Document:

ex10_4.htm

    
      Exhibit
10.4

    

     

    PARTICIPATION
AGREEMENT

    2008-2009
Drilling Package

    

    

    This
Participation Agreement (“Agreement”) is made and
entered into effective as of the 1st day of August, 2008 (the "Effective Date"), by and
between Newfield Exploration Company, a Delaware corporation (“Newfield”), whose address is
363 N. Sam Houston Parkway East, Suite 2020, Houston, Texas 77060 and Ridgewood
Energy Corporation, a Delaware corporation (“Ridgewood”), whose address is
11700 Katy Freeway, Suite 280, Houston, Texas 77079.  Newfield and
Ridgewood are also sometimes hereinafter referred to collectively as the
“Parties” or individually as a “Party”.

    

    WITNESSETH:

    

    WHEREAS, Newfield owns a 100%
Record Title Interest (as such term is defined hereafter) in and to each of the
following oil and gas leases (hereinafter individually referred to as a “Prospect Area” and
collectively referred to as the “Contract Area”):

    

    Oil and
Gas Lease bearing Serial No. [REDACTED], dated effective August 1, 2008, granted
by the United States of America, as Lessor, in favor of Newfield Exploration
Company, as Lessee, covering all of [REDACTED], containing approximately 5000
acres (“REDACTED
Lease”);

    

    Oil and
Gas Lease bearing Serial No. [REDACTED], dated effective August 1, 2008, granted
by the United States of America, as Lessor, in favor of Newfield Exploration
Company, as Lessee, covering all of [REDACTED, containing approximately 4999.17
acres (“REDACTED
Lease”); and

    

    Oil and
Gas Lease bearing Serial No. [REDACTED], dated effective August 1, 2008, granted
by the United States of America, as Lessor, in favor of Newfield Exploration
Company, as Lessee, covering all of [REDACTED], containing approximately 5000.00
acres (“REDACTED
Lease”);

    

    WHEREAS, Ridgewood would like
to participate in the drilling of a Test Well (as such term is defined
hereafter) on each Prospect Area;

    

    WHEREAS, Ridgewood agrees to
pay a disproportionate share of the drilling costs and expenses associated with
each Test Well in order to earn a Record Title Interest in each Prospect Area,
pursuant to the terms and conditions of this Agreement; and

    

    WHEREAS, the Parties desire to
enter into this Agreement to set forth the manner in which the costs and
expenses of drilling, producing and operating each Test Well and any subsequent
wells, as well as the ownership of the production from the Contract Area shall
be shared.

    

    NOW, THEREFORE, in
consideration of the mutual benefits and advantages accruing hereunder, the
receipt and sufficiency of which are hereby acknowledged, the Parties hereby
agree as follows:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    Article 1 – Interest of the
Parties

    

    The costs
and expenses associated with the exploration and development of the Contract
Area (including all wells, platforms, pipelines, facilities and equipment
associated directly with the specified operations herein) and all oil and gas
produced from wells drilled pursuant to the terms hereof, shall be borne and
owned, subject to the terms and conditions set out in this Agreement, and unless
otherwise agreed, by the Parties in accordance with the following percentage
Record Title Interests:

     

    
      
        	Party      	
                 Record
      Title Interests

              
	 	 
	Newfield 	
                66.66667%
      *

              
	Ridgewood  	
                33.33333%
      *

              

      

    

                                                                   

    *Subject to an obligation by Ridgewood
to pay a disproportionate share of the costs and expenses of each Test Well, as
further described in Article 3 of this Agreement.

    

    The term “Record Title Interests” as
used in this Agreement shall mean the right to drill for, produce, remove, own,
and dispose of oil, gas and/or condensate that may be found on and produced from
a Prospect Area.

    

    Article 2 - Operating
Agreement

    

    2.1           Newfield
shall be designated as the Operator of each Prospect Area, and all operations
conducted on a Prospect Area shall be performed in accordance with and shall be
subject to the terms and provisions of this Agreement and the Operating
Agreement attached hereto as Exhibit “A” (“Operating
Agreement”).  Upon Ridgewood earning an Assignment (as such
term is defined hereafter), the Parties shall execute an Operating Agreement,
using the form attached hereto as Exhibit “A”, to govern operations on such
Prospect Area.  It is the intent of the Parties that there shall be a
separate Operating Agreement for each Prospect Area.

    

    2.2           Notwithstanding
anything herein to the contrary, the non-consent penalties set forth in the
Operating Agreement shall not be applicable to drilling operations on the Test
Well for a Prospect Area, or Substitute Well therefore, prior to the Parties
reaching Casing Point (as such term is defined hereafter) in such
well.

    

    

    Article 3 - Test
Well

    

    3.1           On
or before March 31, 2009 or a date mutually agreed to by the parties and subject
to Force Majeure (as such term is defined hereafter), Newfield will commence, or
cause to be commenced, drilling operations on (a) [REDACTED (“Redacted Test Well”), (b)
[REDACTED (“Redacted Test
Well”), and (c) [REDACTED] (“Redacted Test Well”) (the Redacted
Test Well, the Redacted Test Well, and the Redacted Test Well are sometimes
individually referred to as the “Test Well”) or collectively
referred to as the “Test
Wells”).  Each Test Well shall be drilled to the total depth
listed in the Authority for Expenditure (“AFE”) for such Test Well, or a
depth sufficient to test the stratigraphic equivalent of the formation listed in
AFE for such Test Well, whichever is lesser (“Objective
Depth”).

    

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

       

    

    3.2(a)      Newfield
shall furnish to Ridgewood an AFE for the drilling and evaluation costs (“Dry
Hole Cost”) of a Test Well at least 30 days prior to the commencement of actual
drilling operations for such Test Well.  The AFE for each Test Well is
estimated to be as follows:

    

    $19,400,000.00 for the Redacted Test
Well; and,

    $9,400,000.00 for the Redacted Test
Well; and,

    $14,700,000.00 for the Redacted Test
Well.

    

    

       (b)         As
additional consideration for the opportunity to earn a Record Title Interest in
a Prospect Area, Ridgewood will pay a disproportionate share of the AFE Dry Hole
Cost for each Test Well.  Ridgewood shall pay a 44.443% share of the
Dry Hole Cost and expenses shown on an AFE for a Test Well, or a Substitute Well
therefore, until (i) the cumulative costs and expenses for such Test Well, or a
Substitute Well therefore, exceeds 110% of the AFE Dry Hole Cost for such Test
Well, or (ii) upon such Test Well reaching Casing Point, whichever occurs
first.  Thereafter, Ridgewood will pay a 33.333% share of the
subsequent costs and expenses of such Test Well, and all subsequent operations
on the Prospect Area, subject to the non-consent rights set out in the Operating
Agreement.

    

      
(c)         If the AFE for a
Test Well is greater than the amount listed above in Section 3.2 (a) (“Revised AFE”), then Ridgewood
will have thirty (30) days after receipt of the Revised AFE to elect to
participate in the drilling of such Test Well under the Revised
AFE.  If Ridgewood fails to timely provide written notice to Newfield
of its election to participate, then Ridgewood shall be deemed to have elected
to participate in the Revised AFE.  If Ridgewood participates in the
drilling of a Test Well under the Revised AFE, then Ridgewood shall pay a
44.443% share of the costs and expenses of such Revised AFE until (i) the
cumulative costs and expenses for such Test Well, or a Substitute Well
therefore, exceeds 110% of the Revised AFE for such Test Well, or (ii) upon such
Test Well reaching Casing Point, whichever occurs first.  Thereafter,
Ridgewood will pay a 33.333% share of the costs and expenses for such Test Well,
and all subsequent operations on the Prospect Area, subject to the non-consent
rights set out in the Operating Agreement.  Should Ridgewood elect not
to participate in a Revised AFE, then Ridgewood shall be deemed to have
relinquished all of its Record Title Interest earning rights in the associated
Prospect Area.

    

    

    3.3           In
the event Ridgewood participates in the drilling of a Test Well, Ridgewood shall
pay Newfield, within ten (10) business days prior to the commencement of actual
drilling operations on such Test Well, Ridgewood’s proportionate share of sunk
land and G&G costs for such Prospect Area, as set out below (“Sunk Costs”):

    

    $783,992.00 for Redacted Lease;
and,

    $1,214,988.00 for Redacted Lease;
and,

    $1,780,982.00 for Redacted
Lease.

    

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

       

    

    3.4           For
the purposes of this Agreement, the term “Casing Point” is defined as
that point in time when a Test Well, or Substitute Well therefore, has been
drilled to its Objective Depth, and all open-hole logs and all appropriate tests
have been performed and delivered to the Parties, and a recommendation is made
to (i) set casing and complete the well, (ii) plug and abandon the well, or
(iii) conduct other operations as provided within the priority of operations
outlined within the Operating Agreement.

    

    3.5           If
a Test Well is either, (i) unable to reach its Objective Depth due to
encountering domal material, heaving shale, saltwater, salt or other
impenetrable substance, or suffers any adverse condition (mechanical,
structural, stratigraphic or otherwise) in drilling said well, which substance
or condition cannot be overcome at a reasonable cost by means considered
customary or ordinary in the industry; or, (ii) plugged and abandoned as a dry
hole, then Newfield shall have the option, but not the obligation, to propose a
substitute well to be drilled to the Objective Depth of such Test Well (“Substitute
Well”).  Ridgewood shall have the option, but not the
obligation, to participate in such Substitute Well; however, if Ridgewood elects
not to participate in such Substitute Well, it shall relinquish all of its
right, title and interest in the associated Prospect Area and reassign to
Newfield all of its Record Title Interest in such Prospect Area under the terms
of this Agreement.  If actual drilling operations are commenced on the
Substitute Well within one hundred twenty (120) days from the date of rig
release from the Test Well, then such Substitute Well shall be considered the
Test Well for the Prospect Area for purposes of this Agreement.

    

    3.6           Newfield
shall have the right to require Ridgewood to pay in advance its share of the
costs and expenses of an AFE, or Revised AFE, pursuant to the terms and
conditions of the Operating Agreement.

    

    3.7           In
its sole discretion, Newfield shall elect whether to issue an AFE and/or propose
the drilling of a Test Well on a Prospect Area.   If Newfield
elects not to issue an AFE and/or drill a Test Well on a Prospect Area, then
Ridgewood’s only remedy shall be the return of any Sunk Costs paid by Ridgewood
to Newfield for such Prospect Area.

    

    

    Article 4 -
Assignment

    

    4.1           Within
ten (10) business days after Newfield’s receipt from Ridgewood of the Sunk Costs
for a Prospect Area, Newfield shall deliver to Ridgewood an assignment of an
undivided 33.33333% Record Title Interest in such Prospect Area, using the form
of assignment attached hereto as Exhibit “B” (“Assignment”).  The
Record Title Interest conveyed to Ridgewood will be subject to its proportionate
share of the lessor’s royalty and its proportionate share of an overriding
royalty interest equal to 2% of 6/6 to be reserved in favor of Newfield in the
Assignment.  The Record Title Interest conveyed to Ridgewood shall
otherwise be free and clear of any other overriding royalty interests,
production payments, or other burdens on production, subject to a special
limited warranty of title.

    

    4.2           In
the event that Ridgewood does not participate in the drilling of a Test Well, or
Substitute Well therefore, Ridgewood shall immediately reassign to Newfield, on
a form of assignment acceptable to Newfield, all of its right, title and
interest, including all of its Record Title Interest, in the Prospect Area for
such Test Well.  Such reassignment shall be made free and clear of all
overriding royalty interests, production payments, burdens, liens, and other
encumbrances.

    

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    

    Article 5 - Ownership of
Production

    

    Production
from each well drilled on a Prospect Area will be owned pursuant to the terms of
this Agreement and the Operating Agreement for such Prospect Area.

    

    Article 6 -
Insurance

    

    In
connection with any drilling and/or production operations on a Prospect Area,
the Operator shall carry the type and amount of insurance required by the
Operating Agreement for such Prospect Area.  No other insurance shall
be required of the Operator hereunder.

    

    

    Article 7 -
Confidentiality

    

    Except
for required disclosures, including but not limited to disclosures to
governmental agencies and/or stock exchanges, or as otherwise provided in the
Operating Agreement, no Party shall release any geological, geophysical, or
reservoir information or any logs or other information pertaining to the
progress, tests, or results of any well drilled pursuant to this Agreement,
without the prior approval of the other Party.

    

    Article 8 -
Conflicts

    

    In the
event of any conflict between the terms and conditions as set forth herein and
the terms and conditions set forth in the Operating Agreement, the terms and
condition set forth herein shall control.

    

    Article 9 – Force
Majeure

    

    In the event Newfield is rendered
unable, wholly or impart, by a Force Majeure event (as hereinafter defined) to
carry out its obligations under this Agreement, Newfield shall give Ridgewood
prompt written notice of the Force Majeure with reasonably full particulars
concerning it; thereupon the obligations of Newfield; and insofar as they are
affected by the Force Majeure, shall be suspended during the continuance of such
Force Majeure.  The term “Force Majeure” as here
employed, shall include, but not necessarily be limited to, an act of God,
strike, lockout or other industrial disturbance, act of public enemy, war,
blockade, public riot, lightning, fire, storm, flood, explosion, the inability
or unavoidable delay in obtaining lessor's approval for any drillsite locations
on a Prospect Area, governmental permits or authorizations for drilling or other
operations to be conducted hereunder, any other governmental action,
governmental delay, restraint or in action, or the unavailability of equipment
and any other cause, whether of the kind specifically enumerated above or
otherwise, which is not reasonably within the control of Newfield.

    

    Article 10 -
Notices

    

    All notices, requests or demands to be
given under this Agreement shall be in writing and shall be deemed to have been
given (i) three (3) business days after being sent by registered mail or
certified mail, postage prepaid, or (ii) on the day sent, if hand delivered or
sent by facsimile, with receipt confirmed and verbal confirmation, in each case
addressed as follows or to such other address as may have been furnished in
writing to the other Parties hereto in accordance herewith:

    

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

      
      

       

      
        	 	If to Newfield: 	If to
      Ridgewood:
	 	Newfield Exploration
      Company 	Ridgewood Energy
      Corporation
	 	363 N. Sam Houston
      Pkwy. E., Suite 2020 	11700 Katy Freeway ,
      Suite 280
	 	Houston,
      Texas  77060  	Houston,
      Texas  77079
	 	Attention:  Ms.
      Christina Linscomb   	Attn: Mr. W. Greg
      Tabor
	 	Office
      Phone: 	(281)
      847-6074  	Office
      Phone: 	(281)
    293-8449
	 	Fax Number:
    	
                (281)
      405-4207

              	Fax
      Number: 	
                (281)
      293-7705

              

      

       

    

    
       

    

    Article 11 - Topical
Headings

    

    Topical
headings appearing at the top of each numbered article have been inserted for
convenience only and are to be given no force or affect whatsoever in the
interpretation of this Agreement.

    

    Article 12 - Successors and
Assigns

    

    The
rights and obligations of Ridgewood under this Agreement are not assignable, in
whole or in part, without the prior written consent of Newfield, which such
consent shall not be unreasonably withheld.  This Agreement shall be
binding upon each Party and their successors and assigns. Any assignment by a
Party of any lands affected by this Agreement shall be made expressly subject to
this Agreement, and the assignee shall expressly agree to assume and comply
with, the terms and provisions of this Agreement and the applicable Operating
Agreement.

    

    

    Article 13 -
Miscellaneous

    

    13.1         This
Agreement is not intended to create, and shall not be construed to create a
relationship of partnership.  Notwithstanding any provision herein,
the rights and liabilities of the Parties hereunder shall be several and not
joint or collective.

    

    13.2         THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PROVISIONS
THEREOF.

    

    13.3         Ridgewood
understands that Newfield makes no express warranty and disclaims all implied
warranties and all statutory warranties as to (i) the accuracy or completeness
of the data furnished by Newfield as to the Contract Area, (ii) the presence of
hydrocarbons in the Contract Area, or (iii) the results which might be expected
from any exploration, development, production, and/or hydrocarbon marketing
activities contemplated in a Contract Area.  Nothing contained in the
technical information provided by Newfield shall be relied upon as a promise or
representation of warranty, whether as to the past or the future value of the
Contract Area.  Neither Newfield, nor its agents, representatives,
officers, directors or shareholders shall have any liability to Ridgewood or any
affiliate or associate of Ridgewood arising from the use by any person of such
technical information.

    

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

       

    

    13.4         This
Agreement and the exhibits attached hereto constitutes the entire Agreement
between the Parties with respect to the subject matter hereof, and supersedes
all prior oral or written agreements, commitments, or understandings between the
Parties, and there are no other representations or other agreements between the
Parties, except as expressly set forth herein.  No amendment shall be
binding unless in writing and signed by representatives of each
Party.

    

    13.5         The
Parties agree to execute any additional instruments, agreements or documents
that are necessary to effectuate the intentions of this Agreement.

    

    

    Article 14 -
Termination

    

    This Agreement shall terminate as to
each Prospect Area upon (i) the mutual agreement of the Parties; (ii) failure to
commence actual drilling operations on a Test Well for such Prospect Area within
the time period specified in this Agreement; (iii) failure to commence the
drilling of a Substitute Well for such Prospect Area within the time period
specified in this Agreement; or (iv) the bankruptcy or insolvency of
Ridgewood.

    

    Article 15 - Counterpart
Execution

    

    This
Agreement may be executed by signing the original or a counterpart
thereof.  If this Agreement is executed in counterparts, all
counterparts taken together shall have the same effect as if all the Parties had
signed the same instrument.  However, this Agreement shall not be
effective as to any Party, until it has been executed by all
Parties.

    

    IN
WITNESS WHEREOF, the Parties have duly executed this Agreement as of the
Effective Date hereinabove first written.

     

    
      
        
          
            
              	NEWFIELD EXPLORATION
      COMPANY	 
	 	 	 
	 	 	 
	
                      By:
      

                    	    /s/ W.M.
      Blumenshine	 
	 	
                      W.M.
      Blumenshine

                    	 
	 	
                      Vice
      President - Land

                    	 
	 	 	 

            

          

        

      

    
      
        	RIDGEWOOD ENERGY
      CORPORATION	 
	 	 	 
	 	 	 
	
                By:
      

              	    /s/ W.
      Greg Tabor	 
	 	
                W.
      Greg Tabor

              	 
	 	
                Executive
      Vice President

              	 
	 	 	 

      

    

     

    

     

     -7-Unassociated Document

    Exhibit
10.5

    PARTICIPATION
AGREEMENT

    Redacted]PROSPECT

    

    

    This
Participation Agreement ("Agreement") is entered into and made effective this
1st day of July, 2008 ("Effective Date") by and between Newfield Exploration Company
(“NEWFIELD”), whose mailing address is 363 N. Sam Houston Pkwy E., Suite 2020
Houston, Texas 77060, and Ridgewood Energy Corporation
(“RIDGEWOOD”), whose mailing address is 11700 Katy Freeway, Suite 280
Houston, Texas 77079, herein referred to collectively as "Parties" and
individually as a "Party".

    

    WITNESSETH

    

    WHEREAS, NEWFIELD is the owner
of an undivided seventy-five percent (75%) record title interest in and to each
of the Oil and Gas Leases (collectively, the “Leases”) described as
follows:

    

    Oil and
Gas Lease bearing [Redacted], effective [redacted], by and between the United
States of America, as Lessor, and Newfield Exploration Company and Stone Energy
Corporation, as Lessee, covering all of [Redacted], containing 5,760.00 acres
more or less (hereinafter referred to as the “[Redacted Lease”),
and

    

    Oil and
Gas Lease bearing [Redacted], effective [redacted], by and between the United
States of America, as Lessor, and Newfield Exploration Company and Stone Energy
Corporation, as Lessee, covering all of [Redacted] containing 5,760.00 acres
more or less (hereinafter referred to as the “[Redacted] Lease”),
and

    

    Oil and
Gas Lease bearing[Redacted], by and between the United States of America, as
Lessor, and Newfield Exploration Company and Stone Energy Corporation, as
Lessee, covering all of [Redacted], containing 5,760.00 acres more or less
(hereinafter referred to as the “[Redacted] Lease”).

    

    WHEREAS, pursuant to that
certain Confidentiality Agreement dated effective September 4, 2008 by and
between NEWFIELD and RIDGEWOOD covering the Leases (the “Prospect CA”),
RIDGEWOOD reviewed certain confidential information supplied by NEWFIELD
relating to its [Redacted] Prospect that lies within the Leases (hereinafter
referred to as the “Prospect”) and RIDGEWOOD has advised NEWFIELD of its
election to participate in the drilling of the initial exploratory well on the
Prospect, subject to the receipt and approval of the formal authorization for
expenditure, and

    

    WHEREAS, NEWFIELD and
RIDGEWOOD desire to set forth the terms and conditions under which RIDGEWOOD
shall participate in certain operations to be conducted on the Prospect to earn
and be assigned an undivided 15% record title interest from Newfield in and to
the Leases;

    

    
      
         

      

      
        1

        
          

        

      

      
         

      

       

    

    NOW, THEREFORE, for and in
consideration of the sum of Ten Dollars ($10.00) and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowled and
confessed, together with the mutual covenants, conditions, and obligations
contained herein, NEWFIELD and RIDGEWOOD do hereby enter into this Agreement
under the following terms and conditions:

    

    ARTICLE
I

    EXHIBITS

    

    The following Exhibits are
attached hereto and made a part of this Agreement:

     

    
      
        
          
            	 
      	
                    Exhibit
      “A-1”

                  	
                    Redacted

                  
	 
      	
                    Exhibit
      “A-2”

                  	
                    Redactedl

                  
	
                     

                  	
                    Exhibit
      “B”

                  	      
                    Operating
      Agreement

                  
	 
      	
                    Exhibit
      “C”

                  	
                    Geologic
      and data information requirements of RIDGEWOOD

                  
	 
      	
                    Exhibit
      “D”

                  	
                    Form
      of Assignment

                  

          

        

      

     

    

    Article
II

    Initial Test
Well

    

    

    2.1           Initial Test
Well.              
 NEWFIELD, as operator under the Operating Agreement (defined in Article
III below), and subject to rig availability and obtaining all requisite permits,
agrees to use reasonable efforts to commence, or cause to be commenced, on or
before [Redacted], actual drilling of the [Redacted] ("ITW") at an approximate
surface coordinate location of[Redacted]. The ITW is to be drilled as an
Exploratory Well (as such term is used in the Operating Agreement) to 22,000’ MD
/ TVD or a depth sufficient to test the stratigraphic equivalent of the ’21,000’
and 22,000’ Sand’ (the “Objective Depth”), whichever is the lesser depth.
 An Authority for Expenditure (“AFE”) for the ITW is attached to this
Agreement as Exhibit “A-1” (the “Approved AFE”) and by the execution hereof,
each of NEWFIELD and RIDGEWOOD agrees to participate in the drilling of the ITW
in accordance with the terms hereof.  Contemporaneously with the
execution of this Agreement, RIDGEWOOD agrees to execute and deliver to NEWFIELD
a counterpart copy of the Approved AFE.

    

    The
failure to timely commence the drilling of the ITW and the Parties agreement to
terminate this Agreement, shall result in the termination of this Agreement, the
return of the Cash Consideration by NEWFIELD to RIDGEWOOD and the reassignment
from RIDGEWOOD to NEWFIELD of all of its record title interest in and to the
Leases.    Otherwise, there shall be no penalty for failure
to timely commence the drilling of the ITW.

    

    

    2.2           Substitute Well.  
In the event the ITW should encounter rock salt, heaving shale, excessive
water flow, excessive pressure, igneous or other impenetrable formation or other
conditions which would render further drilling impracticable or uneconomic and
preclude the ITW from reaching the Objective Depth, then and in such event
NEWFIELD shall have the exclusive option to propose within sixty (60) days
following the abandonment of the ITW drilling of a substitute
well (“Substitute Well”) therefore, provided same is drilled to the
Objective Depth and under the same terms and conditions as the
ITW.   RIDGEWOOD shall have no obligation to participate in the
Substitute Well; provided RIDGEWOOD shall have thirty (30) days, or forty-eight
(48) hours in the event that a rig is on location, from receipt of the AFE for
the Substitute Well to elect whether it shall participate in such Substitute
Well. Failure to respond within the time period allowed shall be deemed to be an
election not to participate in the Substitute Well.  In the
event  NEWFIELD does not propose a Substitute Well within the time
period provided for above, then RIDGEWOOD may propose the drilling of a
Substitute Well pursuant to the terms of the Operating
Agreement.  NEWFIELD or Ridgewood shall have the continuing option to
drill additional Substitute Wells, provided that no more than sixty (60) days
elapse between the date the drilling rig was released from the last operation on
such Substitute Well and the commencement date of drilling operations for the
next Substitute Well drilled therefor.

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

       

    

    2.2.1  
If the ITW fails to reach its Objective Depth, and RIDGEWOOD’s share of costs
and expenses incurred in connection with the ITW has not yet reached the Promote
Cap, then:

    

    (i) if a
Substitute Well is proposed and RIDGEWOOD elects not to
participate therein, then RIDGEWOOD shall pursuant to Article 4.3,
reconvey to NEWFIELD a 15%  record title interest in and to the Leases
and this Agreement shall terminate and neither Party shall have any further
obligations or liabilities hereunder, except with respect to the fulfillment of
payment and indemnity obligations accrued prior to such
termination;

    

    (ii)  if
a Substitute Well is proposed and RIDGEWOOD does elect to
participate therein, this Agreement shall remain in full force and effect
as though the Substitute Well was the ITW; and

    

    (iii) if
a Substitute Well is proposed and RIDGEWOOD elects to
participate therein, but such well is not drilled, RIDGEWOOD shall retain
its undivided fifteen percent (15%) record title interest in and to the Leases
previously conveyed by the Assignment hereunder and any future operations on the
Prospect by the Parties shall be governed by the Operating
Agreement.

    

    2.2.2  
If the ITW fails to reach its Objective Depth and RIDGEWOOD’s share of costs and
expenses incurred in connection with the ITW has reached the Promote Cap,
RIDGEWOOD shall retain its record title interest in and to the Leases received
by the Assignment pursuant to Section 4.2 hereof, and the consequences of
RIDGEWOOD’s election to participate or not to participate in the Substitute Well
shall be governed by the provisions of Article 16 of the Operating Agreement as
described below.

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

       

    

    Subject
to Sections 2.2.1 and 2.2.2, in the event that a Substitute Well is proposed by
RIDGEWOOD and drilled in accordance with this Agreement, the interest of any
non-participating Party in the drilling of such Substitute Well shall be subject
to the terms and conditions of Article 16 of the Operating Agreement as
described below; however, notwithstanding anything to the contrary in this
Agreement, in the event NEWFIELD elects not to participate in the drilling of a
Substitute Well, and RIDGEWOOD bears all or a portion of such Party’s interest
in the Substitute Well, the acquired interest shall not be subject to the
acreage forfeiture provisions of the Operating Agreement, but instead will be
subject to the non-consent penalty percentages applicable to Exploratory
Operations as defined in the Operating Agreement Article
16.5.1.  Regardless of whether RIDGEWOOD elects to participate or not
to participate in a Substitute Well, NEWFIELD shall retain the Cash
Consideration, as such term is hereafter defined.

    

    

    2.3           ITW Drilling
Costs.  RIDGEWOOD shall bear and pay thirty percent (30.0%) of
the actual costs to drill and test the ITW to Casing Point ; however, if prior
to reaching Casing Point the actual aggregate cost of the ITW, and any
Substitute Well therefor, exceeds one hundred percent (100%) of the dry hole
cost estimate provided for in the Approved AFE (“ Promote Cap”), RIDGEWOOD shall
bear and pay fifteen percent (15%) of the actual costs to drill and test the ITW
thereafter.  Casing Point shall be defined as that point in time when
the ITW (or Substitute Well therefor) has reached its Objective Depth and all
open hole logs and tests have been conducted in accordance with the Approved
AFE.  If RIDGEWOOD elects to participate in a Substitute Well, any
cost to drill the ITW will be carried over to the Substitute Well to calculate
the Promote Cap for purposes of determining when RIDGEWOOD's cost-bearing
interest reduces to fifteen percent (15%).  Subject to the terms and
conditions of this Agreement, all operations in the ITW subsequent to Casing
Point, shall be conducted in accordance with the terms and provisions of the
Operating Agreement and, subject to participation elections, shall be shared 15%
by RIDGEWOOD and 85% by NEWFIELD et al, its co-owner, and their successors and
assigns.

    

    Article
III

    Operating
Agreement

    

    3.1           Operating Agreement. The Leases will be
subject to that certain Offshore Operating Agreement by and between NEWFIELD, as
Operator, and the Non-Operators designated therein, dated effective July 1, 2008
(the “Operating Agreement”), which is attached hereto as Exhibit “B”, and which
will govern operations upon the Leases (subject to RIDGEWOOD’s right to earn an
interest in the Leases per this Agreement).   At the time
RIDGEWOOD executes this Agreement, RIDGEWOOD shall also execute and deliver the
Operating Agreement, at which time it shall be deemed to be a party
thereto.  If there is a conflict between the terms and conditions of
this Agreement and the terms and conditions of the Operating Agreement prior to
the earlier of: (a) reaching the Objective Depth in the ITW or (b) RIDGEWOOD’s
costs and expenses incurred in the ITW and any Substitute Well therefor reaching
the Promote Cap, then the terms and conditions of this Agreement shall
control.  Thereafter, the Operating Agreement shall control.
Notwithstanding the foregoing, the provisions of Article 27 of the Operating
Agreement (Area of Mutual Interest) will be applicable to the Parties hereto
from and after the Effective Date and should RIDGEWOOD be required to reassign
its interest in accordance with Article 4.3 of this Agreement then the
Reassignment will also include any and all rights or interest acquired by
RIDGEWOOD, as applicable, pursuant to said Article 27.

    

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    

    3.2           Prospect
Information.                NEWFIELD,
as Operator of the ITW, shall provide RIDGEWOOD with any and all raw well data
and information obtained and/or results of analyses performed through the
conduct of the drilling of any wells by NEWFIELD on the Prospect in which
RIDGEWOOD is a participant, as further provided for in Exhibit “C”, and any
additional data and/or information that RIDGEWOOD may become entitled to
pursuant to the terms of the Operating Agreement.  All data delivered
to RIDGEWOOD as provided in this Section 3.2 shall be delivered to RIDGEWOOD
pursuant to the Operating Agreement.

    

    

    Article
IV.

    Cash Consideration and
Assignment of Interest in Lease

    

    4.1           Cash
Consideration.  Within five (5) business days after the
complete execution of this Agreement by all Parties, RIDGEWOOD shall pay to
NEWFIELD the sum of Two Million Four Hundred and Thirty-two Thousand, Two
Hundred and Fifty ($2,432,250.00) (the “Cash Consideration”) by wire
transfer to the account designated by NEWFIELD in writing to
RIDGEWOOD.  Such Cash Consideration shall be nonrefundable in all
circumstances, except as otherwise provided for in Section 2.1 of this
Agreement.

    

    4.2           Assignment.   Within
ten (10) business days after receipt by NEWFIELD of the Cash Consideration,
NEWFIELD shall deliver to RIDGEWOOD an assignment of an undivided fifteen
percent (15.00%) record title interest in and to the Leases  (the
“Assignment”), subject
to the following:

    

    (a)           The
Assignment shall be free and clear of any burdens, liens or encumbrances by,
through or under NEWFIELD, but not otherwise, subject only to (i) a
proportionate part of the lessors’ reserved royalty under the Lease, (ii) a 2.0%
of 8/8ths overriding royalty interest reserved in favor of NEWFIELD,
proportionately reduced by the record title interest being conveyed by NEWFIELD
, (iii) the Operating Agreement and (iv) this Agreement. 

    

    (b)           The
Assignment shall be effective [redacted], subject to Minerals Management Service
(“MMS”) approval, and
the Parties shall use the form of assignment attached hereto as Exhibit
“D”.

    

    
      
         

      

      
        5

        
          

        

      

      
         

      

       

    

    The
Assignment requires approval by the MMS.  The assignee of the
Assignment shall promptly (i) file of record the Assignment in the adjacent
parish or county courthouse and (ii) file for approval with the MMS (or other
applicable governmental agencies) the Assignment.  Should approval of
the MMS (or any other similar governmental agency having jurisdiction) be
denied, the Party receiving notice of such denial agrees to provide the other
Party with written notice of such occurrence, along with a copy of all
associated written communications, and the Parties agree to develop a revised
form of assignment in an effort to meet the MMS’ or other appropriate agency’s
requirements for approval.  In the alternative, each Party shall
execute and deliver, or cause to be executed and delivered, such other documents
and take such other actions as a Party may reasonably request in an effort to
comply with any such approval requirements.

    

    4.3           Reassignment.  Subject
to Article 2.2.1(i), RIDGEWOOD shall reconvey to NEWFIELD all of its undivided
fifteen percent (15%) record title interest in and to the Leases, using a form
of assignment similar to the Assignment (the “Reassignment”), in the event
the  ITW fails to reach Objective Depth and RIDGEWOOD’s share of costs
and expenses incurred in connection with the ITW has not reached the RIDGEWOOD
Promote Cap, and a Substitute Well is not proposed within one (1) year from
abandonment of the ITW on the Leases.

    

    The
Reassignment shall be made using the form of assignment attached hereto as
Exhibit “D” and shall be made free and clear of any burdens, liens or
encumbrances by, through, or under RIDGEWOOD, but not otherwise.  The
Reassignment shall be delivered by RIDGEWOOD to NEWFIELD within fifteen (15)
days after receipt by RIDGEWOOD of a request from NEWFIELD for the
Reassignment.

    

    4.4           Earning Events.  The
Reassignment shall not be due, and RIDGEWOOD shall be deemed to have earned its
record title interest in and to Leases, when the Promote Cap has been reached or
upon the ITW being drilled to Casing Point, whichever is the earliest to
occur.

    

    

    

    Article
V

    Assignability

    

    5.           Rights to
Assign.                 In
the event a Party is granted consent to a proposed assignment, the assignment
will be made expressly subject to this Agreement and the assignee must agree in
writing to be expressly bound by this Agreement. The assignor of an assignment
made under this Agreement shall remain primarily liable for its obligations
which have accrued prior to the latter of i) the effective date of the
assignment, or ii) the date the assignment is physically delivered to the
assignee.

    

    After the
ratification of the Operating Agreement by RIDGEWOOD pursuant to Section 3.1 of
the Agreement, a Party’s right to assign its rights under this Agreement and in
the Leases shall be governed by the Operating Agreement.

    

    Subject
to the restrictions on assignment as contained herein, the terms and conditions
of this Agreement shall inure to the benefit of and will be binding upon
NEWFIELD and RIDGEWOOD, and their respective successors and assigns. This
Agreement shall constitute a covenant running with the Leases.

    

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    

    Article
VI

    Miscellaneous
Provisions

    

    

    6.1           Governing Law.  THE PARTIES
HERETO HEREBY AGREE THAT THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO RULES
CONCERNING CONFLICTS OF LAW. VENUE FOR ANY ACTION SHALL BE IN HARRIS COUNTY,
TEXAS.  

    

    

    6.2           Notices.                Any
notices or provision of notices or disclosure, or other communications that may
be required or permitted hereunder shall be in writing and shall be delivered by
facsimile, in person or sent by United States Mail, certified mail, postage
prepaid, return receipt requested, or an equivalent delivery service, addressed
to the Parties at the following respective addresses:

    

    

      
        
          
            
              
                
                  
                    
                      
                        	 
      	
                                Newfield
      Exploration Company

                              
	 
      	
                                363
      North Sam Houston Parkway East, Suite 2020

                              
	 
      	
                                Houston,
      Texas 77060

                              
	 
      	
                                Attention:

                              	
                                John
      D. Hamilton

                              
	 
      	
                                Telephone:

                              	
                                (281)
      847-6105

                              
	 
      	
                                Facsimile:

                              	
                                (281)
      847-6134

                              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                                Ridgewood
      Energy Corporation

                              
	 
      	
                                11700
      Katy Freeway, Suite 280,

                              
	 
      	
                                Houston,
      Texas 77079,

                              
	 
      	
                                Attention:

                              	
                                Mr.
      W. Greg  Tabor

                              
	 
      	
                                Telephone:

                              	
                                (281)
      293-8449

                              
	 
      	
                                Facsimile

                              	
                                (281)
      293-7705

                              

                      

                    

                  

                

              

            

          

        

      

    

    

    6.3           Relationship of the
Parties.  It is not the purpose or intention of this Agreement
to create, and this Agreement will never be construed as creating, a joint
venture, mining partnership or other relationship whereby any Party will be held
liable for the acts, either of omission or commission, of any other Party, and
the liabilities of each of the Parties hereto shall be several and not joint or
collective.  Solely for purposes of federal income taxation and purposes of
certain state income tax laws which incorporate or follow federal income tax
principals as to tax partnerships, however, Each of the Parties hereto agrees
not to elect, under the authority of Section 761(a) of the Internal Revenue Code
of 1986, to be excluded from all the provisions of Subchapter K of Chapter I of
Subtitle A of said Internal Revenue Code of 1986.  With regard to the
resulting tax partnership, the Parties hereby incorporate by this reference, as
if set forth herein in full, the tax partnership provisions set forth on Exhibit
“J” to the Operating Agreement, with the tax partners in such tax partnership
being NEWFIELD, RIDGEWOOD and the other parties to the
Operating Agreement with the Tax Reporting Partner being NEWFIELD. 
This Agreement and operations hereunder relate solely to the Prospect, and no
Party hereto shall have any obligation of any kind to any other Party hereto as
to any other lease, land or minerals (whether in the vicinity of the Lease or
not) by virtue of this Agreement or such operations or otherwise except as may
be provided in the Operating Agreement, Article III hereof or evidenced by
written agreement of such Parties.

    

    
      
         

      

      
        7

        
          

        

      

      
         

      

       

    

    6.4           Rentals.  To the
best of NEWFIELD's knowledge, as of the effective date of the assignment, all
rentals and any other payments due pursuant to the terms of the Leases subject
to this Agreement have been properly and timely paid and said Leases are now in
full force and effect as of the Effective Date.  As of the Effective Date
of this Agreement, RIDGEWOOD will be responsible for its prorata share of the
rentals on the Leases.

    

    6.5           Further Assurances. 
Following execution of the Assignment, each Party agrees to execute and deliver
to the other any instruments or other documents necessary to carry out the
intent and obligations of this Agreement.

    

    6.6           Conflicts. Except as provided
for in Article 3.1, 
in the event of any conflicts or inconsistencies between the provisions
of this Agreement and any other agreement, including any agreement referenced
herein to be executed by the Parties hereafter, the provisions of this Agreement
shall control to the extent of such conflict.

    

    6.7           Entire Agreement.  This
Agreement together with the instruments referred to herein and the Exhibits
attached hereto, embody the entire agreement between the Parties with regard to
the subject matter hereof, and supersede all other prior agreements,
arrangements, understandings, negotiations and discussions, whether oral or
written between the Parties relating to the subject matter hereof, including
without limitation, the Prospect CA executed by the Parties. There are no
warranties, representations or other agreements between the Parties in
connection with the subject matter hereof except as specifically set forth in
this Agreement or in subsequent documents delivered pursuant thereto. This
Agreement may be supplemented, altered, amended, modified or revoked only in
writing, signed by all Parties hereto.

    

    6.8           Arbitration: This Agreement is
subject to the arbitration provisions of the Operating Agreement.

    

    6.9           Severability.  If any
provision of this Agreement is held invalid, the remainder of the Agreement
shall not be affected thereby unless the effect thereof would be to materially
alter the burdens or benefits intended by the Parties by the express language of
this Agreement.

    

    6.10         Captions.  The
captions in this Agreement are for convenience only and shall not be considered
a part hereof of affect the construction or interpretation of any provision of
this Agreement.

    

    
      
         

      

      
        8

        
          

        

      

      
         

      

       

    

    6.11         Force Majeure.  All
obligations imposed by this Agreement on each Party, except for payment of
money, shall be suspended and all periods of time for exercising any rights
hereunder shall be extended while compliance is prevented, in whole or in part,
by Force Majeure.  “Force Majeure” shall mean a labor dispute;
explosion; fire; storm, hurricane, loop currents, and high seas; floods; wars;
civil disturbance; act of god; laws; governmental rules, regulations, orders,
action or delay; inability to secure materials after reasonable efforts; or any
other similar cause beyond the reasonable control of the Party claiming relief
hereunder; provided, however, that such Party shall promptly take all reasonable
action to remove the Force Majeure, and provided that no Party shall be required
against its will to settle any labor dispute.

    

    6.12         Confidentiality.  Except
for required disclosures, including but not limited to disclosures to
governmental agencies and/or stock exchanges, or as otherwise provided for in
the Operating Agreement, no Party shall release any geological, geophysical, or
reservoir information or any logs or other information pertained to the
progress, test, or results of any well drilled pursuant to this Agreement,
without the prior approval of the other Party.

    

    6.13         Wavier Period.  No
wavier by any Party or any default, misrepresentation, or breach of warranty, or
covenant will be deemed to extend to any prior or subsequent default,
misrepresentation or breach of warranty or covenant.

    

    6.14         Counterpart Execution. This
Agreement may be executed in counterparts and each such counterpart shall have
the same force and effect as the original hereof, provided, however, that none
of said counterparts shall be effective until all parties hereto have executed a
counterpart hereof.

    

    
      
         

      

      
        9

        
          

        

      

      
         

      

       

    

    IN WITNESS WHEREOF, the
Parties hereto have executed this Agreement as of the date first hereinabove
written.

    

    
       

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    	 	 	 	 	 
	WITNESSES:   	 	Newfield
      Exploration Company	 
	 	 	 	 	 
	
                                             

                                          	 	By:	
                                             

                                          	 
	 	 	 	 	 
	
                                             

                                          	 	Name:  	W. M. Blumenshine	 
	 	 	 	 	 
	
                                             

                                          	 	Title: 	Vice President 	 
	 	 	 	 	 
	 	 	Date:	 	 

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    
      	 	 	 	 	 
	WITNESSES:   	 	RIDGEWOOD
      ENERGY CORPORATION	 
	 	 	 	 	 
	 	 	 	 	 
	
               

            	 	By:	
               

            	 
	 	 	 	 	 
	
               

            	 	Name:  	W. GREG TABOR  	 
	 	 	 	 	 
	
               

            	 	Title: 	EXECUTIVE VICE PRESIDENT	 
	 	 	 	 	 
	 	 	Date:	 	 

                                                           

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    

    Exhibit
“A-1”

    Attached
to and made a part of that certain Participation Agreement
effective

    November
1, 2008 by and between Newfield Exploration Company and Ridgewood Energy
Corporation

    

    

    [Redacted]

    

    [AFE to
Come]

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

       

    

    Exhibit
“A-2”

    Attached
to and made a part of that certain Participation Agreement
effective

    November
1, 2008 by and between Newfield Exploration Company and Ridgewood Energy
Corporation

    

    

    

    [Redacted]

    

    [Well Plan to Come]

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

       

    

     Exhibit “B”

    Attached
to and made a part of that certain Participation Agreement
effective

    November
1, 2008 by and between Newfield Exploration Company and Ridgewood Energy
Corporation

    

    

    OPERATING
AGREEMENT

    

    

    [Operating
Agreement to Come]

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    

    Exhibit
“C”

    Attached
to and made a part of that certain Participation Agreement
effective

    November
1, 2008 by and between Newfield Exploration Company and Ridgewood Energy
Corporation

    

    GEOLOGIC AND DATA
INFORMATION REQUIREMENTS OF RIDGEWOOD ENERGY CORPORATION

    

    WELL
INFORMATION REQUIREMENTS

     

    
      
        
          
            	
                    FOR:

                  	
                    Ridgewood
      Energy Corporation

                  	 
	 
      	
                    11700
      Katy Freeway, Suite 280

                  	 
	 
      	
                    Houston,
      Texas 77079

                  	 
	 
      	
                    Phone:
      (281) 293-8449     Fax: (281)
      293-7705

                  	 
	 
      	 
      	 
	
                    WELL NAME: 
      [Redacted]

                  	 
      	 

          

        

      

    

     

     

     

    14

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