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Home My WebLink About905197 RECEIVED 12/13/2004 at ~:so PM RECEIVING # 905197 BOOK: 574 PAGE: 558 JEANNE WAGNER LINCOLN COUNTY CLERK, KEMMERER. WY ASSIGNMENT OF PRODUCTION PAYMENT L(0558 THIS ASSIGNMENT OF PRODUCTION PAYMENT (the "Assignment") is from Merit Partners, L.P., a Delaware limited partnership ("Assignor") whose address is 13727 Noel Road, Suite 500, Dallas, Texas 75240, to Merit Energy Partners C-I, L.P., a Delaware limited partnership ("Assignee") whose address is 13727 Noel Road, Suite 500, Dallas, Texas 75240. WITN ESSETH: I. Conveyance 1.1 Assignor, for and in consideration of One Hundred Dollars ($100.00) and other good and valuable consideration, receipt of which is hereby acknowledged, and subject to the conditions and reservations herein set forth, hereby ASSIGNS, TRANSFERS, GRANTS and CONVEYS, effective as of 7:00 a.m., local time, on July 1, 2002 (the "Effective Time"), unto Assignee, a production payment which may equal but not exceed in the aggregate seventy percent (70%) of all the following interests (the "Specified Interests"): that portion of the oil, gas and other minerals in and under and which may be produced from (or otherwise attributable to) the interests assigned to Assignee pursuant to that certain master Assignment of Net Profits Interests dated effective as of July 1, 2002 (the "Net Profits Assignment") recorded in the locations shown on Exhibit A hereto, free of all exploration, development and operating costs but subject to (i) applicable taxes measured by production or value, including gross production, severance and other taxes, and (ii) all presently valid and subsisting overriding royalties, production payments and similar burdens which were of record and burden the Specified Interests on the effective date of the acquisition of each Specified Interest by Assignor (other than the net profits interests created by the Net Profits Assignment, such Assignment being recorded in the jurisdictions set forth on Exhibit A hereto and at the volumes and pages set forth on such Exhibit A); provided, that the payments made pursuant hereto to Assignee for any particular month with respect to each increase in the Payment Amount (as herein defined) shall not exceed the aggregate sum of (i) one-twelfth (1/12th) of each such increase amount divided by seven (7) plus (ii) an amount equivalent to interest accrued on the Payment Amount outstanding from time to time during such month at the Fluctuating Rate (as herein defined) plus (iii) the aggregate amount, if any, by which the aggregate of all prior payments attributable to clause (i) preceding was less than the aggregate maximum payments that were permissible under clause (i) H'IP.~rnI~.WPRIl~PRI'IFIPMT~14~Prn,-I Prat Fnrm rl~ (MEP _C-I - AGG 10 - Devon) 1 0559 preceding. All payments made on account of a production payment shall be computed on the basis of Gross Proceeds, as defined in that certain Net Profits Agreement dated June 22, 1998 by and between Assignor and Assi§noe (the "NPI Agreement"). The production payment granted hereby has a "Payment Amount" that will fluctuate from time to time and that will be adjusted each year prior to the termination hereof in accordance with the NPI Agreement and this Assignment. The "Payment Amount" will increase upon the Effective Time by an initial amount permitted pursuant to the NPI Agreement and thereafter will increase each year, if at all, by the amount permitted pursuant to the NPI Agreement, and will decrease each time a payment is made pursuant hereto (other than payments for the equivalent interest factor described in section 1.1(ii) above). The term "Fluctuating Rate" shall mean a rate per annum of one percent (1%) plus the "reference rate of interest" established from time to time by Bank of America National Trust and Savings Association (or any successor) (the "Bank"), with each change in the interest rate applicable hereunder to be coincident with each change in the reference rate of interest announced from time to time by the Bank. The production payment assigned hereby sl~all terminate upon the earlier of (i) the recording by Assignee and Assignor of (a) an instrument expressly terminating this Assignment, or (b) as it affects a particular asset, an instrument conveying or unifying Assignor and Assignee's interests in such asset, and (ii) at such time as the remaining commercially recoverable reserves in and under the land from which the production payment is conveyed shall be reduced to 15% of the total commercially recoverable reserves in place as of the date of this assignment. All amounts received by Assignee shall first be credited to accrued interest and then to the reduction of the Payment Amount. At the time of termination, Assignee shall execute an instrument in writing, verifying such termination as a matter of record. The term "commercially recoverable reserves" is defined herein to mean the total commercially recoverable oil and gas in place and attributable to the Specified Interests in and under the land from which the production payment is payable from all productive zones taking into account all methods of production, including, without limitation primary, secondary and tertiary recovery methods. All determinations as to the remaining commercially recoverable reserves and as to the commercially recoverable reserves in place as of the date of this assignment shall be made, from time to time, by mutual agreement of the parties, but if they cannot agree, by an independent petroleum engineer or engineering firm selected by mutual agreement; if the parties cannot agree upon such an engineer or firm, then either party may in writing request the Chief Judge of the United States District Court for the Northern District of Texas to appoint a petroleum engineer to make such determination, which appointment shall be made without any necessity for notice or hearing. The cost of engineering services shall be borne equally by the parties. Such determination shall be binding upon the parties. 2 (MEP _C-I - AGG 10 - Devon) .-0560 1:2 Assignee agrees that the production payment herein conveyed is subject to the terms and conditions of the oil, gas and mineral leases described in the Net Profits Assignment and all instruments (other than the Net Profits Assignment) burdening or affecting the leases recorded in the proper public records of the jurisdictions in which such leases are located; the production payment herein conveyed is senior in priority of payment to and not burdened by the Net Profits Assignment. No loss or failure of any such lease or instrument shall serve to reduce the Payment Amount. The reference herein to such terms and conditions is for the purpose of protecting Assignor and Assignee and shall not create, nor constitute recognition of, any rights in third parties. 1.3 Assignor expressly denies any warranty, whether express, implied or statutory, with respect to the Specified Interests, and except for the special warranty set forth in the next succeeding sentence, this Assignment is executed and delivered without any warranties of title, whether express, implied or statutory. TO HAVE AND TO HOLD the production payment herein assigned unto Assignee, its successors and assigns, until termination as herein provided; and Assignor hereby binds itself, its successors and assigns, to WARRANT and FOREVER DEFEND the production payment against every person whomsoever lawfully claiming or to claim the same or any part thereof by, through or under Assignor, but not otherwise. Assignor further gives and grants unto Assignee, insofar as it affects the production payment, full power and right of substitution and subrogation in and to all covenants and warranties by others heretofore given or made in respect of the Specified Interests. II. Miscellaneous 2.1 Assignor will do, execute, acknowledge and deliver all and every such further acts and such other instruments as may be necessary or appropriate more fully to assure to Assignee, its successors and assigns al of the properties, rights, title, interests, estates, remedies, powers and privileges by this instrument transferred, assigned and conveyed or intended so to be. 2.2 All of the terms, provisions, covenants and agreements herein contained shall extend to and be binding upon the parties hereto their respective successors and assigns. (Signature Page Follows) H'~r~l~WPfi~P~t~P~ulTt't4~Prt~l Prat I=~rm ~ 3 (MEP _C-I - AGG 10 - Devon) IN WITNES.,~ WHEREOF, Assignor has caused this Assignment to be executed on FebTtzm7 '7 ~2004. ASSIGNOR: MERIT PARTNERS, L.P. By: Merit Energy Company, General Partner By: ..,;,.,/ _ ,(,.. - ~" Fred N. Diem, Vice President ASSIGNEE: MERIT ENERGY PARTNERS C-I, L.P. By: Merit Padners, L.P., General Partner By: Merit Energy Company, General .Padner By: /" Fred N. Diem, Vice Pres~ent THE STATE OF TEXAS COUNTY OF DALLAS ~ This instrument was acknowledged before me on the 7/7~day of"~-l:r~ 2004, by Fred N. Diem, Vice President of MERIT ENERGY COMPANY, a Delaware corporation, on behalf of said corporation, as General Partner of Merit Partners, L.P., a Delaware limited partnership, which is the General Partner of Merit Energy Partners C-I, L,P. ~?";i'"',?~. ROSALIND W, MERC£R M~ expires: / ' /I Notary Public, State of Texas H-~rr~WPRfl~PR/')FIPldTft4~prrlrl Pmf I::'c, rm rlrvt. 4 (MEP _C-I - AGG 10 - Devon) EXHIBIT A ASSIGNEE STATE CO UNTY BOOK PAGE (Or Other Recording Information) Merit Energy Partners C-I, L.P. CO Kiowa 437 196-209 KS Barton 609 320 KS Ellis 575 760 KS Finney 257 410 KS Graham 207 609-622 KS 1 larper 37M 359 KS K ingtnan 0-11 36 KS Rooks 331 189 KS Seward 557 604 KS Stafford 173 418 LA Cameron LA Concordia LA Iberia Book No. 975 Doc. No. 283136 403 I 850 Book No. 1269 Doc. No. 03-14776 LA t'laquemines 1056 727 LA St. Mary 46-F 447 LA Tensas 64 711 LA Terrebonne Book No. 1840 Doc. No. 1162304 LA Vermilion Doc. No. 20314891 MS Jefferson MS l.owndes MS Rankin MS Wayne MS Yazoo ND McKenzie 109 289, 2003 3255- 3268 L197 408 1057 248-261 299A 669 Doc. No. 346057 Medl Energy Partners C-I, L.P. - Page 1 09051.9? t.,t 0563 ASSIGNEE STATE C O U NTY BOOK PAGE (Or Other Recording Information) NM NM OK OK OK OK OK OK OK OK TX TX TX . TX TX TX TX . TX TX TX TX TX TX TX TX TX [~ddy 523 768 Lea 1254 508 ~caver 1106 380-393 ~ckham 1789 189 llaine 879 356 Ellis 683 537-50 -]rady 3538 127-140 larper 587 127 : Flore 1481 726 ~cr Mills 1723 522-535 ~drcws 814 329 Irazos 5717 1 ambers 662 201 ,~chran 260 547 .?rane 452 757 'ockett 629 443 awson 528 79 ~ctor 1795 728 hvards 218 550 bines 787 152 3arza 268 228 tsscock 73 123 ~)ckley 728 646 h-ion 151 535 ~scomb 44 524 ~bbock 8777 209 'Iartin 143 437 tagorda Doc. No. 037906 1 g (ila IAI M',da Merit Energy Padners C-I, L.P. - P(]ge 2 ;"0564 ASSIGNEE ~STATE ( ;O UNTY TX S TX TX WY C WY t WY S~ WY M itl ()c Rob, ScM ~utto Zal- llV~ ¥CCIV aooK (Or Other Recording Information) Iland 2269 680 iltree 621 769 cos 747 504 gan 54 112 ,errs 155 413 icher 437 872 ton 328 29 'ry 696 494 on 737 602 ara 699 15-28 ,bell 1919 71-84 :rse 1222 834 ~ln 538 085 rater 986 830 a 809 620-633 Merit Energy Partners C-I, L.P. - Page 3