Common use of Test Well Clause in Contracts

Test Well. 4.1 On or before the expiration of the Term of this Agreement subject, however, to rig availability and obtaining requisite governmental permits, COI shall commence, or cause to be commenced, the drilling of the Test Well, at a location on the Lease mutually acceptable to the Parties, and shall prosecute same in a diligent and workmanlike manner to the Objective Depth. In the event the Test Well does not reach the Objective Depth due to encountering impenetrable substances or mechanical conditions beyond COI’s reasonable control, the Parties shall have the option, but not the obligation, to commence the drilling of a substitute well at a mutually acceptable location on the Lease. Any such substitute well drilled hereunder shall, upon its commencement, thereafter be deemed the Test Well. 4.2 With respect to the drilling of the Test Well, ▇▇▇ shall be entitled to an undivided 10% of 75%, being 7.5%, working interest (including record title and operating rights) free and clear of all costs and expenses associated with the Test Well until Post-Casing Point (such undivided 10% of 75% interest until Post-Casing Point is referred to hereafter as the “Carried Interest”). COI, as Operator, will bear all costs and expenses attributable to such Carried Interest prior to Post-Casing Point, together with all costs and expenses pertaining to the Test Well attributable to the remaining undivided 92.5% working interest, subject, however, to the provisions of Section 4.3 below. 4.3 COI, as Operator, shall notify ▇▇▇ once Casing Point has been reached with respect to the Test Well and within forty-eight (48) hours, inclusive of Saturdays, Sundays and federal holidays, of receipt of COI’s Casing Point notification, ▇▇▇ may elect to either (a) increase its interest in the Lease, and the Test Well, by an additional undivided 25% of 75%, being 18.75%, working interest ( in addition to its Carried Interest), free and clear of all costs and expenses attributable to the Test Well prior to Casing Point, or (b) retain its undivided 10% of 75% Carried Interest. If at Casing Point, COI, pursuant to the Operating Agreement, elects to temporarily abandon or to plug and abandon the Test Well and ▇▇▇ elects to participate in a different operation, COI shall not be responsible for costs and expenses attributable to ▇▇▇’▇ Carried Interest accruing thereafter to Post-Casing Point.

Test Well. 4.1 On or before the expiration of the Term of this Agreement subject, however, to rig availability and obtaining requisite governmental permits, COI shall commence, or cause to be commenced, the drilling of the Test Well, at a location on the Lease mutually acceptable to the Parties, and shall prosecute same in a diligent and workmanlike manner to the Objective Depth. In the event the Test Well does not reach the Objective Depth due to encountering impenetrable substances or mechanical conditions beyond COI’s reasonable control, the Parties shall have the option, but not the obligation, to commence the drilling of a substitute well at a mutually acceptable location on the Lease. Any such substitute well drilled hereunder shall, upon its commencement, thereafter be deemed the Test Well. In the event COI does not drill the Test Well during the Term of this Agreement, COI shall assign 100% of the record title interest in all of Vermilion Area Block 170 to ▇▇▇ and ▇▇▇ within 30 days of expiration of the Term. ▇▇▇ and ▇▇▇ shall then be under no further obligations to COI with regard to Vermilion Area Block 170 and therefore free to drill or cause to be drilled ▇▇▇ and ▇▇▇’▇ prospect on Vermilion Area Block 170. 4.2 With respect to the drilling of the Test Well, ▇▇▇ shall be entitled to an undivided 105% of 75100% working interest and ▇▇▇ shall be entitled to 1.7185% of 100% working interest, being a total of 6.7185%, being 7.5%, working interest (including record title and operating rights) free and clear of all costs and expenses associated with the Test Well until Post-Casing Point (such undivided 10% of 756.7185% interest until Post-Casing Point is referred to hereafter as the “Carried Interest”). COI, as Operator, will bear all costs and expenses attributable to such Carried Interest prior to Post-Casing Point, together with all costs and expenses pertaining to the Test Well attributable to the remaining undivided 92.593.2815% working interest, subject, however, to the provisions of Section 4.3 below. 4.3 COI, as Operator, shall notify ▇▇▇ and ▇▇▇ once Casing Point has been reached with respect to the Test Well and within forty-eight (48) hours, inclusive of Saturdays, Sundays and federal holidays, of receipt of COI’s Casing Point notification, ▇▇▇ and ▇▇▇ may elect to either (a) increase its interest in the Lease, and the Test Well, by an additional undivided 2510.07775% of 75100%, being 18.7510.07775%, working interest ( in addition to its Carried Interest), free and clear of all costs and expenses attributable to the Test Well prior to Casing Point, or (b) retain its undivided 106.7185% of 75100% Carried Interest. If at Casing Point, COI, pursuant to the Operating Agreement, elects to temporarily abandon or to plug and abandon the Test Well and ▇▇▇ and ▇▇▇ elects to participate in a different operation, COI shall not be responsible for costs and expenses attributable to REX’s or ▇▇▇’▇ Carried Interest accruing thereafter to Post-Casing Point. Any election made hereunder by ▇▇▇ and ▇▇▇ shall be independent elections as to their respective ownership interest. ▇▇▇ owns 7.5% of 100% working interest and ▇▇▇ owns 2.57775% of 100% working interest of the total 10.07775% working interest back-in discussed in this paragraph 4.3.

Test Well. 4.1 On or before the expiration of the Term of this Agreement subject, however, to rig availability and obtaining requisite governmental permits, COI shall commence, or cause to be commenced, the drilling of the Test Well, at a location on the Lease Leases mutually acceptable to the Parties, and shall prosecute same in a diligent and workmanlike manner to the Objective Depth. In the event the Test Well does not reach the Objective Depth due to encountering impenetrable substances or mechanical conditions beyond COI’s reasonable control, the Parties shall have the option, but not the obligation, to commence the drilling of a substitute well at a mutually acceptable location on the LeaseLeases. Any such substitute well drilled hereunder shall, upon its commencement, thereafter be deemed the Test Well. In the event COI does not drill the Test Well during the Term of this Agreement, COI shall assign 100% of the record title interest in all of Ship Shoal Area Block 121 and Ship Shoal Area Block 122 and 100% of the operating rights interest in Ship Shoal Area Block 134 to ▇▇▇ within 30 days of expiration of the Term. ▇▇▇ shall then be under no further obligations to COI with regard to Ship ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ 122 and Ship Shoal Area Block 134 therefore free to drill or cause to be drilled REX’s prospect(s) on Ship ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ 122 and Ship Shoal Area Block 134. 4.2 With respect to the drilling of the Test Well, ▇▇▇ shall be entitled to an undivided 10% of 75100%, being 7.510%, working interest (including record title and operating rights) free and clear of all costs and expenses associated with the Test Well until Post-Casing Point (such undivided 10% of 75% interest until Post-Casing Point is referred to hereafter as the “Carried Interest”). COI, as Operator, will bear all costs and expenses attributable to such Carried Interest prior to Post-Casing Point, together with all costs and expenses pertaining to the Test Well attributable to the remaining undivided 92.590% working interest, subject, however, to the provisions of Section 4.3 below. 4.3 COI, as Operator, shall notify ▇▇▇ once Casing Point has been reached with respect to the Test Well and within forty-eight (48) hours, inclusive of Saturdays, Sundays and federal holidays, of receipt of COI’s Casing Point notification, ▇▇▇ may ▇▇▇ elect to either (a) increase its interest in the LeaseLeases, and the Test Well, by an additional undivided 2515% of 75100%, being 18.7515%, working interest ( (in addition to its Carried Interest), free and clear of all costs and expenses attributable to the Test Well prior to Casing Point, or (b) retain its undivided 10% of 75100% Carried Interest. If at Casing Point, COI, pursuant to the Operating Agreement, elects to temporarily abandon or to plug and abandon the Test Well and ▇▇▇ elects to participate in a different operation, COI shall not be responsible for costs and expenses attributable to ▇▇▇’▇ REX’s Carried Interest accruing thereafter to Post-Casing Point. 4.4 In the event the Test Well is drilled and plugged and abandoned as a dry hole ▇▇▇ will not have had the opportunity to make an election pursuant to 4.3 above to increase its interest in the leases by an additional 15% working interest. Therefore, ▇▇▇ shall have the opportunity to participate with 25% working interest on a ground floor basis, pursuant to elections made under the Operating Agreement discussed in Article V below, in any future proposals subsequent to the abandonment operations of the Test Well including but not limited to any additional drilling proposals. In the event the Test Well is successfully drilled and completed REX’s working interest in the Leases and the Test Well will be determined pursuant to its election in 4.3 above whereby ▇▇▇ would own either 10% working interest or 25% working interest.

Test Well. 4.1 On or before the expiration of the Term of this Agreement subject, however, to rig availability and obtaining requisite governmental permits, COI shall commence, or cause to be commenced, the drilling of the Test Well, at a location on the Lease Leases mutually acceptable to the Parties, and shall prosecute same in a diligent and workmanlike manner to the Objective Depth. In the event the Test Well does not reach the Objective Depth due to encountering impenetrable substances or mechanical conditions beyond COI’s reasonable control, the Parties shall have the option, but not the obligation, to commence the drilling of a substitute well at a mutually acceptable location on the LeaseLeases. Any such substitute well drilled hereunder shall, upon its commencement, thereafter be deemed the Test Well.. In the event COI does not drill the Test Well during the Term of this Agreement, COI shall assign 100% of its interest in the Stone FO Agreement to ▇▇▇ within 15 days of the expiration of the Term. ▇▇▇ shall then be under no further obligations to COI with regard to South Timbalier Area Block 75 and therefore free to drill or cause to be drilled REX’s prospect(s) on South Timbalier Area Block 75 4.2 With respect to the drilling of the Test Well, ▇▇▇ shall be entitled to an undivided 10% of 75100%, being 7.510%, working interest (including record title and operating rights) free and clear of all costs and expenses associated with the Test Well until Post-Casing Point (such undivided 10% of 75% interest until Post-Casing Point is referred to hereafter as the “Carried Interest”). COI, as Operator, will bear all costs and expenses attributable to such Carried Interest prior to Post-Casing Point, together with all costs and expenses pertaining to the Test Well attributable to the remaining undivided 92.590% working interest, subject, however, to the provisions of Section 4.3 below. 4.3 COI, as Operator, shall notify ▇▇▇ once Casing Point has been reached with respect to the Test Well and within forty-eight (48) hours, inclusive of Saturdays, Sundays and federal holidays, of receipt of COI’s Casing Point notification, ▇▇▇ may ▇▇▇ elect to either (a) increase its interest in the LeaseLeases, and the Test Well, by an additional undivided 2510% of 75100%, being 18.7510%, working interest ( (in addition to its Carried Interest), free and clear of all costs and expenses attributable to the Test Well prior to Casing Point, or (b) retain its undivided 10% of 75100% Carried Interest. If at Casing Point, COI, pursuant to the Operating Agreement, elects to temporarily abandon or to plug and abandon the Test Well and ▇▇▇ elects to participate in a different operation, COI shall not be responsible for costs and expenses attributable to ▇▇▇’▇ REX’s Carried Interest accruing thereafter to Post-Casing Point. 4.4 In the event the Test Well is drilled and plugged and abandoned as a dry hole ▇▇▇ will not have had the opportunity to make an election pursuant to 4.3 above to increase its interest in the leases by an additional 10% working interest. Therefore, ▇▇▇ shall have the opportunity to participate with 20% working interest on a ground floor basis, pursuant to elections made under the Operating Agreement discussed in Article V below, in any future proposals subsequent to the abandonment operations of the Test Well including but not limited to any additional drilling proposals. In the event the Test Well is successfully drilled and completed REX’s working interest in the Leases and the Test Well will be determined pursuant to its election in 4.3 above whereby ▇▇▇ would own either 10% working interest or 20% working interest. 4.5 The carried Interest of ▇▇▇, REX’s working interest election at Casing Point and the ▇▇▇ Employee ORRI discussed in Article 1.5, 4.2, 4.3 and 4.4 above shall be proportionately reduced to the interest farmed out by Stone, pursuant to their election under Articles 1. (a), (b), and (c) of the ST 75 Part/FO Agreement and pursuant to Article 2. of the Stone Farmout Agreement.