Document:

EX-10.18

 Exhibit 10.18 

PARTICIPATION AGREEMENT 

This Participation Agreement (this “Agreement”) is made and entered into as of May 20, 2010 (the “Effective
Date”), between CrownRock, L.P., a Texas limited partnership (“CrownRock”), whose address is 303 Veterans Airpark Lane, Suite 5100, Midland, Texas 79705, CrownQuest Operating, LLC, a Texas limited liability
company (“CrownQuest”), whose address is P.O. Box 53310, Midland, Texas 79710 and Lynden USA Inc., a Utah corporation (“Lynden”), whose address is c/o 885 West Georgia Street, Suite 2150, Vancouver, B.C., V6C 3E8
Canada. CrownRock and Lynden are sometimes referred to herein individually as a “Party”, or collectively as the “Parties”. 

Recitals 

CrownRock owns an Option to Purchase Oil and Gas Lease (“Option”) covering approximately 101,495.38875 acres being the
Spade/Renderbrook Ranch in Coke, Mitchell and Sterling Counties, Texas. Lynden desires to acquire an interest in the Option. This Agreement is being executed to set forth the terms and provisions under which Lynden will acquire an undivided 50%
interest in the Option owned by CrownRock more particularly described herein and in the exhibits attached to this Agreement. 
 Agreement

 NOW, THEREFORE, in consideration of the premises, the mutual covenants and agreements contained herein and other good and valuable
consideration, the adequacy of which is hereby acknowledged by the Parties, the Parties agree as follows: 
  

	1.	Properties Subject to this Agreement. The lands described in the Option attached hereto as Exhibit “A” are subject to this Agreement. 

 

	2.	Participation in Drilling. Subject to the terms of this Agreement, Lynden will pay for 100% of the costs to drill and complete the first two (2) wells up to $2,400,000 and will receive 50% of
CrownRock’s interest in the Option. In the event the cost to drill the initial two (2) wells exceeds $2,400,000, said additional costs will be borne by CrownRock 50% and Lynden 50%. Notwithstanding the foregoing, if either of the initial
two (2) wells require a tie-in to production facilities in excess of one (1) mile, the cost associated with said connection will be borne equally between CrownRock and Lynden. Upon the completion of the 2nd well CrownRock will assign to Lynden 50% of CrownRock’s interest in the Option. The assignment shall be made pursuant to an assignment in the form attached hereto as Exhibit
“B”. All subsequent wells will be owned and paid for 50% by Lynden and 50% by CrownRock. 

  

	3.	 Acquisition of Option and any Lease(s) thereunder. Upon the execution of this Agreement, Lynden shall pay $1,522,430.83 for the Option. In the
event CrownRock is required to pay additional consideration for the Option as required under Paragraph #2 of the Option, Lynden agrees to reimburse CrownRock 100%. Should CrownRock be entitled to a refund pursuant to said paragraph, said refund
shall be credited to Lynden’s 

  
 1 

	 	
account 100%. In addition, it will pay 100% of the first $100,000 due for the initial 800 acres leased under the Option. In the event the Parties are required to lease 10 sections during the
Initial Option Term (as defined in the Option), as outlined under the Option, the costs associated with leasing the remaining acreage shall be paid 4/7ths by Lynden and 3/7ths by CrownRock but will be owned 50/50. Any further costs associated with
either (a) extending the Option for an additional eighteen months, or (b) acquiring additional leases shall be borne by Lynden 50% and CrownRock 50% and will be owned 50/50. Both Parties are obligated to pay their share of any minimum
acreage requirement during the Initial Option Term. If one Party does not participate in the payment for the Extended Option they are out of the Option and this Agreement save and except any existing producing proration units, and operations and all
rights and obligations to the Option transfer to, or remains with as the case may be, the paying Party. If one Party does not want to extend the term to all of the Option but elects to participate as to the 50% minimum required to extend the term of
the Option, the other Party will have the election to extend the term to all or any part of the remaining acreage and said additional lands will no longer be subject to this Agreement. If one Party does not want to lease lands, above any minimum
requirement, at the end of the Extended Option Term the other Party will have the election to lease all or any part of the remaining acreage and said additional lands will no longer be subject to this Agreement. 

 

	4.	Joint Operating Agreement. Contemporaneously with the execution of this Agreement, the Parties will execute an operating agreement on a form substantially the same as Exhibit “C” attached hereto.

  

	5.	Area of Mutual Interest. The Agreement is subject to the area of mutual interest provision set forth in the operating agreement noted above. 

 

	6.	Limitation on Well Proposals. The Parties agree that during the Initial Option Term, neither Party will propose more than a total of five wells unless the Parties mutually agree to additional proposals. During
the Extended Option Term, no more that a total of twelve wells will be proposed unless the Parties mutually agree to additional proposals. After the expiration of the Extended Option Term, no more than eight wells will be proposed for the remainder
of that calendar year unless the Parties mutually agree to additional proposals. For the next calendar year, no more than twelve wells will be proposed unless the Parties mutually agree to additional proposals. Thereafter, the total well proposal
shall never be more than 150% of the number of wells proposed in the previous year unless the Parties mutually agree to additional proposals. 

  

	7.	Additional Consideration. If Lynden, its successors or assigns are still in the Agreement, Lynden will pay CrownRock a $1,500,000 bonus after the drilling and completion of the 20th well. The bonus will only be paid if CrownQuest Operating, LLC is performing the duties of operator. 

  

	8.	 Representations of CrownRock. CrownRock represents and warrants that (i) it has the authority to enter into this Agreement and fully
perform its obligations under this Agreement; (ii) it has delivered to Lynden copies of the Option, operating agreements and other pertinent title documents deemed reasonably relevant by CrownRock; and (iii)

  
 2 

	 	
it will not cause a breach of any existing agreements with third parties or be a violation of any applicable laws, including securities laws, by entering into this Agreement or performing
CrownRock’s obligations hereunder. 

  

	9.	Representations of Lynden. Lynden represents and warrants that (i) it has the authority to enter into this Agreement and fully perform its obligations under this Agreement; and (ii) it will not cause a
breach of any existing agreements with third parties or be a violation of any applicable laws, including securities laws or stock exchange rules and regulations, by entering into this Agreement or performing Lynden’s obligations hereunder.

  

	10.	Disclosure of Information and Confidentiality. Each Party agrees that all geological and geophysical data, maps, charts, models, interpretations and other exploration information shared between the Parties
concerning the Prospects and the development thereof shall be held in confidence for the duration of this Agreement and any related agreements; provided, however, that the obligations of confidentiality shall not apply to the following:

  

	 	(a)	Information that at the time of disclosure is generally available to the public; 

  

	 	(b)	Information that after disclosure is published or otherwise becomes generally available to the public through no fault of the recipient; 

 

	 	(c)	Information that the recipient can show was received by it after the time of disclosure from a third party; 

  

	 	(d)	Information that the recipient reasonably believes is required to be disclosed by applicable law or stock exchange rules; and further provided that each Party (and, in the case of Lynden, its parent company) shall have
the right, upon receiving the express prior written approval of the other Party, which approval shall not be unreasonably withheld, conditioned or delayed, to issue press releases or make other public announcements regarding this Agreement, related
agreements or other activities or performance of the Parties. 

 NOTWITHSTANDING THE FOREGOING, each Party shall have the right
to make such disclosures to (i) its corporate affiliates and each of their directors, officers, employees, agents, lenders, advisors and contractors as reasonably necessary to conduct its evaluation and exercise its rights and obligations as
contemplated under this Agreement; and (ii) purchasers or potential purchasers of all or a portion of a Party’s interests in the Prospects; provided, however, that such disclosures will be made under suitable provisions of confidentiality
not less stringent than those to which the Parties are subject hereunder. 

  
 3 

	14.	Notices. The addresses of the respective Parties for purposes of this Agreement shall be as follows: 

CrownRock, L.P. 
 303 Veterans
Airpark Lane, Suite 5100 
 Midland, Texas 79705 

Telephone: 432-818-0300 
 Fax:
432-687-4804 
 Attention: Mr. Tim Dunn 

CrownQuest Operating, LLC 
 P.O.
Box 53310 
 Midland, Texas 79710 

Telephone: 432-818-0300 
 Fax:
432-687-4804 
 Attention: Mr. Craig Clark 

Lynden USA Inc. 
 885 West
Georgia Street, Suite 2150 
 Vancouver, B.C. V6C 3E8 Canada 

Telephone: 604-629-2991 
 Fax:
604-602-9311 
 Attention: Mr. Colin Watt 
  

	15.	Assignability. Either Party hereto may assign all or any part of its rights under this Agreement. Provided, however, prior to Lynden assigning its rights under this Agreement during the period up to the drilling
of the 21st well, it must receive CrownRock’s written consent, which consent shall not be unreasonably withheld, conditioned or delayed. Any such assignment shall be made subject to the terms
and provisions hereof, and the rights, duties and obligations of the Parties hereto shall run with the lands, which shall require the prior written acceptance of such obligations. 

 

	16.	Further Assurances. The Parties hereto agree to execute and deliver all such instruments and documents contemplated by this Agreement in order to effect the terms and provisions hereof and to evidence and
effectuate the transactions contemplated by this Agreement. 

  

	17.	Relationship of the Parties. It is not the intention of the Parties to create a mining or other partnership, joint venture, agency relationship or other association, or to render the Parties liable with respect
to the matter subject of this Agreement as partners or co-venturers. The liability of the Parties hereto as to all matters concerning the Prospects shall be several, not joint or collective, and each Party shall be responsible only for its own
separate obligations and shall be liable only for its proportionate share of the costs to be incurred hereunder. No Party shall have any liability hereunder to any third party to satisfy the default of any other party in the payment of any expense
or obligation or liability. 

  

	18.	 Severability. In the event that any provision of this Agreement is held by a court of competent jurisdiction to be illegal, invalid,
unenforceable or unconscionable under any applicable present or future law (or interpretation thereof), the remainder of this 

  
 4 

	 	
Agreement shall not be affected and affected provisions shall be deemed severed from this Agreement as if the Agreement had been executed with such provision eliminated. The surviving provisions
of this Agreement shall remain in full force and effect unless the removal of the affected provision destroys the legitimate purposes of this Agreement. 

  

	19.	Entireties. This Agreement and the exhibits attached and incorporated herein contain the final and entire agreement of the Parties with respect to the subject matter hereof. Upon execution of this Agreement by
the Parties, this Agreement shall supersede and replace all previous negotiations, understandings, or promises, whether written or oral, relating to the subject of this Agreement. This Agreement shall not be modified or changed except by written
amendment signed by all Parties. A waiver of any breach or failure to enforce any of the terms or conditions of this Agreement shall not in any way affect, limit or waive a Party’s future rights under this Agreement at any time to enforce
strict compliance thereafter with every term or condition of this Agreement, except as modified in written agreement executed by both Parties 

  

	20.	Governing Law. Disputes. Venue. This Agreement and all provisions and conditions hereof shall be governed by the laws of the State of Texas. Venue for any dispute between the Parties regarding this Agreement
shall be in Midland County, Texas. Any trial shall be a bench trial. The Parties hereto waive their right to a jury trial. The prevailing Party in any such dispute shall be entitled to recover all attorney’s fees, costs of court and all related
costs including, without limitation, the costs and fees of expert witnesses incurred in defending or prosecuting its position. 

  

	21.	Term. This Agreement shall remain in full force and effect for so long as any Joint Operating Agreement is effective as to any of the Prospects or any portion thereof. 

 

	22.	Miscellaneous Provisions Regarding Operator. In the event CrownRock elects not to participate in drilling any wells after the initial two (2) wells, CrownQuest Operating, LLC will continue to serve as
Operator for an additional eight (8) wells if requested by Lynden. In addition, if CrownRock sells all of its interest or CrownQuest Operating, LLC resigns as Operator prior to the drilling of 100 wells, Lynden shall have the option to take
over operations. Lynden will also have the right to assume operations in the event a sufficient number of wells are not being proposed to perpetuate the Option or Lease(s) associated therewith. 

 

	23.	Counterpart Execution. The Agreement may be executed in counterparts and delivered electronically or by fax, each of which shall be deemed to be an original and both of which shall constitute the same document.

  
 5 

 Executed as of the 3rd day of June, 2010,
but effective as of the Effective Date hereof. 
  

									
	CROWNROCK, L.P.	 		 	LYNDEN USA INC..
					
	By:	 	

	 		 	By:	 	

		 	  
	 		 		 	  

	Name:	 		 		 	Name:	 	COLIN WATT
		 	  
	 		 		 	  

	Title:	 		 		 	Title:	 	PRESIDENT
		 	  
	 		 		 	  

				
	CROWNQUEST OPERATING, LLC	 		 		 	
					
	By:	 	

	 		 		 	
		 	  
	 		 		 	
	Name:	 		 		 		 	
		 	  
	 		 		 	
	Title:	 		 		 		 	
		 	  
	 		 		 	

  
 6 

 Exhibit A 

Attached to and made a part of that certain Participation Agreement dated May 20, 2010 between CrownRock, L.P., CrownQuest Operating, LLC
and Lynden USA, Inc. 
  

					
	 Section 9, Block 18, SPRR Co. A-285
	  	 	652.3	  
	 Section 10, Block 18, SPRR Co. A-764
	  	 	652.6	  
	 Section 15, Block 18, SPRR Co.
	  	 	641.5	  
	 Section 16, Block 18, SPRR Co.
	  	 	652.6	  
	 Section 17, Block 18, SPRR Co. A-273
	  	 	652.6	  
	 Section 18, Block 18, SPRR Co. A-870
	  	 	652.3	  
	 Section 19, Block 18, SPRR Co. A-274
	  	 	652.3	  
	 Section 20, Block 18, SPRR Co. A-691
	  	 	652.6	  
	 Section 21, Block 18, SPRR Co. A-275
	  	 	652.6	  
	 Section 22, Block 18, SPRR Co. A-769
	  	 	347.1	  
	 Section 23, Block 18, SPRR Co.
	  	 	130.7	  
	 Section 25, Block 18, SPRR Co. A-276
	  	 	652.6	  
	 Section 26, Block 18, SPRR Co. A-765
	  	 	652.6	  
	 Section 27, Block 18, SPRR Co. A-277
	  	 	652.3	  
	 Section 28, Block 18, SPRR Co. A-879
	  	 	652.3	  
	 Section 31, Block 18, SPRR Co. A-279
	  	 	645	  
	 Section 32, Block 18, SPRR Co. A-835
	  	 	658.2	  
	 Section 33, Block 18, SPRR Co. A-280
	  	 	659.4	  
	 Section 36, Block 18, SPRR Co. A-880
	  	 	652.3	  
	 Section 45, Block 18, SPRR Co. A-261
	  	 	340.3	  
	 Section 9, J.P. Smith Survey
	  	 	588.4	  
	 Section 10, J.P. Smith Survey
	  	 	571.5	  
	 Section 11, J.P. Smith Survey
	  	 	654.7	  
	 Section 12, J.P. Smith Survey
	  	 	640.1	  
	 Section 13, J.P. Smith Survey
	  	 	640.8	  
	 Section 14, J.P. Smith Survey
	  	 	631.4	  
	 Section 15, J.P. Smith Survey
	  	 	640.2	  
	 Section 16, J.P. Smith Survey
	  	 	655.7	  
	 Section 17, J.P. Smith Survey
	  	 	656.6	  
	 Section 18, J.P. Smith Survey
	  	 	633	  
	 Section 19, J.P. Smith Survey
	  	 	633	  
	 Section 20, J.P. Smith Survey
	  	 	634.9	  
	 Section 21, J.P. Smith Survey
	  	 	640.1	  
	 Section 22, J.P. Smith Survey
	  	 	656.5	  
	 Section 23, J.P. Smith Survey
	  	 	653.4	  
	 Section 24, J.P. Smith Survey
	  	 	640.3	  
	 Section 25, J.P. Smith Survey
	  	 	636.8	  
	 Section 26, J.P. Smith Survey
	  	 	639	  
	 Section 27, J.P. Smith Survey
	  	 	641.7	  
	 Section 28, J.P. Smith Survey
	  	 	589.8	  
	 Section 29, J.P. Smith Survey
	  	 	627.8	  
	 Section 30, J.P. Smith Survey
	  	 	638.8	  
	 Section 31, J.P. Smith Survey
	  	 	645.5	  
	 Section 33, J.P. Smith Survey
	  	 	567.3	  
	 Section 34, J.P. Smith Survey
	  	 	658.7	  
	 Section 35, J.P. Smith Survey
	  	 	124.6	  
	 Section 36, J.P. Smith Survey
	  	 	565.2	  
		
	 Sterling County
	  			
		
	 Section 65, Block 18, SPRR Co.
	  	 	555.6	  
	 S/2 S/2 Section 70, Block 18, SPRR Co.
	  	 	167.5	  
	 Section 46, Block 18, SPRR Co.
	  	 	289	  
	 N/2 N/2 Section 60, Block 18, SPRR Co. A-1009
	  	 	160.75	  
	 All exc. SE/4 SE/4 Section 32, Block 15, SPRR Co.
	  	 	623.72	  
	 W/2 NW/4 Section 58, Block 18, SPRR Co.
	  	 	86.025	  
	 N/2, SE/4 Section 64, Block 18, SPRR Co.
	  	 	575.7	  
	 W. 136.9 acres Section 66, Block 18, SPRR Co.
	  	 	136.9	  
	 W/2 Section 68, Block 18, SPRR Co.
	  	 	334.95	  
	 NE/4 & S/2 Section 69, Block 18, SPRR Co.
	  	 	501	  
	 Section 31, Block 15, SPRR Co. A-425
	  	 	735.8	  
	 Section 48, Block 18, SPRR Co. A-1209
	  	 	662	  
	 Section 49, Block 18, SPRR Co. A-457
	  	 	672.6	  

 Exhibit A 

Attached to and made a part of that certain Participation Agreement dated May 20, 2010 between CrownRock, L.P., CrownQuest Operating, LLC and
Lynden USA, Inc. 
  

					
	 Description
	  	# Acres	 
		
	 Coke & Mitchell Counties
	  			
		
	 N/2 Section 4, Block 15, SPRR Co.
	  	 	336.65	  
	 Section 12, Block 15, SPRR Co. A-1066
	  	 	604.9	  
	 Section 13, Block 15 SPRR Co.
	  	 	665.7	  
	 Section 16, Block 15, SPRR Co.
	  	 	667.7	  
	 Section 17, Block 15, SPRR Co.
	  	 	665.2	  
	 N/2 & All SE/4 exc. SW/4 Section 21, Block 15, SPRR Co.
	  	 	465.0	  
		
	 Coke. Mitchell and Sterling Counties
	  			
		
	 Section 20, Block 15, SPRR co. A-629
	  	 	625.2	  
		
	 Coke & Sterling Counties
	  			
		
	 NE/4 Section 28, Block 15, SPRR Co. Svy.
	  	 	165.85	  
	 Section 29, Block 15, SPRR Co. Svy.
	  	 	665.2	  
		
	 Mitchell & Sterling Counties
	  			
		
	 Section 44, Block 16, SPRR Co.
	  	 	659.5	  
	 Section 37, Block 18, SPRR Co.
	  	 	583.3	  
	 Section 41, Block 18, SPRR Co. A-259
	  	 	653.4	  
	 Section 42, Block 18, SPRR Co. A-931
	  	 	619.5	  
	 Section 43, Block 18, SPRR Co. A-260
	  	 	450.3	  
	 Section 43,Block 16, SPRR Co. A-270
	  	 	659.5	  
	 Section 40, Block 18, SPRR Co. A-815
	  	 	668.5	  
	 Section 30, Blk 15, SPRR Co.
	  	 	720.9	  
	 W/2 Section 38, Block 18, SPRR Co. A-813
	  	 	331.85	  
	 All except W/2 NW/4 & NW/4 SW/4
	  			
	 Section 39, Block 18, SPRR Co. A-258
	  	 	539.25625	  
	 Section 42, Block 16, SPRR Co. A-931
	  	 	659.5	  
		
	 Mitchell County
	  			
		
	 Section 5, Block 18, SPRR Co. A-283
	  	 	648.4	  
	 Section 6, Block 18, SPRR Co. A-795
	  	 	635.9	  
	 Section 11, Block 18, SPRR Co. A-286
	  	 	572.6	  
	 Section 32, J.P. Smith A-748
	  	 	600	  
	 Section 13, Block 12, H&TC RR A-173
	  	 	603.9	  
	 Section 6, Block 15, SPRR Co. A-838
	  	 	659.6	  
	 Section 7, Block 15, SPRR Co. A-305
	  	 	662.7	  
	 Section 10, Block 15, SPRR Co. A-840
	  	 	665.2	  
	 Section 12, Block 18, SPRR Co. A-793
	  	 	573	  
	 Section 13, Block 18, SPRR Co.
	  	 	540.9	  
	 Section 41, Block 16, SPRR Co. A-269
	  	 	619.5	  
	 Section 10, Block 16, SPRR Co. A-1066
	  	 	638	  
	 Section 23, Block 16, SPRR Co. A-331
	  	 	619.5	  
	 Section 27, Block 16, SPRR Co. A-333
	  	 	619.5	  
	 Section 40, Block 16, SPRR Co. A-930
	  	 	619.5	  
	 Section 2, Block 16, SPRR Co. A-976
	  	 	651	  
	 Section 3, Block 16, SPRR Co. A-321
	  	 	652.6	  
	 Section 11, Block 16, SPRR Co. A-325
	  	 	685.5	  
	 Section 13, Block 16, SPRR Co. A-326
	  	 	730	  
	 Section 17, Block 16, SPRR Co. A-328
	  	 	659.5	  
	 Section 18, Block 16, SPRR Co. A-917
	  	 	659.5	  
	 Section 20, Block 16, SPRR Co. A-966
	  	 	659.5	  
	 Section 24, Block 16, SPRR Co. A-925
	  	 	659.5	  
	 Section 25, Block 16, SPRR Co. A-332
	  	 	659.5	  
	 Section 26, Block 16, SPRR Co. A-921
	  	 	659.5	  
	 Section 33, Block 16, SPRR Co. A-336
	  	 	659.5	  

 Exhibit A 

Attached to and made a part of that certain Participation Agreement dated May 20, 2010 between CrownRock, L.P., CrownQuest Operating, LLC and
Lynden USA, Inc. 
  

					
	 Section 34, Block 16, SPRR Co. A-933
	  	 	659.5	  
	 Section 38, Block 16, SPRR Co. A-929
	  	 	659.5	  
	 Section 45, Block 16, SPRR Co. A-271
	  	 	459.5	  
	 Section 46, Block 16, SPRR Co. A-876 
	  	 	600	  
	 E/3 & E/2 SW/4; All NW/4 exc. SW/4 NW/4
	  			
	 Section 34, Block 18, SPRR Co. A-256 
	  	 	530.2375	  
	 W/2 SW/4, N/2 NE/4, NW/4
	  			
	 Section 35, Block 18, SPRR Co. A-899
	  	 	326.3	  
	 Section 44, Block 18, SPRR Co. A-875
	  	 	689.9	  
	 Section 9, Block 15, SPRR Co. A-306
	  	 	676.3	  
	 Section 14, Block 18, SPRR Co.
	  	 	399.7	  
	 Section 1, Block 16, SPRR Co. A-320
	  	 	649.4	  
	 Section 4, Block 16, SPRR Co. A-886
	  	 	654.1	  
	 Section 5, Block 16, SPRR Co. A-322
	  	 	655.7	  
	 Section 6, Block 16, SPRR Co. A-804
	  	 	657.2	  
	 Section 7, Block 16, SPRR Co.
	  	 	654.4	  
	 Section 8, Block 16, SPRR Co. A-919
	  	 	649.9	  
	 Section 9, Block 16, SPRR Co. A-324
	  	 	670.6	  
	 Section 12, Block 16, SPRR Co. A-920
	  	 	692.9	  
	 Section 14, Block 16, SPRR Co. A-935
	  	 	707.7	  
	 Section 15, Block 16, SPRR Co. A-327
	  	 	659.5	  
	 Section 16, Block 16, SPRR Co. A-1160
	  	 	659.5	  
	 Section 19, Block 16, SPRR Co. A-329
	  	 	659.5	  
	 Section 21, Block 16, SPRR Co. A-330
	  	 	637.4	  
	 Section 22, Block 16, SPRR Co. A-932
	  	 	628.2	  
	 Section 28, Block 16, SPRR Co. A-928
	  	 	659.5	  
	 Section 29, Block 16, SPRR Co. A-334
	  	 	659.5	  
	 Section 30, Block 16, SPRR Co. A-918
	  	 	659.5	  
	 Section 31, Block 16, SPRR Co. A-335
	  	 	659.5	  
	 Section 32, Block 16, SPRR Co. A-874
	  	 	659.5	  
	 Section 35, Block 16, SPRR Co. A-266
	  	 	622.5	  
	 Section 36, Block 16, SPRR Co. A-767
	  	 	616.3	  
	 Section 37, Block 16, SPRR Co. A-267
	  	 	659.6	  
	 Section 39, Block 16, SPRR Co. A-268
	  	 	659.5	  
	 Section 47, Block 16, SPRR Co. A-272
	  	 	659.5	  
	 Section 48, Block 16, SPRR Co. A-768
	  	 	659.5	  
	 Section 49, Block 16, SPRR Co. A-946
	  	 	606.3	  
	 Section 5, Block 15, SPRR Co. A-304
	  	 	679.5	  
	 Section 8, Block 15, SPRR Co. A-936
	  	 	708	  
	 Section 11, Block 15, SPRR Co. A-307
	  	 	669.8	  
	 Section 18, Block 15, SPRR Co. A-934
	  	 	691.2	  
	 Section 19, Block 15, SPRR Co. A-311
	  	 	706.1	  
	 Section 172, Block 26, H&TC A-1573
	  	 	657.7	  
	 Section 28, Block 19, Lavaca Navigation Svy.
	  	 	656.9	  
	 Section 29, Block 19, Lavaca Navigation Svy. A-219
	  	 	657.2	  
	 Section 30, Block 19, Lavaca Navigation Svy.
	  	 	657.2	  
	 Section 31, Block 19, Lavaca Navigation Svy. A-218
	  	 	619.2	  
	 Section 32, Block 19, Lavaca Navigation Svy. A-1496
	  	 	638.9	  
	 Section 33, Block 19, Lavaca Navigation Svy. A-203
	  	 	321.3	  
	 Section 49, D.H. Snyder A-926
	  	 	132.9	  
	 Section 1, I.L. Ellwood SF 8979 A-1700
	  	 	264.4	  
	 Section 2, I.L. Ellwood SF 8829 A-1698
	  	 	505.4	  
	 Section 3, I.L. Ellwood SF 8830
	  	 	483.6	  
	 Section 4, I.L. Ellwood SF 14240 A-1702
	  	 	10.4	  
	 Section 14, Block 12, H&TC Svy. A-923
	  	 	646.8	  
	 Section 27, Block 12, H&TC Svy A-178
	  	 	634.9	  
	 Section 28, Block 12, H&TC Svy. A-869
	  	 	637.7	  
	 Section 1, Block 18, SPRR Co. A-281
	  	 	166.3	  
	 Section 2, Block 18, SPRR Co. A-796
	  	 	653.5	  
	 Section 3, Block 18, SPRR Co. A-282
	  	 	657.6	  
	 Section 4, Block 18, SPRR Co. A-834
	  	 	694.4	  
	 Section 7, Block 18, SPRR Co. A-284
	  	 	663.9	  
	 Section 8, Block 18, SPRR Co. A-927
	  	 	651.5	  

 Exhibit A 

Attached to and made a part of that certain Participation Agreement dated May 20, 2010 between CrownRock, L.P., CrownQuest Operating, LLC and
Lynden USA, Inc. 
  

					
	 Section 50, Block 18, SPRR Co. A-783
	  	 	659.8	  
	 Section 51, Block 18, SPRR Co. A-458
	  	 	687.2	  
	 N/2 Section 59, Block 18, SPRR Co.
	  	 	325.85	  
	 Section 71, Block 18, SPRR Co.
	  	 	654.7	  
	 SW/4 & N/2 Section 63, Block 18, SPRR Co.
	  	 	501.15	  
	 NW/4, W/2 NE/4, NE/4 NE/4, W/2 SW/4, NE/4 SW/4
	  			
	 Section 61, Block 18, SPRR Co.
	  	 	250.5	  
		
	 Totals
	  	 	101,495.38875	  

 EXHIBIT B 

TO 
 PARTICIPATION
AGREEMENT BETWEEN 
 CROWNROCK, L.P. AND LYNDEN USA INC. 

ASSIGNMENT, BILL OF SALE AND CONVEYANCE 

This Assignment, Bill of Sale and Conveyance is from CrownRock, L.P., a Texas limited partnership, whose address is 303 Veterans
Airpark Lane, Suite 5100, Midland, Texas 79705 (“Assignor”), to Lynden USA Inc., a Utah corporation, whose address is 885 West Georgia Street, Suite 2150, Vancouver, B.C. V6C 3E8 (“Assignee”). 

For adequate consideration, the receipt and sufficiency of which is hereby acknowledged, Assignor, subject to the terms and conditions
contained herein or referred to herein, does hereby transfer, grant, bargain, sell, convey and assign to Assignee, an undivided 50.00% of Assignor’s interest in the following assets (said percentage interest conveyed in the assets described
below being hereinafter called the “Interests”): 
  

	 	(a)	The oil and gas leases or oil, gas and mineral leases described on Exhibit “A” attached hereto (the “Leases”) insofar and only insofar as the Leases cover and relate to the lands
described in Exhibit “A” (the “Lands”), together with all property and rights incident thereto, including all rights in, to and under all unit, pooling and other agreements, product purchase and sale contracts, leases,
permits, rights-of-way, easements, licenses, farmouts, options and orders in any way related thereto; 

  

	 	(b)	All of the contracts, agreements and other instruments owned by Assignor which concern and relate to any of the Leases, insofar and only insofar as same concern or relate to the Lands, or the operation thereof; and

  

	 	(c)	All of the personal property, fixtures and improvements now or as of the Effective Time on the Lands, appurtenant thereto or used or obtained in connection with the Lands or with the production, treatment, sale or
disposal of hydrocarbons or water produced from or attributable thereto and all other appurtenances thereunto belonging. 

This Assignment, Bill of Sale and Conveyance is subject to the following terms, covenants and conditions: 

 

	 	(1)	THIS ASSIGNMENT, BILL OF SALE AND CONVEYANCE IS MADE WITHOUT WARRANTY OF ANY KIND, WHETHER EXPRESS OR IMPLIED, AT COMMON LAW, BY STATUTE OR OTHERWISE, EXCEPT ASSIGNOR WARRANTS TITLE TO THE INTERESTS AGAINST ALL
CLAIMS, LIENS AND ENCUMBRANCES ARISING BY, THROUGH AND UNDER ASSIGNOR, BUT NOT OTHERWISE. 

	 	(2)	THIS ASSIGNMENT, AS IT PERTAINS TO THE PERSONAL PROPERTY AND EQUIPMENT HEREIN CONVEYED IS MADE “AS IS”, “WHERE IS” WITHOUT WARRANTY EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, ANY
AND ALL IMPLIED WARRANTIES OR MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. 

  

	 	(3)	All ad valorem, property, production, severance and similar taxes based upon or measured by ownership of the Leases or production from the Land shall be prorated between Assignor and Assignee as of the Effective Time.

  

	 	(4)	This Assignment is made with full substitution and subrogation of Assignee in and to all covenants and warranties of title by others heretofore given or made with respect to the Interests or any part thereof.

  

	 	(5)	Assignor agrees to execute and deliver to Assignee all such other additional instruments, notices, transfer orders and other documents and do all such other and further acts and things as may be necessary to more fully
and effectively grant, convey and assign to Assignee the Interests. 

  

	 	(6)	This Assignment binds and inures to the benefit of Assignor and Assignee and their respective successors and assigns. 

  

	 	(7)	This Assignment is subject to the terms and provisions of that certain Participation Agreement dated effective May 20, 2010, between Assignor and Assignee. 

TO HAVE AND TO HOLD the Interests unto the Assignee, its successors and assigns, subject to the terms, covenants and conditions hereinabove
set forth. 
 EXECUTED as of the date of the acknowledgments set forth below, but effective as of
                    (the “Effective Time”). 
  

									
	ASSIGNOR:	 		 	ASSIGNEE:
			
	CROWNROCK, L.P.	 		 	LYNDEN USA INC.
	By:	 	CrownRock GP, LLC,	 		 		 	
		 	its General Partner	 		 		 	
					
	By:	 	  
	 		 	By:	 	  

		 	Robert W. Floyd, President	 		 		 	Colin Watt, President

 ACKNOWLEDGMENTS 

 

			
	STATE OF TEXAS	  	§
	COUNTY OF MIDLAND	  	§

 This instrument was acknowledged before me this      day of
            , 2010, by Robert W. Floyd, President of CrownRock GP, LLC, general partner of CrownRock, L.P., a Texas limited partnership, on behalf of said limited partnership. 

 

	
	  

	Notary Public – State of Texas

  

			
	STATE OF                     	  	§
	COUNTY OF                 	  	§

 This instrument was acknowledged before me this      day of
            , 2010, by Colin Watt, President of Lynden USA Inc., a Utah corporation, on behalf of said corporation. 

 

	
	  

	Notary Public – State of            

 A.A.P.L. FORM 610 -1989 

MODEL FORM OPERATING AGREEMENT 

Exhibit C 
 Attached to
and made a part of that certain Participation 
 Agreement dated May 20, 2010, between 

CrownRock, L.P. and Lynden USA Inc. 

OPERATING AGREEMENT 
 DATED 

 

							
		 	            ,	 	        ,	 	
		 		 	Year	 	

  

			
	OPERATOR	  	 CrownQuest Operating,
LLC

			
		
	CONTRACT AREA	  	  

	
	  

	
	  

	
	  

	
	  

 COUNTY OR PARISH OF Coke, Mitchell and Sterling, STATE OF Texas 

 

					
		 	COPYRIGHT 1989 – ALL RIGHTS RESERVED AMERICAN ASSOCIATION OF PETROLEUM LANDMEN, 4100 FOSSIL CREEK BLVD. FORT WORTH, TEXAS, 76137, APPROVED FORM.	 	
			
		 	A.A.P.L. NO. 610 – 1989	 	

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

TABLE OF CONTENTS 
  

											
	 Article
	  	 Title
	  	 Page
	 
	 I.
	  	DEFINITIONS	  	 	1	  
	 II.
	  	EXHIBITS	  	 	1	  
	 III.
	  	INTERESTS OF PARTIES	  	 	2	  
		  	A.	  	OIL AND GAS INTERESTS:	  	 	2	  
		  	B.	  	INTERESTS OF PARTIES IN COSTS AND PRODUCTION:	  	 	2	  
		  	C.	  	SUBSEQUENTLY CREATED INTERESTS:	  	 	2	  
	 IV.
	  	TITLES	  	 	2	  
		  	A.	  	TITLE EXAMINATION:	  	 	2	  
		  	B.	  	LOSS OR FAILURE OF TITLE:	  	 	3	  
		  		  		  	1. Failure of Title	  	 	3	  
		  		  		  	2. Loss by Non-Payment or Erroneous Payment of Amount Due	  	 	3	  
		  		  		  	3. Other Losses	  	 	3	  
		  		  		  	4. Curing Title	  	 	3	  
	 V.
	  	OPERATOR	  	 	4	  
		  	A.	  	DESIGNATION AND RESPONSIBILITIES OF OPERATOR:	  	 	4	  
		  	B.	  	RESIGNATION OR REMOVAL OF OPERATOR AND SELECTION OF SUCCESSOR:	  	 	4	  
		  		  		  	1. Resignation or Removal of Operator	  	 	4	  
		  		  		  	2. Selection of Successor Operator	  	 	4	  
		  		  		  	3. Effect of Bankruptcy	  	 	4	  
		  	C.	  	EMPLOYEES AND CONTRACTORS:	  	 	4	  
		  	D.	  	RIGHTS AND DUTIES OF OPERATOR:	  	 	4	  
		  		  		  	1. Competitive Rates and Use of Affiliates	  	 	4	  
		  		  		  	2. Discharge of Joint Account Obligations	  	 	4	  
		  		  		  	3. Protection from Liens	  	 	4	  
		  		  		  	4. Custody of Funds	  	 	5	  
		  		  		  	5. Access to Contract Area and Records	  	 	5	  
		  		  		  	6. Filing and Furnishing Governmental Reports	  	 	5	  
		  		  		  	7. Drilling and Testing Operations	  	 	5	  
		  		  		  	8. Cost Estimates	  	 	5	  
		  		  		  	9. Insurance	  	 	5	  
	 VI.
	  	DRILLING AND DEVELOPMENT	  	 	5	  
		  	A.	  	INITIAL WELL:	  	 	5	  
		  	B.	  	SUBSEQUENT OPERATIONS:	  	 	5	  
		  		  		  	1. Proposed Operations	  	 	5	  
		  		  		  	2. Operations by Less Than All Parties	  	 	6	  
		  		  		  	3. Stand-By Costs	  	 	7	  
		  		  		  	4. Deepening	  	 	8	  
		  		  		  	5. Sidetracking	  	 	8	  
		  		  		  	6. Order of Preference of Operations	  	 	8	  
		  		  		  	7. Conformity to Spacing Pattern	  	 	9	  
		  		  		  	8. Paying Wells	  	 	9	  
		  	C.	  	COMPLETION OF WELLS; REWORKING AND PLUGGING BACK:	  	 	9	  
		  		  		  	1. Completion	  	 	9	  
		  		  		  	2. Rework, Recomplete or Plug Back	  	 	9	  
		  	D.	  	OTHER OPERATIONS:	  	 	9	  
		  	E.	  	ABANDONMENT OF WELLS:	  	 	9	  
		  		  		  	1. Abandonment of Dry Holes	  	 	9	  
		  		  		  	2. Abandonment of Wells That Have Produced	  	 	10	  
		  		  		  	3. Abandonment of Non-Consent Operations	  	 	10	  
		  	F.	  	TERMINATION OF OPERATIONS:	  	 	10	  
		  	G.	  	TAKING PRODUCTION IN KIND:	  	 	10	  
		  		  		  	(Option 1) Gas Balancing Agreement	  	 	10	  
		  		  		  	(Option 2) No Gas Balancing Agreement	  	 	11	  
	 VII.
	  	EXPENDITURES AND LIABILITY OF PARTIES	  	 	11	  
		  	A.	  	LIABILITY OF PARTIES:	  	 	11	  
		  	B.	  	LIENS AND SECURITY INTERESTS:	  	 	12	  
		  	C.	  	ADVANCES:	  	 	12	  
		  	D.	  	DEFAULTS AND REMEDIES:	  	 	12	  
		  		  		  	1. Suspension of Rights	  	 	13	  
		  		  		  	2. Suit for Damages	  	 	13	  
		  		  		  	3. Deemed Non-Consent	  	 	13	  
		  		  		  	4. Advance Payment	  	 	13	  
		  		  		  	5. Costs and Attorneys’ Fees	  	 	13	  
		  	E.	  	RENTALS, SHUT-IN WELL PAYMENTS AND MINIMUM ROYALTIES:	  	 	13	  
		  	F.	  	TAXES:	  	 	13	  
	 VIII.
	  	ACQUISITION, MAINTENANCE OR TRANSFER OF INTEREST	  	 	14	  
	  	A.	  	SURRENDER OF LEASES:	  	 	14	  
		  	B.	  	RENEWAL OR EXTENSION OF LEASES:	  	 	14	  
		  	C.	  	ACREAGE OR CASH CONTRIBUTIONS:	  	 	14	  

  
 i 

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

TABLE OF CONTENTS 
  

											
		  	D.	  	ASSIGNMENT; MAINTENANCE OF UNIFORM INTEREST:	  	 	15	  
		  	E.	  	WAIVER OF RIGHTS TO PARTITION:	  	 	15	  
		  	F.	  	PREFERENTIAL RIGHT TO PURCHASE:	  	 	15	  
	IX.	  	INTERNAL REVENUE CODE ELECTION	  	 	15	  
	X.	  	CLAIMS AND LAWSUITS	  	 	15	  
	XI.	  	FORCE MAJEURE 	  	 	16	  
	XII.	  	NOTICES	  	 	16	  
	XIII.	  	TERM OF AGREEMENT	  	 	16	  
	XIV.	  	COMPLIANCE WITH LAWS AND REGULATIONS 	  	 	16	  
		  	A.	  	LAWS, REGULATIONS AND ORDERS:	  	 	16	  
		  	B.	  	GOVERNING LAW:	  	 	16	  
		  	C.	  	REGULATORY AGENCIES:	  	 	16	  
	XV.	  	MISCELLANEOUS	  	 	17	  
		  	A.	  	EXECUTION:	  	 	17	  
		  	B.	  	SUCCESSORS AND ASSIGNS:	  	 	17	  
		  	C.	  	COUNTERPARTS:	  	 	17	  
		  	D.	  	SEVERABILITY	  	 	17	  
	XVI.	  	OTHER PROVISIONS	  	 	17	  

  
 ii 

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

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

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

NOW, THEREFORE, it is agreed as follows: 

ARTICLE I. 
 DEFINITIONS

 As used in this agreement, the following words and terms shall have the meanings here ascribed to them: 

A. The term “AFE” shall mean an Authority for Expenditure prepared by a party to this agreement for the purpose of estimating the
costs to be incurred in conducting an operation hereunder. 
 B. The term “Completion” or “Complete” shall mean a single
operation intended to complete a well as a producer of Oil and Gas in one or more Zones, including, but not limited to, the setting of production casing, perforating, well stimulation and production testing conducted in such operation. 

C. The term “Contract Area” shall mean all of the lands, Oil and Gas Leases and/or Oil and Gas Interests intended to be developed
and operated for Oil and Gas purposes under this agreement. Such lands, Oil and Gas Leases and Oil and Gas Interests are described in Exhibit “A.” 

D. The term “Deepen” shall mean a single operation whereby a well is drilled to an objective Zone below the deepest Zone in which
the well was previously drilled, or below the Deepest Zone proposed in the associated AFE, whichever is the lesser. 
 E. The terms
“Drilling Party” and “Consenting Party” shall mean a party who agrees to join in and pay its share of the cost of any operation conducted under the provisions of this agreement. 

F. The term “Drilling Unit” shall mean the area fixed for the drilling of one well by order or rule of any state or federal body
having authority. If a Drilling Unit is not fixed by any such rule or order, a Drilling Unit shall be the drilling unit as established by the pattern of drilling in the Contract Area unless fixed by express agreement of the Drilling Parties. 

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

H. The term “Initial Well” shall mean the well required to be drilled by the parties hereto as provided in Article VI.A. 

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

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

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

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

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

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

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

  
 - 1 - 

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

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

INTERESTS OF PARTIES 
  

	A.	Oil and Gas Interests: 

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

	B.	Interests of Parties in Costs and Production: 

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

Regardless of which party has contributed any Oil and Gas Lease or Oil and Gas Interest on which royalty or other burdens may be payable and
except as otherwise expressly provided in this agreement, each party shall pay or deliver, or cause to be paid or delivered, all burdens on its share of the production from the Contract Area up to, but not in excess of, twenty-five percent
(25%) and shall indemnify, defend and hold the other parties free from any liability therefor. Except as otherwise expressly provided in this agreement, if any party has contributed hereto any Lease or Interest which is burdened with any
royalty, overriding royalty, production payment or other burden on production in excess of the amounts stipulated above, such party so burdened shall assume and alone bear all such excess obligations and shall indemnify, defend and hold the other
parties hereto harmless from any and all claims attributable to such excess burden. However, so long as the Drilling Unit for the productive Zone(s) is identical with the Contract Area, each party shall pay or deliver, or cause to be paid or
delivered, all burdens on production from the Contract Area due under the terms of the Oil and Gas Lease(s) which such party has contributed to this agreement, and shall indemnify, defend and hold the other parties free from any liability therefor.

 No party shall ever be responsible, on a price basis higher than the price received by such party, to any other party’s lessor or
royalty owner, and if such other party’s lessor or royalty owner should demand and receive settlement on a higher price basis, the party contributing the affected Lease shall bear the additional royalty burden attributable to such higher price.

 Nothing contained in this Article III.B. shall be deemed an assignment or cross-assignment of interests covered hereby, and in the event
two or more parties contribute to this agreement jointly owned Leases, the parties’ undivided interests in said Leaseholds shall be deemed separate leasehold interests for the purposes of this agreement. 

 

	C.	Subsequently Created Interests: 

 If any party has contributed hereto a Lease or Interest
that is burdened with an assignment of production given as security for the payment of money, or if, after the date of this agreement, any party creates an overriding royalty, production payment, net profits interest, assignment of production
mortgage, lien or other burden payable out of production attributable to its working interest hereunder, such burden shall be deemed a “Subsequently Created Interest.” Further, if any party has contributed hereto a Lease or Interest
burdened with an overriding royalty, production payment, net profits interests, or other burden payable out of production created prior to the date of this agreement, and such burden is not shown on Exhibit “A,” such burden also shall be
deemed a Subsequently Created Interest to the extent such burden causes the burdens on such party’s Lease or Interest to exceed the amount stipulated in Article III.B. above. 

The party whose interest is burdened with the Subsequently Created Interest (the “Burdened Party”) shall assume and alone bear, pay
and discharge the Subsequently Created Interest and shall indemnify, defend and hold harmless the other parties from and against any liability therefor. Further, if the Burdened Party fails to pay, when due, its share of expenses chargeable
hereunder, all provisions of Article VII.B. shall be enforceable against the Subsequently Created Interest in the same manner as they are enforceable against the working interest of the Burdened Party. If the Burdened Party is required under this
agreement to assign or relinquish to any other party, or parties, all or a portion of its working interest and/or the production attributable thereto, said other party, or parties, shall receive said assignment and/or production free and clear of
said Subsequently Created Interest, and the Burdened Party shall indemnify, defend and hold harmless said other party, or parties, from any and all claims and demands for payment asserted by owners of the Subsequently Created Interest. 

ARTICLE IV. 
 TITLES

  

	A.	Title Examination: 

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

Each party Operator shall be responsible for utilizing its best efforts in securing curative matter and pooling amendments or
agreements required in connection with Leases or Oil and Gas Interests contributed by any such party. Operator shall be responsible for the preparation and recording of pooling designations or declarations and communitization
agreements as well as the conduct of hearings before governmental agencies for the securing of spacing or pooling orders or any other orders necessary or appropriate to the conduct of operations hereunder. This shall not prevent any party from
appearing on its own behalf at such hearings. Costs incurred by Operator, including fees paid to outside attorneys, which are associated with hearings before governmental agencies, and which costs are necessary and proper for the activities
contemplated under this agreement, shall be direct charges to the joint account and shall not be covered by the administrative overhead charges as provided in Exhibit “C.” 

  
 - 2 - 

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

 

 Operator shall make no charge for services rendered by its staff attorneys or other personnel in the
performance of the above functions. 
 No well shall be drilled on the Contract Area until after (1) the title to the Drillsite or
Drilling Unit, if appropriate, has been examined as above provided, and (2) the title has been approved by the examining attorney or title has been accepted by all of the Drilling Parties in such well. 

 

	B.	Loss or Failure of Title: 

 1. Failure of Title: Should
any Oil and Gas Interest or Oil and Gas Lease be lost through failure of title, which results in a reduction of interest from that shown on Exhibit ‘‘A,” the party credited with contributing the affected Lease or Interest (including,
if applicable, a successor in interest to such party) shall have ninety (90) days from final determination of title failure to acquire a new lease or other instrument curing the entirety of the title failure, which acquisition will not be
subject to Article VIII.B., and failing to do so, this agreement, nevertheless, shall continue in force as to all remaining Oil and Gas Leases and Interest; and, 

(a) The party credited with contributing the Oil and Gas Lease or Interest affected by the title failure (including, if applicable, a
successor in interest to such party) shall bear alone the entire loss and it shall not be entitled to recover from Operator or the other parties any development or operating costs which it may have previously paid or incurred, but there shall be no
additional liability on its part to the other parties hereto by reason of such title failure; 
 (b) There shall be no
retroactive adjustment of expenses incurred or revenues received from the operation of the Lease or Interest which has failed, but the interests of the parties contained on Exhibit “A” shall be revised on an acreage basis, as of the time
it is determined finally that title failure has occurred, so that the interest of the party whose Lease or Interest is affected by the title failure will thereafter be reduced in the Contract Area by the amount of the Lease or Interest
failed; 
 (c) If the proportionate interest of the other parties hereto in any producing well previously drilled on the
Contract Area is increased by reason of the title failure, the party who bore the costs incurred in connection with such well attributable to the Lease or Interest which has failed shall receive the proceeds attributable to the increase in such
interest (less costs and burdens attributable thereto) until it has been reimbursed for unrecovered costs paid by it in connection with such well attributable to such failed Lease or Interest; 

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

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

(a) Proceeds of Oil and Gas produced prior to termination of the Lease or Interest, less operating expenses and lease burdens
chargeable hereunder to the person who failed to make payment, previously accrued to the credit of the lost Lease or Interest, on an acreage basis, up to the amount of unrecovered costs; 

(b) Proceeds Oil and Gas, less operating expenses and lease burdens chargeable hereunder to the person who failed to make payment, up
to the amount of unrecovered costs attributable to that portion of Oil and Gas thereafter produced and marketed (excluding production from any wells thereafter drilled) which, in the absence of such Lease or Interest termination, would be
attributable to the lost Lease or Interest on an acreage basis and which as a result of such Lease or Interest termination is credited to the other parties, the proceeds of said portion of the Oil and Gas to be contributed by the other parties in
proportion to their respective interests reflected on Exhibit “A”; and, 
 (c) Any monies, up to the amount of
unrecovered costs, that may be paid by any party who is, or becomes, the owner of the Lease or Interest lost, for the privilege of participating in the Contract Area or becoming a party to this agreement. 

3. Other Losses: All losses of Leases or Interests committed to this agreement, other than those set
forth in Articles IV.B.1. and IV.B.2. above, shall be joint losses and shall be borne by all parties in proportion to their interests shown on Exhibit “A.” This shall include but not be limited to the loss of any Lease or
Interest through failure to develop or because express or implied covenants have not been performed or required payments are not made (other than performance which requires only the payment of money), and the loss of any
Lease by expiration at the end of its primary term if it is not renewed or extended. There shall be no readjustment of interests in the remaining portion of the Contract Area on account of any joint loss. 

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

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

 

 ARTICLE V. 

OPERATOR 
  

	A.	Designation and Responsibilities of Operator: 

 CrownQuest Operating, LLC
shall be the Operator of the Contract Area, and shall conduct and direct and have full control of all operations on the Contract Area as permitted and required by, and within the limits of this agreement. In its performance of services hereunder
for the Non-Operators, Operator shall be an independent contractor not subject to the control or direction of the Non-Operators except as to the type of operation to be undertaken in accordance with the election procedures contained in this
agreement. Operator shall not be deemed, or hold itself out as, the agent of the Non-Operators with authority to bind them to any obligation or liability assumed or incurred by Operator as to any third party. Operator shall conduct its activities
under this agreement as a reasonable prudent operator, in a good and workmanlike manner, with due diligence and dispatch, in accordance with good oilfield practice, and in compliance with applicable law and regulation, but in no event shall it have
any liability as Operator to the other parties for losses sustained or liabilities incurred except such as may result from gross negligence or willful misconduct. 
  

	B.	Resignation or Removal of Operator and Selection of Successor: 

 1. Resignation or
Removal of Operator: Operator may resign at any time by giving written notice thereof to Non-Operators. If Operator terminates its legal existence, no longer owns an interest hereunder in the Contract Area, or is no longer
capable of serving as Operator, Operator shall be deemed to have resigned without any action by Non-Operators, except the selection of a successor. Operator may be removed only for good cause by the affirmative vote of Non-Operators owning a
majority interest based on ownership as shown on Exhibit “A” remaining after excluding the voting interest of Operator; such vote shall not be deemed effective until a written notice has been delivered to the Operator by a Non-Operator
detailing the alleged default and Operator has failed to cure the default within thirty (30) days from its receipt of the notice or, if the default concerns an operation then being conducted, within forty-eight (48) hours of its receipt of
the notice. For purposes hereof, “good cause” shall mean not only gross negligence or willful misconduct but also the material breach of or inability to meet the standards of operation contained in Article V.A. or material failure or
inability to perform its obligations under this agreement. 
 Subject to Article VII.D.1., such resignation or removal shall not become
effective until 7:00 o’clock A.M. on the first day of the calendar month following the expiration of ninety (90) days after the giving of notice of resignation by Operator or action by the Non-Operators to remove Operator, unless a
successor Operator has been selected and assumes the duties of Operator at an earlier date. Operator, after effective date of resignation or removal, shall be bound by the terms hereof as a Non-Operator. A change of a corporate name or structure of
Operator or transfer of Operator’s interest to any single subsidiary, parent or successor corporation shall not be the basis for removal of Operator. 

2. Selection of Successor Operator: Upon the resignation or removal of Operator under any provision of this agreement, a successor
Operator shall be selected by the parties. The successor Operator shall be selected from the parties owning an interest in the Contract Area at the time such successor Operator is selected. The successor Operator shall be selected by the affirmative
vote of two (2) or more parties owning a majority interest based on ownership as shown on Exhibit “A”; provided, however, if an Operator which has been removed or is deemed to have resigned fails to vote or votes only to succeed
itself, the successor Operator shall be selected by the affirmative vote of the party or parties owning a majority interest based on ownership as shown on Exhibit “A” remaining after excluding the voting interest of the Operator that was
removed or resigned. The former Operator shall promptly deliver to the successor Operator all records and data relating to the operations conducted by the former Operator to the extent such records and data are not already in the possession of the
successor operator. Any cost of obtaining or copying the former Operator’s records and data shall be charged to the joint account. 

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

	C.	Employees and Contractors: 

 The number of employees or contractors used by Operator in
conducting operations hereunder, their selection, and the hours of labor and the compensation for services performed shall be determined by Operator, and all such employees or contractors shall be the employees or contractors of Operator. 

 

	D.	Rights and Duties of Operator: 

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

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

 

 4. Custody of Funds: Operator shall hold for the account of the Non-Operators any
funds of the Non-Operators advanced or paid to the Operator, either for the conduct of operations hereunder or as a result of the sale of production from the Contract Area, and such funds shall remain the funds of the Non-Operators on whose account
they are advanced or paid until used for their intended purpose or otherwise delivered to the Non-Operators or applied toward the payment of debts as provided in Article VII.B. Nothing in this paragraph shall be construed to establish a fiduciary
relationship between Operator and Non-Operators for any purpose other than to account for Non-Operator funds as herein specifically provided. Nothing in this paragraph shall require the maintenance by Operator of separate accounts for the funds of
Non-Operators unless the parties otherwise specifically agree. 
 5. Access to Contract Area and Records: Operator shall, except as
otherwise provided herein, permit each participating Non-Operator or its duly authorized representative, at the Non-Operator’s sole risk and cost, full and free access at all reasonable times to all operations in which Non-Operator is
participating of every kind and character being conducted for the joint account on the Contract Area and to the records of operations conducted thereon or production therefrom, including Operator’s books and records relating thereto. Such
access rights shall not be exercised in a manner interfering with Operator’s conduct of an operation hereunder and shall not obligate Operator to furnish any geologic or geophysical data of an interpretive nature. unless the cost of preparation
of such interpretive data was charged to the joint account. Operator will furnish to each participating Non-Operator upon request copies of any and all reports and information obtained by Operator in connection with production and related items,
including, without limitation, meter and chart reports, production purchaser statements, run tickets and monthly gauge reports, but excluding purchase contracts and pricing information to the extent not applicable to the production of the
participating Non-Operator seeking the information. Any audit of Operator’s records relating to amounts expended and the appropriateness of such expenditures shall be conducted in accordance with the audit protocol specified in Exhibit
“C.” 
 6. Filing and Furnishing Governmental Reports: Operator will file, and upon written request promptly furnish copies
to each requesting Non-Operator not in default of its payment obligations, all operational notices, reports or applications required to be filed by local, State, Federal or Indian agencies or authorities having jurisdiction over operations
hereunder. Each Non-Operator shall provide to Operator on a timely basis all information necessary to Operator to make such filings. 
 7.
Drilling and Testing Operations: The following provisions shall apply to each well drilled hereunder, including but not limited to the Initial Well: 

(a) Operator will promptly advise Non-Operators of the date on which the well is spudded, or the date on which drilling operations are
commenced. 
 (b) Operator will send to each of the participating Non-Operators such reports, test results and notices regarding the
progress of operations on the well as the such Non-Operators shall reasonably request, including, but not limited to, daily drilling reports, completion reports, and well logs. 

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

 ARTICLE VI. 

DRILLING AND DEVELOPMENT 
  

	A.	Initial Well: 

 On or before the      day of
            ,         , Operator shall commence the drilling of the Initial Well at the following location: 

and shall thereafter continue the drilling of the well with due diligence to 

The drilling of the Initial Well and the participation therein by all parties is obligatory, subject to Article VI.C.1. as to participation in Completion
operations and Article VI.F. as to termination of operations and Article XI as to occurrence of force majeure. 
  

	B.	Subsequent Operations: 

 1. Proposed Operations: If any party hereto should desire
to drill any well on the Contract Area other than the Initial Well, or if any party should desire to Rework, Sidetrack, Deepen, Recomplete or Plug Back a dry hole or a well no longer capable of producing in paying quantities in which such party has
not otherwise relinquished its interest in the proposed objective Zone under this agreement, the party desiring to drill, Rework, Sidetrack, Deepen, Recomplete or Plug Back such a well shall give written notice of the proposed operation to the
parties who have not otherwise relinquished their interest in such objective Zone 

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

 

 
under this agreement and to all other parties in the case of a proposal for Sidetracking or Deepening, specifying the work to be performed, the location, proposed depth, objective Zone and the
estimated cost of the operation. The parties to whom such a notice is delivered shall have thirty (30) days after receipt of the notice within which to notify the party proposing to do the work whether they elect to participate in the cost of
the proposed operation. If a drilling rig is on location, notice of a proposal to Rework, Sidetrack, Recomplete, Plug Back or Deepen may be given by telephone and the response period shall be limited to twenty-four (24) forty-eight
(48) hours, exclusive of Saturday, Sunday and legal holidays. Failure of a party to whom such notice is delivered to reply within the period above fixed shall constitute an election by that party not to participate in the cost of the
proposed operation. Any proposal by a party to conduct an operation conflicting with the operation initially proposed shall be delivered to all parties within the time and in the manner provided in Article VI.B.6. 

If all parties to whom such notice is delivered elect to participate in such a proposed operation, the parties shall be contractually
committed to participate therein provided such operations are commenced within the time period hereafter set forth, and Operator shall, no later than ninety (90) days after expiration of the notice period of thirty (30) days (or as
promptly as practicable after the expiration of the twenty-four (24) forty-eight (48) hour period when a drilling rig is on location, as the case may be), actually commence the proposed operation and thereafter complete it
with due diligence at the risk and expense of the parties participating therein; provided, however, said commencement date may be extended upon written notice of same by Operator to the other parties, for a period of up to thirty
(30) additional days if, in the sole opinion of Operator, such additional time is reasonably necessary to obtain permits from governmental authorities, surface rights (including rights-of-way) or appropriate drilling equipment, or to complete
title examination or curative matter required for title approval or acceptance. If the actual operation has not been commenced within the time provided (including any extension thereof as specifically permitted herein or in the force majeure
provisions of Article XI) and if any party hereto still desires to conduct said operation, written notice proposing same must be resubmitted to the other parties in accordance herewith as if no prior proposal had been made. Those parties that did
not participate in the drilling of a well for which a proposal to Deepen or Sidetrack is made hereunder shall, if such parties desire to participate in the proposed Deepening or Sidetracking operation, reimburse the Drilling Parties in accordance
with Article VI.B.4. in the event of a Deepening operation and in accordance with Article VI.B.5. in the event of a Sidetracking operation. 

2. Operations by Less Than All Parties: 

(a) Determination of Participation. If any party to whom such notice is delivered as provided in Article VI.B.1. or VI.C.1. (Option
No. 2) elects not to participate in the proposed operation, then, in order to be entitled to the benefits of this Article, the party or parties giving the notice and such other parties as shall elect to participate in the operation shall, no
later than ninety (90) days after the expiration of the notice period of thirty (30) days (or as promptly as practicable after the expiration of the twenty-four (24) forty-eight (48) hour period when a drilling
rig is on location, as the case may be) actually commence the proposed operation and complete it with due diligence. Operator shall perform all work for the account of the Consenting Parties; provided, however, if no drilling rig or other equipment
is on location, and if Operator is a Non-Consenting Party, the Consenting Parties shall either: (i) request Operator to perform the work required by such proposed operation for the account of the Consenting Parties, or (ii) designate one
of the Consenting Parties as Operator to perform such work. The rights and duties granted to and imposed upon the Operator under this agreement are granted to and imposed upon the party designated as Operator for an operation in which the original
Operator is a Non-Consenting Party. Consenting Parties, when conducting operations on the Contract Area pursuant to this Article VI.B.2., shall comply with all terms and conditions of this agreement. 

If less than all parties approve any proposed operation, the proposing party, immediately after the expiration of the applicable notice
period, shall advise all Parties of the total interest of the parties approving such operation and its recommendation as to whether the Consenting Parties should proceed with the operation as proposed. Each Consenting Party, within twenty-four
(24) forty-eight (48) hours (exclusive of Saturday, Sunday, and legal holidays) after delivery of such notice, shall advise the proposing party of its desire to (i) limit participation to such party’s interest as
shown on Exhibit “A” or (ii) carry only its proportionate part (determined by dividing such party’s interest in the Contract Area by the interests of all Consenting Parties in the Contract Area) of Non-Consenting Parties’
interests, or (iii) carry its proportionate part (determined as provided in (ii)) of Non-Consenting Parties’ interests together with all or a portion of its proportionate part of any Non-Consenting Parties’ interests that any
Consenting Party did not elect to take. Any interest of Non-Consenting Parties that is not carried by a Consenting Party shall be deemed to be carried by the party proposing the operation if such party does not withdraw its proposal. Failure to
advise the proposing party within the time required shall be deemed an election under (i). In the event a drilling rig is on location, notice may be given by telephone, and the time permitted for such a response shall not exceed a total of
twenty-four (24) forty-eight (48) hours (exclusive of Saturday, Sunday and legal holidays). The proposing party, at its election, may withdraw such proposal if there is less than 100% participation and shall notify all parties of such
decision within ten (10) days, or within twenty-four (24) hours if a drilling rig is on location, following expiration of the applicable response period. If 100% subscription to the proposed operation is obtained, the proposing party shall
promptly notify the Consenting Parties of their proportionate interests in the operation and the party serving as Operator shall commence such operation within the period provided in Article VI.B.1., subject to the same extension right as provided
therein. 
 (b) Relinquishment of Interest for Non-Participation. The entire cost and risk of conducting such operations shall be
borne by the Consenting Parties in the proportions they have elected to bear same under the terms of the preceding paragraph. Consenting Parties shall keep the leasehold estates involved in such operations free and clear of all liens and
encumbrances of every kind created by or arising from the operations of the Consenting Parties. If such an operation results in a dry hole, then subject to Articles VI.B.6. and VI.E.3., the Consenting Parties shall plug and abandon the well and
restore the surface location at their sole cost, risk and expense; provided, however, that those Non-Consenting Parties that participated in the drilling, Deepening or Sidetracking of the well shall remain liable for, and shall pay, their
proportionate shares of the cost of plugging and abandoning the well and restoring the surface location insofar only as those costs were not increased by the subsequent operations of the Consenting Parties. If any well drilled, Reworked,
Sidetracked, Deepened, Recompleted or Plugged Back under the provisions of this Article results in a well capable of producing Oil and/or Gas in paying quantities, the Consenting Parties shall Complete and equip the well to produce at their sole
cost and risk, and the well shall then be turned over to Operator (if the Operator did not conduct the operation) and shall be operated by it at the expense and for the account of the Consenting Parties. Upon commencement of operations for the
drilling, Reworking, Sidetracking, Recompleting, Deepening or Plugging Back of any such well by Consenting Parties in accordance with the provisions of this Article, each Non-Consenting Party shall be deemed to have relinquished to Consenting
Parties, and the Consenting Parties shall own and be entitled to receive, in proportion to their respective interests, all of such Non-Consenting Party’s interest in the well and share of production therefrom or, in the case of a Reworking,
Sidetracking, 

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

 

 
Deepening, Recompleting or Plugging Back, or a Completion pursuant to Article VI.C.1. Option No. 2, all of such Non-Consenting Party’s interest in the production obtained from the
operation in which the Non-Consenting Party did not elect to participate. Such relinquishment shall be effective until the proceeds of the sale of such share, calculated at the well, or market value thereof if such share is not sold (after deducting
applicable ad valorem, production, severance, and excise taxes, royalty, overriding royalty and other interests not excepted by Article III.C. payable out of or measured by the production from such well accruing with respect to such interest until
it reverts), shall equal the total of the following: 
 (i) 150% of each such Non-Consenting Party’s share of the cost of
any newly acquired surface equipment beyond the wellhead connections (including but not limited to stock tanks, separators, treaters, pumping equipment and piping), plus 100% of each such Non-Consenting Party’s share of the cost of operation of
the well commencing with first production and continuing until each such Non-Consenting Party’s relinquished interest shall revert to it under other provisions of this Article, it being agreed that each Non-Consenting Party’s share of such
costs and equipment will be that interest which would have been chargeable to such Non-Consenting Party had it participated in the well from the beginning of the operations; and 

(ii) 400% of (a) that portion of the costs and expenses of drilling, Reworking, Sidetracking, Deepening, Plugging Back,
testing, Completing, and Recompleting, after deducting any cash contributions received under Article VIII.C., and of (b) that portion of the cost of newly acquired equipment in the well (to and including the wellhead connections), which would
have been chargeable to such Non-Consenting Party if it had participated therein. 
 Notwithstanding anything to the contrary in this
Article VI.B., if the well does not reach the deepest objective Zone described in the notice proposing the well for reasons other than the encountering of granite or practically impenetrable substance or other condition in the hole rendering further
operations impracticable, Operator shall give notice thereof to each Non-Consenting Party who submitted or voted for an alternative proposal under Article VI.B.6. to drill the well to a shallower Zone than the deepest objective Zone proposed in the
notice under which the well was drilled, and each such Non-Consenting Party shall have the option to participate in the initial proposed Completion of the well by paying its share of the cost of drilling the well to its actual depth, calculated in
the manner provided in Article VI.B.4. (a). If any such Non-Consenting Party does not elect to participate in the first Completion proposed for such well, the relinquishment provisions of this Article VI.B.2. (b) shall apply to such
party’s interest. 
 (c) Reworking, Recompleting or Plugging Back. An election not to participate in the drilling, Sidetracking
or Deepening of a well shall be deemed an election not to participate in any Reworking or Plugging Back operation proposed in such a well, or portion thereof, to which the initial non-consent election applied that is conducted at any time prior to
full recovery by the Consenting Parties of the Non-Consenting Party’s recoupment amount. Similarly, an election not to participate in the Completing or Recompleting of a well shall be deemed an election not to participate in any Reworking
operation proposed in such a well, or portion thereof, to which the initial non-consent election applied that is conducted at any time prior to full recovery by the Consenting Parties of the Non-Consenting Party’s recoupment amount. Any such
Reworking, Recompleting or Plugging Back operation conducted during the recoupment period shall be deemed part of the cost of operation of said well and there shall be added to the sums to be recouped by the Consenting Parties 400% of
that portion of the costs of the Reworking, Recompleting or Plugging Back operation which would have been chargeable to such Non-Consenting Party had it participated therein. If such a Reworking, Recompleting or Plugging Back operation is proposed
during such recoupment period, the provisions of this Article VI.B. shall be applicable as between said Consenting Parties in said well. 

(d) Recoupment Matters. During the period of time Consenting Parties are entitled to receive Non-Consenting Party’s share of
production, or the proceeds therefrom, Consenting Parties shall be responsible for the payment of all ad valorem, production, severance, excise, gathering and other taxes, and all royalty, overriding royalty and other burdens applicable to
Non-Consenting Party’s share of production not excepted by Article III.C. 
 In the case of any Reworking, Sidetracking, Plugging Back,
Recompleting or Deepening operation, the Consenting Parties shall be permitted to use, free of cost, all casing, tubing and other equipment in the well, but the ownership of all such equipment shall remain unchanged; and upon abandonment of a well
after such Reworking, Sidetracking, Plugging Back, Recompleting or Deepening, the Consenting Parties shall account for all such equipment to the owners thereof, with each party receiving its proportionate part in kind or in value, less cost of
salvage. 
 Within ninety (90) days after the completion of any operation under this Article, the party conducting the operations for
the Consenting Parties shall furnish each Non-Consenting Party with an inventory of the equipment in and connected to the well, and an itemized statement of the cost of drilling, Sidetracking, Deepening, Plugging Back, testing, Completing,
Recompleting, and equipping the well for production; or, at its option, the operating party, in lieu of an itemized statement of such costs of operation, may submit a detailed statement of monthly billings. Each month thereafter, during the time the
Consenting Parties are being reimbursed as provided above, the party conducting the operations for the Consenting Parties shall furnish the Non-Consenting Parties with an itemized statement of all costs and liabilities incurred in the operation of
the well, together with a statement of the quantity of Oil and Gas produced from it and the amount of proceeds realized from the sale of the well’s working interest production during the preceding month. In determining the quantity of Oil and
Gas produced during any month, Consenting Parties shall use industry accepted methods such as but not limited to metering or periodic well tests. Any amount realized from the sale or other disposition of equipment newly acquired in connection with
any such operation which would have been owned by a Non-Consenting Party had it participated therein shall be credited against the total unreturned costs of the work done and of the equipment purchased in determining when the interest of such
Non-Consenting Party shall revert to it as above provided; and if there is a credit balance, it shall be paid to such Non-Consenting Party. 

If and when the Consenting Parties recover from a Non-Consenting Party’s relinquished interest the amounts provided for above, the
relinquished interests of such Non-Consenting Party shall automatically revert to it as of 7:00 a.m. on the day following the day on which such recoupment occurs, and, from and after such reversion, such Non-Consenting Party shall own the same
interest in such well, the material and equipment in or pertaining thereto, and the production therefrom as such Non-Consenting Party would have been entitled to had it participated in the drilling, Sidetracking, Reworking, Deepening, Recompleting
or Plugging Back of said well. Thereafter, such Non-Consenting Party shall be charged with and shall pay its proportionate part of the further costs of the operation of said well in accordance with the terms of this agreement and Exhibit
“C” attached hereto. 
 3. Stand-By Costs: When a well which has been drilled or Deepened has reached its authorized depth
and all tests have been completed and the results thereof furnished to the parties, or when operations on the well have been otherwise terminated pursuant to Article VI.F., stand-by costs incurred pending response to a party’s notice proposing
a Reworking, 

  
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Sidetracking, Deepening, Recompleting, Plugging Back or Completing operation in such a well (including the period required under Article VI.B.6. to resolve competing proposals) shall be charged
and borne as part of the drilling or Deepening operation just completed. Stand-by costs subsequent to all parties responding, or expiration of the response time permitted, whichever first occurs, and prior to agreement as to the participating
interests of all Consenting Parties pursuant to the terms of the second grammatical paragraph of Article VI.B.2. (a), shall be charged to and borne as part of the proposed operation, but if the proposal is subsequently withdrawn because of
insufficient participation, such stand-by costs shall be allocated between the Consenting Parties in the proportion each Consenting Party’s interest as shown on Exhibit “A” bears to the total interest as shown on Exhibit “A”
of all Consenting Parties. 
 In the event that notice for a Sidetracking operation is given while the drilling rig to be utilized is on
location, any party may request and receive up to five (5) additional days after expiration of the twenty-four (24) forty-eight hour response period specified in Article VI.B.1. within which to respond by paying for all
stand-by costs and other costs incurred during such extended response period; Operator may require such party to pay the estimated stand-by time in advance as a condition to extending the response period. If more than one party elects to take such
additional time to respond to the notice, standby costs shall be allocated between the parties taking additional time to respond on a day-to-day basis in the proportion each electing party’s interest as shown on Exhibit “A” bears to
the total interest as shown on Exhibit “A” of all the electing parties. 
 4. Deepening: If less than all parties elect to
participate in a drilling, Sidetracking, or Deepening operation proposed pursuant to Article VI.B.1., the interest relinquished by the Non-Consenting Parties to the Consenting Parties under Article VI.B.2. shall relate only and be limited to the
lesser of (i) the total depth actually drilled or (ii) the objective depth or Zone of which the parties were given notice under Article VI.B.1. (“Initial Objective”). Such well shall not be Deepened beyond the Initial Objective
without first complying with this Article to afford the Non-Consenting Parties the opportunity to participate in the Deepening operation. 

In the event any Consenting Party desires to drill or Deepen a Non-Consent Well to a depth below the Initial Objective, such party shall give
notice thereof, complying with the requirements of Article VI.B.1., to all parties (including Non-Consenting Parties). Thereupon, Articles VI.B.1. and 2. shall apply and all parties receiving such notice shall have the right to participate or not
participate in the Deepening of such well pursuant to said Articles VI.B.1. and 2. If a Deepening operation is approved pursuant to such provisions, and if any Non-Consenting Party elects to participate in the Deepening operation, such
Non-Consenting party shall pay or make reimbursement (as the case may be) of the following costs and expenses. 
 (a) If the proposal to
Deepen is made prior to the Completion of such well as a well capable of producing in paying quantities, such Non-Consenting Party shall pay (or reimburse Consenting Parties for, as the case may be) that share of costs and expenses incurred in
connection with the drilling of said well from the surface to the Initial Objective which Non-Consenting Party would have paid had such Non-Consenting Party agreed to participate therein, plus the Non-Consenting Party’s share of the cost of
Deepening and of participating in any further operations on the well in accordance with the other provisions of this Agreement; provided, however, all costs for testing and Completion or attempted Completion of the well incurred by Consenting
Parties prior to the point of actual operations to Deepen beyond the Initial Objective shall be for the sole account of Consenting Parties. 

(b) If the proposal is made for a Non-Consent Well that has been previously Completed as a well capable of producing in paying quantities, but
is no longer capable of producing in paying quantities, such Non-Consenting Party shall pay (or reimburse Consenting Parties for, as the case may be) its proportionate share of all costs of drilling, Completing, and equipping said well from the
surface to the Initial Objective, calculated in the manner provided in paragraph (a) above, less those costs recouped by the Consenting Parties from the sale of production from the well. The Non-Consenting Party shall also pay its proportionate
share of all costs of re-entering said well. The Non-Consenting Parties’ proportionate part (based on the percentage of such well Non-Consenting Party would have owned had it previously participated in such Non-Consent Well) of the costs of
salvable materials and equipment remaining in the hole and salvable surface equipment used in connection with such well shall be determined in accordance with Exhibit “C.” If the Consenting Parties have recouped the cost of drilling,
Completing, and equipping the well at the time such Deepening operation is conducted, then a Non-Consenting Party may participate in the Deepening of the well with no payment for costs incurred prior to re-entering the well for Deepening 

The foregoing shall not imply a right of any Consenting Party to propose any Deepening for a Non-Consent Well prior to the drilling of such
well to its Initial Objective without the consent of the other Consenting Parties as provided in Article VI.F. 
 5. Sidetracking:
Any party having the right to participate in a proposed Sidetracking operation that does not own an interest in the affected wellbore at the time of the notice shall, upon electing to participate, tender to the wellbore owners its proportionate
share (equal to its interest in the Sidetracking operation) of the value of that portion of the existing wellbore to be utilized as follows: 

(a) If the proposal is for Sidetracking an existing dry hole, reimbursement shall be on the basis of the actual costs incurred in the initial
drilling of the well down to the depth at which the Sidetracking operation is initiated. 
 (b) If the proposal is for Sidetracking a well
which has previously produced, reimbursement shall be on the basis of such party’s proportionate share of drilling and equipping costs incurred in the initial drilling of the well down to the depth at which the Sidetracking operation is
conducted, calculated in the manner described in Article VI.B.4(b) above. Such party’s proportionate share of the cost of the well’s salvable materials and equipment down to the depth at which the Sidetracking operation is initiated shall
be determined in accordance with the provisions of Exhibit “C.” 
 6. Order of Preference of Operations. Except as
otherwise specifically provided in this agreement, if any party desires to propose the conduct of an operation that conflicts with a proposal that has been made by a party under this Article VI, such party shall have fifteen (15) days from
delivery of the initial proposal, in the case of a proposal to drill a well or to perform an operation on a well where no drilling rig is on location, or twenty-four (24) hours, exclusive of Saturday, Sunday and legal holidays, from delivery of
the initial proposal, if a drilling rig is on location for the well on which such operation is to be conducted, to deliver to all parties entitled to participate in the proposed operation such party’s alternative proposal, such alternate
proposal to contain the same information required to be included in the initial proposal. Each party receiving such proposals shall elect by delivery of notice to Operator within five (5) days after expiration of the proposal period, or within
twenty-four (24) hours (exclusive of Saturday, Sunday and legal holidays) if a drilling rig is on location for the well that is the subject of the proposals, to participate in one of the competing proposals. Any party not electing within the
time required shall be deemed not to have voted. The proposal receiving the vote of parties owning the largest aggregate percentage interest of the parties voting shall have priority over all other competing proposals; in the case of a tie vote, the

  
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initial proposal shall prevail. Operator shall deliver notice of such result to all parties entitled to participate in the operation within five (5) days after expiration of the election
period (or within twenty-four (24) hours, exclusive of Saturday, Sunday and legal holidays, if a drilling rig is on location). Each party shall then have two (2) days (or twenty-four (24) hours if a rig is on location) from receipt of
such notice to elect by delivery of notice to Operator to participate in such operation or to relinquish interest in the affected well pursuant to the provisions of Article VI.B.2.; failure by a party to deliver notice within such period shall be
deemed an election not to participate in the prevailing proposal. 
 7. Conformity to Spacing Pattern. Notwithstanding the
provisions of this Article VI.B.2., it is agreed that no wells shall be proposed to be drilled to or Completed in or produced from a Zone from which a well located elsewhere on the Contract Area is producing, unless such well conforms to the
then-existing well spacing pattern for such Zone. 
 8. Paying Wells. No party shall conduct any Reworking, Deepening, Plugging Back,
Completion, Recompletion, or Sidetracking operation under this agreement with respect to any well then capable of producing in paying quantities except with the consent of all parties that have not relinquished interests in the well at the time of
such operation. 
  

	C.	Completion of Wells; Reworking and Plugging Back: 

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

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

 

	 	 ̈	Option No. 2: All necessary expenditures for the drilling, Deepening or Sidetracking and testing of the well. When such well has reached its authorized depth, and all logs, cores and other tests have been
completed, and the results thereof furnished to the parties, Operator shall give immediate notice to the Non-Operators having the right to participate in a Completion attempt whether or not Operator recommends attempting to Complete the well,
together with Operator’s AFE for Completion costs if not previously provided. The parties receiving such notice shall have forty-eight (48) hours (exclusive of Saturday, Sunday and legal holidays) in which to elect by delivery of notice to
Operator to participate in a recommended Completion attempt or to make a Completion proposal with an accompanying AFE. Operator shall deliver any such Completion proposal, or any Completion proposal conflicting with Operator’s proposal, to the
other parties entitled to participate in such Completion in accordance with the procedures specified in Article VI.B.6. Election to participate in a Completion attempt shall include consent to all necessary expenditures for the Completing and
equipping of such well, including necessary tankage and/or surface facilities but excluding any stimulation operation not contained on the Completion AFE. Failure of any party receiving such notice to reply within the period above fixed shall
constitute an election by that party not to participate in the cost of the Completion attempt; provided, that Article VI.B.6. shall control in the case of conflicting Completion proposals. If one or more, but less than all of the parties, elect to
attempt a Completion, the provision of Article VI.B.2. hereof (the phrase “Reworking, Sidetracking, Deepening, Recompleting or Plugging Back” as contained in Article VI.B.2. shall be deemed to include “Completing”) shall apply to
the operations thereafter conducted by less than all parties; provided, however, that Article VI.B.2. shall apply separately to each separate Completion or Recompletion attempt undertaken hereunder, and an election to become a Non-Consenting Party
as to one Completion or Recompletion attempt shall not prevent a party from becoming a Consenting Party in subsequent Completion or Recompletion attempts regardless whether the Consenting Parties as to earlier Completions or Recompletion have
recouped their costs pursuant to Article VI.B.2.; provided further, that any recoupment of costs by a Consenting Party shall be made solely from the production attributable to the Zone in which the Completion attempt is made. Election by a previous
Non-Consenting party to participate in a subsequent Completion or Recompletion attempt shall require such party to pay its proportionate share of the cost of salvable materials and equipment installed in the well pursuant to the previous Completion
or Recompletion attempt, insofar and only insofar as such materials and equipment benefit the Zone in which such party participates in a Completion attempt. 

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

	D.	Other Operations: 

 Operator shall not undertake any single project reasonably estimated
to require an expenditure in excess of fifty thousand and no/100ths Dollars ($50,000.00) except in connection with the drilling, Sidetracking, Reworking, Deepening, Completing, Recompleting or Plugging Back of a well that
has been previously authorized by or pursuant to this agreement; provided, however, that, in case of explosion, fire, flood or other sudden emergency, whether of the same or different nature, Operator may take such steps and incur such expenses as
in its opinion are required to deal with the emergency to safeguard life and property but Operator, as promptly as possible, shall report the emergency to the other parties. If Operator prepares an AFE for its own use, Operator shall furnish any
Non-Operator so requesting an information copy thereof for any single project costing in excess of fifty thousand and no/100ths Dollars ($50,000.00). Any party who has not relinquished its interest in a well shall have
the right to propose that Operator perform repair work or undertake the installation of artificial lift equipment or ancillary production facilities such as salt water disposal wells or to conduct additional work with respect to a well drilled
hereunder or other similar project (but not including the installation of gathering lines or other transportation or marketing facilities, the installation of which shall be governed by separate agreement between the parties) reasonably estimated to
require an expenditure in excess of the amount first set forth above in this Article VI.D. (except in connection with an operation required to be proposed under Articles VI.B.1. or VI.C.1. Option No. 2, which shall be governed exclusively
be those Articles). Operator shall deliver such proposal to all parties entitled to participate therein. If within thirty (30) days thereof Operator secures the written consent of any party or parties owning at least 65% of the
interests of the parties entitled to participate in such operation, each party having the right to participate in such project shall be bound by the terms of such proposal and shall be obligated to pay its proportionate share of the costs of the
proposed project as if it had consented to such project pursuant to the terms of the proposal. 
  

	E.	Abandonment of Wells: 

 1. Abandonment of Dry Holes: Except for any well drilled
or Deepened pursuant to Article VI.B.2., any well which has been drilled or Deepened under the terms of this agreement and is proposed to be completed as a dry hole shall not be 

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

 

 
plugged and abandoned without the consent of all parties. Should Operator, after diligent effort, be unable to contact any party, or should any party fail to reply within forty-eight
(48) hours (exclusive of Saturday, Sunday and legal holidays) after delivery of notice of the proposal to plug and abandon such well, such party shall be deemed to have consented to the proposed abandonment. All such wells shall be plugged and
abandoned in accordance with applicable regulations and at the cost, risk and expense of the parties who participated in the cost of drilling or Deepening such well. Any party who objects to plugging and abandoning such well by notice delivered to
Operator within forty-eight (48) hours (exclusive of Saturday, Sunday and legal holidays) after delivery of notice of the proposed plugging shall take over the well as of the end of such forty-eight (48) hour notice period and conduct
further operations in search of Oil and/or Gas subject to the provisions of Article VI.B.; failure of such party to provide proof reasonably satisfactory to Operator of its financial capability to conduct such operations or to take over the well
within such period or thereafter to conduct operations on such well or plug and abandon such well shall entitle Operator to retain or take possession of the well and plug and abandon the well. The party taking over the well shall indemnify Operator
(if Operator is an abandoning party) and the other abandoning parties against liability for any further operations conducted on such well except for the costs of plugging and abandoning the well and restoring the surface, for which the abandoning
parties shall remain proportionately liable. 
 2. Abandonment of Wells That Have Produced: Except for any well in which a
Non-Consent operation has been conducted hereunder for which the Consenting Parties have not been fully reimbursed as herein provided, any well which has been completed as a producer shall not be plugged and abandoned without the consent of all
parties. If all parties consent to such abandonment, the well shall be plugged and abandoned in accordance with applicable regulations and at the cost, risk and expense of all the parties hereto. Failure of a party to reply within sixty
(60) days of delivery of notice of proposed abandonment shall be deemed an election to consent to the proposal. If, within sixty (60) days after delivery of notice of the proposed abandonment of any well, all parties do not agree to the
abandonment of such well, those wishing to continue its operation from the Zone then open to production shall be obligated to take over the well as of the expiration of the applicable notice period and shall indemnify Operator (if Operator is an
abandoning party) and the other abandoning parties against liability for any further operations on the well conducted by such parties. Failure of such party or parties to provide proof reasonably satisfactory to Operator of their financial
capability to conduct such operations or to take over the well within the required period or thereafter to conduct operations on such well shall entitle operator to retain or take possession of such well and plug and abandon the well. 

Parties taking over a well as provided herein shall tender to each of the other parties its proportionate share of the value of the
well’s salvable material and equipment, determined in accordance with the provisions of Exhibit “C,” less the estimated cost of salvaging and the estimated cost of plugging and abandoning and restoring the surface; provided, however,
that in the event the estimated plugging and abandoning and surface restoration costs and the estimated cost of salvaging are higher than the value of the well’s salvable material and equipment, each of the abandoning parties shall tender to
the parties continuing operations their proportionate shares of the estimated excess cost. Each abandoning party shall assign to the non-abandoning parties, without warranty, express or implied, as to title or as to quantity, or fitness for use of
the equipment and material, all of its interest in the wellbore of the well and related equipment, together with its interest in the Leasehold insofar and only insofar as such Leasehold covers the right to obtain production from that wellbore in the
Zone then open to production. If the interest of the abandoning party is or includes and Oil and Gas Interest, such party shall execute and deliver to the non-abandoning party or parties an oil and gas lease, limited to the wellbore and the Zone
then open to production, for a term of one (1) year and so long thereafter as Oil and/or Gas is produced from the Zone covered thereby, such lease to be on the form attached as Exhibit “B.” The assignments or leases so limited shall
encompass the Drilling Unit upon which the well is located. The payments by, and the assignments or leases to, the assignees shall be in a ratio based upon the relationship of their respective percentage of participation in the Contract Area to the
aggregate of the percentages of participation in the Contract Area of all assignees. There shall be no readjustment of interests in the remaining portions of the Contract Area. 

Thereafter, abandoning parties shall have no further responsibility, liability, or interest in the operation of or production from the well in
the Zone then open other than the royalties retained in any lease made under the terms of this Article. Upon request, Operator shall continue to operate the assigned well for the account of the non-abandoning parties at the rates and charges
contemplated by this agreement, plus any additional cost and charges which may arise as the result of the separate ownership of the assigned well. Upon proposed abandonment of the producing Zone assigned or leased, the assignor or lessor shall then
have the option to repurchase its prior interest in the well (using the same valuation formula) and participate in further operations therein subject to the provisions hereof. 

3. Abandonment of Non-Consent Operations: The provisions of Article VI.E.1. or VI.E.2. above shall be applicable as between Consenting
Parties in the event of the proposed abandonment of any well excepted from said Articles; provided, however, no well shall be permanently plugged and abandoned unless and until all parties having the right to conduct further operations therein have
been notified of the proposed abandonment and afforded the opportunity to elect to take over the well in accordance with the provisions of this Article VI.E.; and provided further, that Non-Consenting Parties who own an interest in a portion of the
well shall pay their proportionate shares of abandonment and surface restoration cost for such well as provided in Article VI.B.2.(b). 
  

	F.	Termination of Operations: 

 Upon the commencement of an operation for the drilling,
Reworking, Sidetracking, Plugging Back, Deepening, testing, Completion or plugging of a well, including but not limited to the Initial Well, such operation shall not be terminated without consent of parties bearing 65 % of the
costs of such operation; provided, however, that in the event granite or other practically impenetrable substance or condition in the hole is encountered which renders further operations impractical, Operator may discontinue operations and give
notice of such condition in the manner provided in Article VI.B.1, and the provisions of Article VLB. or VI.E. shall thereafter apply to such operation, as appropriate. 
  

	G.	Taking Production in Kind: 

  

	 	 ̈	Option No. 1: Gas Balancing Agreement Attached 

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

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

  
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 If any party fails to make the arrangements necessary to take in kind or
separately dispose of its proportionate share of the Oil produced from the Contract Area, Operator shall have the right, subject to the revocation at will by the party owning it, but not the obligation, to purchase such Oil or sell it to others at
any time and from time to time, for the account of the non-taking party. Any such purchase or sale by Operator may be terminated by Operator upon at least ten (10) days written notice to the owner of said production and shall be subject always
to the right of the owner of the production upon at least ten (10) days written notice to Operator to exercise at any time its right to take in kind, or separately dispose of, its share of all Oil not previously delivered to a purchaser. Any
purchase or sale by Operator of any other party’s share of Oil shall be only for such reasonable periods of time as are consistent with the minimum needs of the industry under the particular circumstances, but in no event for a period in excess
of one (1) year. 
 Any such sale by Operator shall be in a manner commercially reasonable under the circumstances but
Operator shall have no duty to share any existing market or to obtain a price equal to that received under any existing market. The sale or delivery by Operator of a non-taking party’s share of Oil under the terms of any existing contract of
Operator shall not give the non-taking party any interest in or make the non-taking party a party to said contract. No purchase shall be made by Operator without first giving the non-taking party at least ten (10) days written notice of such
intended purchase and the price to be paid or the pricing basis to be used. 
 All parties shall give timely written notice
to Operator of their Gas marketing arrangements for the following month, excluding price, and shall notify Operator immediately in the event of a change in such arrangements. Operator shall maintain records of all marketing arrangements, and of
volumes actually sold or transported, which records shall be made available to Non-Operators upon reasonable request. 
 In
the event one or more parties’ separate disposition of its share of the Gas causes split-stream deliveries to separate pipelines and/or deliveries which on a day-to-day basis for any reason are not exactly equal to a party’s respective
proportionate share of total Gas sales to be allocated to it, the balancing or accounting between the parties shall be in accordance with any Gas balancing agreement between the parties hereto, whether such an agreement is attached as Exhibit
“E” or is a separate agreement. Operator shall give notice to all parties of the first sales of Gas from any well under this agreement. 
  

	 	x	Option No. 2: No Gas Balancing Agreement: 

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

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

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

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

EXPENDITURES AND LIABILITY OF PARTIES 
  

	A.	Liability of Parties: 

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

  
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	B.	Liens and Security Interests: 

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

To perfect the lien and security agreement provided herein, each party hereto shall execute and acknowledge the recording supplement and/or
any financing statement prepared and submitted by any party hereto in conjunction herewith or at any time following execution hereof, and Operator is authorized to file this agreement or the recording supplement executed herewith as a lien or
mortgage in the applicable real estate records and as a financing statement with the proper officer under the Uniform Commercial Code in the state in which the Contract Area is situated and such other states as Operator shall deem appropriate to
perfect the security interest granted hereunder. Any party may file this agreement, the recording supplement executed herewith, or such other documents as it deems necessary as a lien or mortgage in the applicable real estate records and/or a
financing statement with the proper officer under the Uniform Commercial Code. 
 Each party represents and warrants to the other parties
hereto that the lien and security interest granted by such party to the other parties shall be a first and prior lien, and each party hereby agrees to maintain the priority of said lien and security interest against all persons acquiring an interest
in Oil and Gas Leases and Interests covered by this agreement by, through or under such party. All parties acquiring an interest in Oil and Gas Leases and Oil and Gas Interests covered by this agreement, whether by assignment, merger, mortgage,
operation of law, or otherwise, shall be deemed to have taken subject to the lien and security interest granted by this Article VII.B. as to all obligations attributable to such interest hereunder whether or not such obligations arise before or
after such interest is acquired. 
 To the extent that parties have a security interest under the Uniform Commercial Code of the state in
which the Contract Area is situated, they shall be entitled to exercise the rights and remedies of a secured party under the Code. The bringing of a suit and the obtaining of judgment by a party for the secured indebtedness shall not be deemed an
election of remedies or otherwise affect the lien rights or security interest as security for the payment thereof. In addition, upon default by any party in the payment of its share of expenses, interests or fees, or upon the improper use of funds
by the Operator, the other parties shall have the right, without prejudice to other rights or remedies, to collect from the purchaser the proceeds from the sale of such defaulting party’s share of Oil and Gas until the amount owed by such
party, plus interest as provided in “Exhibit C,” has been received, and shall have the right to offset the amount owed against the proceeds from the sale of such defaulting party’s share of Oil and Gas. All purchasers of production
may rely on a notification of default from the non-defaulting party or parties stating the amount due as a result of the default, and all parties waive any recourse available against purchasers for releasing production proceeds as provided in this
paragraph. 
 If any party fails to pay its share of cost within ninety (90) one hundred twenty (120) days after
rendition of a statement therefor by Operator, the non-defaulting parties, including Operator, shall upon request by Operator, pay the unpaid amount in the proportion that the interest of each such party bears to the interest of all such parties.
The amount paid by each party so paying its share of the unpaid amount shall be secured by the liens and security rights described in Article VII.B., and each paying party may independently pursue any remedy available hereunder or otherwise. 

If any party does not perform all of its obligations hereunder, and the failure to perform subjects such party to foreclosure or execution
proceedings pursuant to the provisions of this agreement, to the extent allowed by governing law, the defaulting party waives any available right of redemption from and after the date of judgment, any required valuation or appraisement of the
mortgaged or secured property prior to sale, any available right to stay execution or to require a marshaling of assets and any required bond in the event a receiver is appointed. In addition, to the extent permitted by applicable law, each party
hereby grants to the other parties a power of sale as to any property that is subject to the lien and security rights granted hereunder, such power to be exercised in the manner provided by applicable law or otherwise in a commercially reasonable
manner and upon reasonable notice. 
 Each party agrees that the other parties shall be entitled to utilize the provisions of Oil and Gas
lien law or other lien law of any state in which the Contract Area is situated to enforce the obligations of each party hereunder. Without limiting the generality of the foregoing, to the extent permitted by applicable law, Non-Operators agree that
Operator may invoke or utilize the mechanics’ or materialmen’s lien law of the state in which the Contract Area is situated in order to secure the payment to Operator of any sum due hereunder for services performed or materials supplied by
Operator. 
  

	C.	Advances: 

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

	D.	Defaults and Remedies: 

 If any party fails to discharge any financial obligation under
this agreement, including without limitation the failure to make any advance under the preceding Article VII.C. or any other provision of this agreement, within the period required for such payment hereunder, then in addition to the remedies
provided in Article VII.B. or elsewhere in this agreement, the remedies specified below shall be applicable. For purposes of this Article VII.D., all notices and elections shall be delivered 

  
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only by Operator, except that Operator shall deliver any such notice and election requested by a non-defaulting Non-Operator, and when Operator is the party in default, the applicable notices and
elections can be delivered by any Non-Operator. Election of any one or more of the following remedies shall not preclude the subsequent use of any other remedy specified below or otherwise available to a non-defaulting party. 

1. Suspension of Rights: Any party may deliver to the party in default a Notice of Default, which shall specify the default, specify
the action to be taken to cure the default, and specify that failure to take such action will result in the exercise of one or more of the remedies provided in this Article. If the default is not cured within thirty (30) days of the delivery of
such Notice of Default, all of the rights of the defaulting party granted by this agreement may upon notice be suspended until the default is cured, without prejudice to the right of the non-defaulting party or parties to continue to enforce the
obligations of the defaulting party previously accrued or thereafter accruing under this agreement. If Operator is the party in default, the Non-Operators shall have in addition the right, by vote of Non-Operators owning a majority in interest in
the Contract Area after excluding the voting interest of Operator, to appoint a new Operator effective immediately. The rights of a defaulting party that may be suspended hereunder at the election of the non-defaulting parties shall include, without
limitation, the right to receive information as to any operation conducted hereunder during the period of such default, the right to elect to participate in an operation proposed under Article VI.B. of this agreement, the right to participate in an
operation being conducted under this agreement even if the party has previously elected to participate in such operation, and the right to receive proceeds of production from any well subject to this agreement. 

2. Suit for Damages: Non-defaulting parties or Operator for the benefit of non-defaulting parties may sue (at joint account expense) to
collect the amounts in default, plus interest accruing on the amounts recovered from the date of default until the date of collection at the rate specified in Exhibit “C” attached hereto. Nothing herein shall prevent any party from suing
any defaulting party to collect consequential damages accruing to such party as a result of the default. 
 3. Deemed Non-Consent:
The non-defaulting party may deliver a written Notice of Non-Consent Election to the defaulting party at any time after the expiration of the thirty-day cure period following delivery of the Notice of Default, in which event if the billing is for
the drilling a new well or the Plugging Back, Sidetracking, Reworking or Deepening of a well which is to be or has been plugged as a dry hole, or for the Completion or Recompletion of any well, the defaulting party will be conclusively deemed to
have elected not to participate in the operation and to be a Non-Consenting Party with respect thereto under Article VI.B. or VI.C., as the case may be, to the extent of the costs unpaid by such party, notwithstanding any election to participate
theretofore made. If election is made to proceed under this provision, then the non-defaulting parties may not elect to sue for the unpaid amount pursuant to Article VII.D.2. 

Until the delivery of such Notice of Non-Consent Election to the defaulting party, such party shall have the right to cure its default by
paying its unpaid share of costs plus interest at the rate set forth in Exhibit “C,” provided, however, such payment shall not prejudice the rights of the non-defaulting parties to pursue remedies for damages incurred by the non-
defaulting parties as a result of the default. Any interest relinquished pursuant to this Article VII.D.3. shall be offered to the non-defaulting parties in proportion to their interests, and the non-defaulting parties electing to participate in the
ownership of such interest shall be required to contribute their shares of the defaulted amount upon their election to participate therein. 

4. Advance Payment: If a default is not cured within thirty (30) days of the delivery of a Notice of Default, Operator, or
Non-Operators if Operator is the defaulting party, may thereafter require advance payment from the defaulting party of such defaulting party’s anticipated share of any item of expense for which Operator, or Non-Operators, as the case may be,
would be entitled to reimbursement under any provision of this agreement, whether or not such expense was the subject of the previous default. Such right includes, but is not limited to, the right to require advance payment for the estimated costs
of drilling a well or Completion of a well as to which an election to participate in drilling or Completion has been made. If the defaulting party fails to pay the required advance payment, the non-defaulting parties may pursue any of the remedies
provided in the Article VII.D. or any other default remedy provided elsewhere in this agreement. Any excess of funds advanced remaining when the operation is completed and all costs have been paid shall be promptly returned to the advancing party.

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

 

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

 Rentals, shut-in well payments
and minimum royalties which may be required under the terms of any lease shall be paid by Operator for the joint account the party or parties who subjected such lease to this agreement at its or their expense. In the event two or
more parties own and have contributed interests in the same lease to this agreement, such parties may designate one of such parties to make said payments for and on behalf of all such parties. Any party may request, and shall be entitled to receive,
proper evidence of all such payments. In the event of failure to make proper payment of any rental, shut-in well payment or minimum royalty through mistake or oversight where such payment is required to continue the lease in force, any loss which
results from such non-payment shall be borne in accordance with the provisions of Article IV.B.2. 
 Operator shall notify Non-Operators of
the anticipated completion of a shut-in well, or the shutting in or return to production of a producing well, at least five (5) days (excluding Saturday, Sunday, and legal holidays) prior to taking such action, or at the earliest opportunity
permitted by circumstances, but assumes no liability for failure to do so. In the event of failure by Operator to so notify Non-Operators, the loss of any lease contributed hereto by Non-Operators for failure to make timely payments of any shut-in
well payment shall be borne jointly by the parties hereto under the provisions of Article IV.B.3. 
  

	F.	Taxes: 

 Beginning with the first calendar year after the effective date hereof, Operator
shall render for ad valorem taxation all property subject to this agreement which by law should be rendered for such taxes, and it shall pay all such taxes assessed thereon before they become delinquent. Prior to the rendition date, each
Non-Operator shall furnish Operator information as to burdens (to include, but not be limited to, royalties, overriding royalties and production payments) on Leases and Oil and Gas Interests contributed by such Non-Operator. If the assessed
valuation of any Lease is reduced by reason of its being subject to outstanding excess royalties, overriding royalties or production payments, the reduction in ad valorem taxes resulting therefrom shall inure to the benefit of the owner or owners of
such Lease, and Operator shall adjust the charge to such owner or owners so as to reflect the benefit of such reduction. If the ad valorem taxes are based in whole or in part upon separate valuations of each party’s working interest, then
notwithstanding anything to the contrary herein, charges to the joint account shall be made and paid by the parties hereto in accordance with the tax value generated by each party’s working interest. Operator shall bill the other parties for
their proportionate shares of all tax payments in the manner provided in Exhibit “C.” 

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

ARTICLE VIII. 

ACQUISITION, MAINTENANCE OR TRANSFER OF INTEREST 
  

	A.	Surrender of Leases: 

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

	B.	Renewal or Extension of Leases: 

 If any party secures a renewal or replacement of an Oil
and Gas Lease or Interest subject to this agreement, then all other parties shall be notified promptly upon such acquisition or, in the case of a replacement Lease taken before expiration of an existing Lease, promptly upon expiration of the
existing Lease. The parties notified shall have the right for a period of thirty (30) days following delivery of such notice in which to elect to participate in the ownership of the renewal or replacement Lease, insofar as such Lease affects
lands within the Contract Area, by paying to the party who acquired it their proportionate shares of the acquisition cost allocated to that part of such Lease within the Contract Area, which shall be in proportion to the interest held at that time
by the parties in the Contract Area. Each party who participates in the purchase of a renewal or replacement Lease shall be given an assignment of its proportionate interest therein by the acquiring party. 

If some, but less than all, of the parties elect to participate in the purchase of a renewal or replacement Lease, it shall be owned by the
parties who elect to participate therein, in a ratio based upon the relationship of their respective percentage of participation in the Contract Area to the aggregate of the percentages of participation in the Contract Area of all parties
participating in the purchase of such renewal or replacement Lease. The acquisition of a renewal or replacement Lease by any or all of the parties hereto shall not cause a readjustment of the interests of the parties stated in Exhibit “A,”
but any renewal or replacement Lease in which less than all parties elect to participate shall not be subject to this agreement but shall be deemed subject to a separate Operating Agreement in the form of this agreement. 

If the interests of the parties in the Contract Area vary according to depth, then their right to participate proportionately in renewal or
replacement Leases and their right to receive an assignment of interest shall also reflect such depth variances. 
 The provisions of this
Article shall apply to renewal or replacement Leases whether they are for the entire interest covered by the expiring Lease or cover only a portion of its area or an interest therein. Any renewal or replacement Lease taken before the expiration of
its predecessor Lease, or taken or contracted for or becoming effective within six (6) months after the expiration of the existing Lease, shall be subject to this provision so long as this agreement is in effect at the time of such acquisition
or at the time the renewal or replacement Lease becomes effective; but any Lease taken or contracted for more than six (6) months after the expiration of an existing Lease shall not be deemed a renewal or replacement Lease and shall not be
subject to the provisions of this agreement. 
 The provisions in this Article shall also be applicable to extensions of Oil and Gas Leases.

  

	C.	Acreage or Cash Contributions: 

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

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

 

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

	D.	Assignment; Maintenance of Uniform Interest: 

 For the purpose of maintaining uniformity
of ownership in the Contract Area in the Oil and Gas Leases, Oil and Gas Interests, wells, equipment and production covered by this agreement no party shall sell, encumber, transfer or make other disposition of its interest in the Oil and Gas Leases
and Oil and Gas Interests embraced within the Contract Area or in wells, equipment and production unless such disposition covers either: 

1. the entire interest of the party in all Oil and Gas Leases, Oil and Gas Interests, wells, equipment and production; or 

2. an equal undivided percent of the party’s present interest in all Oil and Gas Leases, Oil and Gas Interests, wells, equipment and
production in the Contract Area. 
 Every sale, encumbrance, transfer or other disposition made by any party shall be made expressly subject
to this agreement and shall be made without prejudice to the right of the other parties, and any transferee of an ownership interest in any Oil and Gas Lease or Interest shall be deemed a party to this agreement as to the interest conveyed from and
after the effective date of the transfer of ownership; provided, however, that the other parties shall not be required to recognize any such sale, encumbrance, transfer or other disposition for any purpose hereunder until thirty (30) days after
they have received a copy of the instrument of transfer or other satisfactory evidence thereof in writing from the transferor or transferee. No assignment or other disposition of interest by a party shall relieve such party of obligations previously
incurred by such party hereunder with respect to the interest transferred, including without limitation the obligation of a party to pay all costs attributable to an operation conducted hereunder in which such party has agreed to participate prior
to making such assignment, and the lien and security interest granted by Article VII.B. shall continue to burden the interest transferred to secure payment of any such obligations. 

If, at any time the interest of any party is divided among and owned by four or more co-owners, Operator, at its discretion, may require such
co-owners to appoint a single trustee or agent with full authority to receive notices, approve expenditures, receive billings for and approve and pay such party’s share of the joint expenses, and to deal generally with, and with power to bind,
the co-owners of such party’s interest within the scope of the operations embraced in this agreement; however, all such co-owners shall have the right to enter into and execute all contracts or agreements for the disposition of their respective
shares of the Oil and Gas produced from the Contract Area and they shall have the right to receive, separately, payment of the sale proceeds thereof. 
  

	E.	Waiver of Rights to Partition: 

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

 

	F.	Preferential Right to Purchase: 

  

	 ̈	(Optional; Check if applicable.) 

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

 ARTICLE IX. 

INTERNAL REVENUE CODE ELECTION 

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

ARTICLE X. 
 CLAIMS AND
LAWSUITS 
 Operator may settle any single uninsured third party damage claim or suit arising from operations hereunder if the
expenditure does not exceed fifty thousand and no/100ths Dollars ($50,000.00) and if the payment is in complete settlement of such claim or suit. If the amount required for settlement exceeds the above amount, the
parties hereto shall assume and take over the further handling of the claim or suit, unless such authority is delegated to Operator. All costs and expenses of handling settling, or otherwise discharging such claim or suit shall be a the joint
expense of the parties participating in the operation from which the claim or suit arises. If a claim is made against any party or if any party is sued on account of any matter arising from operations hereunder over which such individual has no
control because of the rights given Operator by this agreement, such party shall immediately notify all other parties, and the claim or suit shall be treated as any other claim or suit involving operations hereunder. 

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

 

 ARTICLE XI. 

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

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

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

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

  

	 	 ̈	Option No. 2: In the event the well described in Article VI.A., or any subsequent well drilled under any provision of this agreement, results in the Completion of a well as a well capable of production of
Oil and/or Gas in paying quantities, this agreement shall continue in force so long as any such well is capable of production, and for an additional period of      days thereafter; provided, however, if, prior to the expiration
of such additional period, one or more of the parties hereto are engaged in drilling, Reworking, Deepening, Sidetracking, Plugging Back, testing or attempting to Complete or Re-complete a well or wells hereunder, this agreement shall continue in
force until such operations have been completed and if production results therefrom, this agreement shall continue in force as provided herein. In the event the well described in Article VI.A., or any subsequent well drilled hereunder, results in a
dry hole, and no other well is capable of producing Oil and/or Gas from the Contract Area, this agreement shall terminate unless drilling, Deepening, Sidetracking, Completing, Re-completing, Plugging Back or Reworking operations are commenced within
     days from the date of abandonment of said well. “Abandonment” for such purposes shall mean either (i) a decision by all parties not to conduct any further operations on the well or (ii) the elapse of 180
days from the conduct of any operations on the well, whichever first occurs. 

 The termination of this agreement shall not
relieve any party hereto from any expense, liability or other obligation or any remedy therefor which has accrued or attached prior to the date of such termination. 

Upon termination of this agreement and the satisfaction of all obligations hereunder, in the event a memorandum of this Operating Agreement
has been filed of record, Operator is authorized to file of record in all necessary recording offices a notice of termination, and each party hereto agrees to execute such a notice of termination as to Operator’s interest, upon request of
Operator, if Operator has satisfied all its financial obligations. 
 ARTICLE XIV. 

COMPLIANCE WITH LAWS AND REGULATIONS 
  

	A.	Laws, Regulations and Orders: 

 This agreement shall be subject to the applicable laws of
the state in which the Contract Area is located, to the valid rules, regulations, and orders of any duly constituted regulatory body of said state; and to all other applicable federal, state, and local laws, ordinances, rules, regulations and
orders. 
  

	B.	Governing Law: 

 This agreement and all matters pertaining hereto, including but not
limited to matters of performance, non-performance, breach, remedies, procedures, rights, duties, and interpretation or construction, shall be governed and determined by the law of the state in which the Contract Area is located. If the Contract
Area is in two or more states, the law of the state of Texas shall govern. 
  

	C.	Regulatory Agencies: 

 Nothing herein contained shall grant, or be construed to grant,
Operator the right or authority to waive or release any rights, privileges, or obligations which Non-Operators may have under federal or state laws or under rules, regulations or orders promulgated under such laws in reference to oil, gas and
mineral operations, including the location, operation, or production of wells, on tracts offsetting or adjacent to the Contract Area. 

  
 - 16 - 

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

 

 With respect to the operations hereunder, Non-Operators agree to release Operator from any
and all losses, damages, injuries, claims and causes of action arising out of, incident to or resulting directly or indirectly from Operator’s interpretation or application of rules, rulings, regulations or orders of the Department of Energy or
Federal Energy Regulatory Commission or predecessor or successor agencies to the extent such interpretation or application was made in good faith and does not constitute gross negligence. Each Non-Operator further agrees to reimburse Operator for
such Non-Operator’s share of production or any refund, fine, levy or other governmental sanction that Operator may be required to pay as a result of such an incorrect interpretation or application, together with interest and penalties thereon
owing by Operator as a result of such incorrect interpretation or application. 
 ARTICLE XV. 

MISCELLANEOUS 
  

	A.	Execution: 

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

 

	B.	Successors and Assigns: 

 This agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, devisees, legal representatives, successors and assigns, and the terms hereof shall be deemed to run with the Leases or Interests included within the Contract Area. 

 

	C.	Counterparts: 

 This instrument may be executed in any number of counterparts, each of
which shall be considered an original for all purposes. 
  

	D.	Severability: 

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

OTHER PROVISIONS 
 (See
Pages 17a through 17c following for Article XVI. OTHER PROVISIONS.) 

  
 - 17 - 

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

 

 ARTICLE XVI. 

OTHER PROVISIONS 
  

	A.	Designation and Responsibilities of Operator: 

 CrownQuest Operating, LLC,
shall be the Operator of the Contract Area and shall conduct and direct and have full control of all operations on the Contract Area as permitted and required by and within the limits of this Agreement. In its performance of services hereunder for
the Non-Operators, Operator shall be an independent contractor not subject to the control or direction of the Non-Operators except as to the type of operation to be undertaken in accordance with the election procedures contained in this Agreement,
and the removal provisions herein. Operator shall not be deemed, or hold itself out as, the agent of the Non-Operators with authority to bind them to any obligation or liability assumed or incurred by Operator as to any third party. The specific
duty of Operator to Non-Operators shall depend upon the service performed as follows: 
  

	 	1.	In the handling of all moneys received from Non-Operators or from other parties for the benefit of the joint account, Operator shall have the duties of a fiduciary. 

 

	 	2.	In the performance of all of its other duties pursuant to this Agreement, the Operator shall act as a reasonable prudent Operator in a good and workmanlike manner with due diligence and dispatch in accordance with
good oilfield practice and in accordance with applicable law and regulation; PROVIDED, HOWEVER EXCEPT TO THE EXTENT OF
OPERATOR’S INTEREST IN THE CONTRACT AREA, OPERATOR SHALL HAVE NO
LIABILITY TO NON-OPERATORS FOR LOSSES SUSTAINED OR LIABILITIES INCURRED RESULTING
FROM, ARISING OUT OF, OR INCIDENTAL TO OPERATOR’S PERFORMANCE OF
SUCH DUTIES EVEN IF SUCH LOSSES OR LIABILITIES ARISE FROM OR ARE
ATTRIBUTED TO OPERATOR’S SOLE OR CONCURRENT NEGLIGENCE, BUT EXCEPT FOR
SUCH LOSSES SUSTAINED OR LIABILITIES INCURRED THAT RESULT FROM OPERATOR’S
GROSS NEGLIGENCE AND INTENTIONAL TORTS FOR WHICH OPERATOR SHALL BE SOLELY
RESPONSIBLE. 

  

	B.	Priority of Operations: 

 When any well drilled under the provisions of this
Operating Agreement has been drilled to the agreed upon authorized depth, if the parties participating in the drilling of such well cannot mutually agree upon the conduct of further operations, the operations proposed to be conducted shall be
governed by the following sequence of priority: 
  

	 	1.	A proposal to do additional logging, coring or testing; then 

  

	 	2.	A proposal to attempt a completion the well in the objective formation; then 

  

	 	3.	A proposal to sidetrack the well; then 

  

	 	4.	A proposal to deepen the well; then 

  

	 	5.	A proposal to plug the well back and to attempt completion in a formation above the objective formation; then 

  

	 	6.	A proposal to plug and abandon. 

 Notwithstanding the above, the sequence of
operations above may be amended, regarding any proposed operation by the vote of at least eighty percent (80%) of the parties authorized to vote under such operation. 

If at the time said participating parties are considering any of the above proposals, the hole is in such a condition that a prudent
operator would not conduct proposal numbered 1 above for fear of placing the hole in jeopardy or losing the same prior to an attempt to complete the well in the objective formation, proposal numbered 1 shall not be given the priority set forth
above. 
  

	C.	Intentionally Omitted 

  

	D.	Choice of Law, Venue and Arbitration: 

 THIS
AGREEMENT SHALL BE INTERPRETED AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF TEXAS. In the event that there exists any dispute arising out of or relative to this Agreement or any party requires that any provision of the Agreement be
interpreted or construed; or wishes to determine the rights, obligations or duties of any party hereunder (a “Disputed Claim”), the parties hereto agree that no party shall commence or cause to be commenced a judicial action or proceeding
before any court or other tribunal. The party with such Disputed Claim shall immediately upon discovery of such claim give notice to the other party, or parties, and attempt to resolve the Disputed Claim by negotiation. If a Disputed Claim is not
resolved by negotiation, or is not resolved to the satisfaction of all parties by agreement of the parties: 
  

	 	1.	Any party may make demand for arbitration by filing a demand in writing by certified mail with the other party or parties setting forth the facts and circumstances for the Disputed Claim. If the party(ies) receiving
such notice does/do not agree with the nature of the asserted Disputed Claim(s), or has/have additional related Disputed Claim(s), such party(ies) may also submit in writing its/their own statement of the Disputed Claim(s). 

 

	 	2.	Within ten (10) business days after the initial demand for arbitration is received, each of the parties shall name an arbitrator in writing to the other party, and within ten (10) days thereafter, the two
(2) chosen arbitrators shall name a third arbitrator. If multiple parties are aligned with respect to a Disputed Claim, such parties shall attempt to agree and collectively designate one arbitrator. If either party fails to select an
arbitrator, or if the selected arbitrators fail to agree upon a third arbitrator, or if there are more than two (2) unaligned parties, or the aligned parties cannot agree on an arbitrator to designate, or if for any reason the procedures for
appointment or of arbitrators does not result in the designation of a panel of three (3) impartial arbitrators, then any party may ask the senior presiding District Judge for the Judicial District that includes Midland County, Texas, to
designate one or more arbitrators as necessary to create a panel of three (3) arbitrators. 

  

	 	3.	The arbitrators may, upon the motion of any party, order the parties to mediation to attempt to settle the Disputed Claim(s). If the Disputed Claim(s) is not resolved in mediation, the arbitrators shall settle all
Disputed Claim(s) in accordance with the Commercial Arbitration Rules (the “Rules”) of the American Arbitration Association (“AAA”) to the extent such Rules do not conflict with the terms of this Agreement. Any arbitration
hearing shall be held in Midland, Texas, unless another place is determined to be mutually acceptable to the arbitrators and all affected parties. 

  

	 	4.	The arbitrators shall promptly hear and determine (after giving the parties due notice of hearing and reasonable opportunity to be heard) the questions submitted and shall render a decision within sixty
(60) days after notifying the parties that the arbitration hearings have been closed or, if oral hearings have been waived, from the date of receipt of the parties’ final statements and proofs to the arbitrators. If the arbitrators fail to
(i) commence the arbitration within thirty (30) days after their selection or (ii) render a decision within the sixty- (60) day period described in the proceeding sentence, then either party may, by notice to the other party and
to the Rules, demand that the arbitrators be dismissed, and new arbitrators shall be appointed and selected and shall conduct the arbitration pursuant to the provisions of this Agreement. 

 

	 	5.	The arbitrators shall not have jurisdiction or authority to add to, detract from or alter in any way the provisions of the Agreement. Pending the final decision of the arbitrators of any dispute, both parties will
proceed diligently with performance of all contract obligations, including the payment of all sums not in dispute, required by the Agreement. Notwithstanding the foregoing, the parties reserve the right to apply to any court of competent
jurisdiction for the purpose of obtaining security or other provisional relief to satisfy or effectuate an eventual arbitration award, including with limitation, attachment and injunctive relief. The commencement of any action for such relief in aid
or arbitration shall not constitute a waiver of the right to arbitration nor shall it prejudice in any way the right to proceed to arbitration. 

  
 - 17a - 

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

 

	 	6.	If any arbitrator dies, resigns or is otherwise unable to perform his duties as an arbitrator, another arbitrator shall be selected in accordance with the procedures set forth under paragraph 2 of this Section.

  

	 	7.	The written decision or award of the arbitrators shall be final and binding upon the parties, and the parties shall abide by and comply with such decision, and a judgment may be rendered upon such decision or award
in a court of competent jurisdiction. The parties shall equally bear the cost of the services and expenses of the arbitrators and all other costs of the arbitration proceedings, except that the arbitrators shall have the discretion and authority to
charge any party with a disproportionate percentage of such costs, or all of such costs, if the arbitrators find that such party has utilized the arbitration or other dispute resolution process merely for harassment or delay, or to hear an obvious
or frivolous matter, or merely to avoid or postpone the performance by such party of its duties pursuant to the Agreement. 

  

	 	8.	The arbitrators shall have the authority to determine whether the arbitrators are authorized by this Agreement to consider a matter submitted for arbitration, and the determination as to authority to consider such
matter shall be final and binding upon the parties. 

  

	E.	Well Control Insurance: 

 In addition to the insurance provided for the benefit
of the Joint Account as outlined in Exhibit “D” hereto, Operator shall obtain for the benefit of the Joint Account Well Control Insurance for any well drilled hereunder, as deemed appropriate by Operator, and each Consenting Party shall be
charged for its proportionate share of the costs of such Well Control Insurance unless such party has obtained Well Control Insurance in form and amount acceptable to Operator, and provides to Operator an acceptable certificate of coverage. 

 

	F.	Operator Status: 

 The parties hereto other than Operator are the owners of the
oil and gas leases described in Exhibit “A”, Operator owning no interest therein. Accordingly, the provisions herein requiring the consent of all parties, or the mutual agreement, or consent of all parties, refers to all parties who own an
interest in and to the Contract Area. 
  

	G.	Default: 

 If the lien conferred in Article VII.B has been enforced, for so
long as the affected party remains in default, it shall have no further access to the Contract Area or information obtained in connection with operations hereunder and shall not be entitled to vote on any matter hereunder. As to any proposed
operation in which it otherwise would have the right to participate, such party shall have the right to be a Consenting Party therein only if it pays the amount it is in default and all other sums owed before the operation is commenced; otherwise,
it automatically shall be deemed a Non-Consenting party to that operation. 
  

	H.	Billing and Assignments: 

 Notwithstanding the provisions of this Agreement and
of the Accounting Procedure attached as Exhibit “C”, the Parties to this Agreement specifically agree that in no event during the term of this contract shall Operator be required to make more than one (1) billing for the entire
interest credited to each Party on Exhibit “A”. It is further agreed that if any Party to this Agreement (hereinafter referred to as “Selling Party”) disposes of part of the interest credited to it on Exhibit “A”, the
Selling Party will be solely responsible for billing its Assignee or Assignees, and shall remain primarily liable to the other Parties for the interest or interests assigned and shall make prompt payment to Operator for the entire amount of
statements and billings rendered to it. It is further understood and agreed that if Selling Party disposes of all its interest as set out in Exhibit “A”, whether to one or several Assignees, Operator shall continue to issue statements and
billings to the Selling Party for the interest conveyed until such time as Selling Party has designated and qualified one (1) Assignee to receive the billing for the entire interest. In order to qualify one (1) Assignee to receive the
billing for the entire interest credited to Selling Party on Exhibit “A”, Selling Party shall furnish to Operator the following: 
  

	 	1.	Written notice of the conveyance and a copy of the Assignment(s) by which the transfer was made. 

  

	 	2.	The name of the Assignee to be billed and a written statement signed by the Assignee to be billed in which it consents to receive statements and billings for the entire interest credited to Selling Party on Exhibit
“A” hereof; and further consents to handle any necessary sub-billings in the event it does not own the entire interest credited to Selling Party on Exhibit “A”. 

From and after such time that an assignee has been designated and qualified, the Selling Party shall have no further liability to Operator
or the parties hereto pursuant to this Agreement. 
  

	I.	Assignment of Indemnity: 

 Each party hereto covenants and agrees for itself,
its successors and assigns, that any sale, assignment, sublease, mortgage, pledge or other instrument affecting the leases and lands subject (other security interest) will be made and accepted subject to this Agreement, and the party acquiring
hereto who executes any instrument in favor of any party without complying with the provisions of this paragraph shall indemnify, defend and hold the other parties hereto harmless from and against any and all claims or causes of action by any person
whomsoever and for any expenses and losses sustained as a result of the failure of such party to comply with these provisions. 
  

	J.	Lien Rights: 

 The lien and security interest granted by each Non-Operator to
Operator and by Operator to the Non-Operator under Article VII.B shall extend not only to such party’s oil and gas rights in the Contract Area (which for greater certainty shall include all of each party’s leasehold interest and leasehold
estate in the Contract Area), the oil and/or gas when extracted and equipment (as mentioned in said Article) but also to all accounts, contract rights, inventory and general intangibles constituting a part of, relating or arising out of said oil and
gas rights, extracted oil and gas and said equipment or which are otherwise owned or held by any such party in the Contract Area. Further, the lien and security interest of each of said parties shall extend to all proceeds and products of all of the
property and collateral described in this paragraph and in Article VII.B as being subject to said lien and security interest Any party, to the extent it deems necessary to perfect the lien and security interest provided herein, may file this
Operating Agreement as a lien or mortgage in the applicable real estate records and as a financing statement with the proper officer under the Uniform Commercial Code. 
  

	K.	Measurement: 

 If, as a result of operations by less than all parties or any
other reason, oil or other liquid hydrocarbons from one (1) well are owned in different proportions than oil or other liquid hydrocarbons from another well, then volumes of oil or other liquid hydrocarbons from such wells shall be measured by
meters, properly tested and calibrated from time to time, or by well tests on a monthly basis, and no separate tanks shall be installed to segregate such production, unless required by law or regulation. 

 

	L.	Resignation or Removal of Operator: 

 Article V.B.1. is deleted and replaced
with this provision. Operator may resign at any time by giving written notice thereof to Non- Operators. If (i) Operator terminates its legal existence, (ii) Operator, or the party affiliated with Operator, no longer owns an interest
hereunder in the Contract Area, (iii) Operator is no longer capable of serving as Operator, or (iv) Operator, or Operator’s affiliated entity, is sold to an unaffiliated third-party, Operator shall be deemed to have resigned without
any action by Non-Operators, except the selection of a successor. Operator may be removed if it fails or refuses to carry out its duties hereunder, or becomes insolvent, bankrupt or is placed in receivership, by the affirmative vote of two
(2) or more Non-Operators owning a majority interest based on ownership as     

  
 - 17b - 

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

 

 
shown on Exhibit “A” remaining after excluding the voting interest of Operator (or the interest of Operator’s legal entity). Such resignation or removal shall not become effective
until 7:00 o’clock A.M. on the first day of the calendar month following the expiration of ninety (90) days after the giving of notice of resignation by Operator or action by the Non-Operators to remove Operator, unless a successor
Operator has been selected and assumes the duties of Operator at an earlier date. Operator, after effective date of resignation or removal, shall be bound by the terms hereof as a Non-Operator. A change of a corporate name or structure of Operator
or transfer of Operator’s, or Operator’s affiliate entity’s interest to any single subsidiary, parent or successor corporation shall not be the basis for removal of Operator. 

 

	M.	Non-Consent Operations: 

 Notwithstanding anything to the contrary contained
herein, participation by all parties in the drilling of any well is obligatory. In the event a party fails to participate in the drilling of any well, said party (the “Forfeiting Party”): 

IF LESS THAN 100 WELLS HAVE BEEN DRILLED ON THE CONTRACT AREA: 

Shall forfeit all of its rights and interest in and to the Leases in the Contract Area save and except any existing producing proration
unit(s) and the leases associated therewith. Thus, the failure to participate in the Subject Well shall result in the forfeiture of rights by the Forfeiting Party in this entire agreement save and except existing production. Such forfeiture will
cover and include any existing oil and gas leases and any oil and gas lease covering all or a portion of the Contract Area acquired subsequent to the Forfeiting Party’s failure to participate in the Subject Well. Upon the drilling of the
proposed well, the Forfeiting Party shall assign to the other party (the “Participating Party”) all of the Forfeiting Party’s interest in the Contract Area less any producing wells. Any such forfeiture shall be evidenced and
implemented by an assignment from the Forfeiting Party to the Participating Party. Such assignment shall be made in a form satisfactory to the Participating Party without warranty of title, except as to claims by, through and under the Forfeiting
Party. Any “subsequently created interest” that was created by the Forfeiting Party and burdens the interest to be assigned, shall be subject to Article III.C. of the Operating Agreement. 

IF 100 OR MORE WELLS HAVE BEEN DRILLED ON THE CONTRACT AREA: 

Shall forfeit all of its rights and interest in and to the 160 acres surrounding such well (the “Subject Well”), with the Subject
Well being in the center of said 160 acre tract, along with all rights in and to all eight contiguous 160 acre tracts surrounding the 160 acre tract upon which the Subject Well is located. Thus, the failure to participate in the Subject Well shall
result in the forfeiture of rights by the Forfeiting Party in 1,440 acres surrounding the Subject Well. Such forfeiture will cover and include any existing oil and gas leases and any oil and gas lease covering all or a portion of said 1,440 acres
acquired subsequent to the Forfeiting Party’s failure to participate in the Subject Well. The Forfeiting Party shall assign to the other party (the “Participating Party”) all of the Forfeiting Party’s interest in the 1,440 acres
surrounding the Subject Well. Any such forfeiture shall be evidenced and implemented by an assignment from the Forfeiting Party to the Participating Party. Such assignment shall be made in a form satisfactory to the Participating Party without
warranty of title, except as to claims by, through and under the Forfeiting Party. Any “subsequently created interest” that was created by the Forfeiting Party and burdens the interest to be assigned, shall be subject to Article III.C. of
the Operating Agreement. 
  

	N.	Area of Mutual Interest: 

 Except for acquisitions pursuant to Article VIII.B.
and C., any party hereto who acquires an oil and gas leasehold working interest (including, without limitation, any option to acquire the same) within the lands described on Exhibit “A-2” (the “AMI Lands”) shall give notice in
writing to all of the other parties hereto which notice shall contain a description of the interest acquired, consideration paid therefore and all other pertinent information necessary to describe such acquisition. All parties receiving such notice
shall have fifteen (15) days from receipt thereof to advise the acquiring party in writing of its election to participate in such acquisition, failing in which the party receiving such notice shall have no right to such acquisition. All parties
electing to participate in such acquisition shall furnish to the acquiring party, with notice of their election to participate, their proportionate part (the same interest which they have in the Contract Area) of the cost of the acquisition, failing
in which their affirmative responses shall not be deemed effective and shall not entitle such party to participate. If any party elects not to participate in such acquisition, the acquiring party shall notify all other parties of such refusal and
all such other parties shall have the same right to respond within fifteen (15) days thereafter as required in the case of the first notice. If a party elects to participate in such acquisition but fails to pay the acquiring party for its
proportionate share thereof within fifteen (15) days after the acquiring party has made a written request for such payment, then such party shall forfeit all rights in the acquired interest. The acquiring parties agree to execute such
assignments and conveyances as are necessary to reflect the acquisition as a matter of record as soon as reasonably possible after determination of the interest of the parties pursuant to the foregoing provisions. All such assignments and
conveyances shall be made subject to existing burdens on the date of acquisition by the acquiring parties, but free and clear of all liens, claims and encumbrances created by, through or under the acquiring parties. There shall be no obligation
hereunder on any party hereto with respect to acquisitions outside the AMI Lands. As to any interest acquired in oil and gas leasehold working interests covering lands both within and outside the AMI Lands, only the interests covering lands lying
within the AMI Lands shall be subject to this provision. The provisions of this paragraph shall terminate at the earlier of (a) termination of this Operating Agreement; or (b) three (3) years from the date of this agreement. Parties
participating in such acquisition shall be subject to the provisions of this Operating Agreement which shall be referenced in the documents of title reflecting such acquisition. The terms of this paragraph shall not create an obligation on any party
hereto to offer to the other parties the right to participate in acquisitions of an interest in oil and gas leasehold working interests if such interest is acquired from a party hereto and is already subject to this Operating Agreement. 

 

	O.	Participation Agreement. 

 This Operating Agreement is subject to all of the
terms and provisions of that certain Participation Agreement dated April     , 2010, between CrownRock, L.P. and Lynden USA Inc. In the event of a conflict between the terms and provisions of this Operating Agreement and the
Participation Agreement, the terms and provisions of the Participation Agreement shall control. 
  

	P.	Conflict: 

 In the event of a conflict between the provisions of this Article
XVI and any other provision of this Operating Agreement, the provisions of this Article XVI shall control and prevail. 

  
 - 17c - 

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

 

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

									
	ATTEST OR WITNESS:	 		 		  	OPERATOR
				
		 		 		  	 CrownQuest Operating, LLC

				
	  
	 		 	By	  	  

				
	  
	 		 		  	 Robert W. Floyd

		 		 		  	Type or print name
					
		 		 		  	Title	  	 President

					
		 		 		  	Date	  	  

									
					
		 		 		  	Tax ID or S.S. No.	  	  

 
 NON-OPERATORS 

 

									
		 		 		  	 Lynden USA Inc.

				
	  
	 		 	By	  	  

				
	  
	 		 		  	  

		 		 		  	Type or print name
					
		 		 		  	Title	 	  

					
		 		 		  	Date	 	  

									
					
		 		 		  	Tax ID or S.S. No.	 	  

				
		 		 		  	 CrownRock, L.P.

		 		 		  	By CrownRock GP, LLC, its General Partner
				
	  
	 		 	By	  	  

									
				
	  
	 		 		  	 Robert W. Floyd

		 		 		  	Type or print name
					
		 		 		  	Title	 	 President

					
		 		 		  	Date	 	  

									
					
		 		 		  	Tax ID or S.S. No.	 	  

				
		 		 		  	  

				
	  
	 		 	By	  	  

				
	  
	 		 		  	  

		 		 		  	Type or print name

									
					
		 		 		  	Title	 	  

					
		 		 		  	Date	 	  

									
					
		 		 		  	Tax ID or S.S. No.	 	  

  
 - 18 - 

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

 

 ACKNOWLEDGMENTS 

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

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

 

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

 This instrument was acknowledged before me on 

 

							
	  
	 		 	by	 	  

				
	(Seal, if any)	 		 		 	  

 

					
		 	Title (and Rank)	 	  

			
		 	My commission expires:	 	  

 Acknowledgment in representative capacity: 
  

					
	State of Texas	 	)	  	
			
		 	) ss.	  	
			
	County of Midland	 	)	  	

 This instrument was acknowledged before me on 

 

									
	  
	 		 	by	 	 Robert W. Floyd
	 	as

 President of CrownQuest Operating, LLC, a Texas limited
liability company on behalf of said limited liability company. 
  

					
	(Seal, if any)	 	  

			
		 	Title (and Rank)	 	  

			
		 	My commission expires:	 	  

 
 Acknowledgment in representative capacity:

  

					
	State of Texas	 	)	  	
			
		 	) ss.	  	
			
	County of Midland	 	)	  	

 This instrument was acknowledged before me on 

 

									
	  
	 		 	by	 	 Robert W. Floyd
	 	as

 President of CrownRock, GP, LLC, a Delaware limited liability
company, as General Partner of CrownRock, L.P., a Delaware limited partnership, on behalf of said limited liability company and said limited partnership. 
  

					
	(Seal, if any)	 	  

			
		 	Title (and Rank)	 	  

			
		 	My commission expires:	 	  

  
 - 19 - 

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

 

 Acknowledgment in representative capacity: 

 

					
	State of	 		 	)
			
		 		 	) ss.
			
	County of	 		 	)

 This instrument was acknowledged before me on 

 

									
	  
	 		 	by	 	  
	  	as
				
	(Seal, if any)	 		 		 	  

 

					
		 	Title (and Rank)	  	  

			
		 	My commission expires:	  	  

 Acknowledgment in representative capacity: 
  

					
	State of	 		 	)
			
		 		 	) ss.
			
	County of	 		 	)

 This instrument was acknowledged before me on 

 

									
	  
	 		 	by	 	  
	  	as
				
	  
	 	of	 	                                     
   .	  	
				
	(Seal, if any)	 		 		 	  

  

					
		 	Title (and Rank)	  	  

			
		 	My commission expires:	  	  

  
 - 19 - 

 EXHIBIT “A” 

Attached to and made a part of that certain Operating Agreement dated May     , 2010 by and between CrownQuest Operating, LLC, as Operator
and Lynden USA Inc., etal as Non-Operator. 
  

	(1)	Identification of lands subject to this agreement: 

 Lands covered by the leases listed
on Exhibit A-1, attached hereto and made a part hereof as well as lands covered by any additional leases acquired pursuant to the terms of the Area of Mutual Interest described in Article XVI. Paragraph L. 

 

	(2)	Restrictions, if any, as to depths, formations, or substances: 

 None 

 

	(3)	Parties to agreement with addresses and telephone numbers for notice purposes and percentages or fractional interests of parties to this agreement: 

 

											
	 	  	 	  	Working Interest	 
	 Owner
	  	 	  	First 2 Wells	 	  	All
Subsequent Wells	 
			
	 Lynden USA Inc.
	  	 	1.00000	  	  	 	.500000	  
	 Attn: Colin Watt
	  				  			
	 885 West Georgia Street, Suite 2150
	  				  			
	 Vancouver, BC
	  				  			
	 Canada V6C 3E8
	  				  			
	 Telephone:
	  	 (604) 629-2991
	  				  			
	 Fax:
	  	 (604) 602-9311
	  				  			
	 Email:
	  	 cwatt@bed-rock.com
	  				  			
			
	 CrownRock, L.P.
	  	 	0.000000	  	  	 	.500000	  
	 Attn: Craig Clark
	  				  			
	 P.O. Box 52507 (79710-2507)
	  				  			
	 303 Veterans Airpark Lane, Suite 5100 (79705)
	  				  			
	 Midland, Texas
	  				  			
	 Telephone:
	  	 (432) 818-0300
	  				  			
	 Fax:
	  	 (432) 687-4804
	  				  			
	 Email:
	  	 cclark@crownquest.com
	  				  			
			
	 TOTAL
	  	 	1.000000	  	  	 	1.00000	  

  

	(4)	Oil and Gas Lease and/or Oil and Gas Interests subject to this agreement: 

 See Exhibit
A-1, attached hereto and made a part hereof 

  
 Page 1 of 1 

 Exhibit A-1 

Attached to and made a part of that certain Operating Agreement dated May 20, 2010 between CrownQuest Operating, LLC as Operator and
Lynden USA, Inc., etal as Non-Operator 
  

					
	 Description
	  	# Acres	 
		
	 Coke & Mitchell Counties
	  			
		
	 N/2 Section 4, Block 15, SPRR Co.
	  	 	336.65	  
	 Section 12, Block 15, SPRR Co. A-1066
	  	 	604.9	  
	 Section 13, Block 15 SPRR Co.
	  	 	665.7	  
	 Section 16, Block 15, SPRR Co.
	  	 	667.7	  
	 Section 17, Block 15, SPRR Co.
	  	 	665.2	  
	 N/2 & All SE/4 exc. SW/4 Section 21, Block 15, SPRR Co.
	  	 	465.0	  
		
	 Coke, Mitchell and Sterling Counties
	  			
		
	 Section 20, Block 15, SPRR co. A-629
	  	 	625.2	  
		
	 Coke & Sterling Counties
	  			
		
	 NE/4 Section 28, Block 15, SPRR Co. Svy.
	  	 	165.85	  
	 Section 29, Block 15, SPRR Co. Svy.
	  	 	665.2	  
		
	 Mitchell & Sterling Counties
	  			
		
	 Section 44, Block 16, SPRR Co.
	  	 	659.5	  
	 Section 37, Block 18, SPRR Co.
	  	 	583.3	  
	 Section 41, Block 18, SPRR Co. A-259
	  	 	653.4	  
	 Section 42, Block 18, SPRR Co. A-931
	  	 	619.5	  
	 Section 43, Block 18, SPRR Co. A-260
	  	 	450.3	  
	 Section 43, Block 16, SPRR Co. A-270
	  	 	659.5	  
	 Section 40, Block 18, SPRR Co. A-815
	  	 	668.5	  
	 Section 30, Blk 15, SPRR Co.
	  	 	720.9	  
	 W/2 Section 38, Block 18, SPRR Co. A-813
	  	 	331.85	  
	 All except W/2 NW/4 & NW/4 SW/4
	  			
	 Section 39, Block 18, SPRR Co. A-258
	  	 	539.25625	  
	 Section 42, Block 16, SPRR Co. A-931
	  	 	659.5	  
		
	 Mitchell County
	  			
		
	 Section 5, Block 18, SPRR Co. A-283
	  	 	648.4	  
	 Section 6, Block 18, SPRR Co. A-795
	  	 	635.9	  
	 Section 11, Block 18, SPRR Co. A-286
	  	 	572.6	  
	 Section 32, J.P. Smith A-748
	  	 	600	  
	 Section 13, Block 12, H&TC RR A-173
	  	 	603.9	  
	 Section 6, Block 15, SPRR Co. A-838
	  	 	659.6	  
	 Section 7, Block 15, SPRR Co. A-305
	  	 	662.7	  
	 Section 10, Block 15, SPRR Co. A-840
	  	 	665.2	  
	 Section 12, Block 18, SPRR Co. A-793
	  	 	573	  
	 Section 13, Block 18, SPRR Co.
	  	 	540.9	  
	 Section 41, Block 16, SPRR Co. A-269
	  	 	619.5	  
	 Section 10, Block 16, SPRR Co. A-1066
	  	 	638	  
	 Section 23, Block 16, SPRR Co. A-331
	  	 	619.5	  
	 Section 27, Block 16, SPRR Co. A-333
	  	 	619.5	  
	 Section 40, Block 16, SPRR Co. A-930
	  	 	619.5	  
	 Section 2, Block 16, SPRR Co. A-976
	  	 	651	  
	 Section 3, Block 16, SPRR Co. A-321
	  	 	652.6	  
	 Section 11, Block 16, SPRR Co. A-325
	  	 	685.5	  
	 Section 13, Block 16, SPRR Co. A-326
	  	 	730	  
	 Section 17, Block 16, SPRR Co. A-328
	  	 	659.5	  
	 Section 18, Block 16, SPRR Co. A-917
	  	 	659.5	  
	 Section 20, Block 16, SPRR Co. A-966
	  	 	659.5	  
	 Section 24, Block 16, SPRR Co. A-925
	  	 	659.5	  
	 Section 25, Block 16, SPRR Co. A-332
	  	 	659.5	  
	 Section 26, Block 16, SPRR Co. A-921
	  	 	659.5	  
	 Section 33, Block 16, SPRR Co. A-336
	  	 	659.5	  
	 Section 34, Block 16, SPRR Co. A-933
	  	 	659.5	  
	 Section 38, Block 16, SPRR Co. A-929
	  	 	659.5	  
	 Section 45, Block 16, SPRR Co. A-271
	  	 	459.5	  
	 Section 46, Block 16, SPRR Co. A-876
	  	 	600	  
	 E/3 & E/2 SW/4; All NW/4 exc. SW/4 NW/4
	  			
	 Section 34, Block 18, SPRR Co. A-256
	  	 	530.2375	  
	 W/2 SW/4, N/2 NE/4, NW/4
	  			
	 Section 35, Block 18, SPRR Co. A-899
	  	 	326.3	  
	 Section 44, Block 18, SPRR Co. A-875
	  	 	689.9	  
	 Section 9, Block 15, SPRR Co. A-306
	  	 	676.3	  
	 Section 14, Block 18, SPRR Co.
	  	 	399.7	  
	 Section 1, Block 16, SPRR Co. A-320
	  	 	649.4	  
	 Section 4, Block 16, SPRR Co. A-886
	  	 	654.1	  
	 Section 5, Block 16, SPRR Co. A-322
	  	 	655.7	  
	 Section 6, Block 16, SPRR Co. A-804
	  	 	657.2	  
	 Section 7, Block 16, SPRR Co.
	  	 	654.4	  
	 Section 8, Block 16, SPRR Co. A-919
	  	 	649.9	  
	 Section 9, Block 16, SPRR Co. A-324
	  	 	670.6	  
	 Section 12, Block 16, SPRR Co. A-920
	  	 	692.9	  
	 Section 14, Block 16, SPRR Co. A-935
	  	 	707.7	  
	 Section 15, Block 16, SPRR Co. A-327
	  	 	659.5	  
	 Section 16, Block 16, SPRR Co. A-1160
	  	 	659.5	  

 Exhibit A-1 

Attached to and made a part of that certain Operating Agreement dated May 20, 2010 between CrownQuest Operating, LLC as Operator and Lynden
USA, Inc., etal as Non-Operator 
  

					
	 Section 19, Block 16, SPRR Co. A-329
	  	 	659.5	  
	 Section 21, Block 16, SPRR Co. A-330
	  	 	637.4	  
	 Section 22, Block 16, SPRR Co. A-932
	  	 	628.2	  
	 Section 28, Block 16, SPRR Co. A-928
	  	 	659.5	  
	 Section 29, Block 16, SPRR Co. A-334
	  	 	659.5	  
	 Section 30, Block 16, SPRR Co. A-918
	  	 	659.5	  
	 Section 31, Block 16, SPRR Co. A-335
	  	 	659.5	  
	 Section 32, Block 16, SPRR Co. A-874
	  	 	659.5	  
	 Section 35, Block 16, SPRR Co. A-266
	  	 	622.5	  
	 Section 36, Block 16, SPRR Co. A-767
	  	 	616.3	  
	 Section 37, Block 16, SPRR Co. A-267
	  	 	659.6	  
	 Section 39, Block 16, SPRR Co. A-268
	  	 	659.5	  
	 Section 47, Block 16, SPRR Co. A-272
	  	 	659.5	  
	 Section 48, Block 16, SPRR Co. A-768
	  	 	659.5	  
	 Section 49, Block 16, SPRR Co. A-946
	  	 	606.3	  
	 Section 5, Block 15, SPRR Co. A-304
	  	 	679.5	  
	 Section 8, Block 15, SPRR Co. A-936
	  	 	708	  
	 Section 11, Block 15, SPRR Co. A-307
	  	 	669.8	  
	 Section 18, Block 15, SPRR Co. A-934
	  	 	691.2	  
	 Section 19, Block 15, SPRR Co. A-311
	  	 	706.1	  
	 Section 172, Block 26, H&TC A-1573
	  	 	657.7	  
	 Section 28, Block 19, Lavaca Navigation Svy.
	  	 	656.9	  
	 Section 29, Block 19, Lavaca Navigation Svy. A-219
	  	 	657.2	  
	 Section 30, Block 19, Lavaca Navigation Svy.
	  	 	657.2	  
	 Section 31, Block 19, Lavaca Navigation Svy. A-218
	  	 	619.2	  
	 Section 32, Block 19, Lavaca Navigation Svy. A-1496
	  	 	638.9	  
	 Section 33, Block 19, Lavaca Navigation Svy. A-203
	  	 	321.3	  
	 Section 49, D.H. Snyder A-926
	  	 	132.9	  
	 Section 1, I.L. Ellwood SF 8979 A-1700
	  	 	264.4	  
	 Section 2, I.L. Ellwood SF 8829 A-1698
	  	 	505.4	  
	 Section 3, I.L. Ellwood SF 8830
	  	 	483.6	  
	 Section 4, I.L. Ellwood SF 14240 A-1702
	  	 	10.4	  
	 Section 14, Block 12, H&TC Svy. A-923
	  	 	646.8	  
	 Section 27, Block 12, H&TC Svy A-178
	  	 	634.9	  
	 Section 28, Block 12, H&TC Svy. A-869
	  	 	637.7	  
	 Section 1, Block 18, SPRR Co. A-281
	  	 	166.3	  
	 Section 2, Block 18, SPRR Co. A-796
	  	 	653.5	  
	 Section 3, Block 18, SPRR Co. A-282
	  	 	657.6	  
	 Section 4, Block 18, SPRR Co. A-834
	  	 	694.4	  
	 Section 7, Block 18, SPRR Co. A-284
	  	 	663.9	  
	 Section 8, Block 18, SPRR Co. A-927
	  	 	651.5	  
	 Section 9, Block 18, SPRR Co. A-285
	  	 	652.3	  
	 Section 10, Block 18, SPRR Co. A-764
	  	 	652.6	  
	 Section 15, Block 18, SPRR Co.
	  	 	641.5	  
	 Section 16, Block 18, SPRR Co.
	  	 	652.6	  
	 Section 17, Block 18, SPRR Co. A-273
	  	 	652.6	  
	 Section 18, Block 18, SPRR Co. A-870
	  	 	652.3	  
	 Section 19, Block 18, SPRR Co. A-274
	  	 	652.3	  
	 Section 20, Block 18, SPRR Co. A-691
	  	 	652.6	  
	 Section 21, Block 18, SPRR Co. A-275
	  	 	652.6	  
	 Section 22, Block 18, SPRR Co. A-769
	  	 	347.1	  
	 Section 23, Block 18, SPRR Co.
	  	 	130.7	  
	 Section 25, Block 18, SPRR Co. A-276
	  	 	652.6	  
	 Section 26, Block 18, SPRR Co. A-765
	  	 	652.6	  
	 Section 27, Block 18, SPRR Co. A-277
	  	 	652.3	  
	 Section 28, Block 18, SPRR Co. A-879
	  	 	652.3	  
	 Section 31, Block 18, SPRR Co. A-279
	  	 	645	  
	 Section 32, Block 18, SPRR Co. A-835
	  	 	658.2	  
	 Section 33, Block 18, SPRR Co. A-280
	  	 	659.4	  
	 Section 36, Block 18, SPRR Co. A-880
	  	 	652.3	  
	 Section 45, Block 18, SPRR Co. A-261
	  	 	340.3	  
	 Section 9, J.P. Smith Survey
	  	 	588.4	  
	 Section 10, J.P. Smith Survey
	  	 	571.5	  
	 Section 11, J.P. Smith Survey
	  	 	654.7	  
	 Section 12, J.P. Smith Survey
	  	 	640.1	  
	 Section 13, J.P. Smith Survey
	  	 	640.8	  
	 Section 14, J.P. Smith Survey
	  	 	631.4	  
	 Section 15, J.P. Smith Survey
	  	 	640.2	  
	 Section 16, J.P. Smith Survey
	  	 	655.7	  
	 Section 17, J.P. Smith Survey
	  	 	656.6	  
	 Section 18, J.P. Smith Survey
	  	 	633	  
	 Section 19, J.P. Smith Survey
	  	 	633	  
	 Section 20, J.P. Smith Survey
	  	 	634.9	  
	 Section 21, J.P. Smith Survey
	  	 	640.1	  
	 Section 22, J.P. Smith Survey
	  	 	656.5	  
	 Section 23, J.P. Smith Survey
	  	 	653.4	  
	 Section 24, J.P. Smith Survey
	  	 	640.3	  
	 Section 25, J.P. Smith Survey
	  	 	636.8	  
	 Section 26, J.P. Smith Survey
	  	 	639	  
	 Section 27, J.P. Smith Survey
	  	 	641.7	  
	 Section 28, J.P. Smith Survey
	  	 	589.8	  
	 Section 29, J.P. Smith Survey
	  	 	627.8	  
	 Section 30, J.P. Smith Survey
	  	 	638.8	  
	 Section 31, J.P. Smith Survey
	  	 	645.5	  
	 Section 33, J.P. Smith Survey
	  	 	567.3	  

 Exhibit A-1 

Attached to and made a part of that certain Operating Agreement dated May 20, 2010 between CrownQuest Operating, LLC as Operator and Lynden
USA, Inc., etal as Non-Operator 
  

					
	 Section 34, J.P. Smith Survey
	  	 	658.7	  
	 Section 35, J.P. Smith Survey
	  	 	124.6	  
	 Section 36, J.P. Smith Survey
	  	 	565.2	  
		
	Sterling County	  			
		
	 Section 65, Block 18, SPRR Co.
	  	 	555.6	  
	 S/2 S/2 Section 70, Block 18, SPRR Co.
	  	 	167.5	  
	 Section 46, Block 18, SPRR Co.
	  	 	289	  
	 N/2 N/2 Section 60, Block 18, SPRR Co. A-1009
	  	 	160.75	  
	 All exc. SE/4 SE/4 Section 32, Block 15, SPRR Co.
	  	 	623.72	  
	 W/2 NW/4 Section 58, Block 18, SPRR Co.
	  	 	86.025	  
	 N/2, SE/4 Section 64, Block 18, SPRR Co.
	  	 	575.7	  
	 W. 136.9 acres Section 66, Block 18, SPRR Co.
	  	 	136.9	  
	 W/2 Section 68, Block 18, SPRR Co.
	  	 	334.95	  
	 NE/4 & S/2 Section 69, Block 18, SPRR Co.
	  	 	501	  
	 Section 31, Block 15, SPRR Co. A-425
	  	 	735.8	  
	 Section 48, Block 18, SPRR Co. A-1209
	  	 	662	  
	 Section 49, Block 18, SPRR Co. A-457
	  	 	672.6	  
	 Section 50, Block 18, SPRR Co. A-783
	  	 	659.8	  
	 Section 51, Block 18, SPRR Co. A-458
	  	 	687.2	  
	 N/2 Section 59, Block 18, SPRR Co.
	  	 	325.85	  
	 Section 71, Block 18, SPRR Co.
	  	 	654.7	  
	 SW/4 & N/2 Section 63, Block 18, SPRR Co.
	  	 	501.15	  
	 NW/4, W/2 NE/4, NE/4 NE/4, W/2 SW/4, NE/4 SW/4
	  			
	 Section 61, Block 18, SPRR Co.
	  	 	250.5	  
		
	 Totals
	  	 	101,495.38875	  

 

 

 EXHIBIT “B” 

Attached to and made a part of that certain Operating Agreement dated May     , 2010 by and between CrownQuest Operating,
LLC, as Operator and Lynden USA Inc., etal, as Non-Operator. 
 AAPL FORM 659-85 

OIL, GAS AND MINERAL LEASE 

TEXAS-PAID UP 
 THIS AGREEMENT made this
     day of             , 20     , between
                                        , Lessor
(whether one or more), whose address is:
                                        , and
                                         Lessee,
whose address is:
                                        , 

1. GRANT. Lessor, in consideration of cash payment and other good and valuable consideration in hand paid, of the royalties herein provided for, and of the
agreements of Lessee herein contained, hereby grants, leases and lets exclusively unto Lessee the land described in paragraph 2 below, hereinafter referred to as leased premises, for the purposes of investigating, exploring, prospecting, drilling
and mining for and producing oil, gas (the term “gas” as used herein includes helium, carbon dioxide and other commercial gases, as well as hydrocarbons gases), sulphur, fissionable materials, and all other minerals, conducting
exploration, geological and geophysical surveys, core tests, gravity and magnetic surveys, for introducing or injecting fire, air, gas, steam, water, salt water, chemicals, and fluids or substances into any subsurface stratum or strata which is not
productive of fresh water for primary, secondary and other enhanced recovery operations. 
 2. LEASED PREMISES. (Description) 

in the County of                     , State of Texas,
containing      gross acres, more or less, including all riparian rights and any interests therein which Lessor may hereafter acquire by reversion, accretion, prescription or otherwise. In consideration of the aforementioned cash
payment, Lessor agrees to execute at Lessee’s request any additional or supplemental instruments to effect a more complete or accurate description of the land so covered. For the purpose of determining the amount of any shut-in payments
hereunder, the number of gross acres above specified shall be deemed correct, whether actually more or less. 
 3. TERM. Subject to the other provisions
herein contained, this Lease shall be for a term of three (3) years from the date hereof (called “primary term”) and as long thereafter as oil, gas, sulphur, fissionable materials or other mineral is produced in paying quantities from
the leased premises or land pooled therewith, or this lease is otherwise maintained in force and effect pursuant to other provisions herein contained. 
 4.
ROYALTY PAYMENT. The royalties to be paid to the Lessor are: (a) On oil, l/8th of that produced and saved from said land, the same to be delivered at the wells or to the Lessor’s credit into the pipelines to which the wells may be
connected. Lessee shall have the continuing right to purchase such production at the wellhead market price then prevailing in the same field (or if there is no such price then prevailing in the same field, then the nearest field in which there is
such a prevailing price) for production of similar grade and gravity. Lessee may sell any royalty oil in its possession and pay Lessor the price received by Lessee for such oil computed at the well, (b) For gas (including casinghead gas) and
all other substances covered hereby (i) if used off the leased premises or used in the manufacture of gasoline or other products, the market value at the well of one-eighth (1/8) of the gas so used, or (ii) if sold on or off the
leased premises, one-eighth (1/8) of the amount realized from such sale, provided the amount realized from the sale of gas on or off the leased premises shall be the price established by the Gas Sales Contract entered into in good faith by
Lessee and gas purchaser, provided that on gas sold by Lessee the market value shall not exceed the amount received by Lessee for such gas computed at the mouth of the well; (c) If a well on the leased premises or lands pooled therewith is
capable of producing oil or gas or any other substance covered hereby but such well is either shut-in or production therefrom is not being sold or purchased by Lessee or royalties on production therefrom are not otherwise being paid to Lessor, and
if this lease is not otherwise maintained in effect, such well shall nevertheless be considered as though it were producing for the purpose of maintaining this lease whether, during or after the primary term, and Lessee shall tender a shut-in
payment of One Dollar per acre then covered by this lease, such payment to be made to Lessor or to Lessor’s credit in the                     
at                     , or any successor depository on or before 90 days after the next ensuing anniversary date of this lease, and thereafter on or
before each anniversary date hereof while the well is shut-in or production therefrom is not being sold or purchased by Lessee or royalties on production therefrom are not otherwise being paid to Lessor. All payments or tenders may be made in
currency, or by check, or by draft, and such payments or tenders to Lessor or to the depository by deposit in the U.S. Mails in a stamped envelope addressed to the depository or to the Lessor at the last address known to Lessee shall constitute
proper payment. This lease shall remain in force so long as such well is capable of producing and Lessee’s failure to properly pay shut-in payment shall render Lessee liable for the amount due but shall not operate to terminate this lease. The
intermittent production from any well during such year shall not render necessary any new or additional shut-in payments with respect to such well or the acreage ascribed thereto. 

5. POOLING. Lessee shall have the right but not the obligation during or after the primary term while this lease is in effect to pool all or any part of the
leased premises or interest therein with any other lands or interests, as to any or all depths or horizons, and as to any or all substances covered by this lease, either before or after the commencement of production, whenever Lessee deems it
necessary or proper to do so in order to prudently develop or operate the leased premises, whether or not similar pooling authority exists with respect to such other lands or interests. The unit formed by such pooling for an oil well shall not
exceed 80 acres plus a maximum acreage tolerance of 10%, and for a gas well shall not exceed 640 acres plus a maximum acreage tolerance of 10%, except that larger units may be formed for oil wells or gas wells to conform to any well spacing or
density pattern that may be prescribed or permitted by any governmental authority having jurisdiction. In exercising its pooling rights hereunder, Lessee shall file of record a written declaration describing the unit and stating the effective date
of pooling. Production, drilling or reworking operations anywhere on a unit which includes all or any part of the leased premises shall be treated as if it were production, drilling or reworking operations on the leased premises, except that the
production on which Lessor’s royalty is calculated shall be that proportion of the total unit production produced and saved which the net acreage covered by this lease and included in the unit bears to the total gross acreage in the unit.
Pooling in one or more instances shall not exhaust Lessee’s pooling rights hereunder, and Lessee shall have the recurring right but not the obligation to revise any unit formed hereunder by expansion or contraction, or both, either before or
after commencement of production, in order to conform to the well spacing or density pattern prescribed or permitted by the governmental authority having jurisdiction, or to conform to any productive acreage determination made by such governmental
authority. In making such a revision, Lessee shall file of record a written declaration describing the revised unit and stating the effective date of revision. To the extent any portion of the leased premises is included in or excluded from the unit
by virtue of such revision, the proportion of unit production on which royalties are payable hereunder shall thereafter be adjusted accordingly. In the absence of production from a unit, or upon permanent cessation thereof, Lessee may terminate the
unit by filing of record a written declaration describing the unit and stating the date of termination. 
 6. OPERATIONS. If Lessee drills a well which is
incapable of producing in paying quantities (hereinafter called “dry hole”) on the leased Premises or lands pooled therewith, or if all production (whether or not in paying quantities) ceases from any cause, including a revision of unit
boundaries pursuant to the provisions of Paragraph 5 or the action of any governmental authority, then in the event this lease is not otherwise being maintained in force it shall nevertheless remain in force if Lessee commences operations for
reworking an existing well or for drilling an additional well on the leased premises or lands pooled therewith within 90 days after completion of operations on such dry hole or within 90 days after such cessation of all production. This is a PAID-UP
LEASE. In consideration of down cash payment, Lessor agrees that Lessee shall not be obligated to commence or continue any operations during the primary term. If at the end of the primary term or any time thereafter, oil, gas or other substances
covered hereby are not being produced in paying quantities from the leased premises or lands pooled therewith, but Lessee is then engaged in drilling, reworking or any other operations reasonably calculated to obtain or restore production therefrom,
this lease shall remain in force so long as such operations are prosecuted with no cessation of more than 90 consecutive days, and if any such 

 
operations result in the production of oil or gas or other substances covered hereby, as long thereafter as there is production in paying quantities from the leased premises or lands pooled
therewith. After completion of a well capable of producing in paying quantities hereunder, Lessee shall drill such additional wells on the leased premises or lands pooled therewith as a reasonably prudent operator would drill under the same or
similar circumstances to (a) develop the leased premises as to formations then capable of producing in paying quantities on the leased premises or lands pooled therewith, or (b) protect the leased premises from uncompensated drainage by
any well or wells located on other lands not pooled therewith. There shall be no covenant to drill exploratory wells or any additional wells except as expressly provided herein. 

7. LESSER INTEREST. Should Lessor own less than the full mineral estate in all or any part of the leased premises, the royalty and shut-in payments, payable
hereunder for any well on any part of the leased premises or lands pooled therewith shall be reduced to the proportion that Lessor’s mineral interest in such part of the leased premises bears to the fall mineral estate in such part of the
leased premises. 
 8. ANCILLARY RIGHTS. Lessee may use in its operations, free of cost, any oil, gas, water and/or other substances produced on the leased
premises, except water from Lessor’s wells or ponds. The right of ingress and egress granted hereby shall apply to the entire leased premises described in Paragraph 2 above, notwithstanding any partial release or other termination of this lease
with respect thereto. If expressly requested in writing by the surface owner, Lessee agrees to bury pipelines across cultivated land below ordinary plow depth, as such depth may be determined at the time of burial. After the pipeline has once been
laid below such depth, Lessee shall not thereafter be required to restore the ground cover, or to lower, or to remove such pipeline unless the surface owner first agrees in writing to bear the entire cost thereof, and advances to Lessee the
estimated cost thereof. No well shall be located less than 200 feet from any house or bam now on the leased premises without Lessor’s consent, and Lessee shall pay for damage caused by its operations to buildings and other improvements now on
the leased premises, and to timber and growing crops thereon. Lessee shall have the right at any time to remove its fixtures, equipment and materials, including well casing, from the leased premises during the term of this lease or within a
reasonable time thereafter. Lessee may lay pipelines, build roads, tanks, power stations, erect telephone and power lines and construct other facilities deemed necessary by Lessee on and over and across the leased premises and other lands owned or
claimed by Lessor adjacent and contiguous thereto to produce, save, take care of, treat, transport and own products granted by this lease. 
 9. OWNERSHIP
CHANGES. The interest of either Lessor or Lessee hereunder may be assigned, devised or otherwise transferred in whole or in part, by area and/or by depth or horizon, and the rights and obligations of the parties hereunder shall extend to their
respective heirs, devisees, executors, administrators, successors, and assigns. No change in Lessor’s ownership shall have the effect of reducing the rights or enlarging the obligations of Lessee hereunder, and no change in ownership shall be
binding on Lessee until 60 days after Lessee has been furnished the original or certified or duly authenticated copies of the documents establishing such change of ownership to the satisfaction of Lessee or until Lessor has satisfied the
notification requirements contained in Lessee’s usual form of division order. In the event the death of any person entitled to shut-in payments hereunder, Lessee may pay or tender such shut-in payments to the credit of decedent or
decedent’s estate in the depository designated above. If at any time two or more persons are entitled to shut-in payments hereunder, Lessee may pay or tender such shut-in payments to such persons or to the credit in the depository, either
jointly or separately in proportion to the interest which each owns. If Lessee transfers its interest hereunder in whole or in part Lessee shall be relieved of all obligations thereafter arising with respect to the transferred interest, and failure
of the transferee to satisfy such obligations with respect to the transferred interest shall not affect the rights of Lessee with respect to any interest not so transferred. If Lessee transfers a fall or undivided interest in all or any portion of
the area covered by this lease, the obligation to pay or tender shut-in payments hereunder shall be divided between Lessee and the transferee in proportion to the net acreage interest in this lease then held by each. 

10. BREACH OR DEFAULT. No litigation shall be initiated by Lessor with respect to any breach or default by Lessee hereunder, for a period of at least 90 days
after Lessor has given Lessee written notice fully describing the breach or default, and then only if Lessee fails to remedy the breach or default within such period. In the event the matter is litigated and there is a final judicial determination
that a breach or default has occurred, this lease shall not be forfeited or cancelled in whole or in part unless Lessee is given a reasonable time after such judicial determination to remedy the breach or default and Lessee fails to do so. 

11. WARRANTY OF TITLE. Lessor hereby warrants and agrees to defend title conveyed to Lessee hereunder, and agrees that Lessee at Lessee’s option may pay
and discharge any taxes, mortgages or liens existing, levied or assessed on or against the leased premises. If Lessee exercises such option, Lessee shall be subrogated to the rights of the party to whom payment is made, and, in addition to its other
rights, may reimburse itself out of any royalties, or shut-in payments otherwise payable to Lessor hereunder. In the event Lessee is made aware of any claim inconsistent with Lessor’s title, Lessee may suspend the payment of royalties and
shut-in payments hereunder, without interest, until Lessee has been famished satisfactory evidence that such claim has been resolved. Lessee shall have the right to accept leases or conveyances from others owning or claiming to own interests in the
leased premises or minerals covered hereby adverse to the rights of Lessor herein. Should Lessee become involved in any dispute or litigation arising out of any claim adverse to the title of Lessor to said leased premises, Lessee may recover from
Lessor its reasonable and necessary expenses and attorney fees incurred in such dispute or litigation, with the right to apply royalties accruing hereunder toward satisfying said expenses and attorney fees. 

12. REGULATION AND DELAY. Lessee’s obligations under this lease, whether express or implied, shall be subject to all applicable laws, rules, regulations
and orders of any governmental authority having jurisdiction including restrictions on the drilling and production of wells, and the price of oil, gas and other substances covered hereby. When drilling, reworking, production or other operations are
prevented or delayed or interrupted by such laws, rules, regulations orders, or by inability to obtain necessary permits, equipment, services, material, water, electricity, fuel, access or easements, or by fire, flood, adverse weather conditions,
war, sabotage, rebellion, insurrection, riot, strike, or labor disputes, or by inability to obtain a satisfactory market for production or failure of purchasers or carriers to take or transport such production, or by any other cause not reasonably
within Lessee’s control, this lease shall not terminate because of such prevention, delay or interruption, and shall be maintained in force and effect for so long as such force majeure continues, and for 60 days thereafter, or so long as this
lease is maintained in force by some other provisions thereof, whichever is the later date. Lessee shall not be liable for breach of any express or implied covenants of this lease when drilling, production or other operations are so prevented,
delayed or interrupted. 
 13. EXECUTION. This lease may be signed in any number of counterparts, each of which shall be binding upon all who execute same,
whether or not all parties named in the caption hereof execute this lease. Should any one or more of the parties named herein as Lessor fail to execute this lease, it shall nevertheless be binding on the party or parties who execute the same, and
additional parties may execute this lease as Lessor, and this lease shall be binding on each party executing the same notwithstanding that such party is named herein as Lessor, and all of the provisions of this lease shall inure to the benefit of
and be binding on the parties hereto and their respective heirs, legal representatives, successors and assigns. 
 IN WITNESS WHEREOF, this lease is
executed to be effective as of the date first written above, but upon execution shall be binding on the signatory and the signatory’s heirs, devisees, executors, administrators, successors and assigns. 

 

					
		 		  	SS NO. OR TAX ID
			
	  
	 		  	  

			
	  
	 		  	  

  

			
	STATE OF                     	 	§
		 	§
	COUNTY OF                     	 	§

 The foregoing instrument was acknowledged before me this     , 20    ,
by                     . 
  

					
		  	  
	  	
	My Commission Expires:	  	Notary Public in and for said county and state	  	

  

			
	STATE OF                     	 	§
		 	§
	COUNTY OF                     	 	§

 The foregoing instrument was acknowledged before me this     , 20    , by
                    ,
                                        , of
                                         a
                                        
corporation, on behalf of the corporation. 
  

					
		  	  
	  	
	My Commission Expires:	  	Notary Public in and for said county and state	  	

			
	 

	  	 COPAS 2005 Accounting Procedure

Recommended by COPAS

 EXHIBIT “C” 

ACCOUNTING PROCEDURE 

JOINT OPERATIONS 
 Attached to and made
part of that certain Operating Agreement dated                     , by and between CrownQuest Operating, LLC, Operator, and Lynden USA Inc.,
et al, as Non-Operators 
 I. GENERAL PROVISIONS 

IF THE PARTIES FAIL TO SELECT EITHER ONE OF COMPETING “ALTERNATIVE” PROVISIONS, OR SELECT ALL THE COMPETING “ALTERNATIVE” PROVISIONS,
ALTERNATIVE 1 IN EACH SUCH INSTANCE SHALL BE DEEMED TO HAVE BEEN ADOPTED BY THE PARTIES AS A RESULT OF ANY SUCH OMISSION OR DUPLICATE NOTATION. 
 IN
THE EVENT THAT ANY “OPTIONAL” PROVISION OF THIS ACCOUNTING PROCEDURE IS NOT ADOPTED BY THE PARTIES TO THE AGREEMENT BY A TYPED, PRINTED OR HANDWRITTEN INDICATION, SUCH PROVISION SHALL NOT FORM A PART OF THIS ACCOUNTING PROCEDURE, AND NO
INFERENCE SHALL BE MADE CONCERNING THE INTENT OF THE PARTIES IN SUCH EVENT. 
  

	1.	DEFINITIONS 

 All terms used in this Accounting Procedure shall have the following
meaning, unless otherwise expressly defined in the Agreement: 
 “Affiliate” means for a person, another person that
controls, is controlled by, or is under common control with that person. In this definition, (a) control means the ownership by one person, directly or indirectly, of more than fifty percent (50%) of the voting securities of a corporation
or, for other persons, the equivalent ownership interest (such as partnership interests), and (b) “person” means an individual, corporation, partnership, trust, estate, unincorporated organization, association, or other legal entity.

 “Agreement” means the operating agreement, farmout agreement, or other contract between the Parties to which this
Accounting Procedure is attached. 
 “Controllable Material” means Material that, at the time of acquisition or disposition
by the Joint Account, as applicable, is so classified in the Material Classification Manual most recently recommended by the Council of Petroleum Accountants Societies (COPAS). 

“Equalized Freight” means the procedure of charging transportation cost to the Joint Account based upon the distance from the
nearest Railway Receiving Point to the property. 
 “Excluded Amount” means a specified excluded trucking amount most
recently recommended by COPAS. 
 “Field Office” means a structure, or portion of a structure, whether a temporary or
permanent installation, the primary function of which is to directly serve daily operation and maintenance activities of the Joint Property and which serves as a staging area for directly chargeable field personnel. 

“First Level Supervision” means those employees whose primary function in Joint Operations is the direct oversight of the
Operator’s field employees and/or contract labor directly employed On-site in a field operating capacity. First Level Supervision functions may include, but are not limited to: 

 

	 	•	 	Responsibility for field employees and contract labor engaged in activities that can include field operations, maintenance, construction, well remedial work, equipment movement and drilling 

 

	 	•	 	Responsibility for day-to-day direct oversight of rig operations 

  

	 	•	 	Responsibility for day-to-day direct oversight of construction operations 

  

	 	•	 	Coordination of job priorities and approval of work procedures 

  

	 	•	 	Responsibility for optimal resource utilization (equipment, Materials, personnel) 

  

	 	•	 	Responsibility for meeting production and field operating expense targets 

  

	 	•	 	Representation of the Parties in local matters involving community, vendors, regulatory agents and landowners, as an incidental part of the supervisor’s operating responsibilities 

 

	 	•	 	Responsibility for all emergency responses with field staff 

  

	 	•	 	Responsibility for implementing safety and environmental practices 

  

	 	•	 	Responsibility for field adherence to company policy 

  

	 	•	 	Responsibility for employment decisions and performance appraisals for field personnel 

  

	 	•	 	Oversight of sub-groups for field functions such as electrical, safety, environmental, telecommunications, which may have group or team leaders. 

“Joint Account” means the account showing the charges paid and credits received in the conduct of the Joint Operations that
are to be shared by the Parties, but does not include proceeds attributable to hydrocarbons and by-products produced under the Agreement. 

“Joint Operations” means all operations necessary or proper for the exploration, appraisal, development, production,
protection, maintenance, repair, abandonment, and restoration of the Joint Property. 

  
 COPYRIGHT © 2005 by Council of
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 “Joint Property” means the real and personal property
subject to the Agreement. 
 “Laws” means any laws, rules, regulations, decrees, and orders of the United States of America
or any state thereof and all other governmental bodies, agencies, and other authorities having jurisdiction over or affecting the provisions contained in or the transactions contemplated by the Agreement or the Parties and their operations, whether
such laws now exist or are hereafter amended, enacted, promulgated or issued. 
 “Material” means personal property,
equipment, supplies, or consumables acquired or held for use by the Joint Property. 
 “Non-Operators” means the Parties to
the Agreement other than the Operator. 
 “Offshore Facilities” means platforms, surface and subsea development and
production systems, and other support systems such as oil and gas handling facilities, living quarters, offices, shops, cranes, electrical supply equipment and systems, fuel and water storage and piping, heliport, marine docking installations,
communication facilities, navigation aids, and other similar facilities necessary in the conduct of offshore operations, all of which are located offshore. 

“Off-site” means any location that is not considered On-site as defined in this Accounting Procedure. 

“On-site” means on the Joint Property when in direct conduct of Joint Operations. The term “On-site” shall also
include that portion of Offshore Facilities, Shore Base Facilities, fabrication yards, and staging areas from which Joint Operations are conducted, or other facilities that directly control equipment on the Joint Property, regardless of whether such
facilities are owned by the Joint Account. 
 “Operator” means the Party designated pursuant to the Agreement to conduct the
Joint Operations. 
 “Parties” means legal entities signatory to the Agreement or their successors and assigns. Parties
shall be referred to individually as “Party.” 
 “Participating Interest” means the percentage of the costs and
risks of conducting an operation under the Agreement that a Party agrees, or is otherwise obligated, to pay and bear. 

“Participating Party” means a Party that approves a proposed operation or otherwise agrees, or becomes liable, to pay and bear
a share of the costs and risks of conducting an operation under the Agreement. 
 “Personal Expenses” means reimbursed costs
for travel and temporary living expenses. 
 “Railway Receiving Point” means the railhead nearest the Joint Property for
which freight rates are published, even though an actual railhead may not exist. 
 “Shore Base Facilities” means onshore
support facilities that during Joint Operations provide such services to the Joint Property as a receiving and transshipment point for Materials; debarkation point for drilling and production personnel and services; communication, scheduling and
dispatching center; and other associated functions serving the Joint Property. 
 “Supply Store” means a recognized source
or common stock point for a given Material item. 
 “Technical Services” means services providing specific engineering,
geoscience, or other professional skills, such as those performed by engineers, geologists, geophysicists, and technicians, required to handle specific operating conditions and problems for the benefit of Joint Operations; provided, however,
Technical Services shall not include those functions specifically identified as overhead under the second paragraph of the introduction of Section III (Overhead). Technical Services may be provided by the Operator, Operator’s Affiliate,
Non-Operator, Non-Operator Affiliates, and/or third parties. 
  

	2.	STATEMENTS AND BILLINGS 

 The Operator shall bill Non-Operators on or before the last day
of the month for their proportionate share of the Joint Account for the preceding month. Such bills shall be accompanied by statements that identify the AFE (authority for expenditure), lease or facility, and all charges and credits summarized by
appropriate categories of investment and expense. Controllable Material shall be separately identified and fully described in detail, or at the Operator’s option, Controllable Material may be summarized by major Material classifications.
Intangible drilling costs, audit adjustments, and unusual charges and credits shall be separately and clearly identified. 
 The Operator may
make available to Non-Operators any statements and bills required under Section I.2 and/or Section I.3.A (Advances and Payments by the Parties) via email, electronic data interchange, internet websites or other equivalent electronic media in
lieu of paper copies. The Operator shall provide the Non-Operators instructions and any necessary information to access and receive the statements and bills within the timeframes specified herein. A statement or billing shall be deemed as delivered
twenty-four (24) hours (exclusive of weekends and holidays) after the Operator notifies the Non-Operator that the statement or billing is available on the website and/or sent via email or electronic data interchange transmission. Each
Non-Operator individually shall elect to receive statements and billings electronically, if available from the Operator, or request paper copies. Such election may be changed upon thirty (30) days prior written notice to the Operator. 

  
 COPYRIGHT © 2005 by Council of
Petroleum Accountants Societies, Inc. (COPAS) 

  
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	3.	ADVANCES AND PAYMENTS BY THE PARTIES 

  

	 	A.	Unless otherwise provided for in the Agreement, the Operator may require the Non-Operators to advance their share of the estimated cash outlay for the succeeding month’s operations within fifteen (15) days
after receipt of the advance request or by the first day of the month for which the advance is required, whichever is later. The Operator shall adjust each monthly billing to reflect advances received from the Non-Operators for such month. If a
refund is due, the Operator shall apply the amount to be refunded to the subsequent month’s billing or advance, unless the Non-Operator sends the Operator a written request for a cash refund. The Operator shall remit the refund to the
Non-Operator within fifteen (15) days of receipt of such written request. 

  

	 	B.	Except as provided below, each Party shall pay its proportionate share of all bills in full within fifteen (15) days of receipt date. If payment is not made within such time, the unpaid balance shall bear interest
compounded monthly at the prime rate published by the Wall Street Journal on the first day of each month the payment is delinquent, plus three percent (3%), per annum, or the maximum contract rate permitted by the applicable usury Laws
governing the Joint Property, whichever is the lesser, plus attorney’s fees, court costs, and other costs in connection with the collection of unpaid amounts. If the Wall Street Journal ceases to be published or discontinues publishing a
prime rate, the unpaid balance shall bear interest compounded monthly at the prime rate published by the Federal Reserve plus three percent (3%), per annum. Interest shall begin accruing on the first day of the month in which the payment was due.
Payment shall not be reduced or delayed as a result of inquiries or anticipated credits unless the Operator has agreed. Notwithstanding the foregoing, the Non-Operator may reduce payment, provided it furnishes documentation and explanation to the
Operator at the time payment is made, to the extent such reduction is caused by: 

  

	 	(1)	being billed at an incorrect working interest or Participating Interest that is higher than such Non-Operator’s actual working interest or Participating Interest, as applicable; or 

 

	 	(2)	being billed for a project or AFE requiring approval of the Parties under the Agreement that the Non-Operator has not approved or is not otherwise obligated to pay under the Agreement; or 

 

	 	(3)	being billed for a property in which the Non-Operator no longer owns a working interest, provided the Non-Operator has furnished the Operator a copy of the recorded assignment or letter in-lieu. Notwithstanding the
foregoing, the Non-Operator shall remain responsible for paying bills attributable to the interest it sold or transferred for any bills rendered during the thirty (30) day period following the Operator’s receipt of such written notice; or

  

	 	(4)	charges outside the adjustment period, as provided in Section I.4 (Adjustments). 

  

	4.	ADJUSTMENTS 

  

	 	A.	Payment of any such bills shall not prejudice the right of any Party to protest or question the correctness thereof; however, all bills and statements, including payout statements, rendered during any calendar year
shall conclusively be presumed to be true and correct, with respect only to expenditures, after twenty-four (24) months following the end of any such calendar year, unless within said period a Party takes specific detailed written exception
thereto making a claim for adjustment. The Operator shall provide a response to all written exceptions, whether or not contained in an audit report, within the time periods prescribed in Section I.5 (Expenditure Audits). 

 

	 	B.	All adjustments initiated by the Operator, except those described in items (1) through (4) of this Section I.4.B, are limited to the twenty-four (24) month period following the end of the calendar year in
which the original charge appeared or should have appeared on the Operator’s Joint Account statement or payout statement. Adjustments that may be made beyond the twenty-four (24) month period are limited to adjustments resulting from the
following: 

  

	 	(1)	a physical inventory of Controllable Material as provided for in Section V (Inventories of Controllable Material), or 

  

	 	(2)	an offsetting entry (whether in whole or in part) that is the direct result of a specific joint interest audit exception granted by the Operator relating to another property, or 

 

	 	(3)	a government/regulatory audit, or 

  

	 	(4)	a working interest ownership or Participating Interest adjustment. 

  

	5.	EXPENDITURE AUDITS 

  

	 	A.	A Non-Operator, upon written notice to the Operator and all other Non-Operators, shall have the right to audit the Operator’s accounts and records relating to the Joint Account within the twenty-four
(24) month period following the end of such calendar year in which such bill was rendered; however, conducting an audit shall not extend the time for the taking of written exception to and the adjustment of accounts as provided for in Section
I.4 (Adjustments). Any Party that is subject to payout accounting under the Agreement shall have the right to audit the accounts and records of the Party responsible for preparing the payout statements, or of the Party furnishing information
to the Party responsible for preparing payout statements. Audits of payout accounts may include the volumes of hydrocarbons produced and saved and proceeds received for such hydrocarbons as they pertain to payout accounting required under the
Agreement. Unless otherwise provided in the Agreement, audits of a payout account shall be conducted within the twenty-four (24) month period following the end of the calendar year in which the payout statement was rendered. 

Where there are two or more Non-Operators, the Non-Operators shall make every reasonable effort to conduct a joint audit in a manner that will
result in a minimum of inconvenience to the Operator. The Operator shall bear no portion of the Non-Operators audit cost incurred under this paragraph unless agreed to by the Operator. The audits shall not be conducted more than once each year
without prior approval of the Operator, except upon the resignation or removal of the Operator, and shall be made at the expense of those Non-Operators approving such audit. 

  
 COPYRIGHT © 2005 by Council of
Petroleum Accountants Societies, Inc. (COPAS) 

  
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	  	 COPAS 2005 Accounting Procedure

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The Non-Operator leading the audit (hereinafter “lead audit company”) shall issue the audit report within ninety (90) days after
completion of the audit testing and analysis; however, the ninety (90) day time period shall not extend the twenty-four (24) month requirement for taking specific detailed written exception as required in Section I.4.A (Adjustments)
above. All claims shall be supported with sufficient documentation. 
 A timely filed written exception or audit report containing written
exceptions (hereinafter “written exceptions”) shall, with respect to the claims made therein, preclude the Operator from asserting a statute of limitations defense against such claims, and the Operator hereby waives its right to assert any
statute of limitations defense against such claims for so long as any Non-Operator continues to comply with the deadlines for resolving exceptions provided in this Accounting Procedure. If the Non-Operators fail to comply with the additional
deadlines in Section I.5.B or I.5.C, the Operator’s waiver of its rights to assert a statute of limitations defense against the claims brought by the Non-Operators shall lapse, and such claims shall then be subject to the applicable statute of
limitations, provided that such waiver shall not lapse in the event that the Operator has failed to comply with the deadlines in Section I.5.B or I.5.C. 
  

	 	B.	The Operator shall provide a written response to all exceptions in an audit report within one hundred eighty (180) days after Operator receives such report. Denied exceptions should be accompanied by a substantive
response. If the Operator fails to provide substantive response to an exception within this one hundred eighty (180) day period, the Operator will owe interest on that exception or portion thereof, if ultimately granted, from the date it
received the audit report. Interest shall be calculated using the rate set forth in Section I.3.B (Advances and Payments by the Parties). 

  

	 	C.	The lead audit company shall reply to the Operator’s response to an audit report within ninety (90) days of receipt, and the Operator shall reply to the lead audit company’s follow-up response within
ninety (90) days of receipt; provided, however, each Non-Operator shall have the right to represent itself if it disagrees with the lead audit company’s position or believes the lead audit company is not adequately fulfilling its duties.
Unless otherwise provided for in Section I.5.E, if the Operator fails to provide substantive response to an exception within this ninety (90) day period, the Operator will owe interest on that exception or portion thereof, if ultimately
granted, from the date it received the audit report. Interest shall be calculated using the rate set forth in Section I.3.B (Advances and Payments by the Parties). 

 

	 	D.	If any Party fails to meet the deadlines in Sections I.5.B or I.5.C or if any audit issues are outstanding fifteen (15) months after Operator receives the audit report, the Operator or any Non-Operator
participating in the audit has the right to call a resolution meeting, as set forth in this Section I.5.D or it may invoke the dispute resolution procedures included in the Agreement, if applicable. The meeting will require one month’s written
notice to the Operator and all Non-Operators participating in the audit. The meeting shall be held at the Operator’s office or mutually agreed location, and shall be attended by representatives of the Parties with authority to resolve such
outstanding issues. Any Party who fails to attend the resolution meeting shall be bound by any resolution reached at the meeting. The lead audit company will make good faith efforts to coordinate the response and positions of the Non-Operator
participants throughout the resolution process; however, each Non-Operator shall have the right to represent itself. Attendees will make good faith efforts to resolve outstanding issues, and each Party will be required to present substantive
information supporting its position. A resolution meeting may be held as often as agreed to by the Parties. Issues unresolved at one meeting may be discussed at subsequent meetings until each such issue is resolved. 

If the Agreement contains no dispute resolution procedures and the audit issues cannot be resolved by negotiation, the dispute shall be
submitted to mediation. In such event, promptly following one Party’s written request for mediation, the Parties to the dispute shall choose a mutually acceptable mediator and share the costs of mediation services equally. The Parties shall
each have present at the mediation at least one individual who has the authority to settle the dispute. The Parties shall make reasonable efforts to ensure that the mediation commences within sixty (60) days of the date of the mediation
request. Notwithstanding the above, any Party may file a lawsuit or complaint (1) if the Parties are unable after reasonable efforts, to commence mediation within sixty (60) days of the date of the mediation request, (2) for statute
of limitations reasons, or (3) to seek a preliminary injunction or other provisional judicial relief, if in its sole judgment an injunction or other provisional relief is necessary to avoid irreparable damage or to preserve the status quo.
Despite such action, the Parties shall continue to try to resolve the dispute by mediation. 
  

	 	E.	x (Optional Provision – Forfeiture Penalties) 

If the Non-Operators fail to meet the deadline in Section I.5.C, any unresolved exceptions that were not addressed by the Non-Operators
within one (1) year following receipt of the last substantive response of the Operator shall be deemed to have been withdrawn by the Non-Operators. If the Operator fails to meet the deadlines in Section I.5.B or I.5. C, any unresolved
exceptions that were not addressed by the Operator within one (1) year following receipt of the audit report or receipt of the last substantive response of the Non-Operators, whichever is later, shall be deemed to have been granted by the
Operator and adjustments shall be made, without interest, to the Joint Account. 
  

	6.	APPROVAL BY PARTIES 

  

	 	A.	GENERAL MATTERS 

 Where an approval or other agreement of the Parties or Non-Operators is
expressly required under other Sections 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 of the
Operator’s proposal and the agreement or approval of a majority in interest of the Non-Operators shall be controlling on all Non-Operators. 

  
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This Section I.6.A applies to specific situations of limited duration where a Party proposes to change the accounting for charges from that
prescribed in this Accounting Procedure. This provision does not apply to amendments to this Accounting Procedure, which are covered by Section I.6.B. 
  

	 	B.	AMENDMENTS 

 If the Agreement to which this Accounting Procedure is attached contains no
contrary provisions in regard thereto, this Accounting Procedure can be amended by an affirmative vote of three (3) or more Parties, one of which is the Operator, having a combined working interest of at least
seventy-five percent (75%), which approval shall be binding on all Parties, provided, however, approval of at least one (1) Non-Operator shall be required. 

 

	 	C.	AFFILIATES 

 For the purpose of administering the voting procedures of Sections I.6. A and
I.6.B, if Parties to this Agreement are Affiliates of each other, then such Affiliates shall be combined and treated as a single Party having the combined working interest or Participating Interest of such Affiliates. 

For the purposes of administering the voting procedures in Section I.6.A, if a Non-Operator is an Affiliate of the Operator, votes under
Section I.6.A shall require the majority in interest of the Non-Operator(s) after excluding the interest of the Operator’s Affiliate. 

II. DIRECT CHARGES 
 The Operator shall
charge the Joint Account with the following items: 
  

	1.	RENTALS AND ROYALTIES 

 Lease rentals and royalties paid by the Operator, on behalf of
all Parties, for the Joint Operations. 
  

	2.	LABOR 

  

	 	A.	Salaries and wages, including incentive compensation programs as set forth in COPAS MFI-37 (“Chargeability of Incentive Compensation Programs”), for: 

 

	 	(1)	Operator’s field employees directly employed On-site in the conduct of Joint Operations, 

  

	 	(2)	Operator’s employees directly employed on Shore Base Facilities, Offshore Facilities, or other facilities serving the Joint Property if such costs are not charged under Section II.6 (Equipment and Facilities
Furnished by Operator) or are not a function covered under Section III (Overhead), 

  

	 	(3)	Operator’s employees providing First Level Supervision, 

  

	 	(4)	Operator’s employees providing On-site Technical Services for the Joint Property if such charges are excluded from the overhead rates in Section III (Overhead), 

 

	 	(5)	Operator’s employees providing Off-site Technical Services for the Joint Property if such charges are excluded from the overhead rates in Section III (Overhead). 

Charges for the Operator’s employees identified in Section II.2.A may be made based on the employee’s actual salaries and wages, or
in lieu thereof, a day rate representing the Operator’s average salaries and wages of the employee’s specific job category. 

Charges for personnel chargeable under this Section II.2.A who are foreign nationals shall not exceed comparable compensation paid to an
equivalent U.S. employee pursuant to this Section II.2, unless otherwise approved by the Parties pursuant to Section I.6.A (General Matters). 
  

	 	B.	Operator’s cost of holiday, vacation, sickness, and disability benefits, and other customary allowances paid to employees whose salaries and wages are chargeable to the Joint Account under Section II.2.A, excluding
severance payments or other termination allowances. Such costs under this Section II.2.B 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
Section II.2.A. 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 that are applicable to costs chargeable to the Joint Account under Sections II.2.A and B. 

  
 COPYRIGHT © 2005 by Council of
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	 	D.	Personal Expenses of personnel whose salaries and wages are chargeable to the Joint Account under Section II.2.A when the expenses are incurred in connection with directly chargeable activities. 

 

	 	E.	Reasonable relocation costs incurred in transferring to the Joint Property personnel whose salaries and wages are chargeable to the Joint Account under Section II.2.A. Notwithstanding the foregoing, relocation costs
that result from reorganization or merger of a Party, or that are for the primary benefit of the Operator, shall not be chargeable to the Joint Account. Extraordinary relocation costs, such as those incurred as a result of transfers from remote
locations, such as Alaska or overseas, shall not be charged to the Joint Account unless approved by the Parties pursuant to Section I.6.A (General Matters). 

 

	 	F.	Training costs as specified in COPAS MFI-35 (“Charging of Training Costs to the Joint Account”) for personnel whose salaries and wages are chargeable under Section II.2.A. This training charge shall include
the wages, salaries, training course cost, and Personal Expenses incurred during the training session. The training cost shall be charged or allocated to the property or properties directly benefiting from the training. The cost of the training
course shall not exceed prevailing commercial rates, where such rates are available. 

  

	 	G.	Operator’s current cost of established plans for employee benefits, as described in COPAS MFI-27 (“Employee Benefits Chargeable to Joint Operations and Subject to Percentage Limitation”), applicable to
the Operator’s labor costs chargeable to the Joint Account under Sections II.2.A and B based on the Operator’s actual cost not to exceed the employee benefits limitation percentage most recently recommended by COPAS. 

 

	 	H.	Award payments to employees, in accordance with COPAS MFI-49 (“Awards to Employees and Contractors”) for personnel whose salaries and wages are chargeable under Section II.2.A. 

 

	3.	MATERIAL 

 Material purchased or furnished by the Operator for use on the Joint Property
in the conduct of Joint Operations as provided under Section IV (Material Purchases, Transfers, and Dispositions). Only such Material shall be purchased for or transferred to the Joint Property as may be required for immediate use or is
reasonably practical and consistent with efficient and economical operations. The accumulation of surplus stocks shall be avoided. 
  

	4.	TRANSPORTATION 

  

	 	A.	Transportation of the Operator’s, Operator’s Affiliate’s, or contractor’s personnel necessary for Joint Operations. 

 

	 	B.	Transportation of Material between the Joint Property and another property, or from the Operator’s warehouse or other storage point to the Joint Property, shall be charged to the receiving property using one of the
methods listed below. Transportation of Material from the Joint Property to the Operator’s warehouse or other storage point shall be paid for by the Joint Property using one of the methods listed below: 

 

	 	(1)	If the actual trucking charge is less than or equal to the Excluded Amount the Operator may charge actual trucking cost or a theoretical charge from the Railway Receiving Point to the Joint Property. The basis for the
theoretical charge is the per hundred weight charge plus fuel surcharges from the Railway Receiving Point to the Joint Property. The Operator shall consistently apply the selected alternative. 

 

	 	(2)	If the actual trucking charge is greater than the Excluded Amount, the Operator shall charge Equalized Freight. Accessorial charges such as loading and unloading costs, split pick-up costs, detention, call out charges,
and permit fees shall be charged directly to the Joint Property and shall not be included when calculating the Equalized Freight. 

  

	5.	SERVICES 

 The cost of contract services, equipment, and utilities used in the conduct of
Joint Operations, except for contract services, equipment, and utilities covered by Section III (Overhead), or Section II.7 (Affiliates), or excluded under Section II.9 (Legal Expense). Awards paid to contractors shall be
chargeable pursuant to COPAS MFI-49 (“Awards to Employees and Contractors”). 
 

The costs of third party Technical Services are chargeable to the extent excluded from the overhead rates under Section III (Overhead).

  

	6.	EQUIPMENT AND FACILITIES FURNISHED BY OPERATOR 

 In the absence of a separately
negotiated agreement, equipment and facilities furnished by the Operator will be charged as follows: 
 A. Except as otherwise provided, the
Operator shall charge the Joint Account for use of Operator-owned equipment and facilities, including but not limited to production facilities, Shore Base Facilities, Offshore Facilities, and Field Offices, at rates commensurate with the
costs of ownership and operation. The cost of Field Offices shall be chargeable to the extent the Field Offices provide direct service to personnel who are chargeable pursuant to Section II.2.A (Labor). Such rates may include labor,
maintenance, repairs, other operating expense, insurance, taxes, depreciation using straight line depreciation method, and interest on gross investment less accumulated depreciation not to exceed      percent
(    %) per annum; provided, however, depreciation shall not be charged when the 

  
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equipment and facilities investment have been fully depreciated. The rate may include an element of the estimated cost for abandonment, reclamation, and dismantlement. Such rates shall
not exceed the average commercial rates currently prevailing in the immediate area of the Joint Property. 
  

	 	B.	In lieu of charges in Section II.6.A above, the Operator may elect to use average commercial rates prevailing in the immediate area of the Joint Property, less twenty percent (20%). If equipment and facilities
are charged under this Section II.6.B, the Operator shall adequately document and support commercial rates and shall periodically review and update the rate and the supporting documentation. For automotive equipment, the Operator may
elect to use rates published by the Petroleum Motor Transport Association (PMTA) or such other organization recognized by COPAS as the official source of rates. 

  

	7.	AFFILIATES 

 A. Charges for an Affiliate’s goods and/or services used in
operations requiring an AFE or other authorization from the Non-Operators may be made without the approval of the Parties provided (i) the Affiliate is identified and the Affiliate goods and services are specifically detailed in the approved
AFE or other authorization, and (ii) the total costs for such Affiliate’s goods and services billed to such individual project do not exceed $          If the total costs for an Affiliate’s
goods and services charged to such individual project are not specifically detailed in the approved AFE or authorization or exceed such amount, charges for such Affiliate shall require approval of the Parties, pursuant to Section I.6.A (General
Matters). 
 B. For an Affiliate’s goods and/or services used in operations not requiring an AFE or other authorization from the
Non-Operators, charges for such Affiliate’s goods and services shall require approval of the Parties, pursuant to Section I.6.A (General Matters), if the charges exceed $          in a given
calendar year. 
 C. The cost of the Affiliate’s goods or services shall not exceed average commercial rates prevailing in the area of
the Joint Property, unless the Operator obtains the Non-Operator’s approval of such rates. The Operator shall adequately document and support commercial rates and shall periodically review and update the rate and the supporting documentation;
provided, however, documentation of commercial rates shall not be required if the Operator obtains Non-Operator approval of its Affiliate’s rates or charges prior to billing Non-Operators for such Affiliate’s goods and services.
Notwithstanding the foregoing, direct charges for Affiliate owned communication facilities or systems shall be made pursuant to Section II.12 (Communications). 

If the Parties fail to designate an amount in Sections II.7.A or II.7.B, in each instance the amount deemed adopted by the Parties as a result of such
omission shall be the amount established as the Operator’s expenditure limitation in the Agreement. If the Agreement does not contain an Operator’s expenditure limitation, the amount deemed adopted by the Parties as a result of such
omission shall be zero dollars ($0.00). 
  

	8.	DAMAGES AND LOSSES TO JOINT PROPERTY 

 All costs or expenses necessary for the repair or
replacement of Joint Property resulting from damages or losses incurred, except to the extent such damages or losses result from a Party’s or Parties’ gross negligence or willful misconduct, in which case such Party or Parties shall be
solely liable. 
 The Operator shall furnish the Non-Operator written notice of damages or losses incurred as soon as practicable after a
report has been received by the Operator. 
  

	9.	LEGAL EXPENSE 

 Recording fees and costs of handling, settling, or otherwise discharging
litigation, claims, and liens incurred in or resulting from operations under the Agreement, or necessary to protect or recover the Joint Property, to the extent permitted under the Agreement. Costs of the Operator’s or Affiliate’s
legal staff or outside attorneys, including fees and expenses, are not chargeable unless approved by the Parties pursuant to Section I.6.A (General Matters) or otherwise provided for in the Agreement. 

Notwithstanding the foregoing paragraph, costs for procuring abstracts, fees paid to outside attorneys for title examinations (including
preliminary, supplemental, shut-in royalty opinions, division order title opinions), and curative work shall be chargeable to the extent permitted as a direct charge in the Agreement. 

 

	10.	TAXES AND PERMITS 

 All taxes and permitting fees of every kind and nature, assessed or
levied upon or in connection with the Joint Property, or the production therefrom, and which have been paid by the Operator for the benefit of the Parties, including penalties and interest, except to the extent the penalties and interest result from
the Operator’s gross negligence or willful misconduct. 
 If ad valorem taxes paid by the Operator are based in whole or in part upon
separate valuations of each Party’s working interest, then notwithstanding any contrary provisions, the charges to the Parties will be made in accordance with the tax value generated by each Party’s working interest. 

  
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Costs of tax consultants or advisors, the Operator’s employees, or Operator’s Affiliate employees in matters regarding ad valorem or
other tax matters, are not permitted as direct charges unless approved by the Parties pursuant to Section I.6.A (General Matters). 

Charges to the Joint Account resulting from sales/use tax audits, including extrapolated amounts and penalties and interest, are permitted,
provided the Non-Operator shall be allowed to review the invoices and other underlying source documents which served as the basis for tax charges and to determine that the correct amount of taxes were charged to the Joint Account. If the
Non-Operator is not permitted to review such documentation, the sales/use tax amount shall not be directly charged unless the Operator can conclusively document the amount owed by the Joint Account. 

 

	11.	INSURANCE 

 Net premiums paid for insurance required to be carried for Joint Operations
for the protection of the Parties. If Joint Operations are conducted at locations where the Operator acts as self-insurer in regard to its worker’s compensation and employer’s liability insurance obligation, the Operator shall charge the
Joint Account manual rates for the risk assumed in its self-insurance program as regulated by the jurisdiction governing the Joint Property. In the case of offshore operations in federal waters, the manual rates of the adjacent state shall be used
for personnel performing work On-site, and such rates shall be adjusted for offshore operations by the U.S. Longshoreman and Harbor Workers (USL&H) or Jones Act surcharge, as appropriate. 

 

	12.	COMMUNICATIONS 

 Costs of acquiring, leasing, installing, operating, repairing, and
maintaining communication facilities or systems, including satellite, radio and microwave facilities, between the Joint Property and the Operator’s office(s) directly responsible for field operations in accordance with the provisions of COPAS
MFI-44 (“Field Computer and Communication Systems”). If the communications facilities or systems serving the Joint Property are Operator-owned, charges to the Joint Account shall be made as provided in Section II.6 (Equipment and
Facilities Furnished by Operator). If the communication facilities or systems serving the Joint Property are owned by the Operator’s Affiliate, charges to the Joint Account shall not exceed average commercial rates prevailing in the area of
the Joint Property. The Operator shall adequately document and support commercial rates and shall periodically review and update the rate and the supporting documentation. 
  

	13.	ECOLOGICAL, ENVIRONMENTAL, AND SAFETY 

 Costs incurred for Technical Services and
drafting to comply with ecological, environmental and safety Laws or standards recommended by Occupational Safety and Health Administration (OSHA) or other regulatory authorities. All other labor and functions incurred for ecological, environmental
and safety matters, including management, administration, and permitting, shall be covered by Sections II.2 (Labor), II.5 (Services), or Section III (Overhead), as applicable. 

Costs to provide or have available pollution containment and removal equipment plus actual costs of control and cleanup and resulting
responsibilities of oil and other spills as well as discharges from permitted outfalls as required by applicable Laws, or other pollution containment and removal equipment deemed appropriate by the Operator for prudent operations, are directly
chargeable. 
  

	14.	ABANDONMENT AND RECLAMATION 

 Costs incurred for abandonment and reclamation of the Joint
Property, including costs required by lease agreements or by Laws. 
  

	15.	OTHER EXPENDITURES 

 Any other expenditure not covered or dealt with in the foregoing
provisions of this Section II (Direct Charges), or in Section III (Overhead) and which is of direct benefit to the Joint Property and is incurred by the Operator in the necessary and proper conduct of the Joint Operations. Charges made
under this Section II.15 shall require approval of the Parties, pursuant to Section I.6.A (General Matters). 
 

III. OVERHEAD 
 As compensation for costs
not specifically identified as chargeable to the Joint Account pursuant to Section II (Direct Charges), the Operator shall charge the Joint Account in accordance with this Section III. 

Functions included in the overhead rates regardless of whether performed by the Operator, Operator’s Affiliates or third parties and regardless of
location, shall include, but not be limited to, costs and expenses of: 
  

	 	•	 	warehousing, other than for warehouses that are jointly owned under this Agreement 

  

	 	•	 	design and drafting (except when allowed as a direct charge under Sections II.13, III.1.A(ii), and III.2, Option B) 

  

	 	•	 	inventory costs not chargeable under Section V (Inventories of Controllable Material) 

  

	 	•	 	procurement 

  

	 	•	 	administration 

  

	 	•	 	accounting and auditing 

  

	 	•	 	gas dispatching and gas chart integration 

  
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	 	•	 	human resources 

  

	 	•	 	management 

  

	 	•	 	supervision not directly charged under Section II.2 (Labor) 

  

	 	•	 	legal services not directly chargeable under Section II.9 (Legal Expense) 

  

	 	•	 	taxation, other than those costs identified as directly chargeable under Section II.10 (Taxes and Permits) 

  

	 	•	 	preparation and monitoring of permits and certifications; preparing regulatory reports; appearances before or meetings with governmental agencies or other authorities having jurisdiction over the Joint Property, other
than On-site inspections; reviewing, interpreting, or submitting comments on or lobbying with respect to Laws or proposed Laws. 

 Overhead
charges shall include the salaries or wages plus applicable payroll burdens, benefits, and Personal Expenses of personnel performing overhead functions, as well as office and other related expenses of overhead functions. 

 

	1.	OVERHEAD—DRILLING AND PRODUCING OPERATIONS 

 As compensation for costs incurred but
not chargeable under Section II (Direct Charges) and not covered by other provisions of this Section III, the Operator shall charge on either: 
  

	 	x	(Alternative 1) Fixed Rate Basis, Section III.1.B. 

  

	 	 ̈	(Alternative 2) Percentage Basis, Section III.1.C. 

  

	 	A.	TECHNICAL SERVICES 

  

	 	(i)	Except as otherwise provided in Section II.13 (Ecological Environmental, and Safety) and Section III.2 (Overhead – Major Construction and Catastrophe), or by approval of the Parties pursuant to
Section I.6.A (General Matters), the salaries, wages, related payroll burdens and benefits, and Personal Expenses for On-site Technical Services, including third party Technical Services: 

 

	 	x	(Alternative 1 – Direct) shall be charged direct to the Joint Account. 

  

	 	 ̈	(Alternative 2 – Overhead) shall be covered by the overhead rates. 

  

	 	(ii)	Except as otherwise provided in Section II.13 (Ecological, Environmental, and Safety) and Section III.2 (Overhead – Major Construction and Catastrophe), or by approval of the Parties pursuant to
Section I.6.A (General Matters), the salaries, wages, related payroll burdens and benefits, and Personal Expenses for Off-site Technical Services, including third party Technical Services: 

 

	 	 ̈	(Alternative 1 – All Overhead) shall be covered by the overhead rates. 

  

	 	 ̈	(Alternative 2 – All Direct) shall be charged direct to the Joint Account. 

  

	 	x	(Alternative 3 – Drilling Direct) shall be charged direct to the Joint Account, only to the extent such Technical Services are directly attributable to drilling, redrilling,
deepening, or sidetracking operations, through completion, temporary abandonment, or abandonment if a dry hole. Off-site Technical Services for all other operations, including workover, recompletion, abandonment of producing wells, and the
construction or expansion of fixed assets not covered by Section III.2 (Overhead - Major Construction and Catastrophe) shall be covered by the overhead rates. 

Notwithstanding anything to the contrary in this Section III, Technical Services provided by Operator’s Affiliates are subject to
limitations set forth in Section II.7 (Affiliates). Charges for Technical personnel performing non-technical work shall not be governed by this Section III.1.A, but instead governed by other provisions of this Accounting Procedure relating to
the type of work being performed. 
 
  

	B.	OVERHEAD—FIXED RATE BASIS 

  

	 	(1)	The Operator shall charge the Joint Account at the following rates per well per month: 

Drilling Well Rate per month $8,000 (prorated for less than a full month) 

Producing Well Rate per month $800 
  

	 	(2)	Application of Overhead—Drilling Well Rate shall be as follows: 

  

	 	(a)	Charges for onshore drilling wells shall begin on the spud date and terminate on the date the drilling and/or completion equipment used on the well is released, whichever occurs later. Charges for offshore and inland
waters drilling wells shall begin on the date the drilling or completion equipment arrives on location and terminate on the date the drilling or completion equipment moves off location, or is released, whichever occurs first. No charge shall be made
during suspension of drilling and/or completion operations for fifteen (15) or more consecutive calendar days. 

  
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	 	(b)	Charges for any well undergoing any type of workover, recompletion, and/or abandonment for a period of five (5) or more consecutive work-days shall be made at the Drilling Well Rate. Such charges shall be applied
for the period from date operations, with rig or other units used in operations, commence through date of rig or other unit release, except that no charges shall be made during suspension of operations for fifteen (15) or more consecutive
calendar days. 

  

	 	(3)	Application of Overhead—Producing Well Rate shall be as follows: 

  

	 	(a)	An active well that is produced, injected into for recovery or disposal, or used to obtain water supply to support operations for any portion of the month shall be considered as a one-well charge for the entire month.

  

	 	(b)	Each active completion in a multi-completed well shall be considered as a one-well charge provided each completion is considered a separate well by the governing regulatory authority. 

 

	 	(c)	A one-well charge shall be made for the month in which plugging and abandonment operations are completed on any well, unless the Drilling Well Rate applies, as provided in Sections III.1.B.(2)(a) or (b). This one-well
charge shall be made whether or not the well has produced. 

  

	 	(d)	An active gas well shut in because of overproduction or failure of a purchaser, processor, or transporter to take production shall be considered as a one-well charge provided the gas well is directly connected to a
permanent sales outlet. 

  

	 	(e)	Any well not meeting the criteria set forth in Sections III.1.B.(3) (a), (b), (c), or (d) shall not qualify for a producing overhead charge. 

 

	 	(4)	The well rates shall be adjusted on the first day of April each year following the effective date of the Agreement; provided, however, if this Accounting Procedure is attached to or otherwise governing the payout
accounting under a farmout agreement, the rates shall be adjusted on the first day of April each year following the effective date of such farmout agreement. The adjustment shall be computed by applying the adjustment factor most recently published
by COPAS. The adjusted rates shall be the initial or amended rates agreed to by the Parties increased or decreased by the adjustment factor described herein, for each year from the effective date of such rates, in accordance with COPAS MFI-47
(“Adjustment of Overhead Rates”). 

  

	C.	OVERHEAD—PERCENTAGE BASIS 

  

	 	(1)	Operator shall charge the Joint Account at the following rates: 

  

	 	(a)	Development Rate      percent (    )% of the cost of development of the Joint Property, exclusive of costs provided under Section II.9 (Legal Expense) and all
Material salvage credits. 

  

	 	(b)	Operating Rate      percent (    %) of the cost of operating the Joint Property, exclusive of costs provided under Sections II.1 (Rentals and Royalties)
and II.9 (Legal Expense); all Material salvage credits; the value of substances purchased for enhanced recovery; all property and ad valorem taxes, and any other taxes and assessments that are levied, assessed, and paid upon the mineral
interest in and to the Joint Property. 

  

	 	(2)	Application of Overhead—Percentage Basis shall be as follows: 

  

	 	(a)	The Development Rate shall be applied to all costs in connection with: 

  

	 	[i]	drilling, redrilling, sidetracking, or deepening of a well 

  

	 	[ii]	a well undergoing plugback or workover operations for a period of five (5) or more consecutive work days 

  

	 	[iii]	preliminary expenditures necessary in preparation for drilling 

  

	 	[iv]	expenditures incurred in abandoning when the well is not completed as a producer 

  

	 	[v]	construction or installation of fixed assets, the expansion of fixed assets and any other project clearly discernible as a fixed asset, other than Major Construction or Catastrophe as defined in Section III.2
(Overhead-Major Construction and Catastrophe). 

 
  

	 	(b)	The Operating Rate shall be applied to all other costs in connection with Joint Operations, except those subject to Section III.2 (Overhead-Major Construction and Catastrophe). 

 

	2.	OVERHEAD—MAJOR CONSTRUCTION AND CATASTROPHE 

 To compensate the Operator for
overhead costs incurred in connection with a Major Construction project or Catastrophe, the Operator shall either negotiate a rate prior to the beginning of the project, or shall charge the Joint Account for overhead based on the following rates for
any Major Construction project in excess of the Operator’s expenditure limit under the Agreement, or for any Catastrophe regardless of the amount. If the Agreement to which this Accounting Procedure is attached does not contain an expenditure
limit, Major Construction Overhead shall be assessed for any single Major Construction project costing in excess of $100,000 gross. 

  
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Major Construction shall mean the construction and installation of fixed assets, the expansion of fixed assets, and any other project clearly
discernible as a fixed asset required for the development and operation of the Joint Property, or in the dismantlement, abandonment, removal, and restoration of platforms, production equipment, and other operating facilities. 

Catastrophe is defined as a sudden calamitous event bringing damage, loss, or destruction to property or the environment, such as an oil spill,
blowout, explosion, fire, storm, hurricane, or other disaster. The overhead rate shall be applied to those costs necessary to restore the Joint Property to the equivalent condition that existed prior to the event. 

 

	 	A.	If the Operator absorbs the engineering, design and drafting costs related to the project: 

  

	 	(1)	5% of total costs if such costs are less than $100,000; plus 

  

	 	(2)	3% of total costs in excess of $100,000 but less than $1,000,000; plus 

  

	 	(3)	2% of total costs in excess of $1,000,000. 

  

	 	B.	If the Operator charges engineering, design and drafting costs related to the project directly to the Joint Account: 

  

	 	(1)	5% of total costs if such costs are less than $100,000; plus 

  

	 	(2)	3% of total costs in excess of $100,000 but less than $1,000,000; plus 

  

	 	(3)	2% of total costs in excess of $1,000,000. 

 Total cost shall mean the gross cost
of any one project. For the purpose of this paragraph, the component parts of a single Major Construction project shall not be treated separately, and the cost of drilling and workover wells and purchasing and installing pumping units and downhole
artificial lift equipment shall be excluded. For Catastrophes, the rates shall be applied to all costs associated with each single occurrence or event. 

On each project, the Operator shall advise the Non-Operator(s) in advance which of the above options shall apply. 

For the purposes of calculating Catastrophe Overhead, the cost of drilling relief wells, substitute wells, or conducting other well operations
directly resulting from the catastrophic event shall be included. Expenditures to which these rates apply shall not be reduced by salvage or insurance recoveries. Expenditures that qualify for Major Construction or Catastrophe Overhead shall not
qualify for overhead under any other overhead provisions. 
 In the event of any conflict between the provisions of this Section III.2 and
the provisions of Sections II.2 (Labor), II.5 (Services), or II.7 (Affiliates), the provisions of this Section III.2 shall govern. 
  

	3.	AMENDMENT OF OVERHEAD RATES 

 The overhead rates provided for in this Section III may be
amended from time to time if, in practice, the rates are found to be insufficient or excessive, in accordance with the provisions of Section I.6.B (Amendments). 

IV. MATERIAL PURCHASES, TRANSFERS, AND DISPOSITIONS 

The Operator is responsible for Joint Account Material and shall make proper and timely charges and credits for direct purchases, transfers, and dispositions.
The Operator shall purchase and provide all Material contemporaneously as needed for use in the conduct of Joint Operations; however, Material may be supplied by the Non-Operators, at the Operator’s option. Material furnished by any Party shall
be furnished without any express or implied warranties as to quality, fitness for use, or any other matter. 
  

	1.	DIRECT PURCHASES 

 Direct purchases shall be charged to the Joint Account at the price
paid by the Operator after deduction of all discounts received. The Operator shall make good faith efforts to take discounts offered by suppliers, but shall not be liable for failure to take discounts except to the extent such failure was the result
of the Operator’s gross negligence or willful misconduct. A direct purchase shall be deemed to occur when an agreement is made between an Operator and a third party for the acquisition of Material for a specific well site or location. Material
provided by the Operator under “vendor stocking programs,” where the initial use is for a Joint Property and title of the Material does not pass from the manufacturer, distributor, or agent until usage, is considered a direct purchase. If
Material is found to be defective or is returned to the manufacturer, distributor, or agent for any other reason, credit shall be passed to the Joint Account within sixty (60) days after the Operator has received adjustment from the
manufacturer, distributor, or agent. 

  
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	2.	TRANSFERS 

 A transfer is determined to occur when the Operator (i) furnishes
Material from a storage facility or from another operated property, (ii) has assumed liability for the storage costs and changes in value, and (iii) has previously secured and held title to the transferred Material. Similarly, the removal
of Material from the Joint Property to a storage facility or to another operated property is also considered a transfer; provided, however, Material that is moved from the Joint Property to a storage location for safe-keeping pending disposition may
remain charged to the Joint Account and is not considered a transfer. Material shall be disposed of in accordance with Section IV.3 (Disposition of Surplus) and the Agreement to which this Accounting Procedure is attached. 

 

	 	A.	PRICING 

 The value of Material transferred to/from the Joint Property should generally reflect
the market value on the date of physical transfer. Regardless of the pricing method used, the Operator shall make available to the Non-Operators sufficient documentation to verify the Material valuation. When higher than specification grade or size
tubulars are used in the conduct of Joint Operations, the Operator shall charge the Joint Account at the equivalent price for well design specification tubulars, unless such higher specification grade or sized tubulars are approved by the Parties
pursuant to Section I.6.A (General Matters). Transfers of new Material will be priced using one of the following pricing methods; provided, however, the Operator shall use consistent pricing methods, and not alternate between methods for the
purpose of choosing the method most favorable to the Operator for a specific transfer: 
  

	 	(1)	Using published prices in effect on date of movement as adjusted by the appropriate COPAS Historical Price Multiplier (HPM) or prices provided by the COPAS Computerized Equipment Pricing System (CEPS).

  

	 	(a)	For oil country tubulars and line pipe, the published price shall be based upon eastern mill carload base prices (Houston, Texas, for special end) adjusted as of date of movement, plus transportation cost as defined in
Section IV.2.B (Freight). 

  

	 	(b)	For other Material, the published price shall be the published list price in effect at date of movement, as listed by a Supply Store nearest the Joint Property where like Material is normally available, or point of
manufacture plus transportation costs as defined in Section IV.2.B (Freight). 

  

	 	(2)	Based on a price quotation from a vendor that reflects a current realistic acquisition cost. 

  

	 	(3)	Based on the amount paid by the Operator for like Material in the vicinity of the Joint Property within the previous twelve (12) months from the date of physical transfer. 

 

	 	(4)	As agreed to by the Participating Parties for Material being transferred to the Joint Property, and by the Parties owning the Material for Material being transferred from the Joint Property. 

 

	 	B.	FREIGHT 

 Transportation costs shall be added to the Material transfer price using the method
prescribed by the COPAS Computerized Equipment Pricing System (CEPS). If not using CEPS, transportation costs shall be calculated as follows: 
  

	 	(1)	Transportation costs for oil country tubulars and line pipe shall be calculated using the distance from eastern mill to the Railway Receiving Point based on the carload weight basis as recommended by the COPAS MFI-38
(“Material Pricing Manual”) and other COPAS MFIs in effect at the time of the transfer. 

  

	 	(2)	Transportation costs for special mill items shall be calculated from that mill’s shipping point to the Railway Receiving Point. For transportation costs from other than eastern mills, the 30,000-pound interstate
truck rate shall be used. Transportation costs for macaroni tubing shall be calculated based on the interstate truck rate per weight of tubing transferred to the Railway Receiving Point. 

 

	 	(3)	Transportation costs for special end tubular goods shall be calculated using the interstate truck rate from Houston, Texas, to the Railway Receiving Point. 

 

	 	(4)	Transportation costs for Material other than that described in Sections IV.2.B.(1) through (3), shall be calculated from the Supply Store or point of manufacture, whichever is appropriate, to the Railway Receiving Point

 
 Regardless of whether using CEPS or manually
calculating transportation costs, transportation costs from the Railway Receiving Point to the Joint Property are in addition to the foregoing, and may be charged to the Joint Account based on actual costs incurred. All transportation costs are
subject to Equalized Freight as provided in Section II.4 (Transportation) of this Accounting Procedure. 
  

	 	C.	TAXES 

 Sales and use taxes shall be added to the Material transfer price using either the
method contained in the COPAS Computerized Equipment Pricing System (CEPS) or the applicable tax rate in effect for the Joint Property at the time and place of transfer. In either case, the Joint Account shall be charged or credited at the rate that
would have governed had the Material been a direct purchase. 

  
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Recommended by COPAS, Inc.

  

 

	 	D.	CONDITION 

  

	 	(1)	Condition “A” – New and unused Material in sound and serviceable condition shall be charged at actual costs one hundred percent (100%) of the price as determined in Sections IV.2.A
(Pricing), IV.2.B (Freight), and IV.2.C (Taxes). Material transferred from the Joint Property that was not placed in service shall be credited as charged without gain or loss: provided, however, any unused Material that was
charged to the Joint Account through a direct purchase will be credited to the Joint Account at the original cost paid less restocking fees charged by the vendor. New and unused Material transferred from the Joint Property may be credited at a price
other than the price originally charged to the Joint Account provided such price is approved by the Parties owning such Material, pursuant to Section I.6.A (General Matters). All refurbishing costs required or necessary to return the Material
to original condition or to correct handling, transportation, or other damages will be borne by the divesting property. The Joint Account is responsible for Material preparation, handling, and transportation costs for new and unused Material charged
to the Joint Property either through a direct purchase or transfer. Any preparation costs incurred, including any internal or external coating and wrapping, will be credited on new Material provided these services were not repeated for such Material
for the receiving property. 

  

	 	(2)	Condition “B” – Used Material in sound and serviceable condition and suitable for reuse without reconditioning shall be priced by multiplying the price determined in Sections IV.2.A (Pricing),
IV.2.B (Freight), and IV.2.C (Taxes) by seventy-five percent (75%). 

 Except as provided in Section IV.2.D(3),
all reconditioning costs required to return the Material to Condition “B” or to correct handling, transportation or other damages will be borne by the divesting property. 

If the Material was originally charged to the Joint Account as used Material and placed in service for the Joint Property, the Material will
be credited at the price determined in Sections IV.2.A (Pricing), IV.2.B (Freight), and IV.2.C (Taxes) multiplied by sixty-five percent (65%). 

Unless otherwise agreed to by the Parties that paid for such Material, used Material transferred from the Joint Property that was not placed
in service on the property shall be credited as charged without gain or loss. 
  

	 	(3)	Condition “C” – Material that is not in sound and serviceable condition and not suitable for its original function until after reconditioning shall be priced by multiplying the price determined in
Sections IV.2.A (Pricing), IV.2.B (Freight), and IV.2.C (Taxes) by fifty percent (50%). 

 The cost of
reconditioning may be charged to the receiving property to the extent Condition “C” value, plus cost of reconditioning, does not exceed Condition “B” value. 

 

	 	(4)	Condition “D” – Material that (i) is no longer suitable for its original purpose but useable for some other purpose, (ii) is obsolete, or (iii) does not meet original specifications but
still has value and can be used in other applications as a substitute for items with different specifications, is considered Condition “D” Material. Casing, tubing, or drill pipe used as line pipe shall be priced as Grade A and B seamless
line pipe of comparable size and weight. Used casing, tubing, or drill pipe utilized as line pipe shall be priced at used line pipe prices. Casing, tubing, or drill pipe used as higher pressure service lines than standard line pipe, e.g., power oil
lines, shall be priced under normal pricing procedures for casing, tubing, or drill pipe. Upset tubular goods shall be priced on a non-upset basis. For other items, the price used should result in the Joint Account being charged or credited with the
value of the service rendered or use of the Material, or as agreed to by the Parties pursuant to Section 1.6.A (General Matters). 

  

	 	(5)	Condition “E” – Junk shall be priced at prevailing scrap value prices. 

  

	 	E.	OTHER PRICING PROVISIONS 

  

	 	(1)	Preparation Costs 

 Subject to Section II (Direct Charges) and Section III
(Overhead) of this Accounting Procedure, costs incurred by the Operator in making Material serviceable including inspection, third party surveillance services, and other similar services will be charged to the Joint Account at prices which
reflect the Operator’s actual costs of the services. Documentation must be provided to the Non-Operators upon request to support the cost of service. New coating and/or wrapping shall be considered a component of the Materials and priced in
accordance with Sections IV.1 (Direct Purchases) or IV.2.A (Pricing), as applicable. No charges or credits shall be made for used coating or wrapping. Charges and credits for inspections shall be made in accordance with COPAS MFI-38
(“Material Pricing Manual”). 
  

	 	(2)	Loading and Unloading Costs 

 Loading and unloading costs related to the movement of the
Material to the Joint Property shall be charged in accordance with the methods specified in COPAS MFI-38 (“Material Pricing Manual”). 

  
 COPYRIGHT © 2005 by Council of
Petroleum Accountants Societies, Inc. (COPAS) 

  
 13 

			
	

	  	 COPAS 2005 Accounting Procedure

Recommended by COPAS, Inc.

  

 

	3.	DISPOSITION OF SURPLUS 

 Surplus Material is that Material, whether new or used, that is
no longer required for Joint Operations. The Operator may purchase, but shall be under no obligation to purchase, the interest of the Non-Operators in surplus Material. 

Dispositions for the purpose of this procedure are considered to be the relinquishment of title of the Material from the Joint Property to
either a third party, a Non-Operator, or to the Operator. To avoid the accumulation of surplus Material, the Operator should make good faith efforts to dispose of surplus within twelve (12) months through buy/sale agreements, trade, sale to a
third party, division in kind, or other dispositions as agreed to by the Parties. 
 Disposal of surplus Materials shall be made in
accordance with the terms of the Agreement to which this Accounting Procedure is attached. If the Agreement contains no provisions governing disposal of surplus Material, the following terms shall apply: 

 

	 	•	 	The Operator may, through a sale to an unrelated third party or entity, dispose of surplus Material having a gross sale value that is less than or equal to the Operator’s expenditure limit as set forth in the
Agreement to which this Accounting Procedure is attached without the prior approval of the Parties owning such Material. 

  

	 	•	 	If the gross sale value exceeds the Agreement expenditure limit, the disposal must be agreed to by the Parties owning such Material. 

 

	 	•	 	Operator may purchase surplus Condition “A” or “B” Material without approval of the Parties owning such Material, based on the pricing methods set forth in Section IV.2 (Transfers).

  

	 	•	 	Operator may purchase Condition “C” Material without prior approval of the Parties owning such Material if the value of the Materials, based on the pricing methods set forth in Section IV.2 (Transfers),
is less than or equal to the Operator’s expenditure limitation set forth in the Agreement. The Operator shall provide documentation supporting the classification of the Material as Condition C. 

 

	 	•	 	Operator may dispose of Condition “D” or “E” Material under procedures normally utilized by Operator without prior approval of the Parties owning such Material. 

 

	4.	SPECIAL PRICING PROVISIONS 

  

	 	A.	PREMIUM PRICING 

 Whenever Material is available only at inflated prices due to national
emergencies, strikes, government imposed foreign trade restrictions, or other unusual causes over which the Operator has no control, for direct purchase the Operator may charge the Joint Account for the required Material at the Operator’s
actual cost incurred in providing such Material, making it suitable for use, and moving it to the Joint Property. Material transferred or disposed of during premium pricing situations shall be valued in accordance with Section IV.2
(Transfers) or Section IV.3 (Disposition of Surplus), as applicable. 
  

	 	B.	SHOP-MADE ITEMS 

 Items fabricated by the Operator’s employees, or by contract laborers
under the direction of the Operator, shall be priced using the value of the Material used to construct the item plus the cost of labor to fabricate the item. If the Material is from the Operator’s scrap or junk account, the Material shall be
priced at either twenty-five percent (25%) of the current price as determined in Section IV.2.A (Pricing) or scrap value, whichever is higher. In no event shall the amount charged exceed the value of the item commensurate with its use.

  

	 	C.	MILL REJECTS 

 Mill rejects purchased as “limited service” casing or tubing shall be
priced at eighty percent (80%) of K-55/J-55 price as determined in Section IV.2 (Transfers). Line pipe converted to casing or tubing with casing or tubing couplings attached shall be priced as K-55/J-55 casing or tubing at the nearest
size and weight. 
 
 V. INVENTORIES OF CONTROLLABLE MATERIAL

 The Operator shall maintain records of Controllable Material charged to the Joint Account, with sufficient detail to perform physical inventories.

 Adjustments to the Joint Account by the Operator resulting from a physical inventory of Controllable Material shall be made within twelve
(12) months following the taking of the inventory or receipt of Non-Operator inventory report. Charges and credits for overages or shortages will be valued for the Joint Account in accordance with Section IV.2 (Transfers) and shall be
based on the Condition “B” prices in effect on the date of physical inventory unless the inventorying Parties can provide sufficient evidence another Material condition applies. 

  
 COPYRIGHT © 2005 by Council of
Petroleum Accountants Societies, Inc. (COPAS) 

  
 14 

			
	

	  	 COPAS 2005 Accounting Procedure

Recommended by COPAS, Inc.

  

 

	1.	DIRECTED INVENTORIES 

 Physical inventories shall be performed by the Operator upon
written request of a majority in working interests of the Non-Operators (hereinafter, “directed inventory”); provided, however, the Operator shall not be required to perform directed inventories more frequently than once every five
(5) years. Directed inventories shall be commenced within one hundred eighty (180) days after the Operator receives written notice that a majority in interest of the Non-Operators has requested the inventory. All Parties shall be governed
by the results of any directed inventory. 
 Expenses of directed inventories will be borne by the Joint Account; provided, however, costs
associated with any post-report follow-up work in settling the inventory will be absorbed by the Party incurring such costs. The Operator is expected to exercise judgment in keeping expenses within reasonable limits. Any anticipated disproportionate
or extraordinary costs should be discussed and agreed upon prior to commencement of the inventory. Expenses of directed inventories may include the following: 
  

	 	A.	A per diem rate for each inventory person, representative of actual salaries, wages, and payroll burdens and benefits of the personnel performing the inventory or a rate agreed to by the Parties pursuant to Section
I.6.A (General Matters). The per diem rate shall also be applied to a reasonable number of days for pre-inventory work and report preparation. 

  

	 	B.	Actual transportation costs and Personal Expenses for the inventory team. 

  

	 	C.	Reasonable charges for report preparation and distribution to the Non-Operators. 

  

	2.	NON-DIRECTED INVENTORIES 

  

	 	A.	OPERATOR INVENTORIES 

 Physical inventories that are not requested by the Non-Operators may be
performed by the Operator, at the Operator’s discretion. The expenses of conducting such Operator-initiated inventories shall not be charged to the Joint Account. 
  

	 	B.	NON-OPERATOR INVENTORIES 

 Subject to the terms of the Agreement to which this Accounting
Procedure is attached, the Non-Operators may conduct a physical inventory at reasonable times at their sole cost and risk after giving the Operator at least ninety (90) days prior written notice. The Non-Operator inventory report shall be
furnished to the Operator in writing within ninety (90) days of completing the inventory fieldwork. 
  

	 	C.	SPECIAL INVENTORIES 

 The expense of conducting inventories other than those described in
Sections V.1 (Directed Inventories), V.2.A (Operator Inventories), or V.2.B (Non-Operator Inventories), shall be charged to the Party requesting such inventory; provided, however, inventories required due to a change of Operator
shall be charged to the Joint Account in the same manner as described in Section V.1 (Directed Inventories). 

  
 COPYRIGHT © 2005 by Council of
Petroleum Accountants Societies, Inc. (COPAS) 

  
 15 

 EXHIBIT “D” 

 

	
	Attached to and made a part of the Certain Operating Agreement dated                      by and between CrownQuest Operating, LLC
and Lynden USA, Inc., et al, as Non-Operator

 INSURANCE AND INDEMNITY 

Without in any way limiting the Operator’s and Non-Operator’s liability pursuant to this Agreement, Operator shall, at all times while operations
are conducted under this Agreement, maintain for the benefit of all parties hereto, insurance at the types and in the maximum amounts as follows. Premiums for such charges shall be charged to the joint account. 

All such insurance shall be maintained in full force and effect during the terms of this Agreement; however, such insurance may be canceled, altered or
amended as deemed necessary by Operator. If so required, Operator agrees to have its insurance carrier furnish certificates of insurance evidencing such insurance coverages. Operator and non-operating working interest owners agree to mutually waive
subrogation in favor of each other on all insurance carried by each party and/or to obtain such waiver from the insurance carrier if so required by the insurance contract. 

Non-operating working interest owners agree that the limits and coverage carried by the Operator are adequate and shall hold Operator harmless if any claim
exceed such limits or is not covered by such policy. 
  

					
	KIND	  	POLICY FORM	  	 MINIMUM LIMITS OF
 LIABILITY

			
	Workmen’s Compensation	  	Statutory	  	Statutory
 $ 500,000

			
	Commercial General Liability	  	Commercial	  	$ 1,000,000
 General Aggregate

			
	Automobile Liability	  	Comprehensive (including non-ownership liability & hired automobile coverage)	  	$ 1,000,000
 Combined Single
Limit

			
	Liability	  	Umbrella	  	$10,000,000
 Aggregate

			
	Excess Liability	  	Umbrella	  	Excess $10,000,000
			
	Well Control	  	Occurrence	  	$ 3,000,000

 Operator shall require all third party contractors performing work in or on the premises covered hereby to carry insurance and
in such amounts as Operator shall deem necessary. 

 EXHIBIT “F” 

Attached to and made a part of that certain Operating Agreement dated May     , 2010 

By and between CrownQuest Operating, LLC., Operator, 

and LYNDEN USA INC., ET AL., Non-Operators 

GOVERNMENT COMPLIANCE CERTIFICATE 

This contract incorporates the following clauses, certifications and programs by reference with the same force and effect as if they were given in full text:

  

			
	 No AND
FAR SOURCE
	  	 TITLE AND DATE

	 48 CFR §52.219-08
 FAR 19.708(a)
	  	Utilization of Small Business Concerns and Small Disadvantages Business Concerns (Jun 1985)
		
	 48 CFR §52.219-13
 FAR 19.902
	  	Utilization of Women-Owned Small Businesses (Aug 1986)
		
	 48 CFR §52.220-03
 FAR 20.302(a)
	  	Utilization of Labor Surplus Area Concerns (Apr 1984)
		
	 48 CFR §52.222-21
 FAR
22.810(a)(1)
	  	Certification of Nonsegregated Facilities (Apr 1984)
		
	 48 CFR §52.222-25
 FAR 22.810(d)
	  	Affirmative Action Compliance (Apr 1984)
		
	 48 CFR §52.222-26
 FAR 22.810(e)
	  	Equal Opportunity (Apr 1984)
		
	 48 CFR §52.222-35
 FAR 22.1308
	  	Affirmative Action for Special Disabled and Vietnam Era Veterans (Apr 1984)
		
	 48 CFR §52.222-36
 FAR 22.1408
	  	Affirmative Action for Handicapped Workers (Apr 1984)
		
	 48 CFR §52.223-02
 FAR 23.105(b)
	  	Clean Air and Water (Apr 1984)
		
	 48 CFR §52.223-03
 FAR 23.303
	  	Hazardous Material Identification and Material Safety Data (Aug 1987)
		
	 48 CFR §52.223-06
 FAR 23.505(c)
	  	Drug-Free Workplace (Mar 1989)
		
	48 CFR §22-804.1	  	Affirmative Action Programs
		
	 48 CFR §52.220-4
 FAR 20.302(b)
	  	Labor Surplus Area Subcontracting Program (Apr 1984)
		
	 48 CFR §52.219-9
 FAR 19.708(b)
	  	Small Business and Small Disadvantaged Business Subcontracting Plan (Aug 1989)

  
 Page 1 of 1 

 EXHIBIT “H” 

Attached to and made a part of that certain Operating Agreement dated May     , 2010 

By and between CrownQuest Operating, LLC, Operator, 

and LYNDEN USA INC., ET AL., Non-Operator 

MEMORANDUM OF OPERATING AGREEMENT AND
PARTICIPATION AGREEMENT 
 (AND MORTGAGE
AND FINANCING STATEMENT) 
 KNOW ALL MEN BY THESE PRESENTS 

THAT, CROWNQUEST OPERATING, LLC., whose address is P.O. Box 53310, Midland, Texas 79710 (or such
party who may hereafter be designated and serve as Operator under the terms of the below-mentioned Operating Agreement), hereinafter referred to as “Operator”, has entered into a Participation Agreement and Operating Agreement, hereinafter
referred to as “Agreements” with the following party/parties, hereinafter referred to as “Non-Operator”, whether one or more, to-wit: 

Lynden USA Inc. 
 Attn: Colin Watt

 885 West Georgia St, Suite 2150 

Vancouver, BC 
 Canada V6C 3E9

 CrownRock, L.P. 
 Attn: Craig
Clark 
 P.O. Box 52507 

Midland, Texas 79710-2507 
 Such
Agreements are dated and effective as of the May     , 2010 as the same may have thereafter been amended. That such Agreements provides generally for the joint exploration, development and production of oil, gas, and other
hydrocarbons lying in and under the following described lands, to-wit: 
 See Exhibit “A” attached hereto and made a part hereof
for lands in Coke, Mitchell and Sterling counties, Texas 
 That the Agreements provides that every sale, encumbrance, transfer or other
disposition made by any party to the Agreement, shall be expressly subject to the terms and provisions of the Agreements and shall be made without prejudice to the rights of all other parties to the Agreements. 

Among other material provisions of the Agreements, Operator is granted a first lien upon all oil and gas rights of the parties in relation to
the above-described land and a security interest in each party’s share of oil and/or gas when extracted and each party’s interest in all equipment. Such lien and security interest to secure payment of each party’s share of expenses,
together with interest, attributable to the joint exploration, drilling and production of hydrocarbons from the above-described land. Operator is further entitled to exercise the rights and remedies of a secured party under the Uniform Commercial
Code or other comparable law in force in the jurisdiction where the above-described lands are located. Upon default by any Non-Operator in payment of its share of expenses, Operator has the right, without prejudice to other rights and remedies, to
collect from purchasers the proceeds from the sale of such Non-Operator’s share of oil and/or gas until the amount owed by such Non-Operator plus interest, has been paid. Upon request by the Operator, non-defaulting parties shall reimburse
Operator (to the extent unpaid within sixty (60) days from rendition of a statement). Each such non-defaulting party who makes payment of its share of the unpaid amount shall be subrogated to the security rights of Operator mentioned above. The
Agreements grants similar security rights to Non-Operators to secure payment of the debts of Operator. 
 To give further effect to the
provisions of the Agreements, each Non-Operator does hereby grant unto the Operator a first lien and mortgage in and to all of Non-Operator’s oil and gas rights in the Contract Area, including all its right, title and interest in the oil and
gas leases and the leasehold estates in the Contract Area, and a security interest in all of Non-Operator’s share of oil and gas extracted and produced from the Contract Area, and Non- Operator’s share and interest in the equipment used in
the Contract Area, together with proceeds and products of all the foregoing. This mortgage and security agreement shall secure payment of all indebtedness which may (or has) become due and owing to the Operator pursuant to the terms and conditions
of the Agreements. Operator grants a similar mortgage and security interest to each Non-Operator. 
 All prospective assignees, mortgages or
other parties claiming some interest or acquiring some interest by, through or under any of the above-mentioned parties in the above described area are put on notice of the priority of the terms and provisions of the Agreements and are further
advised that Operator may now or in the future claim a lien against one or more of the Non-Operators under the terms of the Agreements. 

The Agreements contain other provisions which limit and restrict the rights of the parties in relation to their specific interests in and to
oil and gas rights. A true and correct copy of such Agreements are available for inspection during business hours at the offices of Operator. Further, information as to amount unpaid by individual Non-Operators in relation to which Operator
presently claims a lien and security interest, is available for inspection to all proper persons in the offices of Operator. 

  
 Page 1 of 2 

 This Memorandum may be executed in any number of counterparts. Counterparts may be combined to
form a single instrument for recording purposes. All parties need not execute in order for the Memorandum to be effective. Failure of a party to execute is not intended to, in any way, limit the notice given by the filing of this Memorandum. 

DATED this      day of
            , 2010, but effective the date of the Agreements above-mentioned. 
  

 
  

			
	CROWNQUEST OPERATING, LLC
		
	By:	 	  

		 	Robert W. Floyd
		 	President
		
	Date:	 	  

  

			
	STATE OF TEXAS	 	§
		
	COUNTY OF MIDLAND	 	§

 This instrument was acknowledged before me on this      day of
            , 2010, by Robert W. Floyd, III, President of CrownQuest Operating, LLC, a Texas Limited Liability Company, on behalf of said limited liability company. 

 

	
	  

	Notary Public, State of Texas

  
  

 

			
	LYNDEN USA INC.
		
	By:	 	  

		 	Colin Watt
		 	President
		
	Date:	 	  

  

			
	STATE OF                     	 	§
		
	COUNTY OF                	 	§

 This instrument was acknowledged before me on this      day of
            , 2010, by Colin Watt, President of Lynden USA Inc., a Utah corporation on behalf of said corporation. 

 

	
	  

	Notary Public

  
  

 

			
	CROWNROCK, L.P.
	 BY CROWNROCK GP, LLC, its General Partner

		
	By:	 	  

		 	Robert W. Floyd
		 	President
		
	Date:	 	  

 
  

			
	STATE OF TEXAS	 	§
		
	COUNTY OF MIDLAND	 	§

 This instrument was acknowledged before me on this      day of
            , 2010, by Robert W. Floyd, President of CROWNROCK GP, LLC, a Delaware limited liability company, as General Partner of
CROWNROCK, L.P., a Delaware limited partnership, on behalf of said limited liability company and said limited partnership. 
  

	
	  

	Notary Public, State of Texas

  
 Page 2 of 2Exhibit 4.1

 

	
  

  	
  THIS CERTIFIES
  THAT is the owner of CUSIP DATED COUNTERSIGNED AND REGISTERED: COMPUTERSHARE
  TRUST COMPANY, N.A. TRANSFER AGENT AND REGISTRAR, FULLY-PAID AND
  NON-ASSESSABLE SHARES OF COMMON STOCK OF Vista Outdoor Inc. (hereinafter
  called the “Company”), transferable on the books of the Company in person or
  by duly authorized attorney, upon surrender of this Certificate properly
  endorsed. This Certificate and the shares represented hereby, are issued and
  shall be held subject to all of the provisions of the Certificate of
  Incorporation, as amended, and the ByLaws, as amended, of the Company (copies
  of which are on file with the Company and with the Transfer Agent), to all of
  which each holder, by acceptance hereof, assents. This Certificate is not
  valid unless countersigned and registered by the Transfer Agent and
  Registrar. Witness the facsimile seal of the Company and the facsimile
  signatures of its duly authorized officers. COMMON STOCK PAR VALUE $0.01
  COMMON STOCK THIS CERTIFICATE IS TRANSFERABLE IN CANTON, MA, JERSEY CITY, NJ
  AND COLLEGE STATION, TX SEE REVERSE FOR CERTAIN DEFINITIONS Certificate
  Number Shares . VISTA OUTDOOR INC. INCORPORATED UNDER THE LAWS OF THE STATE
  OF DELAWARE President Secretary By AUTHORIZED SIGNATURE April 24, 2014 DELAWARE
  VISTA OUTDOOR INC. ZQ|CERT#|COY|CLS|RGSTRY|ACCT#|TRANSTYPE|RUN#|TRANS# 928377
  10 0 DD-MMM-YYYY * * 000000* * * * * * * * * * * * * * * * * * * * * 000000*
  * * * * * * * * * * * * * * * * * * * * 000000* * * * * * * * * * * * * * * *
  * * * * * 000000* * * * * * * * * * * * * * * * * * * * * 000000* * * * * * *
  * * * * * * * ** Mr. Alexander David Sample **** Mr. Alexander David Sample
  **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr.
  Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander
  David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample
  **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr.
  Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David
  Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample ****
  Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander
  David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample
  **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr.
  Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander
  David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample
  **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr.
  Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander
  David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample
  **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr.
  Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander
  David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample
  **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr.
  Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander
  David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample
  **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr.
  Alexander David Sample **** Mr. Sample **** Mr. Sample **000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares***
  *000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****
  000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****0
  00000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****00
  0000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000
  000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****0000
  00**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****00000
  0**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000
  **Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000*
  *Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**
  Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**S
  ***ZERO HUNDRED THOUSAND ZERO HUNDRED AND ZERO*** MR. SAMPLE & MRS.
  SAMPLE & MR. SAMPLE & MRS. SAMPLE ZQ00000000 Certificate Numbers
  1234567890/1234567890 1234567890/1234567890 1234567890/1234567890 1234567890/1234567890
  1234567890/1234567890 1234567890/1234567890 Total Transaction Num/No. 123456
  Denom. 123456 Total 1234567 MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD
  3 ADD 4 PO BOX 43004, Providence, RI 02940-3004 CUSIP XXXXXX XX X Holder ID
  XXXXXXXXXX Insurance Value 1,000,000.00 Number of Shares 123456 DTC 12345678
  123456789012345 

  

 

	
  

  	
  The IRS
  requires that we report the cost basis of certain shares acquired after
  January 1, 2011. If your shares were covered by the legislation and you have
  sold or transferred the shares and requested a specific cost basis
  calculation method, we have processed as requested. If you did not specify a
  cost basis calculation method, we have defaulted to the first in, first out
  (FIFO) method. Please visit our website or consult your tax advisor if you
  need additional information about cost basis. If you do not keep in contact
  with us or do not have any activity in your account for the time periods
  specified by state law, your property could become subject to state unclaimed
  property laws and transferred to the appropriate state. For value received,
  ____________________________hereby sell, assign and transfer unto
  _______________________________________________________________________________________________________________________________
  _______________________________________________________________________________________________________________________________
  _______________________________________________________________________________________________________________________________
  _______________________________________________________________________________________________________________________
  Shares
  _______________________________________________________________________________________________________________________
  Attorney Dated:
  __________________________________________20__________________ Signature:
  ____________________________________________________________ Signature:
  ____________________________________________________________ Notice: The
  signature to this assignment must correspond with the name as written upon
  the face of the certificate, in every particular, without alteration or
  enlargement, or any change whatever. PLEASE INSERT SOCIAL SECURITY OR OTHER
  IDENTIFYING NUMBER OF ASSIGNEE (PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS,
  INCLUDING POSTAL ZIP CODE, OF ASSIGNEE) of the Common Stock represented by
  the within Certificate, and do hereby irrevocably constitute and appoint to
  transfer the said stock on the books of the within-named Company with full
  power of substitution in the premises. . VISTA OUTDOOR INC. THE COMPANY WILL
  FURNISH WITHOUT CHARGE TO EACH SHAREHOLDER WHO SO REQUESTS, A SUMMARY OF THE
  POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL OR
  OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OF THE COMPANY AND THE
  QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES AND RIGHTS,
  AND THE VARIATIONS IN RIGHTS, PREFERENCES AND LIMITATIONS DETERMINED FOR EACH
  SERIES, WHICH ARE FIXED BY THE CERTIFICATE OF INCORPORATION OF THE COMPANY,
  AS AMENDED, AND THE RESOLUTIONS OF THE BOARD OF DIRECTORS OF THE COMPANY, AND
  THE AUTHORITY OF THE BOARD OF DIRECTORS TO DETERMINE VARIATIONS FOR FUTURE
  SERIES. SUCH REQUEST MAY BE MADE TO THE OFFICE OF THE SECRETARY OF THE
  COMPANY OR TO THE TRANSFER AGENT. THE BOARD OF DIRECTORS MAY REQUIRE THE
  OWNER OF A LOST OR DESTROYED STOCK CERTIFICATE, OR HIS LEGAL REPRESENTATIVES,
  TO GIVE THE COMPANY A BOND TO INDEMNIFY IT AND ITS TRANSFER AGENTS AND
  REGISTRARS AGAINST ANY CLAIM THAT MAY BE MADE AGAINST THEM ON ACCOUNT OF THE
  ALLEGED LOSS OR DESTRUCTION OF ANY SUCH CERTIFICATE. Signature(s) Guaranteed:
  Medallion Guarantee Stamp THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN
  ELIGIBLE GUARANTOR INSTITUTION (Banks, Stockbrokers, Savings and Loan
  Associations and Credit Unions) WITH MEMBERSHIP IN AN APPROVED SIGNATURE
  GUARANTEE MEDALLION PROGRAM, PURSUANT TO S.E.C. RULE 17Ad-15. The following
  abbreviations, when used in the inscription on the face of this certificate,
  shall be construed as though they were written out in full according to
  applicable laws or regulations: TEN COM - as tenants in common UNIF GIFT MIN
  ACT - Custodian (Cust) (Minor) TEN ENT - as tenants by the entireties under
  Uniform Gifts to Minors Act (State) JT TEN - as joint tenants with right of survivorship
  UNIF TRF MIN ACT - Custodian (until age ) and not as tenants in common (Cust)
  under Uniform Transfers to Minors Act (Minor) (State) Additional
  abbreviations may also be used though not in the above list.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00240-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00240-of-00352.parquet"}]]