to operate the Buzzard Creek Unit. As between the Parties and their
permitted successors and assigns all operations within the Buzzard Creek Unit shall be governed by
the terms and conditions of the New Operating Agreement. Contemporaneously with EnCana’s
relinquishment of operatorship of the Buzzard Creek Unit to Delta, the February 1, 2008 Gas
Gathering Agreement, as amended, between EnCana, as “Gatherer,” and Delta, as “Shipper” shall
terminate.



     5.3 Operations in the Middleton Creek Unit. All Delta Wells drilled on lands within
the Middleton Creek Federal Unit COC68997X (the “Middleton Creek Unit”) shall be operated by Delta
subject to the terms of the Agent Operator Agreement attached hereto as Exhibit O. As
between the Parties and their permitted successors and assigns all operations within the Middleton
Creek Unit shall be governed by the terms and conditions of the New Operating Agreement.



     5.4 Applications for Permits to Drill. In order to assist Delta in carrying out its
drilling program on the Delta Properties, EnCana will use its reasonable best efforts to prepare
and submit to the Colorado Oil and Gas Conservation Commission up to fifty Applications for Permits
to Drill (“APDs”) on the Delta Properties. In connection with the preparation of the APDs, Delta
shall provide to EnCana the information set forth on Exhibit H.



     5.5 Conflicts. If any of the Delta Properties or Carry Wells are subject to an
existing operating agreement with a third party, such existing operating agreement shall control as
to such third party. However, as between Delta and EnCana, this Agreement and the New Operating
Agreement shall control. In the event of any conflict or inconsistency between the terms of this
Agreement and the New Operating Agreement, this Agreement shall prevail to the extent of such
conflict. If Delta and/or EnCana acquire the entire interest covered by an existing third party
operating agreement, then such third party agreement shall be superseded and replace in its
entirety by the New Operating Agreement. The Parties intend that the New Operating Agreement shall



 









 







govern a Party’s election to participate in a well other than the Carry Wells.
Notwithstanding anything herein or in the New Operating Agreement to the contrary, Delta shall not
propose the drilling of any Carry Well or any well to be drilled on the Carry Lands.
Notwithstanding anything herein or in the New Operating Agreement to the contrary, EnCana shall not
propose the drilling of any well to be drilled on the Delta Properties prior to April 15, 2010.



     5.6 Payment of Burdens. After the Effective Date, if EnCana or Delta creates any
additional burdens on the Property, the Party creating such additional burden shall be solely
responsible for and shall pay such additional burdens. Subject to the foregoing sentence, each
operating Party shall make payment of all burdens affecting lands operated by such Party, and the
non-operating Party shall reimburse the operating Party for all burdens on the interest of the
non-operating Party. It is the intent of the Parties that Delta, as designated operator of the
Buzzard Creek Area Unit (the “Unit”) shall be responsible for remitting payment to the
Minerals Management Service and to the owners of all burdens in existence as of the Effective Date.
Delta acknowledges that payment of royalties and overriding royalties associated with a portion of
the Property is subject to the outcome of the lawsuit styled Miller, et al. v EnCana Oil & Gas
(USA) Inc., Case No. 05CV2753, filed in District Court for the City and County of Denver, Colorado
(the “Miller Litigation”). EnCana shall be responsible for all liabilities relating to the Miller
Litigation for the period prior to the Effective Date.



     5.7 Payment of Delay Rentals and Distribution of Revenue. EnCana agrees to pay all
delay rentals, shut-in or minimum royalty payments or any other lease payments necessary to
maintain the leases or agreements assigned to Delta (“Rental Payments”) in effect and coming due
during the period from the Effective Date to July 31, 2008. Delta shall reimburse EnCana for its
proportionate share of such Rental Payments. EnCana shall not be liable for any damages resulting
from the failure to make proper payment of a Rental Payment where the failure is a result of
mistake or oversight. In addition, EnCana agrees to distribute the proceeds attributable to
production from the EnCana Wells through and including the production month of June 2008.



Section 6. Representations and
Warranties




          Each Party, with respect to itself only, hereby represents and warrants to the other
Party the following:



          (i) Each Party is duly organized, validly existing and in good standing under the applicable
laws of the State of its incorporation or formation, and is qualified to do business and is in good
standing in the State of Colorado and in every other jurisdiction where the failure to so qualify
would have a Material Adverse Effect on its ability to execute, deliver and perform this Agreement
and the other agreements contemplated herein.



          (ii) Each Party has all requisite power and authority to (i) own, lease or operate its assets
and properties and to carry on the business as now conducted, and (ii)



 









 







enter into and perform its obligations under this Agreement and to carry out the transactions
contemplated hereby.



          (iii) Each Party has taken (or caused to be taken) all acts and other proceedings required to
be taken by such Party to authorize the execution, delivery and performance by such Party of this
Agreement and the other agreements contemplated herein. This Agreement has been duly executed and
delivered by each Party and constitutes the valid and binding obligation of each Party, enforceable
against such Party in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, moratorium, reorganization or similar laws affecting the rights of creditors
generally and by principles of equity, whether considered in a proceeding at law or in equity. The
execution, delivery and performance of this Agreement by each Party does not and will not (i)
conflict with, or result in any violation of or constitute a breach or default (with notice or
lapse of time, or both) under (A) any provision of the organizational documents of such Party, or
(B) any Law, agreement, instrument or license applicable to such Party or (with respect to EnCana)
to the Property, except as would not have a Material Adverse Effect or (ii) require the submission
of any notice, report, consent or other filing with or from any Governmental Authority or third
Persons, other than such consents are Customary Post-Closing Consents.



          (iv) Except for the Miller Litigation, there are no actions, suits or proceedings pending or,
to such Party’s knowledge, threatened against a Party which if decided unfavorably to such Party
could have a Material Adverse Effect on the ability of such Party to execute, deliver or perform
this Agreement or the other agreements contemplated herein or (with respect to EnCana) have a
Material Adverse Effect on the Delta Properties.



          (v) No Party has incurred any obligation or liability, contingent or otherwise, for any fee
payable to a broker or finder with respect to the matters provided for in this Agreement or the
other agreements contemplated herein which could be attributable to or charged to the other Party.
Each Party shall indemnify, defend and hold harmless the other Party from any claims, damages,
liabilities, costs and expenses, including reasonable attorney’s fees in the event the prior
sentence should be or become untrue as to such Party.



Section 7. Force Majeure




     If a Party is rendered unable, wholly or in part, by a force majeure event to carry out its
obligations under this Agreement, other than the obligations to make money payments and to deliver
assignments of interests in the Carry Wells and in the Delta Properties, the affected Party shall
give the other Party prompt written notice describing the force majeure event in reasonable detail.
Thereupon, the obligations of the Party giving notice, so far as it is affected by the force
majeure event, shall be suspended and any time periods provided for in this Agreement shall be
extended for a period equal to the period of such force majeure event, the continuance of the force
majeure event. The affected Party shall use all reasonable diligence to remove the force majeure
event as quickly as practicable. The requirement that any force majeure event be remedied with



 









 







all reasonable dispatch shall not require the settlement of strikes, lockouts or other labor
difficulty by the Party affected, contrary to its wishes, and settlement or resolution of such
matters shall be within the discretion of the affected Party. The term “force majeure
event” as used herein, shall mean an act of God, act of terrorism, strike, lockout, or other
industrial disturbance, act of the public enemy, war, blockade, public riot, lightning, fire,
storm, flood, explosion, governmental action, restraint or inaction, inability to gain access,
ingress or egress to conduct operations (including without limitation delays in or inability to
obtain permits, approvals or clearances from governmental bodies); provided, however, that a force
majeure event shall not exist until 120 days, or such longer period specified in the applicable
regulations, after timely application to a governmental body.



Section 8. Gathering, Processing, and treating Services





     8.1 Provision of Services/Delta Properties. With regard to gas produced from EnCana
Wells and Delta Wells drilled pursuant to the terms of this Agreement which is attributable to a
working interest held by EnCana or a royalty or overriding interest burdening such gas (“EnCana
Gas”), Delta shall provide services necessary to gather, process, treat, and redeliver 100%
(less EnCana’s proportionate share of actual fuel usage and shrink, if applicable) of EnCana Gas
into the TransColorado pipeline, downstream of TransColorado’s interconnect facilities (the
“TransColorado Interconnect”) with the Collbran Valley Gas Gathering System operated by DCP
Midstream Partners (“DCP”), or other points mutually agreed or required under existing
agreements. The TransColorado Interconnect is located in Section 18, Township 10S, Range 96W, Mesa
County, Colorado. Delta shall redeliver, or cause to redeliver, EnCana Gas at a pressure and
quality meeting the most restrictive specifications required by the interconnecting pipeline.



     8.2 Delta Facilities. Delta will design and construct facilities, at its sole risk and
expense, necessary to receive 100% of EnCana Gas from the wellhead and deliver such gas at
pressures sufficient to enter the Collbran Valley Gas Gathering System or other mutually agreeable
location. In exchange, EnCana shall pay $0.42/Mcf, plus EnCana’s proportionate share of actual
fuel usage and shrink, if applicable. The Parties anticipate that in moving the gas to an
interconnection with DCP or another location, Delta will provide gathering, dehydration and three
stages of compression. In the future, if all or a portion of such services are provided by a third
party or any portion of the services provided by Delta is reduced or modified, the Parties agree to
renegotiate the fee.



     8.3 Condensate and Natural Gas Liquids. EnCana shall retain and own all Condensate
and Natural Gas Liquids attributable to EnCana Gas. For the avoidance of doubt, and for the
purposes of this Agreement, the term “Condensate and Natural Gas Liquids” shall include,
without limitation, any and all liquid hydrocarbons and concomitant materials separated, extracted,
or condensed as a result of the gathering, processing, treating, and/or the provision of services
under this Section 8.



 









 





     8.4 Marketing of EnCana Gas, Condensate and Natural Gas Liquids and Taking In-Kind/Delta
Properties. Notwithstanding Sections 8.1 and 8.2 above, the marketing of volumes of
EnCana Gas and Condensate and Natural Gas Liquids, as well as EnCana’s right to take such volumes
in-kind, shall be governed by Sections 8.4(a) and 8.4(b) below.



     (a) Subject to EnCana’s right to take in-kind as set forth below, Delta will market 100% of
EnCana Gas and the Condensate and Natural Gas Liquids attributable to such gas. With respect to
EnCana Gas, EnCana will receive Delta’s weighted average price for gas sales into TransColorado,
less (i) Delta’s actual cost of service on DCP’s facilities and (ii) the fees described in
Section 8.2 above. EnCana will receive the actual price received by Delta for the sale of
Condensate and Natural Gas Liquids attributable to EnCana Gas. Notwithstanding anything to the
contrary in this Agreement, in no event shall gas attributable to an interest of Delta or any of
its working interest owners be accorded a greater priority for services on the DCP facilities or
any other facilities than EnCana Gas; and,



     (b) EnCana will have an option, after giving at least thirty (30) days’ notice, to take its
share of EnCana Gas, Condensate and Natural Gas Liquids in-kind. Such option may be exercised to
allow EnCana to receive its gas volume in-kind at (i) the wellhead, (ii) any interconnection with
DCP, (ii) the TransColorado Interconnect, or (iii) any other location designated by EnCana,
provided Delta is not burdened by incremental costs related with such designated location. In
addition, owners of royalty interests burdening EnCana Gas shall have the right to take in-kind in
accordance with the instrument granting such royalty interest.



     8.5 Marketing of Delta Gas and Taking In-kind/Carry Wells. The marketing of volumes
of Delta Gas (as defined below) and Condensate and Natural Gas Liquids, as well as Delta’s right to
take volumes of Delta Gas in-kind, shall be governed by Sections 8.5(a) and 8.5(b) below.



     (a) With regard to gas produced from Carry Wells drilled pursuant to the terms of this
Agreement which is attributable to a working interest held by Delta or a royalty or overriding
interest burdening such gas (“Delta Gas”), and subject to Delta’s right to take in-kind as
set forth below, EnCana will market 100% (less Delta’s proportionate share of actual fuel usage and
shrink, if applicable) of Delta Gas and the Condensate and Natural Gas Liquids attributable to such
gas. With respect to Delta Gas, Delta will receive EnCana’s weighted average price for the sale of
such gas, less EnCana’s costs incurred to market and deliver such gas. Delta will receive the
actual price received by EnCana for the sale of Condensate and Natural Gas Liquids attributable to
Delta Gas. Notwithstanding anything to the contrary in this Agreement, in no event shall gas
attributable to an interest of EnCana or any of its working interest owners be accorded a greater
priority for services than Delta Gas; and,



     (b) Delta will have an option, after giving at least thirty (30) days’ notice, to take its
share of Delta Gas in-kind. Such option may be exercised to allow Delta to receive its gas volume
in-kind at (i) the wellhead, (ii) tailgate of the Meeker Processing



 









 







Plant in Rio Blanco, Colorado operated by Enterprise Gas Processing, LLC
(“Enterprise), or (iii) any other mutually agreeable location; provided, however, Delta
shall be required to pay its allocated share of fees and costs associated with Delta’s exercise of
its option to take its share of Delta Gas in kind. In addition, owners of royalty interests
burdening Delta Gas shall have the right to take in-kind in accordance with the instrument granting
such royalty interest.



     8.6 Proposed Facilities. EnCana proposes to construct, or cause to be constructed,
gathering and compression facilities (the “Required Facilities”) to allow all gas produced
by Delta pursuant to the terms of this Agreement, with the exception of gas subject to a
pre-existing commitment for gathering and processing services, be delivered into the existing
EnCana Great Divide Gathering System. It is planned that production from the Required Facilities
would be delivered to the Enterprise Piceance Creek Pipeline and Meeker Plant in accordance with
existing gathering and processing agreements. Delta, on behalf of itself and its affiliates,
successors, and assigns, also acknowledges that, except for gas produced by Delta from the “Lands”
as defined in the Existing Agreement (the “Excluded Gas”), gas produced from Delta Wells
attributable to a working interest held by Delta or a royalty or overriding royalty interest
burdening such gas shall be dedicated to EnCana and the Required Facilities (“Delta Dedicated
Gas”) in accordance with the terms and conditions set forth below. Notwithstanding the
foregoing, the Parties also acknowledge and agree that 65% of the interest in Existing Agreement
Wells shall not be included within the definition of Excluded Gas, and such 65% interest in such
wells, as well as EnCana Gas, is dedicated to Enterprise for the life of lease under existing
gathering and processing agreements. Delta and EnCana agree to negotiate in good faith a
definitive long term gathering and processing agreement for Delta Dedicated Gas, which terms shall
include the following: (i) a total fee for services in the range of $0.50 to $0.60 per MMBtu, plus
allocated fuel, power, and lost and unaccounted for gas; (ii) a term for a minimum of fifteen
years; (iii) a provision to escalate the fee on an annual basis by the percentage increase or
decrease, if any, in the Consumer Price Index for All Urban Consumers; and, (iv) such other terms
and conditions, including provisions for the temporary release of gas, as are customary for a firm
gathering and processing agreement of the nature contemplated by the Parties pursuant to this
Section 8.6.



Section 9. Term 




     The term of this Agreement (“Term”) shall begin on the Effective Date and, unless
earlier terminated as provided herein, shall continue until June 1, 2013. The confidentiality
obligations of the Parties shall survive any such termination in accordance with their terms.



Section 10. Assignability; Binding
Nature




       Neither Party may assign or transfer, by assignment, sale, farmout or otherwise
(collectively, “Transfer”) in whole or in part any of its rights or obligations under this
Agreement, or any of its rights or interests in either the Carry Wells or the Delta Properties or
other rights or interests earned or acquired hereunder (collectively, the



 









 







“Partnership Property”), except to an assignee or transferee (including any Affiliate of
the transferring Party) who agrees in writing to assume, be bound by and fully and timely perform
the terms of this Agreement, the New Operating Agreement, the tax partnership provisions attached
as Exhibit J and such other transfer provisions and conditions as shall be reasonably
requested by the non-assigning or non-transferring Party required by the tax partnership provisions
attached as Exhibit J, and then only if any such Transfer does not cause any portion of the
Partnership Property to no longer be treated as held by the tax partnership for federal income tax
purposes or by its deemed successor tax partnership under Section 708(b)(1)(B) of the Internal
Revenue Code. Neither Party shall have the right to assign this Agreement without the prior
written consent of the other Party, such consent not to be unreasonably withheld, provided that
such consent shall be based upon the technical and financial ability of the proposed assignee to
perform the duties and obligations of the assignor. If a Party fails to deliver a written response
to a Party’s written request for consent to assignment hereunder on or before 15 days after receipt
of such request, such party shall be deemed conclusively to have consented to such proposed
assignment hereunder. Any assignment hereunder shall be subject to all of the terms and conditions
of this Agreement, and the assignee shall agree to assume, bear and perform the assignor’s duties
and obligations hereunder. The foregoing notwithstanding, either Party shall be entitled to
Transfer an interest in the Property to an Affiliate without the consent of the other Party, but
the transferring Party shall remain liable for the performance of its obligations hereunder
notwithstanding such transfer in the event of a default by such Affiliate hereunder. Provided
however, nothing herein will prohibit Delta from granting a lien on its interest in any Carry Well
and the subsequent foreclosure or other realization on such liens, provided the Person receiving
such interests agrees to be bound to the provisions above. This Agreement shall be binding upon
and shall inure to the benefit of successors of the Parties.



Section 11. Payment Offset 




     If a Party fails to make any payment to the other when due, in addition to, and not
in lieu of, other available remedies, the non-defaulting Party may offset any amount owed by the
non-defaulting Party to the defaulting Party.



Section 12. Notices




     All notices and communications required or permitted under this Agreement shall be in writing
addressed as indicated below, and any communication or delivery hereunder shall be deemed to have
been duly delivered upon the earliest of: (a) actual receipt by the Party to be notified; (b) three
(3) days after deposit with the US Postal Service, certified mail, postage prepaid, return receipt
requested; (c) if by facsimile transmission, upon confirmation by the recipient of receipt; or (d)
by Federal Express overnight delivery (or other reputable overnight delivery service), two days
after deposited with such service. Addresses for all such notices and communication shall be as
follows:



 









 





	 	 	 
	To EnCana:

	 	EnCana Oil & Gas (USA) Inc.
	 

	 	370 17th Street, Suite 1700
	 

	 	Denver, Colorado 80202
	 

	 	Attention: Team Lead, South Piceance
	 

	 	Phone: 720.876.3597
	 

	 	Fax: 720.876.4597
	 

	 	Email: joel.fox@encana.com
	 
	 	 
	To Delta:

	 	Delta Petroleum Corporation
	 

	 	370 17th Street, Suite 4300
	 

	 	Denver, Colorado 80202
	 

	 	Attention: Mr. Lyell Coe
	 

	 	Phone: 303.293.9133
	 

	 	Fax: 303.298.8251
	 

	 	Email:





Either Party may, upon written notice to the other Party, change the address and person to whom
such communications are to be directed.




Section 13. Relationship of the
Parties




       This Agreement is not intended to create, and shall not be construed to create, an
association for profit, a trust, a joint venture, a mining partnership or other relationship of
partnership, or entity of any kind between the Parties. Notwithstanding anything to the contrary
contained herein, the Parties understand and agree that the arrangement and undertakings evidenced
by this Agreement, taken together, result in a partnership for purposes of federal income taxation
and for purposes of certain state income tax laws which incorporate or follow federal income tax
principles as to tax partnerships. For these purposes, the Parties agree to be governed by the tax
partnership provisions attached as Exhibit J, which are incorporated herein and made a part
of this Agreement by this reference. For every purpose other than the above-described income tax
purposes, however, the Parties understand and agree that the liabilities of the Parties shall be
several, not joint or collective, and that each Party shall be solely responsible for its own
obligations. In the event of any conflict or inconsistency between the terms and conditions of
Exhibit J and the terms and conditions of this Agreement or any attachment or exhibit
hereto (other than Exhibit J), the terms and conditions of Exhibit J shall govern
and control.



Section 14. Entire Agreement




     This Agreement, the Wellbore Assignment, the Assignment, and the Operating Agreements, and
the exhibits hereto and thereto, contain the entire agreement of the Parties with respect to the
subject matter hereof and supersede all previous agreements or communications between the Parties,
verbal or written, with respect to the subject matter hereof.



 









 





Section 15. Governing Law; Venue for
Disputes




     This Agreement shall be governed by and construed and interpreted in accordance with the laws
of the State of Colorado, without reference to its conflicts of laws provisions.



Section 16. Amendments;
Waiver




     No amendments or other modifications or changes to this Agreement shall be effective or
binding on either Party unless the same shall be in a writing executed by both Parties. No waiver
by either Party of any one or more defaults by the other in the performance of this Agreement shall
operate or be construed as a waiver of any future default or defaults, whether of a like or
different nature.



Section 17. Confidentiality, Public
Announcements and Recordation of Documents




     17.1 General. Except as permitted herein, for a period of one year after the date of
this Agreement, both Parties shall maintain the terms of this Agreement in strict confidence, and
shall not disclose the same to any third party except (a) to the extent compelled by Governmental
Authority or Law, (b) to its Affiliated entities, and its and their respective attorneys,
accountants, advisors and employees who shall be advised of the confidential nature of this
Agreement, or (c) to the extent required by the rules of any exchange on which securities of a
party or its Affiliates are listed. Prior to any disclosures described in (a) or (c) above, the
disclosing Party shall notify the non-disclosing Party, and except as prohibited by Law, the
non-disclosing Party shall be afforded reasonable opportunity to review and comment upon the
content of the proposed disclosure and to seek appropriate protective orders.



     17.2 Public Announcements. Unless otherwise agreed and except as provided in
Section 17.1, neither Party shall make any public announcement or statement with respect to
this Agreement or the transactions contemplated hereby.



     17.3 Recordation of Documents. The Parties agree to cooperate in good faith and
execute such documents and to take such action as may be required to have the Wellbore Assignments
and the Assignment and any other documents which are necessary or helpful to establish for purposes
of public notice Delta’s rights hereunder filed of public record in the land records of Mesa and
Garfield Counties, Colorado.



Section 18. Nonsolicitation




     For a period of twelve months after the Effective Date of this Agreement, each Party agrees
not to solicit for hire in connection with the Party’s operations in the Piceance Basin, as an
officer, employee, agent, independent contractor or otherwise, any current officer, director,
employee of the other Party or independent contractor who works solely for the other Party. The
foregoing prohibition on solicitation shall not include an advertisement published in a national
newspaper or other similar recruiting media that are not expressly designed or targeted to solicit
the employees of the other



 









 







Party and also shall not apply to the situation wherein an employee of a Party voluntarily
approaches the other Party for employment. Inasmuch as it is now and ever will be impracticable
and extremely difficult to determine the actual damage resulting to a Party from breach of this
Section, each Party agrees to pay to the other the sum of $100,000 for breach of this Section, such
amount to be deemed liquidated damages and not in the nature of a penalty.



Section 19. Severability




     If a court of competent jurisdiction determines that any clause or provision of this Agreement
is void, illegal or unenforceable, the other clauses and provisions hereof shall remain in full
force and effect, and the clauses or provisions that are determined to be void, illegal or
unenforceable shall be limited so that that they remain in effect to the extent permitted by law.



Section 20. Mutuality




     The Parties acknowledge and declare that this Agreement is the result of extensive
negotiations between them. Accordingly, if there is any ambiguity in this Agreement, there shall
be no presumption that this instrument was prepared solely by either Party.



Section 21. Dispute
Resolution




     The Parties agree to resolve all disputes concerning or relating to this Agreement pursuant to
the provisions of this Section. The Parties agree to submit all disputes to binding arbitration in
Denver, Colorado. The arbitration will be conducted according to the procedure that follows. The
arbitration proceedings shall be governed by Colorado law and shall be conducted in accordance with
the rules for Non-Administered Arbitration of Business Disputes published by The Center for Public
Resources, Inc., with discovery to be conducted in accordance with the Federal Rues of Civil
Procedure, and with any disputes over the scope of discovery to be determined by the Arbitrators
(as defined below). The arbitration shall be before a single Arbitrator chosen by the mutual
agreement of the Parties, or if no agreement as to the identity of the Arbitrator can be reached
within ten days, a three-person panel of neutral Arbitrators, consisting of one person chosen by
each Party, and the two Arbitrators so selected choosing the third. The panel so chosen or the
single person are referred to herein as the “Arbitrators.” The Arbitrators shall conduct a hearing
no later than 60 days after submission of the matter to arbitration, and the Arbitrators shall
render a written decision within 30 days of the hearing. At the hearing, the Parties shall present
such evidence and witnesses as they may choose, with or without counsel. Adherence to formal rules
of evidence shall not be required, but the Arbitrators shall consider any evidence and testimony
that they determine to be relevant, in accordance with procedures that they determine to be
appropriate. Any award entered in the arbitration shall be made by a written opinion stating the
reasons and basis for the award made and any payment due pursuant to the arbitration shall be made
within 15 days of the decision by the Arbitrators. The decision of the Arbitrators shall be
binding on the



 









 







Parties, final and non-appealable, and may be filed in a court of competent jurisdiction and
may be enforced by either Party as a final judgment of such court. Each Party shall bear its own
costs and expenses of the arbitration, provided, however, that the costs of employing the
Arbitrators shall by shared equally by the Parties.



Section 22. Waiver of Consequential Damages.




     FOR THE AVOIDANCE OF DOUBT, EACH PARTY HEREBY EXPRESSLY DISCLAIMS, WAIVES AND RELEASES THE
OTHER PARTY FROM ITS OWN SPECIAL, EXEMPLARY, PUNITIVE, CONSEQUENTIAL, INCIDENTAL, AND INDIRECT
DAMAGES (INCLUDING LOSS OF, DAMAGE TO OR DELAY IN PROFIT, REVENUE OR PRODUCTION) RELATING TO,
ASSOCIATED WITH, OR ARISING OUT OF THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY. NO LAW,
THEORY, OR PUBLIC POLICY SHALL BE GIVEN EFFECT WHICH WOULD UNDERMINE, DIMINISH, OR REDUCE THE
EFFECTIVENESS OF THE FOREGOING WAIVER, IT BEING THE EXPRESS INTENT, UNDERSTANDING, AND AGREEMENT OF
THE PARTIES THAT SUCH DAMAGE WAIVER IS TO BE GIVEN THE FULLEST EFFECT, NOTWITHSTANDING THE
NEGLIGENCE (WHETHER SOLE, JOINT OR CONCURRENT), GROSS NEGLIGENCE, WILLFUL MISCONDUCT, STRICT
LIABILITY OR OTHER LEGAL FAULT OF ANY PARTY.



Section 23. Further
Assurances




     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 or other instrument delivered
pursuant hereto.



Section 24. Counterpart
Execution




     This Agreement may be executed by signing an original or a counterpart thereof. If this
Agreement is executed in counterparts, all counterparts taken together shall have the same effect
as if all the Parties had signed the same instrument.



[signature page follows]




 









 





     In Witness Whereof, this Agreement is executed and effective as of the Effective Date first
above written.



	 	 	 	 	 	 	 
	EnCana:	 	Delta:
	 
	 	 	 	 	 	 
	EnCana Oil & Gas (USA) Inc.	 	Delta Petroleum Corporation
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ Darrin Henke
	 	By:
	 	/s/ Roger A. Parker
	 

	 	 
	 	 	 	 
	 

	 	Darrin Henke
	 	 	 	Roger A. Parker
	 

	 	Vice President
	 	 	 	Chief Executive Officer