Common use of Initial Test Well Clause in Contracts

Initial Test Well. 1. Subject to permitting and rig availability, Zenergy, as operator, shall use commercially reasonable efforts to commence or cause to be commenced by December 20, 2007 the turnkey drilling of a well using the ▇▇▇▇▇▇ Richmond rig at a location on the Lease set out on the Authority for Expenditure (AFE) attached hereto as Exhibit “C”, the “Initial Test Well”. Zenergy shall be permitted to extend the commencement date in the event the drilling rig, through no action of Zenergy, will not be available to commence the proposed operation before such date and Zenergy is successful in getting additional time prior to Lease expiration by obtaining a Suspension of Operations (“SOO”) or a Suspension of Production (“SOP”), as circumstances dictate, from the MMS for the Lease. 2. The Parties agree to bear and pay their proportionate share as set forth below of all the cost, risk, expense and liability of any nature whatsoever incurred in the drilling, testing, logging, coring and evaluating the Initial Test Well (including plugging and abandonment costs, if a dry hole), subject to the AFE attached hereto. By execution of this agreement, each party approves the AFE. The Initial Test Well shall be drilled pursuant to the terms of the Operating Agreement and all cost, risk, expense and liability for the drilling of the Initial Test Well to Production Casing Point, as hereinafter defined, and, if necessary, the plugging and abandonment cost shall be shared by the Parties hereto in the following proportions: Zenergy 30.555 % Ridgewood 44.444 % CMI 16.666 % Helis 5.557 % Houston 2.778 % 100.000 % The Parties before Production Casing Point interest as shown above is limited to the actual costs of the Initial Test Well to Production Casing Point or to one hundred percent (100%) of the dry hole costs connected with the Initial Test Well as reflected on the AFE attached hereto as Exhibit “C”, whichever first occurs. Thereafter all subsequent costs shall be borne by the Parties based on their ACP Interest. Production Casing Point is defined herein as that point when the Initial Test Well has been drilled to Contract Depth and all logging, testing and evaluations have been conducted, and such information has been provided to the participating parties and the operator recommends either that production casing be set for a completion attempt or that the well be plugged and abandoned, and through plugging and abandonment, if no completion attempt shall be made. All cost, risk, expense and liability for the Initial Test Well after Production Casing Point (“ACP”) shall be performed under the terms and provisions of the JOA, and subject to elections made by the participants shall be shared by the Parties hereto in the following proportions: Zenergy 27.5 % Ridgewood 40.0 % CMI 15.0 % Helis 12.5 % Houston 5.0 % 100.0 % After Prospect Payout, as hereinabove defined, HE&D, or its designee, shall be entitled to receive from each participating Party a proportionate 10% back-in working interest. 3. If the Initial Test Well provided for herein should fail to reach Contract Depth due to mechanical difficulties or because the well encounters excessive water flow, loss of circulation, excessive pressure, cavities, caprock, salt or salt dome material, heaving shale, or other practically impenetrable conditions which would, in the opinion of the operator, in its reasonable discretion, render further drilling impracticable, then the Parties may, at their election, commence, or cause to be commenced, actual drilling of a substitute well at approximately the same location within ninety(90) days after abandonment of said well. The substitute well shall be considered and treated for all purposes hereof as though the same were the well for which it is a substitute, and the costs of both ▇▇▇▇▇ shall be combined in computing the carry limitation stated in Article V, Section 2. Any Party who elects not to participate in the substitute well shall forfeit their interest in the leasehold and the leasehold interest of the participating parties shall be proportionately increased. 4. All participating Parties or their duly authorized representatives shall be allowed free access to the ▇▇▇▇▇▇▇ floor at their sole risk and expense and to any and all information, geological or otherwise, pertaining to the drilling of any well, substitute well and/or additional well. Prior to running any logging device, coring or taking any formation test or other similar type test, Zenergy shall first give all Parties notice in sufficient time to allow their representative to be present to witness such test. Zenergy agrees to furnish each Party all information associated with the drilling of the well and its operations thereof according to each Party’s well information sheet. 5. Notwithstanding the provisions of the Operating Agreement, the Parties stipulate and agree that the AFE attached hereto is acceptable and that by execution hereof, the Parties hereby approve the AFE. 6. Notwithstanding the provision of Article 10 of the JOA, Operator may cash call dry hole costs 10 days prior to the anticipated spud date and parties shall remit such payment within 72 hours. In the event any party fails to remit such payment, Operator shall give notice of such failure, as set forth in Article VIII, and the non-paying party shall have 24 hours to remit the cash call payment to Operator. Thereafter, failure to remit timely results in forfeiture of the participants’ interest in lease. 7. Should the Lease expire prior to the spud date, no party shall have any liability to any other Party under this Agreement and any Party that has received payments under Article IV shall refund those amounts to the Parties that have paid them.

Initial Test Well. 1. Subject to permitting and rig availability, ZenergyHelis, as operatorOperator, shall use commercially reasonable efforts to commence or cause to be commenced by December 20April 30, 2007 the turnkey drilling of a well using at the ▇▇▇▇▇▇ Richmond rig at a surface and bottom hole location on the Lease Leases set out on the Operator’s Authority for Expenditure (AFE) attached hereto as Exhibit “C”, the “Initial Test Well”. Zenergy shall be permitted to extend the commencement date in the event the drilling rig, through no action of Zenergy, will not be available to commence the proposed operation before such date and Zenergy is successful in getting additional time prior to Lease expiration by obtaining a Suspension of Operations (“SOO”) or a Suspension of Production (“SOP”), as circumstances dictate, from the MMS for the Lease. 2. The Parties agree to bear and pay their proportionate share as set forth below of all the cost, risk, expense and liability of any nature whatsoever incurred in the drilling, testing, logging, coring and evaluating the Initial Test Well (including plugging and abandonment costs, if a dry hole), subject to the AFE attached hereto. By execution of this agreement, each party approves the AFE. The Initial Test Well shall be drilled pursuant to the terms of the Operating Agreement and all cost, risk, expense and liability for the drilling of the Initial Test Well to Production Casing Point, as hereinafter defined, Point and, if necessary, the plugging and abandonment cost shall be shared by the Parties hereto in the following proportions: Zenergy 30.555 Helis 15.5883 % Red Willow Offshore, L.L.C. 25.0000 % CL&F Resources LP 25.0000 % Houston 0.2941 % Ridgewood 44.444 34.1176 % CMI 16.666 % Helis 5.557 % Houston 2.778 % 100.000 100.0000 % The Parties before Production Casing Point interest as shown above is limited to the actual costs of the Initial Test Well to Production Casing Point or to one hundred percent (100%) of that point in time that the dry hole costs connected with the Initial Test Well as reflected on the AFE attached hereto as Exhibit “C”, whichever first occursequal $7,236,950. Thereafter At such time all subsequent costs shall be borne by the Parties based on their ACP Interest. Production Casing Point is defined herein as that point when the Initial Test Well has been drilled to Contract Depth and all logging, testing and evaluations have been conducted, and such information has been provided to the participating parties and the operator Operator recommends either that production casing be set for a completion attempt or that the well be plugged and abandoned, and through plugging and abandonment, if no completion attempt shall be made. All cost, risk, expense and liability for the Initial Test Well after Production Casing Point (“ACP”) shall be performed under the terms and provisions of the JOA, and subject to elections made by the participants shall be shared by the Parties hereto in the following proportions: Zenergy 27.5 Helis 20.0 % Red Willow Offshore, LLC 25.0 % CL&F Resources LP 25.0 % Houston 1.0 % Ridgewood 40.0 29.0 % CMI 15.0 % Helis 12.5 % Houston 5.0 % 100.0 100 % After Prospect Payout, as hereinabove defined, HE&D, or its designee, shall be entitled to receive from each participating Party a proportionate 10% back-in working interest. 3. If the Initial Test Well well provided for herein should fail to reach Contract Depth due to mechanical difficulties or because the well encounters excessive water flow, loss of circulation, excessive pressure, cavities, caprock, salt or salt dome material, heaving shale, or other practically impenetrable conditions which would, in the opinion of the a prudent operator, in its reasonable discretion, render further drilling impracticable, then the Parties may, at their election, commence, or cause to be commenced, actual drilling of a substitute well at approximately the same location within ninety(90sixty (60) days after abandonment of said well. The substitute well shall be considered and treated for all purposes hereof as though the same were the well for which it is a substitute, and the costs of both ▇▇▇▇▇ shall be combined in computing the carry limitation stated in Article V, Section 2. Any Party who elects not to participate in the substitute well shall forfeit their interest in the leasehold and the leasehold interest of the participating parties shall be proportionately increased. 4. All participating Parties or their duly authorized representatives shall be allowed free access to the ▇▇▇▇▇▇▇ floor at their sole risk and expense and to any and all information, geological or otherwise, pertaining to the drilling of any well, substitute well and/or additional well. Prior to running any logging device, coring or taking any formation test or other similar type test, Zenergy Helis shall first give all Parties notice in sufficient time to allow their representative to be present to witness such test. Zenergy Helis agrees to furnish each Party all information associated with the drilling of the well and its operations thereof according to each Party’s well information sheet. 5. Notwithstanding the provisions of the Operating Agreement, the Parties stipulate and agree that the AFE attached hereto is acceptable and that by execution hereof, the Parties hereby approve the AFE. 6. Notwithstanding the provision of Article 10 of the JOA, Operator may cash call dry hole costs 10 days prior to the anticipated spud date and parties shall remit such payment within 72 hours. In the event any party fails to remit such payment, Operator shall give notice of such failure, as set forth in Article VIII, and the non-paying party shall have 24 hours to remit the cash call payment to Operator. Thereafter, failure to remit timely results in forfeiture of the participants’ interest in lease. 7. Should the Lease expire prior to the spud date, no party shall have any liability to any other Party under this Agreement and any Party that has received payments under Article IV shall refund those amounts to the Parties that have paid them.