Exhibit 10.1

Execution Version

PURCHASE AND SALE AGREEMENT

dated as of

September 20, 2021

by and between

SHELL ENTERPRISES LLC

(as Seller)

and

CONOCOPHILLIPS COMPANY

(as Buyer)

Exhibit 10.1

i

TABLE OF CONTENTS

ARTICLE 1 DEFINITIONS AND INTERPRETATION ........................................................ 1

Section 1.1 Defined Terms ....................................................................................................... 1

Section 1.2 References and Rules of Construction ................................................................... 1

ARTICLE 2 PURCHASE AND SALE ...................................................................................... 2

Section 2.1 Purchase and Sale .................................................................................................. 2

Section 2.2 Effective Time; Proration of Revenues .................................................................. 2

Section 2.3 Procedures .............................................................................................................. 3

Section 2.4 Purchase Price ........................................................................................................ 4

Section 2.5 Adjustments to the Base Purchase Price ................................................................ 4

Section 2.6 Indebtedness Free................................................................................................... 5

Section 2.7 Deposit ................................................................................................................... 5

Section 2.8 Withholding ........................................................................................................... 5

ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER ............................ 6

Section 3.1 Generally ................................................................................................................ 6

Section 3.2 Existence and Qualification ................................................................................... 6

Section 3.3 Organizational Power............................................................................................. 6

Section 3.4 Authorization and Enforceability ........................................................................... 7

Section 3.5 No Conflicts ........................................................................................................... 7

Section 3.6 Liability for Brokers’ Fees ..................................................................................... 8

Section 3.7 Litigation ................................................................................................................ 8

Section 3.8 Taxes ...................................................................................................................... 8

Section 3.9 Capital Commitments and Expenditures ............................................................. 11

Section 3.10 Compliance with Laws ........................................................................................ 11

Section 3.11 Material Contracts ................................................................................................ 11

Section 3.12 Payments for Production and Imbalances ............................................................ 13

Section 3.13 Consents and Preferential Rights ......................................................................... 13

Section 3.14 Non-Consent Operations; Payout Status .............................................................. 14

Section 3.15 Environmental Matters......................................................................................... 14

Section 3.16 Suspense Funds .................................................................................................... 15

Section 3.17 Bankruptcy ........................................................................................................... 15

Section 3.18 Ownership Structure and Interests ....................................................................... 15

Section 3.19 Wells .................................................................................................................... 15

Section 3.20 Special Warranty of Title ..................................................................................... 16

Section 3.21 Permits ................................................................................................................. 16

Section 3.22 Royalties .............................................................................................................. 17

Section 3.23 Bonds, Letters of Credit and Guarantees ............................................................. 17

Section 3.24 Indebtedness ......................................................................................................... 17

Section 3.25 Condemnation ...................................................................................................... 17

Section 3.26 Powers of Attorney; Bank Accounts.................................................................... 17

Section 3.27 Anti-Corruption; Trade Controls ......................................................................... 17

Section 3.28 Leases ................................................................................................................... 18

Section 3.29 Employment Matters ............................................................................................ 18

Exhibit 10.1

ii

Section 3.30 Operatorship ......................................................................................................... 18

Section 3.31 Intellectual Property ............................................................................................. 18

Section 3.32 Certain Disclaimers .............................................................................................. 18

ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER ............................ 21

Section 4.1 Generally .............................................................................................................. 21

Section 4.2 Existence and Qualification ................................................................................. 21

Section 4.3 Organizational Power........................................................................................... 21

Section 4.4 Authorization and Enforceability ......................................................................... 21

Section 4.5 No Conflicts ......................................................................................................... 22

Section 4.6 Liability for Brokers’ Fees ................................................................................... 22

Section 4.7 Litigation .............................................................................................................. 22

Section 4.8 Financing.............................................................................................................. 22

Section 4.9 Investment Intent ................................................................................................. 22

Section 4.10 Independent Evaluation ....................................................................................... 22

Section 4.11 Consents, Approvals or Waivers.......................................................................... 23

Section 4.12 Bankruptcy ........................................................................................................... 23

Section 4.13 Anti-Corruption; Trade Controls. ........................................................................ 23

ARTICLE 5 COVENANTS OF THE PARTIES .................................................................... 23

Section 5.1 Access. ................................................................................................................. 23

Section 5.2 Government Reviews ........................................................................................... 25

Section 5.3 Public Announcements; Confidentiality .............................................................. 26

Section 5.4 Operation of Business .......................................................................................... 27

Section 5.5 Amendment to Schedules .................................................................................... 30

Section 5.6 Further Assurances............................................................................................... 31

Section 5.7 Related Party Contracts........................................................................................ 31

Section 5.8 Conduct of Buyer ................................................................................................. 31

Section 5.9 Employee Matters ................................................................................................ 31

Section 5.10 Bonds, Letters of Credit and Guarantees ............................................................. 31

Section 5.11 Transition Services Agreement ............................................................................ 31

Section 5.12 Use of Name ........................................................................................................ 31

Section 5.13 Records. ............................................................................................................... 32

Section 5.14 Insurance .............................................................................................................. 32

Section 5.15 Anti-Bribery and Corruption................................................................................ 33

Section 5.16 Required Consents ............................................................................................... 35

Section 5.17 Defense of Retained Litigation ............................................................................ 36

Section 5.18 Seller Parent Guaranty ......................................................................................... 36

Section 5.19 Reorganization ..................................................................................................... 36

Section 5.20 Name Change and Reorganization....................................................................... 37

Section 5.21 Notice to Third Persons ....................................................................................... 37

Section 5.22 Seismic Data ........................................................................................................ 37

Section 5.23 Supplemental Information ................................................................................... 38

Section 5.24 Operational Technology....................................................................................... 38

ARTICLE 6 CONDITIONS TO CLOSING ........................................................................... 38

Exhibit 10.1

iii

Section 6.1 Seller’s Conditions to Closing ............................................................................. 38

Section 6.2 Buyer’s Conditions to Closing ............................................................................. 39

ARTICLE 7 CLOSING ............................................................................................................. 40

Section 7.1 Time and Place of Closing ................................................................................... 40

Section 7.2 Obligations of Seller at Closing ........................................................................... 40

Section 7.3 Obligations of Buyer at Closing .......................................................................... 41

Section 7.4 Closing Payment and Post-Closing Purchase Price Adjustments ........................ 42

ARTICLE 8 TERMINATION .................................................................................................. 43

Section 8.1 Termination .......................................................................................................... 43

Section 8.2 Effect of Termination ........................................................................................... 43

ARTICLE 9 INDEMNIFICATION ......................................................................................... 45

Section 9.1 Indemnification .................................................................................................... 45

Section 9.2 Indemnity Actions ................................................................................................ 48

Section 9.3 Limitation on Actions .......................................................................................... 50

ARTICLE 10 TAX MATTERS ................................................................................................ 52

Section 10.1 Tax Allocations; Tax Returns .............................................................................. 52

Section 10.2 Tax Refunds ......................................................................................................... 54

Section 10.3 Tax Cooperation................................................................................................... 54

Section 10.4 Characterization of Certain Payments ................................................................. 54

Section 10.5 Transfer Taxes ..................................................................................................... 55

Section 10.6 Termination of Tax Agreements .......................................................................... 55

Section 10.7 Purchase Price Allocation .................................................................................... 55

Section 10.8 Amended Returns................................................................................................. 55

ARTICLE 11 MISCELLANEOUS .......................................................................................... 56

Section 11.1 Counterparts ......................................................................................................... 56

Section 11.2 Notice ................................................................................................................... 56

Section 11.3 Newco Transaction Expenses .............................................................................. 57

Section 11.4 Governing Law .................................................................................................... 57

Section 11.5 Waivers ................................................................................................................ 58

Section 11.6 Assignment .......................................................................................................... 58

Section 11.7 Entire Agreement ................................................................................................. 58

Section 11.8 Amendment .......................................................................................................... 58

Section 11.9 No Third Party Beneficiaries ............................................................................... 58

Section 11.10 Construction ......................................................................................................... 58

Section 11.11 Limitation on Damages ........................................................................................ 59

Section 11.12 Conspicuous ......................................................................................................... 59

Section 11.13 Affiliate Liability ................................................................................................. 59

Section 11.14 Time of Essence ................................................................................................... 60

Section 11.15 Severability .......................................................................................................... 60

Section 11.16 Specific Performance ........................................................................................... 60

Exhibit 10.1

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APPENDICES:

Appendix A - Definitions

EXHIBITS:

Exhibit A - Form of Assignment Agreement

Exhibit B - Allocated Values

Exhibit C - Transition Services Agreement

Exhibit D - Seller Parent Guaranty

SCHEDULES:

Schedule 1.1(a) - Real Property Interests

Schedule 1.1(b) - Wells

Schedule 1.1(c) - Surface Contracts

Schedule 3.1 - Seller Knowledge Individuals

Schedule 3.7(a) - Pending Litigation

Schedule 3.7(b) - Pending Actions

Schedule 3.8 - Taxes

Schedule 3.9 - Capital Commitments

Schedule 3.11(a) - Material Contracts

Schedule 3.12 - Imbalances

Schedule 3.13 - Required Consents

Schedule 3.14 - Non-Consent Operations; Payout Status

Schedule 3.15 - Environmental Matters

Schedule 3.16 - Suspense Funds

Schedule 3.19 - Wells 

Schedule 3.21 - Permits

Schedule 3.22 - Royalties

Schedule 3.23 - Bonds, Letters of Credit, and Guaranties

Schedule 3.24 - Permitted Indebtedness 

Schedule 3.28 - Leases

Schedule 4.1 - Buyer Knowledge Individuals

Schedule 5.4 - Operation of Business

Schedule 5.7 - Allocated Related Party Contracts 

Schedule 5.9(a) - Employee Matters

Schedule 5.9(b) - Personal Data

Schedule 5.17 - Retained Litigation

Schedule 5.23 - Supplemental Information

Schedule A-1 - Previously-Divested Properties

Exhibit 10.1

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PURCHASE AND SALE AGREEMENT

This Purchase and Sale Agreement (as may be amended, restated, supplemented or

otherwise modified from time to time, this “Agreement”) is dated as of September 20, 2021 (the

“Execution Date”), by and between Shell Enterprises LLC, a Delaware limited liability company

(“Seller”), on the one part, and ConocoPhillips Company,

a Delaware corporation (“Buyer”), on

the other part. Seller and Buyer are sometimes referred to herein individually as a “Party” and,

collectively, as the “Parties.”

RECITALS:

WHEREAS, SWEPI LP, a Delaware limited partnership (“SWEPI”), owns the Assets,

which are located in the Permian Basin in western Texas; 

WHEREAS, Seller will complete the Reorganization whereby, after effecting a statutory

merger, (a) Seller will own 100 percent of the membership interests in Non-Permian Newco, (b)

Non-Permian Newco will own 100 percent of the membership interests in Newco (the “Subject

Interests”) and (c) the Assets will be owned by Newco; and

WHEREAS, the Parties desire that, at the Closing, Seller shall cause Non-Permian Newco

to sell and transfer to Buyer, and Buyer shall purchase from Non-Permian Newco, the Subject

Interests, upon the terms, and subject to the conditions, set forth herein.

NOW, THEREFORE, in consideration of the premises and of the mutual promises,

representations, warranties, covenants, conditions and agreements contained herein, and for other

valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties,

intending to be legally bound by the terms hereof, agree as follows:

ARTICLE 1

DEFINITIONS AND INTERPRETATION

Section 1.1

Defined Terms. In addition to the terms defined in the Preamble and the

Recitals of this Agreement, for purposes hereof, the capitalized terms used herein and not

otherwise defined shall have the meanings set forth in Appendix A. A defined term has its defined

meaning throughout this Agreement regardless of whether it appears before or after the place

where it is defined, and its other grammatical forms have corresponding meanings.

Section 1.2

References and Rules of Construction. All references in this Agreement to

Exhibits, Schedules, Appendices, Articles, Sections, subsections, clauses, and other subdivisions

refer to the corresponding Exhibits, Schedules, Appendices, Articles, Sections, subsections,

clauses, and other subdivisions of or to this Agreement unless expressly provided otherwise. Titles

appearing at the beginning of any Exhibits, Schedules, Appendices, Articles, Sections, subsections,

clauses, and other subdivisions of this Agreement are for convenience only, do not constitute any

part of this Agreement, and shall be disregarded in construing the language hereof. All references

to “$” shall be deemed references to Dollars. Each accounting term not defined herein will have

the meaning given to it under GAAP as interpreted as of the Execution Date, and, as applicable,

as consistently applied in the oil and gas industry. Unless the context requires otherwise, the word

“or” is not exclusive. As used herein, the word (a) “day” means calendar day; (b) “extent” in the

Exhibit 10.1

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phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such

phrase shall not mean simply “if”; (c) “this Agreement,” “herein,” “hereby,” “hereunder,” and

“hereof,” and words of similar import, refer to this Agreement as a whole and not to any particular

Article, Section, subsection, clause, or other subdivision unless expressly so limited; (d) “this

Article,” “this Section,” “this subsection,” “this clause,” and words of similar import, refer only to

the Article, Section, subsection, and clause hereof in which such words occur; and (e) “including”

(in its various forms) means including without limitation. Pronouns in masculine, feminine, or

neuter genders shall be construed to state and include any other gender, and words, terms, and

titles (including terms defined herein) in the singular form shall be construed to include the plural

and vice versa, unless the context otherwise requires. Appendices, Exhibits, and Schedules referred

to herein are attached to this Agreement and by this reference incorporated herein for all purposes.

Reference herein to any federal, state, local, or foreign Law shall be deemed to also refer to all

rules and regulations promulgated thereunder, unless the context requires otherwise, and shall also

be deemed to refer to such Laws as in effect as of the Execution Date or as hereafter amended.

Examples are not to be construed to limit, expressly or by implication, the matter they illustrate.

References to a specific time shall refer to prevailing Central Time, unless otherwise indicated. If

any period of days referred to in this Agreement shall end on a day that is not a Business Day, then

the expiration of such period shall be automatically extended until the end of the first succeeding

Business Day. Except as otherwise specifically provided in this Agreement, any agreement,

instrument, or writing defined or referred to herein means such agreement, instrument, or writing,

as from time to time amended, supplemented, or modified prior to the Execution Date.

ARTICLE 2

PURCHASE AND SALE

Section 2.1

Purchase and Sale. At the Closing, upon the terms and subject to the

conditions of this Agreement, Seller agrees to cause Non-Permian Newco to sell, transfer, and

convey the Subject Interests to Buyer, free and clear of any Encumbrances (other than restrictions

on transfer that may be imposed by state or federal securities Laws), and Buyer agrees to purchase,

accept, and pay for the Subject Interests.

Section 2.2

Effective Time; Proration of Revenues. 

(a)

Newco shall be entitled to (i) all production of Hydrocarbons from or

attributable to the Properties after 7:00 a.m., Central Time, on July 1, 2021 (the “Effective Time”)

and all products and proceeds attributable thereto and (ii) all other income, proceeds, receipts and

credits earned with respect to the Assets after the Effective Time, and Newco shall be responsible

for, and entitled to any refunds with respect to, all Property Costs incurred and attributable to the

period after the Effective Time and all Asset Taxes apportioned to Buyer pursuant to Section

10.1(a).

(b)

Seller shall be entitled to (i) all production of Hydrocarbons from or

attributable to the Properties prior to and at the Effective Time and all products and proceeds

attributable thereto and (ii) all other income, proceeds, receipts and credits earned with respect to

the Assets prior to and at the Effective Time, and Seller shall be responsible for, and entitled to

any refunds with respect to, all Property Costs incurred and attributable to the period prior to and

at the Effective Time and all Asset Taxes apportioned to Seller pursuant to Section 10.1(a).

Exhibit 10.1

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(c)

Should Buyer or any of its Affiliates receive after the Closing any amounts

to which Seller is entitled under Section 2.2(b), Buyer shall, and shall cause its relevant Affiliate

to, fully disclose, account for and promptly remit the same to Seller. If, after the Closing, Seller

or any of its Affiliates receives any amount to which Newco is entitled under Section 2.2(a), Seller

shall, and shall cause its relevant Affiliate to, fully disclose, account for, and promptly remit the

same to Buyer.

(d)

Should Buyer or any of its Affiliates pay after the Closing any Property

Costs or Asset Taxes for which Seller is responsible under Section 2.2(b), Seller shall reimburse

Buyer or its relevant Affiliate promptly after receipt from such party of an invoice, accompanied

by copies of the relevant vendor or other invoice and proof of payment, with respect to such

Property Costs or Asset Taxes. Should Seller or any of its Affiliates pay after the Closing any

Property Costs or Asset Taxes for which Newco is responsible under Section 2.2(a), Buyer shall,

or shall cause Newco to, reimburse Seller or its relevant Affiliate promptly after receipt from such

party of an invoice, accompanied by copies of the relevant vendor or other invoice and proof of

payment, with respect to such Property Costs or Asset Taxes.

(e)

Notwithstanding the foregoing, Seller shall have no further entitlement to

amounts earned from the sale of Hydrocarbons produced from or attributable to the Assets and

other income earned with respect to the Assets and no further responsibility for Property Costs

incurred with respect to the Assets following the final determination and payment of the Purchase

Price in accordance with Section 7.4.

(f)

Right-of-way fees, insurance premiums and other Property Costs that are

paid periodically shall be prorated based on the number of days in the applicable period falling

before, and the number of days in the applicable period falling on or after, the day of the Effective

Time. Asset Taxes shall be apportioned as set forth in Section 10.1(a).

(g)

Settlement between Buyer and Seller of receipts and disbursements under

Section 2.2(c) and Section 2.2(d) shall be made no less frequently than monthly on or before the

20

th

 day of the month following the month of such receipt or disbursement.

Section 2.3

Procedures. 

(a)

For purposes of allocating production and accounts receivable with respect

thereto under Section 2.2, (i) liquid Hydrocarbons shall be deemed to be “from or attributable to”

the Properties when they pass through the inlet flange of the pipeline connecting into the storage

facilities into which they are run or, if there are no such storage facilities, when they pass through

the lease automatic custody transfer meters or similar meters at the point of entry into the pipelines

through which they are transported from the field and (ii) gaseous Hydrocarbons shall be deemed

to be “from or attributable to” the Properties when they pass through the custody transfer meters

on the pipelines through which they are transported (or whichever meter is closest to the well). 

Seller shall utilize reasonable interpolative procedures to arrive at an allocation of production when

exact meter readings or gauging and strapping data is not available. The terms “earned” and

“incurred” shall be interpreted in accordance with GAAP and Council of Petroleum Accountants

Society (“COPAS”) standards, and expenditures that are incurred pursuant to an operating

agreement, unit agreement or similar agreement shall be deemed incurred when expended by the

Exhibit 10.1

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operator of the applicable Property in accordance with or allowed under the applicable joint

operating agreement.

(b)

Seller shall be entitled to handle all joint interest audits and other audits of

Property Costs covering the period for which Seller is in whole or in part responsible under Section

2.2;

provided

,

however

,

that Seller shall not agree to any adjustments to previously assessed costs

for which Buyer or Newco is liable, or any compromise of any audit claims to which Buyer or

Newco would be entitled or that may otherwise materially and adversely affect Newco, without

the prior written consent of Buyer, which consent shall not be unreasonably withheld, conditioned

or delayed. Each Party shall provide the other Party with a copy of all applicable audit reports and

written audit agreements received by such Party or its Affiliates and relating to periods for which

such other Party is partially responsible.

Section 2.4

Purchase Price. The total consideration to be paid for the Subject Interests

shall be comprised of cash in the amount of $9,500,000,000 (the “Base Purchase Price” and, as

adjusted pursuant to this Agreement, the “Purchase Price”).

Section 2.5

Adjustments to the Base Purchase Price. All adjustments to the Base

Purchase Price shall be made (x) in accordance with the terms of this Agreement and, to the extent

not inconsistent with this Agreement, in accordance with GAAP and COPAS standards, as

applicable, as consistently applied in the oil and gas industry and (y) in the case of all matters set

forth in Section 2.5(a) and Section 2.5(b), only with respect to adjustments identified on or before

the 180

th

 day after the Closing (the “Cut-off Date”). Each adjustment to the Base Purchase Price

described in Section 2.5(a) and Section 2.5(b) shall be allocated to the Assets affected by such

adjustment. Without limiting the foregoing, the Base Purchase Price shall be adjusted as follows,

with the adjustments to such Base Purchase Price resulting in the “Purchase Price”:

(a)

The Base Purchase Price shall be adjusted upward by the following

amounts, without duplication:

(i)

an amount equal to all Property Costs attributable to the ownership

and operation of the Assets or the production of Hydrocarbons therefrom that are

incurred after the Effective Time or Asset Taxes for which Buyer is responsible

pursuant to Section 10.1(a) but that have been paid by Seller or any of its Affiliates

(other than Newco), as is consistent with Section 2.2(a) and Section 2.2(b), but

excluding any amounts previously reimbursed to Seller or any such Affiliate by a

Third Party or pursuant to Section 2.2(d);

(ii)

an amount equal to all proceeds to which Seller is entitled pursuant

to Section 2.2(b), to the extent that such proceeds have been received by Buyer or

any of its Affiliates, and not remitted or paid to Seller or any of its Affiliates (net

of any Royalties paid by Buyer or its Affiliates to Third Parties, gathering,

processing and transportation costs and any Hydrocarbon production, severance,

sales or excise Taxes not reimbursed to Buyer or its Affiliates by the purchaser of

Hydrocarbon production); and

Exhibit 10.1

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(iii)

any other amount provided for elsewhere in this Agreement or

otherwise agreed upon in writing by the Parties as an upward adjustment to the

Base Purchase Price.

(b)

The Base Purchase Price shall be adjusted downward by the following

amounts, without duplication: 

(i)

an amount equal to all Property Costs attributable to the ownership

and operation of the Assets or the production of Hydrocarbons therefrom that are

incurred prior to and at the Effective Time or Asset Taxes for which Seller is

responsible pursuant to Section 10.1(a) but that have been paid by Buyer or any of

its Affiliates, as is consistent with Section 2.2(a) and Section 2.2(b), but excluding

any amounts previously reimbursed to Buyer or its relevant Affiliate by a Third

Party or pursuant to Section 2.2(d);

(ii)

an amount equal to all proceeds to which Newco is entitled pursuant

to Section 2.2(a), to the extent that such amounts have been received by Seller or

any of its Affiliates and not remitted or paid to Newco (net of any Royalties paid

by Seller or its Affiliates to Third Parties, gathering, processing and transportation

costs and any Hydrocarbon production, severance, sales or excise Taxes not

reimbursed to Seller or its Affiliates by the purchaser of Hydrocarbon production);

(iii)

the amount of funds in suspense listed on Schedule 3.16 that are still

in suspense on the Closing Date; and

(iv)

any other amount provided for elsewhere in this Agreement or

otherwise agreed upon in writing by the Parties as a downward adjustment to the

Base Purchase Price.

Section 2.6

Indebtedness Free. At the Closing, Newco will not be responsible for any

obligations to repay Indebtedness.

Section 2.7

Deposit. No later than 5:00 p.m. Central Time on September 21, 2021,

Buyer shall pay to Shell US E&P Investments LLC, in immediately available funds by wire

transfer to an account designated by Seller, an amount equal to five percent (5%) of the Base

Purchase Price (the “Deposit”). In the event that the Deposit is not paid to Shell US E&P

Investments LLC within the required time period, in addition to any other remedy available at Law

or in equity, Seller shall have the right to terminate this Agreement pursuant to Section 8.1(b), and

any rights or remedies Seller may have under this Agreement in relation to such breach shall

survive such termination. The Deposit shall be distributed in accordance with the terms of Section

8.2(b) or Section 8.2(c), as applicable.

Section 2.8

Withholding. Buyer and its Affiliates (and any Person acting on their

behalf) shall be entitled to deduct and withhold from any consideration otherwise payable or

deliverable to Non-Permian Newco such amounts as may be required to be deducted or withheld

therefrom pursuant to applicable Law. If the applicable withholding agent intends to withhold

from any amounts payable to Non-Permian Newco (other than with respect to any withholding

relating to a failure by Seller to deliver to Buyer, at or prior to the Closing, the deliverable

Exhibit 10.1

- 6 -

contemplated in Section 7.2(b)), the applicable withholding agent shall use commercially

reasonable efforts to provide prior notice of such withholding to Seller as soon as reasonably

practicable after it determines withholding is required and to reasonably cooperate to reduce or

eliminate such withholding to the extent permissible under applicable Law. To the extent such

amounts are so deducted or withheld and remitted to the appropriate Governmental Authority, such

amounts shall be treated for all purposes of this Agreement as having been paid to the Person to

whom such amounts would otherwise have been paid absent such deduction or withholding.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF SELLER

Section 3.1

Generally. 

(a)

Any representation or warranty qualified by the “Knowledge of Seller” or

“to Seller’s Knowledge” or with any similar knowledge qualification is limited to matters within

the Knowledge of the individuals listed in Schedule 3.1.

(b)

Subject to the disclaimers and waivers contained in and the other terms and

conditions of this Agreement, and the exceptions and matters set forth on the Schedules attached

to this Agreement, Seller represents and warrants to Buyer the matters set forth in this Article 3 as

of the Execution Date (except for the representations and warranties that refer to a specified date,

which will be deemed made as of such date).

(c)

The disclosure of any matter in any Schedule to a representation and

warranty of Seller set forth in this Article 3 shall be deemed to be a disclosure for all

representations and warranties in respect of which it is evident such matter relates, but shall

expressly not be deemed to constitute an admission by Seller to otherwise imply that such matter

is material for the purposes of this Agreement.

Section 3.2

Existence and Qualification.

(a)

Seller is a limited liability company duly organized, validly existing, and in

good standing under the Laws of the State of Delaware and is duly qualified to do business in all

jurisdictions in which its ownership of property or conduct of business requires Seller to be

qualified except where the failure to be so qualified or licensed or in good standing, individually

or in the aggregate, has not been and would not reasonably be expected to be material to Seller.

(b)

As of the Closing, following the Merger, each of Non-Permian Newco and

Newco will be a limited liability company duly organized, validly existing, and in good standing

under the Laws of the State of Texas and will be duly qualified to do business in all jurisdictions

in which its ownership of property or conduct of business requires it to be qualified, except where

the failure to be so qualified or licensed or in good standing, individually or in the aggregate, would

not reasonably be expected to be material to it.

Section 3.3

Organizational Power. Seller has all requisite limited liability company

power to enter into and perform this Agreement and each Transaction Document to which Seller

is or will be a party and to consummate the transactions contemplated by this Agreement and such

other Transaction Documents. As of the Closing, following the Merger, Non-Permian Newco will

Exhibit 10.1

- 7 -

have all requisite limited liability company power to own the Subject Interests and to carry on its

business as being conducted except where the failure to have such power, individually or in the

aggregate, has not been and would not reasonably be expected to be material to Non-Permian

Newco. As of the Closing, following the Merger, Newco will have all requisite limited liability

company power to own, lease, and operate its properties and to carry on its business as now being

conducted by SWEPI with respect to the Assets, except where the failure to have such power,

individually or in the aggregate, would not reasonably be expected to be material to Newco.

Section 3.4

Authorization and Enforceability. 

(a)

The execution, delivery, and performance of this Agreement, all documents

required to be executed and delivered by Seller at Closing and all other Transaction Documents to

which Seller is or will be a party, and the performance of the transactions contemplated hereby

and thereby, have been duly and validly authorized by all necessary limited liability company

action on the part of Seller. This Agreement has been duly executed and delivered by Seller (and

all documents required hereunder to be executed and delivered by Seller at Closing and all other

Transaction Documents will be duly executed and delivered by Seller) and this Agreement

constitutes, and at the Closing such documents will constitute, the valid and binding obligations

of Seller, enforceable in accordance with their terms except as such enforceability may be limited

by applicable bankruptcy or other similar Laws affecting the rights and remedies of creditors

generally as well as by general principles of equity (regardless of whether such enforceability is

considered in a proceeding in equity or at Law).

(b)

All documents required to be executed and delivered by Non-Permian

Newco at Closing and all other Transaction Documents to which Non-Permian Newco will be a

party, and the performance of the transactions contemplated thereby, will have been duly and

validly authorized by all necessary limited liability company action on the part of Non-Permian

Newco and such documents will constitute, the valid and binding obligations of Non-Permian

Newco, enforceable in accordance with their terms except as such enforceability may be limited

by applicable bankruptcy or other similar Laws affecting the rights and remedies of creditors

generally as well as by general principles of equity (regardless of whether such enforceability is

considered in a proceeding in equity or at Law).

Section 3.5

No Conflicts. Subject to compliance with the HSR Act, the execution,

delivery, and performance of this Agreement and the other Transaction Documents by Seller, and

the transactions contemplated hereby and thereby, will not (a) violate any provision of the

Organizational Documents of Seller, SWEPI, Non-Permian Newco or Newco, (b) result in a

material default (with or without due notice or lapse of time or both) or the creation of any lien or

encumbrance or give rise to any right of termination, cancellation or acceleration under any note,

bond, mortgage, indenture, or other financing instrument to which Seller, SWEPI, Non-Permian

Newco or Newco is a party or that affects the Assets or the Subject Interests, (c) violate any

judgment, order, writ, injunction, ruling, or decree in any material respect applicable to Seller,

SWEPI, Non-Permian Newco, Newco, or any of the Assets or the Subject Interests, or (d) violate

any Laws in any material respect applicable to Seller, SWEPI, Non-Permian Newco, Newco, or

any of the Assets or the Subject Interests.

Exhibit 10.1

- 8 -

Section 3.6

Liability for Brokers’ Fees. None of Buyer, its Affiliates, or Newco shall

directly or indirectly have any responsibility, liability or expense, as a result of undertakings or

agreements of Seller or its respective Affiliates, for brokerage fees, finder’s fees, agent’s

commissions or other similar forms of compensation in connection with this Agreement or any

agreement or transaction contemplated hereby.

Section 3.7

Litigation.

(a)

Except as set forth on Schedule 3.7(a), there are no actions, suits or

proceedings against SWEPI, Seller, Non-Permian Newco or Newco pending with or before any

Governmental Authority or arbitrator, or, to Seller’s Knowledge, threatened in writing (i) with

respect to or affecting the Assets, the Subject Interests, or Newco that would reasonably be

expected to be material to Newco or the ownership, operation, exploration or development of any

of the Assets or (ii) that would materially impair, hinder, or delay Seller’s ability to perform its

obligations under this Agreement or any Transaction Document or Non-Permian Newco’s ability

to perform those actions that Seller is required to cause Non-Permian Newco to perform under this

Agreement.

(b)

There is no outstanding judgment, order, writ, injunction, ruling, or decree,

or pending or, to the Knowledge of Seller, threatened material investigation, by any Governmental

Authority relating to Newco, the Subject Interests, any of the Assets, or the transactions

contemplated by this Agreement. Except as set forth on Schedule 3.7(b), there is no action, suit,

or proceeding (i) by SWEPI pending, or for which SWEPI has commenced preparations to initiate,

against any other Person with respect to the Subject Interests or the Assets, (ii) by Newco pending,

or for which Newco has commenced preparations to initiate, against any other Person, or (iii) by

any Third Party (including any Representative of Seller or any of its Affiliates (excluding Newco))

pending in connection with the ownership or operation of the Assets that is financed by Seller or

Newco or for which Seller or any of its Affiliates (including Newco) is (or will be) responsible for

any portion of the costs, expenses or liabilities thereof. Except as set forth on Schedule 3.7(b),

during the past two years prior to the Execution Date, there have been no claims for personal injury

or death of any Person in connection with the ownership or operation of the Assets for which

Newco would have any liability in any respect after the Closing Date. Notwithstanding the

foregoing, with respect to matters pertaining to Assets that are operated by a Person other than

Seller or its Affiliates (including Newco), the representations and warranties set forth in this

Section 3.7(b) are limited to the Knowledge of Seller.

Section 3.8

Taxes.

(a)

All income and franchise Taxes and all other material Taxes that have

become due or payable by or with respect to Newco or the Assets or the ownership or operation

thereof (whether or not shown or required to be shown on any Tax Return) have been paid in full.

(b)

All material Tax Returns that were required to be filed by or with respect to

Newco or the Assets or the ownership or operation thereof have been duly filed (taking into

account any extension of time within which to file), and all such Tax Returns are true, complete

and correct in all material respects.

Exhibit 10.1

- 9 -

(c)

The Taxes reflected on the Tax Returns that will be filed under Section

10.1(d) and are set forth on Schedule 3.8(c) will be the only Income Taxes payable by Newco or

SWEPI for the taxable periods covered by such Tax Returns.

(d)

Except as set forth on Schedule 3.8(d), no audits, examinations,

investigations or proceedings are pending, in progress or, to Seller’s Knowledge, have been

threatened with respect to any Taxes or Tax Returns relating to SWEPI or Newco or the Assets.

Neither SWEPI nor Newco has consented to, or entered into any agreement with respect to, and

there is not currently in effect with respect to any of the Assets, any waiver or extension of any

statute of limitations related to the assessment, determination or collection of any Taxes. No power

of attorney granted by or with respect to SWEPI or Newco in respect of any Taxes is in effect that

will not be revoked or cancelled at or prior to the Closing.

(e)

None of the Assets is subject to any tax partnership agreement or is

otherwise treated, or required to be treated, as held in an arrangement requiring a partnership

income Tax Return to be filed or otherwise treated, or required to be treated, as a partnership under

Subchapter K of Chapter 1 of Subtitle A of the Code or any similar state or local Law.

(f)

No deficiency for any material amount of Tax has been asserted or assessed

by any Governmental Authority against SWEPI or Newco or with respect to any of the Assets,

which deficiency has not been fully satisfied by payment, settled or withdrawn.

(g)

No claim has been made by any Governmental Authority in any jurisdiction

in which SWEPI or Newco does not file Tax Returns that any material Tax Return is required to

be filed or any material Taxes are required to be paid in such jurisdiction by or with respect to

SWEPI or Newco.

(h)

There are no Encumbrances for Taxes (other than liens described in clause

(d) of the definition of Permitted Encumbrances) on any of the Assets.

(i)

SWEPI has not since 2007, and Newco has never, been a member of an

affiliated group of corporations within the meaning of Section 1504 of the Code filing a

consolidated U.S. federal income Tax Return, or a member of an aggregate, combined,

consolidated, unitary or other similar group for state, local or foreign Tax purposes. SWEPI has

not since 2007, and Newco has never, had any liability for the Taxes of any Person under Section

1.1502-6 of the Treasury Regulations or any similar provision of state, local or foreign Law, as a

transferee or successor, by contract or other agreement or arrangement (other than pursuant to a

Customary Arrangement), by operation of Law or otherwise. Each of SWEPI and Newco has

timely paid all material amounts of Taxes required to be paid by or on behalf of it pursuant to any

Customary Agreement.

(j)

For U.S. federal income Tax purposes and all applicable state and local Tax

purposes, SWEPI and Newco are currently properly classified as disregarded entities, as described

in Treasury Regulation Section 301.7701-3(b)(1)(ii), and no election has been filed or made to

change such classification for U.S. federal income tax purposes (or applicable state or local Tax

purposes).

Exhibit 10.1

- 10 -

(k)

Neither SWEPI nor Newco has distributed stock of another Person, or had

its stock distributed by another Person, in a transaction that was purported or intended to be

governed in whole or in part by Section 355 or Section 361 of the Code (or any similar provision

of state, local or non-U.S. Law).

(l)

Neither SWEPI nor Newco is, or has ever been, a party to, or bound by, any

agreement or arrangement relating to the sharing, indemnification or allocation of Tax liabilities

(or any similar agreement or arrangement) between or among Persons, in each case, other than a

Customary Agreement.

(m)

Except as set forth on Schedule 3.8(m), SWEPI and Newco have not

requested or received any rulings from, or entered into any arrangements with, any Governmental

Authority, or received or benefited from any Tax exemption, Tax holiday or other Tax reduction

agreement or order or other special Tax regime (each a “Tax Incentive”). Neither Buyer nor any

of its Affiliates will be liable to any Governmental Authority after the Closing for any amounts

benefiting SWEPI or Newco before the Closing under or with respect to any such Tax Incentives

(including as a result of a termination thereof or disqualification therefrom).

(n)

Neither SWEPI nor Newco has participated in, or been a party to, a “listed

transaction” as this term is defined in Treasury Regulations Section 1.6011-4(b) (or any

predecessor provision).

(o)

Neither SWEPI nor Newco (i) has ever been subject to Tax in a country

outside of the country in which it is organized, or (ii) has ever had a permanent establishment (as

defined in any applicable Tax treaty or convention) or other fixed place of business in a country

other than the country in which it is organized. SWEPI and Newco do not currently own and have

not ever owned an interest in any entity that is not a “United States person” within the meaning of

Section 7701(a)(30) of the Code.

(p)

SWEPI (with respect to the Assets or the ownership or operation thereof)

and Newco have properly collected and remitted all material amounts of sales, use, value added,

and similar Taxes with respect to sales or leases made to, purchases made from, or services

provided to their customers or have properly received and retained any appropriate Tax exemption

certificates and other documentation for all services provided, or sales, leases, purchases made,

without charging or remitting sales, use, value added, or similar Taxes that qualify such sales,

leases, purchases, or services as exempt from sales, use, value added, and similar Taxes.

(q)

The consummation of the transactions contemplated by this Agreement

(whether alone or in combination with a subsequent event) will not result in the loss of deduction

to Buyer or Newco under Section 280G of the Code.

(r)

Notwithstanding anything to the contrary in this Agreement, (i) the

representations and warranties in this Section 3.8 and in Section 3.29 (to the extent relating to

Taxes) are the only representations and warranties in this Agreement with respect to the Tax

matters of SWEPI and Newco, and (ii) Seller makes no representation or warranty with respect to

the existence, availability, amount, usability or limitations (or lack thereof) of any net operating

loss, net operating loss carryforward, capital loss, capital loss carryforward, basis amount or other

Exhibit 10.1

- 11 -

Tax attribute of Newco after the Closing Date, except for the representations and warranties set

forth in Section 3.8(j) and Section 3.8(q), and (iii) Buyer acknowledges and agrees that Buyer

cannot rely on Seller’s methodologies for the determination and reporting of Taxes that were

utilized for any Tax period (or portion thereof) beginning prior to the Closing Date for purposes

of calculating and reporting Taxes attributable to any Tax period (or portion thereof) beginning

after the Closing Date.

Section 3.9

Capital Commitments and Expenditures. Except as set forth on

Schedule 3.9, as of the Effective Time, with respect to the Assets, there are no outstanding AFEs

or other commitments to conduct any operations or expend any amount of money on or with

respect to the Assets which are binding on SWEPI that could reasonably be expected to require

expenditures in excess of $2,500,000, individually or in the aggregate, net to SWEPI’s interest.

Section 3.10

Compliance with Laws. With respect to its ownership and operation of the

Assets, SWEPI is (and, as of the Closing Date, Newco will be) in material compliance with all

applicable Laws and, to Seller’s Knowledge, no Third Party operator is in material violation of

any applicable Laws with respect to the Assets. As of the Execution Date, SWEPI has not received,

and to Seller’s Knowledge, no Third Party operator of any of the Assets has received, written

notice of any material violation in any respect of any applicable Law relating to its ownership or

operation of the Assets. As of the Execution Date, SWEPI has not received, and, to Seller’s

Knowledge, no Third Party operator of any of the Assets has received, written notice that it is

under investigation by any Governmental Authority for potential non-compliance with any Law

relating to its ownership or operation of the Assets in a material respect. This Section 3.10 does

not include any matters with respect to Environmental Laws, which are exclusively addressed in

Section 3.15, or Taxes, which are exclusively addressed in Section 3.8 and in Section 3.29 (to the

extent relating to Taxes).

Section 3.11

Material Contracts.

(a)

Schedule 3.11(a) sets forth all Contracts as of the Execution Date of the type

described below to which SWEPI is a party or by which SWEPI or any of the Assets are bound,

in each case, that will be binding on Newco after Closing in accordance with Section 5.19(b), but

excluding, in each case, (x) those Contracts that are cancelable without penalty on 30 days’ or less

prior written notice and (y) any Contract to which a Third Party operator of the Assets is (but

SWEPI is not) a party and by which SWEPI and any of the Assets are bound (for the avoidance of

doubt, for purposes of this Section 3.11, Newco will be deemed to be bound after Closing to any

Contract subject to a Required Consent that SWEPI retains as a Retained Asset pursuant to Section

5.16(c)) (the “Material Contracts”):

(i)

any Contract (excluding customary joint operating agreements

substantially in the form of the AAPL promulgated joint operating agreement

forms) that can reasonably be expected to result in aggregate payments by SWEPI

before Closing or Newco after Closing of more than $2,500,000 (net to SWEPI’s

(or, as of the consummation of the Merger, Newco’s) interest) during the current or

any subsequent calendar year (based solely on the terms thereof and current

volumes, without regard to any expected increase in volumes or revenues);

Exhibit 10.1

- 12 -

(ii)

any Contract that can reasonably be expected to result in aggregate

revenues to SWEPI before Closing or Newco after Closing of more than $2,500,000

during the current or any subsequent calendar year (based solely on the terms

thereof and current volumes, without regard to any expected increase in volumes

or revenues);

(iii)

any Hydrocarbon or water (produced or fresh) purchase and sale,

acreage dedication, volume commitment, storage, marketing, transportation,

processing, gathering, treatment, separation, compression, balancing, fractionation,

disposal, handling, or similar Contract with respect to Hydrocarbons or water

(produced or fresh) produced from or attributable to SWEPI’s interest in the Assets

that is not terminable without penalty or other payment upon 60 days’ or less notice;

(iv)

any indenture, mortgage, deed of trust, loan, credit or note purchase

agreements, or sale-leaseback agreements, guaranties, bonds (other than operator’s

bonds required by the Railroad Commission of Texas or any other applicable

regulatory governmental authority), letters of credit, or similar financial agreements

or other agreements or instruments governing Indebtedness affecting the Assets or

that will affect Newco at Closing;

(v)

any Contract that constitutes a lease under which SWEPI is the

lessor or the lessee of real or personal property which lease (A) cannot be

terminated by SWEPI without penalty or other payment upon 60 days’ or less notice

and (B) involves an annual base rental of more than $2,500,000;

(vi)

any farmout or farmin agreement, participation agreement,

exploration agreement, development agreement, joint operating agreement, unit

agreement, or purchase and sale agreement, or other Contract that provides for the

purchase, exchange, farmin, or earning by SWEPI of any oil and gas lease or

mineral rights, other than customary joint operating agreements substantially in the

form of the AAPL promulgated joint operating agreement forms;

(vii)

any agreement regarding any partnership, Tax partnership, or joint

venture, or regarding any option, put or call, or right of first refusal triggered by the

transactions contemplated by this Agreement, with respect to the Assets or the

Subject Interests;

(viii)

any Contract that (A) contains or constitutes an existing area of

mutual interest agreement, (B) includes non-competition or non-solicitation

restrictions or other similar restrictions on SWEPI’s doing business, or (C) involves

the settlement, waiver, or release of any material rights of SWEPI or the

counterparty;

(ix)

any Contract to sell, lease, exchange, transfer, or otherwise dispose

of all or any part of the Assets (other than with respect to production of

Hydrocarbons in the ordinary course) from and after the Effective Time, but

Exhibit 10.1

- 13 -

excluding rights of reassignment upon intent to abandon or release a Well or a

Lease;

(x)

any Contract under which SWEPI has the right to be “carried” by

another Person (i.e., have another Person pay its share of costs and expenses) or the

obligation to “carry” another Person (i.e., pay the costs and expenses of another

Person) with respect to, or in connection with, the ownership, operation, or

development of the Properties or any other assets or properties (or future assets or

properties);

(xi)

any Related Party Contract set forth on Schedule 5.7; and

(xii)

any agreement the primary purpose of which is the indemnification

of another Person.

(b)

The Material Contracts are in full force and effect as to SWEPI (as of the

Execution Date) and Newco (as of the Closing Date) and, to Seller’s Knowledge, are binding upon

the counterparties thereto in accordance with their terms. SWEPI is not (and, as of the Closing

Date, Newco will not be) in material breach or default under any Material Contract, and to Seller’s

Knowledge, no other Person that is a party thereto is in material breach or default under any

Material Contract. To Seller’s Knowledge, no event has occurred, which after notice or lapse of

time, or both, would constitute a material default under any Material Contract. No written notice

of default or breach has been received or delivered by SWEPI under any Material Contract, the

resolution of which is outstanding as of the Execution Date, and there are no current notices

received by SWEPI or Newco of the exercise of any premature termination, price redetermination,

market-out, or curtailment of any such Material Contract. Prior to the Execution Date, and except

to the extent not permitted due to confidentiality obligations, true, complete, and correct copies of

all Material Contracts have been made available to Buyer, including all amendments or

modifications thereto.

Section 3.12

Payments for Production and Imbalances. As of the Execution Date, SWEPI

is not (and, as of the Closing Date, Newco will not be) obligated by virtue of any take-or-pay

payment, advance payment, or other similar payment (other than Royalties reflected in the Leases)

to deliver Hydrocarbons, or proceeds from the sale thereof, attributable to SWEPI’s (or, as of the

consummation of the Merger, Newco’s) interest in the Properties at some future time without

receiving payment therefor at or after the time of delivery. Except as set forth on Schedule 3.12,

there are no material Imbalances attributable to the Properties.

Section 3.13

Consents and Preferential Rights. Except as set forth on Schedule 3.13 (the

“Required Consents”), and subject to compliance with the HSR Act, (a) none of the Subject

Interests, the Assets or any portion of any of the foregoing, is subject to any Consents, except for

Customary Post-Closing Consents, and (b) there are no Consents required to be obtained, provided

or submitted by SWEPI in connection with the sale of the Subject Interests by Seller to Buyer, the

Reorganization, the execution, delivery and performance of this Agreement or the other

Transaction Documents, or the consummation of the transactions contemplated hereby or thereby.

None of the Subject Interests, the Assets or any portion of any of the foregoing is subject to any

Exhibit 10.1

- 14 -

Preferential Rights or tag-along rights, drag-along rights or similar rights that may be applicable

to the transactions contemplated by this Agreement.

Section 3.14

Non-Consent Operations; Payout Status. Except as set forth on

Schedule 3.14, prior to the Closing Date, SWEPI has not (and, as of the Closing Date, neither

Newco nor SWEPI will have, except as approved by Buyer pursuant to Section 5.4) elected not to

participate in any operation or activity proposed with respect to the Properties that could result in

any of SWEPI’s (or, as of the consummation of the Merger, Newco’s) interest in such Properties

becoming subject to a penalty or forfeiture as a result of such election not to participate in such

operation or activity. To Seller’s Knowledge, Schedule 3.14 contains a complete and accurate list

of the status of any payout balances, as of the date set forth on such Schedule, for each Property

that is subject to a reversion or other adjustment at any level of cost recovery or payout or

Hydrocarbon production from or attributable to such Property (or passage of time or other event

other than termination of an Property by its terms), as of the dates shown on such schedule with

respect to each Property.

Section 3.15

Environmental Matters. Except as set forth on Schedule 3.15:

(a)

Neither SWEPI nor Newco has entered into, or is subject to, any agreement

with, or consent, order, injunction, decree or judgment of, any Governmental Authority issued

pursuant to Environmental Laws that requires any Remediation of or with respect to, or relating to

the ownership or operation of, any of the Assets, that imposes material obligations or liability on

SWEPI or Newco, or that would reasonably be expected to be material to SWEPI, Newco or the

ownership, operation, exploration or development of any of the Assets.

(b)

There is no material action, suit, or proceeding by any Third Party pending,

or to the Knowledge of Seller, threatened in writing, in connection with the ownership, operation

or use of the Assets arising under Environmental Laws.

(c)

To Seller’s Knowledge, there is no outstanding investigation or information

request made in writing by or claims or other pending actions initiated by a Governmental

Authority related to Environmental Laws with respect to the Assets and any act or omission by

SWEPI or Newco. To Seller’s Knowledge, there is no outstanding investigation or information

request made in writing by, or claims or other actions initiated by, a Governmental Authority

related to Environmental Laws with respect to the Assets and the act or omission of any Third

Party.

(d)

As of the Execution Date, neither SWEPI (nor, to Seller’s Knowledge, any

Third Party operator of the Assets) has received written notice that remains unresolved of any

condition on or with respect to any Asset, including notice of liability with respect to off-site

transportation, storage, treatment, recycling or disposal of Hazardous Substances, that, if true,

would constitute a material violation of, require material Remediation after the Closing Date, or

give rise to material obligations or liability under, any Environmental Laws or the environmental

provisions of any of the Leases or Contracts, in each case, by either SWEPI or Newco.

(e)

To Seller’s Knowledge, as of the Execution Date, SWEPI has (and, as of

the Closing Date, Newco will have) all material Permits required under Environmental Laws for

Exhibit 10.1

- 15 -

the ownership or operation of the Assets, and all such Permits are in full force and effect, including

the timely filing of any renewal applications.

(f)

To Seller’s Knowledge, during SWEPI’s and Newco’s period of ownership,

the Assets have been owned and operated by SWEPI and Newco in compliance in all material

respects with all applicable Environmental Laws and the terms of any Permits issued pursuant

thereto and with the environmental provisions of the Leases and Contracts, except for prior

instances of non-compliance that have been fully and finally resolved.

(g)

To Seller’s Knowledge, except as would not constitute a Seller Material

Adverse Effect, no Environmental Condition exists with respect to the Assets or to the operations

of SWEPI or Newco with respect to the Assets.

(h)

Prior to the Execution Date, Seller has provided Buyer with all material

written environmental assessments, reports and audits and written notices from Governmental

Authorities relating to Environmental Laws in its possession or under its control as of the

Execution Date relating to the Assets.

Notwithstanding anything to the contrary herein, with respect to Assets that are operated by a

Person other than SWEPI or Newco, the representations and warranties set forth in this Section

3.15 are limited to the Knowledge of Seller.

The representations and warranties set forth in this Section 3.15 and in Section 3.19 represent the

sole and exclusive representations and warranties of Seller with respect to environmental matters,

including SWEPI’s and Newco’s compliance with Environmental Laws.

Section 3.16

Suspense Funds. As of September 10, 2021 and as of the date that is three

(3) days prior to the Closing Date, to Seller’s Knowledge, except as set forth on Schedule 3.16

(which Schedule 3.16 shall be updated by Seller, on or prior to Closing, to reflect any changes to

such Schedule 3.16 as of the date that is three (3) days prior to Closing), neither SWEPI nor Newco

holds any Third Party funds in suspense with respect to production of Hydrocarbons from any of

the Assets other than amounts less than the statutory minimum amount that SWEPI or Newco is

permitted to accumulate prior to payment.

Section 3.17

Bankruptcy. There are no bankruptcy, insolvency, reorganization,

receivership or similar proceedings pending against, being contemplated by or, to Seller’s

Knowledge, threatened against Seller or any Affiliate of Seller (including Newco).

Section 3.18

Ownership Structure and Interests. Following the Merger, there will be no

Interests in Newco other than the Subject Interests, and Non-Permian Newco will own, of record

and beneficially, 100 percent of the Subject Interests free and clear of any Encumbrance, and at

the Closing, Buyer will obtain good and valid title to the Subject Interests free and clear of any

Encumbrance. Seller is not, and at the Closing Seller and Non-Permian Newco will not be, party

to any voting trust or other agreement or understanding with respect to the voting, transfer or other

disposition of the Subject Interests. The rights and privileges of the Subject Interests will be as set

forth in Newco’s Organizational Documents.

Section 3.19

Wells. Except as set forth on Schedule 3.19:

Exhibit 10.1

- 16 -

(a)

all Wells have been drilled and completed at legal locations and within the

limits permitted by all applicable Leases, Contracts, and/or pooling or unit agreements;

(b)

no Well is subject to penalties on allowables because of any overproduction

or any other violation of Laws;

(c)

(i) neither SWEPI nor Newco has received any written notices or demands

from Governmental Authorities or other Third Parties to plug or abandon any Wells and (ii) there

are no Wells (a) that SWEPI or Newco as operator is currently obligated (directly or indirectly as

a working interest owner) by Law or Contract to plug or abandon that have not been plugged and/or

abandoned, as applicable, in accordance in all material respects with all applicable Laws and

Contracts, as applicable, (b) to the Knowledge of Seller, that a Third Party operator is currently

obligated (directly or indirectly as a working interest owner) by Law, Lease or Contract to plug or

abandon that have not been plugged and/or abandoned, as applicable, in accordance in all material

respects with all applicable Laws, Leases and Contracts, as applicable, (c) that have been plugged

or abandoned by Seller or its Affiliates (including Newco) (or to Seller’s Knowledge by any other

Person) in a manner that does not comply in all material respects with all applicable Laws, Leases

and Contracts, and (d) that are currently subject to exceptions to a requirement to plug or abandon

issued by a Governmental Authority;

provided

,

however

 that any extension for the period to plug

and abandon any Well resulting from the filing of Form W-3C with the Railroad Commission of

Texas shall not constitute such an exception;

(d)

As of the Execution Date, SWEPI has (and, as of the Closing Date, Newco

will have) (i) title to the Equipment free and clear of Encumbrances, other than Permitted

Encumbrances, or (ii) with respect to rented Equipment, a good and valid leasehold interest in such

Equipment;

provided

,

however

, that, with respect to Assets that are operated by a Person other than Seller or

its Affiliates (including Newco), the representations and warranties set forth in this Section 3.19

are limited to the Knowledge of Seller.

Section 3.20

Special Warranty of Title. Subject to the Permitted Encumbrances, Seller

warrants that (a) the Leases and Wells are free and clear of any Encumbrance made by, through or

under SWEPI, Newco, or any of their respective Affiliates prior to the Closing Date, but not

otherwise (provided, if any such Encumbrance would also result in a breach of any other

representation and warranty of Seller set forth in this Article 3 (without giving effect to the

indemnity limitations set forth in Article 9), Buyer shall be precluded from asserting such

Encumbrance as a breach of this Section 3.20(a)), and (b) none of SWEPI, Newco, or any of their

respective Affiliates have conveyed any Leases or Wells prior to the Execution Date or the Closing

Date to anyone outside of Newco;

provided, however

, that any Buyer claim for indemnification or

defense pursuant to Section 9.1(b)(ii) for Damages or Proceedings, as applicable, caused by,

related to, arising out of, or resulting from any breach of this Section 3.20 shall be limited to such

Damages or Proceedings, as applicable, caused by, relating to, arising out of, or resulting from

Third Person Claims.

Section 3.21

Permits. Except as set forth on Schedule 3.21, as of the Execution Date,

SWEPI has (and, as of the Closing Date, Newco will have) all, and, to the Knowledge of Seller,

Exhibit 10.1

- 17 -

each Third Party operator has all, material Permits required to permit the ownership and operation

of the Assets as presently owned and operated by SWEPI or such Third Party operator, as

applicable, and each is in full force and effect and has been duly and validly issued. The execution

and delivery of this Agreement and the consummation of the transactions contemplated hereby

will not result in any revocation, cancellation, suspension or modification of any such Permit.

There is no outstanding violation in any material respect of any of the Permits by either SWEPI or

Newco and, to the Knowledge of Seller, there is no outstanding violation in any material respect

of any of the Permits by any Third Party operator of the Assets. Section 3.21 does not include any

matters with respect to Environmental Laws, which are exclusively addressed in Section 3.15, or

Taxes, which are exclusively addressed in Section 3.8 and in Section 3.29 (to the extent relating

to Taxes).

Section 3.22

Royalties. Except as set forth on Schedule 3.22 and for such items that are

being held in suspense as permitted pursuant to applicable Law, each of SWEPI and Newco has

timely paid in all material respects all Royalties due by SWEPI or Newco, as applicable, with

respect to the Assets.

Section 3.23

Bonds, Letters of Credit and Guarantees. As of the Execution Date, SWEPI

has all bonds, letters of credit, guarantees, and other similar security arrangements necessary to

own the Assets and, with respect to all Assets operated by any Third Party, to the Knowledge of

Seller, such Third Party has all bonds, letters of credit, guarantees, and other similar security

arrangements necessary to operate such operated Assets. Such arrangements are set forth on

Schedule 3.23.

Section 3.24

Indebtedness. Except as set forth on Schedule 3.24, as of the Closing Date,

(a) Newco will not have any Indebtedness, and (b) no Asset will be burdened by any Encumbrances

for Indebtedness created by Seller or its Affiliates (including Newco).

Section 3.25

Condemnation. There is no pending or, to the Knowledge of Seller,

threatened in writing, taking (whether permanent, temporary, whole, or partial) of any material

part of the Assets by reason of condemnation or the threat of condemnation.

Section 3.26

Powers of Attorney; Bank Accounts. Newco will not have any (a) powers

of attorney or comparable delegations of authority outstanding or (b) accounts or safe-deposit

boxes with any banks, trust companies, savings and loan associations or other financial institutions.

Section 3.27

Anti-Corruption; Trade Controls. 

(a)

With respect to Seller, Newco, the Subject Interests and the Assets, neither

Seller, Newco nor their respective officers and directors nor, to their Knowledge, any Person acting

on behalf of them (i) has violated Anti-Corruption Laws or Trade Control Laws, (ii) is a Restricted

Party, or (iii) whether directly or indirectly, has made, offered, authorized or accepted any

payment, gift, promise, or other advantage, to or for the use or benefit of any Government Official

or any other Person where that payment, gift, promise, or other advantage would comprise a

facilitation payment or otherwise violate the Anti-Corruption Laws or any other applicable Law,

or that would cause Buyer to be in breach of any Anti-Corruption Laws.

Exhibit 10.1

- 18 -

(b)

Seller maintains (i) adequate written policies and procedures to comply with

Anti-Corruption Laws and Trade Control Laws and (ii) adequate internal controls, including using

reasonable efforts to ensure that all transactions are accurately recorded and reported in its books

and records to reflect truly the activities to which they pertain, such as the purpose of each

transaction, with whom it was entered into, for whom it was undertaken, or what was exchanged. 

Section 3.28

Leases. Except as set forth on Schedule 3.22, SWEPI is not (and, as of the

Closing Date, Newco will not be) in material breach of any terms and condition of the Leases.

Schedule 3.28 contains a true, correct, and complete list of all Leases that (a) are currently held by

payment of shut-in royalties, reworking operations, any substitute for production in paying

quantities, or any other means other than production in paying quantities, and (b) will expire,

terminate, or otherwise be materially impaired absent actions by or on behalf of SWEPI or Newco

(other than continued production in paying quantities) on or before a date that is 180 days after the

Closing Date.

Section 3.29

Employment Matters. Newco does not employ, and has never employed,

any individual as an employee. Newco does not sponsor or contribute to, or have any obligation

to contribute to, and has never sponsored or contributed to, or had any obligation to contribute to,

any Benefit Plan. There does not now exist, nor do any circumstances exist that could result in,

any Controlled Group Liability of Seller, Newco or any ERISA Affiliate that could reasonably be

expected to be a liability of the Buyer or its Affiliates (including Newco) following the Closing.

Section 3.30

Operatorship. As of the Execution Date, SWEPI has not received written

notice pursuant to and in accordance with the terms of any operating agreement with respect to the

Assets under which SWEPI is currently designated as the operator or, to the Knowledge of Seller,

any other notice with respect to any pending vote to remove SWEPI or any of its Affiliates as the

named “operator” of any of the Assets for which SWEPI or such Affiliate is currently designated

as “operator.” With respect to those swaps of Assets that SWEPI operates that are contemplated

and set forth on Schedule 3.11(a) or Schedule 5.4, Buyer acknowledges that operatorship for such

Assets may change pursuant to and upon the consummation of such swaps, and any such change

in operatorship shall not constitute a breach of this Section 3.30.

Section 3.31

Intellectual Property. Neither SWEPI nor Newco own any Intellectual

Property relating to the Assets. None of Seller or its Affiliates (including Newco) has interfered

with, infringed upon, misappropriated, or violated any material Intellectual Property Rights of

Third Parties in any material respect, and none of Seller or its Affiliates (including Newco) have

received any written notice asserting that the conduct of SWEPI’s or Newco’s operations with

respect to the Assets materially infringes upon or materially violates any Intellectual Property

Rights of any Person.

Section 3.32

Certain Disclaimers.

(a)

EXCEPT AS AND TO THE EXTENT EXPRESSLY REPRESENTED

AND WARRANTED OTHERWISE IN THIS ARTICLE 3, THE ASSIGNMENT

AGREEMENT, THE CERTIFICATE OF SELLER TO BE DELIVERED AT THE

CLOSING PURSUANT TO SECTION 7.2(c) OR ANY ASSIGNMENT SELLER

DELIVERS TO NEWCO PURSUANT TO SECTION 5.16(c), SELLER EXPRESSLY

Exhibit 10.1

- 19 -

DISCLAIMS, AND BUYER WAIVES ANY REPRESENTATION OR WARRANTY,

EXPRESS, STATUTORY OR IMPLIED, IN THIS OR ANY OTHER INSTRUMENT,

AGREEMENT OR CONTRACT DELIVERED HEREUNDER OR IN CONNECTION

WITH THE TRANSACTIONS CONTEMPLATED HEREUNDER OR THEREUNDER,

INCLUDING ANY REPRESENTATION OR WARRANTY, ORAL OR WRITTEN, AS TO

(I) TITLE TO ANY OF THE SUBJECT INTERESTS OR THE ASSETS, (II) THE

CONTENTS, CHARACTER OR NATURE OF ANY DESCRIPTIVE MEMORANDUM,

ANY REPORT OF ANY PETROLEUM ENGINEERING CONSULTANT OR ANY

GEOLOGICAL, SEISMIC DATA, RESERVE DATA, RESERVE REPORTS, RESERVE

INFORMATION (ANY ANALYSIS OR INTERPRETATION THEREOF) RELATING TO

THE ASSETS, (III) THE QUANTITY, QUALITY OR RECOVERABILITY OF

HYDROCARBONS IN OR FROM THE ASSETS, (IV) THE EXISTENCE OF ANY

PROSPECT, RECOMPLETION, INFILL OR STEP-OUT DRILLING OPPORTUNITIES,

(V) ANY ESTIMATES OF THE VALUE OF THE SUBJECT INTERESTS OR THE

ASSETS OR FUTURE REVENUES GENERATED BY SWEPI

OR THE ASSETS, (VI)

THE PRODUCTION OF PETROLEUM SUBSTANCES FROM THE ASSETS, OR

WHETHER PRODUCTION HAS BEEN CONTINUOUS OR IN PAYING QUANTITIES,

OR ANY PRODUCTION OR DECLINE RATES, (VII) THE MAINTENANCE, REPAIR,

CONDITION, QUALITY, SUITABILITY, DESIGN OR MARKETABILITY OF THE

ASSETS, (VIII) INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHT, OR

(IX) ANY OTHER RECORD, FILES OR MATERIALS OR INFORMATION

(INCLUDING AS TO THE ACCURACY, COMPLETENESS OR CONTENTS OF THE

RECORDS) THAT MAY HAVE BEEN MADE AVAILABLE OR COMMUNICATED TO

BUYER OR ITS AFFILIATES, OR ITS OR THEIR EMPLOYEES, AGENTS,

CONSULTANTS, REPRESENTATIVES OR ADVISORS IN CONNECTION WITH THE

TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY DISCUSSION

OR PRESENTATION RELATING THERETO (INCLUDING ANY ITEMS PROVIDED

IN CONNECTION WITH SECTION 5.1); AND EXCEPT AS AND TO THE EXTENT

EXPRESSLY REPRESENTED AND WARRANTED OTHERWISE IN THIS ARTICLE 3,

THE ASSIGNMENT AGREEMENT, THE CERTIFICATE OF SELLER TO BE

DELIVERED AT THE CLOSING PURSUANT TO SECTION 7.2(c) OR ANY

ASSIGNMENT SELLER DELIVERS TO NEWCO PURSUANT TO SECTION 5.16(c),

SELLER FURTHER DISCLAIMS, AND BUYER WAIVES, ANY REPRESENTATION

OR WARRANTY, EXPRESS, STATUTORY OR IMPLIED, OF MERCHANTABILITY,

FITNESS FOR A PARTICULAR PURPOSE OR CONFORMITY TO MODELS OR

SAMPLES OF MATERIALS OR ANY EQUIPMENT, IT BEING EXPRESSLY

UNDERSTOOD AND AGREED BY THE PARTIES HERETO THAT EXCEPT AS AND

TO THE EXTENT EXPRESSLY REPRESENTED AND WARRANTED OTHERWISE IN

THIS ARTICLE 3, THE ASSIGNMENT AGREEMENT, THE CERTIFICATE OF

SELLER TO BE DELIVERED AT THE CLOSING PURSUANT TO SECTION 7.2(c) OR

ANY ASSIGNMENT SELLER DELIVERS TO NEWCO PURSUANT TO SECTION

5.16(c), AND WITHOUT LIMITATIONS OF THE RIGHTS AND OBLIGATIONS IN

ARTICLE 9, THE ASSETS ARE BEING TRANSFERRED “

AS IS, WHERE IS

,” WITH

ALL FAULTS AND DEFECTS, AND THAT, AS OF CLOSING, BUYER HAS MADE OR

CAUSED TO BE MADE SUCH INSPECTIONS AS BUYER DEEMS APPROPRIATE.

Exhibit 10.1

- 20 -

(b)

EXCEPT AS AND TO THE EXTENT EXPRESSLY SET FORTH IN

THIS AGREEMENT, SELLER SHALL NOT HAVE ANY LIABILITY IN CONNECTION

WITH AND HAS NOT AND WILL NOT MAKE (AND HEREBY DISCLAIMS) ANY

REPRESENTATION OR WARRANTY REGARDING ANY MATTER OR

CIRCUMSTANCE RELATING TO ENVIRONMENTAL LAWS, ENVIRONMENTAL

CONDITIONS, ENVIRONMENTAL LIABILITIES, THE RELEASE OF HAZARDOUS

SUBSTANCES, HYDROCARBONS OR NORM INTO THE ENVIRONMENT OR THE

PROTECTION OF HUMAN HEALTH, SAFETY, NATURAL RESOURCES OR THE

ENVIRONMENT, OR ANY OTHER ENVIRONMENTAL CONDITION OF THE

ASSETS, AND EXCEPT AS AND TO THE EXTENT EXPRESSLY SET FORTH IN THIS

AGREEMENT NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED AS SUCH

A REPRESENTATION OR WARRANTY, AND BUYER SHALL BE DEEMED TO BE

TAKING THE SUBJECT INTERESTS AND ASSETS “

AS IS, WHERE IS

” FOR

PURPOSES OF THEIR ENVIRONMENTAL CONDITION. BUYER SHALL HAVE

INSPECTED, OR WAIVED (AND UPON CLOSING SHALL BE DEEMED TO HAVE

WAIVED) ITS RIGHT TO INSPECT, THE ASSETS FOR ALL PURPOSES, AND

SATISFIED ITSELF AS TO THEIR PHYSICAL AND ENVIRONMENTAL CONDITION,

BOTH SURFACE AND SUBSURFACE, INCLUDING CONDITIONS SPECIFICALLY

RELATING TO THE PRESENCE, RELEASE, OR DISPOSAL OF HAZARDOUS

SUBSTANCES, SOLID WASTES, ASBESTOS, AND NORM. BUYER IS RELYING

SOLELY UPON THE TERMS OF THIS AGREEMENT, EACH TRANSACTION

DOCUMENT, AND ITS OWN INSPECTION OF THE ASSETS. AS OF CLOSING,

BUYER HAS MADE ALL SUCH REVIEWS AND INSPECTIONS OF THE ASSETS AND

THE RECORDS AS BUYER HAS DEEMED NECESSARY OR APPROPRIATE TO

CONSUMMATE THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT.

(c)

WITHOUT LIMITING SELLER’S INDEMNITY AND DEFENSE

OBLIGATIONS SET FORTH IN SECTION 9.1(b), BUYER SHALL ASSUME ALL RISK

OF LOSS WITH RESPECT TO (i) CHANGES IN COMMODITY OR PRODUCT PRICES

AND ANY OTHER MARKET FACTORS OR CONDITIONS FROM AND AFTER

CLOSING; (ii) PRODUCTION DECLINES OR ANY ADVERSE CHANGE IN THE

PRODUCTION CHARACTERISTICS OR DOWNHOLE CONDITION OF ANY WELL,

INCLUDING ANY WELL WATERING OUT, OR EXPERIENCING A COLLAPSE IN

THE CASING OR SAND INFILTRATION, FROM AND AFTER CLOSING, AND (iii)

DEPRECIATION OF ANY ASSETS THAT CONSTITUTE PERSONAL PROPERTY

THROUGH ORDINARY WEAR AND TEAR.

(d)

SELLER AND BUYER AGREE THAT, TO THE EXTENT

REQUIRED BY APPLICABLE LAW TO BE EFFECTIVE OR ENFORCEABLE, THE

DISCLAIMERS OF CERTAIN REPRESENTATIONS AND WARRANTIES

CONTAINED IN THIS ARTICLE 3 AND THE REST OF THIS AGREEMENT ARE

“

CONSPICUOUS

” DISCLAIMERS FOR THE PURPOSE OF ANY APPLICABLE LAW.

(e)

SELLER EXPRESSLY DISCLAIMS, AND BUYER WAIVES ANY

REPRESENTATION , WARRANTY, OR ASSURANCE, EXPRESS, STATUTORY OR

IMPLIED, IN THIS AGREEMENT OR ANY OTHER INSTRUMENT, AGREEMENT OR

CONTRACT DELIVERED HEREUNDER OR IN CONNECTION WITH THE

Exhibit 10.1

- 21 -

TRANSACTIONS CONTEMPLATED HEREUNDER OR THEREUNDER, ORAL OR

WRITTEN, REGARDING THE OPERATORSHIP OF ANY PORTION OF THE

PROPERTIES.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF BUYER

Section 4.1

Generally. 

(a)

Any representation or warranty qualified by the “Knowledge of Buyer” or

“to Buyer’s Knowledge” or with any similar knowledge qualification is limited to matters within

the Knowledge of the individuals listed in Schedule 4.1.

(b)

Buyer represents and warrants to Seller the matters set forth in this Article

4 as of the Execution Date (except for the representations and warranties that refer to a specified

date, which will be deemed made as of such date).

(c)

The disclosure of any matter in any section of a Schedule to a representation

and warranty of Buyer set forth in this Article 4 shall be deemed to be a disclosure for all other

sections in respect of which it is evident such matter relates, but shall expressly not be deemed to

constitute an admission by Buyer to otherwise imply that such matter is material for the purposes

of this Agreement. 

Section 4.2

Existence and Qualification. Buyer is an entity duly organized, validly

existing, and in good standing under the Laws of the jurisdiction of its organization and is duly

qualified to do business in each jurisdiction in which the nature of its business or the ownership,

leasing or operation of its properties makes such qualification or licensing necessary, except where

the failure to be so qualified or licensed or in good standing, individually or in the aggregate, has

not been and would not reasonably be expected to be material to Buyer.

Section 4.3

Organizational Power. Buyer has the requisite corporate power to enter into

and perform this Agreement and each Transaction Document to which it is or will be a party and

to consummate the transactions contemplated by this Agreement and such other Transaction

Documents except, where the failure to have such power, individually or in the aggregate, has not

been and would not reasonably be expected to be material to Buyer.

Section 4.4

Authorization and Enforceability. The execution, delivery, and performance

of this Agreement, all documents required to be executed and delivered by Buyer at Closing and

all other Transaction Documents to which Buyer is or will be a party, and the performance of the

transactions contemplated hereby and thereby, have been duly and validly authorized by all

necessary corporate action on the part of Buyer. This Agreement has been duly executed and

delivered by Buyer (and all documents required hereunder to be executed and delivered by Buyer

at Closing and all other Transaction Documents will be duly executed and delivered by Buyer) and

this Agreement constitutes, and at the Closing such documents will constitute, the valid and

binding obligations of Buyer, enforceable in accordance with their terms except as such

enforceability may be limited by applicable bankruptcy or other similar Laws affecting the rights

and remedies of creditors generally as well as by general principles of equity (regardless of whether

such enforceability is considered in a proceeding in equity or at Law).

Exhibit 10.1

- 22 -

Section 4.5

No Conflicts. Subject to compliance with the HSR Act, the execution,

delivery, and performance of this Agreement and the other Transaction Documents by Buyer, and

the transactions contemplated hereby and thereby, will not (a) violate any provision of the

Organizational Documents of Buyer, (b) result in a material default (with or without due notice or

lapse of time or both) or the creation of any lien or encumbrance or give rise to any right of

termination, cancellation or acceleration under any material note, bond, mortgage, indenture, or

other financing instrument to which Buyer is a party, (c) violate any judgment, order, writ,

injunction, ruling, or decree in any material respect applicable to Buyer, or (d) violate any Laws

in any material respect applicable to Buyer or any of its assets.

Section 4.6

Liability for Brokers’ Fees. None of Seller or its Affiliates (including

SWEPI and Non-Permian Newco) shall directly or indirectly have any responsibility, liability or

expense, as a result of undertakings or agreements of Buyer or its Affiliates, for brokerage fees,

finder’s fees, agent’s commissions or other similar forms of compensation in connection with this

Agreement or any agreement or transaction contemplated hereby.

Section 4.7

Litigation. There are no actions, suits, or proceedings against Buyer pending

with or before any Governmental Authority or arbitrator, or, to Buyer’s Knowledge, threatened 

(a) with respect to or affecting the assets of Buyer or any of its Subsidiaries other than any actions,

suits or proceedings that, individually or in the aggregate, have not had and would not reasonably

be expected to have, a Buyer Material Adverse Effect, or (b) that would materially impair, hinder,

or delay Buyer’s ability to perform its obligations under this Agreement or any Transaction

Document.

Section 4.8

Financing. Buyer will have at Closing sufficient cash, available lines of

credit or other sources of immediately available funds (in Dollars) to enable Buyer to pay the

Purchase Price to Seller at the Closing.

Section 4.9

Investment Intent. Buyer is an “accredited investor,” as such term is defined

in Regulation D of the Securities Act and will acquire the Subject Interests for its own account and

not with a view to a sale or distribution thereof in violation of the Securities Act, and any applicable

state blue sky Laws or any other applicable securities Laws.

Section 4.10

Independent Evaluation.

(a)

Buyer is knowledgeable of the oil and gas business and of the usual and

customary practices of oil and gas producers, has retained and taken advice concerning the Assets

and transactions herein from advisors and consultants which are knowledgeable about the oil and

gas business, and is aware of the risks inherent in the oil and gas business.

(b)

Buyer is a party capable of making such investigation, inspection, review

and evaluation of Newco and the Assets as a prudent purchaser would deem appropriate under the

circumstances including with respect to all matters relating to the Assets, their value, operation

and suitability.

(c)

In making the decision to enter into this Agreement and consummate the

transactions contemplated hereby, Buyer has relied solely on the basis of its own independent due

diligence investigation of Newco and the Assets and the terms and conditions of this Agreement,

Exhibit 10.1

- 23 -

and Buyer has not relied on any representation or warranty, express, statutory or implied, oral or

written, or any other statement, oral or written, other than the representations and warranties

contained in Article 3, the Assignment Agreement or any assignment Seller delivers to Newco

pursuant to Section 5.16(c) or confirmed in the certificate of Seller to be delivered at the Closing

pursuant to Section 7.2(c).

Section 4.11

Consents, Approvals or Waivers. Subject to compliance with the HSR Act

and the matters set forth in Section 5.2, the Buyer’s execution, delivery, and performance of this

Agreement (and the other Transaction Documents to be executed and delivered by Buyer, and the

transactions contemplated hereby and thereby) is not and will not be subject to any consent,

approval, or waiver from any Third Party (other than any Governmental Authority), except for

Customary Post-Closing Consents.

Section 4.12

Bankruptcy. There are no bankruptcy, insolvency, reorganization or

receivership proceedings pending against, being contemplated by, or, to the Knowledge of Buyer,

threatened against Buyer or any of its Affiliates.

Section 4.13

Anti-Corruption; Trade Controls.

(a)

Buyer nor any of its officers and directors nor, to their Knowledge, any

Person acting on behalf of them (i) has violated Anti-Corruption Laws or Trade Control Laws, (ii)

is a Restricted Party, or (iii) whether directly or indirectly, has made, offered, authorized or

accepted any payment, gift, promise, or other advantage, to or for the use or benefit of any

Government Official or any other Person where that payment, gift, promise, or other advantage

would comprise a facilitation payment or otherwise violate the Anti-Corruption Laws or any other

Applicable Law, or that would cause Seller to be in breach of any Anti-Corruption Laws.

(b)

Buyer and its Affiliates maintain (i) adequate written policies and

procedures to comply with Anti-Corruption Laws and Trade Control Laws and (ii) adequate

internal controls, including using reasonable efforts to ensure that all transactions are accurately

recorded and reported in its books and records to reflect truly the activities to which they pertain,

such as the purpose of each transaction, with whom it was entered into, for whom it was

undertaken, or what was exchanged. 

ARTICLE 5

COVENANTS OF THE PARTIES

Section 5.1

Access.

(a)

Between the Execution Date and the Closing Date (or earlier termination of

this Agreement), Seller will, and will cause its Affiliates (including Newco) to, give Buyer and its

Representatives reasonable access to the Assets in Seller’s or its Affiliates’ possession or control,

Seller’s and its Affiliates’ personnel knowledgeable about the Assets, the Subject Interests, and

Newco, and access to and the right to copy (or electronic copies of), at Buyer’s sole cost, risk, and

expense, the books and records of Seller, SWEPI and Newco in Seller’s or its Affiliates’ possession

or control (including any other information in Seller’s or its Affiliates’ possession or control that

is reasonably requested by Buyer), for the purpose of conducting a reasonable due diligence review

of the Assets, the Subject Interests, and Newco, except to the extent that Seller may not do so due

Exhibit 10.1

- 24 -

to any obligations to any Third Party after the use of commercially reasonable efforts to have such

obligations waived. Buyer shall be entitled to conduct a Phase I Environmental Site Assessment

of the Assets in SWEPI’s possession or control and may conduct visual inspections and record

reviews relating to the Assets in SWEPI’s possession or control, including their condition and

compliance with Environmental Laws,

provided

, that Buyer (and its Representatives) shall not

operate any equipment or conduct any invasive testing or sampling of soil, groundwater or other

materials (including any testing or sampling for Hazardous Substances, Hydrocarbons or NORM)

on or with respect to the Assets without the prior written consent of Seller, which consent Seller

may grant or deny in its sole discretion. Further, Buyer shall provide Seller with a copy of Buyer’s

Phase I Environmental Site Assessment. 

(b)

Buyer’s investigation shall be conducted in a manner that minimizes

interference with the operation of the Assets. Buyer shall coordinate its access rights with Seller

to reasonably minimize any inconvenience to or interruption of the conduct of business by Seller,

and Seller shall have the right to accompany Buyer (and any Representative of Buyer) in

connection with any physical inspection of the Assets.

(c)

Buyer acknowledges that, pursuant to its right of access to the Assets, Buyer

will become privy to confidential and other information of Seller and its Affiliates and that such

confidential information (which includes Buyer’s conclusions with respect to its evaluations) shall

be held confidential by Buyer in accordance with the terms of the Confidentiality Agreement and

Section 5.3(b) and any applicable privacy Laws regarding personal information.

(d)

In connection with the rights of physical access, examination and inspection

granted to Buyer under this Section 5.1,

WITHOUT PREJUDICE TO ANY BUYER CLAIMS

FOR INDEMNIFICATION OR DEFENSE PURSUANT TO SECTION 9.1(b)

(INCLUDING SUCH CLAIMS RELATED TO SELLER’S BREACH OF SECTION 3.15)

OR OTHERWISE UNDER THIS AGREEMENT, BUYER HEREBY AGREES TO

INDEMNIFY AND HOLD HARMLESS, AND DEFEND, SELLER, ITS AFFILIATES,

AND EACH OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES,

AGENTS, ADVISORS AND OTHER REPRESENTATIVES FROM AND AGAINST (AND

BUYER AGREES TO WAIVE, AND RELEASE SUCH PERSONS FROM AND AGAINST,

ANY CLAIMS BUYER MAY HAVE AGAINST SUCH PERSONS FOR) ANY AND ALL

DAMAGES OR PROCEEDINGS, AS APPLICABLE, ATTRIBUTABLE TO PERSONAL

INJURY, DEATH OR PHYSICAL PROPERTY DAMAGE, ARISING OUT OF,

RESULTING FROM OR RELATING TO ANY FIELD VISIT OR OTHER DUE

DILIGENCE ACTIVITY CONDUCTED BY BUYER WITH RESPECT TO THE ASSETS

OR TO ANY VIOLATION OF ANY OF THE FOREGOING PERSON’S RULES,

REGULATIONS, OR OPERATING POLICIES (PROVIDED THAT SUCH RULES,

REGULATIONS OR OPERATING POLICIES ARE MADE AVAILABLE TO BUYER IN

ADVANCE OF OR DURING BUYER’S DUE DILIGENCE EVALUATION), EVEN IF

SUCH LIABILITIES ARISE OUT OF OR RESULT FROM, SOLELY OR IN PART, THE

SOLE, ACTIVE, PASSIVE, CONCURRENT, OR COMPARATIVE NEGLIGENCE,

STRICT LIABILITY OR OTHER FAULT OR VIOLATION OF LAW BY SELLER, ITS

AFFILIATES, EACH OF THEIR RESPECTIVE OFFICERS, DIRECTORS,

EMPLOYEES, AGENTS, ADVISORS AND OTHER REPRESENTATIVES, BUT SHALL

EXCLUDE: (i) LIABILITIES CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL

Exhibit 10.1

- 25 -

MISCONDUCT OF THE APPLICABLE INDEMNIFIED PERSON, OR (ii) ANY

ENVIRONMENTAL LIABILITIES DISCOVERED OR UNCOVERED AS A RESULT OF

SUCH EXAMINATION OR INSPECTION TO THE EXTENT THE PHYSICAL

CONDITIONS GIVING RISE TO ANY SUCH ENVIRONMENTAL LIABILITIES WERE

NOT EXACERBATED BY SUCH EXAMINATION OR INSPECTION.

Section 5.2

Government Reviews. In a timely manner, the Parties shall (a) make all

required filings, prepare all required applications and conduct negotiations with each

Governmental Authority as to which such filings, applications or negotiations are necessary or

appropriate in the consummation of the transactions contemplated hereby and (b) provide such

information as each may reasonably request to make such filings, prepare such applications and

conduct such negotiations. Each Party shall reasonably cooperate with and use all reasonable

efforts to assist the other with respect to such filings, applications, and negotiations. Without

limiting the foregoing, in the event the Parties determine that filings by the Parties are required

under the HSR Act, then within ten Business Days following the execution by Buyer and Seller of

this Agreement, Buyer and Seller will each prepare and simultaneously file with the DOJ and the

FTC the notification and report form required by the HSR Act for the transactions contemplated

by this Agreement, and request early termination of the waiting period thereunder. Buyer and

Seller agree to respond promptly to any inquiries from the DOJ or the FTC concerning such filings

and to comply in all material respects with the filing requirements of the HSR Act. Buyer and

Seller shall cooperate with each other and shall promptly furnish all information to the other Party

that is necessary in connection with Buyer’s and Seller’s compliance with the HSR Act;

provided,

however

, that (i) any materials concerning valuation of the transaction may be redacted, and (ii)

each of the Parties, as each deem advisable and necessary, may reasonably designate any

competitively sensitive material provided to the other under this Section 5.2 as “counsel only” and,

in such event, such material and the information contained therein shall be given only to the outside

legal counsel of the recipient and shall not be disclosed by such counsel to non-legal directors,

officers, employees or other advisors or representatives of the recipient unless prior consent is

obtained in advance from the source of the materials or its legal counsel. Buyer and Seller shall

keep each other fully advised with respect to any requests from or communications with the DOJ

or FTC concerning such filings and shall consult with each other with respect to all responses

thereto. Buyer and Seller agree not to participate, or to permit their Affiliates or representatives to

participate, in any substantive meeting or discussion with any Governmental Authority in

connection with the transactions contemplated by this Agreement unless it so consults with the

other Party in advance and, to the extent not prohibited by such Governmental Authority, gives

the other Party the opportunity to attend and participate duly represented by its external counsel.

The Parties shall use their reasonable efforts in connection with any HSR Act filing and to secure

any required approval from the antitrust agencies to consummate the transactions contemplated

hereby;

provided, however,

that nothing in this Agreement shall require Buyer or any of its

Affiliates to take any action to, consent or proffer to divest, hold separate, or enter into any license

or similar agreement with respect to, or agree to restrict the ownership or operation of, any business

or assets of Buyer, Newco, Seller, or any of their respective Affiliates. Notwithstanding anything

to the contrary herein, in no event shall Buyer or any of its Affiliates be obligated to litigate or

participate in the litigation of any action, whether judicial or administrative, brought by any

Governmental Authority or appeal any order challenging or seeking to make illegal, delaying

materially or otherwise directly or indirectly restraining or prohibiting the consummation of the

Exhibit 10.1

- 26 -

transactions contemplated hereby. All filing fees incurred in connection with the HSR Act filings

made pursuant to this Section 5.2 shall be paid by Buyer.

Section 5.3

Public Announcements; Confidentiality.

(a)

From and after the Execution Date and through the Closing Date, no Party

shall make (or cause any Affiliate or Newco to make) any press release or other public

announcement, including any press release or other public announcement through social media,

regarding the existence of this Agreement, the contents hereof or the transactions contemplated

hereby without the prior written consent of the other Party (collectively, the “Public

Announcement Restrictions”), which consent shall be requested no fewer than five Business Days

prior to the date on which the relevant press release or other public announcement is desired to be

made. The Public Announcement Restrictions shall not restrict disclosures to the extent (i)

necessary for a Party to perform this Agreement (including disclosures to Governmental

Authorities or Third Parties holding rights of consent or other rights that may be applicable to the

transaction contemplated by this Agreement, as reasonably necessary to provide notices, seek

waivers, amendments or termination of such rights, or seek such consents), (ii) required (upon

advice of counsel) by applicable securities or other Laws or regulations or the applicable rules of

any stock exchange having jurisdiction over the Parties or their respective Affiliates, or (iii)

consistent with prior press releases or other public announcements agreed in writing by the other

Party or otherwise made in compliance with this Section 5.3(a) or any presentation,

communication plan or strategy previously agreed to in writing by the other Party (for the

avoidance of doubt, the Public Announcement Restrictions shall not (x) restrict disclosures made

in an earnings release, earnings call, or other communication with current or potential investors or

financial analysts that is consistent with any such press release, public announcement, presentation,

communication plan or strategy that is permitted pursuant to subsection (iii) of this Section 5.3(a)

or (y) restrict Buyer from communicating with any counterparty to a Lease, Surface Contract or

Contract about any matter that Buyer is permitted to disclose pursuant to this Section 5.3(a) or that

is not otherwise subject to a Confidentiality Restriction). In the case of the disclosures described

under subsections (i) and (ii) of this Section 5.3(a), each Party shall use its best efforts to consult

with the other Party regarding the contents of any such release or announcement prior to making

such release or announcement.

(b)

The Parties shall keep all information and data relating to (i) this

Agreement, the contents hereof, and the transactions contemplated hereby and (ii) the Assets, in

each case, strictly confidential (and shall cause its Affiliates to keep such information and data

confidential) except for (i) disclosures to Representatives of the Parties (

provided

,

however

, that

such Representatives are first directed by the disclosing Party to treat such information in

accordance with the terms of this Agreement and, in each case, the disclosing Party will be

responsible for making sure that the Representatives keep such information and data confidential)

to the extent required to perform this Agreement, (ii) disclosures by Seller of such information and

data to its Affiliate or to the employees, officers, directors, members, equity owners or counsel of

Seller or any of its Affiliates to the extent necessary for use in internal operations by Seller or its

Affiliates (

provided

,

however

, that Seller will be responsible for making sure that such Persons

keep such information and data confidential), and (iii) information that is or becomes known to

the public other than as a result of a breach of this Agreement (collectively, the “Confidentiality

Restrictions”).

Exhibit 10.1

- 27 -

(c)

The Confidentiality Restrictions shall not restrict disclosures that are (i)

required (upon advice of counsel) by applicable securities or other Laws or regulations or the

applicable rules of any stock exchange having jurisdiction over the Parties or their respective

Affiliates; (ii) necessary for a Party to perform this Agreement (including disclosures to

Governmental Authorities or Third Parties holding rights of consent or other rights that may be

applicable to the transaction contemplated by this Agreement, as reasonably necessary to provide

notices, seek waivers, amendments or termination of such rights, or seek such consents); (iii)

necessary for a Party to enforce its rights under this Agreement or to defend any claim brought or

threatened by any other Party to this Agreement, or such Party’s Affiliates; or (iv) permitted or not

restricted pursuant to Section 5.3(a). In the case of the disclosures described under subsections (i)

and (ii) of this Section 5.3(c), each Party shall use its commercially reasonable efforts to consult

with the other Party regarding the contents of any such disclosure prior to making such disclosure.

(d)

To the extent that the foregoing provisions of this Section 5.3 conflict with

the provisions of the Confidentiality Agreement, the provisions of this Section 5.3 shall prevail

and control to the extent of such conflict. If Closing should occur, the Confidentiality Agreement

shall terminate as of the Closing and the Confidentiality Restrictions set forth in this Section 5.3

shall terminate as to Buyer and its Affiliates (including Newco) at Closing.

Section 5.4

Operation of Business. Except (i) for the operations set forth on

Schedule 3.9 or Schedule 5.4, (ii) as required in the event of an emergency to protect life, property

or the environment, (iii) as may be required by Law, (iv) as permitted or otherwise contemplated

by this Agreement, or (v) as otherwise approved in writing by Buyer, which approval shall not be

unreasonably withheld, conditioned, or delayed and without limiting any disclaimer expressly

made by Seller in this Agreement, from the Execution Date until the Closing Date, Seller shall and

shall cause SWEPI and Newco (following the Merger) to: 

(a)

conduct its business, in accordance with its ordinary course of business,

consistent with past practice, and subject to interruptions resulting from force majeure, mechanical

breakdown or planned maintenance, and conduct its business related to the Assets in compliance

with the Leases, Contracts and all applicable Laws;

(b)

not resign SWEPI’s or Newco’s, as the case may be, position as operator

with respect to any of the Assets, or abandon any of the Assets, other than as required pursuant to

the terms of any agreement or as required by applicable Law;

(c)

except for (i) those capital expenditures by SWEPI provided for in the

capital expenditure budget set forth on Schedule 5.4, and (ii) capital expenditures to repair damage

resulting from insured casualty events or required on an emergency basis for the safety of

individuals, assets or the environment, not authorize, propose, or commit to any operation

reasonably anticipated by Seller to cost the owner of the Assets more than $2,500,000 per activity,

net to SWEPI’s (or, as of the consummation of the Merger, Newco’s) interest;

(d)

(i) not take any affirmative action to terminate, materially amend, execute

or extend any Leases (except as specifically described on Schedule 5.4), (ii) except for those

amendments, waivers, modifications or extensions to Material Contracts resulting from operations

set forth on Schedule 5.4 (to the extent the terms of such amendments, waivers, modifications or

Exhibit 10.1

- 28 -

extensions are expressly set forth on Schedule 5.4), not terminate, materially amend, waive,

modify, or extend any Material Contracts, and (iii) not enter into any new contract which would

constitute a Material Contract if executed prior to the Execution Date or amend a Contract that by

virtue of the amendment makes such Contract a Material Contract; in each case, other than the

execution or extension of a Contract for the sale, exchange, or marketing of oil, gas and/or other

Hydrocarbons in the ordinary course of business and terminable without penalty on 60 days’ or

shorter notice;

(e)

not enter into or extend any Surface Contract other than (i) the extension of

the term of those Surface Contracts described in Schedule 5.4 and (ii) the execution of a Surface

Contract that (x) contains terms typically and customarily included in similar instruments in the

oil and gas industry and (y) would not reasonably be expected to result in aggregate payments by

Newco after Closing of more than $250,000 (net to SWEPI’s (or, as of the consummation of the

Merger, Newco’s) interest) during the current or any subsequent calendar year;

(f)

maintain all material insurance policies in the amounts and of the types

presently in force with respect to the Assets and the operations and activities of SWEPI and, as of

the consummation of the Merger, Newco;

(g)

maintain the books, accounts and records of SWEPI with respect to the

Assets and, upon consummation of the Merger, Newco in the ordinary course of business

consistent with past practice and in compliance with all applicable Laws and contractual

obligations;

(h)

promptly notify Buyer of any material emergency affecting Newco’s

business or the Assets;

(i)

promptly notify Buyer of, and not settle or compromise, any material

actions, suits or proceedings filed with any Governmental Authority, or threatened in writing

against SWEPI or Newco with respect to the Assets, Newco or the transactions contemplated by

this Agreement;

(j)

not amend or otherwise change the Organizational Documents of Newco;

(k)

maintain all Permits, approvals, bonds and guaranties affecting the Assets,

and make all filings that Seller and its Affiliates are required to make under applicable Law with

respect to the Assets;

(l)

not transfer, sell, hypothecate, encumber or otherwise dispose of any Assets

except for (i) sales and dispositions of Hydrocarbons or equipment and materials made in the

ordinary course of business consistent with past practices, which in the case of equipment and

materials, are replaced with equipment and materials of comparable or better value and utility in

connection with the maintenance, repair, and operation of the Assets and (ii) other sales and

dispositions of the Assets (other than Properties and Surface Contracts) not exceeding $1,000,000

in the aggregate;

(m)

promptly notify Buyer of any written notice received by Seller, SWEPI, or

Newco of any material violation of any Environmental Laws relating to Newco or the Assets where

Exhibit 10.1

- 29 -

such violation has not been previously cured or otherwise resolved to the written satisfaction of

the relevant Governmental Authority;

(n)

not issue, sell, pledge, transfer, or dispose of, or otherwise subject to any

Encumbrance, any of the Subject Interests or any other Interest of Newco, or any options, warrants,

convertible securities or other rights of any kind to acquire any such Subject Interests or any other

Interest of Newco;

(o)

not declare, set aside or pay any dividends on, or make any other

distributions (whether in cash, stock or property) in respect of, the Subject Interests;

(p)

not reclassify, combine, split, subdivide or redeem, or purchase or otherwise

acquire, directly or indirectly, the Subject Interests, or make any other change with respect to

Newco’s capital structure;

(q)

not acquire any Interest in any corporation, partnership, limited liability

company, other business organization or division thereof or any material amount of assets, or enter

into any joint venture, strategic alliance, exclusive dealing, noncompetition or similar contract or

arrangement other than acquisitions as to which the aggregate amount of the consideration paid or

transferred by Newco in connection with all such acquisitions would not exceed $2,500,000 or

would be permitted under Section 5.4(d);

(r)

not adopt any plan or agreement of complete or partial liquidation,

dissolution, restructuring, recapitalization, merger, consolidation or other reorganization or

otherwise effect any transaction that would alter Newco’s limited liability company structure;

(s)

not incur any Indebtedness or issue any debt securities or assume, guarantee

or endorse, or otherwise become responsible for, the obligations of any Person, or make any loans

or advances;

(t)

not make, compromise or forgive any loans, advances, or capital

contributions to, or investments in, any other Person;

(u)

not make any change in any method of accounting or accounting practice or

policy, except as required by GAAP;

(v)

except in the ordinary course of business (and, in each case, as would not

materially affect Buyer or any of its Affiliates, Newco or the Assets), not (i) make, change or

revoke any Tax election (including making any election for Newco to be treated as an association

taxable as a corporation for U.S. federal income tax purposes or applicable state or local Tax

purposes), (ii) change any annual Tax accounting period, (iii) change any method of accounting

for Tax purposes, (iv) commence, settle, or compromise any claim or assessment in respect of any

Taxes or any other Tax Proceeding, (v) file any Tax Returns other than in a manner that is

consistent with past practice, except to the extent required by applicable Law, (vi) file any amended

Tax Return, (vii) agree to an extension or waiver of the statute of limitations with respect to the

assessment, collection or determination of any Taxes, (viii) enter into any closing agreement with

respect to any Taxes, (ix) grant any power of attorney with respect to Taxes, (x) surrender any

right to claim a Tax refund, or (xi) enter into any Tax allocation, Tax sharing, Tax receivable, Tax

Exhibit 10.1

- 30 -

indemnity agreement or other similar agreement or arrangement, or any closing or other agreement

relating to Taxes;

(w)

not take any action that would or would reasonably be expected to prevent

or materially delay the Closing and the consummation of the transactions contemplated by this

Agreement; and

(x)

not enter into an agreement or commitment that would cause Newco to

violate any of the foregoing clauses (a) through (w).

Requests for approval of any action restricted by this Section 5.4 shall be delivered to the following

individual, who shall have full authority to grant or deny such requests for approval on behalf of

Buyer;

provided

, that such approval shall not be unreasonably withheld, conditioned or delayed:

Danny Yick

Sr. Director

Acquisitions & Divestitures 

925 N. Eldridge Parkway

Houston, Texas 77079

SP1-21-21-N096

Danny.H.Yick@conocophillips.com

Buyer’s approval of any action restricted by this Section 5.4 shall be considered granted within ten

days after Seller’s notice to Buyer requesting such consent unless Buyer notifies Seller to the

contrary during that period. In the event of an emergency, Seller (or SWEPI or Newco) may take

such action as a reasonably prudent owner or operator would take and shall notify Buyer of such

action promptly thereafter. In cases in which neither Seller nor any of its Affiliates (including

SWEPI and Newco) is the operator of any portion of the Assets, to the extent that the actions

described in this Section 5.4 may only be taken by (or are the primary responsibility of) the

operator of such Assets, the provisions of this Section 5.4 shall be construed to require only that

Seller use, or cause Newco to use, commercially reasonable efforts to cause the operator(s) of such

Assets to take such actions within the constraints of the applicable operating agreements and other

applicable agreements.

Section 5.5

Amendment to Schedules. At any point prior to the date that is five Business

Days prior to Closing, Seller shall have the right to supplement its Schedules relating to the

representations and warranties set forth in Article 3 with respect to any matters first occurring

subsequent to the Execution Date (including with respect to any matters taken by Seller in

accordance with, but not in violation of, Section 5.4). However, all such supplements (except with

respect to matters taken by Seller in accordance with Section 5.4) shall be disregarded for all

purposes, including determining whether the conditions to Buyer’s obligation to close the

transaction pursuant to Section 6.2(a) and Section 6.2(b) have been satisfied;

provided

,

however

,

if Seller has supplemented its Schedules pursuant to this Section 5.5, and based upon the matters

relating to such supplements (other than matters taken by Seller in accordance with Section 5.4),

Buyer’s obligation to close the transactions pursuant to Section 6.2(a) and Section 6.2(b) have not

been satisfied but Buyer nevertheless elects to close the transactions contemplated hereunder,

Buyer will be deemed to have waived only the matters disclosed pursuant to any such supplement

Exhibit 10.1

- 31 -

which gave rise to Buyer’s right to not close the transactions contemplated by this Agreement (for

the avoidance of doubt, no matter set forth in any such supplement will be taken into account for

purposes of, and will not affect Buyer’s remedies under, Section 9.1(b)(ii) with respect to any

breaches of Seller’s representations and warranties related to the Assets that do not individually or

in the aggregate give rise to a failure of a condition precedent to Buyer’s obligation to close the

transaction contemplated by this Agreement contained in Section 6.2(a)).

Section 5.6

Further Assurances. After Closing, the Parties agree to take such further

actions and to execute, acknowledge and deliver all such further documents as are reasonably

requested by the other Party for carrying out the purposes of this Agreement or any other

Transaction Document.

Section 5.7

Related Party Contracts. Except as set forth on Schedule 5.7, no Related

Party Contracts shall be allocated to Newco or included in the Assets.

Section 5.8

Conduct of Buyer. Except with the prior written consent of Seller, from the

Execution Date until the Closing, Buyer shall not take any action that would or would reasonably

be expected to prevent or materially delay the Closing and the consummation of the transactions

contemplated by this Agreement.

Section 5.9

Employee Matters. Seller and Buyer shall comply with the terms and

conditions with respect to employee matters and personal data protection set forth in Schedule

5.9(a) and Schedule 5.9(b), respectively.

Section 5.10

Bonds, Letters of Credit and Guarantees. The Parties acknowledge and

agree that none of the bonds, letters of credit and guarantees listed on Schedule 3.23, which have

been posted by Seller or its Affiliates (other than Newco) with Governmental Authorities and relate

to the Assets for the benefit of Newco, may be transferable to Buyer. Promptly following Closing,

Buyer shall obtain, or cause to be obtained in the name of Buyer or its Affiliate (including Newco),

as applicable, replacements for such bonds, letters of credit and guarantees, to the extent such

replacements are necessary to permit cancellations of such bonds, letters of credit and guarantees

posted by Seller or its Affiliates (other than Newco) with respect to the Assets or to consummate

the transactions contemplated by this Agreement.

Section 5.11

Transition Services Agreement. From the Execution Date until the Closing

Buyer and Seller shall take commercially reasonable efforts to negotiate a transition services

agreement that contains terms substantially similar to those set forth on Exhibit C and such other

terms that are mutually acceptable to the Parties (the “Transition Services Agreement”). For the

avoidance of doubt, the Parties’ covenants and obligations pursuant to this Section 5.11 shall not

be conditions precedent to Closing pursuant to Section 6.1 and Section 6.2 or be the basis upon

which either Party may terminate this Agreement pursuant to Section 8.1.

Section 5.12

Use of Name. On or before 90 days after Closing (or earlier to the extent

required by Laws), at Buyer’s cost, Buyer will remove, or cause to be removed, from the Assets,

the name, logo and service mark of Seller and its Affiliates, and all variations and derivations

thereof (including any reference to “Shell”) and will not thereafter make use thereof. 

Exhibit 10.1

- 32 -

Section 5.13

Records. Subject to the limitations contained in this Agreement, Seller shall

deliver to Buyer copies of the Records, in the current written or electronic format of such Records,

to the extent possible at Closing, but in any event, within 90 days after Closing, to the extent not

already delivered by Seller. Any electronic information or data provided shall be in the same

format as that then currently used by Seller, and Seller shall not be required to perform or create

additional programming or system support in connection therewith. Seller may exercise or redact

Records to remove information that does not constitute a Record. Seller may retain photocopies or

electronic images of the Records;

provided

, that Seller shall keep confidential and not disclose any

such Records that are not public information pursuant to the terms of Section 5.3. Seller and Buyer

shall each appoint one focal point for coordination of the transfer of the Records.

Section 5.14

Insurance.

(a)

Buyer acknowledges and agrees that (i) no insurance policies arranged for

the benefit of, or provided to, Seller or any member of the Seller Group, including any current

insurance policies relating to the business or assets of the Seller shall continue after Closing, (ii)

Buyer shall not, and shall procure that no member of the Buyer Group shall, make any claims

under any such insurance policies or insurance coverage in respect of facts, events or

circumstances arising prior to the Closing and (iii) from the Execution Date and until Closing,

Seller shall ensure that all policies of insurance relating to the business or Assets in force as of the

Execution Date are kept in force in accordance with past practices (the “Current Insurance

Policies”). In the event Seller becomes aware of any fact, event or circumstance arising after the

Execution Date and prior to Closing in respect of which a claim may be made under the Current

Insurance Policies, Seller shall (i) file a claim in respect of such event or circumstance and (ii) use

reasonable endeavours to have such claim paid at or prior to Closing, in each case in accordance

with its customary past practices. In the event that such a claim is not paid prior to Closing,

notwithstanding anything else in this Section 5.14, Seller shall use reasonable endeavours to pursue

payment in respect of such a claim on behalf of Buyer and Buyer shall have the right to receive

any payment made in respect of any such claim made prior to the Closing as, when and to the

extent such claim shall be paid. 

(b)

In the event any tangible assets of Newco are destroyed or damaged, in

whole or in part, by fire or other casualty prior to the Closing Date, then, in lieu of making a claim

in accordance with this Section 5.14, Seller shall have the option to repair or replace (with similar

grade and quality) such damaged assets on or before the Closing Date, in which case, neither

Newco nor Buyer shall have any right, claim or title to any insurance proceeds.

(c)

Buyer further hereby acknowledges and agrees that no historic insurance

coverage provided by or to Seller or Newco, including the Current Insurance Policies, shall be

available to the Buyer or Newco after Closing, with the exception of insurance coverages required

by statute or law and, in such limited instances, only to the extent that the policies provide such

historical coverage. Buyer further acknowledges and agrees that it has no right, title or interest in

any unearned premiums on any policies maintained by or for the benefit of Seller or any member

of the Seller Group.

Exhibit 10.1

- 33 -

Section 5.15

Anti-Bribery and Corruption. 

(a)

Without limitation to Section 3.10 or Section 3.27, Seller:

(i)

is aware of, during the period between the Execution Date and the

Closing Date will comply with, and has not violated, Anti-Corruption Laws or

Trade Control Laws and is not a Restricted Party;

(ii)

whether directly or indirectly, has not made, offered, authorized or

accepted and will not make, offer, authorize, or accept any payment, gift, promise,

or other advantage, to or for the use or benefit of any Government Official or any

other Person where that payment, gift, promise, or other advantage would comprise

a facilitation payment or otherwise violate the Anti-Corruption Laws or any other

applicable Law, or that would cause Buyer to be in breach of any Anti-Corruption

Laws;

(iii)

has maintained and will maintain adequate written policies and

procedures to comply with Anti-Corruption Laws;

(iv)

has maintained and will maintain adequate internal controls,

including using reasonable efforts to ensure that all transactions are accurately

recorded and reported in its books and records to reflect truly the activities to which

they pertain, such as the purpose of each transaction, with whom it was entered

into, for whom it was undertaken, or what was exchanged;

(v)

will, to its Knowledge, retain such books and records for the period

required by applicable Law or Seller’s own retention policies, whichever is longer; 

(vi)

is not a Government Official, and to the best of its Knowledge

exercising reasonable diligence, no officer, agent or employee engaged by Seller or

acting on Seller’s behalf is a Government Official; 

(vii)

will, in the event Seller becomes aware it has breached an obligation

in this paragraph, promptly notify Buyer, subject to the preservation of legal

privilege; and

(viii)

shall make payments to Buyer, except with Buyer’s prior written

consent. 

(b)

Without limitation to Section 4.13, Buyer:

(i)

is aware of, during the period between the Execution Date and the

Closing Date will comply with, and has not violated, Anti-Corruption Laws or Trade

Control Laws and is not a Restricted Party;

(ii)

whether directly or indirectly, has not made, offered, authorized, or

accepted and will not make, offer, authorize, or accept any payment, gift, promise, or other

advantage, to or for the use or benefit of any Government Official or any other Person

Exhibit 10.1

- 34 -

where that payment, gift, promise, or other advantage would comprise a facilitation

payment or otherwise violate the Anti-Corruption Laws or any other applicable Law, or

which would cause Seller to be in breach of any Anti-Corruption Laws;

(iii)

has maintained and will maintain adequate written policies and

procedures to comply with Anti-Corruption Laws; 

(iv)

has maintained and will maintain adequate internal controls,

including using reasonable efforts to ensure that all transactions are accurately recorded

and reported in its books and records to reflect truly the activities to which they pertain,

such as the purpose of each transaction, with whom it was entered into, for whom it was

undertaken, or what was exchanged; 

(v)

will, to its Knowledge, retain such books and records for the period

required by applicable Law or Buyer’s own retention policies, whichever is longer; 

(vi)

is not a Government Official, and to the best of its Knowledge

exercising reasonable diligence, no officer, agent or employee engaged by Buyer or acting

on Buyer’s behalf is a Government Official; 

(vii)

will, in the event it becomes aware it has breached an obligation in

this paragraph, promptly notify Seller, subject to the preservation of legal privilege; 

(viii)

and any Person who has acted on its behalf in connection with this

Agreement has not been and is not now involved in internal or external investigations or

discussions with any Governmental Authority related to potential or actual breaches of

Trade Control Laws or Anti-Corruption Laws;

(ix)

warrants that all information provided by Buyer to Seller in

connection with Seller’s integrity due diligence is accurate; and

(x)

shall make payments to Seller, except with Seller’s prior written

consent.

(c)

Prior to Closing and notwithstanding any other provision of this Agreement,

if a Party becomes a Restricted Party, is listed on the Restricted Party list, or is held liable for

violation of Anti-Corruption Laws or Trade Control Laws, in each case, in connection with the

transaction contemplated by this Agreement, then this Agreement shall terminate upon a notice of

termination being provided by the other Party to such Party. For the avoidance of doubt, a Party

becoming a Restricted Party, being listed on the Restricted Party list, or being held liable for

violation of Anti-Corruption Laws or Trade Control Laws, in each case, in connection with the

transaction contemplated by this Agreement, shall constitute a material breach or failure of the

relevant Party’s representations, warranties, or covenants hereunder in accordance with Section

8.2(b)(i) or Section 8.2(c)(ii), as applicable.

Exhibit 10.1

- 35 -

Section 5.16

Required Consents.

(a)

Promptly after the Execution Date, Seller shall prepare and send notices (i)

to the holders of any Required Consents, in compliance with the terms of such Required Consents,

requesting consents to the transactions contemplated hereby or waivers of the applicable rights

related to such Consents. Seller shall use commercially reasonable efforts (at no material cost to

Seller) to cause such Required Consents to be waived or obtained, as applicable, and delivered

prior to the Closing. As applicable, Buyer shall reasonably cooperate with, or (after Closing, if

applicable) cause Newco to reasonably cooperate with, Seller in seeking to obtain consents to, or

to comply with, such Required Consents and will provide any additional collateral or security to

meet reasonable financial requirements requested by counterparties in order to satisfy the

applicable Required Consent. 

(b)

In the event a Soft Required Consent that is triggered by the Merger or the

Closing is not satisfied prior to the Merger, then the applicable Required Consent Asset shall not

be excluded from the Assets to be allocated to Newco pursuant to the Merger on the basis of this

Section 5.16, and Seller shall continue to use commercially reasonable efforts (at no material cost

to Seller) for a period of one year after Closing to obtain the Consent for such Soft Required

Consent. Seller shall not otherwise be liable to Buyer or Newco after Closing for the inability to

obtain the Consent for such Soft Required Consent and BUYER SHALL INDEMNIFY, DEFEND,

AND HOLD EACH MEMBER OF SELLER GROUP HARMLESS FROM ANY CLAIM MADE

AGAINST SUCH MEMBER BY THE HOLDER OF SUCH SOFT REQUIRED CONSENT

WITH RESPECT TO THE FAILURE TO OBTAIN THE CONSENT FOR SUCH SOFT

REQUIRED CONSENT.

(c)

In the event a Hard Required Consent that is triggered by the Merger or the

Closing is not satisfied prior to the consummation of the Merger, then (i) the Required Consent

Asset subject to such Hard Required Consent shall not be allocated to Newco pursuant to the

Merger and, to the extent such Required Consent Asset is a Property, SWEPI shall retain such

Required Consent Asset as a “Retained Asset” for all purposes hereunder, (ii) to the extent such

Required Consent Asset is a Property, the Base Purchase Price will be adjusted downward by the

Allocated Value of such Property, (iii) to the extent such Required Consent Asset is not a Property,

until the Consent for such Hard Required Consent is obtained for any combination of the Merger

and the Closing that triggered such Hard Required Consent (A) such Required Consent Asset shall

be held by SWEPI for the benefit of Newco (which benefit shall include the right for Newco to

receive any and all proceeds related to such Required Consent Asset during the period after Closing

that are attributable to the period from and after the Effective Time), (B) SWEPI shall not amend

or take any action under or with respect to such Required Consent Asset without Buyer’s written

consent (which may be withheld in Buyer’s sole discretion), and (C) Newco shall (1) pay all

amounts related to SWEPI’s interest in such Required Consent Asset under any agreement to the

extent such amounts are attributable to the period from and after the Effective Time, and (2) be

responsible for the performance of SWEPI’s obligations under any agreement related to such

Required Consent Asset, and (iv) SWEPI shall continue for a period of one year after Closing to

use commercially reasonable efforts (at no material cost to Seller or SWEPI) to obtain the Consent

for such Hard Required Consent, and upon receiving the Consent for such Hard Required Consent

applicable to each of the Merger and the Closing, (A) SWEPI shall promptly convey to Newco

such Required Consent Asset subject to the warranty of title set forth in Section 3.20, (B) if the

Exhibit 10.1

- 36 -

Required Consent Asset is a Property, then at the time of such assignment, Buyer will pay Seller

an amount equal to the amount by which the Base Purchase Price was adjusted downward, if any,

for such Required Consent Asset and (C) upon the execution and delivery of such assignment of

such Required Consent Asset by SWEPI to Newco, such Required Consent Asset shall be deemed

to be an “Asset” for all purposes hereunder. If, following such one-year period, the consent for

such Hard Required Consent is not obtained, then such Required Consent Asset shall continue as

a Retained Asset, and Seller’s and SWEPI’s obligations pursuant to this Section 5.16 shall no

longer apply.

Section 5.17

Defense of Retained Litigation. For the avoidance of doubt, Seller or its

relevant Affiliate (but not Newco) will (at its sole cost and expense) continue to defend and shall

continue to manage in accordance with Section 9.2(d) any actions, suits or proceedings (including

any compromise or settlement thereof) set forth on Schedule 5.17 (such actions, suits or

proceedings, the “Retained Litigation”). Buyer will cooperate with Seller’s reasonable written

requests to facilitate such defense and management but, except as otherwise provided in Section

9.2(e), shall have no right to defend or otherwise control the defense with respect to such Retained

Litigation.

Section 5.18

Seller Parent Guaranty. At Closing, Seller shall deliver to Buyer a guaranty

in the form attached as Exhibit D (the “Seller Parent Guaranty”) executed by Shell Oil Company.

Section 5.19

Reorganization. Prior to the Closing Date, Seller shall cause each of the

following to occur (collectively, the “Reorganization ”):

(a)

SWEPI shall file a certificate of conversion with each of the Secretary of

State of Delaware and the Secretary of State of Texas and shall file a certificate of formation with

the Secretary of State of Texas, in each case, in such form as is required by the Texas Business

Organizations Code (the “TBOC”) and the Delaware Revised Uniform Limited Partnership Act,

as applicable, for the purpose of domesticating SWEPI in Texas as a Texas limited liability

company (the “Conversion”).

(b)

Following the Conversion, SWEPI shall merge, pursuant to Section 10.003

et. seq. of the TBOC, resulting in two entities (the “Merger”): (i) Shell Legacy Holdings LLC

(“Non-Permian Newco”), a newly formed single-member limited liability company and wholly-

owned subsidiary of Seller, which will have as its assets and properties the Subject Interests and,

subject to Section 5.16(c), the Retained Assets and which will have as its liabilities and obligations

the Retained Liabilities and Seller Taxes, and (ii) Permian Holdings LLC (“Newco”), a newly

formed single-member limited liability company and wholly-owned subsidiary of Non-Permian

Newco, which will have as its assets and properties the Assets and which will have as its liabilities

and obligations the Assumed Liabilities;

provided, however

, that if all Hard Required Consents

have not been obtained by the Merger, then SWEPI shall merge, pursuant to Section 10.003 et.

seq. of the TBOC, resulting into three entities: (i) Non-Permian Newco, a newly formed single-

member limited liability company and wholly-owned subsidiary of Seller, which will have as its

assets and properties the Subject Interests and the Retained Assets (other than the Required

Consent Assets retained by SWEPI pursuant to Section 5.16(c)) and which will have as its

liabilities and obligations the Retained Liabilities (other than those Retained Liabilities attributable

to such Required Consent Assets retained by SWEPI) and Seller Taxes, (ii) Newco, a newly

Exhibit 10.1

- 37 -

formed single-member limited liability company and wholly-owned subsidiary of Non-Permian

Newco, which will have as its assets and properties the Assets and which will have as its liabilities

and obligations the Assumed Liabilities, and (iii) SWEPI, as the surviving limited liability

company, which will remain as a wholly-owned subsidiary of Seller and will have as its assets and

properties the Required Consent Assets retained by it pursuant to Section 5.16(c) and which will

have as its liabilities and obligations the Retained Liabilities attributable to such Required Consent

Assets retained by SWEPI.

(c)

Seller shall provide Buyer with copies of all documents and instruments

related to or used to consummate the Reorganization, which shall be in forms reasonably

acceptable to Buyer prior to filing.

(d)

Notwithstanding anything to the contrary in this Agreement, Seller will not

be in breach of any provision of this Agreement, nor will any representation or warranty of Seller

be inaccurate in any respect solely by virtue of any secondary liability imposed on Seller under

TBOC Section 10.008;

provided

,

however

, that notwithstanding anything stated herein to contrary,

the Retained Liabilities shall be deemed to include any obligation or liability that is not expressly

included as part of the Assumed Liabilities, including any such successor or secondary liability or

liabilities and obligations relating to assets, properties and businesses not included as part of the

Assets.

Section 5.20

Name Change and Reorganization. Buyer shall promptly after Closing (and

in any event, no later than thirty (30) days after the Closing Date) execute, acknowledge, deliver

and file with the appropriate Governmental Authority all documents as are reasonably requested

by Seller to evidence of record Newco’s ownership and operation of the Assets, or as are required

by any Governmental Authority, as a result of the Reorganization and the transaction contemplated

by this Agreement (each such document, a “Governmental Transition Filing”) that were not

otherwise executed and delivered by the Parties pursuant to Sections 7.2(j) and 7.3(f).

Section 5.21

Notice to Third Persons. Promptly after Closing but in no event later than

thirty (30) days after the Closing Date, Newco shall notify all lessors, royalty owners, operators,

non-operators, purchasers of production, other contract parties and Governmental Authorities that

Newco has succeeded to the interests of Seller by virtue of the Reorganization, in each case to the

extent Newco is required by any applicable Contracts or Laws to notify such Persons of the

Reorganization.

Section 5.22

Seismic Data. Prior to Closing, Seller shall provide Buyer a list of all third-

party Seismic Data. For any such third-party Seismic Data for which Buyer wishes to obtain a

sublicense after Closing, promptly after receiving written notice thereof from Buyer, Seller shall

sublicense to Buyer such third-party Seismic Data to the extent permitted under the agreement by

which such Seismic Data is licensed to Seller or its relevant Affiliate or, to the extent not so

permitted, take commercially reasonable efforts to obtain the necessary consents and approvals to

sublicense to Buyer such third-party Seismic Data. All out-of-pocket costs and expenses associated

with such sublicense which are approved in writing by Buyer shall be for the account of Buyer,

and Seller shall have no further obligations pursuant to this Section 5.22 to the extent Buyer fails

to pay any such costs and expenses.

Exhibit 10.1

- 38 -

Section 5.23

Supplemental Information. Promptly following the Execution Date, Seller

shall provide to Buyer supplemental information as described on Schedule 5.23.

Section 5.24

Operational Technology. If, prior to Closing, it is determined that any

operational technology systems other than the SCADA Systems are held for use exclusively for

the use or operation of the Assets, and such operational technology systems are not used in

connection with Seller or its Affiliates’ business generally, then Seller shall reasonably cooperate

with Buyer to transfer such operational technology systems to Newco at Closing. Upon any such

transfer, such operational technology systems shall be deemed to be “Assets” for all purposes

hereunder. 

ARTICLE 6

CONDITIONS TO CLOSING

Section 6.1

Seller’s Conditions to Closing. The obligations of Seller to consummate the

transactions contemplated by this Agreement are subject to the satisfaction (or written waiver by

Seller) on or prior to Closing of each of the following conditions precedent:

(a)

Representations. The (i) Buyer Fundamental Representations shall be true

and correct in all material respects (and in all respects, in case of Buyer Fundamental

Representations which are qualified by the requirement of a materiality qualifier), as of the

Execution Date and as of the Closing Date, in each case as though made on and as of such date

(except for representations and warranties that expressly refer to a specified date which need only

be true and correct on and as of such specified date), and (ii) the other representations and

warranties of Buyer set forth in Article 4 shall be true and correct as of the Execution Date and as

of the Closing Date, in each case as though made on and as of such date (except for representations

and warranties that expressly refer to a specified date which need only be true and correct on and

as of such specified date), except for breaches, if any, of such representations and warranties

referenced in this clause (ii) as would not, individually or in the aggregate, reasonably be expected

to have a Buyer Material Adverse Effect (without regard to whether such representation or

warranty is qualified in terms of materiality);

(b)

Performance. Buyer shall have performed and observed, in all material

respects, all covenants and agreements to be performed or observed by it under this Agreement

prior to or on the Closing Date;

(c)

No Action. No injunction, order or award restraining, enjoining, or

otherwise prohibiting the consummation of the transactions contemplated by this Agreement shall

have been issued by any Governmental Authority having jurisdiction over any Party and remain

in force;

(d)

Governmental Consents; HSR Act. (i) All material consents and approvals

of any Governmental Authority (including those required by the HSR Act) required for the

transactions contemplated under this Agreement, except consents and approvals by Governmental

Authorities that are customarily obtained after closing (including Customary Post-Closing

Consents), shall have been granted or received, or the necessary waiting period shall have expired,

or early termination of the waiting period shall have been granted and (ii) the consummation of

Exhibit 10.1

- 39 -

the transactions contemplated under the terms of this Agreement is not prevented from occurring

by (and the required waiting period, including the period under an extension or timing agreement,

if any, has expired under) the HSR Act and the rules and regulations of the FTC and the DOJ

thereunder; and

(e)

Deliveries. Buyer shall have delivered (or be ready, willing, and able to

deliver at Closing) to Seller duly executed counterparts of the documents and certificates to be

delivered by Buyer under Section 7.3.

Section 6.2

Buyer’s Conditions to Closing. The obligations of Buyer to consummate the

transactions contemplated by this Agreement are subject to the satisfaction (or written waiver by

Buyer) on or prior to Closing of each of the following conditions precedent:

(a)

Representations. The (i) Seller Fundamental Representations shall be true

and correct in all material respects (and in all respects, in case of such Seller Fundamental

Representations which are qualified by the requirement of a materiality qualifier), as of the

Execution Date and as of the Closing Date, in each case as though made on and as of such date

(except for representations and warranties that expressly refer to a specified date which need only

be true and correct on and as of such specified date), and (ii) the other representations and

warranties of Seller set forth in Article 3 shall be true and correct as of the Execution Date and as

of the Closing Date, in each case as though made on and as of such date (except for representations

and warranties that refer to a specified date which need only be true and correct on and as of such

specified date), except for breaches, if any, of such representations and warranties as would not,

individually or in the aggregate, reasonably be expected to have a Seller Material Adverse Effect

(without regard to whether such representation or warranty is qualified in terms of materiality);

(b)

Performance. Seller shall have performed and observed, in all material

respects, all covenants and agreements to be performed or observed by it under this Agreement

prior to or on the Closing Date;

(c)

No Action. No injunction, order or award restraining, enjoining, or

otherwise prohibiting the consummation of the transactions contemplated by this Agreement shall

have been issued by any Governmental Authority having jurisdiction over any Party and remain

in force;

(d)

Governmental Consents; HSR Act. (i) All material consents and approvals

of any Governmental Authority (including those required by the HSR Act) required for the

transactions contemplated under this Agreement, except consents and approvals by Governmental

Authorities that are customarily obtained after closing (including Customary Post-Closing

Consents), shall have been granted or received, or the necessary waiting period shall have expired,

or early termination of the waiting period shall have been granted and (ii) the consummation of

the transactions contemplated under the terms of this Agreement is not prevented from occurring

by (and the required waiting period, including the period under an extension or timing agreement,

if any, has expired under) the HSR Act and the rules and regulations of the FTC and the DOJ

thereunder;

Exhibit 10.1

- 40 -

(e)

Deliveries. Seller shall have delivered (or be ready, willing, and able to

deliver at Closing) to Buyer duly executed counterparts of the documents and certificates to be

delivered by Seller and its Affiliates under Section 7.2; and

(f)

Reorganization. The Reorganization shall have been consummated.

ARTICLE 7

CLOSING

Section 7.1

Time and Place of Closing. Consummation of the purchase and sale

contemplated by this Agreement (the “Closing”), shall, unless otherwise agreed to in writing by

Buyer and Seller, take place at the offices of Norton Rose Fulbright US LLP at 1301 McKinney,

Suite 5100, Houston, Texas 77010, at 10:00 a.m., Central Time, on the later of (a) December 1,

2021, and (b) the fifth Business Day following the satisfaction or, to the extent permitted by

applicable Law, waiver (in writing) of all conditions to the obligations of the Parties set forth in

Article 6 (except for any such conditions that by their nature may only be satisfied at or in

connection with the occurrence of Closing, but subject to the satisfaction or waiver of those

conditions), subject to the rights of the Parties under Article 8. The date on which the Closing

occurs is herein referred to as the “Closing Date.”

Section 7.2

Obligations of Seller at Closing. At the Closing, upon the terms and subject

to the conditions of this Agreement, and subject to the simultaneous performance by Buyer of its

obligations pursuant to Section 7.3, Seller shall deliver or cause to be delivered to Buyer, the

following:

(a)

counterparts of the Assignment Agreement transferring the Subject Interests

to Buyer, duly executed by an authorized officer of Seller, acting as the sole member of Non-

Permian Newco;

(b)

a certificate of non-foreign status of Non-Permian Newco (or its regarded

owner for U.S. federal income Tax purposes, if Non-Permian Newco is an entity disregarded from

its owner for U.S. federal income Tax purposes), signed under penalties of perjury and dated no

more than 30 days prior to the Closing Date, meeting the requirements of Treasury Regulation

Section 1.1445-2(b)(2) and certifying that Non-Permian Newco (or its regarded owner for U.S.

federal income Tax purposes, if Non-Permian Newco is an entity disregarded from its owner for

U.S. federal income Tax purposes) is not a “foreign person” as defined in Section 1445 of the

Code;

(c)

a certificate duly executed by an authorized officer of Seller, dated as of

Closing, certifying on behalf of Seller that the conditions set forth in Section 6.2(a), Section 6.2(b)

and Section 6.2(f) have been fulfilled; 

(d)

a certificate duly executed by the secretary or any assistant secretary of

Seller, dated as of the Closing, (i) attaching and certifying on behalf of Seller complete and correct

copies of the resolutions or unanimous consent of the board of directors, managers, members,

partners, or other equivalent governing body of Seller authorizing the execution, delivery, and

performance by Seller of this Agreement and the transactions contemplated hereby, and (ii)

Exhibit 10.1

- 41 -

certifying on behalf of Seller the incumbency of each officer of Seller executing this Agreement

or any document delivered in connection with the Closing;

(e)

where approvals are received by Seller pursuant to a filing or application

under Section 5.2, copies of those approvals; 

(f)

resignations effective as of the Closing Date of each director, officer or

manager of Newco, duly executed by each such director, officer or manager;

(g)

terminations of any powers of attorney granted by Newco to any Person,

duly executed by an authorized officer of Newco;

(h)

original certificates of the applicable Governmental Authorities, dated as of

a date not earlier than five Business Days before the Closing Date, evidencing the existence and

good standing of Newco in the State of its formation and in the State of Texas;

(i)

the Seller Parent Guaranty, duly executed by an authorized officer of Shell

Oil Company; 

(j)

duly executed counterparts of each Governmental Transition Filing; and 

(k)

all other instruments, documents and other items reasonably necessary to

effectuate the terms of this Agreement, as may be reasonably requested by Buyer.

Section 7.3

Obligations of Buyer at Closing. At the Closing, upon the terms and subject

to the conditions of this Agreement, and subject to the simultaneous performance by Seller of its

obligations pursuant to Section 7.2, Buyer shall deliver or cause to be delivered to Seller, the

following:

(a)

a wire transfer of the Closing Payment in same-day funds to the account of

Non-Permian Newco, as designated by Seller prior to Closing;

(b)

a certificate duly executed by an authorized officer of Buyer, dated as of

Closing, certifying on behalf of Buyer that the conditions set forth in Section 6.1(a) and Section

6.1(b) have been fulfilled; 

(c)

a certificate duly executed by the secretary or any assistant secretary of

Buyer, dated as of the Closing, (i) attaching and certifying on behalf of Buyer complete and correct

copies of the resolutions or unanimous consent of the board of directors, managers, members,

partners, or other equivalent governing body of Buyer authorizing the execution, delivery, and

performance by Buyer of this Agreement and the transactions contemplated hereby, and (ii)

certifying on behalf of Buyer the incumbency of each officer of Buyer executing this Agreement

or any document delivered in connection with the Closing;

(d)

duly executed counterparts of the Assignment Agreement;

(e)

where approvals are received by Buyer pursuant to a filing or application

under Section 5.2, copies of those approvals; 

Exhibit 10.1

- 42 -

(f)

duly executed counterparts of each Governmental Transition Filing; and

(g)

all other instruments, documents and other items reasonably necessary to

effectuate the terms of this Agreement, as may be reasonably requested by Seller.

Section 7.4

Closing Payment and Post-Closing Purchase Price Adjustments. 

(a)

Not later than ten days prior to the Closing Date, Seller shall prepare and

deliver to Buyer, (i) using the best information available to Seller, a preliminary settlement

statement estimating the initial Purchase Price after giving effect to all adjustments set forth in

Section 2.5 and (ii) reasonable documentation supporting the calculation of the amounts presented

on such statement. In the event Buyer believes that such statement does not accurately set forth

the initial Purchase Price, Buyer shall communicate to Seller in writing such inaccuracies not later

than three Business Days prior to the Closing Date. The Parties shall cooperate in good faith to

agree on the such inaccuracies as soon as possible after Seller’s receipt of Buyer’s written response. 

The estimate delivered in accordance with this Section 7.4(a) (with such changes thereto as the

Parties may agree in connection with this Section 7.4(a))

less

 the Deposit shall constitute the dollar

amount to be paid by Buyer to Seller at the Closing (the “Closing Payment”). 

(b)

As soon as reasonably practicable after the Closing but not later than the

Cut-off Date, Seller shall prepare and deliver to Buyer a statement setting forth the final calculation

of the Purchase Price and showing the calculation of each adjustment set forth in Section 2.5,

based, to the extent possible, on actual credits, charges, receipts and other items before and after

the Effective Time. Concurrently with the delivery of such statement, Seller shall deliver to Buyer

documentation in reasonable detail reasonably available to support any credit, charge, receipt or

other item. Seller shall also deliver to Buyer such other documentation in Seller’s reasonable

possession or control as Buyer may reasonably request to verify the adjustments set forth in such

statement, which documentation shall be delivered by Seller to Buyer promptly after Seller

receives such request. As soon as reasonably practicable but not later than the 30

th

 day following

receipt of Seller’s statement hereunder, Buyer shall deliver to Seller a written report containing

any changes that Buyer proposes be made to such statement. Seller may deliver a written report

to Buyer during this same period reflecting any changes that Seller proposes to be made to such

statement as a result of additional information received after the statement was prepared. Buyer

and Seller shall undertake to agree on the final statement of the Purchase Price no later than

240 days after the Closing Date. In the event that Buyer and Seller cannot reach agreement within

such period of time, either Buyer or Seller may refer the remaining matters in dispute to the

Houston, Texas office of

Deloitte Touche Tohmatsu Limited

(the “Accounting Firm”) for review

and final determination by arbitration. The Accounting Firm shall conduct the arbitration

proceedings in Houston, Texas, in accordance with the Commercial Arbitration Rules of the

American Arbitration Association, to the extent such rules do not conflict with the terms of this

Section 7.4. Seller and Buyer shall instruct the Accounting Firm to deliver to Buyer and Seller a

written determination within 30 days after submission of the matters in dispute, which shall be

final and binding on all Parties, without right of appeal. In determining the proper amount of any

adjustment to the Base Purchase Price, the Accounting Firm shall not increase the Base Purchase

Price more than the increase proposed by Seller nor decrease the Base Purchase Price more than

the decrease proposed by Buyer, as applicable. The Accounting Firm shall act as an independent

neutral expert for the limited purpose of determining the specific disputed matters submitted by

Exhibit 10.1

- 43 -

Buyer and Seller and may not award Damages, interest or penalties to the Parties with respect to

any matter. Buyer and Seller shall each bear its own legal fees and other costs of presenting its

case. Seller shall bear one-half and Buyer shall bear one-half of the costs and expenses of the

Accounting Firm. Within ten days after the earlier of (i) the expiration of Buyer’s 30-day review

period without delivery of any written report by Buyer and (ii) the date on which Buyer and Seller

finally determine the Purchase Price or the Accounting Firm finally determines the disputed

matters submitted to it, as applicable, (A) Buyer shall pay to Seller the amount by which the final

Purchase Price (

less

 the Deposit amount) exceeds the Closing Payment or (B) Seller shall pay to

Buyer the amount by which the Closing Payment exceeds the final Purchase Price (

less

 the Deposit

amount), as applicable. Any post-closing payment pursuant to this Section 7.4(b) shall bear

interest from the Closing Date to the date of payment at the rate of interest published from time to

time as the “Prime Rate” in the “Money Rates” section of

The Wall Street Journal

.

(c)

Buyer shall, and shall cause Newco to, assist Seller in the preparation of the

final statement of the Purchase Price under Section 7.4(b) by furnishing invoices and receipts

reasonably available to Buyer and Newco, reasonable access to personnel, and such other

assistance as may be reasonably requested by Seller to facilitate such process post-Closing.

(d)

All payments made or to be made under this Agreement to Seller shall be

made by electronic transfer of immediately available funds to the account designated by Seller. 

All payments made or to be made hereunder to Buyer shall be made by electronic transfer of

immediately available funds to the account designated by Buyer.

ARTICLE 8

TERMINATION

Section 8.1

Termination. This Agreement may be terminated at any time prior to

Closing:

(a)

by the mutual prior written consent of the Parties;

(b)

by Seller if Shell US E&P Investments LLC has not received the Deposit

by the date and time provided in Section 2.7;

(c)

by either Party if Closing has not occurred on or before the Outside Date;

or

(d)

in accordance with Section 5.15(c); 

provided, however

, that no Party shall be entitled to terminate this Agreement under Section 8.1(c)

if such Party is then in material breach of any of its representations, warranties or covenants

contained in this Agreement, which breach would, individually or in the aggregate, give rise to the

failure of a condition set forth in Section 6.1 or Section 6.2, as applicable.

Section 8.2

Effect of Termination.

(a)

If this Agreement is terminated pursuant to Section 8.1, this Agreement

shall become void and of no further force or effect (except for the provisions of Section 3.6, Section

Exhibit 10.1

- 44 -

4.6, Section 5.1(d), Section 5.3, Section 5.9, Article 8, Article 11, and Appendix A, which shall

continue in full force and effect).

(b)

In the event that (i) all conditions precedent to the obligations of Seller set

forth in Section 6.1 have been satisfied or waived (in writing) by Seller (or would have been

satisfied except for the breach or failure of any of Seller’s representations, warranties, or covenants

hereunder and except for any such conditions that by their nature may only be satisfied at or in

connection with the occurrence of Closing) and (ii) the Closing has not occurred solely as a result

of the material breach or failure of Seller’s representations, warranties, or covenants hereunder,

including, if and when required, Seller’s obligations to consummate the transactions contemplated

hereunder at Closing (including, for the avoidance of doubt, if Buyer terminates this Agreement

pursuant to Section 8.1(c) and at the time of termination, such a material breach or failure by Seller

has occurred and is continuing), then Buyer shall have the right (in its sole discretion) to promptly

elect in writing, as the sole and exclusive remedy of the Buyer Group against any member of the

Seller Group for the failure to consummate the transactions contemplated hereunder at Closing on

account of such events, to either (A) exercise its right to require Seller’s specific performance of

this Agreement as provided in Section 11.16, or (B) terminate this Agreement, receive from Shell

US E&P Investments LLC a refund of the Deposit without any interest accrued thereon, and seek

any other remedy available to Buyer at law on account of the breach by Seller of this Agreement.

If Buyer elects the remedy of specific performance contemplated by clause (A) but such remedy

is not awarded by courts of competent jurisdiction, the Buyer shall be entitled to the remedy

contemplated by clause (B), in each case, in accordance with the terms and conditions set forth

herein. The Parties agree that specific performance is a remedy expressly negotiated by the Parties

and that Buyer shall not be required to provide any bond or other security in connection with

seeking specific performance as a remedy as described in this Section 8.2(b). The remedy elected

and ultimately awarded under this Section 8.2(b) shall be the sole and exclusive remedy available

to Buyer prior to Closing for Seller’s breach or failure of Seller’s representations, warranties, or

covenants hereunder, including, if and when required, Seller’s obligations to consummate the

transactions contemplated at Closing.

(c)

In the event that (i) all conditions precedent to the obligations of Buyer set

forth in Section 6.2 have been satisfied or waived (in writing) by Buyer (or would have been

satisfied except for the breach or failure of any of Buyer’s representations, warranties, or covenants

hereunder and except for any such conditions that by their nature may only be satisfied at or in

connection with the occurrence of Closing) and (ii) the Closing has not occurred solely as a result

of the material breach or failure of any of Buyer’s representations, warranties, or covenants

hereunder, including, if and when required, Buyer’s obligations to consummate the transactions

contemplated hereunder at Closing (including, for the avoidance of doubt, if Seller terminates this

Agreement pursuant to Section 8.1(c) and at the time of termination, such a material breach or

failure by Buyer has occurred and is continuing), then Seller shall have the right (in its sole

discretion) to promptly elect in writing, as the sole and exclusive remedy of the Seller Group

against any member of the Buyer Group for the failure to consummate the transactions

contemplated hereunder at Closing on account of such events, to either (A) exercise its right to

require Buyer’s specific performance of this Agreement as provided in Section 11.16, or (B)

terminate this Agreement and Shell US E&P Investments LLC shall retain the Deposit, together

with any interest or income thereon, free of any claims by Buyer or any other Person, as liquidated

damages. If Seller elects the remedy of specific performance contemplated by clause (A) but such

Exhibit 10.1

- 45 -

remedy is not awarded by courts of competent jurisdiction, Seller shall be entitled to the remedy

contemplated by clause (B), in each case, in accordance with the terms and conditions set forth

herein. The Parties agree that specific performance is a remedy expressly negotiated by the Parties

and that Seller shall not be required to provide any bond or other security in connection with

seeking specific performance as a remedy as described in this Section 8.2(c). The remedy elected

and ultimately awarded under this Section 8.2(c) shall be the sole and exclusive remedy available

to Seller prior to Closing for Buyer’s breach or failure of Buyer’s representations, warranties, or

covenants hereunder, including, if and when required, Buyer’s obligations to consummate the

transactions contemplated at Closing.

(d)

SELLER AND BUYER ACKNOWLEDGE AND AGREE THAT IF

SELLER RECEIVES LIQUIDATED DAMAGES IN ACCORDANCE WITH SECTION 8.2(C),

THEN (1) ACTUAL DAMAGES UPON THE EVENT OF A TERMINATION ARE DIFFICULT

TO ASCERTAIN WITH ANY CERTAINTY, (2) SUCH LIQUIDATED DAMAGES AMOUNT

IS A FAIR AND REASONABLE ESTIMATE BY THE PARTIES OF SUCH AGGREGATE

ACTUAL DAMAGES, AND (3) SUCH LIQUIDATED DAMAGES DO NOT CONSTITUTE A

PENALTY.

(e)

Subject to Section 8.2(b) and Section 8.2(c), upon the termination of this

Agreement in accordance with the express terms of this Article 8, Seller and Newco shall be free

immediately to enjoy all rights of ownership of Newco and the Assets and to sell, transfer,

encumber or otherwise dispose of the Assets to any Person without any restriction under this

Agreement. Except to the extent Seller terminates this Agreement pursuant to Section 8.2(c), if

either Party terminates this Agreement in accordance with this Article 8, Seller shall promptly (but

in any event no more than ten Business Days after such termination of this Agreement) cause Shell

US E&P Investments LLC to return the Deposit (without any interest accrued thereon) to Buyer.

Following termination of this Agreement in accordance with this Article 8, Buyer shall promptly

(but in any event no more than ten Business Days after the termination of this Agreement) return

or destroy all agreements, Contracts, instruments, books, records, materials and other information

regarding Seller or its Affiliates (including Newco and the Assets) provided to Buyer or any of its

Affiliates or any of their respective Representatives in connection with the transactions

contemplated by this Agreement.

(f)

Notwithstanding anything to the contrary in this Agreement, each Party

acknowledges and agrees that if the Closing fails to occur for any reason, such Party’s sole and

exclusive remedy against the other Party shall be to exercise an applicable remedy set forth in this

Article 8.

ARTICLE 9

INDEMNIFICATION

Section 9.1

Indemnification.

(a)

From and after Closing, Buyer, shall indemnify and hold harmless the Seller

Group from and against all Damages incurred by or suffered by such Persons, and shall defend

such Persons (in accordance with Section 9.2) from and against (and indemnify and hold harmless

Exhibit 10.1

- 46 -

such Persons from and against all Damages incurred or suffered by such Persons with respect to

or related to) all Proceedings asserted against such Persons, that are:

(i)

caused by, related to, arising out of, or resulting from Buyer’s breach

of any of such Buyer’s covenants or agreements contained in this Agreement,

including in respect of Buyer’s obligations in Section 5.20;

(ii)

caused by, related to, arising out of, or resulting from any breach of

any of the representations and warranties of Buyer (including the Buyer

Fundamental Representations) contained in this Agreement, or confirmed in the

certificate delivered by Buyer at Closing pursuant to Section 7.3(b) (without regard

to the Buyer Material Adverse Effect or other materiality qualifiers contained in

such certificate) with respect to such representations and warranties; or

(iii)

subject to Seller’s indemnity and defense obligations in Section

9.1(b), caused by, related to, arising out of, or resulting from the Assumed

Liabilities.

(b)

From and after Closing, subject to the limitations set forth in Section 9.3,

Seller shall indemnify and hold harmless the Buyer Group from and against all Damages incurred

by or suffered by such Persons, and shall defend such Persons (in accordance with Section 9.2)

from and against (and indemnify and hold harmless such Persons from and against all Damages

incurred or suffered by such Persons with respect to or related to) all Proceedings asserted against

such Persons, that are:

(i)

caused by, related to, arising out of, or resulting from Seller’s breach

of Seller’s covenants or agreements contained in this Agreement;

(ii)

caused by, related to, arising out of, or resulting from any breach of

any of the representations and warranties of Seller contained in this Agreement, or

confirmed in the certificate delivered by Seller at Closing pursuant to Section 7.2(c)

(without regard to the Seller Material Adverse Effect or other materiality qualifiers

contained in such certificate) with respect to such representations and warranties; 

(iii)

caused by, related to, arising out of, or resulting from the Retained

Liabilities; 

(iv)

caused by, related to, arising out of, or resulting from any Seller

Taxes; or

(v)

caused by, related to, arising out of, or resulting from any of the

Previously-Divested Properties.

(c)

Notwithstanding anything to the contrary contained in this Agreement,

subject to Section 5.1(d), Section 5.9 (including Schedule 5.9(a) and Schedule 5.9(b)), Section

5.15, Article 8, Article 10, Section 11.16, and, from and after the Closing, absent Fraud, this Article

9 contains the Parties’ exclusive remedies against each other with respect to the transactions

contemplated hereby, including any breaches of the representations, warranties, covenants, and

Exhibit 10.1

- 47 -

agreements of the Parties in this Agreement. Except for the remedies contained in this Article 9,

Section 5.1(d), Section 5.9 (including Schedule 5.9(a) and Schedule 5.9(b)), Article 10, and

Section 11.16, if Closing occurs SELLER (ON BEHALF OF ITSELF AND ON BEHALF OF

THE SELLER GROUP) AND BUYER (ON BEHALF OF ITSELF AND ON BEHALF OF THE

BUYER GROUP) EACH RELEASE, REMISE, AND FOREVER DISCHARGE THE OTHER

AND ITS AFFILIATES AND ALL SUCH PARTIES’ OFFICERS, DIRECTORS, EMPLOYEES,

AGENTS, ADVISORS, AND OTHER REPRESENTATIVES FROM ANY AND ALL SUITS,

LEGAL OR ADMINISTRATIVE PROCEEDINGS, CLAIMS, DEMANDS, DAMAGES,

LOSSES, COSTS, LIABILITIES, INTEREST, OR CAUSES OF ACTION WHATSOEVER, IN

LAW OR IN EQUITY, KNOWN OR UNKNOWN, WHICH SUCH PARTIES MIGHT NOW

OR SUBSEQUENTLY MAY HAVE, BASED ON, RELATING TO, OR ARISING OUT OF (i)

THIS AGREEMENT, (ii) NON-PERMIAN NEWCO’S OWNERSHIP OF THE SUBJECT

INTERESTS OR SELLER’S OWNERSHIP OF NON-PERMIAN NEWCO OR SWEPI, (iii)

SWEPI OR NEWCO’S USE, OWNERSHIP OR OPERATION OF THE ASSETS, OR (iv) THE

CONDITION, QUALITY, STATUS, OR NATURE OF THE ASSETS, INCLUDING, IN EACH

SUCH CASE, RIGHTS TO CONTRIBUTION UNDER CERCLA OR ANY OTHER

ENVIRONMENTAL LAW, BREACHES OF STATUTORY OR IMPLIED WARRANTIES,

NUISANCE OR OTHER TORT ACTIONS, RIGHTS TO PUNITIVE DAMAGES AND

COMMON LAW RIGHTS OF CONTRIBUTION, RIGHTS UNDER AGREEMENTS

BETWEEN SELLER, SWEPI, NEWCO, OR NON-PERMIAN NEWCO AND ANY PERSONS

WHO ARE AFFILIATES OF SUCH PERSONS, AND RIGHTS UNDER INSURANCE

MAINTAINED BY SELLER OR ANY PERSON WHO IS AN AFFILIATE OF SELLER

(INCLUDING SWEPI AND NON-PERMIAN NEWCO), EVEN IF CAUSED IN WHOLE OR

IN PART BY THE NEGLIGENCE (WHETHER SOLE, JOINT, OR CONCURRENT), STRICT

LIABILITY, OR OTHER LEGAL FAULT OF ANY RELEASED PERSON.

(d)

The indemnity and defense of each Party provided in this Section 9.1 shall

be for the benefit of and extend to each Person included in the Seller Group and the Buyer Group,

as applicable. Any claim for indemnity or defense under Section 5.1(d), Schedule 5.9(a) or this

Section 9.1 to which any member of the Seller Group or Buyer Group is entitled must be brought

and administered by a Party to this Agreement. No Indemnified Person (including any Person

within the Seller Group or the Buyer Group) other than the Parties shall have any rights against

Seller or Buyer under the terms of Section 5.1(d), Schedule 5.9(a) or this Section 9.1 except as

may be exercised on its behalf by Buyer or Seller, as applicable, pursuant to this Section 9.1(d). A

Party may elect to exercise or not exercise its indemnification or defense rights under Section

5.1(d), Schedule 5.9(a) or this Section 9.1 on behalf of the other Indemnified Persons affiliated

with it in its sole discretion and shall have no liability to any such other Indemnified Person for

any action or inaction under this Section 9.1(d).

(e)

Notwithstanding anything herein to the contrary, for purposes of Section

9.1(b)(ii), when determining the amount of Damages resulting from a breach of a Seller

representation and warranty or in the certificate delivered by Seller pursuant to Section 7.2(c) (but

not whether a breach has occurred) all materiality qualifications (including Seller Material Adverse

Effect) contained in the representations and warranties of Seller made in this Agreement or such

certificate related thereto shall be disregarded.

For the avoidance of doubt, this Section 9.1(e) shall

not be deemed to disregard any dollar amounts or monetary thresholds set forth in any

Exhibit 10.1

- 48 -

representation or warranty in Article 3 (and, for the avoidance of doubt, in no event shall “Material

Contract” be read to mean “Contract”).

Section 9.2

Indemnity Actions. All claims for indemnification or defense under Section

5.1(d), Schedule 5.9(a) and Section 9.1 shall be asserted and resolved as follows:

(a)

For purposes hereof, (i) the term “Indemnifying Person” when used in

connection with particular Damages or Proceedings, as applicable, shall mean the Party having an

obligation to indemnify or defend another Person or Persons with respect to such Damages or

Proceedings, as applicable, pursuant to Section 5.1(d), Schedule 5.9(a) or this Article 9 and (ii) the

term “Indemnified Person” when used in connection with particular Damages or Proceedings, as

applicable, shall mean the Person or Persons having the right to be indemnified or defended with

respect to such Damages or Proceedings, as applicable, by a Party or Parties pursuant to Section

5.1(d), Schedule 5.9(a) or this Article 9.

(b)

To make a claim for indemnification or defense under Section 5.1(d),

Schedule 5.9(a) or Section 9.1, an Indemnified Person shall notify the Indemnifying Person of its

claim under this Section 9.2 including the specific details of and specific basis under this

Agreement for its claim (the “Claim Notice”). In the event that the claim for indemnification or

defense is based upon a claim by a Third Party against the Indemnified Person (a “Third Person

Claim”), the Indemnified Person shall provide its Claim Notice promptly after the Indemnified

Person has actual knowledge of the Third Person Claim and shall enclose a copy of all papers (if

any) served with respect to the Third Person Claim;

provided

, that the failure of any Indemnified

Person to give notice of a Third Person Claim as provided in this Section 9.2 shall not relieve the

Indemnifying Person of its obligations under Section 5.1(d), Schedule 5.9(a) or Section 9.1 except

(i) to the extent such failure results in insufficient time being available to permit the Indemnifying

Person to effectively defend against the Third Person Claim or otherwise materially prejudices the

Indemnifying Person’s ability to defend against the Third Person Claim, or (ii) if such Third Person

Claim is in respect of a Retained Liability or an Assumed Liability, as the case may be, then to the

extent any legal action taken by the Indemnified Person (prior to the giving of such notice) in

response to such Third Person Claim without the consent of the Indemnifying Person increases the

amount of such Third Person Claim. In the event that the claim for indemnification or defense is

based upon an inaccuracy or breach of a representation, warranty, covenant, or agreement, the

Claim Notice shall specify the representation, warranty, covenant, or agreement that was

inaccurate or breached.

(c)

In the case of a claim for indemnification or defense based upon a Third

Person Claim, the Indemnifying Person shall have 30 days from its receipt of the Claim Notice to

notify the Indemnified Person whether it admits or denies its obligation to defend the Indemnified

Person against such Third Person Claim under Section 5.1(d), Schedule 5.9(a) or this Article 9. If

the Indemnifying Person does not notify the Indemnified Person within such 30-day period

whether the Indemnifying Person admits or denies its obligation to defend the Indemnified Person,

it shall be conclusively deemed to have denied such indemnification or defense obligation

hereunder. The Indemnified Person is authorized, prior to and during such 30-day period, to file

any motion, answer, or other pleading that it shall deem necessary or appropriate to protect its

interests or those of the Indemnifying Person and that is not prejudicial to the Indemnifying Person;

provided

, that if such Third Person Claim is in respect of a Retained Liability or an Assumed

Exhibit 10.1

- 49 -

Liability, as the case may be, then the Indemnified Person shall not take any other legal action in

response to such Third Person Claim without the consent of the Indemnifying Person.

(d)

If the Indemnifying Person admits its obligation, it shall have the right and

obligation to diligently defend, at its sole cost and expense, the Third Person Claim;

provided

, that

Buyer (and not Seller) shall be entitled to defend any Third Person Claim that is a Tax Proceeding

to the extent that such Third Person Claim could reasonably be expected to have an adverse impact

on Buyer or any of its Affiliates or the Assets following the Closing or is not fully indemnified

under this Agreement, but Seller may, at its own expense, reasonably participate in the defense of

such Third Person Claim to the extent the resolution of such Third Person Claim could reasonably

result in liability for Seller under this Agreement and in such case Buyer shall not, without the

written consent of Seller, settle such Third Person Claim (such consent not to be unreasonably

withheld, conditioned or delayed). Except as otherwise provided in this Section 9.2(d) or Section

9.2(e), (i) the Indemnifying Person shall have full control of such defense and proceedings,

including any compromise or settlement thereof, and (ii) if such Third Person Claim is in respect

of a Retained Liability or an Assumed Liability, as the case may be, then the Indemnified Person

shall not take any other legal action in response to such Third Person Claim without the consent

of the Indemnifying Person. If requested by the Indemnifying Person, the Indemnified Person

agrees to cooperate in contesting any Third Person Claim that the Indemnifying Person elects to

contest (

provided

,

however

, that the Indemnified Person shall not be required to bring any

counterclaim or cross-complaint against any Person). The Indemnified Person may at its own

expense participate in, but not control, any defense or settlement of any Third Person Claim to the

extent controlled by the Indemnifying Person pursuant to this Section 9.2(d). An Indemnifying

Person shall not, without the written consent of the Indemnified Person, settle any Third Person

Claim or consent to the entry of any judgment with respect thereto that (i) does not result in a final

resolution of the Indemnified Person’s liability with respect to the Third Person Claim (including,

in the case of a settlement, an unconditional written release of the Indemnified Person), (ii) may

materially and adversely affect the Indemnified Person (other than as a result of money damages

covered by the indemnity), (iii) requires a non-monetary commitment by the Indemnified Person,

including compliance with an injunction or other equitable relief, (iv) includes any admission of

guilt or culpability, or (v) relates to the payment or calculation of Royalties or Taxes.

(e)

If the Indemnifying Person does not admit its obligation or admits its

obligation but fails to diligently defend or settle the Third Person Claim, then the Indemnified

Person shall have the right to defend against the Third Person Claim (at the sole cost and expense

of the Indemnifying Person, if the Indemnified Person is entitled to defense or indemnification

hereunder) with counsel of the Indemnified Person’s choosing, subject to the right of the

Indemnifying Person to admit its obligation and assume the defense of the Third Person Claim to

the extent provided in Section 9.2(d) at any time prior to settlement or final determination thereof.

If the Indemnifying Person has not yet admitted its obligation to provide indemnification or

defense with respect to a Third Person Claim, the Indemnified Person shall send written notice to

the Indemnifying Person of any proposed settlement and the Indemnifying Person shall have the

option for ten days following receipt of such notice to (i) admit in writing its obligation to provide

indemnification or defense with respect to the Third Person Claim and (ii) if its obligation is so

admitted, assume the defense of the Third Person Claim, including the power to reject, in its

reasonable judgment, the proposed settlement;

provided

, that the Indemnifying Person shall not,

without the written consent of the Indemnified Person, settle any Third Person Claim or consent

Exhibit 10.1

- 50 -

to the entry of any judgment with respect thereto that relates to the payment or calculation of Taxes.

If the Indemnified Person settles any Third Person Claim over the objection of the Indemnifying

Person after the Indemnifying Person has timely admitted its obligation in writing and assumed

the defense of a Third Person Claim that the Indemnifying Person is entitled to control, the

Indemnified Person shall be deemed to have waived any right to indemnity therefor.

(f)

In the case of a claim for indemnification or defense not based upon a Third

Person Claim, the Indemnifying Person shall have 30 days from its receipt of the Claim Notice to

(i) cure the Damages complained of or Proceedings occurring, as applicable, (ii) admit its

obligation to provide indemnification or defense with respect to such Damages or Proceedings, as

applicable, or (iii) dispute the claim for such indemnification or defense. If the Indemnifying

Person does not notify the Indemnified Person within such 30-day period that it has cured the

Damages or Proceedings, as applicable, or that it disputes the claim for such indemnification or

defense, the Indemnifying Person shall be deemed to have disputed such claim for indemnification

or defense.

Section 9.3

Limitation on Actions.

(a)

The representations and warranties of the Parties in Article 3 and Article 4

and the covenants and agreements of the Parties in Article 5 and Article 10 (other than the proviso

appearing in the last sentence of Section 5.5, Section 5.7, Section 5.16, Section 5.17, Section

5.19(d), Section 5.20, and Section 5.22) and the corresponding representations, warranties,

covenants and agreements confirmed in the certificates delivered at Closing pursuant to Section

7.2(c) and Section 7.3(b), as applicable, shall terminate at Closing, except that (i) the Seller

Fundamental Representations, the Buyer Fundamental Representations and the corresponding

representations and warranties confirmed in the certificates delivered at Closing pursuant to

Section 7.2(c) and Section 7.3(b) shall survive the Closing for seven years following the Closing,

(ii) the representations and warranties of Seller in Section 3.8, the covenants and agreements of

Seller in Article 5 that relate to Taxes, the covenants and agreements of the Parties in Article 10,

and the corresponding representations, warranties, covenants and agreements confirmed in the

certificates delivered at Closing pursuant to Section 7.2(c) and Section 7.3(b) shall survive the

Closing until the earlier of seven years following the Closing or the expiration of the applicable

statute of limitations, (iii) the other representations and warranties of Seller in Article 3 (other than

the Seller Fundamental Representations and the representations and warranties of Seller in Section

3.8, Section 3.15, Section 3.20, Section 3.22, and Section 3.27), the other covenants and

agreements set forth in Section 5.3, Section 5.4, Section 5.9, and Section 5.13 and the

corresponding representations, warranties, covenants and agreements confirmed in the certificate

delivered at Closing pursuant to Section 7.2(c) shall survive the Closing for a period of one year,

(iv) the representations and warranties set forth in Section 3.20 and Section 3.22, the covenants

and agreements set forth in Section 5.6 and the corresponding representations, warranties,

covenants and agreements confirmed in the certificate delivered at Closing pursuant to Section

7.2(c) shall survive the Closing for a period of four years, (v) the representations and warranties

set forth in Section 3.15 and the corresponding representations and warranties confirmed in the

certificate delivered at Closing pursuant to Section 7.2(c) shall survive the Closing for a period of

two years, and (vi) the representations and warranties set forth in Section 3.27 and Section 4.13

and the corresponding representations and warranties confirmed in the certificates delivered at

Closing pursuant to Section 7.2(c) and Section 7.3(b) shall survive the Closing for a period of five

Exhibit 10.1

- 51 -

years. The remainder of this Agreement (including the disclaimers and acknowledgments in

Section 3.32 and Section 4.10) shall survive the Closing without time limit except (A) as may

otherwise be expressly provided herein, (B) for covenants and agreements set forth in this

Agreement that, by their terms, are to be completed prior to Closing, which shall only survive for

one year after the Closing Date, and (C) all other covenants and agreements set forth in this

Agreement, which shall survive until fully satisfied and/or performed in accordance with the terms

hereof (unless otherwise specifically provided in this Agreement). Representations, warranties,

covenants, and agreements shall be of no further force and effect after the date of their expiration;

provided

, that there shall be no termination of any bona fide claim asserted pursuant to this

Agreement with respect to such a representation, warranty, covenant, or agreement prior to its

expiration date.

(b)

The indemnity and defense obligations in Section 9.1(a)(i), Section

9.1(a)(ii), Section 9.1(b)(i), and Section 9.1(b)(ii) shall terminate as of the termination date of each

respective representation, warranty, covenant, or agreement that is subject to indemnification and

defense thereunder, except in each case as to matters for which a specific written claim for

indemnity or defense has been delivered to the Indemnifying Person on or before such termination

date. The indemnity and defense obligation in Section 9.1(a)(iii) shall not terminate. The indemnity

and defense obligation in Section 9.1(b)(iii) shall terminate 10 years after the Closing Date. The

indemnity and defense obligations in Section 9.1(b)(iv) and Section 9.1(b)(v) shall terminate on

the date that is the earlier of 7 years following the Closing or the expiration of the applicable statute

of limitations.

(c)

Seller shall not have any liability for any indemnification or defense under

Section 9.1(b)(ii) (other than with respect to Section 3.8, Section 3.20 and the Seller Fundamental

Representations) or Section 9.1(b)(v) for any individual Damage (whether the subject of a

Proceeding subject to an obligation to defend or otherwise) or Proceeding, unless the amount with

respect to such Damage or the Damages involved in such Proceeding exceeds $400,000 (the

“Individual Indemnity Threshold”);

provided, however

, that, with respect to a breach of Section

3.15, Seller shall not have any liability for any indemnification or defense under Section 9.1(b)(ii)

for any individual Damage (whether the subject of a Proceeding subject to an obligation to defend

or otherwise) or Proceeding unless the amount with respect to such Damage or the Damages

involved in such Proceeding exceeds $250,000 (the “Individual Environmental Indemnity

Threshold”);

provided, further

, that with respect to a breach of Section 3.20, Seller shall not have

any liability for any indemnification or defense under Section 9.1(b)(ii) for (x) any individual

Damage (whether the subject of Proceeding subject to an obligation to defend or otherwise) or

Proceeding in respect of such breach unless the amount with respect to such Damage or the

Damages involved in such Proceeding exceeds $250,000 or (y) Damages (whether the subject of

Proceeding subject to an obligation to defend or otherwise) or Proceedings in respect of such

breach to the extent such Damages or the Damages involved in such Proceeding exceed the

Allocated Value of the affected Asset.

(d)

Seller shall not have any liability for any indemnification or defense under

Section 9.1(b)(ii) (other than with respect to the Seller Fundamental Representations, Section 3.8

and Section 3.20) until and unless the aggregate amount of the liability for all Damages (whether

the subject of a Proceeding subject to an obligation to defend or otherwise) that exceed the

Individual Indemnity Threshold or the Individual Environmental Indemnity Threshold, as

Exhibit 10.1

- 52 -

applicable, and for which Claim Notices are delivered by Buyer exceeds $200,000,000, and then

only to the extent such Damages exceed $200,000,000.

(e)

Notwithstanding anything to the contrary contained elsewhere in this

Agreement, (i) Seller shall not be required to indemnify or defend the Buyer Group under Section

9.1(b)(ii) (other than with respect to the Seller Fundamental Representations, Section 3.8 and

Section 3.20) for aggregate Damages (whether the subject of a Proceeding subject to an obligation

to defend or otherwise) in excess of ten percent (10%) of the Purchase Price, (ii) Seller shall not

be required to indemnify or defend the Buyer Group under Section 9.1(b)(iii) for aggregate

Damages (whether the subject of Proceeding subject to an obligation to defend or otherwise) in

excess of $2,000,000,000, and (iii) Seller shall not be required to indemnify or defend the Buyer

Group under Section 9.1(b) for aggregate Damages (whether the subject of Proceeding subject to

an obligation to defend or otherwise) in excess of the Purchase Price.

(f)

The amount of any Damages (whether the subject of a Proceeding subject

to an obligation to defend or otherwise) for which an Indemnified Person is entitled to indemnity

under this Article 9 shall be reduced by the amount of insurance proceeds actually received by the

Indemnified Person or its Affiliates with respect to such Damages (net of any collection costs, and

excluding the proceeds of any insurance policy issued or underwritten by the Indemnified Person

or its Affiliates).

(g)

In no event shall any Indemnified Person be entitled to duplicate

compensation with respect to the same Damage (whether the subject of a Proceeding subject to an

obligation to defend or otherwise), liability, loss, cost, expense, claim, award, or judgment under

more than one provision of this Agreement and the Transaction Documents.

(h)

Notwithstanding anything to the contrary in this Agreement, (i) in no event

shall Seller’s indemnity or defense obligation under Section 9.1(b)(iii) nullify any prior or existing

indemnity, assumption of liability or right of contribution from Buyer or any of its Affiliates in

favor of Seller or any of its Affiliates, and (ii) Seller shall have no indemnification or defense

obligation pursuant to Section 9.1(b)(iii) to the extent of any such prior or existing indemnity,

assumption of liability or right of contribution from Buyer or any of its Affiliates in favor of Seller

or any of its Affiliates.

ARTICLE 10

TAX MATTERS

Section 10.1

Tax Allocations; Tax Returns.

(a)

Seller shall be allocated, bear and be responsible for all Asset Taxes that are

attributable to (i) any Tax period ending at or prior to the Effective Time and (ii) the portion of

any Straddle Period ending at the Effective Time. Subject to Seller’s indemnity and defense

obligations in Section 9.1(b), Buyer shall be allocated, bear and be responsible for all Asset Taxes

that are attributable to (x) any Tax period beginning after the Effective Time and (y) the portion

of any Straddle Period beginning after the Effective Time. For purposes of allocating Asset Taxes

pursuant to this Section 10.1(a), (A) Asset Taxes that are attributable to the severance or

production of Hydrocarbons (other than such Asset Taxes described in clause (C)) shall be

Exhibit 10.1

- 53 -

allocated to the period in which the severance or production giving rise to such Asset Taxes

occurred, (B) Asset Taxes that are based upon or related to sales or receipts or imposed on a

transactional basis (other than such Asset Taxes described in clause (A) or (C)) shall be allocated

to the period in which the transaction giving rise to such Asset Taxes occurred and (C) Asset Taxes

that are ad valorem, property or other Asset Taxes imposed on a periodic basis pertaining to a

Straddle Period shall be allocated between the portion of such Straddle Period ending immediately

prior to the Effective Time and the portion of such Straddle Period beginning at the Effective Time

by prorating each such Asset Tax based on the number of days in the applicable Straddle Period

that occur on or before the date on which the Effective Time occurs, on the one hand, and the

number of days in such Straddle Period that occur after the date on which the Effective Time

occurs, on the other hand.

(b)

Seller shall be allocated, bear and be responsible for (i) all Taxes (other than

Asset Taxes) of, imposed on or attributable to Newco or SWEPI that are attributable to (A) any

Tax period ending on or before the Closing Date and (B) the portion of any Current Tax Period

ending on and including the Closing Date and (ii) all Taxes imposed with respect to or that are

attributable to any Combined Return. For purposes of allocating Taxes pursuant to Section

10.1(b)(i) for any Current Tax Period, such Taxes shall be allocated based on a deemed closing of

the books of Newco or SWEPI, as applicable, as of the end of the day on the Closing Date.

Notwithstanding anything herein to the contrary, any franchise or similar Tax shall be allocated to

the period during which the income, operations, assets or capital comprising the base of such Tax

is measured, regardless of whether the right to do business for another period is obtained by the

payment of such Tax.

(c)

To the extent the actual amount of an Asset Tax is not known at the time an

adjustment is to be made with respect to such Asset Tax pursuant to Section 2.5 or Section 7.4, as

applicable, the Parties shall utilize the most recent information available in estimating the amount

of such Asset Tax for purposes of such adjustment. To the extent the actual amount of an Asset

Tax (or the amount thereof paid or economically borne by a Party) is ultimately determined to be

different than the amount (if any) that was taken into account in the Purchase Price as finally

determined pursuant to Section 7.4(b), timely payments will be made from one Party to the other

(without duplication of Section 2.2(d)) to the extent necessary to cause each Party to bear the

amount of such Asset Tax that is allocable to such Party under Section 10.1(a).

(d)

With respect to Tax Returns required to be filed by or with respect to Seller

or Newco, Seller shall and shall cause Newco to prepare and timely file all such Tax Returns that

are required to be filed prior to the Closing Date in a manner consistent with past practice and

Seller shall and shall cause Newco to pay to the applicable Governmental Authority all Taxes

shown to be due on such Tax Returns. Seller shall prepare and timely file or cause to be prepared

and timely filed, in a manner consistent with past practice, all Tax Returns that are required to be

filed by or with respect to SWEPI and pay or cause to be paid to the applicable Governmental

Authority all Taxes required to be paid with respect to such Tax Returns. Seller shall also prepare

and timely file or cause to be prepared and timely filed, in a manner consistent with past practice,

all Combined Returns that are required to be filed and pay or cause to be paid to the applicable

Governmental Authority all Taxes required to be paid with respect to such Combined Returns and,

for the avoidance of doubt, neither Buyer nor any of its Affiliates shall have any liability, obligation

or responsibility with respect to any Combined Return or any Taxes imposed with respect to or

Exhibit 10.1

- 54 -

that are attributable to any Combined Return. Newco shall prepare and timely file all Tax Returns

that are required to be filed by or with respect to Newco on or after the Closing Date for any Tax

period that ends before or includes the Closing Date (other than Combined Returns) and Buyer

shall pay or cause Newco to pay to the applicable Governmental Authority all Taxes shown to be

due on such Tax Returns;

provided

,

however

, that to the extent any such Taxes constitute Seller

Taxes, the payment of such Seller Taxes shall be on behalf of Seller and, within five days after

such payment, Seller shall pay to Buyer such Seller Taxes. The Parties agree that (i) this Section

10.1(d) is intended to solely address the timing and manner in which certain Tax Returns are filed

and the Taxes shown thereon are paid to the applicable Governmental Authority, and (ii) nothing

in this Section 10.1(d) shall be interpreted as altering the manner in which Taxes are allocated to

and economically borne by the Parties.

Section 10.2

Tax Refunds. To the extent that Newco actually receives a refund or credit

within two years following the Closing Date with respect to Taxes paid by Seller prior to the

Effective Time (excluding any such refund or credit to the extent it (a) was taken into account in

the Purchase Price as finally determined pursuant to Section 7.4(b) or (b) is attributable to any loss,

credit or other Tax attribute arising in a taxable year (or portion thereof) beginning after the

Effective Time that is carried back to a taxable year (or a portion thereof) ending on or prior to the

Effective Time) (each non-excluded refund, a “Pre-Effective Refund”), such Pre-Effective Refund

shall be for the account of Seller. Buyer shall forward, and shall cause its Affiliates to forward, to

Seller any such Pre-Effective Refund that is for Seller’s account pursuant to this Section 10.2 (net

of (x) any Taxes payable by Buyer or any of its Affiliates (including Newco) attributable to such

Pre-Effective Refund and (y) any expenses incurred by Buyer or any of its Affiliates in obtaining

such amounts) within 30 days after such Pre-Effective Refund is received or realized. To the extent

that Seller or any of its Affiliates receives a refund or credit with respect to Taxes for which Buyer

is responsible pursuant to this Agreement (including Asset Taxes allocable to Buyer pursuant to

Section 10.1(a)), excluding any such refund or credit to the extent it was taken into account in the

Purchase Price as finally determined pursuant to Section 7.4(b), such refund or credit shall be for

the account of Buyer, and Seller shall forward, and shall cause its Affiliates to forward, to Buyer

any such refund or credit (net of (1) any Taxes payable by Seller or any of its Affiliates (excluding

Newco) attributable to such refund or credit and (2) any reasonable out-of-pocket expenses

incurred by Seller or any of its Affiliates in obtaining such amounts) within 30 days after such

refund or credit is received or realized. If any amount actually paid to a Party pursuant to this

Section 10.2 is subsequently challenged successfully by any Governmental Authority, such Party

shall repay to the other Party such amount (together with any interest and penalties assessed by

such Governmental Authority in respect of such amount).

Section 10.3

Tax Cooperation. Buyer and Seller shall reasonably cooperate as and to the

extent reasonably requested by the other Party, in connection with obtaining any Pre-Effective

Refund, the filing of Tax Returns and any audit, litigation or other proceeding with respect to

Taxes (each a “Tax Proceeding”) that is related to Taxes imposed on or with respect to the assets,

operations or activities of SWEPI or Newco.

Section 10.4

Characterization of Certain Payments. The Parties agree that any payments

made pursuant to Section 7.4, Article 9 or this Article 10 shall be treated for all Tax purposes as

an adjustment to the Purchase Price unless otherwise required by Law.

Exhibit 10.1

- 55 -

Section 10.5

Transfer Taxes. Notwithstanding anything to the contrary in this

Agreement, any sales, use, transfer, real property transfer, registration, documentary, stamp, value

added or similar Taxes imposed on or payable in connection with the purchase and sale of the

Subject Interests contemplated by this Agreement (“Transfer Taxes”) shall be borne 50 percent by

Seller and 50 percent by Buyer. The Party responsible under applicable Law for filing the Tax

Returns with respect to any such Transfer Taxes shall prepare and timely file such Tax Returns,

promptly provide a copy of such Tax Return to the other Party, and pay such Transfer Taxes shown

to be due on such Tax Return. Seller and Buyer shall, and shall cause their respective Affiliates to,

cooperate in good faith to minimize, to the extent permissible under applicable Law, the amount

of any such Transfer Taxes and timely prepare and file any Tax Returns or other filings relating to

such Transfer Taxes, including any claim for exemption or exclusion from the application or

imposition of any Transfer Taxes. One half of the amount of any Transfer Taxes due with respect

to any Tax Return to be filed under this Section 10.5 shall be paid by the other Party to the paying

Party at least two Business Days prior to the due date for the filing of such Tax Returns.

Section 10.6

Termination of Tax Agreements. Any Tax sharing, Tax indemnity, Tax

receivable, Tax allocation or similar Contract (other than any Customary Agreement) involving

Newco or pursuant to which Newco could otherwise have any liability shall be terminated prior to

the Closing Date and, after the Closing, none of the Buyer, Newco, or any of their respective

Affiliates shall be bound thereby or have any liability thereunder.

Section 10.7

Purchase Price Allocation. It is the intent of the Parties that the acquisition

by Buyer of the Subject Interests is treated as an acquisition by Buyer of the assets of Newco for

U.S. federal (and applicable state and local) Income Tax purposes and Buyer and Seller shall, and

shall cause their respective Affiliates to, not take any position for Tax purposes (including on any

Tax Return, in any Tax Proceeding or otherwise) that is inconsistent with such intended Tax

treatment unless otherwise required by applicable Law. Buyer and Seller shall use commercially

reasonable efforts to agree, within 60 days after the Closing Date, to an allocation of the Purchase

Price (and any other item included in computing consideration for applicable U.S. federal (and

applicable state and local) income tax purposes to the extent known at such time) among the assets

of Newco in accordance with Section 1060 of the Code, as applicable, and the Treasury

Regulations promulgated thereunder (the “Tax Allocation”). If Seller and Buyer reach an

agreement with respect to the Tax Allocation, (i) Buyer and Seller shall use commercially

reasonable efforts to update the Tax Allocation in accordance with Section 1060 of the Code

following any adjustment to the Purchase Price pursuant to this Agreement, and (ii) Buyer and

Seller shall, and shall cause their Affiliates to, report consistently with the Tax Allocation, as

adjusted, on all Tax Returns, including Internal Revenue Service Form 8594 (Asset Acquisition

Statement under Section 1060), which Buyer and Seller shall timely file with the Internal Revenue

Service, and neither Seller nor Buyer shall take any position on any Tax Return that is inconsistent

with the Tax Allocation, as adjusted, unless otherwise required by applicable Law;

provided,

however

, that neither Party shall be unreasonably impeded in its ability and discretion to negotiate,

compromise and/or settle any Tax Proceeding in connection with such Tax Allocation.

Section 10.8

Amended Returns. Unless required by applicable Law or except as set forth

below, no amended Tax Return with respect to a Tax period (or portion thereof) ending on or prior

to the Effective Time shall be filed by or on behalf of Newco without the prior written consent of

Seller (such consent not to be unreasonably withheld, conditioned, or delayed) if such amended

Exhibit 10.1

- 56 -

Tax Return would increase the Taxes for which Seller is obligated to indemnify or defend Buyer

under Section 9.1(b)(iv).

ARTICLE 11

MISCELLANEOUS

Section 11.1

Counterparts. This Agreement may be executed in counterparts, each of

which shall be deemed an original instrument, but all such counterparts together shall constitute

but one agreement. Either Party’s delivery of an executed counterpart signature page by email is

as effective as executing and delivering this Agreement in the presence of the other Party. No Party

shall be bound until such time as all of the Parties have executed counterparts of this Agreement.

Section 11.2

Notice. All notices and other communications that are required or may be

given pursuant to this Agreement must be given in writing, in English, and shall be deemed to

have been given (a) when delivered personally, by courier, to the addressee, (b) when received by

the addressee if sent by registered or certified mail, postage prepaid, or (c) on the date sent by

email (upon affirmative or automated reply by email by the intended recipient that such email was

received) if sent during normal business hours of the recipient or on the next Business Day if sent

after normal business hours of the recipient. Such notices and other communications must be sent

to the following addresses or email addresses:

If to Buyer:

Danny Yick

Sr. Director, Acquisitions & Divestitures 

925 N. Eldridge Parkway

Houston, Texas 77079

SP1-21-21-N096

Email: Danny.H.Yick@conocophillips.com

With a copy (which shall not constitute notice) to:

Joseph Adams

Lead Counsel, L48 Transactions 

925 N. Eldridge Parkway

Houston, Texas 77079

SP1-16-16-N154

E-mail: joseph.adams@conocophillips.com

If to Seller:

Parag Mathur

Deal Lead, Deepwater and Shales

Shell Enterprises LLC

150 N. Dairy Ashford

Houston, Texas 77079

Exhibit 10.1

- 57 -

E-mail: parag.mathur@shell.com 

Either Party may change its address or email address for notice purposes by written notice

to the other Party in the manner set forth above.

Section 11.3

Newco Transaction Expenses. All Newco Transaction Expenses shall be

borne by Seller (and not Newco), regardless of whether payable prior to or on the Closing Date or

thereafter.

Section 11.4

Governing Law.

(a)

THIS AGREEMENT AND THE LEGAL RELATIONS BETWEEN THE

PARTIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE

LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS

OF LAW THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER

JURISDICTION.

(b)

THE PARTIES HEREBY IRREVOCABLY SUBMIT TO THE

EXCLUSIVE JURISDICTION OF THE FEDERAL COURTS OF THE UNITED STATES OF

AMERICA LOCATED IN HARRIS COUNTY, TEXAS (OR, IF REQUIREMENTS FOR

FEDERAL JURISDICTION ARE NOT MET, STATE COURTS LOCATED IN HARRIS

COUNTY, TEXAS) AND APPROPRIATE APPELLATE COURTS THEREFROM FOR THE

RESOLUTION OF ANY DISPUTE, CONTROVERSY, OR CLAIM ARISING OUT OF OR IN

RELATION TO THIS AGREEMENT, AND EACH PARTY HEREBY IRREVOCABLY

AGREES THAT ALL ACTIONS, SUITS, AND PROCEEDINGS IN RESPECT OF SUCH

DISPUTE, CONTROVERSY, OR CLAIM MAY BE HEARD AND DETERMINED IN SUCH

COURTS. EACH PARTY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT

PERMITTED BY APPLICABLE LAWS, (i) ANY OBJECTION IT MAY NOW OR

HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH ACTION, SUIT, OR

PROCEEDING IN ANY OF THE AFORESAID COURTS, (ii) ANY CLAIM IT MAY NOW OR

HEREAFTER HAVE THAT ANY SUCH ACTION, SUIT, OR PROCEEDING HAS BEEN

BROUGHT IN AN INCONVENIENT FORUM, AND (iii) THE RIGHT TO OBJECT, IN

CONNECTION WITH SUCH ACTION, SUIT, OR PROCEEDING, THAT ANY SUCH

COURT DOES NOT HAVE ANY JURISDICTION OVER SUCH PARTY. EACH PARTY

HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF ANY PAPERS, NOTICES, OR

PROCESS AT THE OFFICE (BUT NOT ELECTRONIC MAIL) ADDRESS SET OUT IN

SECTION 11.2 OF THIS AGREEMENT FOR SUCH PARTY IN CONNECTION WITH ANY

ACTION, SUIT, OR PROCEEDING AND AGREES THAT NOTHING HEREIN WILL

AFFECT THE RIGHT OF THE OTHER PARTY TO SERVE ANY SUCH PAPERS, NOTICES,

OR PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW. EACH

PARTY AGREES THAT A JUDGMENT IN ANY SUCH DISPUTE, CONTROVERSY, OR

CLAIM MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT

OR IN ANY OTHER MANNER PROVIDED BY APPLICABLE LAW.

(c)

EACH PARTY HERETO WAIVES, TO THE FULLEST EXTENT

PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY

Exhibit 10.1

- 58 -

IN RESPECT OF ANY ACTION, SUIT, OR PROCEEDING ARISING OUT OF OR

RELATING TO THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED

HEREBY.

Section 11.5

Waivers. Any failure by either Party to comply with any of its obligations,

agreements or conditions herein contained may be waived by the Party to whom such compliance

is owed by an instrument signed by such Party and expressly identified as a waiver, but not in any

other manner. No waiver of, consent to a change in, or any delay in timely exercising any rights

arising from, any of the provisions of this Agreement shall be deemed or shall constitute a waiver

of, or consent to a change in, other provisions hereof (whether or not similar), nor shall such waiver

constitute a continuing waiver unless otherwise expressly provided.

Section 11.6

Assignment. No Party shall assign or otherwise transfer all or any part of

this Agreement, nor shall any Party assign or delegate any of its rights or duties hereunder, without

the prior written consent of the other Party (which consent may be withheld for any reason);

provided,

that Buyer may assign this Agreement to an Affiliate without the prior written consent

of Seller, but no such assignment shall relieve or discharge Buyer of any liability or obligations

under or in connection with this Agreement. Any assignment, transfer or delegation made not in

accordance with this Section 11.6 shall be void. Subject to the foregoing, this Agreement shall be

binding upon and inure to the benefit of the Parties and their respective successors and permitted

assigns.

Section 11.7

Entire Agreement. This Agreement (including, for purposes of certainty, the

Appendices, Exhibits and Schedules attached hereto), the Transaction Documents, and any other

documents to be executed hereunder, constitute the entire agreement between the Parties pertaining

to the subject matter hereof, and supersede all prior agreements, understandings, negotiations and

discussions, whether oral or written, of the Parties pertaining to the subject matter hereof.

Section 11.8

Amendment. This Agreement may be amended or modified only by an

agreement in writing executed by all Parties and expressly identified as an amendment or

modification.

Section 11.9

No Third Party Beneficiaries. Except (solely with respect to Section 11.13)

the Nonparty Affiliates, nothing in this Agreement shall entitle any Person other than Buyer and

Seller and their respective successors and permitted assigns to any claim, cause of action, remedy,

or right of any kind, except the rights expressly provided in Section 5.1(d) and Section 9.1 to the

Persons described therein, in which case such Persons will be regarded as intended third-party

beneficiaries for the sole purpose of those provisions.

Section 11.10

Construction. The Parties acknowledge that (a) the Parties have had the

opportunity to exercise business discretion in relation to the negotiation of the details of the

transaction contemplated hereby, (b) this Agreement is the result of arms-length negotiations from

equal bargaining positions, and (c) the Parties and their respective counsel participated in the

preparation and negotiation of this Agreement. Any rule of construction that a contract be

construed against the drafter shall not apply to the interpretation or construction of this Agreement.

Exhibit 10.1

- 59 -

Section 11.11

Limitation on Damages.

NOTWITHSTANDING ANYTHING TO THE

CONTRARY, EXCEPT FOR ANY DAMAGES INCURRED BY THIRD PARTIES FOR

WHICH INDEMNIFICATION IS SOUGHT UNDER THE TERMS OF THIS

AGREEMENT, NONE OF BUYER, SELLER, NOR ANY MEMBER OF THE BUYER

GROUP OR SELLER GROUP, RESPECTIVELY, SHALL BE ENTITLED TO

CONSEQUENTIAL, SPECIAL, INDIRECT, PUNITIVE OR EXEMPLARY DAMAGES

IN CONNECTION WITH THIS AGREEMENT AND THE TRANSACTIONS

CONTEMPLATED HEREBY AND, EXCEPT AS OTHERWISE PROVIDED IN THIS

SENTENCE, EACH OF BUYER AND SELLER, FOR ITSELF AND ON BEHALF OF

EACH MEMBER OF THE BUYER GROUP OR SELLER GROUP, AS APPLICABLE,

HEREBY EXPRESSLY WAIVES ANY RIGHT TO CONSEQUENTIAL, SPECIAL,

INDIRECT, PUNITIVE OR EXEMPLARY DAMAGES IN CONNECTION WITH THIS

AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY.

Section 11.12

Conspicuous.

THE PARTIES AGREE THAT, TO THE EXTENT

REQUIRED BY APPLICABLE LAW TO BE EFFECTIVE OR ENFORCEABLE, THE

PROVISIONS IN THIS AGREEMENT IN BOLD-TYPE OR ALL-CAPS FONT ARE

“

CONSPICUOUS

” FOR THE PURPOSE OF ANY APPLICABLE LAW.

Section 11.13

Affiliate Liability. All obligations and/or other liabilities (whether in

contract or in tort, in law or in equity, granted by statute or otherwise) that may be based upon, in

respect of, arise under, out or by reason of, be connected with, or relate in any manner to this

Agreement, the Transaction Documents, or the negotiation, execution, or performance of this

Agreement or the Transaction Documents (including any representation or warranty made in, in

connection with, or as an inducement to, this Agreement or any Transaction Document), may be

made only against (and are expressly limited to) the entities that are expressly identified as Parties

in the preamble to this Agreement (or any successor or permitted assign of any the Parties) or, with

respect to any Transaction Document, the entities and individuals (if applicable) identified as

parties to such Transaction Document (collectively, the “Contracting Parties”). Notwithstanding

anything to the contrary in this Agreement, any Transaction Document or otherwise, no Person

who is not a Contracting Party, including any director, officer, employee, incorporator, member,

partner, manager, direct or indirect equity holder, Affiliate, agent, attorney, or other Representative

of, and any financial advisor or lender to, any Contracting Party, or any director, officer, employee,

incorporator, member, partner, manager, direct or indirect equity holder, Affiliate, agent, attorney,

or other Representative of, and any financial advisor or lender to, any of the foregoing

(collectively, the “Nonparty Affiliates”), shall have any liability (whether in contract or in tort, in

law or in equity, or granted by statute or otherwise) for any obligations or liabilities arising under,

out of, in connection with, or related in any manner to this Agreement or any of the Transaction

Documents or based on, in respect of, or by reason of this Agreement or any of the Transaction

Documents or the negotiation, execution, performance, or breach of this Agreement or any

Transaction Document; and, to the maximum extent permitted by Law, each Contracting Party, on

behalf of itself and all other Persons, hereby waives and releases all such liabilities against any

such Nonparty Affiliates. Without limiting the foregoing, to the maximum extent permitted by

Law, each Contracting Party, on behalf of itself and all other Persons, hereby waives and releases

any and all rights, claims, demands, or causes of action that may otherwise be available (including

at law or in equity, or granted by statute or otherwise) to avoid or disregard the entity form of a

Contracting Party or otherwise impose liability of a Contracting Party on any Nonparty Affiliate,

Exhibit 10.1

- 60 -

whether granted by statute or based on theories of equity, agency, control, instrumentality, alter

ego, domination, sham, single business enterprise, piercing the corporate or other veil,

distributions, unfairness, undercapitalization, or otherwise.

Section 11.14

Time of Essence. This Agreement contains a number of dates and times by

which performance or the exercise of rights is due, and the Parties intend that each and every such

date and time be the firm and final date and time, as agreed. For this reason, each Party hereby

waives and relinquishes any right it might otherwise have to challenge its failure to meet any

performance or rights election date applicable to it on the basis that its late action constitutes

substantial performance, to require the other Party to show prejudice, or on any equitable grounds.

Without limiting the foregoing, time is of the essence in this Agreement. If the date specified in

this Agreement for giving any notice or taking any action is not a Business Day (or if the period

during which any notice is required to be given or any action taken expires on a date which is not

a Business Day), then the date for giving such notice or taking such action (and the expiration date

of such period during which notice is required to be given or action taken) shall be the next day

that is a Business Day.

Section 11.15

Severability. The invalidity or unenforceability of any term or provision of

this Agreement in any situation or jurisdiction shall not affect the validity or enforceability of the

other terms or provisions hereof or the validity or enforceability of the offending term or provision

in any other situation or in any other jurisdiction and the remaining terms and provisions shall

remain in full force and effect, unless doing so would result in an interpretation of this Agreement

that is manifestly unjust.

Section 11.16

Specific Performance. Each Party agrees that if any of the provisions of this

Agreement were not performed by the other Party in accordance with their specific terms,

irreparable damage would occur, no adequate remedy at Law would exist and damages would be

difficult to determine, and the non-breaching Party shall be entitled to specific performance of the

terms hereof and immediate injunctive relief, without the necessity of proving the inadequacy of

money damages as a remedy, in addition to any other remedy available at law or in equity that

such Party is entitled to seek pursuant to the terms of this Agreement. Neither Party shall be

required to provide any bond or other security in connection with seeking any specific performance

or other equitable remedy to enforce specifically the terms and provisions of this Agreement in

accordance with this Section 11.16.

[Signature Pages Follow]

Exhibit 10.1

- 1 -

IN WITNESS WHEREOF

, this Agreement has been signed by each of the Parties on the

Execution Date.

SELLER:

SHELL ENTERPRISES LLC

By: 

Scott S. Porter

Attorney-in-Fact

BUYER:

CONOCOPHILLIPS COMPANY

By: 

Andrew D. Hastings

Attorney-in-Fact

Exhibit 10.1

- 1 -

APPENDIX A

ATTACHED TO AND MADE A PART OF THAT 

CERTAIN PURCHASE AND SALE AGREEMENT

DATED AS OF THE EXECUTION DATE

BY AND BETWEEN SELLER AND BUYER 

DEFINITIONS

 “AAPL” means the American Association of Petroleum Landmen.

“Accounting Firm” has the meaning set forth in Section 7.4(b). 

“AFEs” means authorization for expenditures issued pursuant to a Contract.

“Affiliate” means, with respect to (a) any Person other than Newco, any Person that directly

or indirectly Controls, is Controlled by or is under common Control with such Person and (b)

Seller or Newco, Shell Oil Company, a Delaware corporation, and its direct and indirect

Subsidiaries. Notwithstanding anything to the contrary herein, (a) prior to Closing, Newco shall

be deemed to be an Affiliate of Seller and not Buyer, and (b) from and after Closing, Newco shall

be deemed to be an Affiliate of Buyer.

“Agreement” has the meaning set forth in the Preamble of this Agreement.

“Allocated Value” means, with respect to any Lease or Well, the portion of the Base

Purchase Price that is allocated to such Lease or Well on Exhibit B.

“Anti-Corruption Laws” means (a) the United States Foreign Corrupt Practices Act of

1977; (b) the United Kingdom Bribery Act 2010; and (c) all applicable national, regional,

provincial, state, municipal or local Laws and regulations that prohibit tax evasion, money

laundering or otherwise dealing in the proceeds of crime or the bribery of, or the providing of

unlawful gratuities, facilitation payments, or other benefits to, any Government Official or any

other Person.

“Asset Taxes” means any ad valorem, property, excise, severance, production, sales, use

and other similar Taxes based upon or measured by the operation or ownership of the Assets or

the production of Hydrocarbons therefrom, but excluding, for the avoidance of doubt, Income

Taxes and Transfer Taxes.

“Assets” means all of SWEPI’s right, title and interest in and to the following assets and

properties as of the Effective Time (excluding any Retained Assets):

(a)

the Real Property Interests;

(b)

the Wells;

(c)

the Units;

Exhibit 10.1

- 2 -

(d)

all Surface Contracts;

(e)

all Equipment; 

(f)

all Contracts (including, (x) without limiting any disclaimer by Seller

hereunder, with respect to each joint operating agreement where SWEPI is

named or acting as the operator, all of SWEPI’s rights and obligations

(including operatorship) in and to such joint operating agreement and (y)

the Related Party Contracts set forth on Schedule 5.7) to the extent related

to or used or held for use in connection with (i) the exploration,

development or operation of the Real Property Interests or the

transportation, marketing or disposition of Hydrocarbons, water or other

substances produced therefrom or (ii) the Previously-Divested Properties,

but excluding Contracts to the extent related to the IT Systems;

(g)

all Permits with respect to the exploration, development or operation of the

Properties, the Surface Contracts or the Equipment or the transportation,

marketing or disposition of Hydrocarbons, water or other substances

produced therefrom, to the extent the foregoing Permits are not included in

the Surface Contracts;

(h)

all Records;

(i)

all (i) trade credits, accounts receivable, notes receivable, take-or-pay

amounts receivable, and other receivables and general intangibles,

attributable to the other Assets with respect to periods of times from and

after the Effective Time; and (ii) liens and security interests in favor of

SWEPI or its Affiliates, whether choate or inchoate, under any Law or

Contract to the extent arising from, or relating to, the ownership, operating,

or sale or other disposition on or after the Effective Time of any of the other

Assets or to the extent arising in favor of SWEPI as to the operator or non-

operator of any Property;

(j)

all rights of SWEPI to audit the records of any Person and to receive refunds

or payments of any nature, and all amounts of money relating thereto,

whether before, on, or after the Effective Time;

(k)

all claims for refunds (whether by way of refund, credit, rebate, offset or

otherwise) of, Tax assets or credits attributable to and rights to receive funds

from any Governmental Authority or any loss carryforwards with respect or

related to any Taxes, whether attributable to the period before, at or after

the Effective Time; and

(l)

all (i) Hydrocarbons produced from and to the extent attributable to the

Properties with respect to all periods subsequent to the Effective Time, (ii)

Hydrocarbon inventories from or attributable to the Properties that are in

storage on the Effective Time, (iii) to the extent related or attributable to the

Properties, all production, plant, and transportation imbalances as of the

Exhibit 10.1

- 3 -

Effective Time, and all make-up rights with respect to take-or-pay

payments, (iv) proceeds from or of such Hydrocarbons; and (v) all

proprietary seismic data, geological data, engineering data, and other data

and interpretations, files and records (in whatever form), in each case to the

extent related to the Assets, if any, provided that Buyer obtains any

sublicense or other similar arrangement required to receive such data,

interpretations, files, and records; 

(m)

the SCADA Systems; and

(n)

all claims against Third Parties (including those described on Schedule

3.7(b)) to the extent relating to the ownership, use, construction,

maintenance or operation of the Assets, whether or not previously asserted

by SWEPI, but excluding any such claims to the extent relating to Seller

Taxes.

“Assignment Agreement” means the assignment of membership interest substantially in

the form attached hereto as Exhibit A assigning the Subject Interests to Buyer.

“Assumed Liabilities” means all duties, obligations, claims and liabilities of SWEPI

relating to, arising out of, or resulting from the Assets or SWEPI’s or Newco’s ownership or

operation of the Assets or of any Previously-Divested Properties, prior to, on or after the Effective

Time, but excluding any Seller Taxes.

“Base Purchase Price” has the meaning set forth in Section 2.4.

“Benefit Plan” means any “employee benefit plan,” within the meaning of Section 3(3) of

ERISA, and any bonus, deferred compensation, incentive compensation, employment, consulting

or other compensation agreement, equity, equity purchase or any other equity-based compensation,

change in control, termination or severance, sick leave, pay, salary continuation for disability,

hospitalization, medical insurance, retiree welfare, life insurance, scholarship, cafeteria, employee

assistance, education or tuition assistance, or fringe benefit policy, plan, program or arrangement.

“Business Day” means any day that is not a Saturday, a Sunday or other day on which

banks are required or authorized by Law to be closed in the State of Texas.

“Buyer” has the meaning set forth in the Preamble of this Agreement.

“Buyer Fundamental Representations” means Section 4.2, Section 4.3, Section 4.4, Section

4.5, Section 4.6, Section 4.9, and Section 4.12.

“Buyer Group” means Buyer, its Affiliates, and each of their respective officers, directors,

employees, agents, advisors and other Representatives.

“Buyer Material Adverse Effect” means a Material Adverse Effect with respect to Buyer.

“Central Time” means the central time zone of the United States of America.

Exhibit 10.1

- 4 -

“CERCLA” means the Comprehensive Environmental Response, Compensation and

Liability Act, 42 U.S.C. § 9601 et seq., as amended.

“Claim Notice” has the meaning set forth in Section 9.2(b).

“Closing” has the meaning set forth in Section 7.1.

“Closing Date” has the meaning set forth in Section 7.1.

“Closing Payment” has the meaning set forth in Section 7.4(a). 

“Code” means the United States Internal Revenue Code of 1986, as amended.

“Combined Return” means any affiliated, aggregate, consolidated, combined or unitary

Tax Return with respect to any “affiliated group” as defined in Section 1504(a) of the Code (or

any analogous affiliated, aggregate, combined, consolidated or unitary group under state, local or

foreign Income Tax Law) (a) of which Newco or any predecessor thereof (including SWEPI) is or

has been a member, (b) of which Seller or any of its direct or indirect owners, Affiliates or

Subsidiaries or any predecessor thereof (in each case, other than Newco) is or was the common

parent and (c) which includes Newco (or any predecessor thereof, including SWEPI).

“Confidentiality Agreement” means that certain Confidentiality Agreement dated May 24,

2021 between SWEPI and Buyer.

“Confidentiality Restrictions” has the meaning set forth in Section 5.3(b).

“Consent” means any approval, consent, change of control provision, permission,

ratification, waiver, notification or other authorization that may be applicable to the transactions

contemplated by this Agreement and, for the avoidance of doubt, does not include any change of

control provision if such provision is subject to a carve-out for the sale of all or substantially all of

the assets of a party, which carve-out alone, if satisfied, is sufficient to entirely negate the

application of such change of control provision to any particular transaction.

“Contracting Parties” has the meaning set forth in Section 11.13.

“Contracts” means all contracts, agreements (including any side letter agreements or

purchase orders or other similar agreements entered into under any master agreement (such as

master services agreements or fleet agreements)), or other legally binding arrangements presently

existing to which SWEPI is a party or by which SWEPI is bound or to which any of the Assets or

the Subject Interests is subject, but excluding the Leases, the Surface Contracts, and any other

instrument creating or memorializing the ownership of any Properties or Surface Contracts

included in the Assets.

“Control” means with respect to any Person, the possession, directly or indirectly, of the

power to direct or cause the direction of the management or policies of such Person, whether

through the ownership of voting securities, as trustee or executor, as general partner or managing

member, by contract or otherwise, including the ownership, directly or indirectly, of securities

having the power to elect a majority of the board of directors or similar body governing the affairs

Exhibit 10.1

- 5 -

of such Person. The terms “Controls” and “Controlled by” and other derivatives shall be construed

accordingly.

“Controlled Group Liability” means any and all liabilities (i) under Title IV of ERISA, (ii)

under Sections 206(g), 302 or 303 of ERISA, (iii) under Sections 412, 430, 431, 436 or 4971 of

the Code, and (iv) as a result of the failure to comply with the continuation of coverage

requirements of Section 601 et seq. of ERISA and Section 4980B of the Code.

“Conversion” has the meaning set forth in Section 5.19(a).

“COPAS ” has the meaning set forth in Section 2.3(a). 

“COVID-19” means SARS-CoV-2 or COVID-19, and any evolutions thereof or related or

associated epidemics, pandemic or disease outbreaks.

“Current Insurance Policies” has the meaning set forth in Section 5.14(a).

“Current Tax Period” means any Tax period beginning on or before, and ending after, the

Closing Date.

“Customary Agreement” means an agreement, contract, arrangement or commitment

entered into with customers, vendors, lessors or the like in the ordinary course of business and the

primary purpose of which does not relate to Taxes.

“Customary Post-Closing Consents” means consents and approvals from Governmental

Authorities for the transfer of the Subject Interests to Buyer that are customarily obtained after the

transfer of similar Interests.

“Cut-off Date” has the meaning set forth in Section 2.5.

“Damages” means, subject to Section 11.11, any liability, loss, cost, expense, award,

obligation, assessment, penalty, fine or judgment of any kind or character, whether attributable to

personal injury or death, property damage, contract claims, torts, or otherwise, and including

penalties and interest on any amount payable as a result of any of the foregoing and reasonable

fees and expenses of attorneys, consultants, accountants or other agents and experts (which, in the

case of indemnification, are reasonably incident to matters indemnified against, and the reasonable

costs of enforcement of the indemnity).

“Deposit” has the meaning set forth in Section 2.7.

“DOJ” means the Department of Justice.

“Dollars” means U.S. Dollars.

“Effective Time” has the meaning set forth in Section 2.2(a).

“Encumbrance(s)” means any charge, claim, license, limitation, condition, equitable

interest, mortgage, lien, pledge, option, warrant, security interest, right of first refusal and/or right

Exhibit 10.1

- 6 -

of first offer, pre-emptive right, adverse claim or restriction of any kind, including any restriction

on or transfer or other assignment, as security or otherwise, of or relating to use, quiet enjoyment,

voting, transfer, receipt of income or exercise of any other attribute of ownership.

“Environmental Condition” means (a) a condition with respect to the air, soil, subsurface,

surface waters, ground waters and/or sediments that causes an Asset (or Seller, SWEPI or Newco

with respect to an Asset) not to be in compliance with any Environmental Law, (b) the existence

with respect to the Assets or the operation thereof of any environmental pollution, contamination,

degradation, damage or injury caused by or related to an Asset for which Remediation is presently

required (or if known, would be presently required) under Environmental Laws, or (c) any

condition, act or omission with respect to an Asset or operation thereof that gives rise to liabilities

or obligations under Environmental Laws.

“Environmental Laws” means, as the same have been amended as of the Execution Date,

any Law (including common law) relating to pollution, the protection or restoration of the

environment or, as such relates to Hazardous Substances, Hydrocarbons or NORM, occupational

health and safety, natural resources including flora and fauna, or natural resource damages,

including any such law relating to the generation, manufacture, treatment, storage, disposal, use,

handling, transportation or Release of any Hazardous Substances, Release of Hydrocarbons, or to

exposure to Hazardous Substances, Hydrocarbons or NORM, including CERCLA, the Resource

Conservation and Recovery Act, 42 U.S.C. § 6901 et seq.; the Federal Water Pollution Control

Act, 33 U.S.C. § 1251 et seq.; the Clean Air Act, 42 U.S.C. § 7401 et seq.; the Hazardous Materials

Transportation Act, 49 U.S.C. § 5101 et seq.; the Toxic Substances Control Act, 15 U.S.C. §§

2601 through 2629; the Oil Pollution Act, 33 U.S.C. § 2701 et seq.; the Emergency Planning and

Community Right-to-Know Act, 42 U.S.C. § 11001 et seq.; the Safe Drinking Water Act, 42

U.S.C. §§ 300f through 300j; the Occupational Safety and Health Act, and their implementing

regulations, along with and all similar state or local acts and regulations.

“Equipment” means SWEPI’s right, title and interest in and to all equipment, machinery,

fixtures, and other tangible personal property and improvements used or held for use in connection

with the operation of the Properties or the handling, production, storage, transportation, treatment,

or processing, marketing, or disposition of Hydrocarbons from the Properties (whether located on

or off the Properties), including all rigs, platforms, constructions, extraction plants, facilities, gas

systems (for gathering, treating, injection and compression), water systems (for treating, disposal

and injection), well heads, compressors, casing, tubing, rods, flow lines, transmission lines,

gathering lines, pipelines, derricks, vessels, tanks, boilers, separators, treating equipment, pumps,

motors, gauges, valves, heaters, treaters, machinery, tools, automation systems including meters

and related telemetry on Wells, power lines, telephone and communication lines, and all other

movable property and fixtures located upon or used or held for use in connection with the

Properties, together with all additions, accessories, parts, attachments, special tools and accessions

affixed thereto or used in connection therewith, and including any such equipment, machinery,

fixtures, and other tangible personal property and improvements that is leased pursuant to a master

services agreement or fleet agreement, but excluding the IT Systems.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

Exhibit 10.1

- 7 -

“ERISA Affiliate” means any person or entity under common control with Seller within

the meaning of Section 414(b), (c), (m), or (o) of the Code and the rules and regulations issued

thereunder.

“Execution Date” has the meaning set forth in the Preamble of this Agreement.

“FFCRA” means the Families First Coronavirus Response Act, Pub. L. No. 116-127 (116th

Cong.) (Mar. 18, 2020).

“Fraud” means actual fraud by a Party, which involves a knowing and intentional or willful

misrepresentation or omission of a material fact with respect to the making of (a) any

representation or warranty set forth in Article 3 or confirmed in the certificate delivered by Seller

at Closing pursuant to Section 7.2(c) or (b) Article 4 or confirmed in the certificate delivered by

Buyer at Closing pursuant to Section 7.3(b), as applicable, and in each case, with the intent of

inducing any other Party hereto to enter into this Agreement and upon which such other Party has

relied under applicable tort Laws, and does not include any fraud claim based on negligent

misrepresentation, recklessness or any equitable fraud or promissory fraud.

“FTC” means the Federal Trade Commission.

“GAAP” means United States generally accepted accounting principles as in effect from

time to time.

“Government Official” means an official or employee of any Governmental Authority,

including any person acting in official capacity for a Governmental Authority, regardless of rank

or position; any official or employee of a company wholly or partially controlled by a government

(e.g., a state-owned oil company), but excluding employees seconded to such companies; a

political party or any official of one; any candidate for political office; any officer or employee of

a public international organization, such as the United Nations or World Bank; and immediate

family members (spouse, dependent child, parent or household member) of any of the Persons

listed above.

“Governmental Authority” means any instrumentality, subdivision, court, administrative

agency, commission, official or other authority of the United States or any other country or any

state, province, prefect, municipality, locality or other government or political subdivision thereof,

or any quasi-governmental or private body exercising any administrative, executive, judicial,

legislative, arbitral, police, regulatory, taxing, importing or other governmental or quasi-

governmental authority.

“Governmental Transition Filing” has the meaning set forth in Section 5.20. 

“Hard Required Consent” means a Required Consent that is not a Soft Required Consent.

“Hazardous Substances” means any pollutants, contaminants, toxic or hazardous

substances, materials, wastes, constituents, compounds or chemicals that are regulated by, or may

form the basis of liability under, any Environmental Laws, including asbestos-containing

materials, produced water, poly-chlorinated bi-phenyls, or per- or poly-fluoroalkyl substances.

Exhibit 10.1

- 8 -

“Hedging Transaction” means a transaction that is (a) a swap, basis swap, option, forward

contract, future contract, collar, three-way collar, or similar transaction entered into “over-the-

counter”, (b) involving, or settled by reference to, one or more commodities, and (c) intended to

hedge the risks associated with the production of Hydrocarbons.

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as

amended.

“Hydrocarbons” means oil, gas, condensate and other gaseous and liquid hydrocarbons or

any combination thereof, and all minerals, products and substances extracted, separated, processed

and produced therefrom or therewith.

“Imbalances” means any imbalance at the wellhead between the amount of Hydrocarbons

produced from any of the Wells and allocated to, the interests of SWEPI (as of the Execution Date)

or Newco (as of the consummation of the Merger) therein and the shares of production from the

relevant Well to which such Person was entitled, or at the pipeline flange (or inlet flange at a

processing plant or similar location) between the amount of Hydrocarbons nominated by or

allocated to such Person and the Hydrocarbons actually delivered on behalf of such Person at that

point.

“Income Taxes” means any income, capital gain, gross receipts, franchise or other similar

Taxes.

“Indebtedness” of any Person means, without duplication: (a) indebtedness of such Person

for borrowed money, (b) obligations of such Person to pay the deferred purchase or acquisition

price for any property of such Person, (c) obligations of such Person with respect to unpaid

management fees, (d) all deposits and monies received in advance, (e) indebtedness evidenced by

notes, debentures, bonds, or other similar instruments, (f) obligations of such Person to pay the

deferred purchase price of goods and services, including any earn out liabilities associated with

past acquisitions, (g) reimbursement obligations of such Person in respect of drawn letters of credit

or similar instruments issued or accepted by banks and other financial institutions for the account

of such Person, (h) obligations of such Person under a lease to the extent such obligations are

required to be classified and accounted for as a capital lease on a balance sheet of such Person

under GAAP, and (i) indebtedness of others as described in clauses (a) through (h) above

guaranteed by such Person or for which such Person is liable as obligor, surety, by Contract, or

otherwise; but Indebtedness does not include (x) accounts payable to trade creditors or accrued

expenses, in each case arising in the ordinary course of business consistent with past practice and

that are not yet due and payable, or are being disputed in good faith, and the endorsement of

negotiable instruments for collection in the ordinary course of business, (y) the arrangements set

forth on Schedule 3.24, or (z) the Material Contracts. 

“Indemnified Person” has the meaning set forth in Section 9.2(a).

“Indemnifying Person” has the meaning set forth in Section 9.2(a).

“Individual Environmental Indemnity Threshold” has the meaning set forth in Section

9.3(c).

Exhibit 10.1

- 9 -

“Individual Indemnity Threshold” has the meaning set forth in Section 9.3(c).

“Intellectual Property” means all intellectual property pertaining to the other Assets,

including (a) all registered and unregistered names, trademarks, service names and service marks

(and applications for registration of the same) of SWEPI and (b) all trade secrets, technical

information, know-how and other confidential information which are not disclosed in issued

patents, published patent applications or copyright registrations of SWEPI. 

“Intellectual Property Rights” means rights in any of the following to the extent subject to

protection under applicable Law: (a) trademarks, service marks, logos and trade names; (b) patents;

(c) copyrights; (d) internet domain names; (e) trade secrets and other proprietary and confidential

information; and (f) any registrations or applications for registration for any of the foregoing.

“Interests” means, with respect to any Person, (a) capital stock, membership interests, units,

partnership interests, other equity interests, rights to profits or revenue and any other similar

interest of such Person (including the right to participate in the management and business and

affairs or otherwise Control such Person), (b) any security or other interest convertible into or

exchangeable or exercisable for any of the foregoing, and (c) any right (contingent or otherwise)

to subscribe for, purchase or otherwise acquire any of the foregoing.

“IT Systems” means all information technology equipment and services, networks and

associated information systems, whether owned, used or held for use by Seller or any of its

Affiliates, including SWEPI, including: (i) all computer hardware (including network and

telecommunications devices, laptops, mobile devices, peripherals, printers, scanners, storage,

racks); (ii) all software (including firmware, associated user manuals, object code and source

code); and (iii) all databases, but excluding the SCADA Systems.

“Known/Knowledge” means, whenever a statement regarding the existence (or absence)

of any fact, circumstance or condition in this Agreement is qualified by a phrase such as “to such

Party's Knowledge”, “Known to such Party,” or “had actual Knowledge”, the Parties intend that

the only information to be attributed to such Party with respect to such fact, circumstance or

condition is information actually known to (a) the person in the case of an individual or (b) subject

to Section 3.1(a) and Section 4.1(a), in the case of a corporation (or other business entity), the

current officer and manager who devotes substantial attention to matters of such nature during the

ordinary course of such person’s employment. Unless otherwise specifically provided in this

Agreement, no Party is represented or obligated to have undertaken a separate investigation in

connection with the transaction contemplated in this Agreement to determine the existence (or

absence) of any statement or representation qualified by a phrase such as “to such Party's

Knowledge”, “Known to such Party” or “had actual Knowledge”.

“Laws” means all Permits, statutes, laws, ordinances, regulations, rules, codes, executive

orders, injunctions, judgments, decrees, rulings, or orders of any Governmental Authority.

“Leases” has the meaning set forth in the definition of “Real Property Interests” in this

Appendix A.

“Material Adverse Effect” means, with respect to any Person, any change, circumstance,

development, state of facts, effect, or condition that, individually or in the aggregate, (a) has been,

Exhibit 10.1

- 10 -

or would be reasonably likely to be, materially adverse to the business, liabilities, financial

condition, or results of operations of such Person, or (b) materially and adversely affects the ability

of such Person to consummate the transactions contemplated hereby or would reasonably be

expected to do so;

provided

,

however

, that in the case of subsection (a) above, none of the

following, either alone or in combination, shall be deemed to constitute or contribute to a Material

Adverse Effect, or otherwise be taken into account in determining whether a Material Adverse

Effect has occurred or is existing: (i) any change in applicable Laws or accounting standards or

the interpretation or enforcement thereof after the date of this Agreement; (ii) any change in

general economic or political conditions or business conditions or financial, credit, debt, or

securities market conditions generally, including changes in supply, demand, interest rates,

exchange rates, commodity prices (including Hydrocarbons), electricity prices, or fuel costs, sand

or proppants; (iii) any legal, regulatory, or other change generally affecting the industries, industry

sectors, or geographic sectors of such Person, any increase in operating costs or capital expenses

or any reduction in drilling activity or production or the demand for related gathering, processing,

transportation, and storage services; (iv) any change resulting or arising from the execution or

delivery of this Agreement or the other Transaction Documents, the consummation of the

transactions contemplated hereby, or the announcement or other publicity or pendency with respect

to any of the foregoing (including the impact thereof on relationships, contractual or otherwise,

with customers, suppliers, distributors, partners, employees or labor unions); (v) any change

resulting or arising from hostilities, sabotage, terrorism, or the escalation of any of the foregoing;

(vi) any epidemic, pandemic, disease outbreak (including the COVID-19 virus) or other public

health crisis or public health event, or the worsening of any of the foregoing; (vii) any disruption

in the purchase or transportation of crude oil or natural gas produced or otherwise sold by such

Person or its Subsidiaries as a result of any shutdown, interruption or declaration of force majeure

by any pipeline operator or other purchaser of such products; (viii) natural declines in well

performance or reclassification or recalculation of reserves in the ordinary course of business; (ix)

seasonal reductions in revenues and/or earnings of such Person or any of its Subsidiaries in the

ordinary course of their respective businesses; (x) any actions taken or omitted to be taken by a

Party at the written direction of the other Party (for the avoidance of doubt any action by, or

omission of, a Party for which such Party sought or requested, and the other Party

provided

, that

consent shall not be deemed to be “at the written direction of” such Party); (xi) any change, in and

of itself, in the market price or trading volume of such Person’s securities; (xii) any failure, in and

of itself, by such Person to meet any internal or published projections, forecasts, estimates or

predictions in respect of revenues, earnings, production or other financial or operating metrics for

any period (it being understood that the events, changes, circumstances, occurrences or effects

giving rise to or contributing to such failure may be deemed to constitute or be taken into account

in determining whether there has occurred or would occur a Material Adverse Effect) or (xiii) any

change resulting or arising from compliance with this Agreement, including the taking of any

action required hereby or the failure to take any action that is not permitted hereby;

provided,

that

the exceptions in clauses (ii) and (iii) above shall apply only to the extent that such changes do not

have a disproportionate impact on such Person as compared to other Persons in the oil and gas

industry related to similarly situated operations in the geographic region in which the such Person’s

assets are located.

“Material Contracts” has the meaning set forth in Section 3.11(a).

“Merger” has the meaning set forth in Section 5.19(b).

Exhibit 10.1

- 11 -

“Net Mineral Acres” means, as computed separately with respect to each Lease, (a) the

number of gross acres in the land covered by such Lease, multiplied by (b) the lessor’s or owner’s

undivided mineral interest in the Hydrocarbons covered by such Lease in such lands, multiplied

by (c) SWEPI’s Working Interest in such Lease.

“Net Revenue Interest” means, (a) with respect to any Well, SWEPI’s interest (expressed

as a percentage or a decimal) in and to the Hydrocarbons produced, saved and sold from or

allocated to such Well, (b) with respect to any Lease, SWEPI’s interest (expressed as a percentage

or a decimal on an “8/8ths” basis with respect to SWEPI’s Working Interest in such Lease) in and

to the Hydrocarbons produced, saved and sold from or allocated to such Lease, or (c) with respect

to any Unit, SWEPI’s interest (expressed as a percentage or decimal) in and to the Hydrocarbons

produced, saved and sold from or allocated to such Unit, in the case of each of items (a), (b) and

(c), after giving effect to all Royalties.

“Newco” has the meaning set forth in Section 5.19(b).

“Newco Transaction Expenses” means the aggregate amount of any and all fees and

expenses incurred by or on behalf of, or paid or to be paid directly by, Newco or any Person that

Newco pays or reimburses or is otherwise legally obligated to pay or reimburse (including any

such fees and expenses incurred by or on behalf of Seller or SWEPI) in connection with the process

of selling the Subject Interests or the negotiation, preparation or execution of this Agreement or

the Transaction Documents or the performance or consummation of the transactions contemplated

hereby or thereby, including (a) all fees and expenses of counsel, advisors, consultants, investment

bankers, accountants, auditors and any other experts in connection with the transactions

contemplated hereby (including any process run by or on behalf of Newco in connection with such

transactions); (b) all brokers’, finders’ or similar fees in connection with the transactions

contemplated hereby (including any process run by or on behalf of Newco in connection with such

transactions); (c) subject to Section 5.2, any fees and expenses associated with obtaining necessary

or appropriate waivers, consents, or approvals of any Governmental Authority or Third Parties on

behalf of Newco in connection with the transactions contemplated hereby (including any process

run by or on behalf of Newco in connection with such transactions); (d) any fees or expenses

associated with obtaining the release and termination of any Encumbrances in connection with the

transactions contemplated hereby (including any process run by or on behalf of Newco in

connection with such transactions); and (e) any fees and expenses associated with any of the

matters set forth on Schedule 3.13.

“Non-Permian Newco” has the meaning set forth in Section 5.19(b).

“Nonparty Affiliates” has the meaning set forth in Section 11.13.

“NORM” means naturally occurring radioactive material.

“Organizational Documents” means (a) with respect to a corporation, the charter, articles

or certificate of incorporation, as applicable, and bylaws thereof, (b) with respect to a limited

liability company, the certificate of formation or organization, as applicable, and the operating or

limited liability company agreement thereof, (c) with respect to a partnership, the certificate of

Exhibit 10.1

- 12 -

formation and the partnership agreement thereof, and (d) with respect to any other Person, the

organizational, constituent or governing documents or instruments of such Person.

“Outside Date” means the date that is 120 days after the Execution Date;

provided

,

however

that if the applicable waiting periods (and any extensions thereof) under the HSR Act have not

expired or otherwise been terminated on or prior to such date, but all other conditions precedent to

Closing set forth in Section 6.1 and Section 6.2 have been satisfied or waived (except for any such

conditions that by their nature may only be satisfied at or in connection with the occurrence of

Closing), then the Outside Date will automatically be extended to the date that is 150 days after

the Execution Date.

“Party” and “Parties” have the meanings set forth in the Preamble of this Agreement.

“Permits” means federal, state and local government licenses, permits, registrations,

franchises, orders, consents, approvals, variances, waivers, exemptions and other authorizations

by, or filings with, any Governmental Authority.

“Permitted Encumbrance(s)” means any or all of the following:

(a)

Royalties to the extent that the net cumulative effect of such burdens on a

property does not, individually or in the aggregate, (i) reduce SWEPI’s Net

Revenue Interest in such Property below that shown in Schedule 1.1(a) or

Schedule 1.1(b), as applicable, (ii) increase SWEPI’s Working Interest in

such Property above that shown in Schedule 1.1(a) or Schedule 1.1(b), as

applicable, without a proportionate increase in the Net Revenue Interest of

SWEPI in such Property, or (iii) reduce SWEPI’s Net Mineral Acres in such

Property below that shown in Schedule 1.1(a);

(b)

all unit agreements, pooling agreements, operating agreements, farmout

agreements, Hydrocarbon production sales contracts, division orders and

other contracts, agreements and instruments applicable to the Properties, in

each case to the extent that the net cumulative effect of such instruments

does not, individually or in the aggregate, (i) reduce SWEPI’s Net Revenue

Interest in a Property below that shown therefor in Schedule 1.1(a) or

Schedule 1.1(b), as applicable, (ii) increase SWEPI’s Working Interest in a

Property above that shown in Schedule 1.1(a) or Schedule 1.1(b), as

applicable, without a proportionate increase in the Net Revenue Interest of

SWEPI in such Property, or (iii) reduce SWEPI’s Net Mineral Acres in such

Property below that shown therefor in Schedule 1.1(a);

(c)

the Required Consents, or the failure to obtain the Required Consents, that

are triggered by the consummation of the transactions contemplated by this

Agreement;

(d)

liens for Taxes or assessments not yet due and payable or being contested

in good faith by appropriate proceedings, for which adequate cash reserves

are maintained by SWEPI (as of the Execution Date) and Newco (as of the

Exhibit 10.1

- 13 -

Closing) for the payment thereof in accordance with GAAP and that are set

forth on Schedule 3.8(h);

(e)

materialman’s, mechanic’s, repairman’s, employee’s, contractor’s,

operator’s and other similar liens or charges arising in the ordinary course

of business for amounts not yet delinquent or if delinquent, being contested

reasonably and by appropriate actions, and for which adequate cash reserves

are maintained for the payment thereof in accordance with GAAP

(including any amounts being withheld as provided by Law);

(f)

all rights to consent, by required notices to, filings with, or other actions by

Governmental Authorities that do not apply to the transactions

contemplated by this Agreement or, if they do apply, are customarily

obtained subsequent to the closing of transactions that are similar to the

transactions contemplated by this Agreement if such Governmental

Authority is, pursuant to applicable Law, without discretion to refuse to

grant such consent if specifically enumerated conditions set forth in such

applicable Law are satisfied, including Customary Post-Closing Consents;

(g)

excepting circumstances where such rights have already been triggered,

rights of reassignment arising upon final intention to abandon or release the

Assets, or any of them, and requiring notice to the holders of such rights;

(h)

easements, rights-of-way, covenants, servitudes, Permits, surface leases and

other rights in respect of surface operations that do not, individually or in

the aggregate, materially interfere with the use, development, or ownership

of the Assets subject thereto or affected thereby;

(i)

gas balancing and other production balancing obligations, and obligations

to balance or furnish make-up Hydrocarbons under Hydrocarbon sales,

gathering, processing or transportation contracts;

(j)

all rights reserved to or vested in any Governmental Authorities to control

or regulate any of the Assets in any manner or to assess Tax with respect to

the Assets, the ownership, use or operation thereof, or revenue, income or

capital gains with respect thereto, and all obligations and duties under all

applicable Laws of any such Governmental Authority or under any

franchise, grant, license or Permit issued by any Governmental Authority;

(k)

the terms and conditions of the Leases, to the extent that the net cumulative

effect of such terms and conditions does not, individually or in the

aggregate, (i) reduce SWEPI’s Net Revenue Interest in a Property below

that shown therefor in Schedule 1.1(a) or Schedule 1.1(b), as applicable,

(ii) increase SWEPI’s Working Interest in a Property above that shown

therefor in Schedule 1.1(a) or Schedule 1.1(b), as applicable, without a

proportionate increase in the Net Revenue Interest of SWEPI in such

Exhibit 10.1

- 14 -

Property, or (iii) reduce SWEPI’s Net Mineral Acres in a Property below

that shown therefor in Schedule 1.1(a);

(l)

zoning and planning ordinances and municipal regulations promulgated by

any Governmental Authority;

(m)

any Encumbrance burdening a third party lessor’s or grantor’s interest in

the Assets (including any Encumbrances created under deeds of trust,

mortgages and similar instruments by any such lessor or grantor), which, if

not subordinated to the rights of SWEPI (or Newco after the consummation

of the Merger), is not currently in default or subject to foreclosure or other

enforcement proceedings by the holder;

(n)

depth severances expressly identified on Schedule 1.1(a) or Schedule 1.1(b)

to the extent that they do not, individually or in the aggregate, reduce

SWEPI’s Net Revenue Interest or Net Mineral Acre ownership in any

Property below that shown on Schedule 1.1(a) or Schedule 1.1(b), as

applicable, for such Property or increase SWEPI’s Working Interest in any

Property beyond that shown on Schedule 1.1(b) without a corresponding

and proportionate increase in SWEPI’s Net Revenue Interest for such

Property;

(o)

the terms and conditions of, and any rights of third parties to back into any

interest in the Properties to the extent such terms, conditions and rights are

expressly shown as binding on the applicable Property on Schedule 1.1(a)

and/or Schedule 1.1(b);

(p)

normal and customary liens of co-owners under operating agreements

relating to the Properties, which obligations are not yet due and pursuant to

which SWEPI (or Newco after the consummation of the Merger) is not in

default;

(q)

defective acknowledgements, name variations, lack of power of attorney,

lack of trustee authorization, lack of representative capacity, lack of

evidence of corporate or entity authorization, failure to recite marital status

or omissions of successions of heirship or estate proceedings, except in each

case where evidence is available that reasonably supports a Third Party’s

claim to superior title;

(r)

lack of a survey of the surface of the Properties, unless a survey is required

by Law;

(s)

any matter that has been cured, released or waived by any Law of limitation

or prescription, and which can be substantiated by the affirmative ruling of

a court of competent jurisdiction;

(t)

failure to record Leases issued by any Governmental Authority (which, for

the avoidance of doubt, includes any state or county agency or any successor

Exhibit 10.1

- 15 -

agency thereto) in the real property, conveyance, or other records of the

county in which such Leases are located,

provided

, that the instruments

evidencing the conveyance of such title to SWEPI from its immediate

predecessor in title are recorded with and, if applicable, approved by the

Governmental Authority that issued any such Lease;

(u)

rights of any (i) common owner of any interest in any fee mineral interest

as tenants in common or through common ownership, (ii) owner or lessee

of any oil and gas interests in formations, strata, horizons, or depths other

than the depths described for the applicable Lease described on

Schedule 1.1(a) or (iii) common owner of any interest in surface rights

currently held by SWEPI and such common owner as tenants in common or

through common ownership, to the extent that the net cumulative effect of

the matter referenced in clause (i), (ii) or (iii) does not, individually or in

the aggregate, (i) reduce SWEPI’s Net Revenue Interest in a Property below

that shown therefor in Schedule 1.1(a) or Schedule 1.1(b), as applicable,

(ii) increase SWEPI’s Working Interest in a Property above that shown

therefor in Schedule 1.1(a) or Schedule 1.1(b), as applicable, without a

proportionate increase in the Net Revenue Interest of SWEPI in such

Property, or (iii) reduce SWEPI’s Net Mineral Acres in a Property below

that shown therefor in Schedule 1.1(a);

(v)

(i) lack of a division order or an operating agreement covering any Property

(including portions of a Property that were formerly within a unit but that

have been excluded from the unit as a result of a contraction of the unit) to

the extent that they do not, individually or in the aggregate, reduce SWEPI’s

Net Revenue Interest or Net Mineral Acre ownership in any Property below

that shown in on Schedule 1.1(a) or Schedule 1.1(b), as applicable, for such

Property or increase SWEPI’s Working Interest in any Property beyond that

shown on Schedule 1.1(b) without a corresponding and proportionate

increase in SWEPI’s Net Revenue Interest for such Property, or (ii) failure

to obtain waivers of maintenance of uniform interest, restriction on zone

transfer, or similar provisions in operating agreements with respect to

assignments in SWEPI’s chain of title to the Property unless (A) the

underlying provisions of such operating agreement provide that such failure

voids or nullifies (automatically or at the election of the holder thereof) the

assignment with respect to such asset or (B) there is an outstanding and

pending, unresolved claim from a third party with respect to the failure to

obtain such waiver;

(w)

defects arising from prior expired Hydrocarbon leases that are not

surrendered or released of record absent affirmative evidence of an adverse

claim by another Person that such lease is in full force and effect;

provided,

that SWEPI has held the affected Properties for at least five consecutive

years on the Execution Date;

Exhibit 10.1

- 16 -

(x)

defects based solely on SWEPI’s failure to have a title opinion or title

insurance policy on any Property; 

(y)

the Retained Litigation;

(z)

decreases in SWEPI’s Net Revenue Interest (i) in connection with those

operations in which SWEPI may be a non-consenting co-owner after the

Execution Date in accordance with the terms of Section 5.4, (ii) resulting

from the reversion of interests to co-owners with operations in which such

co-owners elect after the Execution Date not to consent, (iii) resulting from

the establishment or amendment, after the Execution Date, of pools or units

permitted under the terms of Section 5.4, or (iv) required to allow other

working interest owners to make up past underproduction or pipelines to

make up past under-deliveries to the extent accounted for and described in

Schedule 3.12;

(aa)

increases in SWEPI’s Working Interest in a Property above that shown

therefor in Schedule 1.1(a) or Schedule 1.1(b), as applicable (i) that are

accompanied by at least a proportionate increase in SWEPI’s Net Revenue

Interest in such Property above that shown therefor in Schedule 1.1(a) or

Schedule 1.1(b), as applicable, or (ii) resulting from contribution

requirements with respect to defaulting or non-consenting co-owners under

the applicable operating agreement;

(bb)

decreases in SWEPI’s Net Mineral Acres or Net Revenue Interest listed on

Schedule 1.1(a) or Schedule 1.1(b), as applicable, where there is a

proportionate Net Revenue Interest or Net Mineral Acres increase related

to a different Property (the value of which Net Revenue Interest or Net

Mineral Acres increase, as applicable, is in each case on a basis comparable

to or more favorable than the corresponding Net Revenue Interest or Net

Mineral Acres that are the subject of such decrease), and such decrease and

correlating increase are due to an acreage swap that has not been accounted

for in SWEPI’s leasing systems;

(cc)

decreases in SWEPI’s Net Mineral Acres (i) in connection with those

operations in which SWEPI may be a non-consenting co-owner after the

Execution Date in accordance with the terms of Section 5.4, or (ii) resulting

from the establishment or amendment, after the Execution Date, of pools or

units permitted under the terms of Section 5.4;

(dd)

defects which are based solely on (i) a lack of information in SWEPI’s or

Newco’s files or of record, (ii) references to any document if a copy of such

document is not in SWEPI’s or Newco’s files or of record, or (iii) the

inability to locate an unrecorded instrument of which Buyer has

constructive or inquiry notice by virtue of a reference to such unrecorded

instrument in a recorded instrument (or a reference to a further unrecorded

instrument in such unrecorded instrument), unless, in each of (i), (ii) or (iii),

Exhibit 10.1

- 17 -

such lack of information, referenced document or unlocated unrecorded

instrument is required to establish the existence or validity of a Property;

(ee)

any defect as a consequence of cessation of production, insufficient

production, or failure to conduct operations on any of the Assets held by

production, or lands pooled, communitized, or unitized therewith, except to

the extent (i) the cessation of production, insufficient production or failure

to conduct operations is affirmatively shown to exist such that it has given

rise to a right of the lessor or other third party to terminate all or any portion

of the underlying Lease or (ii) of a third party’s claim of termination of all

or any portion of the underlying Lease;

provided, however

, that defects

based upon a determination that (A) there has been no Hydrocarbon

production from wells located on the Property or lands pooled,

communitized or unitized therewith, and (B) there has been no activity

conducted on the Property or lands pooled, communitized or unitized

therewith that would otherwise maintain the Property in force and effect,

may be considered as a breach of Seller’s special warranty of title in Section

3.20; and

(ff)

the Material Contracts and the matters set forth on any Schedule, in each

case to the extent that the net cumulative effect of such Material Contracts

and matters do not, individually or in the aggregate, (i) reduce SWEPI’s Net

Revenue Interest in a Property below that shown therefor in Schedule 1.1(a)

or Schedule 1.1(b), as applicable, (ii) increase SWEPI’s Working Interest

in a Property above that shown in Schedule 1.1(a) or Schedule 1.1(b), as

applicable, without a proportionate increase in the Net Revenue Interest of

SWEPI in such Property, or (iii) reduce SWEPI’s Net Mineral Acres in such

Property below that shown therefor in Schedule 1.1(a).

“Person” means an individual, corporation, partnership, limited liability company, limited

liability partnership, joint venture, syndicate, person, trust, association, organization or other

entity, including any Governmental Authority, and including any successor, by merger or

otherwise, of any of the foregoing.

“Phase I Environmental Site Assessment” means an environmental site assessment

performed pursuant to ASTM E1527-13 Standard Practice for Environmental Site Assessments: 

Phase I Environmental Site Assessment Process or any similar environmental assessment,

including a limited assessment of a facility’s or operation’s compliance with Environmental Laws;

provided,

 that the Phase I Environmental Site Assessment shall not include any sampling, testing,

or invasive activities.

“Pre-Effective Refund” has the meaning set forth in Section 10.2.

“Preferential Rights” means any right or agreement that may enable any Person to purchase

or acquire any Asset or any interest therein or portion thereof as a result of or in connection with

the execution or delivery of this Agreement or the consummation of the transactions contemplated

hereby, including any preferential purchase rights, rights of first refusal, or other similar rights.

Exhibit 10.1

- 18 -

“Previously-Divested Properties” means the leases and wells that have been divested by

SWEPI in the Subject Area and that are set forth on Schedule A-1.

“Proceeding” means any proceeding, claim, charge, complaint, lawsuit, direct or indirect

demand, inquiry, hearing, notice of violation, investigation, action, cause of action, suit, litigation,

arbitration, citation, summons, subpoena, audit, controversy, discovery request, or other dispute or

legal proceeding, whether civil, criminal, administrative or otherwise, made pursuant to federal,

state or other Laws.

“Properties” means, collectively, the Real Property Interests, the Units and the Wells.

“Property Costs” means each of the following to the extent incurred in and attributable to

the ownership and operation of the Assets in the ordinary course of business and, where applicable,

the applicable operating agreement and not otherwise prohibited under Section 5.4: (a) all

operating expenses (including costs of Seller personnel dedicated to the Assets, insurance, rentals,

shut-in payments, title examination and curative actions taken in connection with the drilling of

Wells, and gathering, marketing, processing and transportation costs in respect of Hydrocarbons

produced from the Properties), (b) capital expenditures (including bonuses, broker fees, and other

Lease acquisition costs, costs of drilling and completing wells, cost of building site pads, costs of

acquiring Equipment, and other Lease acquisition, extension or renewal costs); and (c) overhead

costs charged to the Assets under any applicable Third Party operating agreement;

provided

,

however

, that “Property Costs” shall exclude Seller’s and its Affiliates’ general and administrative

expenses and any liabilities, losses and expenses attributable to (i) any matters with respect to

which Buyer Group or Seller Group is entitled to indemnity from the other Party under this

Agreement or (ii) Taxes. 

“Public Announcement Restrictions” has the meaning set forth in Section 5.3(a).

“Purchase Price” has the meaning set forth in Section 2.4.

“Real Property Interests” means SWEPI’s right, title and interest in and to (a) all oil and

gas leases, oil, gas, and mineral leases and subleases, royalties, overriding royalties, net profits

interests, payments out of production, reversionary rights, mineral fee interests, carried interests

and any contractual rights to production relating thereto, including as described on Schedule 1.1(a)

to the extent and only to the extent the same are located within the Subject Area (the “Leases”),

and (b) all other rights in the lands covered by the Units and the foregoing Leases, including all

Royalties, Working Interests, Net Revenue Interests, and other interests and rights to

Hydrocarbons, to the extent and only to the extent the same are located within the Subject Area.

“Records” means, to the extent reasonably in Seller or SWEPI’s possession or control, (a)

any files, records, maps, information, and data, whether written or electronically stored, to the

extent relating to the Assets, including: (i) land and title records (including abstracts of title, title

opinions, and title curative documents); (ii) contract files; (iii) correspondence; (iv) operations,

environmental, production, and accounting records (including equipment lists, repair notes and

archives, and technical drawings); (v) production, facility and well records and data; (vi) supplier

lists and records; (vii) training materials and training records (including certifications) and (b) the

corporate, financial, Tax and legal records of SWEPI and Newco (including Tax Returns);

Exhibit 10.1

- 19 -

provided

,

however

, that the term “Records” shall not include (i) any of Seller’s or its Affiliates’

business plans, strategies, cost and pricing information, accounting records, supplier lists and

records, proprietary training materials and equipment, equipment lists, technical drawings, and

contracts and financial records that address or reflect activities outside of the business of SWEPI

related to the Assets; (ii) any of Seller’s or its Affiliates’ company minute books and records, Tax

Returns, Tax records that relate to Seller’s or its Affiliates’ business generally or other materials

that do not pertain to the business of Newco or ongoing day-to-day operation of the Assets; (iii)

training, personnel, and medical records (including certifications) of employees, including

Transferred Employees (as defined in Schedule 5.9(a)), except as specified in Section 1.02(f) of

Schedule 5.9(a); (iv) hiring exams for Transferred Employees (as defined in Schedule 5.9(a)); (v)

any transfer pricing information; (vi) materials that are subject to any applicable legal privileges,

including attorney work product and attorney-client communications that extend beyond Newco;

and (vii) any files, records, information, and data to the extent related to the IT Systems (for the

avoidance of doubt, such files, records, information and data shall not include information that

may be stored on the IT Systems that would otherwise constitute a Record).

“Related Party Contract” means any Contract between (a) SWEPI, on the one hand, and

(b) Seller, any Affiliate of Seller (other than SWEPI) or any Person that directly or indirectly

controls or is under common control with Shell Oil Company, or any of their respective officers,

directors, stockholders, members, partners, managers, investors, private equity sponsors, or

employees, on the other hand.

“Release” means any releasing, disposing, discharging, injecting, spilling, leaking,

pumping, pouring, leaching, migrating, dumping, emitting, escaping or emptying into or upon any

soil, air, sediment, subsurface strata, surface water, groundwater, or drinking water supply.

“Release of Hydrocarbons” means any Release of Hydrocarbons into or upon any soil, air,

sediment, subsurface strata, surface water, groundwater, or drinking water supply that triggers any

reporting obligations to any Governmental Authority, including the Railroad Commission of

Texas, under any applicable Law.

“Remediation” including the correlative term “Remediate” means the implementation and

completion of any investigative, remedial, removal, response, monitoring, construction, repair,

closure, disposal, restoration or other corrective actions (including any necessary filings or

interactions with Governmental Authorities) required under Environmental Laws to respond, to

the extent required by applicable Environmental Laws, to any Release or threatened Release of

any Hazardous Substances at, on, under or from any Asset, in the most cost-effective manner

allowed under applicable Environmental Laws, considering ongoing operation and maintenance

and any operational or use limitations or controls.

“Reorganization” has the meaning set forth in Section 5.19. 

“Representatives” means (a) partners, employees, officers, directors, members, equity

owners and counsel of a Party or any of its Affiliates or any prospective purchaser of a Party or an

interest in a Party; (b) any investment bank, consultant or agent retained by a Party or the parties

listed in subsection (a) above; and (c) any bank, other financial institution or entity funding, or

Exhibit 10.1

- 20 -

proposing to fund, such Party’s operations in connection with the Assets, including any consultant

retained by such bank, other financial institution or entity.

“Required Consent” has the meaning set forth in Section 3.13.

“Required Consent Asset” means an Asset subject to a Required Consent. 

“Restricted Party” means any Person (a) targeted by national, regional or multilateral trade

or economic sanctions under Trade Control Laws; or (b) directly or indirectly owned or controlled

or acting on behalf of such Persons, including their Affiliates and Representatives.

“Retained Assets”

means

(a)

any and all real property owned by SWEPI or any of its wholly-owned

subsidiaries on or prior to the Execution Date and located outside of the

Subject Area (the “Retained Properties”); 

(b)

all contracts, agreements, and instruments to the extent relating to the

Retained Properties, including operating agreements, letter agreements,

unitization agreements, declarations and orders, farmin and farmout

agreements, exploration and participation agreements, joint development

agreements, area of mutual interest agreements, agreements pursuant to

which the Retained Properties (or any portion thereof) were purchased or

sold by SWEPI, and the transfers, assignments or conveyances relating to

the Retained Properties, and any rights under any such contracts,

agreements, or instruments, including any audit rights or rights to receive

refunds or reimbursements in connection with any such contracts,

agreements, or instruments and any master services agreements, fleet

agreements, or other similar master agreements, including those that relate

to the Assets or that otherwise would constitute an Asset, except in each

case any purchase orders or other similar agreements entered into under any

master agreement (such as master services agreements or fleet agreements)

(collectively, the “Retained Contracts”); 

(c)

all claims and causes of action arising under and to the extent relating to

any Retained Contract (including claims for adjustments or refunds) or any

other Retained Asset;

(d)

the Retained Litigation;

(e)

all rights and interests of SWEPI (i) under any policy or agreement of

insurance or indemnity, (ii) under any bond or (iii) to any insurance or

condemnation proceeds or awards, in each case, to the extent relating to any

other Retained Asset;

(f)

all surety agreements, bonds, letters of credit, guarantees and any other

financial assurances or credit support to the extent relating to any other

Retained Asset; 

Exhibit 10.1

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(g)

all personal property used, or held for use, in connection with the Retained

Properties;

(h)

all easements, permits, well licenses, servitudes, rights-of-way, subsurface

leases, and other subsurface rights appurtenant to, and to the extent used or

held for use in connection with, the Retained Properties;

(i)

all records relating exclusively to any other Retained Asset; 

(j)

all Related Party Contracts (other than those set forth on Schedule 5.7);

(k)

all matters set forth on Schedule 3.22 (the “Retained Royalties”);

(l)

any Contract for a Hedging Transaction;

(m)

any Required Consent Assets retained by SWEPI pursuant and subject to

the terms of Section 5.16(c);

(n)

all end user computing devices used in connection with the Assets,

including laptops, iPhones and iPads;

(o)

subject to Section 5.22, all non-proprietary seismic, geological,

engineering, and other data and interpretations, files and records (in

whatever form) in each case to the extent related to the Assets (“Seismic

Data”);

(p)

the IT Systems; and

(q)

any and all other real property, personal property, Permits, contracts,

agreements, leases, instruments, claims, rights and other interests owned or

held by SWEPI or any of their wholly-owned subsidiaries, in each case to

the extent not comprising a part of, or unrelated to, the Assets.

“Retained Contracts” has the meaning set forth in item (b) of the definition of “Retained

Assets”.

“Retained Liabilities” means any and all duties, obligations, claims and liabilities of

SWEPI other than the Assumed Liabilities, and all duties, obligations, claims and liabilities

attributable to the Retained Assets, the Retained Litigation and the Retained Royalties.

“Retained Litigation” has the meaning set forth in Section 5.17.

“Retained Properties” has the meaning set forth in item (a) of the definition of “Retained

Assets”.

“Retained Royalties” has the meaning set forth in item (k) of the definition of “Retained

Assets”.

Exhibit 10.1

- 22 -

“Royalties” means royalties, overriding royalties, production payments, carried interests,

net profits interests, reversionary interests, options, back-in interests, contractual rights to

production, and other burdens upon, measured by or payable out of production.

“SCADA Systems” means the field based operating system software and hardware

components of the Supervisory Control and Data Acquisition systems exclusively used by SWEPI

to monitor and control the operation of the Wells (including field based sensors which interface

with field based Well Equipment) and to provide data in relation to the operation of those Wells,

excluding telecommunications links between the Supervisory Control and Data Acquisition

systems and the IT Systems and any software and hardware components which are shared with,

used or held for use by Seller or any of its Affiliates other than SWEPI.

“SEC” shall mean the Securities and Exchange Commission.

“Securities Act” shall mean the United States Securities Act of 1933, as amended, together

with the rules and regulations of the SEC promulgated thereunder.

“Seismic Data” has the meaning set forth in item (o) of the definition of “Retained Assets”.

“Seller” has the meaning set forth in the Preamble of this Agreement.

“Seller Fundamental Representations” means the representations and warranties in Section

3.2, Section 3.3, Section 3.4, Section 3.5, Section 3.6, Section 3.17, Section 3.18, Section 3.24,

Section 3.26 and Section 3.29.

“Seller Group” means Seller, its Affiliates (other than SWEPI and Newco), and each of

their respective officers, directors, employees, agents, advisors and other Representatives.

“Seller Material Adverse Effect” means a Material Adverse Effect with respect to Newco,

taken as a whole.

“Seller Parent Guaranty” has the meaning set forth in Section 5.18.

“Seller Taxes” means (a) all Taxes of, attributable to or imposed on Seller or any of its

direct or indirect owners or Affiliates (other than Newco), (b) any Taxes allocable to Seller

pursuant to Section 10.1(a) (taking into account, and without duplication of, any Asset Taxes

effectively borne by Seller as a result of the adjustments to the Purchase Price made pursuant to

Section 2.5 or Section 7.4, as applicable, and any payments made from one Party to the other in

respect of Asset Taxes pursuant to Section 2.2(d) or Section 10.1(c)) or Section 10.1(b), (c) any

Taxes attributable to or imposed on or with respect to the ownership or operation of the Retained

Assets or the production of Hydrocarbons or the receipt of proceeds therefrom, (d) all Taxes

attributable to or resulting from the Reorganization, (e) any Taxes imposed on Newco or for which

Newco becomes liable (i) by reason of having been a member of an affiliated, aggregate,

combined, consolidated or unitary group on or prior to the Closing Date (including pursuant to

Treasury Regulations Section 1.1502-6 or any analogous or similar provision of state, local or

foreign Law) or (ii) as a transferee or successor or by contract or other agreement or arrangement

(other than a Customary Agreement), assumption, operation of Law or otherwise, which Taxes

relate to an event or transaction occurring, or a contract or other agreement or arrangement entered

Exhibit 10.1

- 23 -

into, on or prior to the Closing Date, (f) 50 percent of any Transfer Taxes, (g) any other Taxes

relating to the ownership or operation of the Assets or the production of Hydrocarbons or the

receipt of proceeds therefrom that are attributable to any Tax period (or portion of any Straddle

Period) ending at or prior to the Effective Time and (h) any Taxes caused by, related to, arising

out of or resulting from Seller’s breach of any of Seller’s covenants or agreements contained in

this Agreement.

“Soft Required Consent” means a Required Consent that by its express terms provides that

Consent may not be unreasonably withheld and for which the failure to obtain would not (a) cause

the transfer or assignment (whether by operation of law or otherwise) of any portion of the

Required Consent Asset subject to such Consent to be void, (b) cause the termination of the

Required Consent Asset subject to such Consent under the express terms of such Required Consent

Asset, or (c) result in a penalty of any sort, including a requirement to make a payment.

“Straddle Period” means any Tax period beginning at or before, and ending after, the

Effective Time.

“Subject Area” means Culberson, Loving, Ward, Winkler, and Reeves Counties, Texas.

“Subject Interests” has the meaning set forth in the Recitals of this Agreement.

“Subsidiary” means, with respect to any Person, any other Person Controlled by such first

Person, directly or indirectly, through one or more intermediaries.

“Surface Contracts” means SWEPI’s right, title and interest in and to all easements,

Permits, licenses, servitudes, rights-of-way, surface fee interests, surface use agreements, surface

leases, right of use and easement, and other rights to use the surface and subsurface appurtenant

thereto, to the extent used or held for use in connection with the Properties, including those

described on Schedule 1.1(c).

“SWEPI” has the meaning set forth in the Recitals of this Agreement.

“Tax Allocation” has the meaning set forth in Section 10.7.

“Tax Incentive” has the meaning set forth in Section 3.8(m).

“Tax Proceeding” has the meaning set forth in Section 10.3.

“Tax Return” means any return (including any information return and any estimated

return), report, statement, schedule, notice, form, election, estimated Tax filing, claim for refund

or other document (including any attachments thereto and amendments thereof) filed with or

submitted to, or required to be filed with or submitted to, any Governmental Authority with respect

to any Tax.

“Taxes” means (a) all federal, state, local, foreign and other net income, gross income,

gross receipts, alternative, estimated, sales, use, ad valorem, value added, transfer, franchise,

profits, registration, license, lease, service, service use, withholding, payroll, employment, excise,

severance, social security, welfare, workers’ compensation, unemployment, disability,

Exhibit 10.1

- 24 -

environmental, stock, stamp, occupation, premium, real, personal, or intangible property, windfall

profits, customs, duties, levies, tariffs, imposts, amounts due under any escheat or unclaimed

property Law or other taxes, fees, assessments or charges of any kind whatsoever (whether

imposed directly or through withholding, whether or not disputed, and including any amounts

resulting from the failure to file any Tax Return and any amounts that have been deferred

(including amounts deferred under the rules of Code Section 965)), together with any interest and

any penalties, additions to tax or additional amounts imposed with respect thereto; (b) any liability

for payment of amounts described in clause (a) whether as a result of assumption, transferee or

successor liability, of being a member of an affiliated, aggregate, consolidated, combined or

unitary group for any period, operation of Law or otherwise; and (c) any liability for the payment

of amounts described in clauses (a) or (b) as a result of any tax sharing, tax indemnity or tax

allocation agreement or any other express or implied contract, agreement or arrangement to

indemnify any other Person.

“TBOC” has the meaning set forth in Section 5.19(a).

“Third Party” means any Person other than a Party to this Agreement or an Affiliate of a

Party to this Agreement.

“Third Person Claim” has the meaning set forth in Section 9.2(b).

“Trade Control Laws” means any applicable trade or economic sanctions or embargoes,

Restricted Party lists issued by the respective authorities, controls on the imports, export, re-export,

use, sale, transfer, trade, or otherwise disposal of goods, services or technology, anti-boycott

legislation or similar laws or regulations, rules, restrictions, licenses, orders or requirements in

force from time to time, including those of the European Union, the United Kingdom, the United

States of America or under applicable Laws. 

“Transaction Documents” means this Agreement and any other documents executed in

connection with this Agreement.

“Transfer Taxes ” has the meaning set forth in Section 10.5.

“Transition Services Agreement” has the meaning set forth in Section 5.11.

“Treasury Regulations” means the final, temporary, and proposed United States

Department of the Treasury regulations promulgated under the Code.

“Units” means SWEPI’s right, title and interest in and to all pooled, communitized, or

unitized acreage, which includes all or any part of the lands located within the Subject Area and

covered by the Leases, and all tenements, hereditaments, and appurtenance belonging thereto,

including the pools and units described on Schedule 1.1(a).

“U.S.” means the United States of America.

“Wells” means SWEPI’s right, title and interest in and to all Hydrocarbons, water,

monitoring, disposal or injection wells in the Subject Area, including the wells described on

Exhibit 10.1

- 25 -

Schedule 1.1(b), whether producing, non-producing, temporarily plugged and abandoned, and

whether or not fully described on any exhibit or schedule hereto. 

“Working Interest” means, with respect to any (a) Well, the interest (expressed as a

percentage or a decimal) in such Well that is burdened with the obligation to bear and pay costs

and expenses of maintenance, development and operations on or in connection with such Well

(with respect to those formations in which such Well is currently producing, or with respect to a

Well that is not currently producing, the last depth or formation at which it produced), or (b) Lease

or Unit, the interest (expressed as a percentage or a decimal) in such Lease or Unit that is burdened

with the obligation to bear and pay costs and expenses of maintenance, development and

operations on or in connection with such Lease or Unit, in the case of each of items (a) and (b)

without regard to the effect of any Royalties.