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Home My WebLink About905201 RECEIVED 12/13/2004 at 1:35 PM RECEIVING # 905201 BOOK: 574 PAGE: 586 JEANNE WAGNER LINCOLN COUNTY CLERK, KEMMERER, WY ASSIGNMENT OF PRODUCTION PAYMENT ,..,0586 THIS ASSIGNMENT OF PRODUCTION PAYMENT (the "Assignment") is from Merit Partners, LP., a Delaware limited partnership ("Assignor") whose address is 13727 Noel Road, Suite 500, Dallas, Texas 75240, to Merit Energy Partners VIII, 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 _VIII - AGG 21 -- Devon) I-I-~P.~rnl~WPfilltPRClrlPl~4Tt14~Prntl Pm! I~.m ~ 1 0587 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 March 18, 1994 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 padies 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 Nodhern 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-[P,~rnI~WPAN~PI~tI"IPf,4TN4~Pr~ pm! Fnrm rlr~-~ (MEP _VIII - AGG 21 -- Devon) ,. 0588 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 tt~an 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, 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) I-t-~'.~rnllUUPRtllpRl'll'lPl~TtlJIPrr~ Pmt Fnrm ~ (MEP _VIII - AGG 21 - Devon) 3 IN WITNES~.WHEREOF, Assignor has caused this Assignment to be executed on .-Eeb,,q:~3P/._.~_, 2004. ASSIGNOR: MERIT PARTNERS L.P. By: Merit Energy Company, General Partner BY: ~'Fre~J~ N. Diem, Vice PCesident ASSIGNEE: MERIT ENERGY PARTNERS VIII, L.P. By: Merit Partners, L.P., General Partner By: Merit Energy Company, General Partner i:./.1, l..:---- Fred N. Diem, Vice President THE STATE OF TEXAS COUNTY OF DALLAS ~ This instrument was acknowledged before me on the F'~g'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 Merit Energy Partners VIII, L.Po ~ ~,~,~t. ROSALIND W. MERCER .~.,.'.¢:~.,~, ~ . ' · My commission expires: Notary Public, State of Texas I..l't~.=rr~WPRIltPl~l'~l"JPlulT~llprrvl pm! I:nrm tltw 4 (MEP _VIII - AGG 21 - Devon) 090520 EXHIBIT A 0590 ASSIGNEE STATE (7{) UNTY Merit Energy Partners VIII, L.P. CO KS KS KS KS KS KS KS KS KS LA LA LA LA LA · LA LA LA MS MS MS MS MS BOOK PAGE (Or Other Recording Information) Kiowa 437 126-139 Barton 609 316 Ellis 515 704 Finney 257 406 Graham 207 665-678 11arper 37M 363 Kingman 0-11 42 Rooks 331 231 Seward 557 660 Stafford 173 460 Cameron Book No. 975 Doc. No. 283133 foncordia 403 I 794 Iberia Book No. 1269 Doc. No. 03-14768 aquemines 1056 671 St. Mary 46-F 391 Tensas 64 654 ~crrebonne Book No. 1840 Doc. No. 1162300 ~crmilion Doc. No. 20314887 Jefferson 109 345 [,owndes 2003 3199 Rankin L197 352 Wayne 1057 192-205 Yazoo 299A 613 ,,lcKenzie Doc. No. 346054 Merit Energy Partners VIII, L.P. - Page 1 0905 d ':L ' ( 0591 ASSIGNEE STATE COUNTY OK OK OK OK OK OK OK OK TX TX TX TX TX TX TX TX TX TX TX TX TX TX TX TX TX Eddy Lea Beaver Bcckham Blaine Ellis Grady I Iarper l,e Flore Roger Mills Andrews Brazos Chalnbers Cochran Crane Crockett Dawson Ector Edwards Gaines Garza Glasscock f lockley Irion Lipscomb Lubbock Martin TX M atagorda BOOK PAGE (Or Other Recording Information) 523 726 1254 466 1106 338-351 1789 147 879 314 683 495-508 3538 85 587 85 1481 684 1723 480-493 814 309 5716 259 662 173 260 519 452 729 629 415 528 51 1795 698 218 522 787 124 268 200 73 95 728 618 151 507 414 496 8777 181 143 409 Doc. No. 037904 Meril Energy PaNners VIII, L.P. - Page 2 O592 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 650 Ochiltree 621 741 Pecos 747 462 Reagan 54 94 Roberts 155 371 ~chleicher 437 844 Sutton 328 1 Terry 696 466 Upton 737 574 Zapata 698 878-891 ~2ampbell 1919 1-14 Converse 1222 764 l,incoln 538 015 wcctwater 669 9955 Uinta 809 550-563 Merit Energy Padners VIII, L.P. - Page 3