HomeMy WebLinkAbout20073038 RESOLUTION
RE: APPROVE SETTLEMENT DOCUMENTS FOR ROYALTY UNDERPAYMENT LITIGATION
AND AUTHORIZE CHAIR TO SIGN NECESSARY DOCUMENTS - NOBLE ENERGY
PRODUCTION, INC., AND NOBLE ENERGY, INC.
WHEREAS, the Board of County Commissioners of Weld County, Colorado, pursuant to
Colorado statute and the Weld County Home Rule Charter, is vested with the authority of
administering the affairs of Weld County, Colorado, and
WHEREAS, the Board has been presented with Settlement Documents for Royalty
Underpayment Litigation between the County of Weld, State of Colorado, by and through the Board
of County Commissioners of Weld County, on behalf of the County Attorney's Office, and Noble
Energy Production, Inc., and Noble Energy, Inc., commencing July 1, 2007,with further terms and
conditions being as stated in said documents, and
WHEREAS, after review, the Board deems it advisable to approve said settlement
documents, copies of which are attached hereto and incorporated herein by reference.
NOW, THEREFORE, BE IT RESOLVED by the Board of County Commissioners of Weld
County, Colorado, that the Settlement Documents for Royalty Underpayment Litigation between
the County of Weld, State of Colorado, by and through the Board of County Commissioners of
Weld County, on behalf of the County Attorney's Office, and Noble Energy Production, Inc., and
Noble Energy, Inc., be, and hereby are, approved.
BE IT FURTHER RESOLVED by the Board that the Chair be, and hereby is, authorized to
sign any necessary documents.
The above and foregoing Resolution was, on motion duly made and seconded, adopted by
the following vote on the 26th day of September, A.D., 2007, nunc pro tunc July 1, 2007.
BOARD OF COUNTY COMMISSIONERS
/J W Li COU TY.OL RADO
ATTEST: � '� ,, �..,c' t 4 c 4
?�F avid E. Long, Chair
Wel County Clerk to the 1* /V
EXCUSED
% ,� '�; ,. ! �� Willie . Jge� Pro-Tem
�BY:
D ty CCI@ck to the Bo, .
Willi m F. Garcia
?MIROC/ED FO
Robert D. Masden
y orney e - cma�und�C`
������� D�la ademac er
Date of signature:
2007-3038
CA0014
LAW OFFICES
OF
GEORGE A. BARTON, P.C.
800 W.4T°Street,Suite 700 p
Kansas City,Missouri 64112 ip��'
(816)300-6255
Facsimile:(816)300-6259
to Q(' r 1
GEORGE A.BARTON .7C 8 �p�7 {'
DIRECT DIAL (816)300-6250 111
September 17, 2007 'r j,
a
VIA FEDERAL EXPRESS
Mr. Bruce Barker
Assistant County Attorney
Weld County Board of Commissioners /d , w �t 5 r _
915 10th Street, 3rd Floor
Greeley, CO 80631 ').T 1 4*7—1
Re: Settlement documents for Noble Energy royalty underpayment litigation
Dear Bruce:
I have finally received from Noble's attorney the Settlement Documents for the Weld
County Board of Commissioners. I am therefore enclosing at this time the following Settlement
Documents:
1. Settlement Agreement, with signature page for execution by the Weld County
Board of Commissioners;
2. Release for execution by Weld County Board of Commissioners; and
3. Two Amendments to Leases and Assignments for execution by the Weld :County
Board of Commissioners.
Please have each of the above-referenced Settlement Documents executed in the spaces
provided, have the signatures notarized, and return the executed Settlement Documents
containing original notarized signatures to me as soon as possible, preferably via Federal
Express. As soon as I receive the executed Settlement Documents back from you, I will forward
them to Noble's attorney. Approximately two weeks after my receipt of such executed
Settlement Documents, I will send you a check made payable to the Weld County Board of
Commissioners for its net share of the royalty underpayment settlement with Noble.
I look forward to receiving back from you the executed Settlement Documents for Weld
County Board of Commissioners. If you have any questions, call me at (816) 300-6250.
2007-3038
Page 2
Yours -y'ltruly,
rge A. Barton
GAB/laa
Enclosures
Cc: Charles Carpenter(via email - w/o ends.)
SETTLEMENT AGREEMENT
The parties to this Settlement Agreement(the"Agreement")are(i)Noble Energy,Inc.
and Noble Energy Production, Inc. (collectively,`Noble"),and(ii)the individuals and entities
listed in Exhibit A attached hereto (the"Royalty Owners"). Noble and the Royalty Owners will
be referred to individually or collectively as"the Parties."
RECITALS
A. Noble is a lessee and producer of natural gas and natural gas liquids(collectively,
"Gas")produced from wells subject to leases and/or overriding royalty assignments.
B. For purposes of this Agreement, the term"Gas"does not include oil or other
liquid hydrocarbons recovered by mechanical separators at or near the wellhead and before the
natural gas and liquids are both measured for volume and sampled for Btu content.
C. The Royalty Owners are generally lessors, royalty owners and/or overriding
royalty owners under one or more leases and assignments as to which Noble is the lessee or
suerrssorlessee.
D. All documents under which Noble and the Royalty Owners have both owned or
now own such interests, including but not limited to leases, assignments of leases that convey or
reserve overriding royalty interests therein and other documents conveying or reserving royalty
or overriding royalty interests,to the extent of those mutually owned interests,will be referred to
herein as the"Leases."
E. Some of the Royalty Owners are plaintiffs in the civil action referred to as Davis,
et at v. Patina Oil& Gas Corporation, Case No. 06-CV-3377,pending in the District Court for
the City and County of Denver, Colorado(the"Davis Civil Action"). Noble Energy Production,
Inc. is the successor by merger to Patina Oil and Gas Corporation.
F. Some of the Royalty Owners are plaintiffs in the civil action referred to as Ace
Royalties, LLC, et al. v. Noble Energy, Inc., et al.,Case No.05-CV-5633,pending in the District
Court for the City and County of Denver,Colorado(the "Ace Royalties Civil Action"). The
Davis Civil Action and the Ace Royalties Civil Action have been consolidated.
G. The plaintiffs in the Davis Civil Action and in the Ace Royalties Civil Action
allege that Noble has deducted costs improperly from their royalty payments or has otherwise
improperly reduced their royalties. They also allege that Noble did not report royalties correctly.
Noble denies all material allegations.
H. In light of the time,expense and uncertainty of further litigation,Noble and the
Royalty Owners have agreed to fully and finally compromise and settle all of the claims,causes
of action,demands,obligations,actions, liabilities and damages of every kind and nature
whatsoever, whether known or unknown,whether foreseen or unforeseen,in law or in equity,
that relate to the calculation,payment and reporting of royalties to the Royalty Owners for Gas
produced and sold by Noble pursuant to the Leases prior to July 1,2007 which are,or could have
been,the subject of the Davis Civil Action,the Ace Royalties Civil Action,or any other civil
520663.1
action,(hereinafter"Settled Claims"),and have agreed to resolve the Settled Claims,all under
the terms and conditions set forth in this Agreement.
AGREEMENT
In consideration of the mutual promises and covenants set forth herein,and other good
and valuable consideration,the receipt and sufficiency of which is hereby acknowledged,Noble
and the Royalty Owners hereby contract, covenant and agree as follows:
1. Payment. The Parties agree that, on February 15, 2007,Noble deposited Twelve
Million Two Hundred Eleven Thousand Dollars($12,211,000)(the"Settlement Funds")into the
escrow account(the"Escrow Account")established under the escrow agreement,as amended,a
copy of which is attached hereto as Exhibit B(the"Escrow Agreement")and incorporated herein
by reference, with the Missouri Bank&Trust Company(the"Escrow Agent"). The Settlement
Funds shall be distributed from the Escrow Account as provided by,and subject to,the
conditions described in Paragraphs 2 and 3 of this Agreement.
2. Threshold Requirement. For this Agreement to become effective, and before the
distribution to the Royalty Owners of any Settlement Funds pursuant to Paragraph 3,Royalty
Owners to whom at least 70%of the Settlement Funds have been allocated,as set forth in the
May 30, 2007 letter from George Barton to David Hammond(the"Settlement Allocation
Letter"),must execute without modification and deliver to Noble(i)this Agreement,(ii)their
Amendments to Leases and Assignments(in the form attached hereto as Exhibit C)and(iii)their
Releases(in the form attached hereto as Exhibit D within ninety(90)days after Noble delivers to
counsel for the Royalty Owners in final form and ready for execution(x)this Agreement with
signature pages for all Royalty Owners, (y)Amendments to Leases and Assignments for all
Royalty Owners and(z)Releases for all Royalty Owners. The date on which Noble completes
the delivery of those settlement documents to counsel for the Royalty Owners shall be referred to
as the"Start Date." The requirements of this Paragraph 2 shall be referred to as the"Threshold
Requirement."
3. Release of Settlement Funds for the Escrow Account. The Settlement Funds shall
be released to counsel for the Royalty Owners,or returned to Noble, under the following
circumstances:
(a) In no event shall any portion of the Settlement Funds be released to
counsel for the Royalty Owners unless and until the Threshold Requirement has been satisfied.
(b) In the event that the Threshold Requirement is not satisfied,Noble may so
advise the Escrow Agent by a written notification and receive from the Escrow Agent the
Settlement Funds including interest but less escrow fees,taxes and similar charges as provided
by Part III, Paragraph 3(c)of the Escrow Agreement.
(c) If the Threshold Requirement is satisfied,then within three business days
thereafter,counsel for Noble and counsel for the Royalty Owners shall execute and deliver to the
Escrow Agent a certificate(in the form attached hereto as Exhibit E)directing and authorizing
the Escrow Agent to release,as provided for in Paragraph 3(a)of Part III of the Escrow
Agreement,the amount of the Settlement Funds(plus interest or other earnings that may have
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accrued but less the proportionate share of escrow fees,taxes and similar charges)which has
been allocated,as set forth in the Settlement Allocation Letter,to those Royalty Owners who,as
of the date the Threshold Requirement is met,have executed this Agreement and their respective
Amendments to Leases and Assignments,and Releases and delivered those executed documents
to Noble. The release of Settlement Funds from the Escrow Account pursuant to this
Paragraph 3(c)shall be referred to as the"Initial Release."
(d) With regard to that portion of the Settlement Funds,if any,which remains
in the Escrow Account after the Initial Release has been made,counsel for Noble and counsel for
the Royalty Owners shall execute and deliver,on every tenth(10th)business day after the date of
the submission to the Escrow Agent of the certificate for the Initial Release(the"Subsequent
Certificate Date"),a certificate(in the form attached hereto as Exhibit E)directing and
authorizing the Escrow Agent to release the amount, if any,of the Settlement Funds(plus
interest or other earnings that may have accrued but less the proportionate share of escrow fees,
taxes and similar charges)equaling the total of the amounts allocated in the Settlement
Allocation Letter to those Royalty Owners who have delivered this executed Agreement and
their respective executed Amendments to braces and Assignments,and Retraces to Noble and
for whom the allocated portion of the Settlement Funds was not released as part of the Initial
Release or any subsequent release; provided,however,that if, on any such Subsequent
Certificate Date,no additional executed settlement documents have been received by counsel for
Noble,then a certificate will not be submitted to the Escrow Agent on that Subsequent
Certificate Date.
(e) In the event that a portion of the Settlement Funds remains in the Escrow
Account one hundred twenty(120)days after the Start Date,Noble,as provided by
Paragraph 3(d)of Part III of the Escrow Agreement,may so advise the Escrow Agent by a
written notification and, upon receipt of that notification,the Escrow Agent shall disburse all
remaining amounts, including any interest or other earnings that may have accrued,in the
Escrow Account to Noble by wire transfer; provided,however,that Noble and counsel for the
Royalty Owners may agree,but shall not be required to agree,to accept this executed
Agreement,the executed Amendments to Leases and Assignments,and the executed Releases
from Royalty Owners who did not provide those executed documents to Noble within one
hundred twenty(120)days after the Start Date and to execute and deliver to the Escrow Agent
additional written certificates for the release of Settlement Funds to those Royalty Owners in an
amount equaling the total of the amounts allocated in the Settlement Allocation Letter to those
Royalty Owners plus interest or other earnings that may have accrued but less their proportionate
share of escrow fees,taxes and similar charges.
(f) The Royalty Owners acknowledge that Noble shall not be responsible or
liable for,or with regard to,the distribution of Settlement Funds,which have been released from
the Escrow Account,to the Royalty Owners.
4. Taxes on Interest Earned on Settlement Funds. The Parties agree that Noble shall
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in no way be liable for,or responsible to pay,any taxes attributable to the interest earned on the
Settlement Funds and that Noble shall not be responsible for the preparation or filing of any
reports or other forms which may be required by the laws and regulations of any State or the
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United States of America,except that Noble shall be responsible for the payment of any taxes
_ - attibutableto any interest paid to Noble pursuant to Paragraphs 3(b)and 3 e .
5. Future Royalty Computations. Noble will have the right and obligation to
compute and pay royalties and overriding royalties for Gas produced and sold by Noble under
the Leases(hereinafter,the"Royalties")from and after July 1,2007 as provided in the
Amendment to Leases form attached hereto as Exhibit C and discussed in Paragraph 6 of this
Agreement. The Parties acknowledge and agree that Noble may sell Gas produced from the
wells either at the wellhead or at locations away from the wells.
6. Amendment to Leases and Assignments. Noble and the Royalty Owners will
execute the Amendment to Leases and Assignments in the form attached hereto as Exhibit C,
which shall be recorded by Noble in the real estate records of each county where the properties
covered by the Leases are located. The recorded Amendment to Leases and Assignments sets
forth the Parties' complete agreement concerning the future calculation of Royalties pursuant to
this Agreement, and the Amendment to Leases and Assignments shall run with the land and be
binding on the Parties and their agents,officers, directors,joint venturers,partners,members,
heirs,personal representatives, successors and assigns. Neither the Amendment to Leases and
Assignments nor this Agreement will be interpreted or construed as preventing or limiting
Noble's ability, at its sole discretion and without notice to the Royalty Owners,to enter into new
gathering,transportation, processing or marketing arrangements relating to the Leases,or to
modify existing gathering,transportation,processing or marketing arrangements relating to the
Leases. The Amendment to Leases and Assignments shall apply only to the undivided interest
owned by Noble in each Lease or any interest subsequently acquired by Noble or a Royalty
Owner under each Lease. Nothing in the Amendment to Leases and Assignments shall operate
or be construed as a cross-conveyance or pooling of the Leases which in any manner affects the
right of any separate Royalty Owners to deal with their separate property interests in the Leases
as their sole and separate property without regard to the rights or interests of any other separate
Royalty Owners.
7. Check Stubs. Beginning with royalty checks and check-stubs sent to the Royalty
Owners for production which occurs in January 2008,Noble shall disclose in or on the check
stub that accompanies the payment of Royalties calculated pursuant to the Amendment to Leases
and Assignments(i)the total deduction taken and(ii) separately report the portion of that
deduction that is based upon(a) gathering and processing charges and(b)fuel. Noble shall also
each year,beginning in 2008,during the month of March send a letter to each Royalty Owner
who has executed this Agreement and his,her,their or its Amendment to Leases and
Assignments,or their successors,explaining how Royalties for the preceding calendar year have
been calculated. It is expressly agreed that,by complying with the provisions of this
Paragraph 7,Noble shall be deemed to be in full compliance with C.R.S. § 34-60-118.5,as it
currently exists and relates to the disclosure of deductions taken. The check stub may contain a
footnote or other statement indicating that the Royalties have been calculated as provided in the
Amendment to Leases and Assignments and referring to and incorporating by reference the letter
referred to in this Paragraph 7.
8. Calculation and Payment of Royalties for the Period from July 1,2007 Through
December 31,2007. Notwithstanding the provisions of Paragraph 5,above, for Gas production
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during the period from July 1,2007 through December 31,2007 from the Leases for Parties who
have executed this Agreement,their Amendment to Leases and Assignments,and Release,Gas
royalty payments will be calculated and made by Noble using the calculation method employed
by Noble as of June 30,2007. In March 2008,Noble shall recalculate the royalties for such Gas
production using the royalty calculation method set forth in the Amendment to Leases and
Assignments and shall make payment to the persons and entities who have signed the
Amendment to Leases and Assignments in the amount,if any,by which royalty for the period
July 1,2007 through December 31,2007 as re-calculated in March 2008 exceeds the amount of
the royalty payments actually made by Noble;provided,however,that Noble shall not be
required to pay interest on any such additional payment amounts. With any additional payment
made pursuant to this Paragraph 8,Noble shall provide information explaining the calculation of
the additional payment.
9. Reasonableness of Current Marketing Arrangements. The Parties acknowledge
and agree that Noble's current arrangements for the marketing of Gas produced from the Leases
are reasonable.
10. Releases. Covenants and Warranties.
(a) Release by Royalty Owners. The Royalty Owners shall each sign and
execute a Release in the form attached as Exhibit D,the language of which is incorporated herein
by reference.
(b) Ownership of Claims. Each Royalty Owner represents,covenants and
warrants(i)that he, she,they or it is the sole owner of the Settled Claims that Royalty Owner is
releasing, (ii)that no portion of,or interest in, such Settled Claims has been sold,assigned,
transferred,pledged or hypothecated to any other person or entity, and that there are no persons
or entities having any rights of subrogation or substitution with respect to such Settled Claims,
and(iii)that no other person or entity is entitled to assert any claims arising by,through,or under
the interest of the Royalty Owners which are related to the subject matter of the Settled Claims.
(c) Covenant Not to Sue. The Royalty Owners, for themselves and their
officers,directors,agents,joint venturers,partners,members,parents,subsidiaries,affiliates,
insurers,heirs,legal representatives, successors and assigns,covenant and agree that they will
not commence,participate in,prosecute or cause to be commenced or prosecuted any action or
other proceeding based upon any of the Settled Claims released by them pursuant to this
Agreement.
(d) No Release of Non-Parties. Nothing herein or in the Release shall operate
or be construed to release any claims the Royalty Owners may have against any person or entity
who is not a Party hereto, except for claims that any Royalty Owners may have against"Noble's
Additional Released Parties,"as that term is defined in Exhibit D.
(e) No Double Payment. Each Royalty Owner represents that he,she,or it
has not received,and does not anticipate receiving,a payment as the result of the settlement of
the civil actions styled as Jack Holman, et al. v Noble Energy Production, Inc., et al.,Case No.
03 CV 9, Weld County,Colorado District Court and as Wardell Family Partnership, et al. v.
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Noble Energy, Inc., et al., Case No. 06 CV 734,Weld County,Colorado District Court Each
Royalty Owner covenants that,in the event he,she or it receives a payment check relating to the
settlement of the civil actions described in the preceding sentence,he,she or it will not cash that
check but will, instead, immediately mail it to the Royalty Owners' counsel and will direct
counsel to mail the check to Noble's counsel.
(f) Noble represents that the electronic data disclosed to the Royalty Owners
setting forth the information utilized to calculate their royalty payments between January 1997
and December 31,2005 was provided in good faith and that such data was generated from
Noble's accounting records. Noble further represents that the estimates made with regard to
information for the preceding period was provided to the Royalty Owners were also made in
good faith. However,the Royalty Owners acknowledge that discovery was not completed in the
Davis Civil Action and in the Ace Royalty Civil Action and that they may hereafter discover
facts different from or in addition to those which they now know to be or believe to be true with
respect to the Settled Claims. The Parties represent,warrant and agree that the release contained
herein shall be and remain effective in all respects, notwithstanding such different or additional
facts or the discovery thereof.
(g) Remedies. Each Party agrees to indemnify,defend and hold the other
harmless from and against any and all actions,causes of action,claims and demands,including
but not limited to litigation expenses,costs and reasonable attorney fees,that the released Party
may sustain by reason of any breach of the releases,covenants not to sue,or warranties set forth
in this Paragraph 10. In this respect, such releases,covenants and warranties may be pleaded as
a defense or by way of counterclaim,third-party complaint,or cross-claim. The covenants not to
sue will be specifically enforceable and the Parties agree that any breach thereof will cause
irreparable harm justifying injunctive relief.
11. Confidentiality.
(a) The terms of this settlement and the settlement offers and communications
made by the Parties leading up to this Agreement(hereinafter,the"Confidential Information")
will be confidential and,except as provided for in subparagraph(c)below or except as to the
information set forth in the Amendment to Leases and Assignments to be recorded as provided
for in Paragraph 6,or as required by law or court order. Confidential Information will not be
disclosed or discussed with anyone nor released to the public or media,except as provided below
and that the Parties may disclose that the Davis Civil Action and the Ace Royalty Civil Action
have been settled.
(b) In the event that any Party believes he, she or it is required by law or court
order to disclose Confidential Information,that Party will give the other Party at least five
business days' prior written notice so the other Party has the opportunity to object and/or seek
protections from a court;provided,however,that if a Party is required by law or court order to
disclose any Confidential Information without having sufficient time to give five business days'
prior written notice,that Party will give prompt written notice to the other Party as soon as
reasonably possible.
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(c) The Parties may discuss the Davis Civil Action,the Ace Royalty Civil
Action,and the settlement to the extent necessary in seeking services from professionals who
receive that information in confidence,such as their tax advisors and attorneys,or to successors-
in-interest that may acquire any Party's interest hereunder. Moreover,the Royalty Owners may
discuss the Davis Civil Action and the Ace Royalties Civil Action and the settlement of those
actions with their spouses and immediate family,provided that such spouse or family member
solemnly agrees to be bound by Paragraph 11 of this Agreement. Any corporate Party's
representative may discuss such matters with its directors, officers and employees to the extent
reasonably necessary in the ordinary course of business,provided that each such person solemnly
agrees to be bound by Paragraph 11 of this Agreement. To the extent a Party has disclosed
Confidential Information to any such qualified person,any further disclosure of such
Confidential Information by such qualified person to any other person will be deemed to be a
disclosure by the Party who originally made the disclosure to such qualified person. Similarly,
any disclosure by any person who received Confidential Information from such qualified person,
or which originated from such qualified person,will be deemed a disclosure of the Party who
made the initial disclosure to the qualified person. Notwithstanding any other provision of
Paragraph 11 of this Agreement,Noble may disclose Confidential Information(other than the
to
dollar amount paid to any Royalty Owners or group of Royalty Owners)to any third party the
extent necessary to resolve any dispute relating to its calculation and payment of royalties or
overriding royalties.
(d) The Parties further agree that any claim for breach of Paragraph 11 of this
Agreement will be determined by arbitration and not by litigation in the state or federal courts.
In the event of a demand for arbitration hereunder,the arbitration will be administered as
provided in Paragraph 13 of this Agreement.
12. Stipulations for Dismissal. Simultaneously with the execution of the written
certificates described in Paragraphs 3(c)and 3(d),counsel for Noble and for the Royalty Owners
shall execute a stipulation for dismissal(in the form of that attached hereto as Exhibit F)for the
Royalty Owners who are plaintiffs in the Davis Civil Action or the Ace Royalties Civil Action
with regard to the claims of the Royalty Owners who have executed and delivered this
Agreement and their respective Amendments to Leases and Assignments, and Releases to Noble
and for whom Settlement Funds will be released pursuant to such written certificate,which
stipulation for dismissal shall provide for the dismissal of all claims,each Party to bear its own
costs and attorney fees,of such Royalty Owners with prejudice,except that all claims relating to
oil royalty payments shall be dismissed without prejudice.
13. Arbitration. The Parties agree that any dispute between any of them arising out of
or related to this Agreement,any alleged breach of this Agreement,or any dispute in any manner
relating to the proper payment of the Royalties under the Leases will be determined in
arbitration. Arbitration under this Agreement will be administered by the Judicial Arbiter Group
("JAG")in Denver,Colorado,with the Honorable Richard W.Dana as Arbitrator. The
arbitration will be conducted in accordance with the rules(but not under the administrative
auspices)of the American Arbitration Association then in effect;provided,however,that the
Parties may agree to modify those rules for the purposes of any dispute governed by this
Paragraph 13. In the event that Judge Dana is unable to serve as Arbitrator,the Arbitrator will be
designated by JAG from among its panel of Arbitrators. In the event that JAG no longer exists,
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the Parties will attempt to agree on an arbitrator,and,if unable to do so,arbitration will be
conducted under the auspices of the American Arbitration Association("AAA") and pursuant to
the rules of the AAA then existing.
14. Authority and Capacity to Execute. Each person signing this Agreement on
behalf of a Party represents and warrants that such signatory has the full and complete power,
authority and capacity to execute and deliver this Agreement and any documents to be executed
pursuant hereto,that all formalities necessary to authorize execution of this Agreement so as to
bind the principal,partnership or corporation have been undertaken,and that upon execution and
delivery of this Agreement,the Amendment to Leases and Assignments,and the Release,this
Agreement will constitute the valid and legally binding obligation of each such Party hereto,
enforceable by and against that Party in accordance with its terms.
15. Successors and Assigns. This Agreement is binding upon and will inure to the
benefit of each of the Parties hereto and their respective agents,officers,directors,employees,
heirs,devisees,legal representatives, successors and assigns.
16. Voluntary and Binding Agreement. The Parties have been represented by
independent counsel of their own choice throughout the litigation of the Davis Civil Action and
the Ace Royalty Civil Action and all investigations and negotiations which preceded the
execution of this Agreement. Each Party acknowledges that he, she or it has sufficient
information in order to make an informed decision about whether to enter into this Agreement
and has read and fully understands this Agreement and has entered into this Agreement after
having the opportunity to discuss it with counsel of their choice. The Parties are not entering
into this Agreement because of any duress,economic or otherwise, and agree that they have had
all the time they desire to consider the matter and now desire to execute and consummate this
Agreement.
Each Party expressly undertakes and assumes the risk that this Agreement was made on
the basis of mistakes, mutual or unilateral. The Parties expressly acknowledge that they have
had the opportunity to consult additional professionals of their choice,including lawyers,
accountants,economists,petroleum engineers,geologists,and others regarding any and all
damages, losses,costs, expenses, liabilities,claims and the consequences thereof, of whatsoever
kind and nature,which they may have incurred or which they may or will incur,whether
suspected or unsuspected,known or unknown,foreseen or unforeseen. The Parties are aware
that they or their attorneys may hereafter discover facts different from or in addition to the facts
which they or their attorneys now know or believe to be true with respect to the subject matter of
this Agreement. The Parties expressly understand and agree that the signing of this Agreement
will be forever binding and that no rescission,modification or release of the undersigned from
the terms of this Agreement will be made because of any mistakes in this Agreement.
Each Party further acknowledges that,except for the specific representations,covenants
and warranties set forth herein, it has relied solely on his,her or its own attorneys,accountants,
experts,and consultants in deciding to enter into this Agreement,and no Party has made any
representation,promise or agreement of any kind to do or refrain from doing any act or thing or
pay any money or other consideration not expressly set forth herein. Given the complete absence
of any reliance by one Party upon any representation by the other Party other than as specifically
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set forth herein,whether written or oral,expressed or implied,the Parties agree that hereafter
their rights and obligations with respect to the subject matter of this Agreement will be
exclusively as set forth in this Agreement and the Lease Amendment. The terms of this
Agreement shall govern and control over any conflicting provisions or terms contained in any
prior agreements between the Parties.
17. Construction. The language of all parts of this Agreement and its exhibits will in
all cases be construed as a whole,according to its fair meaning,and not strictly for or against any
Party. All Parties have participated in the preparation of this Agreement and its exhibits and no
presumptions or rules of interpretation based upon the identity of the Party preparing or drafting
this Agreement or its exhibits,or any part thereof,will be applied or invoked.
18. Disputed Claims. It is understood that this Agreement and the Amendment to
Leases constitute a compromise of highly disputed claims, and that neither(a)the consideration
provided for herein,(b)the entry into the Agreement or the Amendment to Leases and
Assignments,nor(c)any recital contained herein,will be construed,interpreted,or admissible as
an admission of liability by or on behalf of any Party hereto,all such liability being expressly
denied.
19. Survival of Covenants and Representations. All covenants, warranties and
representations contained in this Agreement are contractual in nature,are not mere recitals,and
will survive the execution of this Agreement.
20. Miscellaneous.
(a) Governing Law. This Agreement is and will be governed by the laws of
the State of Colorado.
(b) Severability. In the event that a court of competent jurisdiction enters a
final judgment or decision holding invalid any nonmaterial provision of this Agreement,the
remainder of this Agreement will be fully enforceable.
(c) Counterparts. This Agreement may be executed in counterparts,all of
which will have full force and effect between Noble and each individual Royalty Owner that has
executed the Agreement, subject to all conditions precedent and subsequent set forth herein.
(d) Facsimile Signatures. Facsimile signatures and counterparts will be
considered as originals and as one and the same instrument,except that Noble must receive
original signatures for this Agreement,the Release and the Amendment to Leases from each of
the Royalty Owners prior to the release of that Royalty Owner's share of the escrowed
Settlement Funds.
(e) Integration. This Agreement, its exhibits,and the Settlement Allocation
Letter constitute the entire agreement of the Parties and a complete merger of all prior
negotiations and agreements.
-9 -
(t) Modification. This Agreement and its exhibits shall not be modified
except in writing signed by the Parties or their authorized representatives against whom such
modification is sought to be enforced.
(g) Headings. The headings of paragraphs herein are intended solely for the
convenience of reference and will not control the meaning or interpretation of any of the
provisions of this Agreement.
(h) Gender and Number. Whenever applicable,the pronouns designating the
feminine, masculine and neuter will equally apply to the feminine,masculine and neuter genders;
the singular will include the plural and the plural will include the singular.
(i) Subsequent Agreements. The Parties to this Agreement agree that,upon
the reasonable request of any other Party,he,she,they or it will execute,acknowledge and
deliver any additional instruments or documents that may be required to carry out the intentions
of this Agreement, including such instruments as may be required by the laws of any jurisdiction,
now in effect or hereinafter enacted,which may affect the property rights of the Patties as
between them or others with respect to the rights and obligations created by this Agreement.
(j) Parties to Bear Own Costs. Noble shall bear its own costs, expenses,and
attorney's fees incurred in connection with the Davis Civil Action,the Ace Royalties Civil
Action,this settlement,and performance of the obligations imposed hereunder. The Royalty
Owners shall bear their own costs, expenses,and attorney's fees incurred in connection with the
Davis Civil Action,the Ace Royalties Civil Action,this settlement and performance of the
obligations imposed hereunder,
NOBLE ENER PRODUCTI N,INC.
By:
Name: -rp d gvo ivl
Title: VP- NAY Yf Rej 10r)
NOBLE ENERG ,INC.
By:
Name: T gY0LDY1
Title: l - Mor-ht; ea q ibn
- 10-
STATE Or )Ior't-L )
� ' ) ss.
COUNTY OF rbu.r u�ir ) y�
The pregoin instrument was acknowledged before me this��day
Energy
2007,by I.e.d. ,as►I... :le ,d ,tivF —
Production,Inc.,a onM4 (l-e.eeraAm• `H";tJ&1441/414"sue'"-
Witness my hand and official seal.
I Notary Putlic
MELISSA K.MELLETT
NOTARY PUBLIC My commission expires: 7 'l'1'—
nl
STATE OF COLORADO
STATE OF flot CN'ttA , )
) ss.
COUNTY OF 1J1.6O-e r ) y y�
The.�foregoing instrument was acknowledged before me this}�' day ofi ,
2007,by 1 e d'JrraHN1 , as'f�e rpesdeaQ-ag'4&a of Noble Energy,In .,a
is er4.4
Witness my hand and official seal.
i -I \jert-Sh:626.1"") (1/4-YY\Ja9-MELISSA K.MELLETT
Notary Pub is
NOTARY PUBLIC My commission expires: —I' -1'oZD\,\
STATE OF COLORADO
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
- 11 -
WELD COUNTY BOARD OF COMMISSIONERS
By:
Name:
Title:
STATE OF
) ss.
COUNTY OF
The foregoing instrument was acknowledged before me this_day of , 2007,by
as of Weld County Board of
Commissioners,a
Witness my hand and official seal.
My commission expires:
Notary Public
Name:
Address:
[seal]
- 319 -
/ i RELEASE
This ' ASE is entered i a by Weld County Board of Commissioners(the "Releasing
Party" . w• ch is a party to th- vil action referred to as Ace Royalties, LLC, et al. v. Noble
er , , nc., - - `o. 05-CV-5633, pending in the District Court for the City and County
of .-nver, Col• ado (the "Civil Action"). The Releasing Party is also a party to a Settlement
Agree -nt ente ed into with Noble Energy, Inc. and Noble Energy Production, Inc.
(collectiv. , " .b (t - "Settlement Agreement"). All of the terms and conditions of the
Settlement :r a ent . in..rporated herein by reference, and the Releasing Party agrees to be
bound by the .
1. For ..od and va . .ble consideration, including without limitation the Settlement
Agreement, the recei' .nd suffice cy of which is hereby acknowledged, the Releasing Party,
for himself, herself, itse r themse es and his,her,its, or their heirs, agents, officers,directors,
joint venturers, partners, •embe le epr ntatives, successors and assigns, fully and
forever releases and dischar.-s o , and its ficers, directors, employees, attorneys, agents,
parents, subsidiaries, affiliat. , nsurers, predecessors,/successors and assigns and all
non-operating working interest o rs (with regard to these properties and/or property interests
as to which Noble pays, or has pai., attics and/ overriding royalties on behalf of such non-
operating working interest owners t. t e Re sing Party) (hereinafter "Noble's Additional
Released Parties"), from any and all 1 ' s, demands obligations, actions, liabilities and
damages of every kind and nature what .ever, (inc .. -: .r • . .ims, demands, obligations,
actions, liabilities and damages which may ave -. sen or be base upon facts which occurred
while the Releasing Party's predecessors, whe •er known or unk own, owned the Leases and/or
Assignments in whole or in part)whether foresee or unfores-- ,whether known or un n,in
law or in equity, which the Releasing Party may ow - •e a s.a. ,.on any act omission
arising from the calculation, payment and reporting o al '-s or overri.•ng ro ies for natural
gas and associated liquid hydrocarbons (excluding oil o. . er liquid hyd o ons recovered by
mechanical separators at or near the wellhead and befo the natural s and liquids are both
measured for volume and sampled for Btu content) produc.. and d by Noble pursuant to the
Leases and Assignments prior to July 1, 2007 ("Settled C : . ' without regard to present
actual knowledge of any such acts or omissions, that were al -•ed or which could have been
alleged in the Civil Action or which in any way relate to the prop• .ayment of Royalties (as that
term is defined in the Settlement Agreement) to the Releasing Party •rior to July 1, 2007, except
for claims limited to mathematical or calculation errors in determini volumes, price, value or
decimal interest arising on or after January I, 2007 and except for t - rights and obligations
created by the Settlement Agreement. For the purposes of this Release, t "Leases"are defined
as all documents under which Noble,or a non-operating working interest o • er on whose behalf
Noble pays, or has paid, royalties to the Releasing Party, and the Releasi Party have both
owned or now own an interest in natural gas or liquids, including but not limt.-d to leases and
other documents conveying or reserving royalty, to the extent of those mutually o ned interests.
For the purposes of this Release, the "Assignments" are defined as all documents t':t convey or
reserve overriding royalty interests and other documents conveying or reserving .verriding
royalty interests under which both Noble, or a non-operating working interest owner whose
behalf Noble pays, or has paid, royalties to the Releasing Party, and the Releasing P. have
both owned or own an interest.
#785714
2. The Releasing Party represents, covenants and warrants (i) that he, she, it or they
is/are the sole owner(s) of the Settled Claims, including any portion of the Settled Claims which
may have arisen while any predecessor, known or unknown, owned the Leases and/or
Assignments, in whole or in part, that he, she, it or they is/are releasing, (ii)that no portion of, or
interest in, such Settled Claims has been sold, assigned, transferred, pledged or hypothecated to
any other person or entity, and that there are no persons or entities having any rights of
subrogation or substitution with respect to such Settled Claims, and (iii) that no other person or
entity is entitled to assert any Settled Claims arising by, through, or under the interest of the
Releasing Party or his, her, their or its predecessors, which are related to the subject matter of
either the Civil Action or which could have been asserted therein.
3. The Releasing Party, for himself, herself, itself, or themselves and his, her, its, or
their officers, directors, joint venturers, partners, members, heirs, legal representatives,
successors and assigns,covenant and agree that they will not commence, participate in,prosecute
or cause to be commenced or prosecuted against Noble and/or Noble's Additional Released
Parties, any action or other proceeding based upon any of the Settled Claims released by the
Releasing Party.
4. The Releasing Party agrees to indemnify, defend and hold harmless Noble and
Noble's Additional Released Parties from and against any and all actions, causes of action,
claims and demands, including but not limited to litigation expenses, costs and reasonable
attorney fees, that Noble and/or Noble's Additional Released Parties may sustain by reason of
any breach of the releases, covenants not to sue, or warranties set forth in this Release. In this
respect, such releases, covenants and warranties may be pleaded as a defense or by way of
counterclaim,third-party complaint, or cross-claim. The covenants not to sue will be specifically
enforceable and the Releasing Party agrees that any breach thereof will cause irreparable harm
justifying injunctive relief.
5. Nothing herein or in the Settlement Agreement shall operate or be construed to
release any claims the Releasing Party may have against any person or entity who is not a party
thereto,except for Noble's Additional Released Parties.
6. The Releasing Party represents that he, she or it has not received, and does not
anticipate receiving, a payment as the result of the settlement of the civil actions styled as Jack
Holman, et at. v. Noble Energy Production, Inc., et al., Case No.03-CV-9, Weld County,
Colorado District Court and as Wardell Family Partnership, et al. v. Noble Energy, Inc., et al.,
Case No. 06-CV-734, Weld County, Colorado District Court. Each Releasing Party covenants
that, in the event he, she or it receives a payment check relating to the settlement of the civil
actions described in the preceding sentence, he, she or it will not cash that check but will,
instead, immediately mail it to the Releasing Party's counsel and will direct counsel to mail the
check to Noble's counsel.
Each person signing this Release on behalf of a Releasing Party represents and warrants
that such signatory has the full and complete power, authority and capacity to execute and
deliver this Release, that all formalities necessary to authorize execution of this Release so as to
bind the principal, limited liability company, trust, partnership or corporation have been
2
undertaken and that this Release will constitute the valid and legally binding obligation of the
Releasing Party,enforceable by and against that Releasing Party in accordance with its terms.
DONE THIS DAY OF , 2007
RELEASING PARTY
WELD COUNTY BOARD OF COMMISSIONERS
By:
Name:
Title:
ACKNOWLEDGMENTS
STATE OF
) ss.
COUNTY OF
The foregoing instrument was acknowledged before me this day of
2007,by , as of Weld County
Board of Commissioners, a
Witness my hand and official seal.
My commission expires:
Notary Public
Name:
Address:
[seal)
3
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3534181 02/08/2008 02:50P Weld County, CO 1 of 12 R 61.00 0 0.00 Steve Moreno Cler rder
181 AMENDMENT ' LEASES " ASSIGNMENTS
This Amendment of - es and Assignments is tered into effective July I, 2007,
ong each of the 'eel owner(s)("Royalty Own- ,<)")and Noble Energy Production,
t, ("Lessee"),a s ration,with an address of .25 Broadway.Suite 2000,Denver,
Co redo 802".
Royalty a• - owns a royalty interest in the lease(s)described in Exhibit I and
may own ' er oil and : lease(s)under which both Lessee and Royalty Owner own an interest
on or befo • uly 1,20 n whether or not such lease(s)are described on Exhibit I ("Lease(s)")or
Royalty a . ' -. an overriding royalty interest in the Lease(s)created under the terms of the
assignment '-'• ,>' on the +'=' bit I and may own other interests under other
assignment(s) f' ending yalty • oth documents under which both Lessee and Royalty
Owner own an int on .r before 1, 007,whether or not such assignment(s)or other
documents are descri'- on 'bit I("Assignments)").
B. The parties - agreed to am ,e Lease(s)and Assignments)to clarify the
valuation of the royalty share' e production b "• e to such Lease(s)and Assigmnent(s).
For good and valuable '• :ideation, th- receipt sufficiency of which is hereby
acknowledged, Royalty Owner Lessee berth amend Lease(s)
and follows:
For production occurring on and .y�,• July 1 007 and continuing for the life of this
Lease or Assignment,as set forth below, "f*- :i calculate y Royalty Owner's royalty
on natural gas and liquids(as defined below less the Ro Owner's ty share of all
production,severance,ad valorem,cowman and other appli a:
1. For the purposes of this Amendm t to s)and Assignment(s),the following
definitions shall apply:
(a) "Greater Wattenberg Area"m A s,Boulder,Broomfield,Larimer,
and Weld Counties,Colorado.
(b) "Initial Measuranent Pont means, to given well or group of wells,
the initial point at which gas production from the well or : ' . of wells is both measured for
volume and sampled for Bat content.
(c) "Mainline Transmission Inlet"means the . 'int
entered a Mainline Transmission Pipeline.
(d) "Mainline Transmission Pipelines"means the _'- ,;_,,eta natural
transmission pipelines located downstream of plants located in the Great Wattenberg
to treat and/or process Natural Gas and Liquids produced from or ' .'t to the - :;•s)and
Assignment(s),including the natural gas transmission pipelines owned or '.'- .'.' by Colorado
Interstate Gas Company and Public Service Company of Colorado at the tim "s Amendment to
Leases and Assignments is signed. A Mainline Transmission Pipeline man_ Rest• sas
after processing.
(e) "Natural Gas and Liquids" means natural gas and/or ::'' 'ated liquid
hydrocarbons,but does not include oil, condensate or other liquid hydrocarbons wired
mechanical separators at or near the wellhead and before the natural gas and ":ted r
hydrocarbons are both measured for volume and sampled for Btu content.
(f) "Natural Gas Liquids"means liquid hydrocarbons associated with ' tural
gas and separated from the gas stream at a processing plant in the Greater Wattenberg but
does not include oil, condensate or other liquid hydrocarbons recovered by m 'cal
separators at or near the wellhead.
(g) "Natural Gas Liquids Pipeline or Storage Tank" means the pi'
located immediately downstream of plants located in the Greater Wattenberg Area used to treat
or process natural gas produced from or pursuant to the I rases)and Assignment(s),which is
used to transport Natural Gas Liquids,or the storage tank into which Natural Gas Liquids are
6786288.1
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2 of 12 ft 61.00 D 0.00 Steve Moreno Clerk& Recorder
placed for storage and/or transportation after separation from the gas stream at a processing plant
in the Greater Wattenberg Area.
(h) "Other Working Interest Owner(s)"means owner(s)of a working interest
in the Lease(s)for whom Lessee sells or markets Natural Gas and Liquids and/or pays Royalties.
(i) "Post-Wellhead Expenses"means the actual expenses incurred by Lessee
(1)in the case of the gas component of production,to transport,process and treat gas from the
Initial Measurement Point until that gas component has been converted to Residue Gas and
entered the Mainline Transmission Pipeline at the Mainline Transmission Inlet, and(ii)in the
case of the Natural Gas Liquids component of production, to transport, process and treat the
Natural Gas Liquids entrained in the gas stream until Natural Gas Liquids are produced at a
processing plant located in the Greater Wallenberg Area and placed in a Natural Gas Liquids
Pipeline or Storage Tank. Post-Wellhead Expenses include all costs of gathering,compression,
dehydration, transportation, processing, removal of liquid or gaseous substances or impurities
from the affected production and all losses of produced volumes whether by use as fuel,line loss,
flaring, venting retention by a provider of Post-Wellhead Services, or otherwise incurred
between the Initial Measurement Point to the Mainline Transmission Inlet and the Natural Gas
Liquids Pipelines or Storage Tank,tespeutively,provided that Post-Wellhead Expenses shall not
include costs of fractionation for purposes of calculating Royalties under this Amendment to
Leases and Assignments.
(j) "Post-Wellhead Services" means the services obtained and/or facilities
utilized when Post-Wellhead Expenses are incurred.
(k) "Residue Gas"means natural gas that has been processed at a plant in the
Greater Wattenberg Area and has entered and is ready for transport in a Mainline Transmission
Pipeline.
(1) "Royalty"or"Royalties"means royalty and overriding royalty interests in
Natural Gas and Liquids.
2. For the Natural Gas and Liquids produced from the lands covered by the Lease(s)
or Assignment(s) or leases and lands pooled or unitized therewith and after July 1, 2007, at
7:00 am. local time, the Lessee (and its successors)in the ordinary course of business shall,
when calculating Royalties due to the Royalty Owner(s)(and his,her,their or its successors),
apply the following provisions relative to its deduction of Post-Wellhead Expenses:
(a) )rifts percent (50%1 deduction. When calculating Royalties due to the
Royalty Owner(s)and his,her,their or its successors pursuant to the Lease(s)or Assignment(s),
Lessee will cease deducting one hundred percent of Post-Wellhead Expenses and will,instead,
deduct only fifty percent (50%) of the Post-Wellhead Expenses actually incurred, directly or
indirectly, by Lessee. A further description of how this calculation will be made is provided
below.
(i) Post-Wellhead Services Paid for in Money.When any provider of
Post-Wellhead Services charges monies, directly or indirectly, to Lessee for such services,
Lessee shall include and only deduct 50%of the monies paid or to be paid by Lessee to the
provider of Post-Wellhead Services when calculating Royalties due to the Royalty Owne(s).
For example,if Company A charges Lessee 510,000 for gathering services,then Lessee will only
deduct$5,000 for those gathering services in calculating Royalties on the production to which
the gathering services pertain.
(ii) Percentage-of-Proceeds Arrangements. When any provider of Post-
Wellhead Services retains a percentage of the provider's sale proceeds as compensation for Post-
Wellhead Services and returns a percentage of the provider's sale proceeds to Lessee, then
Lessee will, in addition to paying Royalties on the sale proceeds returned to Lessee,also pay
Royalties on 50%of the amount of sale proceeds retained by the provider of such Post-Wellhead
Services.The amount of sale proceeds retained by the provider shall be measured and accounted
for at the same unit price used by the provider to determine Lessee's sale proceeds for Residue
Gas at the Mainline Transmission Inlet and for Natural Gas Liquids at the Natural Gas Liquids
Pipeline or Storage Tank. This type of arrangement includes, without limitation, wellhead
percentage-of-proceeds sale contracts under which another person or entity takes title to Lessee's
2
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Natural Gas and Liquids at or near the wellhead, gathers and processes the Natural Gas and
Liquids,sells the resulting Residue Gas and Natural Gas Liquids,retains a percentage of the sale
proceeds, and pays a percentage of the sale proceeds to Lessee. For example,if Company B
gathers and processes Natural Gas and Liquids and retains 10%of the sale proceeds thereof and
pays 90%of the sale proceeds to Lessee,then Lessee will,in addition to paying Royalties on
90%of the sale proceeds it receives,also pay Royalties on 50%of the sale proceeds retained by
Company B,i.e.,pay Royalties on a total of 95%of the sale proceeds.
(iii) Arrangements Involving Retained Volumes. When any provider
of Post-Wellhead Services receives or retains Residue Gas and/or Natural Gas Liquids volumes
in exchange for Post-Wellhead Services,then Lessee will pay additional Royalties based
on 50%
of the value of the Residue Gas and Natural Gas Liquids received or retained by the provider.
The value of the Residue Gas and Natural Gas Liquids received or retained by the provider will
be calculated by multiplying the same unit price received by Lessee for the remaining Residue
Gas at the Mainline Transmission Inlet and for the remaining Natural Gas Liquids at the Natural
Gas Liquids Pipeline or Storage Tank times the volume of Residue Gas(MMBtu)and Natural
Gas Liquids(gallons)received or retained by the service provider. For example,ifs
y C
provides gathering and processing services to Lessee and, as a gathering and processing fee,
retains twenty-six percent (26%) of the Residue Gas and Natural Gas Liquids volumes
attributable to the gas gathered and processed by Company C and returns seventy-four percent
(74%) of the Residue Gas and Natural Gas Liquids volumes to Lessee, then Lessee will, in
addition to paying royalties on the Residue Gas and Natural Gas Liquids returned to Lessee,also
pay royalties on 50% of the value of the Residue Gas and Natural Gas Liquids received or
retained by Company C.
(iv) Fueused and rovider of Post-Wellhead Services as fueer Lost Volumes. Post-Wellhead l all other
incurred
by Lessee shall include gas by a provider
losses of production volumes(whether through the use of gas or liquids as fuel;through line loss,
flaring or venting;or through the retention of drips by the provider,or whether otherwise lost or
unaccounted for)incurred between the Initial Measurement Point and the Mainline Transmission
Inlet with respect to Residue Gas and the Natural Gas Liquids Pipeline or Storage Tank with
respect to Natural Gas Liquids("Fuel and Other Lost Volumes").Lessee shall pay Royalties on
50% of the value of the Fuel and Other lost Volumes measured and accounted for by the
average price paid to Lessee for Residue Gas at the Mainline Transmission Inlet per MMBtu
during that same period.
(v) Services Provided by Lessee. If Post-Wellhead Services are
provided by Lessee itself,then Lessee may deduct 50%of Lessee's actual,direct costs for such
services or facilities, all of which costs must be reasonable. Such costs shall not include any
overhead,profit,or return on investment.
(vi) Other Arrangements.The Parties recognize that there are a variety
of arrangements that have been made,or may be made in the future,for the provision of Post-
Wellhead Services. Regardless of the particular arrangement,when calculating Royalties due to
the Royalty Owner(s) and their successors, Lessee will
implement
that Lessee deducts only
such
Royalty
accounting
0
procedures and methodologies as may be necessary to the Post-Wellhead Expenses it incurs,including(a)deducting only 50%of any monies
directly or indirectly, by providers of Post-Wellhead Soviets, and (b)paying
Royalties based on 50%of the value of all Natural Gas and Liquids retained,used,consumed,
lost, or unaccounted for by providers of Post-Wellhead Services. It is agreed that Lessee's
contracts and other arrangements for obtaining Post-Wellhead Aces isting on when calculating
or fre
February 15, 2007, so long as they remain in effect,properly be used
Royalties due to Royalty Owner(s), subject to the limitation on the portion of Post-Wellhead
Expenses that may be deducted when calculating Royalties from and after July 1, 2007 as
provided for in this paragraph 2.
(vii) Application. Subparagraphs(1)through(vi) apply as appropriate
to Lessee's Post-Wellhead Expenses,including by applying these provisions to various portions
(e.g., fee-based portions and percentage of proceeds portions) of Lessee's contracts for Post-
Wellhead Services.
(b) No Other Modification of Leases) and Assirmmet(s). The revised
method of calculating Royalties set forth in this paragraph 2 does not affect the provisions of the
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Lease(s)and Assignment(s),if any,relating to any rights Lessee may have to the use,including
free use,of gas produced from the Lease(s)or pursuant to the Assignment(s), the payment or
nonpayment of Royalties on any gas used by Lessee on the lease for well operations,or any other
provision of the Lease(s)except to the extent necessary to conform the Royalty payments due to
the Royalty Owner(s)to the calculation methods set forth in this paragraph 2. This Amendment
to Leases and Assignments also has no impact on the respective responsibilities of the Parties for
production,severance,ad valorern,conservation,or any other applicable taxes.
(a) Impact on Division Orders and Other inahumenta. This Amendment to
Leases and Assignments describes the allocation of Post-Wellhead Expenses between Lessee and
the Royalty Owner(s),but does not supersede or nullify any division order,pooling agreement or
unitization agreement now in existence or executed hereafter,except to the extent that the terms
of such instruments conflict with the Amendment to Leases and Assignments,in which case the
terms of the Amendment to Leases and Assignments shall prevail.
(d) Working Interest Royalty Payments. In addition to Royalties calculated
and paid by Lessee in satisfaction of its own Royalty obligations under the Lease(s) and
Assignment(s),the method for calculating and paying Royalties set forth in this paragraph 2,also
shall apply to Lessee's calculation and payment of the Royalties that it distributes on behalf of
Other Working Interest Owner(s). If any Other Working Interest Owner commences paying
Royalties on its own share of production from any well subject to a Lease or Assignment,and it
fails to comply with the provisions of this paragraph 2,nothing in this Amendment to Leases and
Assignments shall preclude Royalty Owner(s) from pursuing any remedy against such Other
Working Interest Owner with respect to its payment of Royalties.
(e) Limits on Deductions. Lessee shall not make any deductions for expenses
incurred prior to the Initial Measurement Point or any administrative or other costs Lessee incurs
in making arrangements for Post-Wellhead Services,nor shall Lessee make any deductions for
any operations or facilities that are used to produce Natural Gas and Liquids and/or deliver the
Natural Gas and Liquids to the inlet of a gathering system,including well facilities,flow lines,
field separators, field dehydrators, and all other operations, activities, and equipment on the
lease.
(f) If Residue Gas or Natural Gas Liquids are sold downstream of the
Mainline Transmission Inlet and Natural Gas Liquids Pipeline or Storage Tank,respectively,any
costs incurred by Lessee after the Residue Gas enters the Mainline Transmission Inlet or the
Natural Gas Liquids enter the Natural Gas Liquids Pipeline or Storage Tank shall not be treated
as or deemed to be Post-Wellhead Expenses, and nothing in this Agreement shall preclude the
deduction of such costs in their entirety from Royalty payments to the Royalty Owner(s). It is
agreed that Lessee may deduct when calculating Royalties the entire reasonable costs incurred by
Lessee to fractionate Natural Gas Liquids into separate, distinct products (e.g., into Propane,
Butane, Natural Gasoline)and/or to transport Natural Gas Liquids to a location outside of the
Greater Watte nberg Area for fractionation and/or sale.
(g) Nothing herein shall be construed to provide, imply or suggest that the
Post-Wellhead Expenses and other costs Lessee is allowed under this Amendment to Lease(s)
and Assignments)to deduct when calculating Royalties will be borne in their entirety by the
Royalty Owner(s). Instead,it is understood that Lessee's deductions will be calculated on an
8/8ths basis for any given well and that a Royalty Owner(s)'s share of the deductions allowed
hereunder will only be a proportionate share based on his decimal revenue interest in the well.
GENERAL PROVISIONS:
3. The royalty calculation method set forth in paragraph 2 above shall be a covenant
that runs with the land and be binding on the Royalty Owner(s)and Lessee and their successors
and assigns. This Amendment to leases and Assignments shall not be interpreted or construed
as preventing or limiting Lessee's ability,at its sole discretion and without notice to the Royalty
Owne(s), to enter into new contracts for Post-Wellhead Services, including gathering,
transportation,processing or marketing arrangements relating to the Leases and Assignments,or
to modify existing gathering, transportation,processing or marketing arrangements relating to
the Lease(s) and Assignment(s),provided,however, that the obligations of Lessee under this
Amendment to Leases and Assignments will continue. This Amendment to Leases and
Assignments shall apply only to the undivided interest owned by Lessee or any Other Working
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Interest Owner,for whom Lessee is paying Royalties with regard to such undivided interest,in
each Lease and Assignment or any interest subsequently acquired by Lessee or Royalty
Owner(s)under each Lease and Assignment
4. Authority and Capacity to Execute. Each person signing this Amendment to
Leases and Assignments on behalf of a Royalty Owner or Lessee represents and warrants that
such signatory has the right to amend the Leases or Assignments as set forth herein and the fill
and complete power, authority and capacity to execute and deliver this Amendment to Leases
and Assignments, that all formalities necessary to authorize execution of this Amendment to
Leases and Assignments so as to bind the principal,limited liability company,oust,partnership
or corporation have been undertaken, and this Amendment to Leases and Assignments will
constitute the valid and legally binding obligation of each such Royalty Owner and Lessee
hereto,enforceable by and against that Royalty Owner and Lessee in accordance with its terms.
Amended and effective this Ist day of July,2007.
NOBLE ENERGY PRODUCTION,INC.
By: (rInji
Name.
Title: _ - ---- . .
WELD COUNTY BOARD OF
COMMISSIONERS
By: t
Name: -1).
Tide: tWR rv,ryvi
5
111111111111111111111111 IIII IIII 1111111 III 11111 IIII lilt
3534181 02/08/2008 02:50P Weld County, CO
6 of 12 R 61.00 D 0.00 Steve Moreno Clerk&Recorder
ACKNOWLEDGMENTS
STATE OF COLORADO )
ss.
COUNTY OF DENVER )
The foregoing.instnnnent was acknowledged before me thi Y o
201 it.4t witty,attorney-m-fact for A Noble Energy
Production,Inc,on behalf of such corporation.
Witness my hand and official seal.
My commission expires: —] •n.a OI
NOTARY c� NotarYYllblic
• „r Name: Melissa Mellen
Address: 1625 Broadway
[seal]
Denver, CO 80202 STATE OF io I aCrnel a )
COUNTY OF 4J-t )
The • 'r;::::;:._ was acknowledged before me thisAAf day of l]g.ccM'
2007,by ad as G1\n i-rn a1 s1 of Weld County
Board of . • ;* a _ __`i: • - ��h2_ GA crYolA.
.1, NOT. yy • : ►- - •v•v;ir-N l -iE-
Witness; y offict. •
My commission -.UBLtC:'.
OFFOC.. : /�y � _1 f
MvCanmissiorExoiesMavt9.2009 !J aiz 4 0 i1
N. L blc
Addres .
[seal]
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