Amendment No. 6 to Participation Agreement between Penn Virginia Oil & Gas, L.P. and GMX Resources Inc.

Summary

This amendment updates the existing Participation Agreement between Penn Virginia Oil & Gas, L.P. and GMX Resources Inc. (including its subsidiary and Endeavor Pipeline Inc.) to allow the use of up to four drilling rigs for certain oil and gas operations. It outlines how the rigs can be shared, the process for GMX to use a shared rig, cost responsibilities, and limits on the number of drilling proposals. Either party can terminate the multiple rig arrangement with 60 days' notice. All other terms of the original agreement remain unchanged.

EX-10.1 2 exh10-1_14100.txt AMENDMENT NO.6 TO PARTICIPATION AGREEMENT EXHIBIT 10.1 ------------ AMENDMENT NO. 6 TO PARTICIPATION AGREEMENT This Amendment No. 6 ("Amendment") is executed the date as of each signature below, but shall be effective as of January 1, 2006, ("Amendment Effective Date") by and between Penn Virginia Oil & Gas, L.P. successor to Penn Virginia Oil & Gas Corporation, ("PVOG") and GMX RESOURCES INC. and its wholly owned subsidiary, Expedition Natural Resources Inc. (Expedition Natural Resources Inc. having merged with and into GMX RESOURCES INC.) and Endeavor Pipeline Inc. (collectively, "GMX") for purposes of amending the Participation Agreement, as previously amended, ("Agreement") between the parties with reference to the following circumstances: A. PVOG and GMX (collectively, "Parties" and, individually, a "Party") previously entered into Amendment #5 which permitted the use and sharing of multiple rigs. B. PVOG and GMX now wish to further amend the Agreement by revising Amendment #5, Sections 2.3; 2.3.1 and 2.3.4 in order to provide for a third and fourth rig. In consideration of the mutual covenants, promises, rights and obligations contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows: 1 CAPITALIZED TERMS. Capitalized terms not otherwise defined in this Amendment shall have the same meaning as set forth in the Agreement. "2.3 USE OF MULTIPLE RIGS AFTER JANUARY 1, 2006. Notwithstanding the provisions of Section 2.1 that prohibit the drilling of more than one well at the same time in Phase I, Part B and Phase II, Part B, collectively, the Parties agree that after the Amendment Effective Date, drilling operations with no more than four rigs may be used in either Phase I, Phase II or both subject to the following provisions: 2.3.1 SHARING WITH GMX. If PVOG engages additional rigs for drilling in Part B with the concurrence of GMX, PVOG shall: (1) declare one of the drilling rigs to be the "Shared Rig" under the terms of the Agreement, as amended, and (2) make the Shared Rig available for use by GMX for drilling operations in Phase III on a three for three basis, i.e. for every 3 wells that PVOG uses the Shared Rig for drilling operations under the terms of the Agreement, if GMX is ready, able and willing to use the Shared Rig, it may make use of the Shared Rig for the drilling of three wells in Phase III. Five (5) days prior to reaching total depth on the well preceding GMX's option to use the Shared Rig, GMX shall: (1) give PVOG written notice of its election to use the Shared Rig and (2) enter into a single well or a multiple well drilling contract with the rig contractor on terms acceptable to both GMX and the rig contractor, which terms shall be no less favorable to GMX than the terms available to PVOG, save and except any financial requirements prescribed by the rig contractor. During the time a rig is used by GMX, PVOG will have no financial or other responsibility to the rig contractor for such utilization. 2.3.2 PAYMENTS OF COSTS. If GMX elects to participate in any well drilled in Part B of either Phase I or Phase II while multiple rigs are being used, it will be responsible for payment of its share of costs in accordance with the terms of the Agreement based on the size of the election it makes. 2.3.3 AFES. As long as multiple drilling rigs are being used in Phase I and II, PVOG shall not present to GMX more than two AFEs per drilling rig utilized in either Phase I or Phase II within any fifteen (15) day period for any operations conducted under this Section 2.3. 2.3.4 TERMINATION OF THE USE OF MULTIPLE RIGS. Either Party may terminate the multiple rig provisions of this Section 2.3, subject to the terms of the drilling contract currently in effect for the "Shared Rig", at any time by giving at least sixty (60) days notice of such termination to the other party in which event the provisions of Section 2.1 will be reinstated to prohibit the drilling of more than one well at the same time." Except as set forth above, the Agreement as previously amended will remain in full force and effect. Executed effective as of the date set forth above. GMX RESOURCES INC. ENDEAVOR PIPELINE INC. By: /s/ Ken L. Kenworthy, Sr. ----------------------------- Ken L. Kenworthy, Sr. Executive Vice President of GMX Resources Inc. President of Endeavor Pipeline Inc. Date: 1-16-06 ----------- 2 PENN VIRGINIA OIL & GAS, L.P. By: Penn Virginia Oil & Gas GP LLC its General Partner /s/ Edward L. Johnson --------------------------------- By: Edward L. Johnson Its: Land Manager Date: 1/3/06 ---------- 3