PW/GEODYNE
PRODUCTION PARTNERSHIP II-D
AGREEMENT OF PARTNERSHIP
Agreement of Partnership, dated as of May 10, 1988, among Geodyne
Production Company, a Delaware corporation, as Managing Partner, and
PaineWebber/Geodyne Energy Income Limited Partnership II-D, an Oklahoma limited
partnership, as General Partner.
Whereas, the parties hereto desire to form a general partnership under
the Uniform Partnership Act of the State of Oklahoma;
Now, Therefore, in consideration of the mutual promises and agreements
made herein, the parties, intending to be legally bound, hereby agree as
follows:
ARTICLE ONE
Defined Terms
The defined terms used in this Agreement shall, unless the context
otherwise requires, have the meanings specified in this Article One. The
singular shall include the plural and the masculine gender shall include the
feminine, the neuter and vice versa, as the context requires. Any terms used in
this Agreement which are defined in the Limited Partnership Agreement and are
not otherwise defined herein shall have the respective meanings set forth in the
Limited Partnership Agreement.
"Accountants" shall mean ▇▇▇▇▇▇ ▇▇▇▇▇ & Company or such other nationally
recognized firm of independent certified public accountants as shall be engaged
from time to time by the Managing Partner for the Production Partnership.
"Acquisitions and Operations Fee" shall mean the fee paid by the
Production Partnership to the Managing Partner pursuant to Section 5.2(1) of
this Agreement in connection with the Production Partnership's acquisition of
Producing Properties and the conduct of its business operations.
"Acquisition Reserve Report" shall mean a Hydrocarbon reserve report made
available to the Production Partnership prepared by a qualified petroleum
engineering firm acceptable to the Managing Partner in connection with the
proposed acquisition of a Producing Property, which shall include statements (i)
identifying reserves of Hydrocarbons referred to in such report as Proved
Developed Producing Reserves, Proved Developed Non-Producing Reserves or Proved
Undeveloped Reserves, as the case may be, and identifying all computations and
determinations made for purposes of such report, including, without limitation,
the present and future prices for Hydrocarbons and the present and future costs
to produce and develop such Hydrocarbons used in such computations and
determinations, (ii) with respect to the determination of the nature and extent
of the reserves of Hydrocarbons reflected in such report, that the collection,
analysis and evaluation of the basic physical data upon which such
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determination is based were performed by such qualified petroleum engineering
firm or if such data were collected by another Person, that such qualified
petroleum engineering firm has made inquiry with respect to the methods employed
in such collection, (iii) specifying the respective amounts of Proved Developed
Producing Reserves, Proved Developed Non--Producing Reserves, or Proved
Undeveloped Reserves contained therein, and (iv) indicating such qualified
petroleum engineering firm's opinion as to the respective estimated present
values of future net revenues of each category of reserves contained therein
determined in accordance with criteria satisfactory to the Managing Partner and
otherwise in accordance with sound engineering and industry practices, including
such standards and practices as may be promulgated by the Society of Petroleum
Engineers of the American Institute of Mining and Metallurgical Engineers. Any
such report may state that such qualified petroleum engineering firm expresses
no opinion and makes no warranty or representation with respect to the proposed
acquisition of such Producing Property and that such qualified petroleum
engineering firm is relying on information furnished by the Managing Partner as
to the historical volumes of any Hydrocarbons actually produced and as to the
proposed ownership interest of the Production Partnership in such Producing
Property.
"Act" shall mean the Oklahoma Uniform Partnership Act, as amended from
time to time.
"Activation" or "Activated" shall mean (i) with respect to the Limited
Partnership, the date on which the Limited Partnership is formed, and (ii) with
respect to the Production Partnership, the date on which the Limited Partnership
shall have made its Capital Contribution to the Production Partnership.
"Affiliate" shall mean, when used with reference to a specified Person:
(a) any Person directly or indirectly owning, controlling, or holding with power
to vote 10% or more of the outstanding voting securities of the specified
Person; (b) any Person 10% or more of whose outstanding voting securities are
directly or indirectly owned, controlled, or held with power to vote by the
specified Person; (c) any Person directly or indirectly controlling, controlled
by, or under common control with, the specified Person; (d) any Person who is an
officer, director, partner or trustee of, or serves in a similar capacity with
respect to, the specified Person or of which the specified Person is an officer,
director, partner or trustee, or with respect to which the specified Person
serves in a similar capacity; and (e) any relative or spouse of the specified
Person. Notwithstanding the foregoing, no Person shall be deemed to be an
Affiliate solely by reason of its ownership of depositary units of or limited
partnership interests in a limited partnership.
"Affiliated Program" shall mean a drilling or income program (whether in
the form of a limited partnership, general partnership, joint venture or
otherwise) interests in which were offered to persons or entities not engaged in
a trade or business within the oil and gas industry (other than by virtue of its
participation in an Affiliated Program) and of which the Managing Partner or an
Affiliate thereof serves as general partner or venturer.
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"Agreement" shall mean this Agreement of Partnership as amended from time
to time.
"Capital Account" shall mean, as to any Partner, an account maintained on
the books of the Production Partnership in accordance with the provisions of
Section 5.3D below.
"Capital Contribution" shall mean the total amount of money contributed
to the Production Partnership by all Partners or any class of Partners or any
one Partner (or the predecessor holders of the Interests of such Partner or
Partners), as the context requires, net of any refunds pursuant to Section 3.4
of this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended (or any
corresponding provisions of succeeding law).
"Commercial Well" shall mean any Production Partnership Well which is
capable of producing Hydrocarbons in commercial quantities, including those
▇▇▇▇▇ which are shut-in or which have not been abandoned within 60 days
following the commencement of production. For purposes of this definition,
production shall refer to the commencement of the commercial marketing of
Hydrocarbons, and shall not include any spot sales of Hydrocarbon production as
a result of testing procedures.
"Consent" shall mean the consent of a Person, given as provided in
Section 11.1, to do the act or thing for which the consent is solicited, or the
act of granting such consent, as the context may require.
"Depositary Unit" shall mean an increment of the attributes of the
Interest of the Depositary as the Limited Partner of the Limited Partnership
that is assigned to a Unit Holder.
"Development Drilling" shall mean all drilling and completing, or
plugging and abandoning (after a determination that a well is not a Commercial
Well), of a Production Partnership Well drilled to the same reservoir from which
another well or other ▇▇▇▇▇ on a Lease or an offset Lease are being produced, or
the recompletion of an existing Production Partnership Well; provided, however,
that Development Drilling shall not include any Identified Development Drilling.
"Direct Administrative Costs" shall mean the actual and necessary direct
costs attributable to services provided to the Production Partnership by parties
other than the Managing Partner or its Affiliates, whether incurred by the
Production Partnership directly or incurred by the Managing Partner or its
Affiliates, including the annual audit fees, legal fees and expenses, the costs
of reviewing tax returns and reports, the cost of reserve reports (other than
the cost of Acquisition Reserve Reports, Engineering Audit Letters and
evaluations thereof conducted on behalf of a Production Partnership) prepared by
independent petroleum engineering firms, and all other such costs directly
incurred by or for the benefit of the Production Partnership.
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"Distributable Cash" shall mean, with respect to the Production
Partnership's operations at any time, the amount of cash assets on hand at such
time less amounts required to be retained out of such cash assets, in the sole
judgment of the Managing Partner, to pay costs, expenses or other obligations
whether then accrued or anticipated to accrue in the future.
"Engineering Audit Letter" shall mean a document prepared by a qualified
petroleum engineering firm acceptable to the Managing Partner in connection with
the proposed acquisition of a Producing Property, which shall include statements
indicating that (i) such qualified petroleum engineering firm has reviewed an
oil and gas reserve report prepared by the engineering staff of Geodyne
Resources, Inc. or an Affiliate, (ii) in the opinion of such qualified petroleum
engineering firm, the reserve report was prepared in accordance with sound
engineering and industry practices, including such standards and practices as
may be promulgated by the Society of Petroleum Engineers of the American
Institute of Mining and Metallurgical Engineers, and (iii) with respect to the
determination of the nature and extent of the reserves of Hydrocarbons reflected
in such report, such qualified petroleum engineering firm has made inquiry with
respect to the methods employed in the collection, analysis and evaluation of
the basic physical data upon which such determination is based.
"Farmout" shall mean an arrangement whereby the owner of a Lease or
Working Interest agrees to assign his interest in certain specific acreage to
the assignee, retaining some interest such as an overriding royalty interest,
oil and gas payment, offset acreage or other type of interest, subject to the
drilling of one or more specific ▇▇▇▇▇ or other performance as a condition of
the assignment.
"Fiscal Year" shall mean the calendar year.
"General and Administrative Costs" shall mean all customary and routine
legal, accounting, data processing, depreciation (other than depreciation
relating to real property), geological, engineering, travel, office rent,
telephone, secretarial, employee compensation and benefits, and other items of a
general and administrative nature, whether like or unlike the foregoing, and any
other incidental expenses reasonably necessary to the conduct of the Production
Partnership's business, including the acquisition, operation and administration
of Producing Properties, computed on a cost basis, determined by the Managing
Partner in accordance with generally accepted accounting principles and subject
to review by an independent public accountant or certified public accountant in
connection with the annual audit of the Production Partnership and its
Affiliates. General and Administrative Costs shall not include any costs
includable under the foregoing but which are included as Property Acquisition
Costs, Direct Administrative Costs, cost incurred in connection with Development
Drilling, Identified Development Drilling and Improved Recovery projects, or
Operating Costs.
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"General Partner" shall mean PaineWebber/Geodyne Energy Income Limited
Partnership II-D, an Oklahoma limited partnership, acting in such capacity, any
successor in that capacity, and any other General Partner admitted to the
Production Partnership pursuant to the provisions of this Agreement subsequent
to the Activation of the Production Partnership.
"Geodyne Production" shall mean Geodyne Production Company, a Delaware
corporation.
"Hydrocarbons" shall mean crude oil, natural gas, condensate, natural gas
liquids and other liquid or gaseous hydrocarbons.
"Identified Development Drilling" shall mean all drilling and completing,
or plugging and abandoning (after a determination that a well is not a
Commercial Well), of a Production Partnership Well drilled by or on behalf of
the Production Partnership to a reservoir on a Lease or an offset Lease
constituting all or a portion of a Producing Property or the recompletion of an
existing Production Partnership Well, where (i) the drilling or recompletion of
such Production Partnership Well commences after the acquisition of such
Producing Property by the Production Partnership and is conducted in order to
commence production of Hydrocarbons from Proved Undeveloped Reserves identified
in the Acquisition Reserve Report or Engineering Audit Letter prepared in
connection with such Producing Property, (ii) the costs of development of the
Proved Undeveloped Reserves were taken into account in such Acquisition Reserve
Report or Engineering Audit Letter in valuing such Proved Undeveloped Reserves
attributable to such Producing Property, and (iii) a portion of the cost paid by
the Production Partnership for such Producing Property is attributed by such
Acquisition Reserve Report or Engineering Audit Letter to such Proved
Undeveloped Reserves. The term, Identified Development Drilling, shall also
refer to any Production Partnership ▇▇▇▇▇ drilled or recompleted on a Producing
Property subsequent to the initial Identified Development Drilling conducted on
such Producing Property in order to commence production of Hydrocarbons from
Proved Undeveloped Reserves (in addition to those identified in the related
Acquisition Reserve Report or Engineering Audit Letter) which have been
categorized by the Managing Partner as Proved Undeveloped Reserves by virtue of
production obtained from prior Identified Development Drilling conducted on such
Producing Property. Any reference to costs incurred in connection with
Identified Development Drilling shall include the interest, commitment fees and
other financing charges and expenses of Production Partnership borrowings
incurred to finance Identified Development Drilling.
"Improved Recovery" shall mean all methods of supplementing natural
forces and mechanisms of primary recovery or otherwise increasing the ultimate
recovery from a Production Partnership Well, including, but not limited to,
water flooding, pressure maintenance, gas cycling, fluid injection, polymer
flooding, chemical flooding, and the use of miscible displacement fluids.
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"Incapacity" or "Incapacitated" shall mean the adjudication of bankruptcy
(except that, in the case of the Managing Partner, the term "bankruptcy" shall
mean only being subject to Chapter 7 of the Federal Bankruptcy Reform Act of
1978), of interdiction, of incompetence, or of insanity, or the death,
dissolution or termination (other than by merger or consolidation under which
the surviving entity agrees to assume all of the obligations and
responsibilities of the merged or consolidated Person set forth in this
Agreement), as the case may be, of any Person.
"Income" shall mean the gross income of the Production Partnership (other
than Investment Income) as determined for Federal income tax purposes, including
all capital or Code Section 1231 gains (but not losses) of the Production
Partnership.
"Interest" shall mean the entire ownership interest (which may, either
for a Partner's Capital Account or a Partner's Profits interest, be expressed as
a percentage) of a Partner in the Production Partnership at any particular time,
including the rights and obligations of such Partner under this Agreement and
the Act.
"Investment Income" shall mean all interest and dividend income earned on
temporary investments of the Production Partnership at any time prior to the
time at which an amount equal to the Capital Contributions to the Production
Partnership available for the acquisition of Producing Properties have been (i)
expended or (ii) returned pursuant to Section 3.4 of this Agreement.
"Lease" shall mean a lease, mineral interest, royalty or overriding
royalty covering Hydrocarbons (or a contractual right to acquire such an
interest), or an undivided interest therein or portion thereof, together with
all easements, permits, licenses, servitudes and rights-of-way situated upon, or
used or held for future use in connection with, the exploration, development or
operation of such interest.
"Limited Partners" shall mean Geodyne Depositary Company or any
substituted limited partners of the Limited Partnership.
"Limited Partnership" shall mean the PaineWebber/Geodyne Energy Income
Limited Partnership II-D, an Oklahoma limited partnership.
"Limited Partnership Agreement" shall mean the agreement under which the
Limited Partnership was formed, as amended and restated.
"Managing Partner" shall mean Geodyne Production Company, a Delaware
corporation, and any other Person admitted as additional or Substituted Managing
Partner pursuant to Article Six of this Agreement.
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"Notification" shall mean a writing, containing the information required
by this Agreement to be communicated to any Person, hand delivered or sent by
registered or certified mail, return receipt requested, postage prepaid, to such
Person at the last known address of such Person, the date of the certified
receipt (or such other evidence of receipt) therefor being deemed the date of
the giving of Notification; provided, however, that any written communication
containing the information sent or delivered to the Person and actually received
by the Person shall constitute Notification for all purposes of this Agreement.
"Operating Costs" shall mean all expenditures made and costs incurred by
the Production Partnership with respect to (i) the production and marketing of
Hydrocarbons from completed Production Partnership ▇▇▇▇▇, including labor, fuel,
repairs, hauling, materials, supplies, utility charges and other costs incident
to or therefrom, costs of maintaining inventories incidental to the operations
of Producing Properties, costs of making transfers of lease and well equipment
to and from Production Partnership ▇▇▇▇▇, ad valorem and severance taxes,
insurance and casualty loss expense, and compensation to well operators or
others for services rendered in conducting such operations; (ii) the interest,
commitment fees and other finance charges and expenses of Production Partnership
borrowings incurred in connection with Development Drilling and Improved
Recovery Projects; and (iii) processing facilities, pipelines, gas sales
facilities, Improved Recovery projects, and other procedures and facilities
necessary to produce efficiently the Hydrocarbon reserves from a Producing
Property, all to the extent such costs and expenditures are not Property
Acquisition Costs.
"Organization and Offering Costs" shall mean all costs and expenses
incurred by the Managing Partner in connection with the organization of the
Production Partnership, including, without limitation, the legal, printing,
accounting and other costs incurred in connection with the organization of the
Production Partnership, and costs incurred in connection with preparing, filing
and recording this Agreement.
"Partner" shall mean the Managing Partner or any General Partner of the
Production Partnership.
"Payout" shall mean that time at which cash distributions have been made
by the Limited Partnership to the Unit Holders (together with their predecessors
in interest) pursuant to Section 5.1 of the Limited Partnership Agreement
(together with any distributions to such Unit Holders pursuant to Section 3.3 of
the Limited Partnership Agreement), in an aggregate amount equal to the Unit
Holders' Subscriptions to the Limited Partnership.
"Person" shall mean any individual, partnership, corporation, trust or
other entity.
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"Prior Production Partnership" shall mean a general partnership of which
Geodyne Production is managing partner, and a limited partnership, of which
depositary units or units of limited partnership interest were offered pursuant
to a public offering registered with the Securities and Exchange Commission, is
the other general partner, formed prior to the Activation of the Production
Partnership.
"Producing Property" shall mean any property (or interest in such
property) with a well or ▇▇▇▇▇ capable of producing Hydrocarbons in commercial
quantities or properties unitized with such properties or properties adjacent to
such properties which are acquired as an incidental part of the acquisition of
such properties. The term also includes well machinery and equipment, gathering
systems, storage facilities or processing installations or other equipment and
property associated with the production of Hydrocarbons. Interests in properties
may include Working Interests, production payments, Royalties and other
nonworking and nonoperating interests.
"Production Partnership" shall mean the general partnership governed
under and pursuant to this Agreement, as said general partnership may from time
to time be constituted.
"Production Partnership Account" shall mean the bank account or accounts
maintained by the Managing Partner pursuant to Section 9.3.
"Production Partnership Property" shall mean any interest, property and
right of any type owned by the Production Partnership.
"Production Partnership Well" shall mean any well in which the Production
Partnership has an interest.
"Profits" and "Losses" shall mean the income or losses of the Production
Partnership for Federal income tax purposes determined as of the close of the
Production Partnership's Fiscal Year, as well as, when the context requires, any
tax--exempt income and nondeductible expenses.
"Property Acquisition Costs" shall mean, without duplication, the sum of
(1) the prices paid by the Production Partnership or the Managing Partner or an
Affiliate to acquire a Producing Property ultimately sold to the Production
Partnership, including the price paid to acquire a purchase option with respect
to a Producing Property, lease bonuses and equipment costs associated therewith;
(2) title insurance or examination costs, brokers' commissions and finders fees,
filing fees, recording fees, transfer taxes, if any, and like charges in
connection with the acquisition of Producing Properties; (3) delay rentals and
ad valorem taxes paid by the buyer with respect to such property to the date of
its transfer to the buyer; (4) interest actually incurred by the Managing
Partner or its Affiliates to acquire or maintain such Producing Properties prior
to their transfer to the Production Partnership; and (5) all reasonable,
necessary and actual expenses incurred by the Managing Partner or an Affiliate
in connection with the acquisition of Producing Properties and paid to third
parties who are not Affiliates for geological, geophysical, seismic, land,
engineering, drafting, accounting, auditing, legal and other like services,
including the Production Partnership's costs incurred (to the extent consistent
with
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generally accepted industry standards) in connection with the Production
Partnership's review of proposed acquisitions of Producing Properties, Reports
and Engineering Audit Letters, all allocated to the property in accordance with
the allocation procedures used by the Managing Partner, any of its Affiliates or
the Production Partnership; provided that the portion of the Managing Partner's
or Affiliates' expenses allocated to the property, as set forth in items (3),
(4) and (5), shall have been incurred not more than 36 months prior to the
property transaction.
"Prospect" shall mean an area in which the Production Partnership owns or
intends to own one or more oil and gas interests, which is geographically
defined on the basis of geological data by the Managing Partner and which is
reasonably anticipated by the Managing Partner to contain at least one
reservoir.
"Prospectus" shall mean the prospectus pursuant to which the Depositary
Units were offered, and all supplements or amendments thereto, if any.
"Proved Reserves" shall mean those quantities of Hydrocarbons, which,
upon analysis of geologic and engineering data, appear with reasonable certainty
to be recoverable in the future from known Hydrocarbon reservoirs under existing
economic and operating conditions. Proved reserves are limited to those
quantities of Hydrocarbons which can be expected, with little doubt, to be
recoverable commercially at current prices and costs, under existing regulatory
practices and with existing conventional equipment and operating methods.
Depending upon their status of development, such proved reserves shall be
subdivided into the following classifications and have the following
definitions:
(a) "Proved Developed Reserves" shall mean proved reserves which
can be expected to be recovered through existing ▇▇▇▇▇ with existing
equipment and operating methods. This classification shall include:
(1) "Proved Developed Producing Reserves" which are proved
developed reserves which are expected to be produced from existing
▇▇▇▇▇; and
(2) "Proved Developed Non-Producing Reserves" which are
proved developed reserves which exist behind the casing of existing
▇▇▇▇▇, or at minor depths below the present bottom of such ▇▇▇▇▇,
which are expected to be produced through these ▇▇▇▇▇ in the
predictable future, where the cost of making Hydrocarbons available
for production should be relatively small compared to the cost of a
new well.
Additional Hydrocarbons expected to be obtained through the
application of improved recovery techniques are included as "Proved
Developed Reserves" only after testing by a pilot project or after the
operation of an installed program has confirmed through production
responses that increased recovery will be achieved.
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(b) "Proved Undeveloped Reserves" shall mean all reserves which are
expected to be recovered from new ▇▇▇▇▇ on undrilled acreage or from
existing ▇▇▇▇▇ where a relatively major expenditure is required for
recompletion. Such reserves on undrilled acreage are limited to those
drilling units offsetting productive units which are reasonably certain
of production when drilled; provided that proved reserves for other
undrilled units can be claimed where it can be demonstrated with
certainty, based on accepted geological, geophysical and engineering
studies and data, that there is continuity of production from an existing
productive formation. No estimates for Proved Undeveloped Reserves are
attributable to any acreage for which improved recovery is contemplated,
unless the techniques to be employed have been proved effective by actual
tests in the same area and reservoir.
"Remove", "Removed" or "Removal" shall mean, with reference to the
removal of the Managing Partner, the termination of the management powers,
duties and responsibilities of the Managing Partner pursuant to Section 6.2 and
the removal of the Managing Partner as a Partner.
"Royalty" shall mean an interest, including an overriding royalty and a
net profits interest, in gross production or the proceeds therefrom which does
not require the owner thereof to bear any of the cost of production,
development, operation or maintenance.
"Sale" shall mean any event or transaction that is, for Federal income
tax purposes, considered a sale, exchange or abandonment by the Production
Partnership of any Production Partnership Property.
"State" shall mean the State of Oklahoma.
"Substituted Partner" shall mean any Person admitted to the Production
Partnership as a Partner pursuant to Sections 7.3 and 10.2 of this Agreement.
"Unit Holders" shall mean those persons who hold a Depositary Unit and
who are reflected on the books and records of Geodyne Depositary Company, as
Depositary of the Limited Partnership, as holders of record of Depositary Units
as of the close of business at the time of reference thereto.
"Unit Holders' Subscriptions" shall mean the aggregate amount subscribed
for by the initial Unit Holders to acquire their Depositary Units in the Limited
Partnership.
"Working Interest" shall mean the interest (whether held directly or
indirectly) in a Lease which is subject to some portion of the expense of
production, development, operation or maintenance.
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ARTICLE TWO
Name, Place of Business and Office; Term
Section 2.1. Name, Place of Business and Office
The Production Partnership shall be conducted under the name PW/Geodyne
Production Partnership II-D. The business of the Production Partnership may,
however, be conducted under any other name deemed necessary or desirable by the
Managing Partner in order to comply with applicable laws. The office and
principal place of business of the Production Partnership shall be do Geodyne
Production Company, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇. The Managing Partner shall record an assumed name or fictitious name
certificate in the State and in each state in which it owns property or
transacts business when deemed necessary by the Managing Partner.
The Managing Partner may change the principal place of business and the
location of such office and may establish such additional offices as it deems
advisable from time to time; provided, however, that in the event the principal
place of business of the Production Partnership shall be changed, the Managing
Partner shall give written notice thereof to the Unit Holders.
Section 2.2. Purpose
The business and purpose of the Production Partnership shall be to
acquire, own, hold, operate, explore, develop, trade, sell and exchange
Hydrocarbon properties and interests therein of all kinds onshore and offshore
in the continental United States, including, without limitation, interests in
general or limited partnerships, joint ventures and other entities that hold or
are formed to acquire interests in such properties or interests; to engage in
development drilling and enhanced recovery operations thereon, to produce,
transport, market, purchase and trade Hydrocarbons and products thereof; to
purchase, lease, own, hold, operate, sell and exchange all equipment, machinery,
facilities, systems and plans necessary or appropriate for such purposes; and to
do any and all things necessary or proper in connection with or incident to the
foregoing activities.
Section 2.3. Term
The Production Partnership shall continue in force and effect until
December 31, 2001, provided that the Managing Partner may extend such term for
up to five periods of two years each, or until dissolution prior thereto
pursuant to the provisions hereof.
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ARTICLE THREE
Partners and Capital
Section 3.1. Managing Partner
A. The name, address and Capital Contribution of the Managing Partner are
set forth in Schedule A attached hereto and are incorporated herein. The
Managing Partner shall not be required to make any Capital Contribution except
as set forth in Sections ▇.▇▇, 3.4 and 8.2C.
B. The Managing Partner shall also contribute an amount of cash
sufficient to pay its share of costs allocated to it pursuant to Section 5.3 of
this Agreement to the extent that the amount of Income allocated to it (and/or
the amount of Production Partnership borrowings incurred on its behalf) is
insufficient to pay such costs.
Section 3.2. Other General Partner
The name, address and Capital Contribution of the Limited Partnership are
set forth in Schedule A attached hereto and are hereby incorporated herein.
Section 3.3 Application of Capital Contributions
The Managing Partner shall deposit in the Production Partnership Account
the Capital Contributions of the Limited Partnership and the Managing Partner
and apply such Capital Contributions to the payment of Organization and Offering
Costs and the Acquisitions and Operations Fee. The balance of such Capital
Contributions shall be held in the Production Partnership Account to be applied
to the payment of Property Acquisition Costs and, to the extent not payable out
of Income or Investment Income, Operating Costs, General and Administrative
Costs, Direct Administrative Costs and other Production Partnership costs;
provided, however, that such funds may be temporarily invested prior to the
payment of such costs in accordance with Section 9.3.
Section 3.4. Certain Returns of Capital
Any portion of the Capital Contribution of the Limited Partnership
(except for necessary operating capital) that has not been expended or that is
not, or in the determination of the Managing Partner, will not be committed for
expenditure by the second anniversary of the Activation of the Production
Partnership will promptly be refunded to the Limited Partnership as a return of
part of its Capital Contribution at the earlier of such determination or the
second anniversary of the Activation of the Production Partnership. In addition,
the Managing Partner shall contribute cash to the Production Partnership (with
respect to which its Capital Accounts will be credited) in an amount equal to
the amount paid to the Managing Partner in respect of the
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Acquisitions and Operations Fee attributable (on a proportionate basis) to the
unexpended amount of Capital Contributions so refunded, which cash shall be
refunded to the Limited Partnership together with the unexpended Capital
Contributions so refunded. Geodyne Production shall be responsible for the
obligation of the Managing Partner to contribute cash to the Production
Partnership pursuant to this Section 3.4. All amounts so refunded to the Limited
Partnership shall reduce dollar for dollar its Capital Account.
Section 3.5. Production Partnership Capital
A. No Partner shall be paid interest on any Capital Contribution to the
Production Partnership or on such Partner's Capital Account, notwithstanding any
disproportion therein as between Partners.
B. The Production Partnership shall not redeem any Partner's Interest.
Except as provided in Sections 3.4, 6.1, 6.2 and 8.2, no Partner shall have the
right to withdraw or receive any return of the Capital Contribution. Under
circumstances involving a return of any Capital Contribution, no Partner shall
have the right to receive any property other than cash, except as may otherwise
be provided in Sections 6.1, 6.2 and 8.2.
Each Partner signatory hereto or subsequently admitted to the Production
Partnership agrees that it shall remain generally liable for any obligation or
recourse liability of the Production Partnership incurred during the period in
which it is a Partner. However, all present and future Partners hereby agree
among themselves to contribute to each other the amount of funds necessary to
effectuate a sharing of such Production Partnership obligations and recourse
liabilities in proportion to each Partner's share of such obligations and
liabilities at the time of their accrual.
ARTICLE FOUR
Rights, Powers and Duties of
The Managing Partner
Section 4.1. Management and Control of the Production Partnership
A. Subject to the Consent of the Limited Partnership as and when required
by this Agreement, the Managing Partner, within the authority granted to it
under and in accordance with the provisions of this Agreement, shall have the
full and exclusive right to manage and control the business and affairs of the
Production Partnership and to make all decisions regarding the business of the
Production Partnership and shall have all of the rights, powers and obligations
of a managing general partner of a general partnership under the laws of the
State. The Managing Partner shall exercise those powers as a fiduciary to the
Limited Partnership.
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B. No other Partner shall participate in the management of or have any
control over the Production Partnership's business nor shall any other Partner
have the power to represent, act for, sign for or bind the Managing Partner or
the Production Partnership. The Limited Partnership hereby Consents to the
exercise by the Managing Partner of the powers conferred on it by this
Agreement.
Section 4.2. Authority of the Managing Partner
A. In addition to any other rights and powers which the Managing Partner
may possess under this Agreement and the Act, the Managing Partner shall, except
and subject to the extent otherwise provided or limited in this Agreement, have
all specific rights and powers required or appropriate to its management of the
Production Partnership's business which, by way of illustration but not by way
of limitation, shall include the following rights and powers to:
(i) expend the Capital Contributions of the Partners and apply
Production Partnership revenues, subject to Section 4.3C of this
Agreement, in furtherance of the business of the Production Partnership;
(ii) acquire, explore, develop, manage and operate Hydrocarbon
properties and interests therein (including interests in corporations and
partnerships owning Hydrocarbon properties if in the Managing Partner's
judgment such purchase is a necessary or advisable step in acquiring
interests in producing properties held by any such corporation or
partnership, provided, no such purchase will be made for the purpose of
investment in the securities of any such corporation or partnership, the
Production Partnership will not conduct or participate in a hostile tender
offer, and no such purchase will be made unless there is assurance that
sufficient control of the corporation or partnership can be obtained in
the initial acquisition to liquidate it, and it is determined the purchase
would not thereby render the Production Partnership an investment company
within the meaning of the Investment Company Act of 1940, and provided
further the Production Partnership's interest in the underlying assets of
any such corporation or partnership is distributed as soon as practical
thereafter to the Production Partnership in redemption for the Production
Partnership's interest in such corporation or partnership) of all kinds
and acquire depositary units or units of limited partnership interest
tendered to the General Partner pursuant to the terms of any right of
presentment of a Prior Limited Partnership (as defined in the limited
partnership agreement for such Prior Limited Partnership) (provided that
the Production Partnership shall not expend an aggregate amount in excess
of 10% of the Limited Partnership's Capital Contribution to acquire such
units) and hold all such property, interests and units in the name of the
Production Partnership; provided, however, that in connection therewith,
the Managing Partner shall, contemporaneously with the acquisition of a
Producing Property, or as soon as
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practicable thereafter, file or cause to be filed for recordation an
appropriate conveyance or agreement evidencing the Production
Partnership's interest in such Producing Property in the jurisdiction
where such Producing Property is located pursuant to such jurisdiction's
Uniform Commercial Code and/or in the real property records of the clerk
or recorder of the county in which the Producing Property is situated;
and, provided, further, that filings of such conveyances or agreements
shall also be made as the Managing Partner believes necessary to establish
the Production Partnership's priority of interest; and, provided, further,
Producing Properties may be held temporarily in the name of a nominee for
the Production Partnership if such action is deemed necessary by the
Managing Partner to facilitate acquisition;
(iii) execute such instruments and agreements, to do such acts, to
employ such persons and to contract for such services as the Managing
Partner determines are necessary or appropriate to conduct the Production
Partnership's business, including the employment of the Managing Partner
or any Affiliate as an operator, and the entering into management and
advisory contracts;
(iv) execute, in the name of the Production Partnership, contracts
for the sale of Hydrocarbons and division orders and transfer orders as
necessary or incident to the sale of production on behalf of the
Production Partnership;
(v) produce, treat, transport and market Hydrocarbons, execute
processing contracts, transportation contracts, and enter into contracts
for the marketing or sale of Hydrocarbons and other marketing agreements
in the name of the Production Partnership, whether or not extending beyond
the term of the Production Partnership;
(vi) execute offers for United States and any state Leases on behalf
of the Production Partnership; execute and file requests for approval of
assignments of interests in United States and any state Leases, together
with any and all contracts for the option, sale or purchase of such Leases
or the sale or purchase of any products therefrom; to execute any plans of
development under unit agreements, conveyances, subleases, mortgages,
deeds of trust, affidavits or reports concerning the drilling of ▇▇▇▇▇ and
production, designations of operator, Lease bonds, operator's bonds and
consents of surety; and in general to do all things necessary or desirable
on behalf of the Production Partnership regarding any United States or
state Leases or offers therefor;
(vii) enter into any partnership agreement, sharing arrangement, or
joint venture with any Person acceptable to the Managing Partner and which
is engaged in any business or transaction in which the Production
Partnership is authorized to engage, provided that the Production
Partnership shall not be deemed thereby to be an "investment company" for
purposes of the Investment Company Act of 1940, as amended;
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(viii) enter into and execute drilling contracts, Farmout
agreements, operating agreements, unitization agreements, pooling
agreements, unit or pooling designations, recycling contracts, dry hole,
bottom hole and acreage contribution letters and agreements, participation
agreements, agreements and conveyances respecting rights-of-way,
agreements respecting surface and subsurface storage and any other
agreements customarily employed in the oil and gas industry in connection
with the acquisition, exploration, development, operation, or abandonment
of any Leases, and any and all other instruments or documents considered
by the Managing Partner to be necessary or appropriate to conduct the
business of the Production Partnership;
(ix) pay or elect not to pay delay rentals on Production Partnership
Properties as appropriate in the judgment of the Managing Partner, it
being understood that the Managing Partner will not be liable for failure
to make correct or timely payments of delay rentals if such failure was
due to any reason other than negligence or lack of good faith;
(x) subject to Section 4..3B, abandon or otherwise dispose of any
interest in Hydrocarbon properties acquired for the Production Partnership
upon such terms and for such consideration as the Managing Partner may
determine;
(xi) sell production payments payable out of all or any part of any
one or more of the Producing Properties acquired by the Production
Partnership and to devote and expend the proceeds of any such sale for any
of the purposes of the Production Partnership for which the proceeds of
borrowings may be applied;
(xii) borrow monies from time to time, for the purpose and subject
to the limitations stated in Section 4.3C of this Agreement, in the form
of recourse or nonrecourse borrowings, or otherwise to draw, make, execute
and issue promissory notes and other negotiable or nonnegotiable
instruments and evidences of indebtedness, and to secure the payments of
the sums so borrowed and to mortgage, pledge, or assign in trust all or
any part of Production Partnership Property, including Producing
Properties, production and proceeds of production, or to assign any monies
owing or to be owing to the Production Partnership, and to engage in any
other means of financing customary in the petroleum industry; provided,
however, that a creditor who makes a nonrecourse loan to the Production
Partnership shall not have or acquire, at any time as a result of making
the loan, any direct or indirect interest in the profits, capital, or
property of the Production Partnership other than as a secured creditor;
(xiii) invest Capital Contributions temporarily in the investments
set forth in Section 9.3;
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(xiv) employ on behalf of the Production Partnership agents,
employees, accountants, lawyers, geologists, geophysicists, landpersons,
clerical help, and such other assistance and consulting and other services
as may deem necessary or convenient and to pay therefor such remuneration
as the Managing Partner may deem reasonable and appropriate;
(xv) purchase, lease, rent, or otherwise acquire or obtain the use
of machinery, equipment, tools, materials, and all other kinds and types
of real or personal property that may in any way be deemed necessary,
convenient, or advisable in connection with carrying on the business of
the Production Partnership, purchase and establish adequate inventories of
equipment and material required or expected to be required in connection
with its operations, dispose of tangible lease and well equipment for use
or used in connection with Production Partnership Property, and to incur
expenses for travel, telephone, telegraph, insurance, and for such other
things, whether similar or dissimilar, as may be deemed necessary or
appropriate for carrying on and performing the business of the Production
Partnership;
(xvi) enter into such agreements and contracts with such parties and
to give such receipts, releases, and discharges with respect to any and
all of the foregoing and any matters incident thereto as the Managing
Partner may deem advisable or appropriate;
(xvii) guarantee the payment of money or the performance of any
contract or obligation by any person, firm, or corporation on behalf of
the Production Partnership;
(xviii) ▇▇▇ and be sued, complain and defend in the name and on
behalf of the Production Partnership;
(xix) make such classifications and determinations as the Managing
Partner deems advisable, having due regard for any relevant generally
accepted accounting principles and oil and gas industry practices;
(xx) purchase insurance, or extend the Managing Partner's or its
Affiliates' insurance, at the Production Partnership's expense, to protect
the Production Partnership Property and the business of the Production
Partnership against loss, and to protect the Managing Partner against
liability to third parties arising out of Production Partnership
activities, such insurance to be in such limits, to be subject to such
deductibles and to cover such risks as the Managing Partner deems
appropriate;
(xxi) pay all ad valorem taxes levied or assessed against the
Production Partnership Properties, all taxes upon or measured by the
production of Hydrocarbons therefrom, and all other taxes (other than
income taxes) directly related to operations conducted by the Production
Partnership;
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(xxii) enter into agreements on behalf of the Production Partnership
with Affiliates subject to the limitations set forth in Section 4.3B;
(xxiii) sell a portion or all or substantially all of the
properties and other assets of the Production Partnership to itself, or
any of its Affiliates or Affiliated Programs or any other person and to
receive for the Production Partnership consideration consisting of cash,
securities, other property or any other form of consideration, or any
combination thereof, at such prices and for such forms of consideration
as it deems in the best interests of the Unit Holders; provided, however,
that no such sale shall be consummated without the prior Consent of the
Limited Partnership pursuant to the provisions of Section 4.4B of this
Agreement. In the event of the dissolution of the Production Partnership
followed by any such sale of the Production Partnership's assets, the
Managing Partner shall, subject to the provisions of Section 8.2 of this
Agreement, be appointed the liquidating agent for the Production
Partnership;
(xxiv) make, exercise or deliver any general assignment for the
benefit of the Production Partnership's creditors, but only upon the
prior Consent of the Limited Partnership pursuant to the provisions of
Section 4.4B;
(xxv) take such other action and perform such other acts as may be
deemed appropriate to carry out the business of the Production
Partnership; and
(xxvi) inform each other Partner of all administrative and judicial
proceedings for an adjustment at the Production Partnership level for
partnership tax items and forward to each other Partner within 30 days of
receipt all notices received from the Internal Revenue Service regarding
the commencement of a partnership level audit or a final partnership
administrative judgment, and Geodyne Production shall perform all duties
imposed by Sections 6221 through 6232 of the Code as the "tax matters
partner" of the Production Partnership, including, but not limited to,
the following: (a) the power to conduct all audits and other
administrative proceedings (including windfall profit tax audits) with
respect to Production Partnership items; the power to extend the statute
of limitations for all Partners with respect to Production Partnership
tax items; and (b) the power to file a petition with an appropriate
federal court for review of a final partnership administrative
adjustment.
B. No person, firm or corporation dealing with the Production Partnership
shall be required to inquire into the authority of the Managing Partner to take
or refrain from taking any action or make or refrain from making any decision,
but any person so inquiring shall be entitled to rely upon a certificate of the
Managing Partner as to its due authorization.
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Section 4.3. Sales, Purchases and Operation of Producing Properties;
Additional Financing
A. Producing Properties whose purchase price exceeds 10% of the Unit
Holders' Subscriptions to the Limited Partnership may be acquired by the
Production Partnership an Acquisition Reserve Report or an Engineering Audit
Letter has been prepared and evaluated with respect thereto.
B. Neither the Managing Partner nor any Affiliate shall sell, transfer or
convey any or all of its interest in Producing Properties to the Production
Partnership or purchase or acquire any oil and gas properties or interest from
the Production Partnership, directly or indirectly, except pursuant to
transactions that are fair and reasonable to the Limited Partnership under the
circumstances at the time such transaction is consummated. Such transactions
shall be further subject to the following restrictions:
(i) Prior to the date on which the Production Partnership has
acquired its final Producing Property, neither the Managing Partner nor
any Affiliate of the Managing Partner (other than an Affiliated Program)
shall acquire any Producing Property after the Activation of the
Production Partnership unless prior thereto the Production Partnership
shall have been offered the right to acquire such Producing Property, or
an interest therein, and the Managing Partner shall have determined that
the acquisition of such Producing Property, or an interest therein, is
not in the best interests of the Production Partnership;
(ii) Any purchase or sale of a Producing Property from or to the
Managing Partner or any Affiliate shall be made at the Property
Acquisition Cost for such Producing Property as adjusted for intervening
operations, unless the Managing Partner or such Affiliate has reasonable
grounds to believe that cost is materially more or less than the fair
market value of such property, in which case such sale or purchase shall
be made at a price equal to the fair market value thereof as determined
by an independent petroleum engineer;
(iii) If the Managing Partner sells, transfers or conveys any oil,
gas or other mineral interests or property to the Production Partnership,
it must, at the same time, sell to the Production Partnership an equal
proportionate interest in all its other property in the same Prospect. A
Sale or conveyance to the Production Partnership of less than the entire
ownership interest of the Managing Partner or any Affiliate is only
permitted if: (a) the interests retained or obtained by the Managing
Partner or Affiliate and acquired by the Production Partnership are
either (x) proportionate, uniform and undivided Working Interests if the
Producing Property acquired by the Production Partnership is a Working
Interest or (y) proportionate, uniform and undivided Royalty Interests it
the Producing Property acquired by the Production Partnership is a
Royalty, (b) the respective obligations of the Managing
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Partner or Affiliate and the Production Partnership are substantially the
same, and (c) the interest of the Managing Partner or its Affiliate in
revenues does not exceed the amount proportionate to its interest. The
Managing Partner and its Affiliate may not retain or obtain any overrides
or other burdens on the interest obtained by the Production Partnership,
and may not enter into any Farmouts with respect to its retained
interest, except to nonaffiliated third parties or to an Affiliated
Program;
(iv) In the event the Managing Partner or any Affiliate proposes to
acquire an interest in a Prospect in which the Production Partnership has
an interest or in a Prospect abandoned by the Production Partnership
within one year preceding such proposed acquisition, the Managing Partner
or Affiliate shall offer the interest to the Production Partnership; and
if cash or financing is not available to the Production Partnership to
purchase such interest, neither the Managing Partner nor Affiliate shall
acquire an interest in such Prospect. The term "abandon" for the purpose
of this subparagraph shall mean the termination, either voluntary or by
operation of the Lease or otherwise, of all of the Production
Partnership's interest in the Prospect. This subsection shall not apply
after the lapse of five years of the Activation of the Production
Partnership or to any Affiliated Program where the interest of the
Managing Partner is less than or equal to its interest in the Production
Partnership, there are no duplication of fees to the Managing Partner,
and the Managing Partner does not obtain a greater benefit from purchase
of the interest by the Affiliated Program than it would if the interest
were purchased by the Production Partnership;
(v) During the existence of the Production Partnership and before
it has ceased operations, neither the Managing Partner nor any Affiliate
(excluding any Affiliated Program where the interest of the Managing
Partner is less than or equal to its interest in the Production
Partnership) shall acquire, retain or drill for its own account any oil
and gas interest in any Prospect upon which the Production Partnership
possesses an interest, except for transactions which comply with Section
4.3B(iii) or 4.8. The geological limits of a Prospect owned by the
Production Partnership shall be enlarged or contracted on the basis of
subsequently acquired geological data to define the productive limits of
a reservoir and must include all of the acreage determined by the
subsequent data to be encompassed by such reservoir. If the geological
limits of a Prospect, as so enlarged, encompass any interest held by the
Managing Partner or an Affiliate of the Managing Partner (excluding an
Affiliated Program where the interest of the Managing Partner is
identical to or less than its interest in the Production Partnership),
such interest shall be sold to the Production Partnership in accordance
with the provisions of Section 4.3B(iv) and any net income previously
received by the Managing Partner or Affiliate shall be paid over to the
Production Partnership. If the Managing Partner acquires additional
acreage or interests in a Prospect of the
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Production Partnership, it must sell such to the Production Partnership
and is prohibited from retaining any such interest, except as may be
permitted by Section 4.3B. Notwithstanding the foregoing, the Production
Partnership will not be required to expend additional funds to acquire
any such interest unless funds are available from the Capital
Contributions of the Partners;
(vi) Producing Properties may be sold, Farmed-out or otherwise
transferred from or to an Affiliated Program only pursuant to
transactions that comply with Sections 4.3B(iii), 4.3B(iv) or 4.8,
provided that the compensation arrangement or any other interest or right
of the Managing Partner or any Affiliate is the same in the Production
Partnership and Affiliated Program, or, if different, the compensation of
the Managing Partner does not exceed the lower of the compensation it
would have received in the Production Partnership or the Affiliated
Program;
(vii) Any Sale of inventory or other materials by the Production
Partnership to the Managing Partner or Affiliate shall be made at the
applicable rates set forth in the standard form of the accounting
procedure then recommended by the Council of Petroleum Accountants
Societies of North America;
(viii) Any operating agreements pursuant to which the Managing
Partner or any Affiliate acts as operator of Producing Properties shall
be of a nature customary in the industry and payments to the Managing
Partner or any Affiliate for acting as operator shall not exceed the
compensation which would be paid by unaffiliated third parties in the
same geographic area for similar goods and services. Reimbursement of the
Managing Partner's overhead pursuant to such operating agreement will not
be duplicative of any reimbursement of General and Administrative Costs
made pursuant to Section 5.2; and
(ix) To the extent the Managing Partner or any Affiliate acquires
an interest in a Producing Property in which the Production Partnership
acquires an interest, the Managing Partner or Affiliate shall pay its
allocable portion of the cost of the preparation of the Acquisition
Reserve Report or Engineering Audit Letter, as the case may be,
respecting such Producing Property.
C. The Managing Partner may not expend any amount of Production
Partnership funds over the term of the Production Partnership for the payment of
Production Partnership costs (other than recompletion costs) incurred in
connection with Development Drilling and Identified Development Drilling in
excess of 10% of the sum of: (1) the amount of the Unit Holders' Subscriptions
to the Limited Partnership, plus (ii) the Production Partnership permissible
borrowings. If the Managing Partner determines that funds in addition to the
Capital Contributions to the Production Partnership are required for the payment
of Production Partnership costs (other than Property Acquisition Costs), the
Managing
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Partner may apply or reserve Income or Investment Income for the payment of such
Production Partnership costs and/or the Managing Partner may cause the
Production Partnership to borrow funds for the payment of Production Partnership
costs incurred in connection with Development Drilling, Identified Development
Drilling and Improved Recovery operations; provided, however, that the aggregate
outstanding principal amount of such borrowings shall not at any one time exceed
an amount equal to 20% of the Unit Holders' Subscriptions to the Limited
Partnership.
D. The Managing Partner shall have the authority to secure the payment of
borrowings incurred by it for its own account or for purposes of paying its
allocable share of Production Partnership costs by assigning to lenders all or
part of its interest in Profits and Distributable Cash, and by granting such
lenders a security interest or mortgage in an undivided interest in any
Production Partnership Property not to exceed its percentage interest in Income;
provided, however, that the Managing Partner, shall retain unencumbered at least
a 1% interest in each of Production Partnership Property, Profits and
Distributable Cash. Notwithstanding anything to the contrary in this Agreement,
in the event of any sale or foreclosure of the Managing Partner's interest in
full or partial satisfaction of such borrowings, appropriate adjustments shall
be made in the Capital Accounts of the Partners and in the method by which
Income and costs are allocated to the Partners to assure that the Limited
Partnership will not bear any of the costs attributable to such sold or
foreclosed interest and that the Managing Partner will not share or participate
in any of the capital, Income, costs or distributions attributable to such sold
or foreclosed interest except to the extent of the unencumbered interest
retained by the Managing Partner. The Managing Partner shall indemnify the
Limited Partnership against any expenses resulting from a sale or foreclosure of
the Managing Partner's interest.
Section 4.4. Prohibited Transactions
A. Notwithstanding any other provision of this Agreement to the
contrary, the following transactions are expressly prohibited:
(i) the Production Partnership shall not make any loans to the Managing
Partner or any Affiliate;
(ii) neither the Managing Partner nor any Affiliate shall make any loans
to the Production Partnership except at a rate of interest not in excess of the
interest cost incurred by the Managing Partner or Affiliates or the amount of
interest that would be charged to the Production Partnership (without regard to
the Managing Partner's or Affiliate's financial abilities or guarantees) by
unrelated banks on comparable loans for the same purpose, whichever is lower,
and the Managing Partner and Affiliates shall not receive points or financing
charges or fees regardless of the amount;
(iii) except as expressly contemplated hereby, no agent, attorney,
accountant or other independent consultant or contractor who is also employed on
a full-time basis by the Managing Partner or any Affiliate shall be compensated
by the Production Partnership for his or her services;
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(iv) other than those received for the account of the Production
Partnership, no rebates may be received by the Managing Partner or any Affiliate
in connection with Production Partnership operations or expenditures, nor may
the Managing Partner or any Affiliate participate in any reciprocal business
arrangement that would circumvent any of the provisions of this Agreement;
(v) on a monthly basis, costs paid and revenues received by the Managing
Partner or an Affiliate for the account of the Production Partnership shall be
determined and the net amount resulting from such monthly settlement shall be
deposited into a Production Partnership Account and no funds which, after such
monthly settlement, are determined to be held for the account of the Production
Partnership shall be kept in any account other than a Production Partnership
Account, and the Managing Partner shall not employ, or permit any other Person
to employ, such funds in any manner except for the benefit of the Production
Partnership; it being understood that the Managing Partner may invest Production
Partnership funds temporarily in the investments set forth in Section 9.3 of
this Agreement pending their use by the Production Partnership. After such
monthly settlement, Production Partnership funds may not be commingled with
separate funds of the Managing Partner or any other entity; and
(vi) the Limited Partnership shall not make any advance payment to the
Managing Partner or its Affiliates, except where necessary to secure tax
benefits of prepaid drilling costs.
B. Notwithstanding any other provision of this Agreement to the contrary,
without the prior Consent of the Limited Partnership granted pursuant to the
provisions of Article Eleven of this Agreement and the provisions of the Limited
Partnership Agreement, the Managing Partner shall not:
(i) lease, sell, or dispose of all or substantially all of the
Production Partnership's assets;
(ii) make, exercise or deliver any general assignment for the
benefit of the Production Partnership's creditors;
(iii) except as set forth in Section lO.1A, amend any provision
of this Agreement; or
(iv) dissolve the Production Partnership.
Section 4.5. Other Agreements of the Managing Partner
A. Anything in this Agreement to the contrary notwithstanding, it is
agreed that:
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(i) the Managing Partner and its Affiliates shall not take any
action with respect to the assets or property of the Production
Partnership which does not benefit exclusively the Production
Partnership, including:
(a) the utilization of Production Partnership funds as
compensating balances for the benefit of the Managing Partner or
an Affiliate of the Managing Partner; and
(b) the commitment of future production;
(ii) all benefits from marketing arrangements or other
relationships affecting property of the Managing Partner or its Affiliate
and the Production Partnership shall be fairly and equitably apportioned
according to the respective interests of each;
(iii) neither the Managing Partner nor any Affiliate may profit
itself by Development Drilling, Identified Development Drilling or
Improved Recovery operations in contravention of its fiduciary obligation
to the Limited Partnership; and
(iv) neither the Managing Partner nor any Affiliate shall render to
the Production Partnership any oil field, equippage or drilling services
nor sell or lease to the Production Partnership any equipment or related
supplies unless:
(a) such Person is engaged, independently of the Production
Partnership and as an ordinary and ongoing business, in the
business of rendering such services or selling or leasing such
equipment and supplies to a substantial extent to other Persons in
the oil and gas industry in addition to drilling and income
programs in which such Person has an interest;
(b) the compensation, price or rental therefor is competitive
with the compensation, price or rental of other Persons in the area
engaged in the business of rendering comparable services or selling
or leasing comparable equipment and supplies which could reasonably
be made available to the Production Partnership;
(c) the drilling services are billed on either a per
foot, per day or per hour rate, or some combination thereof; and
(d) provided that, if such Person is not engaged in a
business within the meaning of subdivision (a), then such
compensation, price or rental shall be the cost of such services,
equipment or supplies to such Person or the competitive rate which
could be obtained in the area, whichever is less.
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Section 4.6. Construction of Gas Gathering Lines
The Managing Partner may cause the Production Partnership to construct
gas gathering lines if, in the opinion of the Managing Partner, it would be
economically feasible and otherwise consistent with prudent operating practice
to do so. The costs of any such gathering lines will be deemed to be Operating
Costs and shall be charged to the accounts of the Partners as such. The Managing
Partner may, in its discretion, construct, or cause an Affiliate of the Managing
Partner or other person to construct, gathering lines from Production
Partnership ▇▇▇▇▇ to gas transmission systems. Whenever the Managing Partner
constructs, or causes an Affiliate of the Managing Partner to construct, a
gathering line from a Production Partnership Well to a gas transmission system,
the Production Partnership shall pay the Managing Partner or such Affiliate an
amount that is not greater than the compensation that an unrelated party could
have reasonably charged in an arm's-length transaction for similar services in
the area as a transmission fee for the transmission of all gas through the
gathering system so constructed, and no other transmission fee shall be paid to
the Managing Partner or to any Affiliate.
Section 4.7. Contracts with the Managing Partner and Affiliates
All services provided to the Production Partnership by the Managing
Partner or any Affiliate for which it is compensated shall be embodied in a
written contract precisely setting forth the services to be rendered and the
compensation to be paid. Each contract relating to a transaction between the
Production Partnership and the Managing Partner or any Affiliate shall contain a
provision which shall permit termination of the contract by the Production
Partnership without penalty on 30 days' prior written notice. The Limited
Partnership shall have the power to terminate, without cause or penalty, any
such contract on behalf of the Production Partnership.
Section 4.8. Farmouts
The Managing Partner may dispose of Producing Properties by Sale or
Farmout when it, exercising the standard of a prudent operator, determines that
(a) the Production Partnership lacks sufficient funds to conduct Development
Drilling, Identified Development Drilling or Improved Recovery operations on the
properties and cannot obtain suitable alternative financing for such Development
Drilling, Identified Development Drilling or Improved Recovery operations; (b)
the properties have been downgraded by events occurring after assignment to the
Production Partnership to the point that additional Development Drilling,
Identified Development Drilling, Improved Recovery operations or continued
production would no longer be desirable to the Production Partnership; (c)
Development Drilling, Identified Development Drilling or Improved Recovery
operations on the properties would result in an excessive concentration of
Production Partnership funds on a Producing Property creating, in the opinion of
the Managing Partner, undue risk to the Production
-25-
Partnership; or (d) the best interests of the Production Partnership would be
served by the Sale or Farmout. The Production Partnership shall not conduct any
drilling of ▇▇▇▇▇ other than Development Drilling and Identified Development
Drilling; provided, however, that the drilling of ▇▇▇▇▇ other than Development
Drilling and Identified Development Drilling may be performed on behalf of the
Production Partnership pursuant to Farmouts. Any Sale, Farmout or similar
agreement between the Production Partnership and the Managing Partner, Affiliate
or Affiliated Program will be permitted under the restrictions set forth in this
Article Four and will be subject to the following conditions:
(i) the Managing Partner, exercising the standard of a prudent
operator, shall determine that the Sale, Farmout or similar agreement is
in the best interests of the Production Partnership; and
(ii) the terms of the Sale, Farmout or similar agreement are
consistent with and in any case no less favorable than those utilized in
the same geographic area for similar arrangements.
Except as required by Section 4.3B(iii) or (iv), a Production Partnership shall
acquire only those Leases that are reasonably required for the operations of the
Production Partnership, and no Leases shall be acquired for the purpose of
subsequent sale or Farmout, unless such Leases are a part of an acquisition
which is sold as a package only, or unless the acquisition of undeveloped Leases
by the Production Partnership is made after a well has been drilled nearby by
third Parties to a depth sufficient to indicate that such an acquisition is in
the best interests of the Production Partnership.
Section 4.9. Other Operations
The Managing Partner shall devote such time to the Production Partnership
as is reasonably required to carry on the Production Partnership business, and
the Managing Partner and its Affiliates shall at all times be free, subject to
any restrictions contained herein, to engage in all aspects of the Hydrocarbons
and natural resources business for their own accounts and for the accounts of
others. Without limiting the generality of the foregoing, the Managing Partner
and its Affiliates shall have the right to organize and operate other
partnerships, joint ventures or other oil and gas investment programs similar to
the Limited Partnership and the Production Partnership.
Section 4.10. Prosecution, Defense and Settlement of Claims;
Indemnification
A. The Managing Partner shall arrange to prosecute, defend, settle or
compromise actions at law or in equity at the expense of the Production
Partnership as may be necessary to enforce or protect the interests of the
Production Partnership. The Managing Partner shall satisfy any judgment, decree,
decision or settlement, first, out of any insurance proceeds available therefor,
next, out of the Production Partnership assets and
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Income, and, finally, out of the assets of the Managing Partner and the general
partner of the Limited Partnership.
B. The Managing Partner shall have no liability to the Production
Partnership or to any Partner, or Unit Holders for any loss suffered by the
Production Partnership which arises out of any action or inaction of the
Managing Partner if the Managing Partner, in good faith, determined that such
course of conduct was in the best interests of the Production Partnership and
such course of conduct did not constitute negligence or misconduct of the
Managing Partner. The Managing Partner shall be indemnified by the Production
Partnership against any losses, judgments, liabilities, expenses and amounts
paid in settlement of any claims sustained by it in connection with the
Production Partnership, provided that the same were not the result of negligence
or misconduct on the part of the Managing Partner. Any indemnification under
this Section 4.10 shall be satisfied solely out of the Assets and Income of the
Production Partnership. All amounts payable under this Section 4.10 shall be a
liability of the Production Partnership only and no Unit Holders or Limited
Partners will have any liability therefor.
C. Notwithstanding the above, the Managing Partner shall not be
indemnified for liabilities arising under federal and state securities laws
unless (1) there has been a successful adjudication on the merits of each count
involving securities law violations and the court approves such indemnification
and the litigation costs thereof; or (2) such claims have been dismissed with
prejudice on the merits by a court of competent jurisdiction and the court
approves such indemnification and the litigation costs thereof. In any such
case, the Managing Partner shall apprise the court of the current published
positions, if any, of the federal and applicable state securities administrators
regarding indemnification of program sponsors prior to obtaining court approval
of any such indemnification.
D. The Production Partnership shall not incur the costs of that portion
of insurance which insures the Managing Partner for any liability as to which
the Managing Partner is prohibited from being indemnified under Section 4.10.
ARTICLE FIVE
Distributions, Fees and Allocations
Section 5.1. Distributions of Production Partnership Funds
The Distributable Cash of the Production Partnership shall be distributed
simultaneously to the Limited Partnership and the Managing Partner within 45
days after the close of each calendar quarter. Each Partner's share of each such
distribution of Distributable Cash shall be determined after giving effect to
the allocations set forth in Sections 5.3 and 5.4 for such period. All
distributions of Distributable Cash shall reduce dollar-for--dollar the balances
of the Partners' Capital Accounts.
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Section 5.2. Fees and Reimbursement of Expenses to the Managing
Partner
Geodyne Production shall receive as Managing Partner (1) on a
nonrecurring basis, the Acquisitions and Operations Fee in an amount equal to
3.5% of the Unit Holders' Subscriptions; and (2) reimbursement for Direct
Administrative Costs billed directly to the Managing Partner and General and
Administrative Costs incurred by the Managing Partner or its Affiliates
allocable to the Production Partnership, except to the extent that the Managing
Partner or its Affiliate is otherwise reimbursed for such costs through the
payment of Property Acquisition Costs, Operating Costs or otherwise. The
aggregate amount of General and Administrative Costs allocable to the accounts
of the Unit Holders for which the Managing Partner will be reimbursed by the
Production Partnership and the General Partner by the Limited Partnership will
not (a) in the first 12 months following Activation of the Production
Partnership, exceed an amount equal to 2.5% of the Unit Holders' Subscriptions,
and (b) in any succeeding 12 month period, exceed an amount equal to 1% of the
Unit Holders' Subscriptions.
Section 5.3. Allocation of Income, Investment Income, Costs and
Deductions
A. The Income, Investment Income, Profits, Production Partnership costs
and losses of the Production Partnership shall be determined and allocated with
respect to each Fiscal Year of the Production Partnership as of and within 75
days after the end of such Fiscal Year.
B. Except as otherwise provided in this Article Five
(i) 100% of Investment Income, Property Acquisition Costs,
costs incurred in connection with Identified Development
Drilling (including any interest, commitment fees and other
finance charges with respect to borrowings incurred in
connection therewith) and the Acquisitions and Operations
Fee referred to in Section 5.2(1) shall all be allocated
to, and borne by, the Limited Partnership. 100% of
Organization and Offering Costs shall be allocated to, and
borne by, the Managing Partner. Except as otherwise
provided in Sections 5.3B(ii) and (iii), Income, General
and Administrative Costs, Operating Costs, costs incurred
in connection with Development Drilling and Direct
Administrative Costs shall be allocated among, and borne
by, the Partners in the following percentages:
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(a) Until Payout:
Limited Partnership 95.9596%
Geodyne Production 4.0404%
(b) After Payout:
Limited Partnership 85.8586%
Geodyne Production 14.1414%
(ii) As used in this subsection, the "Property Investment Period"
shall mean that period which begins with the first day of the
calendar quarter following either (i) the calendar quarter
during which 90% of the Production Partnership's capital
available for purchasing Producing Properties has been so
expended, or (ii) the calendar quarter in which 50% of the
Production Partnership's capital available for purchasing
Producing Properties has been so expended, as the Managing
Partner shall elect. Notwithstanding anything to the contrary
contained herein, if, at Payout, the total amount of cash
distributions by the Limited Partnership to the Unit Holders
from the commencement of the Property Investment Period have
averaged on a twelve-month basis an amount that is less than
12% of the Unit Holders' Subscriptions, the percentage of
Income, and costs which are shared in the same proportions as
Income, allocated to the Managing and General Partners will
increase to only 10% and the Unit Holders will be allocated
90% thereof until such time, if ever, that the distributions
to the Unit Holders from the commencement of the Property
Investment Period reaches a twelve-month average equal to at
least 12% of the Unit Holders' Subscriptions, at which time
Income and costs shared in the same proportions as Income
will be allocated 14.1414% to the Managing Partner and
85.8586% to the Limited Partnership.
(iii) Notwithstanding anything to the contrary contained herein, if
on the seventh anniversary of the last day of the Fiscal Year
in which the Production Partnership commences Development
Drilling, or Identified Development Drilling, and in each
Fiscal Year thereafter, (a) the aggregate amount of Income
less the aggregate amount of direct lease operating expenses
and severance, ad valorem, windfall profits, excise and other
taxes (but not income taxes) allocated to the Limited
Partnership pursuant to Section 5.3(b)(i) attributable to
production resulting from Development Drilling and Identified
Development Drilling on Producing Properties is less than (b)
the aggregate amount of costs allocated to the Limited
Partnership pursuant to Section 5.3(B)(i) incurred in
connection with Development Drilling
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and Identified Development Drilling on Producing Properties
during each Fiscal Year ending seven or more years prior
thereto, then Income and costs otherwise allocable to the
Managing Partner pursuant to Section 5.3B(i) shall thereafter
be allocated to the Limited Partnership until such deficiency
in Income is eliminated.
(iv) For purposes of the allocations set forth in Section 5.3B(ii)
of this Agreement, the amount of cash distributed to the
Limited Partnership for purposes of determining the return on
the Unit Holders' Subscriptions to the Limited Partnership
shall not include any amounts attributable to the Production
Partnership's payment of any windfall profits tax.
C. All items of Income, gain, loss, deduction and credit allowable for
federal income tax purposes and all recapture of any such deductions and credits
shall be allocated and charged or credited to the Partners in the same manner
that the revenues, costs or expenses giving rise to such items of income, gain,
loss, deduction and credit are allocated and charged. Federal income tax
deductions for cost or percentage depletion with respect to any Producing
Property shall be determined at the Partner level and shall be determined in the
case of percentage depletion on the same basis that the Income from the
Producing Property is allocated; and the Production Partnership shall allocate,
under Section 612A(c)(7)(D) of the Code, its adjusted basis in each Producing
Property to the Partners in proportion to the interest of each in the Production
Partnership capital ultimately used to acquire that property. If such allocation
of basis is not permitted under the Code, the basis of each such property shall
be allocated in the manner which the Managing Partner deems will most closely
achieve the result intended above.
D. Capital Accounts shall be established and maintained for each Partner
in accordance with tax accounting principles and with valid regulations issued
by the U.S. Treasury Department under subsection 704(b) of the Code (the "704
Regulations"). To the extent that tax accounting principles and the 704
Regulations may conflict, the latter shall control. In connection with the
establishment and maintenance of such Capital Accounts, the following provisions
shall apply:
(i) Each Partner's Capital Account shall be (I) increased by the
amount of its Capital Contribution, the fair market value of property
contributed by it to the Production Partnership (net of liabilities
securing such contributed property that the Production Partnership is
considered to assume or take subject to under section 752 of the Code)
and allocations to it of Income and gain (except to the extent such
Income or gain has previously been reflected in its Capital Account by
adjustments thereto) and (ii) decreased by the amount of Distributable
Cash distributed to it, the fair market value of property distributed to
it by the Production Partnership (net of
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liabilities securing such distributed property that such Partner is
considered to assume or take subject to under section 752 of the Code)
and allocations to it of Production Partnership loss, deduction (except
to the extent such loss or deduction has previously been reflected in its
Capital Account by adjustments thereto) and expenditures described in
section 705(a)(2)(B) of the Code.
(ii) In the event Production Partnership Property is distributed to
a Partner, then, before the Capital Account of such Partner is adjusted
as required by clause (I) of this Section 5.3D, the Capital Accounts of
the Partners shall be adjusted to reflect the manner in which the
unrealized Income, gain, loss and deduction inherent in such Production
Partnership Property (that has not been reflected in such Capital
Accounts previously) would be allocated among the Partners if there were
a taxable disposition of such Production Partnership Property for its
fair market value on the date of distribution.
(iii) If, pursuant to this Agreement, Production Partnership
Property is reflected on the books of the Production Partnership at a
book value that differs from the adjusted tax basis of such Production
Partnership Property, then the Partners' Capital Accounts shall be
adjusted in accordance with the 704 Regulations for allocations to the
Partners of depreciation, depletion, amortization, and gain or loss, as
computed for book purposes, with respect to such Production Partnership
Property.
(iv) The Partners' Capital Accounts shall be reduced by a simulated
depletion allowance computed on each oil or gas property using either the
cost depletion method or the percentage depletion method (without regard
to the limitations under the Code which could apply to less than all
Partners); provided, however, that the choice between the cost depletion
method and the percentage depletion method shall be made on a
property-by-property basis and such choice shall be binding for all
Production Partnership taxable years during which such oil or gas
property is held by the Production Partnership. Such reductions for
depletion shall not exceed the aggregate adjusted basis allocated to the
Partners and Unit Holders with respect to such oil or gas property. Such
reductions for depletion shall be allocated among the Partners' Capital
Accounts in the same proportions as the adjusted basis in the particular
property is allocated to each Partner. Upon the taxable disposition of an
oil or gas property by the Production Partnership, the Production
Partnership's simulated gain or loss shall be determined by subtracting
its simulated adjusted basis (aggregate adjusted tax basis of the
Partners less simulated depletion allowances) in such property from the
amount realized on such disposition and the Partners' Capital Accounts
shall be increased or reduced, as the case may be, by the amount of the
simulated gain or loss on such disposition in proportion to the Partners'
allocable shares of the total amount realized on such disposition.
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(v) For purposes of determining the Capital Account balance of any
Partner as of the end of any Production Partnership taxable year for
purposes of Subsection 5.31 hereto, such Partner's Capital Account shall
be reduced by:
(a) Adjustments that, as of the end of such year, reasonably
are expected to be made to such Partner's Capital Account pursuant
to paragraph (b)(2)(iv)(k) of the 704 Regulations for depletion
allowances with respect to oil and gas properties of the Production
Partnership, and
(b) Distributions that, as of the end of such year,
reasonably are expected to be made to such Partner pursuant to Code
section 704(e)(2), Code section 706(d), and paragraph (b)(2)(ii) of
section 1.751--1 of regulations promulgated under the Code, and
(c) Distributions that, as of the end of such year,
reasonably are expected to be made to such Partner to the extent
they exceed offsetting increases to such Partner's Capital Account
that reasonably are expected to occur during (or prior to) the
Production Partnership taxable years in which such distributions
are expected to be made.
E. The Capital Accounts of those Partners which are charged with an
expense of the Production Partnership shall be credited with any portion of that
expense which is finally determined, judicially or administratively, to be
nondeductible for Federal income tax purposes, less any amortization or
depreciation thereof incurred prior to the date that the credit is made.
F. In allocating Income and costs for any Fiscal Year in which the ratio
for sharing Income and costs changes pursuant to Section 5.3B(i), the
allocations of Income and costs shall be made, and the books of the Production
Partnership shall be closed, as soon as practicable after the date Payout
occurs, to determine each Partner's share of pre-change Income and costs and
each Partner's share of post--change Income and costs for that Fiscal Year.
G. Proceeds received from the Sale or transfer of all or any part of the
Production Partnership's Producing Properties shall be allocated to the Limited
Partnership and the Managing Partner to the extent of their adjusted basis in
such sold or transferred Production Partnership Property. Proceeds in excess of
said amount shall be allocated in accordance with the percentages set forth in
Section 5.3B(i), except that, notwithstanding the provisions of Section 5.3F and
solely for purposes of this Section 5.3G, where the proceeds from such Sale are
distributed to the Partners and a portion of the Distributable Cash attributable
to such Sale proceeds is sufficient in amount to cause Payout to occur in
accordance with the allocation percentages in effect until Payout, Payout shall
be deemed to occur such that Income and Distributable Cash attributable to the
portion of such Sale proceeds in excess of the portion of Sales proceeds
sufficient in amount to cause Payout to occur shall be allocated in accordance
with the allocation percentages in effect after Payout.
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H. Notwithstanding any other provision of this Agreement, if, under any
provision of this Agreement, the Capital Account of any Partner is adjusted to
reflect the difference between the basis to the Production Partnership of
Production Partnership Property and such Production Partnership Property's fair
market value, then all items of Income, gain, loss, and deduction with respect
to such Production Partnership Property shall be allocated among the Partners so
as to take account of the variation between the basis of such Production
Partnership Property and its fair market value at the time of the adjustment to
such Partner's Capital Account in accordance with the requirements of subsection
704(c) of the Code, or in the same manner as provided under subsection 704(c) of
the Code.
I. Notwithstanding anything to the contrary stated herein,
(i) There shall be allocated to the Managing Partner, any item of
loss, deduction, credit or allowance that, but for this Section 5.31,
would have been allocated to the other General Partner that is not
obligated to restore any deficit balance in such Partner's Capital
Account and would have thereupon caused or increased a deficit balance in
such Partner's Capital Account as of the end of the Production
Partnership's taxable year to which such allocation related (after taking
into consideration the provisions of Subsection 5.3D(v) hereof);
(ii) Any General Partner that is not obligated to restore any
deficit balance in such Partner's Capital Account who unexpectedly
receives an adjustment, allocation or distribution specified in
Subsection 5.3D(v) hereof shall be allocated items of Income and gain in
an amount and manner sufficient to eliminate such deficit balance as
quickly as possible; and
(iii) In the event any, allocations of loss, deduction, credit or
allowance are made to the Managing Partner pursuant to clause (i) of this
Subsection 5.31, the Managing Partner shall be subsequently allocated all
items of Income and gain until the aggregate amount of such allocations
of Income and gain is equal to the aggregate amount of any such
allocations of loss, deduction, credit or allowance allocated to such
Partners pursuant to clause (i) of this Subsection 5.31.
Section 5.4. Determinations of Allocations and Distributions
Distributable Cash, Income, Investment Income, costs, deductions, Profits
and Losses allocable to the Partners shall be distributed or allocated, as the
case may be, to the Persons who were Partners, as of the last day of the fiscal
period for which the distribution or allocation is to be made, except that in
any fiscal period in which a Partner sells, assigns or transfers all or any part
of such Partner's Interest to any Person who during the fiscal period is
admitted as a Substituted Partner, the Distributable Cash, Income, Investment
Income, costs, deductions,
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Profits and Losses attributable to the Interest so sold, assigned or transferred
shall, subject to the provisions of Section 10.2 of this Agreement, be allocated
between the transferor and the transferee on the basis of the number of days in
the fiscal period before the admission, and on and after the admission, of the
transferee as a Substituted Partner; provided, however, that the Distributable
Cash attributable to a Sale of a Producing Property shall be distributed to
those Partners who are Partners on the day the distribution of such
Distributable Cash occurs. The Managing Partner shall inform the other Partners
of the occurrence and terms of any such Sale by the Production Partnership as
soon as practicable after such Sale has been consummated.
ARTICLE SIX
Withdrawal or Removal of Managing Partner
Section 6.1. Transferability of Managing Partner's Interest
A. Upon 120 days written notice to all other Partners, the Managing
Partner may retire or withdraw from the Production Partnership as Managing
Partner, subject to its obligation to pay all costs and expenses incurred by the
Production Partnership by virtue of such retirement or withdrawal. In addition,
there may be substituted in its stead as Managing Partner any entity that has,
by merger, consolidation or otherwise, acquired substantially all of the
Managing Partner's assets or capital stock and continued its business.
B. Subject to Section 11.1 of this Agreement, upon the Consent of the
Limited Partnership, which shall be given if the Consent of Unit Holders owning
more than 50% of the outstanding Depositary Units is obtained, the Managing
Partner may assign or transfer its Managing Partner Interest; provided, however,
that no such consent shall be required in connection with an assignment or
transfer pursuant to the merger, consolidation or transfer of all or
substantially all of the assets of the Managing Partner.
C. The Managing Partner may, upon at least 90 days' written notice to the
Limited Partnership, cause the Production Partnership to distribute, in partial
liquidation of its Interest in the Production Partnership, to the Managing
Partner fractional, undivided interests in the Producing Properties of the
Production Partnership (such interest of the Managing Partner in a Producing
Property distributed is hereinafter referred to as the "Distributed Interest")
up to an aggregate interest equal in value to 75% of the value of the Producing
Properties of the Production Partnership that it would have been entitled to
upon a hypothetical liquidation of the Production Partnership after application
of the provisions of Section 8.2 (the interest in a Producing Property of the
Managing Partner retained in the Production Partnership is hereinafter referred
to as the "Retained Interest"); provided, however, that no such distribution
shall occur (i) more than once, (ii) prior to seven years after the Activation
of the Production Partnership and (iii) unless the Managing Partner obtains an
opinion of counsel to the Production Partnership to the effect that such
distribution will not result
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in any material adverse tax consequence to the Unit Holders. Notwithstanding
anything to the contrary in this Agreement, in the event that any such
distribution is made, the Managing Partner shall:
(1) make appropriate adjustments in the Capital Accounts of the
Partners and in the allocation of Production Partnership Income and
costs to assure that the Managing Partner will not share or
participate in any of the capital, costs, Income, or distributions
attributable to the Producing Properties of the Production
Partnership except to the extent of the Retained Interest of the
Managing Partner;
(2) not voluntarily or otherwise dispose of its Distributed Interest
unless the undivided interest of the Production Partnership in such
Producing Properties is also sold or disposed of for a
proportionately equivalent consideration;
(3) ensure that the Limited Partnership's share of General and
Administrative Costs does not increase as a result of such
withdrawal; and
(4) indemnify the Limited Partnership against any expenses resulting
from such withdrawal.
Section 6.2. Removal of the Managing Partner
The power shall be vested in the Limited Partnership to remove at any
time the Managing Partner. The power shall be vested in the Limited Partnership
to consent to the admission of a successor Managing Partner following the
removal of the Managing Partner by the Limited Partnership. A successor Managing
Partner shall be selected pursuant to the provisions of Section 6.3C of this
Agreement.
Section 6.3. Successor Managing Partner
A. (i) If the Managing Partner is Removed or withdraws and a successor
Managing Partner is to be admitted to the Production Partnership, the
departing Managing Partner shall not withdraw or be Removed until a
successor Managing Partner has been admitted to the Production
Partnership pursuant to Article Ten of this Agreement.
(ii) In the event the Managing Partner withdraws or is Removed by
the Limited Partnership and a successor Managing Partner is to be
admitted, the incoming Managing Partner and the departing Managing
Partner shall, by mutual agreement, select an independent petroleum
consultant to value the departing Managing Partner's Interest in the
Production Partnership. The incoming Managing Partner, or the Production
Partnership, shall have the option to purchase at least 20% of the
Interest of the departing Managing Partner for the value determined by
the independent appraisal. The departing Managing Partner's Interest in
the Production Partnership shall be transferred to the successor Managing
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Partner, and the successor Managing Partner shall assign to the departing
Managing Partner a portion of Production Partnership Income, costs and
Distributable Cash as and when such items are allocated or distributed,
as the case may be, by the Production Partnership equal to the percentage
interest of the departing Managing Partner in the Production Partnership
prior to withdrawal or Removal, less the portion purchased by the
successor Managing Partner or the Production Partnership.
B. Notwithstanding Section 3.6, the Managing Partner, upon withdrawal or
removal shall be released by the other Partners from all liability for
Production Partnership debts and obligations incurred by the Production
Partnership prior to the date of such withdrawal or Removal.
C. Under circumstances in which the Limited Partnership Consents to the
admission of a successor Managing Partner, such admission shall not become
effective unless the Production Partnership shall have received a certificate,
duly executed by or on behalf of such proposed successor Managing Partner to the
effect that it is experienced in the performance (or employs sufficient
personnel who are experienced in performing) of functions of the type then being
performed by the departing Managing Partner.
ARTICLE SEVEN
Transferability of Limited Partnership's Interest
Section 7.1. Transferability of Limited Partnership's Interest.
No Sale, exchange, transfer or assignment of the Limited Partnership's
Interest may be made if, in the opinion of counsel to the Production
Partnership, such Sale, exchange, transfer or assignment, would cause the
Production Partnership to lose its status as a partnership for Federal income
tax purposes. In addition, the Managing Partner may require an opinion of the
transferor's counsel, satisfactory to the Managing Partner, that such Sale,
exchange, transfer or assignment would not violate the Securities Act of 1933,
as amended, or any state securities or "blue sky" laws.
Section 7.2 Incapacity of Partners
If a Partner (including the Managing Partner) becomes Incapacitated, the
Person who is its legal representative shall have all the rights of a Partner
for the purpose of settling or managing its estate and such power as the
Incapacitated Partner possessed to assign all or any part of its Interest and to
join with such assignee in satisfying conditions precedent to such assignee
becoming a Substituted Partner. The Incapacity of a Partner shall not dissolve
the Production Partnership.
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Section 7.3. Assignees and Substituted Partners
A. The Production Partnership shall not recognize for any purpose any
purported sale, assignment or transfer of all or any fraction of the Interest of
the Limited Partnership unless the provisions of Section 7.1 shall have been
complied with and there shall have been filed with the Production Partnership a
dated Notification of such sale, assignment or transfer, executed and
acknowledged by both the seller, assignor or transferor and the purchaser,
assignee or transferee and such Notification (i) contains the acceptance by the
purchaser, assignee or transferee of all of the terms and provisions of this
Agreement and (ii) represents that such sale, assignment or transfer was made in
accordance with all applicable laws and regulations. Any sale, assignment or
transfer shall be recognized by the Production Partnership as effective on the
date of such Notification if the date of such Notification is within 30 days of
the date on which such Notification is filed with the Production Partnership,
and otherwise shall be recognized as effective on the date such Notification is
filed with the Production Partnership.
B. If the Limited Partnership assigns all of its Interest to an
assignee, the Limited Partnership shall cease to be a Partner.
C. A Person who is the assignee of all or any fraction of the Interest of
the Limited Partnership shall be subject to all the provisions of this Article
Seven to the same extent and in the same manner as the Limited Partnership
desiring to make an assignment of its Interest.
D. Any purchaser, assignee, transferee, donee, heir, legatee or other
recipient of an Interest shall be admitted to the Production Partnership as a
Substituted Partner only with the Consent of the other Partners, which Consent
may be granted or withheld by such Partners at their sole and absolute
discretion. The admission of such Person as a Substituted Partner shall be
evidenced by the execution by the Partners of a certificate evidencing the
admission of such Person as a Partner and an amendment to this Agreement
executed by the Managing Partner on its own behalf, as well as on behalf of each
other Partner, pursuant to the power of attorney granted pursuant to Section
12.5.
E. No Person shall become a Substituted Partner until such Person shall
have satisfied the requirements of Section 10.2; provided, however, that for the
purpose of allocating Income, Investment Income, Profits, Losses, costs, and
Distributable Cash, a Person shall be treated as having become, and as appearing
in the records of the Production Partnership as, a Partner on such date as the
sale, assignment or transfer to such Person was recognized by the Production
Partnership pursuant to Section 7.3A.
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Section 7.4. Incapacity of the Limited Partnership
Upon the Incapacity of the Limited Partnership or upon the seizure of a
Limited Partnership's Interest in the Production Partnership, the successor to
such Limited Partnership's Interest ("Successor") shall be deemed an assignee of
such Limited Partnership's Interest in the Production Partnership and neither
the Production Partnership nor the Successor shall have the right to demand
immediate valuation and payment of such Limited Partnership's Interest.
ARTICLE EIGHT
Dissolution, Liquidation and Termination
of the Production Partnership
Section 8.1. Events Causing Dissolution
A. The Production Partnership shall be dissolved upon the happening
of any of the following events:
(i) the expiration of its term, unless its term shall have been
extended by the Managing Partner pursuant to Section 2.4;
(ii) the Incapacity of the Managing Partner. However, within
ninety days thereafter the remaining Partners may elect to reconstitute
the Production Partnership prior to application of the liquidation
provisions of Section 8.2;
(iii) the Sale or other disposition at one time of all or
substantially all of the assets of the Production Partnership existing
at the time of such Sale;
(iv) the election to dissolve the Production Partnership (a) by the
Managing Partner (which election shall be Consented to by the Limited
Partnership), or (b) by the Consent of all Partners other than the
Managing Partner;
(v) ninety days after the Removal or withdrawal (unless the Limited
Partnership Consents to a Successor pursuant to Section 6.2) of the
Managing Partner;
(vi) the happening of any other event causing the dissolution of
the Production Partnership under the laws of the State, except that the
Incapacity of any Partner (other than the Managing Partner) shall not
dissolve the Production Partnership and the seizure of the Interest of
any Partner shall not dissolve the Production Partnership.
B. Dissolution of the Production Partnership shall be effective on the
day on which the event occurs giving rise to the dissolution, but the
Production Partnership shall not terminate until the Managing Partner has
recorded a notice of dissolution of
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the Production Partnership in the proper records of any jurisdiction in which
this Agreement has been recorded and shall have complied with the laws of the
states in which it does business and the assets of the Production Partnership
have been distributed as provided in Section 8.2.
C. Nothing contained in this Agreement shall impair, restrict or limit
the rights and powers of the Partners under the laws of the State of Oklahoma or
any other jurisdiction in which the Production Partnership is doing business to
reform and reconstitute themselves as a general partnership following
dissolution of the Production Partnership either under provisions identical to
those set forth herein or under any other provisions.
Section 8.2. Liquidation of the Production Partnership; Liquidation
of a Partner's Interest
A. Upon dissolution of the Production Partnership, its liabilities shall
be paid in the order provided herein. The Managing Partner shall either
distribute in kind or sell the Production Partnership's property so that such
disposition is in the best interests of the Limited Partnership, and shall
execute all amendments terminating the Production Partnership. In connection
with any such Sale, the Managing Partner shall attempt to obtain the best prices
for such property. Pending such Sales, the Managing Partner shall have the right
to continue to operate and otherwise to deal with Production Partnership
property. In the event the Production Partnership is dissolved, on account of
the Incapacity or Removal of the Managing Partner, the Production Partnership
shall elect, in accordance with the provisions of Article Eleven, a person (the
"Liquidating Agent") to perform the function of a Managing Partner in
liquidating the assets of the Production Partnership and winding up its affairs,
and shall pay to such Liquidating Agent its reasonable fees and expenses
incurred in connection therewith. In the event of a distribution in kind of any
Production Partnership Property (including a Producing Property), each Partner's
Capital Account shall first be credited or debited with its share of the
unrealized appreciation of depreciation in the fair market value of such
Production Partnership Property. Each Partner's share of said unrealized
appreciation or depreciation shall be equivalent to its share (allocated
pursuant to Sections 5.3 and 5.4) of the gain or loss on an actual Sale of such
Production Partnership Property. The Capital Account of each Partner to whom a
Production Partnership Property is distributed shall be debited with the fair
market value of the Production Partnership Property distributed to it. The
Capital Account of each Partner to whom a Producing Property or an interest in a
Producing Property is distributed shall be `debited with the fair market value
of the Producing Property distributed to it. Any liquidation of the Production
Partnership shall take place out of court and without application being made
therefor to the Secretary of State of the State of Oklahoma.
B. In settling accounts after dissolution, the assets of the Production
Partnership shall be paid out in the following order: (i) to third party
creditors, in the order or priority as provided by law; (ii) to the Managing
Partner and any Liquidating Agent for any expenses of the Production
Partnership paid by or payable to
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them to the extent they are entitled to reimbursement therefor pursuant to this
Agreement; (iii) to the Limited Partnership in the amount equivalent to the
amount of its positive Capital Account balances (as adjusted pursuant to Section
8.2A) on the date of distribution; (iv) to the Managing Partner in the amount
equivalent to the amount of its positive Capital Account balances (as adjusted
pursuant to Section 8.2A) on the date of distribution; and (v) the balance shall
be paid to the Partners in proportion to and to the extent of the positive
balances in the Partners' Capital Accounts.
C. If the Managing Partner has a deficit balance in its Capital Account
following the distribution(s) provided for in Section 8.2B above, as determined
after taking into account all adjustments to its Capital Account for the taxable
year of the Production Partnership during which such distribution(s) occur, it
shall restore the amount of such deficit balance to the Production Partnership
within 90 days and such amount shall be distributed to the other Partners in
accordance with their positive Capital Account balances.
D. Upon the liquidation or partial liquidation of the Managing Partner's
Interest pursuant to Article Six hereof, any distribution to the Managing
Partner shall be made pro rata to such Partner in accordance with and to the
extent of its positive Capital Account balance after the Partners' Capital
Accounts are adjusted as if all of the Production Partnership's property had
been sold at its fair market value immediately prior to such distribution and
the gain or loss realized on such Sale charged or credited to the Partners'
Capital Accounts in accordance with the provisions of Article Five hereof,
provided, however, that if such Partner has a deficit balance in its Capital
Account following such distribution (or adjustment of such Partner's Capital
Account pursuant to this Section 8.2D), such Partner shall restore the amount of
such deficit balance to the Production Partnership by the later of the end of
the Production Partnership taxable year in which the liquidation of such
Partner's Interest occurs or 90 days after the date of such liquidation.
Section 9.4. Reports
A. The Managing Partner shall furnish to the Limited Partnership
sufficient information and data with respect to the properties and operations of
the Production Partnership in order to permit the Limited Partnership to satisfy
its reporting obligations under Section 10.4 of the Limited Partnership
Agreement.
B. The Managing Partner shall file on a timely basis with the Securities
and Exchange Commission all filings required to be made by the Production
Partnership pursuant to the Securities Act of 1933, the Securities Exchange Act
of 1934, and the rules and regulations promulgated thereunder.
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Section 9.5. Elections
The Managing Partner shall cause the Production Partnership to make all
elections required or permitted to be made by the Production Partnership under
the Code and not otherwise expressly provided for in this Agreement, in the
manner that the Managing Partner believes will be most advantageous to the
Limited Partnership, except that (i) the Managing Partner shall not be required
to make an election under Section 754 of the Code or corresponding provisions of
applicable state income tax laws, and (ii) the Managing Partner shall make the
election under Section 263(c) of the Code to expense all intangible drilling and
development costs in the initial Production Partnership federal income tax
return filed for the Fiscal Year in which such costs are incurred.
ARTICLE TEN
Amendments
Section 10.1. Proposal and Adoption of Amendments Generally
A. Notwithstanding anything to the contrary contained herein, the
Managing Partner may, without prior notice or consent of any other Partner,
amend any provision of this Agreement (including an amendment to admit an
additional or successor Managing Partner) if, in its opinion, such amendment
does not have a material adverse effect upon the Limited Partnership. Such
amendment shall thereafter be disclosed to the Unit Holders within a reasonable
time thereafter. Amendments to this Agreement to reflect the addition or
substitution of a Partner or the admission of a successor Managing Partner shall
be made at the time and in the manner referred to in Section 10.2. Any other
amendment to this Agreement may be proposed by the Managing Partner or the
Limited Partnership. The Partner or Partners proposing such amendment shall
submit a Notification containing (i) the text of such amendment, (ii) a
statement of the purpose of such amendment, and (iii) an opinion of counsel
obtained by the Partner or Partners proposing such amendment to the effect that
such amendment is permitted by the Act, will not impair the limited liability of
the Unit Holders, and will not adversely affect the classification of the
Limited Partnership or the Production Partnership as partnerships for federal
income tax purposes. The Managing Partner shall, within 15 days after receipt of
any proposal under this Section 10.1A, give Notification to all Partners of such
proposed amendment, of such statement of purpose and of such opinion of counsel,
together, in the case of an amendment proposed by other Partners, with the
views, if any, of the Managing Partner with respect to such proposed amendment
B. Amendments to this Agreement shall be adopted if: (i) in the case of
amendments referred to in Section 10.2A, the conditions specified in Section
7.3 shall have been satisfactorily completed and the Production Partnership
shall not have been furnished with an opinion of counsel to the Production
Partnership
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to the effect that such amendment will adversely affect the classification of
the Limited Partnership or the Production Partnership as partnerships for
Federal income tax purposes; (ii) in the case of amendments referred to in
Section 10.2B, the conditions specified in Section 6.3 shall have been
satisfactorily completed; or (iii) in the case of all other amendments, such
amendment shall have been Consented to by the Limited Partnership (unless such
Consent is not required pursuant to Section 10.IA); provided, however, that no
such amendment may: (1) enlarge the obligations of any Partner under this
Agreement without the Consent of such Partner; (ii) modify the method provided
in Article Five of determining and allocating or distributing, as the case may
be, Income, Investment Income, Profits, Losses, Distributable Cash or costs and
expenses without the Consent of each Partner adversely affected by such
modification; (iii) amend Sections 6.1, 6.2 or 6.3 without the Consent of all
the Partners; or (iv) amend Sections 2.3, 4.3A, 4.3B, 4.3C, 4.3D, 4.4A, 4.4B,
4.5A, 4.9, 4.10 or this Article Ten without the Consent of all the Partners.
C. Upon the adoption of any amendment to this Agreement, the amendment
shall be executed by the Managing Partner and all other Partners, and shall be
recorded in the proper records of the State and any other state in which the
Production Partnership is then doing business.
Section 10.2. Amendments on Admission, Withdrawal or Removal of
Partners
A. If this Agreement shall be amended to reflect the admission or
substitution of a Partner, the amendment to this Agreement may be adopted by the
Managing Partner, the Person to be substituted or added, and the assigning
Partner. Any such amendment shall be executed on behalf of all Partners but may
be executed by the substituted or added Partner, the assigning Partner, and the
Managing Partner, individually and on behalf of all of the other Partners
pursuant to the power of attorney granted in Section 12.5.
B. If this Agreement shall be amended to reflect the withdrawal or
Removal of the Managing Partner and the continuation of the business of the
Production Partnership, such amendment shall be signed by the successor Managing
Partner and by the departing Managing Partner.
C. No Person shall become a Partner, unless such Person shall have: (i)
become a party to, and adopted all of the terms and conditions of, this
Agreement; (ii) if such Person is other than an individual, provided upon
request the Managing Partner with evidence satisfactory to counsel for the
Production Partnership of such Person's authority to become a Partner under the
terms and provisions of this Agreement; and (iii) paid all reasonable legal fees
of the Production Partnership and the Managing Partner and filing and
publication costs in connection with such Person's becoming a Partner.
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ARTICLE ELEVEN
Consents, Voting and Meetings
Section 11.1. Method of Giving Consent
Any Consent required by this Agreement may be given by a Partner as
follows: (1) at a meeting, in person, by a written proxy or signed writing
directing the manner in which it desires that its vote be cast, which writing
must be received by the Managing Partner prior to such meeting, or (2) without a
meeting, by a signed writing directing the manner in which it desires that its
vote be cast, which writing must be received by the Managing Partner prior to
the date upon which the vote of Partners are to be counted. Any Partner may
waive notice of or attendance at any meeting of the Partners and may execute a
signed written consent. Only the votes of Partners of record on the date of
Notification, whether at a meeting or otherwise, shall be counted. The laws of
the State pertaining to the validity and use of corporate proxies shall govern
the validity and use of proxies given by Partners.
Section 11.2. Meetings of Partners
The Managing Partner may at any time call a meeting of the Partners or
for a vote, without a meeting, of the Partners on matters upon which the
Partners are entitled to vote, and shall call for such a meeting or vote upon
receipt of a Notification therefor of the Limited Partnership. Within 15 days of
the receipt of the Notification, the Managing Partner shall notify all Partners
of record as of the date of the Notification as to the time and place of the
meeting, if called, and the general nature of the business to be transacted
thereat, or if no such meeting has been called, of the matter or matters to be
voted upon and the date upon which the votes will be counted. Any Production
Partnership meeting or the date upon which such votes, without a meeting, will
be counted (regardless of whether the Managing Partner has called for such
meeting or vote upon the request of Limited Partnership or have initiated such
event without such request) shall be not less than 30 or more than 60 days
following mailing of the Notification thereof by the Managing Partner. All
expenses of the meetings, voting and such Notification shall be borne by the
Production Partnership.
Section 11.3. Submissions to Other Partners
The Managing Partner shall give all the other Partners Notification of
any proposal or other matter required by any provisions of this Agreement or by
law to be submitted for the consideration and approval of the other Partners.
Such Notification shall include any information required by the relevant
provision of the Agreement or by law.
Section 11.4. Limited Partnership Consent
To the extent allowed in the Limited Partnership Agreement and subject to
Section 10.1, the Limited Partnership, by and through Unit Holders owning more
than 50% of the Depositary Units, may without the concurrence of the Managing
Partner:
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(i) amend the Production Partnership Agreement;
(ii) dissolve the Production Partnership;
(iii) remove the Managing Partner and elect a new one;
(iv) approve or disapprove the sale of all or substantially all of the
assets of the Production Partnership; and
(v) cancel or amend the terms of any contract for services with the
Managing Partner or any Affiliate thereof without penalty upon 30 days' notice.
ARTICLE TWELVE
Miscellaneous Provisions
Section 12.1. Notification to the Production Partnership or the
Managing Partner
Any Notification to the Production Partnership or the Managing Partner
shall be sent to the principal office of the Production Partnership, as set
forth in this Agreement. Except as provided herein, any Notification to a
Partner shall be sent to its last known address.
Section 12.2 Binding Provisions
The covenants and agreements contained herein shall be binding upon and
inure to the benefit of the heirs, executors, administrators, successors and
assigns of the respective parties hereto.
Section 12.3. Applicable Law
This Agreement shall be construed and enforced in accordance with the
laws of the State applicable to contracts made and to be performed wholly within
the State.
Section 12.4. Separability of Provisions
If for any reason any provision or provisions hereof which are not
material to the purposes or business of the Production Partnership or of the
Partners' Interests are determined to be invalid and contrary to any existing or
future law, such invalidity shall not impair the operation of or affect those
portions of this Agreement that are valid.
Section 12.5. Appointment of the Managing Partner as
Attorney-in-Fact
A. Each Partner, by the execution of this Agreement, irrevocably
constitutes and appoints the Managing Partner, its true and lawful agent and
attorney-in-fact with full power and authority in its name, place and stead to
execute, acknowledge, deliver, swear to, file and record at the appropriate
public
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offices such documents, instruments and conveyances that may be necessary or
appropriate to carry out the provisions or purposes of this Agreement, including
without limitation: (i) all certificates and other instruments (including
counterparts of this Agreement), and any amendment thereof, including any
amendment substituting a Partner, that the Managing Partner deems appropriate to
form, reform, qualify or continue the Production Partnership (or a new
partnership with substantially the same provisions as the Production
Partnership) as a partnership in the jurisdiction in which the Production
Partnership may conduct business; (ii) all amendments and other instruments
necessary to admit into the Production Partnership additional or substituted
Partners pursuant to Section 10.2; (iii) all instruments that the Managing
Partner deems appropriate to reflect a change or modification of the Production
Partnership in accordance with the terms of this Agreement (including those
necessary to reflect any additional Capital Contributions); and (iv) all
conveyances and other instruments that the Managing Partner deem appropriate to
reflect the dissolution and termination of the Production Partnership.
B. The appointment by all Partners of the Managing Partner as agent and
attorney-in--fact shall be deemed irrevocable and to be a power coupled with an
interest, in recognition of the fact that each of the Partners under this
Agreement will be relying upon the power of the Managing Partner to act as
contemplated by this Agreement in any filing and other action by it on behalf of
the Production Partnership, and shall survive the Incapacity of any Person
hereby giving such power and the transfer or assignment of all or any part of
the Interest of such person; provided, however, that in the event of the
transfer by a Partner of all of its Interest, the foregoing powers of attorney
of the transferor Partner shall survive such transfer only until such time as
the transferee shall have been admitted to the Production Partnership as a
Substituted Partner and all required documents and instruments shall have been
duly executed, filed and recorded to effect such substitution.
Section 12.6. Entire Agreement
This Agreement constitutes the entire agreement among the parties. This
Agreement supersedes any prior agreement or understanding among the parties and
may not be modified or amended in any manner other than as set forth herein.
Section 12.7. Paragraph Titles
Article and section titles are for descriptive purposes only and shall
not control or alter the meaning of this Agreement as set forth in the text.
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Section 12.8. Counterparts
This Agreement may be executed in several counterparts, all of which
together shall constitute one agreement binding on all parties hereto,
notwithstanding that all the parties have not signed the same counterpart except
that no counterpart shall be binding unless signed by the Partners.
GEODYNE PRODUCTION COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
-------------------------------
Executive Vice President
PAINEWEBBER/GEODYNE ENERGY INCOME
LIMITED PARTNERSHIP II-D
By: GEODYNE PROPERTIES, INC.
General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Executive Vice President
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