Common use of Future Production Clause in Contracts

Future Production. Except as set forth in Section 3.21 of the Parent Schedule, Parent is not obligated, by virtue of a prepayment arrangement, make-up right under a production sales contract containing a “take or pay” or similar provision, production payment or any other arrangement, to deliver hydrocarbons having a value in excess of $1,500,000 attributable to the Parent Properties at some future time without then or thereafter receiving full payment therefor. No Parent Property is subject to an allowable penalty under applicable laws, rules or regulations that would prevent any well on such property from being entitled to its full legal and regular allowable from and after the Closing Date, the effect of which would be to materially reduce the projected production from such property as set out in the Parent Reserve Reports. Section 3.21 of the Parent Schedule sets forth a summary of Parent’s gas balancing obligations, including the amounts of any over production and under production imbalances.