PURCHASE ANDSALE AGREEMENT BY AND AMONG EASTERN 1996D LIMITED PARTNERSHIP, EASTERN 1997D LIMITED PARTNERSHIP, EASTERN 1998D LIMITED PARTNERSHIP, AND CO and PA 1999DLIMITED PARTNERSHIP, (Seller) AND ALLIANCE PETROLEUMCORPORATION (Buyer) BARBOUR, DODDRIDGE AND TAYLOR COUNTIES, WEST VIRGINIA ARMSTRONG, CLEARFIELD, INDIANA AND WASHINGTON COUNTIES, PENNSYLVANIA Dated January 30, 2014 TABLE OF CONTENTS

EX-10.1 2 d681900dex101.htm EX-10.1 EX-10.1

Exhibit 10.1

EXECUTION VERSION

PURCHASE AND SALE AGREEMENT

BY AND AMONG

EASTERN 1996D LIMITED PARTNERSHIP,

EASTERN 1997D LIMITED PARTNERSHIP,

EASTERN 1998D LIMITED PARTNERSHIP,

AND

CO and PA 1999D LIMITED PARTNERSHIP,

(Seller)

AND

ALLIANCE PETROLEUM CORPORATION

(Buyer)

BARBOUR, DODDRIDGE AND TAYLOR COUNTIES, WEST VIRGINIA

ARMSTRONG, CLEARFIELD, INDIANA AND WASHINGTON COUNTIES, PENNSYLVANIA

Dated January 30, 2014

TABLE OF CONTENTS

 

         Page  

ARTICLE 1

   PURCHASE AND SALE      1   

1.1

   Purchase and Sale      1   

1.2

   Effective Time      1   

1.3

   Shallow Assets      1   

1.4

   Other Excluded Assets      2   

1.5

   Deep Rights      3   

ARTICLE 2

   PURCHASE PRICE      3   

2.1

   Purchase Price      3   

2.2

   Allocation of the Purchase Price      3   

2.3

   Adjustments to Purchase Price and Preliminary Settlement      3   

2.4

   Allocations for Federal Income Tax Purposes      6   

ARTICLE 3

   BUYER’S INSPECTION      6   

3.1

   Due Diligence      6   

3.2

   Access to Records      6   

3.3

   On-Site Inspection      6   

3.4

   Indemnification      7   

ARTICLE 4

   TITLE MATTERS      8   

4.1

   Definitions      8   

4.2

   Title Representations      9   

4.3

   Title Adjustment Procedures      10   

4.4

   Title Dispute Resolution      14   

4.5

   Consents; No Preferential Rights      14   

ARTICLE 5

   ENVIRONMENTAL MATTERS      15   

5.1

   Definitions      15   

5.2

   Environmental Liabilities and Obligations      16   

5.3

   NORM, Wastes and Other Substances      16   

5.4

   Environmental Defect Notice      16   

5.5

   Seller’s Right to Remediate      16   

5.6

   Defect Adjustments      17   

5.7

   Contested Environmental Defects      18   

5.8

   Exclusive Remedies      18   

ARTICLE 6

   SELLER’S REPRESENTATIONS AND WARRANTIES      18   

6.1

   Organization and Standing      19   

6 2

   Power      19   

6.3

   Authorization and Enforceability      19   

6.4

   Liability for Brokers’ Fees      19   

6.5

   Litigation      19   

6.6

   Compliance with Law      19   

6.7

   Status and Operation of Shallow Assets      19   

6 8

   Taxes      20   

6.9

   Imbalance Volumes      20   

6.10

   Leases      20   

6.11

   Material Agreements      20   

6.12

   Areas of Mutual Interest      20   

 

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TABLE OF CONTENTS

(continued)

 

         Page  

6.13

   Production Payments      20   

6.14

   Insurance      20   

6.15

   No Other Representations or Warranties; Disclosed Materials      20   

ARTICLE 7

   BUYER’S REPRESENTATIONS AND WARRANTIES      21   

7.1

   Organization and Standing      21   

7.2

   Power      21   

7.3

   Authorization and Enforceability      21   

7.4

   Liability for Brokers’ Fees      21   

7.5

   Litigation      21   

7.6

   Financial Resources      21   

7.7

   Buyer’s Evaluation      21   

7.8

   Securities Laws      22   

7.9

   Buyer’s Qualification      22   

ARTICLE 8

   COVENANTS AND AGREEMENTS      22   

8.1

   Covenants and Agreements of Seller      22   

8.2

   Covenants and Agreements of Buyer      23   

8.3

   Covenants and Agreements of the Parties      24   

ARTICLE 9

   TAX MATTERS      25   

9.1

   Definitions      25   

9.2

   Apportionment of Property Taxes      26   

9.3

   Apportionment of Severance Taxes      27   

9.4

   Transfer Taxes      27   

9.5

   Post-Closing Tax Matters      27   

ARTICLE 10

   CONDITIONS PRECEDENT TO CLOSING      28   

10.1

   Seller’s Conditions      28   

10.2

   Buyer’s Conditions      29   

10.3

   Conditions of Both Parties      29   

ARTICLE 11

   RIGHT OF TERMINATION      29   

11.1

   Termination      29   

11.2

   Effects of Termination      30   

11.3

   Liabilities Upon Termination      30   

ARTICLE 12

   CLOSING      30   

12.1

   Date of Closing      30   

12.2

   Place of Closing      30   

12.3

   Closing Obligations      31   

12.4

   Non-Foreign Status      31   

ARTICLE 13

   POST-CLOSING ADJUSTMENTS      32   

13.1

   Final Settlement Statement      32   

13.2

   Dispute Mechanism      32   

13.3

   Payments      33   

 

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TABLE OF CONTENTS

(continued)

 

         Page  

ARTICLE 14

   ASSUMPTION AND RETENTION OF OBLIGATIONS AND INDEMNIFICATION; DISCLAIMERS      33   

14.1

   Survival of Warranties, Representations and Covenants      33   

14.2

   Buyer’s Assumption of Liabilities and Obligations      33   

14.3

   Indemnification      34   

14.4

   Procedure      34   

14.5

   No Insurance; Subrogation      35   

14.6

   Reductions in Losses      35   

14.7

   Reservation as to Non-Parties      35   

14.8

   Release      36   

14.9

   Disclaimers      36   

ARTICLE 15

   MISCELLANEOUS      37   

15.1

   Schedules      37   

15.2

   Expenses      37   

15.3

   Notices      37   

15.4

   Amendments      38   

15.5

   Assignment      38   

15.6

   Headings      38   

15.7

   Counterparts/Electronic and Fax Signatures      38   

15.8

   References      38   

15.9

   Governing Law      39   

15.10

   Disputes      39   

15.11

   Waiver of Certain Damages      39   

15.12

   Entire Agreement      39   

15.13

   Severability      39   

15.14

   Binding Effect      39   

15.15

   No Third-Party Beneficiaries      39   

 

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Defined Terms

 

Term

   

Section

AAA

    4.4

Affiliates

    1.3(g)

Agreed Accounting Firm

    13.2

Agreement

    Opening paragraph

Allocated Value

    2.2

Assumed Liabilities

    14.2

Bankruptcy Court

    10.3

Bankruptcy Proceeding

    8.1(j)

Buyer’s Environmental Liabilities

    5.2

Buyer’s Representatives

    3.2

Buyer

    Opening paragraph

Casualty Loss

    8.3(c)

Claim

    14.4(b)

Claim Notice

    14.4(a)

Claims and Interests

    12.3(a)

Closing

    12.1

Closing Amount

    2.3

Closing Date

    12.1

Code

    2.4

Condition

    5.1(a)

Contracts

    1.3(f)

Cure Period

    4.3(e)

Current Tax Period

    9.2

Defect Threshold

    11.1(d)

Defensible Title

    4.1(a)

Dispute

    15.10

Due Diligence Review

    3.1

earned

    2.3(a)

Effective Time

    1.2

Environmental Assessment

    3.3(a)

Environmental Deductible

    5.6(b)

Environmental Defect

    5.1(b)

Environmental Defect Adjustment

    5.6(a)(1)

Environmental Defect Exclusion

    5.6(a)(2)

Environmental Defect Notice

    5.4

Environmental Defect Property

    5.4

Environmental Defect Value

    5.4

Environmental Expert

    5.7

Environmental Law(s)

    5.1(c)

Equipment

    1.3(e)

Excluded Assets

    1.4

Execution Date

    Opening Paragraph

Final Adjustment

    13.1

Final Purchase Price

    13.1

Final Settlement Date

    13.1

Final Settlement Statement

    13.1

Governmental Entity

    5.1(d)

 

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Defined Terms

(continued)

 

GP Indemnification Agreement

    12.3(h)

Hazardous Materials

    5.1(e)

Hydrocarbons

    1.3(b)

Impact Fee

    9.1(a)

Income Taxes

    9.1(b)

incurred

    2.3(a)

Indemnified Party

    14.4(a)

Indemnifying Party

    14.4(a)

Individual Title Threshold

    4.3(i)

Information

    8.2(b)

Initial Purchase Price

    2.1

Initial Defect Notice Date

    3.1

Knowledge

    Article 6

Lands

    1.3(a)

Leases

    1.3(a)

Losses

    14.3

Net Casualty Loss

    8.3(c)

Net Revenue Interest

    4.1(a)(1)

NORM

    5.3

Notice of Defective Interest

    4.3(c)

Obligations

    14.2

Partial Assignment

    4.2(a)

Partnership

    Opening paragraph

Party, Parties

    Opening paragraph

Permitted Encumbrances

    4.1(b)

Person

    1.3(g)

Post-Closing Cure Period

    4.3(f)

Preliminary Settlement Statement

    2.3

Production Taxes

    9.1(c)

Property Expenses

    2.3(b)

Property Taxes

    9.1(d)

Purchase Price

    2.1

Records

    1.3(g)

Remediate; Remediation

    5.1(f)

Seller

    Opening paragraph

Seller Indemnified Parties

    3.3(d)

Severance Taxes

    9.1(e)

Shallow Assets

    1.3

Shallow Wells

    1.3(c)

Supplemental Defect Notice Date

    3.1

Survival Period

    14.1

Tax Controversy

    9.5(d)

Taxes

    9.1(f)

Title Arbitrator

    4.4

Title Benefit

    4.3(b)

Title Benefit Amount

    4.3(h)

Title Benefit Notice

    4.3(d)

Title Benefit Property

    4.3(d)

 

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Defined Terms

(continued)

 

Title Deductible

    4.3(i)

Title Defect

    4.3(a)

Title Defect Adjustment

    4.3(f)

Title Defect Amount

    4.3(g)

Title Defect Property

    4.3(c)

Title Disputed Matters

    4.4

Transaction

    Opening paragraph

Transfer Taxes

    9.1(g)

Working Interest

    4.1(a)(2)

 

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List of Exhibits

 

Exhibit A   Leases
Exhibit B   Shallow Wells
Exhibit C   Contracts
Exhibit D   Form of Partial Assignment, Bill of Sale and Conveyance
Exhibit E   Form of Assignment and Assumption Agreement
Exhibit F   Form of Certificate of Non-Foreign Status
List of Schedules
Schedule 2.2   Allocated Values
Schedule 6.1(a)   Seller’s Knowledge Representatives
Schedule 6.1(b)   Buyer’s Knowledge Representatives
Schedule 6.7   Status and Operation of Shallow Assets

 

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PURCHASE AND SALE AGREEMENT

This Purchase and Sale Agreement (this “Agreement”), is dated January 30, 2014 (the “Execution Date”), by and between Eastern 1996D Limited Partnership, Eastern 1997D Limited Partnership, Eastern 1998D Limited Partnership, and CO and PA 1999D Limited Partnership (each individually a “Partnership,” and collectively the “Seller”), and Alliance Petroleum Corporation, a Georgia corporation (“Buyer”), whose address is 4150 Belden Village Avenue N.W., Suite 410, Canton, Ohio, 44718. Seller and Buyer are individually referred to herein as a “Party” or collectively as the “Parties.” The transaction contemplated by this Agreement may be referred to as the “Transaction.”

RECITALS

A. Seller owns certain wellbore interests located in Barbour, Doddridge and Taylor Counties, West Virginia, and in Armstrong, Clearfield, Indiana and Washington Counties, Pennsylvania, as more fully described in Section 1.3;

B. Seller desires to sell and Buyer desires to purchase all of Seller’s interest in the Shallow Assets, as defined in Section 1.3, upon the terms and conditions set forth in this Agreement;

AGREEMENT

In consideration of the mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Buyer and Seller agree as follows:

ARTICLE 1

PURCHASE AND SALE

1.1 Purchase and Sale. Subject to the terms and conditions of this Agreement, Buyer agrees to purchase from Seller, and Seller agrees to sell, assign and deliver to Buyer, all of Seller’s right, title and wellbore interest in the Shallow Assets for the consideration specified in Article 2.

1.2 Effective Time. The purchase and sale of the Shallow Assets shall be effective as of April 1, 2013, at 12:01 a.m. Eastern Time (the “Effective Time”).

1.3 Shallow Assets. “Shallow Assets” refers to all of Seller’s right, title and interest (which are wellbore interests only) in and to the following as of the Effective Time:

(a) the wellbore interests (i.e., only such of the leaseholds as constitute the drillsite for the subject Shallow Wells, to and only to, the depth of each Shallow Well as of the Effective Time) in the oil and gas leases, subleases and other leaseholds described on Exhibit A (“Leases”), together with all amendments, supplements, renewals, extensions or ratifications thereof (collectively, the “Leases”), together with each and every kind and character of right, title, claim, and interest that Seller has in and to the lands covered by the Leases or the lands currently pooled, unitized or consolidated therewith (the “Lands”);

(b) the oil, gas, casinghead gas, coalbed methane, condensate and other gaseous and liquid hydrocarbons or any combination thereof, sulphur extracted from hydrocarbons and all other lease substances, combustible or non-combustible, under the Leases (“Hydrocarbons”) that may be produced from the Seller’s wellbore interests under the Leases;

(c) the oil, gas, water, disposal, monitoring or injection wells located on the Lands, whether producing, shut-in, or abandoned, including those described in Exhibit B (the “Shallow Wells”) only as to the depth penetrated in each Shallow Well as of the Effective Time and all rights appurtenant to or associated with the Shallow Wells, including, without limitation, all of Seller’s right to use the surface adjacent to the Shallow Wells as is necessary to operate the Shallow Wells;

(d) the unitization and pooling agreements, declarations, orders, and the units created thereby relating to the Shallow Assets and to the production of Hydrocarbons, if any, attributable to the Shallow Assets;

(e) all equipment, machinery, fixtures and other tangible personal property and improvements, including but not limited to, tanks, boilers, compression facilities, pumping units, flow lines, pipelines, gathering systems, gas and oil treating facilities, machinery, power lines, roads, and other appurtenances, improvements and facilities (the “Equipment”) located on and used or held for use solely in connection with the operation of the Shallow Assets;

(f) all existing and effective operating agreements (the “Contracts”), insofar as they directly relate solely to the Shallow Assets, as described in Exhibit C, and provided, however, that “Contracts” shall not include the instruments constituting the Leases; and

(g) to the extent transferable without payment of additional consideration, copies of all lease files (Seller shall retain original lease files), land files, well files, gas and oil sales contract files, gas processing files, division order files, abstracts, title opinions, land surveys, logs, maps, engineering data and reports, interpretive data, technical evaluations and technical outputs, and other books, records, data, files, and accounting records, (the “Records”) in each case to the extent related to the Shallow Assets, or used or held for use in connection with the maintenance or operation thereof, but excluding (i) any books, records, data, files, logs, maps, evaluations, outputs, and accounting records to the extent disclosure or transfer would result in a violation of applicable law or is restricted by any Required Consent that is not satisfied pursuant to Section 4.5, (ii) computer or communications software or intellectual property (including tapes, codes, data and program documentation and all tangible manifestations and technical information relating thereto), (iii) attorney-client privileged communications and work product of Seller’s or any of its Affiliates’ legal counsel (other than title opinions), (iv) reserve studies and evaluations, and (v) records relating to the negotiation and consummation of the purchase or sale of the Shallow Assets; provided, however, that Seller may retain the originals of such Records as Seller has reasonably determined may be required for existing litigation, tax, accounting, and auditing purposes. “Affiliates” shall mean any Person that directly or indirectly controls, is controlled by or is under common control with such Person. The concept of control, controlling or controlled as used in this context means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of another, whether through the ownership of voting securities, by contract or otherwise. “Person” shall mean any corporation, partnership (whether general, limited or otherwise), limited liability company, trust, association, joint venture, unincorporated organization, governmental entity, agency or branch or department thereof, or any other legal entity, or any natural person.

1.4 Other Excluded Assets. Notwithstanding anything in this Agreement to the contrary, the Shallow Assets shall not include, and there is excepted, reserved and excluded from the Transaction (the “Excluded Assets”):

(a) all partnership, financial, income and franchise tax and legal records of Seller that relate to Seller’s business generally (whether or not relating to the Shallow Assets), and all books, records and files that relate to the Excluded Assets and those records retained by Seller pursuant to Section 1.3(f) and copies of any other Records retained by Seller pursuant to Section 8.3(e);

 

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(b) all reserve estimates, economic estimates, and, to the extent excluded from Section 1.3(g), all logs, interpretive data, technical evaluations and technical outputs;

(c) all rights to any refunds for Taxes or other costs or expenses borne by Seller or Seller’s predecessors in interest and title attributable to periods prior to the Effective Time, in accordance with the provisions of Article 9;

(d) all rights, titles, claims and interests of Seller to or under any bond or bond proceeds;

(e) all documents and instruments of Seller that may be protected by an attorney-client privilege, other than title opinions, or the work product doctrine;

(f) any refunds due Seller by a third party for any overpayment of rentals, royalties, excess royalty interests or production payments attributable to the Shallow Assets with respect to any period of time prior to the Effective Time;

(g) any causes of action, claims, rights, indemnities or defenses available to or benefiting Seller with respect to any period of time prior to the Effective Time; and

(h) all amounts due or payable to Seller as adjustments to insurance premiums related to the Shallow Assets with respect to any period prior to the Effective Time.

1.5 Deep Rights. For the avoidance of doubt, Seller owns no rights in any formation below the top of the Rhinestreet formation within the State of West Virginia, and Seller owns no rights below the top of the Marcellus zone in the Commonwealth of Pennsylvania. Nothing in this Agreement shall be construed as transferring or granting any rights below the top of the Rhinestreet formation in the State of West Virginia or below the top of the Marcellus zone in the Commonwealth of Pennsylvania, because Seller does not own any rights to any formation below the top of such Rhinestreet formation or any rights to any formation below the top of the Marcellus zone.

ARTICLE 2

PURCHASE PRICE

2.1 Purchase Price. The purchase price for the Shallow Assets shall be One Million Nine Hundred Ninety Seven Thousand Four Hundred Thirty Six Dollars and Eight Cents ($1,997,436.08) (the “Initial Purchase Price”), subject to adjustment in accordance with the terms and conditions set forth in this Agreement (as adjusted, the “Purchase Price”). After Closing, final adjustments to the Purchase Price shall be made pursuant to the Final Settlement Statement to be delivered pursuant to Section 13.1 and payments made by Buyer or Seller as provided in Section 13.1.

2.2 Allocation of the Purchase Price. The Initial Purchase Price is allocated among the Shallow Assets as set forth on Schedule 2.2, which amounts shall be referred to as the “Allocated Value.”

2.3 Adjustments to Purchase Price and Preliminary Settlement. The Purchase Price shall be adjusted according to this Section 2.3 without duplication. Seller shall deliver to Buyer at least two (2) business days prior to Closing a draft settlement statement (“Preliminary Settlement Statement”) that shall set forth the adjusted Purchase Price reflecting each adjustment in accordance with this Agreement as of the date of preparation of such Preliminary Settlement Statement. The Preliminary Settlement Statement will be used to adjust the Purchase Price at Closing, which adjusted amount is referred to herein as the “Closing Amount.”

 

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(a) Proration of Costs and Revenues. Buyer shall be entitled to all production of Hydrocarbons from or attributable to the Shallow Assets from and after the Effective Time (and all products and proceeds attributable thereto), and to all other income, proceeds, receipts and credits earned with respect to the Shallow Assets from or after the Effective Time, and shall be responsible for (and entitled to any refunds with respect to) all Property Expenses (as defined in Section 2.3(b) below) incurred from and after the Effective Time. Seller shall be entitled to all Hydrocarbon production from or attributable to the Shallow Assets prior to the Effective Time (and all products and proceeds attributable thereto), and to all other income, proceeds, receipts and credits earned with respect to the Shallow Assets prior to the Effective Time, and shall be responsible for (and entitled to any refunds with respect to) all Property Expenses incurred prior to the Effective Time. The terms “earned” and “incurred,” as used in this Agreement shall be interpreted in accordance with generally accepted accounting principles utilized by Seller, except as otherwise specified herein. For purposes of allocating production (and accounts receivable with respect thereto), under this Section 2.3(a), (i) liquid Hydrocarbons, including natural gas liquids, shall be deemed to be “from or attributable to” the Shallow Assets when they pass through the pipeline connecting into the storage facilities into which they are run or into tanks connected to the Shallow Wells and (ii) gaseous Hydrocarbons shall be deemed to be “from or attributable to” the Shallow Assets when they pass through the royalty measurement meters, delivery point sales meters or custody transfer meters on the gathering lines or pipelines through which they are transported (whichever meter is closest to the well). Seller shall utilize reasonable interpolative procedures, consistent with industry practice, to arrive at an allocation of production when exact meter readings or gauging and strapping data are not available. As part of the Preliminary Settlement Statement, Seller shall provide to Buyer, all data reasonably necessary to support any estimated allocation, for purposes of establishing the Closing Amount.

(b) Property Expenses. The term “Property Expenses” means all capital expenses (including all capital expenditures authorized by Section 8.1(a)) and operating expenses incurred in the ownership, development and operation of the Shallow Assets in the ordinary course of business and, where applicable, in accordance with any relevant operating agreement, if any, and all Lease rental and maintenance costs, net profit payments, royalties, overriding royalties and other similar burdens incurred in connection with the Leases or the production and sale of Hydrocarbons therefrom, but excluding Production Taxes (which shall be apportioned as of the Effective Time in accordance with Article 9). Property Expenses shall not include overhead for the period between the Effective Time and the Closing Date.

(c) Upward Adjustments. To calculate the Closing Amount, the Purchase Price shall be adjusted upward, without duplication, by the following:

(1) The aggregate amount of the following proceeds actually received by Buyer: (i) proceeds from the sale of Hydrocarbons attributable to the Shallow Assets (net of any royalties, overriding royalties or other burdens on or payable out of Hydrocarbon production from the Shallow Assets, gathering, processing and transportation costs and any Severance Taxes not reimbursed to Buyer by the purchaser of Hydrocarbon production from the Shallow Assets) produced from or attributable to the Shallow Assets for periods prior to the Effective Time, and (ii) other proceeds earned with respect to the Shallow Assets for periods prior to the Effective Time;

(2) The amount of all Property Expenses and other costs attributable to the ownership and operation of the Shallow Assets for the period from and after the Effective Time which are actually paid by Seller and incurred by Seller, except any Property Expenses and other such costs already deducted in the determination of proceeds in Section 2.3(c)(1);

 

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(3) An amount equal to the value of (i) all oil and other Hydrocarbons produced from the Shallow Assets in pipelines or flowlines or in tanks above the pipeline sales connection (exclusive of any brine, sludge or water that may be present in the oil storage tanks), in each case that at the Effective Time, estimated based on run tickets as of the Effective Time, is credited to Seller’s interest in the Shallow Assets and (ii) all unsold inventory of gas plant products attributable to Seller’s interests in the Shallow Assets at the Effective Time, each such value to be the contract price in effect as of the Effective Time or, in the absence of an applicable contract price, the average price per unit for sales of production for the respective production period attributable to the Shallow Assets as of the Effective Time, less any applicable royalties, overriding royalties or other burdens;

(4) The amount of all Production Taxes allocated to Buyer pursuant to Article 9 that are actually paid by Seller; and

(5) Any other amount provided for in this Agreement or otherwise agreed to by Buyer and Seller.

(d) Downward Adjustments. To calculate the Closing Amount, the Purchase Price shall be adjusted downward, without duplication, by the following:

(1) An amount equal to the Title Defect Adjustment, if any, pursuant to Section 4.3(e);

(2) An amount equal to the Environmental Defect Adjustment, if any, pursuant to Section 5.6(a)(1) or Section 5.6(a)(2);

(3) An amount equal to the Allocated Value of any Shallow Assets not conveyed at Closing due to the failure to obtain a Required Consent to assign in accordance with Section 4.5(a);

(4) The aggregate amount of the following proceeds actually received by Seller: (i) proceeds from the sale of Hydrocarbons (net of any royalties, overriding royalties or other burdens on or payable out of Hydrocarbon production, gathering, processing and transportation costs and any Severance Taxes not reimbursed to Seller by the purchaser of Hydrocarbon production) produced from or attributable to the Shallow Assets during the period between the Effective Time and the date the Final Settlement Statement is executed by Seller and Buyer, and (ii) other proceeds earned with respect to the Shallow Assets during the period from and after the Effective Time and the date the Final Settlement Statement is executed by Seller and Buyer;

(5) The amount of all Property Expenses and other costs attributable to the ownership and operation of the Shallow Assets for the period prior to the Effective Time which are actually paid by Buyer, except any Property Expenses and other such costs already deducted in the determination of proceeds in Section 2.3(d)(4);

(6) The value of any Casualty Loss pursuant to Section 8.3(c);

(7) An amount equal to the revenue held in suspense by Seller for royalties, overriding royalties and similar leasehold burdens attributable to the Shallow Assets and handled in accordance with Section 8.l(i);

 

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(8) The amount of all Production Taxes allocated to Seller pursuant to Article 9 that are actually paid by Buyer; and

(9) Any other amount provided in this Agreement or otherwise agreed to by Buyer and Seller.

2.4 Allocations for Federal Income Tax Purposes. Buyer and Seller acknowledge that, under Section 1060 of the Internal Revenue Code of 1986, as amended (the “Code”), Buyer and Seller must report information regarding the allocation of the Purchase Price to the United States Secretary of Treasury by attaching Department of Treasury, Internal Revenue Service, Form 8594 to their federal income tax returns for the tax period that includes the Closing Date. Buyer and Seller agree that the Allocated Values set forth in Schedule 2.2 (taking into account any adjustment to the Initial Purchase Price pursuant to this Agreement) shall be used by them in preparing their respective Form 8594. The Parties shall not take any income tax position (whether in audits, on tax returns, or otherwise) that is inconsistent with such allocation unless required to do so by applicable law.

ARTICLE 3

BUYER’S INSPECTION

3.1 Due Diligence. Upon execution of this Agreement, but subject to the other provisions of this Agreement (including this Section 3.1) and obtaining any required consents of third parties (with respect to which consents Seller shall use its commercially reasonable efforts to obtain, provided however, that Seller shall not be required to provide consideration, incur any expense or undertake any obligations to or for the benefit of such third parties), Seller will afford Buyer reasonable access to the Shallow Assets during normal business hours for inspection and review to permit Buyer to perform its due diligence (such due diligence, the “Due Diligence Review”) as hereinafter provided. All pre-Closing notices pertaining to the Due Diligence Review must be received by Seller no later than 5:00 p.m., Eastern Time, three (3) business days prior to the Closing Date (the “Initial Defect Notice Date”). All post-Closing notices pertaining to the Due Diligence Review must be received by Seller no later than 5:00 p.m., Eastern Time, thirty (30) days after Closing (the “Supplemental Defect Notice Date”).

3.2 Access to Records. From the date hereof and through the Closing Date, Seller shall provide Buyer, and its counsel, accountants and other representatives (“Buyer’s Representatives”), reasonable access during Seller’s normal business hours to the Records to enable Buyer to complete its Due Diligence Review. Seller shall also make available to Buyer and Buyer’s Representatives, upon reasonable notice during normal business hours, Seller’s personnel knowledgeable with respect to the Shallow Assets in order that Buyer may conduct its Due Diligence Review. The Due Diligence Review conducted by Buyer or any Buyer’s Representative shall be conducted at Buyer’s sole cost, risk and expense and any conclusions made from any examination done by Buyer or any Buyer’s Representative shall result from Buyer’s own independent review and judgment.

3.3 On-Site Inspection.

(a) Seller hereby consents to Buyer conducting, prior to Closing and upon advance written notice to Seller, at Buyer’s sole risk and expense, (i) on-site inspections; and (ii) an ASTM Phase One Environmental Assessment (an “Environmental Assessment”) of the Shallow Assets but only to the extent that Seller may grant such right without violating any obligations to any third party (provided that Seller shall use its commercially reasonable efforts to promptly obtain any necessary third-party consents to any Environmental Assessment to be conducted by Buyer). The Environmental Assessment shall not include sampling activities or other environmental testing. In connection with any Environmental Assessment, Buyer agrees not to interfere with the normal operation of the Shallow Assets and agrees to comply with all requirements and safety policies of the operator. Seller shall have the right to be present during any Environmental Assessment of the Shallow Assets.

 

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(b) In the event Buyer performs any Environmental Assessment on a portion of the Shallow Assets, Buyer shall provide Seller promptly, but not later than the Supplemental Defect Notice Date, copies of all reports (whether in draft or final form), test results, and other documentation and data prepared or compiled by Buyer and/or any of Buyer’s Representatives and which contain information collected or generated from the Environmental Assessment conducted with respect to such Shallow Assets. Seller shall not be deemed by its receipt of said documents or otherwise to have made any representation or warranty, expressed, implied or statutory, as to the condition to the Shallow Assets or to the accuracy of said documents or the information contained therein.

(c) Upon completion of Buyer’s Due Diligence Review, Buyer shall at its sole cost and expense and without any cost or expense to Seller or its Affiliates, (i) repair any damage done to the Shallow Assets in connection with Buyer’s due diligence in accordance with recognized industry standards or requirements of third-party operators, (ii) restore the Shallow Assets to substantially the same condition that existed prior to commencement of Buyer’s due diligence, to the full extent of any damage related to Buyer’s due diligence, and (iii) remove all equipment, tools or other property brought onto the Shallow Assets in connection with Buyer’s Due Diligence Review. Any disturbance to the Shallow Assets (including any real property or other fixtures associated with such Shallow Assets) resulting from Buyer’s Due Diligence Review will be promptly corrected by Buyer upon completion of Buyer’s Due Diligence Review.

(d) During all periods that Buyer, and/or any of Buyer’s Representatives are on the Shallow Assets, Buyer shall maintain, at its sole expense and with insurers reasonably satisfactory to Seller, policies of insurance of the types and in the amounts consistent with industry standards. Coverage under all insurance required to be carried by Buyer hereunder will (i) be primary insurance, (ii) list Seller, its Affiliates, their respective successors and assigns and the respective managers, members, shareholders, officers, directors, employees, representatives, consultants and agents of all of the foregoing (“Seller Indemnified Parties”) as additional insureds, (iii) waive subrogation against Seller Indemnified Parties, (iv) be maintained for three (3) years following Buyer’s and/or Buyer’s Representatives Due Diligence Review, and (v) provide for thirty (30) days’ prior notice to Seller in the event of cancellation or modification of the policy or reduction in coverage. Buyer shall deliver a certificate of insurance to Seller prior to entering upon the Shallow Assets.

3.4 Indemnification. BUYER HEREBY AGREES TO DEFEND, INDEMNIFY AND HOLD HARMLESS THE SELLER INDEMNIFIED PARTIES AND EACH OF THE OPERATORS OF THE SHALLOW ASSETS, SELLER AND ITS AFFILIATES, THEIR RESPECTIVE SUCCESSORS AND ASSIGNS AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, CONSULTANTS AND REPRESENTATIVES FROM AND AGAINST ANY AND ALL LOSSES ARISING OUT OF, RESULTING FROM OR RELATING TO ANY FIELD VISIT, ON-SITE INSPECTION, ENVIRONMENTAL ASSESSMENT OR OTHER DUE DILIGENCE ACTIVITY CONDUCTED BY BUYER OR ANY REPRESENTATIVE OF BUYER WITH RESPECT TO THE SHALLOW ASSETS, EVEN IF SUCH LIABILITIES ARISE OUT OF OR RESULT FROM, SOLELY OR IN PART, THE SOLE, ACTIVE, PASSIVE, CONCURRENT OR COMPARATIVE NEGLIGENCE, STRICT LIABILITY OR OTHER FAULT OR VIOLATION OF LAW OF OR BY A SELLER INDEMNIFIED PARTY, EXCEPTING ONLY LIABILITIES RESULTING FROM OR ARISING OUT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF A SELLER INDEMNIFIED PARTY.

 

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ARTICLE 4

TITLE MATTERS

4.1 Definitions. For the purposes of the Agreement, the following terms shall have the following meanings:

(a) “Defensible Title” means such ownership of record deducible from the applicable county and state records, such that a prudent person engaged in the business of the ownership, development and operation of oil and gas leasehold and properties and having knowledge of all of the facts and their legal bearing would be willing to accept the same, to each Shallow Well, that, subject to and except for Permitted Encumbrances as defined in Section 4.1(b):

(1) Entitles Seller to receive a share of the Hydrocarbons produced, saved and marketed from any Shallow Well throughout the duration of the productive life of such Shallow Well after satisfaction of all royalties, overriding royalties, nonparticipating royalties, net profits interests, production payments or other similar burdens on or measured by production of Hydrocarbons (a “Net Revenue Interest”), of not less than the Net Revenue Interest shown in Exhibit B for such Shallow Well, except for (i) decreases in connection with those operations in which Seller may, from and after the Execution Date, be a non-consenting co-owner (to the extent permitted pursuant to Sections 8.1(a) or 8.1(b)), (ii) decreases resulting from the establishment or amendment of drilling and spacing units, tract allocation or other changes in pool or unit participation occurring after the Execution Date, and (iii) as otherwise stated in Exhibit B;

(2) Obligates Seller to bear a percentage of the costs and expenses for the maintenance, development, operation and the production relating to any Shallow Well throughout the productive life of such Shallow Well (“Working Interest”) not greater than the Working Interest shown in Exhibit B for such Shallow Well without increase, except (i) increases to the extent that they are accompanied by a proportionate increase in Seller’s Net Revenue Interest, (ii) increases resulting from contribution requirements with respect to defaults by co-owners from and after the Execution Date under applicable joint operating agreements, and (iii) as otherwise stated in Exhibit B; and

(3) is free and clear of liens, encumbrances, obligations, security interests or pledges arising by, through or under Seller, but not otherwise.

(b) “Permitted Encumbrances” means:

(1) lessors’ royalties, overriding royalties, net profits interests, production payments, reversionary interests and similar burdens attributable to the Shallow Assets if the net cumulative effect of such burdens does not operate to reduce the Net Revenue Interests below those set forth in Exhibit B;

(2) liens affecting the Shallow Assets for Taxes or assessments not yet due and delinquent or, if delinquent, are being contested in good faith through appropriate proceedings;

(3) all rights to consent by, required notices to, filings with, or other actions by Governmental Entities, in connection with the conveyance of the applicable Shallow Asset if the same are customarily sought after such conveyance;

 

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(4) rights of reassignment contained in any Leases, or assignments thereof, providing for reassignment upon the surrender or expiration of any Leases;

(5) easements and other rights with respect to surface operations, on, over or in respect of any of the Shallow Assets or any restriction on access thereto that do not materially interfere with the operation of the affected Shallow Asset as currently conducted;

(6) materialmen’s, mechanics’, operators’ or other similar liens arising in the ordinary course of business affecting the Shallow Assets if such liens and charges (i) have not been filed pursuant to law and the time for filing such liens and charges has expired, (ii) if filed, have not yet become due and payable, or (iii) are being contested in good faith through appropriate proceedings;

(7) such Title Defects as Buyer has waived;

(8) any defects, irregularities or deficiencies in title to Easements that do not materially adversely affect the value of any Shallow Asset;

(9) the Contracts set forth on Exhibit C;

(10) the consents to assignment referenced in Section 4.5(a) to the extent they are extinguished in the Bankruptcy Proceeding;

(11) all rights reserved to or vested in any Governmental Entity to control or regulate any of the Shallow Assets in any manner, and all obligations and duties under all applicable laws or under any franchise, grant, license or permit issued by any such Governmental Entity;

(12) any liens burdening the Shallow Assets that will be released at or before Closing, as contemplated by this Agreement;

(13) matters that would otherwise be considered Title Defects but that do not meet the Individual Title Threshold and Aggregate Deductible set forth in Section 4.3(i);

(14) liens granted under applicable joint operating agreements pertaining to the Shallow Assets for amounts not yet delinquent; and

(15) all other liens, charges, encumbrances, contracts, agreements, instruments, obligations, defects and irregularities affecting the Shallow Assets that do not (or would not upon foreclosure or other enforcement) reduce the Net Revenue Interest set forth in Exhibit B, or prevent the receipt of proceeds of production therefrom, increase the share of costs above the Working Interest set forth in Exhibit B (unless accompanied by a proportionate increase in Seller’s Net Revenue Interest) or materially interfere with or detract from the ownership, operation, value or use of the Shallow Assets.

4.2 Title Representations.

(a) Defensible Title Representation. Subject to the limitations set forth in Section 4.2(c), Seller represents and warrants to Buyer that, as of the Effective Time and as of the Closing Date, its title to the Shallow Wells is Defensible Title. Except as set forth in this Section 4.2(a) and the Partial Assignment, Bill of Sale and Conveyance to be delivered at Closing, a form of which is attached hereto as Exhibit D (the “Partial Assignment”), Seller makes no warranty or representation, express, implied, statutory or otherwise, with respect to Seller’s title to the Shallow Wells, and Buyer hereby acknowledges and agrees that Buyer’s sole remedy for any defect of title, including any Title Defect, with respect to any of the Shallow Wells before Closing, shall be Buyer’s right to adjust the Purchase Price to the extent provided in this Article 4 or terminate this Agreement pursuant to Section 11.1.

 

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(b) Intentionally Omitted.

(c) Exclusive Remedy. With the exception of the special warranty of title in the Partial Assignment, (i) the representation and warranty in Section 4.2(a) shall terminate as of the Closing Date and shall have no further force and effect thereafter, and (ii) Section 4.3 shall be the exclusive right and remedy of Buyer with respect to Seller’s failure to have Defensible Title with respect to the Shallow Wells. Notwithstanding anything herein provided to the contrary, if a Title Defect under this Article 4 results from any matter which could also result in the breach of any representation or warranty of Seller under Article 6 of this Agreement, then Buyer shall only be entitled to assert such matter before Closing as a Title Defect to the extent permitted by this Article 4. Buyer shall be precluded from also asserting such matter as the basis of the breach of any such representation or warranty under Article 6.

4.3 Title Adjustment Procedures.

(a) Title Defect. As used in this Agreement, the term “Title Defect” means any lien, charge, encumbrance, obligation (including contract obligation), defect, condition or other matter (including a discrepancy in Net Revenue Interest or Working Interest) that causes a breach of Seller’s representation and warranty in Section 4.2(a). Notwithstanding the foregoing, the following shall not be considered Title Defects:

(1) defects based solely on lack of information in Seller’s files;

(2) defects in the chain of title consisting of the mere failure to recite marital status in a document or omissions of successions of heirship or estate proceedings, unless Buyer provides clear and convincing evidence that such failure or omission has resulted in another person’s actual and superior claim of title to the relevant Shallow Asset;

(3) defects based on failure to record Leases issued by any state or federal Governmental Entity, or any assignments of such Leases, in the real property, conveyance or other records of the county in which such Property is located;

(4) defects arising out of lack of survey, unless a survey is expressly required by applicable laws or regulations;

(5) defects asserting a change in Working Interest or Net Revenue Interest based on a change in drilling and spacing units, tract allocation or other changes in pool or unit participation occurring on or after the Execution Date;

(6) defects arising out of lack of corporate or other entity authorization unless Buyer provides a reasonable basis for the assertion that such corporate or other entity action was not authorized and results in another person’s actual and superior claim of title to the relevant Shallow Asset; and

(7) defects that have been cured by applicable laws of limitations or prescription.

 

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(b) Title Benefit. As used in this Agreement, the term “Title Benefit” shall mean any right, circumstance or condition that operates to increase the Net Revenue Interest being assigned to Buyer in any Shallow Well above that shown for such Shallow Well in Exhibit B, to the extent the same does not cause a greater than proportionate increase in the Working Interest being assigned to Buyer therein above that shown in Exhibit B.

(c) Notice of Defective Interest. Buyer shall advise Seller in writing of any matters that in Buyer’s reasonable opinion constitute a Title Defect with respect to Seller’s title to all or any portion of the Shallow Wells (“Notice of Defective Interest”). The Notice of Defective Interest shall be in writing and contain the following: (i) a description of the alleged Title Defect(s), (ii) the Shallow Wells (and the applicable zone(s) therein) affected by the alleged Title Defect (each a “Title Defect Property”), (iii) the Allocated Value of each Title Defect Property, (iv) supporting documentation reasonably necessary for Seller (as well as any title attorney or examiner hired by Seller) to verify the existence of the alleged Title Defect(s), and (v) the amount by which Buyer reasonably believes the Allocated Value of each Title Defect Property is reduced by the alleged Title Defect(s) and the computations and information upon which Buyer’s belief is based. Buyer agrees that it will use reasonable efforts to furnish Seller once every two (2) weeks, commencing on the fourteenth (14th) day following the date of this Agreement until the Initial Defect Notice Date, written notice of any Title Defect that any officer of Buyer or its Affiliates discovers or learns during such two (2) week period, which may be preliminary in nature and supplemented prior to the Supplemental Defect Notice Date; provided, however, that the failure of Buyer to give Seller any such preliminary notices shall not waive any Title Defects or constitute a breach of this Agreement. Subject to Seller’s continuing right to dispute the existence of a Title Defect or the Title Defect Amount, all Title Defects for which a Notice of Defective Interest has been submitted prior to the Initial Defect Notice Date shall be adjusted for in accordance with Section 4.3(f) and Section 4.3(g) on the Preliminary Closing Statement.

(i) From the Closing Date through the Supplemental Defect Notice Date, Buyer may deliver to Seller an additional Notice of Defective Interests for any Title Defects Buyer identifies during such period. Any Title Defect not identified on a Notice of Defective Interests delivered on or before the Supplemental Defect Notice Date shall be deemed to have been waived by Buyer. Buyer’s sole remedy for a Title Defect identified on a Notice of Defective Interest (delivered on or after the Initial Defect Notice Date and on or before the Supplemental Defect Notice Date) shall be an adjustment to the Initial Purchase Price (subject to all of the conditions set forth in this Article 4); provided, however, the sum of (x) aggregate adjustments for Title Defects (net of Title Benefits) and Environmental Defects asserted on before the Initial Defect Notice Date and Casualty Losses reflected on the Preliminary Settlement Statement plus (y) the sum of Title Defects (net of Title Benefits) described in the Notice of Defective Interest and the sum of Environmental Defects described on the Environmental Defect Notice, both delivered after the Closing Date but on or before the Supplemental Defect Notice Date, shall not exceed twenty percent (20%) of the Initial Purchase Price. For the avoidance of doubt, Buyer’s ability to raise Title Defects and Environmental Defects between the Closing Date and on or before the Supplemental Defect Notice Date shall not allow Buyer to raise more Title Defects and Environmental Defects (or be entitled to any adjustment to the Initial Purchase Price for) than it would have been allowed if no post-Closing Due Diligence Review were allowed hereunder. The provisions of Sections 4.3(e), (f), (g) and (i) and Section 4.4 shall apply to the Title Defects identified in the Notice of Defective Interests delivered pursuant to this Section 4.3(c)(i), and the Final Settlement Statement shall reflect all appropriate adjustments to the Initial Purchase Price permitted by this Section 4.3(c)(i).

 

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(d) Notice of Title Benefits. No later than 5:00 p.m. Eastern Time on the Supplemental Defect Notice Date, Seller shall have the right, but not the obligation, to advise Buyer in writing of any matters that in Seller’s reasonable opinion constitute a Title Benefit with respect to Seller’s title to all or any portion of the Shallow Wells (a “Title Benefit Notice”). The Title Benefit Notice shall be in writing and contain the following: (i) a description of the Title Benefit, (ii) the Shallow Wells (and the applicable zone(s) therein) affected by the Title Benefit (“Title Benefit Property”), (iii) the Allocated Values of the Shallow Wells (and the applicable zone(s) therein) subject to such Title Benefit, and (iv) the amount by which the Seller reasonably believes the Allocated Value of those Shallow Wells (and the applicable zone(s) therein) is increased by the Title Benefit, and the computations and information upon which Seller’s belief is based. Seller shall be deemed to have waived all Title Benefits of which it has not given notice prior to 5:00 p.m. Eastern Time on the Supplemental Defect Notice Date. Buyer shall promptly furnish Seller with written notice of any Title Benefit which is discovered by Buyer or any of its representatives while conducting Buyer’s title review, due diligence or investigation with respect to the Shallow Wells.

(e) Seller’s Right to Cure. Seller shall have the right, but not the obligation, to attempt, at its sole cost, to cure or remove at any time prior to the Closing (the “Cure Period”), to Buyer’s reasonable satisfaction, any Title Defects of which it has been advised by Buyer. Seller shall also have the right, but not the obligation to attempt, at its sole cost, to cure prior to the date it delivers the Final Settlement Statement to Buyer’s reasonable satisfaction any Title Defect described in the Notice of Defective Interest delivered after the Closing Date but on or before the Supplemental Defect Notice Date.

(f) Remedies for Title Defects. Subject to Seller’s continuing right to dispute the existence of a Title Defect or the Title Defect Amount asserted with respect thereto, in the event that any Title Defect timely asserted by Buyer in accordance with Section 4.3(c) actually exists and is not waived by Buyer or cured to Buyer’s reasonable satisfaction on or before the end of the Cure Period, Seller shall convey the Title Defect Property to Buyer at Closing with a reduction to the Purchase Price, provided, however, that Seller shall retain the right to cure such Title Defects after Closing, as set forth herein. The reduction to the Purchase Price contemplated by the foregoing sentence shall equal the amount of the aggregate Title Defect Amounts for all such Title Defects as determined pursuant to Section 4.3(g), subject to the Individual Title Threshold and the Aggregate Deductible set forth in Section 4.3(i), less an amount equal to the aggregate of all Title Benefit Amounts (as so calculated, the “Title Defect Adjustment”). Seller shall have one hundred twenty (120) days after the Closing Date (the “Post-Closing Cure Period”) in which to attempt to cure any such Title Defects to Buyer’s reasonable satisfaction, subject to the continuing application of the Individual Title Threshold and the Aggregate Deductible. Buyer shall use good faith efforts to cooperate with Seller’s efforts to cure such Title Defects. If Seller cures any such Title Defect to Buyer’s reasonable satisfaction prior to the end of the Post-Closing Cure Period, then the Title Defect Amount with respect to the Title Defect that is so cured shall promptly be paid to Seller. If the Parties are unable to agree as to whether the Title Defect has been cured to Buyer’s reasonable satisfaction, the provisions of Section 4.4 shall apply as written and the Title Arbitrator shall be selected within fifteen (15) business days following the end of the Post-Closing Cure Period.

(g) Title Defect Amount. The “Title Defect Amount” means the amount by which the Allocated Value of the Title Defect Property affected by such Title Defect is reduced as a result of the existence of such Title Defect and shall be determined in accordance with the following methodology, terms and conditions:

(1) if Buyer and Seller agree on the Title Defect Amount, that amount shall be the Title Defect Amount;

(2) if the Title Defect is a lien, encumbrance or other charge which is undisputed and liquidated in amount, then the Title Defect Amount shall be the amount of the payment necessary to remove the Title Defect from the Title Defect Property;

 

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(3) if the Title Defect represents a discrepancy between (A) the Net Revenue Interest for any Title Defect Property and (B) the Net Revenue Interest stated in Exhibit B for such Title Defect Property, then the Title Defect Amount shall be the product of the Allocated Value of such Title Defect Property multiplied by a fraction, the numerator of which is the Net Revenue Interest decrease and the denominator of which is the Net Revenue Interest stated in Exhibit B; and

(4) if the Title Defect represents an obligation, encumbrance, burden or charge upon or other defect in title to the Title Defect Property of a type not described in subsections (1), (2), or (3) above, the Title Defect Amount shall be determined by taking into account the following factors: (i) any discrepancy between (A) the Net Revenue Interest or Working Interest for any Title Defect Property and (B) the Net Revenue Interest or Working Interest stated in Exhibit B; (ii) the Allocated Value of the Title Defect Property; (iii) the portion of the Title Defect Property affected by the Title Defect; (iv) the legal effect of the Title Defect; (v) the values placed upon the Title Defect by Buyer and Seller and (vi) such other reasonable factors as are necessary to make a proper evaluation.

Notwithstanding anything to the contrary in this Article 4, the aggregate Title Defect Amounts attributable to the effects of all Title Defects upon any Title Defect Property shall not exceed the Allocated Value of the Title Defect Property.

(h) Title Benefit Amount. “Title Benefit Amount” means the amount by which the Allocated Value of the Title Benefit Property affected by such Title Benefit is increased as a result of the existence of such Title Benefit and shall be determined in accordance with the following methodology, terms and conditions:

(1) if Buyer and Seller agree on the amount of the Title Benefit, that amount shall be the Title Benefit Amount;

(2) if the Title Benefit represents an increase between (A) the Net Revenue Interest for any Title Benefit Property and (B) the Net Revenue Interest set forth in Exhibit B for such Title Benefit Property, then the Title Benefit Amount shall be an amount equal to the product of the Allocated Value of such Title Benefit Property multiplied by a fraction, the numerator of which is the Net Revenue Interest and the denominator of which is the Net Revenue Interest set forth in Exhibit B; and

(3) if the Title Benefit is of a type not described above, then the applicable Title Benefit Amount shall be determined by taking into account the following factors: (i) any discrepancy between (A) the Net Revenue Interest or Working Interest for any Title Benefit Property and (B) the Net Revenue Interest or Working Interest stated in Exhibit B; (ii) the Allocated Value of the Title Benefit Property; (iii) the portion of the Title Benefit Property affected by the Title Benefit; (iv) the legal effect of the Title Benefit; and (v) such other reasonable factors as are necessary to make a proper evaluation; and

(4) if a Title Benefit Property has no Allocated Value, then such Title Benefit Property shall have no Title Benefit Amount.

 

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(i) Title Thresholds and Deductibles. Notwithstanding anything to the contrary, (i) in no event shall there be any adjustments to the Purchase Price or other remedies provided by Seller for any individual Title Defect for which the Title Defect Amount does not exceed Ten Thousand Dollars ($10,000.00) (“Individual Title Threshold”); and (ii) in no event shall there be any adjustments to the Purchase Price or other remedies provided by Seller for any Title Defect that exceeds the Individual Title Threshold unless the aggregate Title Defect Amounts of all Title Defects that exceed the Individual Title Threshold (excluding any Title Defects cured by Seller) less the aggregate Title Benefit Amounts, exceed two percent (2%) of the Initial Purchase Price (“Title Deductible”), after which point Buyer shall be entitled to adjustments to the Purchase Price or other remedies only with respect to such Title Defects in excess of such Title Deductible.

4.4 Title Dispute Resolution. The Parties agree to resolve disputes concerning the following matters pursuant to this Section 4.4: (i) the existence and scope of a Title Defect or Title Benefit, (ii) the Title Defect Amount or Title Benefit Amount, as the case may be, relating to the portion of the Shallow Asset affected by a Title Defect or Title Benefit and (iii) the adequacy of Seller’s Title Defect curative materials and Buyer’s reasonable satisfaction thereof (the “Title Disputed Matters”). The Parties agree to attempt to initially resolve all disputes through good faith negotiations. All Title Disputed Matters that are unresolved by the Parties shall be exclusively and finally resolved by arbitration pursuant to this Section 4.4. There shall be a single arbitrator, who shall be (i) a title attorney with at least ten (10) years’ experience in oil and gas titles involving properties in the region in which the subject Lease and Lands are located (“Title Arbitrator”) who shall not have performed any services for either Party during the previous five (5) years, as selected by mutual agreement of Buyer and Seller within fifteen (15) business days after the end of the Cure Period, and absent such mutual agreement, by the Pittsburgh, Pennsylvania office of the American Arbitration Association (the “AAA”). The arbitration proceeding shall be held in Pittsburgh, Pennsylvania and shall be conducted in accordance with the Commercial Arbitration Rules of the AAA, to the extent such rules do not conflict with the terms of this Section 4.4. The Title Arbitrator’s determination shall be made within fifteen (15) business days after submission of the matters in dispute and shall be final and binding upon both Parties, without right of appeal. In making his or her determination, the Title Arbitrator shall be bound by the rules set forth in this Article 4 and may consider such other matters as in the opinion of the Title Arbitrator are necessary or helpful to make a proper determination. Additionally, the Title Arbitrator may consult with and engage disinterested third parties to advise the expert or arbitrator, including petroleum engineers. The Title Arbitrator shall act as an expert for the limited purpose of determining the Title Disputed Matters submitted by either Party and may not award damages, interest or penalties to either Party with respect to any matter. Each Party may submit only one Title Defect Amount with respect to each alleged Title Defect and one Title Benefit Amount with respect to each Title Benefit (provided that the foregoing shall not be construed to preclude a Party from also arguing against, and the Title Arbitrator determining, the existence of a Title Defect or a Title Benefit). Seller and Buyer shall each bear its own legal fees and other costs of presenting its case. Each Party shall bear one-half of the costs and expenses of the Title Arbitrator, including any costs incurred by the Title Arbitrator that are attributable to such third-party consultation. Within ten (10) days after the Title Arbitrator delivers written notice to Buyer and Seller of the award with respect to a Title Disputed Matter, Buyer shall pay to Seller the amount, if any, awarded by the Title Arbitrator, plus the interest accrued on such amount.

4.5 Consents; No Preferential Rights. The remedies set forth in this Section 4.5 are the exclusive remedies under this Agreement for consents to assign.

(a) Consents. Certain of the Leases provide that they cannot be assigned without the consent of their lessors. Such consents to assignment shall be addressed in the Bankruptcy Proceeding.

(b) No Preferential Purchase Rights. No preferential rights to purchase exist with respect to the sale of any of the Shallow Assets.

 

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ARTICLE 5

ENVIRONMENTAL MATTERS

5.1 Definitions. For the purposes of the Agreement, the following terms shall have the following meanings:

(a) “Condition” means any circumstance, occurrence, status or defect that requires Remediation to comply with Environmental Laws.

(b) “Environmental Defect” means a Condition in, on, under or relating to a particular Shallow Asset (including air, land, soil, surface and subsurface strata, surface water, groundwater, or sediments) that causes a particular Shallow Asset to be in violation of an Environmental Law, if the lowest estimated cost of Remediation of that particular Shallow Asset alone exceeds Ten Thousand Dollars ($10,000.00) per Condition.

(c) “Environmental Law” or “Environmental Laws” shall mean, as of the Execution Date, any federal, state or local law (including the common law), statute, rule, regulation, requirement, ordinance and any writ, decree, bond, authorization, approval, license, permit, registration, binding criteria, standard, consent decree, settlement agreement, judgment, order, directive or binding policy issued by or entered into with a Governmental Entity pertaining or relating to: (a) pollution or pollution control, including stormwater discharge; (b) protection of human health from exposure to Hazardous Materials or protection of the environment; (c) employee safety in the workplace; or (d) the management, presence, use, generation, processing, extraction, treatment, recycling, refining, reclamation, labeling, transport, storage, collection, distribution, disposal or release or threat of release of Hazardous Materials. “Environmental Laws” shall include, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9601 et seq., the Solid Waste Disposal Act (as amended by the Resource Conservation and Recovery Act), 42 U.S.C. § 6901 et seq., the Hazardous Materials Transportation Act, 49 U.S.C. § 1801 et seq., the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq., the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq., the Federal Safe Drinking Water Act, 42 U.S.C. §§ 300f-300, the Federal Air Pollution Control Act, 42 U.S.C. § 7401 et seq., the Oil Pollution Act, 33 U.S.C. §2701 et seq., the Occupational Safety and Health Act, 29 U.S.C. §651 et seq., the Endangered Species Act, and the regulations and orders respectively promulgated thereunder, each as amended, or any equivalent or analogous state or local statutes, laws or ordinances, any regulation promulgated thereunder and any amendments thereto.

(d) “Governmental Entity” means any national, state or local government or any subdivision, agency, court, commission, department, board, bureau, regulatory authority or other division or instrumentality thereof.

(e) “Hazardous Materials” shall mean, without limitation, any waste, substance, product, or other material (whether solid, liquid, gas or mixed), which is or becomes identified, listed, published, or defined as a hazardous substance, hazardous waste, hazardous material, toxic substance, or radioactive material, including Hydrocarbons, oil, or petroleum waste, or which is otherwise regulated or restricted under any Environmental Law.

(f) “Remediation” or “Remediate” means investigation, assessment, characterization, delineation, monitoring, sampling, analysis, removal action, remedial action, response action, corrective action, mitigation, treatment or cleanup of Hazardous Materials or other similar actions as required by any applicable Environmental Laws from soil, land surface, groundwater, sediment, surface water, or subsurface strata or otherwise for the general protection of human health and the environment.

 

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5.2 Environmental Liabilities and Obligations. Upon Closing, Buyer agrees to assume and pay, perform, fulfill and discharge all claims, costs, expenses, liabilities and obligations accruing or relating to and release Seller and its Affiliates, and their respective successors and assigns and each of their respective stockholders, directors, officers, employees, advisors, agents and representatives from all Losses (including any civil fines, penalties, costs of assessment, clean-up, removal and Remediation, and expenses for the modification, repair or replacement of facilities on the Lands brought or assessed by any and all persons, including any Governmental Entity, as a result of any personal injury, illness or death, any damage to, destruction or loss of property, and any damage to natural resources (including soil, air, surface water or groundwater) to the extent any of the foregoing directly or indirectly is caused by, relates to, or otherwise involves any Condition of the Shallow Assets whether created or attributable to periods either before or after the Effective Time, including the presence, disposal or release of any Hazardous Material of any kind in, on or under the Shallow Assets or the Lands (collectively, “Buyer’s Environmental Liabilities”).

5.3 NORM, Wastes and Other Substances. Buyer acknowledges that the Shallow Assets have been used for the exploration, development, and production of Hydrocarbons and that there may be petroleum, produced water, wastes, or other substances or materials located in, on or under the Shallow Assets or associated with the Shallow Assets. Equipment and sites included in the Shallow Assets may contain Hazardous Materials, including naturally occurring radioactive material (“NORM”). NORM may affix or attach itself to the inside of wells, materials, and equipment as scale, or in other forms. The wells, materials, and equipment located on or included in the Shallow Assets may contain Hazardous Materials, including NORM. Hazardous Materials, including NORM, may have come in contact with various environmental media, including water, soils or sediment. Special procedures may be required for the assessment, remediation, removal, transportation, or disposal of environmental media and Hazardous Materials, including NORM, from the Shallow Assets.

5.4 Environmental Defect Notice. Buyer shall give Seller written notice of any Environmental Defect as to which Buyer has knowledge prior to the Initial Defect Notice Date (“Environmental Defect Notice”). An Environmental Defect Notice shall contain the following: (i) a description of the Condition in, on, under or relating to the Shallow Asset that causes the alleged Environmental Defect; (ii) a description of the particular Shallow Asset affected by the alleged Environmental Defect (each an “Environmental Defect Property”); (iii) the Allocated Value of each Environmental Defect Property; (iv) supporting documentation reasonably necessary for Seller (as well as any consultant hired by Seller) to verify the existence of the alleged Environmental Defect(s), and (v) Buyer’s estimated cost to Remediate the alleged Environmental Defect and supporting documentation reasonably necessary to verify such estimate (the “Environmental Defect Value”).

5.5 Seller’s Right to Remediate. Seller shall have the right, but not the obligation, to attempt, at its sole cost, to Remediate at any time prior to Closing any Environmental Defect of which it has been advised by Buyer prior to the Initial Defect Notice Date. Seller shall also have the right, but not the obligation, to attempt, at its sole cost, at any time within the Post-Closing Cure Period after the delivery of an Environmental Defect Notice after Closing but on or before the Supplemental Defect Notice Date to cure those Environmental Defects described in such Environmental Defect Notice.

 

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5.6 Defect Adjustments. Upon delivery of a timely Environmental Defect Notice, the Parties shall proceed as follows:

(a) With respect to each Environmental Defect asserted by Buyer on or before the Initial Defect Notice Date, Seller may elect, in its sole discretion, on or before the date that is two (2) days prior to Closing, to:

(1) reach agreement with Buyer on the existence of the Environmental Defect and subject to the Environmental Deductible set forth in Section 5.6(b), adjust the Purchase Price by the Environmental Defect Value of the Environmental Defect Property (the “Environmental Defect Adjustment”), whereupon Seller shall convey the Environmental Defect Property to Buyer at Closing and Buyer shall thereafter assume all liability for Remediation of the Environmental Defect Property;

(2) if the Parties are unable to reach agreement as to the existence of an Environmental Defect or the Environmental Defect Value or if the Environmental Defect Value exceeds the Allocated Value of the Environmental Defect Property, then Seller may remove the Environmental Defect Property from the Transaction and reduce the Purchase Price by the Allocated Value of the Environmental Defect Property (an “Environmental Defect Exclusion”). Seller shall have until the end of the Post-Closing Cure Period to attempt to Remediate any such Environmental Defect. If Seller Remediates any such Environmental Defect prior to the end of the Post-Closing Cure Period, Seller shall convey the subject Environmental Defect Property to Buyer, then Buyer shall promptly pay the amount of the Allocated Value to Seller, less any proceeds from the subject Environmental Defect Property after the Effective Time received and retained by Seller (net of Property Expenses paid by Seller attributable to such period). Seller’s election to Remediate an Environmental Defect after Closing is subject to Buyer’s agreement (which shall not be unreasonably withheld or delayed) to acquire the Environmental Defect Property which is not Remediated prior to Closing, with the Buyer to have no further claim after Closing with respect to the Environmental Defect that is so Remediated; or

(3) challenge the existence and/or scope of the Environmental Defect and/or Environmental Defect Value asserted by Buyer pursuant to Section 5.7.

(b) There shall be no reduction to the Purchase Price or other remedies provided by Seller for any Environmental Defect unless the Environmental Defect Values of all Environmental Defects in the aggregate (excluding any Environmental Defect Remediated by Seller), exceed two percent (2%) of the Initial Purchase Price (the “Environmental Deductible”) after which point Buyer shall be entitled to adjustments to the Purchase Price and remedies only with respect to such Environmental Defect in excess of such Environmental Deductible.

(c) With respect to any Environmental Defect asserted by Buyer after the Closing but on or before Supplemental Defect Notice Date, Seller may elect, in its sole discretion, during the post-Closing Cure Period to:

(1) reach agreement with Buyer on the existence of the Environmental Defect and subject to the Environmental Deductible set forth in Section 5.6(b), and reach agreement with the Buyer as to the Environmental Defect Adjustment to be included on the Final Settlement Statement. For the avoidance of doubt, the Environmental Defect Values of the Environmental Defects asserted prior to the Initial Defect Notice Date plus the Environmental Defect Values for the Environmental Defects asserted on or before the Supplemental Defect Notice Date must together, not separately, exceed the Environmental Deductible before there is any adjustment to the Purchase Price.

(2) attempt to remediate the Environmental Defect during the Post-Closing Time Period and, if it does so to Buyer’s reasonable satisfaction, there shall be no adjustment to the Purchase Price therefor on the Final Settlement Statement; or

 

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(3) challenge the existence and/or scope of the Environmental Defect and/or Environmental Defect Value asserted by Buyer pursuant to Section 5.7.

provided, however, notwithstanding any provision herein to the contrary, the sum of the (x) aggregate adjustments for Title Defects (net of Title Benefits) and Environmental Defects asserted on or before the Initial Defect Notice Date and net Casualty Losses reflected on the Preliminary Settlement Statement plus (y) the sum of the Title Defects (net of Title Benefits) described in the Notice of Defective Interests and the sum of Environmental Defects described in the Environmental Defect Notice, delivered on or before the Supplemental Defect Notice Date, shall not exceed twenty percent (20%) of the Initial Purchase Price.

5.7 Contested Environmental Defects. If, pursuant to Section 5.6(a)(3), Seller elects to proceed under this Section 5.7 with respect to an Environmental Defect, the following matters shall be determined pursuant to this Section 5.7: (a) the existence and scope of an Environmental Defect, and (b) the Environmental Defect Value. The Parties agree to attempt to initially resolve all disputes through good faith negotiations. If the Parties cannot resolve disputes regarding items (a) or (b) within thirty (30) days after the Defect Notice Date, either Party may submit the dispute to an environmental consultant or other professional approved in writing by Seller and Buyer that is experienced in environmental corrective action at oil and gas properties in the relevant jurisdiction and that shall not have performed professional services for either Party or any of their respective Affiliates during the previous five (5) years (the “Environmental Expert”). The Environmental Expert shall render his or her decision within fifteen (15) business days after submission of the matters in dispute, which decision shall be final and binding upon both Parties, without right of appeal. In making his or her determination, the Environmental Expert shall be bound by the rules set forth in this Article 5 and may consider such other matters as in the opinion of the Environmental Expert are necessary or helpful to make a proper determination. The Environmental Expert shall conduct the dispute resolution proceeding by written submissions from Buyer and Seller with exhibits, supplemented with appearances by Buyer and Seller, if necessary, as the Environmental Expert may deem necessary. The Environmental Expert shall act as an expert for the limited purpose of determining the disputed Environmental Defect matters submitted by either Party and may not award damages, interest or penalties to either Party with respect to any matter. Seller and Buyer shall each bear its own legal fees and other costs of presenting its case to the Environmental Expert. Each Party shall bear one-half of the costs and expenses of the Environmental Expert.

5.8 Exclusive Remedies. The right of Buyer to reduce the Purchase Price to reflect one or more Environmental Defect Adjustments pursuant to this Article 5 or terminate this Agreement pursuant to Section 11.1 shall be the exclusive right and remedy of Buyer with respect to environmental matters with respect to the Shallow Assets. Notwithstanding anything herein provided to the contrary, if an Environmental Defect under this Article 5 results from any matter which could also result in the breach of any representation or warranty of Seller in this Agreement, then Buyer shall only be entitled to assert such matter before the Environmental Defect Notice Date as an Environmental Defect to the extent permitted by this Article 5. Buyer shall be precluded from also asserting such matter as the basis of the breach of any such representation or warranty.

ARTICLE 6

SELLER’S REPRESENTATIONS AND WARRANTIES

Each Seller makes the following representations and warranties as of Closing and as of the Effective Time except where otherwise indicated. The term “Knowledge,” with respect to Seller, means the actual knowledge of Seller’s representatives listed on Schedule 6.1(a) hereto, and with respect to Buyer, means the actual knowledge of Buyer’s representatives listed on Schedule 6.1(b) hereto. The representations and warranties contained in this Article 6 do not include any matters with respect to Environmental Laws, such matters being addressed exclusively in Article 5.

 

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6.1 Organization and Standing. Each Partnership is a limited partnership duly organized, validly existing and in good standing under the laws of the State of West Virginia and is qualified to carry on its business in the State of West Virginia and/or the Commonwealth of Pennsylvania.

6.2 Power. Each Seller is authorized under the Bankruptcy Code to carry on its business in the ordinary course. Subject to Bankruptcy Court approval, the execution and delivery of this Agreement does not, and fulfillment of and compliance with the terms and conditions hereof will not, as of Closing, violate, or be in conflict with, any material provision of such Seller’s governing documents, any material agreement or instrument to which such Seller is a party or by which such Seller or the Shallow Assets may be bound, or any material laws applicable to any such Seller or any of the Shallow Assets.

6.3 Authorization and Enforceability. Upon the approval of the Bankruptcy Court, this Agreement constitutes such Seller’s legal, valid and binding obligation, enforceable in accordance with its terms.

6.4 Liability for Brokers’ Fees. Such Seller has not incurred any liability, contingent or otherwise, for brokers’ or finders’ fees relating to the Transaction for which Buyer shall have any responsibility.

6.5 Litigation.

(a) Except for the Bankruptcy Proceeding, there are no actions, suits, proceedings, notice of violation or claim pending or, to the Knowledge of such Seller, threatened, that would impair such Seller’s ability to consummate the Transaction or to assume the liabilities to be assumed by such Seller under this Agreement.

(b) Except for the Bankruptcy Proceeding, there are no actions, suits, proceedings, notice of violation or claim pending or, to the Knowledge of such Seller, threatened, against such Seller or any of the Shallow Assets, in any court or by or before any Governmental Entity involving the ownership or operation of the Shallow Assets; nor is such Seller in default under any order, writ, injunction, or decree of any court or Governmental Entity, in each case that would be reasonably likely to have a material adverse effect.

6.6 Compliance with Law. To such Seller’s Knowledge, the Shallow Assets have been operated in compliance in all material respects with all applicable federal, state and local laws, rules, regulations and orders. Such Seller has not received any written notice of a violation of any statute, law, ordinance, regulation, rule or order of any Governmental Entity, or any judgment, decree or order of any court, applicable to the Shallow Assets which in each case would be reasonably expected to have a material adverse effect on the Shallow Assets.

6.7 Status and Operation of Shallow Assets. Seller has incurred no expenses, and has made no commitments to make expenditures in connection with the ownership or operation of the Shallow Assets after the Effective Time (other than with respect to routine operations performed in the ordinary course of operating the existing Shallow Wells), which expenditures are, individually, estimated to cost Twenty-Five Thousand Dollars ($25,000.00) or more, net to Seller’s interest, and no contractual obligations, proposals or authorities for expenditures are currently outstanding (whether made by Seller or by any other party) to drill additional wells, or to deepen, plug back, rework any Shallow Well, or to conduct other operations on the Shallow Assets for which consent is required under the applicable operating agreement, to abandon any Shallow Well, or to conduct any other operation on the Shallow Assets for which the estimated cost exceeds Twenty-Five Thousand Dollars ($25,000.00), net to Seller’s interest. All expenses and commitments to make expenditures in connection with the ownership or operation of the Shallow Assets after the Effective Time (other than with respect to routine operations performed in the ordinary course of operating the existing Shallow Wells) are listed on Schedule 6.7.

 

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6.8 Taxes. All material Taxes pertaining to the Shallow Assets that are required to have been paid have been properly paid. There are no liens for Taxes with respect to the Shallow Assets other than Permitted Encumbrances. With respect to the Shallow Assets, there are no ongoing suits or proceedings, or to such Seller’s Knowledge, any claims, investigations, audits, inquiries pending or threatened against such Seller in respect of Taxes.

6.9 Imbalance Volumes. There are no gas pipeline and/or wellhead imbalances (positive or negative) (i) which are with gatherers, processors, or transporters, or with co-tenants or working interest owners in a well, unit, or field, (ii) which are associated with the Shallow Assets and (iii) where Seller has received a quantity of gas prior to the Effective Time for which Buyer will have a duty after the Effective Time to deliver an equivalent quantity of gas or pay a sum of money.

6.10 Leases. Such Seller has received no written notice of termination of any of the Leases.

6.11 Material Agreements. Except for the Leases, Exhibit C sets forth all Contracts related to the ownership and operation of the Shallow Assets to which Seller is a party and to which Buyer shall succeed Seller upon Closing.

6.12 Areas of Mutual Interest. Except as disclosed in any of the Contracts, no material Shallow Asset is subject to (or has related to it) any area of mutual interest agreement.

6.13 Production Payments. Seller is not obligated, by virtue of a production payment, prepayment arrangement under any contract for the sale of Hydrocarbons and containing a “take or pay, advance payment or similar provision, gas balancing agreement or any other arrangement to deliver any material amounts of Hydrocarbons without then or thereafter receiving full payment therefor, or to make payment for any material amounts of Hydrocarbons already produced and sold.

6.14 Insurance. As of the Effective Time, such Seller maintained, and through the Closing Date will maintain, with respect to the Shallow Assets, the insurance coverage in amounts and on terms such Seller reasonably believes to be appropriate and customary in the circumstances.

6.15 No Other Representations or Warranties; Disclosed Materials. Except for the representations and warranties contained in this Agreement (as qualified by the Schedules) and the documents assigning the Shallow Assets, such Seller makes no other (and Buyer acknowledges that it is not relying upon any) express or implied representation or warranty with respect to such Seller, the Shallow Assets or the Transaction, and such Seller disclaims any other representations or warranties not contained in this Agreement, whether made by such Seller, any Affiliate of such Seller, or any of their respective officers, directors, managers, employees or agents. Except for the representations and warranties contained in this Agreement (as qualified by the Schedules), the disclosure of any matter or item in the Schedules shall not be deemed to constitute an acknowledgement that any such matter would or would reasonably be expected to be material or result in a material adverse effect on the Shallow Assets.

 

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ARTICLE 7

BUYER’S REPRESENTATIONS AND WARRANTIES

Buyer makes the following representations and warranties as of Closing and as of the Effective Time:

7.1 Organization and Standing. Buyer is a corporation duly organized, validly existing and in good standing under the laws of Georgia and is duly qualified to carry on its business in the State of West Virginia and the Commonwealth of Pennsylvania.

7.2 Power. Buyer has all requisite power and authority to carry on its business as presently conducted. The execution and delivery of this Agreement does not, and the fulfillment of and compliance with the terms and conditions hereof will not, as of Closing, violate, or be in conflict with, any material provision of Buyer’s governing documents, or any material provision of any agreement or instrument to which Buyer is a party or by which it is bound, or, any judgment, decree, order, statute, rule or regulation applicable to Buyer.

7.3 Authorization and Enforceability. This Agreement constitutes Buyer’s legal, valid and binding obligation, enforceable in accordance with its terms, subject, however, to the effects of bankruptcy, insolvency, reorganization, moratorium and other laws for the protection of creditors, as well as to general principles of equity, regardless whether such enforceability is considered in a proceeding in equity or at law.

7.4 Liability for Brokers’ Fees. Buyer has not incurred any liability, contingent or otherwise, for brokers’ or finders’ fees relating to the Transaction for which Seller shall have any responsibility whatsoever.

7.5 Litigation. There is no action, suit, proceeding, claim or investigation by any person, entity, or Governmental Entity pending or, to Buyer’s Knowledge, threatened against it before any Governmental Entity that impedes or is likely to impede its ability to consummate the Transaction and to assume the liabilities to be assumed by it under this Agreement.

7.6 Financial Resources. Buyer has, and shall have as of Closing, sufficient funds with which to pay the Closing Amount and consummate the Transaction and, following Closing, Buyer will have sufficient funds to pay any adjustments to the Purchase Price and meet its other payment obligations under this Agreement.

7.7 Buyer’s Evaluation.

(a) Review. Buyer is experienced and knowledgeable in the oil and gas business and is aware of its risks. Buyer acknowledges that Seller has not made any representations or warranties as to the Shallow Assets, including the Records, except as otherwise expressly provided herein and that Buyer may not rely on any of Seller’s estimates with respect to reserves, the value of the Shallow Assets, projections as to future events or other internal analyses, forward looking statements, or any other information other than as set forth in Seller’s representations and warranties herein.

(b) Independent Evaluation. In entering into this Agreement, Buyer acknowledges and affirms that it has relied and will rely solely on the terms of this Agreement and upon its independent analysis, evaluation and investigation of, and judgment with respect to, the business, economic, legal, tax or other consequences of this Transaction including its own estimate and appraisal of the extent and value of the Hydrocarbon reserves of the Shallow Assets.

 

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7.8 Securities Laws. Buyer is an “accredited investor” as such term is defined in Regulation D of the Securities Act of 1933, as amended, and Buyer is acquiring the Shallow Assets for its own account and not with a view to, or for offer of resale in connection with, a distribution thereof, within the meaning of the Securities Act of 1933, as amended, and any other rules, regulations, and laws pertaining to the distribution of securities. Buyer has not sought or solicited, nor is Buyer participating with, investors, partners, or other third parties other than its lenders in order to fund the Purchase Price and to close this Transaction, and all funds to be used by Buyer in connection with this Transaction are Buyer’s own funds or those borrowed from its lenders.

7.9 Buyer’s Qualification. At Closing, Buyer shall be qualified and shall meet all requirements, comparable to the bonding requirements that have been imposed on Seller that are described in Section 8.2(d), to be designated operator of that portion of the Shallow Assets for which Seller serves as operator. It is understood and agreed that certain Governmental Entities may require Buyer to provide higher levels of financial security than they required of Seller. Buyer shall provide all such additional security in order to meet all requirements necessary for Buyer to be designated as operator of the Shallow Assets. Buyer shall cooperate with Seller to facilitate the release by Governmental Entities of Seller’s bonds described in Section 8.2(d).

ARTICLE 8

COVENANTS AND AGREEMENTS

8.1 Covenants and Agreements of Seller. Seller covenant and agree with Buyer as follows:

(a) Operations Prior to Closing. Except as otherwise consented to in writing by Buyer, which consent shall not be unreasonably withheld or delayed, or provided in this Agreement, from the Effective Time to the Closing, Seller will use reasonable efforts to cause the Shallow Assets to be operated in a good and workmanlike manner consistent with past practices. From the Execution Date to the Closing Date, Seller shall pay or cause to be paid its proportionate share of all costs and expenses incurred in connection with such operations. Seller will notify Buyer and obtain Buyer’s consent, which shall not be unreasonably withheld or delayed, to capital expenditures anticipated to cost in excess of Twenty-Five Thousand Dollars ($25,000.00) per operation, net to Seller’s interest, conducted on the Shallow Assets.

(b) Restriction on Operations. Subject to Section 8.1(a), unless Seller obtains the prior written consent of Buyer to act otherwise (which shall not be unreasonably withheld or delayed), Seller will not (i) abandon any part of the Shallow Assets (except in the ordinary course of business or the abandonment of leases upon the expiration of their respective primary terms), (ii) approve any operations on the Shallow Assets anticipated in any instance to cost more than Fifty Thousand Dollars ($50,000.00) per operation, net to Seller’s interest (excepting emergency operations required under presently existing contractual obligations, and operations undertaken to avoid a monetary penalty or forfeiture provision of any applicable agreement or order all of which shall be deemed to be approved, provided that Seller immediately notifies Buyer of any emergency operation or operation to avoid monetary penalty or forfeiture excepted herein), (iii) encumber, convey or dispose of any part of the Shallow Assets (other than replacement of equipment or the sale of Hydrocarbons produced from the Shallow Assets in the regular course of business), (iv) enter into any farmout or farmin affecting the Shallow Assets, (v) consent to letting lapse any insurance now in force with respect to the Shallow Assets, or (vi) materially modify, or terminate prior to its stated expiration, any Material Agreement.

(c) Marketing. Unless Seller obtains the prior written consent of Buyer (which shall not be unreasonably withheld or delayed) to act otherwise, Seller will not alter any existing marketing contracts currently in existence, or enter into any new marketing contracts or agreements providing for the sale of Hydrocarbons for a term in excess of one (1) month.

 

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(d) Consents. For the purposes of obtaining the written consents required in Sections 8.1(a) through (c), Buyer designates the following contact person: Thomas S. Wright. Such consents may be obtained in writing by overnight courier or given by .pdf or facsimile transmission.

(e) Status. Seller shall use all reasonable efforts to assure that as of the Closing Date, Seller will not be under any material legal or contractual restriction that would prohibit or delay the timely consummation of the Transaction.

(f) Notices of Claims. Seller shall promptly notify Buyer, if, between the date of execution of this Agreement and the Closing Date, Seller receives written notice of any claim, suit, action or other proceeding affecting the Shallow Assets or written notice of any default under the Leases or any Material Agreement.

(g) Compliance with Laws. During the period from the date of execution of this Agreement to the Closing Date, Seller shall use reasonable efforts to cause the Shallow Assets to be operated in compliance in all material respects with all applicable statutes, ordinances, rules, regulations and orders.

(h) Amendment to Schedules. Seller shall, with respect to the representations and warranties of Seller contained in this Agreement, no later than two (2) days prior to Closing, add, supplement or amend the Schedules to such representations and warranties with respect to any matter hereafter arising or discovered which, if existing or known as of the Execution Date or thereafter, would have been required to be set forth or described in such Schedules. For purposes of the Closing conditions set forth in Article 10, the Schedules to Seller’s representations and warranties contained in this Agreement will be deemed to include only that information contained therein on the Execution Date and shall be deemed to exclude all information contained in any addition, supplement or amendment thereto; provided, however, that should Closing occur, any such addition, supplement or amendment shall be taken into account for purposes of the indemnification provisions set forth in Article 14.

(i) Suspense Accounts. Prior to Closing, Seller shall prepare a schedule setting forth the following information: (i) all proceeds of production attributable to the Shallow Assets held by Seller in suspense, (ii) the reason such proceeds are being held in suspense, and (ii) if known, the name or names of the persons claiming such proceeds. Buyer agrees to indemnify Seller against any claim relating to the failure to pay such funds after Closing.

(j) Approval from Bankruptcy Court. Promptly after the execution of this Agreement, Seller shall file in Eastern 1996D Limited Partnership, et al., Case No. 13-34773-HDH-ll pending in the Bankruptcy Court (the “Bankruptcy Proceeding”) a motion seeking approval of the sale of the Shallow Assets to Buyer on the terms and conditions set forth herein and shall file such other pleadings necessary to effect the sale of the Shallow Assets to Buyer. Seller shall provide Buyer with a copy of the motion for its review and approval prior to filing the motion with the Bankruptcy Court.

8.2 Covenants and Agreements of Buyer. Buyer covenants and agrees with Seller as follows:

(a) Status. Buyer shall use all reasonable efforts to assure that as of the Closing Date it will not be under any material legal or contractual restriction that would prohibit or delay the timely consummation of the Transaction.

 

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(b) Confidentiality. Upon Closing, the Confidentiality Agreement dated April 18, 2013, between Seller and Buyer, among others, shall terminate. All information obtained from Seller in connection with the Transaction whether before or after the execution of this Agreement (“Information”) is deemed by the Parties to be confidential and proprietary to Seller. Buyer shall take reasonable steps to ensure that Buyer’s employees, consultants and agents comply with the provisions of this Section 8.2(b). Until completion of the Closing, except as required by law, Buyer and its Affiliates and their respective officers, directors, employees, agents and representatives will hold in strict confidence the terms of this Agreement and all Information, subject to such exceptions as are contained in the Confidentiality Agreement. Upon Closing, any obligation of confidentiality under this Section 8.2(b) shall terminate.

(c) Successor Operator. Seller, or one of its Affiliates, is designated as operator of certain Shallow Assets pursuant to joint operating agreements with third parties. Buyer acknowledges that such third parties may not agree to allow Buyer to succeed Seller or one of its Affiliates as operator under such joint operating agreements or may otherwise exercise other rights they may have that would preclude Buyer from succeeding Seller or one of its Affiliates as operator. Buyer specifically acknowledges and agrees that Seller has made no representation or guarantee that Buyer will succeed Seller or one of its Affiliates as operator under any joint operating agreement; provided that Seller shall use commercially reasonably efforts, if requested by Buyer, to support Buyer’s succession of Seller or one of its Affiliates as operator as to any of the Shallow Assets currently operated by Seller or one of its Affiliates, subject to the provisions of any applicable joint operating agreement.

(d) Bonds, Letters of Credit and Guarantees. Buyer acknowledges that none of the bonds, letters of credit and guarantees, if any, posted by Seller or its Affiliates with Governmental Entities or third parties and relating to the Shallow Assets are transferable to Buyer. Except to the extent that Buyer will, as of Closing, be covered by the bonds (except the Seller’s bonds) of the operators of the applicable Shallow Assets, then on or before the Closing Date, Buyer shall obtain, or cause to be obtained in the name of Buyer, replacements for such bonds, letters of credit and guarantees, to the extent such replacements are necessary to permit the cancellation as of Closing of the bonds, letters of credit and guarantees posted by Seller and/or its Affiliates. Buyer shall deliver true and correct copies of all its replacement bonds, letters of credit and guarantees prior to the Closing Date.

(e) Intentionally Omitted.

(f) Intentionally Omitted.

8.3 Covenants and Agreements of the Parties.

(a) Communication Between the Parties Regarding Breach. If Buyer develops information during its Due Diligence Review that leads Buyer to believe that Seller has breached a representation or warranty under this Agreement, Buyer shall inform Seller in writing of such potential breach as soon as practicable, but in any event, at or prior to Closing. If any Party believes the other Party has breached any term of this Agreement, the Party who believes the breach has occurred shall promptly give written notice to the breaching Party of the nature of the breach.

(b) Announcements. Prior to the Closing Date, Seller and Buyer shall consult with each other with regard to all press releases and other announcements concerning this Agreement or the Transaction, allowing a reasonable period of time for comment by the other Party; provided, however, that the foregoing shall not prevent either Party from timely complying with any applicable Bankruptcy Code provision, Bankruptcy Court order, securities laws or stock exchange rules. Prior to the Closing Date, neither Party shall be named in any press release or announcement of the other Party without such Party’s prior written consent, which shall not be unreasonably withheld or delayed.

 

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(c) Casualty Loss. Prior to Closing, if a portion of the Shallow Assets is destroyed by fire or other casualty or if a portion of the Assets is taken or threatened to be taken in condemnation or under the right of eminent domain (“Casualty Loss”), and the resulting loss from such Casualty Loss exceeds Two Hundred Thousand Dollars ($200,000.00) based on the Allocated Value of the affected Shallow Assets, Buyer shall not be obligated to purchase such Shallow Asset. If Buyer elects to purchase such Shallow Asset, the Purchase Price shall be reduced by the estimated cost to repair such Shallow Asset (with equipment of similar utility), less all insurance proceeds which shall be payable to Buyer, up to the Allocated Value thereof (the reduction being the “Net Casualty Loss”). If Buyer declines to purchase such Shallow Asset, the Purchase Price shall be reduced by the Allocated Value of such Shallow Asset. Seller, at its sole option and expense, may elect to cure such Casualty Loss and, in such event, Seller shall be entitled to all insurance proceeds. If Seller elects to cure such Casualty Loss, Seller may replace any personal property that is the subject of Casualty Loss with personal property of similar grade or utility. If the Casualty Loss is cured to Buyers reasonable satisfaction, Buyer shall purchase the affected Shallow Asset at Closing for the Allocated Value thereof.

(d) Cure of Misrepresentations. If any of the representations and warranties contained in Article 6 or Article 7 hereof are determined (whether by notice from a Party or otherwise) to have been untrue or incorrect as of the Execution Date, then any cure by the other Party prior to Closing of the same shall be at such other Party’s own expense.

(e) Records. Seller shall make the Records available for pick-up by Buyer at Closing to the extent possible, but in any event, within sixty (60) days after Closing. Seller may retain copies of the Records (except all original copies of Leases that Seller is retaining) and Seller shall have the right to review and copy the Records during standard business hours upon reasonable notice for so long as Buyer retains the Records. Buyer agrees that the Records will be maintained in compliance with all applicable laws governing document retention. Seller shall be entitled to keep a copy or copies of all Records; provided, however, that Seller shall not sell or otherwise allow third parties to review, copy or otherwise use (for any purpose) any Records retained by Seller for its own account.

(f) Intentionally Omitted.

(g) Intentionally Omitted.

(h) Further Assurances. From time to time after Closing, Seller and Buyer shall each execute, acknowledge and deliver to the other such further instruments and take such other action as may be reasonably requested in order to accomplish more effectively the purposes of the Transaction.

(i) Intentionally Omitted.

(j) Intentionally Omitted.

(k) Intentionally Omitted.

ARTICLE 9

TAX MATTERS

9.1 Definitions. For the purposes of this Agreement:

(a) “Impact Fee” means the unconventional gas well fee authorized by Act 13 of 2012 of the Pennsylvania House of Representatives (HB 1950) and codified in Chapter 23, Title 58 of the Pennsylvania Consolidated Statutes, including any penalties, additions to Tax, and interest levied or assessed under or on such fee

 

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(b) “Income Taxes” means all Taxes based upon, measured by, or calculated with respect to (i) gross or net income or gross or net receipts or profits (including state franchise Taxes and any capital gains, alternative minimum Taxes, net worth and any Taxes on items of Tax preference, but not including sales, use, goods and services, real or personal property transfer or other similar Taxes), (ii) multiple bases (including corporate franchise, doing business or occupation Taxes) if one or more of the bases upon which such Tax may be based upon, measured by, or calculated with respect to, is described in clause (i) above, or (iii) withholding Taxes measured with reference to or as a substitute for any Tax described in clauses (i) or (ii) above, and (iv) and any penalties, additions to Tax, and interest levied or assessed with respect to a Tax described in (i), (ii), or (iii) above;

(c) “Production Taxes” shall mean all Severance Taxes and Property Taxes;

(d) “Property Taxes” shall mean all ad valorem, real property, personal property, and all other Taxes and similar obligations, including all Impact Fees, and any penalties, additions to Tax, and interest levied or assessed thereon, assessed against the Shallow Assets or based upon or measured by the ownership of the Shallow Assets, but not including Income Taxes, Severance Taxes and Transfer Taxes;

(e) “Severance Taxes” shall mean all extraction, production, excise, net proceeds, severance, windfall profit and all other Taxes and similar obligations, and any penalties, additions to Tax, and interest levied or assessed thereon, with respect to the Shallow Assets that are based upon or measured by the production of Hydrocarbons or the receipt of proceeds therefrom, but not including Property Taxes, Income Taxes, and Transfer Taxes;

(f) “Taxes” means (a) any taxes and assessments imposed by any Governmental Entity, including net income, gross income, profits, gross receipts, net receipts, capital gains, net worth, doing business, license, stamp, occupation, premium, alternative or add-on minimum, ad valorem, real property, personal property, transfer, real property transfer, value added, sales, use, environmental (including taxes under Code Section 59A), customs, duties, capital stock, stock, stamp, document, filing, recording, registration, authorization, franchise, excise, withholding, social security (or similar), fuel, excess profits, windfall profit, severance, extraction, production, net proceeds, estimated or other tax, including any interest, penalty or addition thereto, whether disputed or not, and any expenses incurred in connection with the determination, settlement or litigation of the Tax liability, (b) any obligations under any agreements or arrangements with respect to Taxes described in clause (a) above, and (c) any transferee liability in respect of Taxes described in clauses (a) and (b) above or payable by reason of assumption, transferee liability, operation of law, Treasury Regulation Section 1.1502-6(a) (or any predecessor or successor thereof or any analogous or similar provision under law) or otherwise; and

(g) “Transfer Taxes” means any sales, use, excise, stock, stamp, document, filing, recording, registration, authorization and similar Taxes, fees and charges, and any penalties, additions to Tax, and interest levied or assessed thereon, but not including Production Taxes or Income Taxes, that are imposed with respect to the Transaction.

9.2 Apportionment of Property Taxes. Property Taxes assessed on a calendar year shall be allocated to the Seller for 2012 and earlier and shall be allocated to the Buyer for 2013 and thereafter. Property Taxes that are not assessed on a calendar year and that are assessed against the Shallow Assets with respect to the Tax period in which the Effective Time occurs (the “Current Tax Period”) shall be allocated between Seller and Buyer as of the Effective Time with (a) Seller being allocated the liability for the share of the actual amount of such Property Taxes for the Current Tax Period determined by multiplying such actual Property Taxes by a fraction, the numerator of which is the number of days in the Current Tax Period prior to the Effective Time and the denominator of which is the total number of days in the Current Tax Period and (b) Buyer being allocated the remainder of the Property Taxes for the Current Tax Period. The foregoing allocations shall be made without duplicating any adjustment to the Purchase Price required by Section 2.3. For the purpose of calculating the Final Purchase Price under Section 13.1, Property Taxes shall be estimated based on based on the best available estimate of Property Tax liability available at the time of Closing with the resulting Purchase Price adjustment to be considered full and final settlement of all such Taxes without regard to the actual Tax rates or assessments; provided that, if the actual tax rates or assessment rates are not known at the time of the Closing, the amounts shall be re-estimated based on the best information available at the time of the Final Settlement Statement, and such estimated amounts shall thereupon become full and final settlement of such Taxes for purposes of this Agreement. After Closing, Buyer shall timely file or cause to be filed all required reports and returns for, related to, or incident to the Property Taxes and shall timely pay or cause to be paid to the taxing authorities all Property Taxes for any Property Tax period during which the Closing Date occurs. Any penalties, additions to Tax, or interest levied or assessed with respect to any failure of Buyer to comply with the previous sentence shall be allocated to, and shall be payable by, Buyer.

 

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9.3 Apportionment of Severance Taxes. Severance Taxes shall be deemed attributable to the period during which the production of the Hydrocarbons with respect to such Severance Taxes occurred, and liability therefor shall be allocated to Seller for pre-Effective Time Severance Taxes and to Buyer for post-Effective Time Severance Taxes, without duplicating any adjustment to the Purchase Price required by Section 2.3. For the purpose of calculating the Final Purchase Price under Section 13.1, Severance Taxes determined with respect to 2012 production shall be estimated based on current State of West Virginia or Pennsylvania Severance Tax rates, as applicable, with the resulting Purchase Price adjustment to be considered full and final settlement of all such Taxes without regard to the actual Tax rates or assessments; provided that, if the actual amounts of such production and Severance Tax rates are not known at the time of the Closing, the amounts shall be re-estimated based on the best information available at the time of the Final Closing Statement, and such estimated amounts shall thereupon become full and final settlement of such Taxes for purposes of this Agreement. After Closing, Buyer shall timely file or cause to be filed all required reports and returns for, related to, or incident to Severance Taxes for any period that are due after the Closing Date and shall timely pay or cause to be paid to the taxing authorities all Severance Taxes for all taxable periods including the Closing Date. Any penalties, additions to Tax, or interest levied or assessed with respect to any failure of Buyer to comply with the previous sentence shall be allocated to, and shall be payable by, Buyer.

9.4 Transfer Taxes. Notwithstanding anything to the contrary herein, the Purchase Price excludes, and Buyer shall be liable for, any Transfer Taxes required to be paid in connection with the sale of the Shallow Assets pursuant to this Agreement. Buyer shall timely file or cause to be filed all required reports and returns for, related to, or incident to such Transfer Taxes and shall timely pay or cause to be paid to the taxing authorities all Transfer Taxes. Any penalties, additions to Tax, or interest levied or assessed with respect to any failure of Buyer to comply with the previous sentence shall be allocated to, and shall be payable by, Buyer.

9.5 Post-Closing Tax Matters. After the Closing Date, each of Buyer and Seller shall:

(a) reasonably assist the other in preparing any Tax returns with respect to any Tax incurred or imposed, or required to be filed, in connection with the Transaction, and in qualifying for any exemption or reduction in Tax that may be available;

(b) reasonably cooperate in preparing for any audits or examinations by, or disputes with, taxing authorities regarding any Tax incurred or imposed in connection with the Transaction;

 

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(c) make available to the other, and to any taxing authority as reasonably requested, any information, records, and documents relating to a Tax incurred or imposed in connection with the Transactions;

(d) provide timely notice to the other in writing of any pending or threatened Tax audit, examination, or assessment that could reasonably be expected to affect the other’s Tax liability under applicable law or this Agreement (a “Tax Controversy”), and to promptly furnish the other with copies of all correspondence with respect to any Tax Controversy; and

(e) allow the other to participate, at its own expense, in any Tax Controversy, and not settle any Tax Controversy without the prior written consent of the other, which may not be unreasonably withheld, conditioned or delayed.

ARTICLE 10

CONDITIONS PRECEDENT TO CLOSING

10.1 Seller’s Conditions. The obligations of Seller at the Closing are subject, at the option of Seller, to the satisfaction or waiver at or prior to the Closing of the following conditions precedent:

(a) All representations and warranties of Buyer contained in this Agreement are true and correct in all material respects (provided, however, that any such representation or warranty of the Buyer contained in Article 7 that is qualified by a materiality standard shall not be further qualified by materiality for purposes of this Section 10.1(a)) at and as of the Closing Date in accordance with their terms as if such representations and warranties were remade at and as of the Closing Date (except to the extent such representations and warranties are made as of a specified date, in which case such representations and warranties shall be true and correct as of the specified date); provided, however, that the foregoing condition shall be deemed to have been satisfied unless the individual or aggregate impact of all inaccuracies of such representations and warranties has had or would be reasonably likely to have a material adverse effect on the Shallow Assets; and Buyer has performed and satisfied all covenants and agreements required by this Agreement to be performed and satisfied by Buyer or jointly by Buyer and Seller at or prior to the Closing in all material respects and Buyer shall deliver a certificate to Seller confirming the foregoing.

(b) No order has been entered by any Governmental Entity having jurisdiction over the Parties (including the Bankruptcy Court) or the subject matter of this Agreement that restrains or prohibits the purchase and sale contemplated by this Agreement and that remains in effect at Closing.

(c) Buyer shall have delivered (or be ready, willing and able to immediately deliver) to Seller duly executed counterparts of the Partial Assignment and the Assignment and Assumption Agreement and all other documents and certificates to be delivered by Buyer under Section 12.3 and shall have performed (or be ready, willing and able to immediately perform) the other obligations required to be performed by it under Section 12.3 (including delivery of the Closing Amount).

(d) The aggregate reduction to the Purchase Price due to Title Defects, Environmental Defects and Net Casualty Losses shall not exceed the Defect Threshold.

 

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10.2 Buyer’s Conditions. The obligations of Buyer at the Closing are subject, at the option of Buyer, to the satisfaction or waiver at or prior to the Closing of the following conditions precedent:

(a) All representations and warranties of Seller contained in this Agreement are true and correct in all material respects (provided, however, that any such representation or warranty of the Seller contained in Article 6 that is qualified by a materiality standard shall not be further qualified by materiality for purposes of this Section 10.2(a)) at and as of the Closing Date in accordance with their terms as if such representations were remade at and as of the Closing Date (except to the extent such representations and warranties are made as of a specified date, in which case such representations and warranties shall be true and correct as of the specified date); provided that the foregoing condition shall be deemed to have been satisfied unless the individual or aggregate impact of all inaccuracies of such representations and warranties has had or would be reasonably likely to have a material adverse effect on the Shallow Assets; and Seller has performed and satisfied all covenants and agreements required by this Agreement to be performed and satisfied by Seller or jointly by Buyer or Seller at or prior to the Closing in all material respects and Seller shall deliver a certificate to Buyer confirming the foregoing.

(b) No order has been entered by any Governmental Entity having jurisdiction over the Parties (including the Bankruptcy Court) or the subject matter of this Agreement that restrains or prohibits the purchase and sale contemplated by this Agreement and that remains in effect at the time of Closing.

(c) Seller shall have delivered (or be ready, willing and able to immediately deliver) to Buyer duly executed counterparts of the Partial Assignment and the Assignment and Assumption Agreement and all other documents and certificates to be delivered by Seller under Section 12.3 and shall have performed (or be ready, willing and able to immediately perform) the other obligations required to be performed by it under Section 12.3.

(d) The aggregate reduction to the Purchase Price due to Title Defects, Environmental Defects and Net Casualty Losses shall not exceed the Defect Threshold.

10.3 Conditions of Both Parties. The obligations of Buyer and Seller at the Closing are subject to the satisfaction of the following conditions precedent, which conditions may not be waived by either Party: the entry of a final, non-appealable order by the United States Bankruptcy Court for the Northern District of Texas, Dallas Division (the “Bankruptcy Court”) in the Bankruptcy Proceeding approving the Transaction, as the Transaction is contemplated by this Agreement, under Section 363 of the United States Bankruptcy Code on the terms and conditions set forth herein.

ARTICLE 11

RIGHT OF TERMINATION

11.1 Termination. This Agreement may be terminated in accordance with the following provisions:

(a) by mutual consent of Seller and Buyer;

(b) by Seller, if Seller’s conditions set forth in Section 10.1(a) are not satisfied or are not capable of satisfaction at such time through no fault of Seller, or are not waived by Seller, as of the Closing Date;

(c) by Buyer, if Buyer’s conditions set forth in Section 10.2(a) are not satisfied or are not capable of satisfaction at such time through no fault of Buyer, or are not waived by Buyer, as of the Closing Date;

(d) by Buyer or Seller in the event that the aggregate reduction to the Initial Purchase Price due to Title Defects (net of any Title Benefits), Environmental Defects (covered by a Notice of Defective Interest and/or Environmental Defect Notice delivered on or before the Initial Defect Notice Date) and Net Casualty Losses exceeds twenty percent (20%) of the Initial Purchase Price (the “Defect Threshold”); or

 

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(e) without the necessity of any action by either Party, if the conditions set forth in Section 10.3 are not satisfied or are not capable of satisfaction on or before May 30, 2014.

If Buyer or Seller terminates this Agreement pursuant to this Section 11.1 and asserts that a breach of this Agreement has occurred, the notice of termination shall include a statement describing the nature of the alleged breach together with supporting documentation. If the Closing has not occurred on or prior to the date that is one hundred twenty (120) days after the Execution Date, then this Agreement shall terminate automatically.

11.2 Effects of Termination. If this Agreement is terminated pursuant to Section 11.1, this Agreement shall become void and of no further force or effect (except for the provisions of Section 3.4, Section 6.4, Section 7.4, Section 8.3(b) or Section 14.8 of this Agreement and this Article 11 which shall continue in full force and effect).

11.3 Liabilities Upon Termination.

(a) Buyer’s Default. If Closing does not occur because Seller terminates this Agreement pursuant to Section 11.1(b) based upon Buyer’s wrongful failure to tender performance at Closing or Buyer’s breach of this Agreement prior to Closing, and all of the conditions to Closing under Section 10.2(a) (other than the Defect Threshold condition and conditions to be satisfied at Closing) have been satisfied or waived, and Seller is ready to close, then Seller shall be entitled, in its sole discretion, to seek any remedies available at law or in equity. Under the foregoing sentence, Buyer’s failure to close shall not be considered wrongful if (1) Buyer’s conditions under Section 10.2(a) (other than the Defect Threshold condition and conditions to be satisfied at Closing) are not satisfied through no fault of Buyer and are not waived, or (2) Buyer has the right to terminate or has terminated this Agreement as of right under Section 11.1.

(b) Seller’s Default; Other Termination. Buyer shall be entitled, as its sole remedy, to seek to enforce specific performance against Seller hereunder. If Buyer seeks the remedy of specific performance, it must do so within fifteen (15) business days of the date by which it would otherwise deliver a notice of termination pursuant to the last sentence of Section 11.1.

(c) Mutual Conditions Not Met. If Closing does not occur because this Agreement is terminated pursuant to Section 11.1(e), neither Party shall be entitled to seek any remedy, or to recover any damages, from the other Party.

ARTICLE 12

CLOSING

12.1 Date of Closing. The “Closing” of the Transaction shall be held on the fifth business day following the satisfaction of the conditions set forth in Section 10.3 or such other date as the Parties may agree. The date the Closing actually occurs is called the “Closing Date.”

12.2 Place of Closing. The Closing shall be held at the Bridgeport, West Virginia offices of Seller at 9:00 a.m., Eastern Time or at such other time and place as Buyer and Seller may agree in writing.

 

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12.3 Closing Obligations. At Closing, the following events shall occur, each being a condition precedent to the others and each being deemed to have occurred simultaneously with the others:

(a) Seller and Buyer shall execute, acknowledge and deliver to Buyer (i) the Partial Assignment with, as to only each Shallow Well, a special warranty of title by, through and under Seller but not otherwise and with no warranties, express or implied, as to the personal property, fixtures or condition of the Shallow Wells which are conveyed “as is, where is”; (ii) such other assignments, bills of sale, or deeds necessary to transfer the Shallow Assets to Buyer, including state forms of assignment; (iii) an Assignment and Assumption Agreement in the form attached as Exhibit E under which Seller assigns and Buyer assumes Seller’s interest in the contracts included in the Shallow Assets in accordance with the terms of this Agreement and (iv) all Shallow Assets shall be conveyed free and clear of all pledges, liens, security interests, encumbrances, claims, charges, options, and interests thereon (collectively “the Claims and Interests”) and any such Claims and Interests shall attach to the net proceeds of the sale of such Shallow Assets;

(b) Seller and Buyer shall deliver the certificates required in Sections 10.2(a) and 10.1(a), respectively.

(c) Seller and Buyer shall execute and deliver the Preliminary Settlement Statement in accordance with Section 2.3;

(d) Buyer shall cause the Closing Amount to be paid by wire transfer of immediately available funds to the account(s) designated by Seller in writing;

(e) Seller shall execute, acknowledge and deliver transfer orders or letters in lieu thereof notifying all purchasers of production of the change in ownership of the Shallow Assets and directing all purchasers of production to make payment to Buyer of proceeds attributable to production from the Shallow Assets;

(f) Seller shall execute and deliver to Buyer all required change of operator forms and notices required by any Governmental Entity or under any Contract;

(g) Seller shall execute and deliver to Buyer a certificate of non-foreign status in the form of Exhibit F, and any applicable West Virginia or Pennsylvania forms certifying that Seller is not subject to withholding pursuant West Virginia or Pennsylvania tax law;

(h) Buyer and PDC Energy, Inc. shall execute and deliver that certain letter agreement regarding indemnification providing for certain indemnification by the general partner of each Seller and related matters under the PSA (the “GP Indemnification Agreement”);

(i) Seller and Buyer shall take such other actions and deliver such other documents as are contemplated by this Agreement; and

(j) At Closing, the Joint Operating Agreement dated September 10, 2013 governing the operation of the Shallow Assets shall be terminated and the Operator, PDC Energy, Inc. and Seller shall waive any claim for damages resulting from the termination of the Joint Operating Agreement.

12.4 Non-Foreign Status. If, on or prior to the Closing Date, Seller provides Buyer with the certificate of non-foreign status described in Section 12.3(g) and Buyer is otherwise permitted to rely on such certificate under Treasury Regulations § 1.1445-2, Buyer shall not withhold any amount under Section 1445 of the Code.

 

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ARTICLE 13

POST-CLOSING ADJUSTMENTS

13.1 Final Settlement Statement. As soon as practicable after the Closing, but in no event later than one hundred twenty (120) days after Closing, Seller, with the assistance of Buyer’s staff and with access to such records as necessary, will cause to be prepared and delivered to Buyer, in accordance with customary industry accounting practices, the final settlement statement (the “Final Settlement Statement”) setting forth each adjustment to the Purchase Price in final form in accordance with Section 2.3 and permitted post-Closing adjustments pursuant to Article 4 and Article 5 and showing the calculation of such adjustments and the resulting final purchase price (the “Final Purchase Price”). Seller shall, at Buyer’s request, supply reasonable documentation available to support any credit, charge, receipt or other item. Seller shall afford Buyer and its representatives the opportunity to review such statement and the supporting schedules, analyses, work papers, and other underlying records or documentation as are reasonably necessary and appropriate in Buyer’s review of the Final Settlement Statement. Each Party shall cooperate fully and promptly with the other and their respective representatives in such examination with respect to all reasonable requests related thereto. As soon as reasonably practicable but not later than sixty (60) days following receipt of Seller’s statement hereunder, Buyer shall deliver to Seller a written report containing any changes that Buyer proposes be made to such statement. Seller and Buyer shall undertake to agree on the Final Settlement Statement no later than thirty (30) days after receipt of Buyer’s written report containing recommended changes (the “Final Settlement Date”). Unless the Parties are unable to reach agreement on the Final Settlement Statement on or before the Final Settlement Date, then on or prior to the Final Settlement Date, (x) Buyer shall pay to Seller the amount by which the Final Purchase Price exceeds the Closing Amount or (y) Seller shall pay to Buyer the amount by which the Closing Amount exceeds the Final Purchase Price, as applicable (in either case, the “Final Adjustment”).

13.2 Dispute Mechanism. In the event that Seller and Buyer cannot reach agreement by the Final Settlement Date, either Party may refer the remaining matters in dispute to Hall Kistler & Company LLP, or a regionally-recognized independent accounting firm as may be mutually accepted by Buyer and Seller, for review and final determination (the “Agreed Accounting Firm”). If issues are submitted to the Agreed Accounting Firm for resolution, Seller and Buyer shall each enter into a customary engagement letter with the Agreed Accounting Firm at the time the issues remaining in dispute are submitted to the Agreed Accounting Firm. The Agreed Accounting Firm will be directed to (i) review the statement setting forth Seller’s calculation of the Final Purchase Price and the records relating thereto only with respect to items identified by Buyer in its written report containing changes to such statement that remain disputed immediately following the Final Settlement Date and (ii) determine the final adjustments. Each Party shall furnish the Agreed Accounting Firm such work papers and other records and information relating to the objections in dispute as the Agreed Accounting Firm may reasonably request and that are available to such Party or its Affiliates (and such Parties’ independent public accountants). The Parties will, and will cause their representatives to, cooperate and assist in the conduct of any review by the Agreed Accounting Firm, including making available books, records and, as available, personnel as reasonably required. The Agreed Accounting Firm shall conduct the arbitration proceedings in Pittsburgh, Pennsylvania in accordance with the Commercial Arbitration Rules of the AAA, to the extent such rules do not conflict with the terms of this Section 13.2. The Agreed Accounting Firm’s determination shall be made within thirty (30) days after submission of the matters in dispute and shall be final and binding on both Parties, without right of appeal and such decision shall constitute an arbitral award upon which a judgment may be entered by a court having jurisdiction thereof. In determining the proper amount of any adjustment to the Final Purchase Price, the Agreed Accounting Firm shall not increase the Final Purchase Price more than the increase proposed by Seller nor decrease the Final Asset Value more than the decrease proposed by Buyer, as applicable, and may not award damages or penalties to either Party with respect to any matter. Seller and Buyer shall each bear its own legal fees and other costs of presenting its case. Each Party shall bear one-half of the costs and expenses of the Agreed Accounting Firm. Within ten (10) business days after the date on which the Parties or the Agreed Accounting Firm, as applicable, finally determines the disputed matters, (x) Buyer shall pay to Seller the amount by which the Final Purchase Price exceeds the Closing Amount or (y) Seller shall pay to Buyer the amount by which the Closing Amount exceeds the Final Purchase Price, as applicable. The Parties acknowledge that it is not the intent of this Agreement that either Party be deprived of material amounts of revenue or be burdened by material amounts of expense until the Final Adjustment pursuant to Section 13.1. If at any time after Closing either Party is owed material revenues or material expense reimbursement, which revenues and expense reimbursement owed shall be netted against revenues and expenses due the other Party, it may request payment from the other Party, not more frequently than monthly, and such Party shall make payment of any undisputed amounts within a commercially reasonable period of time.

 

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13.3 Payments. All payments made or to be made hereunder to Seller shall be by electronic transfer of immediately available funds to the account of Seller as may be specified by Seller in writing. All payments made or to be made hereunder to Buyer shall be by electronic transfer of immediately available funds to a bank and account specified by Buyer in writing to Seller. Upon execution of the Final Settlement Statement by the Parties and the payment of the Final Adjustment by one Party to the other, neither Party shall have any further obligation to for any additional adjustments to the Purchase Price under Section 2.3.

ARTICLE 14

ASSUMPTION AND RETENTION OF OBLIGATIONS AND INDEMNIFICATION; DISCLAIMERS

14.1 Survival of Warranties, Representations and Covenants. The representations and warranties contained in Section 4.1(a) shall terminate on the Initial Defect Notice Date. All other representations and warranties of the Seller, and all other covenants, indemnities and agreements of the Seller contained in this Agreement shall terminate on the Closing Date. The representations and warranties contained in Sections 7.1 through 7.7 shall survive indefinitely, subject to applicable statutes of limitation. All other representations and warranties of Buyer contained in this Agreement shall terminate on the date that is six (6) months following the Closing Date. Except as otherwise provided in this Section 14.1, the covenants, indemnities and agreements of Buyer contained in this Agreement shall survive the Closing and continue in accordance with their respective terms. Each applicable survival period may be referred to herein as a “Survival Period.”

14.2 Buyer’s Assumption of Liabilities and Obligations. Upon Closing, Buyer shall assume and pay, perform, fulfill and discharge all claims, costs, expenses, liabilities and obligations (“Obligations”), relating to the (a) ownership and operation of the Shallow Assets arising from and after the Effective Time, including the owning, developing, exploring, operating or maintaining the Shallow Assets or the producing, transporting and marketing of Hydrocarbons from the Shallow Assets including the payment of Property Expenses; (b) the obligation to plug and abandon all Shallow Wells located on the Lands and reclaim all Shallow Well sites located on the Lands; (c) the Buyer’s Environmental Liabilities; (d) “free gas or gas tap” obligations arising under any Lease, Easement, Contract or otherwise; and (e) all Obligations (other than plugging and abandonment Obligations and Environmental Liabilities, which Obligations Buyer assumes upon Closing without recourse) accruing or relating to the ownership or operation of the Shallow Assets before the Effective Time for which Claims have not been asserted pursuant to the GP Indemnification Letter being delivered under Section 12.3(h) before the date that is six (6) months following the Closing Date; (collectively, the “Assumed Liabilities”); provided, however, Buyer does not, and shall at no time, assume any Obligations of Seller to the extent that such Obligations of Seller are:

 

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(a) attributable to or arise out of the ownership, use or operation of the Excluded Assets; or

(b) attributable to any obligation of Seller or any of its Affiliates attributable to any Income Tax measured by or imposed on the net income of Seller or any of its Affiliates that was or is attributable to Seller’s or any of its Affiliates’ ownership of an interest in or the operation of the Shallow Assets; or

(c) attributable to any costs arising out of the administration of Sellers’ bankruptcy proceedings.

14.3 Indemnification.

(a) “Losses” shall mean any actual losses, costs, expenses (including court costs, reasonable fees and expenses of attorneys, technical experts and expert witnesses and the cost of investigation), liabilities, damages, demands, suits, claims, and sanctions of every kind and character (including civil fines) arising from, related to or reasonably incident to matters indemnified against; excluding however any special, consequential, punitive or exemplary damages, diminution of value of a Shallow Asset, loss of profits incurred by a Party hereto or Loss incurred as a result of the Indemnified Party indemnifying a third party.

(b) After the Closing, Buyer assumes all risk, liability, obligation and Losses in connection with, and shall defend, indemnify, and save and hold harmless Seller, its officers, directors, employees and agents, from and against all Losses which arise directly or indirectly from or in connection with (i) the Assumed Liabilities, (ii) any breach by Buyer of any of Buyer’s representations or warranties contained in Article 7 that survive Closing for the respective Survival Period set forth in Section 14.1, or (iii) any breach by Buyer of its covenants and agreements contained in this Agreement.

14.4 Procedure. The indemnifications contained in Section 14.3 shall be implemented as follows:

(a) Claim Notice. The Party seeking indemnification under the terms of this Agreement (‘”Indemnified Party”) shall submit a written notice (a “Claim Notice”) to the other Party (“Indemnifying Party”) which, to be effective, must be delivered prior to the end of the Survival Period and must state: (i) to the extent reasonably possible the amount of each payment claimed by an Indemnified Party to be owing, (ii) to the extent reasonably possible the basis for such claim, with supporting documentation, and (iii) a list identifying to the extent reasonably possible each separate item of Loss for which payment is so claimed. The amount claimed shall be paid by the Indemnifying Party to the extent required herein within thirty (30) days after receipt of the Claim Notice, or after the amount of such payment has been finally established as provided in Section 14.4(c), whichever last occurs.

 

-34-

(b) Information. Within thirty (30) days after the Indemnified Party receives notice of a claim or legal action by a third party that may result in a Loss for which indemnification may be sought under this Article 14 (a “Claim”), the Indemnified Party shall give written notice of such Claim to the Indemnifying Party. If the Indemnifying Party or its counsel so requests, the Indemnified Party shall furnish the Indemnifying Party with copies of all pleadings and other information with respect to such Claim. At the election of the Indemnifying Party, which must be made within sixty (60) days after receipt of such notice and not thereafter, the Indemnified Party shall permit the Indemnifying Party to assume control of such Claim (to the extent only that such Claim, legal action or other matter relates to a Loss for which the Indemnifying Party is liable), including the determination of all appropriate actions, the negotiation of settlements on behalf of the Indemnified Party, and the conduct of litigation through attorneys of the Indemnifying Party’s choice; provided, however, that no such settlement can result in any liability or cost to the Indemnified Party for which it is entitled to be indemnified hereunder without its prior written consent. If the Indemnifying Party elects to assume control, (i) all reasonable expenses incurred by the Indemnified Party in connection with the investigation or defense of the Claim, legal action or other matter prior to the time the Indemnifying Party assumes control shall be reimbursed and paid by the Indemnifying Party, (ii) any expenses incurred by the Indemnified Party thereafter for investigation or defense of the matter shall be borne by the Indemnified Party except for reasonable expenses incurred in connection with providing information or assistance to the Indemnifying Party as required by subsection (iii), and (iii) the Indemnified Party shall give all reasonable information and assistance, other than pecuniary, that the Indemnifying Party shall deem necessary to the proper defense of such Claim, legal action, or other matter but shall be reimbursed and paid for such expenses as provided for in subsection (ii). Before such election is made or in the absence of such an election, the Indemnified Party shall use its best efforts to defend any claim, legal action or other matter and shall be reimbursed and paid by the Indemnifying Party for all reasonable expenses incurred in such defense. Before such election is made or in the absence of such election, the Indemnified Party may settle any Claim, legal action or other matter for which notice has been provided as required by Section 14.4(a), but only with the consent of the Indemnifying Party, which consent may not be unreasonably withheld. If such a Claim requires immediate action, both the Indemnified Party and the Indemnifying Party will cooperate in good faith to take appropriate action so as not to jeopardize defense of such Claim or either Party’s position with respect to such Claim.

(c) Dispute. If the existence of a valid Claim or amount to be paid by an Indemnifying Party is in dispute, the Parties agree to submit determination of the existence of a valid Claim or the amount to be paid pursuant to the Claim Notice to the Bankruptcy Court pursuant to the provisions of Section 15.10, except as otherwise provided in this Section 14.4. Any payment due pursuant to the Bankruptcy Court decision shall be made within fifteen (15) days of the Bankruptcy Court decision.

14.5 No Insurance; Subrogation. The indemnifications provided in this Article 14 shall not be construed as a form of insurance. Buyer and Seller hereby waive for themselves, their successors or assigns, including any insurers, any rights to subrogation for Losses for which each of them is respectively liable or against which each respectively indemnifies the other, and, if required by applicable policies, Buyer and Seller shall obtain waiver of such subrogation from its respective insurers.

14.6 Reductions in Losses. Each Indemnified Party shall use commercially reasonable efforts to mitigate any Losses, including by maintaining insurance coverage with respect to the Shallow Assets and making claims relating to the Shallow Assets thereunder. The amount of any Losses for which an Indemnified Person is entitled to indemnity under this Article 14 shall be reduced by (a) the amount of insurance proceeds realized by the Indemnified Person or its Affiliates with respect to such Losses, and (b) any Tax reductions or other benefits actually or likely to be received by the Indemnified Party in connection with the Losses, after giving effect to any related Tax detriment (determined by reference to the net present value of such Tax reduction or other benefit, calculated using the interest rate in effect at the time of the incurrence of the Tax leading to such Losses).

14.7 Reservation as to Non-Parties. Nothing herein is intended to limit or otherwise waive any recourse Buyer or Seller may have against any non-party for any obligations or liabilities that may be incurred with respect to the Shallow Assets.

 

-35-

14.8 Release. EXCEPT WITH RESPECT TO POST-CLOSING REMEDIATION AGREED TO BY SELLER AND BUYER OR PROVIDED FOR BY DECISION OF THE ENVIRONMENTAL EXPERT PURSUANT TO SECTION 5.7 (IF ANY), AT THE CLOSING BUYER HEREBY RELEASES, REMISES AND FOREVER DISCHARGES THE SELLER ITS AFFILIATES, THEIR RESPECTIVE SUCCESSORS AND ASSIGNS AND EACH OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, CONSULTANTS AND REPRESENTATIVES FROM ANY AND ALL CLAIMS, KNOWN OR UNKNOWN, WHETHER NOW EXISTING OR ARISING IN THE FUTURE, CONTINGENT OR OTHERWISE, WHICH BUYER MIGHT NOW OR SUBSEQUENTLY MAY HAVE AGAINST THE SELLER, ITS AFFILIATES, THEIR RESPECTIVE SUCCESSORS AND ASSIGNS AND EACH OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, CONSULTANTS AND REPRESENTATIVES, RELATING DIRECTLY OR INDIRECTLY TO THE CLAIMS ARISING OUT OF OR INCIDENT TO ENVIRONMENTAL LAWS, ENVIRONMENTAL LIABILITIES, THE RELEASE OF MATERIALS INTO THE ENVIRONMENT OR PROTECTION OF HUMAN HEALTH, SAFETY, NATURAL RESOURCES OR THE ENVIRONMENT, INCLUDING RIGHTS TO CONTRIBUTION UNDER CERCLA.

14.9 Disclaimers.

(a) EXCEPT FOR SELLER’S EXPRESS REPRESENTATIONS AND WARRANTIES CONTAINED IN ARTICLE 6, AND SELLER’S SPECIAL WARRANTY OF TITLE IN THE PARTIAL ASSIGNMENT EXECUTED AND DELIVERED TO BUYER AT CLOSING, THE SHALLOW ASSETS ARE BEING CONVEYED BY SELLER TO BUYER WITHOUT WARRANTY OF ANY KIND, EXPRESS, IMPLIED, STATUTORY, COMMON LAW OR OTHERWISE, AND THE PARTIES HEREBY EXPRESSLY DISCLAIM, WAIVE AND RELEASE ANY EXPRESS WARRANTY OF MERCHANTABILITY, CONDITION OR SAFETY AND ANY EXPRESSED WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE; AND BUYER ACCEPTS THE SHALLOW ASSETS, “AS IS, WHERE IS, WITH ALL FAULTS, WITHOUT RECOURSE.” ALL DESCRIPTIONS OF THE SHALLOW WELLS, EQUIPMENT, FACILITIES, PERSONAL PROPERTY, FIXTURES AND STRUCTURES HERETOFORE OR HEREAFTER FURNISHED TO BUYER BY SELLER HAVE BEEN AND SHALL BE FURNISHED SOLELY FOR BUYER’S CONVENIENCE, AND HAVE NOT CONSTITUTED AND SHALL NOT CONSTITUTE A REPRESENTATION OR WARRANTY OF ANY KIND BY SELLER. SELLER SHALL HAVE NO LIABILITY TO BUYER FOR ANY CLAIMS, LOSS OR DAMAGE CAUSED OR ALLEGED TO BE CAUSED DIRECTLY OR INDIRECTLY, INCIDENTALLY OR CONSEQUENTIALLY, BY SUCH SHALLOW WELLS, EQUIPMENT, FACILITIES, PERSONAL PROPERTY, FIXTURES AND STRUCTURES BY ANY INADEQUACY THEREOF OR THEREWITH, ARISING IN STRICT LIABILITY OR OTHERWISE, OR IN ANY WAY ARISING OUT OF BUYER’S PURCHASE THEREOF. BUYER EXPRESSLY WAIVES THE WARRANTY OF FITNESS AND THE WARRANTY AGAINST VICES AND DEFECTS, WHETHER APPARENT OR LATENT, IMPOSED BY ANY APPLICABLE STATE OR FEDERAL LAW. THE PARTIES HEREBY ACKNOWLEDGE AND AGREE THAT, TO THE EXTENT REQUIRED BY APPLICABLE LAW, THE DISCLAIMERS CONTAINED IN THIS AGREEMENT ARE “CONSPICUOUS” FOR THE PURPOSES OF SUCH APPLICABLE LAW.

(b) SELLER HEREBY EXPRESSLY DISCLAIMS AND NEGATES ANY IMPLIED OR EXPRESS WARRANTY AT COMMON LAW, BY STATUTE OR OTHERWISE RELATING TO THE ACCURACY OF ANY OF THE INFORMATION FURNISHED WITH RESPECT TO THE EXISTENCE OR EXTENT OF RESERVES OR THE VALUE OF THE SHALLOW ASSETS BASED THEREON OR THE CONDITION OR STATE OF REPAIR OF ANY OF THE SHALLOW ASSETS; THIS DISCLAIMER AND DENIAL OF WARRANTY ALSO EXTENDS TO ANY EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY AS TO THE PRICES BUYER AND SELLER ARE OR WILL BE ENTITLED TO RECEIVE FROM PRODUCTION OF HYDROCARBONS OR OTHER SUBSTANCES FROM THE SHALLOW ASSETS, IT BEING ACKNOWLEDGED, AGREED AND EXPRESSLY UNDERSTOOD THAT ALL RESERVE, PRICE AND VALUE ESTIMATES UPON WHICH BUYER HAS RELIED OR IS RELYING HAVE BEEN DERIVED BY THE INDIVIDUAL EVALUATION OF BUYER. BUYER ALSO STIPULATES, ACKNOWLEDGES AND AGREES THAT RESERVE REPORTS ARE ONLY ESTIMATES OF PROJECTED FUTURE HYDROCARBON VOLUMES, FUTURE FINDING COSTS AND FUTURE HYDROCARBON SALES PRICES, ALL OF WHICH FACTORS ARE INHERENTLY IMPOSSIBLE TO PREDICT ACCURATELY EVEN WITH ALL AVAILABLE DATA AND INFORMATION.

 

-36-

ARTICLE 15

MISCELLANEOUS

15.1 Schedules. The Schedules and Exhibits to in this Agreement are hereby incorporated in this Agreement by reference and constitute a part of this Agreement.

15.2 Expenses. Except as otherwise specifically provided, all fees, costs and expenses incurred by Buyer or Seller in negotiating this Agreement or in consummating the Transaction shall be paid by the Party incurring the same, including engineering, land, title, legal and accounting fees, costs and expenses.

15.3 Notices. All notices and communications required or permitted under this Agreement shall be in writing and addressed as set forth below. Any communication or delivery hereunder shall be deemed to have been duly made and the receiving Party charged with notice, whether personally delivered, sent by facsimile transmission, mail or overnight courier, when received. All notices shall be addressed as follows:

If to Seller:

Karen Nash Nicolau

Atropis, Inc.

8100 Washington Avenue, Suite 1000

Houston, Texas 77077

Telephone: (713)  ###-###-####

Email: ***@***

and to

c/o PDC Mountaineer, LLC

120 Genesis Boulevard

Bridgeport, West Virginia 26330

Attn: Deward W. Gerdom, Jr. CEO

Telephone: (304)  ###-###-####

Facsimile: (304)  ###-###-####

Email: ***@***

 

-37-

If to Buyer:

Alliance Petroleum Corporation

4150 Belden Village Avenue N.W., Suite 410

Canton, Ohio ###-###-####

Attn: Thomas S. Wright

Telephone: (330)  ###-###-####

Facsimile: (330)  ###-###-####

Email: ***@***

Any Party may, by written notice so delivered to the other Party, change the address or individual to which delivery shall thereafter be made.

15.4 Amendments. Except for waivers specifically provided for in this Agreement, this Agreement may not be amended nor any rights hereunder waived except by an instrument in writing signed by the Party to be charged with such amendment or waiver and delivered by such Party to the Party claiming the benefit of such amendment or waiver.

15.5 Assignment. Neither Seller nor Buyer shall assign all or any portion of its respective rights or delegate all or any portion of its respective duties under this Agreement without the written consent of the other Party, which consent shall not be unreasonably withheld.

15.6 Headings. The headings of the Articles and Sections of this Agreement are for guidance and convenience of reference only and shall not limit or otherwise affect any of the terms or provisions of this Agreement.

15.7 Counterparts/Electronic and Fax Signatures. This Agreement may be executed and delivered in one or more counterparts, each of which when executed and delivered shall be an original, and all of which when executed shall constitute one and the same instrument. The exchange of copies of this Agreement and of signature pages by facsimile or by electronic image scan transmission in .pdf format shall constitute effective execution and delivery of this Agreement as to the Parties and may be used in lieu of the original Agreement for all purposes. Signatures of the Parties transmitted by facsimile or electronic image scan transmission in .pdf format shall be deemed to be their original signatures for all purposes. Any Party that delivers an executed counterpart signature page by facsimile or by electronic scan transmission in .pdf format shall promptly thereafter deliver a manually executed counterpart signature page to each of the other Parties; provided, however, that the failure to do so shall not affect the validity, enforceability, or binding effect of this Agreement.

15.8 References. References made in this Agreement, including use of a pronoun, shall be deemed to include where applicable, masculine, feminine, singular or plural, individuals or entities. All references to “dollars” or “$” shall mean United States dollars. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” All references to “law” or “laws” shall mean any constitution, decree, resolution, law, statute, act, ordinance, rule, directive, order, treaty, code or regulation and any injunction or final non-appealable judgment or any interpretation of the foregoing, as enacted, issued or promulgated by any governmental authority.

 

-38-

15.9 Governing Law. THIS AGREEMENT AND THE TRANSACTION AND ANY ARBITRATION OR DISPUTE RESOLUTION CONDUCTED PURSUANT HERETO SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF WEST VIRGINIA WITHOUT REGARD TO ITS CHOICE OF LAW PRINCIPLES. THE VALIDITY OF THE VARIOUS CONVEYANCES AFFECTING THE TITLE TO REAL PROPERTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE JURISDICTION IN WHICH SUCH PROPERTY IS LOCATED. SUBJECT TO SECTION 15.10, JURISDICTION AND VENUE WITH RESPECT TO ANY DISPUTES ARISING HEREUNDER SHALL BE PROPER ONLY WITH THE BANKRUPTCY COURT, AND THE PARTIES HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY DISPUTE ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY BROUGHT IN SUCH COURT OR ANY DEFENSE OF INCONVENIENT FORUM FOR THE MAINTENANCE OF SUCH DISPUTE.

15.10 Disputes. In the event of a disagreement, dispute, controversy or claim between the Parties arising out of or relating to this Agreement or the transactions contemplated hereby that cannot be resolved between the Parties (a “Dispute”), such Dispute shall be brought in front of, and shall be decided by, the Bankruptcy Court. EACH OF THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO THE SUBMISSION OF ANY DISPUTE TO THE BANKRUPTCY COURT IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION 15.10, AND HEREBY WAIVES THE RIGHT TO PROCEED TO ANY OTHER COURT OR ANY OTHER FORUM THAT MAY APPLY TO IT BY REASON OF ITS PRESENT OR FUTURE DOMICILE, OR FOR ANY OTHER REASON.

15.11 Waiver of Certain Damages. NO PARTY SHALL BE LIABLE FOR ANY PUNITIVE, INCIDENTAL, SPECIAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES, LOST PROFITS OR DIMINUTION IN VALUE, ARISING IN CONNECTION WITH OR WITH RESPECT TO THIS AGREEMENT, ANY DOCUMENT OR INSTRUMENT DELIVERED TO IMPLEMENT THIS AGREEMENT OR CONSUMMATE THE TRANSACTION CONTEMPLATED HEREIN.

15.12 Entire Agreement. This Agreement constitutes the entire understanding among the Parties, their respective partners, members, trustees, shareholders, officers, directors and employees with respect to the subject matter hereof, superseding all negotiations, prior discussions and prior agreements and understandings relating to such subject matter. The Parties stipulate and agree that this Agreement shall be deemed and considered for all purposes, as prepared through the joint efforts of the Parties, and shall not be construed against one Party or the other as a result of the preparation, submittal or other event of negotiation, drafting or execution thereof.

15.13 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the Transaction is not affected in any adverse manner to either Party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the Transaction is fulfilled to the extent possible.

15.14 Binding Effect. This Agreement shall be binding upon, and shall inure to the benefit of, the Parties hereto, and their respective successors and assigns.

15.15 No Third-Party Beneficiaries. This Agreement is intended only to benefit the Parties hereto and their respective permitted successors and assigns.

[The balance of this page intentionally left blank]

 

-39-

IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the day and year first above written.

 

SELLER:

EASTERN 1996D LIMITED PARTNERSHIP,

EASTERN 1997D LIMITED PARTNERSHIP,

EASTERN 1998D LIMITED PARTNERSHIP,

CO and PA 1999D LIMITED PARTNERSHIP

By: RESPONSIBLE PERSON
By:  

/s/ Karen Nash Nicolaou

  Karen Nash Nicolaou
BUYER:
ALLIANCE PETROLEUM CORPORATION
By:  

/s/ Thomas S. Wright

Name:   Thomas S. Wright
Title:   President

[SIGNATURE PAGE TO PURCHASE AND SALE AGREEMENT]

EXHIBIT A

Partnership Leases

Wellbore Interest Only

 

Lease No

   

Lessor

   

Lessee

    Lease Date      Book      Page     

County

   

State

    Gross Acres      Associated
Partnership
Wells		  

PAL00003.000

    H. B. McGee and Marjorie McGee, C. C. McGee and Eleanor McGee    Victory Energy Corporation      8/9/1997         1868         210       Clearfield    PA      428        

 

 
 
 

 

 

 

 

 

 

 

 

 137.098088

137.098091

137.098092
137.098094
137.098107

137.098109

137.098110

137.098111

137.098112

137.098113

137.098114

137.098115

137.098116

   

  

  
  
  

  

  

  

  

  

  

  

  

PAL00468.001

    Marion Butler and Jay Butler, her husband    Victory Land Company      2/7/1987         1138         370       Clearfield    PA      511         137.097021   

PAL00468.002

    Florence O’Connell and Russell O’Connell, her husband    Victory Land Company      3/9/1987         1144         345       Clearfield    PA      511         137.097021   

PAL00468.003

    Dorothea J. Stauffer    Victory Land Company      4/1/1985         1137         478       Clearfield    PA      511         137.097021   

PAL00468.004

    Clarence Carl Stauffer and Louise Stauffer, his wife    Victory Land Company      4/30/1985         1137         483       Clearfield    PA      511         137.097021   

PAL00502.000

    Glenn E. Thomson, single and Glenn E. Thomson, as Agent for Mildred Thomson Older, widow, Gail T. Brunt and Thomas Brunt, Jr., her husband, Glenn T. McGee and Arlene McGee, his wife, William T. McGee, single, heirs and devisees of Helen T. McGee, deceased    Victory Energy Corporation      10/1/1991         1447         55-57       Clearfield    PA      433        

 

 

 

 

 

 137.097013

137.097014

137.097015

137.097016

137.097017

137.097018

   

  

  

  

  

  

PAL00504.000

    John F. Mitchell, III    Phillips Production Company      2/2/1995         1667         141       Clearfield    PA      105        

 

 137.097098

137.097099

   

  

PAL00521.000

    J. Wesley Oler, Jr., Mary Glenn Fowler and Mildred Thomson Oler, as Co-Executors of The Glenn E. Thomson Estate    Victory Energy Corporation      1/29/1996         1441         71       Clearfield    PA      483        

 

 137.097169

137.099069

   

  

PAL00522.000

    The William T. Mahaffey Heirs, County National Bank as Trustee FBO Rebecca M. Latimer, Deborah M. Westover, and Kathryn M. Kramer; Harriet L. Mahaffey, widow    Victory Energy Corporation      2/7/1997         1843         48       Clearfield    PA      36         137.098016   

PAL00523.000

    Wayne P. Daisher, and Carol J. Kline    Victory Energy Corporation      1/14/1997         1817         522       Clearfield    PA      74        

 

 137.097080

137.097081

   

  

PAL00524.000

    Glenn E. Thomson Estate, Mildred Thomson Oler, widow, Gail T. Brunt and Thomas Brunt, Jr., her husband, Glenn T. McGee and Arlene McGee, his wife, William T. McGee, single, Eric G. McGee, and Marie McGee, his wife, Heirs and Devisees of Helen T. McGee, deceased    Victory Energy Corporation      2/21/1994         1612         32       Clearfield    PA      713        

 

 

 

 

 

 

 137.097001

137.097002

137.097003

137.097028

137.097029

137.097065

137.097066

   

  

  

  

  

  

  

PAL00527.000

    Richard E. Williams    Victory Energy Development Co.      8/11/1989         1309         371       Clearfield    PA      90         137.098093   

PAL00528.001

    F. lora Reade    Victory Energy Corporation      4/19/1990         1368         323       Clearfield    PA      375        

 

 

 

 

 

 

 

 

 

 137.098122

137.098123

137.098124

137.098125

137.098126

137.098127

137.098128

137.098129

137.098131

137.098132

   

  

  

  

  

  

  

  

  

  

 

Page 1 of 7

Lease No

   

Lessor

   

Lessee

    Lease Date    Book    Page   

County

   

State

    Gross Acres    Associated
Partnership
Wells		  

PAL00528.002

    Dunlap Realty, A Partnership    Victory Energy Corporation    8/15/1990    1368    317    Clearfield    PA    375     

 

 

 

 

 

 

 

 

 137.098123

137.098124

137.098125

137.098126

137.098127

137.098128

137.098129

137.098131

137.098132

   

  

  

  

  

  

  

  

  

PAL00528.003

    Arnold B. Shaw and Helen K. Shaw    Victory Energy Corporation    6/21/1990    1368    329    Clearfield    PA    375     

 

 

 

 

 

 

 

 

 137.098123

137.098124

137.098125

137.098126

137.098127

137.098128

137.098129

137.098131

137.098132

   

  

  

  

  

  

  

  

  

PAL00528.004

    Sandra Shaw Decasper and Samuel Decasper    Victory Energy Corporation    5/22/1990    1368    335    Clearfield    PA    375     

 

 

 

 

 

 

 

 

 137.098123

137.098124

137.098125

137.098126

137.098127

137.098128

137.098129

137.098131

137.098132

   

  

  

  

  

  

  

  

  

PAL00532.000

    George L. Prisk, Donald G. Prisk and Kenneth B. Prisk, t/d/b/a Prisk Dairy Farms    Victory Energy Corporation    10/26/1996    1807    321    Clearfield    PA    140     

 

 

 

 137.097007

137.097008

137.097086

137.097095

   

  

  

  

PAL00539.000

    Donald B. Tubbs and Blake L. Tubbs    Victory Energy Corporation    1/10/1998    1901    340    Clearfield    PA    91     

 

 137.098220

137.098221

   

  

PAL00540.001

    Evelyn J. DeHaven, widow    Victory Energy Corporation    12/18/1996    1821    240    Clearfield    PA    65     

 

 

 137.097069

137.097070

137.097071

   

  

  

PAL00540.002

    Shirley and Ellis Passmore, Sr.    Victory Energy Corporation    12/18/1996    1820    160    Clearfield    PA    65     

 

 

 137.097069

137.097070

137.097071

   

  

  

PAL00544.000

    Michael K. Straw and Debra J. Straw    Victory Energy Corporation    1/11/1997    1818    532    Clearfield    PA    25      137.097097   

PAL00545.001

    Chester J. and D. Lorraine Skonier    Victory Energy Corporation    4/1/1993    1527    139    Clearfield    PA    100     

 

 137.097073

137.097074

   

  

PAL00545.002

    Alfred E. and Catherine Skonier    Victory Energy Corporation    1/18/1993    1527    143    Clearfield    PA    100     

 

 137.097073

137.097074

   

  

PAL00545.003

    Evelyn F. Jennings    Victory Energy Corporation    1/28/1993    1527    147    Clearfield    PA    100     

 

 137.097073

137.097074

   

  

PAL00546.000

    A & G Real Estate    Victory Energy Corporation    5/17/1996    1792    270    Clearfield    PA    122     

 

 

 

 137.098164

137.098165

137.098166

137.098167

   

  

  

  

 

Page 2 of 7

Lease No

   

Lessor

   

Lessee

    Lease Date    Book    Page   

County

   

State

    Gross Acres    Associated
Partnership
Wells		  

PAL00547.000

    Robert and Eleanor Ludwig    Victory Energy Corporation    5/15/1997    1844    471    Clearfield    PA    194     

 

 137.098103

137.098105

   

  

PAL00548.000

    Chetwin M. Hurd and Vera S. Hurd, his wife    Victory Energy Corporation    9/29/1997    1881    278    Clearfield    PA    830     

 

 

 

 137.098085

137.098086

137.098089

137.099145

   

  

  

  

PAL00549.000

    S&D Energy    Victory Energy Corporation    7/15/1997    1859    35    Clearfield    PA    219     

 

 

 

 

 137.098181

137.098182

137.098183

137.098185

137.098186

   

  

  

  

  

PAL00559.000

    Gordon B. Wood and Hazel Wood    Phillips Production Company    6/30/1994    1620    540    Clearfield    PA    48      137.098219   

PAL00600.000

    Peter W Summers and Shirley Ann Summers    Petroleum Development Corporation    12/13/1997    1896    564    Clearfield    PA    50.9      137.098157   

PAL00601.000

   

Wayne A Freyer, Wayne E Freyer and William C

Freyer t/d/b/a Wayne A Freyer and Sons

    Petroleum Development Corporation    1/13/1998    1909    205    Clearfield    PA    108     

 

 

 

 137.099009

137.099010

137.099011

137.099012

   

  

  

  

PAL00609.000

    F Douglas Beard and Tonda S Beard    Petroleum Development Corporation    12/15/1998    0    0    Clearfield    PA    23      137.099059   

PAL00611.000

    John McKeage Zold    Petroleum Development Corporation    10/31/1998    1987    96    Clearfield    PA    123     

 

 

 137.099007

137.099006

137.099008

   

  

  

PAL00614.000

    C Alan Walker, Susan Walker Kriner, Anne Walker Macko, acting by and through E David Nelson, agent, dba Shannon Land and Mining Company    Petroleum Development Corporation    11/7/1997    1888    478    Clearfield    PA    98     

 

 137.098097

137.099005

   

  

PAL00617.000

    Kriner, Anne Walker Macko, acting by and through E David Nelson, agent, dba Shan    Petroleum Development Corporation    11/7/1997    1888    501    Clearfield    PA    268     

 

 137.099066

137.099067

   

  

PAL00618.000

    Kriner, Anne Walker Macko, acting by and through E David Nelson, agent, dba Shan    Petroleum Development Corporation    11/7/1997    1888    495    Clearfield    PA    52     

 

 137.098095

137.098096

   

  

PAL00619.000

    Fred J McCracken and Derek R McCracken and Kathryn A Tubbs    Petroleum Development Corporation    1/22/1998    1909    207    Clearfield    PA    50     

 

 137.099035

137.099036

   

  

PAL00632.000

    Michael Kulikowski and John J Kulikowski    Eagle Resources Corporation    4/10/1997    3111    483    Washington    PA    57      137.098163   

PAL00633.000

    Harry J Lallier    Eagle Resources Corporation    6/26/1997    3153    144    Washington    PA    120      137.098162   

PAL00634.000

    David Johnson    Eagle Resources Corporation    5/28/1997    3128    143    Washington    PA    82      137.098161   

PAL00635.000

    Nicholas Rapsack    Eagle Resources Corporation    6/10/1997    3141    294    Washington    PA    94      137.098160   

PAL00639.000

    Randall A Rearick and Twila E Rearick    US Energy Expl Corp    2/26/1997    1721    269    Armstrong    PA    20      137.099108   

PAL00640.000

    William M Wilson and Mary Alice Cooper    U S Energy Expl Corp    11/16/1996    1664    0308    Armstrong    PA    120     

 

 137.099109

137.099111

   

  

PAL00641.000

    Lawrence E Barr Jr and Laura Lee Bart    U S Energy Expl Corp    10/30/1996    1673    61    Armstrong    PA    62      137.099110   

PAL00642.000

    Audley Couch, Virginia L Couch, Mark A Couch and Jesse L Couch    U S Energy Expl Corp    4/15/1997    1698    101    Armstrong    PA    60      137.099112   

PAL00643.000

    Velma E Steidle    U S Energy Expl Corp    11/27/1998    1927    42    Armstrong    PA    17.8      137.099113   

PAL00646.000

    Kiski Township Sportsmen’s Assoc    U S Energy Expl Corp    4/27/1998    1863    61    Armstrong    PA    170      137.099116   

PAL00649.001

    Mary E Wateska, Raymond B Wateska    U S Energy Expl Corp    12/1/1998    2016    227    Armstrong    PA    157     

 

 137.000087

137.000091

   

  

 

Page 3 of 7

Lease No

   

Lessor

   

Lessee

    Lease Date    Book    Page   

County

   

State

    Gross Acres    Associated
Partnership
Wells		  

PAL00649.002

    Debra Ann Walker-Crownover, Norman Eugene Crownover    U S Energy Expl Corp    12/1/1998    2016    224    Armstrong    PA    157     

 

 137.000087

137.000091

   

  

PAL00649.003

    Robert J Walker and Grace M Shearer Walker    U S Energy Expl Corp    6/28/1999    2016    238    Armstrong    PA    157     

 

 137.000087

137.000091

   

  

PAL00649.004

    Edward Walker, David R Walker, Debra Walker Crownover, Roberta A Gearhart    U S Energy Expl Corp    12/1/1998    1894    337    Armstrong    PA    157     

 

 137.000087

137.000091

   

  

PAL00650.000

    Daniel K Shearer, Mary Lou Shearer or Grace Shearer Walker    U S Energy Expl Corp    2/18/1999    2016    233    Armstrong    PA    49.3      137.000025   

PAL00652.000

    Alfred and Phyllis Goldinger    U S Energy Expl Corp    3/29/1999    2019    256    Armstrong    PA    130     

 

 

 137.000080

137.000089

137.000101

   

  

  

PAL00653.000

    C Alan Walker, Susan Walker Kriner, Anne Walker Macko, acting by and through E David Nelson, agent, dba Shannon Land and Mining Company    Castle Gas Company Inc    8/8/1996    1792    540    Clearfield    PA    159     

 

 

 137.098153

137.098154

137.099062

   

  

  

PAL00654.000

    Jean Bacharach Gallaher and Charles Gordon Herrington Trust    Castle Gas Company Inc    1/25/1996    1786    551    Clearfield    PA    57      137.098158   

PAL00660.000

    Robert A. Witherite    Victory Energy Corporation    2/20/1997    1822    241    Clearfield    PA    4.98      137.097094   

PAL00661.000

    Paul D. and Lorraine M. Witherite, brother and sister    Victory Energy Coorporation    11/8/1996    1807    313    Clearfield    PA    80     

 

 

 137.097094

137.097010

137.097011

   

  

  

PAL00662.000

    Lorraine M. Witherite    Victory Energy Coorporation    2/27/1997    1822    245    Clearfield    PA    1.99     

 

 

 137.097094

137.097010

137.097011

   

  

  

PAL00663.000

    George L. Prisk, Donald G. Prisk and Kenneth B. Prisk, t/d/b/a Prisk Diary Farms    Victory Energy Corporation    10/26/1996    1807    317    Clearfield    PA    30      137.097009   

PAL00668.000

    George and Patricia Dickey; Jerry Barrett; Donald and Hannah Barrett; Cloyd and Sandra Barrett    Victory Energy Corporation    3/11/1997    1834    604    Clearfield    PA    59      137.099039   

PAL00673.000

    Thomas E. Reighard and Tammy A. Reighard    Victory Energy Corporation    6/16/1998    470       Clearfield    PA    24      137.099034   

PAL00674.000

    National Bank as Trustee FBO Rebecca M. Latimer, Deborah M. Westover and Kathryn    Victory Energy Corporation    4/14/1997    1843    58    Clearfield    PA    107      137.099034   

PAL00675.000

    James F. and Muriel Reighard, h/w    Victory Energy Corporation    6/16/1998    228       Clearfield    PA    24      137.099034   

PAL00676.000

    Robert L. and Deborah Reighard    Victory Energy Corporation    6/16/1998    226       Clearfield    PA    24      137.099034   

PAL00677.000

    Timothy D. Iraca and Diane M. Iraca, His wife; and Beverly A. Smith and Llewellyn Smith, her husband    Victory Energy Corporation    11/4/1998    1983    103    Clearfield    PA    43      137.099024   

PAL00678.001

   

Thomas P. Hartzfeld, James R. Hartzfeld, Judith A. Mogor

c/o Hartzfeld Land Partners

    Victory Energy Corporation    8/4/1998    1978    434    Clearfield    PA    78      137.099022   

PAL00678.002

    Jessie Hartzfeld, Individually, Jessie Hartzfeld as Guardian for Gordon Bruce Hartzfeld    Victory Energy Corporation    6/18/1998    1978    438    Clearfield    PA    78      137.099022   

PAL00678.003

    Dr. William Beckwith    Victory Energy Corporation    9/14/1998    1978    442    Clearfield    PA    78      137.099022   

PAL00678.004

    Carol Beckwith Clifton    Victory Energy Corporation    6/17/1998    1978    446    Clearfield    PA    78      137.099022   

PAL00678.005

    Patricia Jean Hogan    Victory Energy Corporation    6/17/1998    1978    458    Clearfield    PA    78      137.099022   

PAL00678.006

    Martha Downey    Victory Energy Corporation    6/15/1998    1978    454    Clearfield    PA    78      137.099022   

PAL00678.007

    Fred R. Day    Victory Energy Corporation    6/12/1998    1978    450    Clearfield    PA    78      137.099022   

PAL00678.008

    Phyllis Day    Victory Energy Corporation    10/30/1998    1983    91    Clearfield    PA    78      137.099022   

PAL00678.009

    Anne Y. Weigle and Donald K. Weigle    Victory Energy Corporation    6/12/1998    1978    462    Clearfield    PA    78      137.099022   

 

Page 4 of 7

Lease No

    Lessor    Lessee    Lease Date    Book    Page    County    State    Gross Acres    Associated
Partnership
Wells		  

PAL00679.000

    Spencer, Ray L. Spencer, and Robert G. Spencer trading

and doing business as Spencer

    Victory Energy Corporation    1/15/1997    1823    494    Clearfield    PA    127     

 

 137.099025

137.099026

   

  

PAL00680.000

    John Mandel, Audrey Ann Mandel, and John P. Mande    Victory Energy Corporation    11/4/1998    1983    95    Clearfield    PA    71     

 

 

 137.099025

137.099026

137.099146

   

  

  

PAL00681.000

    The Estate of Thomas Holt Murray, c/o Helen Dufton Clark,
Administratrix		    Victory Energy Corporation    2/5/1999    0    0    Clearfield    PA    30      137.099093   

PAL00682.000

    Susquehanna Recreation Corporation    Victory Energy Corporation    8/15/1997    1866    416    Clearfield    PA    227     

 

 137.099027

137.099103

   

  

PAL00685.000

    Forney D. Winner and Mary E. Winner, his wife    Victory Energy Corporation    1/15/1999    0    0    Clearfield    PA    296      137.099149   

PAL00686.000

    John A. Weaver and James M. Weaver    Victory Energy Corporation    11/7/1998    1986    68    Clearfield    PA    182      137.099017   

PAL00687.000

    Dorothy L. Stineman, widow, Gilbert E. Caroff and Julie Anne
Caroff, husband and wife, Howard C. Matthews and Karen S.
Matthews, husband and wife		    Victory Energy Corporation    10/29/1998    1144    265    Indiana    PA    443     

 

 137.099133

137.099134

   

  

PAL00689.000

    Frank K. and Mary Clark Snyder    Victory Energy Corporation    10/18/1999    0    0    Clearfield    PA    72      137.000093   

PAL00690.000

    Jerry Guiher, and Rick Guiher    Victory Energy Corporation    9/19/1998    1971    391    Clearfield    PA    56      137.000023   

PAL00695.000

    The Thomson Residuary Beneficiaries, being Mary Glenn Flower, J.
Wesley Oler Jr., William T. McGee, Glenn T. McGee, Gail T. Brunt,
The Pennsylvania State University Varsity
Tennis Endowment, the Pennsylvania State University Department
of Electrical Engineering
of the College of Engineering, The Pennsylvania State University
Department of Locomotion Studies of the College of Health and
Human Development, Juniata College, Dickinson School of Law,
Clearfield Community YMCA, Newburg Baptist Church of LaJose,
First Baptist Church of Clearfield, First Baptist Church of Pittsburgh		    Victory Energy Corporation    9/4/1999    0    0    Clearfield    PA    421      137.000022   

PAL00696.000

    Greenwich Collieries, A Division of Pennsylvania Mines Corporatior    Victory Energy Corporation    1/13/1997    1458    1075    Indiana    PA    634     

 

 

 

 

 137.099079

137.099080

137.099083

137.000046

137.000055

   

  

  

  

  

PAL00700.000

    Patricia A. Ireland and Dean Ireland    Angerman Associates, Inc.    1/12/1994    1588    061    Clearfield    PA    104      137.098108   

PAL00701.000

    Gilbert S. Couch, Trustee and Helen M.    US Energy Exlp. Corp.    2/2/2000    2076    0272    Armstrong    PA    143      137.000088   

PAL00702.000

    Ronald E. Pikulski, executor of the    U.S. Energy Expl. Corp.    12/16/1996    1664    0317    Armstrong    PA    282     

 

 137.000026

137.000027

   

  

PAL00703.000

    Clarence M. Coleman and Kenneth A.    U.S. Energy Expl. Corp    1/22/1999    1169    256    Indiana    PA    130     

 

 137.000028

137.000029

   

  

PAL00704.000

    Clearfield Bank and Trust Co. and Julia    Castle Gas Company, Inc.    8/14/1997    1867    047    Clearfield    PA    61.11      137.098156   

PAL00711.000

    Alice Margaret Tate, Lois J. Lipson, Martin C. and Carolyn B. Tate,
Paul A. Tate		    Victory Energy Corporation    11/16/1996    1809    92    Clearfield    PA    111     

 

 

 137.097004

137.097005

137.097006

   

  

  

WVL00024.001

    Steve Thornburg and Clarcie Thornburg, husband and wife    Petroleum Development Corporation    1/5/1998    133    140    Barbour    WV    108      147.099049   

WVL00024.002

    Rebecca McNeil and J. Michael McNeil, husband and wife    Petroleum Development Corporation    1/10/1998    133    144    Barbour    WV    108      147.099049   

WVL00024.003

    Mary E. Moats, a widow woman    Petroleum Development Corporation    2/25/1998    133    253    Barbour    WV    108      147.099049   

WVL00028.000

    Jack W. Miller and Doris C. Miller, husband and wife    Petroleum Development Corporation    12/19/1997    133    88    Barbour    WV    131     

 

 

 147.098200

147.098203

147.098205

   

  

  

 

Page 5 of 7

Lease No

  

Lessor

   Lessee   Lease Date   Book   Page   County   State   Gross Acres   Associated
Partnership
Wells		  

WVL00176.000

   Elladean Railing, a widow woman   Petroleum Development Corporation   6/30/1992   46, 58, 58, 58   681, 45, 47, 49   Taylor   WV   229.25     147.097064   

WVL00206.000

   Peggy Chesser Hadley, as attorney in fact for Lucille Crim Chesser   Beckler Energy Incorporated   7/11/1991   121   566   Barbour   WV   124     147.099073   

WVL00207.000

   Shiriey Rinker, a widow woman   Petroleum Development Corporation   2/3/1997   131   469   Barbour   WV   15     147.099073   

WVL00208.000

   Ira D. Hovatter, a widow woman   Petroleum Development Corporation   9/14/1995   129   272   Barbour   WV   111.75     147.099003   

WVL00210.000

   Martha E. Poling, a widow woman   Petroleum Development Corporation   9/14/1995   129   276   Barbour   WV   82.46     147.099000   

WVL00244.000

   Glenn C. Larew and Jarrell S. Larew, husband and wife   Petroleum Development Corporation   4/14/1992   46   559   Taylor   WV   192    

 

 

 

 147.097043

147.099014

147.099052

147.099097

   

  

  

  

WVL00304.000

   L. S. McGee, a widower man   Clarence W. Mutschelknaus   8/22/1978   105   141   Doddridge   WV   78     147.097037   

WVL00305.001

   Mary F. Hornor, a widow woman   Clarence W. Mutschelknaus   3/10/1981   119   600   Doddridge   WV   106     147.097038   

WVL00305.002

   Kenneth Guinn, single   Clarence W. Mutschelknaus   3/9/1981   119   529   Doddridge   WV   106     147.097038   

WVL00305.003

   Mildred Rittenhouse and Stanley Rittenhouse, husband and wife   Clarence W. Mutschelknaus   3/10/1981   119   527   Doddridge   WV   106     147.097038   

WVL0030S.004

   Audra Varner, a widow woman   Clarence W. Mutschelknaus   3/16/1981   119   525   Doddridge   WV   106     147.097038   

WVL00305.005

  

Clarence W. Mutschelknaus and Mary

F. Mutschelknaus,

husband and wife

   Clarence W. Mutschelknaus   3/9/1981   119   421   Doddridge   WV   106     147.097038   

WVL00305.006

   Bernadette Poole and Robert Poole, husband and wife   Clarence W. Mutschelknaus   6/27/1980   117, 119   56, 418   Doddridge   WV   106     147.097038   

WVL00496.001

   Gerald M. Fogg, Special Receiver Appointed by Order of the Circuit Court of Barbour County, West Virginia, Entered on December 9,1996, in Civil Action No. 96-C-42   Petroleum Development Corporation   12/11/1996   131   396   Barbour   WV   170    

 

 147.097030

147.097031

   

  

WVL00496.002

   Peggy C. Hadley   Petroleum Development Corporation   3/29/1996   130   515   Barbour   WV   170    

 

 147.097030

147.097031

   

  

WVL00496.003

   John A. Mosesso and Mary K. Mosesso, husband and wife   Petroleum Development Corporation   2/26/1996   130   422   Barbour   WV   57    

 

 147.097030

147.097031

   

  

WVL00496.004

   Donnie R. Daugherty and Naomi Daugherty   Petroleum Development Corporation   11/14/1996   131   337   Barbour   WV   20    
 		 147.097030
147.097031		   
  

WVL00496.005

   Elsie Daugherty, a widow woman   Petroleum Development Corporation   11/19/1996   131   333   Barbour   WV   9    

 

 147.097030

147.097031

   

  

WVL00496.006

   Rev. David E. Brown and Virginia M. Brown   Petroleum Development Corporation   11/19/1996   131   344   Barbour   WV   30    

 

 147.097030

147.097031

   

  

WVL00496.007

   Millicent Canter, a widow woman   Petroleum Development Corporation   2/12/1996   130   406   Barbour   WV   170    

 

 147.097030

147.097031

   

  

WVL00496.008

   Anne H. Collins, single   Petroleum Development Corporation   2/13/1996   130   414   Barbour   WV   170    

 

 147.097030

147.097031

   

  

WVL00496.009

   Richard C. Hopkins, a widower man   Petroleum Development Corporation   2/8/1996   130   402   Barbour   WV   170    

 

 147.097030

147.097031

   

  

WVL00496.010

   Nancy B. Collins, single   Petroleum Development Corporation   2/21/1996   130   410   Barbour   WV   170    

 

 147.097030

147.097031

   

  

WVL00496.011

   R. Holt Poling and Mary Alice Poling, husband and wife   Petroleum Development Corporation   2/23/1996   130   418   Barbour   WV   170    

 

 147.097030

147.097031

   

  

WVL00496.012

   Jack W. Canter   Petroleum Development Corporation   3/25/1996   130   523   Barbour   WV   170    

 

 147.097030

147.097031

   

  

 

Page 6 of 7

Lease No

   Lessor   Lessee   Lease Date   Book   Page   County   State   Gross Acres   Associated
Partnership
Wells		  

WVL00496.013

   Rachel Bocock   Petroleum Development Corporation   3/4/1996   130   446   Barbour   WV   170    

 

 147.097030

147.097031

   

  

WVL00496.014

   Betty Krifka   Petroleum Development Corporation   3/25/1996   130   531   Barbour   WV   170    

 

 147.097030

147.097031

   

  

WVL00496.015

   Suzanne C. Sandell   Petroleum Development Corporation   3/27/1996   130   519   Barbour   WV   170    

 

 147.097030

147.097031

   

  

WVL00496.016

   Lucinda H. Rogers, single   Petroleum Development Corporation   4/1/1996   130   527   Barbour   WV   170    

 

 147.097030

147.097031

   

  

WVL00501.000

   Gerald M. Fogg, Special Receiver appointed

by order of Circuit Court of Barbour County,

entered on 10/21/91, in Burner, et al vs.
Shockey, et al Civil Action No. 91 c-68

   Petroleum Development Corporation   5/25/1995   129   166   Barbour   WV   172    

 

 147.097063

147.097092

   

  

WVL00506.001

   William A. Shockey and Pauline B.
Shockey, husband and wife		   Petroleum Development Corporation   1/29/1996   130   78   Barbour   WV   83    

 

 147.097023

147.097055

   

  

WVL00506.002

   Jerry L. Ware and Barbara J. Ware, husband
and wife		   W.R. McDaniel   1/29/1996   131   208   Barbour   WV   112    

 

 147.097023

147.097055

   

  

WVL00507.001

   Henry W. Wheeler and Teresa Wheeler   Petroleum Development Corporation   2/23/1996   130   450   Barbour   WV   160    

 

 147.097056

147.097057

   

  

WVL00507.002

   Virginia C. Baughman, widow;   Petroleum Development Corporation   1/29/1996   130   82   Barbour   WV   144    

 

 147.097056

147.097057

   

  

WVL00525.001

   Mark V. Schumacher   Petroleum Development Corporation   1/8/1998   133   136   Barbour   WV   98.75    

 

 147.099053

147.099054

   

  

WVL00525.002

   Empire National Bank of Clarksburg, a
National Banking Associatior		   Petroleum Development Corporation   1/25/1989   114   432   Barbour   WV   98.75    

 

 147.099053

147.099054

   

  

 

Page 7 of 7

Exhibit B

Shallow Wells

Wellbore Interest Only

 

WELL NO

   

WELL NAME

    API NO    PARTNER    Wl      NRI  
137.000022    THOMPSON #110    37033243090000    PDC99D      99.70014         84.12196   
137.000023    GUIHER #1    37033244380000    PDC99D      99.70014         84.12196   
137.000025    SHEARER #2    37005262210000    PDC99D      99.70014         84.12196   
137.000026    STANKAY #1    37005262340000    PDC99D      99.70014         84.12196   
137.000027    STANKAY #2    37005262550000    PDC99D      99.70014         84.12196   
137.000028    COLEMAN #1, C.    37063324180000    PDC99D      99.70014         84.12196   
137.000029    COLEMAN #2, C.    37063324750000    PDC99D      99.70014         84.12196   
137.000046    PA MINES #32    37021208610000    PDC99D      99.70014         84.12196   
137.000055    PA MINES #33    37021208660000    PDC99D      99.70014         84.12196   
137.000080    GOLDINGER #2    37005262420000    PDC99D      99.70014         84.12196   
137.000087    WALKER #2    37005262250000    PDC99D      99.70014         84.12196   
137.000088    COUCH #1, G.    37005262220000    PDC99D      99.70014         84.12196   
137.000089    GOLDINGER #3    37005262430000    PDC99D      99.70014         84.12196   
137.000091    WALKER #4    37005262240000    PDC99D      99.70014         84.12196   
137.000093    SNYDER #32    37033245940000    PDC99D      99.70014         84.12196   
137.000101    GOLDINGER #4    37005262450000    PDC99D      99.70014         84.12196   
137.097001    THOMSON-STEPHENSON #85    37033237200000    PDC96D      94.24951         82.46857   
137.097002    THOMSON-STEPHENSON #84    37033237190000    PDC96D      94.24951         82.46857   
137.097003    THOMSON-STEPHENSON #81    37033237180000    PDC96D      94.24951         82.46857   
137.097004    TATE #33    37033237110000    PDC96D      94.24951         82.46857   
137.097005    TATE #34    37033237130000    PDC96D      94.24951         82.46857   
137.097006    TATE #31    37033237300000    PDC96D      94.24951         82.46857   
137.097007    PRISK #1    37033237360000    PDC96D      94.24951         82.46857   
137.097008    PRISK #2    37033237370000    PDC96D      94.24951         82.46857   
137.097009    PRISK #4    37033237410000    PDC96D      94.24951         82.46857   
137.097010    WITHERITE #1    37033237340000    PDC96D      94.24951         82.46857   
137.097011    WITHERITE #2    37033237350000    PDC96D      94.24951         82.46857   
137.097013    THOMSON-GIBBS #34    37033237260000    PDC96D      94.24951         82.46857   
137.097014    THOMSON-GIBBS #35    37033237270000    PDC96D      94.24951         82.46857   
137.097015    THOMSON-GIBBS #36    37033237280000    PDC96D      94.24951         82.46857   
137.097016    THOMSON-GIBBS #37    37033237420000    PDC96D      94.24951         82.46857   
137.097017    THOMSON-GIBBS #38    37033237290000    PDC96D      94.24951         82.46857   
137.097018    THOMSON-GIBBS #39    37033237440000    PDC96D      94.24951         82.46857   
137.097021    KRICK #12    37033237460000    PDC96D      94.24951         82.46857   
137.097022    MCCLURE #12    37065240650000    PDC96D      74.24984         62.00686   
137.097028    THOMSON-STEPHENSON #82    37033237520000    PDC96D      94.24951         82.46857   
137.097029    THOMSON-STEPHENSON #83    37033237470000    PDC96D      94.24951         82.46857   
137.097058    SWOPE #154    37033236220000    PDC96D      74.24984         62.00686   
137.097060    MCCAY #296    37033236200000    PDC96D      74.24984         62.00686   
137.097065    THOMSON-STEPHENSON #80    37033237330000    PDC96D      94.24951         82.46857   
137.097066    THOMSON-STEPHENSON #79    37033237310000    PDC96D      94.24951         82.46857   
137.097069    DEHAVEN #1    37033237800000    PDC96D      94.24951         82.46857   
137.097070    DEHAVEN #2    37033237860000    PDC96D      94.24951         82.46857   
137.097071    DEHAVEN #3    37033237920000    PDC96D      94.24951         82.46857   
137.097073    SKONIER #2    37033237530000    PDC96D      94.24951         82.46857   
137.097074    SKONIER #3    37033237540000    PDC96D      94.24951         82.46857   
137.097075    IRVIN #322    37033237020000    PDC96D      74.24984         62.00686   
137.097079    HOPKINS #317    37033237400000    PDC96D      74.24984         62.00686   

 

Page 1 of 4

WELL NO

   

WELL NAME

    API NO    PARTNER    Wl      NRI  
137.097080    DAISHER #1    37033237680000    PDC96D      94.24951         82.46857   
137.097081    DAISHER #2    37033237720000    PDC96D      94.24951         82.46857   
137.097083    MCHENRY #136    37033237630000    PDC96D      74.24984         62.00686   
137.097086    PRISK #3    37033237790000    PDC96D      0.80000         0.70000   
137.097087    DIEM #5    37033237480000    PDC96D      74.24984         62.00686   
137.097091    SHEROSKY #3    37033237690000    PDC96D      74.24984         62.00686   
137.097094    WITHERITE #3    37033237850000    PDC96D      94.24951         82.46857   
137.097095    PRISK #5    37033237830000    PDC96D      94.24951         82.46857   
137.097097    STRAW #1    37033237810000    PDC96D      94.24951         82.46857   
137.097098    MITCHELL #5    37033237230000    PDC96D      94.24951         78.69891   
137.097099    MITCHELL #6    37033237240000    PDC96D      94.24951         78.69891   
137.097169    THOMSON-BLACKHILLS #55    37033238010000    PDC96D      94.24951         82.46857   
137.097172    KAUFMAN #288    37033237490000    PDC96D      74.24984         61.99886   
137.097174    CARDIN #311    37033237060000    PDC96D      74.24984         61.99886   
137.097179    HAAG #327    37033237840000    PDC96D      74.24984         61.99886   
137.098016    MAHAFFEY #13    37033238390000    PDC97D      94.59956         82.77486   
137.098085    HURD #3    37033239020000    PDC97D      94.59956         82.77486   
137.098086    HURD #4    37033238980000    PDC97D      94.59956         82.77486   
137.098088    MCGEE #4    37033239060000    PDC97D      94.59956         82.77486   
137.098089    HURD #1    37033239000000    PDC97D      94.59956         82.77486   
137.098091    MCGEE #5    37033239310000    PDC97D      94.59956         82.77486   
137.098092    MCGEE #7    37033239350000    PDC97D      94.59956         82.77486   
137.098093    WILLIAMS #3    37033238630000    PDC97D      94.59956         82.77486   
137.098094    MCGEE #1    37033239140000    PDC97D      94.59956         82.77486   
137.098095    SHANNON #4    37033239770000    PDC97D      99.60029         90.15025   
137.098096    SHANNON #5    37033239760000    PDC97D      99.60029         90.15025   
137.098097    SHANNON #6    37033239780000    PDC97D      99.60029         90.15025   
137.098103    LUDWIG #4    37033239290000    PDC97D      94.59956         82.77486   
137.098105    LUDWIG #6    37033238690000    PDC97D      94.59956         82.77486   
137.098107    MCGEE #6    37033239370000    PDC97D      94.59956         82.77486   
137.098108    IRELAND #1, P.    37033240050000    PDC97D      69.59991         58.11629   
137.098109    MCGEE #8    37033239360000    PDC97D      94.59956         82.77486   
137.098110    MCGEE #9    37033239090000    PDC97D      94.59956         82.77486   
137.098111    MCGEE #15    37033239580000    PDC97D      94.59956         82.77486   
137.098112    MCGEE #10    37033239100000    PDC97D      94.59956         82.77486   
137.098113    MCGEE #11    37033239110000    PDC97D      94.59956         82.77486   
137.098114    MCGEE #12    37033239120000    PDC97D      94.59956         82.77486   
137.098115    MCGEE #13    37033239300000    PDC97D      94.59956         82.77486   
137.098116    MCGEE #14    37033239130000    PDC97D      94.59956         82.77486   
137.098122    MYERS #1    37033239150000    PDC97D      94.59956         82.77486   
137.098123    MYERS #2    37033239160000    PDC97D      94.59956         82.77486   
137.098124    MYERS #3    37033239200000    PDC97D      94.59956         82.77486   
137.098125    MYERS #4    37033239210000    PDC97D      94.59956         82.77486   
137.098126    MYERS #5    37033239170000    PDC97D      94.59956         82.77486   
137.098127    MYERS #6    37033239180000    PDC97D      94.59956         82.77486   
137.098128    MYERS #7    37033239190000    PDC97D      94.59956         82.77486   
137.098129    MYERS #8    37033239240000    PDC97D      94.59956         82.77486   
137.098131    MYERS #10    37033239330000    PDC97D      94.59956         82.77486   
137.098132    MYERS #11    37033239250000    PDC97D      94.59956         82.77486   
137.098153    SHANNON #2    37033238950000    PDC97D      99.60029         84.03749   
137.098154    SHANNON #3    37033238910000    PDC97D      99.60029         84.03749   

 

Page 2 of 4

WELL NO

   

WELL NAME

    API NO    PARTNER      Wl      NRI  
137.098156    SPINGOLA #2    37033237220000      PDC97D         99.60029         84.03749   
137.098157    SUMMERS #1    37033238900000      PDC97D         99.60029         84.03749   
137.098158    HERRINGTON TRUST #1    37033238920000      PDC97D         99.60029         84.03749   
137.098160    RAPSACK #1, NICHOLAS    37125218790000      PDC97D         0.74600         0.62944   
137.098161    JOHNSON #1, DAVID    37125218330000      PDC97D         0.74600         0.62944   
137.098162    LALLIER #1, H.    37125218820000      PDC97D         0.74600         0.62944   
137.098163    KULIKOWSKI #1    37125218810000      PDC97D         0.74600         0.62944   
137.098164    A&G #21    37033239600000      PDC97D         94.59956         82.77486   
137.098165    A&G #22    37033239920000      PDC97D         94.59956         82.77486   
137.098166    A&G #23    37033239680000      PDC97D         94.59956         82.77486   
137.098167    A&G #24    37033239690000      PDC97D         94.59956         82.77486   
137.098181    S&D #1    37033239910000      PDC97D         94.59956         78.99148   
137.098182    S&D #2    37033239710000      PDC97D         94.59956         78.99148   
137.098183    S&D #3    37033239720000      PDC97D         94.59956         78.99148   
137.098185    S&D #5    37033239740000      PDC97D         94.59956         78.99148   
137.098186    S&D #6    37033239820000      PDC97D         94.59956         78.99148   
137.098219    WOOD #21    37033240000000      PDC97D         94.59956         78.99148   
137.098220    TUBBS #21    37033239900000      PDC97D         0.29600         0.25900   
137.098221    TUBBS #22    37033239700000      PDC97D         94.59956         81.69986   
137.099005    SHANNON #9R    37033241890000      PDC98D         99.59992         87.14981   
137.099006    ZOLD #1    37033242420000      PDC98D         0.99600         0.74650   
137.099007    ZOLD #2    37033242450000      PDC98D         0.99600         0.74650   
137.099008    ZOLD #3    37033242460000      PDC98D         0.99600         0.74650   
137.099009    FREYER #1    37033242070000      PDC98D         99.59992         87.14981   
137.099010    FREYER #2    37033242080000      PDC98D         99.59992         87.14981   
137.099011    FREYER #3    37033242090000      PDC98D         99.59992         87.14981   
137.099012    FREYER #4    37033242570000      PDC98D         99.59992         87.14981   
137.099015    MAHAFFEY #31    37033242250000      PDC98D         94.59959         82.77514   
137.099016    MAHAFFEY #32    37033242200000      PDC98D         94.59959         82.77514   
137.099017    WEAVER #1    37033242290000      PDC98D         94.59959         82.77514   
137.099022    SPENCER UNIT #8    37033241870000      PDC98D         94.59959         82.77514   
137.099024    IRACA #1    37033242010000      PDC98D         94.59959         82.77514   
137.099025    MANDEL UNIT #2    37033242380000      PDC98D         94.59959         82.77514   
137.099026    SPENCER UNIT #9    37033241810000      PDC98D         94.59959         82.77514   
137.099027    SUSQUEHANNA REC. #3    37033241260000      PDC98D         94.59959         82.77514   
137.099034    REIGHARD UNIT #1    37033242210000      PDC98D         94.59959         82.77514   
137.099035    MCCRACKEN #1    37033242170000      PDC98D         99.59992         87.14981   
137.099036    MCCRACKEN #2    37033242180000      PDC98D         99.59992         87.14981   
137.099039    DICKEY #22    37033242230000      PDC98D         94.59959         82.77514   
137.099059    BEARD #1    37033242700000      PDC98D         99.59992         87.14981   
137.099062    SHANNON #1R    37033242060000      PDC98D         99.59992         84.03753   
137.099066    SHANNON L&M #15    37033239960000      PDC98D         99.59992         87.14981   
137.099067    SHANNON L&M #16    37033239970000      PDC98D         99.59992         87.14981   
137.099069    THOMSON-BLACKHILLS #95    37033240480000      PDC98D         94.59959         82.77514   
137.099079    PA MINE #36    37021208650000      PDC98D         94.59959         82.77514   
137.099080    PA MINE #37    37063322770000      PDC98D         94.59959         82.77514   
137.099083    PA MINE #40    37021208670000      PDC98D         94.59959         82.77514   
137.099093    MURRAY #1    37033242630000      PDC98D         94.59959         82.77514   
137.099103    SUSQUEHANNA REC. #4    37033242520000      PDC98D         94.59959         82.77514   
137.099108    REARICK #1, R.    37005259200000      PDC98D         99.59992         84.03753   
137.099109    WILSON #1    37005259430000      PDC98D         99.59992         84.03753   

 

Page 3 of 4

WELL NO

   

WELL NAME

    API NO    PARTNER      Wl      NRI  
137.099110    BARR #1    37005259490000      PDC98D         99.59992         84.03753   
137.099111    WILSON #2    37005261080000      PDC98D         99.59992         84.03753   
137.099112    COUCH #1, A.    37005261150000      PDC98D         99.59992         84.03753   
137.099113    STEIDLE #1    37005259940000      PDC98D         99.59992         84.03753   
137.099116    KISKI SPORTSMEN #2    37005261270000      PDC98D         99.59992         84.03753   
137.099133    CAROFF #1    37063322570000      PDC98D         94.59959         82.77514   
137.099134    CAROFF #2    37063322580000      PDC98D         94.59959         82.77514   
137.099145    HURD #2    37033242670000      PDC98D         94.59959         82.77514   
137.099146    MANDEL UNIT #1    37033242600000      PDC98D         94.59959         82.77514   
137.099149    WINNER #1    37033242620000      PDC98D         94.59959         82.77514   
147.097023    SHOCKEY #2    47001027260000      PDC96D         99.24992         85.48647   
147.097030    SANDRIDGE #1    47001027300000      PDC96D         99.24992         86.84381   
147.097031    SANDRIDGE #2    47001027310000      PDC96D         99.24992         86.84381   
147.097037    MCGEE L.S. 3    47017043410000      PDC96D         99.24992         84.13000   
147.097038    POOLE #4    47017043390000      PDC96D         99.24992         84.13000   
147.097043    COALTRAIN #13    47091010020000      PDC96D         99.24992         86.84381   
147.097055    SHOCKEY #3    47001027250000      PDC96D         99.24992         85.48647   
147.097056    BAUGHMAN #1    47001027270000      PDC96D         99.24992         86.84381   
147.097057    BAUGHMAN #2    47001027280000      PDC96D         99.24992         86.84381   
147.097063    BURNER-HEIRS #1    47001027210000      PDC96D         0.99250         0.83719   
147.097064    RAILING #13    47091010000000      PDC96D         99.24992         86.84381   
147.097092    BURNER-HEIRS #3    47001027220000      PDC96D         99.24992         86.84381   
147.098200    MILLER #1, JACK    47001027400000      PDC97D         99.60029         87.15025   
147.098203    MILLER #4, JACK    47001027430000      PDC97D         99.60029         87.15025   
147.098205    MILLER #6, JACK    47001027450000      PDC97D         99.60029         87.15025   
147.099000    POLING #1, M.    47001027520000      PDC98D         99.59992         87.14981   
147.099003    HOVATER #1    47001027620000      PDC98D         99.59992         87.14981   
147.099014    COALTRAIN #14    47091010030000      PDC98D         99.59992         87.14981   
147.099049    MCNEIL #2    47001027580000      PDC98D         99.59992         87.14981   
147.099052    COALTRAIN #15    47091010400000      PDC98D         99.59992         87.14981   
147.099053    EMPIRE BANK #1    47001027470000      PDC98D         99.59992         87.14981   
147.099054    EMPIRE BANK #2    47001027480000      PDC98D         99.59992         87.14981   
147.099073    CHESSER-RINKER UNIT #1    47001027660000      PDC98D         99.59992         85.15807   
147.099097    COALTRAIN #12    47091010410000      PDC98D         99.59992         87.14981   

 

Page 4 of 4

Exhibit C

Contracts

 

1. Joint Operating Agreement dated September 10, 2013 by and between PDC Energy, Inc. (“PDCE”) and Eastern 1997-D Limited Partnership.

 

2. Joint Operating Agreement dated September 10, 2013 by and between PDCE and CO and PA 1999-D Limited Partnership.

 

3. Joint Operating Agreement dated September 10, 2013 by and between PDCE and Eastern 1996-D Limited Partnership.

 

4. Joint Operating Agreement dated September 10, 2013 by and between PDCE and Eastern 1998-D Limited Partnership.

Exhibit D

Form of

PARTIAL ASSIGNMENT, BILL OF SALE AND CONVEYANCE

This Partial Assignment, Bill of Sale and Conveyance (the “Assignment”), effective as of April 1, 2013, at 12:01 a.m. Eastern Time (“Effective Time”), is by and between Eastern 1996D Limited Partnership, Eastern 1997D Limited Partnership, Eastern 1998D Limited Partnership, and CO and PA 1999D Limited Partnership, whose address is 120 Genesis Boulevard, Bridgeport, West Virginia 26330 (“Assignor”) and Alliance Petroleum Corporation, a Georgia corporation, whose address is 4150 Belden Village Avenue N.W., Suite 410, Canton, Ohio 44718 (“Assignee”). Assignor and Assignee are each a “Party” and collectively the “Parties.” [NTD: The Assignors will be revised for each individual assignment for each county.]

For Ten Dollars and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Assignor grants, bargains, sells, conveys, assigns, transfers, and delivers unto Assignee all of Assignor’s right, title, and interest whether present, contingent, or reversionary, in and to the following (collectively, the “Shallow Assets”):

(1) the wellbore interests (i.e., only such of the leaseholds as constitute the drillsite for the subject Shallow Wells, to and only to, the depth of each Shallow Well as of the Effective Time) in the oil and gas leases, subleases and other leaseholds described on Exhibit A, together with all amendments, supplements, renewals, extensions or ratifications thereof (collectively, the “Leases”), together with each and every kind and character of right, title, claim, and interest that Assignor has in and to the lands covered by the Leases or the lands currently pooled, unitized or consolidated therewith (the “Lands”);

(2) the oil, gas, casinghead gas, coalbed methane, condensate and other gaseous and liquid hydrocarbons or any combination thereof, sulphur extracted from hydrocarbons and all other lease substances, combustible or non-combustible, under the Leases (“Hydrocarbons”) that may be produced from the Assignor’s wellbore interests under the Leases;

(3) the oil, gas, water, disposal, monitoring or injection wells located on the Lands, whether producing, shut-in, or abandoned, including those described in Exhibit B (the “Shallow Wells”) only as to the depth penetrated in each Shallow Well as of the Effective Time and all rights appurtenant to or associated with the Shallow Wells, including, without limitation, all of Assignor’s right to use the surface adjacent to the Shallow Wells as is necessary to operate the Shallow Wells;

(4) the unitization and pooling agreements, declarations, orders, and the units created thereby relating to the Shallow Assets and to the production of Hydrocarbons, if any, attributable to the Shallow Assets;

(5) all equipment, machinery, fixtures and other tangible personal property and improvements, including but not limited to, tanks, boilers, compression facilities, pumping units, flow lines, pipelines, gathering systems, gas and oil treating facilities, machinery, power lines, roads, and other appurtenances, improvements and facilities (the “Equipment”) located on and used or held for use solely in connection with the operation of the Shallow Assets;

(6) all existing and effective operating agreements (the “Contracts”), insofar as they directly relate solely to the Shallow Assets, as described in Exhibit C, and provided, however, that “Contracts” shall not include the instruments constituting the Leases; and

(7) to the extent transferable without payment of additional consideration, copies of all lease files (Assignor shall retain original lease files), land files, well files, gas and oil sales contract files, gas processing files, division order files, abstracts, title opinions, land surveys, logs, maps, engineering data and reports, interpretive data, technical evaluations and technical outputs, and other books, records, data, files, and accounting records, (the “Records”) in each case to the extent related to the Shallow Assets, or used or held for use in connection with the maintenance or operation thereof, but excluding (i) any books, records, data, files, logs, maps, evaluations, outputs, and accounting records to the extent disclosure or transfer would result in a violation of applicable law or is restricted by any Required Consent that is not satisfied pursuant to Section 4.5 of the Purchase Agreement, as defined below, (ii) computer or communications software or intellectual property (including tapes, codes, data and program documentation and all tangible manifestations and technical information relating thereto), (iii) attorney-client privileged communications and work product of Assignor’s or any of its Affiliates’ legal counsel (other than title opinions), (iv) reserve studies and evaluations, and (v) records relating to the negotiation and consummation of the purchase or sale of the Shallow Assets; provided, however, that Assignor may retain the originals of such Records as Assignor has reasonably determined may be required for existing litigation, tax, accounting, and auditing purposes. “Affiliates” shall mean any Person that directly or indirectly controls, is controlled by or is under common control with such Person. The concept of control, controlling or controlled as used in this context means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of another, whether through the ownership of voting securities, by contract or otherwise. “Person” shall mean any corporation, partnership (whether general, limited or otherwise), limited liability company, trust, association, joint venture, unincorporated organization, governmental entity, agency or branch or department thereof, or any other legal entity, or any natural person.

NOTWITHSTANDING ANYTHING IN THIS ASSIGNMENT TO THE CONTRARY, the Shallow Assets shall not include, and there is excepted, reserved and excluded from the Assignment (together with the Deep Assets collectively, the “Excluded Assets”), including those items specifically identified in Schedule 1.5 to the Purchase Agreement:

(1) all partnership, financial, income and franchise tax and legal records of Assignor that relate to Assignor’s business generally (whether or not relating to the Shallow Assets), and all books, records and files that relate to the Excluded Assets and those records retained by Assignor pursuant to Section 1.3(f) of the Purchase Agreement, as defined below and copies of any other Records retained by Assignor pursuant to Section 8.3(e) of the Purchase Agreement, as defined below;

(2) all reserve estimates, economic estimates, and, to the extent excluded from the definition of Records, all logs, interpretive data, technical evaluations and technical outputs;

(3) all rights to any refunds for Taxes or other costs or expenses borne by Assignor or Assignor’s predecessors in interest and title attributable to periods prior to the Effective Time, in accordance with the provisions of Article 9 of the Purchase Agreement, as defined below;

(4) all rights, titles, claims and interests of Assignor to or under any bond or bond proceeds;

(5) all documents and instruments of Assignor that may be protected by an attorney-client privilege, other than title opinions, or the work product doctrine;

(6) any refunds due Assignor by a third party for any overpayment of rentals, royalties, excess royalty interests or production payments attributable to the Shallow Assets with respect to any period of time prior to the Effective Time;

 

-2-

(7) any causes of action, claims, rights, indemnities or defenses available to or benefiting Assignor with respect to any period of time prior to the Effective Time; and

(8) all amounts due or payable to Assignor as adjustments to insurance premiums related to the Shallow Assets with respect to any period prior to the Effective Time.

For the avoidance of doubt, Assignor owns no rights in any formation below the top of the Rhinestreet formation within the State of West Virginia, and Assignor owns no rights below the top of the Marcellus zone in the Commonwealth of Pennsylvania. Nothing in this Assignment shall be construed as transferring or granting any rights below the top of the Rhinestreet formation in the State of West Virginia or below the top of the Marcellus zone in the Commonwealth of Virginia, because Assignor does not own any rights to any formation below the top of such Rhinestreet formation or any rights to any formation below the top of the Marcellus zone.

TO HAVE AND TO HOLD the Shallow Assets unto Assignee, its successors and assigns, forever, subject to the following terms and conditions.

A. Special Warranty of Title. SUBJECT TO THE TERMS OF THE PURCHASE AGREEMENT AND THE PERMITTED ENCUMBRANCES, ASSIGNOR AGREES TO WARRANT AND FOREVER DEFEND TITLE TO THE SHALLOW ASSETS UNTO ASSIGNEE AGAINST THE CLAIMS AND DEMANDS OF ALL PERSONS CLAIMING, OR TO CLAIM THE SAME, OR ANY PART THEREOF, BY, THROUGH, OR UNDER ASSIGNOR, BUT NOT OTHERWISE.

B. Subrogation. To the extent permitted by law, Assignee shall be subrogated to Assignor’s rights in and to representations, warranties, and covenants given with respect to the Shallow Assets. Assignor hereby grants and transfers to Assignee, its successors and assigns, to the extent so transferable and permitted by law, the benefit of and the right to enforce the covenants, representations, and warranties, if any, which Assignor is entitled to enforce with respect to the Shallow Assets, but only to the extent not enforced by Assignor.

C. Assumption of Contracts. Assignee hereby assumes and agrees to be bound by all express and implied covenants, rights, benefits, conditions, obligations, and liabilities under the Contracts insofar as they directly relate solely to the Shallow Rights.

D. Successors and Assigns. This Assignment binds and inures to the benefit of Assignor and Assignee and their respective successors and assigns, and all obligations shall be a covenant running with the land.

E. Entire Agreement; Purchase Agreement. This Assignment supersedes all other prior written or oral agreements, except the Purchase and Sale Agreement between Assignor and Assignee dated January 30, 2014 (the “Purchase Agreement”), which this Assignment is made subject to. If there is a conflict between the terms of this Assignment and the terms of the Purchase Agreement, the terms of the Purchase Agreement will control to the extent of the conflict. Assignor and Assignee intend that the terms of the Purchase Agreement not merge into the terms of this Assignment. There are no oral agreements between the Parties not set out in writing. All capitalized terms used but not defined herein have the meanings given them in the Purchase Agreement.

 

-3-

F. DISCLAIMER OF WARRANTY. EXCEPT FOR ASSIGNOR’S EXPRESS REPRESENTATIONS AND WARRANTIES CONTAINED IN ARTICLE 6 OF THE PURCHASE AGREEMENT, AND ASSIGNOR’S SPECIAL WARRANTY OF TITLE CONTAINED IN THIS ASSIGNMENT, THE SHALLOW ASSETS ARE BEING CONVEYED BY ASSIGNOR TO ASSIGNEE WITHOUT WARRANTY OF ANY KIND, EXPRESS, IMPLIED, STATUTORY, COMMON LAW OR OTHERWISE, AND THE PARTIES HEREBY EXPRESSLY DISCLAIM, WAIVE AND RELEASE ANY EXPRESS WARRANTY OF MERCHANTABILITY, CONDITION OR SAFETY AND ANY EXPRESSED WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE; AND ASSIGNEE ACCEPTS THE SHALLOW ASSETS, “AS IS, WHERE IS, WITH ALL FAULTS, WITHOUT RECOURSE.” ALL DESCRIPTIONS OF THE SHALLOW WELLS, EQUIPMENT, FACILITIES, PERSONAL PROPERTY, FIXTURES AND STRUCTURES HERETOFORE OR HEREAFTER FURNISHED TO ASSIGNEE BY ASSIGNOR HAVE BEEN AND SHALL BE FURNISHED SOLELY FOR ASSIGNEE’S CONVENIENCE, AND HAVE NOT CONSTITUTED AND SHALL NOT CONSTITUTE A REPRESENTATION OR WARRANTY OF ANY KIND BY ASSIGNOR. ASSIGNOR SHALL HAVE NO LIABILITY TO ASSIGNEE FOR ANY CLAIMS, LOSS OR DAMAGE CAUSED OR ALLEGED TO BE CAUSED DIRECTLY OR INDIRECTLY, INCIDENTALLY OR CONSEQUENTIALLY, BY SUCH SHALLOW WELLS, EQUIPMENT, FACILITIES, PERSONAL PROPERTY, FIXTURES AND STRUCTURES BY ANY INADEQUACY THEREOF OR THEREWITH, ARISING IN STRICT LIABILITY OR OTHERWISE, OR IN ANY WAY ARISING OUT OF ASSIGNEE’S PURCHASE THEREOF. ASSIGNEE EXPRESSLY WAIVES THE WARRANTY OF FITNESS AND THE WARRANTY AGAINST VICES AND DEFECTS, WHETHER APPARENT OR LATENT, IMPOSED BY ANY APPLICABLE STATE OR FEDERAL LAW. THE PARTIES HEREBY ACKNOWLEDGE AND AGREE THAT, TO THE EXTENT REQUIRED BY APPLICABLE LAW, THE DISCLAIMERS CONTAINED IN THIS ASSIGNMENT ARE “CONSPICUOUS” FOR THE PURPOSES OF SUCH APPLICABLE LAW. ASSIGNOR HEREBY EXPRESSLY DISCLAIMS AND NEGATES ANY IMPLIED OR EXPRESS WARRANTY AT COMMON LAW, BY STATUTE OR OTHERWISE RELATING TO THE ACCURACY OF ANY OF THE INFORMATION FURNISHED WITH RESPECT TO THE EXISTENCE OR EXTENT OF RESERVES OR THE VALUE OF THE SHALLOW ASSETS BASED THEREON OR THE CONDITION OR STATE OF REPAIR OF ANY OF THE SHALLOW ASSETS; THIS DISCLAIMER AND DENIAL OF WARRANTY ALSO EXTENDS TO ANY EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY AS TO THE PRICES ASSIGNEE AND ASSIGNOR ARE OR WILL BE ENTITLED TO RECEIVE FROM PRODUCTION OF HYDROCARBONS OR OTHER SUBSTANCES FROM THE SHALLOW ASSETS, IT BEING ACKNOWLEDGED, AGREED AND EXPRESSLY UNDERSTOOD THAT ALL RESERVE, PRICE AND VALUE ESTIMATES UPON WHICH ASSIGNEE HAS RELIED OR IS RELYING HAVE BEEN DERIVED BY THE INDIVIDUAL EVALUATION OF ASSIGNEE. ASSIGNEE ALSO STIPULATES, ACKNOWLEDGES AND AGREES THAT RESERVE REPORTS ARE ONLY ESTIMATES OF PROJECTED FUTURE HYDROCARBON VOLUMES, FUTURE FINDING COSTS AND FUTURE HYDROCARBON SALES PRICES, ALL OF WHICH FACTORS ARE INHERENTLY IMPOSSIBLE TO PREDICT ACCURATELY EVEN WITH ALL AVAILABLE DATA AND INFORMATION.

G. Further Assurances. Each Party, at the request of the other Party and without additional consideration, shall execute and deliver to the requesting Party all such further assignments, deeds, agreements, contracts, instruments and other documents as the requesting Party may reasonably request in order to perform, accomplish, perfect or record, if reasonably necessary, the assignment and conveyance to Assignee of the Shallow Assets acquired by Assignee hereunder as contemplated by this Assignment, to otherwise carry out the intention of this Assignment. Without limiting the foregoing, should it be determined after the Closing that Assignor owned as of the Effective Time additional oil and gas leases as described at the end of paragraph (1) above and wells in the county in which the Shallow Assets covered hereby are located that, if identified prior to the Closing would have been included among the Shallow Assets but not among the Excluded Assets, then Assignee may request Assignor to assign (subject to the depth limitation described in paragraph (1) above) such later identified oil and gas leases and wells at a mutually agreeable price. If the Parties reach such agreement, the subject interests shall be conveyed to Assignee with an instrument substantially in the form of this Assignment.

 

-4-

H. Governing Law. THIS ASSIGNMENT AND THE LEGAL RELATIONS BETWEEN THE PARTIES SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF WEST VIRGINIA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS THAT WOULD DIRECT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION. THE VALIDITY OF THE VARIOUS CONVEYANCES AFFECTING THE TITLE TO REAL PROPERTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE JURISDICTION IN WHICH SUCH PROPERTY IS LOCATED.

I. Schedules and Exhibits. All schedules and exhibits attached hereto are hereby made part hereof and incorporated herein by this reference. References in such schedules and exhibits to instruments on file in the public records are notice of such instruments for all purposes. Unless provided otherwise, all recording references in such schedules and exhibits are to the appropriate records of the counties in which the Shallow Assets are located.

J. Counterparts. This Assignment may be executed in any number of counterparts, and each counterpart hereof shall be effective as to each Party that executes the same whether or not all of such Parties execute the same counterpart. If counterparts of this Assignment are executed, the signature pages from various counterparts may be combined into one composite instrument for all purposes. All counterparts together shall constitute only one Assignment, but each counterpart shall be considered an original.

K. Amendment and Waiver. This Assignment may be altered, amended, or waived only by a written agreement executed by the Parties. No waiver of any provision of this Assignment shall be deemed or shall constitute a waiver of any other provision of this Assignment (whether or not similar), nor shall such waiver constitute a continuing waiver unless otherwise expressly provided.

[Remainder of page left intentionally blank. Signature page follows.]

 

-5-

IN WITNESS WHEREOF, each Assignor has executed this Assignment as of the date of acknowledgment, but this Assignment shall be effective as of the Effective Time.

 

ASSIGNOR [to be revised for each assignor]

 

EASTERN 1996D LIMITED PARTNERSHIP,
EASTERN 1997D LIMITED PARTNERSHIP,
EASTERN 1998D LIMITED PARTNERSHIP,

CO and PA 1999D LIMITED PARTNERSHIP

 

By:  

RESPONSIBLE PERSON

 

BY:  

 

 

Karen Nash Nicolaou

 

ASSIGNEE

 

ALLIANCE PETROLEUM CORPORATION

 

By:  

 

 

Thomas S. Wright

President

Partial Assignment, Bill of Sale and Conveyance

ASSIGNOR’S ACKNOWLEDGEMENT

 

STATE OF WEST VIRGINIA    )
   ) ss
COUNTY OF HARRISON    )

This instrument was acknowledged before me this      day of             , 2014, by                     , as                      of                     , a                     , on behalf of the corporation.

 

 

Notary Public
My Commission Expires:                                         

ASSIGNEE ACKNOWLEDGEMENT

 

STATE OF WEST VIRGINIA    )
   ) ss
COUNTY OF HARRISON    )

This instrument was acknowledged before me this     day of             , 2014, by Thomas S. Wright, as President of Alliance Petroleum Corporation, a Georgia corporation, on behalf of the corporation.

 

 

Notary Public
My Commission Expires:                     

 

THIS INSTRUMENT PREPARED BY:     

PDC ENERGY, INC., 120 Genesis Boulevard,

Bridgeport, West Virginia, 26330

 

-7-

Exhibit E

Form of

ASSIGNMENT AND ASSUMPTION AGREEMENT

This Assignment and Assumption Agreement (“Assumption Agreement”), entered into on                 , 2014, but effective as of April 1, 2013, at 12:01 a.m. Eastern Time (the “Effective Time”), is by and among Eastern 1996D Limited Partnership, Eastern 1997D Limited Partnership, Eastern 1998D Limited Partnership, CO and PA 1999D Limited Partnership, each a West Virginia limited partnership (“Assignor”), and Alliance Petroleum Corporation, a Georgia corporation (“Assignee”). Assignor and Assignee are referred to herein individually as “Party” and collectively as the “Parties.”

RECITALS

A. Assignor and Assignee have entered into a Purchase and Sale Agreement dated January 30, 2014, but effective as of the Effective Time (the “PSA”). Terms capitalized but not defined herein shall have the meaning given such terms in the PSA.

B. This Assumption Agreement is being executed contemporaneously with the Closing, pursuant to which Assignor is assigning all of its right, title and interest in and to the contracts directly relating solely to the Shallow Assets, including without limitation, those contracts described on Exhibit “A” hereto and incorporated herein (the “Contracts”) to Assignee on the terms and conditions set forth in the PSA.

AGREEMENT

For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

1. Assignment. Assignor hereby transfers, conveys, and assigns unto Assignee, its successors and assigns, all of Assignor’s right, title, interest and benefits in and to the Contracts, together with all of Assignor’s covenants, conditions, obligations and liabilities in and under the Contracts, insofar as they are attributable to periods from and after the Effective Time.

2. Assumption. In consideration for the foregoing assignment, Assignee does hereby assume and agree to be bound by all express and implied covenants, conditions, obligations and liabilities in and under the Contracts, insofar as they are attributable to periods from and after the Effective Time.

3. No Third Party Beneficiaries. This Assumption Agreement will not (i) entitle any party other than Assignor and Assignee to any claim, cause of action, remedy or right of any kind; (ii) ratify, revive or reinstate any claim or cause of action under any of the Contracts which otherwise would have expired, terminated or been waived by passage of time; or (iii) provide any benefit to any third party under any of the Contracts or under any other contracts or agreements, it being the intent of the Assignor and Assignee that this Assumption Agreement will not be construed as a third party beneficiary contract.

4. Assets. The Contracts assigned in this Assumption Agreement comprise a portion of, and are not in addition to, the Shallow Assets conveyed in the PSA executed by Assignor and Assignee on the same date as this Assumption Agreement.

 

E-1

5. Further Assurances. Each Party covenants and agrees to take such other action and to execute such additional instruments and documents as may be reasonably necessary or advisable to consummate the purposes contemplated by this Assumption Agreement.

6. Governing Law. This Assumption Agreement shall be construed, interpreted, and governed in accordance with the laws of the State of West Virginia, without reference to rules relating to conflicts of law.

7. Dispute Resolution. Any dispute, claim or controversy of any kind or nature between the Parties related to, arising under or connected with this Assumption Agreement shall be resolved using the procedures set forth in Section 15.10 of the PSA.

8. Headings. The headings of the Sections of this Assumption Agreement are for guidance and convenience of reference only and shall not limit or otherwise affect any of the terms or provisions of this Assumption Agreement.

9. Exhibits. All Exhibits attached to this Assumption Agreement are hereby incorporated and made a part of this Assumption Agreement.

10. Severability. If any provision of this Assumption Agreement is held by a court of competent jurisdiction to be invalid, illegal or unenforceable, such provision shall be severed and enforced to the extent possible or modified in such a way as to make it enforceable, and the invalidity, illegality or unenforceability thereof shall not affect the validity, legality or enforceability of the remaining provisions of this Assumption Agreement.

11. Counterparts. This Assumption Agreement may be executed in any number of counterparts, each of which shall be deemed an original instrument, but all of which together shall constitute but one and the same instrument. Electronic and fax signatures shall be considered binding.

[Signature Page Follows]

 

E-2

IN WITNESS WHEREOF, Assignor and Assignee have executed this Assumption Agreement on the date indicated above, but effective as of the Effective Time.

 

ASSIGNOR:

EASTERN 1996D LIMITED PARTNERSHIP,

EASTERN 1997D LIMITED PARTNERSHIP,

EASTERN 1998D LIMITED PARTNERSHIP,

CO and PA 1999D LIMITED PARTNERSHIP

By: RESPONSIBLE PERSON
BY:  

 

  Karen Nash Nicolaou
ASSIGNEE:
ALLIANCE PETROLEUM CORPORATION
By:  

 

Name:   Thomas S. Wright
Title:   President

SIGNATURE PAGE TO ASSIGNMENT AND ASSUMPTION AGREEMENT

 

E-3

EXHIBIT A

Attached to Assignment and Assumption Agreement dated January 30, 2014, by and among

Eastern 1996D Limited Partnership, Eastern 1997D Limited Partnership, Eastern 1998D Limited

Partnership, CO and PA 1999D Limited Partnership as Assignor, and Alliance Petroleum

Corporation, as Assignee

Contracts

 

E-4

EXHIBIT F

FORM OF CERTIFICATE OF SELLER’S NON-FOREIGN STATUS

Section 1445 of the Internal Revenue Code provides that a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign person. For U.S. tax purposes (including Section 1445), the owner of a disregarded entity that has legal title to a U.S. real property interest under local law will be the transferor of the property and not the disregarded entity. To inform the transferee, Alliance Petroleum Corporation, that withholding of tax is not required upon the disposition of a U.S. real property interest by [Eastern 1996D Limited Partnership] [Eastern 1997D Limited Partnership] [Eastern 1998D Limited Partnership] [CO and PA 1999D Limited Partnership] (“Transferor”), the undersigned hereby certifies under penalties of perjury the following on behalf of Transferor:

1. Transferor is not a foreign corporation, foreign partnership, foreign trust, or foreign estate (as those terms are defined in the Internal Revenue Code and Income Tax Regulations);

2. Transferor is not a disregarded entity as defined in Treas. Reg. § 1.1445-2(b)(2)(iii);

3. Transferor’s U.S. employer identification number is                     ; and

4. Transferor’s office address is: 120 Genesis Boulevard, Bridgeport, West Virginia 26330.

Transferor understands that this certification may be disclosed to the Internal Revenue Service by the transferee and that any false statement contained herein could be punished by fine, imprisonment, or both.

Under penalties of perjury I declare that I have examined this certification and to the best of my knowledge and belief it is true, correct and complete, and I further declare that I have authority to sign this document on behalf of Transferor.

 

[Eastern 1996D Limited Partnership]
[Eastern 1997D Limited Partnership]
[Eastern 1998D Limited Partnership]
[CO and PA 1999D Limited Partnership], a West Virginia limited partnership
[By PDC Energy, Inc., its general partner
By:  

 

Name:  

 

Title:  

 

Date:               , 2014

Schedule 2.2

Allocated Values

 

WELL NO

   

WELL NAME

    API NO      PARTNER      ALLOCATED VALUE  

147.099073

    CHESSER-RINKER UNIT #1      47001027660000         PDC98D       $ 92,712.20   

137.098094

    MCGEE #1      37033239140000         PDC97D       $ 60,944.84   

137.097071

    DEHAVEN #3      37033237920000         PDC96D       $ 58,365.15   

137.098129

    MYERS #8      37033239240000         PDC97D       $ 49,153.18   

137.098126

    MYERS #5      37033239170000         PDC97D       $ 48,212.74   

137.097069

    DEHAVEN #1      37033237800000         PDC96D       $ 47,854.93   

147.099000

    POLING #1, M.      47001027520000         PDC98D       $ 46,668.42   

137.097029

    THOMSON-STEPHENSON #83      37033237470000         PDC96D       $ 45,603.61   

147.099014

    COALTRAIN #14      47091010030000         PDC98D       $ 45,115.09   

137.098128

    MYERS #7      37033239190000         PDC97D       $ 41,633.06   

147.098205

    MILLER #6, JACK      47001027450000         PDC97D       $ 41,019.03   

137.098166

    A&G #23      37033239680000         PDC97D       $ 39,709.97   

137.097002

    THOMSON-STEPHENSON #84      37033237190000         PDC96D       $ 38,329.62   

147.097064

    RAILING #13      47091010000000         PDC96D       $ 37,278.45   

137.099011

    FREYER #3      37033242090000         PDC98D       $ 34,639.49   

147.099054

    EMPIRE BANK #2      47001027480000         PDC98D       $ 34,475.86   

137.097081

    DAISHER #2      37033237720000         PDC96D       $ 34,013.77   

137.099116

    KISKI SPORTSMEN #2      37005261270000         PDC98D       $ 33,948.96   

137.097066

    THOMSON-STEPHENSON #79      37033237310000         PDC96D       $ 32,502.39   

137.097065

    THOMSON-STEPHENSON #80      37033237330000         PDC96D       $ 32,162.30   

137.099109

    WILSON #1      37005259430000         PDC98D       $ 30,272.33   

137.097074

    SKONIER #3      37033237540000         PDC96D       $ 29,006.80   

137.098127

    MYERS #6      37033239180000         PDC97D       $ 27,674.51   

137.098016

    MAHAFFEY #13      37033238390000         PDC97D       $ 27,032.74   

137.000022

    THOMPSON #110      37033243090000         PDC99D       $ 26,402.47   

137.098164

    A&G #21      37033239600000         PDC97D       $ 22,893.43   

147.099049

    MCNEIL #2      47001027580000         PDC98D       $ 22,401.08   

147.098203

    MILLER #4, JACK      47001027430000         PDC97D       $ 22,157.15   

137.097098

    MITCHELL #5      37033237230000         PDC96D       $ 22,019.93   

147.097037

    MCGEE L.S. 3      47017043410000         PDC96D       $ 21,977.83   

137.098095

    SHANNON #4      37033239770000         PDC97D       $ 21,293.50   

137.099080

    PA MINE #37      37063322770000         PDC98D       $ 20,856.66   

137.099110

    BARR #1      37005259490000         PDC98D       $ 20,367.05   

137.000023

    GUIHER #1      37033244380000         PDC99D       $ 20,144.92   

147.097043

    COALTRAIN #13      47091010020000         PDC96D       $ 19,378.70   

137.099026

    SPENCER UNIT #9      37033241810000         PDC98D       $ 19,226.69   

137.099113

    STEIDLE #1      37005259940000         PDC98D       $ 17,400.15   

137.099083

    PA MINE #40      37021208670000         PDC98D       $ 17,059.71   

137.099027

    SUSQUEHANNA REC. #3      37033241260000         PDC98D       $ 16,845.44   

137.099112

    COUCH #1, A.      37005261150000         PDC98D       $ 16,568.69   

137.000046

    PA MINES #32      37021208610000         PDC99D       $ 15,912.73   

137.098124

    MYERS #3      37033239200000         PDC97D       $ 14,884.40   

137.098114

    MCGEE #12      37033239120000         PDC97D       $ 14,278.02   

137.098109

    MCGEE #8      37033239360000         PDC97D       $ 14,250.69   

137.097022

    MCCLURE #12      37065240650000         PDC96D       $ 13,854.32   

137.098113

    MCGEE #11      37033239110000         PDC97D       $ 13,692.10   

137.098165

    A&G #22      37033239920000         PDC97D       $ 13,637.43   

147.097023

    SHOCKEY #2      47001027260000         PDC96D       $ 13,440.41   

147.097031

    SANDRIDGE #2      47001027310000         PDC96D       $ 12,911.64   

137.097003

    THOMSON-STEPHENSON #81      37033237180000         PDC96D       $ 12,740.50   

137.097004

    TATE #33      37033237110000         PDC96D       $ 12,701.60   

137.098115

    MCGEE #13      37033239300000         PDC97D       $ 12,629.02   

137.000029

    COLEMAN #2, C.      37063324750000         PDC99D       $ 12,557.18   

137.099133

    CAROFF #1      37063322570000         PDC98D       $ 12,552.00   

137.000093

    SNYDER #32      37033245940000         PDC99D       $ 11,935.69   
           

 

Page 1 of 4

147.099073

    CHESSER-RINKER UNIT #1      47001027660000         PDC98D       $ 92,712.20   

137.098125

    MYERS #4      37033239210000         PDC97D       $ 11,326.93   

137.098089

    HURD #1      37033239000000         PDC97D       $ 11,299.38   

137.099059

    BEARD #1      37033242700000         PDC98D       $ 10,875.58   

137.097001

    THOMSON-STEPHENSON #85      37033237200000         PDC96D       $ 10,811.76   

137.099035

    MCCRACKEN #1      37033242170000         PDC98D       $ 10,389.13   

137.098116

    MCGEE #14      37033239130000         PDC97D       $ 10,266.84   

137.099007

    ZOLD #2      37033242450000         PDC98D       $ 9,175.85   

137.097075

    IRVIN #322      37033237020000         PDC96D       $ 9,078.24   

137.098097

    SHANNON #6      37033239780000         PDC97D       $ 8,710.64   

147.097038

    POOLE #4      47017043390000         PDC96D       $ 8,649.10   

137.099093

    MURRAY #1      37033242630000         PDC98D       $ 8,631.12   

137.098093

    WILLIAMS #3      37033238630000         PDC97D       $ 8,555.86   

137.097169

    THOMSON-BLACKHILLS #55      37033238010000         PDC96D       $ 8,530.61   

147.099053

    EMPIRE BANK #1      47001027470000         PDC98D       $ 8,423.57   

137.098096

    SHANNON #5      37033239760000         PDC97D       $ 8,385.23   

137.097091

    SHEROSKY #3      37033237690000         PDC96D       $ 8,300.88   

137.097079

    HOPKINS #317      37033237400000         PDC96D       $ 7,950.29   

137.099025

    MANDEL UNIT #2      37033242380000         PDC98D       $ 7,921.78   

137.099006

    ZOLD #1      37033242420000         PDC98D       $ 7,892.01   

137.098091

    MCGEE #5      37033239310000         PDC97D       $ 7,843.79   

137.098112

    MCGEE #10      37033239100000         PDC97D       $ 7,753.11   

137.099010

    FREYER #2      37033242080000         PDC98D       $ 7,691.58   

137.099039

    DICKEY #22      37033242230000         PDC98D       $ 7,567.52   

137.099017

    WEAVER #1      37033242290000         PDC98D       $ 7,504.49   

137.099108

    REARICK #1, R.      37005259200000         PDC98D       $ 7,492.06   

137.097017

    THOMSON-GIBBS #38      37033237290000         PDC96D       $ 7,229.04   

137.097028

    THOMSON-STEPHENSON #82      37033237520000         PDC96D       $ 7,139.02   

137.098221

    TUBBS #22      37033239700000         PDC97D       $ 6,974.95   

137.097083

    MCHENRY #136      37033237630000         PDC96D       $ 6,870.10   

137.099079

    PA MINE #36      37021208650000         PDC98D       $ 6,839.56   

137.097016

    THOMSON-GIBBS #37      37033237420000         PDC96D       $ 6,810.49   

137.098181

    S&D #1      37033239910000         PDC97D       $ 6,769.80   

137.099005

    SHANNON #9R      37033241890000         PDC98D       $ 6,730.20   

137.099036

    MCCRACKEN #2      37033242180000         PDC98D       $ 6,510.28   

147.097030

    SANDRIDGE #1      47001027300000         PDC96D       $ 6,441.40   

137.097099

    MITCHELL #6      37033237240000         PDC96D       $ 6,327.68   

137.097097

    STRAW #1      37033237810000         PDC96D       $ 6,288.08   

137.097015

    THOMSON-GIBBS #36      37033237280000         PDC96D       $ 6,232.82   

137.099034

    REIGHARD UNIT #1      37033242210000         PDC98D       $ 6,136.33   

137.097060

    MCCAY #296      37033236200000         PDC96D       $ 6,076.92   

137.097009

    PRISK #4      37033237410000         PDC96D       $ 6,045.09   

137.098131

    MYERS #10      37033239330000         PDC97D       $ 5,772.90   

137.099062

    SHANNON #1R      37033242060000         PDC98D       $ 5,768.73   

137.099022

    SPENCER UNIT #8      37033241870000         PDC98D       $ 5,747.35   

137.097014

    THOMSON-GIBBS #35      37033237270000         PDC96D       $ 5,647.26   

137.099149

    WINNER #1      37033242620000         PDC98D       $ 5,138.54   

137.099069

    THOMSON-BLACKHILLS #95      37033240480000         PDC98D       $ 4,990.83   

137.097073

    SKONIER #2      37033237530000         PDC96D       $ 4,957.06   

137.098182

    S&D #2      37033239710000         PDC97D       $ 4,694.63   

137.097005

    TATE #34      37033237130000         PDC96D       $ 4,529.33   

137.097070

    DEHAVEN #2      37033237860000         PDC96D       $ 4,013.22   

137.099008

    ZOLD #3      37033242460000         PDC98D       $ 3,900.64   

137.097095

    PRISK #5      37033237830000         PDC96D       $ 3,564.05   

137.098085

    HURD #3      37033239020000         PDC97D       $ 3,498.03   

137.097087

    DIEM #5      37033237480000         PDC96D       $ 3,443.65   

147.098200

    MILLER #1, JACK      47001027400000         PDC97D       $ 3,195.28   

137.097058

    SWOPE #154      37033236220000         PDC96D       $ 3,125.65   

137.099016

    MAHAFFEY #32      37033242200000         PDC98D       $ 3,011.38   

 

Page 2 of 4

147.099073

    CHESSER-RINKER UNIT #1      47001027660000         PDC98D       $ 92,712.20   

137.098107

    MCGEE #6      37033239370000         PDC97D       $ 2,995.76   

137.097013

    THOMSON-GIBBS #34      37033237260000         PDC96D       $ 2,501.84   

137.000080

    GOLDINGER #2      37005262420000         PDC99D       $ 2,419.26   

137.099066

    SHANNON L&M #15      37033239960000         PDC98D       $ 2,408.05   

137.099067

    SHANNON L&M #16      37033239970000         PDC98D       $ 2,408.05   

137.000055

    PA MINES #33      37021208660000         PDC99D       $ 2,244.02   

137.098220

    TUBBS #21      37033239900000         PDC97D       $ 2,097.46   

137.098132

    MYERS #11      37033239250000         PDC97D       $ 1,943.54   

147.099097

    COALTRAIN #12      47091010410000         PDC98D       $ 1,942.74   

137.098108

    IRELAND #1, P.      37033240050000         PDC97D       $ 1,862.52   

137.098161

    JOHNSON #1, DAVID      37125218330000         PDC97D       $ 1,813.61   

137.097021

    KRICK #12      37033237460000         PDC96D       $ 1,620.15   

137.000027

    STANKAY #2      37005262550000         PDC99D       $ 1,562.79   

137.097006

    TATE #31      37033237300000         PDC96D       $ 1,391.62   

147.097055

    SHOCKEY #3      47001027250000         PDC96D       $ 1,350.25   

147.099052

    COALTRAIN #15      47091010400000         PDC98D       $ 996.86   

137.098086

    HURD #4      37033238980000         PDC97D       $ 570.53   

137.097007

    PRISK #1      37033237360000         PDC96D       $ 500.00   

137.097008

    PRISK #2      37033237370000         PDC96D       $ 500.00   

137.097010

    WITHERITE #1      37033237340000         PDC96D       $ 500.00   

137.097011

    WITHERITE #2      37033237350000         PDC96D       $ 500.00   

137.097018

    THOMSON-GIBBS #39      37033237440000         PDC96D       $ 500.00   

137.097080

    DAISHER #1      37033237680000         PDC96D       $ 500.00   

137.097094

    WITHERITE #3      37033237850000         PDC96D       $ 500.00   

137.097172

    KAUFMAN #288      37033237490000         PDC96D       $ 500.00   

137.097174

    CARDIN #311      37033237060000         PDC96D       $ 500.00   

137.097179

    HAAG #327      37033237840000         PDC96D       $ 500.00   

147.097056

    BAUGHMAN #1      47001027270000         PDC96D       $ 500.00   

147.097057

    BAUGHMAN #2      47001027280000         PDC96D       $ 500.00   

147.097092

    BURNER-HEIRS #3      47001027220000         PDC96D       $ 500.00   

137.098088

    MCGEE #4      37033239060000         PDC97D       $ 500.00   

137.098092

    MCGEE #7      37033239350000         PDC97D       $ 500.00   

137.098103

    LUDWIG #4      37033239290000         PDC97D       $ 500.00   

137.098105

    LUDWIG #6      37033238690000         PDC97D       $ 500.00   

137.098110

    MCGEE #9      37033239090000         PDC97D       $ 500.00   

137.098111

    MCGEE #15      37033239580000         PDC97D       $ 500.00   

137.098122

    MYERS #1      37033239150000         PDC97D       $ 500.00   

137.098123

    MYERS #2      37033239160000         PDC97D       $ 500.00   

137.098153

    SHANNON #2      37033238950000         PDC97D       $ 500.00   

137.098154

    SHANNON #3      37033238910000         PDC97D       $ 500.00   

137.098156

    SPINGOLA #2      37033237220000         PDC97D       $ 500.00   

137.098157

    SUMMERS #1      37033238900000         PDC97D       $ 500.00   

137.098158

    HERRINGTON TRUST #1      37033238920000         PDC97D       $ 500.00   

137.098167

    A&G #24      37033239690000         PDC97D       $ 500.00   

137.098183

    S&D #3      37033239720000         PDC97D       $ 500.00   

137.098185

    S&D #5      37033239740000         PDC97D       $ 500.00   

137.098186

    S&D #6      37033239820000         PDC97D       $ 500.00   

137.098219

    WOOD #21      37033240000000         PDC97D       $ 500.00   

137.099009

    FREYER #1      37033242070000         PDC98D       $ 500.00   

137.099012

    FREYER #4      37033242570000         PDC98D       $ 500.00   

137.099015

    MAHAFFEY #31      37033242250000         PDC98D       $ 500.00   

137.099024

    IRACA #1      37033242010000         PDC98D       $ 500.00   

137.099103

    SUSQUEHANNA REC. #4      37033242520000         PDC98D       $ 500.00   

137.099111

    WILSON #2      37005261080000         PDC98D       $ 500.00   

137.099134

    CAROFF #2      37063322580000         PDC98D       $ 500.00   

137.099145

    HURD #2      37033242670000         PDC98D       $ 500.00   

137.099146

    MANDEL UNIT #1      37033242600000         PDC98D       $ 500.00   

147.099003

    HOVATER #1      47001027620000         PDC98D       $ 500.00   

 

Page 3 of 4

147.099073

    CHESSER-RINKER UNIT #1      47001027660000         PDC98D       $ 92,712.20   

137.000025

    SHEARER #2      37005262210000         PDC99D       $ 500.00   

137.000026

    STANKAY #1      37005262340000         PDC99D       $ 500.00   

137.000028

    COLEMAN #1, C.      37063324180000         PDC99D       $ 500.00   

137.000087

    WALKER #2      37005262250000         PDC99D       $ 500.00   

137.000088

    COUCH #1, G.      37005262220000         PDC99D       $ 500.00   

137.000089

    GOLDINGER #3      37005262430000         PDC99D       $ 500.00   

137.000091

    WALKER #4      37005262240000         PDC99D       $ 500.00   

137.000101

    GOLDINGER #4      37005262450000         PDC99D       $ 500.00   

147.097063

    BURNER-HEIRS #1      47001027210000         PDC96D       $ 484.38   

137.097086

    PRISK #3      37033237790000         PDC96D       $ 437.66   

137.098160

    RAPSACK #1, NICHOLAS      37125218790000         PDC97D       $ 378.91   

137.098162

    LALLIER #1, H.      37125218820000         PDC97D       $ 378.91   

137.098163

    KULIKOWSKI #1      37125218810000         PDC97D       $ 378.91   
           

 

 

  
            $ 1,997,436.08   

 

Page 4 of 4

Schedule 6.1(a)

Seller’s Knowledge Representatives

Dewey Gerdom, Chief Executive Officer of PDCM

Brad McPherson, Land Manager of PDCM

Eddie Carder, EHS Manager of PDCM

Schedule 6.1(b)

Buyer’s Knowledge Representatives

Thomas Wright, President of Buyer

Dora L. Silvis, Executive Vice President/Chief Operating Officer of Buyer

Schedule 6.7

Status and Operation of Shallow Assets

NONE