Common use of Sidetracking Clause in Contracts

Sidetracking. Except as later provided in this Agreement, the provisions of this Agreement applicable to a “deepening” operation shall also be applicable to any proposal to directionally control and intentionally deviate the well from vertical so as to change the bottom hole location (called “sidetracking”), unless done to straighten the hole or to drill around junk in the hole or because of other mechanical difficulties. Any party having the right to participate in a proposed sidetracking operation that does not own an interest in the well at the time of the notice shall, on electing to participate, tender to the well owners its proportionate share (equal to its interest in the sidetracking operation) of the value of that portion of the well to be utilized as follows: (a) If the proposal is for sidetracking a dry hole, reimbursement shall be on the basis of the actual costs incurred in the initial drilling of the well down to the depth at which the sidetracking operation is initiated. (b) If the proposal is for sidetracking the well which has previously produced, reimbursement shall be on the basis of the well’s salvable materials and equipment down to the depth at which the sidetracking operation is initiated, determined in accordance with the provisions of Exhibit “C,” less the estimated cost of salvaging and the estimated cost of plugging and abandoning. In the event that notice for a sidetracking operation is given while the drilling rig to be utilized is on location, the response period shall be limited to forty-eight (48) hours, exclusive of Saturday, Sunday, and legal holidays; provided, however, any party may request and receive up to eight (8) additional days after expiration of the forty-eight (48) hours in which to respond by paying for all stand-by time incurred during the extended response period. If more than one party elects to take additional time to respond to the notice, stand-by costs shall be allocated between the parties taking additional time to respond on a day-to-day basis in the proportion each electing party’s interest, as shown on Exhibit “A,” bears to the total interest, as shown on Exhibit “A,” of all the electing parties. In all other instances the response period to a proposal for sidetracking shall be limited to thirty (30) days.

Sidetracking. Except as later provided in this Agreementhereinafter provided, the those provisions of this Agreement agreement applicable to a “deepening” operation shall also be applicable to any proposal to directionally control and intentionally deviate the a well from vertical so as to change the bottom hole location (called herein call “sidetracking”), unless done to straighten the hole or to drill around junk in the hole or because of other mechanical difficulties. Any party having the right to participate in a proposed sidetracking operation that does not own an interest in the affected well bore at the time of the notice shall, on upon electing to participate, tender to the well bore owners its proportionate share (equal to its interest in the sidetracking operation) of the value of that portion of the existing well bore to be utilized as follows: (a) 1. If the proposal is for sidetracking a an existing dry hole, reimbursement shall be on the basis of the actual costs incurred in the initial drilling of the well down to the depth at which the sidetracking operation is initiated. (b) 2. If the proposal is for sidetracking the a well which has previously produced, reimbursement shall be on the basis of the well’s salvable materials and equipment down to the depth at which the sidetracking operation is initiated, determined in accordance with the provisions of Exhibit “C,” ”, less the estimated cost of salvaging and the estimated cost of plugging and abandoning. In the event that notice for a sidetracking operation is given while the drilling rig to be utilized is on location, the response period shall be limited to fortytwenty-eight four (48) hours24), exclusive of Saturday, Sunday, Sunday and legal holidays; provided, however, any party may request and receive up to eight (8) additional days after expiration of the fortytwenty-eight four (4824) hours in within which to respond by paying for all stand-by time incurred during the such extended response period. If more than one party elects to take such additional time to respond to the notice, stand-stand by costs shall be allocated between the parties taking additional time to respond on a day-to-day basis in the proportion each electing party’s interest, interest as shown on Exhibit “A,” bears to the total interest, interest as shown on Exhibit “A,” of all the electing parties. In all other instances the response period to a proposal for sidetracking shall be limited to thirty (30) days.