Fill and Sign the Reservation of Additional Interests in Production Form

RESERVATION OF ADDITIONAL INTERESTS IN PRODUCTION Form 1. As additional bonus consideration for the execution and delivery of this Lease, Lessee shall pay Lessor, in addition to all other remuneration requirements contained in this Lease, a production payment equal to the value of (Fraction or Percent) of all the oil, gas and other hydrocarbons if, as, and when produced from any part of the lease premises, until Lessee shall have been paid the sum of $____. When that sum has been received by Lessor, the production payment shall automatically terminate and all rights to or in the production payment shall automatically revert to and vest in Lessee and its successors and assigns. Form 2. In addition to the bonus paid to Lessee for the execution of this Lease and the royal ty and other payments provided for in this Lease, Lessee shall pay Lessor, without reduction, a $____ production payment which shall be payable out of ____% of 8/8 of total production from the lease premises. Upon Lessor receiving $____ out of ____% of 8/8 of total production, this production payment shall automatically terminate and cease to be a burden agai nst the leasehold estate created by this Lease. No written instrument shall be required to evidenc e the termination of this production payment. Form 3. The royalty provided for in this Lease is ____. That royalty shall be paid to Lessor from each well, until Lessee recovers, from the original Lessee’s interest in production (aft er payment of the royalty and Lessee’s production, severance and other taxes on and measured by production) an amount equal to 100% of all of Lessee’s direct and actual costs of materi als and labor incurred in connection with the drilling, testing, completing, and equipping a well. Di rect costs shall not include Lessee’s costs of overhead, office administration, insurance, amort ization, operations, or depreciation. After recovery of that amount, the royalty provided for in this Lease shall automatically increase to ____. This increase in royalty shall apply separate ly to each well drilled and shall be computed on a well-by-well rather than a Lease basis. On completion of a well, and monthly thereafter, as to each well, until Lessee’s specified and permitted costs have been recovered and the royalty on each well increases, Lesse e shall deliver to Lessor an itemized statement of all costs. Lessor may request and Lesse e shall provide copies of all invoices itemized in the monthly statements. Until Lessee rec overs all costs on a well, Lessee shall provide Lessor copies of all production and sales reports on each well, together with a statement of all production income to Lessee on each well. T he increase in royalty shall be effective 7 a.m. on the first day of the month following Lessee’s recovery of all permitted costs on each well. Form 4.In addition to the royalty provided for in the printed portion of this Lease, Lessor shall receive as additional consideration a production payment of $____ payable out of ____% of 8/8ths of all oil, gas and associated hydrocarbons produced, saved and sold from the lease premises. This interest will be paid in the same manner royalty is paid in this L ease. At such time as Lessor receives $____ , the ____% of 8/8ths revenue interest paid to Lessor to re tire the production payment shall revert to Lessee and Lessor shall then be entitled to only receive the royalty provided for in this Lease. Notwithstanding the provisions for payment of this production payment, if the production payment has an unpaid balance at the end of the pri mary term, the entire remaining balance will be due and payable regardless of whether or not this Lease is producing oil and/or gas at that time. If, for any reason, Lessee fails to pay Lessor the unpaid balance of the production payment at the end of the primary term, the revenue from the production payment shall not be interrupted and shall continue to be paid to Lessor until the production payment is retired. Form 5. At such time as the cumulative payout of all wells drilled on the lease prem ises has occurred, Lessor’s royalty reserved in the printed portion of this Lease shall increase from ____ to ____. “Cumulative Payout” will be deemed to have occurred at the time when the total proceeds from the sale of oil, gas, and other hydrocarbons substances produced, saved, and sold (plus the current market value of all oil, gas and other substances which are taken in kind or used off the premises, but not sold) from any wells drilled shall equal 100% of the cost incurred in drilling, deepening, plugging, abandoning, plugging back, reworking, testing, completing, and equipping the well (excluding any costs beyond the wellhead connection, such as tanks, separators, and flow lines), together with 100% of the costs of operations during that time. In computing the total proceeds from the sale of oil, gas, and other hydrocarbons, the following shall be deducted: royalties payable to Lessor; any overriding royalty or production payment reserved to Lessor; other obligations payable out of production existing as of the date of this Lease and not created by Lessee; and, taxes based directly upon or measured directl y by production. Form 6. In addition to the royalty reserved to Lessor in the printed portion of this Lease, Lessor reserves an overriding royalty on oil, gas and associated hydrocarbons produced and saved equal to ____% of 8/8. Form 7. As additional bonus consideration payable to Lessor (as owner of the executive rights in the lease premises) for the execution of this Lease, Lessee shall receive a produc tion payment payable out of ____% of 8/8 of total production of all oil and gas produced and saved from the lease premises equal to $____ per net mineral acre covered by this Lease. When Le ssor is paid, out of ____% of 8/8 of total production, an amount of money, which when divided by the number of mineral acres owned by Lessor equals $____, this production payment shall terminate and this burden against the leasehold estate shall cease without further action on the part of Lessee or Lessor.