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IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION

§ In re: § Chapter 11 § MEMORIAL PRODUCTION § Case No. 17-30262 PARTNERS LP, et al., § § (Jointly Administered) Reorganized Debtors.1 § §

REORGANIZED DEBTORS’ PRELIMINARY RESPONSE TO CURE OBJECTIONS FILED BY RELIANT AND BOAZ

Pursuant to the Agreed Scheduling Order submitted by the parties on August 21, 2017

(ECF No. 426), Amplify Energy Corp. and its affiliates, certain of which are reorganized debtors

in the above-captioned chapter 11 cases (collectively, the “Reorganized Debtors,” and prior to

reorganization, the “Debtors”) hereby file this joint preliminary response to: (1) the June 1, 2017

filing styled as an Objection of Reliant Energy Retail Services, LLC to Debtors’ Proposed Cure

Amounts for Assumed Contracts & Unexpired Leases (ECF No. 385) (the “Reliant Cure

Objection”) and (2) the June 1, 2017 filing styled as Boaz Energy II, LLC’s Objection to Cure

Amount (ECF No. 386) (the “Boaz Cure Objection”) (together, the “Cure Objections”), and in

support states the matters set forth below:

1 The Debtors in these chapter 11 cases, along with the last four digits of their respective federal tax identification numbers, as applicable, were: Memorial Production Partners LP (6667); Memorial Production Partners GP LLC; MEMP Services LLC (1887); Memorial Production Operating LLC; Memorial Production Finance Corporation (3356); WHT Energy Partners LLC; WHT Carthage LLC; Memorial Midstream LLC; Beta Operating Company, LLC; Columbus Energy, LLC; Rise Energy Operating, LLC; Rise Energy Minerals, LLC; Rise Energy Beta, LLC; San Pedro Bay Pipeline Company (1234); and Memorial Energy Services LLC. In accordance with the Plan and Confirmation Order (each as defined below), certain of the Debtors were dissolved or changed their names. The Reorganized Debtors’ mailing address is 500 Dallas Street, Suite 1600, Houston, Texas 77002.

Case 17-30262 Document 427 Filed in TXSB on 08/29/17 of 25

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I. Summary

1. Both the Reliant Cure Objection and Boaz Cure Objection are legally without

merit and should be denied in full or, solely in the alternative, reduced and/or limited for a failure

to properly substantiate the amounts claimed, a failure to mitigate damages, and setoff.

2. First, as to Reliant Energy Retail Services, LLC (“Reliant”), the $1,352,745.21

“termination fee” it seeks to impose for certain properties sold to Boaz Energy II, LLC (“Boaz”)

in May 2016 is invalid because Reliant unilaterally terminated electrical service to those

locations without proper authorization. The only other party to the electricity contract is

Memorial Production Operating LLC (n/k/a Amplify Energy Operating LLC) (“MPO”). MPO

never gave Reliant authorization to stop electrical service and was continuing to pay all charges

for electricity months after the sale occurred while obtaining reimbursement from Boaz (which

Boaz was obligated to pay pursuant to a May 2016 purchase and sale agreement between Boaz

and MPO). Reliant’s unilateral declaration of a partial termination and assessment of a

$1,352,745.21 fee as to the sold locations was a complete repudiation that acted to discharge

MPO from any responsibility as to the severed locations. If Reliant seeks to recover a partial

termination fee, it should pursue that claim against Boaz and/or any other parties upon whom

Reliant allegedly relied for authorization to terminate the electrical service. Alternatively, if

Reliant properly declared a partial termination as to MPO, the amount that Reliant seeks to

recover was not substantiated nor ever properly asserted under law.

3. Second, as to Boaz’s claim for indemnification from MPO as to the $76,341.74 in

legal costs it allegedly incurred in defending against a litigation pending in Coke County, Texas,

that amount is not recoverable because the May 2016 purchase and sale agreement between

MPO and Boaz does not provide indemnification as to the specific allegation made against Boaz


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in that suit. In particular, Boaz was named as a defendant in the Coke County litigation based

solely on the speculation that Boaz had, by contract, assumed all pre-existing liabilities related to

the property sold in the May 2016 purchase and sale agreement. That allegation is incorrect.

More importantly, however, it is not an allegation that is indemnified because it is not based on

any pre-closing conduct of MPO. The allegation is based on Boaz’s own conduct of allegedly

entering into a contract whereby it assumed pre-existing liabilities. Boaz itself is responsible for

answering and disproving that contention. Alternatively, even if the allegations against Boaz in

the Coke County litigation could be characterized as indemnifiable in some way, the $76,341.74

in legal costs that Boaz seeks to recover should be denied as not properly substantiated, due to a

failure to mitigate, and by way of setoff. No proof of the legal costs or their necessity was

provided by Boaz and most were apparently incurred during a stay of the Coke County litigation.

Further, Boaz should have already gotten itself dismissed from the Coke County litigation since

the incorrect allegation is easily disproven. Boaz’s failure to even attempt to limit its legal costs

in such circumstances is a failure to mitigate. Likewise, a failure by Boaz to seek coverage from

its insurance providers for its defense costs would be a failure to mitigate as well. Finally, any

amount due to Boaz for indemnification of its defense costs is subject to setoff by the

indemnification Boaz owes, under the same May 2016 purchase and sale agreement, to MPO for

all costs incurred by MPO related to dealing with the Reliant Cure Objection.

II. Procedural Background

4. On January 16, 2017, each of the Debtors commenced with this Court a voluntary

case under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”). The

chapter 11 cases are being jointly administered for procedural purposes pursuant to Rule 1015(b)


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of the Federal Rules of Bankruptcy Procedure and Rule 1015-1 of the Bankruptcy Local Rules

for the Southern District of Texas.

5. On March 24, 2017, the Debtors filed the Supplement to Amended Joint Plan of

Reorganization of Memorial Production Partners LP, et al. Under Chapter 11 of the Bankruptcy

Code (ECF No. 283), which incorporates the Schedule of Proposed Cure Amounts for Assumed

Contracts and Unexpired Leases at Exhibit H providing proposed cure amounts of $1,520.58 and

$19,093.33 in regard to Reliant and $0.00 for Boaz (together, the “Proposed Cure Amounts”).

6. On April 14, 2017, the Debtors filed the Second Amended Joint Chapter 11 Plan

of Reorganization of Memorial Production Partners LP, et al. Under Chapter 11 of the

Bankruptcy Code (ECF No. 341) (the “Plan”) and the Court entered the Findings of Fact,

Conclusions of Law, and Order Confirming Second Amended Joint Plan of Reorganization of

Memorial Production Partners LP, et al., Under Chapter 11 of the Bankruptcy Code and

Granting Related Relief (ECF No. 344) (the “Confirmation Order”). The Plan became

effective on May 4, 2017.2

7. On June 1, 2017, both of the Cure Objections were filed. The Reliant Cure

Objection seeks $1,352,745.21 in the form of a “partial termination fee” (see Reliant Cure

Objection [ECF No. 385] at ¶ 3) and the Boaz Cure Objection seeks $76,341.74 in “costs of

defending” a separate lawsuit in Coke County, Texas. (See Boaz Cure Objection [ECF No. 386]

at ¶¶ 2-3.)

III. Factual Background

8. By a purchase and sale agreement dated July 15, 2013, MPO acquired all the

equity interest in Boaz Energy LLC (a different entity from the current Boaz “II” that is a party

2 Capitalized terms used but not defined herein have the meanings ascribed to such terms in the Plan.


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here) from Boaz Energy Partners LLC. The various properties and assets acquired in that

transaction included, among others, the Bronte No. 5W Salt Water Disposal Well located in

Coke County, Texas (the “SWD5 Well”).

9. On May 9, 2014, MPO entered into an Electricity Sales Agreement with Reliant

(Exhibit A attached hereto, the “Electricity Contract”) in which Reliant agreed to supply

electricity to various properties owned by MPO until approximately December 31, 2019. (Ex. A

at p. 1 (“Delivery Term”).) Other than the service locations and price, the Electricity Contract

consisted primarily of standard “General Terms” drafted by Reliant. (See generally Ex. A.)

Those terms provide the contract is governed by Texas law (id. at ¶ 9) and that a partial

termination could occur only by the customer, i.e., MPO, “delet[ing] one or more, but not all,

Customer Locations … from the Agreement” (id. at ¶ 12), which MPO could do only by giving

Reliant thirty days’ prior written notice. (Id. at ¶ 12; see also id. at p. 8 (providing means of

deleting customer locations with an “Email Request”).) The Electricity Contract specifically

defined a “Switch” of electrical service as occurring only when “authorized” by MPO (see id. at

p. 4) and made no reference to a switch or partial termination occurring upon the instruction or

authorization of the Electric Reliability Council of Texas (“ERCOT”)3 or anyone else. By its

plain terms, therefore, MPO was the only party to the Electricity Contract that could cause a

partial termination and make it responsible for a termination fee. Reliant was not allowed to 3 According to its website (excerpts attached hereto as Exhibit B), ERCOT “manages the flow of electric power to 24 million Texas customers -- representing about 90 percent of the state’s electric load. As the independent system operator for the region, ERCOT schedules power on an electric grid that connects more than 46,500 miles of transmission lines and 570+ generation units. It also performs financial settlement for the competitive wholesale bulk-power market and administers retail switching for 7 million premises in competitive choice areas. ERCOT is a membership-based 501(c)(4) nonprofit corporation, governed by a board of directors and subject to oversight by the Public Utility Commission of Texas and the Texas Legislature. Its members include consumers, cooperatives, generators, power marketers, retail electric providers, investor-owned electric utilities, transmission and distribution providers and municipally owned electric utilities.” (See Ex. B at 1.) Reliant is identified on the ERCOT website as a current “Corporate Member” of the organization. (See id. at 2.)


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terminate service as to any locations without authorization from MPO and was instead required

to continue supplying electricity to each location listed during the applicable term so long as

MPO continued paying for the electricity.

10. Commencing on or about September 6, 2014 (as discovered on or about

September 24, 2014), the SWD5 Well in Coke County experienced a sudden and unintended

release of saltwater and related fluids that contaminated soil and groundwater in the immediate

vicinity of the well (the “Known Bronte Environmental Condition” or “KBEC”). After

discovery, MPO: (i) reported the event to the relevant authorities, (ii) gave notice to MPO’s

insurance provider, and (iii) hired a vendor to remediate the contamination.

11. Several months later, while the remediation of the KBEC was in process, MPO

entered into negotiations with Boaz Energy Partners LLC to sell certain properties and assets—

specifically including the SWD5 Well—to a newly-formed Boaz entity (i.e., Boaz Energy “II”

LLC, the party here). The environmental issue with the SWD5 Well was fully disclosed.

12. On May 5, 2016, MPO and Boaz entered into a definitive purchase and sale

agreement (Exhibit C attached hereto,4 the “May 2016 PSA”) to transfer ownership of the

various properties and assets sold to Boaz while further providing for continued remediation and

indemnification by MPO on specific matters related to the KBEC. However, the responsibility

to provide indemnification related to the KBEC was expressly limited to the “Lowest Cost

Response” that would be necessary to remediate the KBEC to the satisfaction of governmental

authorities. (See Ex. C at §§ 4.3(d), 10.6, and 11.2(d).) All liability for third-party property

damage that arose from events prior to the closing due to MPO’s ownership or operation of the

4 The May 2016 PSA is subject to certain confidentiality restrictions. (See Ex. C at § 13.4.) The copy attached hereto as Exhibit C is thus filed under seal (and redacted to protect financial terms not relevant to this proceeding) and will be provided to Reliant in the same redacted form provided the parties can reach an agreement as to the confidentiality and use of the May 2016 PSA.


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property was specifically retained and excluded from the May 2016 PSA. (See id. at §§ 2.4,

11.2(c), and p. 11 (definition of “Retained Liabilities”).)

13. A number of the properties sold to Boaz in the May 2016 PSA were receiving

electricity under the terms of the Electricity Contract with Reliant. By way of various

representations, warranties, and covenants, Boaz agreed it would assume the Electricity Contract

as to those properties and pay all charges related to the properties. (See Ex. C at §§ 2.1(d), 2.4,

and 5.4.) As such, in or around August 2016, MPO and Reliant prepared draft assignments to

transfer to Boaz the Electricity Contract as it pertained to the relevant properties. (See Exhibit D

attached hereto.) However, Boaz declined to execute assignment of the Electricity Contract for

the sold locations and chose instead to continue reimbursing MPO for all electricity charges

assessed by Reliant as to the relevant locations on a monthly basis.

14. On September 23, 2016, a number of plaintiffs owning interests in land and other

property around the SWD5 Well sued various defendants—including, among others, MPO and

Boaz—for damages caused by the KBEC in a litigation styled as Carroll L. Lee, et al. v.

Memorial Production Operating LLC, et al., Cause No. CV1604622, which is currently pending

in the 51st Judicial District Court of Coke County, Texas (the “Coke County Litigation”). By

all indications Boaz was named as a defendant in that litigation due solely to an allegation made

“on information and belief” (an incorrect one) that Boaz had assumed all pre-existing liability

related to the SWD5 Well blowout that occurred in September 2014. (See Coke County

Litigation Original Petition, attached hereto as Exhibit E, at ¶ 57.)

15. In October-November 2016 Boaz sought to obtain indemnification from MPO for

its defense costs related to the Coke County Litigation on the basis that the indemnification

related to the KBEC in Section 11.2(d) of the May 2016 PSA was not limited to the “Lowest


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Cost Response” for anything other than pure remediation of the KBEC and, instead, that MPO

was required to indemnify all costs Boaz may otherwise incur in any way related to the KBEC,

allegedly including the Coke County Litigation. (See generally Letter from C. Brown, attached

hereto as Exhibit F.5) MPO did not agree indemnification was required.

16. On January 16, 2017, the Debtors commenced their voluntary case under chapter

11. As a result, the Coke County Litigation was effectively stayed by operation of law.

17. Upon belief it appears that, in or around February 2017, Boaz sought to obtain

electricity for the properties it bought from MPO in the May 2016 PSA—which remained subject

to the Electricity Contract—from a provider other than Reliant. Reliant in turn appears to have

accepted an instruction from Boaz or ERCOT (or someone other than MPO at least) to stop

providing electricity to the affected locations and viewed that as a partial termination of the

Electricity Contract as to the relevant locations. According to the Reliant Cure Objection, the

purported $1,352,745.21 “termination fee” that Reliant seeks to recover now was first assessed

by way of the proof of claim Reliant filed with this Court on April 21, 2017. (See Reliant Cure

Objection [ECF No. 385] at ¶ 3.) The remaining locations in the Electricity Contract not sold to

Boaz continued to receive electricity service from Reliant and are being paid for by MPO in the

ordinary course of business, as duly acknowledged in the Reliant Cure Objection. (See id. at ¶ 3

(noting “… Debtors have remained current on their post-petition invoices”).)

18. On March 7, 2017, Boaz filed a proof of claim in this matter for $29,088.00 in

defense costs related to the Coke County Litigation (Case No. 17-30259, Claim No. 33-1) and

then, on June 1, 2017, raised that amount to the $76,341.74 now sought by the Boaz Cure

5 Mr. Brown’s indemnification letter, unlike the May 2016 PSA itself, contains of facts and legal argument relevant to this proceeding and, thus, is not necessary to file under seal. MPO does not intend to waive any confidentiality rights with respect to the May 2016 PSA by not filing that letter under seal.


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Objection. That represents an increase of $47,253.74 in defense costs allegedly incurred by

Boaz for the Coke County Litigation while it was stayed as a result of Debtors’ bankruptcy.

19. Reliant and Boaz now ask this Court to approve their requests for the assessment

of, respectively, $1,352,745.21 and $76,341.74 as cure amounts. MPO denies liability and

asserts that the Proposed Cure Amounts it set forth as to each respective party—i.e., $1,520.58

and $19,093.33 in regard to Reliant and $0.00 in regard to Boaz—are proper based on the legal

arguments below or, alternatively, that the Cure Amounts should be reduced and/or limited in

accordance with the respective alternative arguments below.

IV. Arguments as to Reliant

A. The Prior Material Breach and Repudiation by Reliant Discharges MPO from Being Responsible to Pay a Termination Fee Under the Electricity Contract.

20. Reliant’s claim of $1,352,745.21 as a termination fee is improper under Texas law

because Reliant committed a prior material breach and repudiation as to the relevant locations by

ceasing to provide electricity service and declaring a partial termination without MPO’s

authorization or deletion of any customer locations from the Electricity Contract.

21. Under Texas contract law, a court’s “primary concern is to give effect to [the]

written expression of the parties’ intent.” In re Perry, 425 B.R. 323, 347 (Bankr. S.D. Tex.

2010) (citing Forbau v. Aetna Life Ins. Co., 876 S.W.2d 132, 133 (Tex. 1994)). As such, when

unambiguous, a contract’s “plain language alone controls, as Texas courts have held that ‘the

instrument alone will be deemed to express the intention of the parties for it is objective, not

subjective, intent that controls.’” In re Nguyen-Gassaway, 408 B.R. 869, 874 (Bankr. S.D. Tex.

2009) (citing Briercroft Sav. & Loan Ass’n v. Foster Fin. Corp., 533 S.W.2d 898, 902 (Tex. Civ.

App.—Eastland 1976, writ ref’d n.r.e.)). A contract is unambiguous if “it can be given a definite

or certain meaning as a matter of law.” In re El Paso Refinery, L.P., 244 B.R. 613, 622 (Bankr.


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W.D. Tex. 2000) (citing Columbia Gas Transmission Corp. v. New Ulm Gas, Ltd., 940 S.W.2d

587, 589 (Tex. 1996)). Further, it is well-established that “where an ambiguity exists in a

contract, the contract language will be construed strictly against the party who drafted it since the

drafter is responsible for the language used.” In re Hence, 358 B.R. 294, 307 (Bankr. S.D. Tex.

2006) (quoting Gonzalez v. Mission Am. Ins. Co., 795 S.W.2d 734, 737 (Tex. 1990)).

22. The plain and unambiguous language of the Electricity Contract provides that

only MPO could authorize a termination as to specific locations by giving thirty days’ prior

written notice (and, to the extent there is any ambiguity in the language, it should be construed

against Reliant as the drafter of the Electricity Contract). MPO never gave such an authorization

or sought to delete locations. As such, Reliant committed a prior material breach of the

Electricity Contract as to the affected locations by accepting an instruction from someone other

than MPO—the only other party to the Electricity Contract—to stop providing electricity service

to the properties purchased by Boaz. Reliant knew from the efforts to assign the sold locations to

Boaz that the properties had been sold but also knew that MPO was continuing to pay for

electricity service as invoiced under the Electricity Contract. Reliant should not have accepted

an instruction from Boaz or ERCOT (or anyone else) to stop providing service.

23. Reliant’s subsequent declaration of termination as to the affected locations and

assessment of $1,352,745.21 as a fee was a complete repudiation as to the severable locations.

See Another Attic, Ltd. v. Plains Builders, Inc., No. 07-08-0312-CV, 2010 WL 4941694, at *3

(Tex. App.—Amarillo Dec. 6, 2010, no pet.) (“A repudiation occurs when a party absolutely

repudiates the obligation, without just excuse, and the other party is damaged by the

repudiation.”). Under Texas law, such a breach excuses all further performance or obligations

that would otherwise be owed by the other party. See Mustang Pipeline Co., Inc. v. Driver


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Pipeline Co., Inc., 134 S.W.3d 195, 196 (Tex. 2004) (“It is a fundamental principle of contract

law that when one party to a contract commits a material breach of that contract, the other party

is discharged or excused from further performance.”); see also Hampton v. Minton, 785 S.W.2d

854, 857 (Tex. App.—Austin 1990, writ denied) (“In a bilateral contract, where promises have

been exchanged for an exchange of performances and the contract is executory on both sides,

one party’s repudiation of a duty to perform, or a breach of the contract of such materiality

indicating an intention to repudiate the contract, excuses or discharges the other party’s

remaining obligation to perform.”).

24. Reliant’s repudiation does not have any impact, however, on the remaining

locations MPO continues to use and pay for under the terms of the Electricity Contract because

the locations are severable. Under Texas law, a contract can be “divisible, or severable, when

one party’s performance consists of more than one distinct and separate item and the price paid

by the other party is apportioned to each item.” Stewart Title Guar. Co. v. Old Republic Nat.

Title Ins. Co., 83 F.3d 735, 739 (5th Cir. 1996) (citations and editing omitted); see also In re

Cafeteria Operators, L.P., 299 B.R. 384, 389-91 (Bankr. N.D. Tex. 2003) (various properties

under master sublease divisible for purposes of rejecting under Section 365 of the Bankruptcy

Code). Such a divisible contract can be repudiated in part without affecting the remainder of the

agreement. Ennis Bus. Forms, Inc. v. Gehrig, 534 S.W.2d 183, 189 (Tex. Civ. App.—Waco

1976, writ ref’d n.r.e.) (“Accordingly, it is the rule that refusal by one party to perform an

independent provision of a divisible contract is not such renunciation or abandonment as will

support an action under the principles of anticipatory breach of the whole agreement.”).

25. The Electricity Contract here contemplates each separate location for which

service was being provided to be divisible because it gave MPO the right to delete some (but not


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all) locations without affecting the right to receive and pay for electricity as to other locations.

(See Ex. A at ¶ 12; see also id. at p. 8 (process to delete locations by email).) As such, Reliant’s

improper repudiation and assertion of a termination fee as to the locations sold to Boaz cannot

operate to relieve Reliant of its obligation to continue supplying electricity to the rest of the

locations or be used to coerce MPO into paying the illegal termination fee. See, e.g., Dietz v.

Van Nortwick, 188 S.W.2d 590, 593 (Tex. Civ. App.—Galveston 1945, writ ref’d w.o.m.) (“To

hold that a severable contract, partly legal and partly illegal, was not severable so as to permit

recovery of the prepayment, proportionate to the lawful part of the contract, would tend to permit

the contractee to coerce the contractor to perform the whole contract.”). Rather, due to Reliant’s

improper acceptance of an instruction from either Boaz or ERCOT to terminate service, it should

be required to pursue any damages it has suffered from one or both of those parties.

26. In sum, Reliant had no authority to shut off electricity service to the locations sold

to Boaz without instructions from MPO to do so when MPO was paying all charges assessed by

Reliant and had a legal right under the PSA to continue to require Boaz to reimburse it for all

such charges. Reliant fatally impaired MPO’s rights by completely repudiating and declaring a

termination of the severable locations under the Electricity Contract. As a result of Reliant’s

improper repudiation, MPO was discharged and excused from any further performance as to the

affected locations. The $1,352,745.21 fee assessed by Reliant is not valid and should be denied.

B. In the Alternative, Reliant Failed to Establish the Termination Fee is Properly Calculated or Due Pursuant to the Terms of the Electricity Contract.

27. Even if the termination declared by Reliant were proper, Reliant fails to establish

it met the conditions required to recover the $1,352,745.21 amount now asserted in the Reliant

Cure Objection. The Electricity Contract provides that any termination payment is to be


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calculated “in the same manner as the Cancellation Fee,6 using only the Benchmark Quantities7

for the deleted Customer Locations” and that the amount must be billed in a “subsequent Retail

Invoice.” (See Ex. A at ¶ 12.) Reliant failed to support its calculation of the $1,352,745.21 in the

Reliant Cure Objection or show that the termination fee was properly billed in a subsequent

Retail Invoice after Reliant stopped providing service. Reliant appears to have simply declared

in its April 21, 2017 proof of claim that it is entitled to $1,352,745.21 and provided no

supporting proof whatsoever. Such a declaration is not sufficient.

28. Section 365 of the Bankruptcy Code places the initial burden of proof on the non-

debtor party moving to recover. See In re Patriot Place, Ltd., 486 B.R. 773, 795 (Bankr. W.D.

Tex. 2013) (citing In re F.W. Rest. Assocs., Inc., 190 B.R. 143, 147 (Bankr. D. Conn. 1995)

(“Under a strict Section 365(b)(1) analysis, the City bears the evidentiary burden of establishing

the Debtor’s default under the Concession Agreement.”)); In re Eagle Bus Mfg., Inc., 148 B.R.

481, 482 (Bankr. S.D. Tex. 1992) (“The landlord, here the Port Authority, bears the burden of

proving its right to payment for ‘all elements of compensation and damages for pecuniary

6 “‘Cancellation Fee’ means (i) where Customer is Non-Defaulting Party, the positive difference, if any, obtained by subtracting (a) the present value of this Agreement had it not been terminated using the Benchmark Quantity applicable to the Customer Locations for the remaining period of the Term from (b) the present value of a replacement contract using the Benchmark Quantity applicable to the Customer Locations and market prices that are reasonably expected to be available in the market for the remaining period of the Term; and (ii) where Reliant is Non-Defaulting Party, the positive difference, if any, obtained by subtracting (a) the present value of a replacement contract from (b) the present value of this Agreement had it not been terminated, calculated in the same manner as provided in item (i), in each case plus Non-Defaulting Party’s reasonable costs associated with the valuation and replacement contract.” (See Ex. A at pp. 3-4.) 7 “‘Benchmark Quantity’ means Customer’s expected monthly kWh electricity consumption for the Term. Customer’s expected consumption may be set out on Exhibit A. If Customer’s expected consumption is not set out on Exhibit A, Benchmark Quantity will be determined by reference to Customer Information and the 12 months of electricity consumption by Customer before Effective Date, or for new facilities, Customer Information and electricity consumption of comparable facilities, each as may be adjusted in accordance with this Agreement.” (See Ex. A at p. 3.)


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loss.’”).8 Reliant failed to demonstrate in the first instance that it is entitled to the $1,352,745.21

amount even if its declaration of a partial termination was possible under the Electricity Contract

and Texas law. As such, the Reliant Cure Objection should be denied.

V. Arguments as to Boaz

A. MPO’s Indemnification Obligation for the KBEC is Limited to the Lowest Cost Response and No Indemnification Exists for Boaz’s Own Conduct.

29. Under Texas law, the plain language of the May 2016 PSA limits MPO’s

obligation to provide indemnification to Boaz for the KBEC to the “Lowest Cost Response.”

(See Ex. C at § 11.2(d).) The Lowest Cost Response is defined in great detail in the contract but,

in essence, is fairly characterized as the lowest cost necessary to remediate the property back into

compliance with the applicable environmental laws. (See id. at p. 6 (definitions).)

30. Section 11.2(d) addresses all indemnification by MPO as it pertains to the KBEC

and contains two subparts which describe the indemnification as covering: (i) “any breach by

[MPO] of Section 10.6”9 and (ii) “the Known Bronte Environmental Condition” itself. However,

both subparts are then immediately confined by the following limitation:

“… provided, however, nothing in this Section 11.2(d) requires (or shall be deemed to require) Seller’s response to address the Known Bronte Environmental Condition to more (or anything other) than the Lowest Cost Response ….”

(emphasis in original) (referred to hereinafter as the “Provided However Limitation”).

8 See also In re Diamond Mfg. Co., Inc., 164 B.R. 189, 199 (Bankr. S.D. Ga. 1994) (noting that, under Section 365, the non-bankrupt party “has the initial burden of showing defaults and that those defaults have been properly noticed to the lessee the bankrupt party. … However, if the proof does not establish any default in an executory contract or unexpired lease, the elements of § 365(b)(1) are not required to be proven by the debtor.”) (editing omitted) (citing In re Rachels Industries, Inc., 109 B.R. 797 (Bankr. W.D. Tenn. 1990)). 9 Section 10.6 of the May 2016 PSA provides a post-closing obligation of MPO to perform the Lowest Cost Response necessary to obtain a No Further Action Document from the Railroad Commission of Texas, which will show no further actions are required to “protect human health, safety or the environment.”


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31. Boaz appears to take the position that the word “Seller’s response” to the KBEC

in the Provided However Limitation means the cap on the indemnity to the Lowest Cost

Response applies only to MPO’s remediation of the environmental condition under Section 10.6

(i.e., only the first subpart of the indemnity) and does not act to also limit the second subpart.

(See Ex. F at 4.) In essence, Boaz contends the second subpart’s reference to the KBEC is not

limited in any manner and should be construed to require indemnification of any cost or expense

Boaz could argue to be related in any way to the SWD5 Well blowout. But that defies common

usage of the English language since the second subpart of the indemnity (Section 11.2(d)(ii)) and

the Provided However Limitation expressly refer to the exact same thing: the “Known Bronte

Environmental Condition” as a whole. If the words “Seller’s response” was somehow meant to

apply only to MPO’s obligations under Section 10.6, then it would state as much. But the plain

language of the Provided However Limitation is not so narrow. Rather, it applies to anything in

Section 11.2(d); specifically including the KBEC and Section 10.6. Boaz’s extremely narrow

reading of the Provided However Limitation is erroneous.

32. Further, reading the plain language of the Provided However Limitation in

Section 11.2(d) to mean what it says—that MPO’s responsibility for the KBEC itself is limited to

the Lowest Cost Response needed to obtain a No Further Action Document—harmonizes with

the other provisions of the contract when read as a whole, as it must be. See In re Perry, 425

B.R. 323, 348 (Bankr. S.D. Tex. 2010) (“The contract must be considered as a whole” and

“[m]oreover, each part of the contract should be given effect.”) (citation omitted). In particular,

Section 4.3(d) of the May 2016 PSA addresses the survival of matters after closing and states

that the entire indemnity provided in Section 11.2(d) (not just one or the other of its subparts)

shall have no force or effect once a No Further Action Document is obtained. That directly


16 WEIL:\96246632\3\62739.0005

corresponds with the Provided However Limitation making clear that all indemnification

available under Section 11.2(d) is limited to the Lowest Cost Response needed to get the No

Further Action Document. It makes no sense to interpret one subpart of Section 11.2(d) as being

immune from the Provided However Limitation. Indeed, to suggest as much would result in

nonsensical results here. For example, Boaz claims the indemnity provided in the second subpart

(Section 11.2(d)(ii) in particular) encompasses Boaz’s defense costs in the Coke County

Litigation but, if that were true, then the indemnity could cease in the middle of such a litigation

once a No Further Action Document is obtained without regard to whether Boaz is still incurring

defense costs. Logically, the entire indemnification provided in both parts of Section 11.2(d) is,

as stated, limited to the Lowest Cost Response.

33. Further, Boaz’s argument that a plain reading of the Provided However Limitation

is contrary to the intent of the parties or will end up creating a meaningless “nullity” (see Ex. F at

4) is not accurate (and, in fact, as shown above, is the opposite when it comes to nullifying

express provisions of the contract). Although perhaps not stated as clear as it could be, what

Boaz appeared to try and articulate in its November 16, 2016 letter demanding indemnification is

that Boaz would not have entered into the May 2016 PSA if there was no indemnification by

MPO for instances where a third party sought to hold Boaz liable for actions or events that

occurred pre-closing during MPO’s ownership of the SWD5 Well. (See id.) Yet, Boaz ignores

that such indemnification is expressly provided in another provision of the contract. Section

11.2(c) of the May 2016 PSA states that MPO would indemnify all losses related to the

“Retained Liabilities,” which are specifically defined to include any:

“… Third Party property damage (but not including costs of response pursuant to Environmental Laws with respect to releases into the


17 WEIL:\96246632\3\62739.0005

environmental at or originating from the Properties10), in each case to the extent, related to the ownership or operation of the Properties and arising from events occurring prior to the Closing ….”

(See Ex. C at 11 (emphasis added).) As a result, if Boaz had mistakenly been named in the Coke

County Litigation as the owner of the SWD5 Well during the time of the blowout in September

2014, then indemnification would be provided under Section 11.2(c) (although the alleged

$76,341.74 amount would still be subject to the mitigation points addressed below). But that is

not the allegation in the Coke County Litigation as to Boaz.

34. Rather, Boaz was named a defendant in the Coke County Litigation due to an

incorrect allegation regarding Boaz’s own conduct. Indeed, the Original Petition contains only

one substantive allegation as to Boaz Energy II LLC (defined in the pleading as “Energy II”) at

all, which states in full:

“Memorial Production and/or Memorial Resource since have transferred interests in SWD5 (amongst other assets) to Energy II, under terms and conditions that on information and belief may have transferred pre-existing liabilities related to the well, including liabilities associated with the blowout in September 2014.”

(See Ex. E at ¶ 57 (emphasis added).) As a result, the sole allegation upon which Boaz is named

as a defendant in the suit is the speculation that Boaz assumed by contract all pre-existing

liabilities for the SWD5 Well blowout. Such speculation is incorrect due to the Retained

Liabilities provision of the May 2016 PSA, but also not one subject to indemnification. There is

no indemnification for Boaz’s own act of choosing to enter into the May 2016 PSA. As a result,

there is no indemnification provided to Boaz for the Coke County Litigation under Section

10 The parenthetical language of exclusion in the relevant part of the “Retained Liabilities” definition quoted above—i.e., “but not including costs of response pursuant to Environmental Laws with respect to releases into the environmental at or originating from the Properties”—further harmonizes and confirms that the Provided However Limitation in Section 11.2(d) applies to the entire indemnification related to the KBEC since the Retained Liabilities indemnification picks up where that limitation would exclude, but limited to pre-closing acts and events.


18 WEIL:\96246632\3\62739.0005

11.2(c) or 11.2(d). Boaz itself bears the burden and costs of defending against the incorrect

allegation made in the Coke County Litigation (which it easily could have done already).

35. In reality, Boaz should have extricated itself from the Coke County Litigation at

the outset by demonstrating the incorrect allegation to the Coke County plaintiffs to either obtain

a voluntary dismissal from them or otherwise move for an immediate motion for summary

judgment. Boaz chose instead to rack up defense costs and try to foist its responsibility to defend

against that allegation onto MPO. That was improper and is not supported by the contract or

Texas law. The Boaz Cure Objection should be denied in full.

B. In the Alternative, the Boaz Cure Objection Should be Denied Due to Boaz’s Failure to Substantiate and/or Mitigate Damages.

36. Even if Boaz were able to prevail with its non-standard interpretation of the May

2016 PSA’s indemnification provision, the amount of defense costs that Boaz seeks as a cure

amount should still be limited and/or denied due to a failure to meet its burden of proof in the

first instance and a failure to mitigate damages otherwise. The Boaz Cure Objection seeks

$76,341.74 as the “total amount arising from the cost of defending” the Coke County Litigation.

Yet Boaz did not include any proof (such as invoices of attorneys’ fees describing the tasks

completed) or other substantiation of the amounts whatsoever. Further, very little has occurred

in the Coke County Litigation due to the bankruptcy of two defendants in that suit and, to MPO’s

awareness, virtually nothing has been done by the plaintiffs in regard to Boaz specifically. It is

thus difficult to fathom how Boaz legitimately incurred $76,341.74 in defense costs (of which

$47,253.74 was apparently billed from March 7, 2017 to June 1, 2017) during the stay period.

37. To the extent Boaz continues with its Cure Objection in this matter, MPO will be

requesting detailed discovery of the alleged costs incurred and objects to a recovery of any

amounts not properly substantiated. Further, given the circumstances, MPO believes the amount


19 WEIL:\96246632\3\62739.0005

sought to be recovered by the Boaz Cure Objection is subject to reduction or denial for a failure

to mitigate damages. Under Texas law, the doctrine of mitigation of damages “prevents a party

from recovering for damages resulting from a breach of contract that could be avoided by

reasonable efforts on the part of the plaintiff.” Great Am. Ins. Co. v. N. Austin Mun. Util. Dist.

No. 1, 908 S.W.2d 415, 426 (Tex. 1995). Amounts that a party should have avoided or

recovered through mitigation are typically offset against the damages. See Carrizales v. State

Farm Lloyds, 518 F.3d 343, 350 (5th Cir. 2008).

38. As noted previously, the Coke County Litigation has been subject to a stay for

much of its existence. The $76,341.74 allegedly incurred by Boaz is thus unreasonable or was

not actually necessary to defend Boaz in that suit. Further, given Boaz was not the owner of the

SWD5 Well at the time the blowout occurred, obtaining the dismissal of Boaz from the Coke

County Litigation—either by voluntary stipulation or summary adjudication—should have

already occurred (or at least been attempted). Any amounts unreasonably incurred as a result of

that failure should be denied. Indeed, this Court has previously denied the recovery of attorneys’

fees for analogous reasons. See, e.g., In re Easley, No. 10-32981-H3-13, 2012 WL 567031, at *2

(Bankr. S.D. Tex. Feb. 21, 2012) (denying attorneys’ fees for failure to mitigate litigation efforts

in the bankruptcy).

39. Separately, to the extent Boaz has insurance coverage that would be expected to

cover and/or reimburse its defense costs in the Coke County Litigation—particularly since the

allegation is Boaz expressly assumed liability in a contract related to the property at issue (a

matter often covered in oil and gas insurance contracts)—then MPO requests the $76,341.74 be

denied or appropriately reduced for Boaz’s failure to mitigate by seeking insurance coverage

and/or reimbursement of its defense costs through its own insurance carrier. The May 2016 PSA


20 WEIL:\96246632\3\62739.0005

provided that Boaz was to obtain certain insurance before closing (see Ex. C at § 6.2(c)) and the

indemnification provisions state that any losses ultimately owed are “net” of any insurance

proceeds or other amounts that could reasonably be expected to be recovered from third parties.

(See id. at § 11.7.) If Boaz failed to obtain insurance coverage for its property (or failed to seek

insurance coverage for its involvement in the Coke County Litigation), then Boaz failed to

mitigate the amounts it seeks to recover from MPO now in the Boaz Cure Objection. Those

amounts should be denied and/or reduced accordingly.

C. In the Further Alternative, the Boaz Cure Objection Should be Setoff Due to Losses Incurred by MPO in Relation to the Reliant Cure Objection.

40. In Texas there is a common law right of “setoff” (sometimes phrased “offset”) by

which obligations owed between two parties may extinguish the lesser amount due between

them. See Trueheart v. Braselton, 875 S.W.2d 412, 415 (Tex. App.—Corpus Christi 1994, no

writ). To the extent any of the $76,341.74 asserted in the Boaz Cure Objection is valid, MPO

asserts that it should be setoff by the indemnity that Boaz owes under the May 2016 PSA in

relation to the Reliant Cure Objection previously addressed herein.

41. As set forth above, the May 2016 PSA required Boaz to assume and pay all

charges for contracts related to the properties that were sold to Boaz. In particular, the following

provisions (although there are others) of the May 2016 PSA are highly relevant:

Section 2.1(d) – “… Buyer shall purchase, pay for, and accept, all of Seller’s right and title to, and interest in … all agreements and contracts to which Seller is a party or in which Seller otherwise holds an interest and … that primarily relate to the assets and properties [sold to Buyer] or the operations with respect thereto …. (all such contracts and agreements, the ‘Applicable Contracts’)”

Section 2.4 – “… Buyer shall assume and hereby agrees to fulfill, perform, pay and discharge … all obligations and Liabilities, whether known or unknown … associated with, the Properties … whether such obligations and Liabilities are deemed to have arisen or accrued or are attributable to


21 WEIL:\96246632\3\62739.0005

periods prior to, on or after the Effective Time (all such obligations and Liabilities, the ‘Assumed Liabilities’).”

Section 5.4 – Buyer will “use commercially reasonable efforts to … consummate and make effective the transactions contemplated by this Agreement, including … (b) cooperation in seeking and obtaining any such actions, consents, approvals, or waivers; and (c) the execution of any additional instruments necessary to consummate the transactions contemplated hereby.”

(See Ex. C at pp. 16, 19, and 32.)

42. The Electricity Contract with Reliant is an “Applicable Contract” under Section

2.1(d) as well as an “Assumed Liability” under Section 2.4. Boaz had a duty to cooperate and

assume the obligations of the Electricity Contract as it pertained to the sold locations to which

the Electricity Contract applied. In August 2016 MPO thus sought for Boaz to fulfill that duty

by obtaining Reliant’s consent to assign the Electricity Contract and presenting Boaz with

agreements for execution. (See Ex. D.) Boaz breached its duty, but at least continued to

reimburse MPO for all electricity charges related to the properties until approximately February

2017 (and only stopped, perhaps not coincidentally, right around the time Debtors began their

bankruptcy proceeding). As a result, Boaz now has an obligation to indemnify MPO for all

losses—including attorneys’ fees and litigation expenses—related to the Electricity Contract as it

pertains to the sold locations. In particular, Section 11.1 of the May 2016 PSA states that:

… Buyer and its successors and assigns shall be responsible for, shall pay, and will DEFEND, INDEMNIFY and HOLD HARMLESS Seller … from and against any and all [Liabilities]11 arising out of, resulting from, based on, associated with, or relating to: (a) any breach by Buyer of Buyer’s

11 Liabilities are defined in Section 11.1 as including: “… any and all obligations, claims, causes of actions, payments, charges, interest assessments, judgments, assessments, liabilities, losses, damages, supplemental environmental projects, penalties, fines, costs and expenses (including any fees of attorneys, experts, consultants, accountants and other professional representatives, and legal or other expenses incurred in connection therewith) and including liabilities, costs, losses and damages for personal injury, illness or death, property damage, contracts claims, torts, investigations, remediation, cleanup, monitoring, reporting or other response to or correction of environmental conditions, or noncompliance with or liability under Laws or otherwise ….” (See Ex. C at p. 50.)


22 WEIL:\96246632\3\62739.0005

representations, warranties or covenants set forth in this Agreement; and (b) the Assumed Liabilities.

(See Ex. C at pp. 50-51.)

43. As such, on June 2, 2017, the day after the Reliant Cure Objection was filed,

MPO made a formal written request to Boaz for indemnification in regard to the Reliant Cure

Objection (see Letter from R. Stillwell to Boaz, dated June 2, 2017, attached hereto as Exhibit G)

and gave Boaz a “reasonable opportunity to pay, settle or contest the claim at [Boaz’s] expense.”

(See Ex. C at § 11.4.) In follow-up email communications, however, Boaz declined to take

control of the Reliant Cure Objection despite being specifically informed MPO would then begin

incurring legal expenses to deal with the claim that would increase the amount subject to

indemnification. (See Email Communications, dated July 20, 2017, attached hereto as

Exhibit H.) MPO has incurred, and expects to continue incurring, legal expenses and costs

related to defending against the Reliant Cure Objection that Boaz is obligated to indemnify. Any

amount of the Boaz Cure Objection (i.e, the $76,341.74) that is ultimately found properly owed

to Boaz, if any, is therefore subject to setoff against the amount Boaz currently owes and/or will

further owe to MPO12 as a result of its obligation to indemnify as to the Reliant Cure Objection.

In all likelihood the amount of the setoff will—due simply to the expense in attorneys’ fees

involved in contesting the Reliant Cure Objection—entirely surpass the $76,341.74 sought to be

recovered in the Boaz Cure Objection. As a result, even if the Boaz Cure Objection is valid there

should still be no recovery by Boaz due to the indemnification it owes MPO for the Reliant Cure

Objection..

12 The amount owed will include: (a) the legal expenses and costs already incurred by MPO in dealing with the Reliant Cure Objection, which is currently liquidated, as well as amounts to be liquidated for (b) the future amount of legal expenses and costs incurred in dealing with the Reliant Cure Objection plus (c) any portion of the $1,352,745.21 termination fee ultimately found properly owed, if any, to Reliant.


23 WEIL:\96246632\3\62739.0005

VI. Attorneys’ Fees and Costs

44. Pursuant to Section 11.1 of the May 2016 PSA, MPO seeks to recover from Boaz

“any fees of attorneys, experts, consultants, accountants and other professional representatives,

and legal or other expenses incurred in connection therewith” related to the Reliant Cure

Objection, as well as any other “Liabilities” as defined in the May 2016 PSA.

45. Pursuant to Chapter 38 of the Texas Civil Practice and Remedies Code and

principles of equity, MPO seeks to recover from Boaz all of MPO’s attorneys’ fees and costs

incurred in regard to the Boaz Cure Objection.

46. MPO further seeks to recover from Reliant and/or Boaz all costs allowable under

the Bankruptcy Code, principles of equity, or any other applicable rules and statutes.


24 WEIL:\96246632\3\62739.0005

WHEREFORE the Reorganized Debtors respectfully request that the Cure Objections be

denied or, solely in the alternative, reduced and/or limited as set forth above, and such other and

further relief be granted to the Reorganized Debtors as the Court may deem just and appropriate.

/s/ Alfredo R. Pérez WEIL, GOTSHAL & MANGES LLP Alfredo R. Pérez (15776275) 700 Louisiana Street, Suite 1700 Houston, Texas 77002 Telephone: (713) 546-5000 Facsimile: (713) 224-9511 -and- WEIL, GOTSHAL & MANGES LLP Paul R. Genender (00790758) 200 Crescent Court, Suite 300 Dallas, Texas 75201 Telephone: (214) 746-7000 Facsimile: (214) 746-7700 Attorneys for the Reorganized Debtors


WEIL:\96246632\3\62739.0005

Certificate of Service

I hereby certify that on August 29, 2017, a true and correct copy of the foregoing document was served by the Electronic Case Filing System for the United States Bankruptcy Court for the Southern District of Texas.

/s/ Alfredo R. Pérez WEIL, GOTSHAL & MANGES LLP Alfredo R. Pérez (15776275) 700 Louisiana Street, Suite 1700 Houston, Texas 77002 Telephone: (713) 546-5000 Facsimile: (713) 224-9511


EXHIBIT A

Case 17-30262 Document 427-1 Filed in TXSB on 08/29/17 Page 1 of 9

reliant: an NRG company

ELECTRICITY SALES AGREEMENT SHORT FORM COVER PAGE FIXED PRICE- UNBUNDLED

This Electricity sales Agreement, induding this Cover Page and the attached General Terms and Exhibit (collectively, this 'Agretmenr), is entered Into as of this 9th day of May, 2014 (the "Effective Date') between Rtllant Energy RataH Services, LLC rReliant") and MEMORIAL PRODUCTION OPERATING LLC rcustomef). Reliant and Customer are Individually referred lo as a "Party• and collectively as the "Parties.• Capitafized tenns used and not defined in this Cover Page have the meanings stated in the General Terms.

Delivery Term:

Contra~ Charge:

Contract Price:

start: For the Group 1 Customer Location(s), the first Meter Read Date on or after 05101/2014 or, if a Swilch is reqlired, the first Meter Read Date on or after the Switch Date, and for lhe Group 2 Customer Locatlon(s), the first Meter Read Date on or after 06/01/2014 or, if a Switch Is required, the first Meter Read Date on or after the Switch Date, and for the Group 3 Customer Locatlon(s). the first Meter Read Date on or after 0110112015 or, if a Switch is required, the first Meter Read Date on or after the Switch Date, and for the Group 4 Customer Location(s), the first Meter Read Date on or after 05/01/2017 or, if a Swilch ls required, the first Meler Read Date on or after the Switch Dale, and for the Group 5 Customer Location(s), the first Meter Read Date on or after 06#01/2017 or, if a Switch is required, the first Meter Read Date on or after the Switch Date

End: For the Group 1 Customer Locatlon(s), Group 2 Customer Locatlon(s), Group 3 Customer Locatlon(s), Group 4 Customer Location(s), and Group 5 Customer Locatlon(s), the later of the first Meter Read Date after 1213112019 (collectively, the "Initial Tenn") and the last day of the Term

The sum of Q) the product of the Contract Price multiplied by Actual Consumption; (ii) Disaetionary Service Fees; (iii) Transmission and Distribution Charges; {iv) Nodal Congestion Charges, If applicable; (v) any applicable Taxes; and (Vil any additional charges that are expressly authorized In this Agreement, each of which wiH be billed as separate One items to Customer · •

$0.04978 per kilowatt·hoUf rkWh") consumed at each Customer Location, including, subject to the terms of this Agreement electricity charges, Ancillary Charges, ERCOT fees, applicable aggregator and broker fees collected from Customer and paid to Customer's aggregator or broker (H any).

This Agreement: (a) supersedes prior agreemenl(s) between the Parties for the supply of electricity to the Customer Locatlon(s) (whether one or more, "Prior Agreement"). H any, effective as of the start of the Oelivery Tenn; (b) constitutes the enli'e agreement between the Parties and there are no other agreements or representations affecting the subject matter of this Agreement other than any Prior Agreemen~ (c) ls exeaited by the Parties' duly authorized representatives In multiple counterparts to be construed as one as of !he Effective Dale; (d) wil inure to the benefit of, and be binding upon, the Parties and their successors and permitted assigns; and (e) will not be binding until executed by Customer and Reliant. If Reliant elects not to exeaJte this Agreement, Reliant will notify Customer, in which case this Agreement will have no effect

RELIANT ENERGY RETAIL SERVICES, LLC MEM7UCTION OPERATING LLC tLJfJJ-

By. B~ ~ c~;,,., ~. 11.o..U President Title: __ \l_p _________ _

(OOl91111~TCM17}(Doot11D9.3J2GOO.TCM17} Fblprlct Unbundlld MEMORIAL PRODUCTION OPERATING LLC Contract Numbef' 1-ICBRTL; ACE Remrd 1·1CBS2X; Deal ID 60246369711 Paoe 1 of 8. SN2014

~ ·. t-\eyvt()nC. \ PYOd.\ll-h;n Pov~ LP,.~ B,~ ·. H~t'\~\ Pt'1>duc,~on for""'us 6-l'LL.C.1 ,~

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GENERAL TERMS

1. Sal11, Term. Reliant will sel to customer, and Customer will buy from Reliant, eledrlcity (•Energy") to salisfy its Enetgy Requirements subject to this AgreemenL Cuslomef wiN provide Customer Information to Reliant and wiH assist Reliant In Implementing this Agreement Customer will notify Reliant or any circumslalce likely to cause a change to Ille Energy Requlraments at any Customer Location. If Customef' has not Switched lo a new REP elfective when the Initial Term expires, then Reliant may:~) continue to sel electricity in aamlance with this Agreement subjed to the Transition Charge or (ii) at any lime after the end of the Initial Tefm, if allowed by Law, terminate this Agreement by Switching Customer to POLR service. If Reiant continues to sell eledridty to Customer, this Agreemeit will ainlitue for successive one mooth terms (colectively, the "TransMfon Tenn') 1.t11i al Customer Locatlon(s) are Switched to POlR or to a new REP. During the Transition Term, Customer Is subJect to the mon~ly Contract Charge, including a new Conlrad Price, and the p'Oducl tenns (collectively, the 'Transition ChafVe') that Reliant publishes on the Site. This Agreement wl continue In effect until final lnvok:es are paid. All obligations regcrding lndermity, payment of Taxes, !Imitations of Nabllity, confldentlality, and waivers survive terminaUon for the applicaHe stalute of llmitalims period.

2. Billing, PIYftl•nt. Tues. For each Customef' Loca1ion Reliant wiU send a monlhly Invoice for the Contract Charge. Customer will notify Reliant In M'itlng of the addreu to whJch Reliant may submit Invoices within five bu1lne11 days after tht ElflCtlve Data. All eledricity delivered to a Customer l.ocatlon is measured poo;uant to the TOSP's tariff by the TOSP at each Customer Location. Customer ~rees that tinely and acetrate invoicing is dependent on the TDSP 0'1<I ERCOT furnishing Reiant infonnaioo, in the absence of which Relant may lnwice Customer on estimated data, subject to later adjustment. On or before the 21Mh day after the inYOice date (the "Due Otte'), Customer wil pay the amount due to lhe address or by wire transfer to the aa:oont speclied in the invoice. Reiant will assess a $25.00 processing fee for unprocessed payments due to insllficienl funds. If an invoice is not paid by the Due Date, then Reliant will apply to Customer's account a late fee on the unpaid amount equal to the lesser of five percent or the maximum amount pemrilted by Law. If Customer disputes an Invoice, Customer wiK pay Rellanl the undisputed illTIOUfll. Upon resolu~on, Customer will pay the amount owed with interest at the Interest Rate from the date the amount was ortglnaffy due to, but excluding, the date the amount is paid. Customer is responsible and Jndemnifl8S Reliant for all Taxes arising from or measured by electricity sold or services provided or Rellanrs receipts frmn lhe foregoing, whether the Law imposes the Taxes on Reliant or Customer. Reliant will colfect Taxes from Customer by including them on lhe Invoice. Reliant wi!f recognize a lawful sales tax exl!mption on a prospective basis only after Reliant receives proper documentation. If Customer is due a sales tax refund because of Reliant's failure to timely recognize valid exemption documentation, Reiant wil credit the overpaid sales lax to Customet's acaiunt. CUslomer is responsite for petitioning the taxing ailhority for all otl'w sales tax refunds.

3. Credit. Relianrs obligation to sel electricity to Customer Is t00ditioned upon Reliant's ongoing review and approval of Customet's creditworthiness. Customer wiH, on Refiant's request from Ume to time, (i) provide financlal information and (ii) if Custome!'s aeditworthiness declines, proylde performance assurance, all reasonably satisfactory lo Reliant.

4. Consumption Change. If for any two conseo.ilive months, Customer _Incurs a chanQ! In its operations at any Customer Location resulting in a change in Custome~s Actual Consumption that is less than 75% or greater than 125% of the Benchmark QuanUty rcontumption Change'), lhen Reliant may adjust lhe Contract Price, Benchmar1t Quantities, and other tenns of this Agreement effedive as of lhe next Meter Read Dale. Customer wil provide notice to Reliant 60 days prior to any proposed change in operations at any Customer location flat may result In a Consumption Chalge. Upon receipt. Reliant may notify Customer of any cqustment to the Con~act Price, Benctvnatk Quantities, or ~ tenns of this lqeemenl at least 45 days pri« to the effective date of such adjuslmenl (the 'Adjvttrnent Effective Date'). If Customer does not accep( the Cltjuslment, then on or before 30 days prior lo tie Adjustment Effective Date" Customer may tenninate this Agreement and pay Reliant a Cancelfatlon Fee and remain flable to pay Reliant Umely for al charges for electricity sold until each Customer Location Is Switched. If Customef' fails lo Umely terminate this Agreement as set forth above, !hen Ille ~stment will take effect oo lhe Adjustment Effective Date. Any electlon by Reliant not lo exercise its rights under this Section 4 will not predude Reliant's exercise of those rights at a later date.

5. Default. 'Non-Defaulting Party" may establish a date (the "E1rty C1nctllatlon Date') on which this Agreement wiH be cancel1ed upon the occurrence of any of the folowing defaults by 'Defaulting Party.' if the default is not cured within five business days after notice (except for an Insolvency Event or lhe failure to provide pe!fonnance asstnnee which are immedale defaults):

Q) Failure to make, when due, any paymen~ or (n) Any represenlalion or warranty proY&s to have been false or misleading in any material respect, or (iii) Failure to perform any covenant; or (iv) An Insolvency Event occurs.

No waiver by a Party of a default will be constf\led as a waiver of any other default. If Non-Defaulting Party cancels this Agreement, (i• Customer, or If abved by Law, Reliant, as Non-DefaulUng Party, may Switch Customer's service to POLR or a new REP. and (iij Defaulting Party win pay lhe Cancellation Fee to NonDelaulting Party, and (iii) if allo.ved by Law, Rellant, as Non-Defaulting Party, may discoMed or cause to be disconnected, each Customer L.ocallon from electricity service. The Paties 19e9 lhat if Customer causes a default by switching ~one or more Customer Locaions lo another REP prior to Ille expiration of the ln~ial Term, the Early Cancelalion Dale wlU be the eal1iest date a Customer location Is Switched. Regardless of which Pcrty Is Defa~ng Pcrty, if this Agreement is cancelled, Customer wll remain Mable lo pay Relant linely for al charges for eledl1c:ity sold unlil each Customer location is sv.;tched or disconnected. Defaulting Party wil pay the Cancellation Fee within 15 business days of receipt of notice therefor illd it wt accrue interest al the Interest Rate from the Early Cancelatlon Date to, but exduding, the date paid. On the date due, each Pany will pay to the other Party all additional amounts payable by It after all amounts have been netted and aggregated with the Cancellation Fee.

6. limitation of Utbllitiet. The Parties confirm that the express remedies and measures of damages provided in this Agreement satisfy its essential puiposes. If 1n 1xpq11 r.medy Is provided, that remedy 11 the tole and 11clu1lv1 r.medy. If no remedy 11 txprHlly provided, the obllgor'a llabllity It lmlted to direct actual damages at the sole and axclutlvt remedy. In each case all other remedies at law or In equity•• waived. Ntlther Party It liable for cormquentlal, Incidental, punitive, uemplary, or lndll'ld damages, or other bulin111 lntmuptlon damages. by ttnltt, In tort or contrKt, under any Indemnity provision, or otherwise. These llmltltfons apply enn If the damages mull from a Party's negligence, wheltltr tole, joint,

{OD091111.3121100·T0417}{ll0091109.312000-T0417} Fbcprlca UnbundllCI MEMORIAL PRODUCTION OPERATING UC Contract Number 1-ICBRTL; ACE Record 1-ICBSZX; Deal ID 50241319711 Paae 2 ol 8. !W/2014


concunent. active. or p11llvt. To tht llttnt any dam1g11 nqulrld to be paid ate llquldated, the Plftle1 1cknowledg1 that the damlgt1 n dlftlcult or lmpo11lble to dellrmlne, otherwise obtaining an adequate nmtdy Is Inconvenient. ind the llquldated damages conltftvtl a msonable approxlmltlon of the lo11.

7. R1pmentatlon1. Customer represents lhat (I) ll ls a commercial user of electricity and has entered Into this Agreement solely for related non-speculative purposes, (i) It >Ml not resell any of the eledriclty It buys from Relian~ (Iii) It has experience in business matters Chat enable it to enter Into and perform this Agraement, and f w) no Customer location wla have generation that is sync:flronously mnneded lo the TDSP (the Parties acknowledge that synclvonously connected generation tbes not include emergency badt-up power generation). The Partin mike no rtpreHntatlonl or warranties excej)t those expressly It.led In these tarmt, and dlsclalm Ill other Ylllrnntles, upress or Implied, lndudlng marchantablllty, conformity to models or samples, Ind fitness for 1 pactlcullr purpou.

8. Force MIJture. If a Party Is unable because of Force Majeura to perfonn Its obllgallons and it notifies the other Party as soon as practicable, lhen its obligations (other than payment for energy received, and performance of o~igalions incurred, before !he Force Majeure evenl) will be suspended for the duration of the Force Majeure event. Customer agrees lhal under no circumstances wiff Reliant be required, because of a Force Majeure event, to supply eledricily except to the Customer loca6ons.

9. llw, Watv.rs, Conftcf.mllllty, Docum111tatlon. Except as provided In Section 6, the Lav of the Slate of Texas (without giving effect lo pMdples of conlllds of laws) governs this Agreement. Each Party walvt1, to the fullnt extent permitted by appllclbl1 law, any right It 1ft1Y hive to a trial by jury In mpect of 1ny suit. action, daJtn or procetdlng r'111tlng to this Agreement The Unlorm Convnen:ili Code ol Texas appies lo this Agreement and eledriclty Is deemed a •goocr. H either Party or its activities relllled lo this Agreement are affected by any Law enacted afW the fffectiye Dale ("Chang• In Law") lhat makes performance ol lhls Agreement unenfoiteable or ilegaf, then either Party may tennlnate this Agreement on notice to the other Party, withoUt 'ally obligation or other liabllty (other than payment for energy received, and perfonnn:e ol obliga6ons lncuned, before the Change in Law beaJrnes ellective). If a Cllilrge In Law OCQJrs relallRJ to the wholesale or retail electrlcity ma'1tet In ERCOT resulting In new or modified fees, costs ~ pelfonnance, or ether charges being lnrurred by Reliant andlor other ERCOT market participants, indudlng taxes, fees, chages, mpositlons, assessments. or restrictions or allatvance requlrement(s) related to carbon emissioll'; from electric generation in ERCOT ("Emt11lon1 Ch1rga"), ttien to the extent incurred by Reliant d of lhe Incremental arnounb, lncklcllng Emissions Charges, may be reasonably alocaled and billed lo Customer as an aulhorized chage or adjuslment to the Ccxttract Price. To lh• extent pemltlad by Law, CUllomlr-.... that th• Customer PRltedlon Ruin ldoptad by t111 PUCT pursuant to the PURA do net 1pply to this Agreement 1nd that this Agl'lllMflt wfn govern any conllct bllwlen ff encl the Cuttomer Protlctlon Rulel. Neither Party will disclose these tenns or 1i11Y Sile passwotd to a third party (oilier than a Party's and b affiiates' empoyees, lende!s, counsel, penMted assignees, oonsullants, accountants, or prospective pulthasers who have agreed lo confidentiaity), except in Older lo comply with Law. If a provision bealmes unlawful or unenforceable. lhe other provisions wifl remain In effect. Except as provided In Exhibit A. only a written amendment signed by the Parties is enlorcellble.

10. A11lgnment. Except as provided, neither Party may assign this Agreement without the other Party's prior written cmsent, Which consent may not be unreasonably withheld. Reliant may, without Customer's consent, (i) as part of aJY'f financing er other financial arrangements, 11Ssign, sell or pledge lhis Agreement or its accounts, revenues, or proceeds, or Pi) assign tlls Agreement to an affiliate of Reliant or to any other person or en~ succeeding to au or a substantial portion of the assets of Reliant whereby Reliant wiD have no fUlther obligations for future performance other than payment of amounts owed.

11. Customer AcknoMtdgtmtnl Customer ackOONledges that Energy prices may be subject to substantial volatilty based on economic cond~ions fuel prices and other factors. and that past resub regarding eleclricily products are not necessarily an indicalion of future results. Further, Customer acknowledges that Reliant and its affiliates ate In Ille business of buying and seling power within the ERCOT millllet for each of their own aaxiunts and that this participation may alfed the calculation of Real-Time Settlement Point Prices. Notwithstanding the foregoing, Custaner agrees to pay the a1m11nts provided for In this Agreement that may be based upon R"eal-Time Settlement Point Prices, as promulgated by ERCOT. Subj~ to the right of Customer to dispute a Rellillt Invoice as set fath in the Agreement, Customer will not withhold payment for any reason, inciuang, investigatory activities undertaken by ERCOT or PUCT, based on Rellanrs participation in the maiket and Its effect on Real· Time Settlement Point Prices. Nolhng In this Agreement restricts Reliant or any of Relianrs affiliates from participating in the ERCOT market activities that may affect Real-rime Settlement Point Prices.

12. Partial Termination. Customer may delete one or more, but no! al, Customer Locations (and associated BenctuMk Quantihs as delennlned by Reliant in Its sole d"isaelion) from the Agreement ('P111111 Termlnatlon1, only if Cusk>mer (a) doses those Customer Locations (a) for the remander of the Term, or (b) sells those CustOOlef Locations(s) and the buyer of the locations does not assume obligations to purchase Eneigy under this Agreement. Customer must provide Reliant with at least 30 days prior written notice of Its intent to delete Customer Location(s) from the Agreement on these conditions. Customer must pay Reliant a partial Tenninalion Payment for the deleted Customer Location(s). unless Customer selfs the deleted Customer Locatlon(s) lo a purchaser who, (a) first executes a new contract with Reliant upon the same tenns as Custome(s contract. and (b) satlsfies Reliant's collateral and credit requirements. Reliant will calculate the partial Tennination Payment in the same manner as the Cancellation Fee, using only the Benchmark Quantities for the deleted Customer Locations, and bill the amount of the partial T emrination Payment on a subsequent Retail invoice.

13. Definitions. The tenn •1nc1ud1ng• means incklding, wihout linilalion. Al internal references are to !hi! Agreeme11t unless stated otherwise.

"Aclual Consumption" meil\S the electricity measured or reported by the TDSP OC' estimated by Reliant for each Customer Location. "Anclll., Charges" means, for each Customer Location, all charges assessed by ERCOT for services necessary to maintain reliable operation cl the transmission system to support transmission of electricity from the source of generation to the points of demand. "B111dlmlllr Q11111tlty" means Custome~s expected monthly kWh alectrlcity consumption for Iha Tenn. Customlll's expected consumption may be sel out on Exhibit A. If Customers expecled consumption is not set out on Exhibit A. Benchmillll Quantity will be determined by refer1nce to Customer trlonnallon and the 12 months of elecbicity consumption by Customer before Ille Effective Date, or for new racilities, Customer Information and electricity consumplilll of ccmparatile facilities, each as may be adjusted in aa:ordance with this AgnH1rRenl "Canctllltlon Fee" means (i) where Customer is Non-Defaulting Party, the ~difference, if any, obtained by subtracting (a) the pment value ci this Agreement had II not been temlinated using the Benchmark Quan61y applicable to the Customer W3ions kJ the rem<Mnlng period of the Term m (b) the pteSent value of a re~t contrad using the Benchmalt Quantity applcable to Ile Customer localions and market prices lhal are reaso~y expected to

{00091111.3/2000.T0417}(00091109.312000-TD417} Fblpric1 Unbundled MEMORIAL PRODUCJION OPERATING LLC Conlrad Number 1·1CBRTL; ACE Rec:cn:l 1·1CBS2X; Deal ID 10241369711 Paae 3 ol 8. St'!l.'2014


be available in the mail!et fa' the remaining period of lhe Tenn; and (ii) where Reliant is Non-Defaulting Party, the DOSl!ive difference, if any. c:iltained by subtracting (a) the present vate of a replacement contract m (b) the present value af lhis Agreement had it not been tenninated, calculated in the same manner as provided In item (i), In each case l!!!m Non..oefaulting Party's reasonable costs associated with tie valuation and replacement contract. "Comp1tltlon ChlfVN" means, for each Customer Location, the foHowing: ~tition transition charges: transition chalges defined in PURA; excess mitigation aedits: and subslanlally similar charges related to the opening of the Texas electric matket to REPs, lndudlng Ille recoveiy of stranded costs as defined by PURA and Increases In Transmission and Distribution Charges related to the rediredioo of depreciation expenses. "Customer lnfotmaflon• means information that accurately substantiates Customet's Energy Requirements forming a basis for the Conlrad Price and Benchmak~. •cUJtomtr Locatlontsr meais Customer's facilities desaibed in Exhibit A. "DisCRtlonaty SllV#ct Fffs• means all non.routine deposits. c:oMectlon fees, metering charges, Installation oosts for equipment to maintain a Power Factor of at least 95% lagging at each Customer l.ocaCion meter, assessments by the TDSP in respect of any Power Factor at any Custaner Location meter, or any similar amounts assessed by and payable lo Iha TOSP related to the TDSPs purchase and installation of meters and associated equipment and Cuslomel's use of that equipment lo establish or malnlain electric service at a Customer Location or to maintain the TDSP system requirements, or other charges for equipmenl or seMc:es requested by Custaner or required by the TOSP. •Energy Requirements• means electricity equal to 100% of the actual eledridty requirements of Customer l.ocalion(s) for the Delivery Term, no! to exceed the TDSPs fadfiUes' capablHes « oontravene Law. "ERCOr means the Electric Reliabiity Council of Texas. "Force M1jt111t• means an event not within the reasonable control of the Party dalning suspension, not caused by the negigena! of that Party, and which, by the exercise of due diligence, that Party Is unable lo oven:ome or obtain a cxmnerdally reasonable subslitute therefor. Force Majeure Includes a Force Majeure OCQJrring with respect 10 the TOSP, a suspension, curtailment, or service inlemipllon by the TDSP, or acts of lerrorism, civil insurrection, war, or ads olGod. "Insolvency Evtnt" means making an assignment ot arrangement for the benefit of creditors, f~ing a petition, or authorizing or aaitiesclng in the commencement of a proceeding under law for protection of creditors, or haYing a similar petition filed against it, or otherwise becoming Insolvent or unable to pay debts as due. "lntettst Rafi" means an annual rate equal to 2% over the per annum prime lencing rate pul*shed In The Wall Street Joumal under "Money Rates" In effect on the first day of the month during which the charge or fee is assessed. The Interest Rafe wil never exceed the maximOOI rate permitted by law. "LIW" means any law, statute, regliation, rule, protocol, exchange rule, decision, writ, order, deaee or judgment, or 1111y Interpretation of any of them by any court. agency, or Instrumentality having jurisdiction, including ERCOT. •Meter Read Date• means the actual meter read date that corresponds to the TDSP's regularly scheduled meter read date, as ascertailed from the meter rea<ing schedule published on the TDSPs website. •Nodal Congestion Charges• means the difference(s) between the Day-Ahead Settlement Point Price(s) determined by ERCOT for the Hub(s) and the Day. Ahead Setdement Point Price(s) detennined by ERCOT for the load Zones associated witi the Customer Localion(s) for Actual Consu~Uon not priced al Settlement Point Price(s) al the load Zane(s); provided that if the Day-Ahead Settlement Point Price(s) are not published by ERCOT or ara Olhecwise unavallable, then for the period(s) for which Day-Ahead Setllement Point Price(s) are not available, this chaige will be based oo <flfference(s) between the Real Time Settlement Point Price(s) determined by ERCOT for the Hub(s) and the Real Tune Settlement Point Price(s) determined by ERCOT for the load Zones associated with the Customer location(s) for Adltal Consumption not priced at Settlement Point Price(s) at the load Zone(s). As used herein, the terms 'Hub', 'Day-Ahead', 'Rul Time", 'Settlement Point Prtce' and 'Load Zont' have the meaning set forth In the Texas Nodal Protoails approved by PUCT, as of October 1. 2006, as amended. 'POLR' means the REP designated by the PUCT required lo offer electricity lo any requesting customer In a specified territory. •Power Factor" means the ratio of k:lowatt ("kW) to kilovolt amperes \kVa') expressed as a percentage, calculaJed by dividing kW by kVa. •pucT"means the Public Uti~ty Commission of Texas. •puRA •means the Public UUllty Regulatory Act. "REP" means a retail electric provider ooder PURA. "SIN" means Relianrs AccountConnectSM web site at www.reliantcom. "Switch" means an authorized change In Cusl<Jme(s electricity suppl'ier. "Switch Dall" means for each Customer lix:ation the date that all actions have been taken by the TOSP and ERCOT (I) for Re&ant to sen electricity to Customer and for Customer to receive same, or ~I) for another REP or POLR to sell electricity to Customer and for Customer to receive same, as the context requires. 'Tuts" means all federal. state, and local taxes, fees, governmental charges, and assessments, imposed na.v or later on Customer as purchaser or on Reliant as seller of elec:trldty under this Agreement, or on this transaction, lnclud:ng Texas state and local sales and use taxes, the Texas g11>SS receipts tax on um ty companies, the PUCT gross receipts tax assessment, municipal fees, and generation, utmty, regulatory, Btu, or electricity taxes, excluding taxes on net Income. '7DSP" means the entities that have custody of the electricity sold and pu!Chased and own or control electric transmission or distribution equipment for transmitting or distributing electricity to a Customer localion 'Tenn• means the Initial Term and the T ransllon Term. 'Transmission 111d Distribution ChlfJI••• means, for each Customer Location, all Charges and fees In the TDSPs tariff (except Competition Charges) and billed to Reliant for TOSP's seMc:es lo deiver eledricity lo the Customer locaUon.

{00091111.3121100.Til417){00Cll1109.312DOO·T0417} Fbtpllce Unbundled MEMORIAL PRODUCTION OPERATING LLC Contract Number 1·1CBRTL: ACE Record 1·1CBS2X; Deal ID 60246319711 Paae 4 of 8. 5i'!1121114


Benchmark Quantity (kWh)

' Date 1 BMQ r

OMl1/2014-05131/2014 I 229,119 f kWh I 1

06Kl1/2014-06/30/2014 1,035,036 kWhj

l 07iU1/2014-07/31/2014 2,237,025 kWh 1

08/01/2014-08/31/2014 2,136.716 kWh!

l 09/0112014-09/30/2014 2,154.201 kWh 1 10/0112014-1001/2014 2,379,880 kWhf

11/01/2014-11/30/2014 2,271,684 kWh!

12/01/2014-12131/2014 2,334,736 kWhl

01/01/2015-0113112015 2,244,026 kWhl

02/01/2015-02/2Bl2015 2,472,786 kWhl

03/0112015-03131/2015 2,626,522 kWh 1 04/01/2015-04/30/2015 2,551,091 kWh l

05i01/2015-05/31/2015 2,342,784 kWhj

06.'01/2015-06/30l2015 2,265,588 kWhj

07/01/2015-07131/2015 2,556,159 kWh 1 1

08/01/2015-0Bl31t2015 I 2,455,n6 I kWh I 09/01/2015-09/30/2015 2,460,990 kWh!

10/01/2015-10/3112015 2,693,805 kWh!

' 11/0112015-11/30/2015 2,555,216 kWhl

I

12/01/2015-1213112015 2,607,612 kWh!

01/01/2016-0113112016 2,449,736 kWhl

02/01/2016-02129/2016 2,560,841 kWhl

03/01 /2016-03131/2016 2,623,004 kWh[

04KJ1/2016-04t:.0/2016 2,551,288 kWhl

05i01/2016-05/3112016 2,343,297 kWh l

0S10112016-06J3Q1201s 1 2,2ss,58e I kWh 1

07/0112016-07131/2016 I 2,558,302 kWh

08/01/2016-08/31/2016 2,456, 138 I kWh I

09/01/2016-09/30/2016 I 2.460,990 kWhj

10/01/2016-10131/2016 2,695,652 kWh

11/01/2016-11/3012016 2,554,965 kWh

12/0112016-1213112016 2,608,017 kWh

0Ml1/2017-0113112017 2,455,642 kWh

02/01/2017-02128/2017 2,472,786 kWh!

{0009'111.312QOO.TM17}{00091109.31'2000.T0417) Flxprice Unbundled MEMORIAL PRODUCTION OPERATING LlC

EXHIBIT A

Contract Number 1-ICBRTL; ACE Record 1·1CBSZX; Deal ID 60246369718 Paaa5 llf8 . 5o9/2014


' Date I BMQI

O:W1/2017-03131/2017 2,623,004 kWh

I 04J01/2017-04/30l2017 2,551,485 kWh

05l01/2017.{)5131/2017 2.359.931 kWh

' 06/01 /2017--06/30/2017 2,290,565 kWh

' 07/01/2017-07/31/2017 2,701,061 kWh

' 08J01/2017.{)8/31/2017 2,599,066 kWhl 1 09/01/2017-09/30/2017 2,601,631 kWh

10J01/2017· 10/31/2017 2,837,703 kWh 1

11/01/2017-11/30/2017 I 2,691,389 kWh

12/01/2017-12131/2017 2,741,268 kWh

01/01/2016-01131/2018 2,592,921 kWh

02101/2016-02/28/2018 2,595,429 kWh

03l01/2016-03/31/2018 2,768,533 kWh

04.01l2018-04l30/2018 2,690,593 kWh!

, 05l01/201&-05131/2018 2,487,294 kWh

06/01/2018-06/30/2018 2,408,808 kWh

07/01/2018-07131/2018 2,699,990 kWh

08/01/2018-08131/2018 2,599,066 kWh!

09101/2018-09/30/2018 2,603,285 kWh

. 10/01/2018-10/31/2018 2,835,855 kWh

11/01/2018-11/30/2018 2,691,389 kWh . 12/01/2018-12131/2018 2,741,268 kWh

I 01J01/2019-01/31/2019 2,592,921 kWh I I 02JD1/2019-02128/2019 2,595,429 kWh

031()1/2019-03131/2019 2.n2.os1 kWhj

t 04J01/2019-04/30J2019 , 2,690,396 kWh

05/01/2019-05/31/2019 2,487,294 kWh

000112019-0&30l201s 1 2.413,9so kWh

07J01/2019-07/31/2019 I 2,696,918 kWh

08/01/2019-08/31/2019 ! 2,596,885 kWh

09/01/2019-09/30/2019 2,601,631 kWh

10/01/2019-10/31/2019 2,835,855 kWh

11/01/2019-11/30/2019 : 2,691,640 kWh

12/01/2019-12/31/2019 2,740,863 kWh

OtJO 1 /2020-0113112020 1,708,170 kWh

1 C Loation IAitl\ Sia Dl1e f 05'0112014 Group - ustomer I • rt 0

• Custom• Location Name

1 Memorial Resoorce Oevalopmenl LLC

(001911t1.WDO·T0417}(0009t1D9.312DOO·T1Mt7} Flxpricl Unbundled MEMORIAL PRODUCTION OPERATING UC

Customtr Loc:atlon

171 HUMBLE RO

City

BRONTE

Contract Number 1-ICBRTl; ACE Record 1·1CBS2X; Deal ID &0248319711 Paie 6 of 8. 51912014

SI* Zip Cod• ESI

TX 76933-5302 10204049765763161


#

1

2

3

4

5

6

Grot a 2-Customer Locations with• Start Datt of 06#01'2014

• Customer Location Name Customer Location City Stitt Zip Code ESI

1 Memorial Resource DMlooment LLC UNIVERSITY PYOTE TX 79772-0000 10400513431500001

2 Memorial Resoun:e Develooment UC 11..K 45 SEC 1 SE 1/4 ODESSA TX 79764 10443720000204211

3 Memorial R8SQUfce ~ tUC @BU< A SW/C NW/4 SEC 6 ECT CO ESSA TX 79763 10443720002555312

4 Memorial Resoun:e - tlLC BU< 26 SEC 33 WINKLER MONAHANS TX 79789 10443720004406197

5 Memorial Resoun:e DevelllDllllWlt LLC BlKA41 se4SEC3WELL ANDREWS TX 79714 10443720001309019

6 Memorial Resource DeveloDment LLC SECTION 10 BlOCK A OOESSA TX 79761-0000 1°'43720006911060

7 Memorial Resoun:e Oeveltllll'IWI LLC HIGHWAY 190 MIDWAY LANE SUBSTHSOE OZ ONA TX 76943 10204049733787790

8 Memorial Resource Develooment LLC SEC9BL.K38A LAMESA TX 79331 10443720009475317

9 Memorial Resource Oevlllnnmllnt LLC BU< 45 T 2 N SEC 12 WELL ANDREWS TX 79714 10443720006397049

10 Memorial Reswce - UC @BlK 45 1N SW/4 sec 3 ECT OOESSA TX 79763 10443720002680676

11 Memorial Resource DevefonmMl LLC SEC 9 BU< 38 B LAMESA TX 79331 10443720009475348

12 Memorial Resource - entLLC @SW/4 SEC9 BU<C-38 LAMESA TX 79331~ 10443720001137000

13 Memorial Resource OIMllooment LLC N UNIVERSITY LEASE PYOTE TX 79777

14 Memorial Resoun:e - LLC BU< 45 T 1 N SEC 1 WELL ANDREWS TX 79714

15 Memorial Resource - LLC @81..K 451N Wf2 NW/4 sec 9 ODESSA TX 79763

16 Memorial Resoun:e - LLC BU< 45 sec 1 T1N ECT WELL ANDREWS TX 79714

Gro 3 c tlon with up - ustomer Loca • a Start Datt of 01 0112015 # Customer Location Namt Customer Loclllon City Siiia Zip Code

1 Memorial Resource Development LLC BU< 53 T 2 SEC 27 LCM MONAHANS TX 79756-(X)OO

2 Memorial Resource Development UC BLK 76 sec 47 LOVING c WINK TX 79789

3 Memoria Resource OeYelopment LLC @ABS A· 12393 SF 15470 MONAHANS TX 79756-0000

4 Memorial Resource Oevelopnent LLC BlK S3T 2 SEC 11 LOVIN MONAHAf!S TX 79756

5 MemDrial Resource Development LLC SEC 37 BLOCK 76 PSL PERM MONAHANS TX 79756

6 Memorial Resource Devel~! LLC BLK 76 SEC 47 LOVING C WLS # 1 WINK TX 79789

7 Memorial Resource Development LLC BU< 76 sec 47 LOVING c WlS # 2 WINK TX 79789

8 Memorial Resource Development LLC BU< S3 SEC 2 LOVING CO MONAHANS TX 79756

9 Memorial Resource Development LLC BU< 53 T2 SEC 41 LOVIN MONAHANS TX 79756

10 Memorial Resource Development LLC BU< 76 SEC 48 LOVING C WINK TX 79789

GtouD 4-Customer Lo ons I 118 D O 12017 catl with Start D of 51 1 Customer Location Name Customer Location City Stitt

Memorial Resource Delllllmment LLC 1300 MCCAMEY UNIT 94STATE 94 STATE GROVE 2 MC CAMEY Oil FIELD TX

Memorial Resource Develonment LLC 1490 MCCAMEY UNIT 94DKGLE 94 DK GLENN A 1

Memorial Resource:. LLC @BU< 45 1 S sn. SEC 30 ECT

Merrorial Rescuce - LLC BLKA 44 SW4 sec 25 WELL

Memorial Resource Oevelooment LLC 15450 MCCAMEY

Memorial Resource DevelDMW'll LLC 15390 MCCAMEY

c wl fO&IO GrouD 5- ustomer Loe11lon1 1111 Stlrt Date o 112017

• CusllDmer Location Name Cualomtr Locallon

1 Memorial RllSOUlte Development UC US HIGHWAY 83 UNIT BLDG

2 Memorial Resoun:e Oe't'elopment LLC 1611 DON CAMILO Bl.VD

{00091111.3/2DOO-T0417)(00091109.3120QO. T0411} Fllprice Unbundled MEMORIAL PRODUCTION OPERATING UC Cooltacl Number 1.fCBRTL: ACE Record 1·1CBS2X; Deal ID &024i369711 Paa11 7 t118. !i&"1014

City

LAREDO

LAREDO

MC CAMEY Oil FIELD TX

ODESSA TX

ANDREWS TX


MC CAMEY OIL FIELD TX

Stale Zip Code

TX 78040

TX 78040

10400513291530001

10443720006426189

10443720002679870

10443720006944137

ESI

10443720006377177

10443720006004216

10443720004353156

10443720007732094

10443720008379281

10443720007400704

10443720007400673

10443720006022134

10443720004352567

10443720006186837

ZjpCocft ESI

79752 10204049702239210

79752 1020404976665'270

79763 10443720002683993

79714 10443720001415318

79752 102040497019810

79752 10204049789988040

ESI

10032789499172036

10032789450778409


3

4

5

6

7

Memorial Resource Development LLC 3190FM2359 SEVEN SISTERS TX 78357 10032789420837712

Memorial Resource Development LLC R HOLBEIN OSPREY UNIT WN # 1 MIRANDO CITY TX 78369 10032789417337225

Memorial Resource Dt...elopment LLC 33101/2SZAPATAHWf LAREDO TX 78046-8843 10032789419467290

Memorial Resowce Development LLC 2042 HIGHWAY 59 SEVEN SISTERS TX 78357 10032789404177142

Memorial Resource Development LLC 2 R HOLBEIN OSPREY MIRANDO CITY TX 78369 10032789436433120

Customer may add and delete Customer Locations at Relianrs sole disaetion. Amendments to Exhibit A to add and delete Customer Locations may be formed and implemented as follows:

(ij Customer emails Reliant requesting that a Customer location be added or deleted, together wilh any resulting changes to tie Benctvnark Quan~ly. and attaching the addition/deletion form to be provided by Reliant (the "Emal Request"); and

(ii) Reliant accepts lie Email Request in a responsive email transmission attaching an amended Exhibit A showing the addition or deletion of the Customer Location (the "Email Confirmation").

The Parties are legally bound by each amended Exhibit A from the time Reliant transmits it to Customer, and if Reliant does not transmit it, no amendment by email transmission Is binding upon the Parties. The Parties adopt the Email Request and Email Confirmation as a means by which the Parties' amendment of Exhibit A may be reduced to writing. The Parties agree not to rontest or assert a defense to lhe validity or enfon:eabifity of each amendment entered Into. Each Party represents that each of Its representatives charged with Implementing tie foregoing has authority to effectuate the foregoing amendment type by email traismisslon.

All notices, requests, and Invoices must be furnished In writing and delivered by regular mail (including registered or certified mail, return receipt requested), Internet {confinned receipt), overnight carrier, facsimile, or hand delivery.

RELIANT NOTICES & CORRESPONDENCE:

Reliant

1201 Fannin Houston, Texas 77002 P.O. Box 3412 Houston, Texas 77253-3412

Attn: Retaa Contract Management Facsimile No.: (832) 584-2010

With ropy to: Robert Gaudette, Vice President

Reliant Customer Care Number: Please see your invoice

CUSTOMER NOTICES & CORRESPONDENCE & PASSWORD

MEMORIAL PRODUCTION OPERATING LLC 1301 MCKINNEY ST STE 2100 HOUSTON TX n010.3042 Attention: Chris Sowyrda Telephone No.: (713) 490·8995 Facsimile No.: E-Mail Address: [email protected]

BILLING & ACCOUNTING MATTERS:

Please see your invoice or your Reliant represenmtive

AFTER EXECUTION OF THIS AGREEMENT, PLEASE RETURN THE ENTIRE AGREEMENT TO RELIANT BY FACSIMILE TO 832·584-2018.

INVOICES: Custom• will provide its bltHng address In accordance with the General T arms.

{00091111..31211DO.T0417}(0D091109..31211DO-T04f7) Ftlprice Unbundled MEMORIAL PRODUCTION OPERATING LLC Conltad Number 1·1CBRTL; ACE Record 1·1CBS2X; Deal ID 60245369711 Paae B of B. 5i'!l/2014


EXHIBIT B


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EXHIBIT C


SEALED DOCUMENT


EXHIBIT D


reliant:= an NRG company

CONSENT TO PARTIAL ASSIGNMENT

Background:

Reliant Energy Retail Services, LLC ("Reliant") and Memorial Production Operating LLC ("MPO") are parties to an Electricity Sales Agreement dated May 9, 2014, which has been previously amended ("Agreement"). MPO has conveyed to Boaz Energy II, LLC ("BE") certain Customer Locations under the Agreement, as specified on the attached Exhibit A ("Assigned Accounts"). MPO and BE seek Reliant's consent to the assignment of the Assigned Accounts.

Agreement:

1. Reliant consents to the assignment of the Assigned Accounts, subject to the following conditions:

a. MPO and BE must sign this Consent.

b. BE must sign an Electricity Sales Agreement assuming all the rights, obligations, duties, and responsibilities attributable to Customer under that agreement ("BE Agreement").

c. MPO and BE must promptly sign and return (i) this Consent and (ii) the BE Agreement to Reliant (the "Executed Agreements").

2. Within eight Business Days following Reliant's receipt of the Executed Agreements, Reliant will submit a standard electronic move-in transaction to ERGOT for each Assigned Account in accordance with applicable protocols. The Executed Agreements are effective as to each Assigned Account on the date that all actions have been taken by the TDSP, ISO, and ERGOT for Reliant to sell and supply Energy to BE at each Assigned Account location and for BE to purchase and receive such Energy from Reliant at each Assigned Account location (each an "Effective Assignment Date").

3. If BE and MPO fail to comply with the requirements of paragraph 1 of this Consent, then this Consent is null and void and MPO will remain obligated for the Assigned Accounts under the Agreement.

4. This Consent does not release MPO from its liabilities and obligations under the Agreement that (i) arose on or prior to the applicable Effective Assignment Date, or (ii) continue in association with rights and interests not assigned.

5. This Consent does not waive or release Reliant's right, if any, to prohibit further assignment of the Agreement without Reliant's consent.

6. This Consent may be executed in multiple counterparts, all of which (including copies thereon constitute one and the same instrument, and each of which (including copies thereon is treated as an original.

{00042300.4 / 02-0295-8120} Consent to Assignment Form (Legal) Memorial Production Operating LLC (Assignor) to Boaz Energy II, LLC {Assignee}_B/25/2016 1-ICBRTL (Assignor) to 1-RMUP7X (Assignee)


All capitalized terms used and not defined herein shall have the meanings set forth in the Agreement.

RELIANT ENERGY RETAIL SERVICES, LLC

Accepted and Agreed

By:

Name: Robert Gaudette

TiUe: Vice President

Date:

Assignee: BOAZ ENERGY II, LLC

Accepted and Agreed

By:

Name:

Title:

Date:

{00042300.4 / 02-0295-8120) Consent to Assignment Form (Legal)

Assignor: MEMORIAL PRODUCTION OPERATING LLC By: Memorial Production Partners LP, its sole member

By: Memorial Production Partners GP LLC Its General Partner

Accepted and Agreed

By:

Name:

Title: Vf Date:

Memorial Production Operating LLC (Assignor) to Boaz Energy II, LLC (Assignee)_S/2512016 1-ICBRTL (Assignor) to 1-RMUP?X (Assignee)

2


1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

12.

13.

14.

15.

16.

17.

18.

19.

20.

21.

22.

23.

24.

25.

26.

27.

an NRG company

EXHIBIT A

ASSIGNED ACCOUNTS

CUSTOMER LOCATION INFORMATION

CUSTOMER LOCATION NAME ADDRESS

HIGHWAY 190 MIDWAY LANE BOAZ ENERGY 11, LLC SUBSTHSDE

BOAZ ENERGY 11, LLC 171 HUMBLE RD

BOAZ ENERGY II, LLC N UNIVERSITY LEASE

BOAZ ENERGY 11, LLC UNIVERSITY

BOAZ ENERGY II, LLC BLK 45 SEC 1 SE 1/4

BOAZ ENERGY 11, LLC @SW/4 SEC9 BLKC-38

BOAZ ENERGY II, LLC BLK A 41 SE4 SEC 3 WELL

BOAZ ENERGY 11, LLC (Ci)BLK A SW/C NW/4 SEC 6 ECT

BOAZ ENERGY II, LLC @lBLK 45 1N W/2 NW/4 SEC 9

BOAZ ENERGY II, LLC lW.BLK 45 1N SW/4 SEC 3 ECT

BOAZ ENERGY II, LLC BLK 53 T2 SEC 41 LOVIN

BOAZ ENERGY 11, LLC (@.ABS A-12393 SF 15470

BOAZ ENERGY II, LLC BLK 26 SEC 33 WINKLER

BOAZ ENERGY 11, LLC BLK 76 SEC 47 LOVING C

BOAZ ENERGY II, LLC BLK 53 SEC 2 LOVING CO

BOAZ ENERGY 11, LLC BLK 76 SEC 48 LOVING C

BOAZ ENERGY II, LLC BLK 53 T 2 SEC 27 LOVI

BOAZ ENERGY 11, LLC BLK 45 T 2 N SEC 12 WELL

BOAZ ENERGY 11, LLC SECTION 10 BLOCK A

BOAZ ENERGY II, LLC BLK 45 SEC 1 T1N ECT WELL

BOAZ ENERGY II, LLC BLK 76 SEC 47 LOVING C WLS # 2

BOAZ ENERGY 11, LLC BLK 76 SEC 47 LOVING C WLS # 1

BOAZ ENERGY II, LLC BLK 53T 2 SEC 11 LOVIN

BOAZ ENERGY 11, LLC SEC 37 BLOCK 76 PSL PERM

BOAZ ENERGY 11, LLC SEC 9 BLK 38 A

BOAZ ENERGY II, LLC SEC 9 BLK 38 B 1300 MCCAMEY UNIT 94STATE 94

BOAZ ENERGY II, LLC STATE GROVE 2

(00042300.4 I 02-0295-8120) Consent to Assignment Form (Legal)

CITY

OZONA

BRONTE

PYOTE

PYOTE

ODESSA

LAMESA

ANDREWS

ODESSA

ODESSA

ODESSA

MONAHANS

MONAHANS

MONAHANS

WINK

MONAHANS

WINK

MONAHANS

ANDREWS

ODESSA

ANDREWS

WINK

WINK

MONAHANS

MONAHANS

LAMESA

LAMESA MC CAMEY OIL

FIELD

Memorial Production Operating LLC (Assignor) to Boaz Energy II, LLC (Assignee)_8/25/2016 Deal Option ID# 60246369718 1-ICBRTL (Assignor) to 1-RMUP7X (Assignee)

A-1

STATE

TX

TX

TX

TX

TX

TX

TX

TX

TX

TX

TX

TX

TX

TX

TX

TX

TX

TX

TX

TX

TX

TX

TX

TX

TX

TX

TX

COMMENCEMENT ZIP ESID DATE

EFFECTIVE 76943 10204049733787790 ASSIGNMENT DATE

EFFECTIVE 76933-5302 10204049765763161 ASSIGNMENT DA TE


EFFECTIVE 79777-0000 10400513431500001 ASSIGNMENT DATE

















EFFECTIVE 79789 10443720007 400673 ASSIGNMENT DATE

EFFECTIVE 79789 10443720007 400704 ASSIGNMENT DATE





79752 10204049702239210 5/1/2017


28.

29.

30.

31 .


1490 MCCAMEY UNIT 94DKGLE 94 BOAZ ENERGY II, LLC DK GLENNA 1

BOAZ ENERGY II, LLC 15450 MCCAMEY

BOAZ ENERGY II, LLC 15390 MCCAMEY

BOAZ ENERGY 11, LLC @BLK 45 1S S/2 SEC 30 ECT

{00042300.4 / 02-0295-8120) Consent to Assignment Fonm {legal}

CITY MC CAMEY OIL

FIELD MC CAMEY OIL

FIELD MC CAMEY OIL

FIELD

ODESSA

Memorial Production Operating LLC {Assignor} to Boaz Energy 11, LLC {Assignee)_8/25/2016 Deal Option ID# 60246369718 1-ICBRTL {Assignor) to 1-RMUP7X {Assignee}

A-2

COMMENCEMENT STATE ZIP ESID DATE

TX 79752 10204049766654270 5/1/2017

TX 79752 10204049780819810 5/1/2017

TX 79752 10204049789988040 5/1/2017

TX 79763-0000 10443720002683993 5/1/201 7


reliant:=-an NRG company

CONSENT TO ASSIGNMENT

Background:

Reliant Energy Retail Services, LLC ("Reliant") and MRD Operating LLC (formerly Memorial Resource Development LLC} ("MRD") are parties to an Electric Energy Sales Agreement dated February 24, 2014, which has been previously amended ("Agreement"). MRD has assigned the Agreement to Boaz Energy II, LLC ("BE"). MRD and BE seek Reliant's consent to the assignment.

Agreement:

Reliant consents to the assignment of the Agreement, subject to the following conditions:

1. MRD and BE must sign this Consent and promptly return it to Reliant.

2. Within eight Business Days following Reliant's receipt of the fully executed Consent, Reliant will submit a standard electronic move-in transaction to ERGOT for each Customer Location in accordance with applicable protocols.

3. The Assignment and this Consent are effective as to each Customer Location on the date that all actions have been taken by the TDSP, ISO, and ERGOT for Reliant to sell and supply Energy to BE at each Customer Location and for BE to purchase and receive such Energy from Reliant at each Customer Location (each an "Effective Transfer Date").

4. BE agrees the information listed below is true and correct and is incorporated into the Agreement by this reference in the section entitled Customer Notices & Correspondence and Payments contained in Exhibit B:

CUSTOMER NOTICES & CORRESPONDENCE:

BOAZ ENERGY II, LLC 201 WEST WALL STREET SUITE 421 MIDLAND, TX 79701 Attention: MARSHALL J. EVES Telephone No.: (432) 253-7074 Facsimile No.: E-Mail Address:

PAYMENTS:

Bank: ABA Routing # Account#

5. As of the Effective Transfer Date, BE agrees to assume all the rights, obligations, duties, and responsibilities attributable to Customer under the Agreement.

6. As of the Effective Transfer Date, MRD is released of its liabilities and obligations under the Agreement except as noted in paragraph 8 below.

7. If either BE or MRD fails to execute and return this Consent, then this Consent is null and void and MRD will remain obligated for the Assigned Accounts under the Agreement.

8. This Consent does not release MRD from its liabilities and obligations under the Agreement that (i) arose on or prior to the applicable Effective Transfer Date, or (ii) continue in association with rights and interests not assigned.

(00042301.3 I 02-0295-81 20} Consent to Assignment Form (Legal) Memorial Resource Development LLC (Assignor) to Boaz Energy 11, LLC (Assignee)_B/2512016 1-GLDSEB (Assignor) to 1-ROKQHR (Assignee)


9. This Consent does not waive or release Reliant's right, if any, to prohibit further assignment of the Agreement without Reliant's consent.

10. This Consent may be executed in multiple counterparts, all of which (including copies thereon constitute one and the same instrument, and each of which (including copies thereon is treated as an original.

All capitalized terms used and not defined herein shall have the meanings set forth in the Agreement.

RELIANT ENERGY RETAIL SERVICES, LLC

Accepted and Agreed

By:

Name: Robert Gaudette

Title: Vice President

Date:

Assignee: BOAZ ENERGY II, LLC

Accepted and Agreed

By:

Name:

Title:

Date:

(00042301.3 / 02-0295-8120) Consent to Assignment Form (Legal)

Assignor: MRD OPERATING LLC By: Memorial Resource Development Corp. its sole member

:~pt2:§;~ Name: p,......, ~k'

"I

J~?..:..._....:::.t_ii:;;;,,,;_~.;....:..,.:;..=..t..,_~~t..\ ~\ Title:

Date: ·e

Memorial Resource Development LLC (Assignor) to Boaz Energy II, LLC (Assignee}_B/25/2016 1-GLDSEB (Assignor) to 1-ROKQHR (Assignee)

2


reliant;= an NRG company

EXHIBIT A

ASSIGNED ACCOUNTS

CUSTOMER LOCATION INFORMATION


1. BOAZ ENERGY 11, LLC A288 B32T3N S15

1300 MCCAMEY UNIT 2. BOAZ ENERGY II, LLC 94STATE 94 STATE GROVE 2

1490 MCCAMEY UNIT 3. BOAZ ENERGY II, LLC 94DKGLE 94 DK GLENN A 1

4. BOAZ ENERGY II, LLC 15450 MCCAMEY

5. BOAZ ENERGY 11, LLC 15390 MCCAMEY

{00042301.3 / 02-0295-8120} Consent to Assignment Form (Legal)

CITY

GAIL

MC CAMEY OIL FIELD

MC CAMEY OIL FIELD

MC CAMEY OIL FIELD

MC CAMEY OIL FIELD

Memorial Resource Development LLC (Assignor) to Boaz Energy II, LLC (Assignee}_8/25/2016 Deal Option ID# 5246257432 1-GLDSEB (Assignor) to 1-ROKQHR (Assignee} A-1

STATE

TX

TX

TX

TX

TX

COMMENCEMENT ZIP ESID DATE

EFFECTIVE 79738 10031099904038864 TRANSFER DATE






an NRG C:OM:X1')'

ELECTRICITY SALES AGREEMENT SHORT FORM COVER PAGE FIXED PRICE - UNBUNDLED

This Electricity Sales Agreement, including this Cover Page and the attached General Terms and Exhibit (collectively, this "Agreement"), is entered into as of this 25th day of August, 2016 (the "Effective Date") between Reliant Energy Retail Services, LLC r Reliant") and Boaz Energy II, LLC rcustomer"). Reliant and Customer are individually referred to as a "Party• and collectively as the "Parties." Capitalized terms used and not defined in this Cover Page have the meanings stated in the General Terms.

Delivery Term:

Contract Charge:

Contract Price:

Start: For the Group 1 Customer Location(s), the frst Meter Read Date on or after the Effective Assignment Date, as defined by the Consent to Partial Assignment, and for the Group 2 Customer Location(s}, the frst Meter Read Date on or after 05/01/2017 or, if a Switch is requred, the first Meter Read Date on or after the Switch Date

End: For the Group 1 Customer Location(s) and Group 2 Customer Location(s), the later of the first Meter Read Date after 12/31/2019 (collectively, the "Initial Term") and the last day of the Term

The sum of (i) the product of the Contract Price multiplied by Actual Consumption; (ii) Disaetioniwy Service Fees; (iii) Transmission and Distribution Ch..-ges; (iv) Nodal Conges1ion Ch..-ges, if applicable; (v) ooy appicable Taxes; and (vi) any additional charges that are expressly authorized in this Agreement, each of ~ich will be billed as sep..-ate line items to Customer

S0.04978 per kilowatt-hour ("kWh") consumed at each Customer Location, including, subject to the terms of this Agreement, electricity ch..-ges, AnciU;wy Charges, ERCOT fees, applicable aggregator and broker fees collected from Customer and paid to Customer's aggregator or broker (if any).

This Agreement {a) supersedes prior agreement(s) between the Parties for the supply of electricity to the Customer location(s) (whether one Of

more, "Prior Agreement"), if any, effective as of the start of the Oeivery Term; (b) cons1itutes the entire agreement between the PCl"ties and there are no other agreements or representations affecting the subject matter of this Agreement, other than any Prior Agreement; (c) is executed by the Parties' duly authorized representatives in multiple counte<parts to be conslrued as one as of the Effective Date; (d) will inure to the benefit of, and be binding upon, the Parties and their successors and permitted assigns; and (e) wiU not be binding until executed by Customer and Reliant If Reiant elects not to execute this Agreement, Relant wiA notify Customer, in ~ich case this Agreement will have no effect

RELIANT ENERGY RET All SERVICES, LLC

By: ____________ _

Robert Gaudette Vice President

{00091111.312000. T0417}{00091109.Jl2000. T041 n Fixprlce Unbundled Boaz Ene<gy II, LLC Contract Numbef' 1-RMUP7X; Deal ID 60246369718 Page 1 of 8. 8125/2016

BOAZ ENERGY 11, LLC

By: ___________ _ Name: ___________ _ Title:, ________ ___ _


GENERAL TERMS

1. Sales. Term. Reliant will sell to Customer, and Customer will buy from Relian~ electricity ("Energy') to satisfy its Energy Requirements subject to this Agreement. Customer will provide Customer Information to Reliant and will assist Relie¥lt in implementing this Agreement Customer will notify Reliant of any circumstll'lce likely to cause a change to the Energy Requirements at any Customer Location. If Customer has not Switched to a new REP effective when the Initial Term expires, then Reliant may: (i) continue to sell electricity in accordance with this Agreement subject to the Transition Charge or (ii) at any time after the end of the Initial Term, if allowed by Law, terminate this Agreement by Switching Customer to POLR service. If Reliant continues to sell electricity to Custcmer, this Agreement will continue fcr successive one mooth terms (collectively, the "Transition Tenn') until all Custcmer Location(s) are Switched to POLR or to a new REP. During the Transition Term, Customer is subject to the monthly Contract Charge, including a new Contract Price, <¥1d the product terms (collectively, the 'Transition Charge') that Reliant publishes on the Site. This Agreement will continue in effect until final invoices are paid. All obligations regarding indemnity, payment of Taxes, limitations cA liability, confidentiality, <¥1d waivers survive termination for the applicable staMe of limitations period.

2. Billing, Payment. Taxes. For each Customer Location Reliant will send a monthly invoice for the Contract Charge. Customer will notify Reliant in writing of the address to which Reliant may submit invoices within five business days after the Effective Date. All electricity delivered to a Customer Location is measured pursue¥\! to the TDSP's tariff by the TOSP at each Customer Location. Customer agrees that timely and acru-ate invoicing is dependent on the TOSP and ERCOT furnishing Reliant information, in the absence of which Reliant may invoice Customer on estimated data, subject to later adjustment. On or before the 2001 day after the invoice date (the 'Due Date"), Customer will pay the amount due to the address or by wire transfer to the account specified in the invoice. Relilllt will assess a $25.00 processing fee for unprocessed payments due to insufficient funds. If an invoice is not paid by the Due Date, then Reliant will apply to Customer's account a late fee on the unpaid amount equal to the lesser of five percent or the maximum amount permitted by Law. If Custcmer disputes an invoice, Customer will pay Reliant the undisputed amount. Upon resolution, Customer will pay the amount owed with interest at the Interest Rate from the date the amount was originally due to, but excluding, the date the amount is paid. Customer is responsible and indemnifies Reliant for all Taxes arising from or measured by electricity sold or services provided or Reliant's recapts from the foregoing, whether the Law imposes the Taxes on Reliant or Customer. Reliant wi" collect Taxes from Customer by including them oo the ill'Klioe. Reliant will recognize a lawful sales tax exemption on a pro6peetive basis ortj after Reliant receives proper documentation. If Customer is due a sales tax refund because of Relianrs failure to timely recognize valid exemption documentation, Reliant will credit the overpaid sales tax to Customer's account. Customer is responsible for petitioning the taxing authority for all other sales tax refunds.

3. Credit Relianrs obligation to sell electricity to Customer is conditioned upon Relianrs on~ng review and approval of Customer's creditworthiness. Customer will, on Relianrs request frcm time to time, (i) provide financial information and (ii) if Customer's creditworthiness declines, provide perlormaice assurance, all reasoncbly satisfactory to Reliant.

4. Consumption Change. If for any two consecu tive months, Customer incurs a change in its operations at any Customer Location resulting in a change in Custome(s Actual Consumption that is less than 75% or greater than 125% of the Benchmark Quantity ("Consumption Change'), then Reliant may adjust the Contract Price, Benchmafk Quantities, and other terms of this Agreement effective as of the next Meter Read Date. Customer will provide notice to Reliant 60 days prior to MY proposed change in operatioos at any Customer Location that may result in a Consumption Change. Upon recei~ Reliant may notify Custcmer of any adjustment to the Contract Price, Benchmark Quantities, or other terms of this Agreement at least 45 days prior to the effective date of such adjustment (the 'Adjustment Effective Date'). If Customer does not accept the adjustmenl theo ai or before 30 days prior to the Adjustment Effective Date Custcmer may terminate this Agreement and pay Reliant a Cancellation Fee and remain liable to pay Reliant timely for all charges for electricity sold until each Custcmer Location is Switched. If Customer fails to timely terminate this Agreement as set forth ab<Ne, then the adjustment will take effect on the Adjustment Effective Date. Afr/ election by Reliant not to exercise its ri!tlts under this Section 4 wiH not preclude Relianrs exercise of those rights at a later date.

5. Default 'Non-Defaulting Party' may establish a date (the 'Early Cancellation Date') on which this Agreement will be cancelled upon the occurrence of any of the folla.ving defaults by 'Defaulting Party,' if the default is not cured within five business days after notice (except for an Insolvency Event or the failure to provide performance assurance which are immediate defaults):

(i) Failure to make, when due, any payment; or (ii) Any representation or warranty proves to have been false or misleading in any material respect; or (iii) Failure to perform any covenant; or (iv) An Insolvency Event occurs.

No waiver by a Party of a default will be coostrued as a waiver of any other default If Non-Defaulting Party cancels this Ag:eemen~ (i) Custcmer, or if allowed by Law, Relian~ as Non-Defaulting Party, may Switch Customer's service to POLR or a new REP, and ~i) Defaulting Party will pay the Cancellation Fee to NooOefaulting Party, and (iii) if alla.ved by Law, Relianl as Non-Defaulting Party, may disconnect Cl cause to be disconnected, each Customer Location from electricity service. The Parties agree that if Customer causes a default by switching away one or more Customer Locations to another REP prior to the expiration of the Initial Term, the Earty Cancellation Date will be the ea~iest date a Customer Location is Switched. Regardless of which Party is Defaulting Party, if this Agreement is cancelled, Customer will remain liable to Pa'/ Reliant timely for all charges for electricity sold until each Customer Location is Switched or disconnected. Defaulting Party will pay the Cancellation Fee within 15 business days of receipt of notice therefor and it will accrue interest at the lnlerest Rate from the Early Cancellation Date to, but excluding, the date paid. On the date due, each Party will pay to the other Party all additional amounts payable by it after all amounts have been netted and aggregated with the Cancellation Fee.

6. Limitation of Liabilities. The Parties confirm that the express remedies and measures of damages provided in this Agreement satisfy its essential purposes. If an express remedy is provided, that remedy is the sole and exclusive remedy. If no remedy is expressly provided, the obligor's liability is limited to direct actual damages as the sole and exclusive remedy. bl each case all other remedies at law or in equity are waived. Neither Party is liable for consequential, incidental, punitive, exemplary, or indirect damages. or other business interruption damages. by statute. in tort or contract. under any indemnity provision, or othef'wise. These limitations apply even if the damages result from a Party's negligence, whether sole, j oint. concurrent. active, or passive. To the extent any damages required to be paid are liquidated, the Parties acknowledge that the damages are difficult

(00091111.312000. T0417}(00091109.3f2000. T0417} Fixprice Unbundled Boaz Energy II, LLC Contract Number 1-RMUP7X; Deal ID 60246369718 Page 1 of 8. 8125/2016


or impossible to determine, otherwise obtaining an adequate remedy is inconvenient, and the liquidated damages constitute a rea.sonable approximation of the loss.

7. Representations. Customer represents that (i) it is a commercial user of electricity and has entered into this Agreement solely for related non-speculative purposes, (ii) it will net resell any of the electricity it buys from Reliant (iii) it has experience in business matters that enable it to enter into and perfoon this Agreement, and (iv) no Customer Location will have generation that is synchronously connected to the TDSP (the Parties acknowledge that synchronously connected generation does not include emergency back-up power generation). The Parties make no representations or warranties except those expressly stated in these terms, and disclaim all other warranties, express or implied, including merchantability, conformity to models or samples, and fitness for a particular purpose.

8. Force Maj eure. If a Party is unable because of Force Majeure to perfoon its obligations and it nctifies the other Party as soon as pra::ticable, then its obligations (other than payment for ertef'lJ received, and perfoonance " obligations incurred, before the Force Majeure event) will be suspended for the duration of the Force Majeure event Customer agrees that under no circumstances will Reliant be required, because of a Force Majeure event. to supply electricity except to the Customer Locatioos.

9. Law, Waivers, Confidentiality, Documentation. Except as provided in Section 6, the Law of the State of Texas (v.1thout giving effect to principles of confticls of laws) governs this Agreement Each Party walv•, to the fullest extant permitt.d by applicable law, any right It may have to a trial by jury in respect of any suit, action, claim or proceeding relating to this Agreement. The Uniform Commercial Code of Texas applies to this Agreement and electricity is deemed a "good''. If either Party or its activities related to this Agreement are affected by any Law enacted after the Effective Date ("Change In Law") that makes performance of this Agreement unenforceable or illegal, then either Party may terminate this Agreement on notice to the other Party, without any obligation or other liability (other than payment for energy received, and performance of obligations incurred, before the Change in Law becomes effective). If a Change in Law occurs relating to the wholesale or retail electricity market in ERCOT resulting in new or modified fees, costs of performance, or other charges being incurred by Reliant and/or other ERCOT market participants, including taxes, fees, charges, impositions, assessments, or restrictions or allowance requirement(s) related to carbon emissions from electric generation in ERCOT ("Emissions Charges"), then to the extent incurred by Reliant, all of the incremental amounts, Including Emissions Charges, may be reasonably allocated and billed to Customer as an authorized charge or adjustment to the Contract Price. To the ex1ent permitted by Law, Customer agrees that the Customer Protection Rules adopted by the PUCT pursuant to the PURA do not apply to this Agreement and that this Agreement will govern any conflict between it and the Customer Protaction Rules. Neither Party will disclose these terms or any Site password to a third party (other than a Party's and i1s affiliates' employees, lenders, counsel, permitted assignees, consultants, accountants, or prospective purchasers who have agreed to confidentiality), except in order to comply with Law. If a provision becomes unlawful or unenforceable, the other provisions will remain in effect. Except as provided in Exhibit A, only a v.1itten amendment signed by the Parties Is enforceable.

10. Assignment Except as provided, neither Party may assign this Agreement without the other Party's prior written consent, which consent may not be unreasonably withheld. Reliant may, without Customer's consent, (i) as part " any financing or other financial arrangements, assign, sell or pledge this Agreement or its accounts, revenues, or proceeds, or (ii) assign this Agreement to an affiliate of Reliant or to any other person or entity succeeding to al or a substantial portion of the assets of Relicrit whe.-eby Reliant will have no further obligations for future perfoonance other than payment of amounts owed.

11. Customer Acknowledgement. Customer ackno.vtedges that Ener'lJ prices may be subject to substantial volatility based on ecooomic conditions fuel prices and other factors, and that past results regarding electricity products are not necessarily an indication of future results. Further, Customer acknowledges that Reliant and its affiliates are in the business of buying and selling ~er within the ERGOT matket for eoch of their own accounts and that this participation may affect the calculation of Rea-Time Settlement Point Prices. Notwithstanding the foregdng, Customer agees to pay the amounts pro1ided for in this Agreement that may be based upon Rea-Time Settlement Point Prices, as pranulgated by ERGOT. Subject to the right of Customer to dispute a Reliant Invoice as set forth in the Agreemenl Customer will net withhold payment for any reason, including, investigatory activities undertaken by ERCOT or PUCT, based on Reliant's participation in the mari<et and its effect oo Real-Time Settlement Point Prices. Nothing in this Agreement restricts Reliant or any of Reliant's affiliates from participating in the ERCOT mari<et activities that may affect Real-Time Settlement Point Prices.

12. Partial Termination. Customer may delete one or more, but not all, Customer Locations (and associated Benchmari< Quantities as determined by Reliant in its sole discretion) from the Agreement ('Partial Termination•), only if Customer (a) closes those Customer Locations (a) for the remainder of the Term, or (b) sells those Customer Locatioos(s) and the buyer of the locations does not assume obligations to purchase Ener'lJ under this Agreement Customer must provide Reliant with at least 30 days prior written notice of its intent to delete Customer Location(s) from the Agreement on these conditions. Customer must p<tf Reliant a partial Terminatioo Payment for the deleted Customer Locatioo(s), unless Customer sells the deleted Customer Location(s) to a purchaser who, (a) first executes a new contract with Reliant upon the same terms as Customer's contract, and (b) satisfies Relianrs collateral and credit requirements. Relic:rit will calculate the partial Termination Payment in the sane manner as the Cancellation Fee, using onty the Benchmait Quantities for the deleted Custaner Locatioos, and bill the amount of the partial Termination Payment on a subsequent Retail invoice.

13. Definitions. The tenn ·including" means including, without limitation. All internal references are to this Agreement unless stated othe!wise.

"Actual Consumption"means the electricity measured or reported by the TDSP or estimated by Reliant for each Customer Location. "Ancillary Charges" means, for each Customer Locatioo, all charges assessed by ERGOT for services necessary to maintain reliable operation of the transmissioo system to support transmission of electricity from the source of generation to the points d demand. "Benchmark Quantity" means Custaner's expected monthly kWh electricity consumption for the Term. Customer's expected consumption may be set out on Exhibit A. If Customer's expected consumption is not set out on Exhibit A, Benchmari< Quantity will be determined by reference to Customer lnfoonation and the 12 months d electricity consumption by Customer before the Effective Date, or for new facilities, Customer lnfoonatlon and electricity coosumption a comparable facilities, each as may be adjusted in accordance with this Agreement "Cancellation Fee" means (i) where Customer is Non-Defaulting Party, the ~difference, ii any, obtained by subtracting (a) the present value of this Agreement had it not been terminated using the Benchmait Quantity applicable to the Customer locations for the remaining period of the Term film (b) the present value of a replacement cootract using the Benchmari< Quantity applicable to the Customer Locations and mari<et prices that are reasonably expected to

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be available in the market for the remaining period of the Term; and M ~e Reliant is Non-Defaulting P..ty, the~ difference, if any, obtained by subtracting (a) the present value of a replacement contract from (b) the present value of this Agreement had it not been tenninated, calculated in the same manner as provided in item (i), in each case~ Non-Defaulting Party's reasooable costs associated with the valuation and replacement contract "Competition Charges" mecris, for each Customer Location. the following: competition transition charges; transition charges defined in PURA; excess mitigation credits; and substantially similar charges related to the opening of the Texas elecbic market to REPs, including the r~ery of stranded costs as defined by PURA and increases in Transmission and Distribution Charges related to the redirection of depreciation expenses. "Customer Information" meais information that accurately substantiates Customer's Energy Requirements forming a basis for the Contract Price and Benchmark Quantity. "Customer Location(s)" means Customer's facilities described in Exhibit A. "Discretionary Service Fees" means all nm.routine deposits, connection fees, metering charges, installation costs for equipment to maintain a Power Factor of at least 95% lagging at each Customer Location meter, assessments by the TDSP in respect of 8lly Power Factor at 811Y Customer Location meter, or any similar amounts assessed by 8lld payable to the TOSP related to the TDSP's purchase 8lld installation of met8'S and associated equipment and Customer's use of that equipment to establish or maintain electric service at a Customer Locatioo or to maintain the TDSP system requirements, or other charges for equipment or services requested by Customer or required by the TDSP. "Energy Requirements" means electricity equal to 100% of the actual electricity requirements of Customer Locatioo(s) for the Oelivety Term, not to exceed the TDSP's facilities' capabilities or contravene Law. "ERCOT" means the Electric Reliability Council of Texas. "Force Majeure"meais an event not within the reasonable control of the Party claiming suspension, not caused by the negigence of that Party, and which, by the exercise of due diligence, that Party is unable to overcome or obtain a commercially reasonable substitute therefor. Force Majeure includes a Force Majeure occurring with respect to the TDSP, a suspension, curtailment, or service intemJption by the TDSP, or acts of terrorism, civil insurrection, war, or acts of God. "Insolvency Event" m88lls making an assi~ment or arrangement for the benefit of creditors, filing a petition, or authorizing or acquiescing in the commencement of a proceeding under Law for protection of creditors, or having a similar petition filed against i~ or otherwise becoming insolvent or unable to pay debts as due. "Interest Rate" means 811 annual rate equal to 2% over the per annum prime lending rate published in The Wall Street Jounal under 'Money Rates' in effect on the first day of the month during which the charge or fee is assessed. The Interest Rate will never exceed the maximum rate permitted by Law. "Law" means e11y law, statute, regulation, rule, protocol, exchange rule, decision, wri~ crder, decree or judgmen~ or any interpretation of any of them by any cou~ agency, or instrumentality having jurisdiction, including ERGOT. "Meter Read Date" means the actual meter read date that corresponds to the TDSPs r~larly scheduled meter read date, as ascertained from the meter reading schedule published on the TDSP's website. "Nodal Congestion Charges" means the difference(s) between the Day-Ahead Settlement Pcint Price(s) determined by ERCOT for the Hub(s) and the DayAhead Settlement Point Price(s) determined by ERGOT for the Load Zones associated with the Customer Location(s) for Actual Coosumption not priced at Settlement Point Price(s) at the Load Zone(s); provided that if the Day-Ahead Settlement Point Price(s) are not published by ERCOT or are otherwise unavailable, then for the period(s) fer which Day-Ahead Settlement Point Price(s) are not available, this charge will be based on difference(s) between the Real Time Settlement Point Price(s) determined by ERCOT for the Hub(s) and the Real Time Settlement Point Price(s) determined by ERCOT for the Load Zones associated with the Customer Location(s) for Actual Consumption not priced at Settlement Pcint Price(s) at the Load Zone(s). As used herein, the terms 'Hub', 'Day-Ahead' , 'Real Time', 'Settlement Point Price' and 'Load Zone' have the meaning set forth in lhe Texas Nodal Protocols approved by PUCT, as of October 1, 2006, as amended. 'POLR" means the REP designated ll'f the PUCT required to offer electricity to any requesting customer in a specified teoitory. "Power Factor" means the ratio of kilowatt ('kW') to kilovolt amperes ('kVa') expressed as a percentage. calculated by dividing kW by kVa. "PUCT" means the Public Utility Commission of Texas. "PURA" means the Public Utility Regulatory Act. "REP" means a retail electric provider under PURA. "Site" means Reliant's AccountConnectSM web site at www.reliant.com. "Switch" means an authorized change in Customer's electricity supplier. "Switch Date" means for each Customer Location the date that all actions have been taken by the TDSP and ERCOT (i) for Reliant to sell electricity to Customer and for Customer to receive same. or (ii) for another REP or POLR to sell electricity to Customer and for Customer to receive same, as the context requires. "Taxes" means all federal, state, and local taxes. fees. QOiemmental charges. and assessments, imposed now or later on Customer as purchaser or on Reliant as seller of electricity under this Agreemen~ or on this transaction, including Texas state and local sales 8lld use taxes, the Texas gross receipts tax on utility canpanies, the PUCT gross receipts tax assessmen~ municipal fees, and genel'ation, utility, regulatory, Btu, or electricity taxes, excluding taxes on net income. "TDSP" meais the entities that have custody of the electricity sold and purchased and own or conlrol elecbic transmission or distribution equipment for transmitting or distributing electricity to a Cus~ location. "Tenn"means the Initial Term and the Transition Term. "Transmission and Distribution Charges" means, for each Customer Location, all charges and fees in the TDSP's tariff (except Competition Charges) and billed to Reliant for TDSP's services to deliver electricity to the Customer Location.

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Benchmark Quantity (kWh}

Date l 8MQ I l 08/01/2016-08/31/2016 1 2,456,137 I kWh

: 09101/2016-09/30/2016 -~~·~ 1 kWh l 10/01/2016-10/31/2016 2,695,652 kWh .. t 11/01/2016-11/30/2016 2,554,964 kWh

J 12/01/2016-12131/2016 2,608,017 kW~ ; 01/01/2017-01/3112017 2,455,641 kWh !

1 02/01/2017-0212812017 2,472,785 kWh ----03/0112017-03/3112017 2,623,003 kWh

f 04/01/2017 -04/l)/2017 2,551,484 kWh

'. 05I01/2017-05J31/2017 j 2,346,636 I kWh I 06/01/2017-06/30/2017 f 2,270,346 , kW~ 0110112011-01131i2Q17 i 678.193 1 kWh

08/01/2017-08J31/2017 2,576,783 I kWh

09101/2017-09/30/2017 2,579,229 kWh

10/01/2011-10/31/2011 2.813.991 kWh 1

. 11/01/2017-11/30/2017 r 2.670,159 1 kWh

I 12/01/2017-12131i2017 2,721 ,955 I kWh I ; 01/01/2018-01/31/2018 2,573,685 I kWh

i 02/01/2018-0212812018 I 2,576,764 1 kWh I I 03/01/2018-03/3112018 2.745,657 kWh

I 04/01/2018-04/l)/2018 2,667,489 kWh I : 05.ol /2018-05/31121>18 1 2, 464" 72 1 kWhl i 06/01/2018-06/30/2018 2,387,242 kWh -

2,677,722 1 kWh . ; 07/01/2018-07131/2018 ! : 08/01/2018-08/31/2018 2,576,783 kWh r-I 09/01/2018-09/30/2018 2,580,884 kWh

10/01/2018-10/31/2018 2,812,143 kWh

: 11/01/2018-11/30/2018 2,670,159 kWh I I

12/01/2018-12131/2018 1

2,721 ,955 I kWh

01/01/2019-01/31/2019 2,573,685 kWh

I 02/01/2019-02/28/2019 2,576,764 k~

: 03/01/2019.oornt20~.116 j kWh I 04/01/2019-04/30/2019 2,667,'292 I kWh

' ~1/2019-05131/20 19 2,464, 172 . kWh J

{00091111.3/2000-T0417}{00091109.3/2000-T0417} FiJq>rice Unboodled Boaz Energy II, LLC Cootract Number 1-RMUP7X; Deal ID 60246369718 Page 1 of 8. 8/'2512016

EXHIBIT A


Date I Br..) I I _ _..,_I - ~ I 06/01/2019-00/l)/2019 2,392,385 kWh

~ 07/01/2019--07131/2019 • 2,676,651 kWh

l 08/01/2019-08/31/2019 1 2,576,602 kW~ foot01/2019--09/30/2019 2,579,229 I kWh : 10/01/2019-10/31/2019 2,812, 143 kWh

I 11/01/2019-11/30/2019 l 2,670,410 I k~ ' 12/01/2019-12/31/2019 1 2,721-:ssolkWh

_o~t0112020-01/3112020 1 1.100.668 ~ J

G 1 c L 'th S Da the En . A . rouo - ustomer ocat1ons w1 a tart te ecttve ss1anment Customer Location

I Name Customer Location

1 BOAZ ENERGY II, LLC HIGHWAY 190 MIDWAY LANE SUBSTHSDE

2 BOAZ ENERGY 11, LLC 171HU~ERD

3 BOAZ ENERGY II, LLC N UNIVERSITY LEASE

4 BOAZ ENERGY 11, LLC UNIVERSITY

5 BOAZ ENERGY II LLC BU< 45 SEC 1 SE 114

6 BOAZ ENERGY 11, LLC @.SW14 SEC9 BlKC..JS

7 BOAZ ENERGY II, LLC BLK A 41 SE4 SEC 3 WELL

8 BOAZ ENERGY II LLC @BLK A SWIC NW14 SEC 6 ECT

9 BOAZ ENERGY LLC 6J!BlK 451N Wl2 NW14 SEC 9

10 BOAZ ENERGY LLC ~BlK 451N SWl4 SEC 3 ECT

11 BOAZ ENERGY LLC BU< 53 T2 SEC 41 LOVIN

12 BOAZ ENERGY LLC @.ABS A-12393 SF 15470

13 BOAZ ENERGY , LLC BlK 26 SEC 33 WINKLER

14 BOAZ ENERGY 11, LLC BU< 76 SEC 47 LOVING C

15 BOAZ ENERGY II, LLC BLK 53 SEC 2 LOVING CO

16 BOAZ ENERGY II, LLC BLK 76 SEC 48 LOVING C

17 BOAZ ENERGY II LLC BU< 53 T 2 SEC 27 LOVl

18 BOAZ ENERGY II LLC BlK 45 T 2 N SEC 12 WELL

19 BOAZ ENERGY II LLC SECTION 10 BLOC1< A

20 BOAZ ENERGY LLC BU< 45 SEC 1 T1N ECT WELL

21 BOAZ ENERGY LLC BlK 76 SEC 47 LOVING C WLS # 2

22 BOAZ ENERGY LLC BU< 76 SEC 4 7 LOVING C WLS # 1

23 BOAZ ENERGY LLC BU< 53T 2 SEC 11 LOVIN

24 BOAZ ENERGY LLC SEC 37 BLOCK 76 PSL PERM

25 BOAZ ENERGY • LLC SEC9BlK38A

26 BOAZ ENERGY II, LLC SEC 9 81.K 38 B

Gf 2 c OUD - L ith Start Date f 05/01/201 7 ustomer ocations w a 0 Customer Location

I Name Cuswmer Location 1300 WCCANEV UNIT 94STATE 94 STATE

1 BOAZ ENERGY II LLC GROVE2

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Da te

Citv State ZioCode ESI

OZONA TX 76943 10204049733787790

BRONTE TX 76933-5302 10204049765763161

PYOTE TX 79m 10400513291530001

PYOTE TX 797n.JX'IXJ 10400513431500001

ODESSA TX 79764 10443720000204211

LAMESA TX 79331.JX'IXJ 10443720001137000

ANDREWS TX 79714 10443720001309019

ODESSA TX 79763 10443720002555312

ODESSA TX 79763 10443720002679870

ODESSA TX 79763 10443720002680676

MONAHANS TX 797<£. 10443720004352<£.7

MONAHANS TX 79756-0000 10443720004353156

MONAHANS TX 79789 10443720004406197

WINK TX 79789 10443720006004216

MONAHANS TX 797<£. 10443720006022134

WINK TX 79789 10443720006186837

MONAHANS TX 79756-0000 10443720006377177

ANDREWS TX 79714 10443720006397049

ODESSA TX 79761.JX'IXJ 10443720006911060

MOREWS TX 79714 10443720006944137

WINK TX 79789 10443720007 400673

WINK TX 79789 10443720007 400704

MONAHANS TX 797<£. 10443720007732004

MONAHANS TX 797<£. 10443720008379281

LAMESA TX 79331 10443720009475317

LAMESA TX 79331 10443720009475348

Citv State ZiDCode ESI MCCMf2f OIL FIELD TX 79752 10204049702239210


, 2

3

4

5

Customer Location Name Customer Location Citv Stale lip Code ESI

1490 MCCAMEY UNIT 94DKGl.E 94 DK MCCAMEY BOAZ ENERGY II, LLC GLENN A 1 OILFIELD TX 79752 10204049766654270

MCCAMEY BOAZ ENERGY II LLC 15450 MCCAM:Y OIL FIELD TX 79752 10204049780819810

MCCAMEY BOAZ ENERGY II LLC 15390MCC~Y OIL FIELD TX 79752 10204049789988040

BOAZ ENERGY II, LLC ftBLK 45 1 S Sf2 SEC 30 ECT ODESSA TX 79763-0000 10443720002683993

Customer may add and delete Customer Locations at Relianrs sole discretion. Amendments to Exhibit A to add and delete Customer Locations may be funned and implemented as follows:

(i) Customer emails Reliant requesting that a Customer location be added or deleted, together with any resulting changes to the Benchmark Quantity, and attaching the addition/deletion form to be provided by Reliant (the "Email Request"); and

(ii) Reliant accepts the Email Request in a responsive email transmission attaching an amended Exhibit A showing the addition or deletion of the Customer location (the "Email Confirmation").

The Parties <l'e legally bound by each amended Exhibit A from the time ReHant transmits it to Customer, and if Reliant does not transmit it, no amendment by email transmission is binding upon the Pa'ties. The Parties adopt the Email Request and Email Confirmation as a means by which the Parties' amendment of Exhibit A may be reduced to writing. The Pa'ties agree not to contest or assert a defense to the vaMdity or enforceabiity of each amendment entered into. Each P<l'ty represents that each of its representatives cha-ged with implementing the foregoing has authority to effectuate the foregoing amendment type by email transmission.

All notices, requests, and Invoices must be furnished in writing and delivered by regul<I' mail (including registered or certified mail, return receipt requested), Internet (confirmed receipt), overnight carrier, facsimile, or hand deivery.

RELIANT NOTICES & CORRESPONDENCE;

Refiant 1201 Fannin Houston, Texas 77002 P.O. Box 3412 Houston, Texas 77253--3412

Attn: Retail Contract Management Facsimile No.: (832) 584-2010

Wrth copy to: Robert Gaudette, Vice President

Reliant Customer Ca-e Number: Please see your invoice

CUSTOMER NOTICES & CORRESPONDENCE & PASSWORD:

BOAZ ENERGY II, LLC 201 WEST WALL STREET SUITE 421 MIDLAND. TX 79701 Attention: MARSHALL J. EVES Telephone No.: (432) 253-7074 Facsimile No.: E·Mail Address:


Please see your invoice or your Reiant representative

AFTER EXECUTION OF THIS AGREEMENT, PLEASE RETIJRN THE ENTIRE AGREEMENT TO RELIANT BY FACSIMILE TO 832-584-2018.

INVOICES: Customer will provide its billing address in accordance with the General Terms.

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EXHIBIT E


CAUSE NO. CV1604622

CARROLL L. LEE, INDIVIDUALLY; § PEGGY G. LEE, li'iDIVIDUALLY; § CARROLL L. LEE AND PEGGY G. LEE, § d/b/a CEDAR MOUNTAIN RANCH; LEE § CONCHO VALLEY FAMILY, L.P.; § LEECO PROPERTIES, INC.; SANDRA § CAGLE, INDIVIDUALLY; .JERRY D. LEE. § INDIVIDUALLY; LARRY G. LEE, § INDIVIDUALLY; AND MATTHEW LEE, § INDIVIDUALLY,

l'laintifls,

,.,

§ § g ~

§ 8 s 8 s

MEMORIAL PHODUCTION § OPERATING, LLC; i'>'!EMORIAL § RESOURCI~ DEVELOPMENT § CORPORATION; CC FORBES § co;\'IPANY, L.P.; GRANDFIELD § CONSULTING, INC.; CHARLES MARK § WITT; BOAZ ENERGY, LLC; BOAZ § ENERGY II, LLC; IVORY ENERGY, LLC; § and .JOHN DOES 1 - 4 §

Defendants. § §

Filed 912312016 6:30:51 P Mar/ Grim

County Clerk Coke County. r exas

r<.1mb0rly Lewis

IN THE DISTRICT COURT OF

COKE COUNTY, TEXAS

51ST JUDICIAL DISTIUCT

PLAINTIFFS' ORIGINAL PETITION

Plaintiffs Carroll L. Lee, Individually: Peggy G. Lee, Individually; Carroll L. Lee and

Peggy G. Lee, d/b/a Cedar \'lountain Ranch; Lee Concho Valley Family. L.P.: Lecea Properties,

Inc.: Sandra Cagle. Individually: Jerry D. Lee, Individually: Larry G. Lee, Individually: and

Manhew Lee, Individually (collectively referred to herein as the "Lee Plaintiffs" or "Plaintiffs")

file this Original Petition against Defendants Memorial Production Operating, LLC. (''Memorial

Production"): Memorial Resource Development Corp. ("Memorial Resource''); CC Forbes

Company. L.I'. (''Forbes"): Grandfield Consulting. Inc. ("Grandfield"): Charles llfark Witt

("Witt"); Boaz Energy, LLC ("Energy''): Boaz Energy IL LLC (''Energy Ir'); Ivory Energy.

PLAINTIFFS' ORIGINAL PETITION - PAGE I


LLC ("Ivory"); and John Does 1, 2, 3, and 4 (all defendants sometimes collectively referred to

as "Defendants") and would respectfully show the Court as follows:

I. DISCOVERY

I. Discovery is intended to be conducted under Level 3 as provided in Texas Rule of

Civil Procedure 190.4. After service on Defendants, the Lee Plaintiffs shall move, or the parties

shall provide the Court with a Scheduling Order compliant with Rule 190.4. The Lee Plaintiffs

affirmatively plead this suit is not governed by the expedited-action provisions of Texas Rules of

Civil Procedure 169 and 190.2, because they seek monetary relief in excess of$!00,000.

II. RELIEF

2. Pursuant to Texas Rule of Civil Procedure Rule 47(c)(5) and (d) the Lee Plaintiffs

seek recovery for damages exceeding $1,000,000 and demand judgment for all other relief to

which the Lee Plaintiffs prove themselves entitled.

III. PARTIES

3. Plaintiff Carroll L. Lee is an individual owning real property in Coke County,

Texas and has been married to Peggy G. Lee for over 62 years.

4. Plaintiff Peggy G. Lee is an individual owning real property in Coke County,

Texas and has been married to Carroll L. Lee for over 62 years.

5. Lee Concho Valley Family, LP.is a Texas limited partnership with its principal

place of business in Odessa, Texas.

6. Leeco Properties, Inc. is a Texas corporation with its principal place of business

in Odessa, Texas.

7. Sandra Cagle is an individual resident of Ector County, Texas.

8. Jerry D. Lee is an individual resident of Ector County, Texas.

PLAINTIFFS' ORIGINAL PETITION - PAGE 2


'

9. Larry G. Lee is an individual resident of Ector County, Texas.

I 0. Matthew Lee is an individual resident of Midland County, Texas.

1 I. Defendant Memorial Production Operating, LLC ("Memorial Production") is a

Delaware limited liability company with its principal place of business located at 500 Dallas

Street, Suite 1800, Houston, Texas 77002. Memorial Production may be served through its

registered agent, National Corporate Research, Ltd., at 1601 Elm St., Suite 4360, Dallas, Texas

7520 I, or wherever the agent may be found.

12. Defendant Memorial Resource Development Corp. ("Memorial Resource") is a

Delaware for-profit corporation with its principal place of business located at 500 Dallas Street,

Suite I 800, Houston, Texas 77002. Memorial Resource may be served through its registered

agent, National Corporate Research, Ltd., at 1601 Elm St., Suite 4360, Dallas, Texas 75201, or

wherever the agent may be found.

13. Defendant CC Forbes Company, L.P., by merger "C.C. Forbes, LLC" ("Forbes")

is a Delaware limited liability company with its principal place of business located at 4783 S.

Business 28 I, Alice, Texas 78333. Forbes may be served through its registered agent, Charles C.

Forbes Jr, at the foregoing address, or wherever he may be found.

14. Defendant Grandfield Consulting, Inc. ("Grandfield") on information and belief

is a Texas corporation, with its principal place of business located at 910 Lamar St., Wichita

Falls, Texas 76307. Grandfield may be served through its registered agent, Charles Mark Witt,

at 2001 Irving Place, Wichita Falls, Texas 76308. To the extent Grandfield's corporate existence

may have terminated, Grandfield is sued pursuant to Texas Rule of Civil Procedure 29-prior to

the third anniversary following its termination, as required by Texas Business Organizations

Code § I 1.356( c ).



15. Charles Mark Witt ("Witt") was a principal of Grandfield, as well as another,

potentially interrelated entity known as CADA Operating, Inc., either or both of which were

retained by various Defendants to perform work on the oil and gas interest and "injection well"

at issue in the lawsuit. In so doing, Mr. Witt, in his individual capacity, engaged in tortious and

fraudulent conduct that has caused injuries at issue in this lawsuit. Mr. Witt therefore is liable

for, and is sued in his individual capacity regarding his tortious and fraudulent conduct. Mr. Witt

resides and may be served at 2001 Irving Place, Wichita Falls, Texas 76308, or wherever he may

be located.

16. Defendant Boaz Energy, LLC ("Energy") is a terminated Delaware limited

liability company, which had its principal place of business located at 2501 Seaboard Avenue,

Midland, Texas 79705. Energy may be served as authorized by law to effect service on a

terminated entity and is sued pursuant to Texas Rule of Civil Procedure 29-prior to the third

anniversary following its termination, as required by Texas Business Organizations Code §

1 !.356(c).

17. Defendant Boaz Energy ll, LLC ("Energy II") is a Delaware limited liability

company with its principal place of business located at 2608 Loma Dr., Midland, Texas 79705.

Energy ll may be served through its registered agent, National Corporate Research, Ltd., at 1601

Elm Street, Suite 4360, Dallas, Texas 75201, or wherever it may be found.

18. Defendant Ivory Energy, LLC ("Ivory") is a Texas limited liability company with

its principal place of business located at 910 Lamar Street, Wichita Falls, Texas 76301. Ivory

may be served through its registered agent, Lee Beam, at that address, or wherever he may be

found.

19. On information and belief, the rights, duties, and liabilities for the oil and gas



interest and injection well at issue in the lawsuit may have been transferred by way of direct or

multi-tiered corporate mergers or asset transfer agreements with and including (but not

necessarily limited to) the following entities: Memorial Production Partners, GP, LLC;

Memorial Production Partners, LP; and Range Resources Corp. The entities consequentially are

identified herein as John Does 1, 2 and 3, respectively, and shall be served with a copy of this

Original Petition, for the express purpose of providing notice of potential liability prior to

expiration of any limitations period(s) that may apply to claims or causes of action that could be

asserted against Memorial Production Partners, GP, LLC; Memorial Production Partners, LP; or

Range Resources Corp. This Petition further shall serve as notice to any other person or entity

not presently discernible (designated herein as John Doe 4) who may be liable for the matters at

issue, receiving a copy of this Petition prior to expiration of any applicable limitations period.

IV. JURISDICTION AND VENUE

20. The Court has jurisdiction over the subject matter of this action because the

amount in controversy exceeds the Court's minimum jurisdictional requirements.

21. Venue is mandatory in this Court because this is a suit for, inter a/ia, damages to

real property located in this county, see TEX. C!v. PRAC. & REM. CODE§ 15.011; and the Lee

Plaintiffs otherwise suffered personal losses, damages, and injuries arising from events and

omissions that occurred in this county. See TEX. C1v. PRAC. & REM. CODE § 15.002(a)(l).

Venue in this county otherwise is appropriate, because the Lee Plaintiffs' breach of contract

claim is premised on a contractual agreement performable in this county. See TEX. C!V. PRAC. &

REM. CODE§ I5.035.

V. SUMMARY

22. Carroll L. and Peggy G. Lee, are owners of the Cedar Mountain Ranch, a



working ranch encumbered by the "Bronte Capps Unit, Lease 02474."

23. A "saltwater disposal well" associated with Lease 02474, known as SWD5, is

located on Cedar Mountain Ranch.

24. The Lee Plaintiffs file this suit to recover real property, as well as personal

damages, losses, and other relief caused by the catastrophic failure and blow out of SWD5,

which occurred on September 25, 2014.

VI. FACTS

A. Underground Injection Wells

25. A "saltwater disposal well" falls under a class of wells known as Underground

Injection Wells.

26. Underground injection is the placement of fluids into the subsurface, through a

well bore.

27. The practice of underground injection is common in industries such as the

petroleum industry, chemical industry, food and product manufacturing, and geothermal energy

development.

28. Underground injection is regulated at the federal level under the Safe Drinking

Water Act of 1974.

29. The federal program establishes minimum requirements to be implemented by

State Underground Injection Control ("VIC") Programs. The Texas UIC Program in turn is

design to prevent contamination of underground sources of drinking water that may result from

the operation of injection wells.

30. Underground injection wells pertaining to the petroleum or oil and gas industry

are regulated by the Texas Railroad Commission.

31. Under this regulatory framework, the injection wells are known as Class ll



Injection Wells.

32. Class II Wells generally are categorized into three subclasses: saltwater disposal

wells, enhanced oil recovery, and hydrocarbon storage wells.

33. On a national average, approximately ten barrels of saltwater are produced with

every barrel of crude oil.

34. This "produced water" is a hazardous concoction of various hydrocarbon

compounds, metals, salt and sometimes, radioactive substances. The chemical constituents

commonly include benzene, chlorides, toluene, ethylbenzene, and xylene. Some of these

substances, such as benzene, are carcinogens.

35. Generally, the produced water is injected into geologic formations through

disposal wells.

36. In Texas, the wells must be located and constructed in such a way that the injected

fluids can be controlled underground without contaminating or risking contamination to

groundwater and surface water or other "media."

B. Cedar Mountain Ranch

37. Carroll L. and Peggy G. Lee are the patriarch and matriarch, respectively of the

Lee Ranching Family. They own and oversee eight (8) ranches totaling approximately 26,000

acres of ranchland in Coke, Tom Green, and Runnels Counties, Texas. Simply put, they and

their family are West Texas ranchers who have been in operation since 1982.

3 8. The Lee Plaintiffs run an Angus Commercial Cow/Calf operation that uses

Heifers that are kept for years as breeding cows. Prior to running cattle, the Lees for several

years were the largest breeder of Bison in Texas.

39. The Lee Plaintiffs' ranching operation relies on genetics to establish which

Heifers to keep over time. Plaintiffs also own approximately sixty (60) bulls, all "registered"

PLAINTIFFS' ORIGINAL PETITION -PAGE 7


herd bulls, that are used for breeding. At any given time, the Lee Plaintiffs run 3,000 to 4,000

head of cattle on their eight ranches.

40. The nerve center for all the Lee Plaintiffs' ranching activities was Cedar

Mountain Ranch, the ranch on which SWDS was located.

41. Prior to the blowout, Cedar Mountain Ranch was the headquarters for Plaintiffs'

eight ranches. Moreover, because of the water available at the Cedar Mountain Ranch, all

weaning, pasturing, feeding, shipping, and selling took place there. In addition, the ranch house

of Carroll L. and Peggy G. Lee is located on Cedar Mountain Ranch, as well as the house of the

Lee Plaintiffs' ranch foreman (for all ranches).

42. Prior to the blowout of SWDS, groundwater at the Cedar Mountain Ranch was

used to grow feed for the cattle and as water for the cattle.

43. Cedar Mountain Ranch also had two (2) stock tanks, or ponds, that were used as a

water source for all of the Lee Plaintiffs' cattle, both those run at Cedar Mountain Ranch and

those run at the other seven (7) ranches owned by the Lee Plaintiffs.

44. Soils and ranch land at Cedar Mountain Ranch were used to grow specific grasses

and other feed used in connection with the Lee Plaintiffs' cattle operations.

C. The Lease

45. On June 1, 1944, James L. Bumson and his wife Margaret Bumson entered into

an oil and gas mineral lease with O.B. Price ("the Lease" or "Lease 02474"). The Lease is

attached hereto as Exhibit A.

46. Since its signing on June l, 1944, the Lease has been assigned to a series of

operators, who have undertaken continuous production of oil, gas, or other minerals and used

wells for purposes of saltwater injection.

47. As set forth more specifically herein, various Defendants are in breach of the



Lease and its implied covenants-in addition to independent duties owed to the Lee Plaintiffs

pursuant to common law or statutory mandates.

D. Specific Defendants

48. The chain of events giving rise to the catastrophic blowout of SWD5 on

September 25, 2014, began in December 2010, although not discovered (and indeed fraudulently

concealed) until the aftermath of the blowout.

49. As of December 2010, Ivory was the operator under Lease 02474.

50. In December 2010, Grandfield was retained as Ivory's consultant or contractor,

and Forbes in turn was a subcontractor to Grandfield.

51. On December 20, 2010, Forbes performed a mandated pressure test (described in

further detail below) on SWD5, determined the injection well could not pass the test, and

attempted to remedy the issue by illegally installing a device commonly known as a "packer" to

jerry rig the well and control pressure in an unauthorized manner.

52. One "packer" already was installed on SWD5, which made the second packer

installed on December 20, 2010 improper under industry custom and practice, as well as

prohibited and illegal pursuant to Texas Railroad Commission mandate.

53. With knowledge of this wrongdoing, or at minimum without a sufficient factual

basis to make representations regarding the nature of the work performed on and status of

SWD5, Grandfield President Charles Mark Witt prepared and filed documentation with the

Texas Railroad Commission falsely representing the condition of SWD5-and in particular, that

a single "packer" was installed on the injection well.

54. In 2011, Ivory transferred its interest in SWD5, amongst other assets, to Energy,

which continued to operate SWD5 in its illegal and dangerous condition.

55. In October 2013, Energy in turn transferred its interest in SWD5, amongst other



assets, to Memorial Production and/or Memorial Resource.

56. Documentation prepared by Memorial Production and/or Memorial Resource,

including, but not necessarily limited to an October 28, 2014 letter to the Texas Railroad

Commission, obscures the distinction, if any, between the two entities as related to ownership

and responsibility for SWD5 at the time of the September 25, 2014 blowout.

57. Memorial Production and/or Memorial Resource since have transferred interests

in SWD5 (amongst other assets) to Energy II, under terms and conditions that on information

and belief may have transferred pre-existing liabilities related to the well, including liabilities

associated with the blowout in September2014.

E. SWDS Five-Year Test Required By Texas Railroad Commission

58. By Rule, the Texas Railroad Commission mandates testing on injection wells at

various time intervals, including a comprehensive test every fifth year.

59. This "Five Year Test" is a pressure test used to determine the mechanical integrity

of a saltwater disposal well. It is also known as the "H-5 Test," based on the form used to report

results to the Railroad Commission.

60. In December 2010, Ivory contracted with Grandfield to perform the Five Year

Test, as well as certain maintenance on SWD5.

6 I. As averred above, Grandfield in turn hired Forbes to perform the Test.

62. In connection with the Five Year Test, on December 20, 2010, Ivory, Grandfield,

and Forbes installed a double element cup type packer at approximately 250 feet down SWD5.

63. On December 29, 2010, Defendant Witt submitted a Disposal/Injection Well

Pressure Test Report to the Railroad Commission (the "Report").

64. The Report (attached hereto as Exhibit B) detailed the H-5 Test was required by

Rule and that only a Backer Loe Set packer was set at 4,499 feet down SWD5.

PLAINTIFFS' ORIGINAL PETITION - PAGE I 0


65. In this Report, Mr. Witt certified:

"under penalties prescribed in Sec. 91.143, Texas Natural Resources Code, [he was] authorized to make this report, that this report was prepared by [him] or under [his] supervision and direction, and that the data and facts stated herein [were] true, correct and complete, to the best of [his] knowledge"

66. The Five Year Test was not witnessed by anyone from the Railroad Commission,

as is required and customary.

67. Neither Ivory, Grandfield, Forbes, nor Mr. Witt reported installation of the second

packer to the Railroad Commission; to the contrary, they concealed this conduct.

68. They should not have.

69. Following the September 25, 2014 blowout, the Railroad Commission

commenced enforcement actions against various Defendants now named in this lawsuit.

70. Without exclusion of other Defendants who have been cited by the Railroad

Commission, on November 17, 2015, the Commission entered a Final Order related to

Grandfield (and Mr. Witt), in Oil and Gas Docket No. 7C-0294462. The Final Order is attached

as Exhibit C. In the Final Order, the Commission made a number of material fact findings,

including, but not limited to:

9. Well No. 5 of the Bronte Capps Unit (02474) Lease is a permitted injection well. On September 25, 2014, the subject well broke out at the surface causing a major discharge of produced water that affected an estimated ten to twenty acres. On September 27, 2014, while working on the well, it was discovered that a double ended packer had been set in the well at 250'. A field ticket dated December 20, 2010, shows that C.C. Forbes Company ("C.C. Forbes") did work on the Bronte Capps Unit (02474) Lease, Well No. 5, on behalf of Respondent [Grandfield]. The ticket shows that C.C. Forbes ran two mechanical integrity tests on the whole string of casing in the well, however, pressure did not hold. A Packer was then inserted at approximately 250' feet and a test was run with eight joints, testing only the top end in order to circumvent testing the entire string of casing, knowing the casing wouldn't hold.

10. On January 31, 2011, Respondent [Grandfield] filed a Commission Form H-5 for the Bronte Capps Unit (02474) Lease, Well No. 5, showing a test



date of December 27, 2010. The test, which passed, was not witnessed by the Commission. By failing to conduct a pressure test on the whole string of casing of Well No. 5 of the Bronte Capps Unit (02474) Lease, Respondent [Grandfield] failed to determine whether the well tubing, packer or casing have sufficient mechanical integrity to meet the performance standards of Rule 46.

11. On January 3, 2011, Respondent [Grandfield] filed a Commission Form H-5 for the Bronte Capps Unit (02474) Lease, Well No. 5, showing that during the test the packer was set at a depth of 4499 feet when, in reality, it was set at a depth of only 250 feet. The Form H-5 was signed and certified by Mark Witt, president of Grandfield Consulting, Inc., as being made under his supervision or direction and containing true, correct and complete facts to the best of his knowledge.

12. By filing a Commission Form H-5 (Disposal/Injection Well Pressure Test Report) for the Bronte Capps Unit (02474) Lease, Well No. 5, showing the packer was set at a depth of 4499 feet, Respondent [Grandfield] knowingly submitted a form to the Commission containing information which was false or untrue in a material fact in violation of TEX. NAT. RES. CODE ANN. §91.143(a)(l). (emphasis added).

13. Usable quality groundwater in the area is likely to be contaminated by migrations or discharges of saltwater and other oil and gas wastes from the subject well. Unplugged wellbores constitute a cognizable threat to the public health and safety because of the probability of pollution.

71. The Railroad Commission also issued Conclusions of Law, including, but not

limited to:

6. The documented violations committed by the respondent constitute acts deemed serious, a hazard to the public health, and demonstrate a lack of good faith pursuant to TEX. NAT. RES. CODE ANN. §81.0531.

F. The September 25, 2014 Blowout at SWDS

72. On September 25, 2014, SWD5 suffered a catastrophic failure; a blowout that

caused a major discharge of produced water to subsurface and surface waters and otherwise

damaged surface and sub-surface soils, spread over many acres at Cedar Mountain. SWD5 is

situated on a hill, so the Spill ran down the hill away from SWD5 in multiple directions.

73. A "Memorial" entity notified the Railroad Commission of the well failure and



discharge once discovered on September 25, 2014--but only after being convinced by the Lee

Plaintiffs that something more serious than rain was causing a flood-like condition around

SWD5.

74. In subsequent communications with the Railroad Commission, Memorial

Production and Memorial Resources discussed their respective ownership interests or

responsibility for the well as if the entities were interchangeable. For all further purposes, the

Lee Plaintiffs collectively will refer to "Memorial," to account for the entities' election to treat

their connection to SWD5 as interchangeable.

75. According to a Railroad Commission investigation and a subsequent report

documenting investigative findings made on September 25, 2014 (attached hereto as Exhibit D),

massive volumes of water escaped through Memorial's SWD5.

76. Injection fluids and produced water were observed to be surfacing around SWD5,

flowing from the ground at numerous locations as far as 200 feet from the well and flowing to

freshwater stock ponds located approximately 400 feet north and 760 feet southeast of SWD5.

77. On September 26, 2014, a Railroad Commission representative returned to SOWS

to evaluate and document the ongoing effects of the blowout. According to the report that

corresponds with findings made that day, the injection fluids and produced water still were

leaching from the ground at SWD5 and continued to leach "from holes and cracks in the ground

at about the same rate as the date before .... " See Exhibit E.

78. Due to the size of the blowout, and the potential for widespread soil, surface

water, and groundwater contamination, the Railroad Commission recommended Memorial

continue to perform emergency activities to remove the impacted water from the surface, and

pump fluid from the subsurface in an effort to reduce contamination of the ground water.



79. The Railroad Commission also requested Memorial create a site investigation

work plan to address all impacted media and constituents of concern, including Total Petroleum

Hydrocarbons ("TPH"); the constituents benzene, toluene, ethylbenzene, and xylene (collectively

referred to as "BTEX"); and chloride.

80. In response, Memorial retained eTech Environmental & Safety Solutions, Inc.,

("eTech") to manage the response to the blowout of SWD5.

81. To date, eTech's environmental response at the Site has been as inadequate as it

has been slow.

82. Without sufficient urgency, and only performing a response to satisfy minimum

regulatory requirements, in the almost two years since the blowout, eTech has not made

meaningful progress on determining the horizontal and vertical extent of the full scope of

contamination caused by the blowout, the scope and severity of ground and surface water

contamination, or excessive salinity levels in surface (0-3 ft. below ground surface) and

subsurface (below 3 feet) soils.

83. To date, Memorial (through eTech) has not even addressed soils deeper than 3 Yi

feet below ground surface. And even in those areas that have been addressed by Memorial, soil

salinity is too high to either grow the appropriate crops as cattle feed or to permit grazing.

84. The eTech environmental response at Cedar Mountain Ranch otherwise has failed

to address the direct, indirect, incidental, and consequential damages suffered by the Lee

Plaintiffs and their interests as a result of the environmental impacts at Cedar Mountain Ranch.

G. Currently Kuowu Damages

85. Permanent Damage to Real Property: The blowout has permanently damaged the

Cedar Mountain Ranch and required the Ranch to be taken out of use. The permanent damages

implicate all "media" at the ranch, including surface water, surface soils, subsurface water, and

PLAINTIFFS' ORJGINAL PETITION - PAGE 14


subsurface soils (e.g. The two stock tanks/ponds used by the Lee Plaintiffs as water for cattle as

well as crops have each been contaminated and are permanently out of use, and without usable

groundwater and uncontaminated surface water, the Lee Plaintiffs no longer have fresh usable

water for ranching operations).

86. Chlorides and other hazardous substances (in most areas above the limits allowed

by the State) are the principal-though not exclusive-contaminants impacting the media, and

even assuming arguendo remedial action can reduce the concentrations of the impacts, the

property cannot be fully restored to pre-blowout conditions and adverse effects cannot be wholly

eliminated.

87. The Lee Plaintiffs therefore are entitled to recover the diminished value of the

property under principles that apply to permanent damage to real property.

88. Alternative Characterization o(Real Propertv Damage: In the event the nature of

damages to the Cedar Mountain Ranch are not deemed permanent, the Lee Plaintiffs nonetheless

should be entitled to full recovery to ensure they are made whole under "flexible" standards that

apply to real property damages deemed "temporary." That recovery should include, but not be

limited to, the balance of cost to adequately investigate, then remediate the full extent of

contamination affecting all media at the property. The damages further should include all costs

associated with the Lee Plaintiffs "loss of use" of the Cedar Mountain Ranch during past and

further investigation and remediation of the property.

89. Beyond these conventional measures to quantify temporary real property

damages, the Lee Plaintiffs further are entitled to recover all other incidental, consequential, or

outstanding losses to the real property until made whole.



90. Personal and Personal Property Damages and Losses: Other damages and

impacts have been suffered by the Lee Plaintiffs because of the blowout. The Lee Plaintiffs have

incurred, for instance, significant replacement costs, increased operational costs, and business

interruption costs, which have caused them personal harm. These cost have included, but are not

necessarily limited to, sale of cattle prematurely at depressed prices and the purchase of

additional ranch property to conduct operations, because the Cedar Mountain Ranch has not been

useable for such purposes since the September 25, 2014 blowout. For instance, to continue

operations and mitigate their damages, Plaintiff Lee Concho Valley Family L.P. purchased a

replacement Ranch of approximately 5,000 acres located in Coke, Runnels, and Tom Green

Counties.

91. The Lee Plaintiffs otherwise pastured newly weaned yearlings in the areas around

SWD5 and Memorial's Saltwater Injection Well #309 (AP!# 08131763) ("SWD309"). On

Thursday, December JO, 2015, three of these yearlings became blind. On Friday, December 1 ],

2015, two more yearlings became blind and on Monday, December 14, 2015, two more yearlings

became blind.

92. There is no history of cattle blindness at the Cedar Mountain Ranch.

93. Based on information and belief, the likely cause of this cattle blindness appear to

be certain chemicals Memorial or prior operator Defendants used on the well heads and related

lines of SWD5 and SWD309, and perhaps other wells.

94. One of the chemicals Memorial stored was Rockwater Energy Solutions SC-512F

(a corrosive liquid).

95. The warning label on this product stated:



INGESTION: Poison-may be fatal if swallowed. A small amount can cause mental sluggishness, and may produce adverse effects on vision with possible blindness or death iftreatment is not received. CHRONIC EFFECTS: ... toxic effects, including vision effects and death.

96. Additional Losses and Damages: Defendants' conduct within applicable

limitations periods has caused and is causing other damages to the Lee Plaintiffs in addition to

that suffered because of the blowout ofSWD5.

97. For years up to the time of the blowout, and since, various Defendants have

conducted, directed, and participated in various oil and gas exploration and production activities

as operators or otherwise at the Cedar Mountain Ranch. These activities include the construction

and operation of various oil and gas facilities included but not limited to pits, sums, pipelines,

flow lines, tank batteries, well heads, measuring facilities, and down hole operations.

98. During this time, the Lee Plaintiffs real property has been damaged by certain

Defendants' oil and gas exploration and production activities and by the spillage and/or disposal

of toxic oil field wastes on and in the Lee Plaintiffs' property.

99. This spillage and/or disposal continues, and has never been removed, has

occurred without Plaintiffs' consent, and is reflective of the responsible Defendants' lack of care

in connection with its operations.

I 00. In addition to disposal and spillage, Defendants either have failed, or continue to

fail, to maintain premises at the Cedar Mountain Ranch in a condition that would allow safe

ranching of cattle.

10 I. Despite repeated requests, Defendants have failed and refused to construct

appropriate fencing or other protection around hazardous activities or activities involving

hazardous substances; failed and refused to segregate toxic and hazardous chemicals from areas

where cattle would be located; and have failed and refused to cleanup pipelines, tubing, casing,



and other oil field equipment, which instead, Defendants have elected to leave on the Lee

Plaintiffs' property.

102. Special Damages: To the extent not previously pleaded herein, and to which any

category of damages the Lee Plaintiffs seek may be deemed "special", such damages include, but

are not limited to: loss of use and costs to repair and to restore fencing, land, and improvements;

lost profits; damage to vegetation and oil and gas wells; loss of value to the land and

improvements; loss of manufactured value for items such as timber; loss of production or

reproduction value for oil and gas wells, in situ minerals, in situ groundwater, enhanced value

minerals, and enhanced value groundwater; contractual damages for lost profits, cost of delay in

performance, cost of mitigation, cost of substitute performance, reliance, and restitution; and

business expectancy and reliance damages.

I 03. Summary o( Damages: For the foregoing reasons, the Lee Plaintiffs seek to

recover actual, direct, and compensatory damages; consequential, indirect, reliance, and special

damages; permanent damage to real property; diminution in value of real property; other

appropriate damage to real property; and damages to the Lee Plaintiffs ongoing concerns and

businesses; personal losses and personal property damages; and mental anguish damages.

I 04. The Lee Plaintiffs also seek punitive and exemplary damages based on

Defendants' concealment, malicious, grossly negligent, and intentional conduct.

VII. STATUTES OF LIMITATIONS

105. The Lee Plaintiffs' legal "injury" occurred no earlier than September 25, 2014, as

of the date SWD5 blew out, or otherwise occurred within any applicable limitations periods.

I 06. But the statute of limitations on any such claims in any event would be tolled until

at least September 25, 2014, by virtue of fraudulent concealment and the discovery rule.



A. Fraudulent Concealment

107. As averred herein, at minimum Defendants Grandfield, Witt, and Forbes

fraudulently concealed the prohibited installation of the double packer on SWD5, which later

caused the blow out, in ways including (but not limited to) the following:

By filing a Commission Form H-5 (Disposal/Injection Well Pressure Test Report) for the Bronte Capps Unit (02474) Lease, Well No. 5, showing the packer was set at a depth of 4499 feet, Respondent [Grandfield] knowingly submitted a form to the Commission containing information which was false or untrue in a material fact in violation of TEX. NAT. RES. CODE ANN. §91.143(a)(l). (emphasis added).

I 08. Falsification of public records in this manner precluded, negated, or nullified any

exercise of diligence, which even theoretically may have enabled Plaintiffs to earlier discover the

subsurface (and concealed) installation of a second packer.

109. The concealed packer therefore was permitted to remain in SWD5, during the

operations oflvory, Energy, and Memorial (who in their own rights failed to appropriately assess

and test the condition ofSWD5), until discovered because of the blowout.

110. Under such circumstances, fraudulent concealment tolls any applicable statutes of

limitation.

B. Discovery Rule

11 I. The installation of the second packer was verified during the post-blowout

investigation of SWD5, because remnants of the packer were extracted (or "fished out") from the

injection well.

112. Prior to such time, the second packer was inherently undiscoverable as a matter of

law, by virtue of its subsurface installation in a well to which the Lee Plaintiffs had no legal right

of access-wupled with the falsified public record that precluded any basis for even inquiry

notice regarding the condition ofSWD5.

113. Under such circumstances, the discovery rule tolls any applicable statutes of



limitation.

VIII. CAUSES OF ACTION

A. Count 1: Breach of Contract

114. The Lee Plaintiffs repeat and re-allege each and every allegation set forth above

as if fully set forth herein.

l 15. The Oil and Gas Lease executed June 4, 1944 is a valid, continuing contract based

on continuous oil and gas production since the execution date of the Lease.

1l6. Under the Oil and Gas Lease, Defendants Ivory, Energy, and Memorial have had,

and other Defendants may be liable for, expressed and implied obligations and covenants to

comply with all applicable laws, prevent damage to the leasehold estate, and to manage and

administer the Oil and Gas Lease.

117. The Lee Plaintiffs fully performed their contractual obligations.

118. Defendants Ivory, Energy, and Memorial breached the Contract by failing to

conduct all operations at the Cedar Mountain Ranch in compliance with all applicable laws,

rules, and regulations.

119. These Defendants also have breached the Agreement by failing to abide by

express and implied covenants to prevent damage to the leasehold estate, and restore the Lee

Plaintiffs' property to its original condition.

120. As a result, the Lee Plaintiffs suffered and seek damages, as pleaded herein, in an

amount within the jurisdictional limits of this Court.

B. Count 2: Negligence



122. All Defendants owed or may be liable for a legal duty to the Lee Plaintiffs based



on obligations to conduct oil and gas operations, injection operations, testing on the Lee

Plaintiffs' property, construction on the Lee Plaintiffs' property, modification or installation of

improvements on the Lee Plaintiffs' property, and any other activity pertinent to SWD5-in a

reasonable and prudent manner, and in accordance with applicable laws and according to

industry standards.

123. Defendants breached or are liable for such duties owed the Lee Plaintiffs.

124. Those breaches of duties proximately caused injuries to the Lee Plaintiffs, which

resulted in damages pleaded herein, in an amount within the jurisdictional limits of this Court.

C. Count 3: Negligence Per Se--Violation of Texas Administrative Code Title 16, Section 3.46



126. Defendants are liable for violation of Texas Administrative Code Title 16, Section

3.46 regarding Fluid Injection into Productive Reservoirs. 16 TEX. ADMIN. CODE § 3.46

(Statewide Rule 46). Specifically, according to the Railroad Commission, the blowout was

caused by a second double element packer being placed, run, and remaining illegally in SWD5 in

violation of Section 3.46. See October 27, 2014 request for penalty regarding Statewide Rule 46,

attached hereto as Exhibit F.

127. Section 3.46 is designed to protect a class of persons to which the Lee Plaintiffs

belong, against the type of injury suffered by the Lee Plaintiffs.

128. Section 3.46 also is a regulation of the type that imposes liability.

129. Defendants' violation of Section 3.46 was without legal excuse.

130. Defendants' liability for or breaches of the duties imposed by Section 3.46

moreover proximately caused injury to the Lee Plaintiffs as pleaded herein, in excess of the



jurisdictional amount of this Court.

D. Count 4: Negligence Per Se-Violation of Texas Administrative Code Title 16, Section 3.8



132. Defendants are liable for violation of Texas Administrative Code title 16, Section

3.8. 16 TEX. ADMIN. CODE § 3.8 (Statewide Rule 8). Specifically, according the Railroad

Commission: "[SWD5] was found to be leaking produced water from 60-200 feet away from

[SWD5]. The saltwater was coming from an unknown depth and flowing from several cracks

and a hillside. The produced water filled 2 stock tanks and covered from l 0-20 acres." See

October 27, 2014 violation notice regarding Statewide Rules 8 and 46, attached hereto as Exhibit

G.

133. Section 3.8 is designed to protect a class of persons to which the Lee Plaintiffs

belong, against the type of injury suffered by the Lee Plaintiffs.

134. Section 3.8 also is a regulation of the type that imposes liability.

135. Defendants violation of Section 3.8 was without legal excuse.

136. Defendants' liability for or breaches of duties imposed by Section 3.8 proximately

caused injury to the Lee Plaintiffs, which resulted in the damages as pleaded herein, in excess of

the jurisdictional limits of this Court.

E. Count 5: Gross Negligence and Malice



Gross Negligence

138. In addition to the allegations set forth concerning negligence above, the Lee

PLAINTIFFS' ORIGINAL PETITION-PAGE 22


Plaintiffs' injuries also resulted from Defendants' gross negligence, which entitles the Plaintiffs

to punitive and exemplary damages under Texas Civil Practice & Remedies Code section

4 I .003(a)(3).

139. Defendants' conduct or liability, as set forth above, when viewed objectively from

responsible Defendants' standpoint, involved activities creating an extreme degree of risk when

one considers the probability and magnitude of potential harm. See TEX. C1v. PRAC. & REM.

CODE § 41.00 I (I I )(A).

140. Moreover, by virtue of the responsible Defendants' experience and relative

sophistication as operators, oil-field service companies, or oil-field service professionals, the

Defendants had actual, subjective awareness of the risks associated with their conduct, but

proceeded with conscious indifference as to the rights, safety, and welfare of the Lee Plaintiffs.

See TEX. CIV. PRAC. & REM. CODE§ 41.001(1 l)(B).

141. Conduct of the kind qualifies as grossly negligent.

Malice

142. As set forth above, the Lee Plaintiffs' injuries resulted not only from the

responsible Defendants' negligence and gross negligence, but as to Grandfield, Witt, and Forbes,

also from their malice.

143. These Defendants acted with specific intent that caused substantial injury to the

Lee Plaintiffs. Forbes, acting on behalf of Grandfield intentionally placed the second packer in

SWD5, which caused the well to blow out.

144. And as further reflection of malice, Defendant Witt, as the President of

Grandfield, filed false documentation with the Railroad Commission to conceal the illegal and

prohibited conduct.

145. Conduct of the kind qualifies as malicious.



F. Count 6: Civil Conspiracy



147. Defendant Grandfield, at minimum in combination with Defendants Witt, and

Forbes, agreed to engage in, and did engage in a conspiracy for the unlawful purpose of illegally

placing a second packer in SWD5 and then concealed this act.

148. These Defendants also conspired to misrepresent SWD5 was safe to operate, had

passed the Five Year Test, and had sufficient mechanical integrity for normal operations.

149. As a part of the conspiracy, Defendants Grandfield, Witt, and Forbes acted with

the intent to harm the Lee Plaintiffs, and did harm the Lee Plaintiffs by their unauthorized and

illegal conduct.

150. To accomplish the objective of their illegal conspiracy, these Defendants not only

concealed their unlawful conduct, but co-conspirators Grandfield and Mr. Witt filed a false

report and information with the Railroad Commission, in order to conceal their actions.

151. This conduct proximately has caused damage to the Lee Plaintiffs pleaded herein.

152. Defendants Grandfield, Witt, and Forbes moreover are jointly and severally liable

for all such damages arising from their conduct.

G. County 10: Fraud by Nondisclosure



154. Defendants failed to disclose material facts related to their operations at the Cedar

Mountain Ranch, including but not limited to, material facts concerning the construction,

operation, maintenance and testing of SWD5.

155. Defendants had a duty to disclose the information to the Lee Plaintiffs.



156. The infonnation was material because of its importance to ensure safe oil and gas

operations at Cedar Mountain Ranch.

157. Defendants knew the Lee Plaintiffs were unaware of the infonnation and did not

have an equal opportunity to discovery the truth.

158. Defendants deliberately remained silent and did not disclose to, but rather

concealed the information from the Lee Plaintiffs.

159. By deliberately remaining silent, Defendants intended for the Lee Plaintiffs to act

without benefit of accurate infonnation and otherwise maybe liable for such conduct.

160. The Lee Plaintiffs justifiably relied on the responsible Defendants' deliberate

silence.

161. This proximately caused injury to the Lee Plaintiffs as pleaded herein, which

resulted in the damages in excess of the jurisdictional limits of this Court.

H. Count 11: Nuisance



163. For reasons previously pleaded, Defendants intentionally or at minimum

negligently interfered (or are liable for the interference) with the Lee Plaintiffs' use and

enjoyment of the Cedar Mountain Ranch.

164. The contamination caused by the blowout has substantially, if not entirely,

interfered with the Lee Plaintiffs' rights and interests in the property.

165. That interference by no metric can be deemed reasonable by the standards of an

objectively reasonable person subject to hann of the kind, and the interference has caused the

Lee Plaintiffs considerable "discomfort" and "annoyance"-because of their inability to continue

their multi-decade cattle operations without significant, unwarranted burden and expense.



166. The nuisance is the proximate cause of the Lee Plaintiffs' damages as pleaded

herein, which exceed the jurisdictional limits of this Court.

I. Count 12: Trespass



168. The Lee Plaintiffs did not authorize Defendants to release injection well

contaminants in surface water, subsurface water, surface soils, or subsurface soils at the property.

169. The scope of permissible injection activities was limited to subsurface formations

regulated by the Railroad Commission.

170. Defendants therefore engaged in, or otherwise are liable for, intrusions on and

into media at the Lee Plaintiffs' property, which has not been authorized.

171. The trespasses proximately have caused injuries and damages as pleaded herein,

which exceed the jurisdictional minimum of this Court.

IX. ATTORNEYS' FEES

172. The Lee Plaintiffs are entitled to recover reasonable and necessary attorneys' fees

under Texas Civil Practice & Remedies Code chapter 38, because the Lee Plaintiffs' causes of

action include a suit for breach of contract-or otherwise are allowed by Jaw. See TEX. Civ.

PRAC. & REM. CODE § 38.00 I (8).

X. CONDITIONS PRECEDENT

173. All conditions precedent have been performed or have occurred.

XI. JURY DEMAND

174. The Lee Plaintiffs demand a jury trial and tender the appropriate fee with this

Petition.



XII. REQUEST FOR DISCLOSURE

175. Under Texas Rule of Civil Procedure 194, The Lee Plaintiffs request Defendants

disclose, within 50 days of the service of this request, the information and material described in

Rule 194.2.

XIII. PRAYER

WHEREFORE, The Lee Plaintiffs request the following:

a. actual, compensatory, special, reliance, indirect, and consequential damages as proven during the trial of this cause;

b. damages to compensate for permanent injury to real property, or other appropriate measures of damage to such property;

c. damages for personal property and to the Lee Plaintiffs individually;

d. Punitive and exemplary damages;

e. an award of costs and attorneys' fees in favor of the Lee Plaintiffs;

f. pre-judgment and post-judgment interest as allowed by law; and

g. such other and further relief, both general and special, at law or in equity, to which the Lee Plaintiffs may show themselves justly entitled.



Rcspect!lilly submitted.

MUNSCH HARDT KOPF & HARR, P.C

By: is! Frederick W. Addison. 111 Frederick W. Addison, III Bar No. 00903350 Nolan C. Knight Bar No. 24027125 Jacqueline M. Wheeler Bar No. 24098606 500 North Akard Street Suite 3800 Dallas, Texas 75201-6659 Telephone: (214) 855-7500 Facsimile: (214) 855-7584 raddison(</'n1unsch.con1 nkn i gh1r'({:1n unsch .con1 i\vhee le r•(/.1111 unsch. con1

ATTORNEYS FOR PLAINTIFFS

PLATNTIFFS' ORIGINAL PETITION - PAGE 28


EXHIBIT F


500 Winstead Building 2728 N. Harwood

Dallas, TX 75201

214.745.5400 OFFICE

214.745.5390 FAX

winstead.com

Christopher A. Brown

direct dial: 214.745.5215 [email protected]

November 16, 2016

Via First Class Mail and Email Memorial Production Operating, LLC 500 Dallas Street, Suite 1800 Houston, Texas 77002 Attention General Counsel [email protected] Mr. Tommy Gillaspie Donato, Minx, Brown & Pool 3200 Southwest Freeway, Suite 2300 Houston, Texas 77027 [email protected]

Re: Second Notice of, and Demand for Compliance with, Indemnification Obligations Pursuant to Purchase and Sale Agreement

Counsel:

I represent Boaz Energy II, LLC (“Boaz II”) in the Carroll L. Lee, et al. v. Memorial Production Operating, LLC (“Memorial”), et al. lawsuit, Cause No. CV1604622, pending in the 51st Judicial District Court of Coke County, Texas (the “Lee Lawsuit”). I have previously discussed my representation of Boaz II, as well as Boaz II’s notice of indemnification obligations, dated October 7, 2016 (the “Indemnity Demand”), with Mr. Gillaspie, who I understand represents Memorial in the Lee Lawsuit. Due to my uncertainty of Mr. Gillaspie’s representation of Memorial with respect to the Indemnity Demand but believing that he may so represent Memorial due to his familiarity with the indemnity issues, I address this letter to you both.

As you are aware, Boaz II’s Indemnity Demand stems from the indemnification provisions in the Purchase and Sale Agreement by and between Memorial, as seller, and Boaz II, as buyer, dated as of May 5, 2016 (the “PSA”). I write in follow up of the October 7, 2016 Indemnity Demand to which Boaz II has


November 16, 2016 Page 2

received no response as of this date and in furtherance of my conversation with Mr. Gillaspie on November 4, 2017 regarding the Indemnity Demand and the indemnity provisions in the PSA. Mr. Gillaspie requested clarification of Boaz II’s interpretation of the PSA’s indemnification provisions.

First, please allow me to clarify my understanding of Memorial’s interpretation of the indemnification provisions and intent to decline to indemnify Boaz II with respect to the claims asserted in the Lee Lawsuit. If my understandings set forth in this letter are incorrect, I would appreciate your prompt corrections by return letter or email.

Per our November 4 discussion, it is my understanding that Memorial intends to decline to indemnify Boaz II on the basis of Memorial’s interpretation that the indemnity provided for in the PSA is limited to its obligation to perform the Lowest Cost Response, as that phrase is defined in the PSA. It is further my understanding that this interpretation is based on the proviso in Section 11.2(d) stating that, “provided, however, nothing in this Section 11.2(d) requires (or shall be deemed to require) Seller’s response to address the Known Bronte Environmental Condition to more (or anything other) than the Lowest Cost Response”. Again, if I am incorrect or oversimplifying Memorial’s position, I would appreciate your prompt response to set this straight.

If my understanding is correct, please be advised that Boaz II respectfully disagrees with this interpretation of the indemnification provisions in the PSA. Three provisions in the PSA inform Boaz II’s interpretation—Sections 4.3(d), 10.6, and 11.2—though others may also be pertinent, and Boaz II expressly reserves the right to assert that other provisions or applicable authority supports this interpretation.

Section 10.6 obligates Memorial to conduct or perform “the Lowest Cost Response necessary to demonstrate to the satisfaction of relevant Governmental Authorities that no further action is required with respect to the Known Bronte Environmental Condition to protect human health and the environment.”

Section 4.3(d) provides that “the covenants provided for in Sections 10.6 and 11.2(d) shall survive the Closing until the date of the No Further Action Document (the “Bronte Survival Period”).”

Under Section 11.2 of the PSA, subject to Section 4.3 of the PSA, Memorial is obligated to indemnify the Buyer Indemnified Parties “from and against any and all Liabilities arising out of, resulting from, based on, associated with, or relating to:

(d) (i) any breach by Seller of Section 10.6, including any Liabilities arising out of, resulting from, based on, associated with, or



relating to the, conditions, performance or non-performance of Buyer’s obligations under Section 10.6, and

(ii) the Known Bronte Environmental Condition (collectively, the “Bronte Indemnity”); provided, however, nothing in this Section 11.2(d) requires (or shall be deemed to require) Seller’s response to address the Known Bronte Environmental Condition to more (or anything other) than the Lowest Cost Response;”

The use of the word “response” in the phrase “Seller’s response to address the

Known Bronte Environmental Condition” in the proviso at the end of Section 11.2(d) of the PSA is in reference to the word “Response” contained in the defined term “Lowest Cost Response” and relates to Memorial’s remediation of the Known Bronte Environmental Condition. Memorial’s continued role in remediating this known condition was an important part of Boaz’s willingness to acquire the related property. In Section 10.6 of the PSA, in order to continue remediation, Boaz II and Memorial expressly agreed that Memorial would not be required to take action, or expend resources, in excess of the Lowest Cost Response. The proviso in the indemnification provision was merely to clarify that the response (i.e., remediation of the property) required under Section 10.6 of the PSA was not required to be greater than the Lowest Cost Response.

The proviso, however, cannot be read fairly to limit the indemnification obligations otherwise set forth in Section 11.2 of the PSA, and in particular, the indemnification rights under Section 11.2(d)(ii) of the PSA, which more broadly requires indemnification for Liabilities “arising out of, resulting from, based on, associated with, or relating to the Known Bronte Environmental Condition.” These claims are not limited to Memorial’s performance of the Lowest Cost Response. Since Section 10.6 of the PSA already limits the required response to the Lowest Cost Response, the inclusion of Section 11.2(d)(ii) of the PSA as an indemnifiable obligation would otherwise serve no purpose. In fact, Section 11.2(d)(ii) of the PSA serves a substantial purpose of protecting Boaz II from claims from third parties that relate to this known condition. Memorial’s obligation to perform under Section 10.6 of the PSA is forward looking as an effort toward remediation but does not protect Boaz II from losses suffered by third parties that resulted from the known condition. Thus, the need for the separate, and distinct, indemnification under Section 11.2(d)(ii) of the PSA.

The indemnification obligation therefore extends to two categories of claims:

1. claims arising out of a breach of Memorial’s response obligation in Section 10.6; and



2. claims arising out of the Known Bronte Environmental Condition.

Together, the indemnification against these two categories of claims is the “Bronte Indemnity”.

The PSA and its indemnity provisions are governed by Texas law, which provides that indemnity agreements are interpreted in accordance with normal rules of contract construction. Gulf Ins. Co. v. Burns Motors, Inc., 22 S.W.3d 417, 424 (Tex. 2000). In construing a written contract, courts should examine the entire writing "to harmonize and give effect to all the provisions of the contract so that none will be rendered meaningless." Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 662 (Tex. 2005). Courts construe contracts “from a utilitarian standpoint bearing in mind the particular business activity sought to be served” and “will avoid when possible and proper a construction [that] is unreasonable, inequitable, and oppressive." Frost Nat'l Bank v. L & F Distribs., Ltd., 165 S.W.3d 310, 312 (Tex. 2005) (quoting Reilly v. Rangers Mgmt., Inc., 727 S.W.2d 527, 530 (Tex. 1987)). Thus, a court must look at all of the contract's parts together and be "particularly wary of isolating from its surroundings or considering apart from other provisions a single phrase, sentence, or section of a contract." State Farm Life Ins. Co. v. Beaston, 907 S.W.2d 430, 433 (Tex. 1995). Courts also presume that the parties to a contract intend every clause to have some effect. Heritage Res., Inc. v. NationsBank, 939 S.W.2d 118, 121 (Tex. 1996).

Any interpretation of the proviso that would limit the indemnity in Section 11.2(d)(ii) to require only the Lowest Cost Response would render that section a nullity in light of Sections 10.6 and 11.2(d)(i) in contravention of settled rules of contract construction. Thus, while Section 11.2(d)(ii) does not require Memorial to undertake more than the Lowest Cost Response with regard to remediating the Known Bronte Environmental Condition, it does obligate Memorial to indemnify Boaz II against claims arising out of, resulting from, based on, associated with, or relating to the Known Bronte Environmental Condition. Boaz II would not have wished to acquire the property with that known condition without such indemnity protection.

Boaz II believes that the language of the PSA is clear and unequivocal in this regard and further submits that Memorial’s principals who negotiated the PSA would be well aware of the fact that the indemnification provision extends to coverage of claims by third parties, like those asserted in the Lee Lawsuit, and formed an essential component of Boaz II’s willingness to purchase the properties despite the existence of the Known Bronte Environmental Condition.

Boaz II, therefore, would appreciate Memorial’s prompt response to its demand for indemnification. Boaz II construes Memorial’s continuing refusal to



acknowledge and honor its indemnification obligations as a material breach of the PSA. If Memorial does not acknowledge its obligation to indemnify Boaz II for the claims asserted in the Lee Lawsuit, including without limitation the attorneys’ fees and costs incurred by Boaz II to date in defending the Lee Lawsuit and in enforcing its indemnity rights under the PSA, by 5:00 p.m. on Tuesday, November 22, 2016, Boaz II intends to pursue enforcement of the PSA’s indemnification obligations.

Best regards,

Chris Brown

CAB:pjh


EXHIBIT G


Amplify Energy Corp. 500 Dallas Street, Suite 1600 Houston, TX 77002 (713) 490-8900

BY FAX AND E-MAIL

June 2, 2017

Attention: Marshall Eves BOAZ ENERGY II, LLC 201 West Wall Street, Suite 421 Midland, Texas 79701 Facsimile: (432) 253-7079 E-mail: [email protected] Dear Marshall: I write in reference to that certain Purchase and Sale Agreement by and between Memorial Production Operating LLC (“Seller”) and Boaz Energy II, LLC (“Buyer”), dated as of May 5, 2016 (the “PSA”). All capitalized terms not defined herein have the same meaning as in the PSA. Pursuant to the terms of the PSA, Buyer agreed to assume the obligations of and pay all charges for contracts related to the Property, including:

Section 2.1(d) – “… Buyer shall purchase, pay for, and accept, all of Seller’s right and title to, and interest in … all agreements and contracts to which Seller is a party or in which Seller otherwise holds an interest and … that primarily relate to the assets and properties [sold to Buyer] or the operations with respect thereto ….”

Section 2.4 – “… Buyer shall assume and hereby agrees to fulfill, perform, pay and discharge … all obligations and Liabilities, whether known or unknown … associated with, the Properties … whether such obligations and Liabilities are deemed to have arisen or accrued or are attributable to periods prior to, on or after the Effective Time (all such obligations and Liabilities, the ‘Assumed Liabilities’).”

Section 5.4 – Buyer will “use commercially reasonable efforts to … consummate and make effective the transactions contemplated by this Agreement, including … (b) cooperation in seeking and obtaining any such actions, consents, approvals, or waivers; and (c) the execution of any additional instruments necessary to consummate the transactions contemplated hereby.”


Amplify Energy Corp. 500 Dallas Street, Suite 1600 Houston, TX 77002 (713) 490-8900

In August 2016, Seller requested Buyer to execute a written assumption of an Electricity

Sales Agreement between Reliant Energy Retail Services LLC and Seller, dated May 9, 2014 (the “Reliant Contract”), that provided for electrical service to various locations sold to Buyer as part of the PSA. A copy of the Reliant Contract is attached hereto as Exhibit A. Buyer refused to assume the Reliant Contract despite receiving its benefits for several months and then unilaterally switched the electrical service from Reliant to a different provider, thereby causing Reliant to assert a $1,352,745.21 termination fee. Seller denied responsibility for the fee and the matter was put on hold during the pendency of Seller’s bankruptcy. Now, after having emerged from bankruptcy, Reliant has formally made a claim against Seller for the full amount of the termination fee by filing an Objection to Cure Amount in United States Bankruptcy Court for the Southern District of Texas on June 1, 2017 (the “Reliant Claim”). A copy of the Reliant Claim is attached hereto as Exhibit B. Pursuant to Article 11 of the PSA, Buyer is responsible for, among other things, all charges, losses, and/or legal costs related to the Reliant Claim. In particular, Section 11.1 of the PSA provides that:

… Buyer and its successors and assigns shall be responsible for, shall pay, and will DEFEND, INDEMNIFY and HOLD HARMLESS Seller … from and against any and all [Liabilities] arising out of, resulting from, based on, associated with, or relating to: (a) any breach by Buyer of Buyer’s representations, warranties or covenants set forth in this Agreement; and (b) the Assumed Liabilities.

Accordingly, Seller makes this formal demand to Buyer for indemnification as to the Reliant Claim. This letter is a Notice of Claim as referred to in Section 11.4 of the PSA and is being delivered to Buyer in accordance with that provision. The deadline for a response to the Reliant Claim is not currently set by the Bankruptcy Court, but is expected to not be earlier than three weeks from the date of the Reliant Claim’s filing.


EXHIBIT A


reliant: an NRG company

ELECTRICITY SALES AGREEMENT SHORT FORM COVER PAGE FIXED PRICE- UNBUNDLED

This Electricity sales Agreement, induding this Cover Page and the attached General Terms and Exhibit (collectively, this 'Agretmenr), is entered Into as of this 9th day of May, 2014 (the "Effective Date') between Rtllant Energy RataH Services, LLC rReliant") and MEMORIAL PRODUCTION OPERATING LLC rcustomef). Reliant and Customer are Individually referred lo as a "Party• and collectively as the "Parties.• Capitafized tenns used and not defined in this Cover Page have the meanings stated in the General Terms.

Delivery Term:

Contra~ Charge:

Contract Price:

start: For the Group 1 Customer Location(s), the first Meter Read Date on or after 05101/2014 or, if a Swilch is reqlired, the first Meter Read Date on or after the Switch Date, and for lhe Group 2 Customer Locatlon(s), the first Meter Read Date on or after 06/01/2014 or, if a Switch Is required, the first Meter Read Date on or after the Switch Date, and for the Group 3 Customer Locatlon(s). the first Meter Read Date on or after 0110112015 or, if a Switch is required, the first Meter Read Date on or after the Switch Date, and for the Group 4 Customer Location(s), the first Meter Read Date on or after 05/01/2017 or, if a Swilch ls required, the first Meler Read Date on or after the Switch Dale, and for the Group 5 Customer Location(s), the first Meter Read Date on or after 06#01/2017 or, if a Switch is required, the first Meter Read Date on or after the Switch Date

End: For the Group 1 Customer Locatlon(s), Group 2 Customer Locatlon(s), Group 3 Customer Locatlon(s), Group 4 Customer Location(s), and Group 5 Customer Locatlon(s), the later of the first Meter Read Date after 1213112019 (collectively, the "Initial Tenn") and the last day of the Term

The sum of Q) the product of the Contract Price multiplied by Actual Consumption; (ii) Disaetionary Service Fees; (iii) Transmission and Distribution Charges; {iv) Nodal Congestion Charges, If applicable; (v) any applicable Taxes; and (Vil any additional charges that are expressly authorized In this Agreement, each of which wiH be billed as separate One items to Customer · •

$0.04978 per kilowatt·hoUf rkWh") consumed at each Customer Location, including, subject to the terms of this Agreement electricity charges, Ancillary Charges, ERCOT fees, applicable aggregator and broker fees collected from Customer and paid to Customer's aggregator or broker (H any).

This Agreement: (a) supersedes prior agreemenl(s) between the Parties for the supply of electricity to the Customer Locatlon(s) (whether one or more, "Prior Agreement"). H any, effective as of the start of the Oelivery Tenn; (b) constitutes the enli'e agreement between the Parties and there are no other agreements or representations affecting the subject matter of this Agreement other than any Prior Agreemen~ (c) ls exeaited by the Parties' duly authorized representatives In multiple counterparts to be construed as one as of !he Effective Dale; (d) wil inure to the benefit of, and be binding upon, the Parties and their successors and permitted assigns; and (e) will not be binding until executed by Customer and Reliant. If Reliant elects not to exeaJte this Agreement, Reliant will notify Customer, in which case this Agreement will have no effect

RELIANT ENERGY RETAIL SERVICES, LLC MEM7UCTION OPERATING LLC tLJfJJ-

By. B~ ~ c~;,,., ~. 11.o..U President Title: __ \l_p _________ _

(OOl91111~TCM17}(Doot11D9.3J2GOO.TCM17} Fblprlct Unbundlld MEMORIAL PRODUCTION OPERATING LLC Contract Numbef' 1-ICBRTL; ACE Remrd 1·1CBS2X; Deal ID 60246369711 Paoe 1 of 8. SN2014

~ ·. t-\eyvt()nC. \ PYOd.\ll-h;n Pov~ LP,.~ B,~ ·. H~t'\~\ Pt'1>duc,~on for""'us 6-l'LL.C.1 ,~

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GENERAL TERMS

1. Sal11, Term. Reliant will sel to customer, and Customer will buy from Reliant, eledrlcity (•Energy") to salisfy its Enetgy Requirements subject to this AgreemenL Cuslomef wiN provide Customer Information to Reliant and wiH assist Reliant In Implementing this Agreement Customer will notify Reliant or any circumslalce likely to cause a change to Ille Energy Requlraments at any Customer Location. If Customef' has not Switched lo a new REP elfective when the Initial Term expires, then Reliant may:~) continue to sel electricity in aamlance with this Agreement subjed to the Transition Charge or (ii) at any lime after the end of the Initial Tefm, if allowed by Law, terminate this Agreement by Switching Customer to POLR service. If Reiant continues to sell eledridty to Customer, this Agreemeit will ainlitue for successive one mooth terms (colectively, the "TransMfon Tenn') 1.t11i al Customer Locatlon(s) are Switched to POlR or to a new REP. During the Transition Term, Customer Is subJect to the mon~ly Contract Charge, including a new Conlrad Price, and the p'Oducl tenns (collectively, the 'Transition ChafVe') that Reliant publishes on the Site. This Agreement wl continue In effect until final lnvok:es are paid. All obligations regcrding lndermity, payment of Taxes, !Imitations of Nabllity, confldentlality, and waivers survive terminaUon for the applicaHe stalute of llmitalims period.

2. Billing, PIYftl•nt. Tues. For each Customef' Loca1ion Reliant wiU send a monlhly Invoice for the Contract Charge. Customer will notify Reliant In M'itlng of the addreu to whJch Reliant may submit Invoices within five bu1lne11 days after tht ElflCtlve Data. All eledricity delivered to a Customer l.ocatlon is measured poo;uant to the TOSP's tariff by the TOSP at each Customer Location. Customer ~rees that tinely and acetrate invoicing is dependent on the TDSP 0'1<I ERCOT furnishing Reiant infonnaioo, in the absence of which Relant may lnwice Customer on estimated data, subject to later adjustment. On or before the 21Mh day after the inYOice date (the "Due Otte'), Customer wil pay the amount due to lhe address or by wire transfer to the aa:oont speclied in the invoice. Reiant will assess a $25.00 processing fee for unprocessed payments due to insllficienl funds. If an invoice is not paid by the Due Date, then Reliant will apply to Customer's account a late fee on the unpaid amount equal to the lesser of five percent or the maximum amount pemrilted by Law. If Customer disputes an Invoice, Customer wiK pay Rellanl the undisputed illTIOUfll. Upon resolu~on, Customer will pay the amount owed with interest at the Interest Rate from the date the amount was ortglnaffy due to, but excluding, the date the amount is paid. Customer is responsible and Jndemnifl8S Reliant for all Taxes arising from or measured by electricity sold or services provided or Rellanrs receipts frmn lhe foregoing, whether the Law imposes the Taxes on Reliant or Customer. Reliant will colfect Taxes from Customer by including them on lhe Invoice. Reliant wi!f recognize a lawful sales tax exl!mption on a prospective basis only after Reliant receives proper documentation. If Customer is due a sales tax refund because of Reliant's failure to timely recognize valid exemption documentation, Reiant wil credit the overpaid sales lax to Customet's acaiunt. CUslomer is responsite for petitioning the taxing ailhority for all otl'w sales tax refunds.

3. Credit. Relianrs obligation to sel electricity to Customer Is t00ditioned upon Reliant's ongoing review and approval of Customet's creditworthiness. Customer wiH, on Refiant's request from Ume to time, (i) provide financlal information and (ii) if Custome!'s aeditworthiness declines, proylde performance assurance, all reasonably satisfactory lo Reliant.

4. Consumption Change. If for any two conseo.ilive months, Customer _Incurs a chanQ! In its operations at any Customer Location resulting in a change in Custome~s Actual Consumption that is less than 75% or greater than 125% of the Benchmark QuanUty rcontumption Change'), lhen Reliant may adjust lhe Contract Price, Benchmar1t Quantities, and other tenns of this Agreement effedive as of lhe next Meter Read Dale. Customer wil provide notice to Reliant 60 days prior to any proposed change in operations at any Customer location flat may result In a Consumption Chalge. Upon receipt. Reliant may notify Customer of any cqustment to the Con~act Price, Benctvnatk Quantities, or ~ tenns of this lqeemenl at least 45 days pri« to the effective date of such adjuslmenl (the 'Adjvttrnent Effective Date'). If Customer does not accep( the Cltjuslment, then on or before 30 days prior lo tie Adjustment Effective Date" Customer may tenninate this Agreement and pay Reliant a Cancelfatlon Fee and remain flable to pay Reliant Umely for al charges for electricity sold until each Customer Location Is Switched. If Customef' fails lo Umely terminate this Agreement as set forth above, !hen Ille ~stment will take effect oo lhe Adjustment Effective Date. Any electlon by Reliant not lo exercise its rights under this Section 4 will not predude Reliant's exercise of those rights at a later date.

5. Default. 'Non-Defaulting Party" may establish a date (the "E1rty C1nctllatlon Date') on which this Agreement wiH be cancel1ed upon the occurrence of any of the folowing defaults by 'Defaulting Party.' if the default is not cured within five business days after notice (except for an Insolvency Event or lhe failure to provide pe!fonnance asstnnee which are immedale defaults):

Q) Failure to make, when due, any paymen~ or (n) Any represenlalion or warranty proY&s to have been false or misleading in any material respect, or (iii) Failure to perform any covenant; or (iv) An Insolvency Event occurs.

No waiver by a Party of a default will be constf\led as a waiver of any other default. If Non-Defaulting Party cancels this Agreement, (i• Customer, or If abved by Law, Reliant, as Non-DefaulUng Party, may Switch Customer's service to POLR or a new REP. and (iij Defaulting Party win pay lhe Cancellation Fee to NonDelaulting Party, and (iii) if allo.ved by Law, Rellant, as Non-Defaulting Party, may discoMed or cause to be disconnected, each Customer L.ocallon from electricity service. The Paties 19e9 lhat if Customer causes a default by switching ~one or more Customer Locaions lo another REP prior to Ille expiration of the ln~ial Term, the Early Cancelalion Dale wlU be the eal1iest date a Customer location Is Switched. Regardless of which Pcrty Is Defa~ng Pcrty, if this Agreement is cancelled, Customer wll remain Mable lo pay Relant linely for al charges for eledl1c:ity sold unlil each Customer location is sv.;tched or disconnected. Defaulting Party wil pay the Cancellation Fee within 15 business days of receipt of notice therefor illd it wt accrue interest al the Interest Rate from the Early Cancelatlon Date to, but exduding, the date paid. On the date due, each Pany will pay to the other Party all additional amounts payable by It after all amounts have been netted and aggregated with the Cancellation Fee.

6. limitation of Utbllitiet. The Parties confirm that the express remedies and measures of damages provided in this Agreement satisfy its essential puiposes. If 1n 1xpq11 r.medy Is provided, that remedy 11 the tole and 11clu1lv1 r.medy. If no remedy 11 txprHlly provided, the obllgor'a llabllity It lmlted to direct actual damages at the sole and axclutlvt remedy. In each case all other remedies at law or In equity•• waived. Ntlther Party It liable for cormquentlal, Incidental, punitive, uemplary, or lndll'ld damages, or other bulin111 lntmuptlon damages. by ttnltt, In tort or contrKt, under any Indemnity provision, or otherwise. These llmltltfons apply enn If the damages mull from a Party's negligence, wheltltr tole, joint,

{OD091111.3121100·T0417}{ll0091109.312000-T0417} Fbcprlca UnbundllCI MEMORIAL PRODUCTION OPERATING UC Contract Number 1-ICBRTL; ACE Record 1-ICBSZX; Deal ID 50241319711 Paae 2 ol 8. !W/2014


concunent. active. or p11llvt. To tht llttnt any dam1g11 nqulrld to be paid ate llquldated, the Plftle1 1cknowledg1 that the damlgt1 n dlftlcult or lmpo11lble to dellrmlne, otherwise obtaining an adequate nmtdy Is Inconvenient. ind the llquldated damages conltftvtl a msonable approxlmltlon of the lo11.

7. R1pmentatlon1. Customer represents lhat (I) ll ls a commercial user of electricity and has entered Into this Agreement solely for related non-speculative purposes, (i) It >Ml not resell any of the eledriclty It buys from Relian~ (Iii) It has experience in business matters Chat enable it to enter Into and perform this Agraement, and f w) no Customer location wla have generation that is sync:flronously mnneded lo the TDSP (the Parties acknowledge that synclvonously connected generation tbes not include emergency badt-up power generation). The Partin mike no rtpreHntatlonl or warranties excej)t those expressly It.led In these tarmt, and dlsclalm Ill other Ylllrnntles, upress or Implied, lndudlng marchantablllty, conformity to models or samples, Ind fitness for 1 pactlcullr purpou.

8. Force MIJture. If a Party Is unable because of Force Majeura to perfonn Its obllgallons and it notifies the other Party as soon as practicable, lhen its obligations (other than payment for energy received, and performance of o~igalions incurred, before !he Force Majeure evenl) will be suspended for the duration of the Force Majeure event. Customer agrees lhal under no circumstances wiff Reliant be required, because of a Force Majeure event, to supply eledricily except to the Customer loca6ons.

9. llw, Watv.rs, Conftcf.mllllty, Docum111tatlon. Except as provided In Section 6, the Lav of the Slate of Texas (without giving effect lo pMdples of conlllds of laws) governs this Agreement. Each Party walvt1, to the fullnt extent permitted by appllclbl1 law, any right It 1ft1Y hive to a trial by jury In mpect of 1ny suit. action, daJtn or procetdlng r'111tlng to this Agreement The Unlorm Convnen:ili Code ol Texas appies lo this Agreement and eledriclty Is deemed a •goocr. H either Party or its activities relllled lo this Agreement are affected by any Law enacted afW the fffectiye Dale ("Chang• In Law") lhat makes performance ol lhls Agreement unenfoiteable or ilegaf, then either Party may tennlnate this Agreement on notice to the other Party, withoUt 'ally obligation or other liabllty (other than payment for energy received, and perfonnn:e ol obliga6ons lncuned, before the Change in Law beaJrnes ellective). If a Cllilrge In Law OCQJrs relallRJ to the wholesale or retail electrlcity ma'1tet In ERCOT resulting In new or modified fees, costs ~ pelfonnance, or ether charges being lnrurred by Reliant andlor other ERCOT market participants, indudlng taxes, fees, chages, mpositlons, assessments. or restrictions or allatvance requlrement(s) related to carbon emissioll'; from electric generation in ERCOT ("Emt11lon1 Ch1rga"), ttien to the extent incurred by Reliant d of lhe Incremental arnounb, lncklcllng Emissions Charges, may be reasonably alocaled and billed lo Customer as an aulhorized chage or adjuslment to the Ccxttract Price. To lh• extent pemltlad by Law, CUllomlr-.... that th• Customer PRltedlon Ruin ldoptad by t111 PUCT pursuant to the PURA do net 1pply to this Agreement 1nd that this Agl'lllMflt wfn govern any conllct bllwlen ff encl the Cuttomer Protlctlon Rulel. Neither Party will disclose these tenns or 1i11Y Sile passwotd to a third party (oilier than a Party's and b affiiates' empoyees, lende!s, counsel, penMted assignees, oonsullants, accountants, or prospective pulthasers who have agreed lo confidentiaity), except in Older lo comply with Law. If a provision bealmes unlawful or unenforceable. lhe other provisions wifl remain In effect. Except as provided In Exhibit A. only a written amendment signed by the Parties is enlorcellble.

10. A11lgnment. Except as provided, neither Party may assign this Agreement without the other Party's prior written cmsent, Which consent may not be unreasonably withheld. Reliant may, without Customer's consent, (i) as part of aJY'f financing er other financial arrangements, 11Ssign, sell or pledge lhis Agreement or its accounts, revenues, or proceeds, or Pi) assign tlls Agreement to an affiliate of Reliant or to any other person or en~ succeeding to au or a substantial portion of the assets of Reliant whereby Reliant wiD have no fUlther obligations for future performance other than payment of amounts owed.

11. Customer AcknoMtdgtmtnl Customer ackOONledges that Energy prices may be subject to substantial volatilty based on economic cond~ions fuel prices and other factors. and that past resub regarding eleclricily products are not necessarily an indicalion of future results. Further, Customer acknowledges that Reliant and its affiliates ate In Ille business of buying and seling power within the ERCOT millllet for each of their own aaxiunts and that this participation may alfed the calculation of Real-Time Settlement Point Prices. Notwithstanding the foregoing, Custaner agrees to pay the a1m11nts provided for In this Agreement that may be based upon R"eal-Time Settlement Point Prices, as promulgated by ERCOT. Subj~ to the right of Customer to dispute a Rellillt Invoice as set fath in the Agreement, Customer will not withhold payment for any reason, inciuang, investigatory activities undertaken by ERCOT or PUCT, based on Rellanrs participation in the maiket and Its effect on Real· Time Settlement Point Prices. Nolhng In this Agreement restricts Reliant or any of Relianrs affiliates from participating in the ERCOT market activities that may affect Real-rime Settlement Point Prices.

12. Partial Termination. Customer may delete one or more, but no! al, Customer Locations (and associated BenctuMk Quantihs as delennlned by Reliant in Its sole d"isaelion) from the Agreement ('P111111 Termlnatlon1, only if Cusk>mer (a) doses those Customer Locations (a) for the remander of the Term, or (b) sells those CustOOlef Locations(s) and the buyer of the locations does not assume obligations to purchase Eneigy under this Agreement. Customer must provide Reliant with at least 30 days prior written notice of Its intent to delete Customer Location(s) from the Agreement on these conditions. Customer must pay Reliant a partial Tenninalion Payment for the deleted Customer Location(s). unless Customer selfs the deleted Customer Locatlon(s) lo a purchaser who, (a) first executes a new contract with Reliant upon the same tenns as Custome(s contract. and (b) satlsfies Reliant's collateral and credit requirements. Reliant will calculate the partial Tennination Payment in the same manner as the Cancellation Fee, using only the Benchmark Quantities for the deleted Customer Locations, and bill the amount of the partial T emrination Payment on a subsequent Retail invoice.

13. Definitions. The tenn •1nc1ud1ng• means incklding, wihout linilalion. Al internal references are to !hi! Agreeme11t unless stated otherwise.

"Aclual Consumption" meil\S the electricity measured or reported by the TDSP OC' estimated by Reliant for each Customer Location. "Anclll., Charges" means, for each Customer Location, all charges assessed by ERCOT for services necessary to maintain reliable operation cl the transmission system to support transmission of electricity from the source of generation to the points of demand. "B111dlmlllr Q11111tlty" means Custome~s expected monthly kWh alectrlcity consumption for Iha Tenn. Customlll's expected consumption may be sel out on Exhibit A. If Customers expecled consumption is not set out on Exhibit A. Benchmillll Quantity will be determined by refer1nce to Customer trlonnallon and the 12 months of elecbicity consumption by Customer before Ille Effective Date, or for new racilities, Customer Information and electricity consumplilll of ccmparatile facilities, each as may be adjusted in aa:ordance with this AgnH1rRenl "Canctllltlon Fee" means (i) where Customer is Non-Defaulting Party, the ~difference, if any, obtained by subtracting (a) the pment value ci this Agreement had II not been temlinated using the Benchmark Quan61y applicable to the Customer W3ions kJ the rem<Mnlng period of the Term m (b) the pteSent value of a re~t contrad using the Benchmalt Quantity applcable to Ile Customer localions and market prices lhal are reaso~y expected to

{00091111.3/2000.T0417}(00091109.312000-TD417} Fblpric1 Unbundled MEMORIAL PRODUCJION OPERATING LLC Conlrad Number 1·1CBRTL; ACE Rec:cn:l 1·1CBS2X; Deal ID 10241369711 Paae 3 ol 8. St'!l.'2014


be available in the mail!et fa' the remaining period of lhe Tenn; and (ii) where Reliant is Non-Defaulting Party, the DOSl!ive difference, if any. c:iltained by subtracting (a) the present vate of a replacement contract m (b) the present value af lhis Agreement had it not been tenninated, calculated in the same manner as provided In item (i), In each case l!!!m Non..oefaulting Party's reasonable costs associated with tie valuation and replacement contract. "Comp1tltlon ChlfVN" means, for each Customer Location, the foHowing: ~tition transition charges: transition chalges defined in PURA; excess mitigation aedits: and subslanlally similar charges related to the opening of the Texas electric matket to REPs, lndudlng Ille recoveiy of stranded costs as defined by PURA and Increases In Transmission and Distribution Charges related to the rediredioo of depreciation expenses. "Customer lnfotmaflon• means information that accurately substantiates Customet's Energy Requirements forming a basis for the Conlrad Price and Benchmak~. •cUJtomtr Locatlontsr meais Customer's facilities desaibed in Exhibit A. "DisCRtlonaty SllV#ct Fffs• means all non.routine deposits. c:oMectlon fees, metering charges, Installation oosts for equipment to maintain a Power Factor of at least 95% lagging at each Customer l.ocaCion meter, assessments by the TDSP in respect of any Power Factor at any Custaner Location meter, or any similar amounts assessed by and payable lo Iha TOSP related to the TDSPs purchase and installation of meters and associated equipment and Cuslomel's use of that equipment lo establish or malnlain electric service at a Customer Location or to maintain the TDSP system requirements, or other charges for equipmenl or seMc:es requested by Custaner or required by the TOSP. •Energy Requirements• means electricity equal to 100% of the actual eledridty requirements of Customer l.ocalion(s) for the Delivery Term, no! to exceed the TDSPs fadfiUes' capablHes « oontravene Law. "ERCOr means the Electric Reliabiity Council of Texas. "Force M1jt111t• means an event not within the reasonable control of the Party dalning suspension, not caused by the negigena! of that Party, and which, by the exercise of due diligence, that Party Is unable lo oven:ome or obtain a cxmnerdally reasonable subslitute therefor. Force Majeure Includes a Force Majeure OCQJrring with respect 10 the TOSP, a suspension, curtailment, or service inlemipllon by the TDSP, or acts of lerrorism, civil insurrection, war, or ads olGod. "Insolvency Evtnt" means making an assignment ot arrangement for the benefit of creditors, f~ing a petition, or authorizing or aaitiesclng in the commencement of a proceeding under law for protection of creditors, or haYing a similar petition filed against it, or otherwise becoming Insolvent or unable to pay debts as due. "lntettst Rafi" means an annual rate equal to 2% over the per annum prime lencing rate pul*shed In The Wall Street Joumal under "Money Rates" In effect on the first day of the month during which the charge or fee is assessed. The Interest Rafe wil never exceed the maximOOI rate permitted by law. "LIW" means any law, statute, regliation, rule, protocol, exchange rule, decision, writ, order, deaee or judgment, or 1111y Interpretation of any of them by any court. agency, or Instrumentality having jurisdiction, including ERCOT. •Meter Read Date• means the actual meter read date that corresponds to the TDSP's regularly scheduled meter read date, as ascertailed from the meter rea<ing schedule published on the TDSPs website. •Nodal Congestion Charges• means the difference(s) between the Day-Ahead Settlement Point Price(s) determined by ERCOT for the Hub(s) and the Day. Ahead Setdement Point Price(s) detennined by ERCOT for the load Zones associated witi the Customer Localion(s) for Actual Consu~Uon not priced al Settlement Point Price(s) al the load Zane(s); provided that if the Day-Ahead Settlement Point Price(s) are not published by ERCOT or ara Olhecwise unavallable, then for the period(s) for which Day-Ahead Setllement Point Price(s) are not available, this chaige will be based oo <flfference(s) between the Real Time Settlement Point Price(s) determined by ERCOT for the Hub(s) and the Real Tune Settlement Point Price(s) determined by ERCOT for the load Zones associated with the Customer location(s) for Adltal Consumption not priced at Settlement Point Price(s) at the load Zone(s). As used herein, the terms 'Hub', 'Day-Ahead', 'Rul Time", 'Settlement Point Prtce' and 'Load Zont' have the meaning set forth In the Texas Nodal Protoails approved by PUCT, as of October 1. 2006, as amended. 'POLR' means the REP designated by the PUCT required lo offer electricity lo any requesting customer In a specified territory. •Power Factor" means the ratio of k:lowatt ("kW) to kilovolt amperes \kVa') expressed as a percentage, calculaJed by dividing kW by kVa. •pucT"means the Public Uti~ty Commission of Texas. •puRA •means the Public UUllty Regulatory Act. "REP" means a retail electric provider ooder PURA. "SIN" means Relianrs AccountConnectSM web site at www.reliantcom. "Switch" means an authorized change In Cusl<Jme(s electricity suppl'ier. "Switch Dall" means for each Customer lix:ation the date that all actions have been taken by the TOSP and ERCOT (I) for Re&ant to sen electricity to Customer and for Customer to receive same, or ~I) for another REP or POLR to sell electricity to Customer and for Customer to receive same, as the context requires. 'Tuts" means all federal. state, and local taxes, fees, governmental charges, and assessments, imposed na.v or later on Customer as purchaser or on Reliant as seller of elec:trldty under this Agreement, or on this transaction, lnclud:ng Texas state and local sales and use taxes, the Texas g11>SS receipts tax on um ty companies, the PUCT gross receipts tax assessment, municipal fees, and generation, utmty, regulatory, Btu, or electricity taxes, excluding taxes on net Income. '7DSP" means the entities that have custody of the electricity sold and pu!Chased and own or control electric transmission or distribution equipment for transmitting or distributing electricity to a Customer localion 'Tenn• means the Initial Term and the T ransllon Term. 'Transmission 111d Distribution ChlfJI••• means, for each Customer Location, all Charges and fees In the TDSPs tariff (except Competition Charges) and billed to Reliant for TOSP's seMc:es lo deiver eledricity lo the Customer locaUon.

{00091111.3121100.Til417){00Cll1109.312DOO·T0417} Fbtpllce Unbundled MEMORIAL PRODUCTION OPERATING LLC Contract Number 1·1CBRTL: ACE Record 1·1CBS2X; Deal ID 60246319711 Paae 4 of 8. 5i'!1121114


Benchmark Quantity (kWh)

' Date 1 BMQ r

OMl1/2014-05131/2014 I 229,119 f kWh I 1

06Kl1/2014-06/30/2014 1,035,036 kWhj

l 07iU1/2014-07/31/2014 2,237,025 kWh 1

08/01/2014-08/31/2014 2,136.716 kWh!

l 09/0112014-09/30/2014 2,154.201 kWh 1 10/0112014-1001/2014 2,379,880 kWhf

11/01/2014-11/30/2014 2,271,684 kWh!

12/01/2014-12131/2014 2,334,736 kWhl

01/01/2015-0113112015 2,244,026 kWhl

02/01/2015-02/2Bl2015 2,472,786 kWhl

03/0112015-03131/2015 2,626,522 kWh 1 04/01/2015-04/30/2015 2,551,091 kWh l

05i01/2015-05/31/2015 2,342,784 kWhj

06.'01/2015-06/30l2015 2,265,588 kWhj

07/01/2015-07131/2015 2,556,159 kWh 1 1

08/01/2015-0Bl31t2015 I 2,455,n6 I kWh I 09/01/2015-09/30/2015 2,460,990 kWh!

10/01/2015-10/3112015 2,693,805 kWh!

' 11/0112015-11/30/2015 2,555,216 kWhl

I

12/01/2015-1213112015 2,607,612 kWh!

01/01/2016-0113112016 2,449,736 kWhl

02/01/2016-02129/2016 2,560,841 kWhl

03/01 /2016-03131/2016 2,623,004 kWh[

04KJ1/2016-04t:.0/2016 2,551,288 kWhl

05i01/2016-05/3112016 2,343,297 kWh l

0S10112016-06J3Q1201s 1 2,2ss,58e I kWh 1

07/0112016-07131/2016 I 2,558,302 kWh

08/01/2016-08/31/2016 2,456, 138 I kWh I

09/01/2016-09/30/2016 I 2.460,990 kWhj

10/01/2016-10131/2016 2,695,652 kWh

11/01/2016-11/3012016 2,554,965 kWh

12/0112016-1213112016 2,608,017 kWh

0Ml1/2017-0113112017 2,455,642 kWh

02/01/2017-02128/2017 2,472,786 kWh!

{0009'111.312QOO.TM17}{00091109.31'2000.T0417) Flxprice Unbundled MEMORIAL PRODUCTION OPERATING LlC

EXHIBIT A

Contract Number 1-ICBRTL; ACE Record 1·1CBSZX; Deal ID 60246369718 Paaa5 llf8 . 5o9/2014


' Date I BMQI

O:W1/2017-03131/2017 2,623,004 kWh

I 04J01/2017-04/30l2017 2,551,485 kWh

05l01/2017.{)5131/2017 2.359.931 kWh

' 06/01 /2017--06/30/2017 2,290,565 kWh

' 07/01/2017-07/31/2017 2,701,061 kWh

' 08J01/2017.{)8/31/2017 2,599,066 kWhl 1 09/01/2017-09/30/2017 2,601,631 kWh

10J01/2017· 10/31/2017 2,837,703 kWh 1

11/01/2017-11/30/2017 I 2,691,389 kWh

12/01/2017-12131/2017 2,741,268 kWh

01/01/2016-01131/2018 2,592,921 kWh

02101/2016-02/28/2018 2,595,429 kWh

03l01/2016-03/31/2018 2,768,533 kWh

04.01l2018-04l30/2018 2,690,593 kWh!

, 05l01/201&-05131/2018 2,487,294 kWh

06/01/2018-06/30/2018 2,408,808 kWh

07/01/2018-07131/2018 2,699,990 kWh

08/01/2018-08131/2018 2,599,066 kWh!

09101/2018-09/30/2018 2,603,285 kWh

. 10/01/2018-10/31/2018 2,835,855 kWh

11/01/2018-11/30/2018 2,691,389 kWh . 12/01/2018-12131/2018 2,741,268 kWh

I 01J01/2019-01/31/2019 2,592,921 kWh I I 02JD1/2019-02128/2019 2,595,429 kWh

031()1/2019-03131/2019 2.n2.os1 kWhj

t 04J01/2019-04/30J2019 , 2,690,396 kWh

05/01/2019-05/31/2019 2,487,294 kWh

000112019-0&30l201s 1 2.413,9so kWh

07J01/2019-07/31/2019 I 2,696,918 kWh

08/01/2019-08/31/2019 ! 2,596,885 kWh

09/01/2019-09/30/2019 2,601,631 kWh

10/01/2019-10/31/2019 2,835,855 kWh

11/01/2019-11/30/2019 : 2,691,640 kWh

12/01/2019-12/31/2019 2,740,863 kWh

OtJO 1 /2020-0113112020 1,708,170 kWh

1 C Loation IAitl\ Sia Dl1e f 05'0112014 Group - ustomer I • rt 0

• Custom• Location Name

1 Memorial Resoorce Oevalopmenl LLC

(001911t1.WDO·T0417}(0009t1D9.312DOO·T1Mt7} Flxpricl Unbundled MEMORIAL PRODUCTION OPERATING UC

Customtr Loc:atlon

171 HUMBLE RO

City

BRONTE

Contract Number 1-ICBRTl; ACE Record 1·1CBS2X; Deal ID &0248319711 Paie 6 of 8. 51912014

SI* Zip Cod• ESI

TX 76933-5302 10204049765763161


#

1

2

3

4

5

6

Grot a 2-Customer Locations with• Start Datt of 06#01'2014

• Customer Location Name Customer Location City Stitt Zip Code ESI

1 Memorial Resource DMlooment LLC UNIVERSITY PYOTE TX 79772-0000 10400513431500001

2 Memorial Resoun:e Develooment UC 11..K 45 SEC 1 SE 1/4 ODESSA TX 79764 10443720000204211

3 Memorial R8SQUfce ~ tUC @BU< A SW/C NW/4 SEC 6 ECT CO ESSA TX 79763 10443720002555312

4 Memorial Resoun:e - tlLC BU< 26 SEC 33 WINKLER MONAHANS TX 79789 10443720004406197

5 Memorial Resoun:e DevelllDllllWlt LLC BlKA41 se4SEC3WELL ANDREWS TX 79714 10443720001309019

6 Memorial Resource DeveloDment LLC SECTION 10 BlOCK A OOESSA TX 79761-0000 1°'43720006911060

7 Memorial Resoun:e Oeveltllll'IWI LLC HIGHWAY 190 MIDWAY LANE SUBSTHSOE OZ ONA TX 76943 10204049733787790

8 Memorial Resource Develooment LLC SEC9BL.K38A LAMESA TX 79331 10443720009475317

9 Memorial Resource Oevlllnnmllnt LLC BU< 45 T 2 N SEC 12 WELL ANDREWS TX 79714 10443720006397049

10 Memorial Reswce - UC @BlK 45 1N SW/4 sec 3 ECT OOESSA TX 79763 10443720002680676

11 Memorial Resource DevefonmMl LLC SEC 9 BU< 38 B LAMESA TX 79331 10443720009475348

12 Memorial Resource - entLLC @SW/4 SEC9 BU<C-38 LAMESA TX 79331~ 10443720001137000

13 Memorial Resource OIMllooment LLC N UNIVERSITY LEASE PYOTE TX 79777

14 Memorial Resoun:e - LLC BU< 45 T 1 N SEC 1 WELL ANDREWS TX 79714

15 Memorial Resource - LLC @81..K 451N Wf2 NW/4 sec 9 ODESSA TX 79763

16 Memorial Resoun:e - LLC BU< 45 sec 1 T1N ECT WELL ANDREWS TX 79714

Gro 3 c tlon with up - ustomer Loca • a Start Datt of 01 0112015 # Customer Location Namt Customer Loclllon City Siiia Zip Code

1 Memorial Resource Development LLC BU< 53 T 2 SEC 27 LCM MONAHANS TX 79756-(X)OO

2 Memorial Resource Development UC BLK 76 sec 47 LOVING c WINK TX 79789

3 Memoria Resource OeYelopment LLC @ABS A· 12393 SF 15470 MONAHANS TX 79756-0000

4 Memorial Resource Oevelopnent LLC BlK S3T 2 SEC 11 LOVIN MONAHAf!S TX 79756

5 MemDrial Resource Development LLC SEC 37 BLOCK 76 PSL PERM MONAHANS TX 79756

6 Memorial Resource Devel~! LLC BLK 76 SEC 47 LOVING C WLS # 1 WINK TX 79789

7 Memorial Resource Development LLC BU< 76 sec 47 LOVING c WlS # 2 WINK TX 79789

8 Memorial Resource Development LLC BU< S3 SEC 2 LOVING CO MONAHANS TX 79756

9 Memorial Resource Development LLC BU< 53 T2 SEC 41 LOVIN MONAHANS TX 79756

10 Memorial Resource Development LLC BU< 76 SEC 48 LOVING C WINK TX 79789

GtouD 4-Customer Lo ons I 118 D O 12017 catl with Start D of 51 1 Customer Location Name Customer Location City Stitt

Memorial Resource Delllllmment LLC 1300 MCCAMEY UNIT 94STATE 94 STATE GROVE 2 MC CAMEY Oil FIELD TX

Memorial Resource Develonment LLC 1490 MCCAMEY UNIT 94DKGLE 94 DK GLENN A 1

Memorial Resource:. LLC @BU< 45 1 S sn. SEC 30 ECT

Merrorial Rescuce - LLC BLKA 44 SW4 sec 25 WELL

Memorial Resource Oevelooment LLC 15450 MCCAMEY

Memorial Resource DevelDMW'll LLC 15390 MCCAMEY

c wl fO&IO GrouD 5- ustomer Loe11lon1 1111 Stlrt Date o 112017

• CusllDmer Location Name Cualomtr Locallon

1 Memorial RllSOUlte Development UC US HIGHWAY 83 UNIT BLDG

2 Memorial Resoun:e Oe't'elopment LLC 1611 DON CAMILO Bl.VD

{00091111.3/2DOO-T0417)(00091109.3120QO. T0411} Fllprice Unbundled MEMORIAL PRODUCTION OPERATING UC Cooltacl Number 1.fCBRTL: ACE Record 1·1CBS2X; Deal ID &024i369711 Paa11 7 t118. !i&"1014

City

LAREDO

LAREDO


ODESSA TX

ANDREWS TX


MC CAMEY OIL FIELD TX

Stale Zip Code

TX 78040

TX 78040

10400513291530001

10443720006426189

10443720002679870

10443720006944137

ESI

10443720006377177

10443720006004216

10443720004353156

10443720007732094

10443720008379281

10443720007400704

10443720007400673

10443720006022134

10443720004352567

10443720006186837

ZjpCocft ESI

79752 10204049702239210

79752 1020404976665'270

79763 10443720002683993

79714 10443720001415318

79752 102040497019810

79752 10204049789988040

ESI

10032789499172036

10032789450778409


3

4

5

6

7

Memorial Resource Development LLC 3190FM2359 SEVEN SISTERS TX 78357 10032789420837712

Memorial Resource Development LLC R HOLBEIN OSPREY UNIT WN # 1 MIRANDO CITY TX 78369 10032789417337225

Memorial Resource Dt...elopment LLC 33101/2SZAPATAHWf LAREDO TX 78046-8843 10032789419467290

Memorial Resowce Development LLC 2042 HIGHWAY 59 SEVEN SISTERS TX 78357 10032789404177142

Memorial Resource Development LLC 2 R HOLBEIN OSPREY MIRANDO CITY TX 78369 10032789436433120

Customer may add and delete Customer Locations at Relianrs sole disaetion. Amendments to Exhibit A to add and delete Customer Locations may be formed and implemented as follows:

(ij Customer emails Reliant requesting that a Customer location be added or deleted, together wilh any resulting changes to tie Benctvnark Quan~ly. and attaching the addition/deletion form to be provided by Reliant (the "Emal Request"); and

(ii) Reliant accepts lie Email Request in a responsive email transmission attaching an amended Exhibit A showing the addition or deletion of the Customer Location (the "Email Confirmation").

The Parties are legally bound by each amended Exhibit A from the time Reliant transmits it to Customer, and if Reliant does not transmit it, no amendment by email transmission Is binding upon the Parties. The Parties adopt the Email Request and Email Confirmation as a means by which the Parties' amendment of Exhibit A may be reduced to writing. The Parties agree not to rontest or assert a defense to lhe validity or enfon:eabifity of each amendment entered Into. Each Party represents that each of Its representatives charged with Implementing tie foregoing has authority to effectuate the foregoing amendment type by email traismisslon.

All notices, requests, and Invoices must be furnished In writing and delivered by regular mail (including registered or certified mail, return receipt requested), Internet {confinned receipt), overnight carrier, facsimile, or hand delivery.

RELIANT NOTICES & CORRESPONDENCE:

Reliant

1201 Fannin Houston, Texas 77002 P.O. Box 3412 Houston, Texas 77253-3412

Attn: Retaa Contract Management Facsimile No.: (832) 584-2010

With ropy to: Robert Gaudette, Vice President

Reliant Customer Care Number: Please see your invoice

CUSTOMER NOTICES & CORRESPONDENCE & PASSWORD

MEMORIAL PRODUCTION OPERATING LLC 1301 MCKINNEY ST STE 2100 HOUSTON TX n010.3042 Attention: Chris Sowyrda Telephone No.: (713) 490·8995 Facsimile No.: E-Mail Address: [email protected]


Please see your invoice or your Reliant represenmtive

AFTER EXECUTION OF THIS AGREEMENT, PLEASE RETURN THE ENTIRE AGREEMENT TO RELIANT BY FACSIMILE TO 832·584-2018.

INVOICES: Custom• will provide its bltHng address In accordance with the General T arms.

{00091111..31211DO.T0417}(0D091109..31211DO-T04f7) Ftlprice Unbundled MEMORIAL PRODUCTION OPERATING LLC Conltad Number 1·1CBRTL; ACE Record 1·1CBS2X; Deal ID 60245369711 Paae B of B. 5i'!l/2014


EXHIBIT B


DMSLIBRARY01\30482848.v2

IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION ) Chapter 11 In re: ) ) Case No. 17-30262 MEMORIAL PRODUCTION ) PARTNERS LP, et al., ) ) (Jointly Administered) ) Debtors1. )

OBJECTION OF RELIANT ENERGY RETAIL SERVICES, LLC TO DEBTORS’ PROPOSED CURE AMOUNTS FOR ASSUMED

CONTRACTS & UNEXPIRED LEASES Reliant Energy Retail Services, LLC (“Reliant”) files this objection (the “Objection”) to

the Debtors’ proposed cure payment to Reliant, as set forth in the Debtors’ Schedule of Proposed

Cure Amounts for Assumed Contracts & Unexpired Leases (the “Cure Amounts”) [Exhibit H of

the Notice of Filing of Supplement to Amended Joint Plan of Reorganization of Memorial

Production Partners LP, et al. Under Chapter 11 of the Bankruptcy Code, Dkt 283]. In support

of its Objection, Reliant states as follows:

BACKGROUND

1. On May 9, 2014, Reliant and Memorial Production Operating LLC (“Memorial”)

entered into an Electricity Sales Agreement governing the sale and supply of electricity to all of

Memorial’s locations (the “Agreement”).

2. On January 16, 2017, Memorial and its debtor affiliates in the above-captioned

cases under chapter 11 of title 11 of the United States Code (jointly, “Debtors”) proposed and 1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, as applicable, are: Memorial Production Partners LP (6667); Memorial Production Partners GP LLC; MEMP Services LLC (1887); Memorial Production Operating LLC; Memorial Production Finance Corporation (3356); WHT Energy Partners LLC; WHT Carthage LLC; Memorial Midstream LLC; Beta Operating Company, LLC; Columbus Energy, LLC; Rise Energy Operating, LLC; Rise Energy Minerals, LLC; Rise Energy Beta, LLC; San Pedro Bay Pipeline Company (1234); and Memorial Energy Services LLC. The Debtors’ mailing address is 500 Dallas Street, Suite 1600, Houston, Texas 77002.

Case 17-30262 Document 385 Filed in TXSB on 06/01/17 Page 1 of 4Case 17-30262 Document 427-7 Filed in TXSB on 08/29/17 Page 15 of 21

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filed the Joint Plan of Reorganization of Memorial Production Partners LP, et al. under Chapter

11 of the Bankruptcy Code. [ECF No. 18] On March 24, 2017, Debtors filed a supplement to the

Amended Joint Plan of Reorganization (as amended, supplemented, or modified, the “Plan

Supplement”) [ECF No. 283]. Attached as Exhibit H to the Plan Supplement was a Schedule of

Cure Amounts, listing proposed cure amounts of $19,093.33 and $1,520.582 relating to the

Agreement with Reliant. On April 14, 2017, the Court confirmed the Plan pursuant to the

Findings of Fact, Conclusions of Law, and Order Confirming Second Amended Joint Plan of

Reorganization of Memorial Production Partners LP, et al under Chapter 11 of the Bankruptcy

Code and Granting Related Relief (the “Confirmation Order”). [ECF No. 342] In the confirmed

Plan, Debtors assumed the Agreement. [Dkt 283, Exhibit H].

3. On April 21, 2017, Reliant timely submitted its Proof of Claim (“Proof of Claim,”

attached as Exhibit 1) in the amount of $1,371,896.753 [Claim No. 64], which amount includes a

priority claim in the amount of $4,425.70. The Claim has several components including amounts

owed pursuant to the Agreement for partial termination fees in the sum of $1,352,745.21.4 Of

the Claim amount, $19,151.54 has been paid leaving $1,352,745.21 due and owing as a cure

claim. The Debtors have remained current on their post-petition invoices.

4. On May 4, 2017, the Second Amended Joint Plan of Reorganization of Memorial

Production Partners LP, et al (the “Second Amended Plan” and together with the Plan

2 Although it does not appear to be relevant to any potential cure claim dispute, as a matter of disclosure, this sum arises from a separate contract between Reliant and debtor, Columbus Energy, LLC. This amount is due and owing and remains to be cured as acknowledged by the Debtors in their filings. 3 The Claim amount inadvertently omitted the $1,520.58 per the contract with Columbus Energy, LLC. Further, there is a nominal difference between the Debtors’ pre-petition claim amount and Reliant’s Claim amount due to Reliant’s calculation of pre-petition to include the petition date. This nominal difference is less than $60.00 and was included in post-petition payments. 4 Under the Agreement, multiple locations are set to start and/or renew service on June 1, 2017. As of the date of filing this Objection, it is not known how many of those locations will actually receive service thus, there may be additional amounts owed under the Agreement that would need to be included in the cure claim.


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Supplement, including the Plan Supplement Amendments, the “Plan”) became effective. [Notice

of Occurrence of Effective Date, Dkt 356]. Under the terms of the Confirmation Order, any

objection by a counterparty to the amount of any Cure must be filed, served and actually

received by the Debtors on or before 30 days after the Effective Date of the Plan. [Dkt 344, p. 12

¶9] Reliant hereby timely objects to the amount of the Cure.

ARGUMENT

5. As acknowledged in both the Plan and Confirmation Order, the terms of the

Agreement govern the calculation of the cure amount. Under the Confirmation Order, “[c]ure

amounts will be determined in accordance with the underlying agreements and applicable

nonbankruptcy law. Thus, the Plan complies with section 1123(d) of the Bankruptcy Code.”

[Dkt 344, p. 14, Section J ¶ 13]. As set forth in Reliant’s Claim, and pursuant to the Agreement,

$1,352,745.21 is the proper calculation of all amounts due and owing pursuant to the assumed

Agreement (subject to potential additional amounts, as noted above).

6. Under the Plan, an objection to a Cure amount must be filed, served and received

by the Debtors on or before thirty days after the Effective Date of the Plan. Reliant has hereby

filed, served, and caused Debtors to receive, its objection within the thirty day deadline.

WHEREFORE, Reliant respectfully requests that the Court enter an Order approving and

requiring payment of Reliant’s cure claim in the amount of $1,352,745.21, plus any additional

fees accrued by the partial termination of Customer Location accounts after May 31, 2017.


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Dated: June 1, 2017

Houston, Texas Respectfully submitted,

KING & SPALDING LLP s/ Edward L. Ripley Edward L. Ripley Texas Bar No: 16935950 [email protected] 1100 Louisiana Street Suite 4000 Houston, TX 77002 Telephone: (713) 751-3200 Fax: (713) 751-3290 Counsel for Reliant Energy Retail Services, LLC

CERTIFICATE OF SERVICE

I certify that a true and correct copy of the foregoing has been served as noted upon the

parties listed below on June 1, 2017, in addition to service via ecf.

s/ Edward L. Ripley Edward L. Ripley Memorial Production Partners LP Attn: Jason Childress, Esq. 500 Dallas Street, Suite 1600 Houston, Texas 77002

Via Hand Delivery

Weil, Gotshal & Manges LLP Attn: Gary T. Holtzer, Esq. Joseph H. Smolinsky, Es . 767 Fifth Avenue New York, NY 10153

Via UPS Overnight Delivery


Official Form 410 Proof of Claim page 1

Official Form 410

Proof of Claim Read the instructions before filling out this form. This form is for making a claim for payment in a bankruptcy case. Do not use this form to make a request for payment of an administrative expense. Make such a request according to 11 U.S.C. § 503. Filers must leave out or redact information that is entitled to privacy on this form or on any attached documents. Attach redacted copies of any documents that support the claim, such as promissory notes, purchase orders, invoices, itemized statements of running accounts, contracts, judgments, mortgages, and security agreements. Do not send original documents; they may be destroyed after scanning. If the documents are not available, explain in an attachment.

A person who files a fraudulent claim could be fined up to $500,000, imprisoned for up to 5 years, or both. 18 U.S.C. §§ 152, 157, and 3571.

Fill in all the information about the claim as of the date the case was filed. That date is on the notice of bankruptcy (Form 309) that you received.

Part 1: Identify the Claim

1. Who is the currentcreditor? ___________________________________________________________________________________________________________

Name of the current creditor (the person or entity to be paid for this claim)

Other names the creditor used with the debtor ________________________________________________________________________

2. Has this claim beenacquired fromsomeone else?

NoYes. From whom? ______________________________________________________________________________________________________

3. Where should noticesand payments to thecreditor be sent?

Federal Rule ofBankruptcy Procedure(FRBP) 2002(g)

Where should notices to the creditor be sent? Where should payments to the creditor be sent? (if different)

_____________________________________________________ Name

______________________________________________________ Number Street

______________________________________________________ City State ZIP Code

Contact phone ________________________

Contact email ________________________

_____________________________________________________ Name

______________________________________________________ Number Street

______________________________________________________ City State ZIP Code

Contact phone ________________________

Contact email ________________________

Uniform claim identifier for electronic payments in chapter 13 (if you use one):

__ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __

4. Does this claim amendone already filed?

No

Yes. Claim number on court claims registry (if known) ________ Filed on ________________________MM / DD / YYYY

5. Do you know if anyoneelse has filed a proofof claim for this claim?

NoYes. Who made the earlier filing? _____________________________

Debtor 1 __________________________________________________________________

Debtor 2 ________________________________________________________________ (Spouse, if filing)

United States Bankruptcy Court for the: __________ District of __________

Case number ___________________________________________

Fill in this information to identify the case:

Memorial Production Partners LP, et. al.

Southern District of Texas

17-30262

Reliant Energy Retail Services, LLC

✔


P. O. Box 1046

Houston TX 77251

(713) 537-2677

[email protected]

✔

✔

EXHIBIT 1

Case 17-30262 Document 385-1 Filed in TXSB on 06/01/17 Page 1 of 3Case 17-30262 Document 427-7 Filed in TXSB on 08/29/17 Page 19 of 21


Part 2: Give Information About the Claim as of the Date the Case Was Filed

6. Do you have any numberyou use to identify thedebtor?

NoYes. Last 4 digits of the debtor’s account or any number you use to identify the debtor: ____ ____ ____ ____

7. How much is the claim? $_____________________________. Does this amount include interest or other charges? No

Yes. Attach statement itemizing interest, fees, expenses, or othercharges required by Bankruptcy Rule 3001(c)(2)(A).

8. What is the basis of theclaim?

Examples: Goods sold, money loaned, lease, services performed, personal injury or wrongful death, or credit card.

Attach redacted copies of any documents supporting the claim required by Bankruptcy Rule 3001(c).

Limit disclosing information that is entitled to privacy, such as health care information.

______________________________________________________________________________

9. Is all or part of the claimsecured?

NoYes. The claim is secured by a lien on property.

Nature of property:

Real estate. If the claim is secured by the debtor’s principal residence, file a Mortgage Proof of ClaimAttachment (Official Form 410-A) with this Proof of Claim.

Motor vehicleOther. Describe: _____________________________________________________________

Basis for perfection: _____________________________________________________________

Attach redacted copies of documents, if any, that show evidence of perfection of a security interest (for example, a mortgage, lien, certificate of title, financing statement, or other document that shows the lien has been filed or recorded.)

Value of property: $__________________

Amount of the claim that is secured: $__________________

Amount of the claim that is unsecured: $__________________ (The sum of the secured and unsecured amounts should match the amount in line 7.)

Amount necessary to cure any default as of the date of the petition: $____________________

Annual Interest Rate (when case was filed)_______%

FixedVariable

10. Is this claim based on alease?

No

Yes. Amount necessary to cure any default as of the date of the petition. $____________________

11. Is this claim subject to aright of setoff?

No

Yes. Identify the property: ___________________________________________________________________

✔ 7 9 5 6

1,371,896.75✔

Goods Sold

✔

✔

✔



12. Is all or part of the claimentitled to priority under11 U.S.C. § 507(a)?

A claim may be partlypriority and partlynonpriority. For example,in some categories, thelaw limits the amountentitled to priority.

No

Yes. Check one: Amount entitled to priority

Domestic support obligations (including alimony and child support) under11 U.S.C. § 507(a)(1)(A) or (a)(1)(B). $____________________

Up to $2 * of deposits toward purchase, lease, or rental of property or services forpersonal, family, or household use. 11 U.S.C. § 507(a)(7). $____________________

Wages, salaries, or commissions (up to $12, *) earned within 180 days before thebankruptcy petition is filed or the debtor’s business ends, whichever is earlier.11 U.S.C. § 507(a)(4).

$____________________

Taxes or penalties owed to governmental units. 11 U.S.C. § 507(a)(8). $____________________

Contributions to an employee benefit plan. 11 U.S.C. § 507(a)(5). $____________________

Other. Specify subsection of 11 U.S.C. § 507(a)(__) that applies. $____________________

* Amounts are subject to adjustment on 4/01/1 and every 3 years after that for cases begun on or after the date of adjustment.

Part 3: Sign Below

The person completing this proof of claim must sign and date it. FRBP 9011(b).

If you file this claim electronically, FRBP 5005(a)(2) authorizes courts to establish local rules specifying what a signature is.

A person who files a fraudulent claim could be fined up to $500,000, imprisoned for up to 5 years, or both. 18 U.S.C. §§ 152, 157, and 3571.

Check the appropriate box:

I am the creditor.

I am the creditor’s attorney or authorized agent.

I am the trustee, or the debtor, or their authorized agent. Bankruptcy Rule 3004.

I am a guarantor, surety, endorser, or other codebtor. Bankruptcy Rule 3005.

I understand that an authorized signature on this Proof of Claim serves as an acknowledgment that when calculating the amount of the claim, the creditor gave the debtor credit for any payments received toward the debt.

I have examined the information in this Proof of Claim and have a reasonable belief that the information is true and correct.

I declare under penalty of perjury that the foregoing is true and correct.

Executed on date _________________ MM / DD / YYYY

________________________________________________________________________Signature

Print the name of the person who is completing and signing this claim:

Name _______________________________________________________________________________________________First name Middle name Last name

Title _______________________________________________________________________________________________

Company _______________________________________________________________________________________________ Identify the corporate servicer as the company if the authorized agent is a servicer.

Address _______________________________________________________________________________________________Number Street

_______________________________________________________________________________________________City State ZIP Code

Contact phone _____________________________ Email ____________________________________

✔

✔ 2 4,425.70

✔

04/21/2017

/s/Sandra Martel

Sandra Martel

Bankruptcy Analyst


P. O. Box 1046

Houston TX 77251

(713) 537-2677 [email protected]


EXHIBIT H


1

Wright, Jason

From: Wright, JasonSent: Thursday, July 20, 2017 12:11 PMTo: Brown, Chris; Freeman, MikeCc: Genender, Paul; Bowling, Scott; Bobby Stillwell; Jake Radcliffe; Marshall Eves

([email protected]); 'Eric Willis'Subject: RE: Boaz II Indemnification Letter

Chris, Thanks for the reply. Based on your response, Seller will accordingly take the actions it deems, in its sole discretion, most appropriate to deal with the Reliant claim. Those actions may include paying, settling, or contesting the Reliant claim at Seller’s discretion and, as such, may increase the amount subject to indemnification from this point forward to account for any attorneys’ fees and other expenses incurred in connection with the Reliant claim. Please do inform us promptly if Buyer changes its mind and wishes to exercise its right to pay, settle, or contest the Reliant matter at its own expense. Regards, Jason E. Wright Weil, Gotshal & Manges LLP +1 214 746 8127 Direct +1 214 746 7777 Fax

From: Brown, Chris [mailto:[email protected]] Sent: Wednesday, July 19, 2017 4:20 PM To: Wright, Jason; Freeman, Mike Cc: Genender, Paul; Bowling, Scott; Bobby Stillwell; Jake Radcliffe; Marshall Eves ([email protected]); 'Eric Willis'Subject: RE: Boaz II Indemnification Letter Jason: Thank you for following up on the indemnity demand relative to the Reliant electricity contracts. Buyer is still evaluating the demand in light of the assignments and obligations in the Purchase and Sale Agreement, but has not yet reached a decision on whether such indemnification obligation exists at this time and expressly reserves the right to acknowledge or deny such obligation at any time and further reserves and does not waive all rights, claims, remedies, and defenses it may have under that certain Purchase and Sale Agreement referenced in Mr. Freeman’s email below. Best regards, Chris Brown Winstead PC | 500 Winstead Building | 2728 N. Harwood Street | Dallas, Texas 75201 214.745.5215 direct | 214.745.5390 fax | [email protected] | www.winstead.com One City Place Building | 300 Throckmorton Street | Fort Worth, Texas 76102 817.420.8200 | 817.420.8201 fax |


2

From: Wright, Jason [mailto:[email protected]] Sent: Tuesday, July 18, 2017 5:22 PM To: Freeman, Mike; Brown, Chris Cc: Genender, Paul; Bowling, Scott; Bobby Stillwell; Jake Radcliffe; Marshall Eves ([email protected]); 'Eric Willis'Subject: RE: Boaz II Indemnification Letter Mike and Chris, I write to follow up in regard to the communication below. A hearing on Reliant’s claim has now been set to occur in the bankruptcy court on August 15, 2017, at 9:30 a.m. Given that Buyer has had over a month to review the matter, please let us know by close of business tomorrow whether Buyer is exercising its right to control the Reliant claim. Otherwise we will have to assume that Buyer is denying the indemnification request and start incurring costs and expenses—attorneys’ fees in particular—that will be added to the claim for indemnification. Regards, Jason E. Wright Weil, Gotshal & Manges LLP +1 214 746 8127 Direct +1 214 746 7777 Fax

From: Freeman, Mike [mailto:[email protected]] Sent: Friday, June 09, 2017 2:48 PM To: 'Eric Willis' Cc: Genender, Paul; Bowling, Scott; Wright, Jason; Bobby Stillwell; Jake Radcliffe; Marshall Eves ([email protected]); Brown, Chris Subject: RE: Boaz II Indemnification Letter Eric, On behalf of Boaz Energy II, LLC (“Buyer”), I acknowledge receipt of the notice for indemnification, dated June 2, 2017 (the “Notice”), that Amplify Energy Operating LLC (f/k/a Memorial Production Operating LLC) (“Seller”) delivered to Buyer, which contained Seller’s demand for indemnification (the “Demand”) related to Reliant Energy Retail Services LLC’s assertion of a termination fee under the Reliant Contract (as defined in the Notice). Buyer is presently reviewing the Demand and is taking it under advisement. With respect to all future communications related to the Demand, please also include my colleague, Chris Brown, who is copied on this email and whose complete contact information is provided below. In providing this communication to Seller, Buyer is not waiving, and hereby expressly reserves, all rights, claims, remedies, and defenses Buyer may have under that certain Purchase and Sale Agreement, by and between Buyer and Seller, dated as of May 5, 2016. Regards, Mike

Michael A. Freeman, Shareholder Winstead PC | 500 Winstead Building | 2728 Harwood Street | Dallas, Texas 75201 214.745.5181 direct | 214.745.5390 fax | [email protected] | www.winstead.com


3

Chris Brown Winstead PC | 500 Winstead Building | 2728 N. Harwood Street | Dallas, Texas 75201 214.745.5215 direct | 214.745.5390 fax | [email protected] | www.winstead.com One City Place Building | 300 Throckmorton Street | Fort Worth, Texas 76102 817.420.8200 | 817.420.8201 fax |

From: Eric Willis [mailto:[email protected]] Sent: Friday, June 02, 2017 3:56 PM To: [email protected]; Freeman, Mike Cc: [email protected]; [email protected]; [email protected]; Bobby Stillwell; Jake Radcliffe; Eric WillisSubject: Boaz II Indemnification Letter Mr. Eves, Attached please find an indemnification letter with respect to the electricity sales agreement with Reliant Energy Services, LLC, dated as of May 9, 2014. A copy of this letter has been delivered via facsimile to Michael A. Freeman at Winstead PC. Regards, Eric

Eric Willis General Counsel Amplify Energy Corp. 500 Dallas Street, Suite 1600 Houston, TX 77002 Direct (713) 588-8369 Main (713) 490-8900 Fax (713) 456-2940 [email protected] Please note that my email address has changed to [email protected]. Click here for Amplify Energy's Electronic Mail Disclaimer

Information contained in this transmission is attorney privileged and confidential. It is intended for the use of the individual or entity named above. If the reader of this message is not the intended recipient, you are hereby notified that any dissemination, distribution or copy of this communication is strictly prohibited. If you have received this communication in error, please immediately notify us by telephone.

--

The information contained in this email message is intended only for use of the individual or entity named above. If the reader of this message is not the intended recipient, or the employee or agent responsible to deliver it to the intended recipient, you are hereby notified that any dissemination, distribution or copying of this communication is strictly prohibited. If you have received this communication in error, please immediately notify us by email, [email protected], and destroy the original message. Thank you. --


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