Common use of Participation Agreements Clause in Contracts

Participation Agreements. During the Program Term, if in the process of evaluation of a Prospect the data and information lead McMoRan to the good faith determination that because of the large expenditures required, the extraordinary risk involved or other facts deemed relevant by McMoRan, an outside venturer should be obtained in such Prospect, McMoRan shall have the right to undertake to negotiate an agreement with a third party to join in the drilling of the Exploratory Well on the Prospect and thereby acquire a portion of the Exploration Program's interest in such Prospect; provided, however, that if any such agreement would reduce the interest of the Exploration Program by more than fifty percent (50%), McMoRan must obtain the prior approval of Participant. McMoRan shall give notice to Participant of its intention to negotiate an agreement with an outside venturer which would reduce the interest of the Exploration Program by more than fifty percent (50%), stating the time within which the circumstances require an expression of approval or disapproval by the Participant. Failure of Participant to disapprove the proposed negotiation within the stated period of time may be deemed by McMoRan to be approval by Participant. Any agreement with an outside venturer shall be on the basis of the outside venturer paying and bearing not less than the proportionate part of all drilling costs and expenses of the Exploratory Well attributable to the undivided interest transferred to such outside venturer, and the interest in the Prospect transferred to or earned by such outside venturer shall reduce the respective interests of McMoRan and Participant proportionately. Any promotion or other consideration received by McMoRan incident to such agreement with an outside venturer shall be held for the benefit of the Exploration Program and the Participant shall be entitled to participate therein in proportion to its interest in the Prospect.

Participation Agreements. During the Program Term, if in the process of evaluation of a Prospect the data and information lead McMoRan to the good faith determination that because of the large expenditures required, the extraordinary risk involved or other facts deemed relevant by McMoRan, an outside venturer should be obtained in such Prospect, McMoRan shall have the right to undertake to negotiate an agreement with a third party to join in the drilling of the Exploratory Well on the Prospect and thereby acquire a portion of the Exploration Program's interest in such Prospect; provided, however, that if any such agreement would reduce the interest of the Exploration Program by more than fifty percent (50%), McMoRan must obtain the prior approval of Participant. McMoRan shall give notice to Participant of its intention to negotiate an agreement with an outside venturer which would reduce the interest of the Exploration Program by more than fifty percent (50%), stating the time within which the circumstances require an expression of approval or disapproval by the Participant. Failure of Participant to disapprove the proposed negotiation within the stated period of time may be deemed by McMoRan to be approval by Participant. Any agreement with an outside venturer shall be on the basis of the outside venturer paying and bearing not less than the proportionate part of all drilling costs and expenses of the Exploratory Well attributable to the undivided interest transferred to such outside venturer, and the interest in the Prospect transferred to or earned by such outside venturer shall reduce the respective interests of McMoRan and Participant proportionately. Any promotion or other consideration received by McMoRan incident to such agreement with an outside venturer shall be held for the benefit of the Exploration Program and the Participant members of the McMoRan Group shall be entitled to participate therein in proportion to its their interest in the Prospect. The foregoing provision shall not be applicable to McMoRan's transaction with other members of the McMoRan Group so long as the interest of Participant set forth in Article III is maintained.