Document:

Exhibit 10.33

 

RESACA EXPLOITATION, INC.

RESTRICTED STOCK AGREEMENT

 

THIS RESTRICTED STOCK AGREEMENT
(the “Agreement”) is made and
entered into by and between Resaca Exploitation, Inc., a Texas corporation
(the “Company”) and Richard Kelly
Plato, an individual and Director of the Company (“Grantee”), on the 17th day of July, 2008 (the “Grant Date”), subject to the Resaca
Exploitation, Inc. 2008 Stock Incentive Plan (the “Plan”). 
This Agreement is subject to the terms and conditions of the Plan, which
is incorporated herein in its entirety by reference.  Capitalized terms not otherwise defined in
this Agreement shall have the meaning given to such terms in the Plan.

 

WHEREAS, Grantee is
a Director of the Company, and in connection therewith, the Company desires to
grant shares of the Company’s Common Stock, par value $0.01 per share (the “Common Stock”) to Grantee, subject to the
terms and conditions of this Agreement and the Plan, with a view to increasing
Grantee’s interest in the Company’s success and growth; and

 

WHEREAS, Grantee
desires to be the holder of shares of Common Stock subject to the terms and
conditions of this Agreement;

 

NOW, THEREFORE, in
consideration of the premises, mutual covenants and agreements contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto, intending to be legally
bound hereby, agree as follows:

 

1.             Grant of Common Stock.  Subject to the restrictions, forfeiture
provisions and other terms and conditions set forth herein (a) the Company
hereby grants to Grantee, Two Hundred Thirty Thousand Six Hundred Forty-Seven (230,647)
shares of Common Stock of the Company (“Grant
Shares”), and (b) Grantee shall have all rights and privileges
of ownership of such Grant Shares subject to this Agreement and the Plan.

 

2.             Transfer Restrictions.

 

(a)           Generally.  Grantee shall not sell, assign, exchange,
pledge, encumber, gift, devise, hypothecate or otherwise transfer (individually
and collectively, “Transfer”) any
Grant Shares unless and until vested. 
The transfer restrictions imposed by this Section 2 shall
lapse in accordance with the following vesting schedule when the Grant Shares
become vested, provided that, subject to Section 3(a), Grantee then
is, and continuously from the Grant Date has been, a Director of the Company
and there has been no termination of Employment.  The Grant Shares as to which such
restrictions have lapsed are referred to herein as “Vested Shares.”

 

 

	
   

  	
  Vesting Date

  	
   

  	
  Vested %

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  First Anniversary of the Grant Date

  	
   

  	
  331/3

  	
  %

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Second Anniversary of the Grant Date

  	
   

  	
  331/3

  	
  %

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Third Anniversary of the Grant Date

  	
   

  	
  331/3

  	
  %

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Total

  	
   

  	
  100

  	
  %

  	
   

  	
   

  

 

(b)           Dividends, Splits and Voting Rights.  If the Company (i) declares a stock
dividend or makes a distribution on Common Stock in shares, (ii) subdivides
or reclassifies outstanding shares of Common Stock into a greater number of
shares of Common Stock, or (iii) combines or reclassifies outstanding
shares of Common Stock into a smaller number of shares of Common Stock, then
the number of Grant Shares subject to the transfer restrictions of this Section 2
shall be proportionately increased or reduced, as applicable, so as to prevent
the enlargement or dilution of Grantee’s rights hereunder.  The determination of the Committee regarding
the methodology for effecting such adjustments shall be binding.  In addition, the Grantee shall not have the
right to vote the Grant Shares while they remain subject to the transfer restrictions
of this Section 2.

 

(c)           Change in Control.  If there is a Change in Control of the
Company (as defined in the Plan at such time), the transfer restrictions of
this Section 2 shall automatically cease as of the effective date
of such Change in Control, and all the Grant Shares shall thus be 100% vested upon
a Change in Control.

 

3.             Forfeiture.

 

(a)           Termination of Employment.   If Grantee’s Employment is terminated due to
Grantee’s involuntary termination (except for Cause or Grantee’s removal from
the Board in any manner other than by the failure to be re-elected by the
shareholders of the Company), including as a result of Grantee’s death or
Disability or failure to be re-elected to the Board by the shareholders of the
Company, then in any such event, all Grant Shares shall become fully vested and
transferable free of restrictions as of the effective date of the termination
of Employment.

 

If Grantee’s Employment with the Company is involuntarily terminated by
the Company for Cause, or voluntarily terminated by the Grantee for any reason
(other than due to Grantee’s death or Disability or failure to be re-elected to
the Board by the shareholders of the Company), including the Retirement of
Grantee, then Grantee shall immediately forfeit all Grant Shares which are not
then Vested Shares.

 

(b)           Forfeited Shares.  All Grant Shares forfeited hereunder shall automatically
revert to the Plan and become canceled. 
Any certificate(s) representing Grant Shares which include
forfeited shares shall only represent that number of Grant Shares which have
not been forfeited hereunder.  Upon the
Company’s request, Grantee agrees to tender to the Company any 

 

2

 

certificate(s) representing
Grant Shares which include forfeited shares for a new certificate representing only
the unforfeited number of Grant Shares.

 

4.             Issuance of
Certificate.

 

(a)           The Grant Shares may
not be Transferred until they become Vested Shares.  Further, the Vested Shares may not be sold or
otherwise disposed of in any manner which would constitute, in the opinion of
counsel for the Company, a violation of any applicable federal or state
securities or other laws or regulations, or any rules or regulations of
any stock exchange on which the Common Stock is listed.  The Company shall cause to be issued a stock
certificate, registered in the name of the Grantee, evidencing the Grant Shares
upon receipt of a stock power duly endorsed in blank with respect to such
shares.  Each such stock certificate
shall bear the following legend:

 

The transferability of this certificate and
the shares of stock represented hereby are subject to the restrictions, terms
and conditions (including forfeiture and restrictions against transfer)
contained in the Resaca Exploitation, Inc. 2008 Stock Incentive Plan and a
Restricted Stock Agreement entered into between the registered owner of such
shares and Resaca Exploitation, Inc. 
Copies of the Plan and Restricted Stock Agreement are on file in the
main corporate offices of Resaca Exploitation, Inc.

 

(b)           The Certificate issued
pursuant to this Section 4, together with the stock powers relating
to the Grant Shares evidenced by such certificate, shall be held by the
Company.  The Company shall issue to
Grantee a receipt evidencing the certificates held by it which are registered
in the name of Grantee.

 

5.             Grantee’s
Representations.  Notwithstanding any
provision hereof to the contrary, the Grantee hereby agrees and covenants that
Grantee will not acquire any Grant Shares, and that the Company will not be
obligated to issue any Grant Shares to the Grantee hereunder, if the issuance
of such shares constitutes a violation by the Grantee or the Company of any applicable
federal or state securities or other laws or regulations, or any rules or
regulations of any stock exchange on which the Common Stock is listed.  Any determination in this regard that is made
by the Committee, in good faith, shall be final and binding.  The rights and obligations of the Company and
the Grantee are subject to all applicable laws and regulations

 

6.             Tax Withholding.  To the extent that the receipt or vesting of
Grant Shares results in compensation income to Grantee for any tax purposes,
Grantee shall deliver to Company at such time the sum that the Company requires
to meet its tax withholding obligations under applicable law or regulation,
and, if Grantee fails to do so, the Company is authorized to (a) withhold
from any cash or stock remuneration then or thereafter payable to Grantee any
tax that Company determines is required to be withheld, or (b) sell such
number of Grant Shares before their transfer to Grantee as is deemed appropriate
to satisfy such tax withholding 

 

3

 

requirements,
before transferring the resulting net number of shares to Grantee in full
satisfaction of its obligations under this Agreement.

 

7.             Miscellaneous.

 

(a)           Certain Transfers Void.  Any purported Transfer of shares of Common
Stock in breach of any provision of this Agreement shall be void and
ineffective, and shall not operate to Transfer any interest or title in the
purported transferee.

 

(b)           No Fractional Shares.  All provisions of this Agreement concern
whole shares of Common Stock.  If the
application of any provision hereunder would yield a fractional share, such
fractional share shall be rounded down to the next whole share if it is less
than 0.5 and rounded up to the next whole share if it is 0.5 or more.

 

(c)           Not an Employment Agreement.  This Agreement is not an Employment agreement,
and no provision of this Agreement shall be construed or interpreted to create
any Employment relationship between Grantee and the Company for any time
period.  The Employment of Grantee shall
be subject to termination to the same extent as if this Agreement had not been
executed.

 

(d)           Notices.  All notices under this Agreement shall be
mailed or delivered by hand to the parties at their respective addresses set
forth beneath their signatures below or at such other address as may be
designated in writing by either of the parties to one another, or to their
permitted transferees if applicable. 
Notices shall be effective upon receipt.

 

(e)           Shares Reserved.  The Company shall, at all times during the
period that any Grant Shares remain subject to this Agreement, reserve under
the Plan such number of shares of Common Stock as shall be sufficient to
satisfy the requirements of this Agreement.

 

(f)            Amendment and Termination.  No amendment, modification or termination of
this Agreement shall be made at any time without the written consent of Grantee
and Company.

 

(g)           No Guarantee of Tax Consequences.  The Company makes no commitment or guarantee
that any tax treatment will apply or be available to Grantee or any other
person.  The Grantee has been advised, and
provided with the opportunity, to obtain independent legal and tax advice
regarding the grant, vesting, transfer and the disposition of any Grant Shares.

 

(h)           Severability.  In the event that any provision of this
Agreement shall be held illegal, invalid, or unenforceable for any reason, such
provision shall be fully severable, but shall not affect the remaining
provisions of the Agreement, and the Agreement shall be construed and enforced
as if the illegal, invalid, or unenforceable provision had not been included
herein.

 

(i)            Supersedes Prior Agreements.  This Agreement shall supersede and replace
all prior agreements and understandings, oral or written, between the Company
and the Grantee regarding the Grant Shares covered hereby.

 

4

 

(j)            Governing Law.  The Agreement shall be construed in
accordance with the laws of the State of Texas, without regard to its conflict
of law provisions, to the extent federal law does not supersede and preempt
Texas law.

 

[Signature page follows]

 

5

 

IN WITNESS WHEREOF,
this Restricted Stock Agreement is made and entered into as of the date first
written above.

 

	
   

  	
   

  	
  RESACA
  EXPLOITATION, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  /s/ John
  Lendrum, III

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  John J.
  Lendrum, III

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address
  for Notices:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Resaca
  Exploitation, Inc.

  
	
   

  	
   

  	
  1331 Lamar
  Street, Suite 1450

  
	
   

  	
   

  	
  Houston, TX
  77010

  
	
   

  	
   

  	
  Attn:
  General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  GRANTEE:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Richard
  Kelly Plato

  
	
   

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address
  for Notices:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

6Exhibit 10.34

 

UNIT OPERATING AGREEMENT

 

COOPER JAL UNIT

 

LEA COUNTY, NEW MEXICO

 

	
   

  	
   

  	
  STATE
  OF NEW MEXICO

  COUNTY OF LEA

  FILED

   

  SEP
  30 1970

   

  [ILLEGIBLE]

   

  [SEAL]

   

  [ILLEGIBLE]

  

 

 

UNIT OPERATING AGREEMENT

COOPER JAL UNIT

LEA COUNTY, NEW MEXICO

 

Table of Contents

 

	
  Section

  	
   

  	
  Page

  
	
   

  
	
  ARTICLE 1

  
	
  CONFIRMATION OF UNIT AGREEMENT

  
	
   

  	
   

  	
   

  
	
  1.1

  	
  Confirmation of Unit Agreement

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2

  
	
  EXHIBITS

  
	
  2.1

  	
  Exhibits

  	
   

  
	
   

  	
  2.1.1

  	
  Exhibits A, B and C

  	
  1

  
	
   

  	
  2.1.2

  	
  Exhibit D

  	
  1

  
	
   

  	
  2.1.3

  	
  Exhibit E

  	
  2

  
	
   

  	
  2.1.4

  	
  Exhibit F

  	
  2

  
	
  2.2

  	
  Revision
  of Exhibits

  	
  2

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3

  
	
  SUPERVISION OF OPERATIONS BY

  
	
  WORKING INTEREST OWNERS

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Overall Supervision

  	
  2

  
	
  3.2

  	
  Specific Authorities and Duties

  	
  2

  
	
   

  	
  3.2.1

  	
  Method of Operation

  	
  2

  
	
   

  	
  3.2.2

  	
  Drilling of Wells

  	
  2

  
	
   

  	
  3.2.3

  	
  Well Recompletions and Change of Status

  	
  3

  
	
   

  	
  3.2.4

  	
  Expenditures

  	
  3

  
	
   

  	
  3.2.5

  	
  Disposition of Unit Equipment

  	
  3

  
	
   

  	
  3.2.6

  	
  Appearance Before a Court or Regulatory Agency

  	
  3

  
	
   

  	
  3.2.7

  	
  Audits

  	
  3

  
	
   

  	
  3.2.8

  	
  Inventories

  	
  4

  
	
   

  	
  3.2.9

  	
  Technical Services

  	
  4

  
	
   

  	
  3.2.10

  	
  Assignments to Committees

  	
  4

  
	
   

  	
  3.2.11

  	
  The Removal of Unit Operator and the Selection of
  a Successor

  	
  4

  
	
   

  	
  3.2.12

  	
  The Enlargement of the Unit Area

  	
  4

  
	
   

  	
  3.2.13

  	
  The Adjustment and Readjustment of Investments

  	
  4

  
	
   

  	
  3.2.14

  	
  The Termination of the Unit Agreement

  	
  4

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4

  
	
  MANNER OF EXERCISING SUPERVISION

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Designation of Representatives

  	
  4

  
	
  4.2

  	
  Meetings

  	
  4

  
	
  4.3

  	
  Voting Procedure

  	
  5

  
	
   

  	
  4.3.1

  	
  Voting Interest

  	
  5

  
	
   

  	
  4.3.2

  	
  Vote Required

  	
  5

  
	
   

  	
  4.3.3

  	
  Vote at Meeting by Nonattending Working Interest
  Owners

  	
  5

  
	
   

  	
  4.3.4

  	
  Poll Votes

  	
  5

  
					

 

i

 

Table of Contents (Cont’d.)

 

	
  Section

  	
   

  	
  Page

  
	
   

  
	
  ARTICLE 5

  
	
  INDIVIDUAL RIGHTS OF WORKING INTEREST OWNERS

  
	
   

  	
   

  	
   

  	
   

  
	
  5.1

  	
  Reservation
  of Rights

  	
  6

  
	
  5.2

  	
  Specific
  Rights

  	
  6

  
	
   

  	
  5.2.1

  	
  Access
  to Unit Area

  	
  6

  
	
   

  	
  5.2.2

  	
  Reports

  	
  6

  
	
  ARTICLE 6

  
	
  UNIT OPERATOR

  
	
   

  	
   

  	
   

  	
   

  
	
  6.1

  	
  Initial
  Unit Operator

  	
  6

  
	
  6.2

  	
  Resignation
  or Removal

  	
  6

  
	
  6.3

  	
  Selection
  of Successor

  	
  6

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 7

  
	
  AUTHORITIES AND DUTIES OF UNIT OPERATOR

  
	
   

  	
   

  	
   

  	
   

  
	
  7.1

  	
  Exclusive
  Right to Operate Unit

  	
  6

  
	
  7.2

  	
  Workmanlike
  Conduct

  	
  7

  
	
  7.3

  	
  Liens
  and Encumbrances

  	
  7

  
	
  7.4

  	
  Employees

  	
  7

  
	
  7.5

  	
  Records

  	
  7

  
	
  7.6

  	
  Reports
  to Working Interest Owners

  	
  7

  
	
  7.7

  	
  Reports
  to Governmental Authorities

  	
  7

  
	
  7.8

  	
  Engineering
  and Geological Information

  	
  7

  
	
  7.9

  	
  Expenditures

  	
  7

  
	
  7.10

  	
  Wells
  Drilled by Unit Operator

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 8

  
	
  TAXES

  
	
   

  	
   

  	
   

  	
   

  
	
  8.1

  	
  Ad
  Valorem Taxes

  	
  8

  
	
  8.2

  	
  Other
  Taxes

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 9

  
	
  INSURANCE

  
	
   

  	
   

  	
   

  	
   

  
	
  9.1

  	
  Insurance

  	
  8

  
	
   

  	
  9.1.1

  	
  Workmen’s
  Compensation Law

  	
  9

  
	
   

  	
  9.1.2

  	
  Employer’s
  Liability

  	
  9

  
	
   

  	
  9.1.3

  	
  Other
  Insurance

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 10

  
	
  ADJUSTMENT OF INVESTMENTS

  
	
   

  	
   

  	
   

  	
   

  
	
  10.1

  	
  Personal
  Property Taken Over

  	
  9

  
	
   

  	
  10.1.1

  	
  Wells

  	
  9

  
	
   

  	
  10.1.2

  	
  Well
  and Lease Equipment

  	
  9

  
	
   

  	
  10.1.3

  	
  Records

  	
  9

  
	
  10.2

  	
  Inventory
  and Evaulation of Personal Property

  	
  9

  
	
  10.3

  	
  Investment
  Adjustment

  	
  10

  
	
   

  	
  10.3.1

  	
  Initial
  Adjustment of Investments

  	
  10

  
	
   

  	
  10.3.2

  	
  Readjustments
  of Investments

  	
  10

  
	
  10.4

  	
  General
  Facilities

  	
  11

  
	
  10.5

  	
  Ownership of Personal
  Property and Facilities

  	
  11

  
						

 

ii

 

Table of Contents (Cont’d.)

 

	
  Section

  	
   

  	
  Page

  
	
   

  
	
  ARTICLE 11

  
	
  UNIT EXPENSE

  
	
   

  	
   

  	
   

  
	
  11.1

  	
  Basis
  of Charge to Working Interest Owners

  	
  11

  
	
  11.2

  	
  Budgets

  	
  12

  
	
  11.3

  	
  Advance
  Billings

  	
  12

  
	
  11.4

  	
  Commingling
  of Funds

  	
  12

  
	
  11.5

  	
  Lien
  of Unit Operator

  	
  12

  
	
  11.6

  	
  Lien of Working Interest Owner

  	
  13

  
	
  11.7

  	
  Unpaid
  Unit Expense

  	
  13

  
	
  11.8

  	
  Uncommitted
  Royalty

  	
  13

  
	
  11.9

  	
  Burden
  of Excess Royalty
  and Other Interests

  	
  14

  
	
  11.10

  	
  Carved-Out
  Interest

  	
  14

  
	
   

  	
   

  	
   

  
	
  ARTICLE 12

  
	
  NON-UNITIZED FORMATIONS

  
	
   

  	
   

  	
   

  
	
  12.1

  	
  Right
  to Operate

  	
  14

  
	
   

  	
   

  	
   

  
	
  ARTICLE 13

  
	
  TITLES

  
	
   

  	
   

  	
   

  
	
  13.1

  	
  Warranty
  and Indemnity

  	
  I5

  
	
  13.2

  	
  Failure Because of
  Unit Operations

  	
  15

  
	
   

  	
   

  	
   

  
	
  ARTICLE 14

  
	
  LIABILITY, CLAIMS, AND SUITS

  
	
   

  	
   

  	
   

  
	
  14.1

  	
  Individual Liability

  	
  15

  
	
  14.2

  	
  Settlements

  	
  16

  
	
   

  	
   

  	
   

  
	
  ARTICLE 15

  
	
  INTERNAL REVENUE
  PROVISION

  
	
   

  	
   

  	
   

  
	
  15.1

  	
  Internal
  Revenue Provision

  	
  16

  
	
   

  	
   

  	
   

  
	
  ARTICLE 16

  
	
  NOTICES

  
	
   

  	
   

  	
   

  
	
  16.1

  	
  Notices

  	
  17

  
	
   

  	
   

  	
   

  
	
  ARTICLE 17

  
	
  WITHDRAWAL OF WORKING INTEREST OWNER

  
	
   

  	
   

  	
   

  
	
  17.1

  	
  Withdrawal

  	
  17

  
	
   

  	
   

  	
   

  
	
  ARTICLE 18

  
	
  ABANDONMENT OF WELLS

  
	
   

  	
   

  	
   

  
	
  18.1

  	
  Rights
  of Former Owners

  	
  18

  
	
  18.2

  	
  Plugging

  	
  18

  
	
   

  	
   

  	
   

  
	
  ARTICLE 19

  
	
  EFFECTIVE DATE AND TERM

  
	
   

  	
   

  	
   

  
	
  19.1

  	
  Effective Date

  	
  18

  
	
  19.2

  	
  Term

  	
  19

  
					

 

iii

 

Table of Contents (Cont’d)

 

	
  Section

  	
   

  	
  Page

  
	
   

  
	
  ARTICLE 20

  
	
  ABANDONMENT OF OPERATIONS

  
	
   

  	
   

  	
   

  
	
  20.1

  	
  Termination

  	
  19

  
	
   

  	
  20.1.1

  	
  Oil
  and Gas Rights

  	
  19

  
	
   

  	
  20.1.2

  	
  Right
  to Operate

  	
  19

  
	
   

  	
  20.1.3

  	
  Salvaging
  Wells

  	
  19

  
	
   

  	
  20.1.4

  	
  Cost
  of Salvaging

  	
  19

  
	
   

  	
   

  	
   

  
	
  ARTICLE 21

  
	
  EXECUTION

  
	
   

  	
   

  	
   

  
	
  21.1

  	
  Original
  Counterpart, or Other Instrument

  	
  20

  
	
   

  	
   

  	
   

  
	
  ARTICLE 22

  
	
  SUCCESSORS AND ASSIGNS

  
	
   

  	
   

  	
   

  
	
  22.1

  	
  Successors and Assigns

  	
  20

  
						

 

iv

 

UNIT OPERATING AGREEMENT

 

COOPER JAL UNIT

Lea County, New Mexico

 

THIS
AGREEMENT, entered into as of the 15th day of January, 1970, by the parties who
have signed the original of this instrument, a counterpart thereof, or other
instrument agreeing to be bound by the provisions hereof;

 

WITNESSETH:

 

WHEREAS,
the parties hereto as Working
Interest Owners have executed, as of the date hereof, an agreement entitled,
“Unit Agreement, Cooper Jal Unit, Lea County, New Mexico”, herein referred to
as “Unit Agreement”, which among other things, provides for a
separate agreement to be entered into by Working Interest Owners to
provide for the development and operation of the Unit Area as therein defined;

 

NOW,
THEREFORE, in consideration of the mutual agreements herein set forth, it is agreed as
follows:

 

ARTICLE 1

 

CONFIRMATION OF UNIT AGREEMENT

 

1.1
 CONFIRMATION OF UNIT AGREEMENT. The Unit Agreement is hereby confirmed
and by reference made a part of this agreement. The definitions in the Unit
Agreement are adopted for all purposes of this agreement. If there
is any conflict between the Unit Agreement and this agreement, the Unit
Agreement shall govern.

 

ARTICLE 2

 

EXHIBITS

 

2.1  EXHIBITS. The following exhibits are
incorporated herein by reference:

 

2.1.1  EXHIBITS A, B AND C of the Unit
Agreement.

 

2.1.2  EXHIBIT D, attached
hereto, which is a schedule showing the Working Interest of each
Working Interest Owner in each Tract, the percentage of total Unit Participation
attributable to each such interest, and the total Unit Participation of
each Working Interest Owner. Exhibit D, or a revision thereof,

 

 

shall not be conclusive as to the information
therein, except it may be used as showing the Unit Participations of the
Working Interest Owners for purposes of this agreement until shown to be in
error or is revised as herein authorized.

 

2.1.3  EXHIBIT E, attached
hereto, which is the Accounting Procedure
applicable to Unit Operations. If
there is any conflict between this agreement and Exhibit E, this agreement shall govern.

 

2.1.4  EXHIBIT F, attached hereto, which contains insurance provisions applicable to
Unit Operations.

 

2.2  REVISION OF EXHIBITS.
Whenever Exhibits A, B and C are revised, Exhibit D
shall be revised accordingly and be effective as of the same date. Unit
Operator shall also revise Exhibit D from time to time as required to
conform to changes in ownership of which Unit Operator has been notified as
provided in the Unit Agreement.

 

ARTICLE 3

 

SUPERVISION OF OPERATIONS BY WORKING INTEREST
OWNERS

 

3.1  OVERALL SUPERVISION. Working Interest Owners shall exercise overall supervision
and control of all matters pertaining to Unit Operations pursuant to this
agreement and the Unit Agreement. In the exercise of such authority, each Working Interest Owner shall act solely in
its own behalf in the capacity
of an individual owner and not on behalf of the owners as an entirety.

 

3.2  SPECIFIC AUTHORITIES AND DUTIES. The matters with respect to which the  Working Interest Owners shall decide and take action shall include, but
not be limited to, the following:

 

3.2.1  METHOD OF OPERATION. The method of operation,
including any type of pressure maintenance, secondary recovery, or other recovery program to be employed.

 

3.2.2  DRILLING OF WELLS. The drilling of any well whether
for production of Unitized Substances, for use as an injection well, or for
other purposes.

 

2

 

3.2.3  WELL RECOMPLETIONS AND CHANGE OF STATUS. The
recompletion, abandonment, or change of status of any well in the Unit Area, or
the use of any well for injection or other purposes, except for well servicing
or stimulation work on the existing completion interval not exceeding Unit Operator’s
authority for single expenditures.

 

3.2.4  EXPENDITURES. The making of any single
expenditure in excess of Ten Thousand Dollars ($10,000.00); provided that, approval by Working
Interest Owners of the drilling, reworking, deepening, or plugging back of any
well shall include approval of all necessary expenditures required therefor,
and for completing, testing and equipping the same, including necessary flow
lines, separators, and lease tankage.

 

3.2.5  DISPOSITION OF UNIT EQUIPMENT. The selling or
otherwise disposing of any major item of surplus Unit Equipment, if the current
list price of new equipment similar thereto is Three Thousand Five Hundred
Dollars ($3,500.00) or more. All dispositions will be made in accordance with
Exhibit E.

 

3.2.6  APPEARANCE BEFORE A COURT OR REGULATORY
AGENCY. The designating of a representative to appear before any court or
regulatory agency in matters pertaining to Unit Operations; provided that, such
designation shall not prevent any Working Interest Owner from appearing in
person or from designating another representative in its own behalf.

 

3.2.7  AUDITS. The auditing of the accounts of Unit Operator pertaining
to Unit Operations hereunder; however, the audits shall

 

(a)  not
be conducted more than once each year except upon the resignation or removal of
Unit Operator,

 

(b)  be
made upon the approval of the majority in interest of Working Interest Owners,
other than Unit Operator, at the expense of all Working Interest
Owners other than Unit Operator, or

 

(c)  be
made at the expense of those Working Interest Owners requesting such audit, if less than a majority in interest of the  Working Interest Owners, other
than Unit Operator, request such an audit, and

 

3

 

(d)  be made upon not
less than thirty (30) days’ written notice to Unit Operator.

 

3.2.8  INVENTORIES. The taking of periodic
inventories under the terms of Exhibit E.

 

3.2.9  TECHNICAL SERVICES. The authorizing of
charges to the joint account for services by consultants or Unit Operator’s technical
personnel not covered by the overhead charges provided by Exhibit E.

 

3.2.10
 ASSIGNMENTS TO COMMITTEES. The appointment of committees to study any
problems in connection with Unit Operations.

 

3.2.11
 The removal of Unit Operator and the selection of a successor.

 

3.2.12
 The enlargement of the Unit Area.

 

3.2.13
 The adjustment and readjustment of investments.

 

3.2.14
 The termination of the Unit
Agreement.

 

ARTICLE 4

 

MANNER OF EXERCISING SUPERVISION

 

4.1
 DESIGNATION OF REPRESENTATIVES. Each Working Interest Owner shall in
writing inform Unit Operator of the names and addresses of the representative
and alternate who are authorized to represent and bind such Working Interest
Owner with respect to Unit Operations. The representative or alternate may be
changed from time to time by written notice to Unit Operator.

 

4.2
 MEETINGS. All meetings of Working Interest Owners shall be called by Unit
Operator upon its own motion or at the request of one or more Working Interest Owners
having a total Unit Participation of not less than
Ten Percent (10%) of the Unit Participation in effect at the time. No meeting shall
be called on less than fourteen (14) days’  advance written notice, with
agenda for the meeting attached. Working Interest Owners who attend the meeting
shall not be prevented from amending items included in the agenda or from
deciding the amended item or other items presented  at the meeting. The
representative of Unit Operator shall be
chairman of each meeting.

 

4

 

4.3
  VOTING PROCEDURE. Working
Interest Owners shall decide all matters coming before them as follows:

 

4.3.1  VOTING INTEREST. Each Working Interest
Owner shall have a voting interest equal to its Unit Participation which is in
effect at the time the vote is taken.

 

4.3.2  VOTE REQUIRED. Except as  may otherwise be
provided herein or in the Unit Agreement, Working Interest Owners shall act
upon and determine all matters coming before them by the affirmative vote of
three or more Working Interest Owners having a total of 65 percent (65%) or
more of the total voting interest in the unit; provided that if any one Working
Interest Owner has a voting interest of more than thirty-five percent (35%),
its negative vote or failure to vote shall not defeat the matter being voted on
if such matter is supported by a majority of the voting interest unless such Working
Interest Owner is supported by the vote of one or more other Working Interest
Owners having a total voting interest of at least five percent (5%), and such
resulting vote shall be binding on all parties.

 

4.3.3  VOTE AT MEETING BY NONATTENDING WORKING
INTEREST OWNER. Any Working Interest Owner who is not represented at a meeting
may vote on any agenda item by letter or telegram addressed to the
representative of the Unit Operator if its vote is received prior to the vote
on the item, provided such nonattending Working Interest Owner’s vote shall not
be counted in the vote taken on any item that was amended or altered at the
meeting.

 

4.3.4  POLL VOTES. Working Interest Owners may vote
on and decide, by letter or telegram, any matter submitted in writing to
Working Interest Owners, if no meeting is requested, as provided in Section 4.2,
within seven (7) days after the proposal is sent to Working Interest
Owners. Unit Operator will give prompt notice of the results of the voting to
all Working Interest Owners.

 

5

 

ARTICLE 5

 

INDIVIDUAL RIGHTS OF WORKING INTEREST OWNERS

 

5.1
 RESERVATION OF RIGHTS.
Working Interest Owners severally reserve to themselves all their rights,
except as otherwise provided in this agreement and the Unit Agreement.

 

5.2
 SPECIFIC RIGHTS. Each
Working Interest Owner shall have, among others, the following specific rights:

 

5.2.1  ACCESS TO UNIT AREA. Access to the Unit
Area at such Working Interest Owner’s own risk at all reasonable times to
inspect Unit Operations, all wells, and the records and data pertaining
thereto.

 

5.2.2  REPORTS. The right to receive from Unit
Operator, upon written request, copies of all reports to any governmental
agency, reports of crude oil runs and stocks, inventory reports, and all other
information pertaining to Unit Operations. The cost of gathering and furnishing
information not ordinarily furnished by Unit Operator to all Working Interest
Owners shall be charged to the Working Interest Owner who requests the
information.

 

ARTICLE 6

 

UNIT OPERATOR

 

6.1
 INITIAL UNIT OPERATOR.
Reserve Oil and Gas Company is hereby designated as Unit Operator.

 

6.2
 RESIGNATION OR REMOVAL.
Unit Operator may resign or be removed at any time under procedures prescribed
in Section 7 of the Unit Agreement.

 

6.3
 SELECTION OF SUCCESSOR. Upon the resignation, or removal of a Unit
Operator, a sucessor Unit Operator shall be selected by Working Interest Owners
in the manner prescribed in Section 8 of the Unit Agreement.

 

ARTICLE 7

 

AUTHORITIES AND DUTIES OF UNIT OPERATOR

 

7.1
 EXCLUSIVE RIGHT TO OPERATE
UNIT. Subject to the provisions of this agreement and to instructions from
Working Interest Owners, Unit Operator shall have the exclusive right and be
obligated to conduct Unit Operations.

 

6

 

7.2
 WORKMANLIKE CONDUCT. Unit Operator shall conduct Unit Operations in a
good and workmanlike manner as would a prudent operator under the same or
similar circumstances. Unit Operator shall freely consult with Working Interest
Owners and keep them informed of all matters which Unit Operator, in the
exercise of its best judgment, considers important. Unit Operator shall not be
liable to Working Interest Owners for damages, unless such damages result from
its gross negligence or willful misconduct.

 

7.3
 LIENS AND ENCUMBRANCES. Unit Operator shall endeavor to keep the lands
and leases in the Unit Area free from all liens and encumbrances occasioned by Unit Operations, except the lien
of Unit Operator granted hereunder.

 

7.4
 EMPLOYEES. The number of employees used by Unit Operator
in conducting Unit Operations, their selection, hours of labor, and
compensation shall be determined by Unit Operator. Such employees shall be the
employees of Unit Operator.

 

7.5
 RECORDS. Unit Operator
shall keep correct books, accounts, and records of Unit Operations.

 

7.6  REPORTS TO
WORKING INTEREST OWNERS. Unit
Operator shall furnish to Working Interest Owners periodic reports of Unit
Operations as prescribed by the Working Interest Owners.

 

7.7
 REPORTS TO GOVERNMENTAL
AUTHORITIES. Unit Operator shall make all reports to governmental
authorities that it has the duty to make as Unit Operator.

 

7.8
 ENGINEERING AND GEOLOGICAL
INFORMATION. Unit Operator shall furnish to a Working Interest
Owner, upon written request, a copy of the log and other engineering and geological
data pertaining to wells drilled for Unit Operations.

 

7.9
 EXPENDITURES. Unit Operator is authorized to make single expenditures not in excess of
Ten Thousand Dollars ($10,000.00) without prior approval of
Working Interest Owners. If an emergency occurs, Unit Operator may immediately
make or incur such expenditures as in its opinion are required to deal with the emergency.

 

7

 

Unit Operator shall report to Working Interest Owners,
as promptly as possible, the nature of the emergency and the action taken.

 

7.10  WELLS DRILLED BY UNIT OPERATOR. All wells drilled by Unit Operator shall be at the usual rates and under usual conditions prevailing in the area.
Unit Operator may employ its own tools and equipment under terms and conditions approved by Working Interest Owners.

 

ARTICLE 8

 

TAXES

 

8.1  AD VALOREM TAXES. Beginning with the first of the calendar year after the
effective date hereof, Unit Operator after consulting with Working Interest Owners, shall make and
file for ad valorem tax purposes all necessary renditions and returns with the proper taxing authorities of governmental subdivisions
covering all property of each Working Interest Owner within the Unit Area and
used in connection with the development and
operation of the Unit Area. Any Working Interest Owner dissatisfied with any
proposed rendition or assessment of its interest in property shall have the right,
at its own expense, to protest and resist the same. All such ad valorem taxes due and
payable on account of real and personal
property of each Working Interest Owner located within the Unit Area and used
in connection with Unit Operations shall be paid by the Unit Operator for the
joint account in the same manner as other costs and expenses of Unit Operations; provided that, if the interest of a Working Interest
Owner is subject-to a separately
assessed overriding royalty interest, production payment, or other interest in
excess of a 1/8 royalty, such Working Interest Owner shall be given credit for the reduction in taxes paid resulting therefrom.

 

8.2  OTHER TAXES. Each Working Interest Owner
shall pay or cause to be paid all production,
severance, gathering, and other taxes imposed upon or in respect of the
production or handling of its share of Unitized Substances.

 

ARTICLE 9

 

INSURANCE

 

9.1  INSURANCE. Unit Operator, with respect to Unit Operations, shall do the following:

 

8

 

9.1.1  Comply with the Workmen’s Compensation Law
of the State of New Mexico.

 

9.1.2  Carry Employer’s Liability and other
insurance as required by the laws of the State of New Mexico.

 

9.1.3  Carry other insurance as net forth in Exhibit F.

 

ARTICLE 10

 

ADJUSTMENT OF INVESTMENTS

 

10.1
 PERSONAL PROPERTY TAKEN OVER.

 

10.1.1  WELLS. All wells completed in the
Unitized Formation.

 

10.1.2  WELL AND LEASE
EQUIPMENT. The casing and tubing in each such well, the wellhead
connections, thereon, and all other lease and operating equipment that is used
in the operation of such wells.

 

10.1.3  RECORDS. A copy of all production and
well records that pertain to such wells.

 

10.2  INVENTORY
AND EVALUATION OF PERSONAL PROPERTY. Working Interest Owners shall at Unit Expense, as
of the effective date hereof, or as soon thereafter as feasible,
inventory in accordance with the provisions of Exhibit D the personal
property taken over under Section 10.1.2, except that casing shall be
given no value. No meeting for such inventory and evaluation shall be called on
less than ten (10) days advance written notice. Such inventories shall
include and be limited to those items of equipment indicated to be controllable
in the COPAS Bulletin No. 6, Material
Classification Manual - 1967 and other items as agreed upon
by the Working; Interest Owners. All other non-controllable items of lease and
well equipment installed within the Unit Area that are required in Unit
Operations, although excluded from the inventories, shall nevertheless be taken
over by the Unit Operator. Immediately following completion of such inventory,
the material and equipment taken over under Section 10.1.2
shall be priced in accordance with the provisions of Section IV,
Paragraph 2 of Exhibit E, Accounting Procedure, or at an appraised value
as determined by the Working Interest Owners, which pricing shall be performed

 

9

 

under the supervision of, by the personnel of, and in the offices of the Unit Operator, with other Working Interest Owners furnishing such additional pricing help as may be
available.

 

10.3  INVESTMENT ADJUSTMENT. Upon approval by Working Interest Owners of the inventory and
evaluation, investments shall be adjusted as follows:

 

10.3.1  INITIAL
ADJUSTMENT OF INVESTMENTS. Each Working
Interest Owner shall be credited with the value, as determined in accordance with Section 10.2 above, of its
interest in all personal property taken
over by the Unit Operator under Section 10.1.2
and charged with an amount equal to that obtained by multiplying the total
value of all such personal property taken over by Unit Operator under
Section 10.1.2 by such Working Interest Owner’s Unit Participation, as shown in Phase I of Exhibit “D”. If the
charge against any Working Interest Owner is greater than the amount credited
to such Working Interest Owner, the resulting net charge shall be paid and in all other respects treated as any other item of Unit Expense
chargeable against such Working Interest Owner. If the credit to any Working Interest Owner is greater than the amount charged against such
Working Interest Owner, the resulting net credit  shall be paid to such Working Interest Owner by Unit Operator out of funds received by it in
settlement of the net charges described above.

 

10.3.2 
READJUSTMENTS OF INVESTMENTS. Effective as of the end of Phase I, the
capital investment account of the Working Interest Owners hereunder shall be
readjusted on the basis of their respective Phase II Unit Participations, as
shown on Exhibit “D”. For the purposes of such readjustment, each Working
Interest Owner shall be (1) credited for its interest in the adjusted value of
all personal property and facilities taken over or otherwise acquired by the
Unit Operator pursuant to this agreement during Phase I Unit Operations, and
(2) charged with an amount equal to that obtained by multiplying the same
adjusted value of personal property and facilities by such Working Interest
Owner’s Phase II Unit Participation. The adjusted value of all personal

 

10

 

property
and facilities for the purposes of this Section 10.3.2 shall be determined
as follows:

 

(a)  Value personal property and facilities initially taken
over by Unit Operator on the same basis as that used when such personal property
and facilities were taken over.

 

(b)  Value all other investment items (controllable and non-controllable
materials and construction costs) acquired during Phase I Unit Operations,
including well casing subsequently purchased and installed, on the basis of
cost to the joint account.

 

(c)  Add (a) and (b) together and deduct the value of all items of investment
retired prior to the effective date of Phase II Unit Operations on
the same basis that such items were originally charged.

 

Each Working Interest Owner shall be charged or credited with the net
cash amount necessary to effect such readjustment of the capital investment
account, and such charges and credits shall be settled
in the same manner as the charges and credits referred to in Section 10.3.1.

 

10.4  GENERAL FACILITIES. The
acquisition of warehouses, warehouse stocks, lease houses, camps, facility
systems, and office building necessary for Unit Operations shall be by
negotiation by the owners thereof and Unit Operator, subject to the approval of
Working Interest Owners. There shall be no adjustment for lease roads or
appurtenances thereto.

 

10.5  OWNERSHIP OF PERSONAL PROPERTY AND FACILITIES. Each
Working Interest Owner, individually, shall by virtue hereof own an undivided interest, equal to its
Unit Participation, in effect at the time, in all personal property and
facilities taken over or otherwise acquired by Unit Operator pursuant to this agreement.

 

ARTICLE 11

 

UNIT EXPENSE

 

11.1  BASIS OF CHARGE TO WORKING INTEREST OWNERS.
Unit Operator initially shall pay all Unit Expense. Each Working
Interest Owner shall reimburse

 

11

 

Unit
Operator for its share of Unit Expense. Each Working Interest Owner’s share shall
be the same as its Unit Participation then in effect. All charges, credits and
accounting for Unit Expense shall be in accordance with Exhibit E.

 

11.2
 BUDGETS. Before or as soon as practical after the effective date hereof,
Unit Operator shall prepare a budget of estimated Unit Expense for the remainder
of the calendar
year, and, on or before the first day of each August thereafter, shall
prepare such a budget for the ensuing calendar year. Such budget shall set forth the
estimated Unit Expense by quarterly periods. Budgets shall be estimates only, and shall
be adjusted or corrected by Working Interest Owners and Unit Operator whenever an adjustment or correction
is proper. A copy of each budget and adjusted budget
shall promptly be furnished to each Working Interest Owner.

 

11.3
 ADVANCE BILLINGS. Unit Operator shall have the right to require Working
Interest Owners to advance their respective shares of estimated Unit
Expense by submitting to Working Interest Owners, on or
before the 15th day of any month, an itemized estimate thereof for the
succeeding month, with a request for payment in advance. Within fifteen (15)
days thereafter, each Working Interest Owner shall pay to Unit Operator its
share of such estimate. Adjustments between estimated and actual Unit Expense
shall be made by Unit Operator at the close of each calendar month, and the
accounts of Working Interest Owners shall be adjusted accordingly.

 

11.4
 COMMINGLING OF FUNDS. No funds received by Unit Operator under this
agreement need be segregated or maintained by it as a separate fund, but may be commingled
with its own funds.

 

11.5
 LIEN OF UNIT OPERATOR. Each Working Interest Owner grants to Unit
Operator a lien upon its Oil and Gas Rights in each Tract, its share of Unitized
Substances when produced, and its interest in all Unit Equipment, as security for
payment of its share of Unit Expense, together with interest thereon at the
rate of ten percent (10%) per annum. Unit Operator shall have the right
to bring suit [ILLEGIBLE] enforce collection of such indebtedness with or
without seeking foreclosure of the lien. In addition,
upon default by any Working Interest Owner in the payment of its share of
Unit Expense. Unit Operator shall have the right to collect from the

 

12

 

purchaser
the proceeds from the sale of such Working Interest Owner’s share of Unitized
Substances until the amount owed by such Working Interest Owner, plus interest
as aforesaid, has been paid. Each purchaser shall be entitled to rely upon Unit
Operator’s written statement concerning the amount of any default.

 

11.6
 LIEN OF WORKING INTEREST OWNER. Each Working Interest Owner shall have a
lien on the Working Interest of Unit Operator in the Unit Area and on the oil
and gas produced therefrom and on the proceeds thereof to secure the payment of
any amount that may at any time become due and payable by Unit Operator to such
Working Interest Owner under the terms of this agreement, together with
interest at the rate of ten percent (10%) per annum.

 

11.7
 UNPAID UNIT EXPENSE. If any Working Interest Owner fails to pay its share
of Unit Expense within sixty (60) days after rendition  of a statement therefor by Unit Operator, each
Working Interest Owner agrees, upon request by Unit Operator to pay its
proportionate part of the unpaid share of Unit Expense of the defaulting
Working Interest Owner. The Working Interest Owners
that pay the share of Unit Expense of a defaulting Working Interest Owner shall
be reimbursed by the Unit Operator for the amounts so paid, plus any interest
collected thereon, upon receipt by Unit Operator of any past due amount
collected from the defaulting Working Interest Owner. Any Working Interest
Owner so paying a defaulting Working Interest Owner’s share of Unit Expenses
shall be subrogated to the lien and rights herein granted Unit Operator.

 

11.8
 UNCOMMITTED ROYALTY. Should an owner of a Royalty Interest in any Tract
fail to become a party to the Unit Agreement, and, as a result thereof, the
actual Royalty Interest payments with respect to such Tract are more or less
than the Royalty Interest payments computed on the basis  of the
Unitized Substances that are allocated to such Tract under the Unit Agreement,
the difference shall be borne by or inure to the benefit of Working Interest
Owners, in proportion to their respective Unit Participations; however, the
difference to be borne by or inure to the benefit of Working Interest Owners
shall not exceed an amount computed on the basis of one eighth (1/8) of the
difference between the Unitized Substances allocated to the Tract and the
Unitized Substance produced from the Tract. Such adjustments

 

13

 

shall
be made by charges
and credits to the joint account.

 

11.9
 BURDEN OF EXCESS ROYALTY AND OTHER INTERESTS. Any uncommitted Royalty
Interest in excess of one eighth (1/8) shall be borne solely by the Working
Interest Owner or Owners contributing the Tract with such uncommitted Royalty
Interest.

 

11.10
 CARVED-OUT INTEREST. In the event any Working Interest Owner
shall, after executing this agreement, create any overriding royalty,
production payment, net profits, or carried interest, or any other
interest out of its Working Interest then subject to this agreement, such
carved-out interest shall be subject to the terms and provisions of this
agreement, specifically including, but without limitation, Section 11.5
hereof, entitled “Lien of Unit Operator”. In the event the Working Interest
Owner creating such carved-out interest (a) fails to pay any costs or
expenses chargeable to such Working Interest Owner under this agreement and the
production of Unitized Substance accruing to the credit of such Working
Interest Owner is insufficient for that purpose, or (b) withdraws from
this agreement under the terms and provisions of Article 17 hereof, the
carved-out interest shall be chargeable with a pro rata portion of all costs
and expenses incurred hereunder, the same as though such carved-out interest
were a Working Interest and Unit Operator shall have the right to enforce
against such, carved-out interest the Lien and all other rights granted in said
Section 11.5 for the purpose of collecting the costs and expenses
chargeable to said carved-out interest.

 

ARTICLE 12

 

NON-UNITIZED FORMATIONS

 

12.1
 RIGHT TO OPERATE. Any Working Interest Owner that now has or hereafter
acquires the right to drill for and produce oil, gas, or other minerals, from other than the
Unitized Formation, shall have the right to do so notwithstanding this
agreement or the Unit Agreement. In exercising the right, however, the Working
Interest Owner shall exercise reasonable precaution to prevent
unreasonable interference with Unit Operations. No Working Interest Owner shall
produce Unitized Substances through any well drilled or operated by it. If any
Working

 

14

 

Interest
Owner drills any well into or through the Unitized Formation, the Unitized Formation shall
be protected in a manner satisfactory to Working Interest Owners so that the
production of Unitized Substances will not adversely be affected.

 

ARTICLE 13

 

TITLES

 

13.1
 WARRANTY AND INDEMNITY. Each Working Interest Owner represents  and warrants
that it is the owner  of the respective  working interests set forth
opposite its name in Exhibit C, and hereby agrees to indemnify and hold harmless the
other Working Interest Owners from any loss due to failure, in whole or in
part, of its title to any such interest, except failure of title arising out of
Unit Operations; provided that, such indemnity shall be limited to
an amount equal to the net value that has been received from the sale or
receipt of Unitized Substances attributed to the interest. as to which title failed. Each failure of
title will be deemed to be effective, insofar as this agreement is
concerned, as of the first day of the calendar month in which such failure is
finally determined, and there shall be no retroactive adjustment of Unit
Expense, or retroactive allocation of Unitized Substances or the proceeds
therefrom, as a result of title failure.

 

13.2
 FAILURE BECAUSE OF UNIT OPERATIONS. The failure of title to any
Working Interest in any Tract by reason of Unit Operations, including
non-production from such Tract, shall not change the Unit
Participation of the Working Interest Owner whose title failed in relation to
the Unit Participations of the other Working Interest Owners at the
time of the title failure.

 

ARTICLE 14

 

LIABILITY, CLAIMS, AND SUITS

 

14.1
 INDIVIDUAL LIABILITY. The duties, obligations, and liabilities of
Working Interest Owners shall be several and not joint or collective; and nothing herein contained
shall ever be construed as creating a partnership of any kind, joint
venture, association, or trust among Working Interest Owners.

 

15

 

14.2
  SETTLEMENTS. Unit Operator may settle any single damage claim or
suit involving Unit Operations but not involving an expenditure in excess of
Two Thousand Dollars ($2,000.00) provided that the payment is in complete
settlement of such claim or suit. If the amount required for settlement exceeds
the above specified amount. Working Interest Owners shall assume and take over
the further handling of the claim or suit unless such authority is expressly
delegated to Unit Operator. All costs and expense of handling, settling, or
otherwise discharging such claim or suit shall be an item of Unit Expense. If a
claim is made against any Working Interest Owner or if any Working Interest
Owner is sued on account of any matter arising from Unit Operations and over
which such Working Interest Owner individually has no control because of the
rights given Working Interest Owners and Unit Operator by this agreement and
the Unit Agreement, the Working Interest Owner shall immediately notify the
Unit Operator, and the claim or suit shall be treated as any other
claim or suit involving Unit Operations.

 

ARTICLE 15

 

INTERNAL REVENUE PROVISION

 

15.1
  INTERNAL REVENUE PROVISION. Notwithstanding any provisions herein,
that the rights and liabilities of the parties hereunder are several and not
joint or collective,  or that this agreement and the
operations hereunder shall not constitute a partnership, if for Federal income
tax purposes this agreement and the operations hereunder are regarded as a
partnership, then each of the parties hereto hereby elects to be excluded from
the application of all of the provisions of Sub-Chapter K, Chapter l, Subtitle
A of the Internal Revenue Code of 1954, as permitted and authorized by Section 761
of the said Code and the regulation promulgated thereunder. Operator is hereby
authorized and directed to execute on behalf of each of the parties hereto 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
data required by Federal Regulations 1.761.1(a). Should there be any
requirement that each party hereto further 

 

16

 

evidence
this election each party hereto agrees to 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. Each party hereto further
agrees not to 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 property covered by this agreement is located, or any
future income tax law of the United States, contain, or shall hereafter
contain, provisions similar to those contained in Sub-Chapter K, Chapter 1,
Subtitle A of the Internal Revenue Code of 1954, under which an election
similar to that provided by Section 761 of said Sub-Chapter K is
permitted, each of the parties hereto hereby makes such election or agrees to
make such election as may be permitted by such laws. In making this election
each of the parties hereto hereby states that the income derived by him from
the operations under this agreement can be adequately determined without the
computation of partnership taxable income.

 

ARTICLE 16

 

NOTICES

 

16.1
  NOTICES. All notices required hereunder shall be in writing and
shall be deemed to have been properly served  when sent by mail or telegram
to the address of the representative of each Working Interest Owner as
furnished to Unit Operator in accordance with Article 4.

 

ARTICLE 17

 

WITHDRAWAL OF WORKING INTEREST OWNER

 

17.1
  WITHDRAWAL. A Working Interest Owner may withdraw from this
agreement by transferring, without warranty of title, either expressed or
implied, to the other Working Interest Owners who do not desire to withdraw,
all its Oil and Gas Rights together with its interest in all Unit Equipment and
in all wells used in Unit Operations. Such transfer shall not relieve said Working Interest
Owner from any obligation or liability incurred prior to the date of the
delivery of the transfer, which delivery may be made to Unit Operator as Agent
for the transferees. The interest transferred shall be owned by the transferees
in proportion to their

 

17

 

respective
Unit Participations then in effect. The transferees, in proportion to the
respective interests so acquired, shall pay transferor, for its interest in
Unit Equipment, the net salvage value thereof as estimated and fixed by Working
Interest Owners. After the date of delivery of the transfer, the withdrawing
Working Interest. Owner shall be relieved from all further obligations and
liability hereunder and under the Unit Agreement, and the rights of such
Working interest Owner hereunder and under the Unit Agreement shall cease
insofar as they existed by virtue of the interest transferred.

 

ARTICLE 18

 

ABANDONMENT OF WELLS

 

18.1
  RIGHTS OF FORMER OWNERS. If Working Interest Owners decide to
abandon permanently any well within the Unit Area prior to termination of the
Unit Agreement, Unit Operator shall give written notice thereof to the Working
Interest Owners of the Tract on which the well is located, and they shall have
the option for period of ninety (90) days after the sending of such notice to
notify Unit Operator in writing of their election to take over and own the
well. Within ten (10) days after the  Working Interest Owners of
the Tract have notified Unit Operator of their election to take over the well,
they shall pay Unit Operator, for credit to the joint account; the amount
estimated by Working Interest Owners to be the net  salvage value of the casing and equipment in
and on the well. The Working Interest Owners of the Tract, by taking over the
well, agree to seal off effectively and protect the Unitized Formation, and
upon abandonment to plug the well in compliance with applicable laws and regulations.

 

18.2
  PLUGGING. If the Working Interest Owners of a Tract do not elect to
take over a well located thereon which is proposed for abandonment, Unit
Operator shall plug.and abandon the
well in compliance with applicable laws and regulations.

 

ARTICLE 19

 

EFFECTIVE DATE AND TERM

 

19.1
  EFFECTIVE DATE. This agreement shall become effective on the date
and at the time the Unit Agreement becomes effective.

 

18

 

19.2
  TERM. This agreement shall continue in effect so long as the Unit
Agreement remains in effect, and thereafter until (a) all unit wells have
been abandoned and plugged or turned over to Working Interest Owners in
accordance with Article 20, (b) all Unit Equipment and real property
acquired for the joint account have been disposed of by Unit Operator
in accordance with instructions of Working Interest Owners, and (c) there
has been a final accounting.

 

ARTICLE 20

 

ABANDONMENT OF OPERATIONS

 

20.1
  TERMINATION. Upon termination of the Unit Agreement the following
will occur:

 

20.1.1  OIL AND GAS RIGHTS. Oil and Gas Rights
in and to each separate tract shall no longer be affected by this agreement,
and thereafter the parties shall be governed by the terms and provisions of the
leases, contracts, and other instruments affecting the separate Tracts.

 

20.1.2  RIGHT TO OPERATE. Working Interest
Owners of any Tract that desire to take over and continue to operate wells
located thereon may do so by paying Unit Operator, for credit to the joint
account, the net salvage value of the equipment in and on the wells taken over
as estimated by Working Interest Owners, and by agreeing to plug properly each
well at such time as t is abandoned.

 

20.1.3  SALVAGING WELLS. Unit Operator shall
salvage as much of the casing and equipment in or on wells not taken over by
Working Interest Owners of separate Tracts as can economically and reasonably
be salvaged, and shall cause the wells to be plugged and abandoned properly.

 

20.1.4  COST OF SALVAGING. Working Interest
Owners shall share the cost of salvaging, liquidation or other distribution of
assets and properties used in Unit Operations in proportion to their respective
Unit Participations then in effect in which such salvaging, liquidation or
other distribution occurs.

 

19

 

ARTICLE 21

 

EXECUTION

 

21.1
  ORIGINAL COUNTERPART, OR OTHER INSTRUMENT. A party may become a
party to this agreement by signing the original of this instrument, a
counterpart thereof, or other instrument agreeing to be bound by the provisions
hereof. The signing of any such instrument shall have the same effect as if all
the parties had signed the same instrument.

 

ARTICLE 22

 

SUCCESSORS AND ASSIGNS

 

22.1
  SUCCESSORS AND ASSIGNS. The provisions hereof shall be covenants running
with the lands, leases, and interests covered hereby, and shall be binding upon
and inure to the benefit of the respective heirs, devisees, legal
representatives, successors, and assigns of the parties hereto.

 

IN.
WITNESS WHEREOF, The parties hereto have executed this agreement on the dates
opposite their respective signatures.

 

 

	
  ATTEST

  	
   

  	
  RESERVE OIL AND GAS
  COMPANY

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [ILLEGIBLE]

  	
   

  	
  [ILLEGIBLE]

  	
   

  	
  January
  21, 1970

  
	
  Assistant Secretary

  	
   

  	
  Vice
  President

  	
   

  	
  Date

  

 

[SEAL]

 

20

 

[ILLEGIBLE]

 

	
   

  	
  Recommended by the

  Council of Petroleum

  Accountants Societies of

  North America

  

 

[ILLEGIBLE]

 

EXHIBIT “ E ”

 

	
   

  	
  Attached to and made a
  part of

  	
  Unit Operating
  Agreement

  
	
   

  	
   

  	
  Cooper Jal Unit

  
	
   

  	
   

  	
  Lea County, New Mexico

  

 

ACCOUNTING PROCEDURE

JOINT OPERATIONS

 

I. GENERAL PROVISIONS

 

1.               Definitions

 

“Joint Account”
shall mean the account showing the charges and credits accruing because of the
Joint Operations and which are to be shared by the Parties.

 

“Joint Property”
shall mean the real and personal properly subject to the agreement to which
this Accounting Procedure is attached.

 

“Joint Operations”
shall mean all operations necessary or proper for the development, operation,
protection and maintenance of the Joint Property.

 

“Operator” shall
mean the party designated to conduct the Joint Operations.

 

“Non-Operators”
shall mean the parties to this agreement other than the Operator.

 

“Parties” shall
mean Operator and Non-Operators.

 

“Material” shall
mean personal properly, equipment or supplies acquired or held for use on the
Joint Properly.

 

“Controllable
Material” shall be defined as set forth under the subparagraph selected below:

 

	
   

  	
  A.

  	
  x

  	
  Material which at the
  time is so classified in the Material Classification Manual as most recently
  recommended by the Council of Petroleum Accountants Societies of North
  America.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  B.

  	
  o

  	
  Material which is
  ordinarily so classified and controlled by Operator in the conduct of its
  operations. List shall be furnished Non-Operators upon request.

  

 

2.               Statements and Billings

 

Operator shall
bill Non-Operators on or before the last day of each month for their
proportionate share of costs and expenses for the preceding month. Such bills
will be accompanied by statements reflecting the total charges and credits as
set forth under the subparagraph selected below:

 

	
   

  	
  A.

  	
  o

  	
  Statement in detail of
  all charges and credits to the Joint Account.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  B.

  	
  o

  	
  Statement of all
  charges and credits to the Joint Account, summarized by appropriate
  classifications indicative of the nature thereof.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  C.

  	
  x

  	
  Statement of all
  charges and credits to the Joint Account, summarized by appropriate
  classification indicative of the nature thereof, except that items of
  Controllable Material and unusual charges and credits shall be detailed.

  

 

3.               Advances and Payments by Non-Operators

 

Unless otherwise
provided for in the agreement, the Operator may require the Non-Operators to
advance their share of estimated cash outlay for the succeeding month’s
operation. Operator shall adjust each monthly billing to reflect advances
received from the Non-Operators.

 

Each Non-Operator
shall pay its proportion of all bills within fifteen (15) days after receipt.
If payment is not made within such time, the unpaid balance shall bear interest
monthly at the rate of ten per cent (10%)  per
annum or the maximum contract rate permitted by the applicable usury laws in
the state in which the Joint Property is located, whichever is the lesser.

 

4.               Adjustments

 

Payment of any
such bills shall not prejudice the right of any Non-Operator to protest or
question the correctness thereof; provided however, all bills and statements
rendered to Non-Operators by Operator during any calendar year shall
conclusively be presumed to be true and correct after twenty-four (24) months
following the end of any such calendar year, unless within the said twenty-four
(24) month period a Non-Operator takes written exception thereto and makes
claim on Operator for adjustment. No adjustment favorable to Operator shall be
made unless it is made within the same prescribed period. The provisions of
this paragraph shall not prevent adjustments resulting from a physical
inventory of the Joint Property as provided for in Section VII.

 

5.               Audits

 

A Non-Operator,
upon notice in writing to Operator and all other Non-Operators, shall have the
right to audit Operator’s accounts and records relating to the accounting
hereunder for any calendar year within the twenty-four (24) month period
following the end of such calendar year; provided however, the making of an audit
shall not extend the time for the taking of written exception to and the
adjustments of accounts as provided for in Paragraph 4 of this Section I.
Where there are two or more Non-Operators, the Non-Operators shall make every
reasonable effort to conduct joint or simultaneous audits in a manner which
will result in a minimum of inconvenience to the Operator. Operator shall bear
no portion of the Non-Operators’ audit cost incurred under this paragraph
unless agreed to by the Operator.

 

6.               Approval by Non-Operators

 

Where an approval
or other agreement of Non-Operators is expressly required under Paragraphs 5A,
5B, 6A and 8 of Section II, Section III, Section V, Section VI,
and Paragraph 4 of Section VII, of this Accounting Procedure and if the
agreement to which this Accounting Procedure is attached contains no contrary
provisions in regard thereto, the Operator shall notify all Non-Operators and
the agreement or approval of a majority in interest of the Non-Operators shall
be controlling on all Non-Operators.

 

1

 

II. DIRECT CHARGES

 

Operator shall charge the
Joint Account with the following items:

 

1.               Rentals and Royalties

 

Lease rentals and
royalties paid by Operator for the Joint Operations.

 

2.               Labor

 

A.           (1)          Salaries and wages of Operator’s
employees directly employed on the Joint Property in the conduct of Joint
Operations.

 

(2)          Salaries of first-level supervisors in
the field if such charges are excluded from overhead rates in Option A of Section III.

 

(3)          Salaries and wages of technical employees
temporarily assigned to and directly employed on the Joint Property if such
charges are excluded from overhead rates in Option B of Section III.

 

(4)          Salaries and wages of technical employees
either temporarily or permanently assigned to and directly employed in the
operation of the Joint Property if such charges are excluded from overhead
rates in Option C of Section III.

 

B.             Operator’s cost of holiday, vacation,
sickness and disability benefits and other customary allowances paid to the
employees whose salaries and wages are chargeable to the Joint Account under
Paragraph 2A of this Section II and Paragraph 1A of Section III;
except that in the case of those employees only a pro rata portion of whose
salaries and wages are chargeable to the Joint Account under Paragraph 1A of Section III,
not more than the same pro rata portion of the benefits and allowances herein
provided for shall be charged to the Joint Account. Cost under this Paragraph
2B may be charged on a “when and as paid basis” or by “percentage assessment”
on the amount of salaries and wages chargeable to the Joint Account under
Paragraph 2A of this Section II and Paragraph 1A of Section III. If
percentage assessment is used, the rate shall be based on the Operator’s cost
experience.

 

C.             Expenditures or contributions made
pursuant to assessments imposed by governmental authority which are applicable
to Operator’s labor cost of salaries and wages chargeable to the Joint Account
under Paragraphs 2A and 2B of this Section II and Paragraph 1A of Section III.

 

D.            Reasonable personal expenses of those
employees whose salaries and wages are chargeable to the Joint Account under
Paragraph 2A of this Section II and for which expenses the employees are
reimbursed under Operator’s usual practice.

 

3.               Employee Benefits

 

Operator’s current
cost of established plans for employees’ group life insurance, hospitalization,
pension, retirement. stock purchase, thrift, bonus, and other benefit plans of
a like nature, applicable to Operator’s labor cost chargeable to the Joint
Account under Paragraphs 2A and 2B of this Section II and Paragraph 1A of Section III
shall be chargeable as indicated in the subparagraph selected below:

 

	
   

  	
  A.

  	
  o

  	
  Operator’s actual cost.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  B.

  	
  x

  	
  Operator’s actual cost
  not to exceed fifteen per cent (15%).

  

 

4.               Material

 

Material purchased
or furnished by Operator for use on the Joint Property as provided under Section IV.
So far as it is reasonably practical and consistent with efficient and
economical operation, only such Material shall be purchased for or transferred
to the Joint Property as may be required for immediate use; and the
accumulation of surplus stocks shall be avoided.

 

5.               Transportation

 

Transportation of
employees and Material necessary for the Joint Operations but subject to the
following limitations:

 

A.           If Material is moved to the Joint
Property from the Operator’s warehouse or other properties, no charge shall be
made to the Joint Account; for a distance greater than the distance from the
nearest reliable supply store, recognized barge terminal, or railway receiving
point where like material is normally available, unless agreed to by Operator
and Non-Operators.

 

B.             If surplus Material is moved to Operator’s
warehouse or other storage point, no charge shall be made to the Joint Account
for a distance greater than the distance to the nearest reliable supply store,
recognized barge terminal, or railway receiving point unless agreed to by
Operators and Non-Operators. No charge shall be made to the Joint Account for
moving Material to other properties belonging to Operator, unless agreed to by
Operator and Non-Operators.

 

C.             [ILLEGIBLE]

 

6.               Services

 

A.           The cost of contract services and
utilities procured from outside sources other than services covered by
Paragraph 8 of this Section II and Paragraph 1B of Section III. The
cost of professional consultant services shall not be charged to the Joint
Account unless agreed to by Operator and Non-Operators.

 

B.             Use and service of equipment and facilities
furnished by Operator as provided in Paragraph 5 of Section IV.

 

7.               Damages and Losses to Joint Property

 

All costs or
expenses necessary for the repair or replacement of Joint Property made
necessary because of damages or losses incurred by fire, flood, storm, theft,
accident, or other cause, except to the extent that the damage or loss could
have been avoided through the exercise of reasonable diligence on the part of
Operator. Operator shall furnish Non-Operators written notice of damages or
losses incurred as soon as practicable after a report thereof has been received
by Operator.

 

8.               Legal Expense

 

All costs and
expenses of handling, investigating, and settling litigation or claims arising
by reason of the Joint Operations or necessary to protect or recover the Joint
Property, including, but not limited to, attorney’s fees, court costs, cost of
investigation or procuring evidence and amounts paid in settlement or
satisfaction of any such litigation or claims; provided, (a) no charge
shall be made for the services of Operator’s legal staff or other regularly
employed personnel (such services being considered to be Administrative
Overhead under Section III), unless agreed to by Operator and
Non-Operators, and (b) no charge shall be made for the fees and expenses
of outside attorneys unless the employment of such attorneys is agreed to by
Operator and Non-Operators.

 

9.               Taxes

 

All taxes of every
kind and nature assessed or levied upon or in connection with the Joint
Property, the operation thereof, or the production therefrom, and which taxes
have been paid by the Operator for the benefit of the Parties.

 

2

 

10.         Insurance

 

Net premiums paid
for insurance required to be carried on the Joint Property for the protection
of the Parties. In the event Joint Operations are conducted in a state in which
Operator may act as self-insurer for Workmen’s Compensation and/or Employers
Liability under the respective state’s laws. Operator may, at its election,
include the risk under its self-insurance program and in that event, Operator
shall include a charge therefor on the following basis:

 

 

11.         Other Expenditures

 

Any other
expenditure not covered or dealt with in the foregoing provisions of this Section II,
or in Section III, and which is incurred by the Operator for the necessary
and proper conduct of the Joint Operations.

 

III. INDIRECT CHARGES

 

Operator may charge the
Joint Account for indirect costs either by use of an allocation of district
expense items plus the rate for administrative overhead, and plus the
warehousing charges, all as provided for in Paragraph 1 of this Section III
or by combining all three of said items under the rates provided for in
Paragraph 2 or 3 of this Section III, as indicated next below:

 

OPERATOR SHALL
CHARGE INDIRECT COSTS TO THE JOINT ACCOUNT UNDER THE TERMS OF:

 

	
   

  	
  o

  	
  Paragraph 1.

  	
  (District Expense,
  Administrative Overhead and Warehousing)

  
	
   

  	
  x

  	
  Paragraph 2.

  	
  (Combined Rates - Well
  Basis)

  
	
   

  	
  o

  	
  Paragraph 3.

  	
  (Combined Rates -
  Percentage Basis)

  

 

The cost and expense of
services from outside sources in connection with matters of taxation, traffic,
accounting or matters before or involving governmental agencies shall be
considered as included in the overhead rates provided for in the above selected
Paragraph of this Section III unless such cost and expense are agreed to
by Operator and Non-Operators as a direct charge to the Joint Account.

 

THE OVERHEAD RATES PROVIDED FOR IN ANY OF THE PARAGRAPHS SELECTED ABOVE

 

	
   

  	
  A.

  	
  x

  	
  shall

  	
  o

  	
  shall not

  	
  include salaries and
  personal expenses of first-level supervisors in the field.

  
	
   

  	
  B.

  	
  x

  	
  shall

  	
  o

  	
  shall not

  	
  include salaries, wages and personal expenses of
  technical employees temporarily assigned to and directly employed on the
  Joint Property.

  
	
   

  	
  C.

  	
  x

  	
  shall

  	
  o

  	
  shall not

  	
  include salaries, wages and personal expenses of
  technical employees either temporarily or permanently assigned to and
  directly employed in the operation of the Joint Property. 

  

 

1.               District Expense, Administrative Overhead
and Warehousing

 

A.           District Expense

 

Operator shall
charge the Joint Account with a pro rata portion of the salaries, wages and
expenses of Operator’s production superintendent and other employees serving
the Joint Property and other properties of the Operator in the same operating
area, whose time is not allocated directly to the properties, and a prorata
portion of the cost of maintaining and operating a production office known as
Operator’s           
                     office
located at or near
                                    (or
a comparable office if location changed); and necessary sub-offices (if any);
maintained for the convenience of the above-described office, and all necessary
camps, including housing facilities for employees if required, used in
connection with the operations of the Joint Property and other properties in
the same operating area. The expense of, less any revenue from, such facilities
may, at the option of Operator, include depreciation of investment or a fair
monthly rental in lieu of depreciation. Such charges shall be apportioned to
all properties served on some equitable basis consistent with Operator’s
accounting practice.

 

B.             Administrative Overhead

 

Operator shall
charge administrative overhead to the Joint Account at the following rates,
which charge shall be in lieu of the cost and expense of all offices of the
Operator not covered by Paragraph 1A of this Section III, including
salaries, wages and expenses of personnel assigned to such offices. Such charge
shall be in addition to the salaries, wages and expenses of employees of
Operator authorized to be charged direct as provided in Paragraphs 2 and 8 of Section II.
Such charge shall be made on the basis indicated below, either (1) well
basis or (2) percentage basis, at the rates shown thereunder. 

(1) o  Well Basis

 

RATE PER WELL PER MONTH

 

	
   

  	
   

  	
   

  	
  DRILLING
  WELL RATE

  (Use Total Depth)

  	
   

  	
  PRODUCING
  WELL RATE

  (Use Current Producing Depth)

  	
   

  
	
   

  	
  Well
  Depth

  	
   

  	
  Each
  Well

  	
   

  	
  First
  Five

  	
   

  	
  Next
  Five

  	
   

  	
  All
  Wells Over Ten

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

(2)          o            Percentage Basis

 

PERCENTAGE BASIS

 

Development:

 

                 Percent
(   %) of the cost of development of the Joint Property
exclusive of costs provided under Paragraph 8 of Section II and all
salvage credits.

 

Operating:

 

                       Percent
(   %)  of the cost of operating the Joint
Property exclusive of costs provided under Paragraphs 1 and 8 of Section II,
all salvage credits, the value of injected substances purchased for secondary
recovery and all taxes and assessments which are levied, assessed and paid upon
the mineral interest in and to the Joint Property.

 

3

 

C.             Operator’s Warehouse Operating and Maintenance Expense

 

	
   

  	
  o

  	
  Included in district
  expense

  
	
   

  	
  o

  	
  No charge either direct
  or indirect

  
	
   

  	
  o

  	
  Percentage basis (describe
  fully)

  
	
   

  	
   

  	
   

  

 

 

2.               Combined Rates - Well Basis

 

Operator shall
charge the Joint Account for the services covered by Paragraph 1 of this Section III
on the basis indicated below:

 

RATE PER WELL PER MONTH

 

	
   

  	
   

  	
   

  	
  DRILLING
  WELL RATE

  (Use Total Depth)

  	
   

  	
  PRODUCING
  WELL RATE

  (Use Current Producing Depth)

  	
   

  
	
   

  	
  Well
  Depth

  	
   

  	
  Each
  Well

  	
   

  	
  First
  Five

  	
   

  	
  Next
  Five

  	
   

  	
  All
  Wells Over Ten

  	
   

  
	
   

  	
  All Depths

  	
   

  	
  $

  	
  500

  	
   

  	
  $

  	
  77.00

  	
   

  	
  $

  	
  77.00

  	
   

  	
  $

  	
  77.00

  	
   

  
															

 

3.               Combined Rates - Percentage Basis

 

Operator shall
charge the Joint Account for the services covered by Paragraph 1 of this Section III
on the basis indicated below:

 

PERCENTAGE BASIS

 

A.           Development:

 

             Percent
(   %) of the cost of development of the Joint Property
exclusive of costs provided under Paragraph 8 of Section II and all
salvage credits.

 

B.             Operating:

 

                       
Percent (   %)  of the
cost of operating the Joint Property exclusive of costs provided under
Paragraphs 1 and 8 of Section II, all salvage credits, the value of
injected substances purchased for secondary recovery and all taxes and
assessments which are levied, assessed and paid upon the mineral interest in
and to the Joint Property.

 

4.               Application of Administrative Overhead or
Combined Rates - Well Basis

 

The following
limitations, instructions and charges shall apply in the application of the
rates as provided under either Paragraph 1B (1) or Paragraph 2 of this Section III.

 

A.           Charges for drilling wells shall begin on
the date each well is spudded and terminate on the date the drilling or completion
rig is released, whichever is later, except that no charge shall be made during
the suspension of drilling operations for fifteen (15) or more consecutive
days.

 

B.             The status of wells shall be as follows:

 

(1)          Producing [ILLEGIBLE] wells; injection
wells for recovery operations, water supply wells utilized for waterflooding operations
and salt water disposal wells shall be considered the same as producing oil
wells.

 

(2)          Wells permanently shut down but on which
plugging operations are deferred shall be dropped from the well schedule at the
time the shutdown is effected. Any well being plugged or produced during any
portion of the month shall be considered as a producing well for the entire
month.

 

(3)          Wells being plugged back, drilled deeper,
converted to a source or input well, or which are undergoing any type of
workover that requires the use of a drilling rig or workover. rig capable of
drilling shall be considered the same as drilling wells.

 

(4)          Temporarily shut-down wells, which are
not produced or worked upon for a period of a full calendar month, shall not be
included in the well schedule, provided however, wells shut in by governmental
regulatory body shall be included in the well schedule only in the event the
allowable production is transferred to some other well or wells on the Joint
Property. In the event of a unit allowable, shut-in wells shall be counted in
determining the charge hereunder for such month if said wells contribute
allowable production that is actually produced during such month from one or
more unit wells as a result of allowable transfer, inclusion in the unit
allowable or other circumstances, but the total shut-in well count shall be
limited to the minimum number of shut-in wells necessary to provide the contributed
allowable actually produced during the month.

 

(5)          Gas wells shall be included in the well
schedule if directly connected to a permanent sales outlet even though
temporarily shut in due to overproduction or failure of purchaser to lake the
allowed production.

 

(6)          Wells completed in multiple horizons,
shall be considered as a producing well for each separately producing horizon,
providing each completion is considered a separate well by governmental or
other state-wide regulatory authority.

 

C.             The well rates or producing wells shall
be applied to the individual leases: provided that, whenever leases covered by
this agreement are operated as a unitized project, the well rates shall be
applied to the total number of producing wells, irrespective of individual
leases.

 

D.            The well rates shall be adjusted as of
the first day of April each year following the effective date of the agreement
to which this Accounting Procedure is attached. The adjustment shall be
computed by multiplying the rate currently in use by the percentage increase or
decrease in the average weekly earnings of Crude Petroleum and Gas Production
Workers for the last calendar year compared to the preceding calendar year as
shown by “The Index of Average Weekly Earnings of Crude Petroleum and Gas
Production Workers” as published by the United States Department of Labor,
Bureau of Labor Statistics, or the equivalent Canadian Index as published by
the Dominion Bureau of Statistics, as applicable. The adjusted rates shall be
the rates currently in use, plus or minus the computed adjustment.

 

5.               Application of Administrative Overhead or
Combined Rates - Percentage Basis

 

For the purpose of
determining charges on a Percentage Basis under Paragraph 1B (2) or
Paragraph 3 of this Section III, Development shall include all costs in
connection with drilling, redrilling, deepening or any remedial operations on
any or oil wills involving the use of drilling crew and equipment; also,
preliminary expenditures necessary in preparation for drilling and expenditures
incurred in abandoning when well is not completed as a producer; and original
cost of construction or installation of fixed assets, the expansion of fixed
assets and any other project clearly discernible as a fixed asset, except Major
Construction as defined in Paragraph 6 of this Section III. All other
costs shall be considered as Operating.

 

6.               Major Construction Overhead

 

For the
construction of compressor plants, water stations, secondary recovery systems,
drilling and production platforms, salt water disposal facilities, and other
such projects, as distinguished from the more usual drilling

 

4

 

and producing
operations, Operator in addition to the Administrative Overhead or Combined
Rates provided for in Paragraph 1, 2 or 3 of this Section III shall either
negotiate a rate prior to beginning of construction or shall charge the Joint
Account with an additional overhead charge as follows:

 

A.           Total cost less than $25,000, no charge.

 

B.             Total cost more than $25,000, but less
than $100,000. 3% of total cost.

 

C.             Total cost of $100,000 or more, 3% of the first $100,000 plus 2% of all
over $100,000 of total cost.

 

Total cost shall
mean the total gross cost of any one project. For the purpose of this paragraph
the component parts of a single project shall not be treated separately and the
cost of drilling wells shall be excluded.

 

7.               Amendment of Rates

 

The specific rates
provided for in this Section III may be amended from time to time by
mutual agreement between the Parties hereto if, in practice, the rates are
found to be insufficient or excessive.

 

IV. BASIS OF CHARGES TO JOINT ACCOUNT

 

Subject to the further
provisions of this Section IV. Operator will procure all Material and
services for the Joint Property. At the Operator’s option, Non-Operators may
supply Material or services for the Joint Property.

 

1.               Purchases

 

Material purchased
and service procured shall be charged at the price paid by Operator after
deduction of all discounts actually received.

 

2.               Material furnished from Operator’s
Warehouse or Other Properties

 

A.           New Material (Condition “A”)

 

(1)          Tubular goods, except line pipe, shall be
priced on a maximum carload and/or barge load weight basis regardless of
quantity transferred and equalized to the lowest prevailing price f.o.b.
railway receiving point or recognized barge terminal nearest the Joint Property
where such Material is normally available able effective at date of transfer.

 

(2)          Line pipe shall be priced at the current
replacement cost effective at date of transfer from a reliable supply store
nearest the Joint Property where such Material is normally available if the
movement is less than 30,000 pounds. If the movement is 30,000 pounds or more,
it shall be priced on the same basis as casing and tubing under Subparagraph (1) of
this paragraph.

 

(3)          When the Operator has equalized actual
hauling costs as provided for in Paragraph 5 of Section II, Operator is
permitted to include ten cents (10c) per hundred-weight on all tubular goods
furnished from his stocks in lieu of loading and unloading costs sustained.

 

(4)          Other Material shall be priced at the
current replacement cost of the same kind of Material, effective at date of
movement and f.o.b. the supply store or railway receiving point nearest the
Joint Property where Material of the same kind is normally available.

 

(5)          The Joint Account shall not be credited
with cash discounts applicable to prices provided for in this Paragraph 2 of Section IV.

 

B.             Used Material (Condition “B” and “C”)

 

(1)          Material in sound and serviceable
condition and suitable for reuse without reconditioning, shall be classified as
Condition “B” and priced at seventy-five per cent (75%) of the current price of
new Material.

 

(2)          Material which is not suitable for its
original function until after reconditioning shall be furnished to the Joint
Account under lone of the two methods defined below:

 

(a)          Classified as Condition “B” and priced at
seventy-five per cent (75%) of the current price of new Material. The cost of
reconditioning shall be absorbed by the Operator of the transferring properly.

 

(b)         Classified as Condition “C” and priced at
fifty per cent (50%) of current price or new Material. The cost of
reconditioning also shall be charged to the receiving property, provided
Condition “C” value, plus cost of reconditioning, does not exceed Condition “B”
value.

 

(3)          Obsolete Material or Material which
cannot be classified as Condition “B” or Condition “C” shall be priced at a
value commensurate with its use. Material no longer suitable for its original
purpose but usable for some other purpose, shall be priced on a basis
comparable with that of items normally used for such other purpose.

 

(4)          Material involving erection costs shall
be charged at applicable percentage of the Current knocked-down price of new
Material.

 

3.               Premium Prices

 

Whenever Material is not readily obtainable at prices specified in
Paragraphs 1 and 2 of this Section IV because of national emergencies,
strikes or other unusual causes over which the Operator has no control, the
Operator may charge the Joint Account for the required Material at the Operator’s
actual cost incurred in procuring such Material, in making it suitable for use,
and in moving it to the Joint Property, provided, that notice in writing is
furnished to Non-Operators of the proposed charge prior to billing
Non-Operators for such Material. Each Non-Operator shall have the right, by so
electing and notifying Operator within 10 days after receiving notice from
Operator, to furnish in kind all or part of his share of such Material suitable
for use and acceptable to Operator.

 

4.               Warranty of Material Furnished by Operator

 

Operator does not warrant the Material furnished. In case of defective
Material, credit shall not be passed to the Joint Account until adjustment has
been received by Operator from the manufacturers or their agents.

 

5.               Equipment and Facilities Furnished by
Operator

 

A.           Operator shall charge the Joint Account
for use of  equipment and
facilities at rates commensurate with cost of ownership and operation. Such
rates shall include cost of maintenance, repairs, other operating expense,
insurance, taxes, depreciation, and interest on investment not to exceed six
per cent (6%) per  annum, provided such rates shall not exceed
those currently prevailing in the immediate area within which the Joint Property
is located. In lieu of rates based on costs of ownership and operation of
equipment, other than automotive, Operator may elect to use commercial rates
prevailing in the area of the Joint Property less 20%; for automotive
equipment, rates as published by the Petroleum Motor Transport Association may
be used. Rates for laboratory services shall not exceed those currently
prevailing if performed by 

 

5

 

outside service
laboratories. Rates for trucks, tractors and well service units may include
wages and expenses of operator.

 

B.             Whenever requested, Operator shall inform
Non-Operators in advance of the rates it proposes to charge.

 

C.             Rates shall be revised and adjusted from
time to time when found to be either excessive or insufficient.

 

V. DISPOSAL OF MATERIAL

 

The Operator may
purchase, but shall be under no obligation to purchase, interest of
Non-Operators in surplus Condition “A” or “B” Material. The disposition of
surplus Controllable Material, not purchased by Operator, shall be agreed to by
Operator and Non-Operators, provided Operator shall dispose of normal
accumulations of junk and scrap Material either by transfer or sale from Joint
Property.

 

1.               Material Purchased by the Operator or
Non-Operators.

 

Material purchased
by either the Operator or Non-Operators shall be credited by the Operator to
the Joint Account for the month in which the Material is removed by the
purchaser.

 

2.               Division in Kind

 

Division of
Material in kind, if made between Operator and Non-Operators, shall be in
proportion to the respective interests in such Material. The Parties will
thereupon be charged individually with the value of the Material received or
receivable. Proper credits shall be made by the Operator to the Joint Account.

 

3.               Sales to Outsiders

 

Sales to outsiders
of Material from the Joint Property shall be credited by Operator to the Joint
Account at the net amount collected by Operator from vendee. Any claim by
vendee related to such sale shall be charged back to the Joint Account if and
when paid by Operator.

 

VI. BASIS OF PRICING MATERIAL TRANSFERRED FROM JOINT ACCOUNT

 

Material purchased by
either Operator or Non-Operators or divided in kind, unless agreed to by
Operator and Non-Operators shall be priced on the following basis:

 

1.               New Price Defined

 

New price as used
in this Section VI shall be the price specified for new Material in
Section IV.

 

2.               New Material

 

New Material
(Condition “A”), being new Material procured for the Joint Property but never
used, at one hundred per cent (100%) of current new price (plus sales tax if
any).

 

3.               Good Used Material

 

Good used Material
(Condition “B”), being used Material in sound and serviceable condition,
suitable for reuse without reconditioning:

 

A.  At
seventy-five per cent (75%) of current new price if Material was charged to
Joint Account as new, or 

 

B.  At sixty-five per cert (65%) of current
new price if Material was originally charged to the Joint Account as secondhand
at seventy-five per cent (75%) of new price.

 

4.               Other Used Material

 

Used Material (Condition
“C”), at fifty per cent (50%) of current new price, being used Material which: 

 

A.  Is
not in sound and serviceable condition but suitable for reuse after
reconditioning, or 

 

B.  Is serviceable
for original function but not suitable for reconditioning.

 

5.               Bad-Order Material

 

Material
(Condition “D”), no longer suitable for its original purpose without excessive
repair cost but usable for some other purpose at a price comparable with that
of items normally used for such other purpose.

 

6.               Junk Material

 

Junk Material (Condition
“E”), being obsolete and scrap Material, at prevailing prices.

 

7.               Temporarily Used Material

 

When the use of
Material is temporary and its service to the Joint Property does not justify
the reduction in price as provided for in Paragraph 3B of this Section VI,
such Material shall be priced on a basis that will leave a net charge to the
Joint Account consistent with the value of the service rendered.

 

VII. INVENTORIES

 

The Operator shall
maintain detailed records of Controllable Material.

 

1.               Periodic Inventories, Notice and
Representation

 

At reasonable
intervals, inventories shall be taken by Operator of the Joint Account
Controllable Material. Written notice of intention to take inventory shall be
given by Operator at least thirty (30) days before any inventory is to begin so
that Non-Operators may be represented when any inventory is taken.  Failure of Non-Operators to be represented at
an inventory shall bind Non-Operators to accept the inventory taken by
Operator.

 

2.               Reconciliation and Adjustment of
Inventories

 

Reconciliation of
inventory with the Joint Account shall be made, and a list of overages and
shortages shall be furnished to the Non-Operators. Inventory adjustments shall
be made by Operator with the Joint Account for overages and shortages, but
Operator shall be held accountable to Non-Operators only for shortages due to
lack of reasonable diligence.

 

3.               Special Inventories

 

Special
Inventories may be taken whenever there is any sale or change of interest in
the Joint Property. It shall be the duty of the party selling to notify all
other Parties as quickly as possible after the transfer of interest takes; place.
In such cases, both the seller and the purchaser shall be governed by such inventory.

 

4.               Expense of Conducting Periodic
Inventories

 

The expense of
conducting periodic inventories shall not be charged to the Joint Account
unless agreed to by Operator and Non-Operators.

 

6

 

EXHIBIT “F”

ATTACHED TO UNIT OPERATING AGREEMENT

COOPER JAL UNIT

LEA COUNTY, NEW MEXICO

 

INSURANCE PROVISIONS

 

Unit Operator, during the
term of the Unit Operating Agreement, shall carry insurance for the benefit and
at the expense of the parties hereto as follows:

 

(1)                                  Employers’ Liability Insurance with Limit
of not less than $100,000.00 per employee.

 

(2)                                  Public Liability and Property Damage
Insurance with limits of not less than 

$100,000.00 for
injuries to or death of one person and 

$300,000.00 for injuries
or deaths in one accident, and 

$100,000.00 for
property damage in one accident

 

(3)                                  Automobile Public Liability and property
Damage Insurance with limits of not less than

$100,000.00 for
injuries to or death of one person and 

$300,000.00 for
injuries or deaths in one accident, and 

$100,000.00 for
property damage in one accident

 

Except as authorized by Article 9
and by this Exhibit E, Unit Operator shall not make any charge to the
joint account for insurance premiums. Losses not covered by Unit Operator’s
insurance (or by insurance required by this Unit Operating Agreement to be
carried for the benefit and at the expense of the parties hereto) shall be
charged to the joint account.

 

 

REVISED EXHIBIT “D”

 

	
   

  	
   

  	
  TRACT

  	
   

  	
  UNIT PARTICIPATION - PERCENT

  	
   

  
	
  WORKING INTEREST OWNERS

  	
   

  	
  NO.

  	
   

  	
  PHASE I

  	
   

  	
  PHASE II

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Richardson, Sarah B., 

  Individually and as Trustee

  U/W/O Jack Richardson

  	
   

  	
  17

  	
   

  	
   

  	
  .76077

  	
   

  	
  1.09252

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sivley,
  T. J.

  	
   

  	
  5

  	
   

  	
   

  	
  2.62755

  	
   

  	
  3.50737

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sowell,
  Adele Irvine

  	
   

  	
  26

  	
   

  	
   

  	
  .87769

  	
   

  	
  .56428

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Strain,
  Jr., Charles Hunter

  	
   

  	
  21

  	
   

  	
   

  	
  .26576

  	
   

  	
  .13925

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Strain,
  Clara Margaret

  	
   

  	
  21

  	
   

  	
   

  	
  .53152

  	
   

  	
  .27851

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Tenneco
  Oil Company

  	
   

  	
  21

  	
   

  	
   

  	
  1.06303

  	
   

  	
  .55701

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Texaco
  Inc.

  	
   

  	
  1

  	
   

  	
   

  	
  5.22514

  	
   

  	
  6.60717

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Texas
  Pacific Oil Company, Inc.

  	
   

  	
  3

  	
   

  	
   

  	
  .41979

  	
   

  	
  .65271

  	
   

  
	
   

  	
   

  	
  11

  	
   

  	
   

  	
  —

  	
   

  	
  .39458

  	
   

  
	
   

  	
   

  	
  12

  	
   

  	
   

  	
  3.01793

  	
   

  	
  .18670

  	
   

  
	
   

  	
   

  	
  13

  	
   

  	
   

  	
  1.12888

  	
   

  	
  1.17095

  	
   

  
	
   

  	
   

  	
  22

  	
   

  	
   

  	
  —

  	
   

  	
  .13712

  	
   

  
	
   

  	
   

  	
  23

  	
   

  	
   

  	
  .62869

  	
   

  	
  .81910

  	
   

  
	
   

  	
   

  	
  26

  	
   

  	
   

  	
  4.00653

  	
   

  	
  2.57585

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  9.20182

  	
   

  	
  5.93701

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TOTALS

  	
   

  	
   

  	
   

  	
   

  	
  100.00000

  	
   

  	
  100.00000

  	
   

  

 

2

 

CERTIFICATE AS TO EFFECTIVE DATE

OF COOPER JAL UNIT AGREEMENT

LEA COUNTY, NEW MEXICO

 

RESERVE OIL AND GAS COMPANY, Unit Operator under the
Unit Agreement for the development and operation of the Cooper Jal Unit Area,
Lea County, New Mexico, hereby certifies:

 

1.             The Unit Agreement and the Unit
Operating Agreement have been executed or ratified by Working Interest Owners
owning Tracts with a combined Phase I unit participation of at least 85% and
the Unit Agreement has been executed or ratified by Royalty Owners owning
Tracts with a combined Phase I unit participation of at least 65% of the
royalty interest in the Unit Area.

 

2.             The Unit Agreement was approved by
the New Mexico Oil Conservation Commission on August 25, 1970, by its
Order No. R-4018 in Case No. 4402.

 

3.             The Unit Agreement was approved by
the Regional Oil and Gas Supervisor for the United States Geological Survey on September 29,
1970, as Contract No. 14-08.0001-11584.

 

4.             A counterpart of the Unit Agreement
has been recorded in Book 292. at Page 352 of the Miscellaneous Records of
Lea County, New Mexico.

 

5.             Pursuant to the provisions of Article XXII,
the Cooper Jal Unit Agreement became effective as of 7:00 A.M. on October 1,
1970.

 

6.             All of the Tracts as shown on the
original Exhibit “B” have qualified under the provisions of Article XIV
of the Unit Agreement except Tract No. 27 which was not qualified for
participation on the Effective Date of the Unit Agreement.

 

DATED this 1st day
of October, 1970.

 

	
   

  	
  RESERVE OIL AND GAS
  COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  [ILLEGIBLE]

  
	
   

  	
   

  	
  Attorney-in-Fact

  

 

	
  STATE OF TEXAS

  	
   

  	
  )

  	
   

  
	
  COUNTY OF DALLAS

  	
   

  	
  )

  	
  ss.

  

 

The foregoing
instrument was acknowledged before me this 1st day of October, 1970, by [ILLEGIBLE],
Attorney-in-Fact for RESERVE OIL AND GAS COMPANY, a corporation, on behalf of
said corporation.

 

	
   

  	
   

  	
   

  
	
   

  	
  [ILLEGIBLE]

  	
   

  
	
   

  	
  Notary Public

  	
  STATE OF NEW
  MEXICO

  
	
  My commission expires:

  	
  [SEAL] [ILLEGIBLE]

  	
  COUNTY OF LEA

  
	
  [ILLEGIBLE]

  	
   

  	
   

  	
  FILED

  
				

[SEAL] [ILLEGIBLE]

OCT 1 1970

[ILLEGIBLE]

 

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
  [ILLEGIBLE]

  	
   

  	
  7.93720

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lind,
  Dorothy B.

  	
   

  	
  5

  	
   

  	
   

  	
  2.62755

  	
   

  	
  3.50737

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Mallard,
  Margaret Strain

  	
   

  	
  21

  	
   

  	
   

  	
  .26576

  	
   

  	
  .13925

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Petroleum
  Corporation of Texas

  	
   

  	
  4

  	
   

  	
   

  	
  2.96428

  	
   

  	
  3.07169

  	
   

  
	
   

  	
   

  	
  14

  	
   

  	
   

  	
  1.81369

  	
   

  	
  1.38309

  	
   

  
	
   

  	
   

  	
  16

  	
   

  	
   

  	
  2.03666

  	
   

  	
  1.55721

  	
   

  
	
   

  	
   

  	
  19

  	
   

  	
   

  	
  —

  	
   

  	
  2.04360

  	
   

  
	
   

  	
   

  	
  25

  	
   

  	
   

  	
  1.60775

  	
   

  	
  4.16529

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  8.42238

  	
   

  	
  12.22088

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Reserve
  Oil and Gas Company

  	
   

  	
  4

  	
   

  	
   

  	
  2.96428

  	
   

  	
  3.07170

  	
   

  
	
   

  	
   

  	
  8

  	
   

  	
   

  	
  1.04565

  	
   

  	
  1.40039

  	
   

  
	
   

  	
   

  	
  12

  	
   

  	
   

  	
  .43113

  	
   

  	
  —

  	
   

  
	
   

  	
   

  	
  16

  	
   

  	
   

  	
  6.10997

  	
   

  	
  4.67164

  	
   

  
	
   

  	
   

  	
  18

  	
   

  	
   

  	
  1.44471

  	
   

  	
  .69461

  	
   

  
	
   

  	
   

  	
  19

  	
   

  	
   

  	
  —

  	
   

  	
  2.04360

  	
   

  
	
   

  	
   

  	
  21

  	
   

  	
   

  	
  2.12606

  	
   

  	
  1.11402

  	
   

  
	
   

  	
   

  	
  22

  	
   

  	
   

  	
  —

  	
   

  	
  .13712

  	
   

  
	
   

  	
   

  	
  25

  	
   

  	
   

  	
  1.60774

  	
   

  	
  4.16530

  	
   

  
	
   

  	
   

  	
  26

  	
   

  	
   

  	
  6.10528

  	
   

  	
  3.92516

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  21.83482

  	
   

  	
  21.22354

  	
   

  

 

(3)          Automobile
Public Liability and Property Damage Insurance with limits of not less than

$100,000.00 for injuries to or death of one person and

$300,000.00 for injuries or deaths in one accident, and

$100,000.00 for property damage in one accident

 

Except as authorized by Article 9 and by this Exhibit E, Unit
Operator shall not make any charge to the joint account for insurance premiums.
Losses not covered by Unit Operator’s insurance (or by insurance required by
this Unit Operating Agreement to be carried for the benefit and at the expense
of the parties hereto) shall be charged to the joint account.

 

 

REVISED

EXHIBIT “D”

ATTACHED TO UNIT OPERATING AGREEMENT

COOPER JAL UNIT

LEA COUNTY, NEW MEXICO

AS OF OCTOBER 1, 1970

 

	
   

  	
   

  	
  TRACT

  	
   

  	
  UNIT PARTICIPATION - PERCENT

  	
   

  
	
  WORKING INTEREST OWNERS

  	
   

  	
  NO.

  	
   

  	
  PHASE I

  	
   

  	
  PHASE II

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Amerada-Hess

  	
   

  	
  2

  	
   

  	
   

  	
  9.30905

  	
   

  	
  9.35239

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Atlantic Richfield Company

  	
   

  	
  8

  	
   

  	
   

  	
  1.04564

  	
   

  	
  1.40039

  	
   

  
	
   

  	
   

  	
  9

  	
   

  	
   

  	
  5.17186

  	
   

  	
  4.60371

  	
   

  
	
   

  	
   

  	
  14

  	
   

  	
   

  	
  1.81369

  	
   

  	
  1.38308

  	
   

  
	
   

  	
   

  	
  15

  	
   

  	
   

  	
  —

  	
   

  	
  2.35558

  	
   

  
	
   

  	
   

  	
  16

  	
   

  	
   

  	
  8.14662

  	
   

  	
  6.22885

  	
   

  
	
   

  	
   

  	
  17

  	
   

  	
   

  	
  .76077

  	
   

  	
  1.09252

  	
   

  
	
   

  	
   

  	
  18

  	
   

  	
   

  	
  1.44471

  	
   

  	
  .69461

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  18.38329

  	
   

  	
  17.75874

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bauerdorf Estate

  	
   

  	
  26

  	
   

  	
   

  	
  1.22106

  	
   

  	
  .78503

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cities Service Oil Company

  	
   

  	
  6

  	
   

  	
   

  	
  —

  	
   

  	
  .58159

  	
   

  
	
   

  	
   

  	
  7

  	
   

  	
   

  	
  2.77474

  	
   

  	
  .54138

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  2.77474

  	
   

  	
  1.12297

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Continental Oil Company

  	
   

  	
  5

  	
   

  	
   

  	
  5.25511

  	
   

  	
  7.01475

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Hansen Oil Company

  	
   

  	
  6

  	
   

  	
   

  	
  —

  	
   

  	
  .11632

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Harlan, John L.

  	
   

  	
  10

  	
   

  	
   

  	
  —

  	
   

  	
  .13844

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Humble Oil & Refining Company

  	
   

  	
  20

  	
   

  	
   

  	
  6.42925

  	
   

  	
  4.34856

  	
   

  
	
   

  	
   

  	
  24

  	
   

  	
   

  	
  2.92371

  	
   

  	
  3.58864

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  9.35296

  	
   

  	
  7.93720

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lind, Dorothy B.

  	
   

  	
  5

  	
   

  	
   

  	
  2.62755

  	
   

  	
  3.50737

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Mallard, Margaret Strain

  	
   

  	
  21

  	
   

  	
   

  	
  .26576

  	
   

  	
  .13925

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Petroleum Corporation of Texas

  	
   

  	
  4

  	
   

  	
   

  	
  2.96428

  	
   

  	
  3.07169

  	
   

  
	
   

  	
   

  	
  14

  	
   

  	
   

  	
  1.81369

  	
   

  	
  1.38309

  	
   

  
	
   

  	
   

  	
  16

  	
   

  	
   

  	
  2.03666

  	
   

  	
  1.55721

  	
   

  
	
   

  	
   

  	
  19

  	
   

  	
   

  	
  —

  	
   

  	
  2.04360

  	
   

  
	
   

  	
   

  	
  25

  	
   

  	
   

  	
  1.60775

  	
   

  	
  4.16529

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  8.42238

  	
   

  	
  12.22088

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Reserve Oil and Gas Company

  	
   

  	
  4

  	
   

  	
   

  	
  2.96428

  	
   

  	
  3.07170

  	
   

  
	
   

  	
   

  	
  8

  	
   

  	
   

  	
  1.04565

  	
   

  	
  1.40039

  	
   

  
	
   

  	
   

  	
  12

  	
   

  	
   

  	
  .43113

  	
   

  	
  —

  	
   

  
	
   

  	
   

  	
  16

  	
   

  	
   

  	
  6.10997

  	
   

  	
  4.67164

  	
   

  
	
   

  	
   

  	
  18

  	
   

  	
   

  	
  1.44471

  	
   

  	
  .69461

  	
   

  
	
   

  	
   

  	
  19

  	
   

  	
   

  	
  —

  	
   

  	
  2.04360

  	
   

  
	
   

  	
   

  	
  21

  	
   

  	
   

  	
  2.12606

  	
   

  	
  1.11402

  	
   

  
	
   

  	
   

  	
  22

  	
   

  	
   

  	
  —

  	
   

  	
  .13712

  	
   

  
	
   

  	
   

  	
  25

  	
   

  	
   

  	
  1.60774

  	
   

  	
  4.16530

  	
   

  
	
   

  	
   

  	
  26

  	
   

  	
   

  	
  6.10528

  	
   

  	
  3.92516 

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  21.83482

  	
   

  	
  21.22354

  	
   

  

 

 

REVISED EXHIBIT “D”

 

	
   

  	
   

  	
  TRACT

  	
   

  	
  UNIT PARTICIPATION - PERCENT

  	
   

  
	
  WORKING INTEREST OWNERS

  	
   

  	
  NO.

  	
   

  	
  PHASE I

  	
   

  	
  PHASE II

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Richardson, Sarah B.,

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Individually and as Trustee

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  U/W/O Jack Richardson

  	
   

  	
  17

  	
   

  	
   

  	
  .76077

  	
   

  	
  1.09252

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sivley, T. J.

  	
   

  	
  5

  	
   

  	
   

  	
  2.62755

  	
   

  	
  3.50737

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sowell, Adele Irvine

  	
   

  	
  26

  	
   

  	
   

  	
  .87769

  	
   

  	
  .56428

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Strain, Jr., Charles Hunter

  	
   

  	
  21

  	
   

  	
   

  	
  .26576

  	
   

  	
  .13925

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Strain, Clara Margaret

  	
   

  	
  21

  	
   

  	
   

  	
  .53152

  	
   

  	
  .27851

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Tenneco Oil Company

  	
   

  	
  21

  	
   

  	
   

  	
  1.06303

  	
   

  	
  .55701

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Texaco Inc.

  	
   

  	
  1

  	
   

  	
   

  	
  5.22514

  	
   

  	
  6.60717

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Texas Pacific Oil Company, Inc.

  	
   

  	
  3

  	
   

  	
   

  	
  .41979

  	
   

  	
  .65271

  	
   

  
	
   

  	
   

  	
  11

  	
   

  	
   

  	
  —

  	
   

  	
  .39458

  	
   

  
	
   

  	
   

  	
  12

  	
   

  	
   

  	
  3.01793

  	
   

  	
  .18670

  	
   

  
	
   

  	
   

  	
  13

  	
   

  	
   

  	
  1.12888

  	
   

  	
  1.17095

  	
   

  
	
   

  	
   

  	
  22

  	
   

  	
   

  	
  —

  	
   

  	
  .13712

  	
   

  
	
   

  	
   

  	
  23

  	
   

  	
   

  	
  .62869

  	
   

  	
  .81910

  	
   

  
	
   

  	
   

  	
  26

  	
   

  	
   

  	
  4.00653

  	
   

  	
  2.57585

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  9.20182

  	
   

  	
  5.93701

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TOTALS

  	
   

  	
   

  	
   

  	
   

  	
  100.00000

  	
   

  	
  100.00000

  	
   

  

 

2

 

CERTIFICATE AS TO EFFECTIVE DATE

OF COOPER JAL UNIT AGREEMENT

LEA COUNTY, NEW MEXICO

 

RESERVE OIL AND GAS COMPANY, Unit Operator under the Unit Agreement for
the development and operation of the Cooper Jal Unit Area, Lea County, New
Mexico, hereby certifies:

 

1.     The Unit Agreement and the
Unit Operating Agreement have been executed or ratified by Working Interest
Owners owning Tracts with a combined Phase I unit participation of at least 85%
and the Unit Agreement has been executed or ratified by Royalty Owners owning
Tracts with a combined Phase I unit participation of at least 65% of the
royalty interest in the Unit Area.

 

2.     The Unit Agreement was
approved by the New Mexico Oil Conservation Commission on August 25, 1970,
by its Order No. R-4018 in Case No. 4402.

 

3.     The Unit Agreement was
approved by the Regional Oil and Gas Supervisor for the United States
Geological Survey on September 29, 1970, as Contract No. 14-08.0001-11584.

 

4.     A counterpart of the Unit
Agreement has been recorded in Book 292 at Page 352 of the Miscellaneous
Records of Lea County, New Mexico.

 

5.     Pursuant to the provisions
of Article XXII, the Cooper Jal Unit Agreement became effective as of 7:00 A.M.
on October 1, 1970.

 

6.     All of the Tracts as shown
on the original Exhibit “B” have qualified under the provisions of Article XIV
of the Unit Agreement except Tract No. 27 which was not qualified for
participation on the Effective Date of the Unit Agreement.

 

DATED this 1st day of October, 1970.

 

	
   

  	
  RESERVE
  OIL AND GAS COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  [ILLEGIBLE]

  
	
   

  	
   

  	
  Attorney-in-Fact

  

 

	
  STATE
  OF TEXAS

  	
  )

  
	
  COUNTY OF DALLAS

  	
  )       ss.

  

 

The foregoing instrument was acknowledged before me this 1st day
of October, 1970, by [ILLEGIBLE], Attorney-in-Fact for RESERVE OIL AND GAS
COMPANY, a corporation, on behalf of said corporation.

 

 

	
   

  	
   

  	
  [ILLEGIBLE]

  	
   

  
	
   

  	
   

  	
  Notary Public

  	
  STATE OF NEW MEXICO

  
	
  My commission expires:

  	
   

  	
  [SEAL] [ILLEGIBLE]

  	
  COUNTY OF LEA

  
	
  [ILLEGIBLE]

  	
   

  	
  FILED

  

[SEAL] [ILLEGIBLE]

OCT 1 1970

[ILLEGIBLE]

 

 

 

 

COOPER JAL UNIT

LEA COUNTY, NEW MEXICO

SCHEDULE OF OWNERSHIP

 

	
  TRACT

  NO.

  	
   

  	
  DESCRIPTION

  OF LAND

  	
   

  	
  NO.

  ACRES

  	
   

  	
  SERIAL NO.

  AND

  LEASE NAME

  	
   

  	
  BASIC ROYALTY

  OWNER AND

  PERCENTAGE

  	
   

  	
  LESSEE OF RECORD

  	
   

  	
  OVERRIDING

  ROYALTY

  OWNER AND

  PERCENTAGE

  	
   

  	
  WORKING INTEREST OWNER

  AND PERCENTAGE

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
  T245, R37E

  	
   

  	
  156.16

  	
   

  	
  LC-032592(b) 

  	
   

  	
  USA - All

  	
   

  	
  Texaco Inc.

  	
   

  	
  None

  	
   

  	
  Texaco Inc.

  	
   

  	
  100.000%

  
	
   

  	
   

  	
  Section 30:

  	
   

  	
   

  	
   

  	
  H.B.P.

  	
   

  	
  (Schedule D)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Lots 1 and 2 

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  and E/2 NW/4

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2

  	
   

  	
  T245, R37E

  	
   

  	
  156.18

  	
   

  	
  LC-032715 

  	
   

  	
  USA - All

  	
   

  	
  Amerada Petroleum Corporation

  	
   

  	
  Supplement Note 

  	
   

  	
  Amerada Petroleum Corporation

  	
   

  	
  100.000%

  
	
   

  	
   

  	
  Section 19:

  	
   

  	
   

  	
   

  	
  H.B.P.

  	
   

  	
  (Schedule B)

  	
   

  	
   

  	
   

  	
  No. 1

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Lots 3 and 4 

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  and E/2 SW/4

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3

  	
   

  	
  T245, R36E

  	
   

  	
  40.00

  	
   

  	
  LC-054665(b) 

  	
   

  	
  USA - All

  	
   

  	
  Texas Pacific Oil Company, Inc. - 

  	
   

  	
  Supplement Note 

  	
   

  	
  Texas Pacific Oil Company, Inc.

  	
   

  	
  100.000%

  
	
   

  	
   

  	
  Section 26:

  	
   

  	
   

  	
   

  	
  H.B.P.

  	
   

  	
  (Schedule D)

  	
   

  	
  7/12

  	
   

  	
  No. 2

  	
   

  	
  (Down to 4,000
  Feet)

  	
   

  	
   

  
	
   

  	
   

  	
  NE/4 NE/4

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Allied Chemical Co. - 5/12 

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4

  	
   

  	
  T245, R36E

  	
   

  	
  80.00

  	
   

  	
  LC-063965 

  	
   

  	
  USA - All

  	
   

  	
  Phillips Petroleum Corp.

  	
   

  	
  Supplement Note 

  	
   

  	
  Petroleum Corporation of Texas

  	
   

  	
  50.000%

  
	
   

  	
   

  	
  Section 24:

  	
   

  	
   

  	
   

  	
  H.B.P.

  	
   

  	
  (Schedule B)

  	
   

  	
   

  	
   

  	
  No. 3

  	
   

  	
  (Down to 3,750
  Feet)

  	
   

  	
   

  
	
   

  	
   

  	
  E/2 SE/4

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Reserve Oil and Gas Company

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  (Down to 3,750
  Feet)

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5

  	
   

  	
  T245, R37E

  	
   

  	
  156.22

  	
   

  	
  NM-0321613 

  	
   

  	
  USA - All

  	
   

  	
  Estate of Abner M. Jack; Annie

  	
   

  	
  Supplement Note 

  	
   

  	
  Continental Oil Company (Down to

  	
   

  	
  50.000%

  
	
   

  	
   

  	
  Section 19:

  	
   

  	
   

  	
   

  	
  H.B.P.

  	
   

  	
  (Schedule D)

  	
   

  	
  May Kavanaugh; Estate of Guy

  	
   

  	
  No. 4

  	
   

  	
  Base of Queen
  Formation)

  	
   

  	
   

  
	
   

  	
   

  	
  Lots 1 and 2 

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Jack, Jr.; Estate of Florence

  	
   

  	
   

  	
   

  	
  T. J. Sivley (Down to Base of 

  	
   

  	
  25.000%

  
	
   

  	
   

  	
  and E/2 NW/4

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Jack Mayo; W. M. Beauchamp,

  	
   

  	
   

  	
   

  	
  Queen Formation)

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Guardian for Wm. Howard Jack

  	
   

  	
   

  	
   

  	
  Dorothy B. Lind (Down to Base of

  	
   

  	
  25.000%

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Queen Formation)

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6

  	
   

  	
  T245, R37E

  	
   

  	
  80.00

  	
   

  	
  NM-0321613 

  	
   

  	
  USA - All

  	
   

  	
  Estate of Abner M. Jack; Annie

  	
   

  	
  Supplement Note 

  	
   

  	
  Cities Service Oil Company

  	
   

  	
  63.333%

  
	
   

  	
   

  	
  Section 18:

  	
   

  	
   

  	
   

  	
  H.B.P.

  	
   

  	
  (Schedule D)

  	
   

  	
  May Kavanaugh; Estate of Guy

  	
   

  	
  No. 5

  	
   

  	
  (Surface to
  3,750 Feet)

  	
   

  	
   

  
	
   

  	
   

  	
  E/2 SW/4

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Jack, Jr.; Estate of Florence

  	
   

  	
   

  	
   

  	
  Hanson Oil Company

  	
   

  	
  16.667%

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Jack Mayo; W. M. Beauchamp,

  	
   

  	
   

  	
   

  	
  (Surface to
  3,750 Feet)

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Guardian for Wm. Howard Jack

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7(a)

  	
   

  	
  T245, R37E

  	
   

  	
  38.11

  	
   

  	
  NM-0321613 

  	
   

  	
  USA - All

  	
   

  	
  Estate of Abner M. Jack; Annie

  	
   

  	
  Supplement Note 

  	
   

  	
  Cities Service Oil Company

  	
   

  	
  100.000%

  
	
   

  	
   

  	
  Section 18:

  	
   

  	
   

  	
   

  	
  H.B.P.

  	
   

  	
  (Schedule D)

  	
   

  	
  May Kavanaugh; Estate of Guy

  	
   

  	
  No. 6

  	
   

  	
  (Down to 3,750
  Feet)

  	
   

  	
   

  
	
   

  	
   

  	
  Lo: 3

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Jack, Jr.; Estate of Florence

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Jack Mayo; W. M. Beauchamp,

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Guardian for Wm. Howard Jack

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

	
  TRACT

  NO.

  	
   

  	
  DESCRIPTION

  OF LAND

  	
   

  	
  NO.

  ACRES

  	
   

  	
  SERIAL NO.

  AND

  LEASE NAME

  	
   

  	
  BASIC ROYALTY

  OWNER AND

  PERCENTAGE

  	
   

  	
  LESSEE OF RECORD

  	
   

  	
  OVERRIDING

  ROYALTY

  OWNER AND

  PERCENTAGE

  	
   

  	
  WORKING INTEREST OWNER

  AND PERCENTAGE

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7(b)

  	
   

  	
  T24S. R37E

  Section 18:

  Lot 4

  	
   

  	
  38.12

  	
   

  	
  NM-0321613

  H. B. P.

  	
   

  	
  USA - All

  (Schedule D)

  	
   

  	
  Estate of Abner M.
  Jack; Annie May Kavanaugh; Estate of Guy Jack, Jr.; Estate of Florence Jack Mayo;
  W. M. Beauchamp, Guardian for Wm. Howard Jack

  	
   

  	
  Supplement Note

  No. 6

  	
   

  	
  Cities
  Service Oil Company

  (Down to 3,750 Feet)

  	
   

  	
  100.000%

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8

  	
   

  	
  T24S. R37E

  Section 18:

  N/2 NE/4

  	
   

  	
  30.00

  	
   

  	
  Adrews

  H. B. P

  	
   

  	
  Supplement Note

  No. 7

  	
   

  	
  Reserve Oil and Gas
  Company Atlantic Richfield Company

  	
   

  	
  Supplement Note

  No.7

  	
   

  	
  Reserve Oil and Gas
  Company

  Atlantic Richfield Company

  	
   

  	
  50.000% 50.000%

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9

  	
   

  	
  T24S. R37E

  Section 18:

  NW/4 NW/4

  (Lot 1) and E/2 NW/4

  	
   

  	
  118.10

  	
   

  	
  Bates, C. T.

  H. B. P.

  	
   

  	
  Supplement Note

  No. 8

  	
   

  	
  Atlantic Richfield
  Company

  	
   

  	
  None

  	
   

  	
  Atlantic Richfield
  Company

  	
   

  	
  100.000%

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10

  	
   

  	
  T24S. R37E

  Section 18:

  SW/4 NW/4

  	
   

  	
  38.11

  	
   

  	
  Bates, C. T.

  H. B. P.

  	
   

  	
  Supplement Note

  No. 9

  	
   

  	
  John L. Harian

  	
   

  	
  Supplement Note

  No. 9

  	
   

  	
  John
  L. Harian (Oil Rights Only

  Down to 3,855 Feet)

  Atlantic
  Richfield Company

  (Gas Rights Down to 3,855 Feet)

  	
   

  	
  100.000%

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11

  	
   

  	
  T24S. R37E

  Section 18:

  SW/4 SE/4

  	
   

  	
  40.00

  	
   

  	
  Bates, C. T.

  H. B. P.

  	
   

  	
  Supplement Note

  No. 10

  	
   

  	
  Texas Pacific Oil Co.,
  Inc.

  	
   

  	
  Supplement Note

  No. 10

  	
   

  	
  Texas Pacific Oil Co.,
  Inc.

  	
   

  	
  100.000%

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12

  	
   

  	
  T24S. R37E

  Section 18:

  NW/4 SE/4

  	
   

  	
  40.00

  	
   

  	
  Blankenship 

  H. B. P.

  	
   

  	
  Supplement Note

  No. 11

  	
   

  	
  Texas Pacific Oil Co.,
  Inc.

  	
   

  	
  Supplement Note

  No. 11

  	
   

  	
  Texas Pacific Oil Co.,
  Inc.

  	
   

  	
  100.000%

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13

  	
   

  	
  T24S. R36E

  Section 14:

  SE/4 SE/4

  	
   

  	
  40.00

  	
   

  	
  Cooper, J. W.

  H. B. P.

  	
   

  	
  Supplement Note

  No. 12

  	
   

  	
  Texas Pacific Oil Co.,
  Inc.

  	
   

  	
  None

  	
   

  	
  Texas Pacific Oil Co.,
  Inc.

  	
   

  	
  100.000%

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14

  	
   

  	
  T24S. R36E

  Section 13:

  N/2 SE/4 and SW/4 SE/4

  	
   

  	
  120.00

  	
   

  	
  Dunn, Maggie

  H. B. P.

  	
   

  	
  Supplement Note

  No. 13

  	
   

  	
  Petroleum Corp. of
  Texas Atlantic Richfield Company

  	
   

  	
  Supplement Note

  No. 13

  	
   

  	
  Petroleum
  Corporation of Texas

  (Down to 4,000 Feet)

  Atlantic
  Richfield Company

  (Down to 4,000 Feet)

  	
   

  	
  50.000% 

  50.000%

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15

  	
   

  	
  T24S. R36E

  Section 13:

  SE/4 SE/4

  	
   

  	
  40.00

  	
   

  	
  Dunn, Maggie

  H. B. P.

  	
   

  	
  Supplement Note

  No. 14

  	
   

  	
  Atlantic Richfield
  Company

  	
   

  	
  None

  	
   

  	
  Atlantic Richfield
  Company

  	
   

  	
  100.000%

  

 

 

EXHIBIT “B” TO UNIT AGREEMENT

 

	
  TRACT

  NO.

  	
   

  	
  DESCRIPTION

  OF LAND

  	
   

  	
  NO.

  ACRES

  	
   

  	
  SERIAL
  NO.

  AND

  LEASE NAME

  	
   

  	
  BASIC
  ROYALTY

  OWNER AND

  PERCENTAGE

  	
   

  	
  LESSEE
  OF RECORD

  	
   

  	
  OVERRIDING

  ROYALTY

  OWNER AND

  PERCENTAGE

  	
   

  	
  WORKING
  INTEREST OWNER

  AND PERCENTAGE

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16

  	
   

  	
  T24S. R36E

  Section 24:

  	
   

  	
  120.00

  	
   

  	
  Dunn, Maggie 

  H. B. P.

  	
   

  	
  Supplement Note
  No. 15

  	
   

  	
  Atlantic Richfield
  Company 

  	
   

  	
  Supplement Note
  No. 15

  	
   

  	
  Atlantic
  Richfield Company

  (Down to 4,000 Feet)

  	
   

  	
  50.000%

  
	
   

  	
   

  	
  E\2 NE\4 and

  SW/4 NE/4

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Reserve Oil and Gas
  Company 

  	
   

  	
   

  	
   

  	
  Reserve
  Oil and Gas Company

  (Down to 4,000 Feet)

  	
   

  	
  37.500%

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Petroleum Corporation
  of Texas

  	
   

  	
   

  	
   

  	
  Petroleum
  Corporation of Texas

  (Down to 4,000 Feet)

  	
   

  	
  12.500%

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17

  	
   

  	
  T24S. R36E 

  	
   

  	
  40.00

  	
   

  	
  Dunn Unit 

  	
   

  	
  Supplement Note 

  	
   

  	
  Atlantic Richfield 

  	
   

  	
  None

  	
   

  	
  Atlantic
  Richfield Company

  	
   

  	
  50.000%

  
	
   

  	
   

  	
  Section 24:

  NW/4 NE/4

  	
   

  	
   

  	
   

  	
  H. B. P.

  	
   

  	
  No. 16

  	
   

  	
  Company

  	
   

  	
   

  	
   

  	
  Richardson,
  Sarah B., Individually and as Trustee U/W/O Jack Richardson

  	
   

  	
  50.000%

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18

  	
   

  	
  T24S. R37E

  Section 18:

  	
   

  	
  80.00

  	
   

  	
  Gutman, Charles 

  H. B. P.

  	
   

  	
  Supplement Note
  No. 17

  	
   

  	
  Reserve Oil and Gas
  Company 

  	
   

  	
  Supplement Note
  No. 17

  	
   

  	
  Reserve
  Oil and Gas Company

  (Down to 3,800 Feet)

  	
   

  	
  50.000%

  
	
   

  	
   

  	
  S/2 NE/4

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Atlantic Richfield
  Company

  	
   

  	
   

  	
   

  	
  Atlantic
  Richfield Company

  (Down to 3,800 Feet)

  	
   

  	
  50.000%

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  19

  	
   

  	
  T24S. R36E

  	
   

  	
  160.00

  	
   

  	
  Harrison, 

  	
   

  	
  Supplement Note 

  	
   

  	
  Petroleum Corporation 

  	
   

  	
  Supplement Note 

  	
   

  	
  Petroleum
  Corporation of Texas

  	
   

  	
  50.000%

  
	
   

  	
   

  	
  Section 25:

  	
   

  	
   

  	
   

  	
  Sally W. 

  	
   

  	
  No. 18

  	
   

  	
  of Texas 

  	
   

  	
  No. 18

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  NW/4

  	
   

  	
   

  	
   

  	
  H. B. P.

  	
   

  	
   

  	
   

  	
  Reserve Oil and Gas Company

  	
   

  	
   

  	
   

  	
  Reserve
  Oil and Gas Company

  	
   

  	
  50.000%

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  20

  	
   

  	
  T24S. R36E

  Section 24:

  NW/4

  	
   

  	
  160.00

  	
   

  	
  Hunter E. E.

  H. B. P.

  	
   

  	
  Supplement Note
  No. 19

  	
   

  	
  Humble Oil and Refining
  Co.

  	
   

  	
  None

  	
   

  	
  Humble
  Oil and Refining Co.

  	
   

  	
  100.000%

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  21

  	
   

  	
  T24S. R36E

  Section 13: 

  	
   

  	
  160.00

  	
   

  	
  Hunter Edns. E.

  H. B. P.

  	
   

  	
  Supplement Note
  No. 20

  	
   

  	
  Reserve Oil and Gas
  Company 

  	
   

  	
  Supplement Note
  No. 20

  	
   

  	
  Reserve
  Oil and Gas Company

  (Down to 3,750 Feet)

  	
   

  	
  50.000%

  
	
   

  	
   

  	
  SW/4

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Tenneco Oil Company 

  	
   

  	
   

  	
   

  	
  Tenneco
  Oil Company

  (Down to 3,750 Feet)

  	
   

  	
  25.000%

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Margaret Strain Maliard
  

  	
   

  	
   

  	
   

  	
  Margaret
  Strain Maliard

  (Down to 3,750 Feet)

  	
   

  	
  6.250%

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Clara Margaret Strain 

  	
   

  	
   

  	
   

  	
  Clara
  Margaret Strain

  (Down to 3,750 Feet)

  	
   

  	
  12.500%

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Charles Hunter Strain

  	
   

  	
   

  	
   

  	
  Charles
  Hunter Strain

  (Down to 3,750 Feet)

  	
   

  	
  6.250%

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  22

  	
   

  	
  T24S. R37E

  Section 18: 

  	
   

  	
  40.00

  	
   

  	
  Russell, P. G.

  H. B. P.

  	
   

  	
  Theodore Low Company,
  Inc. - 

  	
   

  	
  Reserve Oil and Gas
  Company 

  	
   

  	
  Supplement Note
  No. 21

  	
   

  	
  Reserve
  Oil and Gas Company

  	
   

  	
  50.000%

  
	
   

  	
   

  	
  NW/4 SE/4

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  All

  	
   

  	
  Texas Pacific Oil Co.,
  Inc.

  	
   

  	
   

  	
   

  	
  Texas
  Pacific Oil Co., Inc.

  	
   

  	
  50.000% 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  23

  	
   

  	
  T24S. R37E

  Section 18:

  SE/4 SE/4

  	
   

  	
  40.00

  	
   

  	
  Russell,

  H. B. P.

  	
   

  	
  Theodore Low Company,
  Inc. - All

  	
   

  	
  Texas Pacific Oil Co.,
  Inc.

  	
   

  	
  Supplement Note No. 22

  	
   

  	
  Texas
  Pacific Oil Co., Inc.

  	
   

  	
  100.000%

  

 

3

 

EXHIBIT “B” TO UNIT AGREEMENT

 

	
  TRACT

  NO.

  	
   

  	
  DESCRIPTION

  OF LAND

  	
   

  	
  NO.

  ACRES

  	
   

  	
  SERIAL
  NO.

  AND

  LEASE NAME

  	
   

  	
  BASIC
  ROYALTY

  OWNER AND

  PERCENTAGE

  	
   

  	
  LESSEE
  OF RECORD

  	
   

  	
  OVERRIDING

  ROYALTY

  OWNER AND

  PERCENTAGE

  	
   

  	
  WORKING
  INTEREST OWNER

  AND PERCENTAGE

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  24

  	
   

  	
  T24S. R36E

  Section 23:

  S/2 SE/4 

  Section 24:

  W/2 SW/4

  	
   

  	
  160.00

  	
   

  	
  Thomas, A. E.

  H. B. P.

  	
   

  	
  Supplement Note
  No. 23

  	
   

  	
  Humble Oil and Refining
  Co.

  	
   

  	
  None

  	
   

  	
  Humble
  Oil and Refining Co.

  	
   

  	
  100.000%

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  25

  	
   

  	
  T24S. R36E

  Section 24: 

  	
   

  	
  160.00

  	
   

  	
  Thomas, Ada

  H. B. P.

  	
   

  	
  Supplement Note
  No. 24

  	
   

  	
  Petroleum Corporation
  of Texas 

  	
   

  	
  Supplement Note
  No. 24

  	
   

  	
  Petroleum
  Corporation of Texas

  (Down to 3,750 Feet)

  	
   

  	
  50.000%

  
	
   

  	
   

  	
  E/2 SW/4 and

  W/2 SE/4

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Reserve Oil and Gas
  Company

  	
   

  	
   

  	
   

  	
  Reserve
  Oil and Gas Company

  (Down to 3,750 Feet)

  	
   

  	
  50.000%

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  26

  	
   

  	
  T24S. R36E

  Section 25:

  	
   

  	
  160.00

  	
   

  	
  Van Zandit

  H. B. P.

  	
   

  	
  Supplement Note
  No. 25

  	
   

  	
  Reserve Oil and Gas
  Company 

  	
   

  	
  Supplement Note
  No. 25

  	
   

  	
  Reserve
  Oil and Gas Company

  (Down to 3,750 Feet)

  	
   

  	
  50.000%

  
	
   

  	
   

  	
  NE/4

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Texas Pacific Oil
  Company, Inc. 

  	
   

  	
   

  	
   

  	
  Texas
  Pacific Oil Company, Inc.

  	
   

  	
  32.613% 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Adele Irvine Sowell 

  	
   

  	
   

  	
   

  	
  Adale
  Irvine Sowell

  	
   

  	
  7.187% 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  George Bauerdori Estate

  	
   

  	
   

  	
   

  	
  George
  Bauerdorf Estate

  	
   

  	
  10.000%

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  27

  	
   

  	
  T24S. R36E 

  	
   

  	
  40.00

  	
   

  	
  Woolworth, 

  	
   

  	
  Supplement Note 

  	
   

  	
  L. A. Johnson 

  	
   

  	
  None

  	
   

  	
  Johnny
  French

  	
   

  	
  25.000% 

  
	
   

  	
   

  	
  Section 26: 

  	
   

  	
   

  	
   

  	
  C. D. 

  	
   

  	
  No. 26

  	
   

  	
  Johnny  French

  	
   

  	
   

  	
   

  	
  Title
  French

  	
   

  	
  25.000% 

  
	
   

  	
   

  	
  SE/4 NE/4

  	
   

  	
   

  	
   

  	
  H. B. P.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  L. A.
  Johnson

  	
   

  	
  30.000%

  

 

SUMMARY OF COOPER JAL UNIT AGREAGE

 

	
   

  	
   

  	
  NUMBER OF ACRES

  	
   

  	
  PERCENT OF UNIT

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Federal Lands

  	
   

  	
  744.79

  	
   

  	
  26.26

  	
  %

  
	
  State Lands

  	
   

  	
  None

  	
   

  	
  —

  	
   

  
	
  Fee Lands

  	
   

  	
  1,836,21

  	
   

  	
  71.14

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  2,581.00

  	
   

  	
  100.00

  	
  %

  

 

4

 

SUPPLEMENT TO EXHIBIT “B” TO UNIT AGREEMENT

COOPER JAL UNIT

LEA COUNTY, NEW MEXICO

 

NOTE
NO. I - UNDER TRACT NO. 2

 

OVERRIDING
ROYALTY OWNER

 

	
  Atlantic Richfield Company

  	
   

  	
  .37500

  	
  %

  
	
  Bonnie R. Etz

  	
   

  	
  .50000

  	
  %

  
	
  George Etz

  	
   

  	
  .50000

  	
  %

  
	
  Fluor Corporation

  	
   

  	
  .50000

  	
  %

  

 

NOTE
NO. 2 - UNDER TRACT NO. 3

 

OVERRIDING
ROYALTY OWNER

None

 

$9,314,423.00 Production from this and other leases
payable to Prudential Insurance Company of America payable out of 65% of Texas Pacific’s
Net Interest.

 

$1,125,000.00 Production Payment out of this and
other leases payable to Howard Olsen (1/2) and The Estate of R. Olsen, Deceased
(1/2) payable out of 6.25% of Texas Pacific’s Net Interest.

 

$5,875,000.00 Production Payment out of this and
other leases payable to Howard Olsen (1/2) and The Estate of R. Olsen, Deceased
(1/2) payable out of 12.5% of Texas Pacific’s Net Interest after the
$1,125,000.00 Production Payment payout.

 

NOTE
NO. 3 - UNDER TRACT NO. 4

 

OVERRIDING
ROYALTY OWNER

 

	
  Phillips
  Petroleum Company

  	
   

  	
  * 12.50000

  	
  %

  
	
  * When production during any calendar month
  averages over 15 barrels per well per day.

  	
   

  	
  * 5.00000

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  * When production during any calendar month
  averages less than 15 barrels per well per day.

  	
   

  	
   

  	
   

  

 

$245,000.00 Production Payment plus 6-1/2% interest
from this and other leases payable to A. M. C. Corporation out of 65% of 75% of
Petco’s Net Interest.

 

$690,000.00 Production Payment plus 5% interest from
this and other leases payable to Permian Charitable Foundation of Midland,
Texas, Inc. out of 25% of Petco’s Net Interest.

 

$7,100,000.00 Production Payment plus 5-5/8%
interest from this and other leases payable to Continental Illinois National
Bank and Trust Company of Chicago out of Reserve's Not Interest.

 

$4,000,000.00 Production Payment plus 5-7/8%
interest from this and other leases payable to Continental Illinois National
Bank and Trust Company of Chicago out of Reserve's Net Interest.

 

 

NOTE
NO. 4 - UNDER TRACT NO. 5

 

OVERRIDING
ROYALTY OWNER

 

	
  Atlantic Richfield Company

  	
   

  	
  .62500

  	
  %

  
	
  Estate of W. H. Jack

  	
   

  	
  .56250

  	
  %

  
	
  Catholic Church Extension Society

  	
   

  	
  .50000

  	
  %

  
	
  J. H. Daws

  	
   

  	
  .06250

  	
  %

  
	
  Mack Easley

  	
   

  	
  .06250

  	
  %

  
	
  Howard Bradley Jack

  	
   

  	
  .03125

  	
  %

  
	
  Lucille R. Jack

  	
   

  	
  .56250

  	
  %

  
	
  Annie May Kavanaugh

  	
   

  	
  .59375

  	
  %

  
	
  Dorothy B. Mitchell

  	
   

  	
  .06250

  	
  %

  
	
  Pan American Petroleum Corporation

  	
   

  	
  .62500

  	
  %

  
	
  John Quinn

  	
   

  	
  .06250

  	
  %

  
	
  Standard Oil Company of Texas

  	
   

  	
  .62500

  	
  %

  
	
  Continental Oil Company

  	
   

  	
  .62500

  	
  %

  

 

NOTE
NO. 5 - UNDER TRACT NO. 6

 

OVERRIDING
ROYALTY OWNER

 

	
  Catholic Church Extension Society

  	
   

  	
  .50000

  	
  %

  
	
  Chevron Oil Company

  	
   

  	
  .62500

  	
  %

  
	
  J. H. Daws

  	
   

  	
  .06250

  	
  %

  
	
  Mack Easley

  	
   

  	
  .06250

  	
  %

  
	
  Howard Bradley Jack

  	
   

  	
  .03125

  	
  %

  
	
  Lucille R. Jack

  	
   

  	
  .56250

  	
  %

  
	
  Estate of William H. Jack

  	
   

  	
  .56250

  	
  %

  
	
  Annie May Kavanaugh

  	
   

  	
  .59375

  	
  %

  
	
  Dorothy B. Mitchell

  	
   

  	
  .06250

  	
  %

  
	
  John Quinn

  	
   

  	
  .06250

  	
  %

  
	
  Atlantic Richfield Company

  	
   

  	
  .62500

  	
  %

  
	
  Continental Oil Company

  	
   

  	
  .62500

  	
  %

  
	
  Pan American Petroleum Corporation

  	
   

  	
  .62500

  	
  %

  

 

NOTE NO. 6 - UNDER TRACT
NO. 7

 

OVERRIDING ROYALTY OWNER

 

	
  Catholic Church Extension Society

  	
   

  	
  .50000

  	
  %

  
	
  Chevron Oil Company

  	
   

  	
  .62500

  	
  %

  
	
  J. H. Daws

  	
   

  	
  .06250

  	
  %

  
	
  Mack Easley

  	
   

  	
  .06250

  	
  %

  
	
  Howard Bradley Jack

  	
   

  	
  .03125

  	
  %

  
	
  Lucille R. Jack

  	
   

  	
  .56250

  	
  %

  
	
  Estate of William H. Jack

  	
   

  	
  .56250

  	
  %

  
	
  Annie May Kavanaugh

  	
   

  	
  .59375

  	
  %

  
	
  Dorothy B. Mitchell

  	
   

  	
  .06250

  	
  %

  
	
  John Quinn

  	
   

  	
  .06250

  	
  %

  
	
  Atlantic Richfield Company

  	
   

  	
  .62500

  	
  %

  
	
  Continental Oil Company

  	
   

  	
  .62500

  	
  %

  
	
  Pan American Petroleum Corporation

  	
   

  	
  .62500

  	
  %

  

 

2

 

NOTE
NO. 7 - UNDER TRACT NO. 8

 

BASIC
ROYALTY OWNER

 

	
  Albuquerque National Bank, Testamentary Trustee of
  F. A. Andrews, Deceased

  	
   

  	
  11.57

  	
  %

  
	
  Selma
  E. Andrews Agency

  	
   

  	
  13.43

  	
  %

  
	
  Harry
  Arledge

  	
   

  	
  1.04

  	
  %

  
	
  S.
  M. Aronson

  	
   

  	
  1.25

  	
  %

  
	
  Jessie
  B. Crump

  	
   

  	
  6.25

  	
  %

  
	
  Joe
  and Jessie Crump Fund

  	
   

  	
  6.25

  	
  %

  
	
  Alfred
  E. Gutman

  	
   

  	
  4.93

  	
  %

  
	
  Daniel
  L. Gutman

  	
   

  	
  4.93

  	
  %

  
	
  Mrs.
  Dorothy Gutman Trustee

  	
   

  	
  2.47

  	
  %

  
	
  Dorothy
  Gutman

  	
   

  	
  4.93

  	
  %

  
	
  Daniel
  Gutman, Trustee of Estate of Max Gutman

  	
   

  	
  14.79

  	
  %

  
	
  Betty
  Gutman Guttag

  	
   

  	
  7.40

  	
  %

  
	
  Hendrick
  Memorial Hospital

  	
   

  	
  12.50

  	
  %

  
	
  Mrs.
  Julia Levine Daniels

  	
   

  	
  2.08

  	
  %

  
	
  Scope
  Industries

  	
   

  	
  .62

  	
  %

  
	
  Atlantic
  Richfield Company 

  	
   

  	
  .62

  	
  %

  
	
  Edith G. Socolow

  	
   

  	
  4.94

  	
  %

  

 

	
  OVERRIDING
  ROYALTY OWNER

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Scope
  Industries

  	
   

  	
  5.07810

  	
  %

  

 

$7, 100, 000.00 Production Payment plus 5-5/8% interest
from this and other leases payable to Continental Illinois National Bank and
Trust Company of Chicago out of Reserve's Net Interest.

 

$4,000,000.00 Production Payment plus 5-7/8% interest
payable to Continental Illinois National Bank and Trust Company of Chicago out
of Reserve's Net Interest.

 

NOTE
NO. 8 - UNDER TRACT NO. 9

 

BASIC
ROYALTY OWNER

 

	
  Charles T. Bates, Jr.

  	
   

  	
  3.61

  	
  %

  
	
  James Ray Bates

  	
   

  	
  3.6l

  	
  %

  
	
  Kenneth C. Bates

  	
   

  	
  3.6l

  	
  %

  
	
  Lucille Chism Bates

  	
   

  	
  3.13

  	
  %

  
	
  Theodocia G. Bates

  	
   

  	
  12.64

  	
  %

  
	
  Warren J. Bates

  	
   

  	
  3.6l

  	
  %

  
	
  Ether Chism

  	
   

  	
  20.83

  	
  %

  
	
  Catherine L. Dumraese

  	
   

  	
  27.08

  	
  %

  
	
  Wilma Chism Lain

  	
   

  	
  3.13

  	
  %

  
	
  Norma Chism McCarthy

  	
   

  	
  3.13

  	
  %

  
	
  Mary Louine Nommensen

  	
   

  	
  3.12

  	
  %

  
	
  Oil Finders, Inc.

  	
   

  	
  3.13

  	
  %

  
	
  Atlantic Richfield Company

  	
   

  	
  9.37

  	
  %

  

 

3

 

NOTE NO. 9 - UNDER TRACT NO. 10

 

BASIC ROYALTY OWNER

 

	
  Kenneth C. Bates

  	
   

  	
  3.61

  	
  %

  
	
  Docia Bates

  	
   

  	
  3.61

  	
  %

  
	
  Charles T. Bates, Jr.

  	
   

  	
  3.61

  	
  %

  
	
  James Ray Bates

  	
   

  	
  3.61

  	
  %

  
	
  Warren J. Bates

  	
   

  	
  3.61

  	
  %

  
	
  Theodocia C. Bates

  	
   

  	
  9.03

  	
  %

  
	
  Oil Finders, Inc.

  	
   

  	
  3.13

  	
  %

  
	
  Atlantic Richfield Company

  	
   

  	
  9.38

  	
  %

  
	
  Catherine L. Dumraese

  	
   

  	
  27.08

  	
  %

  
	
  Ether Chism

  	
   

  	
  20.83

  	
  %

  
	
  Lucille Chism Bates

  	
   

  	
  3.13

  	
  %

  
	
  Wilma Chism Lain

  	
   

  	
  3.13

  	
  %

  
	
  Norma Chism McCarthy

  	
   

  	
  3.12

  	
  %

  
	
  Mary Louise Nommensen

  	
   

  	
  3.12

  	
  %

  

 

OVERRIDING ROYALTY OWNER

 

	
  Atlantic Richfield Company

  	
   

  	
  *
  10.937500

  	
  %

  
	
  * When wells are capable of making 100% of allowable.

  	
   

  	
  * 8.203125

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  * When wells are capable of making 75% - 100% of allowable.

  	
   

  	
  *
  5.46875

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  * When wells are making less than 75% of allowable.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Oil Wall Remedial Service

  	
   

  	
  5.46875

  	
  %

  
	
  Florence M. Lathrop

  	
   

  	
  5.46875

  	
  %

  

 

NOTE
NO. 10 - UNDER TRACT NO. 11

 

BASIC ROYALTY OWNER

 

	
  Charles T. Bates, Jr.

  	
   

  	
  4.45

  	
  %

  
	
  Docin Bates

  	
   

  	
  15.56

  	
  %

  
	
  James Ray Bates

  	
   

  	
  4.45

  	
  %

  
	
  Kenneth C. Bates

  	
   

  	
  4.45

  	
  %

  
	
  Lucille Chism Bates

  	
   

  	
  3.12

  	
  %

  
	
  Warren J. Bates

  	
   

  	
  4.45

  	
  %

  
	
  Ether Chism

  	
   

  	
  20.83

  	
  %

  
	
  Catherine L. Dumraese

  	
   

  	
  33.33

  	
  %

  
	
  Wilma Chism Lain

  	
   

  	
  3.12

  	
  %

  
	
  Norma Chism McCarthy

  	
   

  	
  3.12

  	
  %

  
	
  Mary Louise Nommensen

  	
   

  	
  3.12

  	
  %

  

 

OVERRIDING ROYALTY OWNER

 

	
  Docia
  Bates

  	
   

  	
  2.73438

  	
  %

  
	
  Catherine
  L. Dumraese

  	
   

  	
  4.16667

  	
  %

  

 

4

 

NOTE NO. 11 - UNDER TRACT NO. 12

 

BASIC ROYALTY OWNER (Based On Gas Ownership)

 

	
  The Colorado Corporation

  	
   

  	
  .01

  	
  %

  
	
  Joseph C. Blake

  	
   

  	
  .01

  	
  %

  
	
  Daisy D. Blankenship

  	
   

  	
  15.00

  	
  %

  
	
  Georgia Lee Clarke

  	
   

  	
  1.56

  	
  %

  
	
  C. S. Daley

  	
   

  	
  .02

  	
  %

  
	
  Myrtle L. Davis

  	
   

  	
  .04

  	
  %

  
	
  L. M. Decker and Yvonne Baird Decker

  	
   

  	
  81.25

  	
  %

  
	
  Margaret R. Ellison

  	
   

  	
  .01

  	
  %

  
	
  Roy F. Faukin

  	
   

  	
  .02

  	
  %

  
	
  Elizabeth Rittenhouse Lamb

  	
   

  	
  .01

  	
  %

  
	
  Harry Levy

  	
   

  	
  .02

  	
  %

  
	
  Paul Lyon and Martha Lyon

  	
   

  	
  1.56

  	
  %

  
	
  Beverly B. Nelson

  	
   

  	
  .02

  	
  %

  
	
  Joseph Nelson

  	
   

  	
  .04

  	
  %

  
	
  Veva Neva K. Nelson

  	
   

  	
  .08

  	
  %

  
	
  Earle M. Simon

  	
   

  	
  .02

  	
  %

  
	
  Elmer H. Wahl

  	
   

  	
  .31

  	
  %

  
	
  A. W. Wuesterberg

  	
   

  	
  .02

  	
  %

  

 

OVERRIDING ROYALTY OWNER

 

	
  The Colorado Corporation

  	
   

  	
  .00107

  	
  %

  
	
  Joseph C. Blake

  	
   

  	
  .00107

  	
  %

  
	
  Daisy D. Blankenship

  	
   

  	
  1.64063

  	
  %

  
	
  Georgia Lee Clarke

  	
   

  	
  .17090

  	
  %

  
	
  C. S. Daley

  	
   

  	
  .00214

  	
  %

  
	
  Myrtle L. Davis

  	
   

  	
  .00427

  	
  %

  
	
  L. M. Decker and Yvonne Baird Decker

  	
   

  	
  8.88672

  	
  %

  
	
  Margaret R. Ellison

  	
   

  	
  .00107

  	
  %

  
	
  Roy F. Faukin

  	
   

  	
  .00214

  	
  %

  
	
  Elizabeth Rittenhouse Lamb

  	
   

  	
  .00107

  	
  %

  
	
  Harry Levy

  	
   

  	
  .00213

  	
  %

  
	
  Paul Lyon and Martha Lyon

  	
   

  	
  .17090

  	
  %

  
	
  Beverly B. Nelson

  	
   

  	
  .00214

  	
  %

  
	
  Joseph Nelson

  	
   

  	
  .00427

  	
  %

  
	
  Veva Neva K. Nelson

  	
   

  	
  .00854

  	
  %

  
	
  Earle M. Simon

  	
   

  	
  .00213

  	
  %

  
	
  Elmer H. Wahl

  	
   

  	
  .03418

  	
  %

  
	
  A. W. Wuesterberg

  	
   

  	
  .00213

  	
  %

  

 

NOTE
NO. 12 - UNDER TRACT NO. 13

 

BASIC ROYALTY OWNER

 

	
  Atlantic Richfield Company

  	
   

  	
  18.37

  	
  %

  
	
  Jessie Cooper

  	
   

  	
  4.08

  	
  %

  
	
  General Crude Oil Company

  	
   

  	
  9.18

  	
  %

  
	
  Kenneth N. Headley

  	
   

  	
  .77

  	
  %

  
	
  Frances Smyrl Jennings

  	
   

  	
  .76

  	
  %

  
	
  John H. Hendrix

  	
   

  	
  48.98

  	
  %

  
	
  Mobil Oil Corporation

  	
   

  	
  16.33

  	
  %

  
	
  Southern Petroleum Exploration, Inc.

  	
   

  	
  1.53

  	
  %

  

 

5

 

NOTE
NO. 13 - UNDER TRACT NO. 14

 

BASIC ROYALTY OWNER

 

	
  Atlantic
  Richfield Company

  	
   

  	
  40.00

  	
  %

  
	
  Billy Dunn

  	
   

  	
  6.07

  	
  %

  
	
  Haskell J. Dunn

  	
   

  	
  4.28

  	
  %

  
	
  Ralph S. Dunn

  	
   

  	
  4.28

  	
  %

  
	
  Fluor
  Corporation

  	
   

  	
  20.00

  	
  %

  
	
  Annie Ford

  	
   

  	
  6.07

  	
  %

  
	
  Ima Hays

  	
   

  	
  1.67

  	
  %

  
	
  G. M. Jinkins

  	
   

  	
  1.67

  	
  %

  
	
  North Central
  Oil Corp.

  	
   

  	
  7.50

  	
  %

  
	
  Roger B. Owings

  	
   

  	
  2.50

  	
  %

  
	
  Sharon Dunn
  Riley

  	
   

  	
  .36

  	
  %

  
	
  Mona Dunn
  Shofner, Aux. Adm. of Estate of Walker A. Dunn, Deceased

  	
   

  	
  3.57

  	
  %

  
	
  Annabel
  Winningham

  	
   

  	
  1.67

  	
  %

  
	
  Suspense (Walker
  A. Dunn, Jr.)

  	
   

  	
  .36

  	
  %

  

 

OVERRIDING ROYALTY
OWNER

 

	
  Aikman Oil and
  Gas Company

  	
   

  	
  2.73420

  	
  %

  
	
  G. W. Hutcheson

  	
   

  	
  2.73420

  	
  %

  

 

$245,000.00 Production Payment plus 6-1/2% interest
from this and other leases payable to A.M.C. Corporation out of 65% of 75%
of PETCO’s Net Interest.

 

$690,000.00 Production Payment plus 5% interest from
this and other leases payable to Permian Charitable Foundation of Midland,
Texas, Inc. out of 25% of PETCO’s Net Interest.

 

NOTE NO. 14 - UNDER TRACT
NO. 15

 

BASIC ROYALTY
OWNER

 

	
  Atlantic
  Richfield Company

  	
   

  	
  40.00

  	
  %

  
	
  Billy Dunn

  	
   

  	
  6.07

  	
  %

  
	
  Haskell J. Dunn

  	
   

  	
  4.28

  	
  %

  
	
  Ralph S. Dunn

  	
   

  	
  4.28

  	
  %

  
	
  Fluor
  Corporation

  	
   

  	
  20.00

  	
  %

  
	
  Annie Ford

  	
   

  	
  6.07

  	
  %

  
	
  Ima Hays

  	
   

  	
  1.67

  	
  %

  
	
  G. M. Jinkins

  	
   

  	
  1.67

  	
  %

  
	
  North Central
  Oil Corp.

  	
   

  	
  7.50

  	
  %

  
	
  Roger B. Owings

  	
   

  	
  2.50

  	
  %

  
	
  Sharon Dunn
  Riley

  	
   

  	
  .36

  	
  %

  
	
  Mona Dunn
  Shofner, Aux. Adm. of Estate of Walker A. Dunn, Deceased

  	
   

  	
  3.57

  	
  %

  
	
  Annabel
  Winningham

  	
   

  	
  1.67

  	
  %

  
	
  Suspense (Walker
  A. Dunn, Jr.)

  	
   

  	
  .36

  	
  %

  

 

6

 

NOTE
NO. 15 - UNDER TRACT NO. 16

 

BASIC
ROYALTY OWNER

 

	
  Atlantic Richfield Company

  	
   

  	
  40.00

  	
  %

  
	
  Billy Dunn

  	
   

  	
  6.07

  	
  %

  
	
  Haskell J. Dunn

  	
   

  	
  4.28

  	
  %

  
	
  Ralph S. Dunn

  	
   

  	
  4.28

  	
  %

  
	
  Fluor Corporation

  	
   

  	
  20.00

  	
  %

  
	
  Annie Ford

  	
   

  	
  6.07

  	
  %

  
	
  Ima Hays

  	
   

  	
  1.67

  	
  %

  
	
  G. M. Jinkins

  	
   

  	
  1.67

  	
  %

  
	
  North Central Oil Corp.

  	
   

  	
  7.50

  	
  %

  
	
  Roger B. Owings

  	
   

  	
  2.50

  	
  %

  
	
  Mona Dunn Shofner, Aux. Adm. of Estate  of Walker A. Dunn, Deceased

  	
   

  	
  3.57

  	
  %

  
	
  Annabel and R. R. Winningham

  	
   

  	
  1.67

  	
  %

  
	
  Suspense (Sharon Dunn Riley and Walker A.  Dunn, Jr.)

  	
   

  	
  .72

  	
  %

  

 

OVERRIDING ROYALTY OWNER

 

	
  Scope Industries

  	
   

  	
  3.95510

  	
  %

  

 

NOTE NO. 16 - UNDER TRACT NO. 17

 

BASIC
ROYALTY OWNER

 

	
  Atlantic Richfield Company

  	
   

  	
  22.22

  	
  %

  
	
  Billy Dunn

  	
   

  	
  14.17

  	
  %

  
	
  Haskell J. Dunn

  	
   

  	
  10.00

  	
  %

  
	
  Ralph S. Dunn

  	
   

  	
  10.00

  	
  %

  
	
  Fluor Corporation

  	
   

  	
  11.11

  	
  %

  
	
  Annie Ford

  	
   

  	
  14.17

  	
  %

  
	
  Ima Hays

  	
   

  	
  .93

  	
  %

  
	
  G. M. Jinkins

  	
   

  	
  .93

  	
  %

  
	
  North Central Oil Corp.

  	
   

  	
  4.16

  	
  %

  
	
  Roger B. Owings

  	
   

  	
  1.39

  	
  %

  
	
  Sharon Dunn Riley

  	
   

  	
  .83

  	
  %

  
	
  Mona Dunn Shofner, Aux. Adm. of Estate  of Walker A. Dunn, Deceased

  	
   

  	
  8.33

  	
  %

  
	
  Annabel Winningham

  	
   

  	
  .93

  	
  %

  
	
  Suspense (Walker A. Dunn, Jr.)

  	
   

  	
  .83

  	
  %

  

 

NOTE
NO. 17 - UNDER TRACT NO. 18

 

BASIC
ROYALTY OWNER

 

	
  Harry Arledge

  	
   

  	
  .78

  	
  %

  
	
  S. M. Aronson

  	
   

  	
  2.50

  	
  %

  
	
  Fluor Corporation

  	
   

  	
  12.50

  	
  %

  
	
  Alfred E. Gutman

  	
   

  	
  8.91

  	
  %

  
	
  Daniel L. Gutman

  	
   

  	
  8.91

  	
  %

  
	
  Mrs. Dorothy Gutman, Trustee

  	
   

  	
  4.45

  	
  %

  
	
  Dorothy Gutman

  	
   

  	
  8.91

  	
  %

  
	
  Daniel Gutman, Trustee of Estate of Max  Gutman

  	
   

  	
  26.72

  	
  %

  
	
  Betty Guttman Guttag

  	
   

  	
  13.36

  	
  %

  

 

7

 

NOTE
NO. 17 - UNDER TRACT NO. 18 (Cont’d. )

 

BASIC ROYALTY OWNER (Cont’d. )

 

	
  Mrs. Tina Levine, Deceased

  	
   

  	
  1.56

  	
  %

  
	
  Scope Industries

  	
   

  	
  1.25

  	
  %

  
	
  Atlantic Richfield Company

  	
   

  	
  1.25

  	
  %

  
	
  Edith G. Socolow

  	
   

  	
  8.90

  	
  %

  

 

OVERRIDING ROYALTY OWNER

 

	
  Scope Industries

  	
   

  	
  2.50000

  	
  %

  

 

$7,100,000.00 Production
Payment plus 5-5/8% interest from this and other leases payable to Continental
Illinois National Bank and Trust Company of Chicago out of Reserve’s Net
Interest.

 

$4,000,000.00 Production
Payment plus 5-7/8% interest from this and other leases payable to Continental
Illinois National Bank and Trust Company of Chicago out of Reserve’s Net
Interest.

 

NOTE
NO. 18 - UNDER TRACT NO. 19

 

BASIC ROYALTY OWNER

 

	
  Charles F. Bedford

  	
   

  	
  .06

  	
  %

  
	
  Edwin M. Bedford

  	
   

  	
  .06

  	
  %

  
	
  Henry D. Bedford

  	
   

  	
  .06

  	
  %

  
	
  Rachel Bedford Bowen

  	
   

  	
  .06

  	
  %

  
	
  Mrs. Walter M. Burress

  	
   

  	
  1.56

  	
  %

  
	
  Buttram Texhoma Co.

  	
   

  	
  8.61

  	
  %

  
	
  Gonzales Royalties Inc.

  	
   

  	
  2.34

  	
  %

  
	
  George V. Holmes, Trustee

  	
   

  	
  3.24

  	
  %

  
	
  Lasca Inc.

  	
   

  	
  2.00

  	
  %

  
	
  Lexington Oil Co.

  	
   

  	
  2.23

  	
  %

  
	
  J. M. Richardson Lyeth, Jr. and Monro Longyear Lyeth, Joint Tenants

  	
   

  	
  2.97

  	
  %

  
	
  James R. Lyttle, Executor Under Will of Mary Duke Pearlbrook

  	
   

  	
  .79

  	
  %

  
	
  Ida D. Miller

  	
   

  	
  .09

  	
  %

  
	
  Helen D. Pearlbrook

  	
   

  	
  .88

  	
  %

  
	
  Petroleum Corporation of Texas

  	
   

  	
  1.67

  	
  %

  
	
  John J. Reynolds

  	
   

  	
  10.50

  	
  %

  
	
  Onez Norman Rooney

  	
   

  	
  2.97

  	
  %

  
	
  Elaine Newby Shepherd, Ind. & as Attorney

  	
   

  	
  .58

  	
  %

  
	
  Southern Minerals Corporation

  	
   

  	
  3.33

  	
  %

  
	
  Sparks Healey Company

  	
   

  	
  1.25

  	
  %

  
	
  E. M. Sweeney

  	
   

  	
  1.56

  	
  %

  
	
  Ellen Anne Williams

  	
   

  	
  .06

  	
  %

  
	
  The Atlantic Richfield Company

  	
   

  	
  28.13

  	
  %

  
	
  Cities Service
  Oil Company

  	
   

  	
  25.00

  	
  %

  

 

OVERRIDING ROYALTY OWNER

 

	
  Humble Oil and Refining Company

  	
   

  	
  12.50000

  	
  %

  	
  (On Oil)

  	
   

  
	
  Humble Oil and Refining Company

  	
   

  	
  25.00000

  	
  %

  	
  (On Gas and Casinghead Gas)

  	
   

  
	
  Scope Industries

  	
   

  	
  2.50000

  	
  %

  	
   

  	
   

  

 

8

 

NOTE
NO. 18 - UNDER TRACT NO. 19 (Cont’d. )

 

OVERRIDING
ROYALTY OWNER
(Cont’d. )

 

$690,000.00 Production Payment
plus 5% interest from this and other leases payable to Permian Charitable
Foundation of Midland, Texas, Inc. out of 25% of PETCO’s Net Interest.

 

$7,100,000.00 Production
Payment plus 5 5/8% interest from this and other leases payable to Continental
Illinois National Bank and Trust Company out of Reserve’s Net Interest.

 

$400,000.00 Production
Payment plus 3 7/8% interest from this and other leases payable to Continental Illinois
National Bank and Trust Company of Chicago out of Reserve’s Net Interest.

 

NOTE NO. 19 - UNDER TRACT NO.  20

 

BASIC ROYALTY OWNER

 

	
  Cities Service Oil Company

  	
   

  	
  20.83

  	
  %

  
	
  Mary J. Dotson

  	
   

  	
  .78

  	
  %

  
	
  Foster Petroleum Corporation

  	
   

  	
  4.17

  	
  %

  
	
  General Crude Oil Company

  	
   

  	
  18.75

  	
  %

  
	
  Mobil Oil Corporation

  	
   

  	
  12.50

  	
  %

  
	
  Southern California Petroleum Corp.

  	
   

  	
  18.75

  	
  %

  
	
  Adele Irvine Sowell, Individually and as Independent Executrix of the
  Estate of R. H. Sowell, Deceased

  	
   

  	
  6.25

  	
  %

  
	
  June D. Speight

  	
   

  	
  2.35

  	
  %

  
	
  The First National Bank for Deposit to Account of Howard M. Wilson

  	
   

  	
  1.56

  	
  %

  
	
  M. Elizabeth Wilson

  	
   

  	
  1.56

  	
  %

  
	
  Atlantic Richfield Company

  	
   

  	
  12.50

  	
  %

  

 

NOTE NO. 20 - UNDER TRACT NO.
21

 

BASIC ROYALTY OWNER

 

	
  Atlantic Richfield Company

  	
   

  	
  12.50

  	
  %

  
	
  Cities Service Oil Company

  	
   

  	
  20.83

  	
  %

  
	
  Mary J. Dotson

  	
   

  	
  .78

  	
  %

  
	
  Foster Petroleum Corporation

  	
   

  	
  4.17

  	
  %

  
	
  General Crude Oil Company

  	
   

  	
  18.75

  	
  %

  
	
  Mobil Oil Corporation

  	
   

  	
  12.50

  	
  %

  
	
  Scope Industries

  	
   

  	
  18.75

  	
  %

  
	
  Mrs. Adele Irvine Sowell

  	
   

  	
  6.25

  	
  %

  
	
  June D. Speight

  	
   

  	
  2.35

  	
  %

  
	
  Howard M. Wilson

  	
   

  	
  1.56

  	
  %

  
	
  M. Elizabeth Wilson

  	
   

  	
  1.56

  	
  %

  

 

OVERRIDING ROYALTY OWNER

 

	
  Humble Oil and Refining Company

  	
   

  	
  6.25000

  	
  %

  	
  On Oil

  	
   

  
	
  Humble Oil and Refining Company

  	
   

  	
  25.00000

  	
  %

  	
  On Gas

  	
   

  
	
  Scope Industries

  	
   

  	
  5.07810

  	
  %

  	
   

  	
   

  

 

$7,100,000.00 Production
Payment plus 5 5/8% Interest from this and other leases payable to Continental
Illinois National Bank and Trust Company of Chicago payable out of Reserve’s Net
Interest.

 

9

 

NOTE
NO. 20 - UNDER TRACT NO. 21 (Cont’d. )

 

OVERRIDING
ROYALTY OWNER
(Cont’d. )

 

$4,000,000.00 Production
Payment plus 5-7/8% Interest from this and other leases payable to Continental
Illinois National Bank and Trust Company of Chicago payable out of Reserve’s
Net Interest.

 

NOTE NO. 21 – UNDER TRACT NO. 22

 

OVERRIDING
ROYALTY OWNER

 

	
  Scope Industries

  	
   

  	
  5.46870

  	
  %

  

 

$7,100,000.00 Production
Payment plus 5-5/8% Interest from this and other leases payable to Continental
Illinois National Bank and Trust Company of Chicago out of Reserve’s Net
Interest.

 

$4,000,000.00 Production
Payment plus 5.7/8% Interest from this and other leases payable to Continental
Illinois National Bank and Trust Company of Chicago out of Reserve’s Net
Interest.

 

NOTE NO. 22 - UNDER TRACT NO. 23

 

OVERRIDING ROYALTY OWNER

 

	
  Atlantic
  Richfield Company

  	
   

  	
  2.73438

  	
  %

  

 

NOTE
NO. 23 - UNDER TRACT NO. 24

 

BASIC ROYALTY
OWNER

 

	
  Fern Cone

  	
   

  	
  1.56

  	
  %

  
	
  Gordon M. Cone

  	
   

  	
  1.43

  	
  %

  
	
  Mary J. Dotson

  	
   

  	
  .78

  	
  %

  
	
  General Crude Oil Company

  	
   

  	
  18.75

  	
  %

  
	
  Sue Saunders Graham

  	
   

  	
  1.04

  	
  %

  
	
  Martha Watkins Harris

  	
   

  	
  .52

  	
  %

  
	
  Mrs. Clyde Miller

  	
   

  	
  .52

  	
  %

  
	
  Mobil Oil Corporation

  	
   

  	
  12.50

  	
  %

  
	
  Elyse Saunders Patterson

  	
   

  	
  1.04

  	
  %

  
	
  Southern Petroleum Exploration Inc.

  	
   

  	
  3.12

  	
  %

  
	
  Adele Irvine Sowell, Individually and as Independent Executrix of the
  Estate of R. H. Sowell, Deceased

  	
   

  	
  6.25

  	
  %

  
	
  June D. Speight

  	
   

  	
  2.35

  	
  %

  
	
  Ada E. Thomas

  	
   

  	
  28.13

  	
  %

  
	
  Sally Saunders Toles

  	
   

  	
  1.04

  	
  %

  
	
  Myrtis Dean Watkins

  	
   

  	
  .52

  	
  %

  
	
  Hattie Cocke Williams

  	
   

  	
  3.00

  	
  %

  
	
  J. H. Williams

  	
   

  	
  .26

  	
  %

  
	
  Elizabeth Woolworth

  	
   

  	
  2.08

  	
  %

  
	
  May Woolworth

  	
   

  	
  2.61

  	
  %

  
	
  Atlantic Richfield Company

  	
   

  	
  12.50

  	
  %

  

 

10

 

NOTE
NO. 24 - UNDER TRACT NO. 25

 

BASIC ROYALTY OWNER

 

	
  Fern Cone

  	
   

  	
  1.56

  	
  %

  
	
  Gordon M. Cone

  	
   

  	
  1.43

  	
  %

  
	
  Hattic Cocke Williams

  	
   

  	
  3.00

  	
  %

  
	
  June D. Speight

  	
   

  	
  2.35

  	
  %

  
	
  General Crude Oil Company

  	
   

  	
  18.75

  	
  %

  
	
  Southern Petroleum Exploration, Inc.

  	
   

  	
  3.12

  	
  %

  
	
  Ada E. Thomas

  	
   

  	
  28.13

  	
  %

  
	
  Elisabeth Woolworth

  	
   

  	
  2.08

  	
  %

  
	
  May Woolworth

  	
   

  	
  2.61

  	
  %

  
	
  Atlantic Richfield Company

  	
   

  	
  12.50

  	
  %

  
	
  Elyse Saunders Patterson

  	
   

  	
  1.04

  	
  %

  
	
  Sue Saunders Graham

  	
   

  	
  1.04

  	
  %

  
	
  Sally Saunders Toles

  	
   

  	
  1.04

  	
  %

  
	
  J. H. Williams

  	
   

  	
  .26

  	
  %

  
	
  Myrtis Dean Watkins

  	
   

  	
  .52

  	
  %

  
	
  Mrs. C. W. Miller

  	
   

  	
  52

  	
  %

  
	
  Mrs.  Martha W. Harris

  	
   

  	
  .52

  	
  %

  
	
  Mary J. Dotson

  	
   

  	
  .78

  	
  %

  
	
  Mobil Oil Company

  	
   

  	
  12.50

  	
  %

  
	
  Mrs.  Adele Irvine Sowell

  	
   

  	
  6.25

  	
  %

  

 

OVERRIDING ROYALTY OWNER

 

	
  Humble
  Oil and Refining Company

  	
   

  	
  12.50000

  	
  %

  	
  (On
  Oil)

  	
   

  
	
  Humble
  Oil and Refining Company

  	
   

  	
  25.00000

  	
  %

  	
  (On Gas and

  Casinghead Gas)

  	
   

  
	
  Scope
  Industries

  	
   

  	
  2.50000

  	
  %

  	
   

  	
   

  

 

$245,000.00 Production
Payment plus 6-1/2% interest from this and other Leases payable to AMC
Corporation out of 65% of 75% of PETCO’s Net Interest.

 

$690,000.00 Production
Payment plus 5% interest from this and other Leases payable to Permian
Charitable Foundation of Midland, Texas, Inc. out of 25% of PETCO’s Net
Interest.

 

$7,100,000.00 Production
Payment plus 5-5/8% interest from this and other leases payable to Continental
Illinois National Bank and Trust Company of Chicago out of Reserve’s Net
Interest.

 

$4,000,000.00 Production
Payment plus 5-7/8% interest from this and other Leases payable to Continental
Illinois National Bank and Trust Company of Chicago out of Reserve’s Net
Interest.

 

NOTE
NO. 25 - UNDER TRACT NO. 26

 

BASIC ROYALTY OWNER

 

	
  Atlantic Richfield Company

  	
   

  	
  7.77

  	
  %

  
	
  General Crude Oil Company

  	
   

  	
  15.55

  	
  %

  
	
  Mobil Oil Corporation

  	
   

  	
  31.10

  	
  %

  
	
  M. M. Miller

  	
   

  	
  1.46

  	
  %

  
	
  Lydia Quilter

  	
   

  	
  3.89

  	
  %

  
	
  Adele Irvine Sowell

  	
   

  	
  4.47

  	
  %

  
	
  Atlantic Richfield Company

  	
   

  	
  35.76

  	
  %

  

 

11

 

NOTE
NO. 25 - UNDER TRACT NO. 26 (Cont’d. )

 

OVERRIDING ROYALTY OWNER

 

	
  Scope Industries

  	
   

  	
  2.50000

  	
  %

  

 

$7,100,000.00 Production
Payment plus 5-5/8% interest from this and other leases payable to Continental
Illinois National Bank and Trust Company of Chicago out of Reserve’s Net
Interest.

 

$4,000,000.00 Production
Payment plus 5-7/8% interest from this and other leases payable to Continental
Illinois National Bank and Trust Company of Chicago out of Reserve’s Net
Interest.

 

NOTE NO. 26 - UNDER TRACT NO.
27

 

BASIC ROYALTY OWNER

 

	
  Midwest Oil Corporation

  	
   

  	
  25.00

  	
  %

  
	
  L. L. Horne Estate

  	
   

  	
  2.60

  	
  %

  
	
  Atlantic Richfield Company

  	
   

  	
  12.50

  	
  %

  
	
  General Crude Oil Company

  	
   

  	
  12.50

  	
  %

  
	
  Maude E. Soward

  	
   

  	
  1.56

  	
  %

  
	
  May Woolworth

  	
   

  	
  1.74

  	
  %

  
	
  Elizabeth Woolworth

  	
   

  	
  1.39

  	
  %

  
	
  Myrtis Dean Watkins

  	
   

  	
  .35

  	
  %

  
	
  Martha. W. Harris

  	
   

  	
  .35

  	
  %

  
	
  Clyde W. Miller

  	
   

  	
  .35

  	
  %

  
	
  Ethel McCabe Trevitt

  	
   

  	
  4.17

  	
  %

  
	
  Gonzales Royalties, Inc.

  	
   

  	
  1.25

  	
  %

  
	
  Livingston Oil Company

  	
   

  	
  1.19

  	
  %

  
	
  George V. Holmes, Trustee

  	
   

  	
  1.73

  	
  %

  
	
  Socony Mobil

  	
   

  	
  12.50

  	
  %

  
	
  Iris Goldston

  	
   

  	
  10.41

  	
  %

  
	
  Iris Goldston and Houston Bank & Trust Company as Co-Trustees
  U/W/O W. L. Goldston, Deceased

  	
   

  	
  10.41

  	
  %

  

 

* * * *

 

Except as otherwise expressly set forth, the basic royalty and
overriding royalty interests and owners shown on this supplement to Exhibit “B”
have been set forth and calculated with respect to the royalties and overriding
royalties payable on oil only.

 

12

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