Form 26-44

This form identifies issues to be negotiated between a surface owner and mineral lessee regarding the extent of the use of the surface for mineral operations. The parties should consult the terms of the applicable mineral leases and other underlying rights in negotiating terms. See form 16-7 in this man­ual for examples of restrictions of surface use in water transactions and section 16.91 for a discussion of produced waters. The insurance provisions are suggestions only; the parties should consult their insurance advisors to determine suitable coverages and limits. See chapter 17 in this manual for a dis­cussion of risk allocation issues, including indemnity, waiver, and insurance. The agreement, or a memorandum of it, should be recorded in each county where the property is located to alert the public and subsequent owners and lessees of its existence.

Surface Use and Drill Site Agreement

Date:

Grantor:

Grantor’s Mailing Address:

Grantee:

Grantee’s Mailing Address:

Consideration: $[amount] [and other valuable consideration]

Grantor is the owner of that certain tract of land located in [county] County, Texas, more fully described on Exhibit A attached hereto (the “Property”);

Grantee is the lessee under that certain oil and gas lease recorded at [recording data] covering the minerals lying under a portion of the Property (the “Lease”); and

Grantee intends to drill, or cause to be drilled, one or more oil wells, gas wells, or both on the Property, and Grantor and Grantee desire to enter into this Surface Use and Drill Site Agreement (“Agreement”) for the purposes of identifying one or more drill sites for the use of Grantee, conveying to Grantee certain nonexclusive easements over portions of the Property for drill sites and road and pipeline purposes and restricting other rights of Grantee to use the Property, all on the terms and conditions set forth in this Agreement.

For the Consideration, the parties hereby agree as follows:

A.Surface Waiver.      Except strictly as set forth in this Agreement, Grantee absolutely and irrevocably waives and relinquishes all of its rights to enter on or use the Property for any purpose, including, without limitation, the purposes of exploring and drilling for, and produc­ing, transporting, and marketing oil, gas, and other minerals from, the Property or lands pooled therewith, regardless of how those rights may arise or exist, including, without limita­tion, all such rights arising under or by virtue of the Lease and/or applicable law. Notwith­standing the foregoing, Grantee expressly does not waive or relinquish any rights it may have to produce oil, gas, and other minerals from the Property by [directional/horizontal] drilling under the Property from well sites on land other than the Property, provided, however, that no penetration of the subsurface of the Property shall be made at a depth less than [number] feet below ground level of the Property.

B.Drill Site[s].      Grantee shall have the right to use [number] drill site[s] comprising no more than [number] acre[s] (whether one or more, the “Drill Site”), during actual drilling, completion, recompletion, reworking, and production operations on the Property (“Opera­tions”), including all accessories and facilities relating thereto, including without limitation all drilling/reworking equipment, tanks, separators, heater-treaters, meters, and meter runs. The Drill Site is depicted on a surveyed plat attached to this Agreement as Exhibit B. Notwith­standing anything to the contrary in this Agreement, Grantee acknowledges and agrees that Grantee shall have no right to enter on or conduct any operations of any type on the surface of the Property located outside of the Drill Site. Before conducting any Operations, Grantee shall fence the Drill Site securely and establish security procedures for entry onto the Drill Site. Within [number] days from the conclusion of Operations on the/any Drill Site: (1) the Drill Site shall be reduced in size, so as not to contain more than [number] acre(s) in the form of a square or rectangle; (2) the/such Drill Site shall be cleaned and all oil and/or gas waste materi­als, junk, pieces of iron, pipes, and other debris shall be removed by Grantee and the original or similar topsoil replaced, leveled, and restored to as near its original condition as possible; and (3) any materials and equipment not necessary for continued operation of a productive well(s) shall be dug up, if necessary, and hauled off of the Drill Site. Upon permanent cessa­tion of use of the Drill Site, all equipment and fences shall be removed by Grantee from the location, all caliche and gravel shall be removed, topsoil shall be distributed thereon, the dis­turbed area shall be fertilized and reseeded with the type and quantity of native grass desig­nated by Grantor, and the site shall be cleaned and restored by Grantee to Grantor’s reasonable satisfaction. Grantee’s obligation to restore the surface of the Drill Site shall include the complete excavation and removal of all walls, fencing, and concrete pads.

C.Access Easement.      Grantor conveys to Grantee the concurrent nonexclusive right and privilege of using that certain portion of the Property shown on Exhibit C attached to this Agreement (the “Access Easement Area”), for purposes of ingress to and egress from the Drill Site. Before entering onto the Access Easement Area, [Grantee/Grantor] shall fence the entry to the Access Easement Area securely and establish security procedures for entry onto the Access Easement Area.

D.Road Improvements and Maintenance.      [Grantee/Grantor] shall improve and there­after maintain all roads to be used by Grantee within the Access Easement Area by placing the necessary amount of rock, caliche, or fill material to ensure that those roads are passable in all reasonably anticipated weather conditions for as long as Grantee makes use of them. [Grantee/Grantor] shall clear and remove all brush located within or along the Access Easement Area, and Grantee shall ensure that the Access Easement Area is kept free of weeds, litter, and debris. In no event shall Grantee allow its use of the Access Easement Area to interfere with Grantor’s use of the Property and shall take precautions to avoid any overhead power lines located on the Property. At Grantor’s direction, and upon the completion of Operations, Grantor shall have the option for Grantee to either (1) leave the road materials in place, in which event the surface material shall become the property of Grantor, or (2) require Grantee to remove all such material and other improvements from the Access Easement Area and cause the Access Easement Area to be returned to the condition in which it existed as of the date of this Agreement as reasonably practicable.

E.Surface Restoration.      Following the abandonment of a well (if any) drilled by Grantee on the Drill Site, Grantee shall promptly plug the well and deliver to Grantor a copy of the plugging report required by the regulations of the Railroad Commission of Texas, remove all casing to a minimum depth of [number] feet below grade, level all ruts and depres­sions, backfill all pits, remove any equipment and debris, and generally restore, as reasonably practicable, the Drill Site (and any other portions of the Property affected by Grantee’s use thereof) to as near its condition as existed as of the date of this Agreement. The terms of this section shall survive the termination of this Agreement.

F.Pipelines.      In addition to Grantee’s rights to use the Drill Site and the Access Ease­ment Area, but subject to the terms and conditions of this Agreement, Grantee shall have a nonexclusive easement and right-of-way running concurrently with this Agreement to lay, construct, maintain, inspect, operate, repair, replace, and remove [number] pipeline[s] on the Property to transport production from the well or wells located on the Drill Site, together with related appurtenances thereto that are reasonably approved in writing by Grantor (whether one or more, collectively, the “Pipeline”). The location of the Pipeline (the “Pipeline Easement Area”) is shown on Exhibit D attached to this Agreement. Grantee shall, at its sole cost and expense, construct the Pipeline in accordance with plans and specifications consistent with industry standards for prudent pipeline operators. In no event shall Grantor have any liability for the design or construction of the Pipeline, nor shall Grantor’s consent (or the absence of Grantor’s objection) to any plans or specifications be deemed a representation or warranty by Grantor to that design or construction. In connection with any pipeline crossings involving the Pipeline, in addition to Grantee’s obligations under this Agreement, Grantee must construct and operate pipeline crossings consistent with industry standards for prudent pipeline opera­tors and in compliance with applicable law and regulations and reasonable requirements of any third-party pipeline owners or operators whose pipelines will be crossed by the Pipeline. The Pipeline shall be buried to a minimum of [number] inches below normal ground level at the time of construction. Grantee shall have the right to remove or replace the Pipeline during and immediately after the term of this Agreement, provided that any area so disturbed shall be immediately restored. This provision shall not apply to flowlines or similar aboveground lines installed by Grantee within the Drill Site (but not elsewhere on the Property) from time to time for gathering of production.

G.Use of Water.

Grantee is prohibited from using groundwater or any surface water on the Property for any purpose.

Grantee is allowed to use groundwater or surface water on the Property [include applicable limitations, e.g., for the following purposes, in the following volumes, under the following conditions, on-site only, on-site and on pooled properties].

H.Disposal of Salt Water or Fluid Oil and Gas Waste.      Grantee shall not dispose of any salt water or fluid oil and gas waste, or any other products of, or substances used in, or a by-product of the Operations in any well or on the surface or subsurface of the Property. Grantee agrees not to allow any waste oil or salt water to flow over the surface of the Property, nor to allow any to flow or drain down any draws, streams, creeks, or ravines on or near the Property. All storage tanks on the Drill Site shall be low-profile tanks and shall have adequate spill containment around them that will hold the capacity of the largest storage tank, plus a reasonable allowance for rainfall. No salt water disposal wells shall be located on the Drill Site. All salt water shall be disposed at a location off the Property.

I.Produced Water.

Grantee is prohibited from disposing of any produced water on the Property; all produced water shall be disposed at a location off the Property.

At the option of Grantor, Grantee shall deliver all water produced in connection with the Operations to Grantor [specify where and how].

At the option of Grantor, Grantee shall inject all water produced in connection with the Oper­ations to such formations, at such depths, and from such locations as directed by Grantor.

At the option of Grantor, Grantee may be allowed to retain, or transfer to a qualified third-party, produced water for the purpose of treating and recycling that water, provided, however, that Grantor shall be entitled to receive a royalty on all such produced water up to $[amount] per [agreed unit volume, e.g., forty-two-gallon barrel, one thousand gallons, acre-foot].

J.Property Taken “AS IS.”      Grantor has not inspected the Drill Site, the Access Easement Area, or the Pipeline Easement Area. Grantee accepts those areas (and the Property in its entirety) on an “AS IS” basis, with any defects and at the sole risk of Grantee. Grantee expressly acknowledges that Grantor has not made any representations or warranties, express or implied, of any kind or nature, including, without limitation, any warranty of habit­ability or fitness for a particular purpose or any representation pertaining to the environmental status of the Property (that is, to the presence or absence of hazardous materials or waste about the Property or the compli­ance or noncompliance of the Property with applicable laws), and Grantor expressly disclaims all representations and warranties relating to the Property. Furthermore, Grantee acknowledges that it takes the Property subject to all easements, rights-of-way, and other encumbrances now exist­ing, together with any additional encumbrances as may be granted from time to time (as long as those additional encumbrances do not materially adversely affect Grantee’s rights under its lease or this Agreement). Grantee shall be solely responsible for identifying and avoiding all inter­ference with any encumbrances (including, without limitation, determining the location of existing pipelines, utility lines, and related facilities on the Property). The terms of this Section shall survive the termination of this Agreement.

K.Insurance Requirements.      As a condition to Grantee’s right to use the Drill Site, the Access Easement Area, the Pipeline Easement Area, or any other portions of the Property described in this Agreement, Grantee shall maintain insurance meeting the minimum require­ments set forth in this section and on Exhibit E attached to this Agreement (collectively, the “Insurance Requirements”). The insurance shall name as additional insureds Grantor Parties (as defined below) and such other persons or entities as Grantor shall reasonably designate, with coverage equivalent to ISO CG 20 26 07 04 (“Additional Insured—Designated Person or Organization”), but only to the extent of the risks and liabilities assumed by Grantee. Grantee’s insurance shall at all times be primary to, and without right of contribution from, Grantor’s insurance (if any), but only to the extent of the risks and liabilities assumed by Grantee. Before commencing any operations on the Property, Grantee shall provide to Grantor certificates evidencing its policies and limits, and Grantee shall provide to Grantor certificates reflecting the renewal of any such insurance from time to time. If Grantee fails at any time within [number] days after request by Grantor to deliver a certificate of insurance to Grantor evidencing the Insurance Requirements, Grantor may obtain such insurance at Grantee’s expense, and Grantee shall reimburse Grantor for the premiums for that insurance. Notwithstanding anything to the contrary contained in this Agreement, Grantee’s right to use the Property (including, without limitation, the Drill Site and any easements described in this Agreement) shall be suspended during any period in which Grantee fails to meet the Insurance Requirements. Grantee shall endeavor to require its contractors to obtain the types of insur­ance coverages and limits that are reasonable under the circumstances.

L.Waivers of Recovery and Subrogation.      Notwithstanding anything to the contrary contained in this Agreement, Grantee, to the extent of the risks and liabilities assumed by grantee, waives all rights of recovery, claim, action, or cause of action against Grantor and its parents, subsidiaries, affiliates, successors, and assigns and their respective directors, officers, employees, shareholders, representatives, and agents (collectively, the “Grantor Parties”) for any loss or damage that may occur to any property or other improvements of Grantee located on the Property from time to time, by reason of fire, the elements, or any other cause that could be insured against under the Insurance Requirements, regardless of cause or origin, including negligence of the Grantor Parties, and Grantee covenants that no insurer shall hold any right of subrogation against the Grantor Parties. Grantee shall endeavor to give each insurance company which is to issue a policy or policies of insurance under this Agreement written notice of the terms of the waivers contained in this section and shall endeavor to cause its contractors to do the same with their respective insurers. The terms of this section shall survive the termination of this Agreement.

M.Prudent Conduct.      Grantee shall conduct its Operations and maintain its facilities in a safe, prudent, and workmanlike manner and in compliance with all pertinent laws, statutes, ordinances, rules, and regulations (including, without limitation, those regarding safety, pollu­tion, and noise abatement) and (as long as Grantee is on the Property or any other property of Grantor) with Grantor’s health, safety, security, and environmental policies, guidelines, and procedures (including, without limitation, Grantor’s policy on consumption of drugs or alco­hol or the discharge of firearms, ordnance, and flammable materials, including fireworks or other incendiary devices, while on the Property), as Grantor may provide to Grantee from time to time. Grantee shall obtain and maintain all permits and approvals necessary from any governmental agency in connection with its operations on the Property (including, without limitation, on the Drill Site, the Access Easement Area, and the Pipeline Easement Area). No excavation or digging of any sort is permitted on any portion of the Property without the prior written approval of Grantor, provided, however, that excavation or drilling shall be permitted without Grantor’s prior written approval (1) on the Drill Site, but only in accordance with the terms of section B of this Agreement; (2) on the Access Easement Area, but only in accor­dance with the terms of section C of this Agreement; and (3) on the Pipeline Easement Area, but only in accordance with the terms of section F of this Agreement.

N.Environmental Matters.      Neither Grantee nor any of its employees, contractors, or agents shall store hazardous materials of any nature on any portion of the Property outside of (or other than) the Drill Site, the Access Easement Area (only if the hazardous materials are stored in trucks and transported off the Property within a reasonable time), or the Pipeline Easement Area. Grantee shall not allow any samples (including, without limitation, soil or groundwater samples) to be collected from any portion of the Property outside of (or other than) the Drill Site, the Access Easement Area, or the Pipeline Easement Area; Grantee shall promptly provide to Grantor copies of any reports generated in connection with sampling (which reports shall be conducted in accordance with industry standards and shall include, without limitation, the geophysical location of the samples taken, the depth from which the samples were taken, and the testing method used on the samples). This Agreement does not grant consent to any geotechnical or environmental investigations of the Property outside of (or other than) the Drill Site, the Access Easement Area, and the Pipeline Easement Area; Grantee shall promptly provide to Grantor copies of any reports generated in connection with geotechnical or environmental investigations. Grantee agrees to remove and dispose of sur­face or subsurface materials, soils, and similar materials brought onto the Property by Grantee, its employees, contractors, or agents, at any time, and which have been contaminated as a result of Grantee’s operations on the Property; such soil and materials shall be deemed contaminated if so defined by applicable federal, state, or local regulatory agencies or under any applicable laws, regulations, or ordinances (“Contamination”). The removal and disposal of Contamination shall be in full compliance with all applicable laws, statutes, ordinances, rules, and regulations. Additionally, Grantee shall provide Grantor with written notice of the existence of Contamination promptly after Grantee’s discovery or identification of it. The terms of this section shall survive the termination of this Agreement.

O.No Conveyance.      It is distinctly understood and agreed that this Agreement does not constitute a conveyance of any part of the Property but grants only the easements and usage privileges provided herein. Grantor retains the right to use and enjoy, and to grant such other easements over, the Property (including, without limitation, the Drill Site, the Access Ease­ment Area, the Pipeline Easement Area, and other easement areas described in this Agree­ment), except to the extent such use, enjoyment, or other easements unreasonably interferes with Grantee’s use of the Property pursuant to the terms of this Agreement.

P.Term.      The term of this Agreement shall be concurrent with the term of the Lease. It is understood and agreed that this Agreement, subject to Grantor’s termination rights under it, shall remain a valid agreement for the duration of the Lease, and this Agreement shall termi­nate when the Lease ceases to be of force and effect. Upon the expiration or earlier termina­tion of this Agreement, upon Grantor’s request, the parties shall promptly execute and acknowledge an instrument evidencing the expiration or termination and shall record that instrument in the official records of [county] County, Texas. The terms of this section shall survive the termination of this Agreement.

Q.Default; Remedies.      This Agreement may be terminated (1) by Grantor if Grantee breaches any of the material covenants, conditions, or provisions of this Agreement and (a) fails to cure the breach within [number] days after receipt of a default notice from Grantor or (b) if the breach is such that it cannot be cured within the [number]-day period, fails to com­mence to cure within that period and to diligently pursue to cure the default to completion, such cure period in no event to exceed a total of [number] days, or (2) automatically if Grantee voluntarily ceases to use the Drill Site, the Access Easement Area, or the Pipeline Easement Area for any of the purposes described in this Agreement for a period of [number] months or longer. If this Agreement is terminated pursuant to any of the terms hereof, this Agreement shall immediately become of no further force or effect, and neither party shall have any fur­ther liability under this Agreement, except for those obligations that expressly survive the ter­mination of this Agreement, and except that any such termination shall not relieve a party from liability resulting from a breach of this Agreement before its termination, from any knowing and intentional misrepresentation of material fact by that party or from any obliga­tion which, by its nature, is to be performed following termination of this Agreement. Grantor shall be entitled to all rights or remedies, at law or in equity, in connection with the enforce­ment of this Agreement, including, without limitation, the right to seek injunctive relief. With­out limiting the foregoing, Grantee shall be responsible to promptly reimburse Grantor, upon receipt of Grantor’s invoice, for the cost of repair of any of the Property (including, without limitation, roadways and pipelines on the Property) and any cleanup costs (in the event of a spill, outage, or other Contamination) resulting from damage incurred as a result of the activi­ties of Grantee or its employees, contractors, or agents, normal wear and tear excepted. All such amounts not paid by Grantee within [number] days of Grantor’s delivery of the invoice for those amounts shall accrue interest from the date of the invoice until actually paid, at a rate that is the lesser of [negotiated rate] or the maximum nonusurious rate of interest permitted by applicable law.

R.Grantee’s Property.      Grantee releases the Grantor Parties from all lia­bility for any loss of or damage to structures, equipment, and property of every kind and character placed on the Property by Grantee or its contrac­tors (collectively, “Grantee’s Property”) while Grantee’s Property is located in or on the Property even if caused by the sole or concurrent neg­ligence, strict liability, or other fault of Grantor Parties, except where the loss of or damage to Grantee’s Property results from the gross negli­gence or willful misconduct of Grantor. Grantee shall not permit equipment main­tenance of any kind to be performed on any portion of the Property (save and except the Drill Site and, solely with respect to installation and maintenance of the Pipeline in accordance with the terms of this Agreement, the Pipeline Easement Area). Grantee shall remove from the Property all of Grantee’s Property within the sooner of [number] days after Grantee has fin­ished with the use of the area where Grantee’s Property is placed or [number] days after the termination of this Agreement. Any of Grantee’s Property left on the Property by Grantee after the expiration of that period shall, at Grantor’s option, become the property of Grantor. Should Grantor not want the above designated property, Grantee will remain obligated to remove from the Property all Grantee’s Property. The terms of this section shall survive the termination of this Agreement.

S.Grantee’s Indemnity.      Grantee agrees to indemnify, defend, and hold harmless the Grantor Parties from and against all claims, damages, losses, liabilities, expenses, lawsuits, deficiencies, costs of removal and/or cleanup of any Contamination, interest, and penalties (including, without limitation, reasonable attorney’s fees) resulting from loss, damage, or injury to any person, persons, or property caused by, connected with, or resulting from Grantee’s operations on the Property (whether on the Drill Site, the Access Easement Area, the Pipeline Easement Area, or other portions of the Prop­erty) or any acts or omissions by Grantee’s agents, servants, employees, con­tractors, or invitees thereon (and expressly including those arising from force majeure, specifically hurricanes and tropical storms) even if caused by the sole or concurrent negligence, strict liability, or other fault of Grantor Parties, but excluding gross negligence or willful misconduct of the person or entity seeking indemnity. Grantee’s obligations hereunder shall survive the termination of this Agreement.

T.Grantor’s Indemnity.      Grantor agrees to indemnify, defend, and hold harmless Grantee and its parents, subsidiaries, affiliates, successors, and assigns and their respective directors, officers, employees, shareholders, representatives, and agents (collectively, the “Grantee Parties”) from and against all claims, damages, losses, liabilities, expenses, lawsuits, deficien­cies, costs of removal and/or cleanup of any Contamination, interest, and penalties (including, without limitation, reasonable attorney’s fees) result­ing from loss, damage, or injury to any person, persons, or property caused by, connected with, or resulting from any grossly negligent acts or omis­sions, or from any willful misconduct, by Grantor Parties, contractors, or invitees thereon. Grantor’s obligations hereunder shall survive the termi­nation of this Agreement.

U.Miscellaneous Provisions

U.1.Notices.      Any notice required by or permitted under this Agreement must be in writing. Any notice required by this Agreement will be deemed to be given (whether received or not) the earlier of receipt or three business days after being deposited with the United States Postal Service, postage prepaid, certified mail, return receipt requested, and addressed to the intended recipient at the address shown in this Agreement. Notice may also be given by regu­lar mail, personal delivery, courier delivery, or email and will be effective when received, pro­vided that (a) any notice received on a Saturday, Sunday, or holiday will be deemed to have been received on the next day that is not a Saturday, Sunday, or holiday and (b) any notice received after 5:00 p.m. local time at the place of delivery on a day that is not a Saturday, Sun­day, or holiday will be deemed to have been received on the next day that is not a Saturday, Sunday, or holiday. Any address for notice may be changed by not less than ten days’ prior written notice given as provided herein.

U.2.Entire Agreement.      This Agreement and its exhibits are the entire agreement of the parties concerning the use of the surface of the Property and the use of the Drill Site, the Access Easement Area, and the Pipeline Easement Area. There are no representations, war­ranties, agreements, or promises pertaining to such matters that are not in this Agreement and its exhibits.

U.3.Amendment.      This Agreement may be amended only by an instrument in writ­ing signed by the parties.

U.4.Transfers and Assignments.      Grantee agrees that it will not assign, sublease, farm out, or transfer, in whole or in part, any rights of Grantee in the Lease and any other rights in or to any part of the mineral estate in the Property or lands pooled therewith without requiring its assignees, sublessees, farmees, or transferees to expressly assume all obligations owed to Grantor and all limitations imposed on Grantee under the terms of this Agreement. Any assignment, sublease, farm-out, or transfer executed in contravention of this provision shall be null and void. All future leases or conveyances of all or any part of the oil, gas, and other minerals in the Property, including transfers of Grantee’s interest in the Lease, shall be subject to and burdened by this Agreement, including, without limitation, the waiver and relinquishment of surface rights, and shall automatically be construed to contain a contractual waiver by the applicable assignee, sublessee, farmee, or transferee of the right to enter on and use the Property, such that none of rights now or hereafter owned by Grantee in the mineral estate in the Property or lands pooled therewith may be explored or drilled for or produced, transported, or marketed (either by themselves or in conjunction with any other undivided interest in the mineral estate in the Property) by drilling or any other activities conducted on the Property except strictly as set forth in this Agreement. Grantee may not assign or other­wise transfer its rights under this Agreement (including, without limitation, any easement rights granted under this Agreement) without the prior written consent of Grantor, which con­sent shall not be unreasonably withheld; any such assignment or other transfer made by Grantee without Grantor’s written consent shall be null and void. Furthermore, no assignment by Grantee of this Agreement shall be binding on Grantor unless Grantee first provides Grantor with written notice or other documentation of the assignment (including, without lim­itation, a copy of any assignment instrument).

U.5.Choice of Law; Venue.      This Agreement is to be construed under the laws of the state of Texas, without regard to choice-of-law rules of any juris­diction. Venue is in the county where the property is located.

U.6.No Waiver.      Failure by Grantor to require performance of any term, covenant, or condition in this Agreement shall not be deemed to be a waiver of that term, covenant, or condition or of any subsequent breach of the same or any other term, covenant, or condition in this Agreement. The subsequent acceptance of performance hereunder by Grantor shall not be deemed to be a waiver of any preceding breach by Grantee of any term, covenant, or condition hereof, regardless of Grantor’s knowledge of that preceding breach at the time of acceptance of the performance. No term, covenant, or condition of this instrument shall be deemed to have been waived by Grantor, unless the waiver is in writing and signed by Grantor.

U.7.No Third-Party Beneficiaries.      There are no third-party beneficiaries of this Agreement.

U.8.Severability.      If a provision in this Agreement is unenforceable for any reason, to the extent the unenforceability does not destroy the basis of the bargain among the parties, the unenforceability does not affect any other provision of this Agreement, and this Agree­ment is to be construed as if the unenforceable provision is not a part of the Agreement.

U.9.Ambiguities Not to Be Construed Against Party Who Drafted Agreement.      The rule of construction that ambiguities in a document are construed against the party who drafted it does not apply in interpreting this Agreement.

U.10.No Special Relationship.      The parties’ relationship is an ordinary commercial relationship, and the parties do not intend to create the relationship of principal and agent, partners, or joint venturers or any other special relationship.

U.11.Counterparts.      If this Agreement is executed in multiple counterparts, all counterparts taken together constitute this Agreement. Copies of signatures to this Agreement are effective as original signatures.

U.12.Binding on Successors.      This Agreement shall be binding on and inure to the benefit of the respective heirs, successors, personal representatives, and permitted assigns of the parties to this Agreement.

Signature Page to Surface Use and Drill Site Agreement

   Grantor:

   [Name of entity], [a/an] [type of entity]

      By:

   
[Name of representative], [title]

State of Texas

COUNTY OF [county]

This instrument was acknowledged before me on [date] by [name of representative], [title] of [name of entity], [a/an] [type of entity], on behalf of the [type of entity].

   
Notary Public, State of Texas

   Grantee:

   [Name of entity], [a/an] [type of entity]

      By:

   
[Name of representative], [title]

State of Texas

COUNTY OF [county]

This instrument was acknowledged before me on [date] by [name of representative], [title] of [name of entity], [a/an] [type of entity], on behalf of the [type of entity].

   
Notary Public, State of Texas

Exhibit A

Property

Exhibit B

Drill Site

Exhibit C

Access Easement Area

Exhibit D

Pipeline Easement Area

Exhibit E

Insurance Requirements

1.Commercial General Liability Insurance.      Grantee shall maintain commercial general liability (CGL) insurance with a limit of not less than $[amount] each occurrence with [a/an] $[amount] aggregate. This insurance shall cover liability including, but not limited to, liability arising from premises, operations, blowout or explosion, products-completed opera­tions, contractual liability, underground property damage, broad form property damage, and independent contractors. This insurance shall also include coverage for underground resources and equipment hazard damage. In addition to the additional insured requirements set forth in this Agreement, the additional insured coverage shall include coverage for prod­ucts-completed operations.

2.Environmental Impairment (or Pollution Liability) Insurance.      Grantee shall maintain environmental impairment or pollution liability insurance with a limit of not less than $[amount]. The coverage shall not exclude damage to the Drill Site, the Access Easement Area, or the Pipeline Easement Area. If coverage is written on a claims-made basis, Grantee shall maintain continuous coverage or purchase tail coverage for [number] years following the expiration or suspension of its well permit, and the retroactive date(s) applicable to that cover­age shall precede the date of issuance of the well permit. Coverage shall apply to sudden and accidental pollution conditions resulting from the escape or release of smoke, vapors, fumes, acids, alkalis, chemicals, liquids or gases, waste material, or other irritants, contaminants, or pollutants. Where commercially available, Grantee shall also maintain such coverage for gradual pollution incidents.

3.Automobile Liability Insurance.      Grantee shall maintain automobile liability insurance with a limit of not less than $[amount] each accident. The insurance shall cover lia­bility arising out of any auto (including owned, nonowned, and hired autos).

4.Worker’s Compensation Insurance.      Grantee shall maintain workers’ compen­sation and employers liability insurance. The workers’ compensation limits shall be as required by statute, and employers liability limits shall not be less than $[amount] each acci­dent for bodily injury and $[amount] each employee for bodily injury by disease.

5.Excess (or Umbrella) Liability Insurance.      Grantee shall maintain excess (or umbrella) liability insurance with a limit of not less than $[amount] per occurrence with [a/an] $[amount] aggregate. The insurance shall be excess of the CGL insurance, automobile liabil­ity insurance, and employers liability insurance as specified herein with coverage no less broad than underlying.

6.Control of Well Insurance.      Grantee shall maintain control of well insurance with a limit of not less than $[amount] per occurrence. The policy shall provide coverage for the cost of controlling a well that is out of control, redrilling or restoration expenses, seepage, and pollution damage. A $[amount] sublimit endorsement may be added for damage to prop­erty for which Grantee has care, custody, and control.