UNITIZATION AGREEMENT____ UNIT
____ COUNTY, ____
(Tract Participation based on Productive Area)
UNITIZATION AGREEMENT
____ UNIT, ____ COUNTY, ____
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS1.1 BTU
1.2 Effective Date
1.3 Engineering Study
1.4 Gas
1.5 Indemnity Agreement
1.6 Net Acre Foot
1.7 Oil
1.8 Oil And Gas Rights
1.9 Original Oil In Place
1.10 Outside Substances
1.11 Productive Acres
1.12 Royalty Interest
1.13 Royalty Owner
1.14 Tract
1.15 Tract Participation
1.16 Unit Area
1.17 Unit Equipment
1.18 Unit Expense
1.19 Unit Operations
1.20 Unit Operator
1.21 Unit Operating Agreement
1.22 Unit Participation
1.23 Unitized Formation
1.24 Unitized Substances
1.25 Working Interest
1.26 Working Interest Owner
ARTICLE 2 EXHIBITS 2.1 Exhibits 2.1.1 Exhibit A: Tract Schedule
2.1.2 Exhibit B: Map of Unit Area
2.1.3 Exhibit C: Electric Log
2.1.4 Exhibit D: Indemnity Agreement
2.2 Reference to Exhibits
2.3 Exhibits Considered Correct
2.4 Correcting Errors
2.5 Additional Well Data
2.6 Filing Revised Exhibits
ARTICLE 3 CREATION AND EFFECT OF UNIT3.1 Oil and Gas Rights Unitized
3.2 Personal Property Excepted
3.3 Amendment of Leases and Other Agreements
3.4 Continuation of Leases and Term Interests
3.5 Title Unaffected by Unitization
3.6 Injection Rights
3.7 Development Obligation
3.8 Ratification and Extension of Leases
ARTICLE 4 PLAN OF OPERATIONS 4.1 Unit Operator
4.2 Method of Operations
4.3 Change of Method of Operation
ARTICLE 5 TRACT PARTICIPATIONS 5.1 Tract Participations
5.2 Relative Tract Participations
ARTICLE 6 ALLOCATION OF UNITIZED SUBSTANCES 6.1 Allocation to Tracts
6.2 Distribution Within Tracts
6.3 Taking Unitized Substances in Kind
6.4 Failure to Take in Kind
6.5 Responsibility for Royalty Settlements
6.6 Royalty on Outside Substances
ARTICLE 7 PRODUCTION AS OF THE EFFECTIVE DATE 7.1 Oil or Liquid Hydrocarbons in Lease Tanks
7.2 Overproduction
ARTICLE 8 USE OR LOSS OF UNITIZED SUBSTANCES 8.1 Use of Unitized Substances
8.2 Royalty Payments
ARTICLE 9 TRACTS TO BE INCLUDED IN UNIT 9.1 Qualification of Tracts 9.1.19.1.29.1.3
9.2 Commitment of Interests to Unit
9.3 Revision of Exhibits
9.4 Acquisition of Uncommitted Interest
ARTICLE 10 TITLES10.1 Removal of Tract from Unit Area
10.2 Revision of Exhibits
10.3 Working Interest Titles
10.4 Royalty Interest Titles
10.5 Production Where Title is in Dispute
10.6 Payment of Taxes to Protect Title
ARTICLE 11 EASEMENTS OR USE OF SURFACE 11.1 Grant of Easements
11.2 Use of Water
11.3 Surface Damages
ARTICLE 12 ENLARGEMENTS OF UNIT AREA 12.1 Enlargements of Unit Area 12.1.112.1.212.1.3
12.2 Determination of Tract Participation
12.3 Effective Date
ARTICLE 13 TRANSFER OF TITLE - PARTITION 13.1 Transfer of Title
13.2 Waiver of Rights to Partition
ARTICLE 14 RELATIONSHIP OF PARTIES 14.1 No Partnership
14.2 No Joint Refining or Marketing
14.3 Royalty Owners Free of Costs
14.4 Information to Royalty Owners
ARTICLE 15 FORCE MAJEURE 15.1 Force Majeure
ARTICLE 16 EFFECTIVE DATE 16.1 Effective Date
16.2 Ipso Facto Termination
16.3 Certificate of Effectiveness
ARTICLE 17 TERM 17.1 Term
17.2 Termination by Working Interest Owners
17.3 Effect of Termination
17.4 Salvaging Equipment Upon Termination
17.5 Certificate of Termination
17.6 Assignment or Surrender of Lease
ARTICLE 18 EXECUTION18.1 Original Counterpart, or Other Instrument
18.2 Joinder in Dual Capacity
ARTICLE 19 GENERAL 19.1 Amendments Affecting Working Interest Owners
19.2 Action by Working Interest Owners
19.3 Lien and Security Interest of Unit Operator or Working Interest Owners
ARTICLE 20 SUCCESSORS AND ASSIGNS 20.1 Successors and Assigns
EXHIBIT A
EXHIBIT B
EXHIBIT C
EXHIBIT D
UNITIZATION AGREEMENT
____ UNIT ____ COUNTY, ____
The Parties to this Agreement are those signing this Agreement, executing counterparts
of this Agreement, and Parties executing Ratification of this Agreement (collect ively referred to
as “the Parties” or individually as a “Party”).
To promote conservation, increase the ultimate recovery of Unitized Substances (defined
below) from the ____ Field in ____ County, ____, and to protect the rights of the owners, it is
deemed necessary and desirable to enter this Agreement, in conformity with (Applicable State
Statute), to unitize the oil and gas rights in the Unitized Formation (defined below) in order to
conduct Unit operations for the conservation and utilization of Unitized Substances as provide d
in this Agreement.
For the mutual benefit and agreements contained in this Agreement, the Parties a gree as
follows:
ARTICLE 1
DEFINITIONS
When used in this Agreement the following terms shall have the following meanings:
1.1 BTU: British Thermal Unit. The amount of heat needed to raise the temperature of one
pound of water one degree Fahrenheit.
1.2 EFFECTIVE DATE: The time and date this Agreement becomes effective is set out in
Section 16.1.
1.3 ENGINEERING STUDY: Means the study of the Unitized Formation dated ____,
approved by the Working Interest Owners on ____.
1.4 GAS: Natural Gas (including casinghead gas) and all its constituent elements, including,
but not limited to, sulfur contained in gas, and natural gasoline, condensate, distill ate, butanes,
propanes, and other hydrocarbons (other than oil) condensed, absorbed, or separated out of or
from the gas after it leaves the reservoir.
1.5 INDEMNITY AGREEMENT: That agreement in Exhibit D that will be signed by
certain Working Interest owners to qualify a certain Tract(s) under Section 9.1.3 of this
Agreement.
1.6 NET ACRE FOOT: (or feet, if plural) Means 43,560 net cubic feet of porous and
permeable formation with ____ percent (____%) porosity or greater within the reservoir
containing originally, before any production, recoverable oil and solution gas. Net Acre Feet for
each Tract is the product of Productive Acres within the Tract times the Tract average of net feet
of pay as shown in the Engineering study prepared in conjunction with establishing the ____
Unit.
1.7 OIL: Means any liquid hydrocarbon, regardless of gravity, capable of being produced
from the Unit Area in liquid form at the well by ordinary production methods, not the result of
condensation of gas after it leaves the reservoir.
1.8 OIL AND GAS RIGHTS: The rights to explore, develop, and operate lands within the
Unit Area for the production of Unitized Substances, or to share in the production obtained, or
the proceeds of production.
1.9 ORIGINAL OIL IN PLACE: Means the calculated oil, in reservoir barrels, within the
Net Acre Feet of the Unitized Formation using the formula: (____ x porosity of ____% or
greater, x net acre feet x (1-SW)). The porosity and water saturation (SW) averages for eac h
Tract are listed on pages ____ and designated as Table ____ in the Engineering Study.
1.10 OUTSIDE SUBSTANCES: All substances purchased or otherwise obtained from any
source other than the Unitized Formation that are injected into the Unitized Formation.
1.11 PRODUCTIVE ACRES: Means the surface acres within the ____ Net Feet line for the
unitized formation as shown on the "Net Pay Isopach Map" approved by the ____ Committee for
the ____ Unit on ____, and as shown on the "Base Map Zero Line,” of ____, all contained in the
Engineering Study.
1.12 ROYALTY INTEREST: The right to or interest in any portion of, or proceeds from the
Unitized Substances other than a Working Interest.
1.13 ROYALTY OWNER: A party to this Agreement who owns a Royalty Interest.
1.14 TRACT: Means the land described and given a Tract number in Exhibit A.
1.15 TRACT PARTICIPATION: Means the percentage shown on Exhibit A for allocating
Unitized Substances to a Tract under this Agreement.
1.16 UNIT AREA: Means the land described by Tracts in Exhibit A and shown on Exhibit B
to which this Agreement becomes effective, or to which it may be extended or reduce d under the
terms of this Agreement.
1.17 UNIT EQUIPMENT: Means all personal property, lease and well equipment, plants,
and other facilities and equipment taken over or otherwise acquired for the joint a ccount for use
in Unit Operations.
1.18 UNIT EXPENSE: Means all cost, expense, or indebtedness incurred by Working
Interest Owners or Unit Operator by the terms of this Agreement and the Unit Operating
Agreement, for or on account of Unit Operations.
1.19 UNIT OPERATIONS: Means all operations conducted by the terms of this Agreement
and the Unit Operating Agreement.
1.20 UNIT OPERATOR: The party designated by Working Interest Owners under the Unit
Operating Agreement to conduct Unit Operations, and act as operator.
1.21 UNIT OPERATING AGREEMENT: The agreement entered by Working Interest
Owners, having the same Effective Date as this Agreement, entitled "Unit Operating
Agreement," ____ Unit, ____ County, ____, including all amendments to the Unit Operating
Agreement.
1.22 UNIT PARTICIPATION: The Unit Participation of a Royalty Interest Owner is the
sum of the percentages obtained by multiplying the Royalty Interest of a Royalty Inte rest Owner
in each Tract included within the Unit Area by the Tract Participation of a Tract. Unit
Participation of a Working Interest Owner is the sum of the percentages obtained by mul tiplying
the Working Interest of a Working Interest Owner in each Tract included within the Unit Area by
the Tract Participation of the Tract.
1.23 UNITIZED FORMATION: Means the subsurface portion of the Unit Area commonly
known as the ____ Field, ____ County, ____, described as that stratigraphic interval or its
correlative equivalent between the log depths of ____ feet and ____ feet in the ____ well located
____ feet from the ____ line and ____ from the ____ line of the ____ Survey, ____ County,
____, as shown on the (Type of Log) electric log run on (Date) , a portion of which log is
attached as Exhibit C.
1.24 UNITIZED SUBSTANCES: Means all oil, gas, gaseous substances, sulfur contained in
oil or gas, condensate, distillate, and all associated and constituent liquid or liquefiable
hydrocarbons, other than Outside Substances, that are within the Unitized Formation and tha t
may be produced from the Unitized Formation from wells within the Unit Area.
1.25 WORKING INTEREST: An interest in Unitized Substances by virtue of a lease,
operating agreement, fee title, or otherwise, including a carried working interest, which interest
is chargeable with and obligated to pay or bear, either in cash, or out of production, or othe rwise,
a portion of the cost of drilling, developing, producing, and operating the Unitized Formation.
Oil and Gas Rights that are not subject to an oil and gas lease or other instrum ent creating a
Working Interest, whether before or after the Effective Date of this Agreement, shall be regarded
as a Working Interest to the extent of (Percentage) of the interest and a Royalty Interest to the
extent of the remaining (Percentage) of the interest. A Royalty Interest created out of a Working
Interest subsequent to the Effective Date of this Agreement by the owner of a Working Intere st
shall continue to be subject to the Working Interest burdens and obligations that are stat ed in this
Agreement and the Unit Operating Agreement.
1.26 WORKING INTEREST OWNER: A party to this Agreement owning a Working
Interest.
ARTICLE 2EXHIBITS
2.1 EXHIBITS. The following are Exhibits to and are attached to this Agreement. Each
Exhibit is incorporated into this Agreement by reference.
2.1.1 EXHIBIT A is a schedule describing each Tract in the Unit Area, showing its
Tract Participation and identifying all Working Interest Owners and their Working
Interest and Unit Interest in the Tract.
2.1.2 EXHIBIT B is a map that shows the boundary lines of the Unit Area and the
Tracts in the Unit.
2.1.3 EXHIBIT C is a portion of the electric log run on the ____ Well referred to in
Section 1.23.
2.1.4 EXHIBIT D is an Indemnity Agreement for certain Working Interest Owners.
2.2 REFERENCE TO EXHIBITS: When reference is made to an Exhibit, it is to the
original Exhibit to this Agreement, or, if revised, to the last revision. Each Exhibit shall be
identified by page number, total pages contained in the Exhibit, and the date of the Exhibit or
amendment.
2.3 EXHIBITS CONSIDERED CORRECT: Exhibits A and B shall be considered to be
correct until revised as provided for in Sections 2.4 and 2.5.
2.4 CORRECTING ERRORS: The shapes and descriptions of the Tracts have been
established by using the best information available. If it subsequently appears that any T ract,
because of diverse royalty or working interest ownership, on the Effective Date, should have
been divided into more than one Tract, or any mechanical miscalculation or cleri cal error has
been made, Unit Operator, with the approval of Working Interest Owners, shall correct the
mistake by revising the Exhibits to conform to the facts. A revision, except as provided for i n
Article 2.5, shall not include any reevaluation of engineering or geological interpretat ions used in
determining Tract Participation. Each revision of an Exhibit made within 30 da ys of the
Effective Date shall be effective as of the Effective Date. Each revision aft er that date shall be
effective at 7 a.m. on the first day of the calendar month next following the dat e the revised
Exhibit is filed of record, or on such other date as may be determined by Working Interest
Owners and set out in the revised Exhibit.
2.5 ADDITIONAL WELL DATA: If any well(s) is drilled and completed after (Date), and
before the Effective Date of the Unit, Unit Operator shall use the data obtained from the
subsequently drilled well(s) to revise and supplement the Engineering Study, using the same
methods and systems as were used in the Engineering Study, and revise Exhibit "A" containing
the relative Tract Participation. However, such revision shall not have the effect of lowering the
Productive Acreage, Net Acre Feet, or Original Oil In Place, as to any Tract within the Unit.
2.6 FILING REVISED EXHIBITS: If an Exhibit is revised after the Effective Date, Unit
Operator shall execute an appropriate instrument with the revised Exhibit attached and file for
record the instrument with the revised Exhibit in ____ County, ____.
ARTICLE 3
CREATION AND EFFECT OF UNIT
3.1 OIL AND GAS RIGHTS UNITIZED: All Oil and Gas Rights of Royalty Owners in
and to the lands described in Exhibit A and B, and all Oil and Gas Rights of Working Interest
Owners in and to those lands, are unitized insofar as the Oil and Gas Rights pertain to the
Unitized Formation, so that Unit Operations may be conducted with respect to the Uniti zed
Formation as if the Unit Area had been included in a single lease executed by all Royalty
Owners, as lessors, in favor of all Working Interest Owners, as lessees, and as if the lease
contained all the provisions of this Agreement.
3.2 PERSONAL PROPERTY EXCEPTED: All lease and well equipment, materials, and
other facilities placed by any of the Working Interest Owners on the lands covered by this
Agreement, prior to or subsequent to the Effective Date shall be deemed to be and shall remain
personal property belonging to and may be removed by Working Interest Owners. The rights
and interest in equipment, materials, and other facilities, as among Working Intere st Owners,
shall be governed by the terms of the Unit Operating Agreement.
3.3 AMENDMENT OF LEASES AND OTHER AGREEMENTS: The provisions of the
various leases, agreements, division and transfer orders, pooling agreements, unit designation
instruments, or other instruments pertaining to each of the Tracts or the production from t he
Tracts are amended to the extent necessary to make them conform to the provisi ons of this
Agreement, as they relate to the Unitized Formation. Otherwise, all leases a nd other agreements
shall remain in full force and effect.
3.4 CONTINUATION OF LEASES AND TERM INTERESTS: Production from any
part of the Unitized Formation, except for the purpose of determining payments to Royal ty
Owners, or Unit operations, shall be considered production from or operations on each Tract.
The production or operations shall continue each lease or term mineral or royalty int erest in
effect as to all lands and formations included in each lease or term interest just as if operations
were conducted on and as if a well were producing from each Tract.
3.5 TITLE UNAFFECTED BY UNITIZATION: Nothing in this Agreement shall be
construed to result in the transfer of title to Oil and Gas Rights by any party to this Agreement to
any other party or to Unit Operator.
3.6 INJECTION RIGHTS: Royalty Owners expressly grant Working Interest Owners the
right to inject into the Unitized Formation or in the remainder of the ____ Field, i f any, any
substances or material, including Outside Substances, in whatever amounts Working Interest
Owners deem expedient for Unit Operations. Working Interest Owners are granted the right to
drill, use, and maintain injection wells on the Unit Area, and to use for injection purposes any
nonproducing, abandoned wells, dry holes, or any producing wells completed in the Unitized
Formation.
3.7 DEVELOPMENT OBLIGATION: Nothing in this Agreement shall relieve Working
Interest Owners from any obligation to reasonably develop, as a whole, the lands and leases
included in the Unit Area.
3.8 RATIFICATION AND EXTENSION OF LEASES: Each Royalty Owner
acknowledges the validity of and confirms all the terms and provisions of each lease a nd each
prior pooling document affecting each lease covering land, in whole or in part, within the Unit
Area in which the Royalty Owner owns a Royalty Interest, as to all minerals in a nd under all
land covered the lease or pooling document. Each Royalty Owner expressly agrees each l ease is
now in full force and effect and shall, as to all minerals, continue in force and e ffect from the
date of execution of this Agreement by each Royalty Owner until the Effective Date and
thereafter according to the respective terms and provisions of each lease and of this Agreement.
Each Royalty Owner expressly adopts, ratifies, revives, and confirms each lease covering l and,
in whole or in part, within the Unit Area under which the Royalty Owner owns a Royalty
Interest, as to all minerals in and under all land covered by each lease.
ARTICLE 4
PLAN OF OPERATIONS
4.1 UNIT OPERATOR: Working Interest Owners are concurrently entering into a Unit
Operating Agreement, designating _____ as the initial Unit Operator. Unit Operator shall have
the exclusive right to conduct Unit Operations, including the right, after approval by Working
Interest Owners, to enter border and lease line agreements with Operators of lands adjace nt to the
Unit Area regarding the location, ownership and operation of injection and producing wells on or
near the Unit boundary, for the purpose of coordinating operations. These agreements will
provide for the apportionment of costs between the Working Interest Owners and the owners of
adjacent land and for the allocation of proceeds between the Working Interest Owners and
Royalty Owners in the Unit and the owners of the adjacent lands whether the wells are located in
the Unit Area or on adjacent lands. All Unit Operations shall conform to the provisions of thi s
Agreement and the Unit Operating Agreement. If there is any conflict between these
agreements, this Agreement shall govern, prevail and/or control.
4.2 METHOD OF OPERATIONS: For the purposes of increasing the quantity of Unitized
Substances ultimately recoverable and waste prevention, Working Interest Owners shall, with
diligence and in accordance with good engineering and production practices, engage in pressure
maintenance, secondary recovery or other enhanced recovery operations which may include
(without limiting the right of the Working Interest Owners to employ other methods) water
injection into the Unitized Formation, as well as operating programs during and/or after i njection
to recover Unitized Substances for sale. These programs may incorporate well locations,
producing rates, and operating practices designed to provide optimum recovery of Unitized
Substances.
4.3 CHANGE OF METHOD OF OPERATION: Nothing in this Agreement shall prevent
Working Interest Owners from discontinuing or changing in whole or in part any method of
operation that, in their opinion, is no longer in accord with good engineering or production
practices. Other methods of operation may be conducted or changes may be made by Working
Interest Owners from time to time if determined by them to be feasible, nece ssary, or desirable to
increase the ultimate recovery of Unitized Substances.
ARTICLE 5
TRACT PARTICIPATIONS
5.1 TRACT PARTICIPATIONS: Beginning 7 a.m. on the Effective Date, the Tract
Participation of each Tract will be as shown on Exhibit A. The Tract Participat ions of each Tract
are based on the following formula: ____ percent (____%) based on Productive Acreage being
determined by the Productive Acres underlying each Tract divided by Productive Acres
underlying the Unit Area; ____ percent (____%) based on Net Acre Feet being determined by
the Net Acre Feet underlying each Tract divided by the Net Acre Feet underlying the Unit Area;
and ____ percent (____%) based on Original Oil in Place being determined by the Original Oil
in Place underlying each Tract divided by the Original Oil in Place underlying the Unit Area.
5.2 RELATIVE TRACT PARTICIPATIONS: If the Unit Area is enlarged or reduced, the
revised Tract Participations of the Tracts remaining in the Unit Area and whic h were within the
Unit Area before the enlargement or reduction shall remain in the same ratio, one to another.
ARTICLE 6
ALLOCATION OF UNITIZED SUBSTANCES
6.1 ALLOCATION TO TRACTS: All Unitized Substances produced and saved shall be
allocated to the Tracts within the Unit Area in accordance with the respect ive Tract
Participations effective during the period the Unitized Substances were produced. The am ount
of Unitized Substances allocated to a Tract, regardless of whether the amount is more or less
than the actual production of Unitized Substances from the well or wells, if any, on a Tract, shall
be deemed for all purposes to have been produced from that Tract.
6.2 DISTRIBUTION WITHIN TRACTS: The Unitized Substances allocated to each Tract
shall be distributed among, or an accounting made to, the parties entitled to sha re in the
production from each Tract in the same manner, in the same proportions, upon the same
conditions, and with the same legal effect as they would have participated and share d in the
production from the Tract, or in the proceeds from Unitized Substances, had this Agreement not
been entered into. If any Oil and Gas Rights in a Tract become divided and owned in severalty
as to different parts of the Tract, the owners of the divided interests, in the absence of an
agreement providing for a different division, shall share in the Unitized Substances all ocated to
the Tract, or in the proceeds from Unitized Substances, in proportion to the surface acre age of
their respective parts of the Tract. Any royalty or other payment which depends upon per well
production, pipeline runs or sales from a well or wells on a Tract shall, after the Effec tive Date,
be determined by dividing the Unitized Substances allocated to the Tract by t he number of wells
on the Tract capable of producing Unitized Substances on the Effective Date. However, i f any
Tract does not have a well on it capable of producing Unitized Substances on the Effective Date,
the Tract shall, for this determination, be deemed to have one well on the Tract.
6.3 TAKING UNITIZED SUBSTANCES IN KIND: The Unitized Substances allocated to
each Tract shall be delivered, by Unit Operator, in kind, to the respective parties e ntitled to an
allocated share of Unitized Substances by virtue of the ownership of Oil and Gas Rights, or by
purchase from owners of the Oil and Gas Rights. Parties shall have the right to construct,
maintain, and operate, within the Unit Area, all necessary facilities for that purpose , provided
they are constructed, maintained, and operated in a manner not to interfere with Unit Operations.
Any extra expenditures incurred by Unit Operator because of the delivery in kind of any portion
of Unitized Substances shall be borne by the owner of the portion delivered in kind. If a Royalt y
Owner has the right to take in kind a share of Unitized Substances and fails to do so, the
Working Interest Owner whose Working Interest is subject to the Royalty Interest shall be
entitled to take in kind that share of Unitized Substances. All parties who exercise the right to
take in kind must notify the Unit Operator in writing at least 30 days in advance of the first day
of the calendar month in which the party wishes to begin taking Unitized Substances in kind.
6.4 FAILURE TO TAKE IN KIND: If any Party fails to take in kind or separately dispose
of the party's share of Unitized Substances, Unit Operator shall have the right, but not the
obligation, and subject to revocation at will by the Party owning the share of Unitiz ed
Substances, in compliance with Section 6.3, to purchase for its own account or sell to others suc h
share at not less than the market price prevailing in the area, and not less t han the Unit Operator
receives for its share of Unitized Substance. However, all contracts of sale by Unit Opera tor of
any other Party's share of Unitized Substances shall only be for the reasonable periods of time as
are consistent with the minimum needs of the industry under the circumstances. In no event
shall any contract be for a period in excess of one (1) year. The proceeds of the Unitize d
Substances disposed of by Unit Operator shall be paid to the Party entitled to the proceeds.
6.5 RESPONSIBILITY FOR ROYALTY SETTLEMENTS: Any party Receiving in
kind, separately disposing of all or part of the Unitized Substances allocated to any Tra ct, or
receiving the proceeds from the sale of Unitized Substances, shall pay or cause to be paid to the
parties entitled to it all royalties, overriding royalties, production payments and a ll other
payments chargeable against or payable out of the Unitized Substances or the resulting proceeds,
and shall indemnify all Parties to this Agreement, including Unit Operator, against any liability
for those payments.
6.6 ROYALTY ON OUTSIDE SUBSTANCES: If any Outside Substance consisting of
natural gases is injected into the Unitized Formation, 90% of any like substance cont ained in
Unitized Substances subsequently produced and sold, or used for other than Unit Operations,
shall be deemed to be a part of the Outside Substance injected until the tot al number of BTU's
deemed to be Outside Substance equals the total number of BTU's of the Outside Substance
injected. However, if injected substance is not measured in BTU's, the recovery shall be on a
volume basis. If any Outside Substance which, before injection, is liquefied petroleum gas or
other liquid hydrocarbons is injected into the Unitized Formation, 90% of all Unitized
Substances produced and sold after one year from the time the injection of Outside Subst ance
was commenced shall be deemed to be a part of the Outside Substance injected unti l the total
value of the production deemed to be Outside Substance equals the total cost of the Outside
Substance injected. The 90% of the Unitized Substances deemed to be Outside Substance s will
be in addition to that which is being recovered for natural gases, if both liquefie d petroleum gas
or other liquid hydrocarbons and natural gases are injected. No payment shall be due or paya ble
to Royalty Owners on substances produced from the Unitized Formation that are deemed to be
Outside Substances.
ARTICLE 7
PRODUCTION AS OF THE EFFECTIVE DATE
7.1 OIL OR LIQUID HYDROCARBONS IN LEASE TANKS: Unit Operator shall
gauge or otherwise determine the amount of merchantable oil or other liquid hydrocarbons
produced from the Unitized Formation that are in lease and storage tanks as of 7 a.m. on the
Effective Date. Oil or other liquid hydrocarbons in treating vessels, separation equipment and
tanks below pipeline connections shall not be considered to be merchantable. Any mercha ntable
oil that is a part of or attributable to the prior allowable of the wells from whic h they were
produced shall remain the property of the parties entitled to the oil as if this Agre ement had not
been entered into. Any merchantable oil not promptly removed may be sold by Unit Operator
for the account of the entitled Working Interest Owners who shall pay all royalty due on the sale
under the provisions of applicable leases or other contracts. Any oil more than that att ributable
to the prior allowable of the wells from which they were produced shall be regarded as Unit ized
Substances produced after the Effective Date.
7.2 OVERPRODUCTION: If, as of the Effective Date, any Tract is overproduced with
respect to an allowable of the wells on that Tract, and if the amount of overproduction has been
sold or otherwise disposed of, overproduction shall be regarded a part of the Unitized Substances
produced after the Effective Date and shall be charged to the Tract as having been delivered to
the parties entitled to Unitized Substances allocated to the Tract.
ARTICLE 8
USE OR LOSS OF UNITIZED SUBSTANCES
8.1 USE OF UNITIZED SUBSTANCES: Working Interest Owners may use or consume
Unitized Substances for Unit Operations, including but not limited to the injection of Unitized
Substances into the Unitized Formation.
8.2 ROYALTY PAYMENTS: No royalty, overriding royalty, production, or other
payments shall be payable on account of Unitized Substances used, lost, or consumed in Unit
Operations, or which otherwise may be lost, or consumed in the production, handling, treating,
processing, compressing, dehydrating, transporting, storing or sale of Unitized Substances.
ARTICLE 9
TRACTS TO BE INCLUDED IN UNIT
9.1 QUALIFICATION OF TRACTS: On and after the Effective Date and until
enlargement or reduction of the Unit, the Unit Area shall be composed of the Tracts l isted in
Exhibit A that qualify as follows:
9.1.1Each Tract in which Working Interest Owners owning ____ percent (____%) of
the Working Interest have become Parties to or ratified this Agreement, and in which
Royalty Owners owning ____ percent (____%) or more of the Royalty Interest have
become Parties to this Agreement. 9.1.2. Each Tract in which Working Interest Owners owning ____ percent (____%) of
the Working Interest have become Parties to this Agreement, Royalty Owners owning
less than ____ percent (____%) of the Royalty Interest have become Parties to this
Agreement, but: (a) all Working Interest Owners in the Tract have joined in a request for
the inclusion of the Tract in the Unit Area; and, (b) Working Interest Owners having
____ percent (____%) or more of the combined voting interests in all Tracts that meet the
requirements of Section 9.1.1 have voted in favor of the inclusion of the Tract. For the
purpose of this Section 9.1.2, the voting interest of a Working Interest Owner shall be
equal to the ratio that its Unit Participation attributable to Tracts qualifying under Section
9.1.1 bears to the total Unit Participation of all Working Interests Owners attributable t o
all Tracts qualifying under Section 9.1.1. 9.1.3. Each Tract in which Working Interest Owners owning less than ____ percent
(____%) of the Working Interest have become Parties to this Agreement, regardless of
the percentage of Royalty Interest in the Tract that is committed to the Unit; but: (a)
Working Interest Owners, including the Working Interest Owner who operates the Tract,
owning a total of ____% or more of the Working Interest in the Tract that is committe d to
this Agreement have joined in a request for inclusion of the Tract in the Unit Area, and
have executed and delivered, or have obligated themselves to execute and deliver, the
indemnity agreement set out in Exhibit D, indemnifying and agreeing to hold harmless
the other Working Interest Owners in the Unit Area, their successors and assigns, against
all claims and demands that may be made by the owners of Working Interests in the Tract
who are not Parties to this Agreement, and which arise out of the inclusion of the Tra ct in
the Unit Area; and, (b) Working Interest Owners having ____% or more of the combined
voting interest in all Tracts that meet the requirements of Sections 9.1.1 and 9.1.2 have
voted in favor of the inclusion of the Tract and to accept the indemnity agreement.
For the purpose of this Section 9.1.3, the voting interest of each Working Interest Owner
shall be equal to the ratio that its Unit Participation attributable to Tra cts that qualify
under Sections 9.1.1 and 9.1.2 bears to the total Unit Participation of all Working Interest
Owners attributable to all Tracts that qualify under Section 9.1.1 and 9.1.2. Upon the
inclusion of such a Tract in the Unit Area, the Unit Participation that would have been
attributable to the nonsubscribing owners of Working Interest in such Tract, had they
become Parties to this Agreement and the Unit Operating Agreement, shall be attribut ed,
in proportion to their respective Working Interests in such Tract, to the Working Interest
Owners in the Tract who have executed indemnity agreements.
9.2 COMMITMENT OF INTERESTS TO UNIT: The execution of this Agreement by a
Party, or a ratification of this Agreement, shall commit all interests within the Unit Area owned
or controlled by the Party as of the date of execution, and additional interests acqui red within the
Unit Area before the Effective Date. After the Effective Date, the commitm ent of any interest in
any Tract within the Unit Area shall be on the terms as may be negotiated by Working Interest
Owners and the owner of the interest. However, any formerly committed interest on which tit le
has failed may be recommitted by the rightful owners on its former basis of participa tion, as
provided in Section 10.1.
9.3 REVISION OF EXHIBITS: If any of the Tracts described in Exhibit A fail to qualify
for inclusion in the Unit Area, as of the Effective Date, Unit Operator shall recompute the Tract
Participation of each of the qualifying Tracts, using the original basis of computation, a nd shall
revise Exhibits A and B accordingly. The revised Exhibits shall be effective as of 7 a.m. on the
Effective Date.
9.4. ACQUISITION OF UNCOMMITTED INTEREST: If at any time after the Effective
Date any Party bound by this Agreement acquires an uncommitted interest in any Tra ct included
in the Unit Area, that interest, upon being acquired, shall, with the approval of Working Interest
Owners, be subject to this Agreement. Where the interest acquired is a Working Interest t he
interest shall also be subject to the Unit Operating Agreement.
ARTICLE 10TITLES
10.1 REMOVAL OF TRACT FROM UNIT AREA: If a Tract ceases to have sufficient
Working Interest Owners or Royalty Owner committed to this Agreement to meet the c onditions
of Article 9 because of failure of title of any party to this Agreement, that Trac t shall be removed
from the Unit Area effective 7 a.m. on the first day of the calendar month in which t he failure of
title is finally determined unless, within 90 days after the date of final determ ination of the
failure to title, the Tract qualifies under a Section of Article 9. However, nothi ng in this Section
10.1 shall ever be construed as removing from the Unit Area any Tract as to the parcels of land
contained in the Tract on which there is no title failure. The Tract, reduced by the parcel or
parcels of land removed from the Unit Area because of failure of title of any Party to this
Agreement shall remain in the Unit Area and shall not be required to requalify unde r any of the
provisions of Article 9. If under the foregoing procedures an attempt is made to requalify a Tract
and fails, then that Tract, as to the parcels of land it contains on which there is no failure of title,
shall remain in the Unit Area just as though there had never been any failure of ti tle to any of the
parcels of land contained in the Tract, except the Tract shall be reduced i n size to the extent of
those parcels of land removed because of failure of title.
10.2 REVISION OF EXHIBITS: If a Tract, or parcel of land within a Tract, is removed
from the Unit Area because of failure of title, Unit Operator, subject to Section 5.2, shal l
recompute the Tract Participation of each of the Tracts remaining in the Unit Area and shall
revise Exhibits A and B, accordingly. The revised Exhibits shall be effective 7 a .m. on the first
day of the calendar month in which the failure of title is finally determined.
10.3 WORKING INTEREST TITLES: If title to a Working Interest fails, the rights and
obligations of Working Interest Owners by reason of the failure of title shall be governed by the
Unit Operating Agreement.
10.4 ROYALTY INTEREST TITLES: If title to a Royalty Interest fails, but the Tract to
which it relates is not removed from the Unit Area, the party whose title faile d shall not be
entitled to share under the terms of this Agreement with respect to the interest.
10.5 PRODUCTION WHERE TITLE IS IN DISPUTE: If the title or right of any party
claiming the right to receive in kind all or any portion of the Unitized Substances allocated to a
Tract or parcel of land within a Tract is in dispute, Unit Operator at the direc tion of Working
Interest Owners shall: (a) require the party to whom the Unitized Substances are delive red or to
whom the proceeds of sale are paid furnish security for the proper accounting to the rightful
owner if the title or right of the party fails in whole or in part; or, (b) withhold and m arket the
portion of Unitized Substances with respect to which title or right is in dispute, and im pound the
proceeds until such time as the title or right to the proceeds is established by a final judgment of
a court of competent jurisdiction or otherwise to the satisfaction of Working Interest Owners,
when the proceeds impounded shall be paid to the party rightfully entitled to such proceeds.
10.6 PAYMENT OF TAXES TO PROTECT TITLE: The owner of surface rights to lands
within the Unit Area, severed mineral interests, or Royalty Interests in the lands, or lands outside
the Unit Area on which Unit Equipment is located, is responsible for the payment of any ad
valorem taxes on all these rights, interests, or property, unless the owner and Working Interest
Owners agree otherwise. If any ad valorem taxes are not paid by or for the owner when due,
Unit Operator may, with approval of Working Interest Owners, at any time prior to tax sal e, or
expiration of the period of redemption after tax sale, pay the tax, redeem the rights, interests, or
property, and discharge the tax lien. Any payment shall be an item of Unit Expense. Unit
Operator shall, if possible, withhold from any proceeds derived from the sale of Unitized
Substances otherwise due any delinquent taxpayer an amount sufficient to defray the costs of any
payment or redemption. The withholding is to be credited to Working Interest Owners. A
withholding shall be without prejudice to any other remedy available to Unit Operator or
Working Interest Owners.
ARTICLE 11
EASEMENTS OR USE OF SURFACE
11.1 GRANT OF EASEMENTS: All Parties to this Agreement, to the extent of their rights
and interests, grant to Working Interest Owners the right to use as much of the surface of the
land within the Unit Area as may be reasonably necessary for Unit Operations and the removal
of Unitized Substances from the Unit Area. Despite the provisions of Article 3.3, 3.6, and this
Article 11.1, any restrictions on the use of surface rights set out in any lease, lease a mendment or
lease supplement shall prevail. Nothing in this Agreement shall be construed as leasing or
otherwise conveying to Working Interest Owners a camp site for water injection, gas injecti on,
or gas processing.
11.2 USE OF WATER: Working Interest Owners shall have and are granted free use of
water from the Unit Area for Unit Operations, except water from any water system, well, la ke,
pond, or irrigation ditch of a Royalty Owner. Working Interest Owners may convert any existing
or future dry or abandoned wells in the Unit Area to water supply, injection and/or disposal
wells.
11.3 SURFACE DAMAGES: Working Interest Owners shall pay the owner for damages to
growing crops, timber, fences, improvements, and structures on the Unit Area resulting from
Unit Operations.
ARTICLE 12
ENLARGEMENTS OF UNIT AREA
12.1 ENLARGEMENTS OF UNIT AREA: The Unit Area may be enlarged from time to
time to include acreage reasonably proven to be productive, upon terms determined by Working
Interests Owners, including but not limited to, the following:
12.1.1. The acreage shall qualify under a Section of Article 9.
12.1.2. The participation to be allocated to the acreage shall be fair and reasonabl e,
considering all available information.
12.1.3. There shall be no retroactive allocation or adjustment of Unit Expense or of
interests in the Unitized Substances produced, or proceeds of sale. However, this
limitation shall not prevent an adjustment of investment by reason of the enlargement.
12.2 DETERMINATION OF TRACT PARTICIPATION: Unit Operator, subject to
Section 5.2, shall determine the Tract Participation of each Tract within the Unit Area as
enlarged, and shall revise Exhibits A and B accordingly.
12.3 EFFECTIVE DATE: The Effective Date of any enlargement of the Unit Area shall be
7 a.m. on the first day of the calendar month following compliance with conditions for
enlargement as specified by Working Interest Owners, and the filing for record of revised
Exhibits A and B in ____ County, ____ by the Unit Operator.
ARTICLE 13
TRANSFER OF TITLE - PARTITION
13.1 TRANSFER OF TITLE: Any conveyance of all or any part of any interest owned by
any party in any Tract shall be made expressly subject to this Agreement. No cha nge of title
shall be binding on Unit Operator, or on any party to this Agreement other than the party
transferring, until 7 a.m. on the first day of the calendar month next succeeding the date of
receipt by Unit Operator of a photocopy, or a certified copy, of the recorded instrument
evidencing the change in ownership.
13.2 WAIVER OF RIGHTS TO PARTITION: Each Party agrees that while this
Agreement is in effect it will not resort to any action to partition the Uniti zed Formation or the
benefits of all Unit Equipment, and to that extent waives all rights and rights unde r laws
authorizing any partition.
ARTICLE 14
RELATIONSHIP OF PARTIES
14.1 NO PARTNERSHIP: The duties, obligations, and liabilities of the Parties to this
Agreement are intended to be several and not joint or collective. This Agreement is not intended
to create, and shall not be construed to create, an association or trust, or to impose a partnership
duty, obligation, or liability with regard to any one or more of the parties. Each Party shall be
individually responsible for its own obligations as provided in this Agreement.
14.2 NO JOINT REFINING OR MARKETING: This Agreement is not intended to
provide, directly or indirectly, for any joint refining or marketing of Unitized Substances.
14.3 ROYALTY OWNERS FREE OF COSTS: This Agreement is not intended to impose,
and shall not be construed to impose, on any Royalty Owner any obligation to pay Unit Expense
unless a Royalty Owner is obligated to do so by this Agreement.
14.4 INFORMATION TO ROYALTY OWNERS: On written request each Royalty Owner
is entitled to all information in possession of Unit Operator to which a Royalty Owner i s entitled
by an existing agreement with any Working Interest Owner.
ARTICLE 15
FORCE MAJEURE
15.1 FORCE MAJEURE: All obligations imposed by this Agreement on each Party, before
and after the Effective Date, except for the payment of money, shall be suspended while
compliance is prevented, in whole or in part by: a labor dispute; fire; war; civil disturbance; act
of God; litigation in any court; federal, state, or municipal laws; any rule, regulation, or order of
a governmental agency; inability to secure materials; or any other cause or causes, whether
similar or dissimilar beyond the reasonable control of the party. No Party shall be required
against its will to adjust or settle any labor dispute or litigation. This Agreem ent nor any lease or
other instrument subject to this Agreement shall be terminated by reason of failure t o commence
Unit Operations or the suspension of Unit Operations due, in whole or in part, to any one or more
of the causes set forth in this Article.
ARTICLE 16
EFFECTIVE DATE
16.1 EFFECTIVE DATE: This Agreement shall become binding on each Party as of the
date the Party signs the instrument by which it becomes a Party to this Agreement. Unless
terminated sooner as provided in Section 17.2, this Agreement shall become effective as t o
qualified Tracts at the time and date determined by Working Interest Owners owning ____
percent (____%) or more of the combined Unit Participation in all qualified Tracts, which time
and date shall be after Tracts comprising 51% or more of the Unit Area as shown on the ori ginal
Exhibit B, have qualified under the provisions of Article 9. Additionally, at least one c ounterpart
of this Agreement must be filed for record by Unit Operator in the county or counties in which
the Unit Area is located (and this Agreement must be approved by [Name of Regulatory B ody
whose Approval is Necessary]).
16.2 IPSO FACTO TERMINATION: If the requirements of Section 16.1 are not
accomplished on or before ____, this Agreement shall ipso facto terminate on that date (the
"Termination Date") and thereafter be of no further effect, unless prior to that time Working
Interest Owners owning a combined Unit Participation of at least ____ percent (____%) have
become Parties to this Agreement and Working Interest Owners owning ____ percent (____%)
or more of that percent have decided to extend the Termination Date for a period not to exceed
one year. If the Termination Date is extended and the requirements of Section 16.1 are not
accomplished on or before the extended Termination Date, this Agreement shall ipso fac to
terminate on the extended Termination Date and be of no further effect. For the purpose of this
section, Unit Participation shall be calculated on the basis of Tract Participa tions shown on the
original Exhibit A.
16.3 CERTIFICATE OF EFFECTIVENESS: Unit Operator shall file for record in the
county or counties in which the Unit Area is located a certificate stating the Effective Date, the
filing to be made within thirty (30) days of the Effective Date.
ARTICLE 17TERM
17.1 TERM: The term of this Agreement shall be for the time that Unitized Substances are
produced in paying quantities or other Unit Operations are conducted without a cessation of
more than ninety (90) consecutive days, unless sooner terminated by Working Interest Owners in
the manner provided in 17.2.
17.2 TERMINATION BY WORKING INTEREST OWNERS: This Agreement may be
terminated by Working Interest Owners owning a combined Unit Participation of ____ percent
(____%) or more whenever those Working Interest Owners determine Unit Operations are not
longer profitable or feasible.
17.3 EFFECT OF TERMINATION: On termination of this Agreement, the further
development and operation of the Unitized Formation as a Unit shall be abandoned, and Unit
Operations shall cease. Each oil and gas lease and other agreement covering lands within the
Unit Area shall remain in force for one hundred eighty (180) days after the date on which this
Agreement terminates, and for all further periods as provided by the lease or other agreem ent.
Despite any other provision of this Agreement, all of the leases on lands included in t he Unit are
deemed amended to allow for leases to remain in force for the stated time following the
termination of the Unit.
17.4 SALVAGING EQUIPMENT UPON TERMINATION: If not otherwise granted by
the leases or other instruments affecting each Tract, Royalty Owners grant Working Inte rest
Owners a period of not less than six (6) months after the date of termination of this Agreeme nt
within which to salvage and remove Unit Equipment.
17.5 CERTIFICATE OF TERMINATION: Within thirty (30) days of the termination date
of this Agreement, Unit Operator shall file for record a certificate of terminati on in the county or
counties where the Unit Area is located. This certificate will identify the Unit Agreement and its
Terminate Date.
17.6 ASSIGNMENT OR SURRENDER OF LEASE: Any Working Interest Owner holding
any Oil and Gas Rights represented by an oil and gas or oil, gas and mineral lease may be
relieved of all obligations and liabilities accruing with respect to the Working Interest under the
lease, insofar as the lease is included within a particular Tract, by the assignme nt or surrender of
the lease. A Working Interest Owner shall give written notice of its desire to be re lieved with
respect to the Working Interest under the lease to all other Working Interest Owners in t he Tract
in which the all or part of the lease is located. Each Working Interest Owner noti fied shall have
the right to receive an assignment of a pro rata interest in the lease or the portion of the lease
located within the Tract. If one or more Working Interest Owners exercise the right by noti ce in
writing to the Party desiring to be relieved, the Party shall assign the lease, or t he portion of the
lease within the Tract, with special warranty of title only, to the Party or Parties desiring an
assignment. If the assignment is in favor of more than one Party, the assignment shall be m ade
to them in the proportion the Working Interest of each in the Tract bears to the tot al of the
Working Interests of all of them in the Tract. The assignment shall include the int erest in all
Unit Wells and Unit Equipment which are attributable to the leasehold being a ssigned. There
shall be no payment to the assignor. After the effective date of the assignment the a ssignor shall
be relieved of all obligations and liabilities accruing, but not previously accrued, unde r this
Agreement and the Unit Operating Agreement, with respect to the leasehold assigned. The
assignment shall be subject to the provisions of this Agreement and the Unit Operating
Agreement. If no Working Interest Owner in the particular Tract chooses to receive an
assignment of the lease, or the portion within the Tract, the Working Interest Owner desiri ng to
be relieved shall surrender (and it shall have the right to surrender) the lease or t he portion within
the Tract, by executing, delivering to the lessor, and recording in the appropriate public records a
surrender or release of the lease.
The mineral owner or owners whose interests were covered by the lease shall, following
the surrender, own the interest in all Unit Wells and Unit Equipment that was att ributable to the
leasehold surrendered. There shall be no payment to the surrendering Party. The unleased
mineral interest of the owner or owners shall be treated for all purposes of this Agreeme nt and
the Unit Operating Agreement as part Working Interest and part Royalty Interest, as provide d in
Section 1.25. Treated in this manner, the mineral interest shall thereafter be subj ect to the
provisions of this Agreement and the Unit Operating Agreement. On the surrender, the
surrendering Party shall be relieved of all obligations and liabilities accruing afte r the effective
date of the surrender, but not previously accrued, under this Agreement and the Unit Operating
Agreement to the leasehold surrendered.
This Section 17.6 shall only be applicable in instances where a Working Interest Owner
desires to surrender its interest in the Unit, or assign its interest for the purpose of relie ving itself
from any further obligations under the terms of this Agreement and related agreements. T his
Section shall not be construed as creating in any other Working Interest Owner a preferenti al
purchase right or right of first refusal to purchase an interest. Any Working Interest Owner may
sell or assign all or any part of its Unit Interest to any party, whether or not a party to this
Agreement, as long as the sale or assignment is subject to the terms of this Agreem ent and the
Unit Operating Agreement.
ARTICLE 18
EXECUTION
18.1 ORIGINAL COUNTERPART, OR OTHER INSTRUMENT: An owner of Oil and
Gas Rights may become a party to this Agreement by signing the original of this instrume nt, a
counterpart, a ratification or other instrument agreeing to become a Party to this Agreement. The
signing of any such instrument shall have the same effect as if all parties had signe d the same
instrument.
18.2 JOINDER IN DUAL CAPACITY: Execution of an original counterpart or other
instrument by any Party as either a Working Interest Owner or a Royalty Owner shall commi t all
interests owned or controlled by the signing party to this Agreement.
ARTICLE 19GENERAL
19.1 AMENDMENTS AFFECTING WORKING INTEREST OWNERS: Amendments
to this Agreement relating wholly to Working Interest Owners may be made if signed by al l
Working Interest Owners.
19.2 ACTION BY WORKING INTEREST OWNERS: Unless otherwise provided in this
Agreement, any action or approval required by Working Interest Owners shall be in compliance
with the provisions of the Unit Operating Agreement.
19.3 LIEN AND SECURITY INTEREST OF UNIT OPERATOR OR WORKING
INTEREST OWNERS: Unit Operator or Working Interest Owners shall have a lien upon and
a security interest in the interests of Working Interest Owners or the Unit Operator (but not on
any Royalty Interest) in the Unit Area as provided in the Unit Operating Agreement.
ARTICLE 20
SUCCESSORS AND ASSIGNS
20.1 SUCCESSORS AND ASSIGNS: This Agreement shall extend to, be binding on, and
inure to the benefit of the Parties and their respective heirs, devisees, legal repre sentatives,
successors and assigns, and shall constitute a covenant running with the lands, leases, and
interest covered by this Agreement.
This Agreement is executed by each Party on the date of the acknowledgement of the
Party’s signature, but shall be deemed effective as of the Effective Date provided for in Article
16.
PARTIES TO AGREEMENT
EXHIBIT ATO
UNIT AGREEMENT ____ UNIT
____ COUNTY, ____
TRACTS AND TRACT PARTICIPATIONS
(Schedule describing and numbering each Tract, each Tract's Unit Participation and
identifying all Working Interest Owners in the Tract and their Working Interest and Unit Inte rest
in each Tract.)
EXHIBIT BTO
UNIT AGREEMENT
____ UNIT
____ COUNTY, ____
(A map of the Unit Area, identifying the boundary lines of the Unit and each numbered Tract in the Unit.)
EXHIBIT CTO
UNIT AGREEMENT
____ UNIT
____ COUNTY, ____
(Copy of a portion of electrical log identifying the Unitized Formation.)
EXHIBIT "D"TO
UNIT AGREEMENT
INDEMNITY AGREEMENT
Section 9.1.3 of the Agreement entitled "Unit Agreement, ____ Unit, ____ County, ____
, ____ (the "Agreement") dated ____, provides that under certain circumstances and conditions a
Tract that fails to qualify for inclusion in the Unit Area may be included in the Unit if the
requisite Working Interest Owners in the Tract, as specified in Section 9.1.3 of the Agreem ent,
request the inclusion of the Tract in the Unit Area and execute and deliver, or obl igate
themselves to execute and deliver, an indemnity agreement.
Tract ____, described in the Unit Agreement is such a Tract.
The undersigned are owners of Working Interest in this Tract and have become Parties to
the Unit Agreement and the Unit Operating Agreement and desire the inclusion of the Tract in
the Unit Area.
In consideration of and conditioned upon the Tract meeting the other requirements of
Section 9. of the Unit Agreement, and its inclusion in the Unit Area, the undersigned request the
inclusion of this Tract in the Unit Area and agree, together with other owners of Worki ng
Interest in the Tract who execute and deliver like indemnity agreements, to inde mnify and hold
harmless all other Working Interest Owners in the Unit Area against all claims and de mands
required by that Section of the Agreement to be the subject of this indemnity. Any li ability
arising under this Indemnity Agreement shall be borne by the undersigned and other Working
Interest Owners in the Tract who are committed to like indemnity agreements in the proportion
that the Working Interest of each in the Tract bears to the total Working Intere st of all the owners
of Working Interest in the Tract committed to the indemnity agreement.
This indemnity shall become void with respect to all claims and demands based on
occurrences subsequent to the time when the conditions are met that would have initia lly
qualified this Tract for inclusion in the Unit Area without this indemnity.
This Agreement shall be binding on and inure to the benefit of the heirs, devisees, le gal
representatives, successors, and assigns of the respective Parties initially bound or benefite d by
the provisions of this Indemnity Agreement.
Each of the undersigned has executed this Agreement on the date opposite their
signatures.
Date Signatures
