Common use of Earned Interest Clause in Contracts

Earned Interest. 18.1 It is the intentions of the Parties that Farmee is incurring significant expenditures to earn a 40% undivided interest in the Farmout Lands (to the extent of Farmee’s drilling operations hereunder). If, immediately prior to the time Farmor conveyed a 40% undivided interest in the Farmout Lands and Title Documents to Farmee, the Farmor had less than a 80% beneficial interest in any of the Farmout Lands or the Title Documents, the Farmee shall nevertheless earn a 40% undivided beneficial interest in and to the Farmout Lands earned hereunder even if the effect is that the Farmor’s residual beneficial interest (after earning by Farmee) is less than a 40% undivided interest in those Farmout Lands.