Fill and Sign the Joint Operating Agreement Texasbarcle Form

Form 2 EXHIBIT “E” TO OPERATING AGREEMENT GAS BALANCING AGREEMENT The parties to the Joint Operating Agreement (the “Agreement”) to which this Agreeme nt is attached, own the working interest in the gas rights underlying the Contract Area covere d by the Agreement. Each party’s ownership percentage in the Contract Area is set out in Exhibit “A” to the Agreement. The Agreement provides each party has the right to take in kind its share of gas produced from the Contract Area and market or otherwise dispose of its gas. In the event any party i s not, at any time, taking or marketing its share of gas, or has contracted to sell it s share of gas produced from the Contract Area to a purchaser which does not, at any time, take the full share of gas attributable to the interest of the party, the terms of this agreement shal l automatically become operative. During the period when any party is not marketing or otherwise disposing of its share of gas produced from any proration unit within the Contract Area, the other parties to the Agreement shall be entitled to produce, in addition to their own share of gas production, t hat portion of a party’s share of gas production which that party is unable to market or otherwise dispose of, and shall be entitled to take that gas production and deliver it to its or their purchaser(s). All parties shall share in and own the liquid hydrocarbons recovered from the gas by lease equipment based on their respective interests in the Contract Area and subject to the terms of the Agreement, but the party or parties taking gas shall own all of the gas delivered to its or their purchaser(s). An account shall be established for each party not marketing or otherwise disposing of its share of the produced gas, which account shall be credited with an amount of gas equal to that party’s full share of the produced gas, less its share of gas used in lease operations, vented or lost, and less that portion marketed or otherwise disposed of by the party. The operator named in the Agreement, and its successors (the “Operator”), will maintain a current over and unde r account of the gas balance between the parties and will furnish all parties m onthly statements showing the total quantity of gas produced, the amount used in lease operations, vented or l ost, the total quantity of liquid hydrocarbons recovered, and the monthly and cumulative over and under account of each party. Each party will continue to be obligated to make settlement with the roya lty owners to whom it is accountable, just as if each party were marketing or otherwise disposing of i ts share, and its share only, of gas production. Each party agrees to hold all other parties harmle ss from any and all claims for royalty payments asserted by royalty owners to whom each party is accountable. The term “royalty owner” shall include owners of royalty, overriding royalties, production payments and similar interests out of production or proceeds from the sale of production. After notice to the Operator, any party, at any time, may begin marketing or otherwise disposing of its share of the gas produced from a proration unit in which it has an under account balance. In addition to that party’s share of gas, based on its ownership in the Contract Are a, until it has balanced the gas account as to its ownership interest, the party shal l also be entitled to take a share of gas, determined by multiplying _____ percent (_____%) of the interest in the current production of the party or parties having an over account balance, by a fraction, t he numerator of which is the interest in the proration unit of the party with the under a ccount balance and the denominator of which is the total percentage interest in the prorat ion unit of all parties having an under account balance and who are currently marketing or otherwise disposing of gas. Each party that is marketing or otherwise disposing of gas shall pay the production taxes due on the gas disposed of or marketed. Nothing in this Gas Balancing Agreement shall be construed to deny any party the right, from time to time, to produce and deliver to its purchaser its full share of the allowable gas production, to meet the deliverability tests required by its purchaser. Should production of gas from a proration unit be permanently discontinued before the gas account of each party for the proration unit is balanced, settlement will be made between those parties credited with under account and over account balances. In making this settlement, the party or parties credited with an under account balance will be paid by the pa rty or parties credited with an over account balance a sum of money equal to the amount recei ved attributable to the over account, less applicable production taxes. For all gas sold this sum shall be computed at the price received for the sale of the gas. Nothing in this Gas Balancing Agreement shall change or affect each party’s obligation to pay its proportionate share of all costs and liabilities incurred, as provided in the Agreement. This Gas Balancing Agreement shall constitute a separate agreement as to ea ch proration unit within the Contract Area. It shall inure to the benefit of and be binding on the parties to the Agreement, and their successors, legal representatives and assigns. It shall become effect ive on the date of first production from the proration unit in the Contract Area to which it i s deemed to apply, and shall remain in force and effect as long as the Agreement to which i t is attached remains in effect.