ASSIGNMENT OF OVERRIDING ROYALTY INTEREST

ED

OEC 3 1990

Minerals Management Service STATE OF LOUISIANA § UtsingI Ebviroament

S KNOW ALL MEN BY THESE PRESENTS: PARISH OF TERREBONNE $

FOR a sufficient consideration received, PILGRIM EXPLORATION CORP., a Texas corporation whose address i s Citicorp Center, Suite 600, 1200 Smith, Houston, Texas 77002 ("Assignor"), subject to the matters hereinafter contained, does hereby SELL, TRANSFER and ASSIGN unto CHEVRON U.S.A. INC., a Pennsylvania corporation which maintains a business address at 935 Gravier Street, New Orleans, Louisiana, Attention: General Manager Exploration ("Assignee") and i t s successors and assigns, an ever-riding royalty interest in o i l and gas produced, saved and sold from that certain Oil and Gas Lease of Submerged Lands under the Outer Continental Shelf Lands Act dated effective as of July 1, 1989, serial number OCS-G-10777 which covers a l l of Block 211, Ship Shoal Area, OCS Leasing Map, Louisiana Map No. 5, offshore Terrebonne Parish, Louisiana (hereinafter called the "Lease"), reference being mada to the Lease and the record thereof for a more particular description of the property covered thereby, equal to two and one-half percent of eight-eighths (2-1/2% of 8/8ths).

The overriding royalty interest herein assigned is ac­cepted subject to the following terms, conditions and covenants, to-wit:

(a) Neither Assignor, nor i t s successors or assigns, shal be under any obligation against their w i l l , to oper? on any of the property covered by the Lease, respectively, or properties pooled therewith, for the discovery, drilling, development or production of o i l or gas, but a l l such operations, and the extent and duration thereof, as well as thc preservation of the leasehold, shall be solely at the w i l l of Assignor, i t s successors and assigns.

(b) No change in ownership or right to eceive said overriding royalty or any part thereof, however accomplished, shall operate to enlarge the obligations or diminish the rights of Assignor and notwithstanding any other notice thereof i t shall not constitute effec­tive notice to Assignor for any purposes, until thirty (30) days after receipt by Assignor by registered mail of the duly recorded instruments or certified copies thereof or other legally authenticated written evidence constituting the chain of t i t l e of such change.

(c) Fuel o i l and gas for operating and/or de­veloping the Lease, and for treating, handling and marketing the products therefrom (and the proportionate part of fuel o i l and gas consumed in a central plant, should the Lease be operated jointly with other prem­ises through the use of such plant) and production vented, flared or unavoidably lost, shall be deducted before the overriding royalty interest herein assigned i s computed. The overriding royalty interest herein assigned shall bear i t s share of applicable ad valorem, severance, excise, production and/or similar taxes. Except as provided to the contrary herein, the over­riding royalty shall bc paid or delivered in the same manner as provided in the Lease for the payment or delivery of the royalty herein reserved to the lessor. In no event, however, snail the overriding royalty bs calculated on a basis lever than that upon which Assignor's interest in th same production i s calcu­lated.

(d) Assignee shall have the right, at any time, and upon thirty (30) days written notice to Assignor, to take in kind and separately dispose of Assignee's portion, in whole or in part, of the o i l , gas, or other hydrocarbons produced and saved from the Lease, ex­clusive of production which may be used in the operat­ing and/or developing the Lease and for treating, handling and marketing the products therefrom and production vented, flared or unavoidably lost. In the event Assignee so elects. Assignee shall provide and operate the necessary f a c i l i t i e s therefor at Assignee's expense. Any contract for the sale or other disposi­tion of production shall expressly state Assignee's right to take in kind as herein provided. Except to the extent that Assignee may have exercised i t s option to take in kind, Assignor w i l l account to Assignee for the overriding royalty as provided in paragraph (c) hereinabove.

(e) In the second succeeding month after the month in which the gas i s produced. Assignor shall mail or deliver to Assignee an itemized statement showing the total production of each substance, including products extracted from the gas, during the month of production, the overriding royalty payable thereon, the data used to compute such overriding royalty, and an explanation of the manner in which such overriding royalty was determined and computed. At the same time. Assignor shall remit to Assignee the overriding royalty due hereunder. I f for any reason whatsoever (other than a defect in or a dispute as to the t i t l e of Assignee) the overriding royalty hereunder i s not paid within thirty (30) days after the same is due, then in addition to any other remedy available to Assignee, a l l such unpaid overriding royalty shall bear interest at the maximum legal rate from the date due until par.d.

(f) The overriding royalty provided for herein will attach and apply to any and a l l extensions, renewals, replacement, exchange or new leases of a l l or any portion of the premises covered by the Leases which are acguired, in whole or in part, by Assignor or by its successors or assigns or successive assigns prior to one year after expiration or termination of the Lease.

The provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective suc­cessors and assigns, and a l l references herein to Assignor and to Assignee shall be deemed to include their respective successors and assigns, whether or not so expressed.

To Have and To Hold the overriding royalty interest herein assigned, subject as above provided, unto Assignee, i t s successors and assigns forever.

This assignment i s made without warranty of t i t l e , express or implied.

e-r 1990.

PILGRIM EXPLORATION CORP. WITNESSES TO SIGNATURES:

9 [SEAL]

By

- ASSIGNOR -

CHEVRON U . S . A . INC.

° : -Aorictnnt gaagoiar %

- ASSIGNEE -

TH STATE OF TEXAS S S

COUNTY OF HARRIS §

BE IT KNOWN, that on t h i s day of Septembg-r , 1990, before me, the undersigned authority, personally came and appeared Edwin G. Jackson, Jr., to me personally known and known by me to be the person and designated o f f i c e r of the corporation specified above his name whose genuine signature i s affixed to the foregoing document, who being duly sworn by me did saj that the seal a f f i x e d to tlie foregoing instrument opposite the name of such corporation i s the corporate seal of said corporation and that the instrument was signed and sealed on behalf of said corporation by authority of i t s board of directors and said o f f i c e r and who signed said document before me and i n the pres­ence of the two witnesses whose names are thereto subscribed as such, being competent witnesses, and who acknowledged, i n my presence and i n the presence of said witnesses, that he signed the above and foregoing document as the free act and deed of said ccrporation and f o r the uses and purposes therein set f o r t h and apparent.

IN WITNESS WHEREOF, the said appearer has signed these presents and I have hereunto a f f i x e d my hand and seal, together with the said witnesses on the day and date f i r s t above wr i t t e n .

Notary Fublic i n and for the State of Texas

- T- • S S '_' 1 _ > 1 J * !

Hy Commission Expires:

3-

THE STATE OF ^dg^afaA* $

BE * T KNOWN, that on this / day of » 1990, bef or 3 r ma, eit.be-iur der signed authority, personally came and appeared *~' * _ _ / t o ™ P«*«onally known and known by ra«» to be the person and designated officer of the corporation pnecified above his name whose genuine signature i s affixed to • ie foregoing document, who being duly sworn by me did say that t..e s a i l affixed to the foregoing instrument opposite the name of sue'. '. jrporation i s the corporate seal of said corporation and that che instrument was signed and sealed on behalf of said corporation by authority of i t s board of directors and said officer end who signed said document before me and in the pres­ence of the two witnesses whose names are thereto subscribed as such, being competent witnesses, and who acknowledged, in my presence and in the presence of said witnesses, tnat he signed the above and foregoing document as the free act and deed of said corporation*and for the uses and purposes therein set forth and apparent.

IN WITNESS WHEREOF, the said appearer has signed these presents and I have hereunto affixed my hand and seal, together with the said witnesses on the day and dX / j i r s t above written.

the State of fQ'^— t - > My Commission E x p i r e s : tomission Expires

STATE OF LOUISIANA PARISH OF TERREBONNE

I HEREBY CERTIFY that tbe within and f rccnJng is a true copy r,f the. original, on file L. litis office and recorded * I f j lS3tf i ati0 : S O o'clock.4.M..\T\ fffflwirif Book No S S t i d / O n et teq. Under Entry No. t f / l & C O

Office of Oerky.of Court and R J159(L) Houma, LopMaaa ffltk I 9 W

0 Deputy Clerk of Court

• -4 -

MILLING. BENSON. WOODWARD. HILLYER PIERSON & HILLER A P l O T N t B S - l f I N C L U D I N G « O f H t l O N » L LAW C O N D O N A T I O N S

A T T O R N E Y S AT L A W

S U I T E T W E N T Y - T H R E E H U M O R E D

9 O 0 P O Y O R A S S T R E E T

N E W O R L E A N S 7 0 M 2 - I O I 7

TCLCPMONC ' 9 0 4 I 5 6 S - 7 0 0 0 T E L E C O P I E R ' 5 0 4 ) 5 6 9 - 7 0 0 1

M C I M A I L " M I L L I N G '

ABA NCT i s e s e CABLE "MILL ING"

TCLCK S S 4 2 I I

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L » f A Y C T T L . L O U I S I A N A 7 0 5 0 3

T E L E P H O N E o i e : I M - I M *

PLEASE REPLT TO N r w O R L E A N S O f l C E

WRITERS DIRECT N a

November 8, 1990

Mineral Management 1201 Elmwood Park Boulevard Hew Orleans, Louisiana 70123-2394

RE: Chevron U.S.A. Inc. v. Pilgrim Exploration Co., E.D.La., CA. Ho. 89-1457, Section *D", QCSIA-G1Q777

Gentlemen:

Enclosed is a Release of Notice of Lis Pendens issued by Chevron. Please file into your record in order to have our •otice of Lis Pendens cancelled.

We are enclosing our firm check no. 81308 in the amount of $25.00 to cover the cost of recording the Release.

If there are any problems or questions, please contact Stt at 569-7233.

JAT/dg/3886* Enclosure

R E C E I V E D

NOV 9 1990

Minerals Management Service Leasing & Environment

LiiV

UBITED STATES DISTRICT COURT

EASTERR DISTRICT OF LOUISIAMA

CHEVROS U.S.A- IMC.

VERSUS

PILGRIM EXPLORATION CORPORATION

CIVIL ACTIO*

NO. 89-1457

SECTION -D-

MAQ. DIV. 3

ICM L U

Bl I T KNOWN, that on this dsy of j\lzfSsS\*h in tha year of Our Lord ono thousand nine hundred and ninety,

t. J t / u r r ^ f A 1 Q E M ^ a •otary and qualified, and in for ths Pariah <

Public, duly conraisaioned and qualified, and in for the Parish of Orleans, State of Louisiana, therein residing, and in the presence of the witnesses hereinafter named and undersigned,

PERSONALLY CAME ANJ APPEARED:

JAMES K. IRVIN of Milling, Benson, Woodward, Hillyer, Pierson k Miller, 909 Poydras Street, Suite 2300, Mew Orleans, Louisiana 70112-1017,

who being by me. Notary, first duly sworn, deposed ad said that he is the attorney of record for Chevron U.S.A. inc., plaintiff in Proceedings which originally bore Mo. 89-1457, on the docket of the United States District Court, Eastern District of Louisiana, and now bear Mo. 89-2413 on the docket of the United Stetes District Court for the Southern Distriet of Texas, Houston Division, entitled "Chevron U.S.A. Ine. v. Pilgrim txploration Corporation," and on behalf of his client he did fil e and record in the Terrebonne Parish Mortgage Records, in MOS 800, folio 574, Entry So. 843506, a Mot ice of Lis Pendens with respect to such proceedings; -hat he has the authority to and that he does hereby on behalf of his client greet a f e l l and complete ro lease of the said Mot ice of Lis Pendens} end thet he does hereby authorise end direct the Clerk of Court for the Perish of Terrebonne to cancel and erase entirely from his records the inscription of the said notice of Lis Pendens recorded in MOB 800, folio 574.

RECEIVED

NOV 9 1990

****** Management Servica Leasing 8 Environment

THUS DOSE AHD PASSED, in multiple original, in my offica at How Orloans, Louisiana, on the day, month and year herein first shove written, in the presence of the undersigned competent witnesses, who hereunto sign their nemos with the seid sppssrers end ne. Votary, after reading, of ihe whole.

/3796H