Fill and Sign the Oil Ampamp Gas Law Chapter 7 Uh Law Center Form

GAS PRICES AND SALES CONTRACTS Form 1. If Lessee enters into a gas sales contract for the sale of gas (including casinghead gas and/or other gaseous substances) produced from or attributable to the lease premises with a purchaser which is owned or controlled by, is an affiliate or subsidiary of Lessee, or of which Lessee is a subsidiary, then the royalties on the gas payable by Lessee, shall be ca lculated and paid on the basis of the market value of the gas. The term “market value” mea ns the average of the three highest prices being paid for gas of like quantity, quality, and delivery pressure at the wellhead of wells (similarly located with respect to a pipeline owned or operated by bona fide third party purchasing companies) located in the county in which the lease premises a re located, under existing contracts of like duration which are entered into within one year of the effective date of the Lessee’s gas sales contract for the purchase of gas and/or casinghead gas from a well on the lease premises or lands pooled with the lease premises. Form 2. In the negotiation and execution of any gas sales contract, Lessee shall use its best efforts to obtain the highest price available in the market area for any gas produced and sold from the lease premises. Lessee shall not enter into any gas sales contract covering the lease premises where Lessee agrees to sell gas produced to a company in which Lessee owns an intere st, whether legal or beneficial, or a company of which Lessee is the parent company or a subsidiary company, unless the price to be paid under the gas sales contract is equal to or grea ter than the highest price offered or being paid by any other purchaser of gas in the area. If gas produced from the lease premises is sold under more than one gas sales contract, Lessor shall be paid its share of royalty gas based upon the average of the prices provided in the contracts. Lessor sha ll always be a necessary party to any gas sales contract which covers Lessor’s share of royal ty gas from the lease premises. Form 3. Lessee shall furnish Lessor a copy of all gas sales contracts under which gas produced from the lease premises is sold or processed, and all subsequent agreements, supplements, a nd amendments to those contracts. Form 4. Lessee and any subsidiary or affiliate of Lessee shall, at all times, exercise due diligence as the fiduciary agent for Lessor in the marketing of all oil and/or gas products produced or derived from the lease premises and in entering into contracts for the processing and sa le of those products. Any sale of products to or contracts for processing products through a subsidiary or affiliate of Lessee shall, at a minimum, be at a price equal to and on terms similar to those which would be obtained or applied under a contract in an arms-length transaction. Without fi rst obtaining the written consent of Lessor, Lessee shall not market any production from the lea se premises under a contract with a term in excess of (Specify Time Period).