Common use of Substitute Well Clause in Contracts

Substitute Well. In the event the ITW should encounter rock salt, heaving shale, excessive water flow, excessive pressure, igneous or other impenetrable formation or other conditions which would render further drilling impracticable or uneconomic and preclude the ITW from reaching the Objective Depth, then and in such event NEWFIELD shall have the exclusive option to propose within sixty (60) days following the abandonment of the ITW drilling of a substitute well (“Substitute Well”) therefore, provided same is drilled to the Objective Depth and under the same terms and conditions as the ITW. RIDGEWOOD shall have no obligation to participate in the Substitute Well; provided RIDGEWOOD shall have thirty (30) days, or forty-eight (48) hours in the event that a rig is on location, from receipt of the AFE for the Substitute Well to elect whether it shall participate in such Substitute Well. Failure to respond within the time period allowed shall be deemed to be an election not to participate in the Substitute Well. In the event NEWFIELD does not propose a Substitute Well within the time period provided for above, then RIDGEWOOD may propose the drilling of a Substitute Well pursuant to the terms of the Operating Agreement. NEWFIELD or Ridgewood shall have the continuing option to drill additional Substitute ▇▇▇▇▇, provided that no more than sixty (60) days elapse between the date the drilling rig was released from the last operation on such Substitute Well and the commencement date of drilling operations for the next Substitute Well drilled therefor. 2.2.1 If the ITW fails to reach its Objective Depth, and RIDGEWOOD’s share of costs and expenses incurred in connection with the ITW has not yet reached the Promote Cap, then: (i) if a Substitute Well is proposed and RIDGEWOOD elects not to participate therein, then RIDGEWOOD shall pursuant to Article 4.3, reconvey to NEWFIELD a 15% record title interest in and to the Leases and this Agreement shall terminate and neither Party shall have any further obligations or liabilities hereunder, except with respect to the fulfillment of payment and indemnity obligations accrued prior to such termination; (ii) if a Substitute Well is proposed and RIDGEWOOD does elect to participate therein, this Agreement shall remain in full force and effect as though the Substitute Well was the ITW; and (iii) if a Substitute Well is proposed and RIDGEWOOD elects to participate therein, but such well is not drilled, RIDGEWOOD shall retain its undivided fifteen percent (15%) record title interest in and to the Leases previously conveyed by the Assignment hereunder and any future operations on the Prospect by the Parties shall be governed by the Operating Agreement. 2.2.2 If the ITW fails to reach its Objective Depth and RIDGEWOOD’s share of costs and expenses incurred in connection with the ITW has reached the Promote Cap, RIDGEWOOD shall retain its record title interest in and to the Leases received by the Assignment pursuant to Section 4.2 hereof, and the consequences of RIDGEWOOD’s election to participate or not to participate in the Substitute Well shall be governed by the provisions of Article 16 of the Operating Agreement as described below. [Redacted] Prospect Ridgewood Energy Corporation 3 Participation Agreement 16.5.1. Regardless of whether RIDGEWOOD elects to participate or not to participate in a Substitute Well, NEWFIELD shall retain the Cash Consideration, as such term is hereafter defined.

Substitute Well. In the event the ITW should encounter rock salt, heaving shale, excessive water flow, excessive pressure, igneous or other impenetrable formation or other conditions which would render further drilling impracticable or uneconomic and preclude the ITW from reaching the Objective Depth, then and in such event NEWFIELD shall have the exclusive option to propose within sixty (60) days following the abandonment of the ITW drilling of a substitute well (“Substitute Well”) therefore, provided same is drilled to the Objective Depth and under the same terms and conditions as the ITW. RIDGEWOOD shall have no obligation to participate in the Substitute Well; provided RIDGEWOOD shall have thirty (30) days, or forty-eight (48) hours in the event that a rig is on location, from receipt of the AFE for the Substitute Well to elect whether it shall participate in such Substitute Well. Failure to respond within the time period allowed shall be deemed to be an election not to participate in the Substitute Well. In the event NEWFIELD does not propose a Substitute Well within the time period provided for above, then RIDGEWOOD may propose the drilling of a Substitute Well pursuant to the terms of the Operating Agreement. NEWFIELD or Ridgewood shall have the continuing option to drill additional Substitute ▇▇▇▇▇, provided that no more than sixty (60) days elapse between the date the drilling rig was released from the last operation on such Substitute Well and the commencement date of drilling operations for the next Substitute Well drilled therefor. 2.2.1 If the ITW fails to reach its Objective Depth, and RIDGEWOOD’s share of costs and expenses incurred in connection with the ITW has not yet reached the Promote Cap, then: (i) if a Substitute Well is proposed and RIDGEWOOD elects not to participate therein, then RIDGEWOOD shall pursuant to Article 4.3, reconvey to NEWFIELD a 15% record title interest in and to the Leases and this Agreement shall terminate and neither Party shall have any further obligations or liabilities hereunder, except with respect to the fulfillment of payment and indemnity obligations accrued prior to such termination; (ii) if a Substitute Well is proposed and RIDGEWOOD does elect to participate therein, this Agreement shall remain in full force and effect as though the Substitute Well was the ITW; and (iii) if a Substitute Well is proposed and RIDGEWOOD elects to participate therein, but such well is not drilled, RIDGEWOOD shall retain its undivided fifteen percent (15%) record title interest in and to the Leases previously conveyed by the Assignment hereunder and any future operations on the Prospect by the Parties shall be governed by the Operating Agreement. 2.2.2 If the ITW fails to reach its Objective Depth and RIDGEWOOD’s share of costs and expenses incurred in connection with the ITW has reached the Promote Cap, RIDGEWOOD shall retain its record title interest in and to the Leases received by the Assignment pursuant to Section 4.2 hereof, and the consequences of RIDGEWOOD’s election to participate or not to participate in the Substitute Well shall be governed by the provisions of Article 16 of the Operating Agreement as described below. [Redacted] Prospect Ridgewood Energy Corporation 3 Participation Agreement. 16.5.1. Regardless of whether RIDGEWOOD elects to participate or not to participate in a Substitute Well, NEWFIELD shall retain the Cash Consideration, as such term is hereafter defined.

Substitute Well. In If the event the ITW should encounter rock saltInitial Well results in a dry hole or, heaving shaleif, excessive water flowprior to reaching Contract Depth, excessive pressure, igneous or other impenetrable Farmee encounters a formation or other conditions physical condition in the well which would render renders further drilling impracticable or uneconomic and preclude the ITW from reaching the Objective Depthimpractical, then and in such event NEWFIELD so called "Gulf Coast" conditions, Farmee shall have the exclusive option to propose within sixty (60) days following the abandonment of the ITW drilling of drill a substitute well (“Substitute Well”) therefore, provided same is drilled subject to the Objective Depth provisions of this Agreement applicable to the Initial Well, as follows: (a) Farmee shall give Farmor written notice describing the status of the well and under stating whether or not Farmee elects to drill a substitute well. Such notice shall be given while the same terms and conditions as drilling rig or completion unit is on the ITW. RIDGEWOOD shall have no obligation to participate in the Substitute Well; provided RIDGEWOOD shall have thirty (30) dayswell, or forty-eight (48) hours in the event that a rig is on location, from receipt of the AFE for the Substitute Well to elect whether it shall participate in such Substitute Wellwithin ten days after its release. Failure to respond within the time period allowed timely make such an election shall be deemed to be an election by Farmee not to participate drill a substitute well. Farmee's only penalty for not electing to drill a substitute well will be the loss of its rights to earn an assignment. (b) If Farmee elects to drill a substitute well, Farmor shall advise Farmee in writing within 24 hours after receipt of Farmee's notice to either plug the Substitute Welloriginal well or turn it over to Farmor as provided in Section 9.1 below, and to proceed with the substitute well, it is provided, however, that Farmor shall not be required to make a takeover election until all of the notices and information, including but not limited to logs and test data, have been received as provided in Exhibit "A" attached hereto. If Farmor elects not to take over the well or fails to make an election, Farmee shall promptly plug and abandon the well. (c) If Farmee elects not to drill a substitute well, or if Farmee has waived its right to do so as hereinabove provided, Farmor shall advise Farmee in writing within 24 hours after receipt of Farmee's notice whether or not Farmor elects to take over the well pursuant to Section 9.1 below; it is provided, however, that Farmor shall not be required to make a takeover election until all of the notices and information, including but not limited to logs and test data, have been received as provided in Exhibit "A" attached hereto. If Farmor elects not to take over the well or fails to make an election, Farmee shall promptly plug and abandon the well and restore the surface. In the event NEWFIELD does Farmee elects not propose to drill a Substitute Well substitute well, Farmee shall have no right to drill a substitute well in order to earn an assignment hereunder. (d) A substitute well drilled hereunder shall be spudded within 90 days after Farmee's election to drill it and the time period provided for abovewell shall be drilled, then RIDGEWOOD may propose the drilling of a Substitute Well pursuant to the terms tested and completed or plugged and abandoned in accordance with all of the Operating Agreementrequirements specified herein for the Initial Well and with the same consequences. NEWFIELD or Ridgewood In like manner, Farmee shall have the continuing option right to drill additional Substitute substitute wells in accordance with the foregoing terms, conditions and ▇▇▇▇▇, provided that no more than sixty (60) days elapse between visions in order to earn an assignment of the date the drilling rig was released from the last operation on such Substitute Well and the commencement date of drilling operations for the next Substitute Well drilled therefor. 2.2.1 If the ITW fails to reach its Objective Depth, and RIDGEWOOD’s share of costs and expenses incurred in connection with the ITW has not yet reached the Promote Cap, then: (i) if a Substitute Well is proposed and RIDGEWOOD elects not to participate therein, then RIDGEWOOD shall pursuant to Article 4.3, reconvey to NEWFIELD a 15% record title interest in and Farmout Area. Reference herein to the Leases and this Agreement shall terminate and neither Party shall have any further obligations or liabilities hereunder, except with respect to the fulfillment of payment and indemnity obligations accrued prior to such termination; (ii) if a Substitute Well is proposed and RIDGEWOOD does elect to participate therein, this Agreement shall remain in full force and effect as though the Substitute Well was the ITW; and (iii) if a Substitute Well is proposed and RIDGEWOOD elects to participate therein, but such well is not drilled, RIDGEWOOD shall retain its undivided fifteen percent (15%) record title interest in and to the Leases previously conveyed by the Assignment hereunder and any future operations on the Prospect by the Parties shall be governed by the Operating Agreement. 2.2.2 If the ITW fails to reach its Objective Depth and RIDGEWOOD’s share of costs and expenses incurred in connection with the ITW has reached the Promote Cap, RIDGEWOOD shall retain its record title interest in and to the Leases received by the Assignment pursuant to Section 4.2 hereof, and the consequences of RIDGEWOOD’s election to participate or not to participate in the Substitute Initial Well shall be governed by the provisions of Article 16 of the Operating Agreement as described below. [Redacted] Prospect Ridgewood Energy Corporation 3 Participation Agreement 16.5.1. Regardless of whether RIDGEWOOD elects to participate or not to participate in a Substitute Well, NEWFIELD shall retain the Cash Consideration, as such term is hereafter definedinclude its substitute well(s).