Document:

Joint Operating Agreement

 Exhibit 10.1 
 A.A.P.L. FORM 610 - 1989 
 MODEL FORM OPERATING AGREEMENT 

OPERATING AGREEMENT 
 DATED 
 December 31, 2010, 

                   
     year 
  

			
	OPERATOR	 	 Haas Petroleum, LLC

			
		
	CONTRACT AREA	 	 The leases comprising the Black Oaks Leasehold are specifically described in Exhibit A of
this

	 Joint Operating Agreement.

	  

	  

	  

	COUNTY OF Greenwood and Woodson, STATE OF Kansas

 

	
	 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

 A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989 

TABLE OF CONTENTS 
  

											
	 Article
	  	 	  	 	 	 Title
	  	Page	 
	I.	  	DEFINITIONS	  	 	1	  
	II.	  	EXHIBITS	  	 	2	  
	III.	  	INTERESTS OF PARTIES	  	 	2	  
		  	A.	  	OIL AND GAS INTERESTS:	  	 	2	  
		  	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	  	 	5	  
		  		  	  4.	 	Curing Title	  	 	5	  
	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	  	 	6	  
		  		  	  2.	 	Selection of Successor Operator	  	 	6	  
		  		  	  3.	 	Effect of Bankruptcy	  	 	6	  
		  	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	  	 	7	  
		  		  	  4.	 	Custody of Funds	  	 	7	  
		  		  	  5.	 	Access to Contract Area and Records	  	 	7	  
		  		  	  6.	 	Filing and Furnishing Governmental Reports	  	 	7	  
		  		  	  7.	 	Drilling and Testing Operations	  	 	7	  
		  		  	  8.	 	Cost Estimates	  	 	8	  
		  		  	  9.	 	Insurance	  	 	8	  
	VI.	  	DRILLING AND DEVELOPMENT	  	 	8	  
		  	A.	  	INITIAL WELL:	  	 	8	  
		  	B.	  	SUBSEQUENT OPERATIONS:	  	 	8	  
		  		  	  1.	 	Proposed Operations	  	 	8	  
		  		  	  2.	 	Operations by Less Than All Parties	  	 	9	  
		  		  	  3.	 	Stand-By Costs	  	 	11	  
		  		  	  4.	 	Deepening	  	 	11	  
		  		  	  5.	 	Sidetracking	  	 	12	  
		  		  	  6.	 	Order of Preference of Operations	  	 	12	  
		  		  	  7.	 	Conformity to Spacing Pattern	  	 	12	  
		  		  	  8.	 	Paying Wells	  	 	12	  
		  	C.	  	COMPLETION OF WELLS; REWORKING AND PLUGGING BACK:	  	 	12	  
		  		  	  1.	 	Completion	  	 	12	  
		  		  	  2.	 	Rework, Recomplete or Plug Back	  	 	12	  
		  	D.	  	OTHER OPERATIONS:	  	 	13	  
		  	E.	  	ABANDONMENT OF WELLS:	  	 	13	  
		  		  	  1.	 	Abandonment of Dry Holes	  	 	13	  
		  		  	  2.	 	Abandonment of Wells That Have Produced	  	 	13	  
		  		  	  3.	 	Abandonment of Non-Consent Operations	  	 	14	  
		  	F.	  	TERMINATION OF OPERATIONS:	  	 	14	  
		  	G.	  	TAKING PRODUCTION IN KIND:	  	 	14	  
		  		  	(Option 1) Gas Balancing Agreement	  	 	14	  
		  		  	(Option 2) No Gas Balancing Agreement	  	 	14	  

  
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 A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989 

TABLE OF CONTENTS 
  

											
	VII.	  	EXPENDITURES AND LIABILITY OF PARTIES	  	 	15	  
		  	A.	  	LIABILITY OF PARTIES:	  	 	15	  
		  	B.	  	LIENS AND SECURITY INTERESTS:	  	 	15	  
		  	C.	  	ADVANCES:	  	 	16	  
		  	D.	  	DEFAULTS AND REMEDIES:	  	 	17	  
		  		  	  1.	 	Suspension of Rights	  	 	17	  
		  		  	  2.	 	Suit for Damages	  	 	17	  
		  		  	  3.	 	Deemed Non-Consent	  	 	17	  
		  		  	  4.	 	Advance Payment	  	 	17	  
		  		  	  5.	 	Costs and Attorneys’ Fees	  	 	17	  
		  	E.	  	RENTALS, SHUT-IN WELL PAYMENTS AND MINIMUM ROYALTIES:	  	 	18	  
		  	F.	  	TAXES:	  	 	18	  
	VIII.	  	ACQUISITION, MAINTENANCE OR TRANSFER OF INTEREST	  	 	18	  
		  	A.	  	SURRENDER OF LEASES:	  	 	18	  
		  	B.	  	RENEWAL OR EXTENSION OF LEASES:	  	 	19	  
		  	C.	  	ACREAGE OR CASH CONTRIBUTIONS:	  	 	20	  
		  	D.	  	ASSIGNMENT; MAINTENANCE OF UNIFORM INTEREST:	  	 	20	  
		  	E.	  	WAIVER OF RIGHTS TO PARTITION:	  	 	20	  
		  	F.	  	PREFERENTIAL RIGHT TO PURCHASE:	  	 	21	  
	IX.	  	INTERNAL REVENUE CODE ELECTION	  	 	21	  
	X.	  	CLAIMS AND LAWSUITS 	  	 	21	  
	XI.	  	FORCE MAJEURE 	  	 	22	  
	XII.	  	NOTICES 	  	 	22	  
	XIII.	  	TERM OF AGREEMENT 	  	 	22	  
	XIV.	  	COMPLIANCE WITH LAWS AND REGULATIONS 	  	 	23	  
		  	A.	  	LAWS, REGULATIONS AND ORDERS:	  	 	23	  
		  	B.	  	GOVERNING LAW:	  	 	23	  
		  	C.	  	REGULATORY AGENCIES:	  	 	23	  
	XV.	  	MISCELLANEOUS 	  	 	23	  
		  	A.	  	EXECUTION:	  	 	23	  
		  	B.	  	SUCCESSORS AND ASSIGNS:	  	 	24	  
		  	C.	  	COUNTERPARTS:	  	 	24	  
		  	D.	  	SEVERABILITY	  	 	24	  
	XVI.	  	OTHER PROVISIONS 	  	 	24	  

  
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 A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989 

 
 OPERATING AGREEMENT 

THIS AGREEMENT, entered into by and between Haas Petroleum, LLC, hereinafter designated and referred to as
“Operator,” and the signatory party or parties other than Operator, sometimes hereinafter referred to individually as “Non-Operator,” and collectively as “Non-Operators.” 

WITNESSETH: 
 WHEREAS, the parties to this agreement are owners of Oil and Gas Leases and/or Oil and Gas Interests in the land identified in Exhibit “A,” and the parties hereto have reached an agreement to
explore and develop these Leases and/or Oil and Gas Interests for the production of Oil and Gas to the extent and as hereinafter provided, NOW, THEREFORE, it is agreed as follows: 

ARTICLE I. 

DEFINITIONS 
 As used in this agreement, the following words and terms shall have the meanings here ascribed to them: 
 A. The term “AFE” shall mean an Authority for Expenditure prepared by a party to this agreement for the purpose of estimating the costs to be incurred in conducting an operation hereunder.

 B. The term “Completion” or “Complete” shall mean a single operation intended to complete a well as a
producer of Oil and Gas in one or more Zones, including, but not limited to, the setting of production casing, perforating, well stimulation and production testing conducted in such operation. 

C. The term “Contract Area” shall mean all of the lands, Oil and Gas Leases and/or Oil and Gas Interests intended to be
developed and operated for Oil and Gas purposes under this agreement. Such lands, Oil and Gas Leases and Oil and Gas Interests are described in Exhibit “A.” 
 D. The term “Deepen” shall mean a single operation whereby a well is drilled to an objective Zone below the deepest Zone in which the well was previously drilled, or below the Deepest Zone
proposed in the associated AFE, whichever is the lesser. 
 E. The terms “Drilling Party” and “Consenting
Party” shall mean a party who agrees to join in and pay its share of the cost of any operation conducted under the provisions of this agreement. 
 F. The term “Drilling Unit” shall mean the area fixed for the drilling of one well by order or rule of any state or federal body having authority. If a Drilling Unit is not fixed by any such
rule or order, a Drilling Unit shall be the drilling unit as established by the pattern of drilling in the Contract Area unless fixed by express agreement of the Drilling Parties. 

G. The term “Drillsite” shall mean the Oil and Gas Lease or Oil and Gas Interest on which a proposed well is to be located.

 H. The term “Initial Well” shall mean the well required to be drilled by the parties hereto as provided in Article
VI.A. 
 I. The term “Non-Consent Well” shall mean a well in which less than all parties have conducted an operation
as provided in Article VI.B.2. 
 J. The terms “Non-Drilling Party” and “Non-Consenting Party” shall mean a
party who elects not to participate in a proposed operation. 
 K. The term “Oil and Gas” shall mean oil, gas,
casinghead gas, gas condensate, and/or all other liquid or gaseous hydrocarbons and other marketable substances produced therewith, unless an intent to limit the inclusiveness of this term is specifically stated. 

L. The term “Oil and Gas Interests” or “Interests” shall mean unleased fee and mineral interests in Oil and Gas in
tracts of land lying within the Contract Area which are owned by parties to this agreement. 

  
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 A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989 

 
 M. The terms “Oil and Gas Lease,” “Lease”
and “Leasehold” shall mean the oil and gas leases or interests therein covering tracts of land lying within the Contract Area which are owned by the parties to this agreement. 

N. The term “Plug Back” shall mean a single operation whereby a deeper Zone is abandoned in order to attempt a Completion in a
shallower Zone. 
 O. The term “Recompletion” or “Recomplete” shall mean an operation whereby a Completion
in one Zone is abandoned in order to attempt a Completion in a different Zone within the existing wellbore. 
 P. The term
“Rework” shall mean an operation conducted in the wellbore of a well after it is Completed to secure, restore, or improve production in a Zone which is currently open to production in the wellbore. Such operations include, but are not
limited to, well stimulation operations but exclude any routine repair or maintenance work or drilling, Sidetracking, Deepening, Completing, Recompleting, or Plugging Back of a well. 

Q. The term “Sidetrack” shall mean the directional control and intentional deviation of a well from vertical so as to change
the bottom hole location unless done to straighten the hole or drill around junk in the hole to overcome other mechanical difficulties. 
 R. The term “Zone” shall mean a stratum of earth containing or thought to contain a common accumulation of Oil and Gas separately producible from any other common accumulation of Oil and Gas.

 Unless the context otherwise clearly indicates, words used in the singular include the plural, the word “person”
includes natural and artificial persons, the plural includes the singular, and any gender includes the masculine, feminine, and neuter. 
 ARTICLE II. 
 EXHIBITS 

The following exhibits, as indicated below and attached hereto, are incorporated in and made a part hereof: 

 

					
	  X  	 	A.	  	Exhibit “A,” shall include the following information:
		 		  	(1) Description of lands subject to this agreement,
		 		  	(2) Restrictions, if any, as to depths, formations, or substances,
		 		  	(3) Parties to agreement with addresses and telephone numbers for notice purposes,
		 		  	(4) Percentages or fractional interests of parties to this agreement,
		 		  	(5) Oil and Gas Leases and/or Oil and Gas Interests subject to this agreement,
		 		  	(6) Burdens on production.
	  X  	 	B.	  	Exhibit “B,” Form of Lease.
	  X  	 	C.	  	Exhibit “C,” Accounting Procedure.
	 	 	D.	  	Exhibit “D,” Insurance.
	 	 	E.	  	Exhibit “E,” Gas Balancing Agreement.
	 	 	F.	  	Exhibit “F,” Non-Discrimination and Certification of Non-Segregated Facilities.
	 	 	G.	  	Exhibit “G,” Tax Partnership.
	  X  	 	H.	  	Other: Participation Agreement between MorMeg, LLC Haas Petroleum, LLC and Black Sable Energy

If any provision of any exhibit, except Exhibits “E,” “F” and “G,” is inconsistent with any provision
contained in the body of this agreement, the provisions in the body of this agreement shall prevail. 
 ARTICLE III.

 INTERESTS OF PARTIES 
 A. Oil and Gas Interests: 
 If any party owns an Oil and Gas Interest in the
Contract Area, that Interest shall be treated for all purposes of this agreement and during the term hereof as if it were covered by the form of Oil and Gas Lease attached hereto as Exhibit “B,” and the owner thereof shall be deemed to own
both royalty interest in such lease and the interest of the lessee thereunder. 

  
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 A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989 

 
 B. Interests of Parties in Costs and Production: 

Unless changed by other provisions, all costs and liabilities incurred in operations under this agreement shall be borne and paid, and all
equipment and materials acquired in operations on the Contract Area shall be owned, by the parties as their interests are set forth in Exhibit “A.” In the same manner, the parties shall also own all production of Oil and Gas from the
Contract Area subject, however, to the payment of royalties and other burdens on production as described hereafter. 

Regardless of which party has contributed any Oil and Gas Lease or Oil and Gas Interest on which royalty or other burdens may be payable
and except as otherwise expressly provided in this agreement, each party shall pay or deliver, or cause to be paid or delivered, all burdens on its share of the production from the Contract Area up to, but not in excess of, the royalty burdens
stipulated in each lease and shall indemnify, defend and hold the other parties free from any liability therefor. Except as otherwise expressly provided in this agreement, if any party has contributed hereto any Lease or Interest which is
burdened with any royalty, overriding royalty, production payment or other burden on production in excess of the amounts stipulated above, such party so burdened shall assume and alone bear all such excess obligations and shall indemnify, defend and
hold the other parties hereto harmless from any and all claims attributable to such excess burden. However, so long as the Drilling Unit for the productive Zone(s) is identical with the Contract Area, each party shall pay or deliver, or cause to be
paid or delivered, all burdens on production from the Contract Area due under the terms of the Oil and Gas Lease(s) which such party has contributed to this agreement, and shall indemnify, defend and hold the other parties free from any liability
therefor. 
 No party shall ever be responsible, on a price basis higher than the price received by such party, to any other
party’s lessor or royalty owner, and if such other party’s lessor or royalty owner should demand and receive settlement on a higher price basis, the party contributing the affected Lease shall bear the additional royalty burden
attributable to such higher price. 
 Nothing contained in this Article III.B. shall be deemed an assignment or cross-assignment
of interests covered hereby, and in the event two or more parties contribute to this agreement jointly owned Leases, the parties’ undivided interests in said Leaseholds shall be deemed separate leasehold interests for the purposes of this
agreement. 
 C. Subsequently Created Interests: 
 If any party has contributed hereto a Lease or Interest that is burdened with an assignment of production given as security for the payment of money, or if, after the date of this agreement, any party
creates an overriding royalty, production payment, net profits interest, assignment of production or other burden payable out of production attributable to its working interest hereunder, such burden shall be deemed a “Subsequently Created
Interest.” Further, if any party has contributed hereto a Lease or Interest burdened with an overriding royalty, production payment, net profits interests, or other burden payable out of production created prior to the date of this agreement,
and such burden is not shown on Exhibit “A,” such burden also shall be deemed a Subsequently Created Interest to the extent such burden causes the burdens on such party’s Lease or Interest to exceed the amount stipulated in Article
III.B. above. 
 The party whose interest is burdened with the Subsequently Created Interest (the “Burdened Party”)
shall assume and alone bear, pay and discharge the Subsequently Created Interest and shall indemnify, defend and hold harmless the other parties from and against any liability therefor. Further, if the Burdened Party fails to pay, when due, its
share of expenses chargeable hereunder, all provisions of Article VII.B. shall be enforceable against the Subsequently Created Interest in the same manner as they are enforceable against the working interest of the Burdened Party. If the Burdened
Party is required under this agreement to assign or relinquish to any other party, or parties, all or a portion of its working interest and/or the production attributable thereto, said other party, or parties, shall receive said assignment and/or
production free and clear of said Subsequently Created Interest, and the Burdened Party shall indemnify, defend and hold harmless said other party, or parties, from any and all claims and demands for payment asserted by owners of the Subsequently
Created Interest. 

  
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 A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989 

 
 ARTICLE IV. 

TITLES 
 A. Title
Examination: 
 Title examination shall be made on the Drillsite of any proposed well prior to commencement of drilling
operations and, if a majority in interest of the Drilling Parties so request or Operator so elects, title examination shall be made on the entire Drilling Unit, or maximum anticipated Drilling Unit, of the well. The opinion will include the
ownership of the working interest, minerals, royalty, overriding royalty and production payments under the applicable Leases. Each party contributing Leases and/or Oil and Gas Interests to be included in the Drillsite or Drilling Unit, if
appropriate, shall furnish to Operator all abstracts (including federal lease status reports), title opinions, title papers and curative material in its possession free of charge. All such information not in the possession of or made available to
Operator by the parties, but necessary for the examination of the title, shall be obtained by Operator. Operator shall cause title to be examined by attorneys on its staff or by outside attorneys. Copies of all title opinions shall be furnished to
each Drilling Party. Costs incurred by Operator in procuring abstracts, fees paid outside attorneys for title examination (including preliminary, supplemental, shut-in royalty opinions and division order title opinions) and other direct charges as
provided in Exhibit “C” shall be borne by the Drilling Parties in the proportion that the interest of each Drilling Party bears to the total interest of all Drilling Parties as such interests appear in Exhibit “A.” Operator shall
make no charge for services rendered by its staff attorneys or other personnel in the performance of the above functions. 

Each party shall be responsible for securing curative matter and pooling amendments or agreements required in connection with Leases or
Oil and Gas Interests contributed by such party. Operator shall be responsible for the preparation and recording of pooling designations or declarations and communitization agreements as well as the conduct of hearings before governmental agencies
for the securing of spacing or pooling orders or any other orders necessary or appropriate to the conduct of operations hereunder. This shall not prevent any party from appearing on its own behalf at such hearings. Costs incurred by Operator,
including fees paid to outside attorneys, which are associated with hearings before governmental agencies, and which costs are necessary and proper for the activities contemplated under this agreement, shall be direct charges to the joint account
and shall not be covered by the administrative overhead charges as provided in Exhibit “C.” 
 Operator shall make no charge for
services rendered by its staff attorneys or other personnel in the performance of the above functions. 
 No well shall be
drilled on the Contract Area until after (1) the title to the Drillsite or Drilling Unit, if appropriate, has been examined as above provided, and (2) the title has been approved by the examining attorney or title has been accepted by all
of the Drilling Parties in such well. 
 B. Loss or Failure of Title: 

1. Failure of Title: Should any Oil and Gas Interest or Oil and Gas Lease be lost through failure of title, which results in a
reduction of interest from that shown on Exhibit “A,” the party credited with contributing the affected Lease or Interest (including, if applicable, a successor in interest to such party) shall have ninety (90) days from final
determination of title failure to acquire a new lease or other instrument curing the entirety of the title failure, which acquisition will not be subject to Article VIII.B., and failing to do so, this agreement, nevertheless, shall continue in force
as to all remaining Oil and Gas Leases and Interests; and, 
 (a) The party credited with contributing the Oil and Gas Lease or
Interest affected by the title failure (including, if applicable, a successor in interest to such party) shall bear alone the entire loss and it shall not be entitled to recover from Operator or the other parties any development or operating costs
which it may have previously paid or incurred, but there shall be no additional liability on its part to the other parties hereto by reason of such title failure; 
 (b) There shall be no retroactive adjustment of expenses incurred or revenues received from the operation of the Lease or Interest which has failed, but the interests of the parties contained on Exhibit
“A” shall be revised on an acreage basis, as of the time it is determined finally that title failure has occurred, so that the interest of the party whose Lease or Interest is affected by the title failure will thereafter be reduced in the
Contract Area by the amount of the Lease or Interest failed; 
 (c) If the proportionate interest of the other parties hereto in
any producing well previously drilled on the Contract Area is increased by reason of the title failure, the party who bore the costs incurred in connection with such well attributable to the Lease or Interest which has failed shall receive the
proceeds attributable to the increase in such interest (less costs and burdens attributable thereto) until it has been reimbursed for unrecovered costs paid by it in connection with such well attributable to such failed Lease or Interest;

  
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 A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989 

 
 (d) Should any person not a party to this agreement, who is
determined to be the owner of any Lease or Interest which has failed, pay in any manner any part of the cost of operation, development, or equipment, such amount shall be paid to the party or parties who bore the costs which are so refunded;

 (e) Any liability to account to a person not a party to this agreement for prior production of Oil and Gas which arises by
reason of title failure shall be borne severally by each party (including a predecessor to a current party) who received production for which such accounting is required based on the amount of such production received, and each such party shall
severally indemnify, defend and hold harmless all other parties hereto for any such liability to account; 
 (f) No charge shall
be made to the joint account for legal expenses, fees or salaries in connection with the defense of the Lease or Interest claimed to have failed, but if the party contributing such Lease or Interest hereto elects to defend its title it shall bear
all expenses in connection therewith; and 
 (g) If any party is given credit on Exhibit “A” to a Lease or Interest
which is limited solely to ownership of an interest in the wellbore of any well or wells and the production therefrom, such party’s absence of interest in the remainder of the Contract Area shall be considered a Failure of Title as to such
remaining Contract Area unless that absence of interest is reflected on Exhibit “A.” 
 2. Loss by Non-Payment or
Erroneous Payment of Amount Due: If, through mistake or oversight, any rental, shut-in well payment, minimum royalty or royalty payment, or other payment necessary to maintain all or a portion of an Oil and Gas Lease or interest is not paid or
is erroneously paid, and as a result a Lease or Interest terminates, there shall be no monetary liability against the party who failed to make such payment. Unless the party who failed to make the required payment secures a new Lease or Interest
covering the same interest within ninety (90) days from the discovery of the failure to make proper payment, which acquisition will not be subject to Article VIII.B., the interests of the parties reflected on Exhibit “A” shall be
revised on an acreage basis, effective as of the date of termination of the Lease or Interest involved, and the party who failed to make proper payment will no longer be credited with an interest in the Contract Area on account of ownership of the
Lease or Interest which has terminated. If the party who failed to make the required payment shall not have been fully reimbursed, at the time of the loss, from the proceeds of the sale of Oil and Gas attributable to the lost Lease or Interest,
calculated on an acreage basis, for the development and operating costs previously paid on account of such Lease or Interest, it shall be reimbursed for unrecovered actual costs previously paid by it (but not for its share of the cost of any dry
hole previously drilled or wells previously abandoned) from so much of the following as is necessary to effect reimbursement: 

(a) Proceeds of Oil and Gas produced prior to termination of the Lease or Interest, less operating expenses and lease burdens chargeable
hereunder to the person who failed to make payment, previously accrued to the credit of the lost Lease or Interest, on an acreage basis, up to the amount of unrecovered costs; 
 (b) Proceeds of Oil and Gas, less operating expenses and lease burdens chargeable hereunder to the person who failed to make payment, up to the amount of unrecovered costs attributable to that portion of
Oil and Gas thereafter produced and marketed (excluding production from any wells thereafter drilled) which, in the absence of such Lease or Interest termination, would be attributable to the lost Lease or Interest on an acreage basis and which as a
result of such Lease or Interest termination is credited to other parties, the proceeds of said portion of the Oil and Gas to be contributed by the other parties in proportion to their respective interests reflected on Exhibit “A”; and,

 (c) Any monies, up to the amount of unrecovered costs, that may be paid by any party who is, or becomes, the owner of the
Lease or Interest lost, for the privilege of participating in the Contract Area or becoming a party to this agreement. 
 3.
Other Losses: All losses of Leases or Interests committed to this agreement, other than those set forth in Articles IV. B.1. and IV.B.2. above, shall be joint losses and shall be borne by all parties in proportion to their interests shown on
Exhibit “A.” This shall include but not be limited to the loss of any Lease or Interest through failure to develop or because express or implied covenants have not been performed (other than performance which requires only the payment of
money), and the loss of any Lease by expiration at the end of its primary term if it is not renewed or extended. There shall be no readjustment of interests in the remaining portion of the Contract Area on account of any joint loss. 

4. Curing Title: In the event of a Failure of Title under Article IV.B.1. or a loss of title under Article IV.B.2. above, any
Lease or Interest acquired by any party hereto (other than the party whose interest has failed or was lost) during the ninety (90) day period provided by Article IV.B.1. and Article IV.B.2. above covering all or a portion of the interest that
has failed or was lost shall be offered at cost to the party whose interest has failed or was lost, and the provisions of Article VIII.B. shall not apply to such acquisition. 

  
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 A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989 

 
 ARTICLE V. 

OPERATOR 
 A.
Designation and Responsibilities of Operator: 
 Haas Petroleum, LLC shall be the Operator of the Contract
Area, and shall conduct and direct and have full control of all operations on the Contract Area as permitted and required by, and within the limits of this agreement. In its performance of services hereunder for the Non-Operators, Operator shall be
an independent contractor not subject to the control or direction of the Non-Operators except as to the type of operation to be undertaken in accordance with the election procedures contained in this agreement. Operator shall not be deemed, or hold
itself out as, the agent of the Non-Operators with authority to bind them to any obligation or liability assumed or incurred by Operator as to any third party. Operator shall conduct its activities under this agreement as a reasonable prudent
operator, in a good and workmanlike manner, with due diligence and dispatch, in accordance with good oilfield practice, and in compliance with applicable law and regulation, but in no event shall it have any liability as Operator to the other
parties for losses sustained or liabilities incurred except such as may result from gross negligence or willful misconduct. 
 B. Resignation
or Removal of Operator and Selection of Successor: 
 1. Resignation or Removal of Operator: Operator may resign at
any time by giving written notice thereof to Non-Operators. If Operator terminates its legal existence, no longer owns an interest hereunder in the Contract Area, or is no longer capable of serving as Operator, Operator shall be deemed to have
resigned without any action by Non-Operators, except the selection of a successor. Operator may be removed only for good cause by the affirmative vote of Non-Operators owning a majority interest based on ownership as shown on Exhibit “A”
remaining after excluding the voting interest of Operator; such vote shall not be deemed effective until a written notice has been delivered to the Operator by a Non-Operator detailing the alleged default and Operator has failed to cure the default
within thirty (30) days from its receipt of the notice or, if the default concerns an operation then being conducted, within forty-eight (48) hours of its receipt of the notice. For purposes hereof, “good cause” shall mean not
only gross negligence or willful misconduct but also the material breach of or inability to meet the standards of operation contained in Article V.A. or material failure or inability to perform its obligations under this agreement. 

Subject to Article VII.D.1., such resignation or removal shall not become effective until 7:00 o’clock A.M. on the first day of the
calendar month following the expiration of ninety (90) days after the giving of notice of resignation by Operator or action by the Non-Operators to remove Operator, unless a successor Operator has been selected and assumes the duties of
Operator at an earlier date. Operator, after effective date of resignation or removal, shall be bound by the terms hereof as a Non-Operator. A change of a corporate name or structure of Operator or transfer of Operator’s interest to any single
subsidiary, parent or successor corporation shall not be the basis for removal of Operator. 
 2. Selection of Successor
Operator: Upon the resignation or removal of Operator under any provision of this agreement, a successor Operator shall be selected by the parties. The successor Operator shall be selected from the parties owning an interest in the Contract Area
at the time such successor Operator is selected. The successor Operator shall be selected by the affirmative vote of two (2) or more parties owning a majority interest based on ownership as shown on Exhibit “A”; provided, however, if
an Operator which has been removed or is deemed to have resigned fails to vote or votes only to succeed itself, the successor Operator shall be selected by the affirmative vote of the party or parties owning a majority interest based on ownership as
shown on Exhibit “A” remaining after excluding the voting interest of the Operator that was removed or resigned. The former Operator shall promptly deliver to the successor Operator all records and data relating to the operations conducted
by the former Operator to the extent such records and data are not already in the possession of the successor operator. Any cost of obtaining or copying the former Operator’s records and data shall be charged to the joint account. 

3. Effect of Bankruptcy: If Operator becomes insolvent, bankrupt or is placed in receivership, it shall be deemed to have resigned
without any action by Non-Operators, except the selection of a successor. If a petition for relief under the federal bankruptcy laws is filed by or against Operator, and the removal of Operator is prevented by the federal bankruptcy court, all
Non-Operators and Operator shall comprise an interim operating committee to serve until Operator has elected to reject or assume this agreement pursuant to the Bankruptcy Code, and an election to reject this agreement by Operator as a debtor in
possession, or by a trustee in bankruptcy, shall be deemed a resignation as Operator without any action by Non-Operators, except the selection of a successor. During the period of time the operating committee controls operations, all actions shall
require the approval of two (2) or more parties owning a majority interest based on ownership as shown on Exhibit “A.” In the event there are only two (2) parties to this agreement, during the period of time the operating
committee controls operations, a third party acceptable to Operator, Non-Operator and the federal bankruptcy court shall be selected as a member of the operating committee, and all actions shall require the approval of two (2) members of the
operating committee without regard for their interest in the Contract Area based on Exhibit “A.” 

  
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 A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989 

 
 C. Employees and Contractors: 

The number of employees or contractors used by Operator in conducting operations hereunder, their selection, and the hours of labor and
the compensation for services performed shall be determined by Operator, and all such employees or contractors shall be the employees or contractors of Operator. 
 D. Rights and Duties of Operator: 
 1. Competitive Rates and Use of
Affiliates: All wells drilled on the Contract Area shall be drilled on a competitive contract basis at the usual rates prevailing in the area. If it so desires, Operator may employ its own tools and equipment in the drilling of wells, but its
charges therefor shall not exceed the prevailing rates in the area and the rate of such charges shall be agreed upon by the parties in writing before drilling operations are commenced, and such work shall be performed by Operator under the same
terms and conditions as are customary and usual in the area in contracts of independent contractors who are doing work of a similar nature. All work performed or materials supplied by affiliates or related parties of Operator shall be performed or
supplied at competitive rates, pursuant to written agreement, and in accordance with customs and standards prevailing in the industry. 
 2. Discharge of Joint Account Obligations: Except as herein otherwise specifically provided, Operator shall promptly pay and discharge expenses incurred in the development and operation of the
Contract Area pursuant to this agreement and shall charge each of the parties hereto with their respective proportionate shares upon the expense basis provided in Exhibit “C.” Operator shall keep an accurate record of the joint account
hereunder, showing expenses incurred and charges and credits made and received. 
 3. Protection from Liens: Operator
shall pay, or cause to be paid, as and when they become due and payable, all accounts of contractors and suppliers and wages and salaries for services rendered or performed, and for materials supplied on, to or in respect of the Contract Area or any
operations for the joint account thereof, and shall keep the Contract Area free from liens and encumbrances resulting therefrom except for those resulting from a bona fide dispute as to services rendered or materials supplied. 

5. Access to Contract Area and Records: Operator shall, except as otherwise provided herein, permit each Non-Operator or its duly
authorized representative, at the Non-Operator’s sole risk and cost, full and free access at all reasonable times to all operations of every kind and character being conducted for the joint account on the Contract Area and to the records of
operations conducted thereon or production therefrom, including Operator’s books and records relating thereto. Such access rights shall not be exercised in a manner interfering with Operator’s conduct of an operation hereunder and shall
not obligate Operator to furnish any geologic or geophysical data of an interpretive nature unless the cost of preparation of such interpretive data was charged to the joint account. Operator will furnish to each Non-Operator upon request copies of
any and all reports and information obtained by Operator in connection with production and related items, including, without limitation, meter and chart reports, production purchaser statements, run tickets and monthly gauge reports, but excluding
purchase contracts and pricing information to the extent not applicable to the production of the Non-Operator seeking the information. Any audit of Operator’s records relating to amounts expended and the appropriateness of such expenditures
shall be conducted in accordance with the audit protocol specified in Exhibit “C.” 
 6. Filing and Furnishing
Governmental Reports: Operator will file, and upon written request promptly furnish copies to each requesting Non-Operator not in default of its payment obligations, all operational notices, reports or applications required to be filed by local,
State, Federal or Indian agencies or authorities having jurisdiction over operations hereunder. Each Non-Operator shall provide to Operator on a timely basis all information necessary to Operator to make such filings. 

7. Drilling and Testing Operations: The following provisions shall apply to each well drilled hereunder, including but not limited
to the Initial Well: 
 (a) Operator will promptly advise Non-Operators of the date on which the well is spudded, or the date on
which drilling operations are commenced. 
 (b) Operator will send to Non-Operators such reports, test results and notices
regarding the progress of operations on the well as the Non-Operators shall reasonably request, including, but not limited to, daily drilling reports, completion reports, and well logs. 

(c) Operator shall adequately test all Zones encountered which may reasonably be expected to be capable of producing Oil and Gas in
paying quantities as a result of examination of the electric log or any other logs or cores or tests conducted hereunder. 

  
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 A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989 

 
 8. Cost Estimates: Upon request of any Consenting
Party, Operator shall furnish estimates of current and cumulative costs incurred for the joint account at reasonable intervals during the conduct of any operation pursuant to this agreement. Operator shall not be held liable for errors in such
estimates so long as the estimates are made in good faith. 
 9. Insurance: At all times while operations are conducted
hereunder, Operator shall comply with the workers compensation law of the state where the operations are being conducted; provided, however, that Operator may be a self- insurer for liability under said compensation laws in which event the only
charge that shall be made to the joint account shall be as provided in Exhibit “C.” Operator shall also carry or provide insurance for the benefit of the joint account of the parties as outlined in Exhibit “D” attached hereto and
made a part hereof. Operator shall require all contractors engaged in work on or for the Contract Area to comply with the workers compensation law of the state where the operations are being conducted and to maintain such other insurance as Operator
may require. 
 In the event automobile liability insurance is specified in said Exhibit “D,” or subsequently receives
the approval of the parties, no direct charge shall be made by Operator for premiums paid for such insurance for Operator’s automotive equipment. 
 ARTICLE VI. 
 DRILLING AND DEVELOPMENT 

B. Subsequent Operations: 

1. Proposed Operations: If any party hereto should desire to drill any well on the Contract Area other than the Initial Well, or if
any party should desire to Rework, Sidetrack, Deepen, Recomplete or Plug Back a dry hole or a well no longer capable of producing in paying quantities in which such party has not otherwise relinquished its interest in the proposed objective Zone
under this agreement, the party desiring to drill, Rework, Sidetrack, Deepen, Recomplete or Plug Back such a well shall give written notice of the proposed operation to the parties who have not otherwise relinquished their interest in such objective
Zone under this agreement and to all other parties in the case of a proposal for Sidetracking or Deepening, specifying the work to be performed, the location, proposed depth, objective Zone and the estimated cost of the operation. The parties to
whom such a notice is delivered shall have thirty (30) days after receipt of the notice within which to notify the party proposing to do the work whether they elect to participate in the cost of the proposed operation. If a drilling rig is on
location, notice of a proposal to Rework, Sidetrack, Recomplete, Plug Back or Deepen may be given by telephone and the response period shall be limited to forty- eight (48) hours, exclusive of Saturday, Sunday and legal holidays. Failure of a
party to whom such notice is delivered to reply within the period above fixed shall constitute an election by that party not to participate in the cost of the proposed operation. Any proposal by a party to conduct an operation conflicting with the
operation initially proposed shall be delivered to all parties within the time and in the manner provided in Article VI.B.6. 

If all parties to whom such notice is delivered elect to participate in such a proposed operation, the parties shall be contractually
committed to participate therein provided such operations are commenced within the time period hereafter set forth, and Operator shall, no later than ninety (90) days after expiration of the notice period of thirty (30) days (or as
promptly as practicable after the expiration of the forty-eight (48) hour period when a drilling rig is on location, as the case may be), actually commence the proposed operation and thereafter complete it with due diligence at the risk and
expense of the parties participating therein; provided, however, said commencement date may be extended upon written notice of same by Operator to the other parties, for a period of up to thirty (30) additional days if, in the sole opinion of
Operator, such additional time is reasonably necessary to obtain permits from governmental authorities, surface rights (including rights-of- way) or appropriate drilling equipment, or to complete title examination or curative matter required for
title approval or acceptance. If the actual operation has not been commenced within the time provided (including any extension thereof as specifically permitted herein or in the force majeure provisions of Article XI) and if any party hereto still
desires to conduct said operation, written notice proposing same must be resubmitted to the other parties in accordance herewith as if no prior proposal had been made. Those parties that did not participate in the drilling of a well for which a
proposal to Deepen or Sidetrack is made hereunder shall, if such parties desire to participate in the proposed Deepening or Sidetracking operation, reimburse the Drilling Parties in accordance with Article VI.B.4. in the event of a Deepening
operation and in accordance with Article VI.B.5. in the event of a Sidetracking operation. 

  
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 A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989 

 
 2. Operations by Less Than All Parties: 

(a) Determination of Participation. If any party to whom such notice is delivered as provided in Article VI.B.1. or VI.C.1.
(Option No. 2) elects not to participate in the proposed operation, then, in order to be entitled to the benefits of this Article, the party or parties giving the notice and such other parties as shall elect to participate in the operation
shall, no later than ninety (90) days after the expiration of the notice period of thirty (30) days (or as promptly as practicable after the expiration of the forty-eight (48) hour period when a drilling rig is on location, as the
case may be) actually commence the proposed operation and complete it with due diligence. Operator shall perform all work for the account of the Consenting Parties; provided, however, if no drilling rig or other equipment is on location, and if
Operator is a Non-Consenting Party, the Consenting Parties shall either: (i) request Operator to perform the work required by such proposed operation for the account of the Consenting Parties, or (ii) designate one of the Consenting
Parties as Operator to perform such work. The rights and duties granted to and imposed upon the Operator under this agreement are granted to and imposed upon the party designated as Operator for an operation in which the original Operator is a
Non-Consenting Party. Consenting Parties, when conducting operations on the Contract Area pursuant to this Article VI.B.2., shall comply with all terms and conditions of this agreement. 

If less than all parties approve any proposed operation, the proposing party, immediately after the expiration of the applicable notice
period, shall advise all Parties of the total interest of the parties approving such operation and its recommendation as to whether the Consenting Parties should proceed with the operation as proposed. Each Consenting Party, within forty-eight
(48) hours (exclusive of Saturday, Sunday, and legal holidays) after delivery of such notice, shall advise the proposing party of its desire to (i) limit participation to such party’s interest as shown on Exhibit “A” or
(ii) carry only its proportionate part (determined by dividing such party’s interest in the Contract Area by the interests of all Consenting Parties in the Contract Area) of Non-Consenting Parties’ interests, or (iii) carry its
proportionate part (determined as provided in (ii)) of Non-Consenting Parties’ interests together with all or a portion of its proportionate part of any Non-Consenting Parties’ interests that any Consenting Party did not elect to take. Any
interest of Non-Consenting Parties that is not carried by a Consenting Party shall be deemed to be carried by the party proposing the operation if such party does not withdraw its proposal. Failure to advise the proposing party within the time
required shall be deemed an election under (i). In the event a drilling rig is on location, notice may be given by telephone, and the time permitted for such a response shall not exceed a total of forty-eight (48) hours (exclusive of Saturday,
Sunday and legal holidays). The proposing party, at its election, may withdraw such proposal if there is less than 100% participation and shall notify all parties of such decision within ten (10) days, or within twenty-four (24) hours if a
drilling rig is on location, following expiration of the applicable response period. If 100% subscription to the proposed operation is obtained, the proposing party shall promptly notify the Consenting Parties of their proportionate interests in the
operation and the party serving as Operator shall commence such operation within the period provided in Article VI.B.1., subject to the same extension right as provided therein. 

(b) Relinquishment of Interest for Non-Participation. The entire cost and risk of conducting such operations shall be borne by the
Consenting Parties in the proportions they have elected to bear same under the terms of the preceding paragraph. Consenting Parties shall keep the leasehold estates involved in such operations free and clear of all liens and encumbrances of every
kind created by or arising from the operations of the Consenting Parties. If such an operation results in a dry hole, then subject to Articles VI.B.6. and VI.E.3., the Consenting Parties shall plug and abandon the well and restore the surface
location at their sole cost, risk and expense; provided, however, that those Non-Consenting Parties that participated in the drilling, Deepening or Sidetracking of the well shall remain liable for, and shall pay, their proportionate shares of the
cost of plugging and abandoning the well and restoring the surface location insofar only as those costs were not increased by the subsequent operations of the Consenting Parties. If any well drilled, Reworked, Sidetracked, Deepened, Recompleted or
Plugged Back under the provisions of this Article results in a well capable of producing Oil and/or Gas in paying quantities, the Consenting Parties shall Complete and equip the well to produce at their sole cost and risk, and the well shall then be
turned over to Operator (if the Operator did not conduct the operation) and shall be operated by it at the expense and for the account of the Consenting Parties. Upon commencement of operations for the drilling, Reworking, Sidetracking,
Recompleting, Deepening or Plugging Back of any such well by Consenting Parties in accordance with the provisions of this Article, each Non-Consenting Party shall be deemed to have relinquished to Consenting Parties, and the Consenting Parties shall
own and be entitled to receive, in proportion to their respective interests, all of such Non- Consenting Party’s interest in the well and share of production therefrom or, in the case of a Reworking, Sidetracking, Deepening, Recompleting or
Plugging Back, or a Completion pursuant to Article VI.C.1. Option No. 2, all of such Non- Consenting Party’s interest in the production obtained from the operation in which the Non-Consenting Party did not elect to participate. Such
relinquishment shall be effective until the proceeds of the sale of such share, calculated at the well, or market value thereof if such share is not sold (after deducting applicable ad valorem, production, severance, and excise taxes, royalty,
overriding royalty and other interests not excepted by Article III.C. payable out of or measured by the production from such well accruing with respect to such interest until it reverts), shall equal the total of the following: 

  
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 A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989 

 
 (i) 300% of each such Non-Consenting
Party’s share of the cost of any newly acquired surface equipment beyond the wellhead connections (including but not limited to stock tanks, separators, treaters, pumping equipment and piping), plus 100% of each such Non-Consenting Party’s
share of the cost of operation of the well commencing with first production and continuing until each such Non-Consenting Party’s relinquished interest shall revert to it under other provisions of this Article, it being agreed that each
Non-Consenting Party’s share of such costs and equipment will be that interest which would have been chargeable to such Non-Consenting Party had it participated in the well from the beginning of the operations; and 

(ii) 300% of (a) that portion of the costs and expenses of drilling, Reworking, Sidetracking, Deepening, Plugging
Back, testing, Completing, and Recompleting, after deducting any cash contributions received under Article VIII.C., and of (b) that portion of the cost of newly acquired equipment in the well (to and including the wellhead connections), which
would have been chargeable to such Non-Consenting Party if it had participated therein. 
 Notwithstanding anything to the
contrary in this Article VI.B., if the well does not reach the deepest objective Zone described in the notice proposing the well for reasons other than the encountering of granite or practically impenetrable substance or other condition in the hole
rendering further operations impracticable, Operator shall give notice thereof to each Non-Consenting Party who submitted or voted for an alternative proposal under Article VI.B.6. to drill the well to a shallower Zone than the deepest objective
Zone proposed in the notice under which the well was drilled, and each such Non- Consenting Party shall have the option to participate in the initial proposed Completion of the well by paying its share of the cost of drilling the well to its actual
depth, calculated in the manner provided in Article VI.B.4. (a). If any such Non- Consenting Party does not elect to participate in the first Completion proposed for such well, the relinquishment provisions of this Article VI.B.2. (b) shall
apply to such party’s interest. 
 (c) Reworking, Recompleting or Plugging Back. An election not to participate in
the drilling, Sidetracking or Deepening of a well shall be deemed an election not to participate in any Reworking or Plugging Back operation proposed in such a well, or portion thereof, to which the initial non-consent election applied that is
conducted at any time prior to full recovery by the Consenting Parties of the Non-Consenting Party’s recoupment amount. Similarly, an election not to participate in the Completing or Recompleting of a well shall be deemed an election not to
participate in any Reworking operation proposed in such a well, or portion thereof, to which the initial non-consent election applied that is conducted at any time prior to full recovery by the Consenting Parties of the Non-Consenting Party’s
recoupment amount. Any such Reworking, Recompleting or Plugging Back operation conducted during the recoupment period shall be deemed part of the cost of operation of said well and there shall be added to the sums to be recouped by the Consenting
Parties 300% of that portion of the costs of the Reworking, Recompleting or Plugging Back operation which would have been chargeable to such Non-Consenting Party had it participated therein. If such a Reworking, Recompleting or
Plugging Back operation is proposed during such recoupment period, the provisions of this Article VI.B. shall be applicable as between said Consenting Parties in said well. 
 (d) Recoupment Matters. During the period of time Consenting Parties are entitled to receive Non-Consenting Party’s share of production, or the proceeds therefrom, Consenting Parties shall be
responsible for the payment of all ad valorem, production, severance, excise, gathering and other taxes, and all royalty, overriding royalty and other burdens applicable to Non-Consenting Party’s share of production not excepted by Article
III.C. 
 In the case of any Reworking, Sidetracking, Plugging Back, Recompleting or Deepening operation, the Consenting Parties
shall be permitted to use, free of cost, all casing, tubing and other equipment in the well, but the ownership of all such equipment shall remain unchanged; and upon abandonment of a well after such Reworking, Sidetracking, Plugging Back,
Recompleting or Deepening, the Consenting Parties shall account for all such equipment to the owners thereof, with each party receiving its proportionate part in kind or in value, less cost of salvage. 

Within ninety (90) days after the completion of any operation under this Article, the party conducting the operations for the
Consenting Parties shall furnish each Non-Consenting Party with an inventory of the equipment in and connected to the well, and an itemized statement of the cost of drilling, Sidetracking, Deepening, Plugging Back, testing, Completing, Recompleting,
and equipping the well for production; or, at its option, the operating party, in lieu of an itemized statement of such costs of operation, may submit a detailed statement of monthly billings. Each month thereafter, during the time the Consenting
Parties are being reimbursed as provided above, the party conducting the operations for the Consenting Parties shall furnish the Non-Consenting Parties with an itemized statement of all costs and liabilities incurred in the operation of the well,
together with a statement of the quantity of Oil and Gas produced from it and the amount of proceeds realized from the sale of the well’s working interest production during the preceding month. In determining the quantity of Oil and Gas
produced during any month, Consenting Parties shall use industry accepted methods such as but not limited to metering or periodic well tests. Any amount realized from the sale or other disposition of equipment newly acquired in connection with any
such operation which would have been owned by a Non-Consenting Party had it participated therein shall be credited against the total unreturned costs of the work done and of the equipment purchased in determining when the interest of such
Non-Consenting Party shall revert to it as above provided; and if there is a credit balance, it shall be paid to such Non- Consenting Party. 

  
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 A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989 

 
 If and when the Consenting Parties recover from a
Non-Consenting Party’s relinquished interest the amounts provided for above, the relinquished interests of such Non-Consenting Party shall automatically revert to it as of 7:00 a.m. on the day following the day on which such recoupment occurs,
and, from and after such reversion, such Non-Consenting Party shall own the same interest in such well, the material and equipment in or pertaining thereto, and the production therefrom as such Non-Consenting Party would have been entitled to had it
participated in the drilling, Sidetracking, Reworking, Deepening, Recompleting or Plugging Back of said well. Thereafter, such Non-Consenting Party shall be charged with and shall pay its proportionate part of the further costs of the operation of
said well in accordance with the terms of this agreement and Exhibit “C” attached hereto. 
 3. Stand-By Costs:
When a well which has been drilled or Deepened has reached its authorized depth and all tests have been completed and the results thereof furnished to the parties, or when operations on the well have been otherwise terminated pursuant to Article
VI.F., stand-by costs incurred pending response to a party’s notice proposing a Reworking, Sidetracking, Deepening, Recompleting, Plugging Back or Completing operation in such a well (including the period required under Article VI.B.6. to
resolve competing proposals) shall be charged and borne as part of the drilling or Deepening operation just completed. Stand-by costs subsequent to all parties responding, or expiration of the response time permitted, whichever first occurs, and
prior to agreement as to the participating interests of all Consenting Parties pursuant to the terms of the second grammatical paragraph of Article VI.B.2. (a), shall be charged to and borne as part of the proposed operation, but if the proposal is
subsequently withdrawn because of insufficient participation, such stand-by costs shall be allocated between the Consenting Parties in the proportion each Consenting Party’s interest as shown on Exhibit “A” bears to the total interest
as shown on Exhibit “A” of all Consenting Parties. 
 In the event that notice for a Sidetracking operation is given
while the drilling rig to be utilized is on location, any party may request and receive up to five (5) additional days after expiration of the forty-eight hour response period specified in Article VI.B.1. within which to respond by paying for
all stand-by costs and other costs incurred during such extended response period; Operator may require such party to pay the estimated stand-by time in advance as a condition to extending the response period. If more than one party elects to take
such additional time to respond to the notice, standby costs shall be allocated between the parties taking additional time to respond on a day-to-day basis in the proportion each electing party’s interest as shown on Exhibit “A” bears
to the total interest as shown on Exhibit “A” of all the electing parties. 
 4. Deepening: If less than all
parties elect to participate in a drilling, Sidetracking, or Deepening operation proposed pursuant to Article VI.B.1., the interest relinquished by the Non-Consenting Parties to the Consenting Parties under Article VI.B.2. shall relate only and be
limited to the lesser of (i) the total depth actually drilled or (ii) the objective depth or Zone of which the parties were given notice under Article VI.B.1. (“Initial Objective”). Such well shall not be Deepened beyond the
Initial Objective without first complying with this Article to afford the Non-Consenting Parties the opportunity to participate in the Deepening operation. 
 In the event any Consenting Party desires to drill or Deepen a Non-Consent Well to a depth below the Initial Objective, such party shall give notice thereof, complying with the requirements of Article
VI.B.1., to all parties (including Non- Consenting Parties). Thereupon, Articles VI.B.1. and 2. shall apply and all parties receiving such notice shall have the right to participate or not participate in the Deepening of such well pursuant to said
Articles VI.B.1. and 2. If a Deepening operation is approved pursuant to such provisions, and if any Non-Consenting Party elects to participate in the Deepening operation, such Non-Consenting party shall pay or make reimbursement (as the case may
be) of the following costs and expenses. 
 (a) If the proposal to Deepen is made prior to the Completion of such well as a well
capable of producing in paying quantities, such Non-Consenting Party shall pay (or reimburse Consenting Parties for, as the case may be) that share of costs and expenses incurred in connection with the drilling of said well from the surface to the
Initial Objective which Non- Consenting Party would have paid had such Non-Consenting Party agreed to participate therein, plus the Non-Consenting Party’s share of the cost of Deepening and of participating in any further operations on the well
in accordance with the other provisions of this Agreement; provided, however, all costs for testing and Completion or attempted Completion of the well incurred by Consenting Parties prior to the point of actual operations to Deepen beyond the
Initial Objective shall be for the sole account of Consenting Parties. 
 (b) If the proposal is made for a Non-Consent Well that
has been previously Completed as a well capable of producing in paying quantities, but is no longer capable of producing in paying quantities, such Non-Consenting Party shall pay (or reimburse Consenting Parties for, as the case may be) its
proportionate share of all costs of drilling, Completing, and equipping said well from the surface to the Initial Objective, calculated in the manner provided in paragraph (a) above, less those costs recouped by the Consenting Parties from the
sale of production from the well. The Non-Consenting Party shall also pay its proportionate share of all costs of re-entering said well. The Non-Consenting Parties’ proportionate part (based on the percentage of such well Non-Consenting Party
would have owned had it previously participated in such Non-Consent Well) of the costs of salvable materials and equipment remaining in the hole and salvable surface equipment used in connection with such well shall be determined in accordance with
Exhibit “C.” If the Consenting Parties have recouped the cost of drilling, Completing, and equipping the well at the time such Deepening operation is conducted, then a Non- Consenting Party may participate in the Deepening of the well with
no payment for costs incurred prior to re-entering the well for Deepening 

  
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 A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989 

 
 The foregoing shall not imply a right of any Consenting Party
to propose any Deepening for a Non-Consent Well prior to the drilling of such well to its Initial Objective without the consent of the other Consenting Parties as provided in Article VI.F. 

5. Sidetracking: Any party having the right to participate in a proposed Sidetracking operation that does not own an interest in
the affected wellbore at the time of the notice shall, upon electing to participate, tender to the wellbore owners its proportionate share (equal to its interest in the Sidetracking operation) of the value of that portion of the existing wellbore to
be utilized as follows: 
 (a) If the proposal is for Sidetracking an existing dry hole, reimbursement shall be on the basis of
the actual costs incurred in the initial drilling of the well down to the depth at which the Sidetracking operation is initiated. 
 (b) If the proposal is for Sidetracking a well which has previously produced, reimbursement shall be on the basis of such party’s proportionate share of drilling and equipping costs incurred in the
initial drilling of the well down to the depth at which the Sidetracking operation is conducted, calculated in the manner described in Article VI.B.4(b) above. Such party’s proportionate share of the cost of the well’s salvable materials
and equipment down to the depth at which the Sidetracking operation is initiated shall be determined in accordance with the provisions of Exhibit “C.” 
 6. Order of Preference of Operations. Except as otherwise specifically provided in this agreement, if any party desires to propose the conduct of an operation that conflicts with a proposal that
has been made by a party under this Article VI, such party shall have fifteen (15) days from delivery of the initial proposal, in the case of a proposal to drill a well or to perform an operation on a well where no drilling rig is on location,
or twenty-four (24) hours, exclusive of Saturday, Sunday and legal holidays, from delivery of the initial proposal, if a drilling rig is on location for the well on which such operation is to be conducted, to deliver to all parties entitled to
participate in the proposed operation such party’s alternative proposal, such alternate proposal to contain the same information required to be included in the initial proposal. Each party receiving such proposals shall elect by delivery of
notice to Operator within five (5) days after expiration of the proposal period, or within twenty-four (24) hours (exclusive of Saturday, Sunday and legal holidays) if a drilling rig is on location for the well that is the subject of the
proposals, to participate in one of the competing proposals. Any party not electing within the time required shall be deemed not to have voted. The proposal receiving the vote of parties owning the largest aggregate percentage interest of the
parties voting shall have priority over all other competing proposals; in the case of a tie vote, the initial proposal shall prevail. Operator shall deliver notice of such result to all parties entitled to participate in the operation within five
(5) days after expiration of the election period (or within twenty-four (24) hours, exclusive of Saturday, Sunday and legal holidays, if a drilling rig is on location). Each party shall then have two (2) days (or twenty-four
(24) hours if a rig is on location) from receipt of such notice to elect by delivery of notice to Operator to participate in such operation or to relinquish interest in the affected well pursuant to the provisions of Article VI.B.2.; failure by
a party to deliver notice within such period shall be deemed an election not to participate in the prevailing proposal. 
 7.
Conformity to Spacing Pattern. Notwithstanding the provisions of this Article VI.B.2., it is agreed that no wells shall be proposed to be drilled to or Completed in or produced from a Zone from which a well located elsewhere on the Contract
Area is producing, unless such well conforms to the then-existing well spacing pattern for such Zone. 
 8. Paying Wells.
No party shall conduct any Reworking, Deepening, Plugging Back, Completion, Recompletion, or Sidetracking operation under this agreement with respect to any well then capable of producing in paying quantities except with the consent of all parties
that have not relinquished interests in the well at the time of such operation. 
 C. Completion of Wells; Reworking and Plugging Back:

 1. Completion: Without the consent of all parties, no well shall be drilled, Deepened or Sidetracked, except any
well drilled, Deepened or Sidetracked pursuant to the provisions of Article VI.B.2. of this agreement. Consent to the drilling, Deepening or Sidetracking shall include: 
  

	 	þ	Option No. 1: All necessary expenditures for the drilling, Deepening or Sidetracking, testing, Completing and equipping of the well, including necessary
tankage and/or surface facilities. 

 2. Rework, Recomplete or Plug Back: No well shall be Reworked,
Recompleted or Plugged Back except a well Reworked, Recompleted, or Plugged Back pursuant to the provisions of Article VI.B.2. of this agreement. Consent to the Reworking, Recompleting or Plugging Back of a well shall include all necessary
expenditures in conducting such operations and Completing and equipping of said well, including necessary tankage and/or surface facilities. 

  
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 A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989 

 
 D . Other Operations: 

Operator shall not undertake any single project reasonably estimated to require an expenditure in excess of Twenty-five
Thousand Dollars ($25,000.00) except in connection with the drilling, Sidetracking, Reworking, Deepening, Completing, Recompleting or Plugging Back of a well that has been previously authorized by or pursuant to this agreement;
provided, however, that, in case of explosion, fire, flood or other sudden emergency, whether of the same or different nature, Operator may take such steps and incur such expenses as in its opinion are required to deal with the emergency to
safeguard life and property but Operator, as promptly as possible, shall report the emergency to the other parties. If Operator prepares an AFE for its own use, Operator shall furnish any Non-Operator so requesting an information copy thereof for
any single project costing in excess of Twenty-five Thousand Dollars ($25,000.00). Any party who has not relinquished its interest in a well shall have the right to propose that Operator perform repair work or undertake
the installation of artificial lift equipment or ancillary production facilities such as salt water disposal wells or to conduct additional work with respect to a well drilled hereunder or other similar project (but not including the installation of
gathering lines or other transportation or marketing facilities, the installation of which shall be governed by separate agreement between the parties) reasonably estimated to require an expenditure in excess of the amount first set forth above in
this Article VI.D. (except in connection with an operation required to be proposed under Articles VI.B.1. or VI.C.1. Option No. 2, which shall be governed exclusively be those Articles). Operator shall deliver such proposal to all parties
entitled to participate therein. If within thirty (30) days thereof Operator secures the written consent of any party or parties owning at least 51% of the interests of the parties entitled to participate in such operation, each
party having the right to participate in such project shall be bound by the terms of such proposal and shall be obligated to pay its proportionate share of the costs of the proposed project as if it had consented to such project pursuant to the
terms of the proposal. 
 E. Abandonment of Wells: 
 1. Abandonment of Dry Holes: Except for any well drilled or Deepened pursuant to Article VI.B.2., any well which has been drilled or Deepened under the terms of this agreement and is proposed to be
completed as a dry hole shall not be plugged and abandoned without the consent of all parties. Should Operator, after diligent effort, be unable to contact any party, or should any party fail to reply within forty-eight (48) hours (exclusive of
Saturday, Sunday and legal holidays) after delivery of notice of the proposal to plug and abandon such well, such party shall be deemed to have consented to the proposed abandonment. All such wells shall be plugged and abandoned in accordance with
applicable regulations and at the cost, risk and expense of the parties who participated in the cost of drilling or Deepening such well. Any party who objects to plugging and abandoning such well by notice delivered to Operator within forty-eight
(48) hours (exclusive of Saturday, Sunday and legal holidays) after delivery of notice of the proposed plugging shall take over the well as of the end of such forty-eight (48) hour notice period and conduct further operations in search of
Oil and/or Gas subject to the provisions of Article VI.B.; failure of such party to provide proof reasonably satisfactory to Operator of its financial capability to conduct such operations or to take over the well within such period or thereafter to
conduct operations on such well or plug and abandon such well shall entitle Operator to retain or take possession of the well and plug and abandon the well. The party taking over the well shall indemnify Operator (if Operator is an abandoning party)
and the other abandoning parties against liability for any further operations conducted on such well except for the costs of plugging and abandoning the well and restoring the surface, for which the abandoning parties shall remain proportionately
liable. 
 2. Abandonment of Wells That Have Produced: Except for any well in which a Non-Consent operation has been
conducted hereunder for which the Consenting Parties have not been fully reimbursed as herein provided, any well which has been completed as a producer shall not be plugged and abandoned without the consent of all parties. If all parties consent to
such abandonment, the well shall be plugged and abandoned in accordance with applicable regulations and at the cost, risk and expense of all the parties hereto. Failure of a party to reply within sixty (60) days of delivery of notice of
proposed abandonment shall be deemed an election to consent to the proposal. If, within sixty (60) days after delivery of notice of the proposed abandonment of any well, all parties do not agree to the abandonment of such well, those wishing to
continue its operation from the Zone then open to production shall be obligated to take over the well as of the expiration of the applicable notice period and shall indemnify Operator (if Operator is an abandoning party) and the other abandoning
parties against liability for any further operations on the well conducted by such parties. Failure of such party or parties to provide proof reasonably satisfactory to Operator of their financial capability to conduct such operations or to take
over the well within the required period or thereafter to conduct operations on such well shall entitle operator to retain or take possession of such well and plug and abandon the well. 

  
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 A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989 

 
 Parties taking over a well as provided herein shall tender to
each of the other parties its proportionate share of the value of the well’s salvable material and equipment, determined in accordance with the provisions of Exhibit “C,” less the estimated cost of salvaging and the estimated cost of
plugging and abandoning and restoring the surface; provided, however, that in the event the estimated plugging and abandoning and surface restoration costs and the estimated cost of salvaging are higher than the value of the well’s salvable
material and equipment, each of the abandoning parties shall tender to the parties continuing operations their proportionate shares of the estimated excess cost. Each abandoning party shall assign to the non-abandoning parties, without warranty,
express or implied, as to title or as to quantity, or fitness for use of the equipment and material, all of its interest in the wellbore of the well and related equipment, together with its interest in the Leasehold insofar and only insofar as such
Leasehold covers the right to obtain production from that wellbore in the Zone then open to production. If the interest of the abandoning party is or includes and Oil and Gas Interest, such party shall execute and deliver to the non- abandoning
party or parties an oil and gas lease, limited to the wellbore and the Zone then open to production, for a term of one (1) year and so long thereafter as Oil and/or Gas is produced from the Zone covered thereby, such lease to be on the form
attached as Exhibit “B.” The assignments or leases so limited shall encompass the Drilling Unit upon which the well is located. The payments by, and the assignments or leases to, the assignees shall be in a ratio based upon the
relationship of their respective percentage of participation in the Contract Area to the aggregate of the percentages of participation in the Contract Area of all assignees. There shall be no readjustment of interests in the remaining portions of
the Contract Area. 
 Thereafter, abandoning parties shall have no further responsibility, liability, or interest in the
operation of or production from the well in the Zone then open other than the royalties retained in any lease made under the terms of this Article. Upon request, Operator shall continue to operate the assigned well for the account of the
non-abandoning parties at the rates and charges contemplated by this agreement, plus any additional cost and charges which may arise as the result of the separate ownership of the assigned well. Upon proposed abandonment of the producing Zone
assigned or leased, the assignor or lessor shall then have the option to repurchase its prior interest in the well (using the same valuation formula) and participate in further operations therein subject to the provisions hereof. 

3. Abandonment of Non-Consent Operations: The provisions of Article VI.E.1. or VI.E.2. above shall be applicable as between
Consenting Parties in the event of the proposed abandonment of any well excepted from said Articles; provided, however, no well shall be permanently plugged and abandoned unless and until all parties having the right to conduct further operations
therein have been notified of the proposed abandonment and afforded the opportunity to elect to take over the well in accordance with the provisions of this Article VI.E.; and provided further, that Non-Consenting Parties who own an interest in a
portion of the well shall pay their proportionate shares of abandonment and surface restoration cost for such well as provided in Article VI.B.2.(b). 
 F. Termination of Operations: 
 Upon the commencement of an operation for
the drilling, Reworking, Sidetracking, Plugging Back, Deepening, testing, Completion or plugging of a well, including but not limited to the Initial Well, such operation shall not be terminated without consent of parties bearing 51% of
the costs of such operation; provided, however, that in the event granite or other practically impenetrable substance or condition in the hole is encountered which renders further operations impractical, Operator may discontinue operations and give
notice of such condition in the manner provided in Article VI.B.1, and the provisions of Article VI.B. or VI.E. shall thereafter apply to such operation, as appropriate. 
 G. Taking Production in Kind: 
  

	 	þ	Option No. 2: No Gas Balancing Agreement: 

 Each party shall take in kind or separately dispose of its proportionate share of all Oil and Gas produced from the Contract Area, exclusive of production which may be used in development and producing
operations and in preparing and treating Oil and Gas for marketing purposes and production unavoidably lost. Any extra expenditures incurred in the taking in kind or separate disposition by any party of its proportionate share of the production
shall be borne by such party. Any party taking its share of production in kind shall be required to pay for only its proportionate share of such part of Operator’s surface facilities which it uses. 

Each party shall execute such division orders and contracts as may be necessary for the sale of its interest in production
from the Contract Area, and, except as provided in Article VII.B., shall be entitled to receive payment directly from the purchaser thereof for its share of all production. 

  
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 A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989 

 
 If any party fails to make the arrangements
necessary to take in kind or separately dispose of its proportionate share of the Oil and/or Gas produced from the Contract Area, Operator shall have the right, subject to the revocation at will by the party owning it, but not the obligation, to
purchase such Oil and/or Gas or sell it to others at any time and from time to time, for the account of the non-taking party. Any such purchase or sale by Operator may be terminated by Operator upon at least ten (10) days written notice to the
owner of said production and shall be subject always to the right of the owner of the production upon at least ten (10) days written notice to Operator to exercise its right to take in kind, or separately dispose of, its share of all Oil and/or
Gas not previously delivered to a purchaser; provided, however, that the effective date of any such revocation may be deferred at Operator’s election for a period not to exceed ninety (90) days if Operator has committed such production to
a purchase contract having a term extending beyond such ten (10) -day period. Any purchase or sale by Operator of any other party’s share of Oil and/or Gas shall be only for such reasonable periods of time as are consistent with the
minimum needs of the industry under the particular circumstances, but in no event for a period in excess of one (1) year. 
 Any such sale by Operator shall be in a manner commercially reasonable under the circumstances, but Operator shall have no duty to share any existing market or transportation arrangement or to obtain a
price or transportation fee equal to that received under any existing market or transportation arrangement. The sale or delivery by Operator of a non-taking party’s share of production under the terms of any existing contract of Operator shall
not give the non-taking party any interest in or make the non-taking party a party to said contract. No purchase of Oil and Gas and no sale of Gas shall be made by Operator without first giving the non-taking party ten days written notice of such
intended purchase or sale and the price to be paid or the pricing basis to be used. Operator shall give notice to all parties of the first sale of Gas from any well under this Agreement. 

All parties shall give timely written notice to Operator of their Gas marketing arrangements for the following month,
excluding price, and shall notify Operator immediately in the event of a change in such arrangements. Operator shall maintain records of all marketing arrangements, and of volumes actually sold or transported, which records shall be made available
to Non-Operators upon reasonable request. 
 ARTICLE VII. 

EXPENDITURES AND LIABILITY OF PARTIES 
 A. Liability of Parties: 
 The liability of the parties shall be several,
not joint or collective. Each party shall be responsible only for its obligations, and shall be liable only for its proportionate share of the costs of developing and operating the Contract Area. Accordingly, the liens granted among the parties in
Article VII.B. are given to secure only the debts of each severally, and no party shall have any liability to third parties hereunder to satisfy the default of any other party in the payment of any expense or obligation hereunder. It is not the
intention of the parties to create, nor shall this agreement be construed as creating, a mining or other partnership, joint venture, agency relationship or association, or to render the parties liable as partners, co-venturers, or principals. In
their relations with each other under this agreement, the parties shall not be considered fiduciaries or to have established a confidential relationship but rather shall be free to act on an arm’s-length basis in accordance with their own
respective self-interest, subject, however, to the obligation of the parties to act in good faith in their dealings with each other with respect to activities hereunder. 

 
 B. Liens and Security Interests: 

Each party grants to the other parties hereto a lien upon any interest it now owns or hereafter acquires in Oil and Gas Leases and Oil and
Gas Interests in the Contract Area, and a security interest and/or purchase money security interest in any interest it now owns or hereafter acquires in the personal property and fixtures on or used or obtained for use in connection therewith, to
secure performance of all of its obligations under this agreement including but not limited to payment of expense, interest and fees, the proper disbursement of all monies paid hereunder, the assignment or relinquishment of interest in Oil and Gas
Leases as required hereunder, and the proper performance of operations hereunder. Such lien and security interest granted by each party hereto shall include such party’s leasehold interests, working interests, operating rights, and royalty and
overriding royalty interests in the Contract Area now owned or hereafter acquired and in lands pooled or unitized therewith or otherwise becoming subject to this agreement, the Oil and Gas when extracted therefrom and equipment situated thereon or
used or obtained for use in connection therewith (including, without limitation, all wells, tools, and tubular goods), and accounts (including, without limitation, accounts arising from gas imbalances or from the sale of Oil and/or Gas at the
wellhead), contract rights, inventory and general intangibles relating thereto or arising therefrom, and all proceeds and products of the foregoing. 

  
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 A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989 

 
 To perfect the lien and security agreement provided herein,
each party hereto shall execute and acknowledge the recording supplement and/or any financing statement prepared and submitted by any party hereto in conjunction herewith or at any time following execution hereof, and Operator is authorized to file
this agreement or the recording supplement executed herewith as a lien or mortgage in the applicable real estate records and as a financing statement with the proper officer under the Uniform Commercial Code in the state in which the Contract Area
is situated and such other states as Operator shall deem appropriate to perfect the security interest granted hereunder. Any party may file this agreement, the recording supplement executed herewith, or such other documents as it deems necessary as
a lien or mortgage in the applicable real estate records and/or a financing statement with the proper officer under the Uniform Commercial Code. 
 Each party represents and warrants to the other parties hereto that the lien and security interest granted by such party to the other parties shall be a first and prior lien, and each party hereby agrees
to maintain the priority of said lien and security interest against all persons acquiring an interest in Oil and Gas Leases and Interests covered by this agreement by, through or under such party. All parties acquiring an interest in Oil and Gas
Leases and Oil and Gas Interests covered by this agreement, whether by assignment, merger, mortgage, operation of law, or otherwise, shall be deemed to have taken subject to the lien and security interest granted by this Article VII.B. as to all
obligations attributable to such interest hereunder whether or not such obligations arise before or after such interest is acquired. 
 To the extent that parties have a security interest under the Uniform Commercial Code of the state in which the Contract Area is situated, they shall be entitled to exercise the rights and remedies of a
secured party under the Code. The bringing of a suit and the obtaining of judgment by a party for the secured indebtedness shall not be deemed an election of remedies or otherwise affect the lien rights or security interest as security for the
payment thereof. In addition, upon default by any party in the payment of its share of expenses, interests or fees, or upon the improper use of funds by the Operator, the other parties shall have the right, without prejudice to other rights or
remedies, to collect from the purchaser the proceeds from the sale of such defaulting party’s share of Oil and Gas until the amount owed by such party, plus interest as provided in “Exhibit C,” has been received, and shall have the
right to offset the amount owed against the proceeds from the sale of such defaulting party’s share of Oil and Gas. All purchasers of production may rely on a notification of default from the non-defaulting party or parties stating the amount
due as a result of the default, and all parties waive any recourse available against purchasers for releasing production proceeds as provided in this paragraph. 
 If any party fails to pay its share of cost within one hundred twenty (120) days after rendition of a statement therefor by Operator, the non-defaulting parties, including Operator, shall upon
request by Operator, pay the unpaid amount in the proportion that the interest of each such party bears to the interest of all such parties. The amount paid by each party so paying its share of the unpaid amount shall be secured by the liens and
security rights described in Article VII.B., and each paying party may independently pursue any remedy available hereunder or otherwise. 
 If any party does not perform all of its obligations hereunder, and the failure to perform subjects such party to foreclosure or execution proceedings pursuant to the provisions of this agreement, to the
extent allowed by governing law, the defaulting party waives any available right of redemption from and after the date of judgment, any required valuation or appraisement of the mortgaged or secured property prior to sale, any available right to
stay execution or to require a marshaling of assets and any required bond in the event a receiver is appointed. In addition, to the extent permitted by applicable law, each party hereby grants to the other parties a power of sale as to any property
that is subject to the lien and security rights granted hereunder, such power to be exercised in the manner provided by applicable law or otherwise in a commercially reasonable manner and upon reasonable notice. 

Each party agrees that the other parties shall be entitled to utilize the provisions of Oil and Gas lien law or other lien law of any
state in which the Contract Area is situated to enforce the obligations of each party hereunder. Without limiting the generality of the foregoing, to the extent permitted by applicable law, Non-Operators agree that Operator may invoke or utilize the
mechanics’ or materialmen’s lien law of the state in which the Contract Area is situated in order to secure the payment to Operator of any sum due hereunder for services performed or materials supplied by Operator. 

C. Advances: 
 Operator,
at its election, shall have the right from time to time to demand and receive from one or more of the other parties payment in advance of their respective shares of the estimated amount of the expense to be incurred in operations hereunder during
the next succeeding month, which right may be exercised only by submission to each such party of an itemized statement of such estimated expense, together with an invoice for its share thereof. Each such statement and invoice for the payment in
advance of estimated expense shall be submitted on or before the 20th day of the next preceding month. Each party shall pay to Operator its proportionate share of such estimate within fifteen (15) days after such estimate and invoice is
received. If any party fails to pay its share of said estimate within said time, the amount due shall bear interest as provided in Exhibit “C” until paid. Proper adjustment shall be made monthly between advances and actual expense to the
end that each party shall bear and pay its proportionate share of actual expenses incurred, and no more. 

  
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 A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989 

 
 D. Defaults and Remedies: 

If any party fails to discharge any financial obligation under this agreement, including without limitation the failure to make any
advance under the preceding Article VII.C. or any other provision of this agreement, within the period required for such payment hereunder, then in addition to the remedies provided in Article VII.B. or elsewhere in this agreement, the remedies
specified below shall be applicable. For purposes of this Article VII.D., all notices and elections shall be delivered only by Operator, except that Operator shall deliver any such notice and election requested by a non-defaulting Non-Operator, and
when Operator is the party in default, the applicable notices and elections can be delivered by any Non-Operator. Election of any one or more of the following remedies shall not preclude the subsequent use of any other remedy specified below or
otherwise available to a non-defaulting party. 
 1. Suspension of Rights: Any party may deliver to the party in default
a Notice of Default, which shall specify the default, specify the action to be taken to cure the default, and specify that failure to take such action will result in the exercise of one or more of the remedies provided in this Article. If the
default is not cured within thirty (30) days of the delivery of such Notice of Default, all of the rights of the defaulting party granted by this agreement may upon notice be suspended until the default is cured, without prejudice to the right
of the non-defaulting party or parties to continue to enforce the obligations of the defaulting party previously accrued or thereafter accruing under this agreement. If Operator is the party in default, the Non-Operators shall have in addition the
right, by vote of Non-Operators owning a majority in interest in the Contract Area after excluding the voting interest of Operator, to appoint a new Operator effective immediately. The rights of a defaulting party that may be suspended hereunder at
the election of the non-defaulting parties shall include, without limitation, the right to receive information as to any operation conducted hereunder during the period of such default, the right to elect to participate in an operation proposed
under Article VI.B. of this agreement, the right to participate in an operation being conducted under this agreement even if the party has previously elected to participate in such operation, and the right to receive proceeds of production from any
well subject to this agreement. 
 2. Suit for Damages: Non-defaulting parties or Operator for the benefit of
non-defaulting parties may sue (at joint account expense) to collect the amounts in default, plus interest accruing on the amounts recovered from the date of default until the date of collection at the rate specified in Exhibit “C”
attached hereto. Nothing herein shall prevent any party from suing any defaulting party to collect consequential damages accruing to such party as a result of the default. 
 3. Deemed Non-Consent: The non-defaulting party may deliver a written Notice of Non-Consent Election to the defaulting party at any time after the expiration of the thirty-day cure period following
delivery of the Notice of Default, in which event if the billing is for the drilling a new well or the Plugging Back, Sidetracking, Reworking or Deepening of a well which is to be or has been plugged as a dry hole, or for the Completion or
Recompletion of any well, the defaulting party will be conclusively deemed to have elected not to participate in the operation and to be a Non-Consenting Party with respect thereto under Article VI.B. or VI.C., as the case may be, to the extent of
the costs unpaid by such party, notwithstanding any election to participate theretofore made. If election is made to proceed under this provision, then the non-defaulting parties may not elect to sue for the unpaid amount pursuant to Article
VII.D.2. 
 Until the delivery of such Notice of Non-Consent Election to the defaulting party, such party shall have the right
to cure its default by paying its unpaid share of costs plus interest at the rate set forth in Exhibit “C,” provided, however, such payment shall not prejudice the rights of the non-defaulting parties to pursue remedies for damages
incurred by the non- defaulting parties as a result of the default. Any interest relinquished pursuant to this Article VII.D.3. shall be offered to the non-defaulting parties in proportion to their interests, and the non-defaulting parties electing
to participate in the ownership of such interest shall be required to contribute their shares of the defaulted amount upon their election to participate therein. 
 4. Advance Payment: If a default is not cured within thirty (30) days of the delivery of a Notice of Default, Operator, or Non-Operators if Operator is the defaulting party, may thereafter
require advance payment from the defaulting party of such defaulting party’s anticipated share of any item of expense for which Operator, or Non-Operators, as the case may be, would be entitled to reimbursement under any provision of this
agreement, whether or not such expense was the subject of the previous default. Such right includes, but is not limited to, the right to require advance payment for the estimated costs of drilling a well or Completion of a well as to which an
election to participate in drilling or Completion has been made. If the defaulting party fails to pay the required advance payment, the non-defaulting parties may pursue any of the remedies provided in the Article VII.D. or any other default remedy
provided elsewhere in this agreement. Any excess of funds advanced remaining when the operation is completed and all costs have been paid shall be promptly returned to the advancing party. 

5. Costs and Attorneys’ Fees: In the event any party is required to bring legal proceedings to enforce any financial
obligation of a party hereunder, the prevailing party in such action shall be entitled to recover all court costs, costs of collection, and a reasonable attorney’s fee, which the lien provided for herein shall also secure. 

  
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 A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989 

 
 E. Rentals, Shut-in Well Payments and Minimum Royalties: 

Rentals, shut-in well payments and minimum royalties which may be required under the terms of any lease shall be paid by the party or
parties who subjected such lease to this agreement at its or their expense. In the event two or more parties own and have contributed interests in the same lease to this agreement, such parties may designate one of such parties to make said payments
for and on behalf of all such parties. Any party may request, and shall be entitled to receive, proper evidence of all such payments. In the event of failure to make proper payment of any rental, shut-in well payment or minimum royalty through
mistake or oversight where such payment is required to continue the lease in force, any loss which results from such non-payment shall be borne in accordance with the provisions of Article IV.B.2. 

Operator shall notify Non-Operators of the anticipated completion of a shut-in well, or the shutting in or return to production of a
producing well, at least five (5) days (excluding Saturday, Sunday, and legal holidays) prior to taking such action, or at the earliest opportunity permitted by circumstances, but assumes no liability for failure to do so. In the event of
failure by Operator to so notify Non-Operators, the loss of any lease contributed hereto by Non-Operators for failure to make timely payments of any shut-in well payment shall be borne jointly by the parties hereto under the provisions of Article
IV.B.3. 
 F. Taxes: 
 Beginning with the first calendar year after the effective date hereof, Operator shall render for ad valorem taxation all property subject to this agreement which by law should be rendered for such taxes,
and it shall pay all such taxes assessed thereon before they become delinquent. Prior to the rendition date, each Non-Operator shall furnish Operator information as to burdens (to include, but not be limited to, royalties, overriding royalties and
production payments) on Leases and Oil and Gas Interests contributed by such Non-Operator. If the assessed valuation of any Lease is reduced by reason of its being subject to outstanding excess royalties, overriding royalties or production payments,
the reduction in ad valorem taxes resulting therefrom shall inure to the benefit of the owner or owners of such Lease, and Operator shall adjust the charge to such owner or owners so as to reflect the benefit of such reduction. If the ad valorem
taxes are based in whole or in part upon separate valuations of each party’s working interest, then notwithstanding anything to the contrary herein, charges to the joint account shall be made and paid by the parties hereto in accordance with
the tax value generated by each party’s working interest. Operator shall bill the other parties for their proportionate shares of all tax payments in the manner provided in Exhibit “C.” 

If Operator considers any tax assessment improper, Operator may, at its discretion, protest within the time and manner prescribed by law,
and prosecute the protest to a final determination, unless all parties agree to abandon the protest prior to final determination. During the pendency of administrative or judicial proceedings, Operator may elect to pay, under protest, all such taxes
and any interest and penalty. When any such protested assessment shall have been finally determined, Operator shall pay the tax for the joint account, together with any interest and penalty accrued, and the total cost shall then be assessed against
the parties, and be paid by them, as provided in Exhibit “C.” 
 Each party shall pay or cause to be paid all
production, severance, excise, gathering and other taxes imposed upon or with respect to the production or handling of such party’s share of Oil and Gas produced under the terms of this agreement. 

ARTICLE VIII. 
 ACQUISITION, MAINTENANCE OR TRANSFER OF INTEREST 
 A. Surrender of Leases:

 The Leases covered by this agreement, insofar as they embrace acreage in the Contract Area, shall not be surrendered in
whole or in part unless all parties consent thereto. 

  
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 A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989 

 
 However, should any party desire to surrender its interest in
any Lease or in any portion thereof, such party shall give written notice of the proposed surrender to all parties, and the parties to whom such notice is delivered shall have thirty (30) days after delivery of the notice within which to notify
the party proposing the surrender whether they elect to consent thereto. Failure of a party to whom such notice is delivered to reply within said 30-day period shall constitute a consent to the surrender of the Leases described in the notice. If all
parties do not agree or consent thereto, the party desiring to surrender shall assign, without express or implied warranty of title, all of its interest in such Lease, or portion thereof, and any well, material and equipment which may be located
thereon and any rights in production thereafter secured, to the parties not consenting to such surrender. If the interest of the assigning party is or includes an Oil and Gas Interest, the assigning party shall execute and deliver to the party or
parties not consenting to such surrender an oil and gas lease covering such Oil and Gas Interest for a term of one (1) year and so long thereafter as Oil and/or Gas is produced from the land covered thereby, such lease to be on the form
attached hereto as Exhibit “B.” Upon such assignment or lease, the assigning party shall be relieved from all obligations thereafter accruing, but not theretofore accrued, with respect to the interest assigned or leased and the operation
of any well attributable thereto, and the assigning party shall have no further interest in the assigned or leased premises and its equipment and production other than the royalties retained in any lease made under the terms of this Article. The
party assignee or lessee shall pay to the party assignor or lessor the reasonable salvage value of the latter’s interest in any well’s salvable materials and equipment attributable to the assigned or leased acreage. The value of all
salvable materials and equipment shall be determined in accordance with the provisions of Exhibit “C,” less the estimated cost of salvaging and the estimated cost of plugging and abandoning and restoring the surface. If such value is less
than such costs, then the party assignor or lessor shall pay to the party assignee or lessee the amount of such deficit. If the assignment or lease is in favor of more than one party, the interest shall be shared by such parties in the proportions
that the interest of each bears to the total interest of all such parties. If the interest of the parties to whom the assignment is to be made varies according to depth, then the interest assigned shall similarly reflect such variances. 

Any assignment, lease or surrender made under this provision shall not reduce or change the assignor’s, lessor’s or
surrendering party’s interest as it was immediately before the assignment, lease or surrender in the balance of the Contract Area; and the acreage assigned, leased or surrendered, and subsequent operations thereon, shall not thereafter be
subject to the terms and provisions of this agreement but shall be deemed subject to an Operating Agreement in the form of this agreement. 

B. Renewal or Extension of Leases: 
 If any party secures a renewal or replacement of an Oil and Gas Lease or Interest subject to this agreement, then all other parties shall be notified promptly upon such acquisition or, in the case of a
replacement Lease taken before expiration of an existing Lease, promptly upon expiration of the existing Lease. The parties notified shall have the right for a period of thirty (30) days following delivery of such notice in which to elect to
participate in the ownership of the renewal or replacement Lease, insofar as such Lease affects lands within the Contract Area, by paying to the party who acquired it their proportionate shares of the acquisition cost allocated to that part of such
Lease within the Contract Area, which shall be in proportion to the interest held at that time by the parties in the Contract Area. Each party who participates in the purchase of a renewal or replacement Lease shall be given an assignment of its
proportionate interest therein by the acquiring party. 
 If some, but less than all, of the parties elect to participate in the
purchase of a renewal or replacement Lease, it shall be owned by the parties who elect to participate therein, in a ratio based upon the relationship of their respective percentage of participation in the Contract Area to the aggregate of the
percentages of participation in the Contract Area of all parties participating in the purchase of such renewal or replacement Lease. The acquisition of a renewal or replacement Lease by any or all of the parties hereto shall not cause a readjustment
of the interests of the parties stated in Exhibit “A,” but any renewal or replacement Lease in which less than all parties elect to participate shall not be subject to this agreement but shall be deemed subject to a separate Operating
Agreement in the form of this agreement. 
 If the interests of the parties in the Contract Area vary according to depth, then
their right to participate proportionately in renewal or replacement Leases and their right to receive an assignment of interest shall also reflect such depth variances. 
 The provisions of this Article shall apply to renewal or replacement Leases whether they are for the entire interest covered by the expiring Lease or cover only a portion of its area or an interest
therein. Any renewal or replacement Lease taken before the expiration of its predecessor Lease, or taken or contracted for or becoming effective within six (6) months after the expiration of the existing Lease, shall be subject to this
provision so long as this agreement is in effect at the time of such acquisition or at the time the renewal or replacement Lease becomes effective; but any Lease taken or contracted for more than six (6) months after the expiration of an
existing Lease shall not be deemed a renewal or replacement Lease and shall not be subject to the provisions of this agreement. 

The provisions in this Article shall also be applicable to extensions of Oil and Gas Leases. 

  
 - 19 -

 A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989 

 
 C. Acreage or Cash Contributions: 

While this agreement is in force, if any party contracts for a contribution of cash towards the drilling of a well or any other operation
on the Contract Area, such contribution shall be paid to the party who conducted the drilling or other operation and shall be applied by it against the cost of such drilling or other operation. If the contribution be in the form of acreage, the
party to whom the contribution is made shall promptly tender an assignment of the acreage, without warranty of title, to the Drilling Parties in the proportions said Drilling Parties shared the cost of drilling the well. Such acreage shall become a
separate Contract Area and, to the extent possible, be governed by provisions identical to this agreement. Each party shall promptly notify all other parties of any acreage or cash contributions it may obtain in support of any well or any other
operation on the Contract Area. The above provisions shall also be applicable to optional rights to earn acreage outside the Contract Area which are in support of well drilled inside Contract Area. 

If any party contracts for any consideration relating to disposition of such party’s share of substances produced hereunder, such
consideration shall not be deemed a contribution as contemplated in this Article VIII.C. 
 D. Assignment; Maintenance of Uniform Interest:

 For the purpose of maintaining uniformity of ownership in the Contract Area in the Oil and Gas Leases, Oil and Gas
Interests, wells, equipment and production covered by this agreement no party shall sell, encumber, transfer or make other disposition of its interest in the Oil and Gas Leases and Oil and Gas Interests embraced within the Contract Area or in wells,
equipment and production unless such disposition covers either: 
 1. the entire interest of the party in all Oil and Gas
Leases, Oil and Gas Interests, wells, equipment and production; or 
 2. an equal undivided percent of the party’s present
interest in all Oil and Gas Leases, Oil and Gas Interests, wells, equipment and production in the Contract Area. 
 Every sale,
encumbrance, transfer or other disposition made by any party shall be made expressly subject to this agreement and shall be made without prejudice to the right of the other parties, and any transferee of an ownership interest in any Oil and Gas
Lease or Interest shall be deemed a party to this agreement as to the interest conveyed from and after the effective date of the transfer of ownership; provided, however, that the other parties shall not be required to recognize any such sale,
encumbrance, transfer or other disposition for any purpose hereunder until thirty (30) days after they have received a copy of the instrument of transfer or other satisfactory evidence thereof in writing from the transferor or transferee. No
assignment or other disposition of interest by a party shall relieve such party of obligations previously incurred by such party hereunder with respect to the interest transferred, including without limitation the obligation of a party to pay all
costs attributable to an operation conducted hereunder in which such party has agreed to participate prior to making such assignment, and the lien and security interest granted by Article VII.B. shall continue to burden the interest transferred to
secure payment of any such obligations. 
 If, at any time the interest of any party is divided among and owned by four or more
co-owners, Operator, at its discretion, may require such co-owners to appoint a single trustee or agent with full authority to receive notices, approve expenditures, receive billings for and approve and pay such party’s share of the joint
expenses, and to deal generally with, and with power to bind, the co-owners of such party’s interest within the scope of the operations embraced in this agreement; however, all such co- owners shall have the right to enter into and execute all
contracts or agreements for the disposition of their respective shares of the Oil and Gas produced from the Contract Area and they shall have the right to receive, separately, payment of the sale proceeds thereof. 

E. Waiver of Rights to Partition: 
 If permitted by the laws of the state or states in which the property covered hereby is located, each party hereto owning an undivided interest in the Contract Area waives any and all rights it may have
to partition and have set aside to it in severalty its undivided interest therein. 

  
 - 20 -

 A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989 

 
 F. Preferential Right to Purchase: 

 

	þ	(Optional; Check if applicable.) 

Should any party desire to sell all or any part of its interests under this agreement, or its rights and interests in the Contract Area,
it shall promptly give written notice to the other parties, with full information concerning its proposed disposition, which shall include the name and address of the prospective transferee (who must be ready, willing and able to purchase), the
purchase price, a legal description sufficient to identify the property, and all other terms of the offer. The other parties shall then have an optional prior right, for a period of ten (10) days after the notice is delivered, to purchase for
the stated consideration on the same terms and conditions the interest which the other party proposes to sell; and, if this optional right is exercised, the purchasing parties shall share the purchased interest in the proportions that the interest
of each bears to the total interest of all purchasing parties. However, there shall be no preferential right to purchase in those cases where any party wishes to mortgage its interests, or to transfer title to its interests to its mortgagee in lieu
of or pursuant to foreclosure of a mortgage of its interests, or to dispose of its interests by merger, reorganization, consolidation, or by sale of all or substantially all of its Oil and Gas assets to any party, or by transfer of its interests to
a subsidiary or parent company or to a subsidiary of a parent company, or to any company in which such party owns a majority of the stock. 
 ARTICLE IX. 
 INTERNAL REVENUE CODE ELECTION 

If, for federal income tax purposes, this agreement and the operations hereunder are regarded as a partnership, and if the parties have
not otherwise agreed to form a tax partnership pursuant to Exhibit “G” or other agreement between them, each party thereby affected elects to be excluded from the application of all of the provisions of Subchapter “K,” Chapter 1,
Subtitle “A,” of the Internal Revenue Code of 1986, as amended (“Code”), as permitted and authorized by Section 761 of the Code and the regulations promulgated thereunder. Operator is authorized and directed to execute on
behalf of each party hereby affected such evidence of this election as may be required by the Secretary of the Treasury of the United States or the Federal Internal Revenue Service, including specifically, but not by way of limitation, all of the
returns, statements, and the data required by Treasury Regulation §1.761. Should there be any requirement that each party hereby affected give further evidence of this election, each such party shall execute such documents and furnish such
other evidence as may be required by the Federal Internal Revenue Service or as may be necessary to evidence this election. No such party shall give any notices or take any other action inconsistent with the election made hereby. If any present or
future income tax laws of the state or states in which the Contract Area is located or any future income tax laws of the United States contain provisions similar to those in Subchapter “K,” Chapter 1, Subtitle “A,” of the Code,
under which an election similar to that provided by Section 761 of the Code is permitted, each party hereby affected shall make such election as may be permitted or required by such laws. In making the foregoing election, each such party states
that the income derived by such party from operations hereunder can be adequately determined without the computation of partnership taxable income. 
 ARTICLE X. 
 CLAIMS AND LAWSUITS 

Operator may settle any single uninsured third party damage claim or suit arising from operations hereunder if the expenditure does not
exceed Five-Thousand Dollars ($5,000.00) and if the payment is in complete settlement of such claim or suit. If the amount required for settlement exceeds the above amount, the parties hereto shall assume and take over
the further handling of the claim or suit, unless such authority is delegated to Operator. All costs and expenses of handling settling, or otherwise discharging such claim or suit shall be a the joint expense of the parties participating in the
operation from which the claim or suit arises. If a claim is made against any party or if any party is sued on account of any matter arising from operations hereunder over which such individual has no control because of the rights given Operator by
this agreement, such party shall immediately notify all other parties, and the claim or suit shall be treated as any other claim or suit involving operations hereunder. 

  
 - 21 -

 A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989 

 
 ARTICLE XI. 

FORCE MAJEURE 
 If any party is rendered unable, wholly or in part, by force majeure to carry out its obligations under this agreement, other than the obligation to indemnify or make money payments or furnish security,
that party shall give to all other parties prompt written notice of the force majeure with reasonably full particulars concerning it; thereupon, the obligations of the party giving the notice, so far as they are affected by the force majeure, shall
be suspended during, but no longer than, the continuance of the force majeure. The term “force majeure,” as here employed, shall mean an act of God, strike, lockout, or other industrial disturbance, act of the public enemy, war, blockade,
public riot, lightening, fire, storm, flood or other act of nature, explosion, governmental action, governmental delay, restraint or inaction, unavailability of equipment, and any other cause, whether of the kind specifically enumerated above or
otherwise, which is not reasonably within the control of the party claiming suspension. 
 The affected party shall use all
reasonable diligence to remove the force majeure situation as quickly as practicable. The requirement that any force majeure shall be remedied with all reasonable dispatch shall not require the settlement of strikes, lockouts, or other labor
difficulty by the party involved, contrary to its wishes; how all such difficulties shall be handled shall be entirely within the discretion of the party concerned. 
 ARTICLE XII. 
 NOTICES 

All notices authorized or required between the parties by any of the provisions of this agreement, unless otherwise specifically
provided, shall be in writing and delivered in person or by United States mail, courier service, telegram, telex, telecopier or any other form of facsimile, postage or charges prepaid, and addressed to such parties at the addresses listed on Exhibit
“A.” All telephone or oral notices permitted by this agreement shall be confirmed immediately thereafter by written notice. The originating notice given under any provision hereof shall be deemed delivered only when received by the party
to whom such notice is directed, and the time for such party to deliver any notice in response thereto shall run from the date the originating notice is received. “Receipt” for purposes of this agreement with respect to written notice
delivered hereunder shall be actual delivery of the notice to the address of the party to be notified specified in accordance with this agreement, or to the telecopy, facsimile or telex machine of such party. The second or any responsive notice
shall be deemed delivered when deposited in the United States mail or at the office of the courier or telegraph service, or upon transmittal by telex, telecopy or facsimile, or when personally delivered to the party to be notified, provided, that
when response is required within 24 or 48 hours, such response shall be given orally or by telephone, telex, telecopy or other facsimile within such period. Each party shall have the right to change its address at any time, and from time to time, by
giving written notice thereof to all other parties. If a party is not available to receive notice orally or by telephone when a party attempts to deliver a notice required to be delivered within 24 or 48 hours, the notice may be delivered in writing
by any other method specified herein and shall be deemed delivered in the same manner provided above for any responsive notice. 

ARTICLE XIII. 
 TERM OF AGREEMENT 
 This agreement shall remain in full force and effect as
to the Oil and Gas Leases and/or Oil and Gas Interests subject hereto for the period of time selected below; provided, however, no party hereto shall ever be construed as having any right, title or interest in or to any Lease or Oil and Gas Interest
contributed by any other party beyond the term of this agreement. 
  

	 	þ	Option No. 1: So long as any of the Oil and Gas Leases subject to this agreement remain or are continued in force as to any part of the Contract Area,
whether by production, extension, renewal or otherwise. 

 The termination of this agreement shall not relieve any
party hereto from any expense, liability or other obligation or any remedy therefor which has accrued or attached prior to the date of such termination. 
 Upon termination of this agreement and the satisfaction of all obligations hereunder, in the event a memorandum of this Operating Agreement has been filed of record, Operator is authorized to file of
record in all necessary recording offices a notice of termination, and each party hereto agrees to execute such a notice of termination as to Operator’s interest, upon request of Operator, if Operator has satisfied all its financial
obligations. 

  
 - 22 -

 A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989 

 
 ARTICLE XIV. 

COMPLIANCE WITH LAWS AND REGULATIONS 
 A. Laws, Regulations and Orders: 
 This agreement shall be subject to the
applicable laws of the state in which the Contract Area is located, to the valid rules, regulations, and orders of any duly constituted regulatory body of said state; and to all other applicable federal, state, and local laws, ordinances, rules,
regulations and orders. 
 B. Governing Law: 
 This agreement and all matters pertaining hereto, including but not limited to matters of performance, non- performance, breach, remedies, procedures, rights, duties, and interpretation or
construction, shall be governed and determined by the law of the state in which the Contract Area is located. If the Contract Area is in two or more states, the law of the state of Kansas shall govern. 

C. Regulatory Agencies: 

Nothing herein contained shall grant, or be construed to grant, Operator the right or authority to waive or release any rights,
privileges, or obligations which Non-Operators may have under federal or state laws or under rules, regulations or orders promulgated under such laws in reference to oil, gas and mineral operations, including the location, operation, or production
of wells, on tracts offsetting or adjacent to the Contract Area. 
 With respect to the operations hereunder, Non-Operators
agree to release Operator from any and all losses, damages, injuries, claims and causes of action arising out of, incident to or resulting directly or indirectly from Operator’s interpretation or application of rules, rulings, regulations or
orders of the Department of Energy or Federal Energy Regulatory Commission or predecessor or successor agencies to the extent such interpretation or application was made in good faith and does not constitute gross negligence. Each Non-Operator
further agrees to reimburse Operator for such Non-Operator’s share of production or any refund, fine, levy or other governmental sanction that Operator may be required to pay as a result of such an incorrect interpretation or application,
together with interest and penalties thereon owing by Operator as a result of such incorrect interpretation or application. 

ARTICLE XV. 
 MISCELLANEOUS 
 A. Execution: 

This agreement shall be binding upon each Non-Operator when this agreement or a counterpart thereof has been executed by such Non-Operator
and Operator notwithstanding that this agreement is not then or thereafter executed by all of the parties to which it is tendered or which are listed on Exhibit “A” as owning an interest in the Contract Area or which own, in fact, an
interest in the Contract Area. Operator may, however, by written notice to all Non-Operators who have become bound by this agreement as aforesaid, given at any time prior to the actual spud date of the Initial Well but in no event later than five
days prior to the date specified in Article VI.A. for commencement of the Initial Well, terminate this agreement if Operator in its sole discretion determines that there is insufficient participation to justify commencement of drilling operations.
In the event of such a termination by Operator, all further obligations of the parties hereunder shall cease as of such termination. In the event any Non-Operator has advanced or prepaid any share of drilling or other costs hereunder, all sums so
advanced shall be returned to such Non-Operator without interest. In the event Operator proceeds with drilling operations for the Initial Well without the execution hereof by all persons listed on Exhibit “A” as having a current working
interest in such well, Operator shall indemnify Non-Operators with respect to all costs incurred for the Initial Well which would have been charged to such person under this agreement if such person had executed the same and Operator shall receive
all revenues which would have been received by such person under this agreement if such person had executed the same. 

  
 - 23 -

 A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989 

 
 B. Successors and Assigns: 

This agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, devisees, legal
representatives, successors and assigns, and the terms hereof shall be deemed to run with the Leases or Interests included within the Contract Area. 
 C. Counterparts: 
 This instrument may be executed in any number of
counterparts, each of which shall be considered an original for all purposes. 
 D. Severability: 

For the purposes of assuming or rejecting this agreement as an executory contract pursuant to federal bankruptcy laws, this agreement
shall not be severable, but rather must be assumed or rejected in its entirety, and the failure of any party to this agreement to comply with all of its financial obligations provided herein shall be a material default. 

ARTICLE XVI. 
 OTHER PROVISIONS 
 IN WITNESS WHEREOF, this agreement shall be effective as
of the      day of         ,         . 
                     , who has prepared and circulated this form for execution, represents and
warrants that the form was printed from and, with the exception(s) listed below, is identical to the AAPL Form 610-1989 Model Form Operating Agreement, as published in computerized form by Forms On-A-Disk, Inc. No changes, alterations, or
modifications, other than those made by strikethrough and/or insertion and that are clearly recognizable as changes in Articles
                    , have been made to the form. 

  
 - 24 -

 A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989 

 
  

									
	ATTEST OR WITNESS:	 		  		 	OPERATOR
		 		  		 	  

	  
	 		  	By	 	  

	  
	 		  		 	  

		 		  		 	Type or print name
					
		 		  		 	Title	 	  

		 		  		 	Date	 	  

				
		 		  		 	Tax ID or S.S. No. ____________________________________
	
	 NON-OPERATORS
  

		 		  		 	  

	  
	 		  	By	 	  

	  
	 		  		 	  

		 		  		 	Type or print name
					
		 		  		 	Title	 	  

		 		  		 	Date	 	  

				
		 		  		 	Tax ID or S.S. No. ____________________________________
				
		 		  		 	  

	  
	 		  	By	 	  

	  
	 		  		 	  

		 		  		 	Type or print name
					
		 		  		 	Title	 	  

		 		  		 	Date	 	  

				
		 		  		 	Tax ID or S.S. No. ____________________________________
				
		 		  		 	  

	  
	 		  	By	 	  

	  
	 		  		 	  

		 		  		 	Type or print name
					
		 		  		 	Title	 	  

		 		  		 	Date	 	  

				
		 		  		 	Tax ID or S.S. No. ____________________________________

  
 - 25 -

 A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989 

 
 ACKNOWLEDGMENTS 

Note: The following forms of acknowledgment are the short forms approved by the Uniform Law on Notarial Acts. 

The validity and effect of these forms in any state will depend upon the statutes of that state. 

 

							
	Individual acknowledgment:	  		  	
				
	State of	 	 	  	)	  	
				
		 		  	) ss.	  	
				
	County of	 	 	  	)	  	

 This instrument was acknowledged before me on 

 

							
	 	 	by	 		    	 

  

							
	(Seal, if any)	  		 	  

				
		  		 	Title (and Rank)	 	  

			
		  		 	My commission expires:__________________________________

 Acknowledgment in representative capacity: 
  

							
				
	State of	 	 	  	)	  	
				
		 		  	) ss.	  	
				
	County of	 	 	  	)	  	

 This instrument was acknowledged before me on 

 

									
	 	 	by	 		  	 	 	as

  

					
	 	 	of	 	 

  

							
	(Seal, if any)	  		 	  

				
		  		 	Title (and Rank)	 	  

			
		  		 	My commission expires:__________________________________

  
 - 26 -Joint Development Agreement

 Exhibit 10.2 
 JOINT DEVELOPMENT AGREEMENT 

(Haas) 

THIS JOINT DEVELOPMENT AGREEMENT (the “Agreement”) is
made and entered into, effective as of December 31, 2010 (the “Effective Date”), by and between ENERJEX RESOURCES, INC., a Nevada corporation
(the “Company”), HAAS PETROLEUM, LLC, LLC, a Kansas limited liability company (“Operator” or “Haas”), and MORMEG, LLC, a
Kansas limited liability company (“MorMeg”) with reference to the following facts: 

RECITALS: 
 A. Operator and MorMeg are entities that are both controlled by Mark Haas, an individual. Operator is an entity that operates oil and gas properties, and MorMeg is an entity that owns working interests in
oil and gas properties. Operator and MorMeg shall be collectively referred to as “Haas” for the purposes of this Agreement. 
 B. The Company owns working interests in producing oil leases commonly identified as the “Black Oaks Leasehold” (the “Project”), as further described in Exhibit A to that
certain Joint Operating Agreement dated concurrently herewith by and between the Company and Operator, and MorMeg. 
 C. The
parties have agreed to execute this Agreement in order to memorialize the terms and conditions on which the Company and Haas shall jointly operate, manage and develop the Project in order to produce oil on an economic basis. 

AGREEMENTS: 
 NOW, THEREFORE, the parties hereto, intending to be legally bound, do hereby agree as follows: 
 1. TERMINATION OF EXISTING AGREEMENT. The parties hereby agree that (a) the “Joint Exploration Agreement” dated April 9, 2007, as amended from time to time, by and between the
Company and MorMeg (the “Prior Agreement”), is hereby terminated forthwith and shall not have any further force or effect. MorMeg hereby waives and releases the Company and its officers, directors, and shareholders, and the
respective affiliates of each of the foregoing from all claims, costs, damages, and expenses arising from or relating to the Prior Agreement and the termination thereof, and (b) Haas and MorMeg each hereby waives any right that either such
party may have to require the Company to registered any shares of the Company’s stock held by such party on or prior to the Effective Date of this Agreement. 
 2. PERFORMANCE AS OPERATOR. The parties acknowledge that Operator will be the operator of record for certain working interests pursuant to a Joint Operating Agreement between the Company and
Operator executed concurrently herewith (the “Joint Operating Agreement”). 
 3. COMPENSATION. The Company shall
compensate Haas for entering into this Agreement as follows: 
 3.1 ISSUANCE OF
SHARES. Concurrently with the execution of this Agreement, and in consideration of Haas’ agreement pursuant to Sections 1 and 2, above, to terminate the Prior Agreement and enter into this
Agreement, the Company shall issue to Haas one hundred thousand (100,000) shares of the common stock of the Company within fifteen (15) days following the execution of this Agreement. Operator agrees to make, execute, and deliver in
connection with that issuance such documents and instruments that the Company reasonably may require in order to memorialize the issuance of those shares in compliance with applicable federal and state securities laws. 

 3.2 COMPENSATION FOR SERVICES
PROVIDED BY OPERATOR OR AFFILIATE.  
 (a)
The parties (i) acknowledge that Operator has agreed to operate the Project at cost in accordance with the terms of the Joint Operating Agreement, and (ii) in furtherance thereof agree that Operator shall bill the Company for its pro
rata portion for Operator’s actual, out-of-pocket costs incurred solely and directly in performing the Services for the Project. For the avoidance of doubt, such costs are not intended to provide any profit to Operator and Operator shall charge
the joint account for direct operating expenses pursuant to the Joint Operating Agreement between the parties dated December 31, 2010. 
 (b) In addition to the foregoing, if the Company hereafter elects to engage Operator or any of Operator’s affiliated services companies to provide services on the Project, then the Company
shall compensate Operator or such affiliate (as applicable) for such additional services at prevailing market rates for work that is performed by such affiliates with respect to the Project. 

3.3 OPERATOR’S INTERESTS IN
PROJECT. 
 (a) ORRI. The Company will assign to MorMeg a 5.0% ORRI
(8/8ths) covering all leases within the Black Oaks project. The ORRI shall be proportionally reduced to the mineral interests covered by the Project leases. 
 (b) WORKING INTEREST. The Company will assign to MorMeg a ten percent (10%) Working Interest (8/8ths) on all leases for all or any portion of
the Project. MorMeg will pay its 10% share of all lease operating expenses on a “heads-up” basis. The Company will fund MorMeg’s 10% working interest (the “Carried Interest”) for all Capital Expenditures invested in
the Project by the Company during the term of this Agreement. 
 (i) For purposes of the foregoing, the term
“Capital Expenditures” shall include all capital investment in new producing wellbores, new water injector wellbores, investment in infrastructure, investment in facilities, and investment in any other area outside of general lease
operating costs. 
 (ii) Such Carried Interest shall terminate at the earlier of (A) the end of the term of this
Agreement, or (B) once the Company has funded total cumulative Capital Expenditures of $500,000 on behalf of MorMeg (e.g., the 10% Carried Interest shall terminate if the Company spends $5 million (8/8ths) of Capital Expenditures within
the Project during the term of this Agreement; $5 million of CAPEX x 10% WI = $500,000 on Operator’s behalf). MorMeg will pay its 10% portion on all operations (including Capital Expenditures) on a “heads-up” basis upon termination of
the Carried Interest. 
 (c) REVERSIONARY WORKING INTEREST.
The Company will assign to MorMeg an additional working interest (the “Reversionary Working Interest”) at the end of the term of this Agreement per the terms below. The Reversionary Working Interest will be between 0.0% and 5.0%
(8/8ths) and will be calculated based on the cumulative Capital Expenditures that the Company invests in the Project during the term of this Agreement. The Reversionary Working Interest will not exceed 5.0% (8/8ths) (the “Max
Amount”) under any circumstance. 
 (i) The Reversionary Working Interest shall be calculated at the end of the
term of this Agreement as follows: The Max Amount shall be reduced 0.1% for every $100,000 of Capital Expenditures the Company invests in the Black Oaks project (the “Reduction Amount”). The Reversionary Working Interest
shall equal the Max Amount minus the Reduction Amount. Per this equation, the Reversionary Working Interest will equal 0.0% if the Company’s cumulative sum of Capital 

  
 2 

 
Expenditures during the term of this Agreement is equal to or exceeds $5 million. No additional working interest will be assigned to MorMeg if the Reversionary Working Interest is equal to
0.0%. 
 (ii) Solely for purposes of illustrating the foregoing by example, assume that the Company invests $3 million
of Capital Expenditures in the Project during the term of this Agreement. At the end of the term of this Agreement, the Reversionary Working Interest shall be calculated as follows: $3 million CAPEX/$100,000 = 30; 30 x 0.10% working interest =
3.0%. The Reversionary Working Interest shall equal 2.0% in this example. 5.0% (Max Amount) minus 3.0% (Reduction Amount) = 2.0% Reversionary Working Interest assigned to MorMeg). 

 

	4.	CONFIDENTIAL INFORMATION AND INDEMNIFICATION.  

4.1 THIRD-PARTY CONFIDENTIAL INFORMATION. Haas
acknowledges that the Company does not desire to obtain improperly any proprietary or confidential information owned by any company or other person with whom Haas now has or heretofore has had a consulting engagement or employment relationship, and
therefore agrees that (a) Haas shall not bring to the Company or share with any employee or other representative of the Company any written, electronic, or other materials containing any confidential information belonging to any such current or
former employer or other person, and (b) Haas shall not provide any such information in any other form to the Company (or any representative of the Company) in violation of any agreements or any other obligations that Haas may owe to any other
persons. 
 4.2 COMPANY CONFIDENTIAL INFORMATION. Haas
covenants and agrees that except with the prior express written consent of the Company, Haas (a) shall keep secret and confidential, and shall hold in strictest confidence and trust, all confidential and proprietary information of the Company
disclosed to or otherwise acquired by Haas, and (b) shall not, either directly or indirectly, (i) disclose such confidential and proprietary information to any third party, or (ii) use (or permit any other person to use) any such
confidential and proprietary information for any purpose other than evaluating whether to enter into a business relationship with the Company. 
  

	5.	MISCELLANEOUS 

 5.1 NOTICES. All notices permitted or required by this Agreement shall be in writing, and shall be deemed to have been delivered and received (a) when personally
delivered, (b) on the third (3rd) business day
after the date on which deposited in the United States mail, postage prepaid, certified or registered mail, return receipt requested, (c) on the date on which transmitted by facsimile, email, or other electronic means producing a tangible
receipt evidencing a successful transmission , or (d) on the next business day after the day on which deposited with a regulated public carrier (e.g., Federal Express), freight prepaid, addressed to the party for whom intended at the
address, facsimile number, or email address set forth on the signature page of this Agreement, or such other address, facsimile number, or email address, notice of which has been delivered in a manner permitted by this Section 5.1. The
Joint Operating Agreement specifically defines operational notice requirements, and the provisions of the Joint Operating Agreement shall control all such notices and this Section 5.1 shall not apply thereto. 

5.2 FURTHER ASSURANCES. Each party agrees, upon the request of the other party, to
make, execute, and deliver such additional documents, and to take such additional actions, as may be reasonably necessary to effectuate the purposes of this Agreement. 
 5.3 SEVERABILITY. If at any time any provision of this Agreement is or becomes illegal, invalid or unenforceable in any respect under the law of any jurisdiction, neither the
legality, validity or enforceability of the remaining provisions hereof nor the legality, validity, or enforceability of such 

  
 3 

 
provision under the law of any other jurisdiction will in any way be affected or impaired thereby, and the remainder of the provisions of this Agreement will remain in full force and effect.

 5.4 ASSIGNMENT. Neither party may assign this Agreement or any rights hereunder, whether by operation
of law or otherwise, without the prior written consent of the other party, except that the Company may assign this Agreement, with prior notice but without Operator’s written consent, to a party with whom the Company or EnerJex merges or
consolidates or to whom the Company or EnerJex sells substantially all or substantially all of its assets relating to this Agreement, so long as such assignee agrees to be bound by all provisions of this Agreement applicable to the Company. Any
attempted or purported assignment or delegation by either Party in violation of this Section 5.4 will be null and void. 
 5.5 FORCE MAJEURE. Any delay in or failure of performance by either Party under this Agreement (other than failure to pay amounts owed) will not be considered a breach
of this Agreement and will be excused to the extent caused by any occurrence beyond the reasonable control of such Party, including but not limited to fires, floods, epidemics, famines, earthquakes, hurricanes and other natural disasters or acts of
God; regulation or acts of any civilian or military authority or act of any self-regulatory authority; wars, terrorism, riots, civil unrest, sabotage, or theft or other criminal acts of third Parties; failure of electronic or mechanical equipment;
and fluctuations in or failures of electric power, heat, light, telecommunications and shortages of relied-upon services or supplies. 
 5.6 WAIVER AND MODIFICATIONS. All waivers must be in writing. Any waiver of or failure to enforce a provision of this Agreement on one occasion will not
be deemed a waiver of any other provision or such provision on any other occasion. 
 5.7 ATTORNEYS’
FEES. If any action is commenced to construe this Agreement or to enforce any of the rights and duties created herein, then the party prevailing in that action shall be entitled to recover its costs and
attorneys’ fees in that action, as well as all costs and fees of enforcing any judgment entered therein. 
 5.8
GOVERNING LAW. This Agreement shall be governed by and construed in accordance with applicable provisions of Kansas law (other than its conflict-of-law principles), and each party hereby consents to
the jurisdiction of the courts of the State of Kansas for purposes of all actions commenced to construe or enforce this Agreement. 
 5.9 ARBITRATION. Unless the relief sought requires the exercise of the equity powers of a court of competent jurisdiction, any dispute arising in connection with the
interpretation or enforcement of the provisions of this Agreement, or the application or validity thereof, shall be submitted to arbitration. Such arbitration proceedings shall be held in Overland Park, Kansas, in accordance with the rules then
obtaining of the American Arbitration Association. This agreement to arbitrate shall be specifically enforceable. Any award rendered in any such arbitration proceedings shall be final and binding on each of the parties hereto, and judgment may be
entered thereon in any court of competent jurisdiction. The arbitrator shall have discretion to award the costs and fees of the arbitration in such manner as the arbitrator determines to be appropriate. 

5.10 COMPLETE AGREEMENT; AMENDMENTS. This Agreement and the Joint
Operating Agreement (a) contain the entire agreement and understanding between the parties regarding the subject matter hereof, and supersedes and replace all prior and contemporaneous agreements and understandings, whether oral or written,
concerning Operator’s engagement by the Company to provide the Services described herein, and (b) shall not be modified or amended, except by a written instrument executed after the Effective Date hereof by the party sought to be charged
with such amendment or modification. 

  
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 5.11 COUNTERPARTS; ELECTRONIC
SIGNATURES. This Agreement may be executed in counterparts, each of which shall be deemed an original and both of which, taken together, shall be one and the same instrument, binding on each signatory. A copy
of this Agreement that is executed by a party and transmitted by that party to the other party by facsimile or email shall be binding on the signatory to the same extent as a copy hereof containing the signatory’s original signature.

 IN WITNESS WHEREOF, the parties hereto have executed this
Agreement, effective as of the date set forth above. 
  

									
	“COMPANY:”	 	“OPERATOR:”
		
	ENERJEX RESOURCES, INC., a Nevada corporation	 	 HAAS PETROLEUM, LLC, a Kansas limited

liability company

  

									
					
	By	 	  
	 		 	By	 	  

		 	Name & title:	 		 		 	Name & title:
					
		 	  
	 		 		 	  

		 	Date	 		 		 	Date
					
		 	Address and Facsimile No. for Notices:	 		 		 	Address and Facsimile No. for Notices:
					
		 	 EnerJex Resources, Inc.

c/oBlack Sable Energy, LLC
 123 Evans
Avenue
 San Antonio, Texas 78209
	 		 		 	 Haas Petroleum, LLC
  

_________________________________________
  

_______________, _______________ _______

					
		 	Facsimile No.: (210) ____________________________	 		 		 	Facsimile No.: (        )___________________________
		 	Email: robert.watson@blacksableenergy.com	 		 		 	Email: ___________________________________
				
		 		 		 	“MORMEG:”
				
		 		 		 	 MORMEG, LLC, a Kansas limited liability

company

					
		 		 		 	By	 	  

		 		 		 		 	Name & title:
					
		 		 		 		 	  

		 		 		 		 	Date
					
		 		 		 		 	Address and Facsimile No. for Notices:
					
		 		 		 		 	MorMeg, LLC
					
		 		 		 		 	______________________________________
		 		 		 		 	____________, __________________
					
		 		 		 		 	Facsimile No.: (        ) ________________________
		 		 		 		 	Email:  ______________

  
 5

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