Exploratory Well. A. SK and ▇▇▇▇ agree that for a period of one (1) year from the date of execution of this Agreement neither party will propose the drilling of a well within the Prospects. B. After one (1) year from the date of the execution of this Agreement, either party may propose the drilling of an initial prospect exploratory well ("Initial Prospect Exploratory Well") within the ▇▇▇▇▇▇▇▇▇▇ Area for any Prospect Area (as hereinafter defined). Should any party desire to propose such Initial Prospect Exploratory Well ("Proposing Party"), said Proposing Party shall make the proposal in writing and provide the other party the following: (i) a structure map of the prospect to be tested at objective depths; (ii) an outline defining the Prospect Area. As a general rule, it is the intent of the parties that the Prospect Area outline shall be drawn on the nearest quarter section line outside the lowest closing contour of the structure rot be tested, or in the case of a stratigraphic trap or fault trap, the outline shall be drawn to the nearest quarter section lines outside the stratigraphic trapping boundary or the trapping fault plane. (iii) an Authorization For Expenditure ("AFE") depicting both the cost for a dry hole and for a completed producing well. (v) a leasehold and ownership map covering the Prospect Area. The party receiving such notice ("Electing Party") shall have thirty (30) days following the receipt of all items set forth above in which to make its election to participate in the Initial Prospect Exploratory Well pursuant to the terms hereof. The JOA will govern the operations of the Initial Prospect Exploratory Well proposed for the Prospect Area, except to the extent it does not conflict wit the provisions of this Agreement, including, but not limited to the relinquishment provision set forth herein. Failure to timely make an election to participate shall be deemed as an affirmative election not to participate in the Initial Prospect Exploratory Well for a Prospect Area. A non-participating Party in the Initial Prospect Exploratory Well for any Prospect Area will relinquish its interest to the participating party as follows: (i) In the event the Initial Prospect Exploratory Well l is drilled to the objective formation and is capable of production in paying quantities, relinquish one hundred percent (100%) of its interest or right to earn or acquire an interest in the producing unit established for the Initial Prospect Exploratory Well, and relinquish fifty percent (50%) of its interest or right to earn or acquire a interest in the remainder of the Prospect Area to the participating Party. (i) In the event the Initial Prospect Exploratory Well is drilled to the objective formation and drilled as a dry hole, the amount of acreage relinquished to the participating Party as to the aforementioned one hundred percent (100%) interest will be limited to the applicable statewide or field spacing rules (for the field where the well is located) established by the Mississippi Oil & Gas Commission for the producing units for the objective formation as if the well had been completed as a producer. In the event the well is drilled to the objective formation and drilled as a dry hole then the relinquishment of the aforementioned fifty percent (50%) interest will still apply as to the balance of the Prospect Area. (i) In the event the participating Party while drilling in good faith, fails to reach the objective formation due to impenetrable substances or conditions in the hole which in a prudent operator's opinion would render further drilling impracticable but encounters producible hydrocarbons in a shallower formation, and should such Party desire to complete the well at such shallower formation it may elect to do so. In this case, should the completion attempt result in a productive well or a well capable of production in paying quantities, the non-participating Party will relinquish to the participating Party one hundred percent (100%) of its interest in the producing unit established for the well and relinquish fifty percent (50%) of its interest or right to earn or acquire a interest in the remainder of the Prospect Area to the participating Party. C. All subsequent ▇▇▇▇▇ drilled in a Prospect Area shall be proposed by the parties in accordance with the JOA. All subsequent operations conducted on an Initial Prospect Exploratory Well and all subsequent ▇▇▇▇▇ shall be in accordance with the JOA.
Appears in 1 contract
Exploratory Well. A. SK and ▇▇▇▇ agree that for a period of one (1) year from the date of execution of this Agreement neither party will propose the drilling of a well within the Prospects▇▇▇▇▇▇▇▇▇▇ Area.
B. After one (1) year from the date of the execution of this Agreement, either party may propose the drilling of an initial prospect exploratory well ("Initial Prospect Exploratory Well") within the ▇▇▇▇▇▇▇▇▇▇ Area for any Prospect Area (as hereinafter defined). Should any party desire to propose such Initial Prospect Exploratory Well ("Proposing Party"), said Proposing Party shall make the proposal in writing and provide the other party the following:
(i) a structure map of the prospect to be tested at objective depths; ;
(ii) an outline defining the Prospect Area. As a general rule, it is the intent of the parties that the Prospect Area outline shall be drawn on the nearest quarter section line outside the lowest closing contour of the structure rot be tested, or in the case of a stratigraphic trap or fault trap, the outline shall be drawn to the nearest quarter section lines outside the stratigraphic trapping boundary or the trapping fault plane.
(iii) an Authorization For Expenditure ("AFE") depicting both the cost for a dry hole and for a completed producing well.
(v) a leasehold and ownership map covering the Prospect Area. The party receiving such notice ("Electing Party") shall have thirty (30) days following the receipt of all items set forth above in which to make its election to participate in the Initial Prospect Exploratory Well pursuant to the terms hereof. The JOA will govern the operations of the Initial Prospect Exploratory Well proposed for the Prospect Area, except to the extent it does not conflict wit the provisions of this Agreement, including, but not limited to the relinquishment provision set forth herein. Failure to timely make an election to participate shall be deemed as an affirmative election not to participate in the Initial Prospect Exploratory Well for a Prospect Area. A non-participating Party in the Initial Prospect Exploratory Well for any Prospect Area will relinquish its interest to the participating party as follows:
(i) In the event the Initial Prospect Exploratory Well l is drilled to the objective formation and is capable of production in paying quantities, relinquish one hundred percent (100%) of its interest or right to earn or acquire an interest in the producing unit established for the Initial Prospect Exploratory Well, and relinquish fifty percent (50%) of its interest or right to earn or acquire a interest in the remainder of the Prospect Area to the participating Party.
(i) In the event the Initial Prospect Exploratory Well is drilled to the objective formation and drilled as a dry hole, the amount of acreage relinquished to the participating Party as to the aforementioned one hundred percent (100%) interest will be limited to the applicable statewide or field spacing rules (for the field where the well is located) established by the Mississippi Oil & Gas Commission for the producing units for the objective formation as if the well had been completed as a producer. In the event the well is drilled to the objective formation and drilled as a dry hole then the relinquishment of the aforementioned fifty percent (50%) interest will still apply as to the balance of the Prospect Area.
(i) In the event the participating Party while drilling in good faith, fails to reach the objective formation due to impenetrable substances or conditions in the hole which in a prudent operator's opinion would render further drilling impracticable but encounters producible hydrocarbons in a shallower formation, and should such Party desire to complete the well at such shallower formation it may elect to do so. In this case, should the completion attempt result in a productive well or a well capable of production in paying quantities, the non-participating Party will relinquish to the participating Party one hundred percent (100%) of its interest in the producing unit established for the well and relinquish fifty percent (50%) of its interest or right to earn or acquire a interest in the remainder of the Prospect Area to the participating Party.
C. All subsequent ▇▇▇▇▇ drilled in a Prospect Area shall be proposed by the parties in accordance with the JOA. All subsequent operations conducted on an Initial Prospect Exploratory Well and all subsequent ▇▇▇▇▇ shall be in accordance with the JOA.
Appears in 1 contract