PLAN OF UNITIZATION

SOUTHEAST NEW HOPE GIBSON SAND UNIT

GARVIN AND M cCLA I N COUNTIES , OKLAHOMA

; - --_- -_

T5

R 3 W

32 N 33 34 3 5 s • ..

, .,~.. o. ..~ ~.'~

LAI N CO .IVIN CO

>o ev ~ i~' n a . , x~ ~ x~ . • 't~~

v e~ u e. nA i z

• , f! ~ N f] pE a.~~.x. x~ ' .

60 ~~l `f9 f~W ~!1 f~

n s a e~~ ~e r e1

u a a t

yi.- 17 i~' .

T . . . . . . . .

4N e~ ee w u ex eo n M n-~

1 ] I o I I8

'•9) ~1 90 •t~ , ~ l

n~ ~ uo

-~ 2 ..20 21

i :o n. in ui

i xe rzx ia

71 .

29 61.

2 141 I~O I]9 I]~ I)1 J6 I)p

miV mo us iu i4.i 4e. . . . . . . . y~e~

1 .

7 •in . . i es i~ e ~ei yie~~ ~ iaa~ i e~N im~ mx ~

us ne . . . u z

32~i s ~•'e ':° n : ~

ni oo ~i» ~ie • Y'm • _

EXHIBIT "A"

S E NE W HOP E GIBSO N SAN D UNI TG<RV I N 5 Me CLPIN COUNTIES , OKLAHOMA

I

L

I t

I S

im

2 4

2 5

38

~ EXHIBIT " B"TRACT PERCENTAGE PARTICIPATION

SOUTHEAST NEW HOPE GIBSON SAND UNITGARVIN AND McCLAIN COUNTIES, OKLAHOMA

T rac tNumbe r Locat ion

12

345678910111 2

13141 5

161718192021

222324

252627282930

313233

Tract

Operator

LeaseNome

T5N R3W - McCLAIN COUNTY

SW NW 36E2NEbE 2 SE 35NE SW 36NW SW 36SE SW 36SW SW 36SW SW 35S25E34SE SW 34SW SW 34SE SE 33SW SE 33

C i t i es Se rv ice Co lbertPh i ll ips Manda

Skelly Morris-DreyfusMagno l ia B rown -Co lbe rt Un i tSkelly JohnsonMagno l ia B rownE . C . C lay & Son , Inc . Wa tk i n sMagnolia McCorm ickMagnolia Parr-HewittRoss Sears Sears- Hewi ttDearing , I nc . H in kl eCities Service H inkle

T4N R3W- GARVIN COUNTY

NW NW 1NE NE 2W2NEbN 25E2NE NW 2W 2 NW 2NE NE 3NW NE 3E 2 NW 3W 2 NW &NW SW 3N 2 NE 4SE NE 2SENEbE 2 SE 3SW NE 3SE NE 4SW NE 4SE NW 4SW NW 4SE NE &NE SE 5NW SW 1NW SW 2SW SE 3

Texas Company T . A . Sm i thTexas Company W . W . Bel lTexas Company J . E . B e l l

S . S . & Y . O il Co . A . P . Be l lRoya l Petro leum A . P . Bel lSinc l air Be l l Uni tP. G. Lake, Inc. W. W. Bel lSkelly ThorpeSinclair Hewi t t

Sinclair Brown "B"Texas Company Bell UnitSincla i r Jones-Hefner

Dearing , Inc . Sanford - Bel lSinclair Bradshaw-WatkinsSinclair WoolridgeDearing , Inc . Woo lridgeWoodson Oil Co . Hart-GillMagnolia Lacy

Texas Company L . M . SmithSunray M i d -Continent Be l l "A"Sincla ir L . Sanford

TractPercentage

Participatio n

0.247021 .1361 2

0.082880.322910.348150.500650 .237210.883590.282810.156130.261910 .26937

0.309380.505531 .7 138 1

0.7 19860 . 409470 . 31 08 10 .359501 .306760.7 46 13

0.505690.302881 .62765

0.5 1 9240 .458450 . 417260.295860 . 297440 . 4581 3

0 . 183910 . 099030 . 1673 3

-1-

TractNumber

75767778798081828384

85

86

8788899091929394

9596

979899

100

101102103104105106107108

109110111112113114

Location

NW NE 16NE NW 16NW NW 16NE NE 17SE NE 15SW NE 15SE NW 15SW NW 15S 2 NE 16SE NW &NE SW &NW SE 16SW NW &NW SW 16SE NE &NE SE 17NE SE 14NW SE 14NE SW 14NW SW 14NE SE 15NW SE 15NE SW 15NWSWG52SW 15NE SE 16SE SW &SW SE 14 &N 2 NE 23SW SW 14SE SE 15SW SE 15S2SEbS25W 16SE SE 17NW NW 24NE NW 23NW NW 23NE NE 22W 2 NE 22NW 22N 3/a 21 &NE NE 20SE NW 23SW NW 23SE NE 22NW SW 23NE SE 22W2SEtTSE SE 22

TractOperator

HalliburtonSinclairSinclairSinclairTexas CompanyTexas CompanySinclai rSinclairHalliburtonSinclai r

Sinclai r

S i ncla i r

SkellySkellySkellySkellyTexas CompanyTexas CompanyTexas CompanyTexas Compan y

HalliburtonSinclai r

SkellyTexas CompanyTexas CompanyTexas Company

Max PrayTexas CompanyTexas CompanyTexas CompanyTexas CompanyTexas CompanySkellySinclai r

Texas CompanyTexas CompanyTexas CompanyTexas CompanyTexas CompanyCities Service

LeaseName

B rown "C"Moore-Mullican UnitMoore -Eva n sH . K . MooreNe i ll U n it

Ross

Law s Un i tNe i ll Un i tB rown "A"H. Moore "A"

H . K . Moo re " B"

McNee r

Woodruff Unit "E"Woodruff Unit "D"Woodruff Unit "C"Woodruff Unit "B"O. E. Neill NCT 20. Ross UnitBrown-Neill UnitBrown

Brown "B"Mantooth

Woodruff "A"Ross-Neill Unit "C"Ross-Neill Uni tDonne I I

S . MooreBolles-Bell UnitWilliams-DegraffenreidMantoothRoss-Neill Unit "D"0. RossDonhamDonnel l

Degraffenreid-DobynDegraffenreid-MantoothNeill-Bost UnitDegraffenreidBost-Moore UnitBost

TractPercen tage

Participation

0.390160.515820.406330.131580.093240.051800.051800.395690.983471 .57479

0 . 6203 3

0 . 38157

0 . 082880 . 397140 . 368290 . 433820 . 082880 . 093240 . 193441 . 51734

0 . 455861 . 85278

0 .082880 . 093240 . 242282 .1 7962

0.233370.113960.379160.271320.093240.648511 .120036.3667 0

0.093240.377110 . 282780 .093240 . 189450 .95036 -

-3-

TractN u mber Location

161 NW NW 33162 SW NE G

SE NW 35163 SW NW 351 64 SE NE G

NE SE 34165 S2NW34166 S 2 NE 33167 SE NW 3 31 68 SW NW 33169 DELETED170 NE SE 3 5171 NW SE G

NE SW 35172 NW SW 35173 NW SE 34174 NE SW 34175 NW SW 341 76 N 2 SE 3317 7 SW SW 36 &

52SE35bS 2 SW 35

178 S 2 SE 34179 SE SW 341 80 SW SW 34181 SE SE 33

Tract LeaseOpera tor Name

Phillips Matt ieT id ewater Fo rd

Tidewa ter J ensenSu n ray M i d -Con tine n t Hassen

Vickers SheegogCi t ies Service Harril lCi ties Service S. McCoub reyCi ties Service Say l ors " B"

Sinc lair McCoy- Ho lmes U n i tTexas Compa ny Fo rd

Texas Compa ny Ford U n i tSunray Mid-Continent Hassen Uni tPhil l ips DonaldsonVickers M ooreSinc lair Harri llSke l ly I mmohotichey

Phillips TicheyPhillips TichLario RollinsSinclair Horrill Uni t

TOTAL ___ _

-5-

TractPercentage

Participatio n

0.348390.77840

0 .110601 .49670

1 .137510 .947940.250640.17906

0.448121 .24751

0.437600 .375050.518020 .721080 .849562.51267

0 . 538740 . 435140 .521370 .23 1 8 1

100 .00000

EXHIBIT as C "

' Attached to and made a part of . . . .F3-anOf IIk 'LiS8t10[I: 8011'Cb880 't-- - ------ -

yerr--11ope._Gibaon._8and_Uait, - Oagpia __ arxl_1!SoClain _Cannties:-------- -4lclahoma - ----- __ _ -- - - - - .

- ----- . . .- - ---- -- - . ._ . .____ . . .__ . . .._ ----- -- ----

ACCOUNTING PROCEDUR E(UNIT AND JOINT LEA S E OPERATIONS )

1 . GENERAL PROVI SIONS

- 1. Detlnltlons

'"1oi nt p ro pcrt y" as herein used sh all b e construed co mean t he subject area covered b y the a grc e men t t o w hidh this " A ccoun[in g P roc ed u rc" is u -

tach ed .

~ "Operat or " as he rein u sed shal l be const rued to mean t he party desi R na«d to conduct t h c d ecdopm e n[ and operation of the s u bjec t area fo r th e

joi nt account of t he parties h erc m ." N o n -Opm[ o r " as h ere i n used sh all be construed to mean a ny one or more of the non-operating p ar[ i c s .

2. Statement s and Billing s

~ Operator shal l bill NomOpera [or on o r before the l a s e da y of each m onth fo r its proportionate s iurc o f costs and expenditures d u r in~ the pr«ed -

ing month . S uch bills w ill be accompanied by statements, reflecting the t ot a l costs a nd c harg es as set forth under $ubpan R rap h . .__G be lo w :

A . Statement in detail of all ch a rgm and credits to the joint acwunt .~ B. Statement o f all ch arg es an d credits to the joint account, s um mar iz ed by appr opr i a m cl a ssif i c atio n s ind ic a[i v e of the nature thereof.

C . $n[<mm[s as follows :( 1) Detailed statement o f material ordinarily cons idere d control labl e by op erators of oil and gas properties ;(2) Statement of ordinar y c h arge s a n d credits w[ ho joint account summarized by appropriate classifications indicative of tL e nature thereof ;

a n d

(3) Detailed s ta tement of a ny other ch arg es a n d credits.

3 . Payments by Non-Operator

Each party shall pa y its proportion of all su c h bills within fif t een (If ) day i after receipt i6 e reoL If pa ymen t is no t made widh in such time , th eunpaid balance shall be a r in tvex a t the rate of six per cent ( 6 t7c ) per annnm until paid .

4 . Adjustments

Payment of any such bills .h t ll not prejudice the right of Non -Opcnmr to protest o r qucuion the correctness thereof. Subject to d i e exceptio n

noted in Paragraph 5 of his section I , all statements rendered its Non-Operator b y Opent o r during a ny calendar year shall conclusively he pres um ed

to be ~rue md correct after [wemy - fnur (2 4 ) months (nli. ov ing t he e n d Of any e u c h olendnr year, unless within the said twrney - four (24) nroi Lperiod Nnn - Open[or takes written exception nc e re tn and makes claim on Operator f o r adjmt m c nc . Failure on the pa rt of Non-0pen mr to mak eclaim o n Operator for adjustment within su c h period shall establish the correctness there o f and pmdude [he filing of exceptions [heree o o r m a kin gof c lai s for adjus t men[ thereon . The provisions of this paragraph shall not prev en[ a J j u s tn + rne s n.ulciny from physi ca l invent o ry o f p ro perty a spro vided for in Section VI, Inventories, hcreof.

5 . Audits

A Non - Operaroq upon notice in wri t ing to Operator and all other Non-0p :n oors , sha l l ha v e t he righ t to audit Operator's ucounts and rccord srelating w t he a c cuun[ing hereunder for any calendar year within t he t wemy - (oor ( 24) movh period following the end of such calendar year, pro -vided, however, that Non-Operator must take written exception to a nd make claim upon the Operator for all discrepancies disclosed by saidaudit wivhin said cwrn t y - (our (24) month period . Where there are two o r more No m Openwrs, the Non-Operators sh a ll m ake every reasonableeffort to cunduc t joint or simultaneous audits in a manner which will re s ule in ~ minimum of inconvenienre to the Operator .

H . DEVELOPMENT AND OPERATING CHARGE S

_ Subject to lim itations hereinafter p rescr ibed, Operntor shall charge the joint account wi th the following item s :

1 . Rentals and Royalties

De l a y or othe r r en tal s, whe n such rentals are paid b y Operator for the joint account ; roy a l t ies, whe n not paid directly to royal t y o w ners by the_ purchaser of th e oil, sas, exsing hnd gas, or other products .

2. Labo r

A. Sal aries a nd wages of Operator's em ployee s directly engaged on the joint p rup< r qin the development, maintenance, a nd operation t6e reof ,

-- including salaries o r wa g es pa i d to geologists and other employees w ho are tcmpon rily assigned to and directly em p loy ed on a drillin g w e ll .B . Operator's cost o f ho l iday, v a c at i o n , si c k n ess a nd disability benefits, and o t he r customary a llo wa nc es applicable to th e s alaries a nd wages charge -

able un d er Subparagraph 2 Aand Paragraph 71 of this S ection IL Costs under this Subparagraph 2 B m ay be ch ar g ed on a "w hen and a spa id basii ' or by "perc e nt age use s emen[ " o n the am ou nt of salar i es a nd wages chargeable unde r Subparagraph 2 A a n d Paragraph 11 of thi sSection I L If perc e ne age assevment is us ed , the rate s hall be ba s<d m[he Operator's cost experience .

C. Costs of expenditures or contributions made pursuant to assessments impo sed by Reve r n man t al au t h ority wh ic h are appl ic ab l e to Operator's laborcost o f s alarin a nd wages as p rov ide d unde r Su b p angraphe 2 A , 2 B , and Paragraph 11 of this Section II.

- 3. Employee Benefits

Operator's current cm[ of established p lan s for emp loyees' g roup li fe insurance, hospitalization, pensio n , retirement, stock purchase, thrift, b o nue,and other benefit plans of a like nature, applicable co Operator's labor c ost , provided that t he total of such charges shall not exceed ten per cen t

_ (l0°fo) of Operator's la bor cosr: a s provided in Subpang raphs A and B of Paragraph 2 of this Section 1 1 and in Paragraph 1 1 of th is Section II.

- 1 -

12 . AdmtnlslraUve Overhead

_ Open ror sh all have the right to assess against the joint property covered hereby the following mana gement a nd administrative overhead charges ,

which ~hal l be in lieu of a ll expenses of al l offices of the Operator not covered by Section 11, Paragraph 11, abov e, includin g salaries a n d expenses

of personnel avi gn< d to such offic<s, except t hat salaries of 6 rolo6isti and other < mp loyttt of Operator who are temporarily assigned to and directl y

serving o n the joint property will be charged as provided in Section II , Paragraph 2, above . Salaries and expenses of other technic al e m p loyea an

~- signed to such offices will be considered as covered by overhead charges in this paragraph unless charges for such ul a rim and expenses a re agree d

upon between Operator a n d Non-Operator as a ditec[ charge to the joint property .

` WELL BASIS (Rate Per Well Per Month )

DRILLING WELLPRODUCI N300connedoc3am

RAT E- Each liell All Will ,

~ Each WNI ilnf F We 3LV"ir e Over To n

- -- ------ . . ..__ . ._;15.0.0 . . .. . . . . ._ . . . . . ._ --------- - - --- . . . .- - =----- .. ..-.20.00--- ----------------------- - -- --- .. . . ._-

~ A . Overhead cha r ges for d rilling wells shall beg in on th e date each well is spudded and terminate when it is on p roduction or is plu gge d, as the

case m a y be, exc ep t that no charge sh all be m ad< during th e suspension of d rillin g operations for fifteen (15) or mor e consecutive days .B . In connection with ove rh ead charges, th e s [ a ms of wells shall b e as follows :

~ (1) Injection wells for re cov e ry operations, such a s for repressure o r water flood, s hall be inc l u ded in the overhead schedule t he same as produc-ing oil wells .

(2) Water supply wells utilized for water flooding operations shall be included in the ov e rhead schedule the same as producing oil vell . .` Q) Producing gas wells shall be included in the o ve r head schedule the same as producing oil w elb.

( 4 ) Wells permanently shut down but on which pl ugging operations a r e de fcrred shall be dropped from the overhead schedule a t the time the

shutdown is effected. When such wdls are p lu g ged, ov e rh ead s h a ll be charged at th e producing w e ll rate during the time required for theplugging operation .

5) Wells be ing p lug g e d back, drilled deeper, or converted to a source or input well shall b e included in the overhea d schedule the same as drill -II1 g wells.

(6) Temporarily shut-down wells (ot her tha n by governmental regulatory b ody) w hich are not produced or worked upon for a per iod o f a ful lcalendar month sh a ll not be i nc luded in the overhead sch edule ; however, wells shut in by governmental regul a tory body shall be inc l udedin the overhead schedul e only in the event the allowable productio n is transferred to other wells on th e s am e property . Sr].11113M11111CECK1

(7) Wells completed in d u al or multiple horizons sha ll be considered a tw o wells in t he producing overhead schedule .` ( e ) Lease salt water d ispos a l wells sh a ll not be include d in the ov er h ead schedule unless suc h wells a r e used in a secondary r e cov ery pro6nm

on the joint prop e rty.C. The above overhead schedule fo r producin g wells shall b e a ppli ed to the total num be r o f wells operated unde r th e Operating Agreement to whic h

this accounting procedure i s attached, irrespective of individual I <asn .D . It is specifiol l y understood that the above overhead rates apply only to drilling and pro d ucing operations a nd are not inte nd e d to cover the

construction or npcn[ion of additional facilities such as, but not limi[ e d co . gasoline pl a n[s, compressor pl ants, repressuring Prol ecu, salt waterdisposnl 6cilities, a nd similar insca l l acions . If at any time a ny or a ll of these becom e neceseory to th e operation, a separate agreement will bereached rel a tiv e to a n overhead charge a nd allocation of district ex p e n se.

E . The above specific overhead rates m a y be amended from time to tim e by agreement between Operator and Non-Operator if, in practice, they are(oun .l to be insufficient or excessive .

13 . Operato r's Full y O wned Warehouse Operating and Maintenance Expense(Describe fully th e agreed procedure co be followed by the Open ror. )

None . . . .. .. .. .

14 . Other ExpendituresAn y expenditure, oc her than expenditures w h i c h are cov e re d and de a l t with by the foregoing p rovisi ons o f t h i s Se ction II , incurred by the Opera-tor for the n e cess a ry and p ro pe r d e v d op manq m a in«n a nc e , a n d o pPn tiun of the joint property .

IIt. BASIS OF CHARGES TO JOINT ACCOUNT

1. Purchase sM uerinl and equi p mrnt purchueJ and ser v ic e procu red sh a ll b e ch arge d at p rice paid by Operator af[ cr deduction of a l l discounts actually rec ei v e d .

-3-

2 . Division in KindDivi,ion of material in kind, if made between Operator and Non-Operator, sh all be in p roportion to the ir respective inurosas in such material . Each

party will t h ere u pon be charged indi v idua l ly with t he value of the material received or receivable b y each party, and corresponding credits wi ll bem ade by the Operator ro th e joint account. Such credits sha l l appear in the monthly statement of operations.

3 . Sales to Outsiders

$alts to o u [si der s o f material f rom the joi n t property s hal l be credited b y Operator m[ he joint account at the net amount collected by Operatorfrom vendee . A ny clai m s by v<ndee for defective material or otherwise sha l l be charged ba c k to the joint a cco unt if and w h en pa id by Operator.

V . BASIS OF PRICING MATERIAL TRANSFERRED FROM JOINT ACCOUN T

Ma teriol purchased by either Operator or Non-Operator or div ided in kind , un less otherwise a greed, shall bevalued on the fo!lowing basis :

.., 1 . New Price DefinedNew price as used in the following paragraphs shall h av e the same meaning a n d application a s that u sed above in Section III , " Ba s i s o f Cha rge s to

Jolna Aceoune .••

.. . L . New Materia l

Nev material (Condit ion "A " ) , bei ng new material proc ured for the joint account but never used thercon , at on e F undred per ce n t (1 00 ^/e) o f cur-rent new pr ice ( pl u s sales tax i f any) .

~ 3 . Good Used Material

Good used material (Condition " B "), bei ng used material in sound and serviceable condition, suitable for reuse without reconditioning :A. At sevm [ y -fi ve per cent (7 5 %) of current new price if material w as charged t o joi nt accou n t as new, o r

B . At sixty-five per cent ( 6 5% ) of current new pri c e if material was originally charged t o the jo int pr operty as secondhand at sev enty - (i ve p er

cent ( 75 % ) of new pric e .

4 . Other Used Materia lU sed mater i al ( Cond it ion "C"), at fifty per cent ( 50 % ) of current new price, being used mat erial wh i ch :

A . After reconditioning will be fu rt her u rv i <table for o riginal fun ctio n as good sec ond h and material (Condition " B "), orB . Is serviceable for original function but substantially not suitable for reconditioning .

5. Bad-Order Materia l

~ Material and equipme n t (Condition "D "), w hi c h is no longer usable for its original purpo se without excessive rcpair cost but is further usable forsome . other purpose, s6 al l be p ri c ed on a b asi s comparable with that of items normally used for that purpose.

6 . JunkJunk (Cond i t ion "l"), being obsole t e and sc np material, at pre v a i l ing prices.

7 . Temporarily Used Materia l

` Whsn the use of material is temporary a nd its se rv i ce to the joint account does n o t justify t he reduction in price as p ro vided i n Paragraph 3 B,above, such material shall be pric ed on a basis that will leave a net charge to the joint acc o unt c onsis t e n t with the value of the service rendered .

VI. INVENTORIES_ 1 . Periodic Inventories, Notice and Representation

At reasonable intervals, invmmries ehal l be bkm by Operator of the joint a ccount material, w hich shall inclu de all such m ater i al as is ordina ri l yronvid<r<d controllable by operators of oil and g as properties .

` Wtinen notice of intention to take inventory shall be given by Operator at lea st thirty (30) days be fo re any inventory is to begin w th at Non-Operator m ay be represented when a ny inventory i s taken.Fa ilure of Non-Operator to be represented At an inventory sh all b in d Non-Operator to accept the inventory t ake n by Operator, who shall in tha tevent furnish Non-Openmr with a copy thereof .

E. Iteconci l iatlon and Adjustment of Inventories

Reconcili a tion of inventory with charges to the joint account shall be made by each pa rty at interest, and a list of ov enaes a nd shortages sh all bejointl y determined by Operator and Non-Operator .Inventory adjustments shall be made by Operator wit h the joint a ccou nt for ov enge s mdshort aga , but Operator s h al l be h e ld accountable to Non -Operator only for shorngn due to lac k of reasonable diligence .

3 . Special Inventories

- Special inventories i qay be taken, at th e expense o f the p urchauq whenever there is an y sale or change of interest in the j oint property ; a n d it s hal lbe th e du ty of the party m lling to notify al l ot her parties hereto as quic kly as possible after the transfer of interest takes plac e . I n such cases, bo t hthe seller and the purchaser shall be represented and shall be governed by the inventory w taken.

-5-

INDEX

PLAN OF UN I TIZAT ION

SOUTHEAST N EW HOPE G I B SON SAND UN I T

GARV I N AN D McCLAIN COU NT IES

OKLAHOMA

1 . DEFINITIONS

1 .1 Un it ----------------1 .2 Comm i ssion ______1 .3 Person1 .4 Gibson Sand_______1 .5 Un it Product ion ____1 .6 Lessee ________________1 .7 T rac t Part icipa t ion __ .1 .8 Un it Opera to r_______ .1 .9 Oil and Gas.________1 .10 Oil and Gas Rights__ .1 .11 Effec t ive Date ______.1 . 12 U n i t Expense _______ .1 .13 Supervisor1 .14 Outside Gas __________1 .1 S Separa te l y Owned T

2. EXH I B ITS

2 . 1 Exhibits

3. NAME AND UNIT AREA

3.1 Name ___3.2 U n it Area

4. GENERAL POWERS

PageNo .

2222222

2

22

4 . 1 General Powers ----------- ---------------------------------------------------------------- 2

5 . EFFECT OF UNITIZATION

5 . 1 Pooling of Lea se s----- -------------------------------------------------------------------- 25 .2 Relat ion sh ip of Lesse e s---------------------------------------------------------------- 35.3 No T ransfer of Ti tle ------------ _----------------------------------------------------- 35.4 Production from Un i t A rea ----------------------------------- _--------------------- 35 .5 Fulfillment of Lease Provision s---------------------------------------------------- 3

-1-

Page11 . OIL IN LEASE TANKS AS OF EFFECTIVE DATE No .

11 .1 Gouging and Accounting -------------------------------------------------------------- 12

12. INITIAL ADJUSTMENT OF INVESTMENTS

12 . 1 Equipment and Records Turned Over _______________________________,__ 1212 . 2 Wells - ------------- ------------ ------------------- --- 1312 . 3 Separate Adjustment for Tangible Property______________________,___ 1312 . 4 Lease and Operating Equipment ______________ ________________-___ 1312 . 5 Inventory and Valuation of Equipment _________________________ 1312 . 6 Adjustment of Investments_________________________________________ 1 4

13. PLAN OF OPERATION

13 . 1 Plon of Op13 . 2 Change of

14 . RIGHT TO I NFORMATION

14.1 Access to Area and Records __

15. LIABILITY

15 . 1 Members of Committees15 . 2 Unit and Unit Operato r15 . 3 Damage to Unit Area __________________ .15 .4 Pavment--------------------------------

16 . CHANGE OF INTEREST

16.1 Change of Interest

1 7. AUDITS

17 . 1 Audi

18 . INTERNAL REVENUE ELECTION

18 .1 Internal Revenue Election _______

19 . RIGHTS OF WA Y

1 9 . 1 R ight o f

141 5

1 5

151 5151 5

1 5

1 5

1 6

1 6

- 3 -

PLAN OF UN IT IZAT ION FOR

SOUTHEAST NEW HOPE G I BSON SAND UN IT

GARVIN AND M cCLAIN COUNT I ES, OKLAHOMA

KNOW ALL MEN BY THESE PRESENTS :

The following shall con stitute the P lan of Unitizat ion applicable to the Southeast NewHope Gibson Sand Unit created pursuant to author ity of T itle 5 2 O . S . 1 95 1 , S ect i ons 287 . 1 - 287 .1 5inclusive and having for its purp ose the un i tized management , ope ration and further developmentof the Southeast New Hope Gibson Sand common source o f supply of Oi l a nd Ga s underly ing thelands outlined by the broken line on the mo p he re to attached and ma rked Exhi b i t "A", all to theend that a greater ultimate rec overy of O il andG is may be had th erefrom , waste prevented and th e

" correlative r i ghts of the respect i ve owners protected .

1 . DEFINITION S

follows :As used in th is Plan o f Unitization, the following terms and expressions are def ined as

1 . 1 Unit, shal l mean the Southeast New H ope Gibson Sand U n i t .

1 .2 Commission, shall mean the Corpora t ion Com mission of the S tate o f Oklahoma .

1 .3 Person, shal l mean any individua l , corporation , partnership, common low or statutory trust ,a ssocia t ion of a ny k i nd, th e S tate of Oklahoma or any subdivision or agency thereof ac t ing i n aproprieta ry capacity, g uard ian, execu tor, administrator, fiduciary of any k i nd or any other en t ity

` ca pabl e of ho ld i ng an i nte res t in and to the Unit A rea .

1 .4 Gibson Sand, shall mean all the Gibson Sand Formation common source of supply under-` lying the Unit Area for which drilling ind spacing units have been established by the Oklahoma

Corporation Commission in its Order No . 24555, as amended .

1 .5 Unit Production , shall mean and include all Oil and Gas produced from the Gibson SandFormation in the Unit Area from and after the Effective Date hereof regardless of the well or tractwithin the Unit Area from which the some is produced .

1 .6 Lessee, sha l l mean any owner, in whole o r in part, of an Oi l and Gas lease or any un-l eased m inera l i nteres t , who alone o r i n associa t ion with another Person or Person s has the righ t ,excep t for th is Plan of Un i t ization, to explore, develo p and opera te a Separately O wned Tract fo rO i l and Gas, a nd i n so doing wou l d be persona l ly chargeable with a propor t iona te par t o f the cos tand expense of the opera t ion thereo f . An owner o f an overriding roya lty i nterest , oi l payment ,carr ied i nte re s t , ne t prof i t contrac t , or any other Oi l and Gas rights o f a simi l ar na ture, who is no tpersona lly chargeable wi th the cost and expense o f operations, shall not be regarded as a Lessee .The Owner o f unleased O i l and Gas righ ts i n a Separate ly Owned Tract sh al l be consid e red as a

- Lessee w i th respect to 7/8 of the Un i t P roduc t ion a llocated to such unleased Oil and Gas righ ts a n das a Roya lty Owne r w ith respect to 1/8 of such Un i t Production .

1 .7 Tract Participation, s ha ll mean the tract participation of each Sepa ra te l y Owned T rac t ,as shown by Exhi b it " B" .

- 1 .8 Unit Operator, sha ll mean a nd re fer to the Lessee designated to car ry on and conduc t theUn it ized Opera t ion s w i thin the Un i t Area as provided in Section 9 hereo f .

- I -

further development and operat ion s for the p roduct ion o f Oi l and Gas f rom the G i b son Sand in theUn i t A rea and of poo l ing and un i t iz i ng the p rod uct ion so obtained, all to the some extent as i f theUnit A rea ha d been i nc l ud ed in a single lease and all r ight s thereunde r owned by the Lessees i nund i v ided i nte res ts . Proper ty r igh ts, leases, co nt racts a nd all other r i ghts and ob l iga t ions in respec tof the O i l and Gas R i ghts and al l r i ghts i ncident th ere to, i n and to the seve ral Sepa rately Own ed T rac tswithin the Un it Area are he reby amended and m od if ied to the extent ne cessa ry to make the sameconform to the provision s and requirements o f this Pla n of Un i t izat ion , but othe rw ise to remai n i nfull fo rce and effect . Speci f ica lly, d ivision orders, unless revoked , shal l rema i n in effec t , but shallapp ly to the respec t ive i ntere s ts in allocated product ion i n l ieu o f actua l p roduct ion from a part ic -ular t ract.

5 . 2 Relationship of Lessees. The re lat ion sh i p between the Le ssees w i th in the Unit Area , re -s u lting from the c rea t ion of the U n it shal l not be that of a trust, partnership or associat ion butshall be i n the na tu re of a ten a ncy in common .

- 5.3 No Tran sfer of Title. Nothing herein contained shall be construed to require or resul tin a transfer to or the vesting in the Unit of title to the Separately Owned Tracts within the Uni tArea or to the leases thereon, other than the right to use and operate the same to the extent se t

'- out in this Plan of Unitization; nor shall the Unit be regarded as owning any of the Unit Produc -tion. The Unit Production and the proceeds from the sale thereof shall be owned by the severa lPersons to whom the some is allocated under this Plan of Unitization . All property, real or personal ,

" acquired, held or possessed for use in the operation of the Unit Area shall be the property of th eLessees as their interest may appear under this Plan of Unitization, subject, however, to the rightsand powers herein granted the Unit and the Unit Operator .

5 .4 Production from Unit Area . The amount of the Unit Production allocated to each Sepa -rately Owned Tract and only that amount, regardless of the well or wells in the Unit Area fro mwhich it may be produced, and regardless of whether it be more or less than the amount of the pro -duction from the well or wells, if any, on any such Separately Owned Tract shall, for all intents ,uses and purposes, be regarded and considered as production from such Separately Owned Tract .

5 .5 Fulfillment of Lease Provisions . Operat ions ca rr i ed on, under and in acco rdance w ithth is Plan o f U n i t i zat ion shall be rega rded and considered as a fulf i llment of and comp l i ance w i th al lthe p rov i s ions, covenant s and cond i t ions, exp ress o r i mpl ied , of the several O i l and Gas m in ing lease supon lands i ncluded w i th in the Un i t Area, o r other cont rac ts pertaining to the development thereof ,to the some extent that the deve l opment and operat ion of and the product ion of Oi l and Gas fromeach of the seve ral Separately Owned T rac t s with i n the Un it Area would have const i tuted a fulf i ll -ment o f and compl iance w i th such leases and contracts . Wells dr i lled o r operated in any pa rt of theUnit Area , no matter where l ocated , shall, for all purposes, be regarded as wells d ri lled on eac hSepartely Owned Tra ct with i n the Un it Area .

` 6 . ALLOCATION OF UNIT PRODUCTIO N

6.1 Allocation to Tracts . All Unit Production, except so much thereof as is used in the de -velopment and operation of the Unit Area, including repres9uring, pressure maintenance, water -

- flooding and other operations carried on in accordance with this Plan of Unitization, or is unavoid -ably lost, shall be apportioned among and allocated to the several Seportely Owned Tracts within th eUnit Area in accordance with the Tract Participation set forth and shown in Exhibit " B" heretoattached .

6 . 2 Distribution Among Tract Owners . Except a s may be o therw ise prov ided in th is Plan.. of Unit ization , the Un it Production allocated to each Separately Owned Tract sha ll be d is tr ibuted

among , taken in k ind and separately d isposed o f or the proceeds thereof pa i d to the several Person sentitled to share i n the produc t ion from su ch Separately Owned Tract i n the some manner , in the

~- same proportions, upon the same cond i t ions and with the some force and effect that they wouldhave participated, taken or shared in the p roduction from such Separa tely Owned T rac t, or the

-3-

(a) withho ld and market , or itself pu rchase, the po rt ion of the U n it Product ion, t itle towh ich is in d ispute, and i mpound th e proceeds thereof un t i l such t ime as the t i tle o r rightther e to is estab lished by f i na l judgmen t o f a cou rt of co mpe tent ju risdic t ion or o therwise tothe satisfaction of the Opera t ing Comm i ttee, whereupon, the p roceeds so impounded shall bepaid, w i thout i ntere st, to the Pe rson or Persons rightfu lly en t it led thereto; p rovided , the royaltyaccrued on any Un it Produc t ion allocated to the res t ricted Ind ian leaseho ld i nte res t i n a

~ Separat e ly Owned Tract, t itle to wh ich p roduc t ion is i n d ispute , shall be paid to the F ive Civil -ized Tr i bes Agency; or

~- ( b ) requ ire that the Pe rson or Pe rson s to whom such Un it Produc t ion is delivered , o r towhom the p roceed s the r eof are paid , furn ish secu r i ty for th e proper accou nt ing there fo r tothe r ightfu l owne r or owners in the event the t i tle or r i gh t o f s uch Person or Pe rsons shal l

- fa i l , i n who le or in part .

6 .7 Use of Production in Operations . The Un it Ope rator shall have the r i ght to take and` ut i l ize so much of the Un it P roduc t ion as may be necessary or desira ble in the deve lopment an d

opera t ion o f the U n i t Area , inc lud ing but w i thou t be i ng l imi ted to the use o f gas (including residuegas) for repressuring , p r essu re ma intenance o r o ther operat ions ca r ried on i n acco rd a nce wi th thi s

` Plan of Unit iza t ion . No roya l t i es, overrid i ng royalties, produ c t ion payments o r other payments sha l lbe payable upon or w i th respect to that por t ion of the Unit P roduct ion so taken and ut ili zed bythe Un i t Ope ra to r or which may be l os t i n handling or o the rwise w i thout want of due d ili gen ce

" on the part of the Un it Operato r.

_ 6 .8 Accounting for Outside Gas . Outsi de gas wh ic h is injec ted i nto the Un it A rea shal l bemeasu red and a record kept the r eo f , and thereafter f if ty pe rcent (50%) of any gas, i ncl ud i ng cas -inghead gas, wh ic h is produced and saved f rom the Un i t Area a nd wh ich is no t needed for Un i tOpe ra t ions and is available for del ive ry to the Lessees shall be considered to be Outside Gas unt il theaggrega te vo lume o f such percentage o f such gas equals th e vol ume o f such Outsi de Gas so i n j ec tedi nto the Un it A rea, and s uch gas shall be a l loca ted and de l ivered to the Lessees the same as Un i tP roduct ion except that no royalties, ov e rrid i ng roya lt i es, payme nts ou t of p roduc t ion or o ther pay-ments sha ll be due or payab le w ith respect there to ; p rovided , however, l iqu id hydrocarbons recov -ered and saved the re from sha ll be treated and rega rded as U n it P roduc t ion .

7 . OPERATING COMMITTE E

7 .1 Creation and Representatives . An Ope rat i ng Commi ttee is he reby created to consist o fone representa t ive to be designated by eac h Lesse e wi th in the Uni t Area ; provided , that a n in -d ividua l Lessee may h imse lf be a member of the Comm it tee. Such designa t ion s hal l be in w rit i n g

_ and w i th respect to the representa t ive to pa rt icipate at the organ izat ion mee t i ng of the Comm i tteeshall be presented at such mee t i ng, or if th ereafter made , shall be fi l ed w i th the Cha irman of theOperat ing Comm i ttee . Any Less ee ma y in l ike manne r ( a ) desi gna te a n al te rna te representative

_ who, in the absence of the Lessee or i ts regular representat ive, shal l have the fu l l r ight and powe rto rep resent the i ntere s t of such Lessee, and (b) from t i me to t ime designa te a n ew representa -t ive to act for s uch Lessee .

7 . 2 Powers . The Operating Comm ittee s ha ll have the general ove ra ll management a nd con -t ro l of the Un i t and the conduc t o f i ts business and a ffairs and the operations carried on by i t , andis authorized and empowered, subject to the terms and provisions hereof to do all things necessary,proper a nd conven ient for carrying out the terms and sp i r i t of this Plan of Unitization a nd to thatend , not exc lud i ng or l i m i t ing any other power or powers that may be necessary o r prope r for tha tpurpose , sha ll have the fol l ow i ng spec i f ic powers and dut ies :

7 . 2 . 1 To adopt rules and regulat ion s for the proper func t ion i ng of the Ope rat i ng Com -m i ttee i nclud i ng such matters as the t i me and place o f ho l ding mee t i ngs, givi ng not ice andca ll i ng the reo f and the meth od of vo t i ng on any ques t ion al l i n a manner not inconsistentw ith the exp ress requ irements of th is Plan of Un it izat ion .

-5-

- 7 .3.2 Should there be more than one Lessee of a Separately Owned Tract, the vote in

respect thereof shall be divided among such Lessees, in proportion as such Lessees share in

the Unit Expense chargeable to such tract .

7 .3 .3 The vo te of a Lessee having an in terest in more tha n one Separately Owne d Trac tshall be the sum total of the vo tes of such Lessee i n respect of al l such t rac ts .

7 . 4 Vote Required. Except as otherw ise herein provided , al l governing action of the Op -erating Committee shall be by affirmative vote of five (5) or more Le ssees having 60% or moreof the voting interest in the Unit ; provided , however , if any sing l e Lessee ha s a vo t i ng interest inexcess of 35 % and such Les see fai l s to vote or votes aga ins t a motion or re so luti on , then the affirm -ative vote of two (2 ) or more Lessees having 90% o r mo re of the remaining voting interest in th eUnit shall be suff icient to pass the motion or reso lut ion .

7 .5 Proxy and Poll Voting . The Operating Committee shall establish a procedure whereby it smembers may vote by proxy or whereby the Unit Operator may poll its members to secure thei rapproval of any action necessary to the proper conduct of the Unit operations . The results ofsuch poll shall be reported and made a part of the minutes of the next succeeding meeting of theOperating Committee .

7.6 Notices. Notices or other communications addressed and sent to the Unit or to the Op -erating Committee by United States mail or telegraph in care of the Unit Operator shall be deeme dto have been properly given to or served upon the Unit or Operating Committee . The Unit Operato rshall promptly deliver all such notices or communications to the Chairman or Secretary of the Op -erating Committee .

7 .7 Minutes . Minutes shall be made of all meetings of the Operating Committee and keptas a part of the permanent records of the Unit . Such minutes need not be a verbatim record of allthe proceedings, but shall show and reflect ,

o . The names of the members p resent a t th e mee t i ng ,

_ b . All mot ions and resolu t ions offered o r acted upon , toge ther with the results o f such ac t ion ,and ,

c. Such o ther forma l ac t ion as may be taken by the Commi ttee.

A copy o f the m inutes o f each mee t ing sha l l be mailed to each mem ber of the Operating Commi tteeand S upervisor wi th in a reasonable t i me after the meetin g .

8 . ORGANIZATION OF UN I T AND EFF ECTI V E DATE

8 .1 O rganizat ion Mee t ing . Subject to call by the Unit Operator, the representatives desig-nated by the several Lessees to serve on the Operating Committee shall meet at some convenientplace to perfect the organization of the Operating Committee . Such meeting may be held at anytime twenty (20) days from the date of entry of the order of the Commission determining thatthis Plan of Unitization has been ratified or approved by the requisite lessees and royalty ownersas required by law . Notice of the time and place of said meeting shall be mailed at least ten (10)days prior thereto to all Lessees within the Unit Area whose names and addresses are known to theUnit Operator, as well as those Lessees who shall have within ten (10) days from the date of saidorder notified the Secretary of the Commission in writing of their desire to be so notified of themeeting. Any Lessee within the Unit Area desiring notice of such meeting may file a statementof such desire with the Secretary of the Commission, giving its name and the address to which itdesires the notice to be sent .

8 . 2 Officers . The Operating Committee shall organize by selecting a Chairman, a Vice Chair-man, a Secretary and such other officers as the Committee may deem proper . The representativeof the Unit Operator shall be designated as Chairman . The alternate representative of the UnitOperator shall be designated as Vice Chairman . The Secretary and other officers may or may notbe members of the Committee . The Chairman shall preside at all meetings of the Operating Com-

- 7 -

9.3 Duties. The Un it Operator sha ll-

9.3 . 1 Conduct all ope ra t ions i n a good a nd workm a nl i ke manner .

9.3 .2 Keep fu l l , t r ue and co r rect books, accoun ts and records of i ts operations here -unde r which s ha ll be made avai l a b le for inspec t ion at al l reaso nable t i mes by any of theLessees wi th in th e U ni t Area .

9.3 .3 Mai l to each Lessee on or be fore the 20th day of each calendar month , a trueand correc t s ta temen t o f all Uni t P roduction for the preced ing calendar month , and alsofurn ish the Supervisor a month ly report o f ope rat ions, the s tatement of oi l a nd gas runs androyalt ies, toge the r w i th such repor ts as are deemed necessa ry to compute the monthly royal -t ies due the res tr icted Ind ian lesso rs .

9 .3 .4 Ca r ry insu rance w i th respect to Un it Ope ra t ions conducted by Un it Operator on alllands sub ject to th is Plan of Un i t i za t ion as fol l ows :

9.3 .4 . 1 Workmen 's compen sat ion and occupa t iona l d isease insurance as requ iredby th e Workmen 's Compensa t ion Law of the S ta te of Okla homa , and employers' l i ab i lityi nsurance w i th a l i mit of not less than $ 100,000 .

9 .3 .4 . 2 Comprehens ive gene ra l pub lic l iab i l i ty i n s urance, exc lud i ng products l i abil -ity in sura nce, with l i m i ts of not less than : $ 1 00,000 applicable to bod i ly in jury, si cknessor dea th o f any one perso n and $100,000 for more than one person i n any one accident,and $1 00,000 for loss o f or damage to p roper ty in o ny one accident and $ 1 00,000 aggre-gate l i m it app licab le to all loss of or damage to p roperty duri ng the policy pe r i od .

9 . 3 . 4 . 3 Automobi l e publ ic l iab ili ty insu ra nce cove r i ng a ll automoti ve equ ipmentu sed i n pe rfo rmance of work under th is agreement w i th l i m its o f not less than : $1 00,000appl icab le to bod i ly i n j ury, sickness o r death o f a ny one pe rson and $100,000 for morethan one person i n any one accident, and $25,000 for loss of or damage to property inany one accident .

9 . 3 . 4 . 4 Such additional insurance as may be required by the Operating Committee .

9. 3.5 All in surance requ i red hereby shall be car r ied at the joint expense and for thethe benef it of the par t i es here to, except for prem iums for Automob i l e Publ ic L i ab i l ity andProperty Damage Insurance on U n i t Ope rator's fu ll y-owned equ i pment , wh ich shall not becha rged d irec tly to the j oint account but w i ll, instead be covered by the flat rate chargesass essed the Un it for the use of such equ i pment . Lessees w i l l be not if ied of losses as pro -v ided fo r in Exhib i t "C" . If the Lesse es or any of them s hal l i n sure the i r respec t ive risksbeyond the speci f ic l i m i ts o f i n surance requ i red to be car ried by Un i t Operator under thete rms of th is Plan o f Unit i za t ion , the benef i ts o f such i n surance sha ll in u re to the Lesseesp rocu ring and maintaining the some re s pec t i vely, and the cost of such insura n ce shall beborne by such Lessees, respec t ive l y, w i thout re i mbu rsement one from the other and w i thoutentering i nto the accoun t i ng hereunde r .

9.3.6 Requ ire contractors and subcont rac tors work ing and pe rfo rming serv ices on landscomm itted hereto to car ry insurance as fo llows :

9 .3 .6 . 1 Workmen 's compen sat ion and occupational d isease insurance as requ i redby the Workmen 's Compensa t ion Low of the State of Oklahoma and employers ' l iab i lity

- insurance w ith a l i m it of not less than $1 00,000 .

9 . 3 . 6. 2 Comprehensive general publ ic l i ab i l i ty i nsurance w ith l i m i ts of not less~ than : $ 1 00,000 applicable to bod i ly in ju ry, sickness or dea th of any one pe rson and

$1 00,000 for mo re than one pe rson in any one accident , and $1 00,000 for loss of o rdamage to property in any one acciden t and $1 00,000 aggregate l im i t appl icable to al lloss of or damage to property during the po licy per iod .

9 .3 .6. 3 Automobile public liability insurance covering all automotive equipmentused in performance of work under this agreement with limits of not less than : $100,

- 9 -

the r ight o f any Lessee to protes t or que s tion the correctness thereo f; provided , the Un it Operator

shall not be req uired to adjus t a ny item of cha rge o r cred i t un less a claim there for has been pre -

sented in wr i t i ng w i th in twe lve (1 2 ) months after the app roval by the Opera t ing Comm i ttee of

the aud it for the pe riod i n wh ich the cha rge o r cred i t was mode .

1 0.5 Budgets. Be fore, o r a s soon as pract ical after the Effective Date hereof , the Un it Op -erato r, s ub ject to the app roval of the Operating Co m mit tee, shal l prepare a budge t of e s t i ma tedUn i t Expense for the remai nder o f the calendar year and , on or before the f i rst day o f eac h Novem -be r thereaf ter, sha ll prepare a budge t o f es t i mated Unit Expense for the e nsui ng calendar year ,wh ich budge ts shal l set forth the estimated Un i t Expen se by quar ter l y periods . Unless o therw isespeci f i ed i n the budge t , i t s hal l be presumed for the purpose of advance b illi ngs as aforesaid , thatthe es t i ma ted Uni t Expense for each month of a quarterly period sha ll be one- th ird (lh) of thees t i ma te for the qua rterly per iod . Budge ts so prepa r ed shall be es t i ma tes on ly and shall be s ub -ject to adjus tment and cor rect ion by the Ope rat i ng Comm i ttee and U n i t Ope ra tor f ro m t i me tot i me whenever i t shall appear tha t an adju s tment or correc t ion is p rope r . A copy o f eac h suchbudget and adju s ted budge t shall be promptly furn ished each Lessee w i th in the Un it Area .

1 0 . 6 Non - Payment by Individual Lessee . In the event a Lessee is unable to meet promptly

its f i nancia l obl iga tions in connec tion w i th the U n it, the unpa id balance o f i t s po rt ion of Un it Ex -

pense sha ll be carried by the other Le ssees and such amount sh a l l bea r interes t at the rate of six

pe rcent (6%) per a nnum , compounded annuall y, and shal l be due a nd payable out of total pro -

c eeds from such de fau lt ing Lessee's share of the Un i t Produ c t ion . All cred i ts to any such Lessee

on account of the sale or other d isposa l of surplus material or equ ipment, o r otherw ise, shall be

appl ied against a ny s uch unpa id Un it Expen se cha rged ag ain s t such Lessee .

1 0.7 Billing of Defaulted Payments . Amounts so carr ied as aforesa i d i n Sec t ion 1 0.6 sha llbe b i l l ed to and paid by all non -default ing Lessees who have execu ted th is Plan of Un i t izat ionin the p ropor t ion that the i ntere s t of each i n the Un i t bears to the to ta l i nte res t i n the Un i t o fall such Lessees . Lessees so pay ing the some s ha ll be re i mbu rsed the re fo r, together with i nterestthereon, as and when the amounts so carried and the interest thereon are collected from the Lesseespr i mar i ly chargeable the rew i th .

1 0.8 Liens and Foreclosures. The Un it shall have a first and pr ior l ien upon the lea seho ldi nte re s t (exc l usive of a1/a royalty inte re s t ) i n and to each Separately Owned T rac t , the i nte rest o fthe owne rs thereo f in and to the Un it Product ion and all equ ipment in possession of the Un i t , to se -cu re the paymen t of the Un it Expense and other i tems o f cos t properly charged to and again s t suc hSepa rately Owned Tra c t ; p rov ided , that su ch l ie n may be enfo rced agai ns t overrid i ng royal ty inter-es ts, oi l and gas payments, royalty interests i n excess of 1/8 o f the produ c t ion , o r o ther interes t s whicha re otherw ise not cha rgeable w i th s uch cos ts, onl y in the event the owne r o f the i ntere s t o r inter estsprimarily responsib le fails to pay such Un i t Expen se when due, and the produc t ion to the creditthereo f is ins uff icien t for tha t purpose . In the event the owner of any roya lty i nte re s t , overridingroyal ty, oi l and gas payment o r o ther i nter est wh ich , unde r th is Plan of Un i t i za t ion is no t pr i ma ri lyresponsib le therefor, pays a ny part of s uch Un i t Expense fo r the pu rpose of pro t ect i ng such i ntere st,or the amount o f such Uni t Expense i n who le or in part is deducted from the Un it Produc t ion to thec red it o f such intere s t , the owner sha l l , to the extent of such paymen t or deduc t ion be sub rogatedto all of the r ights o f th e Un it and of the Un it Operator w ith respect to the intere st o r inte restspr imar ily cha rgeable w i th s uch Un i t Expen se . A one -e i ghth 1 yel part of the Uni t Product ion allo-cated to each Separately Owned T ract shall in all events be regarded as royalty to be distributed toand among and the p roceed s the reof paid to the owners of the normal one-eigh th (ye) roya ltyfree and clear of all Unit Expense and free of any lien therefor. The lien hereinabove provided forshall be for the u s e , bene f it and p ro tec tion of the Unit Opera tor or o ther Le ssees or Person s ent i tledto rece ive o r sha r e in the mon i es, the payment of wh ich is secured thereby, and in the event offa ilu re of the Unit to enforce such l ien , the Un it Operator o r other Person ent itled to the benef i tthereof, sha ll be subr ogated to the l ien r ights of the Un i t , i n c lud ing the r ight of fo rec losure .

1 0 . 9 Sale of Unit Production to Pay Cost . In the event of a fai lu re of any Lessee to pay i tsshare of the Un i t Exp en se when due , the Unit Ope rator shall be ent i tled to take and ma rket , or

_ 11 -

1 2 . 2 Wells . The procedu re fo r effecting an adj us tment o f the respec t ive Lessees' inves tmentfor the cos t of dr i ll ing and comp l e t i ng (exclusive of casi ng, tub ing , and other equ i pment ) a we l ls hal l be as fol l ows :

1 2 .2 .1 Each d ri ll i ng a nd spacing un i t on which is located, on the Effect ive Date hereof ,a wel l comp l eted i n the G i bson Sand, o r on which is l ocated a well wh ich w i ll be recompletedin the G i bson Sand in accorda nce w i th parag raph 12 .1( b ) above, shall be g iven cred it fo ra comp l eted we l l .

122 .2 For the purpose of ad jus tment of we l l i nves tmen t, as hereinafter prov i d e d , thecos t o f dri l ling and comple t i ng (exclusive o f casi ng , tub i ng, a nd other equ i pment) a wel lw ithin the Unit A rea sha l l be deemed to be Seventy Thousand Do llars ($70,000 .00) . Eachd ril l ing and spacin g uni t which is not c redi ted w ith a comp l e ted wel l as aforesaid , shal l becharged wi th the sum of Seven ty Th ousa n d Do l lars ($70,000.00) . The amount o f suchcha rge w il l be paid , draw intere st and i n othe r respec ts be trea ted and regarded as any o theri tem of Un it Expense cha rged against a Sepa ra tely Owned T rac t, except tha t un l ess the Le sseeor Lessees the reo f shall e lect to vol unta ri l y pay the same, the amount o f s uch charge shal lbe payable on ly out of the p roceeds of the Lessees' s hare of Unit P roduction to the cred i tof the dril l i ng and spaci ng un it . Amoun ts so collec ted on account of any such c harge so madeagains t any dril l i ng and s pacing un i t s no t credite d w ith comp l e ted we l ls, as a foresaid , shallbe credi ted in equa l amount s to the dri ll ing and spacing un i ts given cred it for comp l etedwe lls, as aforesaid, and paid to the Lessees thereo f i n p ropor t ion to the own ership o f suchLessees in and to such comp l eted wells .

12.2 .3 The Lessee of any drilling and spacing unit not credited with a well completedi n the G i bson Sa nd may, i n l ieu of the p rocedu r e outl i ned i n paragraph 12 .2.2 above, ac -comp lish the ad j ustment of i nvestment for the cost of d ri l ling and com p let ing a w e ll byassign ing to t he other Lessees in the Uni t an i n terest i n such dri l ling and s pacing un i t nothaving a completed we l l , so that fo ll ow i ng such assign ment, the Lessees sha ll have an i n -tere s t i n s u ch d ri l ling and spacing uni t in proportion to their respective pe rcentages o fpart icipa t ion in the Un i t exclusive of participation derived f rom assigned dri l li ng and spacingun i ts . Any such assignmen ts shall be by separa te ins t rumen t execu ted w i th i n 30 day s afterthe Effective Da te hereo f and made e ffec t ive as of the Effec t ive Da te he reof .

1 2.3 Separate Adjustment for Tangible Prope rty. All casing , tub ing and we ll - head con -nections i n or on wel l s a nd al l lease and opera t ing equip m ent , taken over by the Uni t i n an ex -change separa te from the adju s tmen t contemplated by the provisions o f Section 12 . 2 hereo f , shal lbe exchanged , and adjustment made therefor, as provided i n Sections 12.4, 12.5 and 1 2 .6 hereof .

1 2.4 Lease and Operating Equipment . As of the Effective Date hereo f , the Operating Com -m ittee sha ll determin e what par t of the well, l ease a nd other opera t ing equipment (exc l usive ofwarehouses, lease houses, ca mps and o ff ice buildings) used in the operatio n o f we l ls taken overby the Uni t i t con siders necessary o r desi rable to take over a nd use in con nec t ion wi th the un i t izeddeve lopmen t and opera t ion of the Uni t Area, i nclud ing, by way of example, but no t the reby ex -c l uding other equipment o f a l ike or d if fe ren t kind, derric ks, tank ba t teries, separa tors, rods, pumps,tub i ng , wellhead connec t ions, casing, flow l i ne s, wa ter lines, gas li nes, e tc ., which said lease andope ra t ir.g equ ipment (exc lusive o f warehouses, l ease houses, camps and office bui ld ing) shall bedelivered to a nd taken over by the Uni t . A l l we ll, lease and opera t i ng equipmen t no t so ta ken ove rshall remain the separate prope rty of the several owners thereo f and may be used by the said sep -ara te owne rs i n the operat ion of we lls produci ng f rom forma t ions other than the- G ibson Sa nd orrec l aimed as such separate owne rs may desire . The acquisition of e x is t i ng warehouses, lease houses,camps and off ice bu ild ings conside red desira ble to the ope r a t ion and deve l opmen t of the Unit A reashall be by negotiation and separate contract of purchase with the owner or owners thereof .

12 . 5 Inventory and Valuation of Equipment . An i nven to ry shal l be taken of a l l wel l , leaseand operati ng equi pme nt taken over by the Un it . Each Lessee, i f i t so reques ts, may be repr e sentedon an I nventory Commi ttee to be charged wi th tak i ng the inven to ry .

-13-

13 . 2 Change of Operations. Noth ing herein conta ined shall prevent the Operat i ng Comm itteef rom a bandon ing o r cha ng ing , i n who le o r i n pa r t , any pa r t i cu l ar method or methods of operation ,i n c lud i ng the operat ions requ ired under Sec t ion 1 3 . 1 . 1 above .

14. RIGHT TO INFORMATION

14 . 1 Access to Area and Records . Each a nd al l Le ssees wi thin the Un it Area, and the Super -viso r, sha l l have access to the ent i re U n it Area at all reasonable t i mes to i nspect and ob serve ope r-a t ions o f eve ry k i nd a nd character on the p rope r ty, and sha ll have access at a ll rea s onable t i mesto any and a ll i nforma t ion per tai n ing to we lls dr i lled , produc t ion sec u red , ma rket i ng of Unit Pro-duction and to the books, records a nd vouchers re la t ing to the Operat ion of the Un i t Area . UnitOperator sha ll , upon request, fu rn ish to any such Lessee a record o f crude o i l runs, reports of stockon hand at the f irs t of each month , and any o ther pert i nent informat ion perta i n ing to the Un it Areaor development and opera tion thereof.

15 . LIABILITY

1 5 . 1 Members of Committees . No membe r of the Operat ing Comm ittee or any other com -m i ttee shall be personally l iable o r i nd iv i dually re s pons ible for any act, erro r , default or om iss i on asa member of such comm ittee or comm i ttees .

1 5 .2 Unit and Unit Operator. Ne ither the Un i t nor the Un it Operator shall be liable orrespon si ble under any of the prov i s ions of this Plan of Un i t i zat ion for any acts o r om iss ions re -sult ing from cau s es beyond the control of the Un it or such Un i t Operato r, or f rom other causeswhich , by the ex e rcise of due d iligence , could not have been prevented o r overcome .

15 .3 Damage to Unit Area . Un i t Operato r shall not be l i able or re s pons ible for any damageto the Un i t Area or the p roperty, equ i pment o r facilities used in the deve lopment and operationthe reof, or for the l oss of a ny product ion a risi ng ou t of i ts ope rat ion of the Un it Area , except onlyfor bad fa i th or g ross neg l i gence i n connect ion therew i th .

1 5 . 4 Payment . In the event , no tw i ths tand ing the foregoi ng prov i s ions of th i s sect ion , theUn i t , the Un it Ope ra to r or any memb e r of the Ope rat ing Comm i t tee o r other Comm i ttee or anyPerson is he ld l iable, by a co urt o f competent ju risdic t ion, fo r any ma tter or th ing for whi ch it i shere in p rovided that the Un i t or Pe rson so named sha ll not be l iab le, the amount o f such l i ab i l i tyas finally determined shall thereupon be treated, regarded and paid as an item of Uni t Expense .

16 . CHANGE OF INTEREST

16 . 1 Change of Interest. A l l t rans fe rs ( by operat ion of law o r o therw ise ), ass i gnments andconveyances o f any ip te res t i n , or w ith re s pect to, any of the Separately Owned Tra c ts w i th i n theUn it Area shall be subject to the te rms, p rov ision s and cond i t ions of th is Plan of Un i t ization , buts ha ll not be b ind i ng on the U n i t or the Un it Oper a tor unless and unt i l a photostatic or ce rt i f i ed copyof the recorded i ns trument or final j ud icial decree ev i dencing such change of owner s h ip has beende l ivered to the Un it Ope ra to r . Each such t rans fer, assi gnment o r conveyance , whether so s tatingor not, shall operate to i mpose upon the Person o r Persons acqu i r ing such i nterest the obl i gation ofthe assignor or grantor w i th respect to the i ntere s t so tran s ferred and sha l l l i kew ise operate to g i veand g ra nt to the Person or Per s ons acquiring suc h interest all benef it attr ibutable hereunder tosuch i nte rest.

1 7. AUDIT S

17 . 1 Audits . The Operat ing Comm i ttee shall cause an audit to be made of the books ,accounts and records o f the Un i t Operato r in respect to ma tters per ta i n ing to the Un it and theoperat ion of the Un it A rea not more often than once each y ea r and shall furn ish a copy thereof toeach o f the Lessees w i thin the Un it Area . Each s uch audit sha ll cover the per iod interven i ng s incethe l as t aud i t . The audit shall be made by an audi tor o r a ud i t i ng comm ittee from the Ac count i ngStaff of one or more of the Lessees w i th in the Uni t Area , or by an independent aud ito r or aud i tors

- 15-

23 . OTHER FORMATION S

23 .1 Rights . Although there may be o ther common sources of s upp l y o f Oil a nd Gas overlyingor underlying the said G ibson Sand Common Source o f Supply, th is Plan o f Un i t ization shall rela teonly to the said Gibso n Sand Common Source of Supp l y. Excep t as specifica l ly provided in th isPlan o f Un i t iza t ion , al l rights o f any and all Perso ns in and to such other reservoirs or commonsources of supp ly o f oi l and gas and the produc t ion there f rom, together wi th the righ t of ingressand egress and the use of the surface of the Unit Area for the exploration , development and oper-ation of such ot her reservoirs or co mmon sources of s upp ly of oi l and gas, are expressly reservedun to the separate owners thereof, and sha l l, except as provided hereafter remain unaffected by thecreation of the Unit a nd the adoption of this Plan of Unitization, al l to the same extent as i f th isPlan of Unitization had not been adopted, excepti ng further that, in the exercise of such righ ts,the owners thereof shal l have due regard for the righ ts gra n ted the Un i t with respect to i t soperations hereunder .

23 .2 Compl etion in Zones Other Than G ibson . Except for those wells taken over by the Unitwhich are dually completed or are in process of being dually completed on the Effective Date of thisPlan of Unitization, no other Unit wells may subsequently be dually completed unless and until theapproval of the Operating Committee is obtained and such completion is made in accordance withthe methods prescribed by the Operating Committee .

23.3 Commingled Wells . A Lessee who con t ri butes a we ll p roduci ng from more than onezone shall be obligated to segregate such zo nes prior to the wel l being taken over by the Un i t i na manne r sa t is factory to the Operating Commi ttee, the cost of such work to be borne by the Lesseescontri bu t ing such we l l . I f such zones are no t segregated prior to the E f fective Date then such wor kshall be done by the Uni t Operator as d irected by the Operating Committee at the expense of theLessees cont ribut ing such w ell .

23.4 R emed ial Wo rk by Les s ee. Any Lessee who wishes to recondition, redrill or workoverany dual well taken over by the Unit under this Plan of Unitization for the production of oil or gasfrom any formation other than the Gibson Sand, shall submit his plan to the Operating Committeefor approval, and upon such approval said work shall be performed under the supervision of theUnit Operator at Lessee's own risk, cost and exp~nse . The productive capacity of the Gibson Sandin any such well prior to such reconditioning, redrilling or reworking shall be ascertained by theUnit Operator prior to the commencement of such work, and the respective Lessee so advised inwriting . Said Lessee shall use all reasonable, practicable and customary methods in order to sorestore the productivity of the unitized Gibson Sand to the satisfaction of the Operating Committee .

23.5 Remed ial Work by Unit . Should the Unit Operator at the direction of the OperatingCommittee do remedial work on the Gibson Sand in any dually completed well, and the cost ofsuch work, in the opinion of the Operating Committee, is in excess of what it would have beenhad the formation other than the Gibson not been producing in such well, the additional cost ofsuch work shall be chargeable to the Lessee owning such other zone or formation in such well andsuch Lessee shall be liable for such additional cost upon notification of the amount thereof by theUnit Operator . The words "Additional Cost" as used above shall mean the difference between thenormal charges incurred in working over, reconditioning or redrilling a dually completed well andthe normal charges for doing the some work on a well which is not dually completed .

23 .6 Remedial Work Required by Operating Committee. When and if the Operating Com-mittee determines that the operation of a well that has been dually completed is interfering withthe efficiency of the Unit Plan of operation, Unit Operator shall advise the Lessee operating suchzone or formation other than the Gibson Sand that such formation must be squeezed off or re-worked by Lessee under the direction of the Unit Operator and to the satisfaction of the OperatingCommittee . The work shall be done at the sole risk, cost and expense of said Lessee. If said Les-see shall fail or refuse to perform said work as directed by Unit Operator, then said work shall b e

- 1 7-

shal l be a t a n end; provid ed, however, i f a ny l iabili ty or obl i gat ions incurred p rior thereto shouldacc ru e and become payable the reaf ter, the amoun t tnereof shall be borne and pai d as U n i t Expensein the some manner as i f i t accrued prior to th e d issoiu t ion of the Un i t .

26 . AMENDMENT TO PLAN OFUNITIZAT ION AND ENLARGEMENT OF UN IT

26.1 Amendment and Enlargement . Any amendment of this Plan of Unitization or any en-largement of the Unit or Unit Area shall be in accordance with the provisions of Title 52, Okla-homa Statutes, 1951 Sections 287 .1 - 287 .15, or any amendment thereto .

27. GENERAL

27 .1 S eparate Counterparts or Rat i f ications. This Plan may be signed in any number o fcounterparts and each counterpart shall have the same force and effect as an original instrumen t

_ and as if all of the signers of the aggregate counterparts had signed the some instrument ; or, thi sPlan may be ratified by a separate instrument in writing referring to this Plan, each such ratifi -cation having the force and effect of a signed counterpart hereof, and, in effect, incorporating b yreference all of the provisions hereof .

27 .2 Joinder in Dual Capacity. It shall not be necessary for Persons owning both workin g

interests and royalty interests to execute this Plan in both capacities in order to commit both classe s

of interests. Signing hereof by any such Person in one copacity shall also constitute signing in the

other capacity .

27.3 Signing Binding on All S ignatory Parties . The signing hereof by Lessees and royalt y

owners within the Unit Area shall be binding upon such parties, their heirs, personal representatives ,

successors and assigns .

27 . 4 Right to Revoke . If the order o f the C ommi ss ion crea t i ng this Un i t pursuant to th i s P l a nof Unitization i s not entered on or before April 1, 1959, any s ubscri ber may revoke its s i gnaturehere of by fi l ing no t i ce o f s uch revocation wi th the S ecre tary o f the Comm ission ; provided , suc h no-t i ce is so f i l ed prior to the ent ry o f the orde r of the Commi ssion c rea t ing th i s Unit .

27 . 5 Force Majeure . Al l ob li ga t ions o f each Lessee, e xcep t for the payment of money, shal lbe suspended wh i l e sa i d party is prevented from complying the rewi th, in whole o r i n par t , by strikes ,f i re , war , civ i l d i sturba nces, ac ts of God, s tate or fede ra l orders o r regu la t ions, i nab i l i ty to secu rema te rial s, or othe r causes beyon d the reasona ble contro l o f said party ; provided, howeve r, that per-formance sha l l be resumed wi th i n a reasonable t ime after suc h ca use has been re moved ; a nd pro-

- v i ded , fu r ther , that no pa r ty s hall be required ag)inst it s w i l l to ad jus t or se tt l e any la bor di spute .This plan or the leases subject hereto shall not ba termina ted by reason of suspension of Unit Oper -ations due to the a foresaid causes .

27 .6 Supervision by the Supervi sor. Nothing contained herein shall be construed as limiting

the extent or right of supervision by the Supervisor as to the restricted Indian leases included in the

- Unit Area.

- 19-

Name

COMPANY

By :~ Vice President

COMPANY

By :Presiden t

_ COMPANY

By :President

COMPANY

By :Presiden t

COMPANY

By :President

COM PANY

By :President

.. COMPANY

By :P resident

WORKING INTEREST OWNERS

Da te Signed

A ttes t :

By :Assistant Secretary

Attest :

By :Secre tary

Attest :

By :Secretary

Attes t :

By :Secreta ry

A ttest :

- BYSecre tary

Attest :

BySecre tary

Attes t :

By :Secreta ry

_ Z~ _

ROYALTY OWNER S

Name Date Signed Attest, If a Corporation, o rWitness, If an Individua l

-23-