Common use of Limitation on Speculative Hedging Clause in Contracts

Limitation on Speculative Hedging. Other than the Hedge Contracts set forth on Schedule 4.20 hereto (which Hedge Contracts shall not be modified without the prior written consent of the Administrative Agent), no Borrower shall, nor shall any Borrower permit any of its Subsidiaries to, (a) purchase, assume, or hold a speculative position in any commodities market or futures market or enter into any Hydrocarbon Hedge Agreement, Interest Hedge Agreement or similar hedge arrangement for speculative purposes or (b) be party to or otherwise enter into any Hedge Contract which (i) is entered into for reasons other than as a part of its normal business operations as a risk management strategy and/or hedge against changes resulting from market conditions related to such Borrower’s or such Subsidiary’s operations; (ii) with respect to Non-Conterra Hedge Contracts, covers notional volumes that would be in excess of (A) 80% of the production volumes anticipated by the Administrative Agent to be produced by the Borrowers during each of the Winter/Spring Months for periods that such Hedge Contract is in effect, and (B) 35% of the production volumes anticipated by the Administrative Agent to be produced by the Borrowers during the Summer/Fall Months for periods that such Hedge Contract is in effect; provided that notwithstanding anything in this subsection (ii) to the contrary, the Borrowers may purchase commodity floors or puts on up to 100% of the production volumes anticipated during the period such hedge arrangement is in effect and attributable to Proven Reserves of the Borrowers and their respective Subsidiaries that are categorized as “proved, developed and producing”; and (iii) with respect to Conterra Hedge Contracts, (A) covers notional volumes in excess of 100% of the anticipated production volumes attributable to Proven Reserves of the Conterra Entities which are categorized as “proved, developed and producing” during the period such hedge arrangement is in effect, (B) allows the applicable counterparty to have recourse to any Borrower or any Subsidiary of a Borrower (other than the Conterra Entities) or their respective assets (other than the Conterra Assets), or is otherwise guaranteed or supported by any Borrower or any Subsidiary of a Borrower (other than the Conterra Entities), (C) is longer than three (3) years in duration, or (D) is with a counterparty or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender or one of its Affiliates) at the time the contract is made does not have long-term obligations rated BBB+ or Baa1 or better, respectively, by either Standard & Poor’s Ratings Group or Xxxxx’x Investors Service, Inc. (or such counterparty’s obligations are guaranteed by such a Person). For purposes of the foregoing Section, the “Winter/Spring Months” shall be December, January, February, March, April, May and June, and the “Summer/Fall Months” shall be July, August, September, October and November.

Limitation on Speculative Hedging. Other than the Hedge Contracts set forth on Schedule 4.20 hereto (which Hedge Contracts The Borrower shall not be modified without the prior written consent of the Administrative Agent), no Borrower shallnot, nor shall any Borrower it permit any of its Subsidiaries to, (a) purchase, assume, or hold a speculative position in any commodities market or futures market or enter into any Hydrocarbon Hedge Agreement, Interest Hedge Agreement or similar hedge arrangement Contract for speculative purposes or (b) be party to or otherwise enter into any Hydrocarbon Hedge Agreement, Interest Hedge Agreement, or any other Hedge Contract which that (i) is entered into for reasons other than as a part of its normal business operations as a risk management strategy and/or hedge against changes resulting from market conditions related to such the Borrower’s or such Subsidiary’s operations; , (ii) with respect to Non-Conterra Hedge Contracts, covers notional volumes that would be in excess of (A) 80% of the production volumes anticipated by the Administrative Agent to be produced by the Borrowers during each of the Winter/Spring Months for periods that such Hedge Contract is in effect, and (B) 35% of the production volumes anticipated by the Administrative Agent to be produced by the Borrowers during the Summer/Fall Months for periods that such Hedge Contract is in effect; provided that notwithstanding anything in this subsection (ii) to the contrary, the Borrowers may purchase commodity floors or puts on up to 100% of the production volumes anticipated during the period such hedge arrangement is in effect and attributable to Proven Reserves of the Borrowers and their respective Subsidiaries that are categorized as “proved, developed and producing”; and (iii) with respect to Conterra Hedge Contracts, (A) covers notional volumes in excess of 100the greater of (A) 80% of the anticipated production volumes attributable to Proven Reserves of the Conterra Entities Borrower and its Subsidiaries which are categorized as “proved, developed and producing” during the period such hedge arrangement is in effect, effect or (B) allows 50% of the applicable counterparty anticipated production volumes attributable to have recourse to any Borrower or any Subsidiary of a Borrower (other than total Proven Reserves during the Conterra Entities) or their respective assets (other than the Conterra Assets)period such hedge arrangement is in effect, or is otherwise guaranteed or supported by any Borrower or any Subsidiary of a Borrower (other than the Conterra Entities)each as shown on its most recently delivered Engineering Report, (Ciii) is longer than three (3) years in duration, or (Div) except as consented to by the Administrative Agent, is with a counterparty or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender Party or one of its Affiliates) at the time the contract is made does not have long-term obligations rated BBB+ BBB or Baa1 Baa2 or better, respectively, by either Standard & Poor’s Ratings Group or Xxxxx’x Investors Service, Inc. (Inc., or such counterparty’s obligations are guaranteed by such a Person)is an investment grade-rated industry participant. For purposes Notwithstanding the foregoing, the existence of the Hedge Contracts in effect on the Amendment No. 1 Effective Date (“Existing Hedge Contracts”) shall not be considered a violation of this Section 6.14 (it being understood, however, that in determining compliance with the foregoing Sectionrequirements (including without limitation, the “Winter/Spring Months” percentage of volumes hedged) in connection with any Hedge Contracts proposed to be entered into after the date of this Agreement, both the Existing Hedge Contracts and all other Hedge Contracts existing after the date of this Agreement shall be December, January, February, March, April, May and June, and the “Summer/Fall Months” shall be July, August, September, October and Novemberconsidered).

Limitation on Speculative Hedging. Other than the Hedge Contracts set forth on Schedule 4.20 hereto (which Hedge Contracts The Borrower shall not be modified without the prior written consent of the Administrative Agent), no Borrower shallnot, nor shall any Borrower it permit any of its Subsidiaries to, (a) purchase, assume, or hold a speculative position in any commodities market or futures market or enter into any Hydrocarbon Hedge Agreement, Interest Hedge Agreement or similar hedge arrangement Contract for speculative purposes purposes, or (b) be party to or otherwise enter into any Hydrocarbon Hedge Agreement, Interest Hedge Agreement or any other Hedge Contract which (i) is entered into for reasons other than as a part of its normal business operations as a risk management strategy and/or hedge against changes resulting from market conditions related to such the Borrower’s or such Subsidiary’s operations; , (ii) with respect to Non-Conterra Entrada Hedge Contracts, covers notional volumes that would be in excess of (A) 80% of the production volumes anticipated by the Administrative Agent to be produced by the Borrowers during each of the Winter/Spring Months for periods that such Hedge Contract is in effect, and (B) 35% of the production volumes anticipated by the Administrative Agent to be produced by the Borrowers during the Summer/Fall Months for periods that such Hedge Contract is in effect; provided that notwithstanding anything in this subsection (ii) to the contrary, the Borrowers may purchase commodity floors or puts on up to 100% of the production volumes anticipated during the period such hedge arrangement is in effect and attributable to Proven Reserves of the Borrowers and their respective Subsidiaries that are categorized as “proved, developed and producing”; and (iii) with respect to Conterra Hedge Contracts, (A) covers notional volumes in excess of 10090% of the anticipated production volumes attributable to Proven Reserves of the Conterra Entities Borrower and its Subsidiaries (other than the Entrada Entities) which are categorized as “proved, developed and producing” during the period such hedge arrangement is in effect, (Biii) with respect to Entrada Hedge Contracts, allows the applicable counterparty to have recourse to any the Borrower or any Subsidiary of a Borrower and its Subsidiaries (other than the Conterra Entrada Entities) or their respective assets (other than the Conterra Entrada Assets), or is otherwise guaranteed or supported by any the Borrower and its Subsidiaries (other than the Entrada Entities), (iv) covers fluctuations in interest rates for notional principal amounts in excess of 85% of the Debt for borrowed money of the Borrower and its Subsidiaries, (v) is longer than five years in duration, (vi) requires the Borrower or any Subsidiary of a Borrower to put up money, assets, or other security (other than letters of credit or guaranties permitted by Section 6.02 and liens on cash and securities to the Conterra Entitiesextent permitted under Section 6.01(l), (C) is longer than three (3) years against the event of its nonperformance prior to actual default by the Borrower or such Subsidiary in durationperforming its obligations thereunder, or (Dvii) is with a counterparty or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender or one of its Affiliates) at the time the contract is made does not have long-term obligations rated BBB+ BBB- or Baa1 Baa3 or better, respectively, by either Standard & Poor’s Ratings Group or Xxxxx’x Investors Service, Inc. Inc., or is an investment grade-rated industry participant (or such counterparty’s obligations are guaranteed by such a Person). For purposes of the foregoing Section, the “Winter/Spring Months” shall be December, January, February, March, April, May and June, and the “Summer/Fall Months” shall be July, August, September, October and November.

Limitation on Speculative Hedging. Other than the Hedge Contracts set forth on Schedule 4.20 hereto (which Hedge Contracts The Borrower shall not be modified without the prior written consent of the Administrative Agent), no Borrower shallnot, nor shall any Borrower it permit any of its Subsidiaries to, (a) purchase, assume, or hold a speculative position in any commodities market or futures market or enter into any Hydrocarbon Hedge Agreement, Interest Hedge Agreement or similar hedge arrangement Contract for speculative purposes or (b) be party to or otherwise enter into any Hydrocarbon Hedge Agreement, Interest Hedge Agreement, or any other Hedge Contract which that (i) is entered into for reasons other than as a part of its normal business operations as a risk management strategy and/or hedge against changes resulting from market conditions related to such the Borrower’s or such Subsidiary’s operations; , (ii) with respect to Non-Conterra Hedge Contracts, covers notional volumes that would be in excess of (A) 80% of the production volumes anticipated by the Administrative Agent to be produced by the Borrowers during each of the Winter/Spring Months for periods that such Hedge Contract is in effect, and (B) 35% of the production volumes anticipated by the Administrative Agent to be produced by the Borrowers during the Summer/Fall Months for periods that such Hedge Contract is in effect; provided that notwithstanding anything in this subsection (ii) to the contrary, the Borrowers may purchase commodity floors or puts on up to 100% of the production volumes anticipated during the period such hedge arrangement is in effect and attributable to Proven Reserves of the Borrowers and their respective Subsidiaries that are categorized as “proved, developed and producing”; and (iii) with respect to Conterra Hedge Contracts, (A) covers notional volumes in excess of 10080% of the anticipated production volumes attributable to Proven Reserves of the Conterra Entities Borrower and its Subsidiaries which are categorized as “proved, developed and producing” during the period such hedge arrangement is in effecteffect as shown on its most recently delivered Engineering Report, (B) allows the applicable counterparty to have recourse to any Borrower or any Subsidiary of a Borrower (other than the Conterra Entities) or their respective assets (other than the Conterra Assets), or is otherwise guaranteed or supported by any Borrower or any Subsidiary of a Borrower (other than the Conterra Entities), (Ciii) is longer than three (3) two years in duration, or (Div) except as consented to by the Administrative Agent, is with a counterparty or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender Party or one of its Affiliates) at the time the contract is made does not have long-term obligations rated BBB+ BBB or Baa1 Baa2 or better, respectively, by either Standard & Poor’s Ratings Group or Xxxxx’x Investors Service, Inc. (Inc., or such counterparty’s obligations are guaranteed by such a Person)is an investment grade-rated industry participant. For purposes Notwithstanding the foregoing, the existence of the Hedge Contracts in effect on the Effective Date (“Existing Hedge Contracts”) shall not be considered a violation of this Section 6.14 (it being understood, however, that in determining compliance with the foregoing Sectionrequirements (including without limitation, the “Winter/Spring Months” percentage of volumes hedged) in connection with any Hedge Contracts proposed to be entered into after the date of this Agreement, both the Existing Hedge Contracts and all other Hedge Contracts existing after the date of this Agreement shall be December, January, February, March, April, May and June, and the “Summer/Fall Months” shall be July, August, September, October and Novemberconsidered).

Limitation on Speculative Hedging. Other than the Hedge Contracts set forth on Schedule 4.20 hereto (which Hedge Contracts The Borrower shall not be modified without the prior written consent of the Administrative Agent), no Borrower shallnot, nor shall any the Borrower permit any of its Subsidiaries to, (a) purchase, assume, or hold a speculative position in any commodities market or futures market or enter into any Hydrocarbon Hedge Agreement, Interest Hedge Agreement or similar hedge arrangement Contract for speculative purposes purposes, or (b) be party to or otherwise enter into any Hydrocarbon Hedge Agreement, Interest Hedge Agreement or any other Hedge Contract which (i) is entered into for reasons other than as a part of its normal business operations as a risk management strategy and/or hedge against changes resulting from market conditions related to such the Borrower’s or such Subsidiary’s operations; , (ii) when aggregated with respect to Non-Conterra other Hedge Contracts, covers notional volumes that would be in excess of (A) 80% Contracts of the production volumes anticipated by the Administrative Agent to be produced by the Borrowers during Borrower and each of the Winter/Spring Months for periods that such Hedge Contract is Subsidiary then in effect, and (B) 35% of the production volumes anticipated by the Administrative Agent to be produced by the Borrowers during the Summer/Fall Months for periods that such Hedge Contract is in effect; provided that notwithstanding anything in this subsection (ii) to the contrary, the Borrowers may purchase commodity floors or puts on up to 100% of the production volumes anticipated during the period such hedge arrangement is in effect and attributable to Proven Reserves of the Borrowers and their respective Subsidiaries that are categorized as “proved, developed and producing”; and (iii) with respect to Conterra Hedge Contracts, (A) covers notional volumes in excess of 100the Applicable Hedge Percentage (as defined below) of the lesser of, for each month occurring during the tenor of the Hedge Contract, (1) the Current Production and (2) the Forecasted Production, (iii) covers fluctuations in interest rates for notional principal amounts in excess of 75% of the anticipated production volumes attributable to Proven Reserves Debt for borrowed money of the Conterra Entities which are categorized as “proved, developed Borrower and producing” during the period such hedge arrangement is in effectits Subsidiaries, (Biv) allows is 5 years or longer in duration, (v) requires the applicable counterparty to have recourse to any Borrower or any Subsidiary of a Borrower to put up money, assets, or other security (other than letters of credit or guaranties permitted by Section 6.02 and liens on cash and securities to the Conterra Entitiesextent permitted under Section 6.01(m)) or their respective assets (other than against the Conterra Assets), or is otherwise guaranteed or supported event of its nonperformance prior to actual default by any the Borrower or any such Subsidiary of a Borrower (other than the Conterra Entities), (C) is longer than three (3) years in durationperforming its obligations thereunder, or (Dvi) is with a counterparty or has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender or one of its Affiliates) at the time the contract is made does not have long-term obligations rated BBB+ BBB- or Baa1 Baa3 or better, respectively, by either Standard & Poor’s Ratings Group or Xxxxx’x Investors Service, Inc. Inc., or is an investment grade-rated industry participant (or such counterparty’s obligations are guaranteed by such a Person). For purposes As used in this Section 6.14, “Current Production” means, for any month, the actual amount of production of crude oil, natural gas or natural gas liquids, calculated separately, for the month immediately prior to the month in which the applicable Hedge Contract is entered into. As used in this Section 6.14, “Forecasted Production” means, for any month, the forecasted production of crude oil, natural gas or natural gas liquids, calculated separately, anticipated to be produced during such month as set forth in the most recently delivered report pursuant to Section 5.06(d)(iv) of the foregoing SectionCredit Agreement. “Applicable Hedge Percentage” means, with respect to any Hedge Contract, the “Winter/Spring Months” shall be Decemberapplicable percentage set forth below for the particular types of Hydrocarbons described below, January, February, March, April, May and June, and which percentage is a function of the “Summer/Fall Months” shall be July, August, September, October and November.number of months that have elapsed since the date such Hedge Contract was entered into: