Common use of Abandonment Fund Clause in Contracts

Abandonment Fund. Operator shall have the right to require each or any Participating Party to advance its proportionate share of all estimated costs and expenses for the disposition of any Platforms and Facilities, the abandonment of any ▇▇▇▇▇ and any other site restoration obligations under the Lease, less the estimated salvage value at the expected time of abandonment as determined in accordance with Exhibit "C" ("Abandonment Fund"). Operator and Non-Operators have agreed that $3,300,000.00 ("Abandonment Amount") is to be deposited in the Abandonment Fund. Operator shall have no liability to Non-Operators or to any third party for a failure to establish the Abandonment Fund or for incorrectly estimating the Abandonment Amount. Payments shall be made into the Abandonment Fund based upon a per mcf (thousand cubic feet) charge of $0.31, which amount shall be deducted by the Operator from its share of gross production revenues and the share of gross production revenues for each Non-Operator until the full Abandonment Amount has been funded. Until the full Abandonment Amount has been funded from these revenues, the Non-Operators shall not have the right to take in kind or separately dispose of their shares of Petroleum Substances from the Lease. The Abandonment Fund shall be held in a suspense account by Operator until an independent escrow account is established. The escrow account shall provide for payment of the escrowed funds at the time the disposition or abandonment operations are performed and shall be to the contractors performing the disposition or abandonment operations or to the then Operator for appropriate distribution. If the escrow amount is insufficient to pay the disposition or abandonment costs, each Participating Party shall pay the balance of such costs pursuant to the terms of this Agreement. The escrow account shall be an interest bearing account. Any excess funds including interest after all disposition and abandonment operations are performed shall be returned to the Parties in proportion to each Party's participation in the Abandonment Fund. In lieu of payment into the Abandonment Fund, any Participating Party may elect to furnish an irrevocable letter of credit in favor of the other Participating Parties, proof of coverage under adequate plugging and abandonment bonds, (subrogated in favor of the Operator) or other financial assurances acceptable to Operator to provide for that Party's estimated proportionate share of the Abandonment Fund. The letter of credit or plugging and abandonment bonds shall provide that the instrument shall remain in force in the event of a transfer or assignment of the Party's interest until such time as the transferee or assignee provides a similar irrevocable letter or credit or plugging and abandonment bonds. In the event the BOEM or other governmental agency requires a supplemental bond, each Participating Party in the operation covered by such bond shall bear its proportionate share of Operator's cost for the same or shall provide a bond equivalent to their proportionate share of said supplemental bond at their own costs.