RATE OF PRODUCTION. (a) Grantor shall prudently operate and produce with respect to those Subject Well▇ ▇▇▇rated by Grantor, and shall use Grantor's best efforts to cause to be prudently operated and produced, with respect to the Subject Well▇ ▇▇▇ operated by Grantor in accordance with good engineering practices and the following requirements: (i) the amount of Hydrocarbons produced from any Subject Well shall not exceed in any Month the lower of (x) the maximum amount that the Subject Well is capable of producing at its maximum efficient rate of flow or (y) the respective allowable rate of flow under applicable orders, rules, regulations or laws, if any; (ii) the amount of Hydrocarbons produced from the Subject Well▇ ▇▇▇ll be sufficient to prevent a net migration of Hydrocarbons from the reservoirs to which proved reserves are attributed to the Subject Properties; and (iii) subject to field rules established by governmental authorities having or asserting jurisdiction, the amount of Hydrocarbons produced from the Subject Well▇ ▇▇▇ll be equitable and ratable, based on factors used in determining such field rules. (b) Subject to the provisions of Section 3(a), Grantor shall use Grantor's best efforts to cause the Subject Well▇ ▇▇ produce each Month that quantity of Hydrocarbons sufficient to cause the Monthly PP Amount to equal the product obtained by multiplying the Subject Quantity for such Month times the Spot Price for such Month. (c) If for any reason at any time, or from time to time, (i) (y) there has been an acceleration in the rate of production of Hydrocarbons from the Subject Interests for any one Month period that exceeds the rates set forth in the reserve report prepared by Netherland, Sewe▇▇ & ▇ssociates (the "Independent Engineer") dated as of December 31, 2000 attributable to such Month, or (z) any required operation to be undertaken by Grantor is not timely performed in accordance with the terms hereof, and (ii) the ratio that the Tail Reserves bears to the Remaining
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RATE OF PRODUCTION. (a) Grantor Grantors shall prudently operate and produce with respect to those Subject Well▇ ▇▇▇rated Interests operated by GrantorGrantors, and shall use Grantor's Grantors' best efforts to cause to be prudently operated and produced, with respect to the Subject Interests not operated by Grantors, the Subject Well▇ ▇▇▇ operated by Grantor in accordance with good engineering practices and the following requirements: (i) the amount of Hydrocarbons produced from any Subject Well shall not exceed in any Month the lower of (x) the maximum amount that the Subject Well is capable of producing at its maximum efficient rate of flow or (y) the respective allowable rate of flow under applicable orders, rules, regulations or laws, if any; (ii) the amount of Hydrocarbons produced from the Subject Well▇ ▇▇▇ll be sufficient to prevent a net migration of Hydrocarbons from the reservoirs to which proved reserves are attributed to underlying the Subject PropertiesInterests; and (iii) subject to field rules established by governmental authorities having or asserting jurisdiction, the amount of Hydrocarbons produced from the Subject Well▇ ▇▇▇ll be equitable and ratable, based on factors used in determining such field rules.
(b) Subject to the provisions of Section 3(a5(a), Grantor Grantors shall use Grantor's Grantors' best efforts to cause the Subject Well▇ ▇▇ each Property to produce each Month Day that quantity of Overriding Royalty Hydrocarbons sufficient to cause allow the Monthly PP delivery to Grantee of the Scheduled Amount to equal the product obtained by multiplying the Subject Quantity for such Month times the Spot Price for such MonthDay.
(c) If for any reason at any time, or from time to time, (i) (yw) there has been an acceleration in the rate of production of Hydrocarbons from the Subject Interests any Property for any one Month period that exceeds the rates set forth in the reserve report (the "Reserve Report") prepared by Netherland, Sewe▇▇ & ▇ssociates (the "Independent Engineer") dated as of December 31, 2000 attributable to such Month, (x) the State of Louisiana elects to defer taking its royalty share of hydrocarbons attributable to any of the Subject Interests (or the proceeds therefrom), (y) any of the capital expenditures referred to in Section 10 hereof are not made at the time required, or (z) the drilling of any required replacement well or other operation to be undertaken by Grantor Grantors is not timely performed in accordance with the terms hereof, and (ii) the ratio that the Tail Reserves bears to the RemainingRemaining Reserves is less than the Required Percentage (as defined in Section 5(f)), then in addition to any other rights or remedies available to Grantee, Grantee shall have the right, at Grantee's option, to cause the remaining Scheduled Amounts to be adjusted as provided in Section 5(d). As used in this Section 5, "Tail Reserves" means, as of the date of any determination, (i) the Risk Adjusted Proved Reserves of Hydrocarbons projected to be attributable to the Subject Interests determined by calculating such Risk Adjusted Proved Reserves for each Subject Interest as of the later of (x) the end of the last Month for which a Scheduled Amount is set forth on Schedule 1 or Schedule 2 to the Conveyance for the Property comprised in whole or in part of such Subject Interest or (y) the date of such determination of Tail Reserves, and (ii) adding the amounts so calculated for all Subject Interests. As used in this Section 5, "Remaining Reserves" means, as of the date of any determination, the Risk Adjusted Proved Reserves of Hydrocarbons projected to be attributable to the Subject Interests without regard to the Overriding Royalty. As used in this Section 5, "Risk Adjusted
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