Common use of Seitel Obligations Clause in Contracts

Seitel Obligations. EXXI acknowledges that Centurion has secured the Leasehold Assets and has developed all of the Prospects subject to this Agreement pursuant to the Seitel Agreements, copies of which were provided to EXXI subsequent to EXXI’s execution of the Investor Confidentiality Agreement. Further, EXXI acknowledges that the Leasehold Assets, and all Oil and Gas Properties located within the Gridiron AMI and acquired subsequent to the effective date of this Agreement will be subject to the Seitel Agreements regardless of whether or not such Leasehold Assets and Oil and Gas Properties are acquired directly by Centurion, by EXXI or by some third party. EXXI hereby agrees to be bound by all of the terms and provisions of the Seitel Agreements, and EXXI expressly acknowledges the limitations and obligations of Centurion and its assigns including EXXI as set forth therein. The Seitel Agreements expressly provide for various obligations of Centurion and its assigns including EXXI (“Seitel Obligations”) including, but not necessarily limited to, the following: (i) Seitel owns and is entitled to an assignment of an overriding royalty interest on all Leases and non-producing Oil and Gas Properties (undeveloped leases) based on the following sliding scale: (a) an undivided 5.0% of 8/8ths of the oil and gas produced from the lands covered by any such Leases and non-producing Oil and Gas Properties which grant to Lessee the right to receive an amount equal to or greater than 80% of the oil and gas produced from the lands covered thereby; or (b) an undivided 4.00% of 8/8ths of the oil and gas produced from the lands covered by any such Leases and non-producing Oil and Gas Properties which grant to Lessee the right to receive an amount equal to or greater than 77.5% but less than 80% of the oil and gas produced from the lands covered thereby; or (c) an undivided 2.00% of 8/8ths of the oil and gas produced from the lands covered by any such Leases and non-producing Oil and Gas Properties which grant to Lessee the right to receive an amount less than 77.5% of the oil and gas produced from the lands covered thereby. If any Lease or non-producing Oil and Gas Property in which Seitel is entitled to an overriding royalty interest under the Seitel Agreements covers less than the entire mineral fee estate in any of the lands covered thereby, such overriding royalty, as to such lands, shall be reduced to the proportion thereof which the undivided mineral interest covered by such lease bears to the entire mineral fee estate. Further, in the event Centurion and/or its assigns acquire less than the entire leasehold working interest in any such Lease or non-producing Oil and Gas Property, such overriding royalty, as to such Leases or non-producing Oil and Gas Properties, shall be reduced to the proportion thereof which the leasehold working interest so acquired bears to the entire undivided leasehold working interest; and (ii) if, in the process of acquiring any Leases or producing Oil and Gas Properties, either Party hereto shall purchase or farm-in existing production, then Centurion and/or its assigns will owe no overriding royalty interest to Seitel as to those lands and/or formations within any proved developed and/or proved undeveloped reservoirs identified by one or more previous owners and confirmed by an independent third-party reserve report; however, the overriding royalty interest shall apply to all other lands and formations located within the geographic confines of the Gridiron AMI. In lieu of the overriding royalty interest on the proved developed and/or proved undeveloped reservoirs acquired by Centurion and/or its assigns, for each such purchase or farm-in having a price or value in the aggregate in excess of $500,000, Seitel will be entitled to the sum of $50,000 within thirty (30) days of consummation of each such acquisition.