A.A.P.L. FORM 610 - 1989
FORM OPERATING AGREEMENT
OPERATING AGREEMENT
DATED ___________________________
OPERATOR
WHITT OIL & GAS, INC.
CONTRACT AREA
AS DESCRIBED ON EXHIBIT "A" ATTACHED HERETO.
COUNTY OR PARISH OF
SHACKELFORD, CALLAHAN AND STEPHENS, STATE OF
TEXAS
COPYRIGHT 1989 - ALL RIGHTS RESERVED AMERICAN
ASSOCIATION OF PETROLEUM LANDMEN, 4100 FOSSIL
CREEK BLVD. FORT WORTH, TEXAS, 76137, APPROVED FORM.
A.A.P.L. NO. 610 - 1989
TABLE OF CONTENTS
Article
Title
Page
I.
DEFINITIONS
1
II.
EXHIBITS
2
III.
INTERESTS OF PARTIES
3
A.
OIL AND GAS INTERESTS:
3
B.
INTERESTS OF PARTIES IN COSTS AND PRODUCTION:
3
C.
SUBSEQUENTLY CREATED INTERESTS:
3
IV.
TITLES
4
A.
TITLE EXAMINATION:
4
B.
LOSS OR FAILURE OF TITLE:
4
1.
Failure of Title
4
2.
Loss by Non-Payment or Erroneous Payment of Amount Due
5
3.
Other Losses
6
4.
Curing Title
6
V.
OPERATOR
6
A.
DESIGNATION AND RESPONSIBILITIES OF OPERATOR:
6
B.
RESIGNATION OR REMOVAL OF OPERATOR AND SELECTION OF SUCCESSOR:
6
1.
Resignation or Removal of Operator
7
2.
Selection of Successor Operator
7
3.
Effect of Bankruptcy
7
C.
EMPLOYEES AND CONTRACTORS: 7
D.
RIGHTS AND DUTIES OF OPERATOR: 7
1.
Competitive Rates and Use of Affiliates
7
2.
Discharge of Joint Account Obligations
7
3.
Protection from Liens
8
4.
Custody of Funds
8
5.
Access to Contract Area and Records
8
6.
Filing and Furnishing Governmental Reports
8
7.
Drilling and Testing Operations
8
8.
Cost Estimates
8
9.
Insurance
9
VI.
DRILLING AND DEVELOPMENT
9
A.
INITIAL WELL:
9
B.
SUBSEQUENT OPERATIONS:
9
1.
Proposed Operations
9
2.
Operations by Less Than All Parties
10
3.
Stand-By Costs
12
4.
Deepening
13
5.
Sidetracking
13
6.
Order of Preference of Operations
14
7.
Conformity to Spacing Pattern
14
8.
Paying Wells
14
C.
COMPLETION OF WELLS; REWORKING AND PLUGGING BACK:
14
1.
Completion
14
2.
Rework, Recomplete or Plug Back
15
D.
OTHER OPERATIONS:
15
E.
ABANDONMENT OF WELLS:
15
1.
Abandonment of Dry Holes
15
2.
Abandonment of Wells That Have Produced
16
3.
Abandonment of Non-Consent Operations
16
F.
TERMINATION OF OPERATIONS:
17
G.
TAKING PRODUCTION IN KIND:
17
(Option 1) Gas Balancing Agreement
20
i
(Option 2) No Gas Balancing Agreement
18
VII.
EXPENDITURES AND LIABILITY OF PARTIES
18
A.
LIABILITY OF PARTIES:
18
B.
LIENS AND SECURITY INTERESTS:
19
C.
ADVANCES:
20
D.
DEFAULTS AND REMEDIES:
20
1.
Suspension of Rights
20
2.
Suit for Damages
21
3.
Deemed Non-Consent
21
4.
Advance Payment
21
5.
Costs and Attorneys' Fees
21
E.
RENTALS, SHUT-IN WELL PAYMENTS AND MINIMUM ROYALTIES:
21
F.
TAXES:
22
VIII.
ACQUISITION, MAINTENANCE OR TRANSFER OF INTEREST
22
A.
SURRENDER OF LEASES:
22
B.
RENEWAL OR EXTENSION OF LEASES:
23
C.
ACREAGE OR CASH CONTRIBUTIONS:
24
D.
ASSIGNMENT; MAINTENANCE OF UNIFORM INTEREST:
24
E.
WAIVER OF RIGHTS TO PARTITION:
24
F.
PREFERENTIAL RIGHT TO PURCHASE:
25
IX.
INTERNAL REVENUE CODE ELECTION
25
X.
CLAIMS AND LAWSUITS
25
XI.
FORCE MAJEURE
26
XII.
NOTICES
26
XIII.
TERM OF AGREEMENT