Common use of DRILLING AND DEVELOPMENT Clause in Contracts

DRILLING AND DEVELOPMENT. The Company and the Lender agree to continue to engage in drilling and development efforts pursuant to the Operating Agreement, including the drilling and development of the App Energy H-33 well and the next unnamed well to be drilled thereafter (such two ▇▇▇▇▇, the “Planned ▇▇▇▇▇”). With respect to the Planned ▇▇▇▇▇, notwithstanding anything to the contrary set forth in the Operating Agreement or any other agreement between the Company and the Lender, the Company agrees to fund on the Lender’s behalf one-half of the Lender’s costs to participate in the Planned ▇▇▇▇▇ (such one-half of the Lender’s costs, the “Carry”). The Lender agrees that as part of drilling the App Energy H-33, certain operations have been or will be conducted that are outside the scope of typical drilling and completion operations. The Parties agree that these operations are being conducted to benefit the Parties in the future development of the leasehold. Specifically, these operations include the drilling and logging of the vertical portion of the ▇▇▇▇▇▇ H-34 and the coring, core analysis, and other mutually agreed to reporting of the App Energy H-33. The Parties agree that some of the costs involved in these operations are not included in the Carry and, therefore the Lender agrees to pay its full share (i.e., 25%) of any costs that are incurred in 1) operations related to coring and analyzing the Berea formation; and, 2) operations involving the drilling and logging the vertical well referred to as the ▇▇▇▇▇▇ H-34.