Common use of Initial Well Clause in Contracts

Initial Well. Following Petrogen's signing and delivery of the Assignment and Bazmo's payment of the Cash Consideration, Petrogen and Bazmo will agree upon a location on the Leases and a spud date for the drilling of a well ("INITIAL WELL") to test the Miocene formation. Such agreement shall be memorialized in a detailed Authority for Expenditure ("AFE"). Bazmo will pay thirty-three and one-third percent of eight-eighths (33.33% of 8/8) of the costs for the Initial Well until it is either plugged and abandoned as a dry hole or completed and producing into the tanks or a sales pipeline at or above the Miocene formation. To the extent that costs for the Initial Well exceed one-hundred ten percent (110%) of the AFE'd costs, Bazmo will pay only twenty-five percent (25%) of the costs that exceed one-hundred ten percent (110%) of the costs incurred in drilling and completing the Initial Well. After the Initial Well, Bazmo will pay its twenty-five percent of eight-eighths (25% of 8/8) share of all operations on the Leases.

Initial Well. Following Petrogen's signing and delivery of the Assignment and BazmoNortex's payment of the Cash Consideration, Petrogen and Bazmo Nortex will agree upon a location on the Leases and a spud date for the drilling of a well ("INITIAL WELL") to test the Miocene formation. Such agreement shall be memorialized in a detailed Authority for Expenditure ("AFE"). Bazmo Nortex will pay thirty-three and one-third fifty percent of eight-eighths (33.3350% of 8/8) of the costs for the Initial Well until it is either plugged and abandoned as a dry hole or completed and producing into the tanks or a sales pipeline at or above the Miocene formation. To the extent that costs for the Initial Well exceed one-hundred ten percent (110%) of the AFE'd costs, Bazmo Nortex will pay only twentythirty-five seven and one-half percent (2537.5%) of the costs that exceed one-hundred ten percent (110%) of the costs incurred in drilling and completing the Initial Well. After the Initial Well, Bazmo Nortex will pay its twentythirty-five seven and one-half percent of eight-eighths (2537.5% of 8/8) share of all operations on the Leases.