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Home My WebLink About905198 RECEIVED 12/13/2004 at 1:31 PM RECEIVING # 905198 BOOK: 574 PAGEi 565 JEANNE WAGNER LINCOLN COUNTY CLERK, KEMMERER, VVY ASSIGNMENT OF PRODUCTION PAYMENT 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-II, L.P., a Delaware limited partnerShip ("Assignee")whose address is 13727 Noel Road, Suite 500, Dallas, Texas 75240. WITNESSETH: 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) (MEP _C-II - AGG 10 -- Devon) H'~,~rnI~WPROIPRflnPMTI14~,prrvl Pm! Fr~'m 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 Assignee (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 shall 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. H'~rnI~WPfin~PR~'IPIPMTt'I4tPrnrl Pmt Fnrm (MEP _C-II - AGG 10 - Devon) 2 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 expressl implied or statutory. TO HAVE AND TO HOLD the production payment herein assign'ed 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, all 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'~'.~rnI~WPR/3~PI~F~PI~ITN4~Prr~I Pmf Fnrm ~1~,~ 3 (MEP _C-II - AGG 10 - Devon) 0. 051. 8 0568 IN WITNES_,.,S.WHEREOF, Assignor has caused this Assignment to be executed on F. abruary )"~, 2004. ASSIGNOR: MERIT PARTNERS, L.P. By: Merit Energy Compa.,ny, General Partner · red N. ;l~iem, Vrce P~,~i'~ent ASSIGNEE: MERIT ENERGY PARTNERS C-II, L.P. By: Merit Padners, L.P., General Partner By: Merit Energy Company, General P.~.a dne/r Fred N. Diem, V, Ace President THE STATE OF TEXAS COUNTY OF DALLAS This instrument was acknowledged before me on the ~(~day of 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 Medt Energy Partners C-II, L.P D ~ ~ Nota~ Public, Sta,a of My commission expires: ryP 'c, tate of Texas H'lP. aral~WPafilPDf'lr)PldTfl4[Pr~ Pm! gnrm 4 (MEP _C-II - AGG 10 -- Devon) EXHIBIT A 0569 ASSIGNEE STATE CO UNTY BOOK PAGE (Or Other Recording Information) Merit Energy Partners C-II, L.P. CO KS KS KS KS KS KS KS KS KS LA LA LA LA LA LA LA LA MS MS MS I MS MS Kiowa 437 210-223 Barton 609 321 Ellis 575 774 Finney 257 411 Graham 207 623-636 Ilarper 37M 360 Kingman 0-11 39 Rooks 331 217 Seward 557 618 Stafford 173 390 Cameron Book No. 975 Doc. No. 283137 Concordia 403 864 lberia Book. No. 1269 Doc. No. 03-14777 Plaquemines 1056 741 St. Mary 46-F 461 Tensas 64 725 Tcrrebonne Book No. 184 Doc. No. 1162305 Vermilion Doc. No. 20314892 Jefferson 109 275' Lowndes 2003 3269 Rankin L 197 422 Wayne 1057 262-275 Yazoo' 299A 683 McKenzie Doc. No. 346058 Merit Energy Padners C-II, L.P. - Page 1 (. 0570 ASSIGNEE STATE COUNTY Eddy Lea OK Beaver OK Bcckham OK Blaine OK Ellis OK Grady OK 1 Iarper OK [,e Flare OK TX TX TX TX TX TX TX TX Roger Mills Andrews Brazos Chambers Cochran Crane Crockett Dawson lector TX Edwards TX Gaines TX Garza TX TX TX TX TX TX TX Glasscock I lockley Irion l,ipscomb [,ubbock Martin Matagorda BOOK PAGE (Or Other Recording Information) 523 782 1254 522 1106 394-407 1789 203 879 370 683 551-64 3538 141-154 587 141 1481 740 1723 536-549 814 339 5171 15 662 215 260 561 452 771 629 457 528 93 1795 743 218 564 787 166 268 242 73 137 728 660 151 549 414 538 8777 223 143 451 Doc. No. 037909 Merit Energy Parlners C-Il, L.P. - Page 2 057· ASSIGNEE STATE COUNTY BOOK PAGE (Or Other Recording Information) TX TX TX TX TX TX TX TX TX TX WY WY WY WY WY Midland 2269 695 Ochiltree 621 783 ?ecos 747 518 Reagan 54 121 Roberts 155 427 Schleicher 437 886 Sutton 328 43. Terry 696 508 Upton 737 616 Zapata 699 29-42 Campbell 1918 689-702 Converse 1222 848 Lincoln 538 99 ;weetwater 986 844 Uinta 809 634-647 Merit Energy Partners C-II, L.P.- Page 3