Irrevocable Documentary Blanket Letter Of Credit - Railroad Commission Of Texas printable pdf download

TO:

RAILROAD COMMISSION OF TEXAS

P-5LC

Attention: Oil & Gas Division

rev. 1/2008

Permitting/Production, P-5 Financial Assurance Section

P.O. Box 12967

IRREVOCABLE DOCUMENTARY

Austin, TX 78711-2967

BLANKET LETTER OF CREDIT

We hereby establish our Irrevocable Documentary Blanket Letter of Credit in favor of the Railroad Commission of Texas, Austin, Texas for

the account of

(operator's name), for the aggregate amount of

Dollars ($

) available by your drafts at sight on the bank when

drawn in accordance with the terms and accompanied by the documents listed below:

A. This Blanket Letter of Credit is issued in connection with the filing of a P-5 Organization Report (P-5) with the Commission as required by

§91.142, Texas Natural Resources Code (TNRC) in order to perform operations within the jurisdiction of the Railroad Commission of Texas,

including but not limited to (1) operations listed in the Commission's P-5 Organization Report records (P-5 records) for the operator, and/or

(2) wells listed on the Commission's Oil and Gas Proration Schedules (Schedules), and any additional wells that may be obtained prior to the

expiration of this Blanket Letter of Credit and carried on the Oil and Gas Proration Schedules. Said P-5 records and Schedules are

incorporated herein by reference as if fully set forth at length.

1. Organization Name, exactly as shown on Form P-5 Organization Report.

2. P-5 Number, if assigned.

3. Total # of operator's wells:

Total aggregate depth of all

wells:

4. Other Commission-regulated operations. See bond instruction sheet, Paragraph F.

Other operations not included in (A)-(L).

[Check appropriate operations; example: operating a pipeline= I ]

(A)

(B)

(C)

(D)

(E)

(F)

(G)

(H)

(I)

(J)

(K)

(L)

B. The operator and the issuer of this Blanket Letter of Credit acknowledge and agree that, due to amendments to the Texas Natural Resources

Code, amendments to Commission Rules, and/or changes to the operator’s Commission-regulated operations, including without limitation the

acquisition of additional wells, operator may be required during the effective term of this Blanket Letter of Credit to provide additional

financial security beyond the face amount of this Blanket Letter of Credit before its P-5 Organization Report will be accepted and approved.

C. This Blanket Letter of Credit is specifically issued at the request of the operator as guaranty that this fund will be available during the time

that the operator is performing Commission-regulated operations. We are not a party to, nor bound by, the terms of any agreement between

you and the operator out of which this Blanket Letter of Credit may arise.

D. Drafts drawn under this Blanket Letter of Credit must be accompanied by an affidavit from the Railroad Commission of Texas or an

authorized representative, stating that:

a well or other oil and gas operation or activity subject to this Letter of Credit is likely to pollute or is polluting any ground or surface

water or is allowing uncontrolled escape of formation fluids from the strata in which they were originally located; or

a well or other oil and gas operation or activity subject to this Letter of Credit is not being maintained in compliance with Commission

rules or state law relating to plugging or the prevention or control of pollution; or

a well or other oil and gas operation or activity subject to this Letter of Credit is not polluting any ground or surface water or allowing

uncontrolled escape of formation fluids from the strata in which they were originally located, but the operator has failed to maintain

current operator status as reflected on the Commission's P-5 records;

AND

the draft is in the estimated cost of plugging each well (an amount otherwise impossible to determine as to the exact amount but which is

estimated by multiplying the total depth by $2.50 per foot), closing any other operation or activity or controlling, abating, or cleaning up

pollution.

We will be entitled to rely upon the statements contained in the affidavit and will have no obligation to independently verify any statements

contained therein.

(over)

Irrevocable Documentary Blanket Letter Of Credit - Railroad Commission Of Texas

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