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Home My WebLink About906026 RECEIVED 1/21/2005 at 10:46 AM RECEIVING # 906026 BOOK: 577 PAGE: 623 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 D-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 _D-II- AGG 2 - Devon) 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 30, 2000 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 a'ny 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. (MEP _D-II- AGG 2 - Devon) 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, 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'~P-~I~I~I313PbtTI'I4~Prn~ Prat I:ntnl rl,,~ ' (MEP _D-II- AGG 2 - Devon) ~N W~TNESS WHEREOF, Assignor has caused this Assignment to be executed on _ 2oo4. ~ ASSIGNOR: MERIT PARTNERS, L.P. By: Merit Energy Compaqy, General Partner Fred N. Diem, Vice vresident ASSIGNEE: MERIT ENERGY PARTNERS D-Il, L.P. By: Merit Partners, L.P., General Partner By: Merit Energy Company, Gender , Fred N. Diem, Vice ~q'esi en THE STATE OF TEXAS COUNTY OF DALLAS ~; ~ This instrument was acknowledged before me on the 7¢/'¢'~day o 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 D-II, L.P. ..?. ~_~ .,~.... '"~("'"~,~;t ROSALIND W, ME ~ ('~('~'~,"(~' ='-' Nof~ Public State of Texas ~ ?~7~" ~(6~? My Commisaien Exp rea 08-29-06 ",,,, OF' 6,¢' ROtary ~-ublic, State of Texa~ ommission expires: (MEP _D-II- AGG 2 - Devon) EXHIBIT A ASSIGNEE STATE COUNTY BOOK PAGE (Or Other Recording Information) Merit Energy Partners D-II, L.P. LA Cameron Book No. 975 Doc. No. 283139 LA Concordia 403 891 LA Iberia Book No. 1269 Doc. No. 03-14779 LA Plaquemines 1056 769 LA St. Mary 46-F 489 LA Tensas 64 753 LA Terrebonne Book No. 1840 Doc. No. 1162307 LA Vermilion Doc. No. 20314894 MS Jefferson 109 247 MS Lowndes 2003 3305 MS Rankin L 197 450 MS Wayne 1057 290-303 MS Yazoo 229A 711 ND McKenzie Doc. No. 346472 NM Eddy 527 621 NM Lea 1261 95 OK Beaver 1108 15-28 OK Beckham 1792 426 OK Blaine 881 339 OK Canadian 2825 410-423 OK Ellis 684 747-60 OK Grady 3549 47-60 OK Harper 587 744 OK Roger Mills 1726 86-99 TX Andrews 814 359 Merit Energy Partners D-II, L.P.- Page 1 ASSIGNEE STATE COUNTY BOOK PAGE (Or Other Recording Information) TX Brazos 5717 43 TX Chambers 662 243 TX Cochran 260 589 TX Crane 452 799 TX Crockett 629 485 TX Ector 1795 773 TX Edwards 218 5. 92 TX Gaines 787 194 TX Garza 268 270 TX Glasscock 73 165 TX Hockley 728 688 TX Irion 151 577 TX Lipscomb 474 566 TX Lubbock 8777 251 TX Martin 143 479 TX Matagorda Doc. No. 037911 TX Midland 2269 725 TX Ochiltree 621 811 TX Pecos 747 546 TX Reagan 54 139 TX Roberts 155 455 TX Schleicher 437 914 TX Sutton 328 71 TX Terry 696 536 TX Upton 737 644 TX Zapata 699 57-70 WY Campbell 1925 183-196 WY Converse 1231 173 Merit Energy Partners D-II, L.P. - Page 2 .' ASSIGNEE STATE COUNTY BOOK PAGE (Or Other Recording Information) WY Lincoln 539 306 WY Sweetwater 987 1934 WY Uinta 810 149-162 Merit Energy Partners D-II, L.P. - Page 3