Stephen R. and Mary K. Herbel - Page 9

                                        - 9 -                                         
                       the particular unrecouped annual                               
                       shortage occurred, the right to recoup                         
                       the remainder of that particular annual                        
                       shortage will terminate.                                       
                            (5)  Tax reimbursements, if any,                          
                       due by Buyer to Seller hereunder will                          
                       be payable as and when gas is actually                         
                       received, without regard to whether the                        
                       gas being received is recouped gas or                          
                       gas currently being purchased and paid                         
                       for.                                                           

                                 (6)  If the price                                    
                            payable under this contract                               
                            when particular recoupment                                
                            gas is received is higher                                 
                            than the price Buyer paid                                 
                            hereunder for the particular                              
                            annual shortage against which                             
                            that recoupment gas is                                    
                            credited, then Buyer will pay                             
                            the difference at the time                                
                            the recoupment gas is                                     
                            received.                                                 

             Shortly after Malibu acquired its interest in the                        
             subject wells, Mr. Herbel wrote to Arkla and demanded                    
             payment in the amount of $4,749,123 due to Arkla's failure               
             to take and pay for, or to pay for if not taken, a minimum               
             quantity of gas during the period April 1983 through April               
             1987, as required by section 9 of the Contract quoted                    
             above.  In a letter dated March 9, 1988, Mr. Herbel reduced              
             Malibu's claim to $3,539,040 to account for the fact that                
             the original claim had overstated Malibu's working interest              
             in one of the wells.  He further reduced the claim to                    
             $2,418,170, "After making certain adjustments because of                 




Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011