Common use of Limitation on Speculative Hedging Clause in Contracts

Limitation on Speculative Hedging. 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 operations, (ii) except with respect to Proven Reserves associated with the Sxxxxxxxxx Aldwell Unit located in Rxxxxx County, Texas and any other Oil and Gas Properties (now owned or hereafter acquired and wherever located) of a like character in reserve life to such Proven Reserves associated with the Sxxxxxxxxx Aldwell Unit (“Excepted Oil and Gas Properties”), (A) covers notional volumes in excess of 80% of the production volumes anticipated during the period such hedge arrangement is in effect and attributable to Proven Reserves of the Parent and its Subsidiaries that are categorized as “proved, developed and producing”, or (B) is longer than two years in duration (except that any such hedge arrangement may be for three years in duration if the notional volumes covered in the third year of such arrangement, taken together with the notional volumes covered by other hedging arrangements during such third year, are not in excess of 60% of such anticipated production volumes), and (iii) with respect to the Proven Reserves associated with the Excepted Oil and Gas Properties, (A) covers notional volumes in excess of 80% of the anticipated production volumes attributable to Proven Reserves of the Parent and its Subsidiaries that are categorized as “proved, developed and producing”, or (B) is longer than five years in duration.

Limitation on Speculative Hedging. No The Borrower shallshall not, 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 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 the Borrower’s 's operations, (ii) except with respect to Proven Reserves associated with the Sxxxxxxxxx Xxxxxxxxxx Aldwell Unit located in Rxxxxx Xxxxxx County, Texas and any other Oil and Gas Properties (now owned or hereafter acquired and wherever located) of a like character in reserve life to such Proven Reserves associated with the Sxxxxxxxxx Aldwell Unit (“Excepted Oil and Gas Properties”)Texas, (A) covers notional volumes in excess of 80% of the production volumes anticipated during the period such hedge arrangement is in effect and attributable to Proven Reserves of the Parent Borrower and its Subsidiaries that are categorized as “"proved, developed and producing”", or (B) is longer than two years in duration (except that any such hedge arrangement may be for three years in duration if the notional volumes covered in the third year of such arrangement, taken together with the notional volumes covered by other hedging arrangements during such third year, are not in excess of 60% of such anticipated production volumes), and (iii) with respect to the Proven Reserves associated with the Excepted Oil and Gas PropertiesXxxxxxxxxx Aldwell Unit, (A) covers notional volumes in excess of 80% of the anticipated production volumes attributable to Proven Reserves of the Parent Borrower and its Subsidiaries that are categorized as “"proved, developed and producing”", or (B) is longer than five years in duration.