Common use of Commodity Hedging Clause in Contracts

Commodity Hedging. Commodity hedging arrangements shall be with (i) any Lender or any affiliate of a Lender or (ii) an Approved Counterparty, shall not be for speculative purposes and shall be limited to no more than 85% of the reasonably anticipated forecasted production from the proved oil and gas properties of the Credit Parties (based on the most recent Reserve Report) for the period not exceeding 60 months from the date such hedging arrangement is created (collectively, the “Ongoing ▇▇▇▇▇▇”); provided that, in addition to the Ongoing ▇▇▇▇▇▇, in connection with a proposed acquisition (each, a “Proposed Acquisition”) by a Credit Party of oil and gas properties, the Credit Parties may also enter into incremental hedging contracts from and after the date on which such Credit Party signs a definitive acquisition agreement in connection with a Proposed Acquisition (but not earlier than 90 days prior to the anticipated closing date of the Proposed Acquisition) with respect to the reasonably anticipated forecasted production from the oil and gas reserves attributable to such Proposed Acquisition (based on the Borrower’s internal engineering reports) having notional volumes not in excess of 70% of such projected production for a period not exceeding 36 months from the date such hedging arrangement is created; provided further that if the Proposed Acquisition has not been consummated within 90 days after such definitive acquisition agreement was executed (or such longer period as to which the Administrative Agent may agree) or if the Proposed Acquisition terminates or is terminated, then within 15 days after the earlier of such 90 day period (or longer) or such termination, the Borrower shall novate, unwind or otherwise dispose of such incremental hedging contracts to the extent necessary to be in compliance with the hedging covenants concerning Ongoing ▇▇▇▇▇▇. It is understood that for purposes hereof, the following hedging agreements shall not be deemed speculative or entered into for speculative purposes: (a) any commodity hedging agreement intended, at inception of execution, to hedge or manage any of the risks related to existing and or forecasted oil and gas production (based on the most recently delivered Reserve Report) of the Borrower or its restricted subsidiaries (whether or not contracted) and (b) any hedging agreement intended, at the time of execution, (i) to hedge or manage the interest rate exposure associated with any debt securities, debt facilities or leases (existing or forecasted) of the Borrower or its restricted subsidiaries, (ii) for foreign exchange or currency exchange management, (iii) to manage commodity portfolio exposure associated with changes in interest rates or (iv) to hedge any exposure that the Borrower or its restricted subsidiaries may have to counterparties under other hedging agreements such that the combination of such hedging agreements is not speculative taken as a whole. The Credit Parties shall provide evidence satisfactory to the Administrative Agent of the Credit Parties having entered into commodity swap agreements, collar agreements or put agreements (whether deferred premium or fully-paid) with Approved Counterparties hedging notional volumes of crude oil covering not less than (i) if the Conversion Date occurs on or prior to December 31, 2020, 65% of the reasonably anticipated production of such crude oil constituting proved, developed, producing oil and gas properties for the Initial Measurement Period as such anticipated production is set forth in the Initial Reserve Report by no later than December 31, 2020, (ii) 17.5% of the reasonably anticipated production of crude oil constituting proved, developed, producing oil and gas properties for the period of 12 consecutive calendar months following the Initial Measurement Period by no later than December 31, 2020 and (iii) 35% of the reasonably anticipated production of crude oil constituting proved, developed, producing oil and gas properties for the period of 12 consecutive calendar months following the Initial Measurement Period, as such anticipated production is set forth in the Initial Reserve Report by the later of (A) 60 days following the Conversion Date and (B) December 31, 2020; provided that, such swap, collar or put agreements (whether deferred premium or fully-paid) shall have effective floor prices of not less than the lesser of (x) the prices set forth in JPMCB’s price deck or (y) the NYMEX strip price less 10%, in each case, for the applicable maturity dates of such ▇▇▇▇▇▇ as of the date such swap, collateral or put agreement (whether deferred premium or fully-paid) is entered into.

Commodity Hedging. Commodity hedging arrangements shall be with (i) any Lender or Derivative Transactions to be entered into by the Borrower at any affiliate of a Lender or time during the Security Period relating to gold price hedging (Commodity Transactions) shall, subject to paragraph (a)(viii) below, be entered into only with the Hedging Banks pursuant to the Hedging Documents; (ii) an Approved CounterpartyCommodity Transactions shall be transacted pursuant to the Hedging Documents only by way of forward sales or agreed option strategies, including purchased puts, sold call or collar strategies for gold; (iii) any Commodity Transaction which requires the Borrower to deliver metal or financially settle a delivery obligation shall not be for speculative purposes a Committed Commodity Transaction and shall be limited to form part of the Commodity Transactions for the purposes of this Approved Hedging Programme; (iv) at any time during the Security Period, no more than 8575% of the reasonably anticipated forecasted lesser of the forecast annual production at the Mesquite Mine (as set out in the Development Plan) and the proven and probable reserves of the Mesquite Mine (as determined by the Reserve Statement) shall be subject to Committed Commodity Transactions; (v) the term of all Commodity Transactions (other than Additional Commodity Transactions (as defined below)) shall expire no later than the Final Repayment Date; (vi) there shall be no margin calls or other collateral delivery obligations under any Commodity Transaction; (vii) the Borrower and the Hedging Banks shall have entered into Commodity Transactions on or prior to the Effective Date in respect of 40% of the forecast production over the Security Period (as set out in the Development Plan); any future Commodity Transactions shall, subject to paragraph (a)(viii) below, be entered into between the Borrower and the Hedging Banks on terms and at times agreed to by the Borrower, the Agent and the Hedging Banks entering into such Commodity Transactions, subject to the terms of this Approved Hedging Programme or as required to satisfy the Additional Drawing Conditions; (viii) the Borrower shall enter into Commodity Transactions only with the Hedging Banks pursuant to the Hedging Documents in relation to the original total commitments of US$105,000,000 under this Agreement. If the Borrower requires to enter into Commodity Transactions other than those referred to in the preceding sentence (for the purposes of this Approved Hedging Programme, Additional Commodity Transactions), the following provisions of this paragraph (a)(viii) shall apply: Provided that the Hedging Banks are able to offer to the Borrower pricing for Additional Commodity Transactions that is equal to or lower than the pricing offered to the Borrower by any other potential counterparty, Additional Commodity Transactions shall be entered into only with those Hedging Banks pursuant to the Hedging Documents. Accordingly, the Borrower agrees that the Hedging Banks shall have the right to offer pricing for Additional Commodity Transactions prior to the Borrower seeking pricing quotes from any other potential counterparty. If, on receiving a pricing offer for a Additional Commodity Transaction from the proved oil and gas properties of Hedging Banks, the Credit Parties (based on the most recent Reserve ReportBorrower is able to obtain lower pricing quote(s) for the period not exceeding 60 months Additional Commodity Transaction based on comparable terms (other than as to pricing and any credit support provisions) as those offered by the Hedging Banks from another potential counterparty within 30 Business Days of the date such hedging arrangement is created (collectively, the “Ongoing ▇▇▇▇▇▇”); provided that, in addition to the Ongoing ▇▇▇▇▇▇, in connection with a proposed acquisition (each, a “Proposed Acquisition”) by a Credit Party of oil and gas properties, the Credit Parties may also enter into incremental hedging contracts from and after the date on which such Credit Party signs a definitive acquisition agreement in connection with a Proposed Acquisition (but not earlier than 90 days prior to the anticipated closing date of the Proposed Acquisition) with respect Hedging Banks' offer, and is able to provide to the reasonably anticipated forecasted production from the oil and gas reserves attributable to such Proposed Acquisition (based on the Borrower’s internal engineering reports) having notional volumes not in excess of 70% Hedging Banks reasonable evidence of such projected production for a period not exceeding 36 months from the date such hedging arrangement is created; provided further that if the Proposed Acquisition has not been consummated within 90 days after such definitive acquisition agreement was executed (or such longer period as to which the Administrative Agent may agree) or if the Proposed Acquisition terminates or is terminated, then within 15 days after the earlier of such 90 day period (or longer) or such terminationlower pricing quote(s), the Borrower shall novate, unwind or otherwise dispose of such incremental hedging contracts be entitled to enter into the extent necessary to be in compliance Additional Commodity Transaction with the hedging covenants concerning Ongoing ▇▇▇▇▇▇. It is understood that for purposes hereof, the following hedging agreements shall not be deemed speculative or entered into for speculative purposescounterparty PROVIDED that: (a) any commodity hedging agreement intended, at inception of execution, to hedge or manage any of the risks related to existing and or forecasted oil and gas production (based on the most recently delivered Reserve Report) of the Borrower or its restricted subsidiaries (whether or not contracted) and (b) any hedging agreement intended, at the time of execution, (i) to hedge or manage the interest rate exposure associated with any debt securities, debt facilities or leases (existing or forecasted) of the Borrower or its restricted subsidiaries, (ii) for foreign exchange or currency exchange management, (iii) to manage commodity portfolio exposure associated with changes in interest rates or (iv) to hedge any exposure that the Borrower or its restricted subsidiaries may have to counterparties under other hedging agreements such that the combination of such hedging agreements is not speculative taken as a whole. The Credit Parties shall provide evidence satisfactory to the Administrative Agent of the Credit Parties having entered into commodity swap agreements, collar agreements or put agreements (whether deferred premium or fully-paid) with Approved Counterparties hedging notional volumes of crude oil covering not less than (i) if the Conversion Date occurs on or prior to December 31, 2020, 65% of the reasonably anticipated production of such crude oil constituting proved, developed, producing oil and gas properties for the Initial Measurement Period as such anticipated production is set forth in the Initial Reserve Report by no later than December 31, 2020, (ii) 17.5% of the reasonably anticipated production of crude oil constituting proved, developed, producing oil and gas properties for the period of 12 consecutive calendar months following the Initial Measurement Period by no later than December 31, 2020 and (iii) 35% of the reasonably anticipated production of crude oil constituting proved, developed, producing oil and gas properties for the period of 12 consecutive calendar months following the Initial Measurement Period, as such anticipated production is set forth in the Initial Reserve Report by the later of (A) 60 days following the Conversion Date and (B) December 31, 2020; provided that, such swap, collar or put agreements (whether deferred premium or fully-paid) shall have effective floor prices of not less than the lesser of (xaa) the prices set forth in JPMCB’s price deck or (y) the NYMEX strip price less 10%, in each case, for the applicable maturity dates of such ▇▇▇▇▇▇ as of the date such swap, collateral or put agreement (whether deferred premium or fully-paid) counterparty is entered into.an Additional Commodity Hedging Counterparty;