Page 1 of 18
GAS STORAGE UNIT AGREEMENT
(Establish Unit on Depleted Producing Property)
The Parties to this Gas Storage Unit Agreement (the “Agreement”) own Royalty Interest s
and Working Interests, or either of them, in the Unitized Zone.
The Parties desire to use the Unitized Zone for Unit Operations.
The Parties desire that the Unitized Zone be developed, produced, and operated as a Unit,
all as provided for in this Agreement.
In consideration of the covenants contained in this Agreement, the Parties agree as
follows:
ARTICLE I: INTERPRETATION
1.01 Definitions:
In this Agreement:
“Effective Date” means the time and date referred to in paragraph 13.01.
“Gas” means natural gas both before and after it has been subject to any processing,
together with associated substances, and includes all liquid hydrocarbons other than crude
oil.
“Gas Products” means condensate, ethane, pentanes plus, sulphur, propane, butane, and
any other product, except methane, obtained and removed from Gas by processing.
“Lease” means an instrument granting a Working Interest in the Unitized Zones.
“Month” means a calendar month, commencing at 8:00 a.m. on the first day of the
month, and ending immediately before 8:00 a.m. on the first day of the next month.
“Party” means a person who is bound by this Agreement, whether or not the person is a
signatory to this Agreement.
“Royalty Interest” means:
(i) an absolute ownership interest, or a fee simple or similar freehold ownership estate, in respect of the _____ Formation, and the petroleum, natural gas, or both,
in or producible from the _____ Formation; or,
Page 2 of 18
(ii) a right to a share of the petroleum, or natural gas, or both produced from the _____ Formation, or to a share of the proceeds from the sale thereof,
but does not include a Working Interest, the interest of a purchaser of the petroleum, or
natural gas, or both after production, any interest or right to Storage Gas, or a mortgage,
charge, or other security interest.
“Royalty Owner” means a Party owning a Royalty Interest in or in respect of the
Unitized Zone and Unitized Substances.
“Storage Gas” means Gas with respect to which there is no royalty liability outstanding.
“Tract” means a parcel of land described and given a Tract number in Exhibit “A” and
shown outlined on Exhibit “B.”
“Tract Participation” means the participation percentage assigned to a Tract pursuant to
Article VI.
“Unit Area” means the lands described in Exhibit “A” and shown outlined on Exhibit
“B.”
“Unit Operations” means any operations or activities undertaken in connection with the
injection into or storage of Storage Gas in the Unitized Zone, the development or
exploitation of the Unitized Zone, the production of Unitized Substances (which for the
sake of clarity includes any portion of the Unitized Substances that is deemed under
paragraph 7.01(b) to be Storage Gas) or the installation, operation, maintenance, or
removal of unit facilities, insofar as those operations or activities have been authorized or
provided for under this Agreement.
“Unitized Substances” means Gas in or obtained from the Unitized Zone both before
and after it has been subject to any processing.
“Unitized Zone” means the _____ Formation within the Unit Area.
“Working Interest” means:
(i) an interest entitling the owner to produce and dispose of Gas from the _____ Formation; or,
(ii) the production, disposition, and storage rights associated with an ownership interest, or with a fee simple or similar freehold ownership estate, in respect of t he
_____ Formation and the Gas in or producible from the _____ Formation if those
rights are not subject to an interest of the kind described in paragraph (i) of this
subparagraph, but does not include a beneficial interest in Storage Gas, or a
mortgage, charge, or other security interest.
Page 3 of 18
“Working Interest Owner” means a Party owning a Working Interest in or in respect of
the Unitized Zone and Unitized Substances.
“[Formation name] Formation” means that formation which is identified in the _____
well, between the depths of _____ feet and _____ feet below the kelly bushing as shown
on a reproduction of a portion of the _____ log for the _____ well attached to this
Agreement as Exhibit “C.”
1.02. Headings.
The headings in this Agreement shall not be considered in interpreting the text of the
provisions.
1.03. Number and Gender.
In this Agreement, words importing the singular include the plural and vice versa; words
importing gender include the masculine, feminine, and neuter genders; and references t o persons
include individuals, firms, corporations, partnerships, and other entities, all as the context may
require.
1.04. Time.
In this Agreement, all times are _____ Standard Time or Daylight Savings Time,
whichever is being used and observed where the Unit is located.
ARTICLE II: EXHIBITS
2.01. Exhibits.
The following exhibits are attached to and incorporated in this Agreement:
(a) Exhibit “A,” which numbers and describes each Tract and, with respect to eac h
Tract:
(i) sets forth its Tract Participation;
(ii) sets forth the names of the owners of the Working Interests in each Tract;
(iii) sets forth the names of the owners of the Royalty Interests in each Tract; and,
(iv) identifies the Leases relating to the Unitized Zone and Unitized Substances.
(b) Exhibit “B,” is a plat showing the Unit Area and identifying the Tracts in the Unit.
Page 4 of 18
(c) Exhibit “C,” which is a reproduction of a portion of the _____ log referred to in 1.01. above.
2.02. Exhibits Correct.
Each Exhibit shall be deemed conclusive to be correct to the effective time of a revision
or correction of it as provided below.
2.03. Correction of Exhibits.
If any mistake or mechanical error occurs in an exhibit, the Working Interest Owner shall
prepare a corrected exhibit, but the methods and date used to establish Tract Pa rticipations shall
not be re-evaluated.
2.04. Effective Time of Corrected Exhibits.
Any corrected exhibit prepared on or before the Effective Date shall be effective on t he
Effective Date. Any corrected exhibit prepared after the Effective Date shall be effective at 8:00
on the first day of the Month next following its preparation or on such other date as is dete rmined
by the Working Interest Owner.
2.05. Supplying of Exhibits.
Each time that an exhibit is revised or corrected pursuant to this Agreement, the Working
Interest Owner shall supply each of its Royalty Owners with a copy.
2.06. Form of Revised or Corrected Exhibits.
Exhibits that are revised or corrected shall show the effective time of the revi sion or
correction and shall be numbered consecutively.
ARTICLE III: UNITIZATION AND EFFECT
3.01. Unitization.
On and after the Effective Date, the interests of each Royalty Owner and of each Working
Interest Owner in or in respect of the Unitized Substances and the Unitized Zone are unit ized in
accordance with the provisions of this Agreement.
3.02. Personal Property Excepted.
All Lease and well equipment previously or later placed by the Working Interest Owner
on lands comprised in the Unit Area shall be deemed conclusively to be and shall remain
personal property belonging to and may be removed by the Working Interest Owner.
Page 5 of 18
3.03. Continuation of Leases.
Any Unit Operations shall, except for the purpose of calculating payments to Royalty
Owners, be deemed conclusively to be operations on the Unitized Zone in each Tract, and any
operations shall continue in full force and effect each Lease and any other agreeme nt or
instrument relating to the Unitized Zone or Unitized Substances as if the operati ons had been
conducted on and a well was producing from each Tract or portion thereof, in the Unit Area.
3.04. Leases Amended.
Each Lease and any other agreement or instrument relating to the Unitized Zone or
Unitized Substances is hereby amended to the extent necessary to make it conform to t his
Agreement.
3.05. Ratification of Leases.
Except for a Lease with respect to which a Royalty Owner is involved in a court ac tion
which has been commenced and is pending on the date on which the Royalty Owner execut es
and delivers a counterpart of this Agreement, each Royalty Owner ratifies each Lea se, as
amended by this Agreement, to which it is a party, and confirms that no notice of defa ult has
been given and remains outstanding with respect to any Lease, and that each Lease is in effect as
of the date of execution and delivery of this Agreement. The provisions of this paragraph 3.05.
do not constitute a waiver, and shall not give rise to an estoppel, of any right, to pursue the
enforcement of any outstanding obligation under any Lease.
3.06. Effect of Unitization on Titles.
Nothing in this Agreement shall be construed as a transfer or exchange of any interest in
the Leases, Tracts, or Unitized Zone, or in the Unitized Substances before production.
3.07. Name.
The name of the unit is the “_____ Gas Storage Unit.”
ARTICLE IV: AUTHORITY TO WORKING INTEREST
4.01. Operations.
The Royalty Owners grant to the Working Interest Owner, insofar as they have the right
to grant the same:
(a) The right to conduct Unit Operations in and in respect of the Unitized Zone without regard to the provisions of the Leases or the boundary lines of the Tracts
Page 6 of 18
in such manner and by such means and methods as they consider necessary and
proper; and,
(b) without limiting the generality of the foregoing, the right to convert and use as injection or storage wells, any wells now existing or later drilled into the Unitize d
Zone.
4.02. Injection.
Notwithstanding paragraph 4.01., no Unitized Substances, other than Gas that is deemed
under 7.01.(b) to comprise Storage Gas, shall be injected into the Unitized Zone for any purpose
whatsoever.
ARTICLE V: INCLUSION AND QUALIFICATION OF TRACTS
5.01. Tracts Included on Effective Date.
The Tracts included in the Unit Area as of the Effective Date are those Tract s which
qualify for such inclusion pursuant to paragraph 5.02.
5.02. Qualification of Tracts.
A Tract is qualified for inclusion in the Unit Area when the owner of one hundred percent
(100%) of the Working Interest in it has become a Party and the owners of one hundred percent
(100%) of the Royalty Interests in it have become Parties.
ARTICLE VI: TRACT PARTICIPATION
6.01. Tract Participation.
Each Tract has a Tract Participation as shown on Exhibit “A.”ARTICLE VII: PRODUCTION OF GAS
7.01. Production of Residue Gas.
(a) In this Article and Article 8:(i) “Allocated Unitized Substances” means the Unitized Substances allocated to each Tract in accordance with paragraph 7.03.;
(ii) “Minimum Quantity” means,
Page 7 of 18
(A) with respect to each Month commencing on or after the Effective Date other than a Month described in paragraph (B), the greater of
_____, or the excess of the total amount of Net Unitized
Substances obtained in that Month from the Unitized Zone, over
the sum of the Monthly Opening Storage Balance for that Month
and the total quantity of Storage Gas injected into the Unitized
Zone in that Month; and,
(B) with respect to each Month after the Month in which the aggregate of the Minimum Quantities as determined under paragraph (A) first
equals or exceeds _____;
(iii) “Monthly Opening Storage Balance” means, (A) with respect to the Month commencing on the Effective Date, _____; and,
(B) with respect to each Month thereafter, the excess of the sum of the Monthly Opening Storage Balance for the previous Month, the
total quantity of Storage Gas injected into the Unitized Zone in that
previous Month and the Minimum Quantity for that previous
Month, over the total quantity of Net Unitized Substances obtained
in that previous Month from the Unitized Zone;
(iv) “Net Unitized Substances” means Unitized Substances, other than Gas Products obtained from the Unitized Substances.
(b) The Net Unitized Substances obtained in a Month from the Unitized Zone shall, to the extent,
(i) they exceed the Minimum Quantity for the Month, and,
(ii) do not exceed the sum of the Monthly Opening Storage Balance for the Month and the total quantity of Storage Gas injected into the Unitized
Zone in the Month,
be deemed to comprise Storage Gas.
THE FOLLOWING IS FOR ILLUSTRATION PURPOSES ONLY:
Formulae MQ = Minimum Quantity for the current Month
NUS = Net Unitized Substances withdrawn for the current Month
SGI = Storage Gas injected for the current Month
MOSB1 = Monthly Opening Storage Balance for the current Month
MOSB 2 = Monthly Opening Storage Balance for the next Month
Page 8 of 18
To determine Minimum Quantity for the current MonthMQ = the greater of X/120 or NUS-(MOSB
1+SGI) (until
aggregate Minimum quantities for all Months first equals
or exceeds [X])
= zero (after aggregate Minimum Quantities for all Months first equals or exceeds [X])
To determine the Monthly Opening Storage Balance for the next Month MOSB2= (MOSB
1+SGI+MQ)-NUS
7.02. Production of Storage Gas.
Net Unitized Substances deemed under paragraph 7.01.(b) to comprise Storage Gas shall
not be allocated among the Tracts, and no royalty shall be payable on it.
7.03. Production of Unitized Substances.
(a) The following Unitized Substances shall be allocated among the Tracts in accordance with their Tract Participations:
(i) Gas Products obtained from the Unitized Zone each Month,
(ii) Net Unitized Substances that are not deemed to comprise Storage Gas under paragraph 7.01.(b) and that are obtained from the Unitized Zone
each Month after the Month in which the aggregate of the Minimum
Quantities first equals or exceeds _____, and
(iii) the Minimum Quantity for each Month, notwithstanding that the actual quantity of Net Unitized Substances obtained from the Unitized Zone for
the Month may be less than the Minimum Quantity for the Month.
(b) The amount allocated to each Tract pursuant to clause (a), and only that a mount,
shall be deemed conclusively to have been produced from the Unitized Zone in
the Tract.
7.04. Distribution Within Tracts.
The Allocated Unitized Substances shall be distributed by the Working Interest Owner
among, or accounted for to the Parties entitled to share in production from the Tract in the same
manner, the same proportions, and on the same conditions as they would have participated and
shared in the production from the Tract, or in any proceeds from the same of production, had the
Page 9 of 18
Allocated Unitized Substances actually have produced from the Tract by the Working Interest
Owner.
7.05. Calculation of Royalty.
The Working Interest Owner shall calculate royalty on the Allocated Unitized Substa nces
at the applicable rate pursuant to the Lease, other agreement or instrument rela ting to the Tract.
The Royalty Owners of each Tract agree to accept payment of royalty so calculat ed in
satisfaction of the obligation of the Working Interest Owner to make royalty payments on
Unitized Substances under the Lease, other agreements or instrument covering the Tract.
7.06. Taking Unitized Substances in Kind.
If a Party is entitled to take in kind its share of Allocated Unitized Substa nces obtained
from the Unitized Zone, or if a Party has given notice in accordance with its Le ase to take its
share of Allocated Unitized Substances and the taking in accordance with the notice will not
interfere with Unit Operations, that share shall be delivered in kind in accordance with the Lease.
7.07. Failure to Take in Kind.
To the extent that any Party is entitled in accordance with paragraph 7.06. to t ake in kind
any Allocated Unitized Substances and fails to take or otherwise dispose of them, then so long as
the failure continues, the Working Interest Owner, as agent and for the account and at the
expense of the Party, may sell or otherwise dispose of them. If that Party’s share of Allocated
Unitized Substances is sold by the Working Interest Owner, the Working Interest Owner shall
pay the net proceeds remaining from the sale to the Party after deducting reasonable costs for
carrying out the sale. The Working Interest Owner may contract for the sale of production only
for the minimum term obtainable which in no event shall exceed one (1) year. When the
Working Interest Owner has so contracted, that Party may take its share of the Allocated
Unitized Substances in kind on the expiration of the current sales contract if the Part y has given
the Working Interest Owner at lease three (3) months written notice prior to the expirat ion of the
current contract that the Party intends to take its share in kind.
7.08. Deductions from the Proceeds of the Royalty Owner’s Share.
The Working Interest Owner shall be entitled to deduct those costs and allowances whi ch
are permitted to be deducted under its Lease or agreement in determining the proceeds payable to
the Royalty Owner for its royalty share of Allocated Unitized Substances.
ARTICLE VIII: CONSUMPTION AND LOSS OF UNITIZED SUBSTANCES
8.01. Consumption and Loss of Unitized Substances .
Page 10 of 18
(a) The Working Interest Owner shall be entitled to use as much of the Unitized Substances, other than crude oil and Gas Products, as may reasonably be required
for Unit Operations.
(b) Any Unitized Substances used in connection with the injection of Storage Gas into the Unitized Zone, or in the recovery, processing, or reprocessing of that part
of Unitized Substances deemed under paragraph 7.01.(b) to comprise Storage Gas
shall be allocated to the Tracts in accordance with their Tract Partic ipations, and
be distributed and accounted for, and have royalty calculated on it, in accordance
with paragraphs 7.04. and 7.05.
(c) Subject to paragraph (b), Unitized Substances consumed through Unit Operations that are permitted to be used under paragraph (a), and those unavoidably lost in
the conduct of Unit Operations, shall not be allocable to the Tracts, and
accordingly no royalty shall be payable or deliverable on it. The provisions of
this paragraph 8.01. shall not be construed as relieving the Working Interest
Owner of any liability which it would otherwise have for any loss of Unitized
Substances.
ARTICLE IX: DISPUTES
9.01. Disputes
If the title or right of a Party to receive in kind all or any portion of the Unitize d
Substances allocated to a Tract, or any share of the proceeds from the sale of it, is in dispute, the
Party concerned shall give notice to the Working Interest Owner. If the Working Interest Owner
is so notified, or if it is otherwise informed of the dispute, the Working Interest Owner shall
withhold and sell the portion of Unitized Substances allocated to a Tract, the title or right to
which is in dispute, and hold in a non interest bearing account the proceeds from the sale thereof
until:
(a) the party whose title or right is in dispute furnishes security in a form and manner satisfactory to the Working Interest Owner for the proper accounting to the
rightful owner if the title or right of the Party shall fail in whole or in part, a nd the
proceeds shall be paid to that Party; or,
(b) the title or right is established by a final judgment of a court or otherwise to the
satisfaction of the Working Interest Owner, and the proceeds shall be paid to the
person rightfully entitled to them.
Any Party which is a party to a title dispute and fails to give the Working Interest Owne r
notice of it on becoming aware of the same shall be liable for any liability, loss, costs, claims, or
damages suffered or incurred by the Working Interest Owner or any other Party as a result of the
failure to notify in a timely manner.
Page 11 of 18
ARTICLE X: TITLES
10.01. Warranty of Title and Indemnification.
The Working Interest Owner represents and warrants that it is the owner of the Working
Interests as set out in Exhibit “A,” and that it has the authority to commit i ts Working Interests
and Royalty Interests in the Tracts, as the case may be, to unitization in accordance with the
provisions of this Agreement, and bind the same; and agrees to indemnify and save harmless
each of the other Parties against and from any liability, loss, costs, claims, or dam ages of any
nature whatsoever arising out of any breach or failure of this representation and warranty,
whether in whole or in part, or any failure of or defect in, the title to any of the W orking Interests
it owns, no matter when occurring or arising.
10.02. Subsequent Failure of Title.
If the title of the Working Interest Owner to a Tract fails, the Working Interest Owne r
shall have ninety (90) days following the time in which the failure is finally determ ined, and any
additional time thereafter as it may be or become entitled to at l aw, to undertake other remedies
to have the Tract qualify for inclusion into the Unit Area. During this period all procee ds from
sale of production allocated to the Tract shall be dealt with in accordance with Article IX. If the
Working Interest Owner fails to pursue these other remedies to resolve the title failure with that
time period or periods of time, the Tract shall be excluded from this Agreement as of the first
day of the Month in which the failure is so determined, unless:
(a) any other Party is held or declared to own the title, in which event that Party shall
be bound by this Agreement in respect of the Tract; or,
(b) by the last day of the next following Month the Tract qualifies for inclusion in the Unit Area pursuant to paragraph 5.02.
10.03. Revision of Exhibits.
The Working Interest Owners shall revise the Exhibits to reflect any change in owne rship
in or exclusion from this Agreement of a Tract pursuant to paragraph 10.02. Where a Tract i s
excluded, the Tract Participations of the other Tracts shall each be increased, without changing
their ratios to each other, so that their summation is one hundred percent (100%). The revi sed
exhibits shall be effective as of 7:00 a.m. on the first day of the Month in which the failure of
title referred to in paragraph 10.02. is finally determined.
10.04. Title Failure Clarification.
Without in any manner limiting the generality of the meaning of failure of titl e, the
cancellation, surrender, or other termination of a Lease for any reason shall for the purposes of
this Article be regarded as a failure of title.
Page 12 of 18
ARTICLE XI: TRANSFER OF INTEREST
11.01. Disposition.
In this paragraph, “disposition” means a sale, assignment, transfer, lease, sublease,
conveyance, gift, parting with possession, or any transaction of a similar nature, whether by t rust
or otherwise. A disposition of any interest owned by a Party in a Tract shall cover the whol e of
or an undivided interest in the Party’s interest in the Tract. A disposition by a Royalt y Owner
shall not be binding on the Working Interest Owner until at least one of the parties to the
disposition has given the Working Interest Owner written notice, together with documentary
evidence of the disposition, and any acquiring parties which are not Parties have execute d and
delivered to the Working Interest Owner a counterpart of this Agreement. The Working Interest
Owner shall revise the exhibits to reflect each disposition of an interest in a Trac t and the revised
exhibits shall be effective as of 7:00 a.m. on the first day of the Month next following the Month
in which the Working Interest Owner transacts or is notified of the disposition.
ARTICLE XII: IN GENERAL
12.01. Execution in Counterpart.
This Agreement may be executed in separate counterparts, and all of the executed
counterparts together shall constitute one instrument and have the same force and effec t as if all
of the persons executing counterparts executed the same instrument. The Working Interest
Owner shall, on written request, provide a complete set of photocopied counterpart executi on
pages to each Party requesting the same.
12.02. Due Capacity.
If a Party owns a Working Interest and a Royalty Interest, its execution and delivery of a
counterpart of this Agreement shall constitute execution and delivery in both capacities.
12.03. Subsequent Execution.
An owner of an interest in a Tract who has not executed and delivered a counterpart of
this Agreement as of the date the Tract was included in the Unit Area under Articl e V. may not
later become entitled to exercise the rights of a Party with respect to the i nterest except on the
terms and conditions as may be prescribed by the Working Interest Owner.
12.04. No Partnership.
Nothing in this Agreement shall be read or construed as creating a partnership, or as
imposing on any Party any partnership duty, obligation or liability of any kind. It is the express
intention of the Parties that the respective rights, obligations, and liabilitie s of each of the Parties
Page 13 of 18
under this Agreement, and in respect of the subject matter generally, shall be several, and not
joint or joint and several.
12.05. Force Majeure.
No Party shall be deemed to be in default with respect to the nonperformance of its
obligations under this Agreement, other than financial, if and for so long as its nonperformance
is due in whole or in part to any cause beyond its reasonable control, but lack of funds shall not
be a cause beyond a Party’s reasonable control. A Party shall use reasonable efforts to re move
the cause, and the performance of the obligations shall begin or be resumed within a reasonable
time after the cause has been removed. Nothing shall be construed to require any Party to settle
a strike, lockout, or other labor difficulty by acceding against its judgment to the de mands of
opposing persons in any labor dispute. Where the performance of any Party is prevented or
materially affected, the Party shall give notice and full particulars to the other Parties within a
reasonable time after the occurrence of the cause relied on and shall give notic e to the other
Parties immediately when the cause ceases to operate. Neither this Agreement nor any Lease or
any other agreement or instrument relating to the Unitized Zone or Unitized Substances shall
terminate by reason of suspension of Unit Operations for any cause set forth in this paragraph.
12.06. Taxes.
As between the Working Interest Owner and the Royalty Owners in each Tract, all t axes
levied in respect of the ownership, production or sale of the Unitized Substances allocate d to a
Tract shall be borne in accordance with the provisions of the applicable legislation, regulations,
Lease or other agreement or instrument relating to it. In the event that a Royal ty Owner fails to
pay when due any such taxes which are payable by it, the Working Interest Owner may pay those
taxes on the Royalty Owner’s behalf and deduct the Royalty Owner’s share of any payment so
made from any proceeds of royalty payable or deliverable to it in respect of a Tract.
12.07. Right of Redemption.
In the event that a Royalty Owner fails to pay when due any amount owing under or in
respect of any mortgage, agreement for sale, or other instrument or arrangement by virtue of
which a third party claims an interest in a Tract, the Working Interest Owner ma y, with full right
of subrogation, pay the amount on the Royalty Owner’s behalf and deduct the Royalty Owner’s
share of any payment so made from any royalty payable or deliverable to it in respect of such
Tract.
12.08. Inuring Clause.
Subject to the provisions of paragraph 11.01., this Agreement shall inure to the benefit of,
and be binding on the respective heirs, executors, administrators, successors, and assigns of the
Parties.
12.09. Governing Law.
Page 14 of 18
This Agreement shall be governed by and construed in accordance with the laws of the
State of _____, and each of the Parties submits to the jurisdiction of the courts of the St ate of
_____ for the interpretation and enforcement of the terms of this Agreement.
12.10. Statutory Compliance.
In exercising their respective rights and discharging their respective obligations under this
Agreement, the Parties shall comply in all material respects with all appl icable local, state and
federal laws and regulations. In the event of any conflict between the provisions of this
Agreement and the provisions of any local, state and federal laws and regulations, the lat ter
provision shall prevail.
ARTICLE XIII: EFFECTIVE DATE
13.01. Effective Date.
The unitization provided for in this Agreement shall be effective at 7:00 a.m. on the first
day of the first Month following the date of qualification of all Tracts for inclusion i n the Unit
Area pursuant to clause 5.02. (the “Effective Date”).
13.02. Notice of Effective Date.
As soon as possible after the Effective Date, the Working Interest Owner shall notify eac h
of its Royalty Owners of the Effective Date, and shall file of record one (1) copy of this
Agreement.
13.03. Release Date.
This Agreement shall cease to bind the Parties if the unitization provided for in it has not
become effective on or before the 1st day of ______, _____.
ARTICLE XIV: TERM
14.01. Effect of Execution and Delivery.
Subject to paragraph 13.01., this Agreement is binding on:
(a) a person who executes and delivers a counterpart of it to the Working Interest Owner, and that person is bound by this Agreement as of the time of that delivery;
and,
(b) a person who the Working Interest Owner has bound by virtue of an agreement with that person.
Page 15 of 18
14.02. Termination.
Subject to paragraph 13.01., this Agreement terminates ninety (90) days after all wells for
the conduct of Unit Operations in the Unit Area have been abandoned, plugged, or disposed of,
or on written notification from the Working Interest Owner, whichever is the first to occur. As
of the date of termination, there shall be no further royalty obligation in connection wi th the
provisions of Article VII, other than in respect of royalty and royalty proceeds that became
payable on or before the date of termination that has not been paid by that date. Thereafter the
Parties shall be governed by the terms and provisions of their Leases and other agreement s or
instruments relating to the Unitized Zone or Unitized Substances.
14.03. Salvaging Equipment Upon Termination.
The Royalty Owners grant the Working Interest Owner the right for a period of six (6)
Months after termination of this Agreement to salvage, sell, distribute, or otherwise dispose of
the personal property and facilities used in connection with Unit Operations. This provision
shall survive the termination of this Agreement for that six (6) Month period.
14.04. Notice to Royalty Owners.
The Working Interest Owners shall give notice in accordance with their Leases t o their
respective Royalty Owners of the termination of this Agreement within thirty (30) days of t he
termination.
Each Party has executed this Agreement on the date shown opposite its name.
OWNER
Date:
EXHIBIT “A”
ATTACHED TO AND MADE PART OF AN AGREEMENT ENTITLED
“_____ GAS STORAGE UNIT”
Tract No. Land Description Royalty Owner
Tract
Participation
(%)
Working Interest Owner
Share of Working
Interest (%) Share of Tract
Participation (%)
Working Interest Owners:
____________________________ _____%
____________________________ _____%
EXHIBIT “B”
ATTACHED TO AND MADE PART OF AN AGREEMENT ENTITLED
“_____ GAS STORAGE UNIT”
(Plat showing the Unit Area and identifying the Tracts in the Unit)
Page 18 of 18
EXHIBIT “C”
ATTACHED TO AND MADE PART OF AN AGREEMENT ENTITLED
“_____ GAS STORAGE UNIT”
(The Well log referred to in 1.01 of the Agreement)
