to
continue to conduct all operations with respect to such Lease to the extent
requiring access to the surface of the lands governed by the Surface Use
Agreement in consideration for Owner assuming all obligations of Surface
Operator thereunder, all in accordance with the terms hereof; and
WHEREAS, entering into this Agreement will further the Transaction for the
mutual benefit of the Parties;
NOW, THEREFORE, for and in consideration of the benefits herein contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties hereby agree as follows:
ARTICLE I
OPERATIONS
1.1
OPERATIONS.
DURING THE TERM OF THIS AGREEMENT, SURFACE OPERATOR
SHALL CONDUCT SUCH OPERATIONS WITH RESPECT TO THE LEASE AND ALL OTHER ASSETS
(INCLUDING HYDROCARBONS), CONTRACTS AND INTERESTS HELD IN CONNECTION THEREWITH
OR PRODUCED THEREFROM (COLLECTIVELY WITH THE LEASE, THE "LEASE ASSETS") TO THE
EXTENT REQUIRING ACCESS TO THE SURFACE OF THE LANDS COVERED BY, OR
2
OTHERWISE RELATED TO OR ARISING UNDER, THE SURFACE USE AGREEMENT (SUCH
OPERATIONS BEING HEREIN REFERRED TO AS THE "SURFACE OPERATIONS"), IF ANY, AS
INSTRUCTED BY OWNER FROM TIME TO TIME.
1.2
STANDARD OF CARE.
SURFACE OPERATOR SHALL CONDUCT THE SURFACE
OPERATIONS IN A GOOD AND WORKMANLIKE MANNER IN ACCORDANCE WITH ALL APPLICABLE
LAWS AND GOOD INDUSTRY STANDARDS FOR PROTECTING HEALTH, SAFETY AND THE
ENVIRONMENT.
IF AT ANY TIME SURFACE OPERATOR DETERMINES THAT COMPLYING WITH
OWNER'S INSTRUCTIONS HEREUNDER WOULD BE INCONSISTENT WITH SUCH STANDARDS,
SURFACE OPERATOR SHALL PROMPTLY NOTIFY SURFACE OPERATOR OF ITS SPECIFIC CONCERNS
AND THE PARTIES SHALL AGREE ON HOW TO PROCEED, BUT FAILING SUCH AGREEMENT
SURFACE OPERATOR SHALL PROCEED AS INSTRUCTED BY OWNER; PROVIDED THAT SURFACE
OPERATOR SHALL NEVER BE OBLIGATED TO VIOLATE ANY LAW OR ANY GOOD INDUSTRY
STANDARD FOR PROTECTING HEALTH, SAFETY AND THE ENVIRONMENT AND PROVIDED THAT
OWNER SHALL FULLY RELEASE, INDEMNIFY AND HOLD HARMLESS SURFACE OPERATOR FROM ANY
LOSS, COST, EXPENSE, DAMAGE OR LIABILITY ARISING FROM SUCH ACTION(S) (OTHER THAN
TO THE EXTENT RESULTING FROM SURFACE OPERATOR'S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT IN CONDUCTING SURFACE OPERATIONS) REGARDLESS OF SIMPLE NEGLIGENCE OR
STRICT LIABILITY.
ARTICLE II
ACCOUNTING
2.1
INVOICES.
THE PARTIES SHALL USE REASONABLE EFFORTS TO CAUSE ALL
THIRD PARTY INVOICES FOR SERVICES RENDERED IN CONNECTION WITH THE SURFACE
OPERATIONS (EACH, A "THIRD PARTY INVOICE") TO BE DELIVERED DIRECTLY TO OWNER FOR
PAYMENT.
SURFACE OPERATOR SHALL PROMPTLY FORWARD TO OWNER ALL THIRD PARTY
INVOICES IT RECEIVES, IN ORDER FOR OWNER TO HAVE SUFFICIENT TIME TO PAY SAME,
TOGETHER WITH SUCH SUPPORTING MATERIAL AS IS REASONABLY NECESSARY TO DOCUMENT
ANY THIRD PARTY INVOICE OR AS OWNER MAY REASONABLY REQUEST. SURFACE OPERATOR
SHALL OBTAIN THE CONSENT OF OWNER FOR NON-RECURRING EXPENSES OR ANY COSTS
OUTSIDE THE ORDINARY OPERATIONS IN CONNECTION WITH THE SURFACE OPERATIONS IN
EXCESS OF $25,000.
2.2
OUT OF POCKET EXPENSES.
OWNER SHALL REIMBURSE SURFACE OPERATOR ON
A MONTHLY BASIS FOR ALL DIRECT AND INDIRECT EXPENSES INCLUDING REASONABLE
OVERHEAD AND INDIRECT COSTS, INCURRED BY SURFACE OPERATOR IN CONDUCTING
OPERATIONS ON BEHALF OF OWNER HEREUNDER.
SUCH REIMBURSEMENT SHALL BE DETERMINED