OUT OF
PRODUCTION, GATHERING, PROCESSING AND TRANSPORTATION COSTS AND ANY PRODUCTION,
SEVERANCE, SALES, EXCISE OR SIMILAR TAXES NOT REIMBURSED TO SELLER BY THE
PURCHASER OF PRODUCTION) PRODUCED FROM OR ATTRIBUTABLE TO THE PROPERTIES DURING
THE ADJUSTMENT PERIOD, AND (II) OTHER PROCEEDS EARNED WITH RESPECT TO THE ASSETS
DURING THE ADJUSTMENT PERIOD;
(B)
REDUCED TO THE EXTENT PROVIDED IN SECTION 7.7 WITH RESPECT TO
PREFERENCE RIGHTS AND RETAINED ASSETS;
(C)
(I) IF THE PARTIES MAKE THE ELECTION UNDER SECTION 3.4(D)(I) WITH
RESPECT TO A TITLE DEFECT, SUBJECT TO THE INDIVIDUAL TITLE DEDUCTIBLE AND THE
AGGREGATE DEFECT DEDUCTIBLE, REDUCED BY THE TITLE DEFECT AMOUNT WITH RESPECT TO
SUCH TITLE DEFECT IF THE TITLE DEFECT AMOUNT HAS BEEN DETERMINED PRIOR TO
CLOSING AND (II) SUBJECT TO THE INDIVIDUAL BENEFIT DEDUCTIBLE AND THE AGGREGATE
BENEFIT DEDUCTIBLE, INCREASED BY THE TITLE BENEFIT AMOUNT WITH RESPECT TO EACH
TITLE BENEFIT FOR WHICH THE TITLE BENEFIT AMOUNT HAS BEEN DETERMINED PRIOR TO
CLOSING;
(D)
INCREASED BY THE AMOUNT OF ALL PROPERTY COSTS AND OTHER COSTS
ATTRIBUTABLE TO THE OWNERSHIP AND OPERATION OF THE ASSETS WHICH ARE PAID BY
SELLER AND INCURRED DURING THE ADJUSTMENT PERIOD (INCLUDING ANY OVERHEAD COSTS
UNDER SCHEDULE 1.4 DEEMED CHARGED TO THE ASSETS WITH RESPECT TO THE ADJUSTMENT
PERIOD EVEN THOUGH NOT ACTUALLY PAID), EXCEPT ANY PROPERTY COSTS AND OTHER SUCH
COSTS ALREADY DEDUCTED IN THE DETERMINATION OF PROCEEDS IN SECTION 2.2(A);
(E)
REDUCED TO THE EXTENT PROVIDED IN SECTION 3.4(D)(III) FOR ANY
PROPERTIES EXCLUDED FROM THE ASSETS PURSUANT TO SECTION 3.4(D)(III) AND REDUCED
TO THE EXTENT PROVIDED IN SECTION 4.3 FOR ENVIRONMENTAL DEFECTS;
(F)
REDUCED BY THE AGGREGATE AMOUNTS PAYABLE TO OWNERS OF WORKING
INTERESTS, ROYALTIES AND OVERRIDING ROYALTIES AND OTHER INTERESTS IN THE
PROPERTIES HELD IN SUSPENSE BY SELLER AS OF THE CLOSING DATE;
(G)
INCREASED OR REDUCED AS MUTUALLY AGREED UPON IN WRITING PRIOR TO
CLOSING BY SELLER AND PURCHASER;
6
(H)
INCREASED BY THE VALUE OF THE AMOUNT OF MERCHANTABLE HYDROCARBONS
STORED IN TANKS AND PIPELINES ATTRIBUTABLE TO THE OWNERSHIP AND OPERATION OF THE
ASSETS THAT BELONG TO SELLER AS OF THE EFFECTIVE TIME (WHICH VALUE SHALL BE
COMPUTED AT THE APPLICABLE THIRD-PARTY CONTRACT PRICES FOR THE MONTH OF DECEMBER
2006 FOR SUCH STORED HYDROCARBONS); AND
(I)
REDUCED BY THE ACTUAL NET AGGREGATE IMBALANCES, IF ANY, OWED BY
SELLER TO THIRD-PARTIES, AS OF THE EFFECTIVE TIME, MULTIPLIED BY A PRICE OF
$3.00 PER MMBTU.
Each adjustment made pursuant to Section 2.2(a) shall serve to satisfy, up to
the amount of the adjustment, Purchaser's entitlement under Section 1.4 to
Hydrocarbon production from or attributable to the Properties during the
Adjustment Period, and to the value of other income, proceeds, receipts and
credits earned with respect to the Assets during the Adjustment Period, and as
such, Purchaser shall not have any separate rights to receive any Hydrocarbon
production or income, proceeds, receipts and credits with respect to which an
adjustment has been made. Similarly, the adjustment described in Section 2.2(d)
shall serve to satisfy, up to the amount of the