Common use of Liquidation Value Clause in Contracts

Liquidation Value. The merger values are based on the value of the underlying properties, which are essentially the same values that could be achieved by selling the partnerships' property interests and liquidating the partnerships at this time. In addition, we believe that the lump sum cash payment to each limited partner in the mergers is higher than what the limited partners would otherwise receive over the life of the partnership, assuming constant oil and gas commodity prices and operating costs and giving effect to the time value of money, for the following reasons: - The partnership agreements require cash distributions to be reduced by general and administrative expenses allocable to each partnership. The merger values reflect liquidation values based on reserve values that have not been reduced for general and administrative expenses. - The merger values are based upon current oil and gas prices. It is likely that oil and gas prices will vary often and possibly widely, as has been demonstrated historically, from the prices used to prepare these estimates. In that way, the merger values eliminate the potential loss in value due to lower oil and gas prices.