Fill and Sign the Unit Agreementpdf Mississippi State Oil Ampamp Gas Board Form

GAS STORAGE AND SECONDARY RECOVERY UNIT AGREEMENT FOR __________________________ FIELD _____________ COUNTY, __________ Page 2 of 17 TABLE OF CONTENTS Article Title I. DEFINITIONS II. UNITIZATION III. BASIS OF PARTICIPATION AND ALLOCATION OF UNITIZED SUBSTANCES IV. PRESSURE MAINTENANCE SYSTEM V. OWNERSHIP OR ROYALTY AND OVERRIDING ROYALTY INTEREST VI. USE OF PREMISES FOR UNIT OPERATIONS VII. PERPETUATION OF UNITIZED LEASES VIII. GENERAL IX. EFFECTIVE DATE AND TERM Page 3 of 17 GAS STORAGE AND SECONDARY RECOVERYUNIT AGREEMENTFOR _____________________ FIELD ____________________ COUNTY, __________ This Agreement is made and entered into between _____, called “Operator,” and all parties who sign or join in this Agreement or a counterpart or ratification of it, all of whom are collectively called the “Participants.” Operator and Participants may be referred to in this Agreement collectively as the “Parties,” or individually as a “Party.” For the purposes of more effectively developing, producing, and operating the Unit Area, as defined below, in order to prevent surface and underground waste, and obtain the greatest ultimate recovery of production of oil and gas, promote conservation, and to afford each of the Parties the right to recover their fair and equitable share of the production to be obtained from the Unit Area, or to receive the attributable proceeds of such production, it is deeme d in the best interests of the Parties that the Unit Area be developed, produced, and operated as a single Unit, all as provided for in this Agreement. The Parties further desire to provide for the utiliz ation of the Unit Area, by Operator, and its successors or assigns, for gas and Extraneous Gas storage, all as provided for in this Agreement. For valuable consideration and the other benefits to be received, the receipt of which i s acknowledged by each Participant, and of the mutual covenants and agreements contained in this Agreement, the Parties agree as follows: ARTICLE I DEFINITIONS For the purpose of this Agreement, the following terms shall have the stated meanings: 1. Extraneous Gas shall mean gas not originally produced from the Unit Area, but which is purchased and supplied by the Operator, or a third party pursuant to arrangements with the Operator, and injected from time to time into the Unit Area for the purposes of pressure regulation and Extraneous Gas storage, for the maintaining or raising the reservoir pressure of the _____ Formation. Extraneous Gas shall not be deemed to include the liquids recovered at the outlet of any separator, compressor, or processing plant located within or connected to the Unit Area. 2. Operator shall mean _____, or its successors or assigns. If the Operator is now, or later becomes, the owner of a mineral, Royalty, or Overriding Royalty Interest within the Unit Area, the provisions of this Agreement shall be applicable to Operator both in its capaci ty as an Operator and a Participant. Page 4 of 17 3. Overriding Royalty Interest shall mean any interest, other than a working interest and/or a Royalty Interest or Royalty, in or giving rise to the right to rece ive a portion of the Unitized Substances or their attributable proceeds from any part of the Unit Area, and shall include any Overriding Royalty Interests, oil payment interests, or other payment out of production, or a burden on a lease which does not carry with it the right to search for and produce Unitized Substances. 4. Overriding Royalty Owner shall mean the owner of an Overriding Royalty Interest. 5. Pressure Maintenance shall mean the injection of fresh water, salt water, air, gas, Extraneous Gas, or other substances into the _____ Formation and the control of the reservoir and the producing of the wells in the _____ Formation on a pool wide basis for the purposes of conserving and increasing the recovery of Unitized Substances, and the storage of gas and Extraneous Gas in the Unit Area, and shall include all operations known as secondary recovery operations, cycling, recycling, repressuring, water flooding, pressure maintenance, gas storage, and other operations designed for a similar purpose. 6. Royalty Interest or Royalty shall mean the royalty interest reserved to the lessor in an oil and gas lease on lands included within the Unit Area, and shall include the mineral, royalty, and reversionary rights to receive such interest in the Unitized Substances or the proceeds from them from any part of the Unit Area. 7. Royalty Owner shall mean the owner of a Royalty Interest that is a Party to this Agreement. The rights of Royalty Owners are referred to as “Royalty Interest” or “Royal ty” to distinguish them from the owners of a working interest or Overriding Royalty Interest. 8. Unit Area shall mean the _____ Formation lying within the area outlined by the hatched border line on the plat attached as Exhibit “A,” and described on Exhibit “B” to this Agreement. 9. Unitized Formation shall mean the formation geologically known and referred to as the _____ Formation and lying within the Unit Area and more generally referred to but not limited by the stratigraphic section encountered in the following described wells a t the depth specified, as indicated on the electrical logs of these wells: [Description of Wells, statement of depth, and log reference.] 10. Unitized Substances shall mean all oil and natural gas contained within or produced from that portion of the _____ Formation which underlies the Unit Area, including all hydrocarbons and other fluids associated with them, whether liquid, gaseous, or mixed, and all liquids which may be recovered at the outlet of any separator, compressor, or processing plant located within or connected to the Unit Area, but shall not include the gaseous porti on of Extraneous Gas; provided, however, all the Extraneous Gas used or sold shall be passed through a separator, compressor, or processing plant located within or connected to the Unit Area. Page 5 of 17 11. Working Interest shall mean the right to search for, produce, and acquire Unitized Substances from any part of the Unit Area, whether held as an incident to ownershi p of the fee simple title or under an oil and gas lease or leases described in E xhibit “C” to this Agreement. ARTICLE II UNITIZATION On or after the Effective Date, the right of Operator to search for and to produce Unitiz ed Substances, develop the leases described in Exhibit “C,” and the rights and interests of each Participant in and to Unitized Substances (or the proceeds from them) obtained from t he lands within the Unit Area, and the Unitized Substances contained in and the Unitize d Substances that are produced from the Unit Area are hereby unitized and pooled for developing, operating, producing, and Pressure Maintenance purposes as those terms are defined in this Agreement, it being the intention of the Parties that Operator and each Participant, by virtue of t heir respective interests in the lands within the Unit Area, shall be entitled to receive the ir respective participation interests in the production (or the proceeds from them) from the Unit Area as a whole. On and after the Effective Date, all separately owned tracts within the Unit Are a shall be operated without respect to their separate boundary lines and on a pooled-unit basis, and the re shall be no obligation on Operator to drill interior offset wells to any well drilled on the Unit Area producing Unitized Substances. Operator may drill, use, and produce such wells as it deems advantageous to the Unit, shut in or abandon any wells it deems unnecessary or disadvantageous to the Unit, use any wells that it may select for Pressure Maintenance , or gas storage, injection purposes, and accrue, produce, and gather gas, Extraneous Gas, fresh water, salt water, and other substances, and inject such substances or any of them into the Unit Area, at times, in quantities, at places, at pressures, and under conditions that it deem s necessary or appropriate, and in general to do all other things that it deems advisable for gas stora ge, Pressure Maintenance and regulation, and the maintenance or increase in the conservation of Unitized Substances. On and after the Effective Date, all operations for drilling on the Unit Area or any part of it for obtaining Unitized Substances, and all operations on the Unit Area or any part of it , including gas storage operations, shall be considered for all purposes as operations on each and every tract in the Unit Area, and the Unitized Substances obtained from any tract in the Unit Area under the leases included in the Unit and/or the continuous or pressure regulation, maintenance, or gas storage operations shall be conclusively considered for all purposes as production on or from each and every tract in the Unit Area. The development and operation of the Unit Area on a pooled-unit basis, as provided in this Agreement, shall satisfy all requirements, conditions, and covenants, statutorily imposed, and both express and implied, for exploration, development, and for operations separately on each and every oil and gas lease covering any part of the Unit Area; but, nothing contained in this Agreement shall be c onstrued Page 6 of 17 as relieving Operator from the obligation to protect the Unit as a reasonable and prudent operator would do, from drainage by a well or wells outside the Unit Area. ARTICLE III BASIS OF PARTICIPATION AND ALLOCATION OF UNITIZED SUBSTANCES In determining the method, manner, and extent of paying the Royalty and Overriding Royalty Interests on Unitized Substances to Participants, the following principles shall be applied to conditions of ownership and participation in the Unitized Substances: 1.Royalty Interests and Overriding Royalty Interests shall accrue with respect to the Unitized Substances produced and saved by Operator from the Unit Area under leases covering lands described in Exhibit “B,” and shall be apportioned among and allocated to all of the respective separately owned tracts of land in the Unit Area pro rata, on an acrea ge basis, determined by the ratio by which the acreage in each tract, as shown in Exhibit “B,” bears to the total acreage within the Unit Area, regardless of whether all owners of Interests in t he Unit Area are bound by this Agreement; and, then, each Royalty and Overriding Royalty Owner owning a Royalty or Overriding Royalty Interest in the separately owned tracts shall be entitl ed to payment of Royalty or Overriding Royalty, except as otherwise provided for in this Agreement, in accordance with the terms of the lease covering the interests in each tract, solely on the production allocated to each tract, without regard to the tract or tracts from which the unitized substance is actually being obtained. However, no Royalty Interests or Overriding Royalty Interests which is not bound by this Agreement on the Effective Date shall participa te in the payment of Royalty or Overriding Royalty or other payments which have accrued or which will later accrue prior to the first day of the calendar month preceding the date whe n the interest becomes bound by this Agreement. Nothing in this Agreement shall inure to the benefit of any nonparticipating Royalty or Overriding Royalty Owner or to any Participant’s interest which i s not bound by this Agreement. The tracts of land covered by this Agreement shall each be construed as contained the designated acreage shown on the map attached as Exhibit “A,” and shall be conclusive on the Parties to this Agreement. 2.If any lease or any Royalty Interest included in the Unit terminates, expires, becomes canceled or forfeited, or was never included by reason of a Royalty Owner refusing or electing not to become a Participant to this Agreement, or this Agreement is or becomes invalid for any reason as to any Royalty Interest, then if that interest is not subject to any other valid and existing lease included within the Unit Area, that interest shall then be eli minated from participating in this Agreement and shall be free from the effect of this Agreement . If any Royalty or Overriding Royalty Interest owner now owns or later acquires any Royalty or Overriding Royalty Interest in the Unit Area which is not subject to any lease covered by this Agreement, the Royalty or Overriding Royalty Interest shall not be covered by nor shall it participate in this Agreement unless and until that later interest becomes subj ect to one or more leases presently held or which may later be acquired by Operator covering lands within the Unit Area. Page 7 of 17 3.No Royalty or Overriding Royalty shall be due on Unitized Substances used for the operation or development of the Unit Area, that may be returned to the Lessors, lost by leakage, handling, treating or transportation, that may be injected into the Unit Area, or that may be used or consumed in or incident to the operation or development of the Unit or a Pressure Maintenance regulation system. 4.During each calendar year of the term of this Agreement, commencing with the calendar year _____, and continuing thereafter as long as this Agreement is in effect, if no royalties have accrued to each Royalty Owner, or if the Royalties do not amount t o a minimum Royalty of as much as _____ dollars ($) per annum for each acre included in the Unit, Ope rator shall, on or before the expiration of sixty (60) days following the end of each calendar year, pay or tender to the Royalty Owners, as a minimum Royalty, a sum of money, either by check or draft, equal to the difference between the amount of the annual accrued Royalties and the sum of $_____ dollars ($) for each acre in the Unit Area, as of December 31st of the calendar year. In the event the whereabouts of a Royalty Owner is unknown to Operator, Operator may hold any sum due for the Royalty Owner’s credit or may tender the sum to the credit of the Royal ty Owner in the depository bank designated in the respective oil, gas, and mineral lease covering the Royalty Owners Interests, as the depository for delay rentals, or other payments provided for in a lease. Payment of the minimum Royalty provided for in this Section 4. of this Article III ma y be enforced as any other debt, but failure or omission to pay such minimum Royalty within t he time and manner provided shall not be the basis for forfeiture or termination of this Agreement. Without intending to limit the term of this Agreement, it is understood and agreed that in the event that payment, credit, or tender of Royalties as provided for in this Artic le III, are made, and while the right to make the same is accruing, it shall be conclusively presum ed that Pressure Maintenance, regulation, or gas storage operations are being conducted by Operator on the Unit Area. 5.No Royalty shall be payable to Participants with respect to or on Extraneous Gas injected in the Unit Area or with respect to Extraneous Gas when it is later wit hdrawn, produced from, and sold or used off the Unit Area. All indigenous and Extraneous Gas shall be metered when injected or sold. For the purposes of this Agreement, and in order to determine, for Royalty and Overriding Royalty payment purposes to Royalty and Overriding Royalty Owners, what portion of the injected gas which is later produced from and sold or used off the Unit is indigenous and what portion is Extraneous Gas, the following formula is adapted for applicat ion under the terms of this Agreement: (a)Notwithstanding anything contained in this Section 5. of Article III to the contrary, it is understood and agreed that the first __________ cubic feet of gas produced from the Unit and sold or used off the Unit for purposes other than injection, shall be deemed indigenous gas on which Royalty and Overriding Royalty payments shall apply and be paid. (b) If no Extraneous Gas is injected in the Unit Area, all indigenous gas which is injected and is later produced from the Unit and is sold or used off of the Unit for t he purposes Page 8 of 17 other than injection, shall be deemed indigenous gas on which Royalty and Overriding Royalty payments shall apply and be paid. (c)If Extraneous Gas only is used for injection purposes, then all gas later produced from the Unit Area through a well or wells on the Unit, and sold or used off the premises other than for injection purposes shall be deemed to be Extraneous Gas, free of Roya lty and Overriding Royalty, until the volume produced equals the volume of Extraneous Gas injected, and thereafter all gas produced shall be deemed to be indigenous gas on which Royalty and Overriding Royalty payments shall apply and be paid (d)If indigenous and Extraneous Gas are both injected into the Unit Area at the same or different times, then all gas later produced from the Unit Area in a well or wells and sold or used off the Unit Area for any purpose other than injection, shall be deemed to be Extraneous Gas on which no Royalty or Overriding Royalty payments shall apply until the volume of the portion of the gas equals the volume of Extraneous Gas injected, and the ba lance of the gas shall be deemed to be indigenous gas on which Royalty and Overriding Royalty payments shall apply and be paid. 6.The method, manner, and extent of paying Royalty on Unitized Substances to Royalty or Overriding Royalty Owners, as set out in this Article III, shall, insofar as Royalt y and Overriding Royalty Owners are concerned, with respect to their interests, be in lieu of the Royalty and Overriding Royalty that would have been paid on the Unitized Substances under the terms of the respective leases, if there had been no unitization. 7.In the event of conflicting claims to the Royalty, Overriding Royalty or any other payments payable under this Agreement, Operator shall not be obligated to pay the Roya lty, Overriding Royalty, or any other payments, and Operator may withhold payments without interest until the conflicting claims have been finally settled by the cla imants, or by final adjudication. ARTICLE IV PRESSURE MAINTENANCE SYSTEM Subject to the provisions of Article IX below, Operator or its assigns shall install or cause to be installed, maintained, and operate, at its sole cost and expense, except as otherwise provided for in this Agreement, a system for regulating the pressure of and operating and producing the Unit Area as a whole. The system shall be of such design as Operator in its good faith judgment considers appropriate for the purposes of this Agreement and shall be constructed and placed in operation as soon as practicable after the Effective Date of thi s Agreement. Operator shall have the right to abandon the Pressure Maintenance system or any phase of it when, in its good faith judgment, operation and maintenance of the system shall no longer be profitable. Page 9 of 17 ARTICLE V OWNERSHIP OR ROYALTY AND OVERRIDING ROYALTY INTEREST 1. Each Participant represents and warrants that it is the owner of a Royalty or Overriding Royalty Interest in a tract or tracts within the outer limits of the Unit Area as the Participant’s interests appear of record in _____ County, _____, as of the date the Participant executes or joins in this Agreement. Nothing in this Agreement shall be construed as al tering or impairing the provisions of any of the leases or other contacts with reference to the reduction of Royalties or other interests in the event the lessor or grantor in any such instrument owns less than the entire fee simple estate in the land described or less than the inte rest of which each lessor or grantor represents it was the owner. 2.All assignments and transfers of Royalty and Overriding Royalty Interest shall be subject to, and the assignees and transferees shall be bound by this Agreement. No transfer of Royalty or Overriding Royalty Interests in any land or lease covered by this Agreement sha ll be binding on Operator until Operator has been furnished with a complete original or a certifi ed copy of the recorded instrument or instruments affecting the transfer or assignment. 3.Subject to any existing contact between the affected Parties, Operator and each Participant shall be severally liable for all severance, production, or other taxes asse ssed or levied by the state or any lawful taxing authority on account of ownership, severance, production, or sale of Unitized Substances allocated to a Participant’s interest, trac t, or tracts, and in the event the taxes are paid by Operator for the account of a Party or Participant , then Operator shall charge to and collect from that Party the full amount of the taxes whi ch have been paid for the account of the liable Party, and may deduct the amount of the taxes from the amount due that Party. 4.Nothing contained in this Agreement shall be construed as imposing on any Participant any obligation to pay for any of the expenses of this unitization or for any development, equipment, or operation expenses unless the Participant is obligated to pay for the same by the terms of an agreement or agreements existing before the execution of thi s Agreement. The execution of this Agreement by any Participant shall not have the effec t of recognizing the ownership of any other Participant that may execute this Agreement. ARTICLE VI USE OF PREMISES FOR UNIT OPERATIONS Participants, to the extent of their respective rights and interests, by joining in t his Agreement, grant to Operator and its successors and assigns, as to all or any part of t he Unit Area and any interest in it, the right to utilize the Unit Area or any part of it for ga s storage and pressure regulation or maintenance operations, including the right, at Operator’s election, from time to time, to inject indigenous and/or Extraneous Gas and store the same, and a t its will, remove that gas from the Unit. Operator shall the right to continue all operations so l ong as Unitized Substances and/or Extraneous Gas is or can be produced from or gas and/or Extraneous Page 10 of 17 Gas is stored in the Unit Area or so long as Operator shall own, maintain, or operator the pressure regulation and maintenance and/or gas storage facilities in the manner provided for in this Agreement, and Operator and its successors and assigns shall be the sole and exclusi ve judge of the necessity, advisability, or need of the Unit Area, or any part of it, for use in c onnection with or for the protection of the pressure regulation, maintenance, and/or gas storage facili ty or operations. Participants, to the extent of their respective rights and interest, grant Operator al l rights, rights of ways, and easements reasonably necessary or convenient to the carrying out of the purposes of this Agreement, including but not limited to easements and rights of way on, over, and across their respective tracts of land, with full right of ingress and egress, for the purpose of laying, constructing, using, maintaining, changing, repairing and removing pipelines and other facilities for pressure regulation and maintenance, gathering, storing of gas and/or Extraneous Gas, measuring and delivering Unitized Substances and Extraneous Gas and for transporting gas, Extraneous Gas, water and other substances for injection purposes, and easements and rights of way for the purposes of constructing, erecting, maintaining, operating, and repairing telephone and electric lines, and for building and maintaining roads and easements and rights of wa y for the purposes of conducting all development and operations on the Unit Area for all purposes permitted by the oil and gas leases, and for all purposes provided for in this Agreement. Operator shall have the right to drill for and produce water, or cause the same to be done, free of Royalty or other charge, from any horizon, for unit operation purposes; provided, however, Operator shall not have the right to drill for or produce water found at a depth less than _____ feet below the surface for use in injecting or repressuring purposes. Operator shall have the right to remove and salvage any and all buildings, structures, equipment, pipes and pipelines, and other personal property that have been placed on or in the premises or in the wells, for t he purposes of or in connection with the development, equipment, and operation of the Unit Area. Any property that Operator desires to remove from the premises shall be removed during the terms of this Agreement or within one (1) year after the termination of this Agreement . Pipelines for Unit operation purposes that cross cultivated lands shall be buried below ordinary plow depth, on request by the surface owner. If any damages are caused to growing crops, timber, fences, improvements, or other structures by Unit operations resulting from the exercise of the rights and privileges granted to Operator in this Agreement, reasonable compensation shall be paid by Operator to the affected owners. ARTICLE VII PERPETUATION OF UNITIZED LEASES No lease described in Exhibit “A” shall terminate on or after the Effective Dat e of this Agreement or later during the term of this Agreement, insofar as Participants and the ir interests are concerned. Operator shall not be required to pay, within the time and in the m anner provided in each lease, the delay rental provided for to continue any lease in force during the primary term of the lease in the absence of production, gas storage or drilling operations. If the production of Unitized Substances from the Unit Area should cease after the date of this Agreement, then, nevertheless, all Royalty and Overriding Royalty Interests bound by this Agreement and all of the leases, insofar as they cover land in the Unit Area, shall remain perpetuated a nd in full force Page 11 of 17 and effect so long after the expiration of the respective primary terms of each of the leases as gas storage, drilling, or reworking operations are being prosecuted on the Unit Area with reasonable diligence, and thereafter as long as gas or Extraneous Gas is or can be produced or withdra wn from the Unit Area. The commencement of operations for the drilling or reworking of a well within ninety (90) days after the unsuccessful completion or reworking of a well, or permanent cessation of production or abandonment of a well, shall constitute reasonable diligence. T he provisions in this Agreement and the respective leases covered by it and amendments whic h relate to the life and continuance in force of the leases and extensions of the e xistence of the leases shall be cumulative and each shall be in addition to the others. ARTICLE VIIIGENERAL 1. For the purposes of this Agreement and all of the terms, conditions, and agreements contained in the various leases, unitization and/or pooling agreements, or ot her contracts covering the separate tracts within the Unit Area, either express or implie d, related to development and production or Royalty or Overriding Royalty or oil payment or other settlements, are, to the extent, they are inconsistent with or in conflict with the provisions of this Agreement, are superseded by and altered by and amended to conform to the terms, provisions, and intent of this Agreement. On the termination of this Agreement, however accomplishe d, and in all matters not covered by this Agreement, the Parties will be governed by the leases, prior unitization agreements, and contracts affecting the various tracts included in the Unit Area. 2.This Agreement and all operations under it shall be subject to all applicable federal and state laws and applicable orders, rules, and regulations of _____, and any other sta te or federal authority having jurisdiction, but nothing contained in this Agreement shall be construed as a waiver of any right to contest any law, order, rule, or regulation in any forum having jurisdiction. Neither this Agreement nor any oil and gas lease or leases covering lands within the Unit Area shall expired or be terminated in whole or in part, nor shall Operator be liable in damages for failure to comply with any regulation, if compliance is prevented by, or if the failure is a result of any federal or state law, order, rule or regulation. It is not the intention of the Parties to limit, restrict, or prorate the amount of production to be produced from t he Unit Area, it being recognized that such powers are exclusively exercised by governmental authorit y, and no provision of this Agreement is intended to mean that the Parties are agreeing to exercise such powers. 3.In the event performance under this Agreement is prevented or delayed in whole or in part by acts of God, strikes, lockouts, or other industrial disturbances, wars, blockades, insurrections, civilian disturbances, riots, blowouts, inability to obtain material or equipm ent for any cause, which, by the exercise of due diligence, Operator is unable to prevent or overcome , this Agreement shall continue and remain in full force and effect and Operator shal l not be in default; provided, however, that performance shall be begun and resume within a reasonable time after the cause has been removed, and further provided that Operator shall not be required, against its will, to settle any labor disputes. Page 12 of 17 4.Each Party executing this Agreement acknowledges and represents it has read this Agreement, that it has noted all of its contents, that no oral representations, promises, or agreements have been made as an inducement for executing this Agreement, and that any oral promise, representation, or agreement that has been made, is not being relied on, and tha t the signing Party is bound only in the manner and to the extent stipulated in this Agreement. 5.This Agreement may be executed in counterparts, or it may be joined in or ratified by any Party or Parties by executing a ratification of it, and when executed, eithe r in counterpart or by ratification, shall have the same effect as if the Party or Parties had a ctually joined in executing one and the same document. 6.The captions and headings of this Agreement are inserted and included solely for convenience and shall not be considered or given any effect in construing the terms of this Agreement. 7.The pronoun “it” may be used in this Agreement for convenience to refer to a party to this Agreement, regardless of gender. 8.It is not the intention of the Parties, by this Agreement, to create a partnershi p, joint venture, or an association. The duties and obligations of the Parties under this Agreem ent are intended to be separate and not joint or collective, and nothing contained in this Agreement shall be construed to create a partnership, joint venture, or association, or to impose a partnership duty, obligation, or liability with respect to any one or more of the Parties. 9.Should any additional Parties own Royalty or Overriding Royalty Interests in the lands included within the Unit Area, after the acceptance of this Agreement by Opera tor, and at that time during the existence of this Unit Agreement, Operator shall have the right to secure the signature of such Party to this Agreement, or a counterpart of it, or to any other instrument or instruments ratifying this Agreement, at which time that Party should also become a Participant to this Agreement. 10.This Agreement shall be binding on all who sign it, whether all Royalty and Overriding Royalty Owners sign it or not, an shall inure to the benefit of the Operator and Participants who have signed the Agreement, and their respective successors, assigns, heirs, a nd legal representatives, and all provisions of this Agreement inuring to the benefit of the Operator shall likewise inure to all present and future owners of the leases covered by this Agreem ent, or any interest in this Agreement, insofar as the leases cover lands in the Unit Area. All covenants contained in this Agreement shall run with the land, minerals, royalties, and leases covered by this Agreement during its term. 11.If Operator later acquires any interest in any lease covering lands or interests in the Unit Area, Operator may subject such interest to the terms of this Agreement by fil ing with the County Clerk of _____ County, _____, written notices to that effect, signed and acknowledged by Operator, at which time such interest shall for all purposes become one of the leases described in Exhibit “C” to the same effect as though it had been original ly described in that Exhibit. Page 13 of 17 12.Oil, gas, and other minerals produced from wells on the lands included within the pooled area, but not produced from the Unit Area, are not pooled or unitized by this Agreement, and royalties and other payments on that production shall be accounted for in accordance with the leases and contracts applicable to the respective wells from which the oil , gas and other minerals are produced. 13.Operator shall have the right to assign all or any part of its interest under this Agreement. ARTICLE IX EFFECTIVE DATE AND TERM 1. Effective Date: The Effective Date of this Agreement shall be at 7:00 a.m. on the first day of the calendar month succeeding the filing for record in _____ County, _____, of this Agreement or any counterpart of it executed by Operator, accepting the creation of the Uni t by this Agreement; provided, however, if Operator fails to accept this Agreement on or before _____, then this Agreement shall automatically terminate. 2. Term: This Agreement shall be binding on each Party executing it, from the date of execution by that Party. If this Agreement becomes effective as provided for in Section 1. of this Article IX, it shall then remain in full force and effect as long as eithe r or all of the following conditions shall exist: (a)As long as the payment or tender of Royalties, as provided for in Article III, are made in the manner as set out in Article III. (b)As long as Extraneous Gas is or can be produced from or gas and Extraneous Gas stored in the Unit Area, and so long thereafter as Operator shall own, ma intain, or operate the pressure regulation, maintenance, and/or gas storage facilities in the m anner provided for in this Agreement. (c)As long as Unitized Substances in paying quantities are obtained or Extraneous Gas previously injected in the Unit Area is recovered from the Unit Area, or any pa rt of it, and as long as operations for the purposes of discovering and producing Unitized Substances are conducted, and until all wells in the unit have been plugged and abandoned. Should Operator fail to commence the construction of the Pressure Maintenance and regulation system provided for in Article IV on or before _____, this Agreement shall automatically terminate on that date; provided, however, Operator shall pay Royalt y Owners and Overriding Royalty Owners their share of any payments which may have accrued under the terms of this Agreement and be unpaid up to the date of its termination. In the event this Agreement is terminated during and not at the end of any calendar year to whic h minimum Royalty is guaranteed, then the guaranteed minimum Royalty during that calendar year shall be Page 14 of 17 prorated for the period and paid with respect to that portion of the calendar year to which this Agreement was in force. This Agreement is dated _____ and is signed by the respective Participants as of the dat es set opposite their signatures. Date: Operator Date: Participant Date: Participant (Acknowledgments) Page 15 of 17 EXHIBIT “A”TO GAS STORAGE AND SECONDARY RECOVERY UNIT AGREEMENT ( A plat depicting the lands included in the Unit, identifying the boundaries of each tract in the Unit, the tract number assigned to each tract, and the quantum of acreage included in each tract.) Page 16 of 17 EXHIBIT “B”TO GAS STORAGE AND SECONDARY RECOVERY UNIT AGREEMENT (A description of the lands included in each tract.) Page 17 of 17 EXHIBIT “C”TO GAS STORAGE AND SECONDARY RECOVERY UNIT AGREEMENT (A description of the oil and gas leases on the lands included in the Unit, identifying which tract is covered by each described lease.)