Exhibit 10.35


 


UNIT AGREEMENT


 


COOPER JAL UNIT


 


LEA COUNTY, NEW MEXICO


 

















 


CERTIFICATION - DETERMINATION


 


Pursuant
to the authority vested in the Secretary of Interior as to Federal Lands, under
the Act approved February 25, 1920, 41 Stat. 437, as amended, 30 U.S.C.
Secs, 181, et seq., and delegated to the Oil and Gas Supervisor of the
Geological Survey (33 F.R. 5812) I do hereby


 


A.            Approve the attached
agreement for the development and operation of the Cooper Jal Unit, Lea County,
New Mexico.


 


B.            Certify and determine
that the unit plan of development and operation contemplated in the attached
agreement is necessary and advisable in the public interest for the purpose of
more properly conserving the natural resources.


 


C.            Certify and determine
that the drilling, producing, rental, minimum royalty and royalty requirements
of all Federal Leases committed to said agreement are hereby established,
altered, changed, or revoked to conform with the terms and conditions of this
agreement.


 


 


	
   

  	
   

  	
   

  
	
  Dated

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Regional
  Oil and Gas Supervisor,

  
	
   

  	
   

  	
  UNITED
  STATES GEOLOGICAL SURVEY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Contract
  Number

  	
   

  	
   

  	
   

  
				



 

















 


UNIT AGREEMENT

COOPER JAL UNIT

LEA COUNTY, NEW MEXICO


 


Table of Contents


 


	
  Article

  	
   

  	
  Title

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  I

  	
   

  	
  Enabling
  Act and Regulations

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  II

  	
   

  	
  Definitions

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  III

  	
   

  	
  Unit
  Area and Exhibits

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IV

  	
   

  	
  Expansion
  of Unit Area

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  V

  	
   

  	
  Unitized
  Land and Unitized Substances

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VI

  	
   

  	
  Unit
  Operator

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VII

  	
   

  	
  Resignation
  or Removal of Unit Operator

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VIII

  	
   

  	
  Successor
  Unit Operator

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IX

  	
   

  	
  Accounting
  Provisions and Unit Operating Agreement

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  X

  	
   

  	
  Rights
  and Obligations of Unit Operator

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XI

  	
   

  	
  Plan
  of Operations

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XII

  	
   

  	
  Easements
  or Use of Surface

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XIII

  	
   

  	
  Tract
  Participation

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XIV

  	
   

  	
  Tracts
  Qualified for Participation

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XV

  	
   

  	
  Allocation
  of Unitized Substances

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XVI

  	
   

  	
  Royalty
  Settlement

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XVII

  	
   

  	
  Rental
  Settlement

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XVIII

  	
   

  	
  Conservation

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XIX

  	
   

  	
  Drainage

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XX

  	
   

  	
  Leases
  and Contracts Conformed and Extended

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XXI

  	
   

  	
  Covenants
  Run With Land

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XXII

  	
   

  	
  Effective
  Date and Term

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XXIII

  	
   

  	
  Rate
  of Prospecting, Development and Production

  	
   

  	
  27

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XXIV

  	
   

  	
  Non-Discrimination

  	
   

  	
  27

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XXV

  	
   

  	
  Appearances

  	
   

  	
  28

  



 

















 


Table
of Contents (Cont’d.)


 


	
   Article

   	
    

   	
   Title

   	
    

   	
   Page

   
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XXVI

  	
   

  	
  Notices

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XXVII

  	
   

  	
  No
  Waiver of Certain Rights

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XXVIII

  	
   

  	
  Personal
  Property Excepted

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XXIX

  	
   

  	
  Unavoidable
  Delay

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XXX

  	
   

  	
  Loss
  of Title

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XXXI

  	
   

  	
  Border
  Agreements

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XXXII

  	
   

  	
  Joinder
  in Dual Capacity

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XXXIII

  	
   

  	
  Non-Joinder
  and Subsequent Joinder

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XXXIV

  	
   

  	
  Taxes

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XXXV

  	
   

  	
  Conflict
  of Supervision

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XXXVI

  	
   

  	
  No
  Partnership

  	
   

  	
  34

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XXXVII

  	
   

  	
  Production
  as of the Effective Date

  	
   

  	
  34

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XXXVIII

  	
   

  	
  Counterparts

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
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UNIT AGREEMENT

FOR THE DEVELOPMENT AND OPERATION OF THE

COOPER SAL UNIT

LEA COUNTY, NEW MEXICO


 


THIS
AGREEMENT, entered into as of the 15th day of January, 1970, by and between the
parties subscribing, ratifying or consenting hereto, and herein referred to as
“parties hereto”;


 


WITNESSETH:


 


WHEREAS,
the parties hereto are the owners of working, royalty or other oil or gas
interests in the Unit Area subject to this agreement; and


 


WHEREAS,
the Mineral Leasing Act of February 25, 1920, (41 Stat. 437, as amended 30
U.S.C. Sections 181, et seq.)  authorizes Federal Lessees and
their representatives to unite with each other or jointly or separately with
others in collectively adopting and operating a unit plan of development or
operation of any oil or gas pool, field or like area, or any part thereof for
the purpose of more properly conserving the natural resources thereof whenever
determined and certified by the Secretary of the Interior to be necessary or
advisable in the public interest; and


 


WHEREAS,
the Oil Conservation Commission of the State of New Mexico is authorized by law
(Art. 3, Ch. 65, Vol. 9, Part 2. 1953 Stat. Anno.) to approve this
agreement, and the conservation provisions hereof; and


 


WHEREAS,
the parties hereto hold sufficient interests in the Cooper Jal Unit Area
covering the land hereinafter described to give reasonably effective control of
operations therein; and


 


WHEREAS,
it is the purpose of the parties hereto, to enable institution and consummation
of secondary recovery operations to conserve natural resources, to prevent
waste and secure the other benefits obtainable through development and
operation of the area subject to this agreement, under the terms, conditions
and limitations herein set forth:


 

















 


NOW
THEREFORE, in consideration of the premises and the promises herein contained,
the parties hereto commit to this agreement their respective interests in the
hereinafter defined Unit Area, and agree severally among themselves as follows:


 


ARTICLE I


 


ENABLING ACT AND REGULATIONS


 


1.1
The Mineral Leasing Act of February 25, 1920, as amended, supra., and all
valid, pertinent regulations, including operating and unit plan regulations,
heretofore issued thereunder and valid, pertinent and reasonable regulations
hereafter issued thereunder are accepted and made a part of this agreement as
to Federal lands, provided such regulations are not inconsistent with the terms
of this agreement.


 


ARTICLE II


 


DEFINITIONS


 


2.1
For the purpose of this agreement, the following terms and expressions as used
herein shall mean:


 


(a)  “Commission” is defined as the Oil Conservation
Commission of the State of New Mexico.


 


(b)  “Director” is defined as the Director of the United
States Geological Survey.


 


(c)  “Secretary” is defined as the Secretary of the Interior
of the United States of America.


 


(d)  “Department” is defined as the Department of the Interior
of the United States of America.


 


(e)  “Supervisor” is defined as the Oil and Gas Supervisor of
the United States Geological Survey for the region in which the Unit Area is
situated.


 


(f)  “Unitized Formation” means all of the Tansill, Yates,
Seven Rivers and Queen Formations underlying the Unitized Land; said interval
being the equivalent of the continuous interval occurring in Amerada Petroleum
Corporation’s A. G. Falby No. I (located 1, 650 feet from the South line
and


 


2

















 


990
feet from the West Line of Section 19, Township 24 South, Range 37 East,
Lea County, New Mexico) at an indicated depth of 2,890 feet to 3,745 feet as
recorded on the Schlumberger Electrical Log taken on December 4, 1948.


 


(g)  “Unitized Substances” means all oil, gas, gaseous
substances, sulphur contained in gas, condensate, distillate and all associated
and constituent liquid or liquefiable hydrocarbons produced from the Unitized
Formation.


 


(h)  “Tract” means each parcel of land shown as such and given
a tract number in Exhibit “A” and as described in Exhibit “B”.


 


(i)  “Tract Participation” is defined as the percentage of
participation as is shown on Exhibit “C” for allocating Unitized
Substances to a Tract under this agreement.


 


(j)  “Unit Participation” as used herein shall mean the sum of
the Tract Participations as shown by Tracts for each Working Interest Owner in
Exhibit “C” to the Unit Agreement.


 


(k)  “Working Interest” is defined as the right to search for,
produce and acquire Unitized Substances whether held as an incident of
ownership of mineral fee simple title, under an oil and gas lease, or otherwise
held. Any interest in Unitized Substances which is a Working Interest as of the
date the owner thereof executes or ratifies this agreement, or which at any
time thereafter becomes a Working Interest, shall thenceforth be treated as a
Working Interest for all purposes of this agreement.


 


(1)  “Working Interest Owner” is defined as and shall mean any
party hereto owning a Working Interest, including a carried Working Interest
Owner, holding an interest in Unitized Substances by virtue of a lease,
operating agreement, fee title or otherwise, which interest is chargeable with
and obligated to pay or bear, either in cash or out of production, or
otherwise, all or a portion of the cost of drilling, developing and producing
the Unitized Substances from the Unitized Formation and operation thereof
hereunder.


 


(m)  “Royalty Interest” or “Royalty” is defined as an interest
other than a Working Interest in or right to receive a portion of the Unitized
Substances


 


3

















 


or
the proceeds thereof and includes the Royalty Interest reserved by the lessor
in an oil and gas lease and any overriding royalty interest, oil payment
interest, net profit contracts, or any other payment or burden which does not
carry with it the right to search for and produce Unitized Substances.


 


(n)  “Royalty Owner” is defined as and shall mean the owner of
a Royalty Interest.


 


(o)  “Unit Operating Agreement” is defined as and shall mean
any agreement or agreements (whether one or more) entered into (separately or
collectively) by and between the Unit Operator and the Working Interest Owners
as provided in Article IX infra., and shall be styled “Unit Operating
Agreement, Cooper Jal Unit, Lea County, New Mexico”.


 


(p)  “Unit Manager” is defined as the person or corporation
appointed by the Unit Working Interest Owners, upon resignation or removal of
the Unit Operator, to perform the duties of the Unit Operator until the
selection and qualification of a successor Unit Operator as provided for in
Article VIII hereof.


 


(q)  “Oil and Gas Rights” is defined as the right to explore,
develop, and operate lands within the Unit Area for the production of Unitized
Substances, or to share in the production so obtained or the proceeds thereof.


 


(r)  “Unit Area” is defined as the lands described by Tracts
in Exhibits “A” and “B”.


 


(s)  “Unit Operator” is defined as the party designated by
Working Interest Owners to develop and operate the Unitized Formation, acting
as operator and not as a Working Interest Owner.


 


(t)  “Record Owner” is defined as the holder of the record
title to a lease covering Federal Lands according to the applicable records of
the Department of the Interior of the United States of America.


 


(u)  “Unit Operations” means all operations conducted by the
Unit Operator pursuant to this agreement and the Unit Operating Agreement for
or on account of the development and operation of the Unitized Formation for
the production of Unitized Substances.


 


4

















 


(v)  “Unit Equipment” means all personal property, lease and
well equipment, plants, and other facilities and equipment taken over or
otherwise acquired for the joint account for use in Unit Operations.


 


(w)  “Unit Expense” means all cost, expense, or indebtedness
incurred by Unit Operator pursuant to this agreement and the Unit Operating
Agreement for or on account of Unit Operations.


 


ARTICLE III


 


UNIT AREA AND EXHIBITS


 


3.1
The following described land is hereby designated as constituting the Unit
Area, all of said land being situated in Lea County, New Mexico, to-wit:


 


Township
24 South, Range 36 East


 


S/2 of Section 13


 


SE/4 SE/4 of Section 14


 


All of Section 24


 


S/2 SE/4 of Section 23


 


E/2 NE/4 of Section 26


 


N/2 of Section 25


 


Township
24 South, Range 37 East


 


All
of Section 18


 


W/2
of Section 19


 


NW/4
of Section 30


 


containing
2,581 acres, more or less.


 


3.2
Exhibit, “A” attached hereto is a map showing. the Unit Area and the boundaries
and identity of Tracts and leases in said Unit Area to the extent known to the
Unit Operator. Exhibit “B” attached hereto is a schedule showing, to the
extent known to the Unit Operator, the acreage comprising each Tract and the
percentage and kind of ownership in each Tract. Exhibit “C” is a schedule
showing the percentage of participation of each Tract on the basis of the
commitment of all tracts to this agreement. However, nothing herein or in said
schedule or map shall be construed as a representation by any party hereto as
to the ownership of any interest other than such interest or interests as are shown
in said map or schedule as owned by such party. Exhibits “A”, “B” and “C” shall
be revised by the Unit Operator whenever changes in the Unit Area render such
revision necessary, or when requested by the Supervisor, and the required


 


5

















 


number
of copies of such revision shall be filed with the Supervisor.


 


3.3
If it subsequently appears that any mechanical miscalculation has been made,
Unit Operator, with the approval of Working Interest Owners and the Supervisor,
may correct the mistake by revising the exhibits to conform to the facts. The revision shall not
include any re-evaluation of engineering or geological interpretations used in
determining Tract Participation. Any such revision of an exhibit shall be
effective at 7:00 A. M. on the effective date of this agreement.


 


ARTICLE IV


 


EXPANSION OF UNIT AREA


 


4. 1 The above described Unit Area
may, when practicable, be expanded to include therein any additional tract or
tracts regarded as reasonably necessary or advisable for the purposes of this
agreement to conform with the purposes of this agreement. Such expansion shall
be effected in the following manner:


 


(a)  The working interest owner or owners of a tract or tracts
desiring to bring such tract or tracts into this Unit shall file an application
therefor with Unit Operator requesting such admission.


 


(b)  Unit Operator shall circulate a notice of the proposed
expansion to each Working Interest Owner in the Unit and in the tract proposed
to be included in the Unit, setting out the basis for admission, the Unit
Participation to be assigned to each tract in the enlarged Unit and other
pertinent data. After negotiation (at Working Interest Owners’ meeting or
otherwise) if Working Interest Owners having in the aggregate eighty percent
(80%) Phase II Unit Participation have agreed to such tract or tracts being
brought into the Unit, then Unit Operator shall, after preliminary concurrence
by the Director:


 


(1)  Prepare a notice of proposed
expansion describing the contemplated changes in the boundaries of the Unit
Area, the reason therefor, the basis for admission of the additional Tract or
Tracts, the Unit Participation to be assigned thereto and the effective date
thereof; and


 


6

















 


(2)  Deliver copies of said notice to the Commissioner, the
Supervisor, each Working Interest Owner and to the lessee and lessor whose
interests are affected, advising such parties that thirty (30) days will be
allowed for submission to the Unit Operator of any objection to such proposed
expansion; and


 


(3)  File, upon the expiration of said  (30) day
period as set out in (2) immediately above, with the Commission and
Supervisor the following: (a) Evidence of mailing or delivering copies of
such notice of expansion; (b) An application for such expansion;
(c) An instrument containing the appropriate joinders in compliance with
the participation requirements of Article XIV (Tracts Qualified for
Participation); and (d) Copy of any objections received.


 


(4)  There shall be no retroactive allocation or adjustment of
Unit expense or of interests in the Unitized Substances produced, or proceeds
thereof prior to the effective date of expansion and qualification under
Article XIV; however, this limitation shall not prevent an adjustment of
investment by reason of the enlargement.


 


4.2
The expansion shall, after due consideration of all pertinent information and
approval by the Supervisor, become effective as of the date prescribed in the
notice thereof, preferably the first day of a month subsequent to the date of
notice.


 


4.3
In any approved expansion of the Unit Area the revised Tract Participations of
those tracts which were committed prior to each such expansion shall remain in
the same ratio one to another.


 


ARTICLE V


 


UNITIZED LAND AND UNITIZED SUBSTANCES


 


5.1
All land committed to this agreement as to the Unitized Formation shall
constitute land referred to herein as “Unitized Land” or “land subject to this
agreement”. All oil, gas, gaseous substances, sulphur contained in gas,
condensate, distillate and all associated and constituent liquid or liquefiable
hydrocarbons produced from the lands committed to this agreement


 


7

















 


as
to the Unitized Formation are unitized under the terms of this agreement and
herein are called “Unitized Substances”. Nothing herein shall be construed to
unitize, pool or in any way affect the oil, gas and other minerals that may be
produced from any formation other than the Unitized Formation as above
described.


 


ARTICLE VI


 


UNIT OPERATOR


 


6.1
Reserve Oil and Gas Company is hereby designated the Unit Operator, and by
signing this instrument as Unit Operator, it agrees and consents to accept the
duties and obligations of Unit Operator for the operation, development and
production of Unitized Substances as herein provided. Whenever reference is
made herein to the Unit Operator, such reference means the Unit Operator acting
in that capacity and not as an owner of interests in Unitized Substances, and
the term “Working Interest Owner”, when used herein, shall include or refer to
the Unit Operator as the owner of a working interest when such an interest is
owned by it.


 


ARTICLE VII


 


RESIGNATION OR REMOVAL OF UNIT OPERATOR


 


7.1
Unit Operator shall have the right to resign at any time, but such resignation
shall not become effective as to release Unit
Operator from the duties and obligations of
Unit Operator and terminate Unit Operator’s rights as such for a period of six
(6) months after written notice of intention to resign has been given by
Unit Operator to all Working Interest Owners and the
Supervisor, and until all Unit Wells are placed in a condition satisfactory to
the Supervisor for suspension, abandonment, or operations, whichever is
intended by the Unit Manager, unless a new Unit Operator shall have taken over
and assumed the duties and obligations of Unit Operator prior to the expiration
of said period.


 


7.2
The Unit Operator shall be subject to removal by Working Interest Owners having
in the aggregate eighty percent (80%) or more of the Phase II Unit
Participation remaining after excluding the Phase II Unit


 


8

















 


Participation
of the Unit Operator. Such removal shall be effective upon notice thereof to
the Supervisor.


 


7.3
In all such instances of effective resignation or removal, until a successor to
Unit Operator is selected and approved as hereinafter provided, the Working
Interest Owners shall be jointly responsible for the performance of the duties
of the Unit Operator and shall, not later than thirty (30) days before such
resignation or removal becomes effective, appoint a Unit Manager to represent
them in any action to be taken hereunder.


 


7.4
The resignation or removal of Unit Operator under this agreement shall not
terminate its right, title or interest as the owner of a Working Interest or
other interest in Unitized Substances, but upon the resignation or removal of
Unit Operator becoming effective, such Unit Operator shall deliver possession
of all wells, equipment, books and records, materials, appurtenances and any
other assets, used in connection with the Unit operations and owned by the
Working Interest Owners to the new duly qualified successor Unit Operator or to
the Unit Manager if no such new Unit Operator is elected, to be used for the
purpose of conducting Unit Operations hereunder. Nothing herein shall be
construed as authorizing the removal of any material, equipment or
appurtenances needed for the preservation of any wells. Nothing herein
contained shall be construed to relieve or discharge any Unit Operator who
resigns or is removed hereunder from any liability or duties accruing or
performable by it prior to the effective date of such resignation or removal.


 


ARTICLE VIII


 


SUCCESSOR UNIT OPERATOR


 


8.1
Whenever the Unit Operator shall tender its resignation as Unit Operator or
shall be  removed as
hereinabove provided, the Working Interest Owners shall select  a successor Unit
Operator as herein provided. Such selection shall not become effective until
(a) a Unit Operator so selected shall accept in writing the duties and
responsibilities of Unit Operator, and (b) the selection shall have been
approved by the Supervisor. If no successor


 


9

















 


Unit
Operator is selected and qualified as herein provided, the Director may declare
this agreement terminated.


 


8.2
In selecting a successor Unit Operator the affirmative vote of three or more
Working Interest Owners having a total of sixty-five percent (65%) or more of
the total voting interest in the Unit shall prevail; provided, that if any one Working Interest Owner
has a voting interest of more than thirty-five percent (35%), its negative vote
or failure to vote shall not be regarded as sufficient unless supported by the
vote of one or more other Working Interest Owners having a total voting
interest of at least five percent (5%). If the Unit Operator who is removed
votes only to succeed itself or fails to vote, the successor Unit Operator may
be selected by the affirmative vote of at least fifty-one percent (51%) of the
voting interest remaining after excluding the voting interest of Unit Operator
so removed. In voting under this Section 8 each Working Interest Owner
shall have a voting interest equal to its Phase II Participation.


 


ARTICLE IX


 


ACCOUNTING PROVISIONS AND UNIT OPERATING AGREEMENT


 


9.1
Costs and expenses incurred by Unit Operator in conducting Unit operations
hereunder shall be paid, apportioned among and borne by the Working Interest
Owners in accordance with the Unit Operating Agreement. Such Unit Operating
Agreement shall also provide the manner in which the Working Interest Owners
shall be  entitled to receive their respective proportionate
and allocated share of the benefits accruing hereto in conformity with their
underlying operating agreements, leases or other independent contracts and such
other rights and obligations as between Unit Operator and the Working Interest
Owners as may be agreed upon by the Unit Operator and the Working Interest
Owners; however, no such Unit Operating Agreement shall be deemed either to
modify any of the terms and conditions of this Unit Agreement or to relieve the
Unit Operator of any right or obligation established under this agreement and
in case of any inconsistency or conflict between this agreement and the Unit
Operating Agreement, this Unit Agreement shall prevail. Three (3)


 


10














 


true
copies of any Unit Operating Agreement executed pursuant to this
Article shall be filed with the Supervisor as required prior to approval
of this agreement.


 


ARTICLE X


 


RIGHTS AND OBLIGATIONS OF UNIT OPERATOR


 


10.1
Except as otherwise specifically provided herein, the exclusive right,
privilege and duty of exercising any and all rights of the parties hereto which
are necessary or convenient for prospecting for, producing, storing, allocating
and distributing the Unitized Substances are hereby delegated to and shall be
exercised by the Unit Operator as herein provided. Upon request by Unit
Operator, acceptable evidence of title to said rights shall be deposited with
said Unit Operator, and together with this agreement, shall constitute and
define the rights, privileges and obligations of Unit Operator. Nothing herein,
however, shall be construed to transfer title to any land or to any lease or
operating agreement, it being understood that under this agreement, the Unit
Operator, in its capacity as Unit Operator, shall exercise the rights of
possession and use vested in the parties hereto only for the purposes herein
specified.


 


ARTICLE XI


 


PLAN OF OPERATIONS


 


11.1
It is recognized and agreed by the parties hereto that all of the land subject
to this agreement is reasonably proved to be productive of Unitized Substances
in paying quantities and that the object and purpose of this agreement is to
formulate and to put into effect a secondary recovery project in order to
effect additional recovery of Unitized Substances, prevent waste and conserve
natural resources consistent with good engineering practices expected of a
prudent operator. The parties hereto agree that the Unit Operator may, subject
to the consent and approval of a plan of operation by the Working Interest
Owners and the Supervisor, inject into the Unitized Formation through any well
or wells completed therein, brine, water, air, gas, oil, liquid petroleum gases
and any one or more other substances or combinations of


 


11

















 


substances
whether produced from the Unitized Formation or not, and that the location of
input wells and the rate of injection therein and the rate of production shall
be governed by standards of good geologic and petroleum engineering practices
and conservation methods. The Working Interest Owners and the Supervisor shall
be furnished periodic reports on the progress of the plan of operation and any
revision or changes thereto; provided, however, that any revision of the plan of
operation involving a deviation from the initial plan of operation shall be
subject to the consent and approval of the Working Interest Owners and the
Supervisor.


 


11.2
The initial plan of operation shall be filed with the Supervisor concurrently
with the filing of this Unit Agreement for final approval. Said initial plan of
operation and all revisions thereof shall be as complete and adequate as the
Supervisor may determine to be necessary for timely operation consistent
herewith. Reasonable diligence shall be exercised in complying with the
obligations of the approved plan of operation. Thereafter, from time to time
before the expiration of any existing plan, the Unit Operator shall submit for
like approval a plan for an additional specified period of operation.
Notwithstanding anything to the contrary, herein contained, if Unit Operator
fails to commence Unit Operations for the secondary recovery of Unitized
Substances from the Unit Area within six months after the effective date of
this agreement or any extension thereto approved by the Supervisor, this
agreement shall terminate automatically upon the expiration of said six month
period.


 


11.3
The parties hereto subject to prior rights, if any, grant to the Unit
Operator the use of brine or water or both from any formation in and under the
Unitized Land for injection into the Unitized Formation insofar as these rights
are granted by the oil and gas leases.


 


ARTICLE XII


 


EASEMENTS OR USE OF SURFACE


 


12.1
The parties hereto, to the extent of their rights and interest, hereby grant to
Working Interest Owners the right to use as much of the
surface


 


12

















 


of
the land within the Unit Area as may reasonably be necessary for Unit
Operations, including the free use of water from the Unit Area for Unit
Operations, except water from any well, lake, pond or irrigation ditch of
Royalty Owners, provided that, nothing herein shall be construed as leasing or
otherwise conveying to Working Interest Owners a site for a water, gas
injection, processing or other plant or camp site.


 


ARTICLE XIII


 


TRACT PARTICIPATION


 


13.1
In Exhibit “C” attached hereto there are listed and numbered the various
Tracts within the Unit Area, and set forth opposite each Tract are figures
which represent the percentage of participation allocated to each Tract in the
Unit Area assuming that all tracts are committed hereto.


 


13.2
Tract Participation of each Tract shall be as shown within Exhibit “C” and
shall be determined as follows:


 


(a) Phase I
Participation: Beginning at 7:00 A. M. on the effective date hereof
and remaining in effect until 7:00 A. M. on the first day of the month next
following the month in which the cumulative amount of oil produced from the
Tansill, Yates, Seven Rivers and Queen Formations underlying all of the Tracts
described in Original Exhibit “B” from and after January 1, 1968,
equals 1,000,000 barrels, the Tract Participation of each Tract shall be as
shown in Phase I of Exhibit “C” and shall be determined from the following
formula:


 


Tract
Participation Percentage, Phase I equals 100%


 


A


B


 


Where:                  A equals total income from oil, casinghead gas
and dry gas produced from such Tract from the Unitized Formation during the
period January 1, 1967 to January 1, 1968.


 


B
equals the summation of the total income from oil, casinghead gas and dry gas
produced from all Tracts


 


13

















 


in
the Unit Area from the Unitized Formation during the period January 1,
1967 to January 1, 1968.


 


(b) Phase II Participation: Beginning at
7:00 A.M. on the first day of the month next following the date when the
1,000,000 barrels referred to in (a) above shall have been produced, the
Tract Participation of each Tract shall be as shown under Phase II of
Exhibit “C” and shall be determined from the following formula:


 


Tract
Participation Percentage, Phase II equals 100%


 


C


D


 


Where:                  C equals the estimated quantity of oil
ultimately recoverable from the Unitized Formation underlying each such tract
by primary recovery operations.


 


D
equals the summation of the estimated quantity of oil ultimately recoverable
from the Unitized Formation underlying all such Tracts by primary recovery
operations.


 


13.3
In the event less than all tracts are qualified for participation on the effective
date hereof, the Tract Participations shall be calculated on the basis of all
qualified Tracts rather than all Tracts in the Unit Area and Exhibit “C”
shall be revised by the Unit Operator accordingly to show the percentage of
participation of each tract.


 


ARTICLE XIV


 


TRACTS QUALIFIED FOR PARTICIPATION


 


14.1
As the objective of this agreement is to have lands in the Unit Area operated
and entitled to participation under the terms hereof, it is agreed that,
notwithstanding anything else herein, no joinder shall be considered a
commitment to this agreement unless the Tract involved is qualified under this
Article. On and after the effective date hereof, the Tracts within the Unit
Area which shall be entitled to participation (as provided in Article XIII


 


14

















 


hereof)
in the production of Unitized Substances therefrom shall be those Tracts within
the Unit Area as shown on Exhibit “A” and described in Exhibit “B”
that corner or have a common boundary, (Tracts separated only by a public
highway or a railroad right-of-way shall be considered to have a common
boundary), and which are otherwise qualified as follows: (The record title
owner shall replace the Royalty Interest with respect to Federal lands for the
purposes of this Article.)


 


(a) Each
Tract as to which Working Interest Owners owning one hundred percent (100%) of
the Working Interest therein have become parties hereto and as to which Royalty
Owners owning seventy-five percent (75%) or more of the Royalty Interest
therein have become parties hereto.


 


(b) Each
Tract as to which Working Interest Owners owning one hundred percent (100%) of
the Working Interest therein have become parties hereto and as to which Royalty
Owners owning less than seventy-five percent (75%) of the Royalty Interest
therein have become parties hereto, and, further, as to which:


 


(1)  All Working Interest Owners in any such Tract have joined
in a request for the inclusion of such Tract, and


 


(2)  Seventy-five percent (75%) of the combined voting
interests of Working Interest Owners in all Tracts meeting the requirements of
paragraph (a) hereof have voted in favor of including such Tract.


 


For
the purpose of this paragraph (b), a Working Interest Owner’s “voting interest”
shall be equal to the ratio (expressed in percent) which its aggregate Phase I
Participation in all Tracts qualifying under paragraph (a) bears to the
total Phase I Participation of all Working Interest Owners in all Tracts
qualifying under paragraph (a).


 


(c) Each
Tract as to which Working Interest Owners owning less than one hundred percent
(100%) of the Working Interest therein have become parties hereto, regardless
of the percentage of Royalty Interest therein which is committed hereto, and,
further, as to which:


 


15

















 


(I) The
Working Interest Owner operating any such Tract and all of the other Working
Interest Owners in such Tract who have become parties hereto have joined in a
request for inclusion of such Tract and at least 85% of such parties have
executed and delivered an indemnity agreement indemnifying and agreeing to hold
harmless the other Working Interest Owners in the Unit, their successors and
assigns, against all claims and demands which arise out of the inclusion of
such Tract, which may be made by the owners of Working Interest in such tract
who are not parties hereto; and


 


(2) Seventy-five
percent (75%) of the combined voting interest of Working Interest Owners in all
Tracts meeting the requirements of paragraph (a) and (b) have voted
in favor of the inclusion of such Tract and acceptance of the indemnity
agreement.


 


For
the purpose of this paragraph (c), a Working Interest Owner’s voting interest
shall be equal to the ratio (expressed in percent) which its aggregate Phase I
Participation in all Tracts qualifying under paragraphs (a) and
(b) bears to the total Phase I participation of all Working Interest
Owner’s in all Tracts qualifying under paragraphs (a) and (b). Upon
qualification of such a Tract, the Unit Participation which would have been
attributed to the nonsubscribing owners of the Working Interest in such Tract,
had they become parties to this agreement and the Unit Operating Agreement,
shall be attributed to the Working Interest Owners in such Tract who have
become parties to such agreements, in proportion to their respective Working
interests in the Tract.


 


(d) Each
Tract, regardless of the percentage of Working Interest or Royalty Interest
therein that has been committed hereto, as to which (1) the Working
Interest Owner who operates the Tract has become a party to this agreement and
(2) Working Interest Owners having seventy-five percent (75%) of the
combined voting interest of Working Interest Owners in all Tracts that meet the
requirements of paragraphs (a), (b) and (c) vote in favor of the
inclusion of such Tract. For the purpose of this paragraph (d) the voting
interest


 


16

















 


of
a Working Interest Owner shall be equal to the ratio that its Phase I Unit
Participation attributable to Tracts that qualify under paragraphs (a),  (b) and
(c) bears to the total Phase I Unit Participation of all Working Interest
Owners attributable to all Tracts that qualify under paragraphs (a),
(b) and (c). Upon qualification of such a Tract, the Unit Participation
that would have been attributed to the nonsubscribing owners of the Working
Interest in such Tract, had they become parties to this agreement and the Unit
Operating Agreement shall be attributed to the Working Interest Owners in all
Tracts that meet the requirements of paragraphs (a), (b) and (c) in
proportion to their respective Unit Participations attributable to the Tracts
that qualify under paragraphs (a), (b) and (c).


 


14.2
If on the effective date of this agreement there is any Tract or Tracts which
have not been qualified as above provided, then such Tract or Tracts shall not
be entitled to participate hereunder. Unit Operator shall, when submitting this
agreement for final approval by the Supervisor, file therewith, or as soon as
practicable, a schedule of those Tracts which are entitled to participate in
the production of Unitized Substances. This schedule of participation shall be
revised Exhibit “C” and upon approval thereof by the Supervisor shall
become a part of this agreement and shall govern the allocation of production of
Unitized Substances until the effective date of a new  schedule approved by the
Supervisor.


 


ARTICLE XV


 


ALLOCATION OF UNITIZED SUBSTANCES


 


15.1
All Unitized Substances produced and saved (less, save and except any part of
such Unitized Substances used in conformity with good operating practices on
Unitized Land for drilling, operating, camp and other production or development
purposes and for pressure maintenance or unavoidable loss) shall be apportioned
among and allocated to the qualified Tracts within the Unit Area in accordance
with the respective Tract Participation effective hereunder during the
respective periods such Unitized Substances were produced, as set


 


17

















 


forth
in the schedule of participation, Exhibit “C”. The amount of Unitized
Substances so allocated to each Tract (regardless of whether it be more or less
than the amount of the actual production of Unitized Substances from the well
or wells, if any, on such Tract), shall, for all intents, uses and purposes, be
deemed to have been produced from such Tract.


 


15.2
The Unitized Substances allocated to each Tract shall be distributed among, or
accounted for, to the parties executing, consenting to or ratifying this
agreement who otherwise are entitled to share in the production from such Tract
in the same manner, in the same proportion, and upon the same conditions, as
they would have participated and shared in the production from such Tracts, or
in the proceeds thereof, had this agreement not been entered into; and with the
same legal force and effect.


 


15.3
No Tract committed to this agreement and qualified for participation as above
provided shall be subsequently excluded from participation hereunder on account
of depletion of Unitized Substances, and nothing herein contained shall be
construed as requiring any retroactive adjustment for production obtained prior
to the effective date of the joinder of any Tract.


 


15.4
If the Working Interest and the Royalty Interest in any Tract are divided with
respect to separate parcels or portions of such Tract and owned severally by
different persons, the percentage participation assigned to such Tract shall,
in the absence of a recordable instrument executed by all owners and furnished
to Unit Operator fixing the divisions of ownership, be divided among such
parcels or portions in proportion to the number of surface acres in each.


 


15.5
The Unitized Substances allocated to each Tract shall be delivered in kind to
the respective Working Interest Owners and parties entitled thereto by virtue
of the ownership of Oil and Gas Rights therein or by purchase from such owners.
Each Working Interest Owner and the parties entitled thereto shall have the
continuing right to receive such production in kind at a common point within
the Unit Area and to sell or dispose of the same as it


 


18

















 


sees fit. Each such
party shall have the right to construct, maintain, and operate all necessary
facilities for that purpose on Unitized Land, provided the same are so
constructed, maintained and operated as not to interfere with operations
carried on pursuant hereto. Subject to Article XVI hereof, any extra expenditure
incurred by Unit Operator by reason of the delivery in kind of any portion of
the Unitized Substances shall be borne by the party receiving the same in kind.
If a Royalty Owner has the right to take in kind a share of Unitized Substances
and fails to do so, the Working interest Owner whose Working Interest is
subject to such Royalty Interest shall be entitled to take in kind such share
of the Unitized Substances.


 


15.6
If any party fails to take in kind or separately dispose of its share of
Unitized Substances, Unit Operator shall have the right for the time being and
subject to revocation at will by the party owning the share, to sell, or
otherwise dispose of such production to itself or to others on a day to day
basis at not less than the prevailing market price in the area for like
production. The proceeds of the Unitized Substances so disposed of by Unit
Operator shall be paid to the party entitled thereto.


 


15.7
Notwithstanding the foregoing, the Unit Operator shall not make a sale into
interstate commerce of any Working Interest Owner’s share of gas production
without first giving such Working Interest Owner sixty (60) days notice of such
intended sale.


 


15.8
Any Working Interest Owner receiving in kind or separately disposing of all or
any part of the Unitized Substances allocated to any Tract, or receiving the
proceeds therefrom if the same is sold or purchased by Unit Operator, shall be
responsible for the payment of all Royalty on the lease or leases and Tracts
contributed by it and received into the Unit, and each such party shall hold
each other party hereto harmless against all claims, demands and causes of
action for such Royalty on the lease or leases  and Tracts contributed by it
to the Unit.


 


15.9
If, after the effective date of this agreement, there is any Tract or Tracts
that are subsequently committed hereto, as provided in Article


 


19

















 


IV
(Expansion of Unit Area) hereof, or any Tract or Tracts within the Unit Area
not committed hereto as of the effective date hereof but which are subsequently
committed hereto under the provisions of Article XXXII (Non-Joinder and
Subsequent Joinder) or if any Tract is excluded from the Unit Agreement as
provided for in Article XXX (Loss of Title), the schedule of participation
as shown in Exhibit “C”, subject to Article XIII (Tract
Participation), and Article XIV (Tracts Qualified for Participation),
shall be revised by the Unit Operator and distributed to the Working Interest
Owners and the Supervisor to show the revised Tract Participation of all the
qualified Tracts; and the revised Exhibit “C”, upon approval by the
Supervisor shall govern all the allocation of production of Unitized Substances
from and after the effective date thereof until a revised schedule is approved
as hereinabove provided.


 


15.10
Unit Operator may use as much of the Unitized Substances as may reasonably be
deemed necessary for the operation and development of the Unitized Lands,
including but not limited to the injection of Unitized Substances into the
Unitized Formation, provided such operations are in accordance with a plan of
operations approved by the Supervisor.


 


15.11
No Royalty shall be payable upon or with respect to Unitized Substances used or
consumed in the operation or development of the Unitized Land or which may be
otherwise unavoidably lost or consumed in production, handling, treating,
transportation or storing of Unitized Substances, provided such operations are
in accordance with a plan of operations approved by  the Supervisor.


 


ARTICLE XVI


 


ROYALTY SETTLEMENT


 


16.1
The United States of America and all Royalty Owners who, under an existing
contract, are entitled to take in kind a share of the substances produced from
any Tract unitized hereunder, shall continue to be entitled to such right to
take in kind their share of the Unitized Substances allocated to such Tract,
and Unit Operator shall make deliveries of such Royalty share taken in kind in
conformity with the applicable contracts, laws and regulations.


 


20














 


Settlement
for Royalty Interest not taken in kind shall be made by Working Interest Owners
responsible therefor under existing contracts, laws and regulations on or
before the last day of each month for Unitized Substances produced during the
preceding calendar month; provided, however, that nothing herein contained
shall operate to relieve the lessee of any land from their respective lease
obligations for the payment of any Royalty due under their leases,  except that such
Royalty shall be computed on Unitized Substances as allocated to each Tract in
accordance with the terms of this Unit Agreement.


 


16.2
If the amount of production or the proceeds thereof accruing to any Royalty
Owner (except the United States of America) in a Tract depends upon the average
production per well or the average pipeline runs per well from such Tract
during any period of time, then such production shall be determined from and
after the effective date hereof by dividing the quantity of Unitized Substances
allocated hereunder to such Tract during such period of time by the number of
wells located thereon capable of producing as of the effective date hereof,
provided, however, any Tract without a producible well on said effective  date shall, for
the purposes herein contained, be considered as having one such well thereon.


 


16.3
If gas, obtained from lands not subject to this agreement is introduced into
the Unitized Formation, for use in repressuring, stimulation of production or
increasing ultimate recovery in conformity with a plan approved pursuant to
Article XI (Plan of Operations), a like amount of gas, less appropriate
deductions for loss or depletion from any cause, may be withdrawn from the
Unitized Formation, Royalty free as to dry gas but not as to the products extracted
therefrom; provided such withdrawal shall be pursuant to such conditions and
formulas as may be prescribed or approved by the Supervisor; and provided
further that such right of withdrawal shall terminate as of the effective date
of termination of the Unit Agreement.


 


16.4
Royalty due the United States shall be computed as provided in the operating
regulations and paid in value or delivered in kind as to all


 


21

















 


Unitized
Substances on the basis of the amounts thereof allocated to Unitized Federal
lands as provided herein at the rate or rates as may be authorized by law or
regulation; provided, that for leases on which the royalty rate depends on the
daily average production per well, such average production shall be determined
in accordance with the operating regulations as though the unitized lands were
one lease.


 


16.5
Each Royalty Owner (other than the United States of America) that executes this
agreement represents and warrants that it is the owner of a Royalty Interest in
a Tract or Tracts within the Unit Area as its interest appears in
Exhibit “B” attached hereto. If any Royalty Interest in a Tract or Tracts
should be lost by title failure or otherwise in whole or in part, during the
term of this agreement, then the Royalty Interest of the party representing
himself to be the owner thereof shall be reduced proportionately and the
interest of other parties shall be adjusted accordingly.


 


ARTICLE XVII


 


RENTAL SETTLEMENT


 


17.1
Rentals or minimum royalties due on leases committed hereto shall be paid by
Working Interest Owners responsible therefor under existing contracts, laws and
regulations provided that nothing herein contained shall operate to relieve the
lessees of any land from their respective lease obligations for the payment of
any rental or minimum royalty in lieu thereof, due under their leases. Rental
or minimum Royalty for lands of the United States of America subject to this
agreement shall be paid at the rate specified in the respective leases from the
United States of America, unless rental or minimum Royalty is waived, suspended
or reduced by law or by approval of the Secretary or his duly authorized
representative.


 


ARTICLE XVIII


 


CONSERVATION


 


18.1
Operations hereunder and production of Unitized Substances shall be conducted
to provide for the most economical and efficient recovery of


 


22

















 


said
substances without waste, as defined by or pursuant to Federal and State laws
and regulations.


 


ARTICLE XIX


 


DRAINAGE


 


19.
1 The Unit Operator shall take such measures as the Supervisor deems
appropriate and adequate to prevent drainage of Unitized Substances from
Unitized Land by wells on land not subject to this agreement.


 


ARTICLE XX


 


LEASES AND CONTRACTS CONFORMED AND EXTENDED


 


20.1
The terms, conditions and provisions of all leases, subleases and other
contracts relating to exploration, drilling, development or operation for oil
or gas on lands committed to this agreement are hereby expressly modified and
amended to the extent necessary to make the same conform to the provisions
hereof, but otherwise to remain in full force and effect, and the parties
hereto hereby consent that the Secretary, by his approval hereof, or by the
approval hereof by his duly authorized representative, does hereby establish,
alter, change or revoke the drilling, producing, rental minimum Royalty and
Royalty requirements of Federal leases committed hereto and the
regulations of Federal leases committed hereto and the regulations in respect
thereto to conform said requirements to the provisions of this agreement.


 


20.2
Without limiting the generality of the foregoing, all leases, sub-leases and
contracts are particularly modified in accordance with the following:


 


(a)  The development and operation of lands subject to this
agreement under the terms hereof shall be deemed full performance of all
obligations for development and operation with respect to each and every
separately owned Tract subject to this agreement, regardless of whether there
is any development of any particular Tract of the Unitized Land.


 


(b)  Drilling, producing or secondary recovery operations
performed hereunder upon any Tract of Unitized Lands shall be accepted and
deemed to be


 


23

















 


performed
upon and for the benefit of each and every Tract of Unitized Land, and no lease
shall be deemed to expire by reason of failure to drill or produce wells
situated on land therein embraced.


 


(c)  Suspension of drilling or producing operations on all
Unitized Lands.-pursuant to
direction or consent of the Secretary or his duly authorized representative,
shall be deemed to constitute such suspension pursuant to such direction or
consent as to each and every Tract of Unitized Lands. A suspension of drilling
or producing operation on specified lands shall be applicable only to such
lands.


 


(d)  Each lease, sub-lease or contract relating to the
exploration, drilling, development or operation for oil and gas which by its
terms might expire prior to the termination of this agreement, is hereby
extended beyond any such term so provided therein, so that it shall be
continued in full force and effect for and during the term of this agreement.


 


(e)  The segregation of any Federal lease committed to this
agreement is governed by the following provision in the fourth paragraph of Article 17(j) of
the Mineral Leasing Act, as amended by the Act of September 2, 1960 (74
Stat. 781-784: “Any (Federal) lease heretofore or hereafter committed to any such
(Unit) plan embracing lands that are in part within and in part outside
of the area covered by any such plan shall be segregated into separate
leases as to the lands committed and the lands not committed as of the
effective date of unitization; provided, however, that any such lease as to the
non-unitized portion shall continue in force and effect for the term thereof
but for not less than two years from the date of such segregation and so long
thereafter as oil or gas is produced in paying quantities”.


 


ARTICLE XXI


 


COVENANTS RUN WITH LAND


 


21.1
All terms and conditions herein contained shall be construed to be covenants
running with the land with respect to the interest of the parties hereto and
their successors in title until this agreement terminates, and any


 


24

















 


grant,
transfer, conveyance or any passage of any interest in land or leases  subject
hereto, no matter how accomplished, shall be and hereby is conditioned upon the
assumption of all privileges and obligations by such successor in interest. By
way of illustration, but not limitation, if any Working Interest Owner shall,
after executing this agreement, create any overriding royalty, production
payment or any similar interest or interests, the new owner or owners of such
interest or interests shall be bound by the terms of this agreement and the
Unit Operating Agreement. No assignment or transfer of any Working Interest
subject hereto shall be binding upon Unit Operator until the first day of the calendar
month after Unit Operator is furnished with the original or acceptable
photostatic or certified copy, of the recorded instrument of transfer; and no
assignment or transfer of a Royalty Interest subject hereto shall be binding
upon the Working Interest Owner responsible therefor until the first day of the
calendar month after said Working Interest Owner is furnished with the
original, or acceptable photostatic or certified copy, of the recorded
instrument of transfer.


 


ARTICLE XXII


 


EFFECTIVE DATE AND TERM


 


22.1
This agreement shall become binding upon each party who executes or ratifies it
as of the date of execution or ratification by such party and shall become
effective as of 7:00 A.M. of the first day of the calendar month next
following:


 


(a)  The execution or ratification of this agreement and, the
Unit Operating Agreement by Working Interest Owners owning Tracts with a
combined Phase I Unit Participation of at least eighty-five percent (85%), and
the execution or ratification of this agreement by Royalty Owners owning Tracts
with a combined interest of at least sixty-five percent (65%) of the Royalty
Interest in the Unit Area, calculated on the basis of Phase I Unit
Participation; and


 


(b)  The approval of this agreement by the Supervisor and Commission.


 


25

















 


(c)  The filing of at
least one counterpart of this agreement for record in the office of the County
Clerk of Lea County, New Mexico, by the Unit Operator; and provided further
that if (a), (b) and (c) above are not accomplished on or before. July 1, 1971, this agreement shall ipso
facto expire on said date (hereinafter called “expiration date”) and thereafter
be of no further force or effect unless prior thereto this agreement has been
executed or ratified by Working Interest Owners owning a combined Phase I
Participation of at least eighty percent (80%), and that Working Interest
Owners owning in the aggregate sixty-five percent (65%) or more of the total
Phase I Participation committed to this agreement have decided to extend said
expiration date for a period not to exceed six (6) months (hereinafter
called “extended expiration date”). If said expiration date is so extended and
(a), (b) and (c) are not accomplished on or before said extended expiration
date, this agreement shall ipso facto expire on said extended
expiration date and thereafter be of no further force or effect.


 


22.2
Unit Operator shall, within thirty (30) days after the effective date of this
agreement, file for record in the office where a counterpart of this agreement
is recorded, a certificate to the effect that this agreement has become
effective according to its terms and stating further the effective date.


 


22.3
The term of this agreement shall be for and during the time that Unitized
Substances are produced in quantities sufficient to pay for the cost of producing same
from wells on the Unitized Land and so long thereafter as diligent drilling,
reworking or other operations (including secondary recovery operations) are prosecuted
thereon without cessation of more than ninety (90) consecutive days, and so
long thereafter as Unitized Substances are produced as aforesaid.


 


22.4
This agreement may be terminated at any time for any other reason with the
approval of the Supervisor by at least three Working Interest Owners owning
seventy-five percent (75%) Unit Participation which is in
effect at the time the vote is taken. Notice of any such termination shall be
given to all parties hereto, and a copy filed by Unit Operator in
the office of the County


 


26

















 


Clerk
of Lea County, New Mexico.


 


22.5
Upon termination of this agreement, Unit Operations shall cease and the parties
hereto shall be governed by the terms and provisions of the leases and
contracts affecting the separate Tracts.


 


22.6
If not otherwise provided by the leases unitized under this agreement, Royalty
Owners hereby grant Working Interest Owners a period of six (6) months
after termination of this agreement in which to salvage, sell, distribute or
otherwise dispose of the personal property and facilities used in connection
with Unit operations.


 


ARTICLE XXIII


 


RATE OF PROSPECTING, DEVELOPMENT AND PRODUCTION


 


23.1
All production and the disposal thereof shall be in conformity with allocations
and quotas made or fixed by any duly authorized person or regulatory body under
any Federal or State statute. The Director is hereby vested with authority to
alter or modify from time to time, in his discretion, the rate of prospecting and
development and within the limits made or fixed by the Commission to alter or
modify the quantity and rate of production under this agreement, such authority
being hereby limited to alteration or modification in the public interest, the
purpose thereof and the public interest to be served thereby to be stated in
the order of alteration or modification.


 


23.2
Powers in this Article vested in the Director shall only be exercised
after notice to Unit Operator and opportunity for hearing to be held not less
than fifteen (15) days from notice, and thereafter subject to administrative
appeal before becoming final.


 


ARTICLE XXIV


 


NON-DISCRIMINATION


 


24.1
In connection with the performance of work under this agreement, the Unit
Operator agrees to comply with all of the provisions of Section 202(1) to
(7), inclusive, of Executive Order 11246, (30 F.R. 12319), which are hereby
incorporated by reference in this agreement.


 


27

















 


ARTICLE XXV


 


APPEARANCES


 


25.1
Unit Operator, after notice to other parties affected, shall have the right to
appear for or on behalf of any and all interests affected hereby before the
Department and to appeal from any order issued under the rules and
regulations of the Department, or to apply for relief from any of said rules and
regulations or in any proceedings relative to operations before the Department,
or any other legally constituted authority; provided, however, that any other
interested party shall also have the right at his or its own expense to be
heard in any such proceeding.


 


ARTICLE XXVI


 


NOTICES


 


26.1
All notices, demands, objections or statements required hereunder to be given
or rendered to the parties hereto shall be deemed fully given if made in
writing and personally delivered to the party or parties or sent by postpaid
certified mail, addressed to such party or parties at their respective
addresses set forth in connection with the signatures hereto or to the
ratification or consent hereof or to such other address as any such party or parties may have furnished in writing to the party sending
the notice, demand or statement.


 


ARTICLE XXVII


 


NO WAIVER OF CERTAIN RIGHTS


 


27.1
Nothing in this agreement contained shall be construed as a waiver of any party
hereto of the right to assert any legal or constitutional right or defense as
to the validity or invalidity of any law of the State wherein said Unitized
Lands are located, or of the United States or the rules or regulations
issued thereunder in any way affecting such party, or as a waiver by any such
party of any right beyond his or its authority to waive.


 


28














 


ARTICLE XXVIII


 


PERSONAL PROPERTY EXCEPTED


 


28.1 Each of the Working Interest Owners hereto has
heretofore individually placed in or on the wells drilled by such Working
Interest Owner on its leases or interests and in or on the land covered by said
leases or interests certain casing, casing flanges, tubing, rods, pipes, tanks
as well as other lease and well equipment or other personal property (to all of
which the provisions hereof are applicable whether similar or dissimilar in
nature to the foregoing enumeration). As to all of such equipment, the
installing Working Interest Owner has the contractual right in and under its
respective leases to remove same from the premises, and the installation
thereof by said Working Interest Owner was with the intention and understanding
that all of such equipment would be and remain personal property and that no
part thereof would be or become fixtures to the realty. The Working Interest
Owners hereto have dealt separately among themselves and do hereby make a
separate agreement with each other with respect to such lease and well
equipment and all other such personal property located in or on the well or
their respective leases, on the one hand, and the realty, leasehold estates,
and the wells (exclusive of all equipment in or on said wells) located on and
the Unitized Substances underlying the Unit Area, on the other hand. To that
end, the Working Interest Owners have severed, and do hereby sever for all
purposes of this agreement, all such lease and well equipment and other such
personal property which may be located in or on the respective leases or in or
on the wells thereon from the real leasehold estates, and the wells located on
and the Unitized Substances underlying the Unit Area. To conform their
respective investments in such equipment, Working Interest Owners have made a
separate agreement with each other with respect thereto.


 


ARTICLE XXIX


 


UNAVOIDABLE DELAY


 


29.1 All obligations under this agreement requiring the Unit Operator to
commence or continue secondary recovery operations or to operate on or produce
Unitized Substances from any of the lands covered by this agreement shall be
suspended while, but only so long as the Unit Operator, despite the exercise of
due care and diligence, is prevented from complying with such obligations,


 


29

















 


in
whole or in part, by strikes, acts of God, Federal, State or municipal law or
agency, unavoidable accident, uncontrollable delays in transportation,
inability to obtain necessary materials in open market, or other matters beyond
the reasonable control of the Unit Operator whether similar to matters herein
enumerated or not. No Unit obligation which is suspended pursuant to this
section shall become due less than thirty (30) days after it has been
determined that the suspension is no longer applicable. The determination of
creditable “unavoidable delay” time shall be made by Unit Operator subject to
the approval of the Supervisor.


 


ARTICLE XXX


 


LOSS OF TITLE


 


30.1
If any Tract of Unitized Land ceases to have sufficient Working Interest or
Royalty Interest committed to this agreement to meet the conditions of Article XIV
because of failure of title to any party hereto, such Tract shall be regarded
as not committed hereto as of 7:00 A. M. on the first day of the calendar month
in which such failure of title is finally determined; provided, however, that
no such Tract shall be so regarded if same can be re-qualified under said Article XIV
within ninety (90) days after the date on which such title failure was finally
determined. If any such Tract cannot be so re-qualified, Unit Operator shall
recompute the Tract Participation of each Tract of Unitized Land remaining
subject to this agreement so that such Tract Participation shall remain in the
same ratio one to another. Thereafter, Unit Operator shall revise Exhibits “C”
conformably with such recomputation. Each such revised exhibit shall be
effective at 7:00 A. M. on the first day of the calendar month in which such
failure of title is finally determined. If title to a Working Interest fails,
the rights and obligations of Working Interest Owners by reason of such failure
shall be governed by the Unit Operating Agreement. If title to a Royalty
Interest fails, but the Tract to which it relates remains committed to this
agreement, the Royalty Owner whose title failed shall not be entitled to
participate hereunder insofar as its participation is based on such


 


30

















 


lost
Royalty Interest. In the event of a dispute as to the title of any Working or
Royalty Interest, or other interest subject hereto, payment or delivery on
account thereof may be withheld without
liability or interest until the dispute is finally settled; provided, that as
to Federal land or leases, no payments of funds due the United States of
America shall be withheld, but such funds shall be deposited as directed by the
Supervisor to be held as unearned money pending final settlement of the title
dispute, and then applied as earned or returned in accordance with such final
settlement.


 


30.2
Unit Operator, as such, is relieved from any responsibility for any defect or
failure of any title hereunder.


 


ARTICLE XXXI


 


BORDER AGREEMENTS


 


31.1
Subject to the approval of the Supervisor, the Unit Operator upon the
concurrence of at least three Working Interest Owners owning at least
sixty-five percent (65%) of Unit Participation which is in effect at the time
the vote is taken may enter into a border-protection agreement or agreements
with the Working Interest Owners of lands adjacent to the committed Tracts with
respect to the operations in the border area for the maximum ultimate recovery,
conservation purposes and proper protection of the parties and interests.


 


ARTICLE XXXII


 


JOINDER IN DUAL CAPACITY


 


32.1
Execution as herein provided by any party either as a Working Interest Owner or
as a Royalty Owner shall commit all interests that may be owned or controlled
by such party, provided that any party owning a Working Interest must also execute
the Unit Operating Agreement for his Working Interest to be committed hereto.


 


ARTICLE XXXIII


 


NON-JOINDER AND SUBSEQUENT JOINDER


 


33.1
Joinder by any Royalty and Record Owner, at any time, must


 


31

















 


be
accompanied by appropriate joinder of the corresponding Working Interest Owner
in order for the interest of such Royalty and Record Owner to be regarded as
committed. Joinder to the Unit Agreement by a Working Interest Owner, at any
time, must be accompanied by appropriate joinder to the Unit Operating
Agreement in order for such interest to be regarded as committed to this Unit
Agreement.


 


33.2
Any oil or gas interest in the Unitized Formation not committed hereto prior to
submission of this agreement for final approval may thereafter be committed
hereto upon compliance with the applicable provisions of this Article and
of Article XIV (Tracts Qualified for Participation) hereof, at any time up
to the effective date hereof on the same basis of participation as provided in
said Article XIV, by the owner or owners thereof subscribing, ratifying or
consenting in writing to this agreement and, if the interest is a Working
Interest, by the owner of such interest subscribing also to the Unit Operating
Agreement.


 


33.3
It is understood and agreed, however, that from and after the effective date
hereof the right of subsequent joinder by a Working Interest Owner as provided
in this Article shall be subject to such requirements or approvals and on
such basis as may be agreed upon by Working Interest Owners having not less
than eighty percent (80%) Unit Participation which is in effect at the time the
vote is taken and approved by the Director or Supervisor. Such subsequent
joinder by a proposed Working Interest Owner must be evidenced by his execution
or ratification of this agreement and the Unit Operating Agreement. Such
joinder by a proposed Royalty Owner must be evidenced by his execution,
ratification or consent of this agreement and must be consented to in writing by
the Working Interest Owner responsible for the payment of any benefits that may
accrue hereunder in behalf of such proposed Royalty Owner. Except as may be
otherwise herein provided, subsequent joinder to this agreement shall be
effective at 7:00 A.M. as of the first day of the month following the
filing with the Supervisor of duly executed counterparts of any and all
documents necessary to establish effective commitment of any Tract or interest
to this


 


32

















 


agreement,
unless objection to such joinder by the Supervisor is duly made within sixty
(60) days after such filing.


 


ARTICLE XXXIV


 


TAXES


 


34.
1 Each party hereto shall, for its own account, render and pay its share
of any taxes levied against or measured by the amount or value of the Unitized
Substances produced from the Unitized Land; provided, however, that if it is required or
if it be determined that the Unit Operator or the several Working Interest
Owners must pay or advance said taxes for the account of the parties hereto, it
is hereby expressly agreed that the parties so paying or advancing said taxes
shall be reimbursed therefor by the parties hereto, including Royalty Owners,
who may be responsible for the taxes on their respective allocated share of
said Unitized Substances. No such taxes shall be charged to the United States
nor to any lessor who has a contract with a lessee which requires his lessee to
pay such taxes.


 


ARTICLE XXXV


 


CONFLICT OF SUPERVISION


 


35.1
Neither the Unit Operator nor the Working Interest Owners, nor any of them,
shall be subject to any forfeiture, termination or expiration of any rights
hereunder or under any leases or contracts subject hereto, or to any penalty or
liability on account of delay or failure in whole or in part to comply with any
applicable provisions thereof, to the extent that the said Unit Operator or the
Working Interest Owners, or any of them, are hindered, delayed or prevented from
complying therewith by reason of failure of the Unit Operator to obtain, in the
exercise of due diligence, the concurrence of proper representatives of the
United States in and about any matters or things concerning which it is
required herein that such concurrence be obtained. The parties hereto, agree
that all powers and authority are vested in the Commission in and by any
provisions of the laws of the State of New Mexico and subject in any case to
appeal or judicial review as may now or hereafter be provided by the laws of
the State of New Mexico.


 


33

















 


ARTICLE XXXVI


 


NO PARTNERSHIP


 


36.1
The duties, obligations and liabilities of the parties hereto are intended to
be several and not joint or collective. This agreement is not intended to
create, and shall not be construed to create, an association or trust, or to
impose a partnership duty, obligation or liability with regard to any one or
more of the parties hereto. Each party hereto shall be individually responsible
for its own obligations as herein provided.


 


ARTICLE XXXVII


 


PRODUCTION AS OF THE EFFECTIVE DATE


 


37.1
Unit Operator shall make a proper and timely gauge of all leases and other
tanks on Unitized Land in order to ascertain the amount of merchantable oil
above the pipeline connection in such tanks as of 7:00 A. M. on the effective
date hereof. The oil that is a part of the prior allowable of the wells from
which it was produced shall be and remain the property of the Interest Owner
entitled thereto, the same as if the Unit had not been formed; and the
responsible Working Interest Owner shall promptly remove said oil from Unitized
Land. Any such oil not so removed may be sold by Unit Operator for the account
of such Working Interest Owner, subject to the payment of all Royalty to
Royalty Owners under the applicable lease or leases and other contracts. The
oil that is in excess of the prior allowable of the wells from which it was
produced shall be regarded as Unitized Substances produced after effective date
hereof.


 


37.2
If, as of the effective date hereof, any Tract is overproduced with respect to
the allowable of the wells on that Tract and the amount of overproduction has been sold or
otherwise disposed of, such overproduction shall be regarded as a part of the
Unitized Substances produced after the effective date hereof and shall be
charged to such Tract as having been delivered to the parties entitled to
Unitized Substances allocated to such Tract.


 


34

















 


ARTICLE
XXXVIII


 


COUNTERPARTS


 


38.1
This agreement may be executed in any number of counterparts, no one of which
needs to be executed by all parties and may be ratified or consented to by
separate instruments in writing specifically referring hereto, and shall be
binding upon all those parties who have executed such a counterpart,
ratification or consent hereto with the same force and effect as if all parties
had signed the same document, and regardless of whether or not it is executed
by all other parties owning or claiming an interest in the land within the
above described Unit Area.


 


IN
WITNESS WHEREOF, the parties hereto have executed this agreement on the dates
shown opposite their respective signatures.


 


	
   

  	
  RESERVE
  OIL AND GAS COMPANY

  
	
   

  	
   

  
	
  ATTESTS

  	
   

  
	
   

  	
   

  
	
  By

  	
  [ILLEGIBLE]

  	
   

  	
  By

  	
  Paul
  D. Meadows

  
	
  Assistant Secretary

  	
   

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
  January 21, 1970

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  THE
  STATE OF TEXAS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  COUNTY
  OF DALLAS

  	
   

  	
   

  
						



 


 


The forgoing instrument was acknowledged before me this       day
of January, 1970, by PAUL D. MEADOWS, Vice President for Reserve Oil and Gas
Company, on behalf of said corporation.


 


 


	
   

  	
   

  	
  [ILLEGIBLE]

  
	
   

  	
   

  	
  Notary
  Public in and for Dallas County, Texas

  
	
  By
  Commission Expires:

  	
   

  	
   

  
	
  June 1, 1971

  	
   

  	
   

  



 


35

















 


WORKING INTEREST OWNERS


 


 


	
  Date

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date

  	
   

  	
   

  	
   

  



 


36

















 





 















 


EXHIBIT “B” TO UNIT AGREEMENT


COOPER JAL UNIT


LEA COUNTY, NEW MEXICO


 


SCHEDULE OF OWNERSHIP


 


	
  TRACT

  NO.

  	
   

  	
  DESCRIPTION

  OF LAND

  	
   

  	
  NO.

  ACRES

  	
   

  	
  SERIAL
  NO.

  AND

  LEASE NAME

  	
   

  	
  BASIC
  ROYALTY

  OWNER AND

  PERCENTAGE

  	
   

  	
  LESSEE
  OF RECORD

  	
   

  	
  OVERRIDING

  ROYALTY

  OWNER AND

  PERCENTAGE

  	
   

  	
  WORKING
  INTEREST OWNER

  AND PERCENTAGE

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
  T24S,
  R37E

  Section
  30: 

  Lots
  1 and 2 and E/2 NW/4

  	
   

  	
  156.16

  	
   

  	
  LC-032592(b)
  

  H.
  B. P.

  	
   

  	
  USA
  - All

  (Schedule
  D)

  	
   

  	
  Texaco
  Inc.

  	
   

  	
  None

  	
   

  	
  Texaco Inc.

  	
   

  	
  100.000

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2

  	
   

  	
  T24S,
  R37E 

  Section
  19: 

  Lots
  3 and 4 and E/2 SW/4

  	
   

  	
  156.18

  	
   

  	
  LC-032715
  

  H.
  B. P.

  	
   

  	
  USA
  - All

  (Schedule
  B)

  	
   

  	
  Amerada
  Petroleum Corporation

  	
   

  	
  Supplement
  Note

  No.
  1

  	
   

  	
  Amerada Petroleum Corporation

  	
   

  	
  100.000

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3

  	
   

  	
  T24S,
  R36E 

  Section
  26: 

  NE/4
  NE/4

  	
   

  	
  40.00

  	
   

  	
  LC-054665(b)

  H.
  B. P.

  	
   

  	
  USA
  - All

  (Schedule
  D)

  	
   

  	
  Texas
  Pacific Oil Company, Inc. - 7/12

  Allied
  Chemical Co. - 5/12

  	
   

  	
  Supplement
  Note

  No.
  2

  	
   

  	
  Texas Pacific Oil Company, Inc. (Down to 4,000
  Feet)

  	
   

  	
  100.000

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4

  	
   

  	
  T24S,
  R36E 

  Section
  24: 

  	
   

  	
  80.00

  	
   

  	
  LC-063965

  H.
  B. P.

  	
   

  	
  USA
  - All

  (Schedule
  B)

  	
   

  	
  Phillips
  Petroleum Corp.

  	
   

  	
  Supplement
  Note

  No.
  3

  	
   

  	
  Petroleum Corporation of Texas (Down to 3,750
  Feet)

  	
   

  	
  50.000

  	
  %

  
	
   

  	
   

  	
  E/2
  SE/4

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Reserve Oil and Gas Company (Down to 3,750 Feet)

  	
   

  	
  50.000

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5

  	
   

  	
  T24S,
  R37E 

  Section
  19: 

  Lots
  1 and 2 and E/2 NW/4

  	
   

  	
  156.22

  	
   

  	
  NM-0321613
  

  H.
  B. P.

  	
   

  	
  USA
  - All

  (Schedule
  D)

  	
   

  	
  Estate of Abner M. Jack; Annie
  May Kavanaugh; Estate of Guy Jack, Jr. ; Estate of Florence Jack Mayo; W.
  M. Beauchamp, Guardian for Wm. Howard Jack

  	
   

  	
  Supplement
  Note

  No.
  4

  	
   

  	
  Continental Oil Company (Down to Base of Queen
  Formation) 

  T. J. Sivley (Down to Base of Queen Formation) 

  Dorothy B. Lind (Down to Base of Queen Formation)

  	
   

  	
  50.000

   

  25.000

   

  25.000

  	
  %

   

  %

   

  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6

  	
   

  	
  T24S,
  R37E 

  Section
  18: 

  	
   

  	
  80.00

  	
   

  	
  NM-0321613
  

  H.
  B. P.

  	
   

  	
  USA
  - All

  (Schedule
  D)

  	
   

  	
  Estate of Abner M. Jack; Annie
  May Kavanaugh; Estate of Guy Jack, Jr. ;

  	
   

  	
  Supplement
  Note

  No.
  5

  	
   

  	
  Cities Service Oil Company (Surface to 3,750 Feet)
  

  	
   

  	
  83.333

  	
  %

  
	
   

  	
   

  	
  E/2
  SW/4

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Estate of Florence Jack Mayo;
  W. M. Beauchamp, Guardian for Wm. Howard Jack

  	
   

  	
   

  	
   

  	
  Hanson Oil Company (Surface to 3,750 Feet)

  	
   

  	
  16.667

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7(a)

  	
   

  	
  T24S,
  R37E 

  Section
  18: 

  Lot
  3

  	
   

  	
  38.11

  	
   

  	
  NM-0321613
  

  H.
  B. P.

  	
   

  	
  USA
  - All

  (Schedule
  D)

  	
   

  	
  Estate of Abner M. Jack; Annie
  May Kavanaugh; Estate 

  of Guy Jack, Jr. ; Estate
  of Florence Jack Mayo; W. M. Beauchamp, Guardian for Wm. Howard Jack

  	
   

  	
  Supplement
  Note

  No.
  6

  	
   

  	
  Cities Service Oil Company (Down to 3,750 Feet)

  	
   

  	
  100.000

  	
  %

  



 















 


EXHIBIT “B” TO UNIT AGREEMENT


 


	
  TRACT

  NO.

  	
   

  	
  DESCRIPTION

  OF LAND

  	
   

  	
  NO.

  ACRES

  	
   

  	
  SERIAL
  NO.

  AND

  LEASE NAME

  	
   

  	
  BASIC
  ROYALTY

  OWNER AND

  PERCENTAGE

  	
   

  	
  LESSEE OF RECORD

  	
   

  	
  OVER
  RIDING

  ROYALTY

  OWNER AND

  PERCENTAGE

  	
   

  	
  WORKING
  INTEREST OWNER

  AND PERCENTAGE

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7(b)

  	
   

  	
  T24S,
  R37E 

  Section
  18: 

  Lot
  4

  	
   

  	
  38.12

  	
   

  	
  NM-0321613

  H.
  B. P.

  	
   

  	
  USA
  - All

  (Schedule
  D)

  	
   

  	
  Estate of Abner M. Jack; Annie
  May Kavanaugh; Estate of Guy Jack, Jr. ; Estate of Florence Jack Mayo; W.
  M. Beauchamp, Guardian for Wm. Howard Jack

  	
   

  	
  Supplement
  Note

  No.
  6

  	
   

  	
  Cities Service Oil Company

  (Down to 3,750 Feet)

  	
   

  	
  100.000

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8

  	
   

  	
  T24S,
  R37E 

  Section
  18: 

  N/2
  NE/4

  	
   

  	
  80.00

  	
   

  	
  Andrews

  H.
  B. P.

  	
   

  	
  Supplement
  Note

  No.
  7

  	
   

  	
  Reserve Oil and Gas Company
  Atlantic Richfield Company

  	
   

  	
  Supplement
  Note

  No.
  7

  	
   

  	
  Reserve
  Oil and Gas Company 

  Atlantic
  Richfield Company

  	
   

  	
  50.000

  50.000

   

  	
  %

  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9

  	
   

  	
  T24S,
  R37E 

  Section
  18: 

  NW/4
  NW/4 

  (Lot
  1) and E/2 NW/4

  	
   

  	
  118.10

  	
   

  	
  Bates,
  C. T.

  H.
  B. P.

  	
   

  	
  Supplement
  Note

  No.
  8

  	
   

  	
  Atlantic Richfield Company

  	
   

  	
  None

  	
   

  	
  Atlantic Richfield Company

  	
   

  	
  100.000

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10

  	
   

  	
  T24S,
  R37E 

  Section
  18: 

  SW/4
  NW/4

  	
   

  	
  38.11

  	
   

  	
  Bates,
  C. T.

  H.
  B. P.

  	
   

  	
  Supplement
  Note

  No.
  9

  	
   

  	
  John L. Harian

  	
   

  	
  Supplement
  Note

  No.
  9

  	
   

  	
  John L. Harian (Oil Rights Only Down to 3,855
  Feet) 

  Atlantic Richfield Company

  (Gas Rights Down to 3,855 Feet)

  	
   

  	
  100.000

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11

  	
   

  	
  T24S,
  R37E 

  Section
  18: 

  SW/4
  SE/4

  	
   

  	
  40.00

  	
   

  	
  Bates,
  C. T.

  H.
  B. P.

  	
   

  	
  Supplement
  Note

  No.
  10

  	
   

  	
  Texas Pacific Oil Co., Inc.

  	
   

  	
  Supplement
  Note

  No.
  10

  	
   

  	
  Texas
  Pacific Oil Co., Inc.

  	
   

  	
  100.000

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12

  	
   

  	
  T24S,
  R37E 

  Section
  18: 

  NW/4
  SE/4

  	
   

  	
  40.00

  	
   

  	
  Blankenship

  H.
  B. P.

  	
   

  	
  Supplement
  Note

  No.
  11

  	
   

  	
  Texas Pacific Oil Co., Inc.

  	
   

  	
  Supplement
  Note

  No.
  11

  	
   

  	
  Texas
  Pacific Oil Co., Inc.

  	
   

  	
  100.000

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13

  	
   

  	
  T24S,
  R36E 

  Section
  14: 

  SE/4
  SE/4

  	
   

  	
  40.00

  	
   

  	
  Cooper,
  J. W.

  H.
  B. P.

  	
   

  	
  Supplement
  Note

  No.
  12

  	
   

  	
  Texas Pacific Oil Co., Inc.

  	
   

  	
  None

  	
   

  	
  Texas
  Pacific Oil Co., Inc.

  	
   

  	
  100.000

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14

  	
   

  	
  T24S,
  R36E 

  Section
  13: 

  	
   

  	
  120.00

  	
   

  	
  Dunn,
  Maggie

  H.
  B. P.

  	
   

  	
  Supplement
  Note

  No.
  13

  	
   

  	
  Petroleum Corp. of Texas
  Atlantic Richfield Company

  	
   

  	
  Supplement
  Note

  No.
  13

  	
   

  	
  Petroleum
  Corporation of Texas (Down to 4,000 Feet) 

  	
   

  	
  50.000

  	
  %

  
	
   

  	
   

  	
  N/2
  SE/4 and SW/4 SE/4

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Atlantic
  Richfield Company

  (Down to 4,000 Feet)

  	
   

  	
  50.000

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15

  	
   

  	
  T24S,
  R36E 

  Section
  13: 

  SE/4
  SE/4

  	
   

  	
  40.00

  	
   

  	
  Dunn,
  Maggie

  H.
  B. P.

  	
   

  	
  Supplement
  Note

  No.
  14

  	
   

  	
  Atlantic Richfield Company

  	
   

  	
  None

  	
   

  	
  Atlantic
  Richfield Company

  	
   

  	
  100.000

  	
  %

  



 


2















 


EXHIBIT “B” TO UNIT AGREEMENT


 


	
  TRACT 

  NO.

  	
   

  	
  DESCRIPTION

  OF LAND

  	
   

  	
  NO.

  ACRES

  	
   

  	
  SERIAL
  NO.

  AND

  LEASE NAME

  	
   

  	
  BASIC
  ROYALTY

  OWNER AND

  PERCENTAGE

  	
   

  	
  LESSEE
  OF RECORD

  	
   

  	
  OVERRIDING

  ROYALTY

  OWNER AND

  PERCENTAGE

  	
   

  	
  WORKING
  INTEREST OWNER

  AND PERCENTAGE

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16

  	
   

  	
  T24S,
  R36E  

  Section
  24: 

  	
   

  	
  120.00

  	
   

  	
  Dunn,
  Maggie

  H.
  B. P.

  	
   

  	
  Supplement
  Note 

  No.
  15

  	
   

  	
  Atlantic
  Richfield Company

  Reserve
  Oil and Gas Company

  	
   

  	
  Supplement
  Note 

  No.
  15

  	
   

  	
  Atlantic Richfield Company

  (Down to 4,000 Feet)

  	
   

  	
  50.000

  	
  %

  
	
   

  	
   

  	
  E/2
  NE/4 and SW/4 NE/4

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Petroleum
  Corporation of Texas

  	
   

  	
   

  	
   

  	
  Reserve Oil and Gas Company (Down to 4,000 Feet)

  	
   

  	
  37.500

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Petroleum Corporation of Texas (Down to 4,000
  Feet)

  	
   

  	
  12.500

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17

  	
   

  	
  T24S,
  R36E 

  Section
  24: 

  NW/4
  NE/4

  	
   

  	
  40.00

  	
   

  	
  Dunn
  Unit

  H.
  B. P.

  	
   

  	
  Supplement
  Note 

  No.
  16

  	
   

  	
  Atlantic
  Richfield Company

  	
   

  	
  None

  	
   

  	
  Atlantic Richfield Company 

  Richardson, Sarah B., Individually and as Trustee
  U/W/O Jack Richardson

  	
   

  	
  50.000

  50.000

   

  	
  %

  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18

  	
   

  	
  T24S,
  R37E 

  Section
  18: 

  	
   

  	
  80.00

  	
   

  	
  Gutman,
  Charles

  H.
  B. P.

  	
   

  	
  Supplement
  Note 

  No.
  17

  	
   

  	
  Reserve
  Oil and Gas Company

  Atlantic
  Richfield Company

  	
   

  	
  Supplement
  Note 

  No.
  17

  	
   

  	
  Reserve Oil and Gas Company (Down to 3,800 Feet)

  	
   

  	
  50.000

  	
  %

  
	
   

  	
   

  	
  S/2
  NE/4

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Atlantic Richfield Company

  (Down to 3,800 Feet)

  	
   

  	
  50.000

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  19

  	
   

  	
  T24S,
  R36E 

  Section
  25: 

  NW/4

  	
   

  	
  160.00

  	
   

  	
  Harrison,
  Sally W.

  H.
  B. P.

  	
   

  	
  Supplement
  Note 

  No.
  18

  	
   

  	
  Petroleum
  Corporation of Texas

  Reserve
  Oil and Gas Company

  	
   

  	
  Supplement
  Note 

  No.
  18

  	
   

  	
  Petroleum Corporation of Texas 

  Reserve Oil and Gas Company 

  	
   

  	
  50.000

  50.000

  	
  %

  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  20

  	
   

  	
  T24S,
  R36E 

  Section
  24: 

  NW/4

  	
   

  	
  160.00

  	
   

  	
  Hunter,
  E. E. 

  H.
  B. P.

  	
   

  	
  Supplement
  Note 

  No.
  19

  	
   

  	
  Humble Oil and Refining Co.

  	
   

  	
  None

  	
   

  	
  Humble Oil and Refining Co.

  	
   

  	
  100.000

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  21

  	
   

  	
  T24S,
  R36E 

  Section
  13: 

  SW/4

  	
   

  	
  160.00

  	
   

  	
  Hunter,
  Edna E. 

  H.
  B. P.

  	
   

  	
  Supplement
  Note 

  No.
  20

  	
   

  	
  Reserve
  Oil and Gas Company

  Tenneco
  Oil Company

  Margaret
  Strain Mallard Clara Margaret Strain Charles Hunter Strain

  	
   

  	
  Supplement
  Note 

  No.
  20

  	
   

  	
  Reserve Oil and Gas Company (Down to 3,750 Feet)

  Tenneco Oil Company

  (Down to 3,750 Feet)

  Margaret Strain Mallard

  (Down to 3,750 Feet)

  Clara Margaret Strain

  (Down to 3,750 Feet)

  Charles Hunter Strain

  (Down to 3,750 Feet)

  	
   

  	
  50.000

   

  25.000

   

  6.250

   

  12.500

   

  6.250

  	
  %

   

  %

   

  %

   

  %

   

  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  22

  	
   

  	
  T24S,
  R37E 

  Section
  18: 

  NE/4
  SE/4

  	
   

  	
  40.00

  	
   

  	
  Russell,
  P. G. 

  H.
  B. P.

  	
   

  	
  Theodore
  Low 

  Company,
  Inc. - All

  	
   

  	
  Reserve
  Oil and Gas Company

  Texas
  Pacific Oil Co., Inc.

  	
   

  	
  Supplement
  Note 

  No.
  21

  	
   

  	
  Reserve Oil and Gas Company 

  Texas Pacific Oil Co., Inc.

  	
   

  	
  50.000

  50.000

  	
  %

  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  23

  	
   

  	
  T24S,
  R37E 

  Section
  18: 

  SE/4
  SE/4

  	
   

  	
  40.00

  	
   

  	
  Russell
  

  H.
  B. P.

  	
   

  	
  Theodore
  Low 

  Company,
  Inc. - All

  	
   

  	
  Texas
  Pacific Oil Co., Inc.

  	
   

  	
  Supplement
  Note 

  No.
  22

  	
   

  	
  Texas Pacific Oil Co., Inc.

  	
   

  	
  100.000

  	
  %

  



 


3















 


EXHIBIT “B” TO UNIT AGREEMENT


 


	
  TRACT

  NO.

  	
   

  	
  DESCRIPTION

  OF LAND

  	
   

  	
  NO.

  ACRES

  	
   

  	
  SERIAL
  NO.

  AND

  LEASE NAME

  	
   

  	
  BASIC
  ROYALTY

  OWNER AND

  PERCENTAGE

  	
   

  	
  LESSEE
  OF RECORD

  	
   

  	
  OVERRIDING

  ROYALTY

  OWNER AND

  PERCENTAGE

  	
   

  	
  WORKING
  INTEREST OWNER

  AND PERCENTAGE

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  24

  	
   

  	
  T24S,
  R36E  

  Section
  23: 

  S/2
  SE/4 

  Section
  24: 

  W/2
  SW/4

  	
   

  	
  160.00

  	
   

  	
  Thomas,
  A. E. 

  H.
  B. P.

  	
   

  	
  Supplement
  Note 

  No.
  23

  	
   

  	
  Humble
  Oil and Refining Co.

  	
   

  	
  None

  	
   

  	
  Humble
  Oil and Refining Co.

  	
   

  	
  100.000

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  25

  	
   

  	
  T24S,
  R36E 

  Section
  24: 

  E/2
  SW/4 and W/2 SE/4

  	
   

  	
  160.00

  	
   

  	
  Thomas,
  Ada 

  H.
  B. P.

  	
   

  	
  Supplement
  Note 

  No.
  24

  	
   

  	
  Petroleum
  Corporation of Texas

  Reserve
  Oil and Gas Company

  	
   

  	
  Supplement
  Note 

  No.
  24

  	
   

  	
  Petroleum Corporation of Texas (Down to 3,750
  Feet)

  Reserve Oil and Gas Company (Down to 3,750 Feet)

  	
   

  	
  50.000

   

  50.000

   

  	
  %

   

  %

   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  26

  	
   

  	
  T24S,
  R36E 

  Section
  25: 

  NE/4

  	
   

  	
  160.00

  	
   

  	
  Van
  Zandt

  H.
  B. P.

  	
   

  	
  Supplement
  Note 

  No.
  25

  	
   

  	
  Reserve
  Oil and Gas Company

  Texas
  Pacific Oil Company, Inc.

  Adele
  Irvine Sowell George Bauerdorf Estate

  	
   

  	
  Supplement
  Note 

  No.
  25

  	
   

  	
  Reserve Oil and Gas Company (Down to 3,750 Feet)

  Texas Pacific Oil Company, Inc.

  Adele Irvine Sowell George 

  Bauerdorf
  Estate

  	
   

  	
  50.000

   

  32.813

  7.187

  10.000

  	
  %

   

  %

  %

  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  27

  	
   

  	
  T24S,
  R36E 

  Section
  26: 

  SE/4
  NE/4

  	
   

  	
  40.00

  	
   

  	
  WoolWorth,
  C. D.

  H.
  B. P.

  	
   

  	
  Supplement
  Note 

  No.
  26

  	
   

  	
  L.
  A. Johnson Johnny French

  	
   

  	
  None

  	
   

  	
  Johnny
  French

  Tillie
  French

  L.
  A. Johnson

  	
   

  	
  25.000

  25.000

  50.000

  	
  %

  %

  %

  



 


SUMMARY OF COOPER JAL UNIT
ACREAGE


 




	
   

  	
   

  	
  NUMBER OF ACRES

  	
   

  	
  PERCENT OF UNIT

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Federal Lands

  	
   

  	
  744.79

  	
   

  	
  28.86

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  State Lands

  	
   

  	
  None

  	
   

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fee Lands

  	
   

  	
  1,836.21

  	
   

  	
  71.14

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TOTAL

  	
   

  	
  2,581.00

  	
   

  	
  100.00

  	
  %

  






 


4














 


SUPPLEMENT TO
EXHIBIT “B” TO UNIT AGREEMENT

COOPER JAL UNIT

LEA COUNTY, NEW MEXICO


 


NOTE NO. 1 - UNDER
TRACT NO. 2


 


OVERRIDING ROYALTY
OWNER


 


	
  Atlantic
  Richfield Company

  	
   

  	
  .37500

  	
  %

  
	
  Bonnie
  R. Etz

  	
   

  	
  .50000

  	
  %

  
	
  George
  Etz

  	
   

  	
  .50000

  	
  %

  
	
  Fluor
  Corporation

  	
   

  	
  .50000

  	
  %

  



 


NOTE NO. 2 - UNDER TRACT
NO. 3


 


OVERRIDING ROYALTY OWNER


 


None


 


$9,314,423.00
Production from this and other leases payable to Prudential Insurance Company
of America payable out of 65% of Texas Pacific’s Net Interest.


$1,125,000.00
Production Payment out of this and other leases  payable to Howard Olsen (1/2) and
The Estate of R. Olsen, Deceased (1/2) payable out of 6.25% of Texas Pacific’s
Net Interest.


$5,875,000.00
Production Payment out of this and other leases payable to Howard Olsen (1/2)
and The Estate of R. Olsen, Deceased (1/2) payable out of 12.5% of Texas
Pacific’s Net Interest after the $1,125,000.00 Production Payment payout.


 


NOTE NO. 3 - UNDER TRACT
NO. 4


 


OVERRIDING ROYALTY OWNER


 


	
  Phillips
  Petroleum Company

  	
   

  	
   

  	
   

  
	
  *  When production during any calendar month
  averages over 15 barrels per well per day.

  	
   

  	
  *12.50000

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  *  When production during any calendar month
  averages less than 15 barrels per well per day.

  	
   

  	
  * 5.00000

  	
  %

  



 


$245,000.00
Production Payment plus 6-1/2% interest from this and other leases payable to
A. M. C. Corporation out of 65% of 75% of Petco’s Net Interest.


$690,000.00
Production Payment plus 5% interest from this and other leases payable to
Permian Charitable Foundation of Midland, Texas, Inc. out of 25% of Petco’s
Net Interest.


$7,100,000.00
Production Payment plus 5-5/8% interest from this and other leases payable to
Continental Illinois National Bank and Trust Company of Chicago out of Reserve’s
Net Interest.


$4,000,000.00
Production Payment plus 5-7/8% interest from this and other leases  payable
to Continental Illinois National Bank and Trust Company of Chicago out of
Reserve’s Net Interest.


 

















 


NOTE NO. 4 - UNDER TRACT
NO. 5


 


OVERRIDING ROYALTY OWNER


 


	
  Atlantic
  Richfield Company

  	
   

  	
  .62500

  	
  %

  
	
  Estate
  of W. H. Jack

  	
   

  	
  .56250

  	
  %

  
	
  Catholic
  Church Extension Society

  	
   

  	
  .50000

  	
  %

  
	
  J.
  H. Daws

  	
   

  	
  .06250

  	
  %

  
	
  Mack
  Easley

  	
   

  	
  .06250

  	
  %

  
	
  Howard
  Bradley Jack

  	
   

  	
  .03125

  	
  %

  
	
  Lucille
  R. Jack

  	
   

  	
  .56250

  	
  %

  
	
  Annie
  May Kavanaugh

  	
   

  	
  .59375

  	
  %

  
	
  Dorothy
  B. Mitchell

  	
   

  	
  .06250

  	
  %

  
	
  Pan
  American Petroleum Corporation

  	
   

  	
  .62500

  	
  %

  
	
  John
  Quinn

  	
   

  	
  .06250

  	
  %

  
	
  Standard
  Oil Company of Texas

  	
   

  	
  .62500

  	
  %

  
	
  Continental
  Oil Company

  	
   

  	
  .62500

  	
  %

  



 


NOTE NO. 5 - UNDER TRACT
NO. 6


 


OVERRIDING ROYALTY OWNER


 


	
  Catholic
  Church Extension Society

  	
   

  	
  .50000

  	
  %

  
	
  Chevron
  Oil Company

  	
   

  	
  .62500

  	
  %

  
	
  J.
  H. Daws

  	
   

  	
  .06250

  	
  %

  
	
  Mack
  Easley

  	
   

  	
  .06250

  	
  %

  
	
  Howard
  Bradley Jack

  	
   

  	
  .03125

  	
  %

  
	
  Lucille
  R. Jack

  	
   

  	
  .56250

  	
  %

  
	
  Estate
  of William H. Jack

  	
   

  	
  .56250

  	
  %

  
	
  Annie
  May Kavanaugh

  	
   

  	
  .59375

  	
  %

  
	
  Dorothy
  B. Mitchell

  	
   

  	
  .06250

  	
  %

  
	
  John
  Quinn

  	
   

  	
  .06250

  	
  %

  
	
  Atlantic
  Richfield Company

  	
   

  	
  .62500

  	
  %

  
	
  Continental
  Oil Company

  	
   

  	
  .62500

  	
  %

  
	
  Pan
  American Petroleum Corporation

  	
   

  	
  .62500

  	
  %

  



 


NOTE NO. 6 - UNDER TRACT
NO. 7


 


OVERRIDING ROYALTY OWNER


 


	
  Catholic
  Church Extension Society

  	
   

  	
  .50000

  	
  %

  
	
  Chevron
  Oil Company

  	
   

  	
  .62500

  	
  %

  
	
  J.
  H. Daws

  	
   

  	
  .06250

  	
  %

  
	
  Mack
  Easley

  	
   

  	
  .06250

  	
  %

  
	
  Howard
  Bradley Jack

  	
   

  	
  .03125

  	
  %

  
	
  Lucille
  R. Jack

  	
   

  	
  .56250

  	
  %

  
	
  Estate
  of William H. Jack

  	
   

  	
  .56250

  	
  %

  
	
  Annie
  May Kavanaugh

  	
   

  	
  .59375

  	
  %

  
	
  Dorothy
  B. Mitchell

  	
   

  	
  .06250

  	
  %

  
	
  John
  Quinn

  	
   

  	
  .06250

  	
  %

  
	
  Atlantic
  Richfield Company

  	
   

  	
  .62500

  	
  %

  
	
  Continental
  Oil Company

  	
   

  	
  .62500

  	
  %

  
	
  Pan
  American Petroleum Corporation

  	
   

  	
  .62500

  	
  %

  



 


2

















 


NOTE NO. 7 - UNDER TRACT
NO. 8


 


BASIC ROYALTY OWNER


 


	
  Albuquerque
  National Bank, Testamentary Trustee of F. A. Andrews, Deceased

  	
   

  	
  11.57

  	
  %

  
	
  Selma
  E. Andrews Agency

  	
   

  	
  13.43

  	
  %

  
	
  Harry
  Arledge

  	
   

  	
  1.04

  	
  %

  
	
  S.
  M. Aronson

  	
   

  	
  1.25

  	
  %

  
	
  Jessie B. Crump

  	
   

  	
  6.25

  	
  %

  
	
  Joe
  and Jessie Crump Fund

  	
   

  	
  6.25

  	
  %

  
	
  Alfred
  E. Gutman

  	
   

  	
  4.93

  	
  %

  
	
  Daniel
  L. Gutman

  	
   

  	
  4.93

  	
  %

  
	
  Mrs. Dorothy
  Gutman Trustee

  	
   

  	
  2.47

  	
  %

  
	
  Dorothy
  Gutman

  	
   

  	
  4.93

  	
  %

  
	
  Daniel
  Gutman, Trustee of Estate of Max Gutman

  	
   

  	
  14.79

  	
  %

  
	
  Betty
  Gutman Guttag

  	
   

  	
  7.40

  	
  %

  
	
  Hendrick
  Memorial Hospital

  	
   

  	
  12.50

  	
  %

  
	
  Mrs. Julia
  Levine Daniels

  	
   

  	
  2.08

  	
  %

  
	
  Scope
  Industries

  	
   

  	
  .62

  	
  %

  
	
  Atlantic
  Richfield Company

  	
   

  	
  .62

  	
  %

  
	
  Edith
  G. Socolow

  	
   

  	
  4.94

  	
  %

  



 


OVERRIDING ROYALTY
OWNER


 


	
  Scope
  Industries

  	
   

  	
  5.07810

  	
  %

  



 


$7,100,000.00
Production Payment plus 5-5/8% interest from this and other leases payable to
Continental Illinois National Bank and Trust Company of Chicago out of Reserve’s
Net Interest.


$4,000,000.00
Production Payment plus 5-7/8% interest payable to Continental Illinois
National Bank and Trust Company of Chicago out of Reserve’s Net Interest.


 


NOTE NO. 8 - UNDER TRACT
NO. 9


 


BASIC ROYALTY OWNER


 


	
  Charles
  T. Bates, Jr.

  	
   

  	
  3.61

  	
  %

  
	
  James
  Ray Bates

  	
   

  	
  3.61

  	
  %

  
	
  Kenneth
  C. Bates

  	
   

  	
  3.61

  	
  %

  
	
  Lucille
  Chism Bates

  	
   

  	
  3.13

  	
  %

  
	
  Theodocia
  G. Bates

  	
   

  	
  12.64

  	
  %

  
	
  Warren
  J.
  Bates

  	
   

  	
  3.61

  	
  %

  
	
  Ether
  Chism

  	
   

  	
  20.83

  	
  %

  
	
  Catherine
  L. Dumraese

  	
   

  	
  27.08

  	
  %

  
	
  Wilma
  Chism Lain

  	
   

  	
  3.13

  	
  %

  
	
  Norma
  Chism, McCarthy

  	
   

  	
  3.13

  	
  %

  
	
  Mary
  Louise Nommensen

  	
   

  	
  3.12

  	
  %

  
	
  Oil
  Finders, Inc.

  	
   

  	
  3.13

  	
  %

  
	
  Atlantic
  Richfield Company

  	
   

  	
  9.37

  	
  %

  



 


3

















 


NOTE NO. 9 - UNDER TRACT
NO. 10


 


BASIC ROYALTY OWNER


 


	
  Kenneth
  C. Bates

  	
   

  	
  3.61

  	
  %

  
	
  Docia
  Bates

  	
   

  	
  3.61

  	
  %

  
	
  Charles
  T. Bates, Jr.

  	
   

  	
  3.61

  	
  %

  
	
  James
  Ray Bates

  	
   

  	
  3.61

  	
  %

  
	
  Warren
  J. Bates

  	
   

  	
  3.61

  	
  %

  
	
  Theodocia
  C. Bates

  	
   

  	
  9.03

  	
  %

  
	
  Oil
  Finders, Inc.

  	
   

  	
  3.13

  	
  %

  
	
  Atlantic
  Richfield Company

  	
   

  	
  9.38

  	
  %

  
	
  Catherine
  L. Dumraese

  	
   

  	
  27.08

  	
  %

  
	
  Ether
  Chism

  	
   

  	
  20.83

  	
  %

  
	
  Lucille
  Chism Bates

  	
   

  	
  3.13

  	
  %

  
	
  Wilma
  Chism Lain

  	
   

  	
  3.13

  	
  %

  
	
  Norma
  Chism McCarthy

  	
   

  	
  3.12

  	
  %

  
	
  Mary
  Louise Nommensen

  	
   

  	
  3.12

  	
  %

  



 


OVERRIDING ROYALTY
OWNER


 


	
  Atlantic
  Richfield Company

  	
   

  	
   

  	
   

  
	
  *When
  wells are capable of making 100% of allowable.

  	
   

  	
  *10.937500

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  *When
  wells are capable of making 75% - 100% of allowable.

  	
   

  	
  * 8.203125

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  *When
  wells are making less than 75% of allowable.

  	
   

  	
  * 5.46875

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Oil
  Well Remedial Service

  	
   

  	
  5.46875

  	
  %

  
	
  Florence
  M. Lathrop

  	
   

  	
  5.46875

  	
  %

  



 


NOTE NO. 10 - UNDER TRACT
NO. 11


 


BASIC ROYALTY OWNER


 


	
  Charles
  T. Bates, Jr.

  	
   

  	
  4.45

  	
  %

  
	
  Docia
  Bates

  	
   

  	
  15.56

  	
  %

  
	
  James
  Ray Bates

  	
   

  	
  4.45

  	
  %

  
	
  Kenneth
  C. Bates

  	
   

  	
  4.45

  	
  %

  
	
  Lucille
  Chism Bates

  	
   

  	
  3.12

  	
  %

  
	
  Warren
  J. Bates

  	
   

  	
  4.45

  	
  %

  
	
  Ether
  Chism

  	
   

  	
  20.83

  	
  %

  
	
  Catherine
  L. Dumraese

  	
   

  	
  33.33

  	
  %

  
	
  Wilma
  Chism Lain

  	
   

  	
  3.12

  	
  %

  
	
  Norma
  Chism McCarthy

  	
   

  	
  3.12

  	
  %

  
	
  Mary
  Louise Nommensen

  	
   

  	
  3.12

  	
  %

  



 


OVERRIDING ROYALTY OWNER


 


	
  Dacia Bates

  	
   

  	
  2.73438

  	
  %

  
	
  Catherine L. Dumraese

  	
   

  	
  4.16667

  	
  %

  



 


4

















 


NOTE NO. 11 -
UNDER TRACT NO. 12


 


BASIC ROYALTY
OWNER (Based On
Gas Ownership)


 


	
  The
  Colorado Corporation

  	
   

  	
  .01

  	
  %

  
	
  Joseph
  C. Blake

  	
   

  	
  .01

  	
  %

  
	
  Daisy
  D. Blankenship

  	
   

  	
  15.00

  	
  %

  
	
  Georgia
  Lee Clarke

  	
   

  	
  1.56

  	
  %

  
	
  C.
  S. Daley

  	
   

  	
  .02

  	
  %

  
	
  Myrtle
  L. Davis

  	
   

  	
  .04

  	
  %

  
	
  L.
  M. Decker and Yvonne Baird Decker

  	
   

  	
  81.25

  	
  %

  
	
  Margaret
  R. Ellison

  	
   

  	
  .01

  	
  %

  
	
  Roy
  F. Faskin

  	
   

  	
  .02

  	
  %

  
	
  Elizabeth
  Rittenhouse Lamb

  	
   

  	
  .01

  	
  %

  
	
  Harry
  Levy

  	
   

  	
  .02

  	
  %

  
	
  Paul
  Lyon and Martha Lyon

  	
   

  	
  1.56

  	
  %

  
	
  Beverly
  B. Nelson

  	
   

  	
  .02

  	
  %

  
	
  Joseph
  Nelson

  	
   

  	
  .04

  	
  %

  
	
  Veva
  Neva K. Nelson

  	
   

  	
  .08

  	
  %

  
	
  Earle
  M. Simon

  	
   

  	
  .02

  	
  %

  
	
  Elmer
  H. Wahl

  	
   

  	
  .31

  	
  %

  
	
  A.
  W. Wuesterberg

  	
   

  	
  .02

  	
  %

  



 


OVERRIDING ROYALTY
OWNER


 


	
  The
  Colorado Corporation

  	
   

  	
  .00107

  	
  %

  
	
  Joseph
  C. Blake

  	
   

  	
  .00107

  	
  %

  
	
  Daisy
  D. Blankenship 

  	
   

  	
  1.64063

  	
  %

  
	
  Georgia
  Lee Clarke

  	
   

  	
  .17090

  	
  %

  
	
  C.
  S. Daley

  	
   

  	
  .00214

  	
  %

  
	
  Myrtle
  L. Davis

  	
   

  	
  .00427

  	
  %

  
	
  L.
  M. Decker and Yvonne Baird Decker

  	
   

  	
  8.88672

  	
  %

  
	
  Margaret
  R. Ellison

  	
   

  	
  .00107

  	
  %

  
	
  Roy
  F. Faskin

  	
   

  	
  .00214

  	
  %

  
	
  Elizabeth
  Rittenhouse Lamb

  	
   

  	
  .00107

  	
  %

  
	
  Harry
  Levy

  	
   

  	
  .00213

  	
  %

  
	
  Paul
  Lyon and Martha Lyon

  	
   

  	
  .17090

  	
  %

  
	
  Beverly
  B. Nelson

  	
   

  	
  .00214

  	
  %

  
	
  Joseph
  Nelson

  	
   

  	
  .00427

  	
  %

  
	
  Veva
  Neva K. Nelson

  	
   

  	
  .00854

  	
  %

  
	
  Earle
  M. Simon

  	
   

  	
  .00213

  	
  %

  
	
  Elmer
  H. Wahl

  	
   

  	
  .03418

  	
  %

  
	
  A.
  W. Wuesterberg

  	
   

  	
  .00213

  	
  %

  



 


NOTE NO. 12 - UNDER TRACT
NO. 13


 


BASIC ROYALTY OWNER


 


	
  Atlantic
  Richfield Company

  	
   

  	
  18.37

  	
  %

  
	
  Jessie
  Cooper

  	
   

  	
  4.08

  	
  %

  
	
  General
  Crude Oil Company

  	
   

  	
  9.18

  	
  %

  
	
  Kenneth
  N. Headley

  	
   

  	
  .77

  	
  %

  
	
  Frances
  Smyrl Jennings

  	
   

  	
  .76

  	
  %

  
	
  John
  H. Hendrix

  	
   

  	
  48.98

  	
  %

  
	
  Mobil
  Oil Corporation

  	
   

  	
  16.33

  	
  %

  
	
  Southern
  Petroleum Exploration, Inc.

  	
   

  	
  1.53

  	
  %

  



 


5

















 


NOTE NO. 13 - UNDER TRACT
NO. 14


 


BASIC ROYALTY OWNER


 


	
  Atlantic
  Richfield Company

  	
   

  	
  40.00

  	
  %

  
	
  Billy Dunn

  	
   

  	
  6.07

  	
  %

  
	
  Haskell
  J. Dunn

  	
   

  	
  4.28

  	
  %

  
	
  Ralph
  S. Dunn

  	
   

  	
  4.28

  	
  %

  
	
  Fluor
  Corporation

  	
   

  	
  20.00

  	
  %

  
	
  Annie
  Ford

  	
   

  	
  6.07

  	
  %

  
	
  Ima
  Hays

  	
   

  	
  1.67

  	
  %

  
	
  G.
  M. Jinkins

  	
   

  	
  1.67

  	
  %

  
	
  North
  Central Oil Corp.

  	
   

  	
  7.50

  	
  %

  
	
  Roger
  B. Owings

  	
   

  	
  2.50

  	
  %

  
	
  Sharon
  Dunn Riley

  	
   

  	
  .36

  	
  %

  
	
  Mona
  Dunn Shofner, Aux. Adm. of Estate of Walker A. Dunn, Deceased

  	
   

  	
  3.57

  	
  %

  
	
  Annabel
  Winningham

  	
   

  	
  1.67

  	
  %

  
	
  Suspense
  (Walker A. Dunn, Jr.)

  	
   

  	
  .36

  	
  %

  



 


OVERRIDING ROYALTY
OWNER


 


	
  Aikman
  Oil and Gas Company

  	
   

  	
  2.73420

  	
  %

  
	
  G.
  W. Hutcheson

  	
   

  	
  2.73420

  	
  %

  



 


$245,000.00
Production Payment plus 6-1/2% interest from this and other leases  payable
to A.M.C. Corporation out of 65% of 75% Of PETCO’s Net Interest.


$690,000.00
Production Payment plus 5% interest from this and other leases payable to
Permian Charitable Foundation of Midland, Texas, Inc. out of 25% of PETCO’s
Net Interest.


 


NOTE NO. 14 - UNDER TRACT
NO. 15


 


BASIC ROYALTY OWNER


 


	
  Atlantic
  Richfield Company

  	
   

  	
  40.00

  	
  %

  
	
  Billy Dunn

  	
   

  	
  6.07

  	
  %

  
	
  Haskell
  J. Dunn

  	
   

  	
  4.28

  	
  %

  
	
  Ralph
  S.
  Dunn

  	
   

  	
  4.28

  	
  %

  
	
  Fluor
  Corporation

  	
   

  	
  20.00

  	
  %

  
	
  Annie
  Ford

  	
   

  	
  6.07

  	
  %

  
	
  Ima
  Hays

  	
   

  	
  1.67

  	
  %

  
	
  G.
  M. Jinkins

  	
   

  	
  1.67

  	
  %

  
	
  North
  Central Oil Corp.

  	
   

  	
  7.50

  	
  %

  
	
  Roger
  B. Owings

  	
   

  	
  2.50

  	
  %

  
	
  Sharon
  Dunn Riley

  	
   

  	
  .36

  	
  %

  
	
  Mona
  Dunn Shofner, Aux. Adm. of Estate of Walker A. Dunn, Deceased

  	
   

  	
  3.57

  	
  %

  
	
  Annabel
  Winningham

  	
   

  	
  1.67

  	
  %

  
	
  Suspense
  (Walker A. Dunn, Jr.)

  	
   

  	
  .36

  	
  %

  



 


6

















 


NOTE NO. 15 - UNDER TRACT
NO. 16


 


BASIC ROYALTY OWNER


 


	
  Atlantic
  Richfield Company

  	
   

  	
  40.00

  	
  %

  
	
  Billy
  Dunn

  	
   

  	
  6.07

  	
  %

  
	
  Haskell
  J. Dunn

  	
   

  	
  4.28

  	
  %

  
	
  Ralph
  S. Dunn

  	
   

  	
  4.28

  	
  %

  
	
  Fluor
  Corporation

  	
   

  	
  20.00

  	
  %

  
	
  Annie
  Ford

  	
   

  	
  6.07

  	
  %

  
	
  Ima
  Hays

  	
   

  	
  1.67

  	
  %

  
	
  G.
  M. Jinkins

  	
   

  	
  1.67

  	
  %

  
	
  North
  Central Oil Corp.

  	
   

  	
  7.50

  	
  %

  
	
  Roger
  B. Owings

  	
   

  	
  2.50

  	
  %

  
	
  Mona
  Dunn Shofner, Aux. Adm. of Estate of Walker A. Dunn, Deceased

  	
   

  	
  3.57

  	
  %

  
	
  Annabel
  and R. R. Winningham

  	
   

  	
  1.67

  	
  %

  
	
  Suspense
  (Sharon Dunn Riley and Walker A. Dunn, Jr.)

  	
   

  	
  .72

  	
  %

  



 


OVERRIDING ROYALTY OWNER


 


	
  Scope
  Industries

  	
   

  	
  3.95510

  	
  %

  



 


NOTE NO. 16 - UNDER TRACT
NO. 17


 


BASIC ROYALTY OWNER


 


	
  Atlantic
  Richfield Company

  	
   

  	
  22.22

  	
  %

  
	
  Billy
  Dunn

  	
   

  	
  14.17

  	
  %

  
	
  Haskell
  J. Dunn

  	
   

  	
  10.00

  	
  %

  
	
  Ralph
  S.  Dunn

  	
   

  	
  10.00

  	
  %

  
	
  Fluor
  Corporation

  	
   

  	
  11.11

  	
  %

  
	
  Annie
  Ford

  	
   

  	
  14.17

  	
  %

  
	
  Ima
  Hays

  	
   

  	
  .93

  	
  %

  
	
  G.
  M. Jinkins

  	
   

  	
  .93

  	
  %

  
	
  North
  Central Oil Corp.

  	
   

  	
  4.16

  	
  %

  
	
  Roger
  B. Owings

  	
   

  	
  1.39

  	
  %

  
	
  Sharon
  Dunn Riley

  	
   

  	
  83

  	
  %

  
	
  Mona
  Dunn Shofner, Aux. Adm. of Estate of Walker A. Dunn, Deceased

  	
   

  	
  8.33

  	
  %

  
	
  Annabel
  Winningham

  	
   

  	
  .93

  	
  %

  
	
  Suspense
  (Walker A. Dunn, Jr.)

  	
   

  	
  .83

  	
  %

  



 


NOTE NO. 17 - UNDER TRACT
NO. 18


 


BASIC ROYALTY OWNER


 


	
  Harry
  Arledge

  	
   

  	
  .78

  	
  %

  
	
  S.
  M. Aronson

  	
   

  	
  2.50

  	
  %

  
	
  Fluor
  Corporation

  	
   

  	
  12.50

  	
  %

  
	
  Alfred
  E. Gutman

  	
   

  	
  8.91

  	
  %

  
	
  Daniel
  L. Gutman

  	
   

  	
  8.91

  	
  %

  
	
  Mrs. Dorothy Gutman, Trustee

  	
   

  	
  4.45

  	
  %

  
	
  Dorothy
  Gutman

  	
   

  	
  8.91

  	
  %

  
	
  Daniel
  Gutman, Trustee of Estate of Max Gutman

  	
   

  	
  26.72

  	
  %

  
	
  Betty
  Guttman Guttag

  	
   

  	
  13.36

  	
  %

  



 


7

















 


NOTE NO. 17 -
UNDER TRACT NO. 18
(Cont’d.)


 


BASIC ROYALTY
OWNER (Cont’d.)


 


	
  Mrs. Tina
  Levine, Deceased

  	
   

  	
  1.56

  	
  %

  
	
  Scope
  Industries

  	
   

  	
  1.25

  	
  %

  
	
  Atlantic
  Richfield Company

  	
   

  	
  1.25

  	
  %

  
	
  Edith
  G. Socolow

  	
   

  	
  8.90

  	
  %

  



 


OVERRIDING ROYALTY
OWNER


 


	
  Scope
  Industries

  	
   

  	
  2.50000

  	
  %

  



 


$7,100,000.00
Production Payment plus 5-5/8% interest from this and other leases payable to
Continental Illinois National Bank and Trust Company of Chicago out of Reserve’s
Net Interest.


$4,000,000.00
Production Payment plus 5-7/8% interest from this and other leases payable to
Continental Illinois National Bank and Trust Company of Chicago out of Reserve’s
Net Interest.


 


NOTE NO. 18 - UNDER TRACT
NO. 19


 


BASIC ROYALTY OWNER


 


	
  Charles
  F. Bedford

  	
   

  	
  .06

  	
  %

  
	
  Edwin
  M. Bedford

  	
   

  	
  .06

  	
  %

  
	
  Henry
  D. Bedford

  	
   

  	
  .06

  	
  %

  
	
  Rachel
  Bedford Bowen

  	
   

  	
  .06

  	
  %

  
	
  Mrs. Walter
  M. Burress

  	
   

  	
  1.56

  	
  %

  
	
  Buttram
  Texhoma Co.

  	
   

  	
  8.61

  	
  %

  
	
  Gonzales
  Royalties Inc.

  	
   

  	
  2.34

  	
  %

  
	
  George
  V. Holmes, Trustee

  	
   

  	
  3.24

  	
  %

  
	
  Lasca
  Inc.

  	
   

  	
  2.00

  	
  %

  
	
  Lexington
  Oil Co.

  	
   

  	
  2.23

  	
  %

  
	
  J.
  M. Richardson Lyeth, Jr. and Monro Longyear Lyeth, Joint Tenants

  	
   

  	
  2.97

  	
  %

  
	
  James
  R. Lyttle, Executor Under Will of Mary Duke Pearlbrook

  	
   

  	
  .79

  	
  %

  
	
  Ida
  D. Miller

  	
   

  	
  .09

  	
  %

  
	
  Helen
  D. Pearlbrook

  	
   

  	
  .88

  	
  %

  
	
  Petroleum
  Corporation of Texas

  	
   

  	
  1.67

  	
  %

  
	
  John
  J. Reynolds

  	
   

  	
  10.50

  	
  %

  
	
  Onez
  Norman Rooney

  	
   

  	
  2.97

  	
  %

  
	
  Elaine
  Newby Shepherd, Ind. & as Attorney

  	
   

  	
  .58

  	
  %

  
	
  Southern
  Minerals Corporation

  	
   

  	
  3.33

  	
  %

  
	
  Sparks
  Healey Company

  	
   

  	
  1.25

  	
  %

  
	
  E.
  M. Sweeney

  	
   

  	
  1.56

  	
  %

  
	
  Ellen
  Anne Williams

  	
   

  	
  .06

  	
  %

  
	
  The
  Atlantic Richfield Company

  	
   

  	
  28.13

  	
  %

  
	
  Cities
  Service Oil Company

  	
   

  	
  25.00

  	
  %

  



 


OVERRIDING ROYALTY
OWNER


 


	
  Humble
  Oil and Refining Company

  	
   

  	
  12.50000

  	
  %  

  	
  (On Oil)

  
	
  Humble
  Oil and Refining Company

  	
   

  	
  25.00000

  	
  %  

  	
  (On Gas and Casinghead
  Gas)

  
	
  Scope
  Industries

  	
   

  	
  2.50000

  	
  %  

  	
   

  



 


8

















 


NOTE NO. 18 - UNDER TRACT
NO. 19 (Cont’d.) 


 


OVERRIDING ROYALTY OWNER (Cont’d.)


 


$690,000.00
Production Payment plus 5% interest from this and other leases payable to
Permian Charitable Foundation of Midland, Texas, Inc. out of 25% of PETCO’s
Net Interest.


$7,100,000.00
Production Payment plus 5 5/8% interest from this and other leases payable to
Continental. Illinois National Bank and Trust Company
out of Reserve’s Net Interest.


$400,000.00
Production Payment plus 3 7/8% interest from this and other leases payable to
Continental Illinois National Bank and Trust Company of Chicago out of Reserve’s
Net Interest.


 


NOTE NO. 19 - UNDER TRACT
NO. 20


 


BASIC ROYALTY OWNER


 


	
  Cities
  Service Oil Company

  	
   

  	
  20.83

  	
  %

  
	
  Mary
  J. Dotson

  	
   

  	
  .78

  	
  %

  
	
  Foster
  Petroleum Corporation

  	
   

  	
  4.17

  	
  %

  
	
  General
  Crude Oil Company

  	
   

  	
  18.75

  	
  %

  
	
  Mobil
  Oil Corporation

  	
   

  	
  12.50

  	
  %

  
	
  Southern
  California Petroleum Corp.

  	
   

  	
  18.75

  	
  %

  
	
  Adele
  Irvine Sowell, Individually and as Independent Executrix of the Estate of R.
  H. Sowell, Deceased

  	
   

  	
  6.25

  	
  %

  
	
  June D.
  Speight

  	
   

  	
  2.35

  	
  %

  
	
  The
  First National Bank for Deposit to Account of Howard M. Wilson

  	
   

  	
  1.56

  	
  %

  
	
  M.
  Elizabeth Wilson

  	
   

  	
  1.56

  	
  %

  
	
  Atlantic
  Richfield Company

  	
   

  	
  12.50

  	
  %

  



 


NOTE NO. 20 - UNDER TRACT
NO. 21


 


BASIC ROYALTY OWNER


 


	
  Atlantic
  Richfield Company

  	
   

  	
  12.50

  	
  %

  
	
  Cities
  Service Oil Company

  	
   

  	
  20.83

  	
  %

  
	
  Mary
  J. Dotson

  	
   

  	
  .78

  	
  %

  
	
  Foster
  Petroleum Corporation

  	
   

  	
  4.17

  	
  %

  
	
  General
  Crude Oil Company

  	
   

  	
  18.75

  	
  %

  
	
  Mobil
  Oil Corporation

  	
   

  	
  12.50

  	
  %

  
	
  Scope
  Industries

  	
   

  	
  18.75

  	
  %

  
	
  Mrs. Adele
  Irvine Sowell

  	
   

  	
  6.25

  	
  %

  
	
  June D.
  Speight

  	
   

  	
  2.35

  	
  %

  
	
  Howard
  M. Wilson

  	
   

  	
  1.56

  	
  %

  
	
  M.
  Elizabeth Wilson

  	
   

  	
  1.56

  	
  %

  



 


OVERRIDING ROYALTY OWNER


 


	
  Humble
  Oil and Refining Company

  	
   

  	
  6.25000

  	
  %  

  	
  On Oil

  
	
  Humble
  Oil and Refining Company

  	
   

  	
  25.00000

  	
  %  

  	
  On Gas

  
	
  Scope
  Industries

  	
   

  	
  5.07810

  	
  %  

  	
   

  



 


$7,100,000.00 Production Payment plus 5 5/8% Interest
from this and other leases payable to Continental Illinois National Bank and
Trust Company of Chicago payable out of Reserve’s Net Interest.


 


9

















 


NOTE
NO. 20 - UNDER TRACT NO. 21 (Cont’d.)


 


OVERRIDING
ROYALTY OWNER (Cont’d.)


 


$4,000,000.00 Production Payment plus 5-7/8%
Interest from this and other leases payable to Continental Illinois National
Bank and Trust Company of Chicago payable out of Reserve’s Net Interest.


 


NOTE
NO. 21 - UNDER TRACT NO. 22


 


OVERRIDING
ROYALTY OWNER


 


	
  Scope Industries

  	
   

  	
  5.46870

  	
  %

  



 


$7,100,000.00 Production Payment plus 5-5/8%
Interest from this and other leases payable to Continental Illinois National
Bank and Trust Company of Chicago out of Reserve’s Net Interest.


$4,000,000.00 Production Payment plus 5-7/8%
Interest from this and other leases payable to Continental Illinois National
Bank and Trust Company of Chicago out of Reserve’s Net Interest.


 


NOTE NO. 22 - UNDER TRACT
NO. 23


 


OVERRIDING ROYALTY OWNER


 


	
  Atlantic
  Richfield Company

  	
   

  	
  2.73438

  	
  %

  



 


NOTE NO. 23 - UNDER TRACT
NO. 24


 


BASIC ROYALTY OWNER


 


	
  Fern
  Cone

  	
   

  	
  1.56

  	
  %

  
	
  Gordon
  M. Cone

  	
   

  	
  1.43

  	
  %

  
	
  Mary
  J. Dotson

  	
   

  	
  .78

  	
  %

  
	
  General
  Crude Oil Company

  	
   

  	
  18.75

  	
  %

  
	
  Sue
  Saunders Graham

  	
   

  	
  1.04

  	
  %

  
	
  Martha
  Watkins Harris

  	
   

  	
  .52

  	
  %

  
	
  Mrs. Clyde
  Miller

  	
   

  	
  .52

  	
  %

  
	
  Mobil
  Oil Corporation

  	
   

  	
  12.50

  	
  %

  
	
  Elyse
  Saunders Patterson

  	
   

  	
  1.04

  	
  %

  
	
  Southern
  Petroleum Exploration Inc.

  	
   

  	
  3.12

  	
  %

  
	
  Adele
  Irvine Sowell, Individually and as Independent Executrix of the Estate of R.
  H. Sowell, Deceased

  	
   

  	
  6.25

  	
  %

  
	
  June D.
  Speight

  	
   

  	
  2.35

  	
  %

  
	
  Ada
  E. Thomas

  	
   

  	
  28.13

  	
  %

  
	
  Sally
  Saunders Toles

  	
   

  	
  1.04

  	
  %

  
	
  Myrtis
  Dean Watkins

  	
   

  	
  .52

  	
  %

  
	
  Hattie
  Cooke Williams

  	
   

  	
  3.00

  	
  %

  
	
  J.
  H. Williams

  	
   

  	
  .26

  	
  %

  
	
  Elizabeth
  Woolworth

  	
   

  	
  2.08

  	
  %

  
	
  May Woolworth

  	
   

  	
  2.61

  	
  %

  
	
  Atlantic
  Richfield Company

  	
   

  	
  12.50

  	
  %

  



 


10














 


NOTE NO. 24 - UNDER TRACT
NO. 25


 


BASIC ROYALTY OWNER


 


	
  Fern Cone

  	
   

  	
  1.56

  	
  %

  
	
  Gordon M. Cone

  	
   

  	
  1.43

  	
  %

  
	
  Hattie Cocke
  Williams

  	
   

  	
  3.00

  	
  %

  
	
  June D.
  Speight

  	
   

  	
  2.35

  	
  %

  
	
  General Crude
  Oil Company

  	
   

  	
  18.75

  	
  %

  
	
  Southern
  Petroleum Exploration, Inc.

  	
   

  	
  3.12

  	
  %

  
	
  Ada E. Thomas

  	
   

  	
  28.13

  	
  %

  
	
  Elizabeth
  Woolworth

  	
   

  	
  2.08

  	
  %

  
	
  May Woolworth

  	
   

  	
  2.61

  	
  %

  
	
  Atlantic
  Richfield Company

  	
   

  	
  12.50

  	
  %

  
	
  Elyse Saunders
  Patterson

  	
   

  	
  1.04

  	
  %

  
	
  Sue Saunders
  Graham

  	
   

  	
  1.04

  	
  %

  
	
  Sally Saunders
  Toles

  	
   

  	
  1.04

  	
  %

  
	
  J. H. Williams

  	
   

  	
  .26

  	
  %

  
	
  Myrtis Dean
  Watkins

  	
   

  	
  .52

  	
  %

  
	
  Mrs. C. W.
  Miller

  	
   

  	
  .52

  	
  %

  
	
  Mrs. Martha
  W. Harris

  	
   

  	
  .52

  	
  %

  
	
  Mary J. Dotson

  	
   

  	
  .78

  	
  %

  
	
  Mobil Oil
  Company

  	
   

  	
  12.50

  	
  %

  
	
  Mrs. Adele
  Irvine Sowell

  	
   

  	
  6.25

  	
  %

  



 


OVERRIDING ROYALTY OWNER


 


	
  Humble Oil and
  Refining Company

  	
   

  	
  12.50000

  	
  %  

  	
  (On Oil)

  
	
  Humble Oil and
  Refining Company

  	
   

  	
  25.00000

  	
  %  

  	
  (On Gas and Casinghead Gas)

  
	
  Scope Industries

  	
   

  	
  2.50000

  	
  %  

  	
   

  



 


$245,000.00
Production Payment plus 6-1/2% interest from this and other Leases payable to
AMC Corporation out of 65% of 75% of PETCO’s Net. Interest.


$690,000.00
Production Payment plus 5% interest from this and other Leases payable to
Permian Charitable Foundation of Midland, Texas, Inc. out of 25% of PETCO’s
Net Interest.


$7,100,000.00
Production Payment plus 5-5/8% interest from this and other leases payable to
Continental Illinois National Bank and Trust Company of Chicago out of Reserve’s
Net Interest.


$4,000,000.00
Production Payment plus 5-7/8% interest from this and other Leases payable to
Continental Illinois National Bank and Trust Company of Chicago out of Reserve’s
Net Interest.


 


NOTE NO. 25 - UNDER TRACT NO. 26


 


BASIC ROYALTY OWNER


 


	
  Atlantic
  Richfield Company

  	
   

  	
  7.77

  	
  %

  
	
  General Crude
  Oil Company

  	
   

  	
  15.55

  	
  %

  
	
  Mobil Oil
  Corporation

  	
   

  	
  31.10

  	
  %

  
	
  M. M. Miller

  	
   

  	
  1.46

  	
  %

  
	
  Lydia Quilter

  	
   

  	
  3.89

  	
  %

  
	
  Adele Irvine
  Sowell

  	
   

  	
  4.47

  	
  %

  
	
  Atlantic
  Richfield Company

  	
   

  	
  35.76

  	
  %

  



 


11

















 


NOTE NO. 25 - UNDER TRACT
NO. 26 (Cont’d.)


 


OVERRIDING
ROYALTY OWNER


 


	
  Scope Industries

  	
   

  	
  2.50000

  	
  %

  



 


$7,100,000.00
Production Payment plus 5-5/8% interest from this and other leases payable to
Continental Illinois National Bank and Trust Company of Chicago out of Reserve’s
Net Interest.


$4,000,000.00
Production Payment plus 5-7/8% interest from this and other leases payable to
Continental Illinois National Bank and Trust Company of Chicago out of Reserve’s
Net Interest.


 


NOTE NO. 26 - UNDER TRACT NO. 27


 


BASIC ROYALTY OWNER


 


	
  Midwest Oil
  Corporation

  	
   

  	
  25.00

  	
  %

  
	
  L. L. Horne
  Estate

  	
   

  	
  2.60

  	
  %

  
	
  Atlantic
  Richfield Company

  	
   

  	
  12.50

  	
  %

  
	
  General Crude
  Oil Company

  	
   

  	
  12.50

  	
  %

  
	
  Maude E. Soward

  	
   

  	
  1.56

  	
  %

  
	
  May Woolworth

  	
   

  	
  1.74

  	
  %

  
	
  Elizabeth
  Woolworth

  	
   

  	
  1.39

  	
  %

  
	
  Myrtis Dean
  Watkins

  	
   

  	
  .35

  	
  %

  
	
  Martha W. Harris

  	
   

  	
  .35

  	
  %

  
	
  Clyde W. Miller

  	
   

  	
  .35

  	
  %

  
	
  Ethel McCabe
  Trevitt

  	
   

  	
  4.17

  	
  %

  
	
  Gonzales
  Royalties, Inc.

  	
   

  	
  1.25

  	
  %

  
	
  Livingston Oil
  Company

  	
   

  	
  1.19

  	
  %

  
	
  George V.
  Holmes, Trustee

  	
   

  	
  1.73

  	
  %

  
	
  Socony Mobil

  	
   

  	
  12.50

  	
  %

  
	
  Iris Goldston

  	
   

  	
  10.41

  	
  %

  
	
  Iris Goldston
  and Houston Bank & Trust Company as Co-Trustees U/W/O W. L.
  Goldston, Deceased

  	
   

  	
  10.41

  	
  %

  



 


*  * 
*  *


 


Except as otherwise expressly set forth, the
basic royalty and overriding royalty interests and owners shown on this
supplement to Exhibit “B” have been set forth and calculated with respect
to the royalties and overriding royalties payable on oil only.


 


12

















 


REVISED

EXHIBIT “C”


 


UNIT
AGREEMENT

SCHEDULE OF TRACT PARTICIPATION

COOPER JAL UNIT - LEA COUNTY, NEW MEXICO


 




	
   

  	
   

  	
   

  	
  PHASE I

  	
   

  	
  PHASE II

  	
   

  
	
   

  	
   

  	
   

  	
  TRACT

  	
   

  	
  TRACT

  	
   

  
	
  TRACT

  	
   

  	
   

  	
  PARTICIPATION

  	
   

  	
  PARTICIPATION

  	
   

  
	
  NO.

  	
   

  	
   

  	
  IN UNIT

  	
   

  	
  IN UNIT

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
   

  	
  5.22514

  	
   

  	
  6.60717

  	
   

  
	
  2

  	
   

  	
   

  	
  9.30905

  	
   

  	
  9.35239

  	
   

  
	
  3

  	
   

  	
   

  	
  .41979

  	
   

  	
  .65271

  	
   

  
	
  4

  	
   

  	
   

  	
  5.92856

  	
   

  	
  6.14339

  	
   

  
	
  5

  	
   

  	
   

  	
  10.51021

  	
   

  	
  14.02949

  	
   

  
	
  6

  	
   

  	
   

  	
  —

  	
   

  	
  .69791

  	
   

  
	
  7

  	
  A

  	
   

  	
  —

  	
   

  	
  .17268

  	
   

  
	
  7

  	
  B

  	
   

  	
  2.77474

  	
   

  	
  .36870

  	
   

  
	
  8

  	
   

  	
   

  	
  2.09129

  	
   

  	
  2.80078

  	
   

  
	
  9

  	
   

  	
   

  	
  5.17186

  	
   

  	
  4.60371

  	
   

  
	
  10

  	
   

  	
   

  	
  —

  	
   

  	
  .13844

  	
   

  
	
  11

  	
   

  	
   

  	
  —

  	
   

  	
  .39458

  	
   

  
	
  12

  	
   

  	
   

  	
  3.44906

  	
   

  	
  .18670

  	
   

  
	
  13

  	
   

  	
   

  	
  1.12888

  	
   

  	
  1.17095

  	
   

  
	
  14

  	
   

  	
   

  	
  3.62738

  	
   

  	
  2.76617

  	
   

  
	
  15

  	
   

  	
   

  	
  —

  	
   

  	
  2.35558

  	
   

  
	
  16

  	
   

  	
   

  	
  16.29325

  	
   

  	
  12.45770

  	
   

  
	
  17

  	
   

  	
   

  	
  1.52154

  	
   

  	
  2.18504

  	
   

  
	
  18

  	
   

  	
   

  	
  2.88942

  	
   

  	
  1.38922

  	
   

  
	
  19

  	
   

  	
   

  	
  —

  	
   

  	
  4.08720

  	
   

  
	
  20

  	
   

  	
   

  	
  6.42925

  	
   

  	
  4.34856

  	
   

  
	
  21

  	
   

  	
   

  	
  4.25213

  	
   

  	
  2.22804

  	
   

  
	
  22

  	
   

  	
   

  	
  —

  	
   

  	
  .27424

  	
   

  
	
  23

  	
   

  	
   

  	
  .62869

  	
   

  	
  .81910

  	
   

  
	
  24

  	
   

  	
   

  	
  2.92371

  	
   

  	
  3.58864

  	
   

  
	
  25

  	
   

  	
   

  	
  3.21549

  	
   

  	
  8.33059

  	
   

  
	
  26

  	
   

  	
   

  	
  12.21056

  	
   

  	
  7.85032

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TOTAL

  	
   

  	
  100.00000

  	
  %

  	
  100.00000

  	
  %

  






 

















 


CERTIFICATE AS TO
EFFECTIVE DATE

OF COOPER JAL UNIT AGREEMENT

LEA COUNTY, NEW MEXICO


 


RESERVE OIL AND GAS COMPANY, Unit Operator under the
Unit Agreement for the development and operation of the Cooper Jal Unit Area, Lea
County, New Mexico, hereby certifies:


 


1.     The Unit Agreement and the Unit Operating Agreement have been
executed or ratified by Working Interest Owners owning Tracts with a combined
Phase I unit participation of at least 85% and the Unit Agreement has been
executed or ratified by Royalty Owners owning Tracts with a combined Phase I
unit participation of at least 65% of the royalty interest in the Unit Area.


 


2.     The Unit Agreement was approved by the New Mexico Oil
Conservation Commission on August 25, 1970, by its Order No. R-4018
in Case No. 4402.


 


3.     The Unit Agreement was approved by the Regional Oil
and Gas Supervisor for the United States Geological Survey on September 29,
1970, as Contract No. 14-08.0001-11584.


 


4.     A counterpart of the Unit Agreement has been recorded in Book 292
at Pages 352 of the Miscellaneous Records of Lea County, New Mexico.


 


5.     Pursuant to the provisions of Article XXII, the Cooper Jal
Unit Agreement became effective as of 7: 00 A.M. on October 1, 1970.


 


6.     All of the Tracts as shown on the original Exhibit “B” have
qualified under the provisions of Article XIV of the Unit Agreement except
Tract No. 27 which was not qualified for participation on the Effective
Date of the Unit Agreement.


 


DATED this 1st day of October, 1970.


 


	
   

  	
  RESERVE OIL AND GAS COMPANY

  
	
   

  	
   

  
	
   

  	
  

  



 


STATE OF TEXAS                 )


COUNTY OF DALLAS          )   
ss.


 


The foregoing instrument was acknowledged before me
this 1st day of October, 1970, by (ILLEGIBLE), Attorney-in-Fact for
RESERVE OIL AND GAS COMPANY, a corporation, on behalf of said corporation.


 


 




	
  [SEAL]

  	
   

  	
  ILLEGIBLE

  	
   

  	
  ILLEGIBLE

  
	
   

  	
   

  	
  Notary
  Public

  	
   

  	
  STATE
  OF NEW MEXICO

  
	
  My
  commission expires:

  	
   

  	
   

  	
   

  	
  COUNTY
  OF LEA

  
	
  ILLEGIBLE

  	
   

  	
  [SEAL]

  	
   

  	
  FILED

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  ILLEGIBLE

  






 

















 


CERTIFICATION -
DETERMINATION


 


Pursuant to the authority vested in the Secretary of
Interior as to Federal Lands, under the Act approved February 25, 1920, 41
Stat. 437, as amended, 30 U.S.C. Secs. 181, et seq., and delegated to the Oil
and Gas Supervisor of the Geological Survey (33 F.R. 5812) I do hereby


 


A.    Approve the attached agreement for the development and
operation of the Cooper Jal Unit, Lea County, New Mexico.


 


B.    Certify and determine that the unit plan of
development and operation contemplated in the attached agreement is necessary
and advisable in the public interest for the purpose of more properly
conserving the natural resources.


 


C.    Certify and determine that the drilling, producing,
rental, minimum royalty and royalty requirements of all Federal Leases
committed to said agreement are hereby established, altered, changed, or
revoked to conform with the terms and conditions of this agreement.


 


 


	
  September 29, 1970

  	
   

  	
   

  
	
  Dated

  	
   

  	
   

  



 


 


	
   

  	
   

  	
  ILLEGIBLE

  
	
  Acting

  	
   

  	
  Regional Oil and Gas
  Supervisor,

  
	
   

  	
   

  	
  UNITED STATES GEOLOGICAL
  SURVEY

  



 


	
  Contract Number

  	
  ILLEGIBLE

  	
   

  	
   

  



 

















 


BEFORE THE OIL
CONSERVATION COMMISSION

OF THE STATE OF NEW MEXICO


 


IN THE MATTER OF THE HEARING


CALLED BY THE OIL CONSERVATION 


COMMISSION OF NEW MEXICO FOR 


THE PURPOSE OF CONSIDERING:


 


	
   

  	
  CASE No. 4402

  
	
   

  	
  Order No. R-4018

  



 


APPLICATION OF RESERVE OIL AND GAS 


COMPANY FOR APPROVAL OF THE COOPER- 


JAL UNIT AGREEMENT, LEA COUNTY, NEW 


MEXICO.


 


ORDER OF THE COMMISSION


 


BY THE COMMISSION:


 


This cause came on for hearing at 9: 30 a.m. on August 19,
1970, at Santa Fe, New Mexico, before Examiner Daniel S.Nutter.


 


NOW, on this 25th day of August, 1970, the Commission,
a quorum being present, having considered the testimony, the record, and the
recommendations of the Examiner, and being fully advised in the premises,


 


FINDS:


 


(1)           That
due public notice having been given as required by law, the Commission has
jurisdiction of this cause and the subject matter thereof.


 


(2)           That the applicant, Reserve Oil and Gas
Company, seeks approval of the Cooper-Jal Unit Agreement covering 2581 acres,
more or less, of Federal and fee lands described as follows:


 


 


LEA COUNTY, NEW MEXICO


	
  TOWNSHIP 24 SOUTH, RANGE 36 EAST, NMPM

  
	
  Section  13:   S/2

  
	
  Section  14:  SE/4 SE/4

  
	
  Section  23:  S/2 SE/4

  
	
  Section  24:  All

  
	
  Section  25:  N/2

  
	
  Section  26:  E/2 NE/4

  
	
   

  
	
  TOWNSHIP 24 SOUTH, RANGE 37 EAST, NMPM

  
	
  Section  18:  All

  
	
  Section  19:  W/2

  
	
  Section  30:  NW/4

  



 

















 


CASE No. 4402


Order No. R–4018


 


(3)   That approval of the proposed unit agreement
should promote the prevention of waste and the protection of correlative rights
within the unit area.


 


IT IS THEREFORE ORDERED:


 


(1)   That the Cooper-Jal Unit Agreement is hereby
approved.


 


(2)   That the plan contained in said unit
agreement for the development and operation of the unit area is hereby approved
in principle as a proper conservation measure; provided, however, that
notwithstanding any of the provisions contained in said unit agreement, this
approval shall not be considered as waiving or relinquishing, in any manner,
any right, duty, or obligation which is now, or may hereafter be, vested in the
Commission to supervise and control operations for the exploration and
development of any lands committed to the unit and production of oil or gas
therefrom.


 


(3)   That the unit operator shall file with the
Commission an executed original or executed counterpart of the unit agreement
within 30 days after the effective date thereof; that in the event of
subsequent joinder by any party or expansion or contraction of the unit area,
the unit operator shall file with the Commission within 30 days thereafter
counterparts of the unit agreement reflecting the subscription of those
interests having joined or ratified.


 


(4)   That this order shall become effective upon
the approval of said unit agreement by the Director of the United States
Geological Survey; that this order shall terminate ipso facto
upon the termination of said unit agreement; and that the last unit operator
shall notify the Commission immediately in writing of such termination.


 


(5)     That jurisdiction of this cause is
retained for the entry of such further orders as the Commission may deem
necessary.


 


DONE at Santa Fe,
New Mexico, on the day and year hereinabove designated.


 


	
   

  	
  STATE OF NEW MEXICO

  
	
   

  	
  OIL CONSERVATION. COMMISSION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DAVID F. CARGO, Chairman

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ALEX J. ARMIJO, Member

  
	
   

  	
   

  
	
   

  	
   

  
	
  SEAL

  	
  A. L. PORTER, Jr., Member & Secretary

  
	
   

  	
   

  
	
  esr/

  	
   

  



 


2














 


	
  [ILLEGIBLE]

  	
  [ILLEGIBLE]

  



 


EXHIBIT “E”


 


	
  Attached to and made a
  part of

  	
  Unit Operating
  Agreement

  
	
   

  	
  Cooper Jal Unit

  
	
   

  	
  Lea County, New Mexico

  



 


ACCOUNTING
PROCEDURE.

JOINT OPERATIONS


 


I.
GENERAL PROVISIONS


 


1.         Definitions


 


“Joint Account” shall
mean the account showing the charges and credits accruing because of the Joint
Operations and which are to be shared by the Parties.


 


“Joint Property” shall
mean the real and personal property subject to the agreement to which this
Accounting Procedure is attached.


 


“Joint Operations” shall
mean all operation’s necessary or proper for the development, operation,
protection and maintenance of the Joint Property.


 


“Operator” shall mean the
party designated to conduct the Joint Operations.


 


“Non-Operators” shall
mean the parties to this agreement other than the Operator.


 


“Parties” shall mean
Operator and Non-Operators.


 


“Material” shall mean
personal property, equipment or supplies acquired or held for use on the Joint
Property. 


 


“Controllable Material”
shall be defined as set forth under the subparagraph selected below:


 


A.    x Material which at the time is so
classified in the Material Classification Manual as most recently recommended
by the Council of Petroleum Accountants Societies of North America.


 


B.    o Material which is ordinarily so classified and
controlled by Operator in the conduct of its operations. List shall be
furnished Non-Operators upon request.


 


2.         Statements and Billings


 


Operator shall bill
Non-Operators on or before the last day of each month for their proportionate
share of costs and expenses for the preceding month. Such bills will be
accompanied by statements reflecting the total charges and credits as set forth
under the subparagraph selected below:


 


A.    o Statement in detail of all charges and credits to the
Joint Account.


 


B.    o Statement of all charges and credits to the Joint
Account, summarized by appropriate classifications indicative of the nature
thereof.


 


C.    x Statement of all charges and credits to the Joint
Account, summarized by appropriate classification indicative of the nature
thereof, except that items of Controllable Material and unusual charges and
credits shall be detailed.


 


3.         Advances and Payments by
Non-Operators


 


Unless otherwise provided
for in the agreement, the Operator may require the Non-Operators to advance
their share of estimated cash outlay for the succeeding month’s operation.
Operator shall adjust each monthly billing to reflect advances received from
the Non-Operators.


 


Each Non-Operator shall
pay its proportion of all bills within fifteen (15) days after receipt. If
payment is not made within such time, the unpaid balance shall bear interest
monthly at the rate of ten per cent (10%) per annum or the maximum contract
rate permitted by the applicable usury laws in the state in which the Joint
Property is located, whichever is the lesser.


 


4.         Adjustments


 


Payment of any such bills
shall not prejudice the right of any Non-Operator to protest or question the
correctness thereof; provided however, all bills and statements rendered to
Non-Operators by Operator during any calendar year shall conclusively be
presumed to be true and correct after twenty-four (24) months following the end
of any such calendar year, unless within the said twenty-four (24) month period
a Non-Operator takes written exception thereto and makes claim on Operator for
adjustment. No adjustment favorable to Operator shall be made unless it is made
within the same prescribed period. The provisions of this paragraph shall not
prevent adjustments resulting from a physical inventory of the Joint Property
as provided for in  Section VII.


 


5.         Audits


 


A Non-Operator, upon
notice in writing to Operator and all other Non-Operators, shall have the right
to audit Operator’s accounts and records relating to the accounting hereunder
for any calendar year  within the twenty-four (24) month
period following the end of such calendar year; provided however, the making of
an audit shall not extend the time for the taking of written exception to and
the adjustments of accounts as provided for in Paragraph 4 of this Section I.
Where
there are two or more Non-Operators, the Non-Operators shall
make every reasonable effort to conduct joint or simultaneous audits in a
manner which will result in a minimum of inconvenience to the Operator.
Operator shall bear no portion of the Non-Operators’ audit cost incurred under
this paragraph unless agreed to by the Operator.


 


6.         Approval
by
Non-Operators


 


Where an approval or
other agreement of Non-Operators is expressly required under Paragraphs 5A, 5B,
6A and 8 of Section II, Section III, Section V, Section VI,
and Paragraph 4 of Section VII, of this Accounting Procedure and if the
agreement to which this Accounting Procedure is attached contains no contrary
provisions in regard thereto, the Operator shall notify all Non-Operators and
the agreement or approval of a majority in interest  of the
Non-Operators shall be controlling on all Non-Operators.


 


1

















 


II.
DIRECT CHARGES.


 


Operator shall charge the
Joint Account with the following items:


 


1.              Rentals and Royalties


 


Lease rentals and
royalties paid by Operator for the Joint Operations.


 


2.              Labor


 


A.           (1)          Salaries
and wages of Operator’s employees directly employed on the Joint Property in
the conduct of Joint Operations.


 


(2)     Salaries of first-level supervisors in
the field if such charges are excluded from overhead rates in Option A of Section III.


 


(3)     Salaries and wages of technical employees
temporarily assigned to and directly employed on the Joint Property if such
charges are excluded from overhead rates in Option B of Section III.


 


(4)     Salaries and wages of technical employees
either temporarily or permanently assigned to and directly employed in the
operation of the Joint Property if such charges are excluded from overhead
rates in Option C of Section III. 


 


B.             Operator’s cost of holiday, vacation,
sickness and disability benefits and other customary allowances paid to the
employees whose salaries and wages are chargeable to the Joint Account under
Paragraph 2A of this Section II and Paragraph IA of Section III;
except that in the case of those employees only a pro rata portion of whose
salaries and wages are chargeable to the Joint Account under Paragraph 1A of Section III,
not more than the same pro rata portion of the benefits and allowances herein
provided for shall be charged to the Joint Account. Cost under this Paragraph
2B may be charged on a “when and as paid basis” or by “percentage assessment”
on the amount of salaries and wages chargeable to the Joint Account under
Paragraph 2A of this Section II and Paragraph lA of Section III. If
percentage assessment is used, the rate shall be based on the Operator’s cost
experience.


 


C.             Expenditures or contributions made
pursuant to assessments imposed by governmental authority which are applicable
to Operator’s labor cost of salaries and wages chargeable to the Joint Account
under Paragraphs 2A and 2B of this Section II and Paragraph 1A of Section III.


 


D.            Reasonable personal expenses of those
employees whose salaries and wages are  chargeable to the Joint Account under Paragraph 2A of this Section II and for
which expenses the employees are reimbursed under Operator’s usual practice.


 


3.              Employee Benefits


 


Operator’s current cost
of established plans for employees’ group life insurance, hospitalization,
pension, retirement, stock purchase, thrift, bonus, and other benefit plans of
a like nature, applicable to Operator’s labor cost chargeable to the Joint
Account under Paragraphs 2A and 2B of this Section II and Paragraph 1A of Section III
shall be  chargeable as
indicated in the subparagraph selected below:


 


A.           o                      Operator’s actual cost.


 


B.             x                    Operator’s actual cost not to exceed fifteen per cent
(15%).


 


4.              Material


 


Material purchased or
furnished by Operator for use on the Joint Property as provided under Section IV.
So far as it is reasonably practical and consistent with efficient and
economical operation, only such Material shall be purchased for or transferred to the Joint Property as may be
required for immediate use; and the accumulation of surplus stocks shall be
avoided.


 


5.              Transportation


 


Transportation of
employees and Material necessary for the Joint Operations but subject to the
following limitations:


 


A.           If
Material is moved to the Joint Property from the Operator’s warehouse or other
properties, no charge shall be made to the Joint Account for a distance greater
than the distance from the nearest reliable supply store, recognized barge
terminal, or railway receiving point where like material is normally available,
unless agreed to by Operator and Non-Operators.


 


B.             If
surplus Material is moved to Operator’s warehouse or other storage point, no
charge shall be made to the Joint Account for a distance greater than the
distance to the nearest reliable supply store, recognized barge terminal,
or railway receiving point unless agreed to by Operators and Non-Operators. No
charge shall be made In the Joint Account for moving Material to other
properties belonging to Operator, unless agreed to by Operator and
Non-Operators.


 


6.              Services


 


A.           The cost of contract services and
utilities procured from outside sources other than services covered by
Paragraph B of this Section II and Paragraph 1B of Section III. The
cost of professional consultant services shall not be charged to the Joint
Account unless agreed to by Operator and Non-Operators.


 


B.             Use  and service of equipment and facilities
furnished by Operator as provided in Paragraph 5 of Section IV.


 


7.              Damages and Losses to Joint
Property


 


All costs or expenses
necessary for the repair or replacement of Joint Property made necessary
because of damages or losses incurred by fire, flood, storm, theft, accident,
or other cause, except to the extent that the damage or loss could have been
avoided through the exercise of reasonable diligence on the part of Operator.
Operator shall furnish Non-Operators written notice of damages or losses
incurred as soon as practicable after a report thereof has been received by
Operator.


 


8.              Legal Expense


 


All costs and expenses of
handling, investigating, and settling litigation or claims arising  by reason of
the Joint Operations or necessary to protect or recover the Joint Property,
including, but not limited to, attorney’s fees, court costs, cost of
investigation or procuring evidence and amounts paid in settlement or
satisfaction of any such litigation or claims; provided, (a) no charge  shall be made
for the services of Operator’s legal staff or other regularly employed
personnel (such services being considered to be Administrative Overhead under Section III),
unless agreed to by Operator and Non-Operators, and (b) no charge shall be
made for the fees and expenses of outside attorneys unless the employment of
such attorneys is agreed to by Operator and Non-Operators.


 


9.              Taxes


 


All taxes of every kind and nature
assessed or levied upon or in connection with the Joint Property, the operation
thereof, or the production, therefrom, and which taxes have been paid by the
Operator for the benefit of the Parties.


 


2

















 


10.       Insurance


 


Net  premiums paid for insurance required to be carried on
the Joint Property for the protection of the Parties. In the event Joint
Operations are conducted in a state in which Operator may act as self-insurer
for Workmen’s Compensation and/or Employers Liability under the respective
state’s laws, Operator may, at its election, include the risk under its
self-insurance program and in that event, Operator shall include a charge
therefor on the following basis:


 


11.       Other Expenditures


 


Any other expenditure not
covered or dealt with in the foregoing provisions of this Section II, or
in Section III, and which is incurred by the Operator for the necessary
and proper conduct of the Joint Operations.


 


III. INDIRECT
CHARGES


 


Operator may charge the
Joint Account for indirect costs either by use of an allocation of district
expense items plus the rate for administrative overhead, and plus the
warehousing charges, all as provided for in Paragraph 1 of this Section III
or by combining all three of said items under the rates provided for in
Paragraph 2 or 3 of this Section III, as indicated next below:


 


OPERATOR
SHALL CHARGE INDIRECT COSTS TO THE JOINT ACCOUNT UNDER THE TERMS OF:


 


o                                    Paragraph 1.                              (District Expense, Administrative Overhead and
Warehousing)


 


x                                  Paragraph 2.                              (Combined Rates - Well Basis)


 


o                                    Paragraph 3.                              (Combined Rates - Percentage Basis)


 


The cost and expense of
services from outside sources in connection with matters of taxation, traffic,
accounting or matters before or involving governmental agencies shall be
considered as included in the overhead rates provided for in the above selected
Paragraph of this Section III unless such cost and expense are agreed to
by Operator and Non-Operators as a direct charge to the Joint Account.


 


THE
OVERHEAD RATES PROVIDED  FOR IN ANY OF THE PARAGRAPHS SELECTED ABOVE


 


A.    x    shall    o shall not include salaries and personal expenses of
first-level supervisors in
the field.


 


B.    x    shall    o shall not include salaries, wages and personal
expenses of technical employees temporarily assigned  to and
directly employed on the Joint Property.


 


C.    x    shall    o shall not include salaries, wages and personal
expenses of technical employees either temporarily or permanently assigned to
and directly employed in the operation of the Joint Property.


 


1.              District Expense, Administrative
Overhead and Warehousing


 


A.            District Expense


 


Operator shall charge the Joint Account with a pro rata portion of the salaries, wages and expenses of
Operator’s production superintendent and other employees serving the Joint
Property and other properties of the Operator in the same operating area, whose
time is not allocated directly to the properties, and a pro rata portion of the
cost of maintaining and operating a production office known as Operator’s                                                
office located at or
near                        
                              
(or a comparable office if location changed); and necessary sub-offices (if
any), maintained for the convenience of the above-described office, and all
necessary camps, including housing facilities for employees if required, used
in connection with the operations of the Joint Property and other properties in
the same operating area. The expense of, less any revenue from, such  facilities
may, at the option of Operator, include depreciation of investment or a fair
monthly rental in lieu of depreciation. Such charges shall be apportioned to
all properties served on some equitable basis consistent with Operator’s
accounting practice.


 


B.            Administrative Overhead


 


Operator shall charge
administrative overhead to the Joint Account at the following rates, which
charge shall be in lieu of the cost and expense of all offices of the Operator
not covered by Paragraph lA of this Section III, including salaries, wages
and expenses of personnel assigned to such offices. Such charge shall be in
addition to the salaries, wages and expenses of employees of Operator
authorized to be charged direct as provided in Paragraphs 2 and B of Section II.
Such charge shall be made on the basis indicated below, either (1) well
basis or (2) percentage basis, at the rates shown thereunder.


 


(1)  o  Well Basis


 


RATE
PER WELL PER MONTH


 


	
   

  	
   

  	
  DRILLING
  WELL RATE

  (Use Total Depth)

  	
   

  	
  PRODUCING
  WELL RATE

  (Use
  Current Producing Depth)

  	
   

  
	
  Well Depth

  	
   

  	
  Each
  Well

  	
   

  	
  First
  Five

  	
   

  	
  Next
  Five

  	
   

  	
  All
  Wells Over Ten

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


(2)  o  Percentage Basis


PERCENTAGE BASIS


 


Development:


 


Percent (     %) of the cost
of development of the Joint Property exclusive of costs provided under
Paragraph 8 of Section II and all salvage credits.


 


Operating:


 


Percent (      %) of the cost of operating the Joint Property
exclusive of costs provided under Paragraphs 1 and 8 of Section II, all
salvage credits, the value of injected substances purchased for secondary
recovery and all taxes and assessments which are levied, assessed and paid upon
the mineral interest in and to the Joint Property.


 


3

















 


C.            Operator’s Warehouse Operating
and Maintenance Expense


 


o
Included in district expense


 


o
No charge either direct or indirect


 


o Percentage basis (describe fully)


 


2.              Combined Rates - Well Basis


 


Operator shall
charge the Joint  Account for the services covered by
Paragraph I of this Section III on the basis indicated below:


 


RATE PER
WELL PER MONTH


 


	
   

  	
   

  	
  DRILLING
  WELL RATE

  (Use Total Depth)

  	
   

  	
  PRODUCING
  WELL RATE

  (Use
  Current Producing Depth)

  	
   

  
	
  Well Depth

  	
   

  	
  Each
  Well

  	
   

  	
  First
  Five

  	
   

  	
  Next
  Five

  	
   

  	
  All
  Wells Over Ten

  	
   

  
	
  All
  Depths

  	
   

  	
  $

  	
   500

  	
   

  	
  $

  	
   77.00

  	
   

  	
  $

  	
   77.00

  	
   

  	
  $

  	
   77.00

  	
   

  
														



 


3.              Combined Rates - Percentage Basis


 


Operator shall charge the
Joint Account for the services covered by Paragraph I of this Section III
on the basis indicated below:


 


PERCENTAGE
BASIS


A.           Development:


 


Percent (    %) of the cost of
development of the Joint Property exclusive of coats provided under Paragraph 8
of Section II and all salvage credits.


 


B.             Operating:


 


Percent (     %) of the cost of operating the Joint Property exclusive
of costs provided under Paragraphs 1 and 8 of Section II, all salvage
credits, the value of injected substances purchased for secondary recovery and
all taxes and assessments which are levied, assessed and paid upon the mineral
interest in and to the Joint Property.


 


4.              Application of Administrative
Overhead or Combined Rotes - Well Basis


 


The following
limitations, instructions and charges shall apply in the application of the rates
as provided under either Paragraph 1B (I) or Paragraph 2 of this Section III.


 


A.           Charges for drilling wells shall begin on the date
each well is spudded and terminate on the date the drilling or completion rig is released, whichever is later,
except that no charge shall be made during the suspension of drilling
operations for fifteen (15) or more consecutive days.


 


B.             The status of wells shall be as  follows:


 


(1)      Producing gas wells, injection wells for
recovery operations, water supply wells utilized for waterflooding operations and salt water disposal wells shall be
considered the same as producing oil wells.


 


(2)      Wells perm-month,
shut down but on which plugging operations are deferred shall be dropped from
the well schedule at the time the shutdown is effected. Any well being plugged or
produced during any portion of the month shall be considered as a producing
well for the entire month.


 


(3)      Wells being plugged back, drilled deeper, converted to
a source or input well, or which are undergoing any type of workover that
requires the use of a drilling rig or workover rig capable of drilling shall be
considered the same as drilling wells.


 


(4)      Temporarily shut-down wells,
which are not produced or worked upon for a period of in full calendar month,
shall not be included in the well
schedule, provided however, wells shut in by governmental regulatory body shall be
included in the well schedule only in the event the allowable production is
transferred to some other well or wells on the Joint Property. In the event of
a unit allowable, shut-in wells shall be counted in determining the charge
hereunder for such month if said wells contribute allowable production that is
actually produced during such month from one or more unit wells as a result of
allowable transfer, inclusion in the unit allowable or other circumstances, but
the total shut-in well count shall be limited to the minimum number of shut-in
wells necessary to provide the contributed allowable actually produced during
the month.


 


(5)      Gas wells shall be included in the well schedule if
directly connected to a permanent sales outlet even though temporarily shut in
due to overproduction
or failure of purchaser to take the allowed production.


 


(6)      Wells completed in multiple horizons,
shall be considered as a producing well for each separately producing horizon,
providing each completion is considered a separate well by governmental or
other statewide regulatory authority.


 


C.             The well rates for producing wells shall be applied to
the individual leases: provided that whenever leases covered by this agreement
are operated as a unitized project, the well rates shall be applied to the
total number of producing wells. irrespective of individual leases.


 


D.            The well rates shall be adjusted as of the  first
day of April each year following the effective date of the agreement to
which this Accounting Procedure is attached. The adjustment shall be computed
by multiplying the rate currently in use by the percentage increase or decrease
in the average weekly earnings of Crude Petroleum and Gas Production Workers
for the last calendar year compared to the preceding calendar year as shown by “The
Index of Average Weekly Earnings of Crude Petroleum and Gas  Production
Workers” as published by the United States Department of Labor, Bureau of Labor
Statistics, or the equivalent Canadian Index as published by the Dominion
Bureau of Statistics, as applicable. The adjusted rates shall be the rates
currently in use, plus or minus the computed adjustment.


 


5.              Application of Administrative
Overhead or Combined Rates - Percentage Basis


 


For the purpose of determining
charges on a Percentage Basis under Paragraph 1B (2) or Paragraph 3 of
this Section III, Development shall include all costs in connection with
drilling, redrilling, deepening or any remedial operations on any or all wells involving the use of
drilling crew and equipment; also, preliminary expenditures necessary in
preparation for drilling and expenditures incurred in abandoning when well is not
completed as a producer; and original cost of construction or installation of
fixed assets, the expansion of fixed assets and any other project clearly
discernible as a fixed asset, except Major Construction as defined in Paragraph
6 of this Section III. All other costs shall be considered as Operating.


 


6.              Major Construction Overhead


 


For
the construction of compressor plants, water stations, secondary recovery
systems, drilling and production platforms, salt water disposal facilities, and
other such projects, as distinguished from the more usual drilling


 


4

















 


and
producing operations, Operator in addition to the Administrative Overhead or
Combined Rates provided for in Paragraph 1, 2 or 3 of this Sector III
shall either negotiate a rate prior to beginning of construction or shall
charge the Joint Account with an additional overhead charge as follows:


 


A.           Total cost less than $25,000, no charge.


 


B.             Total cost more than $25,000, but less
than $100,000. 3% of total cost.


 


C.             Total cost of $100,000 or more, 3% of the
first $100,000 plus 2% of all over $100,000 of total cost.


 


Total cost shall mean the
total gross cost of any one project. For the purpose of this paragraph the
component parts of a single project shall not be treated separately and the
cost of drilling wells shall be excluded.


 


7.              Amendment of Rates


 


The specific rates
provided for in this Section III may be amended from time to time by
mutual agreement between the Parties hereto if, in practice, the rates are
found to be insufficient or excessive.


 


IV. BASIS
OF CHARGES TO JOINT ACCOUNT


 


Subject to the further
provisions of this Section IV, Operator will procure all Material and
services for the Joint Property. At the Operator’s option, Non-Operators may
supply Material or services for the Joint Property.


 


1.              Purchases


 


Material purchased and
service procured shall be charged at the price paid by Operator after deduction
of all discounts actually received.


 


2.              Material furnished from Operator’s
Warehouse or Other Properties


 


A.           New Material (Condition “A”)


 


(1)          Tubular goods, except line pipe, shall be
priced on a maximum carload and/or barge load weight basis regardless of
quantity transferred and equalized to the lowest prevailing price f.o.b.
railway receiving point or recognized barge terminal nearest the Joint Property
where such Material is normally available effective at date of transfer.


 


(2)          Line pipe shall be priced at the current
replacement cost effective at date  of transfer from a reliable supply
store nearest the Joint Property where such Material is normally available if
the movement is less than 30,000 pounds. If the movement is 30,000 pounds or
more, it shall be priced on the same basis as casing and tubing under
Subparagraph (1) of this paragraph.


 


(3)          When the Operator has equalized actual
hauling costs as provided for in Paragraph 5 of Section II, Operator is
permitted to include ten cents (10¢) per
hundred-weight on all tubular goods furnished from his stocks in lieu of
loading and unloading costs sustained.


 


(4)          Other Material shall be priced at the
current replacement cost of the same kind of Material, effective at date of
movement and f.o.b. the supply store or railway receiving point nearest the
Joint Property where Material of the same kind is normally available.


 


(5)          The Joint Account shall not be credited
with cash discounts applicable to prices provided for in this Paragraph 2 of Section IV.


 


B.             Used Material (Condition “B” and “C”)


 


(1)          Material in sound and serviceable
condition and suitable for reuse without reconditioning, shall be classified as
Condition “B” and priced at seventy-five per cent (75%) of the current price of
new Material.


 


(2)          Material which is not suitable for its
original function until after reconditioning shall be furnished to the Joint
Account under one of the two methods defined below:


 


(a)          Classified as Condition “B” and priced at
Seventy-five per cent (75%) of the current price of new Material. The cost of
reconditioning shall be absorbed by the Operator of the transferring property.


 


(b)         Classified as Condition “C” and priced at
fifty per cent (50%) of current price of new Material. The cost of
reconditioning also shall be charged to the receiving property, provided
Condition “C” value, plus cost of reconditioning, does not exceed Condition “B”
value.


 


(3)          Obsolete Material or Material which
cannot be classified as Condition “B” or Condition “C” shall be priced at a
value commensurate with its use. Material no longer suitable for its original
purpose but usable for some other purpose, shall be priced on a basis
comparable with that of items normally used for such other purpose.


 


(4)          Material involving erection costs shall
be charged at applicable percentage of the current knocked-down price of new
Material.


 


3.              Premium Prices


 


Whenever Material is not
readily obtainable at prices specified in Paragraphs 1 and 2 of this Section IV
because of national emergencies, strikes or other unusual causes over which the
Operator has no control, the Operator may charge the Joint Account for the
required Material at the Operator’s actual cost incurred in procuring such Material,
in making it suitable for use, and in moving it to the Joint Properly,
provided, that notice in writing is furnished to Non-Operators of the proposed
charge prior to billing Non-Operators for such Material. Each Non-Operator shall  have
the right, by so electing and notifying Operator within 10 days after receiving
notice from Operator, to furnish in kind all or part of his share of such
Material suitable for use and acceptable to Operator.


 


4.              Warranty of Material Furnished by
Operator


 


Operator does not warrant
the Material furnished. In case of defective Material, credit shall not be passed
to the Joint Account until adjustment has been received by Operator from the
manufacturers or their agents.


 


5.              Equipment and Facilities
Furnished by Operator


 


A.           Operator shall charge the Joint Account
for use of equipment and facilities at rates commensurate with cost of
ownership and operation. Such rates shall include cost of maintenance, repairs,
other operating expense, insurance, taxes, depreciation, and interest on
investment not to exceed six per cent (6%) per annum, provided such rates shall
not exceed those currently prevailing in the immediate area within which the
Joint Property is located. In lieu of rates based on costs of ownership and
operation of equipment, other than automotive. Operator may elect to use
commercial rates prevailing in the area of the Joint Property less 20%; for
automotive equipment, rates as published by the Petroleum Motor Transport Association
may be used. Rates for laboratory services shall not exceed those currently
prevailing if performed by


 


5














 


outside service
laboratories. Rates for trucks, tractors and well service units may include
wages and expenses of operator.


 


B.             Whenever requested, Operator shall inform
Non-Operators in advance of the rates it proposes to charge.


 


C.             Rates shall be revised and adjusted from time to time
when found to be either excessive or insufficient.


 


V. DISPOSAL OF MATERIAL


 


The Operator may
purchase, but shall be under no obligation to purchase, interest of
Non-Operators in surplus Condition “A” or “B” Material. The disposition of
surplus Controllable Material, not purchased by Operator, shall be agreed to by
Operator and Non-Operators, provided Operator shall dispose of normal
accumulations of junk and scrap Material either by transfer or sale from Joint
Property.


 


1.              Material Purchased by the
Operator or Non-Operators.


 


Material purchased by
either the Operator or Non-Operators shall be credited by the Operator to the Joint  Account
for the month in which the Material is removed by the purchaser.


 


2.              Division in Kind


 


Division of Material in
kind, if made between Operator and Non-Operators, shall be in proportion to the
respective interests in such Material. The Parties will thereupon be charged
individually with the value of the Material received or receivable. Proper
credits shall be made by the Operator to the Joint Account.


 


3.              Sales to Outsiders


 


Sales to outsiders of
Material from the Joint Property shall be credited by Operator to the Joint
Account at the net amount collected by Operator from vendee. Any claim by
vendee related to such sale shall be charged back to the Joint Account if and
when paid by Operator.


 


VI. BASIS
OF PRICING MATERIAL TRANSFERRED FROM JOINT ACCOUNT


 


Material purchased by
either Operator or Non-Operators or divided in kind, unless agreed to by
Operator and Non-Operators shall be priced on the following basis:


 


1.              New Price Defined


 


New price as used in this
Section VI shall be the price specified for new Material in Section IV.


 


2.              New Material


 


New Material (Condition “A”),
being new Material procured for the Joint Property but never used, at one
hundred per cent (100%) of current new price (plus sales tax if any).


 


3.              Good Used Material


 


Good used Material
(Condition “B”), being used Material in sound and serviceable condition,
suitable for reuse without reconditioning:


 


A.           At seventy-five per cent (75%) of current new price if
Material was charged to Joint Account as new, or


 


B.             At sixty-five per cent (65%) of current
new price if Material was originally charged to the Joint Account as secondhand
at seventy-five per cent (75%) of new price.


 


4.              Other Used Material


 


Used Material (Condition “C”),
at fifty per cent (50%) of current new price, being used Material which:


 


A.           Is not in sound and serviceable condition but suitable
for reuse after reconditioning, or


 


B.             Is serviceable for original function  but not suitable for reconditioning.


 


5.              Bad-Order Material


 


Material (Condition “D”),
no longer suitable for its original purpose without excessive repair cost but
usable for some other purpose at a
price comparable with that of items normally used for such other purpose.


 


6.              Junk Material


 


Junk Material (Condition “E”),
being obsolete and scrap Material, at prevailing prices.


 


7.              Temporarily Used Material


 


When the use of Material
is temporary and its service to the Joint Property does not justify the
reduction in price as provided for in Paragraph 3B of this Section VI,
such Material shall be priced on a basis that will leave a net charge to the
Joint Account consistent with the value of the service rendered.


 


VII.
INVENTORIES


 


The Operator shall maintain
detailed records of Controllable Material.


 


I.                 Periodic Inventories, Notice and
Representation


 


At reasonable intervals,
inventories shall be  taken by Operator of the Joint
Account Controllable Material. Written notice of intention to take inventory
shall be given by Operator at least thirty (30) days before any inventory is to
begin so that Non-Operators may be represented when any inventory is taken.
Failure of Non-Operators to be represented at an inventory shall bind
Non-Operators to accept the inventory taken by Operator.


 


2.              Reconciliation and Adjustment of
Inventories


 


Reconciliation of
inventory with the Joint Account shall be made, and a list of overages end
shortages shall be furnished to the Non-Operators. Inventory adjustments shall be made by Operator with the Joint
Account for overages and shortages, but Operator shall be held accountable to
Non-Operators only for shortages due to lack of reasonable diligence.


 


3.              Special Inventories


 


Special Inventories may
be taken whenever there is any sale or change of interest in the Joint Property.
It shall be the duty of the party selling to notify all other Parties as
quickly as possible after the transfer of interest taken place. In such cases,
both the seller and the purchaser shall be governed by such inventory.


 


4.              Expense of Conducting Periodic
Inventories


 


The expense of conducting
periodic inventories shall not be charged to the Joint Account unless agreed to
by Operator and Non-Operators.


 


6

















 


EXHIBIT “F”


ATTACHED TO UNIT
OPERATING AGREEMENT

COOPER JAL UNIT


LEA COUNTY, NEW
MEXICO


 


INSURANCE
PROVISIONS


 


Unit Operator, during the
term of the Unit Operating Agreement, shall carry insurance for the benefit and
at the expense of the parties hereto as follows:


 


(1)     Employers’ Liability Insurance with Limit of not less
than $100,000.00 per employee.


 


(2)     Public Liability and Property Damage Insurance with
limits of not less than


$100,000.00 for injuries
to or death of one person and

$300, 000.00 for injuries or deaths in one accident, and

$100, 000.00 for property damage in one accident


 


(3)     Automobile Public Liability and Property Damage
Insurance with limits of not less than


$100,000.00 for injuries
to or death of one person and

$300,000.00 for injuries or deaths in one accident, and

$100,000.00 for property damage in one accident


 


Except as authorized by Article 9
and by this Exhibit E, Unit Operator shall not make any charge to the
joint account for insurance premiums. Losses  not covered by Unit Operator’s
insurance (or by insurance required by this Unit Operating Agreement to be
carried for the benefit and at the expense of the parties hereto) shall be
charged to the joint account.


 

















 


CERTIFICATE AS TO
EFFECTIVE DATE

OF COOPER JAL UNIT AGREEMENT

LEA COUNTY, NEW MEXICO


 


RESERVE OIL AND GAS
COMPANY, Unit Operator under the Unit Agreement for the development and
operation of the Cooper Jal Unit Area, Lea County, New Mexico, hereby
certifies:


 


1.                                                     The Unit Agreement and the Unit Operating
Agreement have been executed or ratified by Working Interest Owners owning
Tracts with a combined Phase I unit participation of at least 85% and the Unit
Agreement has been executed or ratified by Royalty Owners owning Tracts with a
combined Phase I unit participation of at least 65% of the royalty interest in
the Unit Area.


 


2.                                                     The Unit Agreement was approved by the
New Mexico Oil Conservation Commission on August 25, 1970, by its Order No. R-4018
in Case No. 4402.


 


3.                                                     The Unit Agreement was approved by the
Regional Oil and Gas Supervisor for the United States Geological Survey on September 29,
1970, as Contract No. 14-08-0001-11584.


 


4.                                                     A counterpart of the Unit Agreement has
been recorded in Book 292. at Pages 352 of the Miscellaneous Records of
Lea County, New Mexico.


 


5.                                                     Pursuant to the provisions of Article XXII,
the Cooper Jal Unit Agreement became effective as of 7:00 A.M. on October 1,
1970.


 


6.                                                     All of the Tracts as shown on the
original Exhibit “B” have qualified under the provisions of Article XIV
of the Unit Agreement except Tract No. 27 which was not qualified for
participation on the Effective Date of the Unit Agreement.


 


DATED this 1st day of
October, 1970.


 


	
   

  	
  RESERVE OIL AND GAS
  COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  ILLEGIBLE

  
	
   

  	
   

  	
  Attorney-in-Fact

  



 


	
  STATE OF TEXAS

  	
  )

  
	
  COUNTY OF DALLAS

  	
  )    ss.

  



 


The foregoing instrument
was acknowledged before me this 1st day of October, 1970, by ILLEGIBLE, Attorney-in-Fact
for RESERVE OIL AND GAS COMPANY, a corporation, on behalf of said corporation.


 




	
   

  	
   

  	
  ILLEGIBLE

  	
   

  	
   

  
	
  [SEAL]

  	
   

  	
  Notary Public

  	
   

  	
  STATE OF NEW MEXICO
  COUNTY OF LEA FILED

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  My commission
  expires:

  	
   

  	
  [SEAL]

  	
   

  	
  OCT 1, 1970

  
	
  ILLEGIBLE

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  ILLEGIBLE

  
	
   

  	
   

  	
   

  	
   

  	
  ILLEGIBLE

  
	
   

  	
   

  	
   

  	
   

  	
  ILLEGIBLE

  
	
   

  	
   

  	
   

  	
   

  	
  ILLEGIBLE

  






 

















 


	
   

  	
   

  	
   

  	
   

  	
  [ILLEGIBLE]

  	
   

  	
  7.93720

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lind, Dorothy B.

  	
   

  	
  5

  	
   

  	
  2.62755

  	
   

  	
  3.50737

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Mallard, Margaret Strain

  	
   

  	
  21

  	
   

  	
  .26576

  	
   

  	
  .13925

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Petroleum Corporation of Texas

  	
   

  	
  4

  	
   

  	
  2.96428

  	
   

  	
  3.07169

  	
   

  
	
   

  	
   

  	
  14

  	
   

  	
  1.81369

  	
   

  	
  1.38309

  	
   

  
	
   

  	
   

  	
  16

  	
   

  	
  2.03666

  	
   

  	
  1.55721

  	
   

  
	
   

  	
   

  	
  19

  	
   

  	
  —

  	
   

  	
  2.04360

  	
   

  
	
   

  	
   

  	
  25

  	
   

  	
  1.60775

  	
   

  	
  4.16529

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  8.42238

  	
   

  	
  12.22088

  	
   

  
	
  Reserve Oil and Gas Company

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4

  	
   

  	
  2.96428

  	
   

  	
  3.07170

  	
   

  
	
   

  	
   

  	
  8

  	
   

  	
  1.04565

  	
   

  	
  1.40039

  	
   

  
	
   

  	
   

  	
  12

  	
   

  	
  .43113

  	
   

  	
  —

  	
   

  
	
   

  	
   

  	
  16

  	
   

  	
  6.10997

  	
   

  	
  4.67164

  	
   

  
	
   

  	
   

  	
  18

  	
   

  	
  1.44471

  	
   

  	
  .69461

  	
   

  
	
   

  	
   

  	
  19

  	
   

  	
  —

  	
   

  	
  2.04360

  	
   

  
	
   

  	
   

  	
  21

  	
   

  	
  2.12606

  	
   

  	
  1.11402

  	
   

  
	
   

  	
   

  	
  22

  	
   

  	
  —

  	
   

  	
  .13712

  	
   

  
	
   

  	
   

  	
  25

  	
   

  	
  1.60774

  	
   

  	
  4.16530

  	
   

  
	
   

  	
   

  	
  26

  	
   

  	
  6.10528

  	
   

  	
  3.92516

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  21.83482

  	
   

  	
  21.22354

  	
   

  



 


(3)                                  Automobile
Public Liability and Property Damage Insurance with limits of not less than 

$100,000.00 for injuries to or death of one person and

$300.000.00 for injuries or death in one accident, and

$100,000.00 for property damage in one accident


 


Except as authorized by Article 9 and by this Exhibit E, Unit
Operator shall not make any charge to the joint account for insurance premiums.
Losses not covered by Unit Operator’s insurance (or by insurance required by
this Unit Operating Agreement to be carried for the benefit and at the expense
of the parties hereto) shall be charged to the joint account.


 

















 


CERTIFICATE AS TO
EFFECTIVE DATE

OF COOPER JAL UNIT AGREEMENT

LEA COUNTY, NEW MEXICO


 


RESERVE OIL AND GAS
COMPANY, Unit Operator under the Unit Agreement for the development and
operation of the Cooper Jal Unit Area, Lea County, New Mexico, hereby
certifies:


 


1.                                                     The Unit Agreement and the Unit Operating
Agreement have been executed or ratified by Working Interest Owners owning
Tracts with a combined Phase I unit participation of at least 85% and the Unit
Agreement has been executed or ratified by Royalty Owners owning Tracts with a
combined Phase I unit participation of at least 65% of the royalty interest in
the Unit Area.


 


2.                                                     The Unit Agreement was approved by the
New Mexico Oil Conservation Commission on August 25, 1970, by its Order No. R-4018
in Case No. 4402.


 


3.                                                     The Unit Agreement was approved by the
Regional Oil and Gas Supervisor for the United States Geological Survey on September 29,
1970, as Contract No. 14-08-0001-11584.


 


4.                                                     A counterpart of the Unit Agreement has
been recorded in Book 292 at Page 352 of the Miscellaneous Records of Lea
County, New Mexico.


 


5.                                                     Pursuant to the provisions of Article XXII,
the Cooper Jal Unit Agreement became effective as of 7:00 A.M. on October 1,
1970.


 


6.                                                     All of the Tracts as shown on the
original Exhibit “B” have qualified under the provisions of Article XIV
of the Unit Agreement except Tract No. 27 which was not qualified for
participation on the Effective Date of the Unit Agreement.


 


DATED this 1st day of
October, 1970.


 


 


 


	
   

  	
  RESERVE OIL AND GAS
  COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  ILLEGIBLE

  
	
   

  	
   

  	
  Attorney-in-Fact

  



 


	
  STATE OF TEXAS

  	
  )

  
	
  COUNTY OF DALLAS

  	
  )    ss.

  



 


The foregoing instrument
was acknowledged before me this 1st day of October, 1970, by ILLEGIBLE Attorney-in-Fact
for RESERVE OIL AND GAS COMPANY, a corporation, on behalf of said corporation.


 




	
   

  	
   

  	
  ILLEGIBLE

  	
   

  	
   

  
	
  [SEAL]

  	
   

  	
  Notary Public

  	
   

  	
  STATE OF NEW MEXICO
  COUNTY OF LEA FILED

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  My commission
  expires:

  	
   

  	
  [SEAL]

  	
   

  	
  OCT 1, 1970

  
	
  ILLEGIBLE

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  ILLEGIBLE

  
	
   

  	
   

  	
   

  	
   

  	
  ILLEGIBLE

  
	
   

  	
   

  	
   

  	
   

  	
  ILLEGIBLE

  
	
   

  	
   

  	
   

  	
   

  	
  ILLEGIBLE