ANY ONE OR MORE OF THE FORMATIONS OR
HORIZONS THEREUNDER, AND AS TO ANY OF THE SUBJECT MINERALS, WHEN, IN THE
REASONABLE JUDGMENT OF GRANTOR, IT IS NECESSARY OR ADVISABLE TO DO SO IN ORDER
TO FORM A DRILLING OR PRORATION UNIT TO FACILITATE THE ORDERLY DEVELOPMENT OF
THE SUBJECT INTERESTS OR TO COMPLY WITH THE REQUIREMENTS OF ANY LAW OR
GOVERNMENTAL ORDER OR REGULATION RELATING TO THE SPACING OF WELLS OR PRORATION
OF THE PRODUCTION THEREFROM.
FOR PURPOSES OF COMPUTING THE NET PROFITS, THERE
SHALL BE ALLOCATED TO THE SUBJECT INTERESTS INCLUDED IN SUCH UNIT A PRO RATA
PORTION OF THE MINERALS PRODUCED FROM THE POOLED UNIT ON THE SAME BASIS THAT
PRODUCTION FROM THE POOL OR UNIT IS ALLOCATED TO OTHER WORKING INTERESTS IN SUCH
POOL OR UNIT.
THE INTEREST IN ANY SUCH UNIT ATTRIBUTABLE TO THE SUBJECT
INTERESTS (OR ANY PART THEREOF) INCLUDED THEREIN SHALL BECOME A PART OF THE
SUBJECT INTERESTS AND SHALL BE SUBJECT TO THE NET PROFITS INTEREST IN THE SAME
MANNER AND WITH THE SAME EFFECT AS IF SUCH UNIT AND THE INTEREST OF GRANTOR
THEREIN WERE SPECIFICALLY DESCRIBED IN EXHIBIT A TO THIS CONVEYANCE.
4.3
NON-CONSENT.
IF GRANTOR ELECTS TO BE A NON-PARTICIPATING PARTY
(WHETHER PURSUANT TO AN OPERATING AGREEMENT OR OTHER AGREEMENT OR ARRANGEMENT,
INCLUDING WITHOUT LIMITATION, NON-CONSENT RIGHTS AND OBLIGATIONS IMPOSED BY
STATUTE OR REGULATORY AGENCY) WITH RESPECT TO ANY OPERATION ON ANY SUBJECT
INTEREST OR ELECTS TO BE AN ABANDONING PARTY WITH RESPECT TO A SUBJECT WELL
LOCATED ON ANY SUBJECT INTEREST, THE CONSEQUENCE OF WHICH ELECTION IS THAT
GRANTOR'S INTEREST IN SUCH SUBJECT INTEREST OR PART THEREOF IS TEMPORARILY
(I.E., DURING A RECOUPMENT PERIOD) OR PERMANENTLY FORFEITED TO THE PARTIES
PARTICIPATING IN SUCH OPERATIONS, OR ELECTING NOT TO ABANDON SUCH SUBJECT WELL,
THEN THE COSTS AND PROCEEDS ATTRIBUTABLE TO SUCH FORFEITED INTEREST SHALL NOT,
FOR THE PERIOD OF SUCH FORFEITURE (WHICH MAY BE A CONTINUOUS AND PERMANENT
PERIOD), BE DEBITED OR CREDITED TO THE NET PROFITS ACCOUNT AND SUCH FORFEITED
INTEREST SHALL NOT, FOR THE PERIOD OF SUCH FORFEITURE, BE SUBJECT TO THE NET
PROFITS INTEREST.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN,
GRANTOR SHALL NOT ELECT, AS TO ANY SUBJECT INTEREST, TO BE A NON-PARTICIPATING
PARTY WITH RESPECT TO ANY OPERATION CONTEMPLATED IN THIS SECTION 4.3 IN THE
EVENT ANY AFFILIATE OF GRANTOR WILL ALSO BE A PARTICIPATING PARTY IN SUCH
OPERATION.
4.4
MARKETING/HEDGES.
AS BETWEEN GRANTOR AND GRANTEE, GRANTOR SHALL
HAVE EXCLUSIVE CHARGE AND CONTROL OF THE MARKETING OF ALL SUBJECT MINERALS
ALLOCABLE TO THE NET PROFITS INTEREST.
GRANTOR SHALL MARKET THE SUBJECT
MINERALS ALLOCABLE TO THE NET PROFITS INTEREST IN THE SAME MANNER THAT IT
MARKETS ITS SUBJECT MINERALS AND GRANTOR SHALL NOT BE ENTITLED TO DEDUCT FROM
THE CALCULATION OF THE NET PROFITS ANY FEE FOR MARKETING THE SUBJECT MINERALS
ALLOCABLE TO THE NET PROFITS INTEREST.
GRANTOR SHALL NOT ENTER INTO ANY HEDGES
(OTHER THAN THE EXISTING HEDGES) WITH RESPECT TO THE SUBJECT MINERALS FROM AND
AFTER THE EFFECTIVE TIME.
4.5
AMENDMENT OF LEASES.