Exhibit 10.1


 


 


WEST
TEXAS RESOURCES, INC. 



5729 Lebanon Road, Suite 144



Frisco, Texas 75034 


April 15, 2014


EnTek Partners, LLC


770 South Post Oak Lane, Suite 600


Houston, Texas 77056


 


	Re:		Sale of Properties

Port Hudson Field, East Baton Rouge Parish; Louisiana;

West
Cameron 225, Offshore Cameron Parish, Louisiana, GOM OCS-G-0900 (“WC225”)






 


Dear Sirs:


 


As discussed in previous conversations
and correspondence between WEST TEXAS RESOURCES, INC. (“WTXR”) and ENTEK PARTNERS, LLC (“ENTEK”),
ENTEK has agreed to purchase certain oil and gas properties and interests from WTXR. Specifically, ENTEK has agreed to acquire
(a) an undivided 3.1956% of 8/8ths working interest (being equivalent to a 2.4926% net revenue interest) out of the interests owned
by WTXR in certain producing oil and gas leases known as the Port Hudson Field in East Baton Rouge Parish, Louisiana (the “Port
Hudson Property”); and (b) a graduated Net Profits Interest (as such term is more specifically defined in the attached Exhibit
B-2) in the leasehold interests owned by WTXR in that certain Federal Offshore Lease Number OCS G-0900 known as WC225 (the “WC225
NPI”) (which leases and interests, together with their attendant wells and production assets, and related contract and other
rights are collectively referred to herein as the “Properties”, or each as a “Property” and are more particularly
described on Exhibit A hereto). By execution of this letter agreement (the “Agreement”), the parties are formalizing
their agreement to the above described transaction, upon the following terms and conditions:


 


	1.		Purchase Price: ENTEK agrees to pay or advance on behalf of WTXR the total
sum of $565,000 in consideration for the conveyance by WTXR of the above described interests in the Properties as follows: (a)
$290,000 at closing on account of the acquisition of the leasehold interests in the Port Hudson Property less a credit for any
monies received by WXTR for hydrocarbon production after the January 1, 2014 effective date; and (b) payment of WTXR’s proportionate
share of the cost of the D-1 well dual recompletion of up to (i) a maximum of $275,000, or (ii) such greater amount as provided
for in the attached Exhibit B2 Section 1, within 20 days of the presentation of the WC225 D-1 Recompletion AFE Amount.





  


	2.		WC225 Collateral: Failure of ENTEK to timely pay WTXR’s share of the
invoice for the WC225 D-1 Recompletion AFE Amount as stipulated in Section 1 above, except as otherwise provided for in the attached
Exhibit B-2 Section 1, will result in forfeiture of its participation interest in the Port Hudson Property and in the WC225 NPI.
ENTEK agrees that in such event it will sell its interest in both Properties back to WTXR for $1.00 when presented with an Assignment
and Bill of Sale and an Assignment of Net Profits Interest by WTXR as Buyer and ENTEK as Seller and otherwise in the same form
as that attached hereto as Exhibits B-1 and B-2.








 



    	1



    	 



    

 


	3.		Effective Date and Time: The Effective Date and Time for the conveyance of
the interests in the Port Hudson Property shall be 7:00 a.m., Central Daylight Time, January 1, 2014 ("Effective Time")
and, in the case of the WC225 NPI, the first day of the month immediately following the payment of the WC225 D-1 Recompletion
AFE Amount.



 




	4.		Closing Date: Closing for the initial conveyance of the subject interests in
the Properties shall take place on or before April 15, 2014 (the “Closing Date”).



 




	5.		Future Operations: Pursuant to the terms of the joint operating agreement governing
the Port Hudson Property, ENTEK shall have the right and obligation to participate proportionately in all future operations related
to that Property. Under the terms of the Net Profits Interest ENTEK will benefit from the future operations on the West Cameron
225 Lease from and after its Effective Time, but will not become a party to the joint operating agreement governing this Property.



 




	6.		Definitive Conveyance Documents: WTXR shall execute and deliver at Closing
(i) the Assignment and Bill of Sale for the interest in the Port Hudson Property, in the form attached as Exhibit B-1 hereto,
and (ii) the WC225 Net Profits Interest Conveyance, in the form attached as Exhibit B-2 hereto.



 




	7.		Liens and Encumbrances: The Properties to be assigned to ENTEK shall be free
and clear of all liens and encumbrances.



 




	8.		Warranty of Title: WTXR makes no warranty of any kind, expressed or implied,
except as to parties claiming or to claim by, through or under WTXR, but not otherwise.



 




	9.		Title Review; Records Research: Following execution of this Agreement and through
the Closing Date, ENTEK shall be entitled to review and photocopy all title material relating to the Properties in the possession
of WTXR. In addition to the review of title, and in order to facilitate ENTEK's due diligence work with respect to the Properties,
WTXR shall permit ENTEK's representatives access to all accounting, engineering, geological, geophysical and other records, books,
contracts relating to the Properties.



 




	10.		Facilities Inspection: Following execution of this Agreement and through the
Closing Date, ENTEK, at its sole risk and expense, shall complete any and all inspections and its "As Is" approval of
all equipment and facilities attributable to or owned or used in connection with the Properties, to confirm for itself that the
Properties are in reasonable operating condition consistent with oil and gas industry standards.





  


	11.		Governing Law: The construction and interpretation of this letter agreement
shall be governed by the laws of the State of Texas without reference to the conflict of laws provisions thereof.



 




	12.		Allocation of Liability and Expenses: Each party shall pay and discharge all
liabilities, obligations and expenses incurred by such party or on such party's behalf in connection with the preparation, authorization,
execution and performance of this Agreement and the Assignment and Bill of Sale and Net Profits Conveyance, including without
limitation all fees and expenses of agents, representatives, counsel, accountants, and auditors retained by such party, as well
as all amounts payable with respect to any claim for brokerage, finder's fees or other commissions based in any way on any agreements,
arrangements, or understandings made by such party.



 






    	2



    	 



    




 


	13.		Post Effective Time Assumption of Liabilities: ENTEK shall assume its proportionate
share of the responsibility and liability, and does hereby indemnify and hold WTXR and PHV harmless as to the conveyed interests
in the Properties acquired herein, arising from the ownership or operation of the Properties after the Effective Time.



	14.		Confidentiality: This letter and its contents are confidential and shall not
be disclosed to any third party by either party hereto, other than to (a) administrative agencies to which such disclosure is
required by law, contract or administrative regulation, and (b) personnel, agents, or representatives as each party believes are
necessary in good faith for completing the transactions represented by this Agreement.



 


 


 





	 	Very truly yours,


 


WEST TEXAS RESOURCES, INC.



	 	 
	 	/s/ Stephen E. Jones, President
	 	Stephen E. Jones, President



 











 


Agreed to and accepted


This 15th day of April, 2014


 


ENTEK PARTNERS, LLC


 


/s/ Robert B. Ruston, Jr. 


Robert
B. Ruston, Jr., Manager


 




    	3



    	 



    

 


EXHIBIT
A


Schedule of Properties


 


Attached to and made a part of that certain
Agreement between WEST TEXAS RESOURCES,
INC. and ENTEK PARTNERS, LLC


dated April 15, 2014


 


1. PORT HUDSON FIELD PROPERTIES


 


The Interests referred to in this Assignment,
Bill of Sale and Conveyance describe forty four and one thousand and six ten thousandths percent (44.1006%) of Assignor's right,
title and interest in and to the following:


 


A.


 


		Working Interest	 Net Revenue Interest
	Wells:	To be Conveyed	To be Conveyed 
	Pennington Oil Company, et al #1	3.1956%	2.4926%
	Pennington Oil Company, et al #2	3.1956%	2.4926%


 


Lease:


 





Oil, Gas and Mineral Lease dated April
15, 2003 by and between Pennington Oil Company, Paula Pennington de la Bretonne, Claude Pennington, III, and Daryl B. Pennington,
Sr., Lessors, and Brian Seamster, Inc., Lessee, covering Section 46, Township 5 South, Range 2 West, East Baton Rouge Parish, Louisiana
and recorded in the Official Records of the East Baton Rouge Parish Clerk of Court Original 614, Bundle 11487.


 


B.


Wells:


 





		Working Interest	 Net Revenue Interest
	Wells:	To be Conveyed	To be Conveyed 
	U WX RB SUA; Pennington #3	3.1956%	2.4926%


 


(Created by Order No. 1027-C-5 for the
Office of Conservation, dated effective February 16, 2006, a plat of which was recorded in the Official Records of the East Baton
Rouge Parish Clerk of Court at Original 899, Bundle 11834.)


 


Leases: 


 


Oil, Gas and Mineral Lease dated September
1, 2004 by and between Reid Rushing and Becky W. Rushing, Lessors, and Brian Seamster, Inc., Lessee, and recorded in the Official
Records of the East Baton Rouge Parish Clerk of Court at Original 402, Bundle 11718.


 




    	4



    	 



    

 





Oil, Gas and Mineral Lease dated September
1, 2004 by and between Vicki J. Netterville, Lessor, and Brian Seamster, Inc., Lessee, and recorded in the Official Records of
the East Baton Rouge Parish Clerk of Court at Original 399, Bundle 11718.


 





Oil, Gas and Mineral Lease dated September
1, 2004 by and between Riverbank Investments, Inc., et al, Lessors, and Brian Seamster, Inc., Lessee, and recorded in the Official
Records of the East Baton Rouge Parish Clerk of Court at Original 679, Bundle 11655.


 


Oil, Gas and Mineral Lease dated December
2, 2004 by and between Riverbank Investments, Inc., et al, Lessors, and Brian Seamster, Inc., Lessee, but insofar and only insofar
as that acreage within the U WX RB SUA created by Order No. 1027-C-5 for the Office of Conservation, dated effective February 16,
2006, and recorded in the Official Records of the East Baton Rouge Parish Clerk of Court at Original 986, Bundle 11747.


 


Oil, Gas and Mineral Lease dated May 1,
2004 by and between Pennington Oil Company, et al, Lessors, and Brian Seamster, Inc., Lessee, but insofar and only insofar as that
easternmost 36% of said lease, or the easternmost 52.5 acres, more or less (including but not limited to all acreage within the
U WX RB SUA), and recorded in the Official Records of the East Baton Rouge Parish Clerk of Court at Original 242, Bundle 11664.


 


Area of Mutual Interest: 


 


Created under that certain Letter Agreement
dated November 15, 2004, titled, Cooper Bayou Prospect, between BSN Exploration, Flash Gas & Oil Southwest Inc., Oden &
Associates LLC, PHV, and Roxana Oil Company.


 


C.


 


Including, without limitation, a proportionate
interest in all of Assignor's right, title and interest in and to the leases and wells described above; all lease/well equipment
and personal property associated therewith; all oil, gas and associated hydrocarbons produced, saved and marketed from the above
described leases after the Effective Date and all lands and leases pooled therewith; all contracts and agreements, including but
not limited to that certain Exploration Agreement effective January 1, 2004 between BSN Exploration, Flash Gas & Oil Southwest
Inc., Oden & Associates LLC, PHV, and Roxana Oil Company, of every kind and character affecting or relating to the Properties
and, a proportionate interest in Assignor’s right, title, interest, estate privileges, remedies, rents, benefits, and revenues
inuring to or under the leases, contracts and agreements or pursuant to laws, orders, rules and regulations governing the Properties
after the Effective Time.


 


 


2. WEST CAMERON 225 PROPERTIES


 


See Schedule A to Exhibit B-2 (the “West Cameron 225 Division
Order Letter dated 11/21/13)






    	5



    	 



    

 


EXHIBIT B-1


 


Form of Assignment


Attached to and made a part of that certain
Letter Agreement between WEST TEXAS
RESOURCES, INC. and ENTEK PARTNERS, LLC


dated April 15, 2014


 


STATE OF LOUISIANA


 


PARISH OF EAST BATON ROUGE


 


 


ASSIGNMENT, BILL OF SALE AND CONVEYANCE


 


THIS ASSIGNMENT, BILL OF SALE AND CONVEYANCE
(“Assignment”), dated April 15, 2014, but effective as of January 1, 2014 at 7:00 a.m. local time (“Effective
Time”), from WEST TEXAS RESOURCES, INC. a Nevada corporation whose address is 5729 Lebanon Road, Suite 144, Frisco,
Texas 75034 (“Assignor”) to ENTEK PARTNERS, LLC, a Texas limited liability company whose address is 770 South
Post Oak Lane, Suite 600, Houston, TX 77056 (Assignee”).


 


FOR $100.00 and other
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by Assignor, Assignor hereby transfers,
grants, conveys and assigns to Assignee forty four and one thousand and six ten thousandths percent (44.1006%) of Assignor’s
right, title and interest in and to the following (all of which are herein called the “Interests”) which equates to
3.1956% (of 8/8ths) Working Interest and 2.4926% (of 8/8ths) Net Revenue Interest in the Interests, subject to the reservations
set forth below:


 


1.The oil and
gas well(s) located on the lease(s) described on Schedule “A”,
attached hereto (“Leases”), said well(s) being referred to herein as “Wells”, together with all equipment
and machinery associated therewith;


 


2.The leasehold
estate created by the Leases, licenses, permits and other
agreements associated with the Leases;


 


3.The property
and rights incident to the Wells, and the Leases, including, to
the extent transferable, all agreements, surface leases, gas gathering contracts, salt water disposal leases and wells, equipment
leases, permits, gathering lines, rights-of-way, easements, licenses and all other agreements directly relating thereto; and


 


4.The personal
property, fixtures and improvements as of the Effective Time
appurtenant to the Wells, or the Leases or used or obtained in connection with the operation of the Wells, or the Leases.


 


TO HAVE AND TO HOLD
the Interests unto Assignee and its successors and assigns forever; provided, however, that THE INTERESTS ARE TRANSFERRED AS
IS, WHERE IS AND THIS ASSIGNMENT IS MADE WITHOUT WARRANTY OF ANY KIND WHETHER EXPRESSED, IMPLIED OR STATUTORY; EXCEPT AS TO PARTIES
CLAIMING OR TO CLAIM BY, THROUGH OR UNDER ASSIGNOR, and provided the Interests are assigned to Assignee free and clear of all
liens and mortgages created by, through or under Assignor.


 






    	6



    	 



    

 


Assignee assumes it’s proportionate
share of responsibility and liability, and does hereby indemnify and hold Assignor harmless from all liability arising from the
ownership or operation of the Interests herein conveyed from and after the Effective Time.


 


The parties to this Assignment agree that
to the extent required to be operative, the disclaimers of certain warranties contained in this Assignment are “conspicuous”
disclaimers for the purposes of any applicable law, rule or order. THE INTERESTS ARE ASSIGNED TO ASSIGNEE WITHOUT WARRANTY OF
ANY KIND, EXPRESS, IMPLIED OR STATUTORY, EXCEPT AS TO PARTIES CLAIMING OR TO CLAIM BY, THROUGH OR UNDER ASSIGNOR BUT NOT OTHERWISE.
WITHOUT LIMITATION OF THE GENERALITY OF THE IMMEDIATELY PRECEDING SENTENCE, ASSIGNOR EXPRESSLY DISCLAIMS AND NEGATES AS TO PERSONAL
PROPERTY AND FIXTURES (a) ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, (b) ANY IMPLIED OR EXPRESS WARRANTY OF FITNESS FOR
A PARTICULAR PURPOSE, AND (c) ANY IMPLIED OR EXPRESS WARRANTY OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS. ASSIGNOR ALSO EXPRESSLY
DISCLAIMS AND NEGATES ANY IMPLIED OR EXPRESS WARRANTY AS TO THE COMPLETENESS AND ACCURACY OF ANY OF THE INFORMATION FURNISHED WITH
RESPECT TO THE EXISTENCE OR EXTENT OF RESERVES OR THE VALUE OF THE INTERESTS BASED THEREON OR THE CONDITION OR STATE OF REPAIR
OF ANY OF THE INTERESTS (IT BEING UNDERSTOOD THAT ALL RESERVE ESTIMATES ON WHICH ASSIGNEE HAS RELIED OR IS RELYING HAVE BEEN DERIVED
BY INDIVIDUAL EVALUATION OF ASSIGNEE) OR AS TO THE PRICES THAT ASSIGNEE WILL BE ENTITLED TO RECEIVE FROM PRODUCTION OF OIL, GAS
OR OTHER SUBSTANCES FROM THE INTERESTS.


 


This Assignment, Conveyance and Bill of
Sale shall be further subject to the terms and conditions of that certain Letter Agreement between Assignor and Assignee dated
April 15, 2014.


 


This Assignment shall bind and inure to
the benefit of Assignor and Assignee and their respective successors and assigns.


 


EXECUTED this 15th day of April,
2014 to be effective for all purposes as of the Effective Time.


 





	WITNESS	 	WEST
    TEXAS RESOURCES, INC.
	 	 	 
		 	By:__________________________________
		 	      Stephen E. Jones, President
	 	 	 
	 	 	 
	WITNESS:	 	ENTEK PARTNERS, LLC
	 	 	 
		 	By:___________________________________
	 	 	       Robert B. Rustin, Jr., ManageR
	 	 	 
		 	







 





 






    	7



    	 



    

 





STATE OF TEXAS


COUNTY OF


 


Before me, the undersigned authority, on
this day personally appeared Stephen E. Jones known to me to be the person whose name is subscribed to the foregoing instrument
and acknowledged to me that he executed the same as President of West Texas Resources, Inc., a Nevada corporation, and acknowledged
to me that he executed the same, on behalf of said corporation, for the purposes and consideration therein expressed and in the
capacity therein stated.


 


Given under my hand and seal of office this________
day of_________ , 2014.


 


 


	My commission expires:	 	 
	 	 	Notary Public in and for _____
	 	 	County, State of Texas
	 	 	 
	 	 	 






 


 


STATE OF TEXAS


COUNTY OF



 





Before me, the undersigned authority, on
this day personally appeared Robert B. Ruston, Jr. known to me to be the person whose name is subscribed to the foregoing
instrument as Manager of ENTEK PARTNERS, LLC, a Texas limited liability company, and acknowledged to me that he executed the same,
on behalf of said company, for the purposes and consideration therein expressed and in the capacity therein stated.


 


Given under my hand and seal of office this 15th
day of April, 2014.


 





	My commission expires:	 	 
	 	 	Notary Public in and for _____
	 	 	County, State of Texas
	 	 	 
	 	 	 


 


 


 







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SCHEDULE A to EXHIBIT B-1  


Schedule
of Properties


 


 


Attached to and made a part of that certain
Agreement between WEST TEXAS RESOURCES,
INC. and ENTEK PARTNERS, LLC


dated April 15, 2014


1. PORT HUDSON FIELD PROPERTIES


 


The Interests referred to in this Assignment,
Bill of Sale and Conveyance describe forty four and one thousand and six ten thousandths percent (44.1006%) of Assignor's right,
title and interest in and to the following:


 


A.


 


Wells:


 





	 	Working Interest	Net Revenue Interest
	 	To be Conveyed	To be Conveyed
	Pennington Oil Company, et al #1	3.1956%	2.4926%
	Pennington Oil Company, et al #2	3.1956%	 2.4926% 



 








 


Lease:


 





Oil, Gas and Mineral Lease dated April
15, 2003 by and between Pennington Oil Company, Paula Pennington de la Bretonne, Claude Pennington, III, and Daryl B. Pennington,
Sr., Lessors, and Brian Seamster, Inc., Lessee, covering Section 46, Township 5 South, Range 2 West, East Baton Rouge Parish, Louisiana
and recorded in the Official Records of the East Baton Rouge Parish Clerk of Court Original 614, Bundle 11487.


 


B.


 


 


 


	 	Working Interest	Net Revenue Interest
	 	To be Conveyed	To be Conveyed
	U WX RB SUA; Pennington #3	3.1956%	2.4926%








(Created by Order No. 1027-C-5 for the
Office of Conservation, dated effective February 16, 2006, a plat of which was recorded in the Official Records of the East Baton
Rouge Parish Clerk of Court at Original 899, Bundle 11834.)


 


Leases: 


 


Oil, Gas and Mineral Lease dated September
1, 2004 by and between Reid Rushing and Becky W. Rushing, Lessors, and Brian Seamster, Inc., Lessee, and recorded in the Official
Records of the East Baton Rouge Parish Clerk of Court at Original 402, Bundle 11718.


 




    	9



    	 



    

 





Oil, Gas and Mineral Lease dated September
1, 2004 by and between Vicki J. Netterville, Lessor, and Brian Seamster, Inc., Lessee, and recorded in the Official Records of
the East Baton Rouge Parish Clerk of Court at Original 399, Bundle 11718.


 


Oil, Gas and Mineral Lease dated September
1, 2004 by and between Riverbank Investments, Inc., et al, Lessors, and Brian Seamster, Inc., Lessee, and recorded in the Official
Records of the East Baton Rouge Parish Clerk of Court at Original 679, Bundle 11655.


 


Oil, Gas and Mineral Lease dated December
2, 2004 by and between Riverbank Investments, Inc., et al, Lessors, and Brian Seamster, Inc., Lessee, but insofar and only insofar
as that acreage within the U WX RB SUA created by Order No. 1027-C-5 for the Office of Conservation, dated effective February 16,
2006, and recorded in the Official Records of the East Baton Rouge Parish Clerk of Court at Original 986, Bundle 11747.


 


Oil, Gas and Mineral Lease dated May 1,
2004 by and between Pennington Oil Company, et al, Lessors, and Brian Seamster, Inc., Lessee, but insofar and only insofar as that
easternmost 36% of said lease, or the easternmost 52.5 acres, more or less (including but not limited to all acreage within the
U WX RB SUA), and recorded in the Official Records of the East Baton Rouge Parish Clerk of Court at Original 242, Bundle 11664.


 


Area of Mutual Interest:





Created under that certain Letter Agreement
dated November 15, 2004, titled, Cooper Bayou Prospect, between BSN Exploration, Flash Gas & Oil Southwest Inc., Oden &
Associates LLC, PHV, and Roxana Oil Company.


 


C.


 


Including, without limitation, a proportionate
interest in all of Assignor's right, title and interest in and to the leases and wells described above; all lease/well equipment
and personal property associated therewith; all oil, gas and associated hydrocarbons produced, saved and marketed from the above
described leases after the Effective Date and all lands and leases pooled therewith; all contracts and agreements, including but
not limited to that certain Exploration Agreement effective January 1, 2004 between BSN Exploration, Flash Gas & Oil Southwest
Inc., Oden & Associates LLC, PHV, and Roxana Oil Company, of every kind and character affecting or relating to the Properties
and, a proportionate interest in Assignor’s right, title, interest, estate privileges, remedies, rents, benefits, and revenues
inuring to or under the leases, contracts and agreements or pursuant to laws, orders, rules and regulations governing the Properties
after the Effective Time.




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EXHIBIT B-2


Form of Net Profits Interest Conveyance


 


Attached to and made a part of that certain
Letter Agreement between WEST TEXAS
RESOURCES, INC. and ENTEK PARTNERS, LLC


dated April 15, 2014


 


STATE OF LOUISIANA


 


PARISH OF CAMERON


ASSIGNMENT OF NET PROFITS INTEREST


 


For and in consideration
of Ten and No/100 Dollar ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged
WEST TEXAS RESOURCES, INC., a Nevada corporation with an office at 5729 Lebanon Road, Suite 144, Frisco, Texas 75034 (“Assignor”),
does hereby GRANT, SELL, ASSIGN, TRANSFER and CONVEY to ENTEK PARTNERS, LLC, a Texas limited liability company with an office at
770 South Post Oak Lane, Suite 600, Houston, Texas 77056, its successors and assigns (collectively, “Assignee”)
a graduated net profits interest equal to seventy-five percent (75%) of the “Net Profits” (as hereinafter defined)
“Before Payout” (as hereafter defined) adjusted to fifty percent (50%) of the Net Profits “After Payout”
(as hereafter defined), if any, calculated in the manner provided herein, that are attributable to the production of Subject Hydrocarbons
(the “Net Profits Interest”). The conveyance of the Net Profits Interest is effective as of the 1st
day of the month immediately following the month in which Assignee advances funds equal to the WC225 D-1 Recompletion AFE Amount
up to a maximum of $275,000 (the “Effective Time”) or such greater amount as provided for herein. Assignor and Assignee
are sometimes collectively referred to herein as the “Parties” and individually as a “Party”.


 


To have and to hold
the Net Profits Interest, together with all and singular the rights and appurtenances thereto in anywise belonging, unto Assignee
and its successors and assigns forever, subject, however, to the terms and conditions set forth herein.


 


CERTAIN DEFINITIONS AND REFERENCES


 


1.0 When used in this Assignment of Net
Profits Interest (this “Assignment”), the following terms shall have the respective meanings assigned to them in this
Section 1.0 or in the Sections referred to below:


 


“Affiliate” means,
in respect of a Person, any other Person that either directly or indirectly (i) it owns or Controls; (ii) owns or
Controls it; or (iii) is under common ownership or Control with it. For the purposes of this definition,
"ownership" shall mean, in the case of an entity which issues voting securities, any Person having the right to
exercise directly or indirectly the vote of more than 50% (fifty percent) (or such lesser percentage which results in actual, de
facto control) of the voting securities in the relevant entity or, in
the case of an entity which does not issue voting securities, any Person having at least 50% (fifty percent) of the interest in
the profits of the relevant entity and "owns" shall be construed accordingly.




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“After Payout”
means that period of time commencing after Payout occurs and continuing for the balance of the term of this Assignment.


 


“Assignee” means ENTEK PARTNERS, LLC and
its successors and assigns. “Assignment” is defined in Article 1.


 


“Assignor” means WEST TEXAS RESOURCES, INC.
and its successors and assigns.


 


“Before Payout”
means that period of time commencing at the Effective Date and continuing until that point in time at which Payout occurs.


 


“Block”
means an area on the Outer Continental Shelf in the Gulf of Mexico, designated by the BOEM for purposes of Hydrocarbon exploration
and development and for which said BOEM has authority to issue a Lease, as West Cameron Block 225, OCS-G-0900, GOM, Offshore Cameron
Parish, Louisiana.


 


“BOEM”
means the Bureau of Ocean Energy Management of the U.S. Department of Interior (or any other successor agency).


 


“Calendar
Month” means a period of thirty one (31) consecutive days commencing with January 1 and ending on the following January
31, a period of twenty eight (28) consecutive days commencing with February 1 and ending on the following February 28 (in leap
year, a period of twenty nine (29) consecutive days commencing with February 1 and ending on the following February 29), a period
of thirty one (31) consecutive days commencing with March 1 and ending on the following March 31, a period of thirty (30) consecutive
days commencing with April 1 and ending on the following April 30, a period of thirty one (31) consecutive days commencing with
May 1 and ending on the following May 31, a period of thirty (30) consecutive days commencing with June 1 and ending on the following
June 30, a period of thirty one (31) consecutive days commencing with July 1 and ending on the following July 31, a period of thirty
one (31) consecutive days commencing with August 1 and ending on the following August 31, a period of thirty (30) consecutive days
commencing with September 1 and ending on the following September 30, a period of thirty one (31) consecutive days commencing with
October 1 and ending on the following October 31, a period of thirty (30) consecutive days commencing with November 1 and ending
on the following November 30, and a period of thirty one (31) consecutive days commencing with December 1 and ending on the following
December 31.


 


“Capital Investment”
means the WC225 D-1 Recompletion AFE Amount up to a maximum of $275,000 or such other greater amount as provided for below.


 


“Contract”
means any written agreement which vests in Assignor and/or its Designated Partner(s) rights to pursue the sale, drilling or
development of the Subject Interests, whether styled as a farm-in, exploration agreement, joint venture agreement, participation
agreement, operating agreement, purchase and sale agreement, assignment of record title, assignment of operating rights or similar
document.


 


“Control”
means possession of the power to direct or cause the direction of the management and policies of an entity, whether through
the ownership of voting securities, by contract, or otherwise.




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“Designated
Partner” means a third party oil company, Lessee, farmee, or other Person that joins Assignor in the pursuit of Hydrocarbons
under the terms of a Contract or as a partner in a Lease.


 


“Effective Time” is defined at the head of
this Assignment.


 


“Eligible Wells” is defined as the WC225
#7 well and the WC225 D-1 (previously the #8) well.


 


“Hydrocarbons”
means all oil, condensate, gas and other liquid or liquefiable hydrocarbon substances.


 


“JOA”
means that certain Joint Operating Agreement dated October 1, 2013 between Tarpon Offshore Ventures, LP as Operator and West
Texas Resources, Inc., HRWC225 Investors LLC and Camron Resources, LLC as Non-Operators covering OCS G-00900, West Cameron Block
225 attached hereto as Schedule C.


 


“Leasehold
Interest” means, with respect to part or all of the Block, the cumulative interests in the right to explore for, develop,
produce and/or receive a share of Hydrocarbons from the Block, including any Lease, fractional working or cost-bearing interests,
operating rights, overriding royalty, production payment, net profits, and other similar interests.


 


“Letter Agreement”
means that certain Letter Agreement between West Texas Resources, Inc. and EnTek Partners, LLC dated April 15, 2014


 


“Net Investment”
means an amount equal to the sum of the following items of cost and expense accrued during or prior to (but never before the
Effective Date) such Calendar Month, for which Assignor has received and processed for payment invoices within such Calendar Month,
or in the case of the Calendar Month in which the Effective Date falls, within the period commencing on the Effective Date and
ending on the last day of such Calendar Month, insofar only as such items of cost and expense are properly allocable to the Subject
Interests and the production and marketing of Hydrocarbons therefrom and have not previously been deducted in any remittance to
Assignor:


 


a)the Capital Investment;


 


b)the Operating Expense; and


 


c)the Plug and Abandonment Accrual;


 


 


provided however, that any cost that would not otherwise
be incurred by an Operator complying with the operating standards set forth in Section 4 hereof shall not be included as a cost
or expense for purposes of this Assignment.


 


“Net Profits” has the meaning assigned to
it in Section 3.


 


“Net Profits Account” has the meaning assigned
to it in Section 3.


 


“Net Revenue
Amount” means an amount equal to the sum of the following items for which Assignor has received payment within such Calendar
Month, or in the case of the Calendar Month in which the Execution Date falls, within the period commencing on the Effective Date
and ending on the last day of such Calendar Month, to the extent such amounts are attributable to any Eligible Well:


 


	(i)		the proceeds (or the market value of any proceeds not received in the form of cash
or cash equivalents) from the sale or other disposition of all Hydrocarbons, after deducting therefrom those proceeds attributable
to all royalties or overriding royalties;



 


 




    	13



    	 



    




 


	(ii)		monies received by Assignor under any “take-or-pay” or similar provision
of any agreement related to the Subject Interests;





	(iii)		monies received by Assignor pursuant to any gas balancing agreement;





	(iv)		amounts received by Assignor as a result of a refund of taxes previously paid;





	(v)		the proceeds of all judgments and claims collected by Assignor;





	(vi)		rentals received by Assignor pursuant to subsurface Hydrocarbon storage or other reservoir
use arrangements;





	(vii)		all delay rentals, shut-in well payments, minimum royalties, and other payments made
to Assignor in connection with the maintenance of any Lease granted by Assignor;





	(viii)		any bonus or other consideration received by Assignor in connection with the grant
by Assignor of any Lease;





	(ix)		insurance proceeds received by Assignor as a result of the damage to the Eligible
Wells or to the fixtures and equipment;





	(x)		proceeds from the sale of fixtures and equipment; and





	(xi)		amounts received in connection with any cost adjustment of any well and/or leasehold
equipment upon unitization.





 


“Operating
Expense” means Assignor’s pro rata share, calculated in accordance with the Assignor’s Leasehold Interest,
of all overhead and operating costs and expenses incurred in, arising out of or relating to the operation and maintenance of the
Subject Interests and the Eligible Wells and the production, sale and marketing of Hydrocarbons therefrom, such items to include:


 


	(i)		all costs of complying with applicable local, state, and federal statutes, ordinances,
rules, and regulations and the terms of the Leases;





	(ii)		all costs of lifting and producing Hydrocarbons, including all costs of labor, fuel,
repairs, hauling, materials, supplies, utility charges, workover and other remedial well servicing operations, and other costs
incident thereto;





	(iii)		all direct and indirect overhead charges and operating charges paid, pursuant to any
Contracts, to any third party operator or operators of the Eligible Wells or to others for services rendered in conducting operations
thereon (provided that no administrative, rent, overhead or other indirect cost incurred by Assignor shall be included in such
costs);





	(iv)		all delay rentals, shut-in well payments, minimum royalties and other payments made
in connection with the maintenance of the Leases;





	(v)		all severance, gross production, ad valorem, occupation, gathering, pipeline regulating
and other similar taxes assessed against or attributable to the Subject Interests or Hydrocarbons produced therefrom; provided
however, that income taxes and any other taxes shall not be included in such costs;









    	14



    	 



    

 


 


	(vi)		proceeds reclaimed from or returned by the Assignor as the result of the insolvency,
bankruptcy, or reorganization of a purchaser of production which proceeds have been previously paid to Assignee;





	(vii)		all costs of claims, judgments and litigation (including without limitation reasonable
attorneys’ fees and court costs) concerning marketing the Hydrocarbons and delivery of production from, title to and operation
and ownership of the Subject Interests and any other acts or omissions of Assignor consistent herewith (as a prudent owner or
operator) or brought by Assignor to protect the Subject Interests as a prudent owner or operator;





	(viii)		the cost of insurance described in Section 4; and





	(ix)		monies owed by Assignor pursuant to any gas balancing agreement and any “take
                                                                                or-pay” or similar provision of any Contract related to the Subject Interests;





 


“Operator”
means the Person that bears the responsibility to perform the obligations of an operator with respect to any of the Subject
Interests.


 


“Payout”
means that point in time at which Assignee has cumulatively received from the distribution of Net Profits hereunder, all of
the cash consideration paid to Assignor for the conveyance of the Net Profits Interest under this Assignment.


 


“Person”
means any natural person, firm, partnership, company, limited liability company, corporation, association, organization, foundation,
trust or other entity or organization (in each case whether or not having separate legal personality).


 


“Plug and
Abandonment Accrual” means an amount accrued in respect of Assignor’s liability for the total estimated cost to
plug, dismantle and abandon wells, platforms, facilities and pipelines associated with the Subject Interests, which liability shall
be calculated and be consistent with guidelines provided by the BOEM for determining the plug and abandonment bond amount and shall
also include the annual cost of providing such bond. For purposes of this Agreement, such amount shall be determined by multiplying
the calendar month production net to the Subject Interests by the accrual rate of $.31 per Mcf as provided in Section 27.1.2 of
the JOA as such rate may be redetermined from time to time by the Operator.


 


“Subject
Hydrocarbons” means Hydrocarbons subject to the Block that comprises the Subject Interests.


 


“Subject
Interests” means the undivided interest of Assignor in the Leasehold Interest in WC Block 225, as more fully described
in the Division Order attached hereto as Exhibit A.


 


“WC225 D-1
Recompletion AFE Amount” means, for purposes of this Agreement, Assignor’s net share of the cost to recomplete
the WC225 D-1 well, the initial estimate of which will be submitted by the Operator to WTXR in the form on an Authority for Expenditure
(“AFE”) according to Section 10.2.3 of the JOA. Assignor’s net share of such recompletion costs will be determined
according to Section 27.1.3 of the JOA. If the WC225 D-1 Recompletion AFE Amount is determined to be more than $275,000, Assignor
shall be solely responsible for such excess amount (the “Excess Amount”). In the event Assignor is unable to pay such
Excess Amount, Assignee may, at its sole option, (i) elect to pay such Excess Amount and then recoup out of 100% of the Net Profits
300% of the Excess Amount after which the Net profits Interest shall be as otherwise provided for herein, or (ii) if such Excess
Amount is greater than $50,000, elect not to participate under Section 1(b) of the Letter Agreement
without recourse as provided for in that same agreement under Section 2. An example of the calculation methodology for the
WC225 D-1 Recompletion AFE Amount and for the calculation of the Excess Amount is attached hereto as Schedule B.




    	15



    	 



    




Assignor hereby
binds itself, its legal representatives, successors, and assigns to warrant and forever defend all and singular the Net Profits
Interest to Assignee and its successors and assigns forever against any and every Person whomsoever claiming or to claim the same
or any part thereof; by, through or under Assignor, but not otherwise.


 


This Assignment is
an absolute conveyance of a real property interest and a real right. For the purposes of this Assignment, the Net Profits Interest
shall be calculated and computed in respect and on the basis of the Subject Interests as a whole, and to that end, the Assignor
and Assignee agree and stipulate that the Net Profits Interest shall apply to the Subject Interests in their entirety as one property.


 


GOVERNING DOCUMENTS 


 


2.0 This Assignment is expressly made and
accepted by Assignee subject to: (a) all applicable local, state, and federal statutes, ordinances, rules, and regulations and
all decisions of every court and governmental authority having jurisdiction over this Assignment, the Subject Interests and the
Subject Hydrocarbons; (b) the terms and provisions of a Lease or Contract within the Subject Interests; (c) any agreements extending
the term of and renewals of a Lease within the Subject Interests; and (d) any agreements amending the term of a Contract.


 


CALCULATION, CHARACTERISTICS, AND


DISBURSEMENT OF NET PROFITS INTEREST 


 


3.1 For purposes of calculating the Net
Profits Interest, Assignor shall maintain an account for the Subject Interests (the “Net Profits Account”) in accordance
with the terms of this Assignment, generally accepted accounting practices, and Council of Petroleum Accountants Society standards
that sets forth the charges and credits made thereto pursuant to this Assignment on the basis of a Calendar Month for which production
and other items of credit and costs and expenses are accounted for. Assignee shall furnish to Assignee or its designee, within
thirty (30) days of the end of each Calendar Month, commencing with the first Calendar Month immediately succeeding the Calendar
Month in which the Effective Date falls, a report, in form and substance as agreed by the Parties, that sets forth the charges
and credits made to the Net Profits Account through the end of the relevant Calendar Month, as well as any payment of Net Profits
Interest due to Assignee for the relevant Calendar Month.


 


The term “Net
Profits” shall mean an amount determined for each Calendar Month after the Effective Date equal to the result of subtracting
(a) the sum of (i) the amount of any negative Net Profits in respect of the prior Calendar Month plus (ii) the Net Investment
for the relevant Calendar Month, from (b) the Net Revenue Amount for the relevant Calendar Month.


 


To the extent that,
at the end of any Calendar Month, the Net Profits are negative, then there shall be no Net Profits Interest due to Assignee for
that Calendar Month, and the negative Net Profit amount shall be carried forward to the next Calendar Month in calculating its
Net Profits.




    	16



    	 



    

3.2 Before Payout, to the extent that,
at the end of any Calendar Month, the Net Profits are positive, Assignor shall pay to Assignee its Net Profits Interest of seventy-five
percent (75%) of the Net Profits in the Net Profits Account, by wire transfer of immediately available funds to the account specified
by Assignee from time to time, within thirty (30) days after the end of the relevant Calendar Month. After Payout, to the extent
that, at the end of any Calendar Month, the Net Profits are positive, Assignor shall pay to Assignee its Net Profits Interest of
fifty percent (50%) of the Net Profits in the Net Profits Account in the same manner as Before Payout.


 


3.3 Assignee shall never be responsible
for the payment of any part of the costs and expenses charged against the Net Profits Account or for any liabilities incurred in
connection with the development, exploration, equipping, operation and/or plug and abandonment of the Subject Properties. Assignor
hereby covenants and agrees to indemnify and to hold harmless Assignee, its respective agents, employees, successors and assigns
from and against any and all such responsibility and liability.


 


3.4 If Assignee shall take exception to
any monthly statement or payment of Net Profits Interest rendered by Assignor within one (1) year from its receipt of such monthly
statement, Assignee shall notify Assignor in writing, setting forth in such notice the specific matters to which exception is taken.
The Parties shall undertake to agree on a resolution to any exception within thirty (30) days of the provision of notice of such
exception. In the event that the Parties cannot reach complete agreement within such period of time, either Party may refer any
remaining matters in dispute to Henry & Company PC and if that firm is unable or unwilling to perform its obligations
under this Section, such other independent accounting firm as may be mutually acceptable to the Parties for review and final determination.
The accounting firm shall conduct the arbitration proceedings in Houston, Texas in accordance with the Commercial Arbitration Rules
of the American Arbitration Association, to the extent such rules do not conflict with the terms of this Section. The accounting
firm’s determination shall be made within thirty (30) days after submission of the matters in dispute and shall be final
and binding on both Parties, without right of appeal. The accounting firm shall act as an expert for the limited purpose of determining
the specific disputed matters submitted by either Party and may not award damages or penalties to either Party with respect to
any matter. Each Party shall bear its own legal fees and other costs of presenting its case. Each Party shall bear one-half of
the costs and expenses of the accounting firm. Any exception not made within such one (1) year period shall be deemed waived.


 


3.5 As between Assignor and Assignee, Assignor
and/or the Operators of the Block shall have exclusive charge and control of the marketing of all Hydrocarbons allocable to the
Net Profits Interest. Assignor and/or such Operators shall market the production of Hydrocarbons allocable to the Net Profits Interest
with and on the same terms as Assignor’s share of Hydrocarbons from the Subject Interests and shall collect and receive the
proceeds from the sale of all such production of Hydrocarbons. Assignor and/or Operator(s) shall not enter into a contract with
an Affiliate for the sale of Hydrocarbons produced from the Subject Interests, unless such contract is on the same terms and prices
prevailing in the area in arms’ length sales contracts that Assignor and/or such Operators, acting as a reasonably prudent
operator, would enter into with a non-Affiliate. Assignor and/or such Operators shall duly perform all material obligations binding
on it under all sales contracts in accordance with the terms thereof, and shall take all appropriate measures to enforce the performance
under each of the sales contracts of the obligations of the purchaser thereunder.


 


3.6 Immediately prior to the expiration
of the Term of this Assignment, fifty percent (50%) of the balance in the Net Profits Account (and to the extent that Payout has
not previously occurred, seventy five percent (75%) of the balance
in the Net Profits Account), to the extent not previously paid to Assignee, shall be paid to Assignee by wire transfer of immediately
available funds to the account specified by Assignee within thirty (30) days of such event.




    	17



    	 



    

 





3.7 Any amount not paid by Assignor to
Assignee when due shall bear interest, and Assignor shall pay interest at the lesser of (a) twelve percent (12%), and (b) the maximum
rate of interest allowed by law from such due date until such amount is paid.


 


COVENANTS








 


4.1 Assignor hereby represents and warrants
to Assignee its officers, directors, employees, shareholders, representatives, agents, successors and assigns as follows:


 


	(a)		Assignor is duly organized, validly existing, and in good standing and duly qualified
as of the date hereof to carry on business in the State of Texas and the Outer Continental Shelf in the Gulf of Mexico.



 




	(b)		Assignor has all requisite power and authority to (i) carry on its business as presently
conducted and as is contemplated under this Assignment, (ii) enter into this Assignment and the transactions contemplated hereby
and (iii) perform all of its duties and obligations under this Assignment and the transactions contemplated hereby. The consummation
of the transactions contemplated by this Assignment will not violate, nor be in conflict with, any provision of Assignor’s
articles of incorporation or bylaws, or any material provision of any agreement or instrument to which Assignor is a Party or
is bound or any judgment, decree, order, statute, rule or regulation applicable to Assignor.



 




	(c)		The execution, delivery and performance of this Assignment and the transactions contemplated
hereby have been duly and validly authorized by all requisite corporate action on the part of Assignor.



 




	(d)		Assignor has not incurred any obligation or liability, contingent or otherwise, for
brokers’ or finders’ fees with respect to the matters provided for in this Assignment which will be the responsibility
of Assignee; and any such obligation or liability that might exist shall be the sole obligation of Assignor.



 




	(e)		This Assignment constitutes a legal, valid and binding obligation of Assignor enforceable
in accordance with its terms, subject, however, to the effects of bankruptcy, insolvency, reorganization, moratorium and similar
laws, as well as to principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or
at law).



 




	(f)		Assignor has, and at all relevant times will have, the financial ability to meet its
obligations under this Assignment.



 




4.2 Assignor covenants and agrees, to the extent that Assignor
controls such matters:


 


	(a)		to comply with the terms and provisions of the Leases;





	(b)		to conduct, or to use reasonable efforts to cause to be conducted, the development,
maintenance, operation and abandonment of the Subject Interests with reasonable and prudent business judgment and in accordance
with good oilfield practices, the provisions of the Leases, and all applicable federal, state, and local statutes, ordinances,
rules and regulations;



 






    	18



    	 



    

 


	(c)		to cause all wells located on the Subject Interests to be operated in a good, prudent,
and workmanlike manner and to cause all improvements and equipment necessary or useful to the operation thereof to be provided;



 




	(d)		to use reasonable efforts to market or cause to be marketed all commercial quantities
of Hydrocarbons produced and saved from the Subject Interests;



 




	(e)		to pay all severance, gross production, ad valorem, occupation, gathering and pipeline
taxes imposed on the Subject Interests or the production of Hydrocarbons therefrom, except those being contested in good faith
and as to which adequate reserves have been established;



 




	(f)		to maintain insurance with respect to the Subject Interests against such liabilities,
casualties, risks and contingencies as is customary in the oil and gas industry, including insurance for blow-outs, well control,
seepage, pollution, clean up, containment, redrilling and other similar catastrophes; and



 




	(g)		otherwise to cause to be done all things that a prudent operator would do with respect
to the Subject Interests to the end that the Leases are maintained in full force and effect and each well located on the Subject
Interests that is cable of producing Hydrocarbons in paying quantities shall be produced to maximize the return both to Assignor
and Assignee



 




provided that Assignor shall not
be obligated to (i) continue to operate any well, or to operate or maintain in force or attempt to maintain in force any Lease
when, such well or Lease ceases to produce, or in Assignor’s reasonable opinion, is not capable of producing, Hydrocarbons
in paying quantities, or (ii) drill any well, or to participate in any operation which is to be conducted under the terms of any
Contract, if such election is made by Assignor in good faith and in compliance with the standards delineated above.


 


MISCELLANEOUS 


 


5.1 Term. The term of this Assignment
shall commence on the Effective Date and this Assignment shall remain in force and effect so long as the Assignor or any successor
in interest retains an interest in the Subject Interests, including any renewal, extension, assignment, transfer or amendment of
any Leasehold Interest.


 


5.2 Records. Assignor agrees to
at all times maintain true and correct books and records sufficient to determine the amounts payable to Assignee hereunder, and
such books and records shall be open to Assignee for inspection and audit during normal business hours.


 


5.3 Covenants. All of the covenants
of Assignor and Assignee herein contained shall be covenants running with the land, and this Assignment and the covenants herein
contained shall inure to the benefit of and be binding upon the successors and assigns of Assignor and Assignee.


 


5.4 Assignment. Assignor shall be
entitled to assign and transfer any or all of its rights, responsibilities, obligations and liabilities under this Assignment to
any of its Affiliates, subject to prior written approval from Assignee. Assignee shall have the right to request reasonable guarantees
from Assignor concerning any outstanding or future payment of the Net Profits Interest, and such assignment shall not be effected
until such guarantees have been given to Assignee and approval has been received from Assignee. Any attempt by Assignor to assign
and transfer any or all of its rights, responsibilities, obligations and liabilities under this Assignment, without the prior written
approval of Assignee, is a breach of Assignor’s obligations under this Assignment. Upon such a default, Assignee, at Assignee’s
sole option, may nevertheless approve the purported assignment by treating such purported assignment as an agreement between the
purported assignee and Assignee to continue the terms of this Assignment at no advantage to the purported assignee and no disadvantage
to Assignee.


 




    	19



    	 



    




 


5.5 Governing Law. This Assignment
and the legal relations between the Parties with respect to this Assignment shall be interpreted and construed in accordance with
the Laws of the State of Texas, without giving effect to any choice or conflicts of law rules which would refer the governance
and construction of this Assignment to the Laws of another jurisdiction.


 


5.6 Notices. All notices or other
communications required or permitted to be given under this Assignment shall be sufficiently given for all purposes hereunder if
in writing and personally delivered, delivered by recognized courier service (such as Federal Express) or certified United States
mail, return receipt requested, or sent by facsimile communication to the appropriate address or number as set forth below. Notices
shall be effective upon receipt by the Party to be notified. The addresses for notice are as follows or to such other address as
hereafter furnished in accordance with this paragraph by either Party hereto to the other Party hereto:


 





	If to Assignee:	If to Assignor:
	 	 
	 EnTek Partners, LLC


770 South Post Oak Lane, Suite 600


Houston, Texas 77056


	West Texas Resources, Inc.

        5729 Lebanon Road, Suite
144

        Frisco, Texas 75034

	 	 



 





5.7 Amendment and Waiver. This Agreement
may be amended or modified only by means of a written instrument signed by or on behalf of the Parties hereto. Any failure by any
Party to comply with any of its obligations, agreements or conditions herein contained may be waived by the Party to whom such
compliance is owed by an instrument signed by the Party to whom compliance is owed and expressly identified as a waiver, but not
in any other manner. No waiver of, or consent to a change in, any of the provisions of this Assignment shall be deemed or shall
constitute a waiver of, or consent to a change in, other provisions hereof (whether or not similar), nor shall such waiver constitute
a continuing waiver unless otherwise expressly provided.


 


5.8 Further Assurances. Each Party
agrees to take such further actions and to execute, acknowledge and deliver all such further documents as are reasonably requested
by the other Party for carrying out the purposes of this Assignment.


 


5.9 Execution in Counterparts. This
Assignment may be executed in any number of counterparts, and each counterpart hereof shall be deemed to be an original instrument,
but all counterparts shall constitute but one Assignment.


 


The remainder of this page is left
intentionally blank


 




    	20



    	 



    

IN WITNESS WHEREOF,
the Parties have executed this Assignment as of the dates of their respective acknowledgements, effective for all purposes
as of the Effective Date.


 





	 	 ASSIGNOR:

                                  


WEST TEXAS RESOURCES, INC.

 


By:____________________


Name:___________________


Title:____________________



	 	 
	 	 


ASSIGNEE:

 


ENTEK PARTNERS, LLC

 


By:_______________________


Name:  Robert B. Ruston, Jr.


Title:  Manager






 





 







    	21



    	 



    

STATE OF TEXAS


COUNTY OF


 


Before me, the undersigned authority, on
this day personally appeared Stephen E. Jones known to me to be the person whose name is subscribed to the foregoing instrument
and acknowledged to me that he executed the same as President of West Texas Resources, Inc., a Nevada corporation, and acknowledged
to me that he executed the same, on behalf of said corporation, for the purposes and consideration therein expressed and in the
capacity therein stated.


 


Given under my hand and seal of office this________
day of_________ , 2014.


 





	My commission expires:	 	 
	 	 	Notary Public in and for _____
	 	 	County, State of Texas
	 	 	 
	 	 	 





 





STATE OF TEXAS


COUNTY OF


 


Before me, the undersigned authority, on
this day personally appeared Robert B. Ruston, Jr. known to me to be the person whose name is subscribed to the foregoing
instrument as Manager of EnTek Partners, LLC, a Texas limited liability company, and acknowledged to me that he executed the same,
on behalf of said company, for the purposes and consideration therein expressed and in the capacity therein stated.


 


Given under my hand and seal of office this 15th day
of April, 2014:


 





 





	My commission expires:	 	 
	 	 	Notary Public in and for _____
	 	 	County, State of Texas
	 	 	 
	 	 	 


 


 




    	22



    	 



    

 


SCHEDULE A


Attached and made a part of that certain Letter Agreement between West Texas Resources, Inc.
and EnTek Partners, LLC dated 4/14/15


 


	
        2000 DAIRY ASHFORD

        SUITE 575

        HOUSTON, TEXAS 77077
	
        CHARLES R. SANDEL

        ATTORNEY AT LAW

        LICENSED IN TEXAS, LOUISIANA & MISSISSIPPI
	TELEPHONE 281-759-0100 FACSIMILE 281-493-6821 EMAIL sandelcr@sandel-law.com


 


November 21, 2013


 


VIA EMAIL & US MAIL


 


West Texas Resources Inc.


Attn: Scott Haire


5729 Lebanon Road, Suite 144


Frisco, Texas 75034


fscott.haire@outlook.corn


 


	RE:		West Cameron 225 (OCS-G 00900) - Division Order Letter Well No. 7 and Well No.
8 (D-1)



 


Dear Sir or Madam:


 


Tarpon Operating &
Development, L.L.C. ("Tarpon") has taken over as operator of the West Cameron 225 lease ("WC 225")
from Breton Energy, LLC. The WC 225 Nos. 7 and 8 (D-1) Wells were connected to a new pipeline and the lease restored to production
on September 20, 2013.


 


Tarpon operates WC
225 under the terms of a Joint Operating Agreement ("JOA") dated effective October 1, 2013. You are a non-operator
party to the JOA.


 


In accordance with the terms of the JOA,
Tarpon will sell 100% of production from WC 225 and receive 100% of each non-operator's gross revenues from sales of production.


 


Prior to distributing
proceeds to non-operators, Tarpon will subtract each non-operator's share of:


 


	a)		A $0.02 per mcf fee paid to Tarpon for marketing production.



 




	b)		A fee or surcharge equal to 15% of the premiums for "Extra Expense Liability"
and "All Risks of Physical Loss or Damage for Facilities" insurance provided by Tarpon.



 




	c)		A $0.31 per mcf fee to establish and maintain an "Abandonment Fund." The
fee will be taken out of each working interest owner's share of proceeds from sale of production until $3.3 million is accumulated.



 




	d)		The lease royalty burdening WC 225.



 


 


 


Page 1 of 2




WC 225 Division Order Lttr - West Texas CRS 11-19-13




    	23



    	 



    

	e)		Although not required by the JOA, Tarpon is prepared to pay all current overriding
royalties burdening each non-operator's interest in WC 225. Tarpon will provide such service to the joint account only for the
overriding royalties listed on Attachment I and Attachment II to this letter. Any other overriding royalties burdening
a non-operator's interest will be the responsibility of that non-operator to pay.



 


As shown on Attachment
I and Attachment II to this letter, after deducting royalty and current overriding royalty burdens, your net revenue interest before
payout in WC 225 production will be:


 


Well No. 7 - 7.21183%


 


Well No. 8 (D-1) - 7.21182%


 


Before paying you based
upon these net revenue interests, Tarpon will deduct the fees and surcharges described under items a, b and c above


Subject to your execution
of this letter, Tarpon is prepared to begin paying you proceeds attributable to your interest in WC 225.


 


_______


 


By
your execution of this letter, and until Tarpon receives written notice from you with different instructions, you agree to indemnify
and hold Tarpon harmless from and against any and all claims or responsibility arising from any source which Tarpon may sustain
by reason of making payments of proceeds to you, the royalty and overriding royalty owners in the proportions and manner set out
above.


 


If it meets with your
approval, please a copy of this letter after signing in the space provided and writing in your payment address and tax identification
number.


 


Should you have any questions, please let us know.


 


Very truly yours,


 


/s/ Charles R.Sandel





Charles R. Sandel


Acting as General Counsel for


Tarpon Operating & Development, L.L.C.


 


 





	West Texas Resources, Inc.	 	 
	 	 	Address & Tax ID#
	By: __________	 	__________
	Its: __________	 	__________
	Date:__________	 	__________
	 	 	 
	 	 	Tax ID # _________



 


 





 


Page 2 of 2


WC 225 Division Order Lttr - West Texas CRS 11-19-13


 




    	24



    	 



    

ATTACHMENT I


 


West Cameron 225 (OCS-G 00900) No. 7
Well


 


Before Payout TARPON DIVISION OF INTEREST - EFFECTIVE JULY 1. 2013


 





	Working Interest (WI) Owners	 	WI	 	NRI
	 
	Tarpon (“Tarpon")	 	0.6525000	 	0.4971660
	Camron Resources, LLC ("Camron")	 	0.1433330	 	0.1104170
	HRWC225 Investors LLC ("HRWC225")	 	0.1040000	 	0.0748819
	West Rexas Resources Inc. ("West Texas")	 	0.1001670	 	0.0721183
	 	Total WI	1.0000000	Total NRI	0.7545832
	Overriding Royalty (ORRI) Owners	 	 	 	 
	Floyd F. Foster, Jr. ("Foster'')	 	 	 	0.0036562
	L. M. Atkins, Jr. ("Atkins")	 	 	 	0.0015000
	Hubert Tett ("Tett")	 	 	 	0.0015000
	Larry Corbin ("Corbin")	 	 	 	0.0036562
	George Nemetz ("Nemetz")	 	 	 	0.0009375
	James H. Bailey ("Bailey")	 	 	 	0.0030000
	Gerald T. Gonzales ("Gonzales")	 	 	 	0.0030000
	Mel Baiamonte ("Baiamonte")	 	 	 	0.0015000
	Wells Fargo Energy Capital (Wells Fargo")	 	 	 	0.0100000
	Eni Petroleum US LLC ("Ent")	 	 	 	0.0366664
	Apache Shelf, Inc. ("Apache")	 	 	 	0.0133338
	 	 	 	Total ORRI	0.0787501
	Royalty Owner	 	 	 	 
	United States of America	 	 	Total Royalty	0.1666667
	 	 	 	 	0.1666867
	 	 	 	TOTAL	1.0000000


 


Tarpon" Includes the combined WI's, NRI's & ORRI's
, wherever derived, of Tarpon Operating & Development, L.L.C., Tarpon Offshore, L.P. & Tarpon Offshore Ventures, LP.


 


 


CRS 11/07/2013




    	25



    	 



    

 


Attachment II


 


West Cameron 225 (OCS-G 00900) No.
8 or D-1 Well Before Payout


TARPON DIVISION OF INTEREST - EFFECTIVE JULY 1. 2013 


 


	Working Interest IWI) Owners	 	WI	NRI
	 
	Tarpon ("Tarpon")	 	0.6525000	0.4513340
	Camron Resources, LLC ("Camron")	 	0.1433330	0.0958320
	HRWC225 Investors LLC ("HRWC225")	 	0.1040000	0.0748818
	West Rexas Resources Inc. ("West Texas")	 	0.1001670	0.0721182
	 	Total WI	1.0000000	Total NRI0.6941660
	Overriding Royalty (ORRI) Owners	 	 	 
	Catherine A. Newman Fund ("Newman")	 	 	0.0000001
	Cynthia Cobb Gillen ("Gillen")	 	 	0.0000004
	Julia Scannell Fund ("Scannell")	 	 	0.0000004
	Mark Appleby Fund ("Mark Appleby")	 	 	0.0000001
	Todd Appleby Fund ("Todd Appleby")	 	 	0.0000004
	Tidelands Royalty B Corporation ("Tidelands")	 	 	0.0104155
	Floyd F. Foster, Jr. ("Foster")	 	 	0.0036562
	L. M. Atkins, Jr. ("Atkins")	 	 	0.0015000
	Hubert Tett ("Tett')	 	 	0.0015000
	Larry Corbin ("Corbin")	 	 	0.0036562
	George Nemetz ("Nemetz")	 	 	0.0009375
	James H. Bailey ("Bailey")	 	 	0.0030000
	Gerald T. Gonzales ("Gonzales")	 	 	0.0030000
	Mel Balamonte ("Balamonte")	 	 	0.0015000
	Wells Fargo Energy Capital ("Wells Fargo")	 	 	0.0100000
	Eni Petroleum US LLC ("Eni")	 	 	0.0733330
	Apache Shelf, Inc. ("Apache")	 	 	0.0266675
	 	 	 	Total ORRI0.1391673
	Royalty Owner	 	 	 
	United States of America	 	 	0.1666667
	 	 	 	Total Royalty 0.1666667
	 	 	 	TOTAL1.0000000


 


'Tarpon" includes the combined WI's, NRI's & ORRI's
, wherever derived, of Tarpon Operating & Development, L.L.C., Tarpon Offshore, L.P. & Tarpon Offshore Ventures, LP.


 


CRS 11/07/2013


 




    	26



    	 



    

Schedule B


to that certain Letter Agreement between West Texas Resources,
Inc. and EnTek Partners, LLC dated 4/15/2014


WC225 D-1 Recompletion AFE Amount
Example Calculation


 


	
 




 


	 


	 


 


	Net Profits Interest Conveyance Dated 4-15-14	 	 	 	 
	 	Min	ML	MAX
	Estimated Gross AFE Amount	 	$3,950,000	$4,450,000	$5,000,000
	Gross Credit Amount	 	$1,753,699	$1,753,699	$1,753,699
	Difference	 	$2,196,301	$2,696,301	$3,246,301
	WTXR net WI share10.0167%	 	$219,996.88	$270,080.38	$325,172.23
	Maximum Investment	 	 	 	$275,000.00
	Excess Amount	 	 	 	$50,172.23
	Excess Amount Payout	300%	 	 	$150,516.70


 


Min denotes Minimum estimate as of 4/15/14


ML denotes Most Likely estimate as of 4/15/14


Max denotes Maximum estimate as of 4/15/14




    	27



    	 



    

 Schedule C


 


to that certain Letter Agreement
between West Texas Resources, Inc. and EnTek Partners, LLC dated 4/15/2014


 


 


JOINT OPERATING AGREEMENT


 


DATED EFFECTIVE OCTOBER 1, 2013


 


BY AND BETWEEN


 


TARPON OFFSHORE, VENTURES, LP,


AS OPERATOR,


 


AND


 


WEST TEXAS RESOURCES INC., HRWC225 INVESTORS
LLC AND CAMRON RESOURCES, LLC


AS NON-OPERATORS


 


COVERING


 


OCS-G 00900


WEST CAMERON BLOCK 225


JOINT OPERATING AGREEMENT


 


 


Page
1 of 45




    	28



    	 



    

THIS AGREEMENT
is made and entered into effective as of October 1, 2013, by and between Tarpon Offshore Ventures, LP ("Tarpon"),
West Texas Resources Inc. ("West Texas"), HRWC225 Investors LLC ("HRWC225") and Camron Resources,
LLC ("Camron") being hereinafter sometimes collectively referred to as "Parties" and sometime individually
referred to as "Party". Tarpon is sometimes referred to herein as "Operator" and the other Parties as "Non-Operators"
or, individually, as a "Non-Operator."


 


WITNESSETH:


 


THAT, WHEREAS,
the Parties are the owners of the oil and gas Lease covering certain submerged lands offshore and being more particularly described
on Exhibit "A" hereto; and


 


WHEREAS, the
Parties desire to provide for the exploration, development, production and operation of said oil and gas Lease, and to define their
rights and obligations with respect thereto;


 


NOW, THEREFORE,
in consideration of the premises and of the mutual covenants, agreements and obligations herein contained and to be performed,
and other good and valuable considerations, the receipt and sufficiency of which is hereby acknowledged, it is agreed by and between
the Parties as follows:


 


ARTICLE 1


APPLICATION TO SEPARATE LEASES


 


1.1 Application
to Separate Leases. If more than one lease is identified in Exhibit "A," this Agreement shall be applicable to each
such lease separately for the purpose herein and each such lease shall be considered as being covered by a separate Joint Operating
Agreement.


 


ARTICLE 2
DEFINITIONS


 


2.1 Casing Point.
Casing Point shall be defined as the point in time when any Exploratory, Development or Substitute Well(s) drilled on the Lease,
have been drilled to their objective depth as stated in the applicable AFE (Authority for Expenditure), appropriate tests have
been performed and a recommendation is made to (i) set casing and complete the well, (ii) plug and abandon the well or (iii) conduct
other operations as provided within the priority of operations outlined within Article 11.4.


 


2.2 Contract Area.  Those lands described on Exhibit
"A" attached to this Agreement.


 


 2.3 Development Operations.  Operations on the
Lease other than Exploratory Operations as defined in Article 2.5 herein.


 


2.4 Development Well. Any well proposed as a Development
Operation.


 


2.5 Exploratory
Operations. An operation that is conducted on the Lease and that is any of the following:


 


Page
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    	29



    	 



    

 


(a)proposed to Complete an Exploratory
Well;


 


(b)proposed for an Objective Horizon
that is not a Producible Reservoir;


 


(c)proposed for an Objective Horizon
that has a Producible Well, but that will be penetrated at a location where the distance between the midpoint of the Objective
Horizon to be penetrated by the proposed operation and the midpoint of the same Objective Horizon where it is actually penetrated
by a Producible Well will be at least three thousand (3,000) feet for a gas Completion and at least two thousand (2,000) feet for
an oil Completion; or


 


(d)proposed for an Objective Horizon
that is unanimously agreed by the Parties not to be in an existing Producible Reservoir.


 


2.6 Exploratory Well. Any well proposed as an Exploratory
Operation.


 


2.7 Facilities.
 All lease equipment, excluding Platforms and Pipelines, beyond the wellhead connections acquired pursuant to this Agreement,
including Gathering and Flowlines.


 


2.8 Pipelines. 
Pipelines used to transport production off the Lease premises either to connect to a purchaser's pipeline, or to transport production
to shore.


 


2.9 Gathering and
Flowlines. Flowlines shall include all pipelines used to transport production to a facility on the Lease.


 


2.10 Lease.
That Oil and Gas Lease granting rights in connection with Petroleum Substances within, upon or under the Leased Lands. Exhibit
"A" hereof describes the Lease, the Parties owning the working interests therein and thereunder, and their proportions
of ownership.


 


2.11 Leased Lands.
Those lands in which rights are owned by virtue of the Lease, which are more particularly described on Exhibit "A" hereof.


 


2.12 Non-Consent Operations. Operations conducted by
less than all Parties.


 


2.13 Non-Consent Platform. A drilling or production
platform owned by fewer than all Parties.


 


2.14 Non-Consent
Well.  Any well drilled, deepened, sidetracked or recompleted by less than all Parties to this Agreement.


 


2.15 Non-Operator. Any Party to this Agreement other
than the Operator. 2.16 Non-Participating Party, Any Party other than a Participating Party.


 


2.17 Operator.
The Party designated to conduct exploration, drilling, development, production and all other operations on the
Contract Area under the terms of this Agreement.


 


Page
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    	30



    	 



    

2.18 Participating
Interest. The respective percentage of participation of each Party electing to participate in an operation conducted hereunder,
including the production of Petroleum Substances, based on ownership in the Lease.


 


2.19 Participating
Party. A Party electing to participate in an operation conducted hereunder, paying its portion of the cost of the operation
and being entitled to its portion of the benefits thereof.


 


2.20 Petroleum
Substances. All petroleum, natural gas and any and all other substances granted to the owner of the rights under the Lease,
which may be recovered from the Leased Lands under the terms hereof.


 


2.21 Producible
Reservoir. An underground accumulation of oil or gas (a) in a single and separate natural pool characterized by a distinct
pressure system, (b) not in oil or gas communication with another accumulation of oil or gas, and (c) into which a Producible Well
has been drilled.


 


2.22 Producible
Well. A well producing oil or gas, or, if not producing oil or gas, a well determined to be capable of producing in paying
quantities pursuant to the governmental authority having jurisdiction hereof.


 


2.23 Working Interest. The ownership
of each Party in and to the Lease as set forth in Exhibit “A”.


 


2.24 Reservoir.
An underground accumulation of porous and permeable rocks containing hydrocarbons which is bounded either by physical changes within
such rocks or by other rocks so as to prevent efficient and effective migration of such hydrocarbons across such boundaries.


 


2.25 Sidetrack(ing).
A drilling operation which is accomplished by an intentional deviation of the well bore to an objective other than that objective
to which said well bore would have penetrated absent such deviation.


 


2.26 Substitute
Well Operation. Drilling operations on a new well which (i) is undertaken prior to reaching the objective zone(s) for a prior
well because Gulf Coast Conditions have been encountered in the drilling of such prior well, (ii) is commenced within 90 days after
efforts to overcome or remedy such Gulf Coast Conditions have ceased, and (iii) is otherwise drilled in the same manner as the
proposal for such prior well.


 


2.27 Platform.
A drilling and/or production platform, caisson, well protector or similar structure which is installed for Lease development.


 


ARTICLE 3


EXHIBITS


 


3.1 Exhibits.  The following Exhibits,
as indicated below and attached hereto, are incorporated in and made a part hereof:


 


Page 4 of 45




    	31



    	 



    

Exhibit "A" - A description
of the Contract Area, Lease Description, Leased Lands and Addresses for Notice Purposes, the Parties and their percentages of
ownership of working interest.


 


Exhibit "B" - Insurance Procedures. Exhibit
"C" - Accounting Procedures.


 


Exhibit "D" - Equal Opportunity Employment.


 


Exhibit "E" - Gas Balancing Agreement.


 


If any provision of an exhibit is inconsistent
with any provision contained in the body of this Agreement, the provision in the body of the Agreement shall prevail, except for
Exhibit "E."


 


ARTICLE 4 


EFFECTIVE DATE AND TERM OF AGREEMENT


 


4.1 Effective Date. This Agreement shall be effective
as of October 1, 2013.


 





4.2 Term of Agreement.
This Agreement shall remain In effect as to the Contract Area for and during the term of the Lease (and any extension thereof,
whether by production or otherwise) and for such reasonable length of time thereafter as is necessary for the Parties to conduct
a final accounting and remove all salvable equipment from the Leased Lands.


 


ARTICLE 5
OPERATOR


 


5.1 Operator.
Tarpon Offshore Ventures, LP is the Operator under this Agreement, however, its affiliate, Tarpon Operating & Development,
L.L.C. shall provide the operating services provided for in this Agreement as the Bureau of Ocean Energy Management recognized
"Designated Operator."


 


5.2 Resignation
of Operator. Operator may resign at any time by giving written notice thereof to the Parties. Operator shall resign if it divests
itself of all its interest in the Lease. Such resignation shall not become effective until the first day of the first full month
following a period of ninety (90) days from the date of said notice, unless a successor Operator has theretofore assumed the duties
of Operator hereunder.


 


5.3 Removal of
Operator. Operator may be removed in the event (a) Operator becomes insolvent or unable to pay its debts as they mature, makes
an assignment for the benefit of creditors, commits any act of bankruptcy or seeks relief under laws providing for the relief
of debtors; or (b) a receiver is appointed for Operator or for substantially all of its property and/or affairs; or (c) Operator
divests itself of one hundred percent (100%) of the interest owned by it in the Lease at the time its was designated Operator;
provided, however, this Section 5.3(c) shall not be applicable to a divestiture by Operator by means of merger, consolidation,
reorganization, or the sale or transfer of its interest to a wholly-owned or controlled subsidiary or affiliate. "Affiliate"
as used here, includes any corporation, partnership, trust or other entity
which is at least fifty percent (50%) owned or controlled by or for the benefit of Operator.


Page 5 of 45


 




    	32



    	 



    




In addition, Operator may be removed for
good cause by the affirmative vote of Non- Operators owning a majority interest based on ownership as shown on Exhibit "A"
remaining after excluding the voting interest of Operator; such vote shall not be deemed effective until a written notice has been
delivered to the Operator by a Non-Operator detailing the alleged default and Operator has failed to cure the default within thirty
(30) days from the receipt of the notice or, if the default concerns an operation then being conducted, within forty-eight (48)
hours of its receipt of the notice. For purposes hereof, "good cause" shall mean not only gross negligence or willful
misconduct but also substantial breach of a material provision of this Agreement or material failure or inability to perform its
obligations under this Agreement.


 


5.4 Selection of
Successor. Upon the resignation or removal of Operator, a successor Operator shall be selected by an affirmative vote of two
(2) or more Parties having a cumulative Working Interest of fifty percent (50%) or more; however, if the removed or resigned Operator
fails to vote or votes only to succeed itself, the successor Operator shall be selected by an affirmative vote of one (1) or more
Parties having a cumulative Working Interest of fifty percent (50%) or more after excluding the Working Interest of the removed
or resigned Operator. This requirement of "two (2) or more Parties" will be deleted if less than three voting parties
exist. All provisions of this Agreement pertaining to Operator shall also apply to any successor Operator.


 


5.5 Delivery of
Property and Records. Prior to or on the effective date of resignation or removal, Operator shall deliver and turn over to
its successor the operations of the Leased Lands and all property and records necessary therefore.


 


5.6 Operator's
Liability. Operator shall not be liable to the other Parties for any act or omission in conducting operations hereunder unless
such act or omission is the result of Operator's willful misconduct or gross negligence.


 


ARTICLE 6 


RIGHTS AND DUTIES OF OPERATOR


 


6.1 Exclusive Right
to Operate. Unless otherwise specifically provided and subject to the provisions of this Agreement, Operator shall have the
exclusive right and duty to conduct all operations on the Contract Area. Operator shall not be deemed or hold itself out as the
agent or fiduciary of the Non-Operators.


 


6.2 Workmanlike
Conduct. Operator shall conduct all operations in a good and workmanlike manner, as would a prudent operator under the same
or similar circumstances. Operator shall consult with the other Parties and keep them informed of all important matters involving
operations on the Leased Lands.


 


6.3 Liens and Encumbrances.
Operator shall endeavor to keep the Lease and equipment (affixed thereon or used in connection therewith) free from all liens and
encumbrances occasioned by operations hereunder, except those provided for in Section 9.5.


 


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    	33



    	 



    

6.4 Employees. The number of employees, and their
selection, hours of work and compensation shall be determined by Operator; and all employees and contractors used or employed in
operations hereunder shall be employees and contractors of Operator.


 


6.5 Records. 
Operator shall keep accurate books, accounts and records of operations, which shall be available at reasonable times for inspection
and copying by the other Parties, subject to the provisions of the Accounting Procedures attached hereto as Exhibit "C."


 


6.6 Compliance.
 Operator shall comply with and require all agents and contractors to comply with all applicable laws, rules, regulations,
orders and requirements of any governmental agency having jurisdiction.


 


6.7 Drilling.
All wells drilled on the Leased Lands shall be drilled by a contractor of Operator's choice at competitive rates. Pursuant to a
written agreement among the Participating Parties, Operator may use tools, services, materials, or drilling equipment owned, leased
or controlled by Operator, but the charges for, and terms and conditions of, such use shall be competitive with other responsible
independent contractors offering comparable, suitable drilling equipment available for use within the time frame contemplated by
Operator. A copy of any drilling contract entered into by Operator will be furnished to any Party upon its written request therefor.


 


6.8 Reports. 
Operator shall make all required reports to governmental authorities that it has the duty to make as Operator. Operator shall give
timely written notice to the Parties of all litigation and hearings which affect the Lease or operations hereunder.


 


6.9 Information.Operator shall
furnish all Participating Parties copies of the following information pertaining to each well being drilled:


 


(a)application for permit to drill and all amendments thereto;


 


(b)daily drilling report with estimated cumulative cost
to date;


 


(c)all core analyses;


 


(d)any logs and surveys made in the well(s) as run and upon
completion of the well(s), a composite of all electrical type logs and mud logs;


 


(e)samples of cuttings and cores marked
as to depth, to be packaged and shipped at the expense of the requesting Party;


 


(f)any well tests, bottom hole pressure
surveys, gas and condensate analyses, or any other pertinent information; and


 


(g)any additional information requirements
stated in the Non-Operators' Notification and Information requirements sheet.


 


Operator shall also furnish to each Party, upon request, copies
of the following general information:


Page 7 of 45




    	34



    	 



    

(a)all reports to any governmental agency;


 


(b)reports of production, crude oil runs and stocks;


 


(c)reports on status of wells including wells not producing
and not abandoned;


 


(d)reports of inventory and any other information pertaining
to operations;


 


(e)all reports relating to pay-out of a non-consent operation;
and


 


(f)all reports pertaining to the Gas Balancing Agreement
attached hereto as Exhibit "E."


 


The cost of gathering and furnishing information
not ordinarily furnished to all Parties shall be charged to the Party that requests such information.


 


ARTICLE 7 


VOTING PROCEDURE


7.1 Voting Procedures.
Unless otherwise provided herein, the Parties shall determine any matter which requires their approval, as follows:


 


7.1.1 Voting Interest. On matters
of a general nature involving all Parties, each Party shall have a voting interest equal to its percentage ownership in the Lease
at the time such vote is taken. On matters pertaining to a specific operation, each Participating Party shall have a voting interest
equal to its Participating Interest at the time such vote is taken.


 


7.1.2 Vote Required. Unless otherwise
provided for herein, proposals requiring approval of the Parties shall be decided by an affirmative vote of one (1) or more Parties
having a combined voting interest of twenty-five percent (25%) or more.


 


7.1.3 Votes. The Parties
may vote at meeting; by telephone, promptly confirmed in writing to Operator; or by certified letter or fax. Operator shall give
prompt notice of the results of such voting to each Party.


 


7.1.4 Meeting. Meetings of the Parties
may be called by Operator upon its own motion or at the request of one (1) or more Parties having a combined voting interest of
not less than twenty five percent (25%). Except in the case of an emergency or when agreed by unanimous consent, no meeting shall
be called on less than seven (7) days advance written notice, with a meeting agenda attached. The representative of Operator shall
be chairman of each meeting.


 


ARTICLE 8 


ACCESS TO LEASED LANDS AND CONFIDENTIALITY


 


8.1 Access to Leased
Lands. Each Party shall have access to the leased Lands at its sole risk and expense at all reasonable times to inspect joint
operations, wells in which it participates, and records and data pertaining thereto.


 


Page 8 of 45




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8.2 Confidentiality. Except as provided in Section
8.3 and Section 26.1 and except for necessary disclosures to governmental agencies, or otherwise required by law, no Party shall
release any geological, geophysical, or reservoir information or any logs or other information pertaining to the progress, tests,
or results of any well unless agreed to by all Parties, and further, any announcements, news releases, or disclosures of information
to the public concerning proposed or actual operations and/or actions taken or being considered pursuant to this Agreement shall
be made pursuant to Article 26.1.


 


8.3 Limited Disclosure. Such confidential data may be
made available to:


 


(a)reputable engineering firms (including
geological and geophysical consultants) for hydrocarbon reserve and other technical evaluations,


 


(b)gas transmission companies for technical
evaluations,


 


(c)reputable financial institutions
for evaluations prior to commitment of funds, or with respect to financing for which the Lease has been pledged,


 


(d)a reputable and financially responsible
third party with whom a Party is engaged in bona fide negotiations for the sale or farmout of all or a portion of its interest
in the Lease, but only during the period that such negotiations are being conducted, and


 


(e)an affiliate which owns at least
fifty percent (50%) of the stock,


 


at the offices of the Party making such
data available. Any third party permitted access to data pursuant to this Section 8.3 shall first agree in writing not to release
the data to anyone for any purpose. Also, any data made available under this Section shall not be removed from the custody of the
Party making such data available. Any third party permitted access to data pursuant to Section 8.3(d) shall also first agree in
writing that, in the event of a failure to complete such transaction, it shall make no use of the confidential information. However,
in no event shall confidential data be made available to any third party or an affiliate thereof who is also an interest owner
in an offsetting block without prior written consent of all parties.


ARTICLE 9
EXPENSE





 


9.1 Basis of Charge to Parties. Operator shall
pay all costs incurred hereunder, and each Party shall reimburse Operator for such costs in proportion to its Participating Interest.
All charges, credits and accounting for expenditures shall be pursuant to Exhibit "C." The provisions of this Agreement
shall prevail in the event of conflict with Exhibit "C."


 


9.2 Authorization.
Operator shall neither make any single expenditure nor undertake any project estimated to cost in excess of One Hundred Thousand
Dollars ($100,000) without prior approval of the Participating Parties. Operator shall furnish written information to all the Participating
Parties of any expenditures in excess of Twenty-five Thousand Dollars ($25,000). Subject to any election provided In Articles 11
and 12, approval of a well operation shall include approval of all necessary expenditures through installation of the wellhead. (Overexpenditures
see Article 9.9.) Notwithstanding the provisions of this Section, in the event of an emergency, Operator may immediately make such
expenditures as in its opinion are required to safeguard life and property or to comply with applicable laws or regulations in
dealing with the emergency. Operator shall report to the Parties, as promptly as possible, the nature of the emergency and action
taken.


 


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9.3 Advance Billings. As provided for in the provisions
of Exhibit "C" attached hereto.


 


9.4 Commingling
of Funds. Funds received by Operator under this Agreement may be commingled with its own funds. Notwithstanding any provision
hereof to the contrary, however, Operator shall hold as agent for the Non-Operators any funds of the Non- Operators advanced or
paid to Operator, either for the conduct of operations hereunder or as the result of the sale of production from the Lease, and
such funds shall remain the funds of the Non-Operators on whose account they are advanced or paid until used for their intended
purpose or otherwise delivered to the relevant Non-Operators or applied toward the payment of debts as provided in this Article
9.


 


9.5 Security Rights.
Each Party grants to each of the other Party (ies) a first lien upon all its right, title and interest in the Lease and a security
interest in its share of oil and gas when extracted and its interest in all equipment and property, including fixtures located
upon and/or used or useful in the production of oil and gas from the Lease. In order to perfect this lien, Operator is authorized
to file this Agreement or a declaration thereof in the records of the appropriate county or parish and in the records of the U.S.
Department of Interior, Bureau of Ocean Energy Management ("BOEM"). To the extent that a Party has a security interest
under the Uniform Commercial Code ("UCC"), Operator is also authorized to file a financing statement in appropriate
records and each Party shall be entitled to exercise the rights and remedies of a secured party under the UCC. The bringing of
a suit and the obtaining of judgment by any Party for the secured indebtedness shall not be deemed an election of remedies or
otherwise affect the rights or security interest for the payment thereof. The liability of each Party under the Joint Operating
Agreement and the first lien and security interest granted hereby shall be limited (and no party shall be entitled to enforce
the same against each Party for an amount exceeding) to the actual obligations and indebtedness (including all interest charges,
costs, attorneys fees, and other charges provided for in this Joint Operating Agreement) outstanding and unpaid and that are attributable
to or charged against the interest of such Party pursuant to this Joint Operating Agreement.


 


9.5.1 Rights to Production.
 If any Party fails to pay its share of the costs when due as provided in the Agreement, Operator (or the Non-Operator with the
greatest Working Interest in the Lease if Operator is in default of the payment of costs hereunder), at any time and from time
to time, shall be entitled to collect and receive the proceeds from the sale of all or any part of such defaulting Party's share
of hydrocarbons produced from the Lease, including the proceeds from previously executed sales contracts made by or for such delinquent
Party. All sums so collected shall be applied against the delinquent or unpaid expenses due from such Party, with the balance
of such proceeds, if any, to be paid to the delinquent Party or other person entitled thereto. Operator (or the collecting Non-
Operator, if Operator is the delinquent Party) may likewise take any other credit due any such delinquent Party and apply the
same against sums due from such delinquent Party under this Agreement. The rights granted to Operator (or Non-Operators, if Operator
is the delinquent Party) in this Section 9.5 shall not be construed as exclusive remedies but shall be in addition to all rights,
privileges, and remedies afforded Operator (or Non-Operators, if Operator
is the delinquent Party) by any other provisions of this Agreement and by law or equity. The service of a true copy of this Agreement,
or the declaration and financing statement described in Section 9.5 above, upon any purchase of all or any part of any delinquent
Party's share of hydrocarbon production from the Lease shall constitute written authorization by such delinquent Party for such
purchaser to pay the proceeds from such sale to Operator (or the collecting Non-Operator if Operator is the delinquent Party)
during such delinquency, and such purchaser shall be deemed to have been notified of such authorization at the time of such service.
The books and records kept by Operator with respect to operations hereunder shall constitute conclusive proof for purposes of
this Section 9.5.1 of the existence or non-existence of any such delinquency insofar as the right of Operator (or the collecting
Non-Operator, if Operator is the delinquent Party) to collect the proceeds from the sale or any Party's hydrocarbons is concerned,
subject, however, to all rights of inspection, verification and audit provided for in this Agreement. The exercise of the rights
granted in this Section 9.5.1 shall not in any way affect the liability of any delinquent Party for royalty payments.


 


Page 10 of 45




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9.6 Unpaid Charges.
If any Party fails to pay the charges due hereunder within sixty (60) days after rendition of Operator's statement, the other Participating
Parties shall, upon Operator's request, pay the unpaid amount in proportion to their interests. Each Party so paying its share
of the unpaid amount shall be subrogated to Operator's security rights to the extent of such payment.


 


9.7 Default.
If any Party does not pay its share of the charges when due, Operator may give such Party written notice by certified or registered
mail that unless payment is made within thirty (30) days, such Party shall be in default. Any Party in default shall have no further
access to the maps, records, data, interpretations, or other information obtained in connection with operations for so long as
such Party remains in default. A defaulting Party shall not be entitled to vote on any matters until such time as all of said Party's
payments are current. The voting interest of each non-defaulting Party shall be in the proportion its Participating Interest bears
to the total non-defaulting Participating Interest. As to any operation approved during the time which a Party is in default, such
Party shall be deemed to be a Non-Participating Party.


 


9.8 Carved-Out Interests.
Any overriding royalty interest, production payment, net profits interest, carried interest or any other interest carved out of
a working interest (each a "carved-out interest") in the Lease other than the carved-out interests listed on Exhibit
"A' to this Agreement shall be subject to the rights of the Parties to this Agreement. If any Party whose Participating Interest
is so encumbered does not pay its share of expense and the proceeds from such Party's share of the sale of production under Section
9.5 are insufficient for that purpose, the security rights provided for therein may be applied against the carved-out interests
with which such Party's Working Interest is burdened. In such event, the rights of the owner of such carved-out interest shall
be subordinated to the security rights granted in Section 9.5.


 


9.9 Supplemental
AFE. If an approved item, project or operation, exceeds the expenditure previously approved by the Participating Parties by
an amount exceeding twenty-five percent (25%) of the amount originally approved (the "excess limit"), Operator shall
advise each Participating Party of the amount necessary to complete the item, project, or operation and an election by the Participating
Parties shall determine whether the item, project, or operation shall be completed. If there is not unanimous agreement with respect to such
expenditure, the Party or Parties electing to complete the project shall be entitled to do so. The Party or Parties who elect not
to complete such project shall be subject, with respect only to such Party's proportionate part of the costs to complete in excess
of the excess limit, to a recoupment penalty in accordance with the provisions of Article 13.2.1. In any event, each Party who
initially agreed to participate in such item, project or operation, shall remain liable, where necessary, for its proportionate
part of dry hole abandonment costs, salvage costs, and rig removal costs, but only to the extent that such costs have not been
increased by the completion of the item, project, or operation. It is expressly stipulated that this provision shall not apply
to those circumstances involving a bona fide emergency.


 


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ARTICLE 10


NOTICES





 


10.1 Giving and
Receiving Notices. Except as specifically provided otherwise herein, all notices of proposals required herein shall be given
in writing by delivery in person, by U.S. Postal Service, fax, or by telephone with written confirmation sent within twenty- four
(24) hours (if a drilling rig is on location and standby charges are accumulating, such notices shall be given by telephone and
immediately confirmed in writing or given by fax). Notice shall be deemed given only when received by the Party to whom such notice
is directed. Each Party's proper address, telephone number and fax number shall be that shown on Exhibit "A" until such
Party gives written notice to the other Parties of a different address for the purposes of this Section.


 


10.2 Response to
Notices. When notice of a proposal has been given, each Party shall respond in writing to the Party making the proposal within
the maximum response time for such proposal, as stated below:


 


10.2.1 Platform Construction. When
any proposal for operations involves the construction and/or installation of a drilling and/or production platform, the maximum
response time shall be sixty (60) days. When a proposal is for a caisson, well protector or similar structure, the maximum response
time is thirty (30) days; however, if a drilling rig is on location and standby charges are accumulating, the maximum response
time is forty-eight (48) hours.


 


10.2.2 Proposals Related to Pipelines.
When any proposal involves the construction of a pipeline, the maximum response time shall be the lesser of thirty (30) days or
the time required to respond to a third party proposal.


 


10.2.3 Well Proposal Not Requiring Platform.
With the exception of the Initial Exploratory Test Well, when any proposal for well operations does not require construction of
a platform, the maximum response time shall be thirty (30) days. If a drilling rig is on the Leased Lands with rig standby charges
accumulating or the Parties would have an obligation to the drilling contractor for similar charges, the maximum response time
shall be forty-eight (48) hours.


 


10.2.4 Other Matters. Unless otherwise
provided, for all other matters requiring a notice, the maximum response time shall be thirty (30) days.


 


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10.3 Failure to Respond. Failure of any Party to
respond to a notice within the required period shall be deemed to be a negative response.


 


10.4 Content of
Notice. Any notice which requires a response shall include sufficient information to allow each Party to make a decision as
to the response to be given, and shall indicate the maximum response time specified in Section 10.2, above. Where a proposal involves
the drilling, deepening or sidetracking to an objective other than that originally proposed, or recompletion of a well, the notice
shall include the location, proposed depth of the operation, objective zone(s) to be tested, proposed size of drilling and/or spacing
units, if any, estimated costs of the operation including those which would be required for completing and equipping the well through
the wellhead, details regarding directional drilling as applicable, and the type of equipment which will be used, such as mobile
drilling rig, floating drilling vessel, or platform.


 


10.5 Restrictions
on Multiple Well Proposals. Unless otherwise agreed by the Parties, no more than one well shall be drilling or completing at
the same time. Well proposals made under the terms hereof shall be limited to one well each and except as provided below, no Party
shall be required to make an election under more than one well proposal at the same time or while a well is drilling or completing.
This paragraph shall not limit the right of a Party to propose a well while another is drilling or completing, however, the time
to elect under such a proposal shall be deferred until (a) thirty (30) days after the previous well has been completed or plugged
and abandoned, or (b) forty-eight (48) hours from receipt of notification that a drilling rig is on location and standby charges
are being accumulated, whichever is earlier. It is provided, however, that any Party, upon request to Operator, may have additional
time, if practicable, to make its election on the condition that such Party shall bear all costs and risk incurred during such
additional standby period.


 


ARTICLE 11 


EXPLORATORY WELLS


 


11.1 Operations
By All Parties. Any Party may propose an Exploratory Well by notifying the other Parties. If all the Parties agree to participate
in drilling the proposed well, Operator shall drill same for the joint account of the Parties within one-hundred twenty (120) days
of the end of the election date(s).


 


11.2 Second Opportunity
to Participate. If fewer than all, but one (1) or more Parties having a combined Working Interest of twenty-five percent (25%)
or more, elect to participate, the proposing Party shall inform the Parties of the elections made, whereupon any Party originally
electing not to participate may then elect to Participate by notifying the Proposing Party within forty-eight (48) hours after
receipt of such information.


 


11.3 Operations
By Fewer Than All Parties. If less than all, but one (1) or more Parties owning twenty-five percent (25%) or more in interest
in the Lease, elect to participate in such operations, the proposing Party, immediately after the expiration of the notice period
in Article 11.2, above, shall advise the Participating Parties of (a) the total interest of the Parties approving such operation,
and (b) its recommendation as to whether the Participating Parties should proceed with the operation as proposed. Each Participating
Party, within five (5) business days or forty-eight (48) hours if rig is on location, after receipt of such notice, shall advise
the proposing Party of its desire to (a) limit participation to such Party's interest
as shown on Exhibit “A", or (b) carry its proportionate part of the Non-Participating Parties' interest. Each Participating
Party shall be entitled, but not obligated, to acquire its share of the Non-Participating Parties' share in the ratio that such
Parties' working interest at the time the original proposal was made bears to the total working interest of all Participating Parties.
Failure of a Participating Party receiving such a notice to reply within the fixed period shall constitute an election by the Party
not to carry its proportionate part of the Non-Participating Parties' interest. The proposing Party, at its election, may withdraw
such proposal if there is insufficient participation, and shall promptly notify all Parties of such decision. If the operation
is fully subscribed, it shall be conducted as a Non-Consent Operation for the joint account of the Participating Parties and the
following special provisions shall apply:


 


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11.3.1 Exploratory
Wells. If the well will be an Exploratory Well drilled under this Agreement, then upon commencement of such drilling operations
[within one- hundred twenty (120) days after the last applicable election date], each Non- Participating Party's interest and leasehold
operating rights in any Reservoir(s) tested by such Exploratory Well, and title to production from any productive Reservoir(s)
resulting from such drilling operations shall be owned by and vested in each Participating Party in proportion to its Participating
Interest for so long as the operations are conducted or production is being obtained therefrom; provided, however, that such rights
shall revert to each Non-Participating Party in accordance with the provision of Articles 13.2.1(a) and 13.2.2.


 


11.4 Casing Point
Election. Upon reaching Casing Point in any well drilled under the provisions of this Agreement (whether commenced as an Exploratory
or Development Operation), the Operator shall immediately notify the other Participating Parties in writing and delivered by personal
messenger, or by fax, its recommendations as to further operations thereon. Each Participating Party, within forty-eight (48) hours
after receipt of such notice and all available logs and test results, shall advise the Operator and the other Participating Parties
by telephone with written confirmation sent within twenty-four (24) hours, or by fax, or in writing whether it accepts Operator's
recommendation or makes additional recommendations as to further operations with respect to such well. If additional recommendations
are made, the Participating Parties shall have an additional twenty-four (24) hours to respond. If all Participating Parties elect
to abandon the well at that point, it shall be plugged and abandoned at their joint cost and expense. Any Party may request in
writing up to forty-eight (48) hours of additional time beyond the herein specified time in order to make an election; however,
all costs associated to such standby rig time shall be at the expense of the Party or Parties requesting such additional time.


 


If less than all, but one (1) or more
Participating Parties owning twenty-five percent (25%) or more in interest in the well elect to conduct a specific operation,
other than plugging and abandoning the well, the Parties so electing shall conduct such operation as a Non-Consent Operation under
the provisions of Article 13. If at any time there is more than one operation proposed in connection with any Well subject to
this Agreement, and in the event no one proposed operation receives the approval of one (1) or more Participating Parties owning
fifty percent (50%) or more in interest in the well, then unless all Participating Parties agree on the sequence of such operations,
such operations shall be proposed and conducted (with no minimum party's percentage approval necessary) in the following order
of priority:


 


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(a)proposals to do additional testing, coring or logging.


 


(b)proposals to attempt completions in the objective zone,
in ascending order.


 


(c)proposals to plug back and attempt completions, in ascending
order.


 


(d)proposals to sidetrack to original objective depth.


 


(e)proposals to deepen the Well, in descending order.


 


(f)proposals to sidetrack the Well to a new objective.


 


(g)proposals to perform other operations.


 


(h)proposals to temporarily plug and abandon Well.


 


If the Operation is other than to plug
and abandon the Well, such further Operation shall be conducted as a Non-Consent Operation under the provision of Article 13, and
if the well is subsequently abandoned as a dry hole, then the Non-Participating Party as to such further Operation shall bear its
proportionate part of what would otherwise have been the cost of plugging and abandoning the Well at the initial objective depth.


 


ARTICLE 12


DEVELOPMENT WELL OPERATIONS


 


12.1 Operations
By All Parties. Any Party may propose Development Well Operations, including any Platform or Facilities required by such operations,
by notifying the other Parties. If all Parties elect to participate in the proposed operation, Operator shall conduct such operations
for the joint account of the Parties.


 


12.2 Second Opportunity
to Participate. If fewer than all, but one (1) or more Parties have a combined Working Interest of twenty-five percent (25%)
or more, elect to participate, the proposing Party shall inform the Parties of the elections made where upon any Party originally
electing not to participate may then elect to participate by notifying the proposing Party within forty-eight (48) hours after
receipt of such information.


 


12.3 Operations
By Fewer Than All Parties. If after the second notice provided for in Article 12.2 above, less than all, but one (1) or more
Parties owning twenty-five percent (25%)or more in interest in the Lease, elects to participate in such operation, the proposing
Party shall advise the Participating Parties of (a) the total interest of the Parties approving such operation, and (b) its recommendation
as to whether the Participating Parties should proceed with the operation as proposed. Each Participating Party within forty-eight
(48) hours after receipt of such notice, shall advise the proposing Party of its desire to (a) limit participation to its existing
working interest, or (b) carry its proportionate part of or any part of the Non-Participating Parties' interest. Failure of a Participating
Party receiving such a notice to reply within the fixed period shall constitute an election by the Party not to carry its proportionate
part of the Non-Participating Parties' interest. The proposing Party, at its election, may withdraw such proposal if there is insufficient
participation, and shall promptly notify all Parties of such decision. If the operation is fully subscribed,
it shall be conducted as a Non-Consent Operation for the joint account of the Participating Parties. If such operations are to
be conducted from an existing Platform, the election to participate shall be made by one (1) or more Parties having a combined
participating interest of twenty-five percent (25%) or more in such Platform.


 


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12.4 Timely Operations.
Operations shall be commenced within one-hundred twenty (120) days following the date upon which the last applicable election may
be made. If no operations are begun within such time period, the effect shall be as if the proposal had not been made. Operations
shall be deemed to have commenced (a) on the date the contract for a new Platform is let, if the notice indicated the need for
such Platform; or (b) on the date that charges begin according to the terms of the drilling contract.


 


12.5 Course of Action
After Drilling to Initial Objective Zone(s). At such time as a Development Well has been drilled to the objective zone(s),
Operator shall notify the Participating Parties setting forth Operator's recommendation pursuant to Article 11.4.


 


12.6 Deeper Drilling.
If a well is proposed to be drilled below the deepest producible zone penetrated by a Producible Well, any Party may elect to participate
either in the well as proposed or to the base of the deepest producible zone. A Party electing to participate in such well to the
base of said zone shall bear its proportionate part of the cost and risk of drilling to said zone including completion or abandonment.
All operations below the depth to which such Party agreed to participate shall be governed by Article 13.


 


ARTICLE 13 


NON-CONSENT OPERATIONS


 


13.1 Non-Consent
Operations. No party, including the Operator, shall be obligated to acquire a Non-Participating Party's interest in a proposed
operation. Operator shall conduct Non-Consent Operations at the sole risk and expense of the Participating Parties, in accordance
with the following provisions:


 


13.1.1 Non-Interference. Non-Consent
Operations shall not interfere unreasonable with operations being conducted by all Parties


 


13.1.2 Multiple Completion Limitations.
Non-Consent Operations shall not be conducted in a well having multiple completions unless: (a) each completion is owned by the
same Parties in the same proportions; (b) the well is incapable of producing from any of its completions; or (c) all Participating
Parties in the well consent to such operations.


 


13.1.3 Metering. In Non-Consent
Operations, separate metering devices shall be required to measure production, but subject to approval by appropriate governmental
authority, such production may be determined upon the basis of appropriate well tests.


 


13.1.4 Non-Consent
Well. Operations on a Non-Consent Well shall not be conducted in any producible zone penetrated by a Producible Well
without approval of each Non-Participating Party unless: (a) such zone shall have been designated
in the notice as a completion zone; (b) completion of such well in said zone will not increase the well density governmentally
prescribed or approved for such zone; and (c) the horizontal distance between the vertical projections of the midpoint of the zone
in such well and the same zone in an existing well, if producible, will be at least two-thousand (2,000) feet if an oil-well completion
or three-thousand (3,000) feet if a gas-well completion.


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Subject to the foregoing provisions of
this Article, until the Participating Parties in a Non-Consent Well have recouped the amount to which they are entitled hereunder,
they may conduct any reworking operation on such well which they may desire, including plugging back to a shallower zone. In this
event, the cost of such reworking operation shall be subject to the penalty provisions of Section 13.2.1.


 


13.1.5 Cost Information.Operator
shall, within one-hundred twenty (120) days after completion of a Non-Consent Well, furnish the Non-Participating Parties an itemized
statement of the cost of such well prepared in accordance with Exhibit "C" or copies of the monthly billings made to
the Participating Parties. Operator shall thereafter furnish to the Non-Participating Parties a quarterly statement showing operating
expenses and the proceeds from the sale of Petroleum Substances produced therefrom.


 


13.1.6 Completions. For the purposes
of determinations hereunder, each completion shall be considered a separate well.


 


13.1.7 Liens. In the conduct of
Non-Consent Operations, the Participating Parties shall keep the Lease, Leased Lands and equipment and material thereon free and
clear of liens and encumbrances.


 


13.1.8 Producing Well Limitation.
Non-Consent Operations shall not be conducted in a well which is producing in paying quantities without the consent of all Participating
Parties in such producing well.


 


13.2 Forfeiture of Interest. Upon
commencement of Non-Consent Operations other than Non-Consent Operations governed by Article 13.6, each Non-Participating Party's
interest and leasehold operating rights in the Non-Consent Operation and title to the Petroleum Substances produced therefrom shall
be owned by and vested in each Participating Party in proportion to its Participating Interest for as long as the operations originally
proposed are being conducted or production is being obtained therefrom, subject to the following:


 


13.2.1 Production Reversion Penalties.
Such rights, title and interest shall revert to each Non-Participating Party when the Participating Parties have recouped out of
the Non-Participating Party's share of the proceeds of production (after deducting Non-Participating Party's share of royalty,
operating expenses and all applicable taxes) from such Non-Consent Operations an amount which equals:


 


(a)
If such operation is an Exploratory Operation under Article 11.3.1, eight hundred percent (800%) of the amount which, had it
participated, would have been borne by the Non-Participating Party as its share of the cost of such
Non-Consent Operation, including the cost of equipping the Non-Consent Well through the wellhead connections.


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(b)If such operation is a Development
Operation, five hundred percent (500%) of the amount which, had it participated, would have been borne by the Non-Participating
Party as its share of the cost of such


 


Non-Consent Operations, including the cost
of equipping the Non-Consent Well through the wellhead connections.


 


(c)If such operation is the construction
and installation of a Platform or Pipelines, three-hundred percent (300%) of the amount which, had it participated, would have
been borne by the Non-Participating Party as its share of the cost of such Non-Consent Platform or Pipelines. If such operation
is the construction and installation of Facilities, two hundred percent (200%) of the amount which, had it participated, would
have been borne by the Non-Participating Party as its share of the cost of such Non-Consent Facilities.


 


Upon the recoupment of such costs, each
Non-Participating Party shall become a Participating Party in such operations, except as provided in Article 13.4.


 


13.2.2 Recoupment. The recoupment
of amounts applicable to any Non-Consent Exploratory Well under Article 13.2.1 (a) shall be recoverable out of each Non-Participating
Party's share of production as follows:


 


(a)If the said Non-Consent Exploratory
Well is completed as a producer, then the above amounts shall be recoverable, with respect to said well, not only out of each Non-Participating
Party's share of production therefrom, but also out of fifty percent (50%) of each Non-Participating Party's share of initial
production attributable to the new productive reservoirs encountered in said Non-Consent Exploratory Well in any and all wells
subsequently drilled on the Lease and completed in such reservoirs;


 


(b)If the said Non-Consent Exploratory
Well is not completed as a producer, but otherwise qualified as producible under the provisions of Article 2.21 hereof, then the
above amounts shall be recoverable, with respect to said well, out of fifty percent (50%) of each Non-Participating Party's share
of initial production attributable to the new productive reservoirs encountered in said Non-Consent Exploratory Well in any and
all wells subsequently drilled on the Lease and completed in such reservoirs;


 


and the provisions herein for the relinquishment
and reverting of each Non-Participating Party's operating rights and production shall also apply, with respect to such fifty percent
(50%) interest, to said subsequently drilled well or wells.


 


13.2.3 Non-Production
Reversion. If a Non-Consent Well results in a dry hole or ceases to produce in paying quantities before the Participating Parties
recoup the amount to which they are entitled, and provided a proposal to deepen the Non-Consent Well is not made in accordance with Article 13.3, each Non-Participating Party's
operating rights shall revert, except that the well shall be abandoned and plugged at the sole risk and expense of the Participating
Parties. Any sum realized from salvage in excess of amounts to be recouped from the well shall be credited to all Parties.


 


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13.3 Deepening or
Sidetracking of Non-Consent Well. If after a Non-Consent Well has been drilled to its objective zone, any Participating Party
proposes to deepen or sidetrack such Non-Consent Well, a Non-Participating Party may participate by notifying the Operator within
thirty (30) days [forty-eight (48) hours If rig is on location] after receiving the proposal that it will join in the deepening
or sidetracking operation and by paying to the Participating Parties an amount equal to such Non-Participating Party's share of
the actual costs incurred in the drilling and casing of such well to the depth at which such deepening or sidetracking operation
is commenced. The Participating Parties shall continue to be entitled to recoup, out of the proceeds of production from the non-
consent portion of the well, the full sum specified in Article 13.2.1 applicable to such Non-Consent Well less the amount paid
under this Article.


 


13.4 Operations
from Non-Consent Platforms. A Party which did not originally participate in a Platform shall be a Non-Participating Party as
to ail wells and operations from such Platform and shall be subject to the provisions of Article 13.2. Reversion shall occur only
after the original Participating Parties have recouped the sum set forth in Article 13.2.1 for the Platform and the Non-Consent
Operations thereon, provided, however, that such Non-Participating Party shall have the right at any time to pay to the Participating
Parties in such Platform an amount, in cash, equal to said Non-Participating Party's Share of the unrecovered balance of the recoupment
account attributable to such Platform under Section 13.2.1.(c) and thereby become a Participating Party with regard to such Platform
and subsequent operations therefrom.


 


13.5 Allocation
of Platform Costs to Non-Consent Operations. Non-Consent Operations shall be subject to further conditions as follows:


 


13.5.1 Charges.
If a Non-Consent Well is drilled from a Platform, the Participating Parties in such well shall pay to the Operator for credit to
the owners of such Platform a charge for the right to use the Platform and its Facilities as follows:


 


(a)Such Participating Parties shall
pay a sum equal to that portion of the total cost of the Platform, which one Platform slot bears to the total number of slots on
the Platform. If the Non-Consent Well is abandoned, the right of Participating Parties to use that Platform slot shall terminate,
unless such Parties commence drilling a substitute well from the same slot within ninety (90) days after abandonment.


 


(b)If theNon-Consent Wellproduction
is handled through the Facilities, the
Participating Parties shall pay a sum equal to that portion of the total cost of such Facilities which one well bears to the total
number of wells utilizing the Facilities, including such Non- Consent Well.


 


13.5.2 Operating
and Maintenance Charges. The Participating Parties shall pay all costs necessary to connect a Non-Consent Well to the Facilities
and that proportionate part of the expense of operating and maintaining the Platform and
Facilities applicable to the Non-Consent Well. Platform operating and maintenance expenses shall be allocated equally to all wells
served, and operating and maintenance expenses for the Facilities shall be allocated equally to all producing wells.


 


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13.5.3 Payments.
Payment of sums pursuant to Article 13.5.1 is not a purchase of an additional interest in the Platform or Facilities. Such payments
shall be included in the total amount which the Participating Parties are entitled to recoup out of production from the Non-Consent
Well.


 


13.6 Non-Consent
Operations to Maintain Lease. A Lease Maintenance Operation is defined for the purposes of this paragraph as one required to
maintain the Lease or a portion thereof within the Leased Lands, at its expiration date or otherwise. This shall include, but not
be limited to, a well proposed to be drilled during the last year of the primary term of the Lease, or subsequent thereto, when,
(a} a Lease, or affected portion thereof, is not otherwise being held by operations or production; or (b) any governmental agency
having jurisdiction requires operations to avoid loss or forfeiture of all or any portion of a Lease. A Party electing not to participate
in the Lease Maintenance Operation will assign to the Participating Parties in the proportions in which the Participating Parties
participated therein, all of its rights, title and interest In and to such Lease or such portion thereof, free and clear of any
burdens thereon, but shall not be relieved of any accrued obligations as to the Lease or such portion thereof prior to the acceptance
of such assignment. If more than one well should be proposed and drilled, either of which would maintain the Lease or such jeopardized
portion thereof, an assignment shall not be required from any Party participating in any one of such wells, but as to those wells
in which it falls to participate, any such failure shall be governed by the applicable provisions of Article 11.3 (Exploratory
Operations) or Article 12.3 (Development Operations). There shall be no minimum participating percentage approval necessary to
conduct a Lease Maintenance Operation.


 


13.7 Operator.
The designated Operator hereunder shall operate all wells drilled as a Non-Consent Operation. If the Non-Consent well is drilled
from a mobile rig, and if the designated Operator Is a Non-Participating Party therein, the Participating Party owning the largest
Participating Interest shall serve as Operator for the drilling and completion of such Well, unless the Participating Parties agree
otherwise. Upon the completion of any such well as a productive well (completion through the christmas tree), the well shall be
turned over to the designated Operator for further operations.


 


ARTICLE 14
FACILITIES


 


14.1 Approval.
Any Party may propose the installation of Facilities by notice to the other Parties with information adequate to describe the proposed
Facilities and the estimated costs. The affirmative vote of one (1) or more Parties having a combined Participating Interest of
twenty-five percent (25%) or more in the wells to be served shall constitute approval which shall be binding on all owners of the
wells to be served; however, nothing hereunder shall limit a Party's rights under Article 21.1. A proposal for a Platform, Facilities
or Pipeline shall not be combined with a proposal for any other operation.


 


14.2 Contracts.
Operator may enter into contracts with independent contractors for the Facilities and, insofar as is reasonable, shall utilize
competitive bidding. If Operator employs its own Operator acting as an independent
contractor under a written contract containing terms and conditions and at rates which are customary and prevailing in competitive
contracts of independent contractors who are doing work of a similar nature and who have as a primary source of business the construction
of Facilities, Platforms and Pipelines.


 


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personnel and equipment for the selection, installation
and/or construction of the Facilities, Platform or Pipeline, such work will be performed by 


 


ARTICLE 15 


ABANDONMENT OF WELLS AND PLATFORM
SALVAGE


 


15.1 Platform Salvage
and Removal Costs. When the Parties owning a Platform mutually agree to dispose of such Platform, it shall be disposed of by
the Operator as approved by such Parties. The costs, risks and net proceeds, if any, resulting from such disposition shall be shared
by such Parties in proportion to their ownership interests therein.


 


15.2 Abandonment
of Wells. Any Party may propose the abandonment of a well by notifying the other Parties. No Producible Well or producing
zone shall be abandoned without the mutual consent of the Participating Parties therein.The Participating Parties not consenting
to the abandonment shall pay to each Party desiring to abandon, the amount, if any, by which its share of the current value of
the well's salvageable material and equipment as determined pursuant to Exhibit "C" exceeds the estimated current costs
of salvaging same and of plugging and abandoning the well as determined by the Participating Parties. In the event that estimated
costs of salvage, plugging and abandonment exceed the value of such salvageable material and equipment, the abandoning Party shall
pay its share of such excess to the Operator, for the benefit of the Participating Parties (Non-Abandoning Parties).


 


15.3 Assignment
of Interest. Each Participating Party desiring to abandon a Producible Well pursuant to Article 15.2 shall assign, effective
as of the last applicable election date, to the Non-Abandoning Parties, in proportion to their Participating Interests, its interest
in such Producible Well and equipment therein and its ownership in the production from such Producible Well. Any Party so assigning
shall be relieved from any further liability with respect to said Producible Well. Except as to those liabilities accruing prior
to the effective date of the assignment; however, such assignment shall not absolve said Party of its responsibilities, if any,
for Platform removal under Section 15.1.


 


15.4 Abandonment
Operations Required by Governmental Authority. Any well abandonment or Platform removal required by a governmental authority
shall be accomplished by Operator with the costs, risks and net proceeds, if any, to be shared by the Parties owning such well
or Platform in proportion to their Participating Interests therein.


 


ARTICLE 16 


RELEASE AND WITHDRAWAL


 


16.1 Release.
No interest in the Lease or the Leased Lands shall be released or surrendered in whole or in part without the written consent of
all Parties.


 


16.2 Withdrawal.
Any Party may withdraw from this Agreement and thereby be relieved of all future obligations and responsibilities hereunder by
giving written notice to the other Parties of suchintent, together with an offer to convey
all of its interest in and to the Lease, Leased Lands, Petroleum Substances and all property and equipment related thereto. If
one or more of the other Parties elect to acquire such interest, it shall be assigned to them (a) in the proportions that the interest
In the Lease owned by each acquiring Party bears to the total interest in the Lease owned by all acquiring Parties, unless the
acquiring Parties agree otherwise, and (b) upon such other terms and conditions as agreed upon by the Parties in interest. In the
event no Party elects to acquire the interest of the withdrawing Party:


 


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(a)If the remaining Parties wish to
continue operations on the Leased Lands, each remaining Party shall ratably acquire the interest of the withdrawing Party; the
withdrawing Party shall pay to the remaining Parties its share of the estimated costs of plugging and abandoning all wells and
the removal of all Platforms, structures and other facilities and equipment on the Leased Lands in which it owns an interest, less
the salvage value thereof; and the assignment from the withdrawing Party shall be made free and clear of overriding royalties,
production payments or other excess burdens on production; or


 


(b)If the remaining Parties do not
wish to continue operations on the Leased Lands, all Parties shall proceed to abandon all operations and to surrender and release
the Lease.


 


The execution and delivery of an assignment
by a withdrawing Party under the provisions of this Article shall not relieve such Party from any obligation or liability incurred
prior to the first day of the month following receipt of the assignment by the assignees. The withdrawing Party shall remain liable
for any cost, expense, liability or damage theretofore accrued or arising out of any event occurring prior to withdrawal and attributable
to an operation in which the withdrawing Party was a Participating Party.


 


16.3 Limitation
on Withdrawal. No Party shall be relieved of its obligations hereunder during a well or Platform fire, blow out or other emergency,
but may withdraw from this Agreement and be relieved of such obligations after termination of such emergency; provided, such Party
shall remain liable for its share of all costs related to said emergency, including the drilling of relief wells, containment and
cleanup of oil spill and pollution, and all costs of debris removal made necessary by the emergency (this includes fines, penalties,
etc.).


 


ARTICLE 17 


RENTALS AND ROYALTIES


 


17.1 Encumbrances.
Any Party whose interest is encumbered or becomes encumbered by a burden on production or any other encumbrance shall hold all
other Parties free and harmless from all such encumbrances. When the interest of a Party is or becomes so encumbered and any other
Party becomes entitled to an assignment of the interest pursuant to the provisions of this Agreement or, as a result of a Non-Consent
Operation becomes entitled to receive production attributable to the interest, the Party entitled to receive the assignment or
production shall receive the same free and clear of such encumbrances and the Party whose interest is encumbered shall hold all
other Parties harmless with respect to such encumbrances and shall do all acts necessary to allow the Party so entitled to receive
the assignment or production free and clear of such encumbrances.


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17.2 Rentals, Shut-in Payments and Minimum Royalties.
Rentals, shut-in well payments and minimum royalties which may be required under terms of any Lease subject to this Agreement
shall be paid in a timely manner by Operator and shall be charged to the Parties based on their working interest ownership in
the Lease. All Parties shall receive proper evidence of all such payments. In the event of failure to make proper payment of any
rental, shut-in well payment or minimum royalty where such payment is required to continue the Lease in force, any loss which
results from such non-payment shall be borne proportionately by all Parties. Operator shall not be liable for failure to make
such payments, or for erroneous payment, unless such failure or error results from gross negligence or willful misconduct. As
to any production delivered in kind by Operator to any Non-Operator or to another for the account of such Non-Operator, said Non-Operator
shall provide Operator with information as to the proceeds or value of such production in order that the Operator may make payment
of any minimum royalty due.


 


17.3 Non-Concurrence
in Rental Payment. Should any Party not concur in the payment of any rental, minimum royalty or similar payment, it shall notify
Operator and the other Parties in writing at least sixty (60) days prior to the date on which such payment is due and Operator
shall thereafter make such payment for the account of all concurring Parties. In this event, the non-concurring Party shall assign
to the concurring Parties in the proportions that the interest in the Lease is owned by each concurring Parties, without warranty
except for its own acts, all of its interest in and to the Lease and the Leased Lands, or any portion thereof, maintained by such
payment. Such assignment shall be made free and clear of overriding royalties, production payments or other excess burdens on production.


 


The execution and delivery of an assignment
by the non-concurring Party under the provisions of this Article shall not relieve such Party from any obligation or liability
incurred prior to the first day of the month following receipt of the assignment by the assignees. The non-concurring Party shall
remain liable for any cost, expense, liability or damage theretofore accrued or arising out of any event occurring prior to the
assignment and attributable to any operation in which the non-concurring Party was a Participating Party.


 


17.4 Royalty Payments.
The Operator shall pay or cause to be paid all royalty payable out of production from the Lease. Each Party shall pay or cause
to be paid all other amounts, including, without limitation, any overriding royalties, payable out of its share of production.
During any time in which the Participating Parties in a Non-Consent Operation are entitled to receive a Non- Participating Party's
share of production, the Participating Parties shall bear the Lease royalty on such production.


 


ARTICLE 18


INSURANCE, LIABILITY AND DAMAGE CLAIMS


 


18.1 Insurance.
Operator shall secure and maintain in force for the benefit of the joint account of the Parties insurance as outlined in Exhibit
"B", and shall charge the Parties therefor as provided therein.


 


18.2 Individual
Liability. It is not the intention of the Parties hereto to create a partnership, association, trust, or other character of
business entity. The duties, obligations and liabilities hereunder are declared to be separate and individual and not joint; and
nothing contained in this Agreement shall be construed to create a partnership, association, trust, or other character of business
entity or to impose a partnership duty, obligation or liability with
respect to the Parties hereto. Each Party shall be individually responsible only for its own obligations as set out in this Agreement
and shall be liable only for its own proportionate share of the costs, expenses and liabilities as herein stipulated.


 


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18.3 Damage Claims.
Liability for losses, damages, injury, or death arising from operations under this Agreement shall be borne by the Parties in proportion
to their Participating Interests in the operations out of which such liability arises, except when such liability results from
the gross negligence or willful misconduct of a Party or Parties, in which case such Party or Parties shall be liable. Each Party
who receives any such claim or demand arising from operations hereunder shall promptly advise Operator and provide Operator full
and complete information with respect thereto. Operator shall give each of the other Parties written notice of any such claim or
demand. The settlement of any such claim involving operations hereunder shall be within the sole discretion of Operator so long
as the amount paid in settlement of any claim does not exceed $25, 000.00. If settlement can be made for a total payment in excess
of $25,000.00, Operator may settle only upon written agreement thereto by all Participating Parties. Any sum paid in settlement
of such a claim shall be charged as an operating expense hereunder and shall be borne in proportion to each Party's interest in
the Leased Lands or its Participating Interest, whichever is applicable.


 


18.4 Indemnification.
To the extent allowed by law, the Participating Parties agree to hold the Non-Participating Parties harmless from, and to indemnify
and protect them against, all claims, demands, liabilities and liens for property damage or personal injury, including death, caused
by or otherwise arising out of Non-Consent Operations, and any loss and cost suffered by any Non-Participating Party as an incident
thereof.


 


ARTICLE 19


INTERNAL REVENUE PROVISION


 


19.1 Internal Revenue Provision. This Agreement
is not intended to create, and shall not be construed to create, a relationship of partnership or an association for profit between
or among the Parties hereto. Notwithstanding any provisions herein that the rights and liabilities hereunder are several and not
joint or collective, or that this Agreement and operations hereunder shall not constitute a partnership, if, for Federal income
tax purposes, this Agreement and the operations hereunder are regarded as a partnership, each Party hereby affected elects to
be excluded from the application of all of the provision of Subchapter "K", Chapter 1, Subtitle "A", of the
Internal Revenue Code of 1986, as amended, and as permitted and authorized by Section 761 of the Code and the regulations promulgated
thereunder. Operator is authorized and directed to execute on behalf of each Party hereby affected such evidence of this election
as may be required by the Secretary of the Treasury of the United States or the Federal Internal Revenue Service, including specifically,
but not by way of limitation, all of the returns, statements, and the data required by Federal Regulations 1.761.2. Should there
be any requirement that each Party hereby affected give further evidence of this election, each such Party shall execute such
documents and furnish such other evidence as may be required by the Federal Internal Revenue Service or as may be necessary to
evidence this election. No such Party shall give any notices or take any other action inconsistent with the election made hereby.
If any present or future income tax laws of the state or states in which the Contract Area is located or any future income tax
laws of the United States contain provisions similar to those in Subchapter "K", Chapter 1, Subtitle "A",
of the Internal Revenue Code of 1986, as amended, under which an election similar to that provided by Section 761
of the Code is permitted, each Party hereby affected shall make such election as may be permitted or required by such laws. In
making the foregoing election, each such Party states that the income derived by such Party from operations hereunder can be adequately
determined without the computation of partnership taxable income.


 


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ARTICLE 20


CONTRIBUTIONS


 


20.1 Notice of Contribution Other Than Advance for
Sale of Production. Each Party shall promptly notify the other Parties of any contribution which it obtains, or is attempting
to obtain, concerning the drilling of any well on the Leased Lands, other than contributions made as consideration for entering
into a contract for sale of production from the Lease, loans and other financial arrangements, which shall not be considered contributions
for the purposes of this Article.


 


20.2 Contribution
Where All Parties are Participating. In the event any Party receives such a contribution, in cash, toward a well in which all
Parties participate, said contribution shall be turned over to Operator, and Operator shall credit the amount thereof to all the
Parties. Any contribution of acreage toward the drilling of a well shall be shared by the Parties in proportion to their respective
interests in the Lease.


 


20.3 Contribution
Where Less Than All Parties Participate. In the event any Party receives such a contribution, in cash, toward a well in which
all Parties are not Participating Parties, said cash contribution shall be turned over to Operator, and Operator shall credit the
amount thereof to the Participating Parties in accordance with their Participating Interests. Said cash contribution shall be deducted
from the cost of drilling and completing the well prior to computation of the amount the Participating Parties shall be entitled
to recoup out of production. Any contribution of acreage toward the drilling of a well by less than all of the Parties hereto shall
be shared by the Participating Parties in accordance with their Participating Interests.


 


ARTICLE 21 


DISPOSAL OF PRODUCTION


 


21.1 Taking in Kind. Subject to Section 27.1.2
hereof, each Party shall have the right, but not the obligation to take in kind or separately dispose of its proportionate share
of all Petroleum Substances produced from the Leased Lands, exclusive of production which may be used in development and producing
operations and in the preparation and treatment of production for marketing purposes and production unavoidably lost. Any Party
shall have the right, at its sole risk and expense, to construct facilities for taking its share of production in kind, provided
that such facilities at the time of installation do not interfere with continuing Operations on the Lease and adequate space is
available therefore. Any extra expenditure incurred In the taking in kind or separate disposition by any Party of its proportionate
share of production shall be borne by such Party.


 


Notwithstanding the foregoing, and subject
to Section 5.6 hereof, Operator agrees to take and sell all Petroleum Substances for the accounts of each Non-Operator unless and
until a Non-Operator notifies Operator in writing that it has elected to take its share of Petroleum Substances in kind. For as
long as Operator sells a Non-Operator's share of Petroleum Substances, Operator may charge such Non-Operator a fee equal to two cents ($0.02)
per mcf (thousand cubic feet) sold for that Non-Operator's account.


 


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21.2 Contract for
Sale. Each Party shall execute such division orders and contracts as may be required for the sale of its interest in production
from the Leased Lands, and shall be entitled to receive payment direct from the purchaser or purchasers thereof for its share of
all production.


 


21.3 Gas Balancing.
In the event that some, but not all, of the Parties are marketing their share of gas production from the Lease, the terms and conditions
under which a non- taking Party may recoup its share of production shall be governed by the terms and conditions of a Gas Balancing
Agreement attached hereto as Exhibit "E".


 


ARTICLE 22


LAWS AND REGULATIONS


 


22.1 Federal Law and Regulation. This Agreement
shall be subject to all valid and applicable State and Federal laws, rules, regulations and orders, and operations conducted hereunder
shall be in accordance with the same. In the event this Agreement, or any provision hereof, is found to be inconsistent with or
contrary to any such law, rule, regulation or order, the latter shall be deemed to control and this Agreement shall be regarded
as modified accordingly and, as so modified, shall continue in full force and effect.


 


22.2 Nondiscrimination.
In performing work under this Agreement, the Parties shall comply and Operator shall require each independent contractor to comply
with the governmental requirements in Exhibit "D" and with Sections 202(1) to (7), inclusive, of Executive Order 11246,
as amended.


 


22.3 State Law for
Interpretation. To the extent possible, this Agreement shall be interpreted according to the laws of the State of Texas.


 


22.4 Dispute Resolution.
Except as otherwise provided in this Agreement, any dispute, claim or controversy In connection with or arising under this Agreement,
its interpretation, validity or any breach hereof, which cannot be amicably settled between the Parties shall be subject to the
following dispute resolution process:


 


22.4.1 Internal
Mediation. Upon notice from either the Operator or a Non Operator to the other Party, the disputed matter shall first be referred
jointly to two designees, one designated by Operator and one designated by the Non-Operators. if the designees do not agree upon
a decision within five (5) business days after the delivery of the above notice, either Party may give the other notice that the
disputed matter shall be referred to arbitration in accordance with Section 22.4.2.


 


22.4.2 Arbitration.
Any and all disputes, claims or controversies in connection with or arising under this Agreement, its interpretation, validity
or any breach hereof, which have not been resolved within the five (5) business day period specified in Section 22.4.1 shall be
settled by arbitration by one (1) arbitrator under the Commercial Arbitration Rules of the American Arbitration
Association then in force (the "AAA Rules") in accordance with the following terms and conditions:


 


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(a)In the event
of any conflict between the AM Rules and the provisions of this Agreement, the provisions of this Agreement shall prevail;


 


(b)The place of
the arbitration shall be Houston, Texas, United States of America;


 


(c)The Parties
shall appoint one arbitrator in accordance with the MA Rules within ten (10) business days of the delivery of the notice of referral
to arbitration under Section 22.4.1. In the event of an inability to agree on the arbitrator, the appointing authority shall be
the American Arbitration Association, acting in accordance with such rules as it may adopt for this purpose;


 


(d)Any arbitration
proceedings under this Section 22.4 shall be concluded within thirty (30) days of the appointment of the arbitrator;


 


(e)The decision
of the arbitrator shall be rendered within thirty (30) days of the conclusion of the arbitration proceedings;


 


(f)The English
language shall be used as the written and spoken language for the arbitration and all matters connected to the arbitration;


 


(g)The arbitrator
shall have the power to grant any remedy or relief that it deems just and equitable and that is in accordance with the terms of
this Agreement, including specific performance, and any such relief may be specifically enforced by any court of competent jurisdiction;


 


(h)The award of
the arbitrator shall be final and binding on the Parties; and


 


(i)The award of
the arbitrator may be enforced by any court of competent jurisdiction and may be executed against the person and assets of the
losing party in any competent jurisdiction.


 


ARTICLE 23 


FORCE MAJEURE


 


23.1 Force
Maieure.  In the event that any Party is rendered unable, in whole or in part, by Force Majeure to carry out is
obligations under this Agreement (other than the obligation to make payments of money due), upon such Party giving notice and
reasonably full particulars of such Force Majeure in writing to the other Parties within a reasonable time after the
occurrence of the cause relied upon, the obligations of the Party giving such notice, so far as they are affected by such
Force Majeure, shall be suspended during the continuance of any inability so caused, but for no longer period; and the cause
of the Force Majeure as far as possible shall be remedied with all reasonable dispatch. The term "Force Majeure" as
employed herein shall mean an act of God, strike, lockout or other industrial disturbance, war, blockade, riot, lightning,
fire, storm, flood, explosion, breakdown of machinery and equipment, unavailability
of rigs, equipment, materials, inability to obtain rights of way, permits and licenses, governmental restraint and any other cause
whether of the kind herein enumerated, or otherwise, not reasonably within the control of the Party claiming suspension. The settlement
of strikes, lockouts and other labor difficulties shall be entirely within the discretion of the Party having the reasonable dispatch
shall not require the settlement of labor difficulties by acceding to the demands of the opponents therein when such course is
inadvisable in the discretion of the Party having the difficulty. Whenever a Party's obligations are suspended under Article 23.1,
such Party shall immediately notify the other Parties, in writing, and give full particulars of the reason for such suspension.


 


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ARTICLE 24


SUCCESSORS, ASSIGNS AND PREFERENTIAL
RIGHTS


 


24.1 Successors
and Assigns. This Agreement shall extend to, be binding upon and inure to the benefit of each of the Parties and their respective
heirs, devisees, legal representatives, successors, and assigns, and shall constitute a covenant running with the Lease and the
lands and interests covered hereby.


 


24.2 Assignments.
No Party hereto shall assign an interest hereunder except unto a reputable and financially responsible Third Party, and the assigning
Party shall be and remain liable for the obligations incurred by its assignee unless and until the sale or assignment has been
approved in writing by the other Parties hereto, which approval shall not be unreasonably withheld. A transfer of interest to an
affiliate, successor or subsidiary of a Party to this Agreement is not considered a transfer to a third party for the purpose of
this provision. However, no approval shall be given unless and until all monies due and accounts payable accruing out of the development
and operation of the Lease subject hereto shall have been paid in full by the Party assigning its interest. An assignment of interest
hereunder shall not become effective as to the Parties until the first day of the month following delivery to Operator of a copy
of an instrument evidencing the sale or assignment approved by the proper governmental authority and conforming to the requirements
of this section. If, at any time the interest of any original Party to this Agreement is divided among and owned by more than two
(2) co-owners, Operator, at its discretion, may require such co-owners to appoint a single trustee or agent with full authority
to receive notices, approve expenditures, receive billings for and approve and pay such assignees' share of the joint expenses,
and to deal generally with, and with power to bind, the assignees of such interest within the scope of operations embraced by this
Agreement. Each Party shall incorporate in any assignment of an interest in the Lease a provision that such assignment is subject
to this Agreement. Any assignment, vesting or relinquishment of interest between the Parties shall be without warranty of title,
except by, through and under Assignor.


 


24.3 Preferential
Right to Purchase. Subject to the provisions of this Article, each Party shall have the right to freely transfer and alienate
its Working Interest. Any transfer of all or a portion of a Party's Working Interest, directly or indirectly, shall be subject
to the following provisions:


 


24.3.1 Notice of
Proposed Transaction. Should any Party (the "Assignor") desire to dispose of or transfer all or a portion of its
Working Interest in the Lease in any manner not otherwise excluded under Article 24.3.3 (Transactions Not Affected By The Preferential
Right To Purchase), and has received a bona fide offer (whether from a Party to this Agreement or from a third party) which the
Assignor is willing to accept for the purchase or other acquisition of the Working Interest, each of the remaining Parties to this
Agreement shall have a preferential right to purchase all or a Party's proportionate share of such Working Interest. In such case,
the Assignor shall promptly give prior written notice of the proposed transaction to the other Parties. The notice of the proposed
transaction shall provide full information concerning the transaction including at least:


 


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othe name and address of the prospective
purchaser (who must be ready, able and willing to acquire the interest),


 


othe purchase price or other consideration
offered (which shall include a monetary equivalent in U.S. Dollars based upon the reasonable market value of any consideration
other than cash),


 


oeffective date of transaction, and


 


oall other material terms of the offer
(including a copy of the offer or the portion of the offer document dealing with the acquisition of the Lease interest, unless
Assignor is contractually prevented from delivering such document due to confidentiality provisions or other legal reasons).


 


24.3.2 Exercise
of Preferential Right to Purchase. For a period of fifteen (15) days from receipt of the notice, the remaining Parties shall
have the optional right to elect to acquire the Working Interest offered (on the same terms and conditions, or on equivalent terms
for a non-cash transaction as stated in the notice) without reservations or conditions. The Election to exercise the preferential
right shall be made by the exercising Party giving the Assignor written notice of its Election to purchase prior to the expiration
of the fifteen (15) day period. If an Election to preferentially purchase is made, the Assignor shall be required to transfer the
Working Interest to the Party at the price and on the terms specified in the notice. The transaction shall be concluded within
a reasonable time, but no later than sixty (60) days after receipt of the Election to preferentially purchase (plus a reasonable
time to secure all necessary governmental approvals). If more than one Party elects to acquire the Working Interest offered, then
each Party shall acquire a proportion of the Working Interest offered equal to the ratio its own pre-acquisition Working Interest
bears to the total pre-acquisition Working Interests of all acquiring Parties (unless the acquiring Parties agree upon a different
ratio). If only one Party elects to acquire the Working Interest offered,


it may require the assignor to transfer all of the Working
Interest offered, but may not require the transfer of less than all Working Interest offered.


24.3.3 Transactions
Not Affected by the Preferential Right to Purchase. This preferential right to purchase shall not exist or apply when a Party
proposes to:


 


(a)mortgage, pledge,
hypothecate or grant a security interest in all or a portion of its Working Interest {including assignments of Hydrocarbon production
executed as further security for the debt secured by such mortgage), or


 


 (b) grant an overriding royalty interest, or


 


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(c) dispose of its
Working Interest by merger, reorganization or consolidation or a sale or other transfer to an Affiliate.


 


24.3.4 Completion
of the Transaction. If none of the remaining Parties elect to exercise its preferential right to purchase the Working Interest
offered, the Assignor shall be free to complete the proposed transaction on the terms disclosed in the notice. However, if any
proposed transaction is not completed within one hundred twenty (120) days from the expiration of the fifteen {15) day preferential
right election period (plus a reasonable time to secure any necessary governmental approvals) or, if the purchase price or material
terms of the proposed transaction (which are relevant to the Lease) are amended in any way, the proposed transaction shall be considered
withdrawn and the Working Interest offered shall again be subject to the preferential right to purchase as if the originally proposed
transaction had never been proposed.


 


ARTICLE 25


TAXES


 


25.1
Property Taxes. Operator shall render property covered by this Agreement as may be subject to ad valorem taxation, and
shall pay such property taxes for the benefit of each Party.


 


25.2 Contest of
Property Tax Valuation. Operator shall timely and diligently protest to a final determination of any valuation it deems unreasonable.
Pending such determination, Operator may elect to pay under protest. Upon final determination, Operator shall pay the taxes and
any interest, penalty or cost accrued as a result of such protest. In either event, Operator shall charge each Party its share.


 


25.3 Production
and Severance Taxes. Each Party shall pay, or cause to be paid, all production and severance, Windfall Profits Tax and similar
taxes due on any production which it receives pursuant to the terms of this Agreement.


 


25.4 Other Taxes
and Assessments. Operator shall pay other applicable taxes or assessments and charge each Party its share.


 


ARTICLE 26 


MEDIA RELEASES


 


26.1 Media Releases. No Party hereto shall distribute
any Information or photographs to the press or other media without the approval of all other Parties hereto. When all Parties
hereto have reviewed such material and have approved the issuance of the material, Operator shall have the principal responsibility
for its issuance (but shall not be liable for failure or error in exercising such responsibility), and each other Party hereto
may issue such approved material without restriction. Nothing herein contained, however, shall preclude any Party hereto from
making such disclosures as may be deemed by such Party to be required by any applicable law, order, rule, regulation or ordinance.


 


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ARTICLE 27 OTHER 


 


27.1 Notwithstanding anything in this Agreement to the contrary:


 


27.1.1 Forfeiture
and Penalty for Delinquent Payments. Each Party agrees that if it fails or is unable to pay by the due date its share of the
costs of any operation conducted or to be conducted under this Agreement, Operator shall have the right to enforce the lien (including
the right to charge interest on late payments) as provided in the Section 9.5 above or the right, to be exercised before
or after completion of the operation, upon thirty (30) days prior written notice of delinquency, to treat the delinquent Party
as having elected not to participate in the operation thereby forfeiting its interest subject to a "Production Reversion Penalty"
like that provided in Section 13.2 above except that the penalty amounts shall be one-hundred twenty-five percent (125%) of the
amount which, had it timely paid, would have been borne by the delinquent Party. Such forfeiture shall be effective as of when
such Party became delinquent in payment, unless such amounts are paid in full within thirty (30) days of the notice of delinquency.


 


During any period when a Party is deemed
to have non-consented to an operation because it has failed or is unable to timely pay its share of costs, all of such Party's
share and title of production from the Lease shall be owned and vested in the other Parties to this Agreement in proportion to
their participating interests.


 


27.1.2 Abandonment
Fund. Operator shall have the right to require each or any Participating Party to advance its proportionate share of all estimated
costs and expenses for the disposition of any Platforms and Facilities, the abandonment of any wells and any other site restoration
obligations under the Lease, less the estimated salvage value at the expected time of abandonment as determined in accordance with
Exhibit "C" ("Abandonment Fund").


 


Operator and Non-Operators have agreed
that $3,300,000.00 ("Abandonment Amount") is to be deposited in the Abandonment Fund. Operator shall have no liability
to Non-Operators or to any third party for a failure to establish the Abandonment Fund or for incorrectly estimating the Abandonment
Amount.


 


Payments shall be made into the Abandonment
Fund based upon a per mcf (thousand cubic feet) charge of $0.31, which amount shall be deducted by the Operator from its share
of gross production revenues and the share of gross production revenues for each Non-Operator until the full Abandonment Amount
has been funded.


 


Until the full Abandonment Amount has been
funded from these revenues, the Non-Operators shall not have the right to take in kind or separately dispose of their shares of
Petroleum Substances from the Lease.


 


The Abandonment Fund shall be held in a
suspense account by Operator until an independent escrow account is established. The escrow account shall provide for payment of
the escrowed funds at the time the disposition or abandonment operations are performed and shall be to the contractors performing the disposition or abandonment
operations or to the then Operator for appropriate distribution. If the escrow amount is insufficient to pay the disposition or
abandonment costs, each Participating Party shall pay the balance of such costs pursuant to the terms of this Agreement. The escrow
account shall be an interest bearing account. Any excess funds including interest after all disposition and abandonment operations
are performed shall be returned to the Parties in proportion to each Party's participation in the Abandonment Fund.


 


 


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In lieu of payment into the Abandonment
Fund, any Participating Party may elect to furnish an irrevocable letter of credit in favor of the other Participating Parties,
proof of coverage under adequate plugging and abandonment bonds, (subrogated in favor of the Operator) or other financial assurances
acceptable to Operator to provide for that Party's estimated proportionate share of the Abandonment Fund. The letter of credit
or plugging and abandonment bonds shall provide that the instrument shall remain in force in the event of a transfer or assignment
of the Party's interest until such time as the transferee or assignee provides a similar irrevocable letter or credit or plugging
and abandonment bonds.


 


In the event the BOEM or other governmental
agency requires a supplemental bond, each Participating Party in the operation covered by such bond shall bear its proportionate
share of Operator's cost for the same or shall provide a bond equivalent to their proportionate share of said supplemental bond
at their own costs.


 


27.1.3 Disproportionate
Cost Sharing No. 8 (D-1) Well. Pursuant to prior agreements between Enovation Resources LLC and Breton Energy, LLC (predecessors
in title to all of the Parties to this Agreement), the Parties agree that all costs of recompleting the No. 8 (D-1) Well on the
Lease will be borne as follows:


 


	Tarpon Offshore Ventures, LP 	 	71.3334% 
28.6666%
	Camron Resources, LLC .	 	 
	West Texas Resources Inc	 	–
	HRWC225 Investors LLC	 	–
	 	 	100%



 


The working interests set out immediately
above shall apply until $1,753,699 has been incurred on the No. 8 (D-1) Well recompletion. Once costs for such recompletion exceed
$1,753,699, the following working interests will apply until the recompletion is completed and thereafter:


 


	Tarpon Offshore Ventures, LP	 	56.7633%
	Camron Resources, LLC	 	22.8200%
	West Texas Resources Inc.	 	10.0167%
	HRWC225 Investors LLC	 	10.4000%
	 	 	100%





 


The costs of all other operations on the
Lease shall be borne by the Parties in accordance with the other provisions of this Agreement, including Exhibit "A."


 


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27.1.4 Designation
of Operator Forms. Immediately following their execution of this Agreement, all Parties shall execute the forms required by
governmental authorities having jurisdiction to effectuate designation of Tarpon Operating & Development, L.L.C. as BOEM "Designated
Operator" of the Lease.


 


27.1.5 Recompletion
of No. 8 (D-1) Well. Each of the Party's agrees that it will not use the provisions of this Agreement, including, without limitation,
Sections 13.1.2 and 13.1.8, as a basis for objecting to a proposal for a recompletion of the Well No. 8 (D-1), which includes abandonment
of the existing 6,800 Sand completion.


 


27.1.6 Payout Status
of Well No. 7 and Well No. 8 (D-1). "Payout" is defined as the point in time when, on a well by well basis, all costs
involved in the exploration, development and production of Well No. 7 or Well No. 8 (D-1), including but not limited to all capital
expenditures for drilling, completion, tie-back, and associated pipeline and infrastructure costs, have been recouped out of "Net
Operating Income," defined as revenues (net of royalty and overriding royalties) less production related costs from such well.
Such production related costs shall include funds deposited to the Abandonment Fund.


 


27.1.7 Entire Agreement.
This Agreement (including the exhibits attached hereto) constitutes the entire understanding among the Parties with respect to
the subject matter hereof, superseding all prior negotiations, discussions, agreements and understandings relating to such subject
matter whether between the Parties to this Agreement or with any third party.


 


ARTICLE 28 


COUNTERPART EXECUTION


 


28.1 Counterpart
Execution.  This Agreement may be executed in counterparts, each of which when so executed shall be given the effect of execution
of the original instrument. When so executed the signatures of the Parties as affixed hereto may be combined in, and treated and
given effect for all purposes as, a single instrument.


 


IN WITNESS WHEREOF,
the Parties have caused this Agreement to be executed effective as of the date hereinabove stated.


 


 





	Tarpon Offshore Ventures, LP	HRWC225 Investors LLC
	 	 
	 	 
	By:  /s/
    Ralph G. McBee	By:_________________________
	Name:  Ralph G. McBee	Name:
	Title: President	Title:
	 	 
	 	 
	 	 
	West Texas Resources Inc.	Camron Resources, LLC
	 	 
	By:______________________	By: _____________________
	Name:	Name:
	Title:	Title:
	 	 
		







 


Page 33 of 45


 




    	60



    	 



    

 



  


EXHIBIT
"A"


 


Attached to and made a part of that certain
Joint Operating Agreement dated effective October 1, 2013, by and
between Tarpon Offshore Ventures, LP, Operator, and West Texas Resources Inc., HRWC225 Investors LLC and
Camron Resources, LLC, Non-Operators.


 


For Purposes of this Exhibit:  "Tarpon" means
Tarpon Offshore Ventures, LP; "West Texas" means West Texas Resources Inc..; "HRWC225" means HRWC225 Investors
LLC; "Camron" means Camron Resources, LLC; "WI" means working interest; "BPO" means before payout;
"APO" means after payout; and "ORRI" means overriding royalty interest.


 


I. Contract Area, Lease Description and Leasehold Royalty
Burdens:


 


LEASE#: OCS-G 00900


 


AREA NAME: West Cameron Area


 


BLOCK NUMBER: 225


 


MAP: LA1


 


LEASE DESCRIPTION: All of Block


 


Subject to Lessor's royalty and other existing
burdens of record ("carved-out interests"), which are stipulated by the Parties to be:


 


1)16.6667% Lessor's royalty;


 


2)10.00000% of 8/8ths ORRI on the E/2
NE/4 SW/4 of the Lease from 9,163 feet down to 50,000 feet, originally reserved by EM Petroleum US LLC and Mariner Energy Resources,
Inc. in an assignment to Breton Energy, LLC;


 


3)10.00000% of 8/8ths ORRI on the W/2
W/2 NE/4, E/2 NW/4, E/2 NW/4 SW/4, NE/4 SW/4 SW/4, N/2 SE/4 SW/4, SE/4 SE/4 SW/4, W/2 NE/4 SW/4, W/2 SE/4 and SW/4 SE/4 SE/4 of
the Lease from the surface down to 50,000 feet, except that the ORRI in Well No. 7 will be 5% of 8/8ths escalating at payout to
10% of 8/8ths, originally reserved by ENI Petroleum US LLC and Mariner Energy Resources, Inc. in an assignment to Breton Energy,
LLC;


 


3) 10.00000% of 8/8ths ORRI on the E/2
NE/4, E/2 W/2 NE/4, W/2 NW/4, W/2 W/2 SW/4, SE/4 SW/4 SW/4, SW/4 SE/4 SW/4, NE/4 SE/4, N/2 SE/4 SE/4 and SE/4 SE/4 SE/4 of the
Lease from the surface down to 50,000 feet, originally reserved by ENI Petroleum US LLC and Mariner Energy Resources, Inc. in an
assignment to Breton Energy, LLC;


 


5) 1.00000% of 8/8ths ORRI on the E/2 NW/4
NW/4 and W/2 NE/4 NW/4 of the Lease from the surface to the base of the 4,900 Foot Sand as seen in the Well No. 7, and the SE/4
NW/4 NW/4, SW/4 NE/4 NW/4, SE/4 NE/4, and E/2 SW/4 NW/4 of the Lease from the surface to the base of the 6,800 Foot Sand as seen in the Well
No. 8, originally conveyed to Wells Fargo Energy Capital, Inc. by Breton Energy, LLC;


 


Page 34 of 45




    	61



    	 



    




 


6)0.75000% of 8/8ths ORRI on the W/2
W/2 NE/4, E/2 NW/4, E/2 NW/4 SW/4, NE/4 SW/4 SW/4, NE/4 SW/4, N/2 SE/4 SW/4, SE/4 SE/4 SW/4, W/2 SE/4 and SW/4 SE/4 SE/4 of the
Lease save and except certain "Productive Reservoirs", originally conveyed to F. F. Foster & Associates, Inc. by
Seneca Resources Corporation;


 


7)0.37500% of 8/8ths ORRI on the W/2
W/2 NE/4, E/2 NW/4, E/2 NW/4 SW/4, NE/4 SW/4 SW/4, NE/4 SW/4, N/2 SE/4 SW/4, SE/4 SE/4 SW/4, W/2 SE/4 and SW/4 SE/4 SE/4, and the
E/2 NE/4, E/2 W/2 NE/4, W/2 NW/4, W/2 W/2 SW/4, SE/4 SW/4 SW/4, SW/4 SE/4 SW/4, NE/4 SE/4, N/2 SE/4 SE/4, and SE/4 SE/4 SE/4 of
the Lease save and except certain "Proven Reservoirs", originally conveyed to F. F. Foster & Associates, Inc. by
Seneca Resources Corporation;


 


8)0.75000% of 8/8ths ORRI in Well No.
7 and Well No. 8 (D-1) conveyed to Melvin J. Baiamonte, Jr., James H. Bailey and Gerald T. Gonzales, by Tarpon, Enovation and Camron,
all as successors in title to Breton Energy, LLC; and


 


9)1.04155% of 8/8ths ORRI in the S/2
S/2 of the Lease as conveyed to Tidelands Royalty B Corporation by Chevron U.S.A. Inc.


 


II.Restrictions, if any, as to depths,
formations or substance:


 


All depths below 50,000 feet and depth
intervals from the surface to 9,163 feet in the E/2 NE/4 SW/4 are not subject to this Agreement.


 


III.Working Interests:


 


Existing Wells:


 


Well Nos. 7 & 8 (D-1) - As to All Sands and Depths:


 


	 	 	WI% BPO of Well	 	 	WI% APO of Well	 
	Tarpon	 	 	65.2500%	 	 	 	68.1667%	 
	West Texas	 	 	10.0167%	 	 	 	8.5855%	 
	HRWC225	 	 	10.4000%	 	 	 	8.9145%	 
	Camron	 	 	14.3333%	 	 	 	14.3333%	 
	 	 	 	100%	 	 	 	100%	 



 


Except for operations exclusively related
to those sands described under "Existing Wells" above, the Parties' WI's for all future operations on the Lease (including
those in Existing Wells not exclusively related to the sands described) shall for all depths and operations be:


 





Page
35 of 45




    	62



    	 



    

	 	 	WI% BPO & APO	 
	Tarpon	 	 	65.2500%	 
	West Texas	 	 	10.0167%	 
	HRWC225	 	 	10.4000%	 
	Camron	 	 	14.3333%	 
	 	 	 	100%	 



 


IV.Designated Operator:


 


Tarpon Operating & Development, L.L.C.


 


V.Parties to the Agreement and addresses for purpose
of Notices:


 


Tarpon Offshore Ventures, LP


2000 S. Dairy Ashford, Suite 578


Houston, Texas 77077 USA


Attention: Ralph G. McBee


Tel: 281-493-5885


Email: ralphmcbee@tarponop.com


 


HRWC225 Investors LLC


909 Poydras Street, 2700 Floor


New Orleans, Louisiana 70112


Attention: Richard Richter Tel: 504-299-2104


Email: rrichter@shergarner.com


 


West Texas Resources Inc.


5729 Lebanon Road, Suite 144


Frisco, Texas 75034 Attention: Scott Haire


Tel:_______________________


Email: fscott.haire@outlook.com


 


Camron Resources, LLC


P.O. Box 18978


Sugar Land, Texas 77496


Attention: Brian G. Donnelly


Tel: 713-252-6887


Email: bdonnelly@esoftsolutions.com


 
  


Page
36 of 45




    	63



    	 



    

EXHIBIT "B"


 


Attached to and made a part of that certain
Joint Operating Agreement dated effective October 1, 2013, by and
between Tarpon Offshore Ventures, LP, Operator, and West Texas Resources Inc., HRWC225 Investors LLC and
Camron Resources, LLC, Non-Operators.


 


INSURANCE TO BE CARRIED


 


At
all times during the conduct of operations hereunder, Operator shall maintain in force all insurance listed in this exhibit at
the expense of and for the benefit of the Joint Account. Any party may, at its own expense, acquire such additional insurance
as it may deem necessary to protect its own interest against claims losses, damages or destruction to property arising out of
operations hereunder.


 


I.Workers' Compensation and Employer's Liability


 


A.Workers' Compensation, statutory limits
and Employer's Liability Insurance with $1,000,000 limit covering the employees of Operator engaged in operations hereunder in
compliance with all applicable State and Federal Laws.


 


B.Coverage under U.S. Longshoremen's
and Harbor Worker's Act, extended to the Outer Continental Shelf


 


C.Coverage also to include Employer's
Liability with S 1,000,000 limit under Admiralty jurisdiction, including the Jones Act, and Marine Voluntary Compensation Endorsement
and Transportation, Maintenance, Wages and Cure, as well as an endorsement to the effect that a claim "in rem" shall
be treated as a claim against the insured.


 


II.Comprehensive General Liability Insurance


 


A. Bodily Injury and
Property Damage with limits of $1,000,000 per occurrence combined single limit, and $2,000,000 aggregate subject to $25,000 deductible,
Coverage to include contractual liability, products/completed operations, blowout, cratering, and underground resources and property
damage. It is hereby agreed that a claim "in rem" shall be treated as a claim "in personam."


 


III.Comprehensive Automobile Liability Insurance covering
all Owned, Hired or Non-Owned Vehicles


 


A.Bodily Injury and Property Damage with $1,000,000 per
occurrence combined single limit.


 


IV.Vessels


 


All vessels owned (including drill barges, drill ships, and
drilling rigs) by Operator shall be covered by Hull Protection and Indemnity Insurance to the value of the vessel plus excess collision
and excess P and I insurance with limits of at least $1,000,000 per occurrence. If Operator charters any vessels, Charter's Legal
Liability with limits of $1,000,000 will be carried.


 


Page 37 of 45


WC 225 JOA CRS 09-27-2013




    	64



    	 



    

V.Aircraft


 


All aircraft owned or chartered by Operator shall be covered
by Aircraft Liability insurance with limits of at least $ 1,000,000 per occurrence.


 


VI.Umbrella Liability


 


Umbrella Liability insurance in the amount of $25,000,000, excess
of all primary limits in the insurance specified above.


 


VII.OPA


 


Oil Pollution Act of 1990 endorsement with a limit of liability
of $35,000,000 or qualified self-insurer with the Minerals Management Service.


 


VIII.Operators Extra Expense Liability


 


Extra Expense Liability coverage including Control of Well,
Seepage, Pollution and contamination coverage, Cleanup and/or Containment coverage and Redrilling and/or Restoring. The Limit of
Liability shall be no less than $35,000,000, limited to Gulf of Mexico operations only. Acknowledging that Extra Expense Liability
coverage is normally the responsibility of each Party, the Non-Operators authorize the Operator to add a 15% surcharge to the premium
for this coverage.


 


IX.Facilities


 


All Risks of Physical Loss or Damage Insurance for any Facilities
owned by the Joint Account covering the value of such Facilities, subject to a $250,000 deductible per occurrence. The value of
the facilities shall be determined by Operator. Acknowledging that All Risks of Physical Loss or Damage Insurance coverage is normally
the responsibility of each Party, the Non-Operators authorize the Operator to add a 15% surcharge to the premium for this coverage.


 


X.Contractors


 


Operator shall use reasonable efforts to require all contractors
working or performing services hereunder to comply with the Workers' Compensation and the Employer's Liability laws, both State
and Federal, and said contractors or others performing services shall be required to procure and maintain Comprehensive General
Liability insurance with policy limits of at least $1,000,000 per occurrence and said policy, or policies, shall include Contractual
Liability assured under any contract as between the contractor and Operator, and carry such other insurance as Operator deems necessary.
All policies issued to provide coverage as provided for in this section, except Worker's Compensation Insurance, shall be endorsed
to name the Operator and the parties as Additional Insureds. All such policies shall be endorsed with a Waiver of Subrogation as
against Operator and the parties.


 


Xl.The Non-Operators shall be named as Additional Insured
on a blanket basis under the insurance policies required in this exhibit, with respect to joint activities, and all such policies
shall provide for Waiver of Subrogation between Operator and Non-Operator. Operator
shall furnish Certificates of Insurance to the Non-Operators if so required.


Page 38 of 45




    	65



    	 



    




 


XII.Operator shall charge to the joint account all premiums
for the insurance coverages required by
this exhibit. All losses not covered by such insurance shall be charged to the joint account. To the extent that any policies which
Operator obtains for the joint account pursuant to this exhibit also cover operations of Operator outside the scope of the Agreement,
the cost of premiums for such policies shall be allocated between the joint account and Operator on a fair and reasonable basis.


 


XIII.Operator reserves the sole right to select the insurance
carrier and to select and purchase from
such insurance carrier the types and kinds of coverage available under the above described policies to cover any loss that may
occur. The insolvency of the insurance carrier selected by Operator shall not be deemed negligence of Operator.


 


XIV.Unavailability of Insurance at Reasonable Rates


 


If any of the above described insurance policies are not available
(or become unavailable) at reasonable premium rates in the judgment of the Operator, then Operator thereafter shall not be required
to obtain or continue such insurance in force. In the event of such occurrence, Operator shall use its best efforts to notify Non-Operator
before the coverage lapses.


 





Page 39 of 45




    	66



    	 



    

EXHIBIT "C"


 





 


Attached to and made a part of that certain Joint Operating
Agreement dated effective October 1, 2013, by and between


Tarpon Offshore Ventures, LP, as Operator, and Camron Resources,
LLC, West Texas Resources Inc. and HRWC225 Investors LLC,


as Non-Operators.


 


ACCOUNTING PROCEDURE


OFFSHORE JOINT OPERATIONS


 


I. GENERAL PROVISIONS


 


I. Definitions


 


"Joint Property" shall mean dm real and personal
property subject to the Agreement to which this Accounting Procedure is attached.


"Joust Operations shall mean all operations necessary
or proper for the development. operation, protection and maintenance of the Joint Property


"Joint Account" shall mean the account showing the
charges paid and credits received in the conduct of the Joint Operations and which are to be shared by the Parties.


"Operator” shall mean the party designated to conduct
the Joint Operations


"Non-Operators" shall mean the Parties of this Agreement
other than the Operator


"Parties." shall mean Operator and Non-Operators


'First Level Supervisors" shall mean
those employees whose primary function in Joint Operations is the direct supervision of other employees and/or contract labor
directly employed on the Joint Property in a field operating capacity


"Technical Employees" shall
mean those employees having special and specific engineering, geological or other professional skills, and whose primary function
in Joint Operations is the handling of specific operating conditions and problems for the benefit of the Joint Property.


'' Personal Expenses" shall meals travel and other reasonable
reimbursable expenses of Operator's employees


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


"Controllable Material" shall mean Material which
at the time is so classified in tie Material Classification Manual as most recently recommended by the Council of Petroleum Accountants
Societies.


"Shore Base Facilities"
shall mean onshore support facilities that during drilling, development, maintenance and producing operations provide such
services to the Joint Property as receiving and transshipment paint for supplies, materials and equipment; debarkation point
for drilling and production personnel and services, communication, scheduling mint dispatching center, other associated
functions benefiting the Joint Property.


"Offshore Facilities" shall
mean platforms and support systems such as oil and gas handling facilities, living quarters, offices, shops, cranes, electrical
supply equipment and systems, fuel and water storage and piping, heliport, marine docking installations communication facilities,
navigation aids, And other similar facilities necessary in the conduct of offshore operations


 


2. Statements and Billings


Operator shall bill Non-Operators on or
before the last day of each month for their proportionate shine of the Joint Account for the preceding month. Such bills will
he accompanied by statements which identify the authority for expenditure, lease or facility, and all charges and credits, summarized
by appropriate classifications of investment and expense except thin items or Controllable Material and unusual charges
and credits shall be separately identified and fully described in detail


 


3. Advances and Payments by Non-Operators


	A.		Unless otherwise provided for in the Agreement, the Operator may require the Non-Operators
to advance their share of estimated cash out:ay for the succeeding month's operation within ten (10) days after receipt of the
billing or by the first day of the month for which the advance is required, whichever is later Operator shall adjust each monthly
billing to reflect advances received from the Non-Operators.



	B.		Each Non-Operator shall pay its proportion of all bills within ten (10) days after receipt
                                                                              repayment is not made within such dine, the unpaid balance shall bear interest monthly at the prime rate in effect
                                                                              at Chase ,Manhattan Bank, NY. NY on the first day of the month in which delinquency occurs
                                                                              plus 1% or the maximum contract rate permitted by the applicable usury laws of the jurisdiction in which the Joint Property
                                                                              is located, whichever is the lesser. plus attorney's fees, court costs, and other costs in connection with the collection of
                                                                              unpaid amounts In the event an advance or payment is not timely made pursuant to this provision, Operator shall give written
                                                                              notice of same to Non-Operators and Non-Operators shall have 48 hours from receipt of said notice to render said advance or
                                                                              payment before being considered delinquent under this provision



 


4. Adjustments


Payment of any such bills shall
not prejudice the right of any Non-Operator to protest or questions 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 an Operator for adjustment. No
adjustments favorable to Operator shall be made unless it is mode within the same prescribed period The provisions of this
paragraph shall not prevent adjustments resulting from a physical inventory of Controllable Material as provided for in
Section V. Adjustments in excess of the two year limitation period can be made in accordance with CO PAS
Interpretation No 22




    	67



    	 



    

 


 


5. Audits


	A.		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 Joint Account 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 a joint audit in a manner
which will result in a minimum of inconvenience to the Operator. Operator shall bear no portion of the Non-Operators' audit east
incurred under this paragraph unless agreed to by the Operator The audits shall not be conducted more than once each year without
prior approval of Operator, except upon the resignation or removal of the Operator, and shall be made at the expense of those
Non-Operators approving such audit A written report must be furnished to the Operator within 90 days after the date on which the
auditing Non-Operators concluded auditing the Operator's books and records Failure to provide the written report within this tune
shall be deemed a conclusion by the auditing Non-Operators that there were no improper charges to the Jolts Account for the period
audited.



 


	B.		File Operator shall reply in writing to an audit report within 180 days after receipt
of such report



 


	C.		Non-action by auditing Non-Operators in excess of one year alter Operator's asst recent
substantive response should be viewed as acceptance of the Operator's position on the exceptions addressed, and the exceptions
should be closed



 


6. Approval by Non-Operators


Where an approval or other agreement of
the Parties or Non-Operators is expressly required under other sections of this Accounting Procedure and if the agreement to which
this Accounting Procedure is attached contains no contrary provisions in regard thereto, Operator shall notify all Non-Operators
of the Operator's proposal, arid the agreement or approval of a majority in interest attic Non-Operators shall be controlling on
all Non-Operators


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 field employees directly employed on the Joint
Property in the contract of Joint Operations.



		(2)	Salaries and wages of Operator's employees directly employed on Shore Base Facilities
or other Offshore Facilities serving the Joint Property if such costs are not charged under Paragraph 7 of this Section II.





		(3)	Salaries of First Level Supervisors in the field.





		(4)	Salaries and wages of Technical Employees directly employed on the Joint Property
if such charges ore excluded irons the Overhead rates.





		(5)	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 the overhead rates.





	B		Operator's cost of holiday, vacation, sickness and disability benefits and other customary
allowances paid to employees whose salaries and wages are chargeable to the Joint Account under Paragraph 2A of this Section
IL. Such costs under this Paragraph 2B may be charged on a "when and as paid basis" or by "percentage assessment"
oil the amount of salaries and wages chargeable to the Joint Account under Paragraph 2A of this Section II. 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 costs chargeable to the Joint Account under Paragraphs 2A and 2B of this Section
II.



 


	D		Personal Expenses of those
employees whose salaries and wages are chargeable to the Joint Account under Paragraph 2A of this Section II





 


3. Employee Benefits


Operator's current costs 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 Mint Account under Paragraphs 2A and 2B of this
Section II shall be Operator's actual cost riot to exceed the percent most recently recommended by the Council of Petroleum
Accountants Societies.


 


4. Material


Material purchased or furnished by
Operator for use on  the Joint Property as provided under Section [V Only such Material shall be purchased for or transferred
to the Joint Property as may be required for immediate use and is reasonably practical and consistent with efficient and
economical operations The accumulation of surplus stocks shall be avoided.


 


5. Transportation


Transportation of employees and Mater tat
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 where like, material is normally available or railway
                                         receiving point nearest the Joint Property unless agreed to by the Parties.



	B		If surplus Material is moved to Operator's warehouse or other storage point, no charge
shall be made to toe Joint Account fur is distance greater than the distance to the nearest reliable supply store where like material
is normally available, or railway receiving point nearest the Joint Property unless agreed to lay the Parties. No charge shall
be made to the Joint Account for 'moving Material to other properties
belonging to Operator, unless agreed to by the Parties.







    	68



    	 



    




	C		In the application of subparagraphs A and B above, the option to equalize or charge
actual trucking cost is available when the actual charge is $400 or less excluding accessorial charges. The $400 will be adjusted
to the amount most recently recommended by the Council of Petroleum Accountants Societies.



 


6.Services


The cost of contract services,
equipment and utilities provided by outside sources, except services excluded by Paragraph 9 of Section 11 and Paragraphs i
and ii  of Section III.  The cost of professional consultants services and contract services of technical personnel directly
engaged on the Joint Property if such charges are excluded from the overhead rates. The cost of professional consultant
services or contract services of technical personnel directly engaged in the operation of the Joint Property shall be charged
to the Joint Account if such charges are excluded from the overhead rates.


 


7.Equipment and Facilities Furnished by Operator


	A		Operator shall charge the Joint Account for use of Operator-owned equipment and Facilities,
including Shore Base/and or Offshore Facilities, at rates commensurate with costs of ownership and operation. Such rates may include
labor, maintenance, repairs, other operating expense, insurance, taxes, depreciation and interest on gross investment less accumulated
depreciation not to exceed twelve Percent (12 %) per annum fit addition, for platforms only, the rate may include an element
of the estimated cost of platform dismantlement. Such rates shall not exceed average commercial rates currently prevailing in
the immediate area of the Joint Property



	B.		In lieu of charges in Paragraph 7A above, Operator may elect to use average commercial
rates prevailing in the Immediate area of the Joint Property less twenty percent (20%) For automotive equipment, Operator may
elect to use rates published by the Petroleum Motor Transport Association.



 


8. 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 causes,
except those resulting from Operator's gross negligence or willful misconduct Operator shall furnish Non-Operator written notice
of damages or losses incurred as soon as practicable after a report thereof has been received by Operator.


 


9.Legal Expense


Expense of handling, investigating
and settling litigation or claims, discharging of liens, payments of judgments and amounts paid for settlement of claims
incurred in or resulting from operations under the Agreement or necessary to protect or recover the Joint Property, except
that no charge for services of Operator's legal staff or fees or expense of outside attorneys shall be made unless previously
agreed to by the Parties. All other legal expense is considered to be covered by the overhead provisions of Section III unless
otherwise agreed to by the Parties, except as provided in Section 1, Paragraph 3.


 


10.Tones


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. If the ad valorem taxes are hosed in whole or in part upon separate valuations
of each party's working interest, then notwithstanding anything to the contrary herein, charges to the Joint Account shell be made
and paid by the Parties hereto in accordance with the tax value generated by each party's working interest.


 


11. Insurance


Net premiums paid for insurance, required
to be carried fur the Joint Operations for die protection or the Parties In the event joint Operations are conducted at offshore
locations in which Operator may act as self-insurer for Workers Compensation and Employers' Liability, Operator may include the
risk under its self-insurance program in providing coverage under State and Federal laws and charge the Joint Account at manual
rates currently recommended by COPAS.


 


12. Communications


Costs of acquiring, leasing, installing,
operating, repairing and maintaining communication systems including radio and microwave facilities between the Joint Property
and the Operators nearest Shore Base Facility. In he event communication facilities systems serving the Joint Property are Operator-owned,
charges to the Joint Account shall be mode as provided in Paragraph 7 of this Section II.


 


13.Ecological and Environmental


Costs incurred on the Joust Property as
a result oh' statutory regulations for archaeological and geophysical surveys relative to identification and protection of cultural
resources and/or other environmental or ecological surveys, including shallow hazard surveys, as may he required by the Bureau
of Land Management or other regulatory authority Also, costs to provide or have available pollution containment and removal equipment
plus costs factual control and cleanup and resulting responsibilities of oil spills as required by applicable laws and regulations.


 


14.Abandonment and Reclamation


Costs incurred for abandonment of the Joint
Property, including costs required by governmental or other regulatory authority.


 


15.Other Expenditures


Any
other expenditure not covered or dealt with in the foregoing provisions of this Section 11, or in Section III and which is of
direct benefit to the Joint Property and is incurred by the Operator in the necessary and proper conduct of the Joint Operations.




    	69



    	 



    

III. OVERHEAD


 


As compensation for administrative, supervision, office services
and warehousing costs, Operator shall charge the Joint Account in accordance with this Section III.


 


Unless otherwise agreed to by the Parties,
such charge shall be in lieu of costs and expenses of all offices and salaries or wages plus applicable burdens and expenses of
all personnel except those directly chargeable under Section II. 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 this Section III unless such cost and expense are agreed to by the Parties as a direct charge
to the Joint Account.


 


	i.		Except as otherwise provided in Paragraph 2 of this Section III, the salaries, wages,
Employee Benefits and Personal Expenses of Technical Employees and/or the cost of professional consultant services and contract
services of technical personnel directly employed on the Joint Property:



 (    ) shall be covered by the
overhead rates


( x ) shall not be covered
by the overhead rates,


 


	ii.		Except as otherwise provided to Paragraph 2 of this Section III, the
salaries, wages and Personal Expenses or 
Technical Employees and/or costs of professional consultant services and
contract services of technical Personnel either temporarily or permanently assigned to and directly employed in the operation of
the Joint Property. 



(   ) shall be covered by the overhead rates


( x ) shall not be covered by the overhead rates.


 


1. Overhead - Drilling
and Producing Operations


As compensation for overhead incurred in connection with drilling
and producing operations, Operator shall charge either


( X )Fixed Rate Basis, Paragraph IA, or


(   )Percentage Basis, Paragraph I B


A Overhead - Fixed Rate Basis


(1) Operator shall charge the Joint Account at the following
rates per well per month


Drilling Well Rate     $  $34,580


Producing Well Rate  
$3,466


(2) Application of Overhead - Fixed Rate
Basis for Drilling Well Rate shall be as Follows.


	(a)		Charges for drilling wells shall begin on the date when drilling or completion
equipment is under contract and terminate on the date the drilling or completion equipment moves off location or rig is
released, whichever occurs first, except that no charge shall be made during suspension of drilling operations for fifteen (15)
or more consecutive calendar days



	(b)		Charges for wells undergoing any type of workover or recompletion For a period of
five (5) consecutive work days or more shall be made at the drilling well rate. Such charges shall be applied for the period from
date workover operations, with rig or other units used it workover, commence through date of rig or other unit release, except
that no charge shall be made during suspension of operations for fifteen (15) or inure consecutive calendar days Walkover or recompletion
is defined as the activities performed after initial production has been established and are intended to restore, maintain or
increase production in an existing well bore.



	(3)		Application of Overhead - Fixed Rare Basis for Producing Well Rate shall be as follows



	(a)		An active well either produced or injected into for any portion of tile month shall
be considered as a one-well charge for the entire month.





	(b)		Each active completion in a multi-completed well in which production is not commingled
down hole shall be considered as a one-well charge providing each completion is considered a separate well by the governing regulatory
authority





	(c)		An inactive gas well shut in because of overproduction or failure of purchaser to
take the production shall he considered as a ono-well charge providing the gas well is directly connected to a permanent sales
outlet





	(d)		A one-welI charge shall be made for the month in which plugging and abandonment operations
are completed on any well. This one-well charge shall be made whether or not the well has produced except when drilling well rate
applies.





	(e)		All other inactive wells (including bet not limited to inactive wells covered by unit
allowable, lease allowable, transferred allowable, etc. ) shall not qualify for an overhead charge (I) Each idle platform having
no wells capable of producing shall be considered as a one-well charge



	(4)		The well rates shall be adjusted as of the first day of Apr.I 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 unready 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 calendar year preceding as Shown by the index of average weekly earnings of
Crude Petroleum and Gas Fields Production Workers as published by the United Stales Department of Labor, Bureau of Labor Statistics,
or the equivalent Canadian index as published by Statistics Canada, as applicable. The adjusted rates shall be the rates currently
in use, plus or minus the computed adjustment



 


B Overhead - Percentage Basis


	(1)		Operator shall charge the Joint Account at the following rates.



	(a)		Development



_________________________ Percent (   %)
of cost of Development of the Joint Property exclusive of costs provided under
Paragraph 9 of Section II and all salvage credits.


	(b)		Operating



_________________________Percent (   %)
of the cost of Operating the Joint Property exclusive of costs provided under
Paragraphs I and 9 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




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(2) Application of Overhead - Percentage
Basis shall be as follows:


For
the purpose of determining charges on a percentage basis under Paragraph I B of this Section III  development shall include
all costs in connection with drilling, redrilling, or deepening of any or all wells, and shall also include any remedial
operations requiring a period of five (5) consecutive work days or more an any or all wells; also, preliminary expenditures
necessary in preparation for drilling and expenditures incurred in abandoning when the 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 2 of this Section III All other costs
shall be considered as Operating except that catastrophe costs shall be assessed overhead as provided in Section III, Paragraph
3.


 


2. Overhead - Major Construction


To compensate Operator for overhead costs
incurred in the construction and installation of fixed assets, the expansion of fixed assets, and any other project clearly discernible
as is fixed asset required for the development and operation of the Joint Property, or in the dismantling for abandonment of platforms
and related production facilities, Operator shall either negotiate a rate prior to the beginning of construction, or shall charge
the Joint Account for Overhead based on the following rates fur any Major Construction project in excess of $ 325,000 


	A		If the Operator absorbs the engineering, design and drafting costs related to the
project



	(1)		5%
                                         of total costs if such costs are more than $25,000 but less than $100,000; plus



	(2)		3% of
                                         total costs in excess of $100,000 but less than $1,000,000; plus



	(3)		2%
                                         of total costs in excess of 31,000.000



	B.		If the Operator
                                         charges engineering, design and drafting costs related to the project directly to the
                                         Joint Account



	(1)		3%
                                         of total costs if such costs are more than $25,000 but less than$100,000, plus



	(2)		2
                                         % of total costs in excess of $100,000 but less than $1,000,000; plus



	(3)		1%
                                         of total costs in excess of SI,000,000




 


Total cost shall mean the gross cost of
any one project. For the purpose of this paragraph, the component parts of a single project shall not he treated separately and
the cost of drilling and workover wells and artificial lift equipment shall be excluded On each project, Operator shall advise
Non-Operator(s) in advance which of the above options shall apply In the event of any conflict between the provisions of this
paragraph and those provisions order Section 11, Paragraph 2 or Paragraph 6, the provisions or this paragraph shall govern.


 


3.Overhead - Catastrophe


To compensate Operator fur overhead costs
incurred in the event of expenditures resulting from a single occurrence due to oil spill, blowout, explosion, fire, storm, hurricane,
or other catastrophes as agreed to by the Parties, which are necessary to restore the Joint Property to the equivalent condition
that existed prior to the event cruising the expenditures, Operator shall either negotiate a rate prior to charging the Joint Account
or shall charge the Joint Account for overhead based on the following rates:


	(1)		5% of total
                                         costs through $100,000; plus



	(2)		3 % of total
                                         costs in excess oil I 00,000 but less than $1,000,000: plus



	(3)		2 % of total
                                         costs in excess of $1,000,000



 


Expenditures subject to the overheads
above will not be reduced by insurance recoveries, and no other overhead provisions of this Section III  shall apply


 


4.Amendment of Rates


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


 


IV. PRICING OF JOINT ACCOUNT MATERIAL
PURCHASES, TRANSFERS AND DISPOSITIONS


 


Operator is responsible for Joint Account
Material and shall make proper and timely charges arid credits for all Material movements affecting the Joint Property Operator
she provide all Material for use on the Joint Property; however, at Operator's option, such Material may be supplied by the Non-Operator.
Operator shall make timely disposition of idle and/or surplus material, such disposal being made either through sale to Operator
or Non-Operator, division in kind, or sale to outsiders Operator may purchase, but shell he under no obligation to purchase, interest
of Non-Operators in surplus condition A or B Material The disposal of surplus Controllable Material not purchased by the Operator
shall be agreed to by the Parties


 


1. Purchases


Material purchased shall be charged at
the price paid by Operator after deduction of all discounts received. In case of Material found to he defective or returned to
vendor for any other reasons, credit shall he passed to the Joint Account when adjustment has been received by the Operator.


 


2. Transfers and Dispositions


Material furnished to the Joint Property
and Material transferred from the Joint Property or disposed of by the Operator, unless otherwise agreed to by the Parties, shall
be priced on the following basis exclusive smash discounts.


	A		New Material (Condition A)



	(1)		Tubular Goods Other than Line Pipe



	(a)		Tubular goods, sized 2-3/8 inches OD and larger, except line pipe, shall be priced
at Eastern mill published carload base prices effective as of date or movement plus transportation cost using the 80,000 pound
carload weight basis to the railway receiving point nearest the Joint Property for which published rail rates for tubular goods
exist If the 80,000 pound rail rate is not offered, the 70,000 pound or 90,000 pound rail rate may be used Freight charges for tubing will be calculated
from Lorain, Ohio and casing (from Youngstown, Ohio



 







    	71



    	 



    




 


	(b)		For grades which are special to one mill only, prices shall be computed at the mill
base of that mill plus transportation cost from that mill to the railway receiving point nearest the Joint Property as provided
above in Paragraph 2 A (I)(a). For transportation cost from points other titan Eastern mills, the 30,000 pound Oil Field Haulers
Association interstate truck rate shall he used.





	(c)		Special end finish tubular goods shall be priced at the lowest published out-of-stock
price, f.o.b. Houston, Texas, plus transportation cost, using Oil Field Haulers Association interstate 30,000 pound truck rate,
to the railway receiving point nearest the Joint Property.





	(d)		Macaroni tubing (size less than 2-3/8 inch OD) shall be priced at the lowest
published out-of-stock prices f.o.b. the supplier plus transportation costs, using the Oil Field Haulers Association interstate
truck rate per weight of tubing transferred, to the railway receiving point nearest he Joint Property.





	(2)		Line Pipe



	(a)		Line pipe movements (except size 24 inch 01) and larger with walls 3/4 inch and over)
30,000 pounds or more shall be priced under provisions of tubular goods pricing in Paragraph A (I)(a) as provided above Freight
charges shall be calculated from Lorain, Ohio.





	(b)		tune pipe movements
                                         (except size 24 inch OD and larger with walls 3/4 inch and over) less than 30,001) pounds
                                         shall be priced at Eastern mill published carload base prices effective as of date of
                                         shipment, plus 20 percent, plus transportation costs based on freight rates as set forth
                                         under provisions of tubular goods pricing in Paragraph A.(I)(a) as provided above Freight
                                         charges shall be calculated from Lorain, Oluo.





	(c)		Line pipe 24 inch OD and over and 3/4 inch wall and larger shall be priced f.o.b.
the point of manufacture at current new published prices plus transportation cost to the railway receiving point nearest the Joint
Property.



	(d)		Line pipe, including fabricated line pipe, drive pipe and conduit not listed on published
price lists shall be priced at piloted prices plus freight to the railway receiving point nearest the Joint Property or at prices
agreed to by the Parties.





	(3)		Other Material shall be priced at the current new price, in effect at date of movement,
as listed by a reliable supply store nearest the Joint Property, or point of manufacture, plus transportation costs, if applicable,
to the railway receiving point nearest the Joint Property.



	(4)		Unused new Material, except tubular goods, moved from the Joint Property shall be
priced at the current new price. in effect on date of movement. as listed by a reliable supply store nearest the Joint Property,
or point of manufacture, plus transportation costs, if applicable, to the railway receiving point nearest the Joint Property Unused
new tubulars will be priced as provided above ill Paragraph 2 A (I) and (2),



	B		Good Used Material (Condition 13)



Material in sound and serviceable condition and suitable for
reuse without reconditioning.


	(1)		Material moved to the Joint Property



At seventy-five percent (75%) of current new price, as determined
by Paragraph A


	(2)		Material used on and moved from the feint Property



	(a)		At seventy-five percent (75%) or current new price, as determined by Paragraph A.
if Material was originally charged to the Joint Account as new Material or



	(b)		Al sixty-five percent (65%) of current new price, as determined by Paragraph A, if
Material was originally charged to the Joint Account as used Material



	(3)		Material not used on and moved from the Joint Property



At seventy-five percent (75 %) current new price as determined
by Paragraph A


The cost of reconditioning, if any,
shall be absorbed by the transferring property Percent of current new price as determined by Paragraph A shall be adjusted by
the current Used Equipment Index (UEI) for conditions B and C materials as recommended by COPAS


	C		Other Used Material



	(1)		Condition C



Material which is not in sound and serviceable
condition and not suitable for its original Function until after reconditioning shall be priced tit fifty percent (50%) of current
new price as determined by Paragraph A The cost of reconditioning shall be charged to the receiving property, provided Condition
C value plus cost of reconditioning does not exceed Condition B value.


	(2)		Condition D



Material, excluding junk, no longer suitable
for its original purpose, but usable for some other purpose shall be priced on it basis commensurate with its use Operator may
dispose of Condition D Material under procedures normally used by Operator without prior approval of Non-Operators


	(a)		Casing, tubing, or drill pipe used as line pipe shall be priced as Grade A and B seamless
line pipe of comparable size and weight Used casing, tubing or drill pipe utilized as line pipe shall be priced at used line pipe
prices;



	(b)		Casing tubing or drill pipe used as higher pressure service lines than standard line pipe, eg
                                                                               power oil lines, shall be priced under normal pricing procedures for easing, tubing, or drill pipe Upset tubular goods shall
                                                                               be priced on a non-upset basis.



	3		Condition E



Junk shall he priced al prevailing prices Operator may dispose
or Condition E Material under procedures normally utilized by Operator without prior approval of Non-Operators


	(4)		Mudine Suspension Tubulars and Mudine Equipment



Mudine suspension tubulars, landing
and cutoff, joints, and mudine equipment will be considered junk upon completion of its use in any and all protects, and will
be disposed of in accordance with Section IV, Paragraph 2 C(3)


	D		Obsolete Material



Material which is serviceable and usable for its original function
but condition and/or value of such Material is not equivalent to that which would justify a price as provided above may be specially
priced as agreed to by the Parties Such price should result in the Joint Account being charged with the value of the service rendered
by such Material.




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	E		Pricing Conditions



	(1)		Loading or unloading costs may be charged to the Joint Account at the rate of
                                                                               twenty-five cents (25 cents) per hundred weight on all tubular goods movements, in lieu of actual loading or unloading costs
                                                                               sustained at the Stocking point. The above rate shall be adjusted as of the first day of April each year following January 1,
                                                                               1985 by the same percentage increase or decrease used to adjust overhead rates in Section Ill. Paragraph I A(4) Each year.
                                                                               the rate calculated shall be rounded to the nearest cent and shall be the rate in effect until the first day of April next
                                                                               year Such rate shall be published each year by the Council of Petroleum Accountants Societies.



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



3.Premium Prices


Whenever Material is not readily obtainable
at published or listed prices because or 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 providing such Material,
in making it suitable for use, and in moving it to the Joint Property; provided 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 no electing
and notifying Operator within seven 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 famished. 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.


 


V. INVENTORIES


 


The Operator shall maintain detailed records of Controllable
Material


 


1. 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


 Adjustments to the Joint Account resulting from the reconciliation
of a physical inventory shall be made within six months following the taking of the inventory Inventory adjustments shall be made
by Operator to the Joint Account for overages and shortages, but, Operator shall be held accountable only for shortages due to
lack of diligence.


 


3. Special Inventories


Special inventories may be taken whenever there is any sale, change
or interest, or change of Operator 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 takes place In such cases, both the seller and the purchaser shall be governed
by such inventory In cases involving a change of Operator, all Parties shall be governed by such inventory.


 


4. Expense of Conducting Inventories


	A		The expense of conducting periodic inventories shall not be charged to the Joint Account
unless agreed to by the Parties



	B		The expense of conducting special inventories shall be charged to the Parties requesting
such inventories, except inventories required due to change of Operator shall be charged to the Joint Account





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EXHIBIT "D"


 


Attached to and made a part of that certain
Joint Operating Agreement dated effective October 1, 2013, by and
between Tarpon Offshore Ventures, LP, Operator, and West Texas Resources Inc., HRWC225 Investors LLC and
Camron Resources, LLC, Non-Operators.


 


NON-DISCRIMINATION PROVISIONS 


 


During
the performance of this Agreement, Operator agrees as follows:


 


A. EQUAL OPPORTUNITY CLAUSE


 


1.Operator will not discriminate against
any employee or applicant for employment because of race, color, religion, sex, or national origin. Operator will take affirmative
action to ensure that applicants are employed, and that employees are treated during employment, without regard to their race,
color, religion, sex or national origin. Such action shall include but not be limited to the following: employment, upgrading,
demotion, or transfer, recruitment or recruitment advertising; layoff or termination, rates of pay or other forms of compensation;
and selection for training, including apprenticeship. Operator agrees to post in conspicuous places, available to employees and
applicants for employment, notices to be provided by the contracting officer setting forth the provisions of this nondiscrimination
clause.


 


2.Operator will, in all solicitations
or advertisement for employees placed by or on behalf of the Operator, state that all qualified applicants will receive consideration
for employment without regard to race, color, religion, sex, or national origin.


 


3.Operator will sent to each labor
union or representative of workers with which he has a collective bargaining agreement or other contract or understanding, a notice
to be provided by the agency contracting officer, advising the labor union or workers' representative of the Operator's commitments
under Section 202 of Executive Order No. 11246 of September 24, 1965, and shall post copies of the notice in conspicuous places
available to employees and applicants for employment.


 


4.Operator will comply with all provisions
of Executive Order No. 11246 of September 24, 1965, and of the rules, regulations and relevant orders of the Secretary of Labor.


 


5.Operator will furnish all information
and reports required by Executive Order No. 11246 of September 24, 1965, and by the rules, regulations, and orders of the Secretary
of Labor, or pursuant thereto, and will permit access to his books, records, and accounts by the contracting agency and the Secretary
of Labor for purposes of investigation to ascertain compliance with such rules, regulations, and orders.


 


6.In the event of the Operator's noncompliance
with the nondiscrimination clauses contract or with any of such rules, regulations, or orders, this contract may be cancelled,
terminated, or suspended in whole or in part and the Operator may be declared ineligible for further Government contracts in accordance
with procedures authorized in Executive Order No. 11246 of September 24, 1965, and such other sanctions may be imposed and remedies
invoked as provided in Executive Order No. 11246 of September 24, 1965, or by rule, regulation,
or order of the Secretary of Labor, or as otherwise provided by law.


 


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WC 225 JOA CRS 09-27-2013




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7. Operator will include the provisions
of Paragraphs (1) through (7) in every subcontract or purchase order unless exempted by rules, regulations, or orders of the Secretary
of Labor issues pursuant to Section 204 of Executive Order No. 11246 of September 24, 1965, so that such provisions will be binding
upon each subcontractor or vendor. Operator will take such action with respect to any subcontract or purchase order as the contracting
agency may direct as a means of enforcing such provision including sanctions for noncompliance. Provided, however, that in the
event the Operator becomes involved in, or is threatened with, litigation with a subcontractor or vendor as a result of such direction
by the contracting agency, the Operator may request the United States to enter into such litigation to protect the interest of
the United States.


 


B. SEGREGATED FACILITIES CERTIFICATION


 


Operator certifies that it does not and
will not maintain any Facilities it provides for its employees in a segregated manner, or permit its employees to perform their
services at any location, under its control, where segregated Facilities are maintained; and that Operator will obtain a similar
certification in the form approved by the Director, prior to the Award of any non-exempt subcontract.


 





 


 


 


 


 


 


 


 


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    	75



    	 



    

EXHIBIT "E"


 


Attached to and made a part of that certain
Joint Operating Agreement dated effective October 1, 2013, by and
between Tarpon Offshore Ventures, LP, Operator, and West Texas Resources Inc., HRWC225 Investors LLC and
Camron Resources, LLC, Non-Operators.


 


OFFSHORE GAS BALANCING AGREEMENT


 


1.In accordance with the terms
of the Joint Operating Agreement to which this Agreement is attached, each Party has the right, but not the obligation take its
share of Oil and Gas in kind and separately dispose of its proportionate share of the Oil and Gas produced from any well on the
Lease; subject, however, to Section 27.1.2 of the Joint Operating Agreement. In the event any Party hereto fails, or is unable
to take and market its share of the gas as produced, the terms of this Agreement shall automatically become effective.


 


2.It is the intent of this
Agreement that each Party should receive its proportionate share of gas produced from each well, in accordance with its Working
Interest in the well, and that balancing of gas taken in kind under Paragraph 6 or cash settlement as provided in Paragraph 7
will occur for each well. For purposes of this Agreement, each completion in a well bore shall constitute a separate well.


 


3.Each Party shall make a good
faith effort to take its share of gas as currently produced. During any period when a party fails to take its full share of gas
produced, the other Parties shall be entitled, but not obligated, to take any of such available gas production not taken. Each
Party failing to take its full share of the gas as produced shall be considered underproduced by quantity of gas equal to its
proportionate share of the total volume of gas produced from any well on the lease, less such Party's proportionate share of the
gas taken for its account, vented, lost, or used in Lease operations. Those Parties wishing to take quantities of gas not taken
by an underproducing party, in the absence of any other agreement between them, may each take a share of such gas in the direct
proportion that its interest in the well bears to the total interest of all Parties taking the underproducing Party's share of
production. A Party taking gas not taken by an underproducing Party shall be considered to be by the amount of such gas taken
in excess of gas attributable to its Working Interest. All gas taken by a Party in accordance with the terms of this Agreement,
regardless of whether such Party is underproduced or overproduced, shall be regarded as gas taken for its own account with title
thereto being in such Party, whether such gas be attributable to such Party's Working Interest share of production, or whether
it is being taken as over production, or whether it is being taken as makeup gas under Paragraph 6 below.


 


4.All parties hereto shall
share in and own the liquid hydrocarbons recovered from all gas by primary separation equipment prior to processing in a gas plant
in accordance with their respective interests as specified in the Joint Operating Agreement, whether or not such Parties are actually
producing and taking gas at such time.


 


5.The Operator will maintain
appropriate accounting on a monthly and cumulative basis of the quantities of gas each Party is entitled to receive and the quantities
of gas taken by each of the Parties. For the sole purpose of implementing the terms of this Agreement and adjusting gas imbalances
which may occur, each Party disposing of gas from any well on the Lease in any month, shall furnish or cause to be furnished to
the Operator as soon as possible, but no later than the last day of each calendar month, a statement showing the total volume
of gas sold by such party or taken in kind for its own account during the preceding calendar month (the "report period").
Within sixty (60) days after the end of each report period, the Operator shall furnish each Party a statement showing the status
of the overproduced and underproduced accounts of all Parties.


 


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6.Any underproduced Party shall endeavor
to bring its taking of gas into balance. After written notice to the Operator, any Party may begin taking its full share of gas
produced from the Lease. To allow for the recovery and makeup of gas by an underproduced party and to balance the gas accounts
among the Parties in accordance with their respective interests, the underproduced Party or Parties shall, upon at least fifteen
(15) days written notice prior to the first day of any calendar month, also be entitled to take up to the lesser of (1) 200% of
the underproduced Party's share, or (2) an additional thirty-three and one third percent (33 1/3%) of the monthly quantity of that
category of gas attributable to the overproduced Party or Parties. In the event there is more than one (1) underproduced or overproduced
Party, unless otherwise agreed, each underproduced and overproduced Party's share of gas available for makeup shall be in the direct
proportion of its Working Interest to the total Working Interest of all underproduced or overproduced Parties taking or furnishing
gas for makeup. The first gas made up shall be assumed to be the first gas underproduced. Notwithstanding anything contained herein
to the contrary, no underproduced Party shall be allowed to take makeup gas during the months of November, December, January or
February ("The Winter Period") unless such underproduced Party has taken at least seventy-five percent (75%) of the makeup
gas to which it is entitled during the six (6) consecutive months immediately prior to the Winter Period.


 


7.If gas production from the Lease
is permanently discontinued before the gas accounts of the Parties are balanced, the overproduced party shall be liable to the
underproduced party for the unrecovered value of underproduction, with the amount and method of payment thereof and settlement
therefore to be as provided hereinafter. In making settlement with the underproduced Party for such unrecovered underproduction,
the overproduced Party shall, within thirty (30) days after a final statement is issued by Operator (said final statement to be
issued within ninety (90) days from the date gas production from the Lease is permanently discontinued), pay the underproduced
Party or Parties in cash an amount equal to the net value the overproduced Party received for all overproduced gas (i.e. volumes
of gas, less a pro rate share of gas used in lease operations, vented or lost, in excess of such overproduced Party's share of
the cumulative production from the Lease) received by such overproduced Party. For purposes hereof, the first gas production taken
by the overproduced Party in excess of its own share shall be the first to be returned to or recouped by the underproduced Party.


 


For gas taken by a Party and not resold,
the price basis shall be the same basis as used to determine royalty payments to the lessor for such gas.


For gas sold in interstate commerce, the
price basis shall be the rate collected, from time to time. If such rate is subject to regulations of the Federal Energy Regulatory
Commission, or other governmental entity, the price basis applicable to volumes sold during the period of regulation shall be the
rate which is not subject to possible refund, as provided by said Commission pursuant to final order or settlement applicable to
the gas sold from the lease, plus an additional collected amount which is not ultimately required by said Commission to be refunded,
such additional collected amount to be accounted for at such time as final determination is made with respect thereto.


 





Page 43 of 45




    	77



    	 



    

 





Notwithstanding the foregoing, should the underproduced
party elect to receive such additional collected amount which is subject to possible refund pending the issuance of said final
order, such underproduced Party shall be entitled to the payment thereof from the overproduced party or Parties upon the underproduced
Party executing and delivering to the said overproduced party or Parties a letter in which the underproduced Party agrees to repay
to the overproduced Party or Parties that amount so paid that is required by said final order to be refunded, plus the interest
thereon specified in the pertinent order of said Commission.


 


8.The operating expenses are to be
borne as provided in the Joint Operating Agreement, regardless of whether all Parties are selling or using gas or whether the sales
and use of each Party are in proportion to their percentage ownership interest as set forth in the Joint Operating Agreement.


 


9.At all times while gas is produced
from the Lease, each Party shall pay or cause to be paid all royalties, severance or production taxes or other obligations burdening
its interest in gas actually utilized or sold for its account. Each Party agrees to hold each other Party harmless from any and
all claims for royalty payments asserted by its royalty owners. The term "royalty owner" shall include owners of royalty,
overriding royalties, production payments and similar interests. In the event any governmental authority lawfully prescribes that
royalty payments be made on any other basis than that described above in this Paragraph 9, each Party to this Agreement shall make
royalty payments accordingly, commencing on the effective date prescribed by such governmental authority, but the obligation of
each Party to hold each other Party harmless for royalty claims shall in all cases continue.


 


10.Nothing herein shall be construed
to deny any Party the right, from time to time, to produce and take or deliver to its purchaser the full well stream (not to exceed
maximum efficient rate of flow) for a reasonable period to meet the deliverability test required by its purchaser.


 


11.In the event an overproduced Party
intends to sell, assign, exchange or otherwise transfer any of its interest in the Lease to which this Agreement applies, such
overproduced Party shall notify in writing the other Working Interest owners who are Parties hereto within forty-five (45) days
prior to closing the transaction. The notice provided by the overproduced Party shall set forth the most recent gas imbalance on
the property being assigned. Any underproduced Party may demand in writing within twenty (20) days after receipt of the overproduced
Party's notice: (i) a cash settlement attributed to such overproduction in the Lease or (ii) natural gas of like grade, quantity
and quality from another mutually agreeable source. Upon receiving such demand, the overproduced Party shall have sixty (60) days
to effect cash settlement or agree with the underproduced Party upon an alternate source of make-up gas. Any underproduced Party
electing to cash settle with the overproduced Party shall thereby indemnify and hold the overproduced Party harmless against any
causes of action, claims, losses or other actions which may be claimed by any third party.


 


The Operator shall be notified of any such
demand and of any cash settlement or agreement between the Parties hereto to make up gas in kind pursuant to this Section and the
gas balance accounts of the Parties shall be adjusted accordingly. Any cash settlement pursuant to this Section shall be on the
same basis as otherwise set forth in Section 7 above dealing with permanent cessation of production.


The provisions of this Section shall not
be applicable in the event an overproduced Party has disposed of its interest by transfer of its assets, in whole or in part, to
a subsidiary or parent company in which such parent or subsidiary owns a majority interest in such overproduced Party.


 


 


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12. This Agreement shall remain
in force and effect as long as the Joint Operating Agreement is in effect and thereafter until the gas balance accounts between
the Parties are settled in full and shall accrue to the benefit and be binding upon the Parties hereto, their successors, representatives,
and assigns.
  


 


 


 


 


 


 


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