Common use of Upward Adjustments Clause in Contracts

Upward Adjustments. The Purchase Price will be increased by the following expenses and revenues (without duplication) ( “Upward Adjustments”): (a) ASSIGNOR’s share of all actual production and operating costs and expenses, overhead charges under applicable operating agreements, capital expenditures paid or incurred by ASSIGNOR in connection with ownership or operation of the Property (including without limitation royalties, minimum royalties, rentals, and prepaid charges), to the extent they are attributable to the Property for the period on and after the Effective Date; provided that, for the period between the Effective Date and the Closing Date, with respect to those portions of the Property for which ASSIGNOR is a one hundred percent (100%) working interest owner, all attributable production and operating costs and expense, including a charge for overhead in the amount of $1,225.00 per producing Well per month; but excluding, in all cases, liabilities, obligations, costs and expenses attributable to (i) actual or claimed personal injury, including death of ASSIGNOR’s employees, (ii) the gross negligence or willful misconduct of ASSIGNOR or any of its Affiliates in the operation of its Assets prior to Closing, (iii) remediation of environmental conditions created prior to the Effective Date and attributable to the Property, (iv) Excluded Assets or ASSIGNOR’s Retained Obligations, (v) curing Title Defects or remediating Adverse Environmental Conditions attributable to the Property, (vi) requiring the furnishing of make-up gas or other gas balancing obligations, or (vii) working interests, royalties, overriding royalties or other interests held in suspense attributable to the Property; (b) ASSIGNOR’s share of any proceeds from the sale of Hydrocarbons produced from or attributable to the Property and other income from the Property received by ASSIGNEE, to the extent they are attributable to the ownership or operation of the Property before the Effective Date, and the value of the Stock Tank Oil and the Pipeline Inventory as of 7:00 a.m. local time where the Property is located on the Effective Date; (c) Any other increases in the Purchase Price specified in this Agreement or otherwise agreed in writing between ASSIGNOR and ASSIGNEE prior to or at Closing; and (d) (i) Capital or maintenance expenses incurred by ASSIGNOR to the extent each such expense is attributable to the Property for the period on and after the Effective Date and is either (A) approved or deemed approved under Section 10.1 or (B) less than $50,000 net to ASSIGNOR’s interest in the applicable portion of the Property and (ii) expenses incurred by ASSIGNOR with respect to the capital or maintenance AFE’s shown on Schedule I-1; provided, however, that with respect to any such AFE, the Purchase Price will not be increased for any such expenses to the extent they exceed one hundred and ten percent (110%) of the budgeted amount for such AFE shown on Schedule I-1 without the prior written consent of ASSIGNEE.

Upward Adjustments. The Purchase Price Base Merger Consideration will be increased by the following expenses expenses, revenues and revenues (without duplication) ( “Upward Adjustments”):other items: (ai) ASSIGNORKMG’s share of all actual production and operating costs and expenses, overhead charges under applicable operating agreementsagreements (or, with respect to active producing or injection ▇▇▇▇▇ included in the Property operated by KMG that are not subject to an operating agreement, an overhead charge of $500 per each such Well per month), capital expenditures paid or incurred by ASSIGNOR KMG in connection with ownership or operation of the Property (including without limitation royalties, minimum royalties, rentals, and prepaid charges), to the extent they are attributable to the Property for the period on and after the Effective Date; provided that, for the period between the Effective Calculation Date and the until Closing Date, with respect to those portions of the Property for which ASSIGNOR is a one hundred percent but excluding Hurricane-Related Costs (100%) working interest owner, all attributable production and operating costs and expense, including a charge for overhead as defined in the amount of $1,225.00 per producing Well per month; but excluding, in all cases, liabilities, obligations, costs and expenses attributable to (i) actual or claimed personal injury, including death of ASSIGNOR’s employees, Section 8.12); (ii) the gross negligence or willful misconduct of ASSIGNOR or any of its Affiliates in the operation of its Assets prior to Closing, (iii) remediation of environmental conditions created prior to the Effective Date and attributable to the Property, (iv) Excluded Assets or ASSIGNOR’s Retained Obligations, (v) curing Title Defects or remediating Adverse Environmental Conditions attributable to the Property, (vi) requiring the furnishing of make-up gas or other gas balancing obligations, or (vii) working interests, royalties, overriding royalties or other interests held in suspense attributable to the Property; (b) ASSIGNORKMG’s share of any proceeds from the sale of Hydrocarbons oil, gas, casinghead gas, condensate, distillate and other liquid and gaseous hydrocarbons of every kind or description (“Hydrocarbons”) produced from or attributable to the Property and other income from the Property received by ASSIGNEESurviving Entity or W&T, to the extent they are attributable to the ownership or operation of the Property before the Effective Date, and the value of the Stock Tank Oil and the Pipeline Inventory as of 7:00 a.m. local time where the Property is located on the Effective Calculation Date; (ciii) $60.00 per barrel for all merchantable Hydrocarbons produced from or attributable to the Property before the Calculation Date that are stored in the Lease or unit stock tanks as identified on the ▇▇▇▇ for the production month of September, 2005 filed with the MMS (the “Stock Tank Oil”) (but excluding all Hydrocarbons produced from or attributable to the Property before the Calculation Date and stored in gathering lines or production facilities upstream of the sale or custody transfer meters (or other applicable point at which the transfer of title actually occurs) of the purchaser or processor of Hydrocarbon production attributable to the Property which shall, at Closing, be the property of Surviving Entity); (iv) Imbalance adjustments pursuant to Section 11.1, as applicable; and (v) Any other increases in the Purchase Price Base Merger Consideration specified in this Agreement or otherwise agreed in writing between ASSIGNOR KMG and ASSIGNEE W&T prior to or at Closing; and (d) (i) Capital or maintenance expenses incurred by ASSIGNOR to the extent each such expense is attributable to the Property for the period on and after the Effective Date and is either (A) approved or deemed approved under Section 10.1 or (B) less than $50,000 net to ASSIGNOR’s interest in the applicable portion of the Property and (ii) expenses incurred by ASSIGNOR with respect to the capital or maintenance AFE’s shown on Schedule I-1; provided, however, that with respect to any such AFE, the Purchase Price will not be increased for any such expenses to the extent they exceed one hundred and ten percent (110%) of the budgeted amount for such AFE shown on Schedule I-1 without the prior written consent of ASSIGNEE.

Upward Adjustments. The Purchase Price will be increased by the following expenses and revenues (revenues, without duplication) ( “Upward Adjustments”):: (ai) ASSIGNOR’s share the aggregate amount of all actual production and operating costs and expenses, overhead charges under applicable operating agreements, capital expenditures non-reimbursed Property Costs that have been paid or incurred by ASSIGNOR in connection with ownership or operation of the Property (including without limitation royalties, minimum royalties, rentals, and prepaid charges), to the extent they Sellers that are attributable to the Property for ownership and operation of the period Assets on and after the Effective Date; provided that, for the period between the Effective Date and the Closing Date, with respect to those portions of the Property for which ASSIGNOR is a one hundred percent (100%) working interest owner, all attributable production and operating costs and expense, including a charge for overhead in the amount of $1,225.00 per producing Well per month; but excluding, in all cases, liabilities, obligations, costs and expenses attributable to (i) actual or claimed personal injury, including death of ASSIGNOR’s employees, ; (ii) the gross negligence or willful misconduct aggregate amount of ASSIGNOR or any of its Affiliates in the operation of its Assets prior to Closing, (iiiA) remediation of environmental conditions created prior to the Effective Date and attributable to the Property, (iv) Excluded Assets or ASSIGNOR’s Retained Obligations, (v) curing Title Defects or remediating Adverse Environmental Conditions attributable to the Property, (vi) requiring the furnishing of make-up gas or other gas balancing obligations, or (vii) working interests, royalties, overriding royalties or other interests held in suspense attributable to the Property; (b) ASSIGNOR’s share of any proceeds received by Buyer from the sale of Hydrocarbons produced from or and attributable to the Property Assets during any period prior to the Effective Date to which the Sellers are entitled under Section 2.3(a) (net of any of the following actually paid by Buyer: (1) Royalties and (2) gathering, processing, transportation and other income from the Property midstream costs), and (B) other proceeds received by ASSIGNEE, with respect to the extent they are attributable Assets for which the Sellers would otherwise be entitled under Section 2.3(a); (iii) the aggregate amount of all prepaid expenses paid by the Sellers with respect to the ownership or operation of the Property before Assets on and after the Effective Date; (iv) the aggregate amount of all Outstanding Accounts Receivable, and up to a maximum amount of $150,000.00; (v) the value of the Stock Tank Oil and the Pipeline Inventory (as determined pursuant to Section 2.3(a)); (vi) the aggregate amount of all Cure Costs with respect to the Assigned Contracts up to the Cure Costs Cap in accordance with Section 2.7; (vii) if applicable, the amount, if any, of Imbalances listed on Schedule 4.16 in favor of the Sellers, multiplied by the price per Mcf payable to the Sellers under the applicable gas sales Assigned Contract as of 7:00 a.m. local time where the Property is located on Effective Date, or, to the extent that the applicable Assigned Contracts provide for cash balancing, the actual cash balance amount determined to be due to the Sellers as of the Effective Date; (cviii) Any any deposits included in the Assets, including security deposits and the like; (ix) the amount of all Asset Taxes allocated to Buyer in accordance with Article 11 but that are paid or otherwise economically borne by the Sellers; (x) an amount equal to $200,000.00 per month for each month between the Effective Date and the Closing Date representing recovery of the Sellers’ overhead (such amount to be prorated for each partial month between the Effective Date and the Closing Date); and (xi) any other increases in the Purchase Price specified in this Agreement or otherwise agreed in writing between ASSIGNOR the Sellers and ASSIGNEE Buyer prior to or at Closing; and (d) (i) Capital or maintenance expenses incurred by ASSIGNOR to the extent each such expense is attributable to the Property for the period on and after the Effective Date and is either (A) approved or deemed approved under Section 10.1 or (B) less than $50,000 net to ASSIGNOR’s interest in the applicable portion of the Property and (ii) expenses incurred by ASSIGNOR with respect to the capital or maintenance AFE’s shown on Schedule I-1; provided, however, that with respect to any such AFE, the Purchase Price will not be increased for any such expenses to the extent they exceed one hundred and ten percent (110%) of the budgeted amount for such AFE shown on Schedule I-1 without the prior written consent of ASSIGNEE.

Upward Adjustments. The To calculate the Closing Amount and for the purposes of the Preliminary Settlement Statement and the Final Settlement Statement calculations, the Purchase Price will shall be increased adjusted upward by the following expenses and revenues (without duplication) ( “Upward Adjustments”):following: (a) ASSIGNOR’s share of all actual production and operating costs and expenses, overhead charges under applicable operating agreements, capital expenditures paid or incurred by ASSIGNOR in connection with ownership or operation of the Property (including without limitation royalties, minimum royalties, rentals, and prepaid charges), to the extent they are attributable to the Property for the period on and after the Effective Date; provided that, for the period between the Effective Date and the Closing Date, with respect to those portions of the Property for which ASSIGNOR is a one hundred percent (100%) working interest owner, all attributable production and operating costs and expense, including a charge for overhead in the amount of $1,225.00 per producing Well per month; but excluding, in all cases, liabilities, obligations, costs and expenses attributable to (i) actual or claimed personal injury, including death of ASSIGNOR’s employees, An amount equal to (iiA) the gross negligence or willful misconduct of ASSIGNOR or any of its Affiliates in the operation of its Assets prior to Closing, (iii) remediation of environmental conditions created prior to the Effective Date and attributable to the Property, (iv) Excluded Assets or ASSIGNOR’s Retained Obligations, (v) curing Title Defects or remediating Adverse Environmental Conditions attributable to the Property, (vi) requiring the furnishing of make-up gas or other gas balancing obligations, or (vii) working interests, royalties, overriding royalties or other interests held in suspense attributable to the Property; (b) ASSIGNOR’s share of any all proceeds from the sale of Hydrocarbons produced from or attributable to the production of Hydrocarbons from the Assets attributable to the period prior to the Effective Time received by Buyer, net of Taxes (subject to Article 10) and Burdens, and (B) all other income, proceeds, receipts and credits with respect to the Assets attributable to the period prior to the Effective Time received by Buyer; (ii) An amount equal to all Property Expenses attributable to the Assets for the period at and after the Effective Time that were paid by Seller; but excluding costs to cure and/or Remediate, as applicable, any Title Defects, Environmental Defects, or Casualty Losses, or to obtain any Consents or waivers of Preferential Rights or incurred in connection with any breach of this Agreement; (iii) An amount equal to the value of all oil and other income from Hydrocarbons in pipelines or flowlines or in tanks above the Property received by ASSIGNEEpipeline sales connection or other storage (including line fill) (exclusive of any brine, sludge or water that may be present in the oil storage tanks), in each case that at the Effective Time, to the extent they not previously sold by Seller, is credited to Seller’s interest in the Assets, each such value to be the contract price in effect as of the Effective Time or, in the absence of an applicable contract price, the average price per unit for sales of production for the respective production period attributable to the Assets as of the Effective Time, less any Taxes and Burdens; (iv) To the extent that there are attributable any Pipeline Imbalances, if the net of such Imbalances is an overdelivery Imbalance (that is, at the Effective Time, Seller has delivered more gas to the pipeline than the pipeline has purchased or redelivered for Seller), the Purchase Price shall be adjusted upward by $2.50 per MMBtu multiplied by the net overdelivery Imbalance as of the Effective Time in MMBtu; (v) The amount of all prepaid Property Expenses (including pre-paid bonuses, rentals, cash calls and other advances to Third Party operators under applicable joint operating agreements for expenses not yet incurred) and scheduled payments and insurance insofar as such relate solely to the Assets, which in all cases are paid by Seller with respect to the ownership or operation of the Property before Assets at and after the Effective DateTime and except to the extent related to any Assumed Liabilities; provided, however, that such prepaid expenses shall be prorated such that there shall only be an upward adjustment to the extent that such pre-paid expenses relate to the period of time from and the value of the Stock Tank Oil and the Pipeline Inventory as of 7:00 a.m. local time where the Property is located on after the Effective DateTime, in the event that such pre-paid expenses straddle the Effective Time; (cvi) An amount equal to any Asset Taxes and Property Taxes allocated to Buyer pursuant to Article 10 paid or payable by Seller; and (vii) Any other increases in the Purchase Price specified amount provided for in this Agreement or otherwise agreed to in writing between ASSIGNOR by Buyer and ASSIGNEE prior to or at Closing; and (d) (i) Capital or maintenance expenses incurred by ASSIGNOR Seller as an upward adjustment to the extent each such expense is attributable to the Property for the period on and after the Effective Date and is either (A) approved or deemed approved under Section 10.1 or (B) less than $50,000 net to ASSIGNOR’s interest in the applicable portion of the Property and (ii) expenses incurred by ASSIGNOR with respect to the capital or maintenance AFE’s shown on Schedule I-1; provided, however, that with respect to any such AFE, the Purchase Price will not be increased for any such expenses to the extent they exceed one hundred and ten percent (110%) of the budgeted amount for such AFE shown on Schedule I-1 without the prior written consent of ASSIGNEEPrice.

Upward Adjustments. The Purchase Price will P▇▇▇▇▇ Ranch Cash Consideration with respect to the P▇▇▇▇▇ Ranch 3H Well Interests and the Non-P▇▇▇▇▇ Ranch Cash Consideration with respect to all other Assets shall each be increased by adjusted (as applicable) upward for the following expenses and revenues (following, without duplication) ( “Upward Adjustments”):: (ai) ASSIGNOR’s share of all actual production and operating costs and expenses, operating expenses, operated and non-operated overhead charges and capital expenditures, and, in addition, all other costs under applicable operating agreements, capital expenditures and production, severance or excise Taxes, paid or incurred by ASSIGNOR in connection with ownership Seller (excluding such expenses, charges or operation expenditures paid out of the Property (including without limitation royalties, minimum royalties, rentals, proceeds of Hydrocarbons produced and prepaid charges), to the extent they are attributable to the Property for the period on saved from and after the Effective Date; provided that, for Time) in connection with the period between ownership and operation of the Assets attributable to the periods from and after the Effective Date Time (including, without limitation, royalties and the Closing Dateproduction, with respect to those portions of the Property for which ASSIGNOR is a one hundred percent (100%) working interest owner, all attributable production and operating costs and expense, including a charge for overhead in the amount of $1,225.00 per producing Well per month; but excluding, in all cases, liabilities, obligations, costs and expenses severance or excise Taxes attributable to (i) actual or claimed personal injuryHydrocarbons produced and saved from and after the Effective Time, including death of ASSIGNOR’s employees, and pre-paid charges); (ii) all proceeds attributable to the gross negligence or willful misconduct sale of ASSIGNOR or any of its Affiliates in Hydrocarbons from the Assets and all other income and benefits received by Buyer attributable to production, ownership and operation of its the Assets prior to Closing, (iii) remediation of environmental conditions created prior to the Effective Date Time, less applicable production, severance or excise Taxes, royalties and attributable similar burdens; (iii) to the Propertyextent the Assumed Imbalances reflect an underbalanced (or under-produced or under-received balance) position of Seller as of the Effective Time regarding the Assets, all adjustments regarding such under balanced Assumed Imbalances in accordance with the provisions of Section 12.4; (iv) Excluded Assets or ASSIGNOR’s Retained Obligationsall adjustments for oil in storage above the pipeline connection, as provided in Section 12.1; (v) curing Title Defects or remediating Adverse Environmental Conditions attributable adjustments for over-delivered Pipeline Imbalances (volumes owed to the Property, Seller) as provided in Section 12.5; (vi) requiring without duplication of any other amounts set forth in this Section 3.3(a), the furnishing amount of make-up gas all production, severance, excise or other gas balancing obligationsreal or personal property or ad valorem Taxes, if any, allocated to Buyer in accordance with this Agreement but paid or to be paid by Seller (excluding such Taxes paid by Seller out of the proceeds of Hydrocarbons produced and saved from and after the Effective Time); and (vii) working interests, royalties, overriding royalties or any other interests held in suspense attributable upward adjustments to the Property; (b) ASSIGNOR’s share Cash Portion of any proceeds from the sale of Hydrocarbons produced from or attributable to the Property and other income from the Property received by ASSIGNEE, to the extent they are attributable to the ownership or operation of the Property before the Effective Date, and the value of the Stock Tank Oil and the Pipeline Inventory as of 7:00 a.m. local time where the Property is located on the Effective Date; (c) Any other increases in the Purchase Price specified in this Agreement or otherwise agreed in writing between ASSIGNOR and ASSIGNEE prior to or at Closing; and (d) (i) Capital or maintenance expenses incurred by ASSIGNOR to the extent each such expense is attributable to the Property for the period on and after the Effective Date and is either (A) approved or deemed approved under Section 10.1 or (B) less than $50,000 net to ASSIGNOR’s interest in the applicable portion of the Property and (ii) expenses incurred by ASSIGNOR with respect to the capital or maintenance AFE’s shown on Schedule I-1; provided, however, that with respect to any such AFE, the Purchase Price will not be increased for any such expenses to the extent they exceed one hundred and ten percent (110%) of the budgeted amount for such AFE shown on Schedule I-1 without the prior written consent of ASSIGNEEAgreement.

Upward Adjustments. The Purchase Price will shall be increased adjusted upward by the following expenses following: 1. an amount equal to all proceeds (net of royalty and revenues (without duplicationTaxes not otherwise accounted for hereunder) ( “Upward Adjustments”): (a) ASSIGNOR’s share of all actual production received and operating costs and expenses, overhead charges under applicable operating agreements, capital expenditures paid or incurred retained by ASSIGNOR in connection with ownership or operation of the Property (including without limitation royalties, minimum royalties, rentals, and prepaid charges), to the extent they are attributable to the Property for the period on and after the Effective Date; provided that, for the period between the Effective Date and the Closing Date, with respect to those portions of the Property for which ASSIGNOR is a one hundred percent (100%) working interest owner, all attributable production and operating costs and expense, including a charge for overhead in the amount of $1,225.00 per producing Well per month; but excluding, in all cases, liabilities, obligations, costs and expenses attributable to (i) actual or claimed personal injury, including death of ASSIGNOR’s employees, (ii) the gross negligence or willful misconduct of ASSIGNOR or any of its Affiliates in the operation of its Assets prior to Closing, (iii) remediation of environmental conditions created prior to the Effective Date and attributable to the Property, (iv) Excluded Assets or ASSIGNOR’s Retained Obligations, (v) curing Title Defects or remediating Adverse Environmental Conditions attributable to the Property, (vi) requiring the furnishing of make-up gas or other gas balancing obligations, or (vii) working interests, royalties, overriding royalties or other interests held in suspense attributable to the Property; (b) ASSIGNOR’s share of any proceeds Buyer from the sale of all Hydrocarbons produced from or attributable credited to the Property and other income from the Property received by ASSIGNEE, Assets prior to the extent they are attributable to the ownership or operation of the Property before the Effective Date, and the value of the Stock Tank Oil and the Pipeline Inventory as of 7:00 a.m. local time where the Property is located on the Effective Date; (c) Any other increases in 2. an amount equal to all direct and actual expenses attributable to the Purchase Price specified in this Agreement or otherwise agreed in writing between ASSIGNOR Assets, including without limitation the Property Expenses, incurred and ASSIGNEE prior paid by Seller that are attributable to or at Closing; andthe period after the Effective Date; (d) (i) Capital or maintenance expenses incurred by ASSIGNOR 3. to the extent each such expense is not covered in the preceding subparagraph, an amount equal to all prepaid expenses attributable to the Property for the period on and Assets after the Effective Date that were paid by or on behalf of Seller, including without limitation, prepaid drilling and/or completion costs, applicable insurance costs through Closing, and is either (A) approved prepaid utility charges; 4. an amount equal to the value of all Hydrocarbons in storage or deemed approved under Section 10.1 or (B) less than $50,000 net to ASSIGNOR’s interest in the applicable portion pipelines as of the Property Effective Date that is credited to the Assets, provided that the value of oil in the production tanks shall be calculated to include only the oil stored above the load lines as of the Effective Date (i.e. a Buyer is not responsible for paying Seller "tank bottoms") For purposes of the Preliminary Settlement Statement, the value will be based upon the actual price received for such oil, gas, or natural gas liquids, less applicable taxes, upon the first unaffiliated third party sale thereof, if available, and upon such estimates, as are reasonably agreed upon by the Parties, to the extent actual amounts sold, or to be sold, and prices obtained, or to be obtained, are not known at Closing. For purposes of the Final Settlement Statement, the value will be based upon actual amounts sold and prices obtained, less applicable taxes; 5. for purposes of the Preliminary Settlement Statement, an amount equal to the value of imbalances including, without limitation, pipeline, plant, and over-produced gas owed to the Seller as of the Effective Date, with the value to be based upon actual amounts received, if available, and upon such estimates as are reasonably agreed upon by the Parties, to the extent actual amounts are not known at Closing, and (ii) expenses incurred by ASSIGNOR with respect for purposes of the Final Settlement Statement based upon actual amounts; 6. an amount equal to the capital or maintenance AFE’s shown on Schedule I-1Interest Addition Adjustment as defined in Article 4.5 below; provided, however, that with respect and 7. any other amount agreed to any such AFE, the Purchase Price will not be increased for any such expenses to the extent they exceed one hundred by Buyer and ten percent (110%) of the budgeted amount for such AFE shown on Schedule I-1 without the prior written consent of ASSIGNEESeller.

Upward Adjustments. The Purchase Price will shall be increased adjusted upward by the following expenses following: 1. an amount equal to all proceeds (net of royalty and revenues (without duplicationTaxes not otherwise accounted for hereunder) ( “Upward Adjustments”): (a) ASSIGNOR’s share of all actual production received and operating costs and expenses, overhead charges under applicable operating agreements, capital expenditures paid or incurred retained by ASSIGNOR in connection with ownership or operation of the Property (including without limitation royalties, minimum royalties, rentals, and prepaid charges), to the extent they are attributable to the Property for the period on and after the Effective Date; provided that, for the period between the Effective Date and the Closing Date, with respect to those portions of the Property for which ASSIGNOR is a one hundred percent (100%) working interest owner, all attributable production and operating costs and expense, including a charge for overhead in the amount of $1,225.00 per producing Well per month; but excluding, in all cases, liabilities, obligations, costs and expenses attributable to (i) actual or claimed personal injury, including death of ASSIGNOR’s employees, (ii) the gross negligence or willful misconduct of ASSIGNOR or any of its Affiliates in the operation of its Assets prior to Closing, (iii) remediation of environmental conditions created prior to the Effective Date and attributable to the Property, (iv) Excluded Assets or ASSIGNOR’s Retained Obligations, (v) curing Title Defects or remediating Adverse Environmental Conditions attributable to the Property, (vi) requiring the furnishing of make-up gas or other gas balancing obligations, or (vii) working interests, royalties, overriding royalties or other interests held in suspense attributable to the Property; (b) ASSIGNOR’s share of any proceeds Buyer from the sale of all Hydrocarbons produced from or attributable credited to the Property and other income from the Property received by ASSIGNEE, Assets prior to the extent they are attributable to the ownership or operation of the Property before the Effective Date, and the value of the Stock Tank Oil and the Pipeline Inventory as of 7:00 a.m. local time where the Property is located on the Effective Date; (c) Any other increases in 2. an amount equal to all direct and actual expenses attributable to the Purchase Price specified in this Agreement or otherwise agreed in writing between ASSIGNOR Assets, including without limitation the Property Expenses, incurred and ASSIGNEE prior paid by Seller that are attributable to or at Closing; andthe period after the Effective Date; (d) (i) Capital or maintenance expenses incurred by ASSIGNOR 3. to the extent each such expense is not covered in the preceding subparagraph, an amount equal to all prepaid expenses attributable to the Property for the period on and Assets after the Effective Date that were paid by or on behalf of Seller, including without limitation, prepaid drilling and/or completion costs, applicable insurance costs through Closing, and is either (A) approved prepaid utility charges; 4. an amount equal to the value of all Hydrocarbons in storage or deemed approved under Section 10.1 or (B) less than $50,000 net to ASSIGNOR’s interest in the applicable portion pipelines as of the Property Effective Date that is credited to the Assets, provided that the value of oil in the production tanks shall be calculated to include only the oil stored above the load lines as of the Effective Date (i.e. a Buyer is not responsible for paying Seller “tank bottoms”). For purposes of the Preliminary Settlement Statement, the value will be based upon the actual price received for such oil, gas, or natural gas liquids, less applicable taxes, upon the first unaffiliated third party sale thereof, if available, and upon such estimates, as are reasonably agreed upon by the Parties, to the extent actual amounts sold, or to be sold, and prices obtained, or to be obtained, are not known at Closing. For purposes of the Final Settlement Statement, the value will be based upon actual amounts sold and prices obtained, less applicable taxes; 5. for purposes of the Preliminary Settlement Statement, an amount equal to the value of imbalances including, without limitation, pipeline, plant, and over-produced gas owed to the Seller as of the Effective Date, with the value to be based upon actual amounts received, if available, and upon such estimates as are reasonably agreed upon by the Parties, to the extent actual amounts are not known at Closing, and (ii) expenses incurred by ASSIGNOR with respect for purposes of the Final Settlement Statement based upon actual amounts; 6. an amount equal to the capital or maintenance AFE’s shown on Schedule I-1; providedInterest Addition Adjustment as defined in Article 4.5 below; 7. an operating fee, however, that with respect to any such AFE, the Purchase Price will not be increased for any such expenses inclusive of all fees related to the extent they exceed one hundred and ten percent (110%) operation of the budgeted ▇▇▇▇▇, including, but not limited to, overhead and pumper fees, in an amount for such AFE shown on Schedule I-1 without equal to $750.00 per day from the prior written consent Effective Date through the Closing Date; 8. any amount mutually agreed to by the Parties as a result of ASSIGNEEerrors in the Initial Disclosures, if any; and 9. any other amount agreed to by Buyer and Seller.

Upward Adjustments. The To calculate the Preliminary Purchase Price will and the Final Purchase Price, the Purchase Price shall be increased adjusted upward by the following expenses and revenues (without duplication) ( “Upward Adjustments”):following: (a1) ASSIGNOR’s share The amount of all actual production and operating costs and expenses, overhead costs, Non-Income Taxes, rents, lease payments and charges under applicable operating agreements, capital expenditures paid by Sellers or incurred by ASSIGNOR in connection with PCM relating to the time from and after the Effective Time that are attributable to the ownership or and operation of the Property (Assets on or after the Effective Time, including without limitation royalties(i) the costs and expenses attributable to operation and maintenance of the Assets incurred in the ordinary course of business; (ii) any capital expenditures permitted under this Agreement, minimum royaltiesattributable to the Assets; (iii) any amounts paid for the acquisition, rentalsextension or renewal of any Asset incurred in the ordinary course of business; (iv) any amounts paid for the acquisition of any asset included within the Assets after the Effective Time and incurred in the ordinary course of business or approved in writing by Buyer; (v) all prepaid expenses existing at the Effective Time (including Taxes, lease payments and prepaid chargesrents), to the extent they are not otherwise included herein, for costs and expenses directly attributable to the Property for Assets, and (vi) any amounts relating to obligations arising under the period on Contracts (other than amounts arising as a result of PCM’s breach of such agreements); (2) All revenues received by Buyer or PCM attributable to the ownership and after the Effective Date; provided that, for the period between the Effective Date and the Closing Date, with respect to those portions operation of the Property for which ASSIGNOR is a one hundred percent (100%) working interest owner, all attributable production and operating costs and expense, including a charge for overhead in the amount of $1,225.00 per producing Well per month; but excluding, in all cases, liabilities, obligations, costs and expenses attributable to (i) actual or claimed personal injury, including death of ASSIGNOR’s employees, (ii) the gross negligence or willful misconduct of ASSIGNOR or any of its Affiliates in the operation of its Assets prior to Closing, (iii) remediation of environmental conditions created prior to the Effective Date and attributable to the Property, (iv) Excluded Assets or ASSIGNOR’s Retained Obligations, (v) curing Title Defects or remediating Adverse Environmental Conditions attributable to the Property, (vi) requiring the furnishing of make-up gas or other gas balancing obligations, or (vii) working interests, royalties, overriding royalties or other interests held in suspense attributable to the PropertyTime; (b3) ASSIGNOR’s share An amount equal to all accounts receivable of any proceeds from PCM as of the sale of Hydrocarbons produced from or attributable Closing Date arising prior to the Property and other income from the Property received by ASSIGNEE, to the extent they Effective Time that are attributable to the ownership or and operation of the Property before the Effective Date, and the value of the Stock Tank Oil and the Pipeline Inventory as of 7:00 a.m. local time where the Property is located on the Effective DateAssets; (c4) Any cash or cash equivalents in PCM’s possession as of the Effective Time; and (5) Any other increases in the Purchase Price specified amount provided for in this Agreement or otherwise agreed in writing between ASSIGNOR to by Buyer and ASSIGNEE prior to or at Closing; and (d) (i) Capital or maintenance expenses incurred by ASSIGNOR to the extent each such expense is attributable to the Property for the period on and after the Effective Date and is either (A) approved or deemed approved under Section 10.1 or (B) less than $50,000 net to ASSIGNOR’s interest in the applicable portion of the Property and (ii) expenses incurred by ASSIGNOR with respect to the capital or maintenance AFE’s shown on Schedule I-1; provided, however, that with respect to any such AFE, the Purchase Price will not be increased for any such expenses to the extent they exceed one hundred and ten percent (110%) of the budgeted amount for such AFE shown on Schedule I-1 without the prior written consent of ASSIGNEESellers.