BY A THIRD PARTY, CONSISTENT WITH OTHER OIL AND GAS OPERATORS IN THE
AREA OF THE RESPECTIVE OIL AND GAS PROPERTIES (OTHER THAN THOSE THE FAILURE OF
WHICH TO MAINTAIN IN ACCORDANCE WITH THIS SECTION 7.17 COULD NOT REASONABLY BE
EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT).
SECTION 7.18
GAS IMBALANCES, PREPAYMENTS.
EXCEPT
AS SET FORTH ON SCHEDULE 7.18 OR ON THE MOST RECENT CERTIFICATE DELIVERED
PURSUANT TO SECTION 8.12(C), ON A NET BASIS THERE ARE NO GAS IMBALANCES, TAKE OR
PAY OR OTHER PREPAYMENTS WHICH WOULD REQUIRE THE BORROWER OR ANY OF ITS
SUBSIDIARIES TO DELIVER HYDROCARBONS PRODUCED FROM THEIR OIL AND GAS PROPERTIES
AT SOME FUTURE TIME WITHOUT THEN OR THEREAFTER RECEIVING FULL PAYMENT THEREFOR
EXCEEDING 1.5 BCF OF GAS (ON AN MCF EQUIVALENT BASIS) IN THE AGGREGATE.
SECTION 7.19
MARKETING OF PRODUCTION.
EXCEPT FOR
CONTRACTS LISTED AND IN EFFECT ON THE DATE HEREOF ON SCHEDULE 7.19, AND
THEREAFTER EITHER DISCLOSED IN WRITING TO THE ADMINISTRATIVE AGENT OR INCLUDED
IN THE MOST RECENTLY DELIVERED RESERVE REPORT (WITH RESPECT TO ALL OF WHICH
CONTRACTS THE BORROWER REPRESENTS THAT IT OR ITS SUBSIDIARIES ARE RECEIVING A
PRICE FOR ALL PRODUCTION SOLD THEREUNDER WHICH IS COMPUTED SUBSTANTIALLY IN
ACCORDANCE WITH THE TERMS OF THE RELEVANT CONTRACT AND ARE NOT HAVING DELIVERIES
CURTAILED SUBSTANTIALLY BELOW THE SUBJECT
53
PROPERTY'S DELIVERY CAPACITY), NO MATERIAL AGREEMENTS EXIST WHICH ARE NOT
CANCELABLE ON 60 DAYS NOTICE OR LESS WITHOUT PENALTY OR DETRIMENT FOR THE SALE
OF PRODUCTION FROM THE BORROWER'S OR ITS SUBSIDIARIES' HYDROCARBONS (INCLUDING,
WITHOUT LIMITATION, CALLS ON OR OTHER RIGHTS TO PURCHASE, PRODUCTION, WHETHER OR
NOT THE SAME ARE CURRENTLY BEING EXERCISED) THAT (A) PERTAIN TO THE SALE OF
PRODUCTION AT A FIXED PRICE AND (B) HAVE A MATURITY OR EXPIRY DATE OF LONGER
THAN SIX (6) MONTHS FROM THE DATE HEREOF.
SECTION 7.20
SWAP AGREEMENTS.
SCHEDULE 7.20, AS
OF THE DATE HEREOF, AND AFTER THE DATE HEREOF, EACH REPORT REQUIRED TO BE
DELIVERED BY THE BORROWER PURSUANT TO SECTION 8.01(E), SETS FORTH, A TRUE AND
COMPLETE LIST OF ALL SWAP AGREEMENTS OF THE BORROWER AND EACH SUBSIDIARY, THE
MATERIAL TERMS THEREOF (INCLUDING THE TYPE, TERM, EFFECTIVE DATE, TERMINATION
DATE AND NOTIONAL AMOUNTS OR VOLUMES), THE NET MARK TO MARKET VALUE THEREOF, ALL
CREDIT SUPPORT AGREEMENTS RELATING THERETO (INCLUDING ANY MARGIN REQUIRED OR
SUPPLIED) AND THE COUNTERPARTY TO EACH SUCH AGREEMENT.
SECTION 7.21
USE OF LOANS AND LETTERS OF CREDIT.
THE PROCEEDS OF THE LOANS AND THE LETTERS OF CREDIT SHALL BE USED TO (A) FINANCE
ACQUISITIONS, (B) FINANCE EXPLORATION AND PRODUCTION OPERATIONS OF THE BORROWER
AND ITS SUBSIDIARIES AND (C) PROVIDE FOR WORKING CAPITAL FOR AND FOR GENERAL
CORPORATE PURPOSES OF THE BORROWER AND ITS SUBSIDIARIES.
THE BORROWER AND ITS
SUBSIDIARIES ARE NOT ENGAGED PRINCIPALLY, OR AS ONE OF ITS OR THEIR IMPORTANT
ACTIVITIES, IN THE BUSINESS OF EXTENDING CREDIT FOR THE PURPOSE, WHETHER
IMMEDIATE, INCIDENTAL OR ULTIMATE, OF BUYING OR CARRYING MARGIN STOCK (WITHIN
THE MEANING OF REGULATION T, U OR X OF THE BOARD).
NO PART OF THE PROCEEDS