Common use of Proportionate Adjustment Clause in Contracts

Proportionate Adjustment. The Parties recognize that certain Prospects listed on Exhibits "B" may involve acreage not under the ownership or control of Chevron on the Effective Date of this Agreement. Should Chevron secure an agreement from the Third Party owner(s) of any offsetting acreage or Prospect Contract Acreage necessary to control a Prospect before drilling an Initial Test Well, and said agreement results in the reduction of the interest of Chevron in the Initial Test Well and Prospect, the obligations and duties of the Parties hereto in regard to the Prospect included under the agreement with a Third Party shall be proportionately adjusted to compensate for the reduction in interest by Chevron in the Prospect, dependent upon whether such reduction in interest results from (i) a recordable or N MS approvable cross-assignment of Record Title or Operating Rights Interests with the Third Party or (ii) an assignment of contractual interests in a Prospect with a Third Party. In the event of a cross-assignment with a Third Party of Record Title or Operating Rights Interest in a Prospect, the interest Chevron would assign to Ridgewood in the Leases in the Prospect would be proportionately reduced by the Ridgewood ACP Interest of the specific Prospect area, to reflect the Record Title or Operating Rights Interest of Chevron remaining after such cross-assignment. Ridgewood would also be entitled to an assignment of a similar Record Title or Operating Rights Interest in lands acquired by Chevron from the Third Party as the result of any such cross-assignment. In the event of a reduction of Chevron's interest in a Prospect by means of a contractual arrangement that does not result in the cross-assignment of Record Title or Operating Rights Interest in a Prospect with a Third Party, the interest Chevron would assign to Ridgewood in the Leases in the Prospect would be subject to such contractual rights, and Ridgewood would be entitled to its proportionate share, of the specific Prospect area, of the contractual rights acquired. The interest to be assigned by Chevron to Ridgewood in the Leases in the Prospect would be proportionately reduced by the Ridgewood ACP Interest of the specific Prospect area to reflect the contractual arrangement. Examples of such contractual arrangements would be a pooling arrangement or a farmin between Chevron and a Third Party that was not approved by the MIS. In no event shall Ridgewood be liable for or entitled to receive any benefit from or associated with any promoted costs the Third Party may be required to pay to Chevron. Ridgewood's obligations, rights and duties under this Agreement would be adjusted as appropriate to recognize the interests to be assigned to, or the contractual arrangement agreed to with, the Third Party. Notwithstanding anything to the contrary stated in this Section 3.4, in no event will the provisions of this Section further reduce or diminish the obligations and duties under this Agreement of the Parties to each other with the exception of any interest earned which Chevron is obligated to assign to Ridgewood as to Exhibit "B" Prospects would be adjusted to compensate for the interest assigned to or contractual arrangement made with a Third Parry. Costs associated with any obligation as to such prospects would also be adjusted accordingly.

Proportionate Adjustment. The Parties recognize that certain Prospects listed on Exhibits "B" may involve acreage not under the ownership or control of Chevron on the Effective Date of this Agreement. Should Chevron secure an agreement from the Third Party owner(s) of any offsetting acreage or Prospect Contract Acreage necessary to control a Prospect before drilling an Initial Test Well, and said agreement results in the reduction of the interest of Chevron in the Initial Test Well and Prospect, the obligations and duties of the Parties hereto in regard to the Prospect included under the agreement with a Third Party shall be proportionately adjusted to compensate for the reduction in interest by Chevron in the Prospect, dependent upon whether such reduction in interest results from (i) a recordable or N MS MMS approvable cross-assignment of Record Title or Operating Rights Interests with the Third Party or (ii) an assignment of contractual interests in a Prospect with a Third Party. In the event of a cross-assignment with a Third Party of Record Title or Operating Rights Interest in a Prospect, the interest Chevron would assign to Ridgewood in the Leases in the Prospect would be proportionately reduced by the Ridgewood ACP Interest of the specific Prospect area, to reflect the Record Title or Operating Rights Interest of Chevron remaining after such cross-assignment. Ridgewood would also be entitled to an assignment of a similar Record Title or Operating Rights Interest in lands acquired by Chevron from the Third Party as the result of any such cross-assignment. In the event of a reduction of Chevron's interest in a Prospect by means of a contractual arrangement that does not result in the cross-assignment of Record Title or Operating Rights Interest in a Prospect with a Third Party, the interest Chevron would assign to Ridgewood in the Leases in the Prospect would be subject to such contractual rights, and Ridgewood would be entitled to its proportionate share, of the specific Prospect area, of the contractual rights acquired. The interest to be assigned by Chevron to Ridgewood in the Leases in the Prospect would be proportionately reduced by the Ridgewood ACP Interest of the specific Prospect area to reflect the contractual arrangement. Examples of such contractual arrangements would be a pooling arrangement or a farmin between Chevron and a Third Party that was not approved by the MISMMS. In no event shall Ridgewood be liable for or entitled to receive any benefit from or associated with any promoted costs the Third Party may be required to pay to Chevron. Ridgewood's obligations, rights and duties under this Agreement would be adjusted as appropriate to recognize the interests to be assigned to, or the contractual arrangement agreed to with, the Third Party. Notwithstanding anything to the contrary stated in this Section 3.4, in no event will the provisions of this Section further reduce or diminish the obligations and duties under this Agreement of the Parties to each other with the exception of any interest earned which Chevron is obligated to assign to Ridgewood as to Exhibit "B" Prospects would be adjusted to compensate for the interest assigned to or contractual arrangement made with a Third ParryParty. Costs associated with any obligation as to such prospects would also be adjusted accordingly.