Amendment to Development Unit Agreement 2837 between the Commission of the General Land Office on behalf of the State of Texas and the Lessees, effective as of January 1, 2020

Exhibit 10.6

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AMENDMENT TO DEVELOPMENT UNIT AGREEMENT 2837
HUDSPETH OPERATING, LLC
HUDSPETH COUNTY, TEXAS

This AMENDMENT TO DEVELOPMENT UNIT AGREEMENT 2837 (this “Amendment”), effective as of January 1, 2020, is entered into by and between the Commissioner of the General Land Office on behalf of the State of Texas (collectively referred to as “Lessor” or the “State” and as approved by the Board for Lease of University Lands (hereinafter referred to as the “Board” with both the State of Texas and Board collectively referred to as “University Lands”), Lessee and any other party who has or may execute this Amendment (collectively referred to as “Lessees” and individually as “lessee”) and Operator (the “Operator”), Parties executing this Amendment are individually referred to as a “Party” and collectively referred to as the “Parties”.

BACKGROUND

WHEREAS, on January 1, 2017, the Parties entered into that certain. DEVELOPMENT UNIT AGREEMENT 2837 (the “DUA”), recorded as Document. #00000144907 of the Official Records of Hudspeth County, Texas.

WHEREAS, effective July 31, 2018, University Lands gave its consent to allow the Lessee to change the Operator of record from Founders Oil & Gas Operating, LLC to the current Operator, Maverick Operating, LLC.

WHEREAS, the Parties now wish to amend the DUA to again update the Operator and to amend the Continuous Development Obligation.

WHEREAS, capitalized terms not defined herein shall have the meaning ascribed to them in the DUA.

NOW THEREFORE, “for adequate” consideration and to “effectuate the foregoing, the Parties” agree that ARTICLE 1.5, ARTICLE 4.2, ARTICLE 6.3, ARTICLE 6.9, and ARTICLE 7.2 are hereby deleted in their entirety and replaced as follows:

Operator shall mean and refer to Hudspeth Operating, LLC, while the Development Unit Wells are being, drilled and thereafter shall mean and refer to the Party designated and authorized by Lessees to conduct any and all operations under this Agreement, acting as Operator, if at any time no party is authorized to conduct such operations, each reference in this Agreement to Operator shall mean and refer to all Lessees.

No Development Unit wells will be required for the calendar year beginning on January 1, 2020 and ending December 31 2020. Beginning January 1, 2021 and prior to December 31, 2021, Operator will drill four (4) Development Unit Wells. Beginning January 1, 2022 and prior to December 31, 2022, Operator will drill and complete five (5) Development Unit Wells, Beginning January 1, 2023, and prior to December 31, 2023, Operator will drill and complete five (5) Development Unit Wells. Beginning January 1, 2024 and prior to December 31, 2024, Operator will drill and complete five (5) Development Unit Wells. All Development Unit Wells will be drilled to completion in good faith and in a good and workmanlike manner. If the Parties agree to continue this Drilling and Development Unit beyond 2024, the Parties will determine the Continuous Drilling Obligation required after 2024. Thereafter, Operator will commence the spudding of Development Unit WelIs is until Development Unit Wells have been drilled on the Development Unit in ail commercially productive benches and formations to the maximum density permitted by the rules, regulations, or orders of the Railroad Commission and as approved by University Lands or as indicated on EXHIBIT C. The attached EXHIBIT C illustrates the acreage allocation for horizontal Development Unit Wells drilled within the Development Unit, Nothing herein will relieve the Operator or any Lessee from any obligation to reasonably develop as a whole the Lands and Leases committed hereto. Upon drilling and completing Development Unit Wells to the maximum density as required in this Article 4.2, Operator will agree to fully develop any additional commercially productive formation or subzone (Marker) within a formation until the Development Unit has been fully developed. Notwithstanding the Continuous Development Obligation set forth above, if Operator spuds and completes more than the required number of Development Unit Wells for a calendar year period, Operator will be allowed a credit for each additional Development Unit Well drilled during such year, that may be carried over to the Operator’s Continuos Drilling Obligation for the next calendar year period.

The Term of this Agreement begins on the Effective Date set in Article 6.2 and, unless terminated under Article 6.4, continues until December 31, 2024, unless this Agreement is extended by all Parties as outlined in Article 6.9.

Provided Operator satisfies the Drilling and Development obligations as set out in Article 4.2 on or before December 31, 2024, the Parties may renegotiate for an additional five (5) year term, extending the term of the Agreement until December 31, 2029. This additional term will be based on a Consideration Fee of Twenty-five dollars ($25.00)/Undeveloped Acre, or an increased number of wells to be drilled and completed during this term, or a combination of these two provisions. For purposes of this provision, Developed Acreage, as to any vertical well, will mean and refer to the acreage in a Tract allocated to each Development Unit Well for production purposes pursuant to the applicable rules and regulations of the Railroad Commission of Texas and as agreed upon and approved by University Lands Developed Acreage, as to any horizontal drainhole well, will be the total of the acreage allocated to a horizontal drainhole well as stated in EXHIBIT C of this Agreement, plus tolerance acreage (approximately twenty (20) additional acres), if needed, or shall be the number of acres the Railroad Commission of Texas allocates the operator to assign to obtain an allowable for the horizontal well pursuant to the applicable Statewide and/or Special Field Rules and as agreed upon and approved by University Lands, Undeveloped Acres will mean any acreage not allocated to a Development Unit Well. Notwithstanding anything else contained herein to the contrary, in the event the Operator, as Lessee, desires to extend this Agreement as provided in this Paragraph, the Operator has the right to select all or any part of the undeveloped acreage to extend and Is not required to extend all Undeveloped Acreage contained in the Development Unit.

Any records, reports or other information required to be filed, by this Agreement may be mailed to the addresses shown below. Any notices required to be given under this Agreement shall be effective three days after deposit in the United States Mail, at the appropriate address shown below:

The University of Texas System Board of Regents:
c/o University Lands
P.O. Box 553
Midland, TX 79702

Operator:
Hudspeth Operating, LLC
6300 Ridglea Place
Suite 890
Fort Worth, TX 76116

* * *

To the extent of a conflict between the terms of the DUA and this Amendment, this Amendment will control.

Except as specifically modified by this Amendment, the Parties adopt, ratify, and confirm all the terms and conditions Of the DUA.

The effective date of this Amendment is retroactive and shall be January 1, 2020.

IN WITNESS’ WHEREOF, the parties’ have executed this AMENDMENT TO DEVELOPMENT UNIT AGREEMENT 2837 on the date evidenced by their respective certificate of acknowledgement hereof.

INTENTIONALLY BLANK SIGNATURES FOLLOW