21416 PETNARY FUELS. INC. EXHIBIT -A"

PART I

itiinrfism tmm louiss X U t l "nilUT"*' " T - gfH/Cauntv

It55001 • OCS C 7793, BLK 91 Corpus Chrlatl Exploration Co. 001 Dolta Woat 98 LA Host Delta Araa

LECAL DESCRIPTION: A l l of Block 91, West Dolta Aroa, OCS Laaalnc N a P - Louiaiana Nap No. S

Pago no. - 1 Doto 02/73/89

•srmtHns Birs Bnts tsni 09/01/15 5.000.0000

21416 Y fMllS, WC. riilT

ART 1

l i i r s m m s Mmm —Uiaat.

1729001 • OCS 0 3052. RUC 11 Shall Offahora. tor.. 001 Kara LA South Paaa-South Aroa

LECAL DISCS IFTI OK: A l l o f Slock 13. South Paaa Araa. South & Eaat Addi t ion. OCS Laaolnj Nap, Louiaiana Nap No. 9A

Paga ne. • 1 Data - 03/23/89

US-IoUS B t s a J f j f jgj firsia isrss

04/01/82 3,000.00JO

21416 PRIMARY FUELS, INC. EXHIBIT "A"

PART I

Pag* no. • 1 Data • 02/23/19

Traa.t taglRr JaUEaR.

ffBIBBfi t

126J0O2 - OCI C 7103,BLK 109 Naln Paaa Southaaat

LECAL DESCR I I T I ON: A l l o f Block 109. Naln Paso Aroo, OCS Loaalng Nap, Louieiana Hap No

LA Haln Pisa-South & Eaat Araa

10

Bun lam 09/01/19 4,996.3300

iSBSrdtM

1693003 Shall Offahora. Inc. LA Haln Paaa-South & Eaat Araa

OCS C j714,BLK 202 Anna puma

LECAL DESCRIPTION: A l l o f Block 202, Haln Paaa Araa, South 6 Eaat Addi t ion . OCS Laaaing Hap, Louiaiana Hap No. 10A

07/01/13 4,994.3300

1693004 - OCS 5715.SLR 203 Anna puma

LECAL DESCRIPTION: A »f Slock 201. Haln Paaa Araa. OCi Laaaing Han, Louiaiana Hap No. 10

Shall Offahore, Inc. LA Haln Paaa-South 6 Faat Araa

07/01/81 4.99*.5300

1699003 - OCS 0 3716.BLK 20S Shall Offahora. Inc. 07/01/11 001 Amapurna LA haln Paaa-South 6 Eaat Araa 4.996.5500

LECAL DESCRIPTION: A l l of ftlo-k 201. Naln Paaa Araa. OCS Loaol.ig Nap, Louisiana Nap No. 10

1730001 - OCS 0 6122.BLK 213 Shall Offahora. inc. 06/01/S4 001 Shasta LA Naln Paaa-South & East Araa 4.994.35O0

LECAL DESCRIPTION: A l l o f Block 215. Haln Pass Araa. South 6 East Addi t ion . OCS Laaaing Hap. Louiaiana Hap No IOA

21416 PRIMARY FUELS. IHC. EXHIBIT "A"

PAST I

Page no. ? Oat* • 02/23/S9

XSaktt

17 30002 • OOl

UiiBtr / l i ISJtB/CwntY

JaUSJt*.

Shel l Offshore. Inc. LA Ht ln Pass-South 4 Bast Aroa

OCB 0 MIS,BUC 314 •haata

LEGAL DESCRIPTION: A l l o f Block 216. Naln Paaa Aroa. South 4 Eaat Addi t ion. OCS Laaa Ina, Hap, Louiaiana Hap No. IOA

BafafJ isrsi 06/01/34 4,994.3300

Bt t rS lBS M U

Shall Offahora. Inc. LA Naln Paaa-South 4 Eaat Aroa

1730003 - OCS 0 M24.SU 226 001 Shcata

LEGAL DESCRIPTION A l l o f Block 224, Haln Paaa Aroo, South 4 Eaat Addi t ion. OCS Leasing Nap, Louiaiana Nap No. 10A

06/01/S4 4,994.3300

21416 miKAJtY rt)ELS, IMC. EXHIBIT "A"

PART I

Pat* no. • 1 Doto - 02/23/19

Tract. ]skmiJmmmt mm* JAUUM.

rrninarr mm atm/CflnntY 1262001

ooi OCI 0 3694,ILX 98

Haln Pooa 91 LECAL DESCRIPTION:

A l l of Hock 91, Haln Paaa f roa, OCS Leaalng Hap, Louiaiana No

Corpua Chr l a t l Exploration Co. LA Haln Paaa Araa

10

Corpua Chr la t l Exploration Co. LA Haln Paaa Araa

1I64O01 • OCS 0 7S00.SU 43 P 001 Naln Paaa 43 P 6 G

LEGAL DESCRIPTION: A l l of Slock 41P, Haln Paaa Araa, OCS Laaaing n>p, Louiaiana Hap Ho. 10 Being that por t ion of Block 43. Haln Paaa Area, OCS Leasinj Hap, Louiaiana Hap No. 10, s» -ward of " » Una established purs-jant to Sactlon S (g) of th* OCS Lands Ac. as aaended, snec t f t ca l ly deacribed aa fo l lows:

lernMlns mu

07/01/Sl 4,994.3300

07/01/83 347.0300

INTERSECTIONS ARC CENTERS X Y X Y

1. 2 723 402.91' 2t,3 330 00' 1-2 2 689 305' ISO 195' 2 2 720 193.06' 269 780 17' 2-3 7 688 235' ?•>? 715-J. 2 719 ,9 .01 ' 270 705.00' •3-4 2 6S1 913'

<••>/ 735'

4. 2 714 631.25' 270 705.00* 5. 2 714 611.23' 267 017 50' 6. 2 709 100.00' 267 017.50' 'Tangent Segment 7. 2 709 100 00* 263 330.00' 1 2 721 402.91' 263 330.00'

21416 PRIMARY FUELS, IRC. EXHIBIT -A"

PARY I

Page no. • | Bete • 02/2J/B9

iBiinrdRiii mu UIIM atBtf/CgUnlY O O U A&IRR.

1864002 • OCR 0 7801.BIX AS 0 Corpui Chrlatl Exploration Ce. 07/01/85 001 Haln Paaa AS P ft 0 LA Haln Paaa Araa 1.661.9800

LBQAL, DCSCRIPTIOM: All »r Block ASC, Main Paaa Area, OCS Leaa In, Nap, Louiaiana Nap No. 10 Seln« that portion of Slock AS. Naln Paaa Area, OCS Leaeing Nap, Louiaiana Nap No. 10. landward of the line aetatallihed purauent te Section I <|) of the OCS Landa Act aa aeonied, apeclf lcal ly desci ".Led ar foileue:

IITIfSSRCTIOUS ARC CENTERS X Y X Y •

1. 2 721 402.91' 2SS 330 00" 1-2 7 6S9 303* 230 393* 2. 2 /20 195.06' 249 780 W 2-3 2 6SS 233* 232 713* 1. 2 719 449.OS' 270 705.00' *J-4 2 4S1 913* 237 735' 4. 2 714 631.2V 170 70S.00' 5. 2 714 631.2V 567 017.30* 6. 2 709 100.00' 267 017.50' 'Tangent Segeent

;. 2 709 100.00' 243 330 00' 8 2 771 402.91* 263 J30.00'

21*1* PRINABY PU1U, INC. EXHIBIT "A"

PART I

Page tm. • 1 Beta • 02/23/19

T r a a t MUtR/SflVJlLY .JLRRARR.

1692001 001 0 9739.SU 22 Achillea

UOAL DRRCRIPTIOM: All or Bloek 22, Chandeleur Aroa, OCS Laaaing Hap, Louiaiana Nap Ro

ShaU Offahora, ine. LA Chandeleur Area

BfBSI ARISE

07/01/11 3,000.0000

11

tofiBrtflriif mmi

16920L2 • OCS 0 3742.BU 34 Achillea

LEGAL DSSCRIPTIOM: Al l ef Bleak 34. Chandeleur Araa, OCS Leaalng Nap, Louiaiana Nap No.

Shell Offahore. LA Chandeleur Aroa

Inc. 07/01/B1 S,000.0000

11

21*16 PRIMARY FUELS, I K . ?age no. • I EXHIBIT "A" 0«C* • 02/23/89

FAIT I

JLtlRRR. T r a c t rnuwfifr Btate/Cou.itv

1301001 OCS 0 S M 3 . s u S S l Matagorda l i t atd S S l

LEGAL DESCRIPTION: A l l o f B lock 631. Hatagorda lela.»d A r a a . OCS Loaa lng Hap. Taaaa Hap No. 4

Corpua C h r l a t l O i l A Caa Co. TX Hatrgarda l a S . B . Araa

CrssB mmm 10/01/83 5.760.0000

a a , —

1S03O01 • OCS 0 6 0 S 2 . B U 6S7 Matagorda I a l a n d 687

LECAL DESCRIPTION: A l l o t B lock 487. Hatagorda I a l a n d A r * a . OCS L a a a i n g Nap, Taaaa Hap No. 4

Corpua C h r l a t l O i l 6 Caa Co. TX Hatarnrda l a S . B . Araa

1700001 • OCS C 4 9 S 7 . B U SSS Cortoi

LECAL DESCRIPTION: A l l o f S l o c k 388. Hatagorda I a l a n d A r a a . OCS L o a a l n g Nap, Taaaa Nap No. 4

S h a l l Of fahore . I n c . TX Hatagorda l a . S . B . Area

10/01/83 5.760.0000

04/01/82 5.760 0000

* • • • • . l | B | f f , ( L t i i e c ^ l . | i c i . l i i i

TI l r

• B i t o t ARB

I l l l l - I I B B I C . I t i i e i l k i i

11*B»»I f'* .ei f u i ^ l f f t l T 1 ' OOI l a r l a * J > f i t

17 1*002 • OCI 8 4 S * » . B l t « 1 B OOI 8 * r l * * • * T t Br Li8iL itsciirrtoai

i / t OP ILOCI 411. IIIZOS I I I

l l i l l l k l l . l l t l t l l l C l l l l . l l t l . . . I K I f . : : ici i iz| i i i | ! : ::::::

I.B. I r • •

OCI I I B S I M I I P . T I I I S I I I HO

« • I • • toopooi •• I.B. Ir»* OCI L l t l l B I I I P . I l l l l I l f 10

•..7 40 OOOO

Ot/OI/OI 101 I I S PB I I I 2 . IOO . 0000

I J 1 4 C 0 J -OOI

• Ct • I M I . I U I S i • a r t * " • • T l Br

11011 I I S C I I P T I O I : l i t or n o d l i t . I I I Z O S i l l

i t l e a t t * l i c h f i . l d Cu.p.«» •a I.B. I r a a

OCI l l l l l l l I I I . T I I I S 10

0 1/01/10 ».7*0.OOOO

H » i i i . n i i ! i J H . , . , „ „ „ nj,|ji;?i-'"e iu:

L t i e c . B V i i i . . U l l l i a i l l l . I l M , , - r - - - - r l M • • • I n , D i l i I l l l C l i l l . t l U .

, . " • I I - I - I I I ! * IK , ! I I I M S ;;---;-iiH!jl(flMl!:-iw: foil*":" OOI C r i c l i t x l 11 O I I V M U I S . l l r t * 5 . H O . 0 0 0 0 * < 3 . I I L f l l T O I l l l l . OCS L I I I I H I I I P . T H I S I I I NO

2141S PRIMARY FUELS, INC. EXHIBIT "Ai"

PABT I

Page ne. • 1 Dece . • 02/2 3/89

T r a c t LBISflf/1 J*UAtS_

fraswrr IBBN gtBtB/CwntY

1300001 OCS C 6147,BUC 86 High Island 86. 117

LECAL DESCRIPTION: A l l of Block 86. High Ulend Area. OCS LeesIng Nap, Texas Nap No. 7

Corpua Chrlatl F.xploratlon Co. TX High l a . S.B Arna

G r o s s A c r e * .

10/01/83 5,760.0000

jqTfisrSins LMti

1300002 - OCS 0 7277,BLK 117 High Island 86. 117

LECAL DESCRIPTION: A l l ef Block 117, High leland Area. OCS Leaalng Hap, Taxaa Hap No. 7

Corpua Chrlatl Exploration Co. TX High Is S.S. Area

09/01/86 5.760 0000

1702002 • OCS C 6172.BLK 232 Bo

LECAL DESCRIPTION: A l l or Block 237, High Island Area. OCS Leaalng Nap. Texas Hap No. 7

SheU Offshore. TX High I s . S.B. Aree

I t * 10/01/81 5.760.0000

1713001 - OCS C 6173.BU A l Clenda Eaat

"JCAI. DESCRIPTION: ..11 of Block A - l , High Ialand Araa. OCS Leaalng Hap, Toxaa Hap No. 7

Shall Offihore, Inc. TX High I s . S.B. Are*

10/01/BJ 5.760.0000

Llll«.||lkf( ...... . L . l l l l t l f . g l l l . a ' l l l . . . . . k B I I f f f k l t . l l t l I i e t l l . l t . t i l l

I M - M I 1 ! " 1 • M - i - i n l * l i r i l i ; , M e . H s l ' i i M S f * iMi i f i i r . . e . f l t t J« ; i l J I I -Oil l e t >|.r I • l | | { ] | * B f c l I I T I O I r •ll*»*rl| t l . S . l . I r t i 5.7*0.0000

I I I O f ' l l O f I l i t , '••*•••'•* I • 1«• I t r e e . OCI Leaetaa, <.**>, Teaae Rap l a . 4

r

This Schedule forth Procaction Coats aat for*- *- Action 1.21(a) ( i i )

Attached to and Bade a part of overriding Royalty lntaraat Conveyance {-he "Ccnveyance") froa Subject ' ntereat Owner to Royalty G»T..».rs.

PRODUCTION COSTS

I. Definitions

1. Defined tarns in the Conveyance to which this Schedule C i * attached have the saae meaning vhen used rerein.

2. "Controllable Material" shall nean tf*ti»si.jl which at the ':<.me is so classified in th.s Material '7 cssification Manual as most recently rf copmended by she Council of Petroleua Accountants Societies of Notch Aaerica.

3. "First Level supervisors" shall aean those employees whose primary function la the direct supervision of other employees and/or cor f.r.ct lafc^r Oirectly employed on the Subject Interest! Lt . field operating capacity.

4. "Material" shall o - - * p r o p e r t y , equipaent or sup-rlies acquired *s he .£ for us4 on the Subject Interests.

5. "Operations" shall BfMft a l l operations necessary ot proper for the d'jvelccaenh, operation, protection and maintenance of the Property.

6. "Operator" shall isean the Subject Interest Owner.

7. "Personal Expenses" shall aean travel >nd othor reasonable reimbursable expenses of Suhject Interest Owner's employees.

8. "Prop -ty" shall aean the property to vhich a Subject Inter described in SchoduAe D to tho Conveyance relate J.

c - l

"Technical Employees" shall mean th'.se employees having spec' .1 ard specific engineering, g*>:ioyical or other ^•ofossionai ski l l s , a.-uf whose p-ikM»ry function ia the handling ai" epeclfic op«.-.-<s: Ing ucocJtions and problems for ths benefit oi the Subject ino -esto

I I . L '."act Costr

Rent.* g •>.-".! Royalties.

Direct coi-.i shall include (i) l*ase rentals (including tie?.**" rentals and shut-in gas r:'.yeents) and * i i ) royi lti« s buk lening the Property whicr vere *n existence at the Closiny Date.

Labor.

A. (1) Salaries and v.ages 01* operator's field employees directly ewpleyed on tha Property in the conduct of Operations.

(2) Salaries of first ~ svel supervisors in the field are not covered by the Overhead rates.

(3) Salaries anr. wages of Technical Employees directly employ«a m the Property i f such charges e>re excluded from the O/evhead rates.

B. Operator's cusi 9t holiday, vacation, sickness ar.d disability benef -.tc and other r -tomary allowances ^aid to employee' * hose salaries and wages are chargeable under *ragrapn 2A of this Senior; i v . sich costs under this Paragraph 2B may be charge3 in a **v^n and as paid basis'1 or by "percentage assessment" ou rhe amount of salaries and wages chargeable under Piragriph 2\ of this Section I I . I f percentage ass.sawent .s used, the rate sK.tll bi» based on the operator's cost experience.

C. Expenditures or contributions made pursuant to assess­ments imposed by governmental authority which are applicable to operator's costs chargeable under Para­graphs 2A and 2B of this section I I .

3. Personal Expenses of those employees whose salaries and wages are chargeable under Paragraph 2A of this Section I I .

Etplovae Benefits.

Oper.xr or' s current costs of etsblished plans fo r employers' croup l i f e insu .-a c t , hospitalization, pension, retirement, stock purchase, t h r i f t , bonus, and other benefit plan** of a l ike nature applicable to Optra ta r ' s ia*>or cost chargeable under Paragraphs 2A and 2B of th i s Section ZZ shal l be Operator's actual cost not to exceed twenty percent (20%) or the percent most recently recommend.by the Council bi 1 Petvoleum Accountants Societies of North Aaerica.

Material.

Material purchased or furnished by Operator for use on the Property as provided, under Section ZV. Only such Material shall be purchased for or transferred to the Property ax may be required for immediate use and is reasonably practical and consistent with efficient and economical operations. The accumulation of surplus stocks shall be avoided.

Transportation.

Transportation of employees snd notarial necessaiy fox operations but subject to the following limitations:

A. Zf Material is moved to this Property frum the Operator's warehouse or other properties, no char eye shall be made for a distance greater than the distance from the nearest reliable supply store, recognized barge terminal, or railway receiving point «h*re like material is normally available.

B. Zf surplus Material is moved to operator's wivehcuse or other storage point, no charge shall be &?de for a distance greater than the distance to the nearest tellable supply store, recognized tiz^m terminal, or reilvsy receiving point. No cha. ge shall be made for moving Material to other propert es belonging to Operator.

C. Zn the application of Subparagraphs A and B above, t^ere shall be no equalization of actual gross trucking costs of $200 or less excluding accessorial charge*.

2

6. Services.

T.im cost ot contrsot services, equipment snd utilities provides by outside sources, except services excluded by t-'iragraph 9 af Section ZZ end Paragraph l . i i of Section I'M, The cosv of professional consultation service, and contract services ot technical personnel directly engaged in connection vith the Property. The cost of professional consultant services or contract services of technical personnel not directly engaged on the Property shsll not be charged.

7 • Equipment end Pecllltlee FurnlsYwd by Operator.

A. Operator shall charge for use of Operator ovned equipment and facilities at rates consensu rate with costfr of ownership six* operstion. Such rstss shell include costs of mrint.nence, repairs, other operating expense, insurer oe taxes, depreciation, and inter*.t on investment not :o exceed the Prime Rate plus tvo per cent per annus. Such rates shall not exceed average commercial rates currently prevailing in the immediate area of the Property.

B. Zn lieu of charges in Paragraph 7A above, Operetor may elect to nee average commercial rates prevailing in the imstcJ>te sree of tho Property less 20%. For automotive eguipment, Ove rator may elect to use rstes published by the Petroleum Motor Transport Association.

• • Damages and Losses to L*ropertv.

All costs or expenses necessary for the repair or replacement o/ Property made necessary because of damages or losses incurred by fire, flood, storm, thsft, accident, or other cauae, except those resulting fros Operetor's groi. -. negligence or willful misconduct.

9. Legal Expense.

Expense of handling, investigating and settling litigation or cUlme, discharging of liens, peyment of judgments and amounts paid for settlement of claims incurred in or resulting from operations under the agreement or n-vces dry to protect or recover the Property, except that no charge for service* of Operator'e legal staff or fe#«? or exp nse c*f outside attorneys shall be made; provided, however, *a?at a c 'an* may be made for the expense of outside

C-4

attorneys in connsction vith any actions brought by Oporator against third partiss vhich actions a prudent operator vould determine to bring or to defend actions brought by third parties against Operator in connecticr. vith the operetions hereunder. All other legsl experts. ie considered to be covered by the overhead provisions ct Section ZZZ.

10. Tares.

All taxes oi' %very kind end nature assessed or levied u;?< n or ln connection vith the Property, t»:e operation thereat, cr the production therefrom snd vhich taxes have been piid by whci Operator..

21. Zmniritncs.

Net premiums paid for insurance reguired to be carried for Operations. Zn the event Operetions ere conducted in e stats in wnlcn Operator may eet es self-insurer for Workmen's compensation and/or Employers Liability undsr ths respective state's lavs. Operator may, at his election, include the risk undsr its ssif-insurence program and in that event, Operetor ehell include a charge at Operator's cost not to exceed manual rates.

12. Other Extendi .ures.

Any other expenditure no. covered or deelt vithin the foregoing provisions of this Section ZZ, or in Section ZZZ, and vhich i» Incurred by the Operator in the neceiffsry end proper conduct of the Operations.

ZZZ. Overhead

1 • Overhead — Drilling and Producing Operations.

(i) As compensation for administrative, supervision, office servicer and warehousing costs, Opsrator shall charge dril l ing and producing operatione on the Pixed Rate fMsls orovided belov. Such charge ehall be in lieu o:! cow .1 and expenses of a l l offices and salaries or wsges plus applicable burdens and expenses of mil personnel, except* those dirsctly chargeable under Paragraph 2A, Section ZZ. The cost and expanse of services from outsids sources in connection vith matters of taxation, traf f ic , accounting or, except as otherwise provided in this Schedule C, matters before or involving governmental

C-5

th .

C-«

(ii) The salaries, wages and Psrsonal Expensss of Technical Employees not directly employed on the Property shall be covered by the overhead rates, and the costs of professional consultants' services and contract services of technical personnel directly employed on the Property shall not be covered by the Overhead rates.

A. Operator shall charge the following retes per well per montht

Drilling Well Rate: Retes competitive with the fees of unaffiliated persons in the aree engaged in the business of rendering comparable services.

Producing Well Rate: Ratee competitive with the fees of unaffiliated pereone in the aree engaged in the business of rendering comparable services.

B. Application of Overhead ~ Fixed Rate Basis shall bs as follows:

(1) Drilling wsll Rate

(a) Charges for onshors drilling wells shall begin on the date the well is spudded and terminate on the dete the drilling or completion rig is released, whichever is later, sxcspt thst no charge ehall be made during suspension of drilling operationa for ten (10) or more consecutive days.

(b) Charges for offshore drilling wells shall begin on the date when drilling or completion eguipment arrives on location and terminate on ths data ths drilling or completion equipment movee off location or rig is released, whichever occurs first, sxcspt thet no charge shall be made during suspension of drilling operations for ten (10) or more consecutive daye.

(c) Charges for wells undergoing any type of workover or recompletion for a period of five (5) consecutive days or mors shell be made at the drilling well rate. Such charges shall be applied for the period from the date workover operations, with

rig, commence through tho date of rig release, except that no charge shall bs •ads during suspension of opsrstions for ton (10) or mors consecutive days.

(2) Producing Well Rates

in) An active well either produced or injected into for any portion of the month shsll be considered as s one-well charge for the entire month.

(b) An inactive ges well shut ln because of overproduction or feilure of purchaser to tare the production ehall be considered as a one-well charge providing the gas wsll is directly connected to e permanent sales outlet.

(o) A one-well charge mey be made for the aonth in which plugging end abandonment operations sre completed on any well.

(d) All other inactive wells (Including but not liaited to insetive wells covered by unit allowable, lesse allowable, transferred allowable, etc.) shsll not qualify for an overhead charge.

C. The well rates shsll be adjusted ae of the first day of April each yeer commencing in 1989. The adjustment shell be computed by multiplying the rete currently in use by the percentage increase or decreeee in the average weekly earnings of Crude Petroleua end Cas Production workers for the lest calender yeer compered to the calendar yeer preceding es ehown by the index of average weekly earnings of Crude Petroleua end Gas Fields Production Workers ss published by the United Statee Departaent of Labor, Bureau of Labor Statistics. The adjusted retes shsll be the retee currently in uee, plue er minus the computed adjustaent.

ZV. Pricing of Material Purchases, Transfers and Dispositions

operator is responsible for Materiel end shell make proper end timely charges and credits for el l aaterial movements affecting the Property. Operetor shell provide ell material

for uso on ths Property. Oporator shall makj timely disposition of idle and/or surplus Material, aueh disposal being made either through sale to Operator or sale to outsiders. The disposal of surplus Controllable Material not purchased by the Operetor ehall be determined by Operator.

1. Purchases.

Materiel purchased shell be charged at the price, including carrying coete incurred during tha 24-month period preceding the ssls, peid by Operator after deduction of e l l discounts rscsived. Zn case of Material found to be defective or returned to vendor for eny other reason, credit ehall be allowed when adjuetment has been received by the Operator.

2. Transfers and Dispositions.

Material furnished to the Property end Materiel transferred from the Property or disposed of by ths Operator ehell be priced on the following beeee exclueive of eaeh discounts:

A. New Material (Condition A}

(1) Tubular goods, except line pipe, ehell be priced at the current new price in effect on date of movement on a maximum carload or barge load weight basis, regardless of quantity traneferred, equalized to the loweet published price f.o.b. railway receiving point or recognized barge terminal nearest the Property where such Matsrial is normally available.

(2) Line Pipe

(e) Movement of leee then 30,000 pounds shall be priced at the current new price, in effect at date of movement, ae lieted by a reliable supply etore neareet the Property where such Material ie normally available.

(b) Movement of 30,000 pounds or more shall be priced under provisions of tubular goods pricing of Paragraph 2A(1) of this Section ZV.

(3) Other Material ehell be priced et the current new price, in effect et date of movement, as

listed by a railabia supply stors or f.o.b. railway receiving point nearest ths Property where such Material is normally available.

B. Oood Ussd Material (Condition B)

Material i n sound and serviceable condition and suitable for reuse without reconditioning:

(1) Material moved to ths Property

(s) At seventy-five percent (75%) of current new price, as determined by Paragraph 2A of this Section IV.

(2) Material moved from the Property

(s) At seventy-five percent (75%) of current new price, es determined by Paragraph 2A of thie Section IV, i f Material wee originally charged es new Material, or

(b) At sixty-five percent (65%) of current new price, as determined by Paragreph 2A of thie Section IV, i f Materiel wee originally charged as good used Materiel et seventy-five percent (75%) of current new price.

The cost of reconditioning, i f any, ehall be absorbed by the transferring property.

C. Other Used Material (Condition C and D)

(1) Condition C

Materiel which ie not in sound and serviceable condition and not suitable for ite originel function until efter reconditioning shall be priced at fifty percent (50%) of current new price ae determined by Paragraph 2A of thie Section IV. The coet of reconditioning shell be charged to the receiving property, provided Condition C velue plus cost of reconditioning does not exceed Condition B value.

(2) Condition D

A l l other Materiel, including junk, shell be priced at a value commensurate with i t e uss or

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at prevailing prices. Material no longer suitable for its original purpose but usable for some other purpose, shsll be priced on s basis comparable vith that of iteas normally used for such othsr purpose.

0. Obsolete Material

Material vhich i s serviceable and usable for its original function but condition and/or valus of such Material i s not equivalent to that which vould justify e price as provided above aay be specially pr?-ad by the Operator. Such price ehould result in the Operations being charged vith the velue of the service^renderad by such Material.

E. Pricing" Conditions

(1) Loading end unloading coete aay be charged at the rate of twenty-five cents (25) per hundred veight on e l l tubular goods movements, in lieu of loading and unloading coats sustained, when actual hauling coet of euch tubular gooda are equalized under provisions of Peragraph 5 of Section I I .

(2) Material involving erection coets shell be charged et eppliceble percentage of the current knocked-down price of nev Material.

Preaiua Pricea.

Whenever Material is not rsadily obteinabla at published or listsd prices because of national emergencies, strikes or other unusual causae over vhich the Oporator has not control, ths Operetor aay charge u r the required Material at the Operator's actual coet incurred in providing such Materiel, in making i t suitable fo? uss, and in moving i t to ths Property.

V. Inventories

Ths Operetor ehell maintain detailed records of Controllable Materiel.

Periodic Inventorlee. Motice and Representation.

At reasonable intervals. Inventories shall be taken by operator of the Controllable Material.

2. Reconciliation and Adlustrsnt of Inventories.

Reconciliation of e physical inventory with charges against Operations shall be aade, and inventory adjustments ahall be aade by Operator for coverages and shortages, but Operator ehell be held accountable only for shortages due to lack Of reasonable diligence.

3. Special Invo'ii-arlee.

special Inventories aay be taken whenever there is any sals or change of intsrsst in ths Property, i t shall bs ths duty of ths party sslling to notify a i l othsr working intereet holdere as quickly as possible aicer the transfer of intereet tekee place. In euch cawes- both the seller and the purchaser shall be governed by *u£h inventory.

4. Expenee of Conducting Periodic In*'

The expenee of conducting periodic in /*.»»-.»*. xes ehell not be charged.

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