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Home My WebLink About20071119.tiff Message Page 1 of 1 King, James From: Mayo, Joel A. Sent: Tuesday, February 06, 2007 2:22 PM To: 'Frazier, Sheila S.' Cc: King, James; 'vecchiassociates@comcast.net'; 'eric.reckentine@lafarge-na.com' Subject: Lafarge/ Riverbend Sheila, Attached please find a redlined copy of the proposed Compatible Development and Surface Use Agreement containing our comments to your original, and a clean copy of the same as revised. Please review and contact me at your earliest opportunity with Encana's approval or comments. Also, due to the fact that the surface use agreement will be delivered to the county, could you please let me know by reply to this e-mail if the shut-in rates as set out in the agreement are confidential in any way. Please be advised that Lafarge has yet to review the attached version of the agreement and, therefore, the same is subject to their comments, revision or approval. Should further changes be indicated by Lafarge, I will let you know immediately. Thanks. My aio ! Web site ! v-card T 303.764.4108 Joel Mayo F 303.861.7805 jmayo@bakerlaw.com www.bakerlaw.com Baker&Hostetler LLP 303 East 17th Avenue Suite 1100 Denver, Colorado 80203-1264 Baker Hostetler EXHIBIT 2007-1119 lkmb(SC th259,. 2/6/2007 • DRAFT OF CSDUA 42/3406/07 COMPATIBLE DEVELOPMENT AND SURFACE USE AGREEMENT This Agreement ("Agreement") is effective this day of February, 2007, and is by and between EnCana Oil & Gas (USA) Inc. (hereinafter referred to as "ENCANA") with an address of 370 17th Street, Suite 1700, Denver, Colorado 80202, and Lafarge West, Inc., ("Lafarge") with an address of 10170 Church Ranch Way, Suite 200, Westminster, Colorado 80021. RECITALS: A. Lafarge is the current landowner or current lessee, as the case may be, under one or more sand, gravel and aggregate mining leases that cover those certain tracts of land more particularly described on Exhibit A attached hereto, located in Weld County, Colorado, and hereinafter referred to collectively as the "Property." B. Surface ownership of the Property is subject to the rights of the oil and gas mineral leasehold estate in which ENCANA currently owns interests. C. Lafarge has a mining permit from the State of Colorado, Division of Reclamation, Mining and Safety ("DRMS"), to extract sand and gravel from the Property and identified as Riverbend. Further, following the mining and reclamation of portions of the Property, Lafarge plans to use —. portions of the Property for water storage reservoirs. D. Lafarge plans to mine the Property in two phases: the portions of the Property included in each phase are identified as Phase 1 and Phase 2 on Exhibit B and referred to hereinafter as the "Phase 1 Property" and the "Phase 2 Property," respectively. E. ENCANA has a-leasehold interests in the NW/4 of Section 19, Township 1 North, Range 66 West, Weld County, Colorado, which, with respect to the Phase I Property,1 Property, and the SW/4 of Section 7,, Township_1 Not] 66 West Weld County, Colorado. with respect to the Phase 2 Property, each of which interests are more specifically depicted on Exhibit B attached hereto, and . ENCANA has the right to develop its oil and gas leasehold estates by drilling future wells on the Property ("Wells"). In addition to the foregoing leasehold interests, ENCANA claims a reversionary right as to certain operating rights currently farmed out to K.P. Kaufman Company Inc within the NW/4 of Section 19 Township 1 North Range 66 West, Weld County. Colorado. F. This Agreement provides for the compatible development of the oil and gas estate and the surface estate and sets forth the rights and obligations of the parties with respect to the development of their respective interests in the Property, including any reversionary interests realized by ENCANA from K.P. Kaufman Company, Inc. as described above,_such rights and obligations to be binding upon the parties and their successors and assigns. Now THEREFORE, In consideration of the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: EXHIBIt I K. 24 DRAFT OF CSDUA 42/3406/07 1. APPLICATION OF THIS AGREEMENT TO THE PHASE 1 PROPERTY AND PHASE 2 PROPERTY. At the time the parties entered into this Agreement, Lafarge had specific plans for the development of only the Phase 1 Property. For this reason, the plats attached to this Agreement show locations for Existing Wells, Futurefuture Wells, production facility locations and access routes and pipeline easements for only the Phase 1 Property. The parties agree that the terms in this Agreement shall apply to both the Phase 1 Property and the Phase 2 Property, and they shall enter into an amendment to this Agreement within one (1) year from the effective date, which amendment shall identify the locations for Oil and Gas Operations Areas, Production Facility Locations, Pipelines, Petroleum Pipeline Easements (all as hereinafter defined) and access routes for the Phase 2 Property. The amendment shall provide for, among other things, areas that are comparable in size and configuration to those described herein for the Phase 1 Property and also for the paymentreimbursement by Lafarge of actual incremental directional drilling costs incurred bANA for drilling windows that ENCANA relinquishes for the Phase 2 Property in an amount that is comparable to those outlined in the letter agreement between the parties referred to herein in section 21, but which amount shall be increased on January 1 of each year beginning on January 31, 2008, with such adjustment to be in accordance with the corresponding percentage increase in the Consumer Price Index published by the U.S. Department of Labor Bureau of Labor Statistics for the Denver Boulder Greeley Metropolitan Area. The amendment shall incorporate exhibits for the Phase 2 Property comparable to Exhibit B for the Phase 1 Property. Lafarge covenants and agrees that it will not commence extraction or processing operations on any portion of the Phase 2 Property until the parties have reached an agreement regarding surface use for the Phase 2 Property. 2. REPRESENTATION AND WARRANTY REGARDING AUTHORITY TO BIND OWNERS OF THE PROPERTY. Lafarge represents and warrants that it has the right and authority to enter into this Agreement on behalf of and to bind each and every person or entity which owns an interest in the surface estate for all or any portion the Phase 1 Property with respect to all of the terms, provisions and conditions in this Agreement, including, but not limited to, all of the waivers, consents and covenants included in sections 3.d., 4.e., 5.e., 5.m., 12 and 26.25. Lafarge covenants and agrees that, as a condition precedent for commencing operations on the Phase 2 Property, Lafarge shall obtain any such authority, waivers or consents from all owners of interests in the surface estate of the Phase 2 Property within the time for completing the supplementation of this Agreement pursuant to section 1. 3. AREAS RESERVED FOR THE XISTIN^v �x�ELLS :,-.D �,TURE WELLS; WELL LOCATIONS. a. Lafarge shall set aside and provide to ENCANA those portions of the Property hereinafter referred to as the "Oil and Gas Operations Areas," such areas as to Phase 1 being -� depicted on the attached Exhibit B which are locations for Ffuture Wells as well as related Production Facilities (as hereinafter defined). The Oil and Gas Operations Areas shall be made -2- • DRAFT OF CSDUA 42/3406/07 available to ENCANA in their present condition for all operations conducted by ENCANA in connection with any Well, including, but not limited to, drilling and production activities, workovers, well deepenings, recompletions, fracturing and the drilling of twinned and replacement wells. The Oil and Gas Operations Areas shall include the areas shown on Exhibit B which are generally in the shape of a circle with a radius of 150 feet, except as otherwise reflected in the Exhibits. b. ENCANA shall also have the right to locate, build, repair and maintain tanks, separators, dehydrators, compressors and all other associated oil and gas drilling and production equipment and facilities within the Oil and Gas Operations Areas. c. ENCANA shall have the right to drill Future Wells and multiple Wells within the Oil and Gas Operations Areas, including horizontal and directional wells that produce in whole or in part from the Property. d. As part of the consideration for this Agreement, Lafarge hereby waives its right to, and covenants that it will not protest or object to, any exception location or application to drill, redrill, deepen or recomplete any Well on the Property, so long as the Well is located within an Oil and Gas Operations Area. e. ENCANA shall drill Future Wells as close to the center of the Oil and Gas Operations Area as is practicable, given the location of other Wells within the Oil and Gas Operations Area, geologic, regulatory and technical concerns, and any segregation of ownership of the oil and gas horizons, among other things. Lafarge shall not stockpile mined materials within a radius of 150 feet from Eexisting Wells. 4. EXTRACTION OF SAND AND GRAVEL IN VICINITY OF OIL AND GAS OPERATIONS AREAS; SETBACK REQUIREMENTS. Lafarge reserves the option to mine the gravel within the Oil and Gas Operations Areas in accordance with the terms of this section 4. a. In the event that Lafarge elects to mine the gravel within an Oil and Gas Operations Area, Lafarge shall notify ENCANA in writing sixty (60) days prior to commencing mining operations within the Oil and Gas Operations Area and shall place temporary concrete barriers around theany Eexisting Wells, as directed by ENCANA, prior to the commencement of mining operations. b. In the event that Lafarge elects to mine gravel within an Oil and Gas Operations Area with no Eexisting Well, Lafarge shall conduct and complete its mining operations within the Oil and Gas Operations Area as quickly as is reasonably practicable. In the event that ENCANA intends to drill a Well within the Oil and Gas Operations Area, it shall give written notice to Lafarge and meet at the site with Lafarge, as required by Colorado Oil and Gas Conservation Commission ("COGCC") rules and regulations, and the parties shall coordinate mining operations with oil and gas operations; provided, however, ENCANA shall have priority to conduct oil and gas operations within the Oil and Gas Operations Area such that it may require Lafarge to temporarily cease mining operations or adjust the timing and location of such -3- DRAFT OF CSDUA 42/3406/07 operations within the Oil and Gas Operations Area as necessary or convenient to conduct oil and gas operations in a safe and efficient manner. c. In the event that Lafarge elects to mine gravel within an Oil and Gas Operations Area with an €existing Well or Wells, Lafarge shall conduct mining operations within the Oil and Gas Operations Area by excavating pie shaped wedges of gravel and aggregate and thereafter backfilling and compacting the area with overburden or other suitable material prior to excavating the next pie shaped area; provided, however, in no event shall Lafarge mine within ninety (90) feet of an lexisting Well and, provided further, that in no event shall more than one quarter circle segment of the pie shape be excavated at any one time. d. Excavation within the Oil and Gas Operations Areas will be coordinated with ENCANA in a mutually acceptable manner so as to avoid conflict with ENCANA's oil and gas operations and to ensure there is an appropriate safety plan and interim emergency procedures. Lafarge will bear all costs associated with such mining operations, including permanent or temporary rerouting and replacement of access roads, flowlines, and utility lines in order to prevent unnecessary interruption of production from any Well. In addition, Lafarge and its successors and assigns shall defend, indemnify and hold ENCANA harmless from any and all damage, loss and liability, including attorney's fees, incurred by ENCANA as a result of Lafarge's operations within the Oil and Gas Operations Areas and Production Facility Locations (defined below). Upon completion of mining operations, Lafarge shall fill and level the mined areas to create an even grade throughout the Oil and Gas Operations Area and/or Production Facility Location. e. Lafarge will not locate any lot line or any building, structure or other improvement within any Oil and Gas Operations Area or Production Facility Location. Lafarge understands and acknowledges that the COGCC has rules and regulations that apply to the distance between a wellhead and public roads, production facilities, building units and surface property lines, among other things. In order to give full effect to the purposes of this Agreement, Lafarge hereby consents to and waives its right to object to the location of any Wells and Production Facilities on the basis of the setback requirements in the rules and regulations of the COGCC, as they may be amended from time to time. Lafarge further and similarly consents to and waives its right to object to any other state or local setback requirements or other requirements or regulations that are or become inconsistent with this Agreement or that would prohibit or interfere with the rights of ENCANA, its successors and assigns, to explore for and produce the oil and gas in accordance with this Agreement. ENCANA or its successors and assigns may cite the waiver in this section in order to obtain a location exception or variance under COGCC rules or from any other state or local governmental body having jurisdiction; provided, however, Lafarge shall not be required to enlarge the amount of the surface area of an Oil and Gas Operations Area to accommodate the location exception or variance. Lafarge will provide ENCANA, or its successors and assigns, with whatever written support ENCANA may reasonably require to obtain permits from the COGCC or any local jurisdiction and will reasonably cooperate at no material cost to Lafarge in any efforts of ENCANA or its successors and assigns to obtain such permits. -4- DRAFT OF CSDUA 42/3406/07 --- 5. GATHERING LINES AND FLOWLINES. a. Subject to the terms in this Agreement, ENCANA has a continuing right and entitlement to own, operate, maintain, repair and replace all existing and future flowlines, gathering lines and other pipelines that may be necessary or convenient to its operations on the Property ("Pipelines"). Except as may be otherwise agreed upon between the parties, the construction and burying of Pipelines shall be at the sole cost and expense of ENCANA or its gas purchaser. b. Although this Agreement identifies the locations of existing and future pipelines and pipeline easements, nothing herein limits the right of ENCANA to make well connections to Wells at other locations in the event of circumstances due to mining operations, water storage or reservoir operations, topographic matters or any similiar circumstance. c. ENCANA shall have the right to lay Pipelines within the "Petroleum Pipeline Easements" depicted on Exhibit B or at such other locations as may be mutually agreed to in writing by the parties. Except for those portions of the Petroleum Pipeline Easements that are identified on Exhibits B as specifically being more than thirty (30) feet in width, Petroleum Pipeline Easements shall be fifty (50) feet in width for construction, installation and relocation operations and reduced to thirty (30) feet in width for post-construction usage. Flowline easements shall be thirty (30) feet in width for all operations. d. Current development plans for Lafarge require the relocation of certain Pipelines that are currently located on the Phase 1 Property as depicted on Exhibit B and identified as "Petroleum Pipelines to be Abandoned" or "Existing Petroleum Pipeline Easements and Access Roads to be Abandoned" (the "Existing Pipelines") which the parties agree shall be relocated to the locations depicted on Exhibit B and identified as "Petroleum Pipeline Easements and Access Roads." Lafarge shall have the right to make written requests to ENCANA to relocate the lines to be abandoned; provided, however, all costs (including a 15% markup for such costs as compensation for administrative, supervision and overhead costs) of all relocations shall be borne by Lafarge. Lafarge and ENCANA shall enter into a pipeline relocation agreement prior to the relocation of all or any portion of an Existing Pipeline. The parties shall cooperate with each other to implement pipeline relocations and shall not unreasonably interfere with the operations of the other party. ENCANA shall perform the pipeline relocations. e. With respect to the Phase 1 Property, Lafarge represents and warrants that, except as depicted on Exhibit B hereto, the lands on which the Oil and Gas Operations Areas, Petroleum Pipeline Easements and Access Roads are to be located are not lands which have been designated as jurisdictional wetlands by any federal, state or local jurisdiction or any other regulatory authority. With respect to the Phase 2 Property, Lafarge covenants that it will not attempt to place any Access Road, Pipeline Easement or directional drilling site or other Oil and Gas Operations Area requested by Lafarge within any jurisdictional wetland. The foregoing shall not require Lafarge to consent to well drilling sites outside of legal vertical drilling windows. f. Prior to the time that ENCANA commences drilling a Future Well, and in the event that it would be convenient for ENCANA to hook up the Well to an Existing Pipeline which has not at the time been abandoned hereunder, ENCANA and Lafarge shall agree prior to the commencement of drilling operations that ENCANA shall either: i) connect the Well to an -5- DRAFT OF CSDUA 12/3406/07 Existing Pipeline; or ii) install the Pipeline in a Petroleum Pipeline Easement and Access Road, at the option and expense of Lafarge. g. Lafarge's operating plans anticipate that roads may cross over the Pipelines. For any Pipeline now existing or hereafter constructed within a Petroleum Pipeline Easement, Lafarge agrees to abide by the General Guidelines for Design and Construction Activities On or Near Kerr-McGee Gathering LLC and Kerr-McGee Rocky Mountain Corporation Pipelines and Related Facilities revised 3-2004. h. Lafarge shall not disturb the existing cover over Pipelines during Lafarge's operations on the Property, except that: i) when crossing Pipelines with heavy equipment, such as earth moving equipment, Lafarge shall maintain a minimum of four (4) feet and a maximum of six (6) feet of dirt over Pipelines, in addition to the then existing cover over the Pipeline; and ii) when crossing Pipelines with light trucks and equipment, Lafarge shall maintain a minimum of two (2) feet and a maximum of six (6) feet of dirt coverage over the then existing cover over the Pipeline. The depth of cover over Pipelines shall not be reduced or drainage patterns over Pipelines altered without written approval from ENCANA. i. ENCANA may install and maintain markers on the Petroleum Pipeline Easements, and ENCANA shall mark its flowlines at locations as reasonably requested by Lafarge. j. Lafarge will not conduct or cause to be conducted extraction operations of any kind, including sand, gravel and aggregate mining operations, that are within twenty-five (25) feet from a Pipeline unless an engineer licensed in the State of Colorado and with expert r knowledge in the area of soils, opines in a soils stability report, that a setback that is less than twenty-five (25) feet will be sufficient to preserve the integrity of the Pipeline. In such case, upon completion of extraction operations, Lafarge shall backfill and level the area that is within twenty-five (25) feet from the Pipeline. Notwithstanding anything herein to the contrary, Lafarge shall in no event conduct extraction operations closer than fifteen (15) feet from any Pipeline without the prior written approval of ENCANA. k. Lafarge shall not stockpile soil over any Pipeline. 1. Utility crossings shall have a minimum of eighteen (18) inches vertical separation from Pipelines. Parallel utilities shall maintain a minimum of ten (10) feet of separation between the utilities and the Pipelines, unless ENCANA consents to a lesser distance, which consent shall not be unreasonably withheld. For example, it would not be unreasonable to withhold consent because of safety or operational concerns. Lafarge agrees to request all utility companies to contact ENCANA prior to laying lines parallel to Pipelines. m. Lafarge shall not permit the construction of any temporary or permanent buildings, structures or other improvements or facilities within or over the Petroleum Pipeline Easements or the Pipelines. Lafarge shall not plant trees or shrubs over the Petroleum Pipeline Easements and Pipelines. 6. ACCESS. a. Lafarge shall provide ENCANA with continuous access to all Oil and Gas Operations Areas, Production Facility Locations, Petroleum Pipeline Easements and Pipelines at all times. Except for access roads to be built to access Oil and Gas Operations Areas where no wells are located at the time of this Agreement, access roads to be used by ENCANA will either -6- DRAFT OF CSDUA 42/3406/07 ^ be the roads it currently uses or those that Lafarge constructs at its sole cost and expense as relocated roads as part of its development of the Property; provided, however, no access road may be closed by Lafarge until an acceptable replacement access route is available to ENCANA for use. b. Except as may be otherwise provided in subsection 6.a., ENCANA agrees to access the Property and the Oil and Gas Operations Areas along the routes depicted on the Exhibit B. Access to the Oil and Gas Operations Areas may be changed by mutual agreement of Lafarge and ENCANA; provided, however, all costs and expenses of such relocations unless requested by ENCANA shall be borne by Lafarge. c. Lafarge shall maintain and keep access roads that are jointly used by Lafarge and ENCANA in a condition and state of repair that serves the needs of Lafarge or, in the case of relocated existing roads, to at least the standard such road was maintained prior to its relocation, if a more substantial condition. In the event that joint access roads need to be improved in order to serve the needs of ENCANA, the parties agree to cooperate to allow ENCANA to construct the improvements, such improvements to be at the sole cost and expense of ENCANA. Neither ENCANA nor Lafarge shall unreasonably interfere with the use by the other of access roads. d. If Lafarge, as part of the relocation of any existing access road used by ENCANA, moves the point of intersection of such road and any public road or highway, Lafarge shall be responsible for obtaining and shall pay the costs to obtain from Weld County or any municipal authority having jurisdiction over the Property, as necessary, permits or authorization for the replacement access to and from the public road. Each such access location shall be not less than forty (40) feet in width along the public road. e. Construction and Width of Access Roads. 1) ENCANA shall be responsible for construction of its own roads in the locations shown on Exhibit B to Oil and Gas Operations Areas for Future Wells where Lafarge is not constructing roads for its own operations. 2) If Lafarge relocates an existing road being used by ENCANA for access to any Oil and Gas Operations Area, such relocated road shall be built to at least the quality of the road it replaces. 3) Access roads or portions of access roads that are jointly used by ENCANA and Lafarge shall be thirty (30) feet in width. If Lafarge improves or paves such joint- use roads for regular permanent or extended use, Lafarge shall construct or improve them so as to withstand the weight of oilfield equipment. Specifically in such case, Lafarge shall construct the roads so that they can be used to withstand the weight of 110,000 pounds and 28,000 pounds per axle. 4) Access roads or portions of access roads that are used exclusively by ENCANA shall be thirty (30) feet in width, and ENCANA shall install and maintain them to COGCC standards that apply to oil and gas operations. -7- DRAFT OF CSDUA 42/3406/07 f. Lafarge agrees that it will not mine or extract materials from any portion of the access roads identified on Exhibit B, or those access roads that may be otherwise mutually agreed upon by the parties, without the written consent of ENCANA. Lafarge agrees to post and enforce a ten (10) mile per hour speed limit along all stretches of access roads that are jointly used by ENCANA and Lafarge. 7. BATTERIES AND EQUIPMENT/PRODUCTION FACILITY LOCATIONS/ELECTRICAL SERVICE LINES. a. ENCANA shall have the right to locate, build, repair and maintain tanks, separators, dehydrators, compressors and other equipment ("Production Facility" or "Production Facilities") reasonably appropriate for the operation and production of Existing Wells and Future Wells within the Oil and Gas Operations Areas locations depicted on Exhibit B, generally located in the NW/4 of Section 19 ("Production Facility Locations.") b. With respect to Production Facilities other than flowlines and Pipelines: 1) ENCANA shall install and maintain, at its sole cost and expense, all fences around Wells and Production Facilities in compliance with the Rules and Regulations of the COGCC. 2) ENCANA shall install and maintain, at its sole cost and expense, all gates and locks reasonably necessary for the security of the Wells and Production Facilities. 3) ENCANA shall paint production facilities for the Wells, including wellhead guards, with a color of paint that is approved by the COGCC. 4) Lafarge shall not prevent or inhibit access by ENCANA to the Oil and Gas Operations Areas and Production Facility Locations or prevent or inhibit ENCANA's operations within the Oil and Gas Operations Areas or Production Facility Locations by landscaping or other improvements, unless otherwise agreed upon in writing between Lafarge and ENCANA. 5) Lafarge shall place temporary concrete barriers around Production Facilities, as directed by ENCANA, before the commencement of mining operations within an Oil and Gas Operations Area or Production Facility Location. In no event shall Lafarge mine within ninety (90) feet of Production Facilities or stockpile mined materials within a radius of fifty (50) feet of Production Facilities. 8. NOTICE OF FUTURE OPERATIONS. ENCANA shall provide at least seven (7) days prior written notice to Lafarge of operations in connection with reworking, fracturing, deepening or recompletion operations on Existing Wells and Future Wells; provided, however, ENCANA shall provide at least thirty (30) days prior written notice to Lafarge of the initial drilling of Future Wells. Regardless of the foregoing notice requirements, ENCANA shall have immediate access to all Production Facilities, Pipelines and Wells in the event of an emergency. -8- DRAFT OF CSDUA 4-2/3406/07 After receipt of the above notice, but not less than five (5) working days prior to the date that ENCANA plans to commence drilling operations within an Oil and Gas Operations Area, ENCANA or Lafarge may request an on-site meeting. The purpose of the meeting shall be for ENCANA to inform Lafarge of the proposed oil and gas drilling operations and to coordinate site access, hazards, barricades, restoration or any other issues that may affect the use and development of the Property by Lafarge. 9. COMPLIANCE WITH SAFETY REGULATIONS. ENCANA understands that the surface mining operations of Lafarge on the Property are subject to certain Mine Safety and Health Administration ("MSHA") regulations. ENCANA agrees that, while conducting its oil and gas operations on Property, it will comply with MSHA requirements that Lafarge notifies ENCANA in writing are applicable to ENCANA's operations on the Property. ENCANA agrees to inform its contractors and subcontractors about such requirements, but shall have no liability for the failure of such contractors and subcontractors to comply with the requirements. 10. DRILLING AND COMPLETION OPERATIONS. ENCANA shall endeavor to diligently pursue drilling operations to minimize the total time period for drilling and to avoid rig relocations or startup during the course of drilling. Lafarge waives any objections to continuous (i.e., 24-hour) drilling operations. .--. 11. SHUT-IN OF WELLS. In the event that Lafarge interferes with the operations of ENCANA on the Property so that ENCANA: in--its discretion, is required to shut in a Well or Wells or is otherwise prevented from repairing the value of the average daily production for the Well or Wells that are shut in (based upon the • its discrction.connection with its operations on the Propert wherein Lafarge will utilize heavy egui..ment Lafarge shall maintain dirt coverage over ENCANA's flowlines and pipelines as set forth in Sections 2.g. and 2.h, above. In the event Lafarge intends to commence construction activiti... where it vvillutilizc heavy_equipment or other qmipment likely to damage any of ENCANA's flowlines or pipelines which are not covered as set forth in Sections 2.g and 2.h. Lafarge will notify ENCANA at least twenntt y (2ptdays bel;;0re ommencement of said activities in which event ENCANA may, in its discretion and for safety purposes, shut in any pipeline or flowline over which Lafarge's heavy earth-moving equipment is to be operated. Lafarge will activities where it will utilize heavy equipment or other equipment that may cause damage to the EnCana's flowlines or pipelines. Further, Lafarge may request or EnCana may elect in its discretion,ENCANA to shut in one or more of its wellsWells, flowlines or pipelines during OwnerLafarge's construction activity on the surface of the Described Premises. DuringProperty. In the event that Lafarge reouests ENCANA to shut in one or more of its Wells flowlines or pipelines: or should Lafarge interfere with the operations of ENCANA on the Property so that ENCANA. in its discretion is reççiired to shut-in a Well or Wcllsone or more of its Wells -9- DRAFT OF CSDUA 42/3406/07 flowlines or pipelines or is otherwiscprevented from rcpairip or rettummtt_a Well or wells to productic >, Lafarg_e shall during the period of shut-in of any wWell, pipeline or flowline (either F r a r a et?e:: of HICana), Lafarge shall, pay E ENCANA the following amounts for each shut-in: Shut-In Duration Fee per Well per Day 5 days or less None 6 - 29days $150 30-60 days $200 Lafarge will also pay EnCanaENCANA any costs to rework the well in order to place the well in production status after the shut-in and costs to replace pipelines and flowlines that are damaged by the surface construction activities of Owner. 12. GOVERNMENTAL PROCEEDINGS. Lafarge acknowledges the rights of ENCANA to conduct oil and gas operations on the Property in accordance with this Agreement and shall not object to or oppose ENCANA in any agency or governmental proceedings, including, but not limited to, the COGCC, Weld County, or other governmental entity related to the operations of ENCANA on the Property, including, but not limited to drilling, workovers, well deepenings and recompletions; provided that, the position of ENCANA in such proceedings is consistent with this Agreement. 13. MINING PLANS. Lafarge has provided copies to ENCANA of its Mining Permit and the engineering structural report prepared in connection with the Mining Permit (the "Plans"). ENCANA acknowledges receipt of the Plans and does not object to the Plans; provided, however, ENCANA does not in any way thereby either waive its rights under this Agreement or the obligations or agreements of Lafarge in this Agreement. 14. RESTRICTED USE OF THE SURFACE BY ENCANA. Except for the Oil and Gas Operations Areas, Production Facility Locations, Petroleum Pipeline Easements, Pipelines and the access roads provided for in this Agreement, ENCANA shall not occupy the surface of the Property, except in the events of an emergency or for reasonable incidental, temporary and non-damaging activities, for which ENCANA shall be responsible for any damages that it causes that may occur to the Property. 15. LIMITATION OF LIABILITY,RELEASE AND INDEMNITY. a. No party shall be liable for, or be required to pay for, special, punitive, exemplary, incidental, consequential or indirect damages to any other party for activities undertaken within the scope of this agreement. b. Except as to claims arising out of pollution or environmental damage (which claims are governed by section 16 below) or out of other provisions of this Agreement (which claims shall 10 • DRAFT OF CSDUA 42/3406/07 be governed by the terms of this Agreement), each party shall be and remain responsible for its own liability for all losses, claims, damages, demands, suits, causes of action, fines, penalties, expenses and liabilities, including without limitation, attorneys' fees and other costs associated therewith (all of the aforesaid herein referred to collectively as "Claims"), arising out of or connected with each such party's ownership or operations on the Property, no matter when asserted, subject to applicable statutes of limitations. Each party shall release, defend, indemnify and hold the other party, its officers, directors, employees, successors and assigns, harmless against all such Claims. This provision does not, and shall not be construed to, create any rights in persons or entities not a party to this Agreement, nor does it create any separate rights in parties to this Agreement, other than the right to be indemnified for Claims as provided herein. c. Upon the assignment or conveyance of a party's entire interest in the Property, that party shall be released from the indemnification in section 15.b. above, for all actions or occurrences happening after such assignment or conveyance. 16. ENVIRONMENTAL INDEMNITY. The provisions of section 15 above, except for section 15.a., shall not apply to any environmental matters, which shall be governed exclusively by the following, subject to the limitations of section 15.a. above: a. "Environmental Claims" shall mean all Claims asserted by governmental bodies or other third parties for pollution or environmental damage of any kind, arising from operations on or ownership of the Property or ownership of the oil and gas leasehold interests, whichever is applicable, and all cleanup and remediation costs, fines and penalties associated therewith, including but not limited to any Claims arising from Environmental Laws or relating to asbestos or to naturally occurring radioactive material. Environmental Claims shall not include the costs of any remediation undertaken voluntarily by any party, unless such remediation is performed under the imminent threat of a Claim by a governmental body or other third party. b. "Environmental Laws" shall mean any laws, regulations, rules, ordinances, or order of any governmental authority(ies), which relate to or otherwise impose liability, obligations, or standards with respect to pollution or the protection of the environment, including but not limited to, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. § 9601 et seq.), the Resource Conservation and Recovery Act of 1976 (42 U.S.C. §§ 6901 et seq.), the Clean Water Act (33 U.S.C. §§ 466 et seq.), the Safe Drinking Water Act (14 U.S.C. §§ 1401-1450), the Hazardous Material Transportation Act (49 U.S.C. §§ 1801 et seq.), the Clean Air Act, and the Toxic Substances Control Act (15 U.S.C. §§ 2601-262 c. Environmental Indemnification. ENCANA shall defend, indemnify and hold harmless Lafarge, its successors and assigns, from Environmental Claims relating to Property that arise out of ENCANA's oil and gas leasehold under the Property or operations on the Property. Lafarge shall defend, indemnify and hold harmless ENCANA from Environmental Claims relating to the Property that arise out of its ownership, leasehold interests, operations or development of the Property. 44 • DRAFT OF CSDUA 1-2/3406/07 17. EXCLUSION FROM INDEMNITIES. The indemnities of the parties herein shall not cover or include any amounts for which the indemnified party is actually reimbursed by any third party. The indemnities in this Agreement shall not relieve any party from any obligations to third parties. 18. NOTICE OF CLAIM FOR INDEMNIFICATION. If a Claim is asserted against a party for which the other party would be liable under the provisions of section 15 or section 16 above, it is a condition precedent to the indemnifying party's obligations hereunder that the indemnified party give the indemnifying party written notice of the Claim setting forth all particulars of the Claim, as known by the indemnified party, including a copy of the Claim (if it is a written Claim). The indemnified party shall make a good faith effort to notify the indemnifying party within ten (10) days of receipt of a Claim and shall effect such notice in all events within such time as will allow the indemnifying party to defend against such Claim. An indemnifying party shall not be obligated to reimburse an indemnified party for amounts paid in settlement of an indemnified claim unless the indemnifying party has agreed to the settlement, which agreement shall not be unreasonably withheld or delayed. 19. REPRESENTATIONS. Each party represents that it has the full right and authority to enter into this Agreement with respect to the surface estate or leasehold interests or oil and gas leasehold interests it owns in the Property. ENCANA does not represent that it has rights to settle matters for any mineral owner or any other oil and gas lessee for the Property, and this Agreement shall only apply to and bind ENCANA as to its oil and gas leasehold interests in the Property. 20. INDIVIDUAL LIABILITY OF PETROLEUM LESSEES. The liability of ENCANA to perform any obligation hereunder or to comply with any agreement included herein or with any state or local rule or regulation is individual and not joint or collective. This Agreement does not create a joint venture or partnership between or among ENCANA and any other party which owns or acquires oil and gas leasehold interests in the Property. 22.21, SUCCESSORS AND ASSIGNS. The terms, covenants, and conditions hereof shall be binding upon and inure to the benefit of the parties and their respective successors and assigns; provided, however, successors and assigns for ENCANA shall be limited to only those assignees under the oil and gas leases that are owned by ENCANA. 23:2_L TERM. This Agreement shall become effective as of the date written above and shall remain in full force and effect until the latest to occur of the following: i) all of ENCANA's oil and gas leasehold interests in the Property have expired or are terminated, and ENCANA has plugged and abandoned all Wells it operates on the Property and complied with all reclamation and other requirements in its oil and gas leases and of the COGCC and other entities having jurisdiction; or ii) all of Lafarge's sand, gravel and aggregate mining leasehold interests in the Property have 4s DRAFT OF CSDUA 42/3406/07 expired or are terminated (as to the portion of the Property leased by Lafarge), and Lafarge has complied with all reclamation and other requirements in its mining leases and Mining Permit and with all other applicable provisions in the mining leases, Mining Permit and state and local permits and rules and regulations. At the time this Agreement terminates, the parties shall execute releases that state that this Agreement no longer applies to the Property, except with respect to the indemnities in this Agreement, which indemnities shall survive termination to the extent provided herein. 34:23. NOTICES. Any notice or other communication required or permitted under this Agreement shall be given in writing by any of: i) personal delivery; ii) expedited delivery service with proof of delivery; iii) United States mail, postage prepaid, and registered with certified mail with return receipt requested; or iv) prepaid telecopy or fax, the receipt of which shall be acknowledged, addressed as follows: ENCANA: Lafarge: EnCana Oil and Gas (USA) Inc. Lafarge West, Inc. 370 17`h Street, Suite 1700 10170 Church Ranch Way, Suite 200 Denver, Colorado 80202 Westminster, Colorado 80021 Attention: DJ Land Department Attention: Director of Lands Any party may, by written notice so delivered to the other parties, change the address or individual to whom delivery shall thereafter be made. 2-r&.24. RECORDING. This Agreement and any amendments shall be recorded by ENCANA, and ENCANA shall provide Lafarge with copies showing the recording information as soon as practicable thereafter. 26.25. SURFACE DAMAGES; WAIVER OF PAYMENTS. In consideration of the respective rights, obligations and benefits of the parties as outlined herein, this Agreement shall constitute a surface use or surface damage agreement as described or provided for in any current or future rule or regulation of the COGCC or any local jurisdiction, state statute or at common law and in any oil and gas lease. Lafarge hereby waives all surface damage payments or other such payments for the use of the Property or portions thereof pursuant to any current or future COGCC or local regulation, state statute, common law or oil and gas lease or agreement for each and every well and related wellsite that is or will be drilled and located within the Oil and Gas Operations Areas and for Production Facility Locations and Pipelines and Petroleum Pipeline Easements and access roads. ENCANA may provide a copy of this Agreement to the COGCC or to any local jurisdiction, person or entity or any court of law as evidence of this waiver. 226. NO PRIVATE RIGHT OF ACTION. 43 DRAFT OF CSDUA 42/3406/07 Nothing in this Agreement creates a private right of action under any state statute or state or local rule or regulation, including the regulations of the COGCC and the provisions of the Colorado Oil and Gas Conservation Act at C.R.S. 34-60-101 et.seq. 28:27, CONSTRUCTION. The parties have participated jointly in the negotiating and drafting of this Agreement. In the event ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties. and no presumption or burden of proof shall arise favoring or disfavoring either party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any federal, state, local or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The word "including" shall mean including, without limitation. 2%28. APPLICABLE LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of Colorado, without reference to its conflict of laws provisions. 3t29. ENTIRE AGREEMENT. This Agreement and the letter agreement referenced in section 21 sctsets forth the entire understanding between the parties regarding the matters addressed herein, and supersedes any previous communications, representations or agreement, whether oral or written. This Agreement shall not be amended, except by written document signed by the parties. 34,30. EXECUTION AND BINDING EFFECT. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original instrument, but all of which together shall constitute one and the same instrument. This Agreement is executed by the parties on the dates set forth in the acknowledgements, but to be effective on the date set forth above. ENCANA OIL AND GAS (USA) INC. By: Attorney-in-fact LAFARGE WEST, INC. By: Name: 44 DRAFT OF CSDUA 42/3446/07 Title: 15 DRAFT OF CSDUA 1-2/3406/07 ACKNOWLEDGMENTS STATE OF COLORADO ) CITY AND ) ss. COUNTY OF DENVER ) The foregoing instrument was acknowledged before me this day of , 2007, by , as Attorney-in-Fact of EnCana Oil & Gas (USA) Inc. on behalf of such company. Witness my hand and official seal. Notary Public My Commission Expires: STATE OF COLORADO ) ) ss. COUNTY OF ) The foregoing instrument was acknowledged before me this day of , 2007, by as of Lafarge West, Inc. Witness my hand and official seal. Notary Public My Commission Expires: 1s Document comparison by Workshare Professional on Tuesday, February 06, 2007 12:07:04 Py�M I T?fG V'5 /2"`Alisti l Y .�. 4 3 4 b% 4 W'h ,'z44 i r ty •LK.S` ;.kv-vaDocument 1 ID interwovenSite://DEDMS/SOLICITORS/101641263/1 #101641263v1<SOLICITORS> -Anadarko - SUA, encana Description version Document 2 ID interwovenSite://DEDMS/SOLICITORS/101642937/1 #101642937v1<SOLICITORS> - Anadarko - SUA, encana Description version, 2 Rendering set BH 2 Standard L<eced h °` ry 4 x r t Insertion Deletion Moved from Moved to Style change Format change Moved deletion Inserted cell Deleted cell Moved cell C'1' =°w Split/Merged cell Padding cell :WA v` . + ' .,s cs 4s v. - k1 Count Insertions 51 Deletions 54 Moved from 4 Moved to 4 Style change 0 Format changed 0 Total changes 113 DRAFT OF CSDUA 2/06/07 COMPATIBLE DEVELOPMENT AND SURFACE USE AGREEMENT This Agreement ("Agreement") is effective this day of February, 2007, and is by and between EnCana Oil & Gas (USA) Inc. (hereinafter referred to as "ENCANA") with an address of 370 17`h Street, Suite 1700, Denver, Colorado 80202, and Lafarge West, Inc., ("Lafarge") with an address of 10170 Church Ranch Way, Suite 200, Westminster, Colorado 80021. RECITALS: A. Lafarge is the current landowner or current lessee, as the case may be, under one or more sand, gravel and aggregate mining leases that cover those certain tracts of land more particularly described on Exhibit A attached hereto, located in Weld County, Colorado, and hereinafter referred to collectively as the "Property." B. Surface ownership of the Property is subject to the rights of the oil and gas mineral leasehold estate in which ENCANA currently owns interests. C. Lafarge has a mining permit from the State of Colorado, Division of Reclamation, Mining and Safety ("DRMS"), to extract sand and gravel from the Property and identified as Riverbend. Further, following the mining and reclamation of portions of the Property, Lafarge plans to use portions of the Property for water storage reservoirs. D. Lafarge plans to mine the Property in two phases: the portions of the Property included in each phase are identified as Phase 1 and Phase 2 on Exhibit B and referred to hereinafter as the "Phase 1 Property" and the "Phase 2 Property," respectively. E. ENCANA has leasehold interests in the NW/4 of Section 19, Township 1 North, Range 66 West, Weld County, Colorado, with respect to the Phase 1 Property, and the SW/4 of Section 7, Township 1 North, Range 66 West, Weld County, Colorado, with respect to the Phase 2 Property, each of which interests are more specifically depicted on Exhibit B attached hereto. ENCANA has the right to develop its oil and gas leasehold estates by drilling future wells on the Property ("Wells"). In addition to the foregoing leasehold interests, ENCANA claims a reversionary right as to certain operating rights currently farmed out to K.P. Kaufman Company, Inc. within the NW/4 of Section 19, Township 1 North, Range 66 West, Weld County, Colorado. F. This Agreement provides for the compatible development of the oil and gas estate and the surface estate and sets forth the rights and obligations of the parties with respect to the development of their respective interests in the Property, including any reversionary interests realized by ENCANA from K.P. Kaufman Company, Inc. as described above, such rights and obligations to be binding upon the parties and their successors and assigns. Now THEREFORE, In consideration of the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: EXHIBIT -1- 1 K.3 DRAFT OF CSDUA 2/06/07 1. APPLICATION OF THIS AGREEMENT To THE PHASE 1 PROPERTY AND PHASE 2 PROPERTY. At the time the parties entered into this Agreement, Lafarge had specific plans for the development of only the Phase 1 Property. For this reason, the plats attached to this Agreement show locations for future Wells, production facility locations and access routes and pipeline easements for only the Phase 1 Property. The parties agree that the terms in this Agreement shall apply to both the Phase 1 Property and the Phase 2 Property, and they shall enter into an amendment to this Agreement within one (1) year from the effective date, which amendment shall identify the locations for Oil and Gas Operations Areas, Production Facility Locations, Pipelines, Petroleum Pipeline Easements (all as hereinafter defined) and access routes for the Phase 2 Property. The amendment shall provide for, among other things, areas that are comparable in size and configuration to those described herein for the Phase 1 Property and also for the reimbursement by Lafarge of actual, incremental directional drilling costs incurred by ENCANA for drilling windows that ENCANA relinquishes for the Phase 2 Property. The amendment shall incorporate exhibits for the Phase 2 Property comparable to Exhibit B for the Phase 1 Property. Lafarge covenants and agrees that it will not commence extraction or processing operations on any portion of the Phase 2 Property until the parties have reached an agreement regarding surface use for the Phase 2 Property. 2. REPRESENTATION AND WARRANTY REGARDING AUTHORITY To BIND OWNERS OF THE PROPERTY. Lafarge represents and warrants that it has the right and authority to enter into this Agreement on behalf of and to bind each and every person or entity which owns an interest in the surface estate for all or any portion the Phase 1 Property with respect to all of the terms, provisions and conditions in this Agreement, including, but not limited to, all of the waivers, consents and covenants included in sections 3.d., 4.e., 5.e., 5.m., 12 and 25. Lafarge covenants and agrees that, as a condition precedent for commencing operations on the Phase 2 Property, Lafarge shall obtain any such authority, waivers or consents from all owners of interests in the surface estate of the Phase 2 Property within the time for completing the supplementation of this Agreement pursuant to section 1. 3. AREAS RESERVED FOR THE WELLS;WELL LOCATIONS. a. Lafarge shall set aside and provide to ENCANA those portions of the Property hereinafter referred to as the "Oil and Gas Operations Areas," such areas as to Phase 1 being depicted on the attached Exhibit B which are locations for future Wells as well as related Production Facilities (as hereinafter defined). The Oil and Gas Operations Areas shall be made available to ENCANA in their present condition for all operations conducted by ENCANA in connection with any Well, including, but not limited to, drilling and production activities, workovers, well deepenings, recompletions, fracturing and the drilling of twinned and replacement wells. The Oil and Gas Operations Areas shall include the areas shown on Exhibit B which are generally in the shape of a circle with a radius of 150 feet, except as otherwise reflected in the Exhibits. -2- DRAFT OF CSDUA 2/06/07 b. ENCANA shall also have the right to locate, build, repair and maintain tanks, separators, dehydrators, compressors and all other associated oil and gas drilling and production equipment and facilities within the Oil and Gas Operations Areas. c. ENCANA shall have the right to drill multiple Wells within the Oil and Gas Operations Areas, including horizontal and directional wells that produce in whole or in part from the Property. d. As part of the consideration for this Agreement, Lafarge hereby waives its right to, and covenants that it will not protest or object to, any exception location or application to drill, redrill, deepen or recomplete any Well on the Property, so long as the Well is located within an Oil and Gas Operations Area. e. ENCANA shall drill Wells as close to the center of the Oil and Gas Operations Area as is practicable, given the location of other Wells within the Oil and Gas Operations Area, geologic, regulatory and technical concerns, and any segregation of ownership of the oil and gas horizons, among other things. Lafarge shall not stockpile mined materials within a radius of 150 feet from existing Wells. 4. EXTRACTION OF SAND AND GRAVEL IN VICINITY OF OIL AND GAS OPERATIONS AREAS; SETBACK REQUIREMENTS. Lafarge reserves the option to mine the gravel within the Oil and Gas Operations Areas in accordance with the terms of this section 4. a. In the event that Lafarge elects to mine the gravel within an Oil and Gas Operations Area, Lafarge shall notify ENCANA in writing sixty (60) days prior to commencing mining operations within the Oil and Gas Operations Area and shall place temporary concrete barriers around any existing Wells, as directed by ENCANA, prior to the commencement of mining operations. b. In the event that Lafarge elects to mine gravel within an Oil and Gas Operations Area with no existing Well, Lafarge shall conduct and complete its mining operations within the Oil and Gas Operations Area as quickly as is reasonably practicable. In the event that ENCANA intends to drill a Well within the Oil and Gas Operations Area, it shall give written notice to Lafarge and meet at the site with Lafarge, as required by Colorado Oil and Gas Conservation Commission ("COGCC") rules and regulations, and the parties shall coordinate mining operations with oil and gas operations; provided, however, ENCANA shall have priority to conduct oil and gas operations within the Oil and Gas Operations Area such that it may require Lafarge to temporarily cease mining operations or adjust the timing and location of such operations within the Oil and Gas Operations Area as necessary or convenient to conduct oil and gas operations in a safe and efficient manner. c. In the event that Lafarge elects to mine gravel within an Oil and Gas Operations Area with an existing Well or Wells, Lafarge shall conduct mining operations within the Oil and Gas Operations Area by excavating pie shaped wedges of gravel and aggregate and thereafter backfilling and compacting the area with overburden or other suitable material prior to -3- DRAFT OF CSDUA 2/06/07 excavating the next pie shaped area; provided, however, in no event shall Lafarge mine within ninety (90) feet of an existing Well and, provided further, that in no event shall more than one quarter circle segment of the pie shape be excavated at any one time. d. Excavation within the Oil and Gas Operations Areas will be coordinated with ENCANA in a mutually acceptable manner so as to avoid conflict with ENCANA's oil and gas operations and to ensure there is an appropriate safety plan and interim emergency procedures. Lafarge will bear all costs associated with such mining operations, including permanent or temporary rerouting and replacement of access roads, flowlines, and utility lines in order to prevent unnecessary interruption of production from any Well. In addition, Lafarge and its successors and assigns shall defend, indemnify and hold ENCANA harmless from any and all damage, loss and liability, including attorney's fees, incurred by ENCANA as a result of Lafarge's operations within the Oil and Gas Operations Areas and Production Facility Locations (defined below). Upon completion of mining operations, Lafarge shall fill and level the mined areas to create an even grade throughout the Oil and Gas Operations Area and/or Production Facility Location. e. Lafarge will not locate any lot line or any building, structure or other improvement within any Oil and Gas Operations Area or Production Facility Location. Lafarge understands and acknowledges that the COGCC has rules and regulations that apply to the distance between a wellhead and public roads, production facilities, building units and surface property lines, among other things. In order to give full effect to the purposes of this Agreement, Lafarge hereby consents to and waives its right to object to the location of any Wells and Production Facilities on the basis of the setback requirements in the rules and regulations of the COGCC, as they may be amended from time to time. Lafarge further and similarly consents to and waives its right to object to any other state or local setback requirements or other requirements or regulations that are or become inconsistent with this Agreement or that would prohibit or interfere with the rights of ENCANA, its successors and assigns, to explore for and produce the oil and gas in accordance with this Agreement. ENCANA or its successors and assigns may cite the waiver in this section in order to obtain a location exception or variance under COGCC rules or from any other state or local governmental body having jurisdiction; provided, however, Lafarge shall not be required to enlarge the amount of the surface area of an Oil and Gas Operations Area to accommodate the location exception or variance. Lafarge will provide ENCANA, or its successors and assigns, with whatever written support ENCANA may reasonably require to obtain permits from the COGCC or any local jurisdiction and will reasonably cooperate at no material cost to Lafarge in any efforts of ENCANA or its successors and assigns to obtain such permits. 5. GATHERING LINES AND FLOWLINES. a. Subject to the terms in this Agreement, ENCANA has a continuing right and entitlement to own, operate, maintain, repair and replace all existing and future flowlines, gathering lines and other pipelines that may be necessary or convenient to its operations on the Property ("Pipelines"). Except as may be otherwise agreed upon between the parties, the construction and burying of Pipelines shall be at the sole cost and expense of ENCANA or its gas purchaser. -4- DRAFT OF CSDUA 2/06/07 b. Although this Agreement identifies the locations of existing and future pipelines and pipeline easements, nothing herein limits the right of ENCANA to make well connections to Wells at other locations in the event of circumstances due to mining operations, water storage or reservoir operations, topographic matters or any similar circumstance. c. ENCANA shall have the right to lay Pipelines within the "Petroleum Pipeline Easements" depicted on Exhibit B or at such other locations as may be mutually agreed to in writing by the parties. Except for those portions of the Petroleum Pipeline Easements that are identified on Exhibits B as specifically being more than thirty (30) feet in width, Petroleum Pipeline Easements shall be fifty (50) feet in width for construction, installation and relocation operations and reduced to thirty (30) feet in width for post-construction usage. Flowline easements shall be thirty (30) feet in width for all operations. d. Current development plans for Lafarge require the relocation of certain Pipelines that are currently located on the Phase 1 Property as depicted on Exhibit B and identified as "Petroleum Pipelines to be Abandoned" or "Existing Petroleum Pipeline Easements and Access Roads to be Abandoned" (the "Existing Pipelines") which the parties agree shall be relocated to the locations depicted on Exhibit B and identified as "Petroleum Pipeline Easements and Access Roads." Lafarge shall have the right to make written requests to ENCANA to relocate the lines to be abandoned; provided, however, all costs (including a 15% markup for such costs as compensation for administrative, supervision and overhead costs) of all relocations shall be borne by Lafarge. Lafarge and ENCANA shall enter into a pipeline relocation agreement prior to the relocation of all or any portion of an Existing Pipeline. The parties shall cooperate with each other to implement pipeline relocations and shall not unreasonably interfere with the operations of the other party. ENCANA shall perform the pipeline relocations. e. With respect to the Phase 1 Property, Lafarge represents and warrants that, except as depicted on Exhibit B hereto, the lands on which the Oil and Gas Operations Areas, Petroleum Pipeline Easements and Access Roads are to be located are not lands which have been designated as jurisdictional wetlands by any federal, state or local jurisdiction or any other regulatory authority. With respect to the Phase 2 Property, Lafarge covenants that it will not attempt to place any Access Road, Pipeline Easement or directional drilling site or other Oil and Gas Operations Area requested by Lafarge within any jurisdictional wetland. The foregoing shall not require Lafarge to consent to well drilling sites outside of legal vertical drilling windows. £ Prior to the time that ENCANA commences drilling a Well, and in the event that it would be convenient for ENCANA to hook up the Well to an Existing Pipeline which has not at the time been abandoned hereunder, ENCANA and Lafarge shall agree prior to the commencement of drilling operations that ENCANA shall either: i) connect the Well to an Existing Pipeline; or ii) install the Pipeline in a Petroleum Pipeline Easement and Access Road, at the option and expense of Lafarge. g. Lafarge's operating plans anticipate that roads may cross over the Pipelines. For any Pipeline now existing or hereafter constructed within a Petroleum Pipeline Easement, Lafarge agrees to abide by the General Guidelines for Design and Construction Activities On or Near Kerr-McGee Gathering LLC and Kerr-McGee Rocky Mountain Corporation Pipelines and Related Facilities revised 3-2004. -5- DRAFT OF CSDUA 2106/07 h. Lafarge shall not disturb the existing cover over Pipelines during Lafarge's operations on the Property, except that: i) when crossing Pipelines with heavy equipment, such as earth moving equipment, Lafarge shall maintain a minimum of four (4) feet and a maximum of six (6) feet of dirt over Pipelines, in addition to the then existing cover over the Pipeline; and ii) when crossing Pipelines with light trucks and equipment, Lafarge shall maintain a minimum of two (2) feet and a maximum of six (6) feet of dirt coverage over the then existing cover over the Pipeline. The depth of cover over Pipelines shall not be reduced or drainage patterns over Pipelines altered without written approval from ENCANA. i. ENCANA may install and maintain markers on the Petroleum Pipeline Easements, and ENCANA shall mark its flowlines at locations as reasonably requested by Lafarge. j. Lafarge will not conduct or cause to be conducted extraction operations of any kind, including sand, gravel and aggregate mining operations, that are within twenty-five (25) feet from a Pipeline unless an engineer licensed in the State of Colorado and with expert knowledge in the area of soils, opines in a soils stability report, that a setback that is less than twenty-five (25) feet will be sufficient to preserve the integrity of the Pipeline. In such case, upon completion of extraction operations, Lafarge shall backfill and level the area that is within twenty-five (25) feet from the Pipeline. Notwithstanding anything herein to the contrary, Lafarge shall in no event conduct extraction operations closer than fifteen (15) feet from any Pipeline without the prior written approval of ENCANA. k. Lafarge shall not stockpile soil over any Pipeline. 1. Utility crossings shall have a minimum of eighteen (18) inches vertical separation from Pipelines. Parallel utilities shall maintain a minimum of ten (10) feet of separation between the utilities and the Pipelines, unless ENCANA consents to a lesser distance, which consent shall not be unreasonably withheld. For example, it would not be unreasonable to withhold consent because of safety or operational concerns. Lafarge agrees to request all utility companies to contact ENCANA prior to laying lines parallel to Pipelines. m. Lafarge shall not permit the construction of any temporary or permanent buildings, structures or other improvements or facilities within or over the Petroleum Pipeline Easements or the Pipelines. Lafarge shall not plant trees or shrubs over the Petroleum Pipeline Easements and Pipelines. 6. ACCESS. a. Lafarge shall provide ENCANA with continuous access to all Oil and Gas Operations Areas, Production Facility Locations, Petroleum Pipeline Easements and Pipelines at all times. Except for access roads to be built to access Oil and Gas Operations Areas where no wells are located at the time of this Agreement, access roads to be used by ENCANA will either be the roads it currently uses or those that Lafarge constructs at its sole cost and expense as relocated roads as part of its development of the Property; provided, however, no access road may be closed by Lafarge until an acceptable replacement access route is available to ENCANA for use. b. Except as may be otherwise provided in subsection 6.a., ENCANA agrees to access the Property and the Oil and Gas Operations Areas along the routes depicted on the Exhibit B. Access to the Oil and Gas Operations Areas may be changed by mutual agreement of -6- DRAFT OF CSDUA 2/06/07 Lafarge and ENCANA; provided, however, all costs and expenses of such relocations unless requested by ENCANA shall be borne by Lafarge. c. Lafarge shall maintain and keep access roads that are jointly used by Lafarge and ENCANA in a condition and state of repair that serves the needs of Lafarge or, in the case of relocated existing roads, to at least the standard such road was maintained prior to its relocation, if a more substantial condition. In the event that joint access roads need to be improved in order to serve the needs of ENCANA, the parties agree to cooperate to allow ENCANA to construct the improvements, such improvements to be at the sole cost and expense of ENCANA. Neither ENCANA nor Lafarge shall unreasonably interfere with the use by the other of access roads. d. If Lafarge, as part of the relocation of any existing access road used by ENCANA, moves the point of intersection of such road and any public road or highway, Lafarge shall be responsible for obtaining and shall pay the costs to obtain from Weld County or any municipal authority having jurisdiction over the Property, as necessary, permits or authorization for the replacement access to and from the public road. Each such access location shall be not less than forty (40) feet in width along the public road. e. Construction and Width of Access Roads. 1) ENCANA shall be responsible for construction of its own roads in the locations shown on Exhibit B to Oil and Gas Operations Areas for Wells where Lafarge is not constructing roads for its own operations. 2) If Lafarge relocates an existing road being used by ENCANA for access to any Oil and Gas Operations Area, such relocated road shall be built to at least the quality of the road it replaces. 3) Access roads or portions of access roads that are jointly used by ENCANA and Lafarge shall be thirty (30) feet in width. If Lafarge improves or paves such joint- use roads for regular permanent or extended use, Lafarge shall construct or improve them so as to withstand the weight of oilfield equipment. Specifically in such case, Lafarge shall construct the roads so that they can be used to withstand the weight of 110,000 pounds and 28,000 pounds per axle. 4) Access roads or portions of access roads that are used exclusively by ENCANA shall be thirty (30) feet in width, and ENCANA shall install and maintain them to COGCC standards that apply to oil and gas operations. f. Lafarge agrees that it will not mine or extract materials from any portion of the access roads identified on Exhibit B, or those access roads that may be otherwise mutually agreed upon by the parties, without the written consent of ENCANA. Lafarge agrees to post and enforce a ten (10) mile per hour speed limit along all stretches of access roads that are jointly used by ENCANA and Lafarge. -7- DRAFT OF CSDUA 2/06/07 7. BATTERIES AND EQUIPMENT/PRODUCTION FACILITY LOCATIONS/ELECTRICAL SERVICE LINES. a. ENCANA shall have the right to locate, build, repair and maintain tanks, separators, dehydrators, compressors and other equipment ("Production Facility" or "Production Facilities") reasonably appropriate for the operation and production of Wells within the Oil and Gas Operations Areas locations depicted on Exhibit B, generally located in the NW/4 of Section 19 ("Production Facility Locations.") b. With respect to Production Facilities other than flowlines and Pipelines: 1) ENCANA shall install and maintain, at its sole cost and expense, all fences around Wells and Production Facilities in compliance with the Rules and Regulations of the COGCC. 2) ENCANA shall install and maintain, at its sole cost and expense, all gates and locks reasonably necessary for the security of the Wells and Production Facilities. 3) ENCANA shall paint production facilities for the Wells, including wellhead guards, with a color of paint that is approved by the COGCC. 4) Lafarge shall not prevent or inhibit access by ENCANA to the Oil and Gas Operations Areas and Production Facility Locations or prevent or inhibit ENCANA's operations within the Oil and Gas Operations Areas or Production Facility Locations by landscaping or other improvements, unless otherwise agreed upon in writing between Lafarge and ENCANA. 5) Lafarge shall place temporary concrete barriers around Production Facilities, as directed by ENCANA, before the commencement of mining operations within an Oil and Gas Operations Area or Production Facility Location. In no event shall Lafarge mine within ninety (90) feet of Production Facilities or stockpile mined materials within a radius of fifty (50) feet of Production Facilities. 8. NOTICE OF FUTURE OPERATIONS. ENCANA shall provide at least seven (7) days prior written notice to Lafarge of operations in connection with reworking, fracturing, deepening or recompletion operations on Wells; provided, however, ENCANA shall provide at least thirty (30) days prior written notice to Lafarge of the initial drilling of Wells. Regardless of the foregoing notice requirements, ENCANA shall have immediate access to all Production Facilities, Pipelines and Wells in the event of an emergency. After receipt of the above notice, but not less than five (5) working days prior to the date that ENCANA plans to commence drilling operations within an Oil and Gas Operations Area, ENCANA or Lafarge may request an on-site meeting. The purpose of the meeting shall be for ENCANA to inform Lafarge of the proposed oil and gas drilling operations and to coordinate site access, hazards, barricades, restoration or any other issues that may affect the use and development of the Property by Lafarge. -8- DRAFT OF CSDUA 2/06/07 9. COMPLIANCE WITH SAFETY REGULATIONS. ENCANA understands that the surface mining operations of Lafarge on the Property are subject to certain Mine Safety and Health Administration ("MSHA") regulations. ENCANA agrees that, while conducting its oil and gas operations on Property, it will comply with MSHA requirements that Lafarge notifies ENCANA in writing are applicable to ENCANA's operations on the Property. ENCANA agrees to inform its contractors and subcontractors about such requirements, but shall have no liability for the failure of such contractors and subcontractors to comply with the requirements. 10. DRILLING AND COMPLETION OPERATIONS. ENCANA shall endeavor to diligently pursue drilling operations to minimize the total time period for drilling and to avoid rig relocations or startup during the course of drilling. Lafarge waives any objections to continuous (i.e., 24-hour) drilling operations. 11. SHUT-IN OF WELLS. In connection with its operations on the Property wherein Lafarge will utilize heavy equipment, Lafarge shall maintain dirt coverage over ENCANA's flowlines and pipelines as set forth in Sections 2.g. and 2.h. above. In the event Lafarge intends to commence construction activities where it will utilize heavy equipment or other equipment likely to damage any of ENCANA's flowlines or pipelines which are not covered as set forth in Sections 2.g. and 2.h., Lafarge will notify ENCANA at least twenty (20) days before commencement of said activities, in which event ENCANA may, in its discretion and for safety purposes, shut in any pipeline or flowline over which Lafarge's heavy earth-moving equipment is to be operated. Further, Lafarge may request ENCANA to shut in one or more of its Wells, flowlines or pipelines during Lafarge's construction activity on the Property. In the event that Lafarge requests ENCANA to shut in one or more of its Wells, flowlines or pipelines; or should Lafarge interfere with the operations of ENCANA on the Property so that ENCANA, in its discretion, is required to shut-in one or more of its Wells, flowlines or pipelines or is otherwise prevented from repairing or returning a Well or Wells to production, Lafarge shall, during the period of shut-in of any Well, pipeline or flowline, pay ENCANA the following amounts for each shut-in: Shut-In Duration Fee per Well per Day 5 days or less None 6 - 29days $150 30-60 days $200 Lafarge will also pay ENCANA any costs to rework the well in order to place the well in production status after the shut-in and costs to replace pipelines and flowlines that are damaged by the surface construction activities of Owner. 12. GOVERNMENTAL PROCEEDINGS. Lafarge acknowledges the rights of ENCANA to conduct oil and gas operations on the Property in accordance with this Agreement and shall not object to or oppose ENCANA in any -9- DRAFT OF CSDUA 2/06/07 r agency or governmental proceedings, including, but not limited to, the COGCC, Weld County, or other governmental entity related to the operations of ENCANA on the Property, including, but not limited to drilling, workovers, well deepenings and recompletions; provided that, the position of ENCANA in such proceedings is consistent with this Agreement. 13. MINING PLANS. Lafarge has provided copies to ENCANA of its Mining Permit and the engineering structural report prepared in connection with the Mining Permit (the "Plans"). ENCANA acknowledges receipt of the Plans and does not object to the Plans; provided, however, ENCANA does not in any way thereby either waive its rights under this Agreement or the obligations or agreements of Lafarge in this Agreement. 14. RESTRICTED USE OF THE SURFACE BY ENCANA. Except for the Oil and Gas Operations Areas, Production Facility Locations, Petroleum Pipeline Easements, Pipelines and the access roads provided for in this Agreement, ENCANA shall not occupy the surface of the Property, except in the events of an emergency or for reasonable incidental, temporary and non-damaging activities, for which ENCANA shall be responsible for any damages that it causes that may occur to the Property. 15. LIMITATION OF LIABILITY,RELEASE AND INDEMNITY. r a. No party shall be liable for, or be required to pay for, special, punitive, exemplary, incidental, consequential or indirect damages to any other party for activities undertaken within the scope of this agreement. b. Except as to claims arising out of pollution or environmental damage (which claims are governed by section 16 below) or out of other provisions of this Agreement (which claims shall be governed by the terms of this Agreement), each party shall be and remain responsible for its own liability for all losses, claims, damages, demands, suits, causes of action, fines, penalties, expenses and liabilities, including without limitation, attorneys' fees and other costs associated therewith (all of the aforesaid herein referred to collectively as "Claims"), arising out of or connected with each such party's ownership or operations on the Property, no matter when asserted, subject to applicable statutes of limitations. Each party shall release, defend, indemnify and hold the other party, its officers, directors, employees, successors and assigns, harmless against all such Claims. This provision does not, and shall not be construed to, create any rights in persons or entities not a party to this Agreement, nor does it create any separate rights in parties to this Agreement, other than the right to be indemnified for Claims as provided herein. c. Upon the assignment or conveyance of a party's entire interest in the Property, that party shall be released from the indemnification in section 15.b. above, for all actions or occurrences happening after such assignment or conveyance. 40 DRAFT OF CSDUA 2/06/07 16. ENVIRONMENTAL INDEMNITY. The provisions of section 15 above, except for section 15.a., shall not apply to any environmental matters, which shall be governed exclusively by the following, subject to the limitations of section 15.a. above: a. "Environmental Claims" shall mean all Claims asserted by governmental bodies or other third parties for pollution or environmental damage of any kind, arising from operations on or ownership of the Property or ownership of the oil and gas leasehold interests, whichever is applicable, and all cleanup and remediation costs, fines and penalties associated therewith, including but not limited to any Claims arising from Environmental Laws or relating to asbestos or to naturally occurring radioactive material. Environmental Claims shall not include the costs of any remediation undertaken voluntarily by any party, unless such remediation is performed under the imminent threat of a Claim by a governmental body or other third party. b. "Environmental Laws" shall mean any laws, regulations, rules, ordinances, or order of any governmental authority(ies), which relate to or otherwise impose liability, obligations, or standards with respect to pollution or the protection of the environment, including but not limited to, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. § 9601 et seq.), the Resource Conservation and Recovery Act of 1976 (42 U.S.C. §§ 6901 et seq.), the Clean Water Act (33 U.S.C. §§ 466 et seq.), the Safe Drinking Water Act (14 U.S.C. §§ 1401-1450), the Hazardous Material Transportation Act (49 U.S.C. §§ 1801 et seq.), the Clean Air Act, and the Toxic Substances Control Act (15 U.S.C. §§ 2601-262 c. Environmental Indemnification. ENCANA shall defend, indemnify and hold harmless Lafarge, its successors and assigns, from Environmental Claims relating to Property that arise out of ENCANA's oil and gas leasehold under the Property or operations on the Property. Lafarge shall defend, indemnify and hold harmless ENCANA from Environmental Claims relating to the Property that arise out of its ownership, leasehold interests, operations or development of the Property. 17. EXCLUSION FROM INDEMNITIES. The indemnities of the parties herein shall not cover or include any amounts for which the indemnified party is actually reimbursed by any third party. The indemnities in this Agreement shall not relieve any party from any obligations to third parties. 18. NOTICE OF CLAIM FOR INDEMNIFICATION. If a Claim is asserted against a party for which the other party would be liable under the provisions of section 15 or section 16 above, it is a condition precedent to the indemnifying party's obligations hereunder that the indemnified party give the indemnifying party written notice of the Claim setting forth all particulars of the Claim, as known by the indemnified party, including a copy of the Claim (if it is a written Claim). The indemnified party shall make a good faith effort to notify the indemnifying party within ten (10) days of receipt of a Claim and shall effect such notice in all events within such time as will allow the indemnifying party to defend against such Claim. An indemnifying party shall not be obligated to reimburse an indemnified 14 DRAFT OF CSDUA 2/06/07 party for amounts paid in settlement of an indemnified claim unless the indemnifying party has agreed to the settlement, which agreement shall not be unreasonably withheld or delayed. 19. REPRESENTATIONS. Each party represents that it has the full right and authority to enter into this Agreement with respect to the surface estate or leasehold interests or oil and gas leasehold interests it owns in the Property. ENCANA does not represent that it has rights to settle matters for any mineral owner or any other oil and gas lessee for the Property, and this Agreement shall only apply to and bind ENCANA as to its oil and gas leasehold interests in the Property. 20. INDIVIDUAL LIABILITY OF PETROLEUM LESSEES. The liability of ENCANA to perform any obligation hereunder or to comply with any agreement included herein or with any state or local rule or regulation is individual and not joint or collective. This Agreement does not create a joint venture or partnership between or among ENCANA and any other party which owns or acquires oil and gas leasehold interests in the Property. 21. SUCCESSORS AND ASSIGNS. The terms, covenants, and conditions hereof shall be binding upon and inure to the benefit of the parties and their respective successors and assigns; provided, however, successors and assigns for ENCANA shall be limited to only those assignees under the oil and gas leases that are owned by ENCANA. 22. TERM. This Agreement shall become effective as of the date written above and shall remain in full force and effect until the latest to occur of the following: i) all of ENCANA's oil and gas leasehold interests in the Property have expired or are terminated, and ENCANA has plugged and abandoned all Wells it operates on the Property and complied with all reclamation and other requirements in its oil and gas leases and of the COGCC and other entities having jurisdiction; or ii) all of Lafarge's sand, gravel and aggregate mining leasehold interests in the Property have expired or are terminated (as to the portion of the Property leased by Lafarge), and Lafarge has complied with all reclamation and other requirements in its mining leases and Mining Permit and with all other applicable provisions in the mining leases, Mining Permit and state and local permits and rules and regulations. At the time this Agreement terminates, the parties shall execute releases that state that this Agreement no longer applies to the Property, except with respect to the indemnities in this Agreement, which indemnities shall survive termination to the extent provided herein. 23. NOTICES. Any notice or other communication required or permitted under this Agreement shall be given in writing by any of: i) personal delivery; ii) expedited delivery service with proof of delivery; iii) United States mail, postage prepaid, and registered with certified mail with return receipt requested; or iv) prepaid telecopy or fax, the receipt of which shall be acknowledged, addressed as follows: 12 DRAFT OF CSDUA 2/06/07 ENCANA: Lafarge: EnCana Oil and Gas (USA) Inc. Lafarge West, Inc. 370 17`h Street, Suite 1700 10170 Church Ranch Way, Suite 200 Denver, Colorado 80202 Westminster, Colorado 80021 Attention: DJ Land Department Attention: Director of Lands Any party may, by written notice so delivered to the other parties, change the address or individual to whom delivery shall thereafter be made. 24. RECORDING. This Agreement and any amendments shall be recorded by ENCANA, and ENCANA shall provide Lafarge with copies showing the recording information as soon as practicable thereafter. 25. SURFACE DAMAGES; WAIVER OF PAYMENTS. In consideration of the respective rights, obligations and benefits of the parties as outlined herein, this Agreement shall constitute a surface use or surface damage agreement as described or provided for in any current or future rule or regulation of the COGCC or any local jurisdiction, state statute or at common law and in any oil and gas lease. Lafarge hereby waives all surface damage payments or other such payments for the use of the Property or portions thereof pursuant to any current or future COGCC or local regulation, state statute, common law or oil and gas lease or agreement for each and every well and related wellsite that is or will be drilled and located within the Oil and Gas Operations Areas and for Production Facility Locations and Pipelines and Petroleum Pipeline Easements and access roads. ENCANA may provide a copy of this Agreement to the COGCC or to any local jurisdiction, person or entity or any court of law as evidence of this waiver. 26. No PRIVATE RIGHT OF ACTION. Nothing in this Agreement creates a private right of action under any state statute or state or local rule or regulation, including the regulations of the COGCC and the provisions of the Colorado Oil and Gas Conservation Act at C.R.S. 34-60-101 et.seq. 27. CONSTRUCTION. The parties have participated jointly in the negotiating and drafting of this Agreement. In the event ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties. and no presumption or burden of proof shall arise favoring or disfavoring either party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any federal, state, local or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The word "including" shall mean including, without limitation. 28. APPLICABLE LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of Colorado, without reference to its conflict of laws provisions. -13 DRAFT OF CSDUA 2/06/07 29. ENTIRE AGREEMENT. This Agreement sets forth the entire understanding between the parties regarding the matters addressed herein, and supersedes any previous communications, representations or agreement, whether oral or written. This Agreement shall not be amended, except by written document signed by the parties. 30. EXECUTION AND BINDING EFFECT. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original instrument, but all of which together shall constitute one and the same instrument. This Agreement is executed by the parties on the dates set forth in the acknowledgements, but to be effective on the date set forth above. ENCANA OIL AND GAS (USA) INC. By: Attorney-in-fact LAFARGE WEST, INC. By: Name: Title: 14 DRAFT OF CSDUA 2/06/07 ACKNOWLEDGMENTS STATE OF COLORADO ) CITY AND ) ss. COUNTY OF DENVER ) The foregoing instrument was acknowledged before me this day of 2007, by , as Attorney-in-Fact of EnCana Oil & Gas (USA) Inc. on behalf of such company. Witness my hand and official seal. Notary Public My Commission Expires: STATE OF COLORADO ) ) ss. COUNTY OF ) The foregoing instrument was acknowledged before me this day of 2007,by as of Lafarge West, Inc. Witness my hand and official seal. Notary Public My Commission Expires: 15 King, James gym; Mayo, Joel A. 1t; Friday, February 02, 2007 2:39 PM To: 'Frazier, Sheila S.' Cc: King, James Subject: Lafarge Riverbend Sheila, Per my phone message, attached below please find the exhibit depicting the wetlands area in relation to the proposed well sites. Please look this over and give me a call to discuss at your earliest convenience. Also as mentioned in my phone message, please let me know whether a redline of the surface use agreement might be available (indicating your revisions to the Anadarko form previously sent). Thanks. Joel A. Mayo Baker Hostetler 303 East 17th Avenue, Suite 1100 Denver,Colorado 80203 T(303)764-4108 F(303)861-7805 jmayo@bakerlaw.com <mailto:jmayo@bakerlaw.com> IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS in Circular 230, we inform you that, unless we expressly '.e otherwise in this communication (including any attachments), any tax advice contained in this communication is not ...,ended or written to be used, and cannot be used, for the purpose of(i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or other matter addressed herein. Original Message From: Helpdesk, BH Sent: Friday, February 02, 2007 2:27 PM To: King,James Cc: Mayo,Joel A. Subject: RE: Attached Here you go t Pages from 11633318_1.pdf(24 Tamara BH Helpdesk System Speed 888 Our goal is to deliver prompt,courteous and quality technical service to maximize your productivity. Please contact Jeffrey Humphrey,CLE x6074 with your feedback on how we can improve our service to you.You may also contact us via e-mail at IS MANAGEMENT in the B&H address book and know that the IS Management team will view and consider your comments and suggestions.Thank you. Original Message From: King,James Sent: Friday, February 02, 2007 4:18 PM To: Helpdesk, BH Cc: Mayo,Joel A. 1 Subject: Attached Please use your special Adobe program to extract page 5 of this document and make it a separate document. Send the new file to me and Joel Mayo. Thanks James M. King Baker& Hostetler LLP 303 E. 17th Avenue, Suite 1100 Denver, Colorado 80203 303-764-4087 Fax: 303-861-2307 << File: EXHIBIT B-PHASE 1 w_Wetlands 1-17-07.nrl » 2 ,_ _ I_ _ a II 1 ±- 1 r 30'PETROLEUM III PIPELINE EASEMENT \ I / Illyl' �\ /�Ft}TUREEN�A; TitI- - 30'WIDE PETROLEUM ', � � 1 / PIPELINE EASEMENT GAS WELL , AND ACCESS ROAD /1 a= � � J ' 1 ' •,` {.a•%I/ 1W NN. V . 2 J :.� ca , ,7 i _ � , III I • - KERR McGEE• f 7 -- FUTURE li —1"... I CIA'S1WLLLS ' I� I k V I i I( , 7 �A I KERR McGEE Ii 1( i i <A o North cXIS TING �� f I TANK STORAGE I��p - - - -KERR-IEGE€ , 11! � I� ! > � 'r II EXISTING g; �_ c i ;E ! .. ;. Hi13ocr III KERR-McGEE ► 53,.',. it V 4 C� FUTURE KERR McGEE!! i t -- \ , ` fl PRODUCTION FUTURE . i,* ' SCALE: 1"=300'SC III GAS WELLS -I —� � — — — FINAL I ,,, FACILITY AREA 1 - u DRAFT f ll I FUTURES.l,' 4:- • i " .:_ 7 j., i ' P s J \, I ENCANA 1 GAS WELL 1 -17-07 '' - - - -� - - - L LEGEND: MATCHLINE-SEE SHEET NO. 4 CITY OF AURORA WELL "° " KP KAUFMAN OIL AND GAS • " `. OPERATIONS AREA , -/` 30'PETROLEUM ♦ ENCANA WELL EASEMENT AND ACCESSPIPELINE ROAD PETROLEUM PIPELINE ENCANA OIL AND GAS KERR-McGEE OIL & GAS WELL -G RELOCATION ROUTE OPERATIONS AREA OPERATIONS IN NW 1/4, SECTION PETROLEUM PIPELINE TO .;5 WETLANDS 19, Ti N, R66W, 6TH P.M. ' ----- BE ABANDONED - (JURISDICTIONAL) --DRILL WINDOW WELD COUNTY, COLORADO .. TANK/GAS WELL TETRATECH RMC fi EXISTING PETROLEUM PIPELINESit 1900 S. SUNSET ST., SUITE 1-F, LONGMONT, CO 80501 KERR-McGEE OIL AND GAS TEL 303.772,5282 METRO 303.665.6283 FAX 303.665.6959 'IT..I�� OPERATIONS AREA RIVERBEND OIL & GAS WELL OPERATIONS5 OF S 80-4137.012.00 Message Page 1 of 8 King, James From: Frazier, Sheila S. [Sheila.Frazier@encana.com] Sent: Friday, February 02, 2007 11:59 AM To: Mayo, Joel A. Cc: vecchiassociates@comcast.net; King, James; eric.reckentine@lafarge-na.com Subject: RE: Lafarge/ Riverbend Project Please find attached a copy of the Compatible Sur Use Agt in draft format. I have revised the agreement in accordance with our ownership and obligations as to these lands. I have included wording in Item 11 Shut-ins that is standard language to our agreements. Please look over and we can fine tune if necessary. Thanks Sheila From: Mayo, Joel A. [mailto:jmayo@bakerlaw.com] Sent: Thursday, February 01, 2007 4:59 PM To: Frazier, Sheila S. • Cc: vecchiassociates@comcast.net; King, James; eric.reckentine@lafarge-na.com Subject: RE: Lafarge / Riverbend Project Sheila, How are we coming with comments to the Anadarko (Kerr McGee) Surface Use Agreement form? Please let us know at your earliest opportunity. Also, with respect to your comments to the exhibits for the Anadarko agreement, I forwarded the same to Ms. Vecchi for a quick look. Thanks. Joel A. Mayo Baker Hostetler 303 East 17th Avenue,Suite 1100 Denver,Colorado 80203 T(303)764-4108 F(303)861-7805 jmayo.@bakerlaw.com IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS in Circular 230, we inform you that, unless we expressly state otherwise in this communication (including any attachments), any tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of(i) avoiding penalties under the Internal Revenue Code or(ii) promoting, marketing or recommending to another party any transaction or other matter addressed herein. Original Message EXHIBIT From: Frazier, Sheila S. [mailto:Sheila.Frazier@encana.com] Sent: Thursday, January 25, 2007 11:15 AM u. y • 2/6/2007. . . G•• Message Page 2 of 8 To: Mayo, Joel A. Subject: RE: Lafarge/ Riverbend Project Wanted to let you know that I will jump on this immediately. Any feedback on the Kennedy 31-21? From: Mayo, Joel A. [mailto:jmayo@bakerlaw.com] Sent: Thursday, January 25, 2007 11:13 AM To: Frazier, Sheila S. Subject: RE: Lafarge / Riverbend Project Sheila, No message was attached to your reply. Joel A. Mayo Baker Hostetler 303 East 17th Avenue,Suite 1100 Denver,Colorado 80203 T(303)764-4108 F(303)861-7805 jmavo(olbakedaw.corn IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS in Circular 230, we inform you that, unless we expressly state otherwise in this communication (including any attachments), any tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of(i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or other matter addressed herein. Original Message From: Frazier, Sheila S. [mailto:Sheila.Frazier@encana.com] Sent: Thursday, January 25, 2007 11:10 AM To: Mayo, Joel A. Subject: RE: Lafarge/ Riverbend Project From: Mayo, Joel A. [mailto:jmayo@bakerlaw.com] Sent: Thursday, January 25, 2007 10:50 AM To: Frazier, Sheila S. Cc: King, James; vecchiassociates@comcast.net; eric.reckentine@lafarge- na.com Subject: RE: Lafarge/ Riverbend Project Sheila, Per our telephone conference yesterday, attached please find the latest version of the Anadarko (Kerr-McGee) Surface Use Agreement in connection with the Riverbend Project. We would have no objection to using this form with Encana as it would allow for 2/6/2007 Message Page 3 of 8 some consistency amongst the mineral interest holders and Lafarge. I will forward by separate e-mail the exhibits which go along with the attached Surface Use Agreement. Hopefully this will enable us to move forward quickly in finalizing the agreement. Sincerely, Joel A. Mayo Baker Hostetler 303 East 17th Avenue,Suite 1100 Denver,Colorado 80203 T(303)764-4108 F(303)861-7805 jmaflC bakedaw.com IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS in Circular 230, we inform you that, unless we expressly state otherwise in this communication (including any attachments), any tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of(i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or other matter addressed herein. Original Message From: Frazier, Sheila S. [mailto:Sheila.Frazier@encana.com] Sent: Wednesday, January 24, 2007 3:51 PM To: Mayo, Joel A. Subject: RE: Lafarge / Riverbend Project Joel, What is hanging me up now is the plats. Draft of 12/8/06 provides a plat of the NW/4 of 19, but we do not have a plat which covers the operations areas for Section 7. Can you advise the status of this plat? From: Mayo, Joel A. [mailto:jmayo@bakerlaw.com] Sent: Tuesday, January 23, 2007 11:37 AM To: Frazier, Sheila S. Cc: vecchiassociates@comcast.net; eric.reckentine@lafarge- na.com; King, James Subject: RE: Lafarge / Riverbend Project Sheila, Thank you for the follow up. I do wish to point out that, pursuant to previous discussions with Mike Tucker in November of 2006, Lafarge and this firm were certainly willing to negotiate a surface use agreement from Encana's standard form/format, having been familiar with the same from previous dealings (see Duckworth matter). Instead, in the interest of time and similarity of understandings between Lafarge and all applicable mineral interests within the project, Mr. Tucker suggested that we send 2/6/2007 • Message Page 4 of 8 over the form already in the process of negotiation with Kerr McGee (now Anadarko) and K P Kaufman. It is my belief that the form provided was very similar to that previously used by Encana in previous dealings. In order to allow us to sew up this final condition to permitting, your efforts in providing the draft by this afternoon (per your e-mail) for our immediate review and comment would be greatly appreciated. We will get our comments back as soon as possible. Thank you for your help. Joel A. Mayo Baker Hostetler 303 East 17th Avenue,Suite 1100 Denver,Colorado 80203 T(303)764-4108 F(303)861-7805 jm ayo{tD b a ke Ida w.com IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS in Circular 230, we inform you that, unless we expressly state otherwise in this communication (including any attachments), any tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of(i) avoiding penalties under the Internal Revenue Code or(ii) promoting, marketing or recommending to another party any transaction or other matter addressed herein. Original Message From: Frazier, Sheila S. [mailto:Sheila.Frazier@encana.com] Sent: Tuesday, January 23, 2007 10:49 AM To: Mayo, Joel A. Subject: RE: Lafarge/ Riverbend Project Good morning, I wanted to give you an update regarding the proposed Compatible SUA that has been submitted. First, I have been advised that the format as provided will need to be converted to the EnCana standardized format which means I will be drafting up an agreement based upon the previous discussions between EnCana and LaFarge. I should be able to accomplish this by the end of today and will then forward on to you for your review. Once we come to final agreement, I will then submit the final draft to our inhouse attorney for another review. This process should flow more smoothly. The transition of Mike leaving has put me in somewhat of a tailspin, and I do apologize for any delays this has caused your clients. 2/6/2007 Message Page 5 of 8 Sheila A. Frazier, CPL EnCana Oil&Gas(USA) Land Negotiator, DJ Basin (720)876-3440 (720)876-4440 Fax (303)242-9449 Cell Original Message From: Mayo, Joel A. [mailto:jmayo@bakerlaw.com] Sent: Monday, January 22, 2007 9:58 AM To: Frazier, Sheila S. Cc: vecchiassociates@comcast.net; King, James Subject: Lafarge/ Riverbend Project Sheila, I wanted to follow up with respect to the status of the pending Surface Use Agreement. Per our conversation last week, you were hopeful that comments to the same would be available early this week, pending only review by your legal department. As discussed, Jim King and I will make available time to meet with you and Diane Blieszner to discuss any comments to the document in hopes of expediting finalization of the same. Lafarge has reached agreement with Anadarko and K.P. Kaufman (in much the same form and content as the document forwarded to Encana) and would very much like to wrap this matter up as quickly as possible. Please contact us as to the status of this matter(as well as whether a meeting would prove beneficial) at your earliest opportunity. Sincerely, Joel Mayo My Blo I Web site I V-card T 303.764.4108 Joel Mayo F 303.861.7805 jmayo@bakerlaw.com www.bakerlaw.com Baker&Hostetler LLP 303 East 17th Avenue Suite 1100 Denver,Colorado 80203-1264 2/6/2007 Message Page 6 of 8 Baker Hostrter This email is intended only for the use of the party to which it is addressed and may contain information that is privileged, confidential, or protected by law. If you are not the intended recipient you are hereby notified that any dissemination, copying or distribution of this email or its contents is strictly prohibited. If you have received this message in error, please notify us immediately by replying to the message and deleting it from your computer. Internet communications are not assured to be secure or clear of inaccuracies as information could be intercepted, corrupted, lost, destroyed, arrive late or incomplete, or contain viruses. Therefore, we do not accept responsibility for any errors or omissions that are present in this email, or any attachment, that have arisen as a result of e-mail transmission. This email communication and any files transmitted with it may contain confidential and or proprietary information and is provided for the use of the intended recipient only.Any review,retransmission or dissemination of this information by anyone other than the intended recipient is prohibited. If you receive this email in error,please contact the sender and delete this communication and any copies immediately.Thank you. http://www.encana.com This email is intended only for the use of the party to which it is addressed and may contain information that is privileged, confidential, or protected by law. If you are not the intended recipient you are hereby notified that any dissemination, copying 2/6/2007 Message Page 7 of 8 or distribution of this email or its contents is strictly prohibited. If you have received this message in error, please notify us immediately by replying to the message and deleting it from your computer. Internet communications are not assured to be secure or clear of inaccuracies as information could be intercepted, corrupted, lost, destroyed, arrive late or incomplete, or contain viruses. Therefore, we do not accept responsibility for any errors or omissions that are present in this email, or any attachment, that have arisen as a result of e-mail transmission. This email is intended only for the use of the party to which it is addressed and may contain information that is privileged, confidential, or protected by law. If you are not the intended recipient you are hereby notified that any dissemination, copying or distribution of this email or its contents is strictly prohibited. If you have received this message in error, please notify us immediately by replying to the message and deleting it from your computer. Internet communications are not assured to be secure or clear of inaccuracies as information could be intercepted, corrupted, lost, destroyed, arrive late or incomplete, or contain viruses. Therefore, we do not accept responsibility for any errors or omissions that are present in this email, or any attachment, that have arisen as a result of e-mail transmission. This email is intended only for the use of the party to which it is addressed and may contain information that is privileged, confidential, or protected by law. If you are not the intended recipient you are hereby notified that any dissemination, copying or distribution of this email or its contents is strictly prohibited. If you have received this message in error, please notify us immediately by replying to the message and deleting it from your computer. Internet communications are not assured to be secure or clear of inaccuracies as information could be intercepted, corrupted, lost, destroyed, arrive late or incomplete, or contain viruses. Therefore, we do not accept responsibility for any errors or omissions that are present in this email, or any attachment, that have arisen as a result of e-mail transmission. 2/6/2007 Message Page 8 of 8 This email is intended only for the use of the party to which it is addressed and may contain information that is privileged, confidential, or protected by law. If you are not the intended recipient you are hereby notified that any dissemination, copying or distribution of this email or its contents is strictly prohibited. If you have received this message in error, please notify us immediately by replying to the message and deleting it from your computer. Internet communications are not assured to be secure or clear of inaccuracies as information could be intercepted, corrupted, lost, destroyed, arrive late or incomplete, or contain viruses. Therefore, we do not accept responsibility for any errors or omissions that are present in this email, or any attachment, that have arisen as a result of e-mail transmission. 2/6/2007 DRAFT OF CSDUA 1/31/07 COMPATIBLE DEVELOPMENT AND SURFACE USE AGREEMENT This Agreement ("Agreement") is effective this day of February, 2007, and is by and between EnCana Oil & Gas (USA) Inc. (hereinafter referred to as "ENCANA") with an address of 370 17`h Street, Suite 1700, Denver, Colorado 80202, and Lafarge West, Inc., ("Lafarge") with an address of 10170 Church Ranch Way, Suite 200, Westminster, Colorado 80021. RECITALS: A. Lafarge is the current landowner or current lessee, as the case may be, under one or more sand, gravel and aggregate mining leases that cover those certain tracts of land more particularly described on Exhibit A attached hereto, located in Weld County, Colorado, and hereinafter referred to collectively as the "Property." B. Surface ownership of the Property is subject to the rights of the oil and gas mineral leasehold estate in which ENCANA currently owns interests. C. Lafarge has a mining permit from the State of Colorado, Division of Reclamation, Mining and Safety ("DRMS"), to extract sand and gravel from the Property and identified as Riverbend. Further, following the mining and reclamation of portions of the Property, Lafarge plans to use portions of the Property for water storage reservoirs. D. Lafarge plans to mine the Property in two phases: the portions of the Property included in each phase are identified as Phase 1 and Phase 2 on Exhibit B and referred to hereinafter as the "Phase 1 Property" and the "Phase 2 Property," respectively. E. ENCANA has a leasehold interest in the NW/4 of Section 19, Township 1 North, Range 66 West, Weld County, Colorado, which, with respect to the Phase I Property, more specifically depicted on Exhibit B attached hereto, and ENCANA has the right to develop its oil and gas leasehold estate by drilling future wells on the Property ("Wells"). F. This Agreement provides for the compatible development of the oil and gas estate and the surface estate and sets forth the rights and obligations of the parties with respect to the development of their respective interests in the Property, such rights and obligations to be binding upon the parties and their successors and assigns. NOW THEREFORE, In consideration of the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as fol lows: 1. APPLICATION OF THIS AGREEMENT To THE PHASE 1 PROPERTY AND PHASE 2 PROPERTY. At the time the parties entered into this Agreement, Lafarge had specific plans for the development of only the Phase 1 Property. For this reason, the plats attached to this Agreement show locations for Existing Wells, Future Wells, production facility locations and access routes and pipeline easements for only the Phase I Property. The parties agree that the terms in this Agreement shall apply to both the Phase I Property and the Phase 2 Property, and they shall enter into an amendment to this Agreement within one (1) year from the effective date, which amendment shall identify the locations for Oil and Gas Operations Areas, Production Facility Locations, Pipelines, Petroleum Pipeline Easements (all as hereinafter defined) and access routes for the Phase 2 Property. The amendment shall provide for, EXHIBIT 1 Ks - fir:. DRAFT OF CSDUA 1131/07 among other things, areas that are comparable in size and configuration to those described herein for the Phase 1 Property and also for the payment by Lafarge of directional drilling costs for drilling windows that ENCANA relinquishes for the Phase 2 Property in an amount that is comparable to those outlined in the letter agreement between the parties referred to herein in section 21, but which amount shall be increased on January 1 of each year beginning on January 31, 2008, with such adjustment to be in accordance with the corresponding percentage increase in the Consumer Price Index published by the U.S. Department of Labor Bureau of Labor Statistics for the Denver-Boulder-Greeley Metropolitan Area. The amendment shall incorporate exhibits for the Phase 2 Property comparable to Exhibit B for the Phase 1 Property. Lafarge covenants and agrees that it will not commence extraction or processing operations on any portion of the Phase 2 Property until the parties have reached an agreement regarding surface use for the Phase 2 Property. 2. REPRESENTATION AND WARRANTY REGARDING AUTHORITY To BIND OWNERS OF THE PROPERTY. Lafarge represents and warrants that it has the right and authority to enter into this Agreement on behalf of and to bind each and every person or entity which owns an interest in the surface estate for all or any portion the Phase 1 Property with respect to all of the terms, provisions and conditions in this Agreement, including, but not limited to, all of the waivers, consents and covenants included in sections 3.d., 4.e., 5.e., 5.m., 12 and 26. Lafarge covenants and agrees that, as a condition precedent for commencing operations on the Phase 2 Property, Lafarge shall obtain any such authority, waivers or consents from all owners of interests in the surface estate of the Phase 2 Property within the time for completing the supplementation of this Agreement pursuant to section 1. 3. AREAS RESERVED FOR THE EXISTING WELLS AND FUTURE WELLS; WELL LOCATIONS. a. Lafarge shall set aside and provide to ENCANA those portions of the Property hereinafter referred to as the "Oil and Gas Operations Areas," such areas as to Phase 1 being depicted on the attached Exhibit B which are locations for Future Wells as well as related Production Facilities (as hereinafter defined). The Oil and Gas Operations Areas shall be made available to ENCANA in their present condition for all operations conducted by ENCANA in connection with any Well, including, but not limited to, drilling and production activities, workovers, well deepenings, recompletions, fracturing and the drilling of twinned and replacement wells. The Oil and Gas Operations Areas shall include the areas shown on Exhibit B which are generally in the shape of a circle with a radius of 150 feet, except as otherwise reflected in the Exhibits. b. ENCANA shall also have the right to locate, build, repair and maintain tanks, separators, dehydrators, compressors and all other associated oil and gas drilling and production equipment and facilities within the Oil and Gas Operations Areas. c. ENCANA shall have the right to drill Future Wells and multiple Wells within the Oil and Gas Operations Areas, including horizontal and directional wells that produce in whole or in part from the Property. d. As part of the consideration for this Agreement, Lafarge hereby waives its right to, and covenants that it will not protest or object to, any exception location or application to drill, redrill, deepen or recomplete any Well on the Property, so long as the Well is located within an Oil and Gas Operations Area. -2- DRAFT OF CSDUA 1/31/07 e. ENCANA shall drill Future Wells as close to the center of the Oil and Gas Operations Area as is practicable, given the location of other Wells within the Oil and Gas Operations Area, geologic, regulatory and technical concerns, and any segregation of ownership of the oil and gas horizons, among other things. Lafarge shall not stockpile mined materials within a radius of 150 feet from Existing Wells. 4. EXTRACTION OF SAND AND GRAVEL IN VICINITY OF OIL AND GAS OPERATIONS AREAS; SETBACK REQUIREMENTS. Lafarge reserves the option to mine the gravel within the Oil and Gas Operations Areas in accordance with the terms of this section 4. a. In the event that Lafarge elects to mine the gravel within an Oil and Gas Operations Area, Lafarge shall notify ENCANA in writing sixty (60) days prior to commencing mining operations within the Oil and Gas Operations Area and shall place temporary concrete barriers around the Existing Wells, as directed by ENCANA, prior to the commencement of mining operations. b. In the event that Lafarge elects to mine gravel within an Oil and Gas Operations Area with no Existing Well, Lafarge shall conduct and complete its mining operations within the Oil and Gas Operations Area as quickly as is reasonably practicable. In the event that ENCANA intends to drill a Well within the Oil and Gas Operations Area, it shall give written notice to Lafarge and meet at the site with Lafarge, as required by Colorado Oil and Gas Conservation Commission ("COGCC") rules and regulations, and the parties shall coordinate mining operations with oil and gas operations; provided, however, ENCANA shall have priority to conduct oil and gas operations within the Oil and Gas Operations Area such that it may require Lafarge to temporarily cease mining operations or adjust the timing and location of such operations within the Oil and Gas Operations Area as necessary or convenient to conduct oil and gas operations in a safe and efficient manner. c. In the event that Lafarge elects to mine gravel within an Oil and Gas Operations Area with an Existing Well or Wells, Lafarge shall conduct mining operations within the Oil and Gas Operations Area by excavating pie shaped wedges of gravel and aggregate and thereafter backfilling and compacting the area with overburden or other suitable material prior to excavating the next pie shaped area; provided, however, in no event shall Lafarge mine within ninety (90) feet of an Existing Well and, provided further, that in no event shall more than one quarter circle segment of the pie shape be excavated at any one time. d. Excavation within the Oil and Gas Operations Areas will be coordinated with ENCANA in a mutually acceptable manner so as to avoid conflict with ENCANA's oil and gas operations and to ensure there is an appropriate safety plan and interim emergency procedures. Lafarge will bear all costs associated with such mining operations, including permanent or temporary rerouting and replacement of access roads, flowlines, and utility lines in order to prevent unnecessary interruption of production from any Well. In addition, Lafarge and its successors and assigns shall defend, indemnify and hold ENCANA harmless from any and all damage, loss and liability, including attorney's fees, incurred by ENCANA as a result of Lafarge's operations within the Oil and Gas Operations Areas and Production Facility Locations (defined below). Upon completion of mining operations, Lafarge shall fill and level the mined areas to create an even grade throughout the Oil and Gas Operations Area and/or Production Facility Location. e. Lafarge will not locate any lot line or any building, structure or other improvement within any Oil and Gas Operations Area or Production Facility Location. Lafarge understands and acknowledges that the COGCC has rules and regulations that apply to the distance between a wellhead and public roads, production facilities, building units and surface property lines, among other things. In order to give full effect to the purposes of this Agreement, Lafarge hereby consents to and waives its right to object to the -3.. DRAFT OF CSDUA 1/31/07 location of any Wells and Production Facilities on the basis of the setback requirements in the rules and regulations of the COGCC, as they may be amended from time to time. Lafarge further and similarly consents to and waives its right to object to any other state or local setback requirements or other requirements or regulations that are or become inconsistent with this Agreement or that would prohibit or interfere with the rights of ENCANA, its successors and assigns, to explore for and produce the oil and gas in accordance with this Agreement. ENCANA or its successors and assigns may cite the waiver in this section in order to obtain a location exception or variance under COGCC rules or from any other state or local governmental body having jurisdiction; provided, however, Lafarge shall not be required to enlarge the amount of the surface area of an Oil and Gas Operations Area to accommodate the location exception or variance. Lafarge will provide ENCANA, or its successors and assigns, with whatever written support ENCANA may reasonably require to obtain permits from the COGCC or any local jurisdiction and will reasonably cooperate at no material cost to Lafarge in any efforts of ENCANA or its successors and assigns to obtain such permits. 5. GATHERING LINES AND FLOWLINES. a. Subject to the terms in this Agreement, ENCANA has a continuing right and entitlement to own, operate, maintain, repair and replace all existing and future flowlines, gathering lines and other pipelines that may be necessary or convenient to its operations on the Property ("Pipelines"). Except as may be otherwise agreed upon between the parties, the construction and burying of Pipelines shall be at the sole cost and expense of ENCANA or its gas purchaser. b. Although this Agreement identifies the locations of existing and future pipelines and pipeline easements, nothing herein limits the right of ENCANA to make well connections to Wells at other locations in the event of circumstances due to mining operations, water storage or reservoir operations, topographic matters or any similiar circumstance. c. ENCANA shall have the right to lay Pipelines within the "Petroleum Pipeline Easements" depicted on Exhibit B or at such other locations as may be mutually agreed to in writing by the parties. Except for those portions of the Petroleum Pipeline Easements that are identified on Exhibits B as specifically being more than thirty (30) feet in width, Petroleum Pipeline Easements shall be fifty (50) feet in width for construction, installation and relocation operations and reduced to thirty (30) feet in width for post-construction usage. Flowline easements shall be thirty (30) feet in width for all operations. d. Current development plans for Lafarge require the relocation of certain Pipelines that are currently located on the Phase 1 Property as depicted on Exhibit B and identified as "Petroleum Pipelines to be Abandoned" or "Existing Petroleum Pipeline Easements and Access Roads to be Abandoned" (the "Existing Pipelines") which the parties agree shall be relocated to the locations depicted on Exhibit B and identified as "Petroleum Pipeline Easements and Access Roads." Lafarge shall have the right to make written requests to ENCANA to relocate the lines to be abandoned; provided, however, all costs (including a 15% markup for such costs as compensation for administrative, supervision and overhead costs) of all relocations shall be borne by Lafarge. Lafarge and ENCANA shall enter into a pipeline relocation agreement prior to the relocation of all or any portion of an Existing Pipeline. The parties shall cooperate with each other to implement pipeline relocations and shall not unreasonably interfere with the operations of the other party. ENCANA shall perform the pipeline relocations. e. With respect to the Phase 1 Property, Lafarge represents and warrants that, except as depicted on Exhibit B hereto, the lands on which the Oil and Gas Operations Areas, Petroleum Pipeline Easements and Access Roads are to be located are not lands which have been designated as jurisdictional wetlands by any federal, state or local jurisdiction or any other regulatory authority. With respect to the Phase 2 Property, Lafarge covenants that it will not attempt to place any Access Road, Pipeline Easement or directional drilling site or other Oil and Gas Operations Area requested by Lafarge within any -4- DRAFT OF CSDUA 1/31/07 jurisdictional wetland. The foregoing shall not require Lafarge to consent to well drilling sites outside of legal vertical drilling windows. f. Prior to the time that ENCANA commences drilling a Future Well, and in the event that it would be convenient for ENCANA to hook up the Well to an Existing Pipeline which has not at the time been abandoned hereunder, ENCANA and Lafarge shall agree prior to the commencement of drilling operations that ENCANA shall either: i) connect the Well to an Existing Pipeline; or ii) install the Pipeline in a Petroleum Pipeline Easement and Access Road, at the option and expense of Lafarge. g. Lafarge's operating plans anticipate that roads may cross over the Pipelines. For any Pipeline now existing or hereafter constructed within a Petroleum Pipeline Easement, Lafarge agrees to abide by the General Guidelines for Design and Construction Activities On or Near Kerr-McGee Gathering LLC and Kerr-McGee Rocky Mountain Corporation Pipelines and Related Facilities revised 3- 2004. h. Lafarge shall not disturb the existing cover over Pipelines during Lafarge's operations on the Property, except that: i) when crossing Pipelines with heavy equipment, such as earth moving equipment, Lafarge shall maintain a minimum of four (4) feet and a maximum of six (6) feet of dirt over Pipelines, in addition to the then existing cover over the Pipeline; and ii) when crossing Pipelines with light trucks and equipment, Lafarge shall maintain a minimum of two (2) feet and a maximum of six (6) feet of dirt coverage over the then existing cover over the Pipeline. The depth of cover over Pipelines shall not be reduced or drainage patterns over Pipelines altered without written approval from ENCANA. i. ENCANA may install and maintain markers on the Petroleum Pipeline Easements, and ENCANA shall mark its flowlines at locations as reasonably requested by Lafarge. j. Lafarge will not conduct or cause to be conducted extraction operations of any kind, including sand, gravel and aggregate mining operations, that are within twenty-five (25) feet from a Pipeline unless an engineer licensed in the State of Colorado and with expert knowledge in the area of soils, opines in a soils stability report, that a setback that is less than twenty-five (25) feet will be sufficient to preserve the integrity of the Pipeline. In such case, upon completion of extraction operations, Lafarge shall backfill and level the area that is within twenty-five (25) feet from the Pipeline. Notwithstanding anything herein to the contrary, Lafarge shall in no event conduct extraction operations closer than fifteen (15) feet from any Pipeline without the prior written approval of ENCANA. k. Lafarge shall not stockpile soil over any Pipeline. I. Utility crossings shall have a minimum of eighteen (18) inches vertical separation from Pipelines. Parallel utilities shall maintain a minimum of ten (10) feet of separation between the utilities and the Pipelines, unless ENCANA consents to a lesser distance, which consent shall not be unreasonably withheld. For example, it would not be unreasonable to withhold consent because of safety or operational concerns. Lafarge agrees to request all utility companies to contact ENCANA prior to laying lines parallel to Pipelines. m. Lafarge shall not permit the construction of any temporary or permanent buildings, structures or other improvements or facilities within or over the Petroleum Pipeline Easements or the Pipelines. Lafarge shall not plant trees or shrubs over the Petroleum Pipeline Easements and Pipelines. 6. ACCESS. a. Lafarge shall provide ENCANA with continuous access to all Oil and Gas Operations Areas, Production Facility Locations, Petroleum Pipeline Easements and Pipelines at all times. Except for access roads to be built to access Oil and Gas Operations Areas where no wells are located at the time of this Agreement, access roads to be used by ENCANA will either be the roads it currently uses or those that Lafarge constructs at its sole cost and expense as relocated roads as part of its development of the -5- DRAFT OF CSDUA 1/31/07 Property; provided, however, no access road may be closed by Lafarge until an acceptable replacement access route is available to ENCANA for use. b. Except as may be otherwise provided in subsection 6.a., ENCANA agrees to access the Property and the Oil and Gas Operations Areas along the routes depicted on the Exhibit B. Access to the Oil and Gas Operations Areas may be changed by mutual agreement of Lafarge and ENCANA; provided, however, all costs and expenses of such relocations unless requested by ENCANA shall be borne by Lafarge. c. Lafarge shall maintain and keep access roads that are jointly used by Lafarge and ENCANA in a condition and state of repair that serves the needs of Lafarge or, in the case of relocated existing roads, to at least the standard such road was maintained prior to its relocation, if a more substantial condition. In the event that joint access roads need to be improved in order to serve the needs of ENCANA, the parties agree to cooperate to allow ENCANA to construct the improvements, such improvements to be at the sole cost and expense of ENCANA. Neither ENCANA nor Lafarge shall unreasonably interfere with the use by the other of access roads. d. If Lafarge, as part of the relocation of any existing access road used by ENCANA, moves the point of intersection of such road and any public road or highway, Lafarge shall be responsible for obtaining and shall pay the costs to obtain from Weld County or any municipal authority having jurisdiction over the Property, as necessary, permits or authorization for the replacement access to and from the public road. Each such access location shall be not less than forty (40) feet in width along the public road. e. Construction and Width of Access Roads. 1) ENCANA shall be responsible for construction of its own roads in the locations shown on Exhibit B to Oil and Gas Operations Areas for Future Wells where Lafarge is not constructing roads for its own operations. 2) If Lafarge relocates an existing road being used by ENCANA for access to any Oil and Gas Operations Area, such relocated road shall be built to at least the quality of the road it replaces. 3) Access roads or portions of access roads that are jointly used by ENCANA and Lafarge shall be thirty (30) feet in width. If Lafarge improves or paves such joint-use roads for regular permanent or extended use, Lafarge shall construct or improve them so as to withstand the weight of oilfield equipment. Specifically in such case, Lafarge shall construct the roads so that they can be used to withstand the weight of 110,000 pounds and 28,000 pounds per axle. 4) Access roads or portions of access roads that are used exclusively by ENCANA shall be thirty (30) feet in width, and ENCANA shall install and maintain them to COGCC standards that apply to oil and gas operations. f. Lafarge agrees that it will not mine or extract materials from any portion of the access roads identified on Exhibit B, or those access roads that may be otherwise mutually agreed upon by the parties, without the written consent of ENCANA. Lafarge agrees to post and enforce a ten (10) mile per hour speed limit along all stretches of access roads that are jointly used by ENCANA and Lafarge. -6- DRAFT OF CSDUA 1/31/07 r-- 7. BATTERIES AND EQUIPMENT/PRODUCTION FACILITY LOCATIONS/ELECTRICAL SERVICE LINES. ENCANA shall have the right to locate, build, repair and maintain tanks, separators, dehydrators, compressors and other equipment ("Production Facility" or "Production Facilities") reasonably appropriate for the operation and production of Existing Wells and Future Wells within the Oil and Gas Operations Areas locations depicted on Exhibit B, generally located in the NW/4 of Section 19 ("Production Facility Locations.") With respect to Production Facilities other than flowlines and Pipelines: 1) ENCANA shall install and maintain, at its sole cost and expense, all fences around Wells and Production Facilities in compliance with the Rules and Regulations of the COGCC. 2) ENCANA shall install and maintain, at its sole cost and expense, all gates and locks reasonably necessary for the security of the Wells and Production Facilities. 3) ENCANA shall paint production facilities for the Wells, including wellhead guards,with a color of paint that is approved by the COGCC. 4) Lafarge shall not prevent or inhibit access by ENCANA to the Oil and Gas Operations Areas and Production Facility Locations or prevent or inhibit ENCANA's operations within the Oil and Gas Operations Areas or Production Facility Locations by landscaping or other improvements, unless otherwise agreed upon in writing between Lafarge and ENCANA. 5) Lafarge shall place temporary concrete barriers around Production Facilities, as directed by ENCANA, before the commencement of mining operations within an Oil and Gas Operations Area or Production Facility Location. In no event shall Lafarge mine within ninety (90) feet of Production Facilities or stockpile mined materials within a radius of fifty (50) feet of Production Facilities. 8. NOTICE OF FUTURE OPERATIONS. ENCANA shall provide at least seven (7) days prior written notice to Lafarge of operations in connection with reworking, fracturing, deepening or recompletion operations on Existing Wells and Future Wells; provided, however, ENCANA shall provide at least thirty (30) days prior written notice to Lafarge of the initial drilling of Future Wells. Regardless of the foregoing notice requirements, ENCANA shall have immediate access to all Production Facilities, Pipelines and Wells in the event of an emergency. After receipt of the above notice, but not less than five (5) working days prior to the date that ENCANA plans to commence drilling operations within an Oil and Gas Operations Area, ENCANA or Lafarge may request an on-site meeting. The purpose of the meeting shall be for ENCANA to inform Lafarge of the proposed oil and gas drilling operations and to coordinate site access, hazards, barricades, restoration or any other issues that may affect the use and development of the Property by Lafarge. 9. COMPLIANCE WITH SAFETY REGULATIONS. ENCANA understands that the surface mining operations of Lafarge on the Property are subject %^ to certain Mine Safety and Health Administration ("MSHA") regulations. ENCANA agrees that, while conducting its oil and gas operations on Property, it will comply with MSHA requirements that Lafarge -7- DRAFT OF CSDUA 1/31/07 notifies ENCANA in writing are applicable to ENCANA's operations on the Property. ENCANA agrees to inform its contractors and subcontractors about such requirements, but shall have no liability for the failure of such contractors and subcontractors to comply with the requirements. 10. DRILLING AND COMPLETION OPERATIONS. ENCANA shall endeavor to diligently pursue drilling operations to minimize the total time period for drilling and to avoid rig relocations or startup during the course of drilling. Lafarge waives any objections to continuous (i.e., 24-hour) drilling operations. 11. SHUT-IN OF WELLS. In the event that Lafarge interferes with the operations of ENCANA-on the Property so that wrnnwrn a• a' t, xxr n or x i n «r.. '•ea c.,.... z repairing or returning a Well or Wells to production, then Lafarge shall pay to ENCANA the value of the average daily production for the Well or Wells that are shut in (based upon the prior month's average production rates for the Well) and all other damages or losses that ENCANA incurs as a result of such interference. Shut-In Production Payments. EnCana may, in its discretion, for safety purposes, shut in any pipeline or flowline over which Lafarge's heavy earth-moving equipment is to be operated. Lafarge will notify EnCana at least twenty (20) days before Lafarge intends to commence construction activities where it will utilize heavy equipment or other equipment that may cause damage to the EnCana's flowlines or pipelines. Further, Lafarge may request or EnCana may elect in its discretion, to shut in one or more of its wells during Owner's construction activity on the surface of the Described Premises. During the period of shut-in of any well, pipeline or flowline (either at the request of Lafarge or at the discretion of EnCana), Lafarge shall pay EnCana the following amounts for each shut-in: Shut-In Duration Fee Der Well per Day 5 days or less None 6 -29days $150 30-60 days $200 Lafarge will also pay EnCana any costs to rework the well in order to place the well in production status after the shut-in and costs to replace pipelines and flowlines that are damaged by the surface construction activities of Owner. 12. GOVERNMENTAL PROCEEDINGS. Lafarge acknowledges the rights of ENCANA to conduct oil and gas operations on the Property in accordance with this Agreement and shall not object to or oppose ENCANA in any agency or governmental proceedings, including, but not limited to, the COGCC, Weld County, or other governmental entity related to the operations of ENCANA on the Property, including, but not limited to drilling, workovers, well deepenings and recompletions; provided that, the position of ENCANA in such proceedings is consistent with this Agreement. 13. MINING PLANS. Lafarge has provided copies to ENCANA of its Mining Permit and the engineering structural report prepared in connection with the Mining Permit (the "Plans"). ENCANA acknowledges receipt of the Plans and does not object to the Plans; provided, however, ENCANA does not in any way thereby either waive its rights under this Agreement or the obligations or agreements of Lafarge in this Agreement. -8- DRAFT OF CSDUA 1/31/07 14. RESTRICTED USE OF THE SURFACE BY ENCANA. Except for the Oil and Gas Operations Areas, Production Facility Locations, Petroleum Pipeline Easements, Pipelines and the access roads provided for in this Agreement, ENCANA shall not occupy the surface of the Property, except in the events of an emergency or for reasonable incidental, temporary and non-damaging activities, for which ENCANA shall be responsible for any damages that it causes that may occur to the Property. 15. LIMITATION OF LIABILITY,RELEASE AND INDEMNITY. a. No party shall be liable for, or be required to pay for, special, punitive, exemplary, incidental, consequential or indirect damages to any other party for activities undertaken within the scope of this agreement. b. Except as to claims arising out of pollution or environmental damage (which claims are governed by section 16 below) or out of other provisions of this Agreement (which claims shall be governed by the terms of this Agreement), each party shall be and remain responsible for its own liability for all losses, claims, damages, demands, suits, causes of action, fines, penalties, expenses and liabilities, including without limitation, attorneys' fees and other costs associated therewith(all of the aforesaid herein referred to collectively as "Claims"), arising out of or connected with each such party's ownership or operations on the Property, no matter when asserted, subject to applicable statutes of limitations. Each party shall release, defend, indemnify and hold the other party, its officers, directors, employees, successors and assigns, harmless against all such Claims. This provision does not, and shall not be construed to, create any rights in persons or entities not a party to this Agreement, nor does it create any separate rights in parties to this Agreement, other than the right to be indemnified for Claims as provided herein. c. Upon the assignment or conveyance of a party's entire interest in the Property, that party shall be released from the indemnification in section 15.b. above, for all actions or occurrences happening after such assignment or conveyance. 16. ENVIRONMENTAL INDEMNITY. The provisions of section 15 above, except for section 15.a., shall not apply to any environmental matters, which shall be governed exclusively by the following, subject to the limitations of section 15.a. above: a. "Environmental Claims" shall mean all Claims asserted by governmental bodies or other third parties for pollution or environmental damage of any kind, arising from operations on or ownership of the Property or ownership of the oil and gas leasehold interests, whichever is applicable, and all cleanup and remediation costs, fines and penalties associated therewith, including but not limited to any Claims arising from Environmental Laws or relating to asbestos or to naturally occurring radioactive material. Environmental Claims shall not include the costs of any remediation undertaken voluntarily by any party, unless such remediation is performed under the imminent threat of a Claim by a governmental body or other third party. b. "Environmental Laws" shall mean any laws, regulations, rules, ordinances, or order of any governmental authority(ies), which relate to or otherwise impose liability, obligations, or standards with respect to pollution or the protection of the environment, including but not limited to, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. § 9601 et seq.), the Resource Conservation and Recovery Act of 1976 (42 U.S.C. §§ 6901 et seq.), -9- DRAFT OF CSDUA 1/31/07 the Clean Water Act (33 U.S.C. §§ 466 et seq.), the Safe Drinking Water Act (14 U.S.C. §§ 1401-1450), the Hazardous Material Transportation Act (49 U.S.C. §§ 1801 et seq.), the Clean Air Act, and the Toxic Substances Control Act(15 U.S.C. §§ 2601-262 c. Environmental Indemnification. ENCANA shall defend, indemnify and hold harmless Lafarge, its successors and assigns, from Environmental Claims relating to Property that arise out of ENCANA's oil and gas leasehold under the Property or operations on the Property. Lafarge shall defend, indemnify and hold harmless ENCANA from Environmental Claims relating to the Property that arise out of its ownership, leasehold interests, operations or development of the Property. 17. EXCLUSION FROM INDEMNITIES. The indemnities of the parties herein shall not cover or include any amounts for which the indemnified party is actually reimbursed by any third party. The indemnities in this Agreement shall not relieve any party from any obligations to third parties. 18. NOTICE OF CLAIM FOR INDEMNIFICATION. If a Claim is asserted against a party for which the other party would be liable under the provisions of section 15 or section 16 above, it is a condition precedent to the indemnifying party's obligations hereunder that the indemnified party give the indemnifying party written notice of the Claim setting forth all particulars of the Claim, as known by the indemnified party, including a copy of the Claim (if it is a written Claim). The indemnified party shall make a good faith effort to notify the indemnifying party within ten (10) days of receipt of a Claim and shall effect such notice in all events within such time as will allow the indemnifying party to defend against such Claim. An indemnifying party shall not be obligated to reimburse an indemnified party for amounts paid in settlement of an indemnified claim unless the indemnifying party has agreed to the settlement, which agreement shall not be unreasonably withheld or delayed. 19. REPRESENTATIONS. Each party represents that it has the full right and authority to enter into this Agreement with respect to the surface estate or leasehold interests or oil and gas leasehold interests it owns in the Property. ENCANA does not represent that it has rights to settle matters for any mineral owner or any other oil and gas lessee for the Property, and this Agreement shall only apply to and bind ENCANA as to its oil and gas leasehold interests in the Property. 20. INDIVIDUAL LIABILITY OF PETROLEUM LESSEES. The liability of ENCANA to perform any obligation hereunder or to comply with any agreement included herein or with any state or local rule or regulation is individual and not joint or collective. This Agreement does not create a joint venture or partnership between or among ENCANA and any other party which owns or acquires oil and gas leasehold interests in the Property. 22. SUCCESSORS AND ASSIGNS. The terms, covenants, and conditions hereof shall be binding upon and inure to the benefit of the parties and their respective successors and assigns; provided, however, successors and assigns for ENCANA shall be limited to only those assignees under the oil and gas leases that are owned by ENCANA. 1O DRAFT OF CSDUA 1/31/07 r- 23. TERM. This Agreement shall become effective as of the date written above and shall remain in full force and effect until the latest to occur of the following: i) all of ENCANA's oil and gas leasehold interests in the Property have expired or are terminated, and ENCANA has plugged and abandoned all Wells it operates on the Property and complied with all reclamation and other requirements in its oil and gas leases and of the COGCC and other entities having jurisdiction; or ii) all of Lafarge's sand, gravel and aggregate mining leasehold interests in the Property have expired or are terminated (as to the portion of the Property leased by Lafarge), and Lafarge has complied with all reclamation and other requirements in its mining leases and Mining Permit and with all other applicable provisions in the mining leases, Mining Permit and state and local permits and rules and regulations. At the time this Agreement terminates, the parties shall execute releases that state that this Agreement no longer applies to the Property, except with respect to the indemnities in this Agreement, which indemnities shall survive termination to the extent provided herein. 24. NOTICES. Any notice or other communication required or permitted under this Agreement shall be given in writing by any of: i) personal delivery; ii) expedited delivery service with proof of delivery; iii) United States mail, postage prepaid, and registered with certified mail with return receipt requested; or iv) prepaid telecopy or fax, the receipt of which shall be acknowledged, addressed as follows: ENCANA: Lafarge: EnCana Oil and Gas (USA)Inc. Lafarge West, Inc. 370 17th Street, Suite 1700 10170 Church Ranch Way, Suite 200 Denver, Colorado 80202 Westminster, Colorado 80021 Attention: DJ Land Department Attention: Director of Lands Any party may, by written notice so delivered to the other parties, change the address or individual to whom delivery shall thereafter be made. 25. RECORDING. This Agreement and any amendments shall be recorded by ENCANA, and ENCANA shall provide Lafarge with copies showing the recording information as soon as practicable thereafter. 26. SURFACE DAMAGES; WAIVER OF PAYMENTS. In consideration of the respective rights, obligations and benefits of the parties as outlined herein, this Agreement shall constitute a surface use or surface damage agreement as described or provided for in any current or future rule or regulation of the COGCC or any local jurisdiction, state statute or at common law and in any oil and gas lease. Lafarge hereby waives all surface damage payments or other such payments for the use of the Property or portions thereof pursuant to any current or future COGCC or local regulation, state statute, common law or oil and gas lease or agreement for each and every well and related wellsite that is or will be drilled and located within the Oil and Gas Operations Areas and for Production Facility Locations and Pipelines and Petroleum Pipeline Easements and access roads. ENCANA may provide a copy of this Agreement to the COGCC or to any local jurisdiction, person or entity or any court of law as evidence of �^ this waiver. 27. NO PRIVATE RIGHT OF ACTION. 41- _ DRAFT OF CSDUA 1/31/07 Nothing in this Agreement creates a private right of action under any state statute or state or local rule or regulation, including the regulations of the COGCC and the provisions of the Colorado Oil and Gas Conservation Act at C.R.S. 34-60-101 et.seq. 28. CONSTRUCTION. The parties have participated jointly in the negotiating and drafting of this Agreement. In the event ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties. and no presumption or burden of proof shall arise favoring or disfavoring either party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any federal, state, local or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The word "including" shall mean including, without limitation. 29. APPLICABLE LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of Colorado, without reference to its conflict of laws provisions. 30. ENTIRE AGREEMENT. This Agreement and the letter agreement referenced in section 21 set forth the entire understanding between the parties regarding the matters addressed herein, and supersedes any previous communications, representations or agreement, whether oral or written. This Agreement shall not be amended, except by written document signed by the parties. 31. EXECUTION AND BINDING EFFECT. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original instrument, but all of which together shall constitute one and the same instrument. This Agreement is executed by the parties on the dates set forth in the acknowledgements, but to be effective on the date set forth above. ENCANA OIL AND GAS (USA) INC. By: Attorney-in-fact LAFARGE WEST,INC. By: Name: Title: 42 DRAFT OF CSDUA 1/31/07 ACKNOWLEDGMENTS STATE OF COLORADO ) CITY AND ) ss. COUNTY OF DENVER The foregoing instrument was acknowledged before me this day of 2007, by , as Attorney-in-Fact of EnCana Oil & Gas (USA) Inc. on behalf of such company. Witness my hand and official seal. Notary Public My Commission Expires: STATE OF COLORADO ) ss. COUNTY OF The foregoing instrument was acknowledged before me this day of 2007, by as of Lafarge West, Inc. Witness my hand and official seal. Notary Public My Commission Expires: 13 Message Page 1 of 2 King, James From: Frazier, Sheila S. [Sheila.Frazier@encana.com] Sent: Friday, January 12, 2007 3:26 PM To: Mayo, Joel A. Subject: RE: Lafarge/ Riverbend Joel: I believe you are aware that today is Mike's last day with us. Due to his departure, our time has been diverted to downloading Mike's knowledge which will prepare me for my upcoming nervous breakdown. Meanwhile, our attorney has been battling a virus so she is back logged needless to say. I hope to have some answers for you early next week. Thanks for your patience! Sheila A. Frazier, CPL Land Negotiator, DJ Basin (720)876-3440 (720)876-4440 (303) 242-9449 cell Original Message From: Mayo, Joel A. [mailto:jmayo@bakerlaw.com] Sent: Wednesday, January 10, 2007 1:26 PM To: Tucker, Mike; Frazier, Sheila S. Cc: vecchiassociates@comcast.net; King, James Subject: Lafarge / Riverbend Mike and Sheila, Per our telephone discussion last week, it was your aim to have available to us your company's comments to both the SUA and exhibits in connection with the Lafarge Riverbend Project. Please let me know how things stand in that regard. Thanks. My Bio I Web site I V-card T 303.764.4108 Joel Mayo F 303.861.7805 imayo@bakerlaw.com www.bakerlaw.com Baker&Hostetler LLP 303 East 17th Avenue Suite 1100 Denver,Colorado 80203-1264 EXHIBIT Baker Hostel:er 2/6/2007 Message Page 2 of 2 This email is intended only for the use of the party to which it is addressed and may contain information that is privileged, confidential, or protected by law. If you are not the intended recipient you are hereby notified that any dissemination, copying or distribution of this email or its contents is strictly prohibited. If you have received this message in error, please notify us immediately by replying to the message and deleting it from your computer. Internet communications are not assured to be secure or clear of inaccuracies as information could be intercepted, corrupted, lost, destroyed, arrive late or incomplete, or contain viruses. Therefore, we do not accept responsibility for any errors or omissions that are present in this email, or any attachment, that have arisen as a result of e-mail transmission. This email communication and any files transmitted with it may contain confidential and or proprietary information and is provided for the use of the intended recipient only.Any review,retransmission or dissemination of this information by anyone other than the intended recipient is prohibited. If you receive this email in error,please contact the sender and delete this communication and any copies immediately.Thank you. http://www.encana.com 2/6/2007 Message Page 1 of 1 King, James From: Mayo, Joel A. Sent: Tuesday, January 02, 2007 5:07 PM To: 'vecchiassociates@comcast.net' Cc: King, James Subject: Riverbend Jennifer, I just received a call from Mike Tucker and Sheila Frazier at Encana. Due to the holidays, snow days and the fact that their legal counsel is still out for the holidays, Mike stated that they would not have comments to the SUA and exhibits until early next week. I did ask for"at a minimum" preliminary comments (from their end, if not legal's) by early next week, just to see where we stand. I will keep pushing and keep you posted with any updates. Sincerely, Joel Mayo My Bio I Web site I v-card T 303/64.4108 Joel Mayo 303 861.7805 jmayo@bakerlaw.com www.bakerlaw.com Baker&Hostetler LLP 303 East 17th Avenue Suite 1100 Denver,Colorado 80203-1264 Baker _OStel(O r 2/6/2007 Message Page 1 of 2 King, James From: Mayo, Joel A. Sent: Friday, December 15, 2006 4:40 PM To: 'Tucker, Mike'; 'Frazier, Sheila S.' Cc: King, James; 'Jennifer Vecchi' Subject: RE: Section 19 / Riverbend Project Mike and Sheila, Please let me know on Monday when we might be able to get your feedback/comments with respect to the proposed Surface Use Agreement and Exhibits. Thanks. Joel A. Mayo Baker Hostetler 303 East 17th Avenue,Suite 1100 Denver,Colorado 80203 T(303)764-4108 F(303)861-7805 jmavo(@bakerlaw.com IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS in Circular 230, we inform you that, unless we expressly state otherwise in this communication (including any attachments), any tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of(i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or other matter addressed herein. Original Message From: Tucker, Mike [mailto:Mike.Tucker@encana.com] Sent: Monday, December 11, 2006 11:32 AM To: Mayo, Joel A.; Frazier, Sheila S. Cc: King, James; Jennifer Vecchi Subject: RE: Section 19 / Riverbend Project Joel, We have received the email and are in the process of reviewing the plats in conjunction with the agreement. We should be able to provide some feedback by Wednesday the 13th. MLT Original Message From: Mayo, Joel A. [mailto:jmayo@bakerlaw.com] Sent: Monday, December 11, 2006 11:28 AM To: Tucker, Mike; Frazier, Sheila S. Cc: King, James; Jennifer Vecchi Subject: Section 19 / Riverbend Project Mike and Sheila, 2/6/2007 Message Page 2 of 2 Based upon Mike Morrison's e-mail of last week, it is my understanding that you have the exhibits depicting the proposed locations for Encana's wells and oil and gas operations areas within Section 19. Please contact us at your earliest opportunity with any comments to the exhibits and/or the proposed surface use agreement. Thanks - Joel. My Bio I Web site I V-card T 303.764.4108 Joel Mayo F 301861 7805 jmayo@bakerlaw.com M www.bakerlaw.com Baker&Hostetler LLP 303 East 17th Avenue Suite 1100 Denver,Colorado 80203-1264 Baker Hostetler This email is intended only for the use of the party to which it is addressed and may contain information that is privileged, confidential, or protected by law. If you are not the intended recipient you are hereby notified that any dissemination, copying or distribution of this email or its contents is strictly prohibited. If you have received this message in error, please notify us immediately by replying to the message and deleting it from your computer. Internet communications are not assured to be secure or clear of inaccuracies as information could be intercepted, corrupted, lost, destroyed, arrive late or incomplete, or contain viruses. Therefore, we do not accept responsibility for any errors or omissions that are present in this email, or any attachment, that have arisen as a result of e-mail transmission. 2/6/2007 Message Page 1 of 2 King, James From: Tucker, Mike [Mike.Tucker@encana.comj Sent: Monday, December 11, 2006 11:32 AM To: Mayo, Joel A.; Frazier, Sheila S. Cc: King, James; Jennifer Vecchi Subject: RE: Section 19 / Riverbend Project Joel, We have received the email and are in the process of reviewing the plats in conjunction with the agreement. We should be able to provide some feedback by Wednesday the 13th. MLT Original Message From: Mayo, Joel A. [mailto:jmayo@bakerlaw.com] Sent: Monday, December 11, 2006 11:28 AM To: Tucker, Mike; Frazier, Sheila S. Cc: King, James; Jennifer Vecchi Subject: Section 19 / Riverbend Project Mike and Sheila, Based upon Mike Morrison's e-mail of last week, it is my understanding that you have the exhibits depicting the proposed locations for Encana's wells and oil and gas operations areas within Section 19. Please contact us at your earliest opportunity with any comments to the exhibits and/or the proposed surface use agreement. Thanks -Joel. My Elio 1 Web site I V-card T 303.764.4108 Joel Mayo F 303.881.7805 jmayo@bakerlaw.com M www.bakerlaw.com Baker 8 Hostetler LLP 303 East 17th Avenue Suite 1100 Denver,Colorado 80203-1264 Baker Hostoticr This email is intended only for the use of the party to which it is addressed and may contain information that is privileged, confidential, or protected by law. If you are not the intended recipient you are hereby notified that any dissemination, copying or distribution of this email or its contents is strictly prohibited. If you have received this message in error, please notify us immediately 2/6/2007 Message Page 2 of 2 by replying to the message and deleting it from your computer. Internet communications are not assured to be secure or clear of inaccuracies as information could be intercepted, corrupted, lost, destroyed, arrive late or incomplete, or contain viruses. Therefore, we do not accept responsibility for any errors or omissions that are present in this email, or any attachment, that have arisen as a result of e-mail transmission. 2/6/2007 Page 1 of 2 King, James From: Mike Morison [Mike.Morison@ttrmc.com] Sent: Friday, December 08, 2006 1:22 PM To: mike.tucker@encana.com Cc: shiela.frazier@encana.com; King, James; Mayo, Joel A.; eric.reckentine@lafarge-na.com; vecchiassociates@comcast.net; Pam Hora Subject: Re: Encana oil facilities exhibits for Riverbend/LaFarge project Please find attached a PDF with documents dated 12-8-06 for your review. Happy Friday! MICHAEL A. MORISON TETRA TECH RMC 1900 SO. SUNSET ST., SUITE 1F LONGMONT, COLORADO 80501 303-772-5282X213 DISCLAIMER STATEMENT-USE OF ELECTRONIC DATA FILES TETRA TECH, RMC The electronic data files (Files) furnished by Tetra Tech, Inc. (Tetra Tech), and any subsidiaries of Tetra Tech, to the person or entity receiving the Files (User) are provided only for the convenience of the User, and only for its sole use. USER AGREES THAT, BY OPENING THE PACKAGE CONTAINING THE FILES, USER SHALL BE BOUND BY AND SUBJECT TO THE TERMS OF THIS DISCLAIMER. User recognizes that the Files may not be adequate or appropriate for User's needs. In the case of any defects in the Files or any discrepancies between the Files and the hardcopy of the Files bearing the seal of Tetra Tech's professional registrant, the sealed hardcopy shall govern. User accepts the Files on an "as-is" basis, with any and all faults. There are no express warranties made by Tetra Tech with respect to the Files, and any implied warranties are excluded. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE EXCLUDED. Tetra Tech assumes no responsibility for the accuracy or completeness of the Files, and any use or reuse of such electronic data for any purpose shall be at the User's sole risk. Furthermore, in consideration of the use of the electronic data and the Files, User agrees, to the fullest extent permitted by law, to defend (by 2/6/2007 Page 2 of 2 legal counsel selected by Tetra Tech), indemnify, and hold Tetra Tech harmless from any and all claims, damages, losses, costs, and expenses, including attorney's fees and court costs (including the costs of any appeals) arising out of or resulting from User's use, reuse, or use by others, regardless of whether such claims, damages, losses, costs, and expenses are caused in whole or in part by Tetra Tech. The duty to defend, indemnify, and hold Tetra Tech harmless shall apply regardless of whether such claims, damages, losses, costs, and expenses arise out of causes of action for tort, including negligence, contract, warranty, or strict liability. 2/6/2007 R67W R66W„_.. _ _..._..._ ..r.. .. k, / 1 \ / L jj y I 4 / 1 '1� r l 'fit A C t` - -- .- PROP Y _ 1 ii SEC. 12 ',: i .', '. SC )7 I LAFARGE i' ITY pF WEST, INC. I r.e �` TO' I ,I, ::'I PROPERTY PRO R —I w 1 •n= � I I. .I IKUMA j E >fT N I , Ca I-elEA • ex E_ ¢ ' ,0- SEA. 13 1'r g ! SEC. 1 ;; ¢ L. F I I h irl V` . 'II , .a yr. _- ' �'°T l 1 ' rvr , GE ' r E' , INC. q;' `� I PRtM «. .® r II RIVERBEND BOUNDARY .._.-.. - , SEC. 19 BOUNDARY „ 3 I. 1 OUSE ,,,1 , _..._..._. WCR 6 I - - _ '-i DRAFT 12-08-06 • ENCANA CORPORATION North EXHIBIT "B" OIL & GAS WELL OPERATIONS SECTION 19,T1 N, R66W, PARCEL 6TH P.M.,WELD COUNTY COLOADO -a- ii OWNERSHIP/LEASE TETRATECH RMC 0 1000' 2000' MAP Mb 1900 S. SUNSET ST., SUITE 1-F, LONGMONT, CO 80501 4 = TEL 303.772 5282 METRO 303.665.6283 FAX 303.665,6959 SCALE: 1"=2000' RIVERBEND OIL & GAS 1 OF 3 FACILITIES 80-4137.012.00 L , R67W , R66W y 1 , (' •• 1 i 4 1 i i 1 SEC. 12 I, I SEC,I7 I u i A 'W c -` _-_'_4_ ,'N _ l= _ ; -\ �; I/ M 1 T N It �i I .S:i I ce : '; / I. C 0'3__ _� SE . 13 .ii. R k SEC. 1 I I ,. 1 lI } It llaii! • PI I w q.. f .-.. II 'L SE . 24 SEC. 19 , BOUNDARY :.' r-" I I I ,I II . _..._..._...+. WCR 6. _.s- DRAFT 12-08-06 North ENCANA CORPORATION OIL & GAS WELL OPERATIONS KEY MAP SECTION 19,TIN, R66W, 6TH P.M.,WELD COUNTY COLOADO 0 1000' 2000' TETRATECH RMC _� 1900 S. SUNSET ST., SUITE 1-F, NT, CO 80501 { TEL 303.772.5282 METRO 303 665 6283 FAX FAX 303.665.6959 JS SCALE: 1"=2000' RIVERBEND OIL & GAS 2 OF 3 FACILITIES 80-4137.012.00 �"/ — — — — ELI COUNT*R,s D NO - 0' } illl it I" CU II ✓ 1 I{ J 6-e, . 1 30'PETROLEUM 1 LeI ' 7 .f III PIPELINE EASEMENT ;I -11 I I'I i v 30'WIDE PETROLEUM i ® FUTURE ENCANA ,„%;",/,;,` PIPELINE EASEMENT ' GAS WELL I , ,,lI AND ACCESS ROAD , 1F is It F x,:N It I 3t 1 .C-.b it I ! • MIII 1 a , �Lhonneav� ,,k.' t, 1 :3 11 II !I f ' 11 ill -:♦ 7 ,� 11 W c' �' f II•�.K.a r' �'1ia 11 • I St ..--. A 111 "t �/ wr0 :Tr Li;i n u.i.G �₹ 111 AL:-:„:2, .r,"'y� t / 11; • „E 1 ;1 4 i 71( n ,J"! RE ♦ .>.. —i p-1, .. �rct* 1 e `I. kt, L 6, 27 1; ij �. , I FUTURE ENCANA SWELL i, tl DRAFT i LEGEND: i'i PETROLEUM PIPELINE TO BE ABANDONED A ENCANA GAS WELL 12-08-06 - -G-- PETROLEUM PIPELINE RELOCATION ROUTE ..,,..► ENCANA OIL&GAS OPERATIONS North AREA DRILL WINDOW •E KERR-McGEE TANK/GAS WELL A CITYOFAURORAWELL ENCANA CORPORATION ,,,,, 1 KERR-McGEE OIL&GAS OPERATIONS AREA OIL & GAS WELL OPERATIONS u 1501300' c---..... EXISTING PETROLEUM PIPELINE SECTION 19,TIN, R66W, 4 �� .,,,,.,30'PETROLEUM PIPELINE 6TH P.M.,WELD COUNTY COLOADO 'r ° .:".'EASEMENT&ACCESS ROAD TETRA TECH RMC SCALE: 1"=300' ,,,KP KAUFFMAN OIL&GAS r."•h VLF C,.. TEL 3 SUNSET ST., SUITE 1-F,65 LONGMONT. 6 80501 OPERATIONS AREA TEL 303.772.5262 METRO 303.665.6283 FAX 303.665.6959 x KP KAUFFMAN GAS WELL RIVERBEND OIL & GAS FACILITIES 3 OF 3 80-4137.012.00 Message Page 1 of 2 ^ King, James From: Mayo, Joel A. Sent: Thursday, January 25, 2007 10:59 AM To: King, James Subject: FW: Lafarge/ Riverbend Project Joel A. Mayo Baker Hostetler 303 East 17th Avenue,Suite 1100 Denver,Colorado 80203 T(303)764-4108 F(303)861-7805 /mayorthbakerlaw.com IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS in Circular 230, we inform you that, unless we expressly state otherwise in this communication (including any attachments), any tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of(i) avoiding penalties under the Internal Revenue Code or(ii) promoting, marketing or recommending to another party any transaction or other matter addressed herein. ^ Original Message From: Mayo, Joel A. Sent: Tuesday, December 05, 2006 4:21 PM To: Tucker, Mike'; 'Frazier, Sheila S.' Cc: King, James; 'Eric.Reckentine@lafarge-na.com'; 'vecchiassociates@comcast.net' Subject: Lafarge / Riverbend Project Mike and Sheila, Attached please find two (2) provisions to be included within the pending Surface Use Agreement by and between Encana and Lafarge, the form of which was previously sent November 14, 2006.. As discussed earlier today, it is my understanding that you should shortly be in receipt of the revised exhibits to the Surface Use Agreement as prepared at the request of Ms. Vecchi. I am aware that the same are intrinsic to your ability to review and approve the proposed agreement. Please review the foregoing provisions and contact us at your earliest opportunity with any comments or questions. Based upon the approaching holidays and the fact that Lafarge has reached agreement with KP Kaufman and Kerr McGee, we would like to work towards finalization of the proposed agreement as quickly as possible, allowing for Lafarge to move forward with their permitting and operations. Thank you. Joel Mayo My Bio Web site I V-card T 303.764.4108 Joel Mayo F 303.861.7805 jmayo@bakerlaw.com M 2/6/2007 Message Page 2 of 2 www.bakerlaw.com Baker&Hostetler LLP 303 East 17th Avenue Suite 1100 Denver, Colorado 80203-1264 Bake,r Hostetler 2/6/2007 1) Waiver Language: This Agreement constitutes acknowledgement by Encana that, based upon the understandings reached herein, it has no objection to Lafarge's planned surface development and mining operations upon the Property, and Encana further waives, pursuant to C.R.S. 24-65.5-103(5), any objection it might otherwise assert as to the sufficiency or timeliness of Lafarge's notification of surface development of the Property as required pursuant to C.R.S. 24-65.5-103. 2) Section 7: Lafarge's planned and permitted mining operations extend to the W'/2SW%< of Section 7, T1 N, R66W of the 6`h P.M., Weld County, Colorado (the "Section 7 Property"), which Lafarge leases from the City of Thornton. Encana has oil and gas leases or other working interests within the Section 7 Property. Neither party contemplates immediate operations on the Section 7 Property. Accordingly, in lieu of an immediate final agreement as to the location and extent of Oil and Gas Operations Areas, Pipeline Easements and access easements pertaining to the Section 7 Property, the parties hereby acknowledge that the operational standards, conditions, rights and obligations set forth in this Agreement shall likewise apply to the Section 7 Property and the parties shall reach final agreement on the details of the Oil and Gas Operations Areas, Pipeline Easements and access to the Section 7 Property prior to commencement of any surface-disturbing operations by Lafarge on the Section 7 Property. In furtherance of this intent, if such locational and operational details have not been finalized prior to the time Encana desires to conduct drilling operations with respect to the Section 7 Property, Encana agrees to give Lafarge at least ninety (90) days prior written notice of such intent and the parties shall endeavor at that time to resolve all open matters as to Oil and Gas Operations Areas, access and Pipeline Easements and shall supplement this Agreement by the addition of Exhibits depicting all such areas in form comparable to the Exhibits attached hereto, or otherwise amend the Agreement to address such matters. In no event shall Lafarge commence surface disturbing operations on the Section 7 Property unless and until the location of all Oil and Gas Operations Areas, Pipeline Easements and access routes are agreed to by a definitive supplement or amendment to this Agreement and the City of Thornton has agreed to the same. Notwithstanding the foregoing, in the event Encana does not, by written notice to Lafarge, evidence its intent to commence drilling operations upon the Section 7 Property on or before January 1, 2027 and Lafarge has not otherwise indicated its intent to commence mining operations by said date, Encana shall have been deemed to have vacated its drilling rights within the Section 7 Property and waived all objections to Lafarge's mining operations thereon as may be available per statute; no surface use agreement as to the Section 7 Property shall be required hereunder; and Lafarge may proceed with mining operations upon the Section 7 Property without further notice to Encana. King, James gym: Mayo, Joel A. it: Thursday, January 25, 2007 10:59 AM To: King, James Subject: FW: Lafarge/Section 19 - Riverbend Project Joel A. Mayo Baker Hostetler 303 East 17th Avenue,Suite 1100 Denver,Colorado 80203 T(303)764-4108 F(303)861-7805 jmayo@bakerlaw.com <mailto:jmayo@bakerlaw.com> IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS in Circular 230, we inform you that, unless we expressly state otherwise in this communication (including any attachments), any tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of(i) avoiding penalties under the Internal Revenue Code or(ii) promoting, marketing or recommending to another party any transaction or other matter addressed herein. Original Message From: Mayo,Joel A. Sent: Monday,November 27, 2006 5:17 PM To: 'sheila.frazier@encana.com'; 'mike.tucker@encana.com' King,James ject: Lafarge/Section 19- Riverbend Project Mike and Sheila, Just following up on the status of your review of the proposed SUA in connection with the above-referenced matter. It is my understanding that Ms. Vecchi has provided you with updated maps of the area which, for our purposes, will be used as exhibits to the SUA. Please let me know when we can expect your initial comments. As you are no doubt aware, our client is anxious to finalize all SUAs so that permitting may proceed. Thanks. Joel Mayo 1 Message Page 1 of 2 King, James • From: Mayo, Joel A. Sent: Thursday, January 25, 2007 11:00 AM To: King, James Subject: FW: Lafarge Joel A. Mayo Baker Hostetler 303 East 17th Avenue,Suite 1100 Denver,Colorado 80203 T(303)764-4108 F(303)861-7805 jmavo@bakedaw.com IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS in Circular 230, we inform you that, unless we expressly state otherwise in this communication (including any attachments), any tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of(i) avoiding penalties under the Internal Revenue Code or(ii) promoting, marketing or recommending to another party any transaction or other matter addressed herein. Original Message From: Mayo, Joel A. Sent: Tuesday, November 14, 2006 3:58 PM To: 'Tucker, Mike'; 'Sheila.Frazier@encana.com' Cc: King, James Subject: Lafarge Mike and Sheila, In connection with Lafarge's planned mining operations within portions of Section 19, T 1 N, R 66W of the 6th P.M., and in efforts to move forward quickly with our negotiations for a mutually acceptable surface use agreement as pertains to that property, attached for your review, please find the form of Surface Use Agreement as is currently being finalized by and between Lafarge and KP Kaufman (whom, as you are aware, also holds leasehold interests within portions of Section 19). We would suggest that this same form be used as a basis for our negotiations as to the form and content of the Surface Use Agreement between Lafarge and Encana and, in connection therewith, would ask that you have the same forwarded to your legal department, if necessary, for initial review and comment. After initial review by all necessary parties on your end (said review to include the future well location exhibits as are to be provided by Ms. Vecchi) , please contact us at your earliest opportunity so that we may move ahead towards finalization as quickly as possible. Should you have any questions in the interim, please do not hesitate to contact me. Sincerely, Joel Mayo 2/6/2007 Message Page 2 of 2 My Blo I Web site V-card T 303 764 4108 Joel A.Mayo F 303.861.7805 riayo@bakedawcom M www.bakerlaw.corn Baker&Hostetler LLP 303 East 17th Avenue Suite 1100 Denver,Colorado 80203-1264 Baker Hostetler 2/6/2007 LaFarge Page 1 of 1 King, James From: Frazier, Sheila S. [Sheila.Frazier@encana.com] Sent: Tuesday, November 14, 2006 11:51 AM To: vecchiassociates@comcast.net Cc: Mayo, Joel A.; Tucker, Mike Subject: LaFarge Jennifer: It was a pleasure meeting with you yesterday regarding the finalization of your plans for Lafarge. Pursuant to our meeting yesterday, I have reviewed title to confirm Encana's interest in the NW/4 of Section 19 Ti N-R66W to be 100% from the surface to the J formation, subject to the KPK Farmout of the Sussex/Shannon formation, therefore we will require a surface use agreement in connection with Lafarege's planned activities. Mike will be out of the office next week but I will be working closely on this project to avoid any delays. As discussed, please proceed with the recommended changes to Encana's future wellsites and forward same to the attention of the myself with a cc to Mike Tucker. Thanks Sheila Starch Frazier, CPL (720)876-3440 Land Negotiator 2/6/2007 King, James >=-om: Mayo, Joel A. ,t: Thursday, November 02, 2006 4:13 PM To: King, James; 'Jennifer Vecchi' Subject: RE: Encana Jennifer, Just a quick follow-up regarding Encana. Mike and I have scheduled a meeting next Tuesday afternoon to discuss Section 19. I will update you following the same. Thanks. Joel A. Mayo Baker& Hostetler LLP 303 East 17th Avenue Suite 1100 Denver, Colorado 80203 (303) 764-4108 (303) 764-7805 (fax) email:jmayo(a�bakerlaw.com <mailto:imavo(c?bakerlaw.com> IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS in Circular 230, we inform you that, unless we expressly state otherwise in this communication (including any attachments), any tax advice contained in this communication is not -nded or written to be used, and cannot be used, for the purpose of(i) avoiding penalties under the Internal Revenue 4e or (ii) promoting, marketing or recommending to another party any transaction or other matter addressed herein. Original Message From: King,James Sent: Wednesday, October 04, 2006 5:14 PM To: Jennifer Vecchi Cc: Mayo,Joel A. Subject: Peterson SUA Jennifer, Here's a Word version so you can insert addresses, etc. Before any document is actually executed, it would be desirable to lock it down in PDF Format so that all counterparts, wherever printed, look the same. Jim King. James M. King Baker & Hostetler LLP 303 E. 17th Avenue, Suite 1100 Denver, Colorado 80203 303-764-4087 Fax: 303-861-2307 « File: PetersonSUA.DOC » 1 Message Page 1 of 1 King, James From: Mayo, Joel A. Sent: Tuesday, October 31, 2006 12:00 PM To: 'Tucker, Mike' Subject: Lafarge Mike, I just spoke with our client who was inquiring as to your progress with Encana's potential interest in Section 19 (Ti N, R66w). They are anxious to move forward and need to resolve any issues with respect to this and Section 7 (which we have already clarified). Please contact at your earliest convenience with any information and discuss the same. Thanks, hope all is well. My BIo I Web site I V-card T 303.764.4108 Joel A.Mayo F 303.861.7805 jmayo@bakerlaw.com M www.bakerlaw.com Baker&Hostetler LLP 303 East 17th Avenue Suite 1100 Denver,Colorado 80203-1264 Baker Hostetler 2/6/2007 Message Page 1 of 1 King, James From: Mayo, Joel A. Sent: Wednesday, October 25, 2006 10:27 AM To: 'Tucker, Mike' Cc: King, James Subject: Lafarge Mike, It was good seeing you yesterday. Just wanted to follow up regarding the situation with Lafarge. As you will recall, Lafarge is preparing to begin mining operations which will affect Sections 7 and 19, T1 N, R66W. Per our last meeting, we verified that there was no need for additional agreement between Encana and Lafarge with respect to Section 7 as Encana had previously bottom holed the affected portion of that section. However, we are awaiting word from you in connection with Encana's possible operations in Section 19 and the potential need for a surface use agreement in connection with Lafarge's planned activities in that area. Please let me know, at your earliest opportunity, what your review may have revealed so that we can move towards finalizing matters for both sections. As always, I appreciate your help. Sincerely, Joel A. Mayo My Bio I Web site I v-card T 303.764.4108 Joel A.Mayo F 303.861.7805 jmayo@bakerlaw.com www.bakerlaw.com Baker&Hostetler LLP 303 East 17th Avenue Suite 1100 Denver,Colorado 80203-1264 Bak.:Hosteller 2/6/2007 Message Page 1 of I King, James From: Mayo, Joel A. Sent: Friday, October 20, 2006 9:46 AM To: 'Tucker, Mike' Subject: Lafarge/ Section 19 Mike, Could we talk at some point (say Monday) regarding the status of Section 19 within Lafarge's Riverbend Project? I know you've been in the field but my client is calling regarding the status. Perhaps we can schedule a conference (in person or by phone) to discuss. Thanks. My Bio Web site I V-card T 303.764.4108 Joel A.Mayo F 303.861.7805 jmayo@bakerlaw.com M www.bakerlaw.com Baker& Hostetler LLP 303 East 17th Avenue Suite 1100 Denver,Colorado 80203-1264 Bata Hostetler 2/6/2007 Message Page 1 of 2 King, James From: Mayo, Joel A. Sent: Thursday, October 12, 2006 1:43 PM To: 'Tucker, Mike' Subject: RE: Lafarge Just wanted to keep you on your toes. I figured tomorrow might be shaping up for one of your regular"field work" days. Joel A.Mayo Baker& Hostetler LLP 303 East 17th Avenue Suite 1100 Denver, Colorado 80203 (303) 764-4108 (303) 764-7805 (fax) email:jmayo@bakerlaw.com IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS in Circular 230, we inform you that, unless we expressly state otherwise in this communication (including any attachments), any tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of(i) avoiding penalties under the Internal Revenue Code or(ii) promoting, marketing or recommending to another party any transaction or other matter addressed herein. Original Message From: Tucker, Mike [mailto:Mike.Tucker@encana.com] Sent: Thursday, October 12, 2006 1:38 PM To: Mayo, Joel A. Subject: RE: Lafarge Joel, I have not had a chance to dive into Sec 19 just yet, but it is sitting here on my desk for my review. Original Message From: Mayo, Joel A. [mailto:jmayo@bakerlaw.com] Sent: Thursday, October 12, 2006 1:35 PM To: Tucker, Mike Subject: Lafarge Mike, Just following up to see if you had any update regarding Section 19, T1N, R66W. As always, appreciate your help and look forward to hearing from you. 2/6/2007 Message Page 2 of 2 My Bio I Web site I V-card T 303.764.4108 Joel Mayo F 303.861/B05 jmayo@bakerlaw.com M www.bakedaw.com Baker&Hostetler LLP 303 East 17th Avenue Suite 1100 Denver,Colorado 80203-1264 Baer Hostetter This email is intended only for the use of the party to which it is addressed and may contain information that is privileged, confidential, or protected by law. If you are not the intended recipient you are hereby notified that any dissemination, copying or distribution of this email or its contents is strictly prohibited. If you have received this message in error, please notify us immediately by replying to the message and deleting it from your computer. Internet communications are not assured to be secure or clear of inaccuracies as information could be intercepted, corrupted, lost, destroyed, arrive late or incomplete, or contain viruses. Therefore, we do not accept responsibility for any errors or omissions that are present in this email, or any attachment, that have arisen as a result of e-mail transmission. 2/6/2007 Message Page 1 of 1 King, James From: Mayo, Joel A. Sent: Wednesday, October 04, 2006 1:28 PM To: 'mike.tucker@encana.com' Subject: Lafarge West, Inc. /W1/2 of the SW114, Section 7, Township 1 N, Range 66 W Mike, I appreciate your time yesterday in discussing the above-referenced matter. Attached is a draft of the letter as proposed, setting forth our understandings and requesting waivers with respect to the timeliness of the notification of surface development and any objections to Lafarge's development of the respective property. Due to the fact that the meeting was between you and I, I have left the letter addressed to you, but have allowed for execution of the same by an authorized representative of Encana. Hope this works. I know you won't be able to review the same today, but if you could give me any feedback at your earliest opportunity, it would be much appreciated as I would like to get the letter out as quickly as possible. Again, thanks. My Rio I Web site I V-card T 303.764.4108 Joel Mayo F 303.861.7805 jmayo@bakerlaw.com www.bakedaw.com Baker&Hostetler LLP 303 East 17th Avenue Suite 1100 Denver,Colorado 80203-1264 Backe _IL`Js otor 2/6/2007 Hello