UNITBD STATES DEPARTMENT OF THE INTERIOR MINERALS MANAOttMCNT SERVICE

OULF OP MEXICO OCS REGION ORPICE BLOO., U 0 1 N. CAUSEWAY BLVD.

R. O. SOX 7S44

OCM 8345

DECISION

Offering Dfi te 12/18/85

$17,280

U«p Ana DES - 20

of] $734,400.00

Shell Offshore Inc. Post Office Box 61933 New Orleans, Louisiana 70161

LEASE FORMS TRANSMITTED POR EXECUTION

to Section 8 of tht Outar Coatinentai Shalf Laada Act (67 Stat. 462(43 U.S.C. 1337)»» amended (92 Stat. 629). and the nfalatiaaa pertaining tharato (30 CFR 254). your bid for the nbove Uock toi cordiatly, in order to perfect yoor rifhta hareoodar, the following fiction mutt be taken:

[*"] 1. Enecnte aad return the three copiea of att>-hed leaee. (If Ims to araomad br an agent, evidence mult be furnuhed ofggezi't authoriution.)

fx] 2. Pay the balance of booua aad the flnt year'a raatal indicated above la ai«or4-ance with the attached Instructioos for Electronic Funds Traaafar. Payment amat be received by the Federal Reaerve Beak of New York ao lata OMB noon, eastem atandard time, oa the llth buaineaa day after receipl ef this decision (30 CFR 256.4T). Thst dsy is f £ B ^3 1387

3. Comply wtth bonding requirement* according to 30 CFR 256, Subpart I.

P j 4. Comply wtth tha affinnative ection compliance program requirements of 41 CFR section 60-1.40 withm 120 daya of the effective date of thel

roaipitonra wtth lenuiieiaanti 1, 2, aad 3 sbore must be msdr not Ister Uun the llthbusinaaa day after racaipl of thk dacMoa. PeOure to comply wiD reault in forfeiture ofthe l/S bonua deposit and your rights to acquire the

IMPORTANT: The Imm form requires the attachment of tlm CORPORATE SBAL to aff toaaar executed by corporaf ioaa

Original Signed: J . R o g ^ P ^ . y Regional Director

Dera JAN 2 8 1987

POSTED - WINS

Form MMS-SOOfi (August 1982) (formerly Form 3800-1)

UNITED STATES DEPARTMENT OF THE INTERIOR

MINERALS MANAGEMENT SERVICE

OIL AND GAS LEASE OF SUBMERGED LANDS UNDER THE OUTER CONTINENTAL SHELF LANDS ACT Thu form doa ml amvtUtU an in/orma/ion toltmUom tu defined % 44 I'S C. MOt

and thrrffor, dam Ml rtquxr, approval kf UU O/fict qfMntfmmd md Budgtt.

Offic*

Metairie. LA

Cash bonus

$918,000.00

Minimum royalty rate ptr •en hectare or fraction ^""ta.OO per mm Work commitment

Serial number

OCS-G 8345

Rental rate per acre, hectare or fraction thereof $3.00 per acre Royalty nta

16 2/3 percent

Pioflt ahare rat*

This lease is effective as of _ MAR 1 W (bemnafter calkd the 'Effective Date") and shail continue for &n initial penoa of u v e years (hereinafter called the -Initial Period") by and betwaen the United StaUs of Amarica (hereinafUr

Shell Offehore inc. 100.00000%

(hereinafter called thc "Lesaee"), In consideration of any caah payment heretofore made by the Leaaee to the Lessor and in conaiderauon of tiw promisea. Urmr, conditiona, and covenants contained herein, including the Stipulation ) numbtrad 1 . 2 . 3. 4 . and 5 attached hereto, the Leaaae and Lesaor agree aa follows:

Saa. 1. SUfc't— and Begnlatleaa Thia leaae is issued punuant to the Outer Continental Shelf Lands Act of August 7. IMS. 87 StaL 462; 43 Lt. S.C. ISSl et aeq., as amended (92 Stat 629). (hereinafter called the 'Act"). The lease is iscued subject to the Act; all n>gulatirm.i issued punuant to the statute and in existence upon the Effective Date of this leaae; all regulations issued punuant to the statute in tbe future wh'ch provid* for tbe prevention of waste and th* conservation of the nat ral reaourcea of the Outer Continental Shelf, and the protection of correlative righta therein, and all other applicable statutea and regulationa.

Sec. I . Bight* of Laaaae. Tha Leaaor hereby grants and leaaea to ths Lesaee the exclusive right and privilege to drill for. de­velop, and produce oil and gu resources, escept helium gaa, in the submerged landa of the Outer Continental Shelf containing approximaiely

5760 hectares (hereinafter referred to aa the "leased area"), described as follows-

All of Block 201, Destin Dome. OCS Official Protraction Diagram, NH 16-8.

COW

• Thcae righta indude: (a) thc nonexcluaive right to conduct within the leased ann

fwtol ica l and geophyakal explorationa in accordance with applicable regulationa;

(b) thc noncxdurive right to drill water wella within the leaaed area, unleaa thc wntrr ia part of geopreaattred-geothermal and asaociated reaources, and ui use the wnL"r produced therefrom for operations punuant to the Act free of coat, on the condition that the drilling ia conducted in accordance with procedures approved by the Director of thc Minarala Management Service or thc Director's deV"?!* (hereinafter called the "Director"); and

(e) thc right to conatruct or erect and to rmintain within the leaaed areo artificial islands, installations, and other devices permanen r temporarily attached to the seabed and other works and struct'-'< » naceaaary to the full enjoyment of the leaae, r ubject to compliance with applicable lawa and regulations.

Sec. 3. T o m . This lease shall continue from the Effective Date of thc leaae for the Initial Period and so long thereafter as oil or gas is produced from the leaaed area in paying quantitiea. or drilling or well reworking operations, as approved by the Leaaor, are conducted thereon.

Sec. 4. Rentala. The Lessee shall pay the Leaaor. un or before the first day of each leaae year which commences prior to a discovery in paying quantitiea of o'i or gas on the leased area, a rental aa shown on the face hereof.

Sac. ft. MiaiawBa Royalty. The Lesaee shall pay the lessor al the expiration of each leaae year which commences after a diacovery of oil and gas in paying quantities, a minimum royalty as shown on the face hereof or, if there is pruducUon. the difference between the actual royalty required to be paid with respect i such lease year and the preacribed minimum royalty, if tbe actual royalty paid is less than the minimum royalty.

Soc. 6. Royalty on Production (a) The Lessee shall pay a fixed • .</ ally aa ahown on the face hereof in amount nr value of product:. * ed, removed, or sold frnm the leased are^. Uaa uf all kinds ('. cept hdium) ia aubject to royalty. The l-essor shall determin) whether pro­duction royalty shall be paid in amount or value.

(b) The value of production for purposes uf '.-umpuung royalty on pro duction ft om tHa lease shall never be less tban thc fair market value of the production The value of production shall be thc estimated reasonable valurf of the production as determined by the Lesaor, due consideration being given to the highest price paid for a part nr for a majority of production of like qudity in tbe same field or area, to the price received by the Lessee, tn posted prices, to regulalec* prices, snd tn other retevanl matters. Except when tlie lessor, in its discretion, determines not to i-onsider special pricing relief from otherwise pliiHble Pedenl regulatory requuvments, thc value of production (or the purposes ut computing royalty shall not !*• deemed lu be less than the groaa proceeds accruing to the Lessee from the sale thereof In the absence of good reason to the wintrary. value compuled on the liasis of the highest pnce paw or offered at the time of production in a fair ai"'

open market for the trmfor portion of like-quality producta produced and sold from the field or area where the laaaad area is lif.atad, will bo considered to be a reaaonable valiw.

(c) When paid in value, royaltiea on production sh * e Jue and payable monthly on the last day of t t s month next fcSuv t $ * < in which the production is obtained, unlaas tiw Leaaor (bai atv . later time. When paid in amount, auch royalties ahall to deli., i <••» at pipdine connections or in tanka provided by the Leaaee Such deliveries shall be made at reaaonable timea and intervals and. at the Lessor's option, shall be effected either (i) on or immediatdy adjacent to thc leaaed area, without coat to the Leaaor, or (ii) at a more conven­ient point cloaer to shore or on shore, in which event the Lessee shall be entitled to reimbursement for the reaaonable ojat of transporting the royalty suhatanre to auch delivery point The Loses shall not bc required lu provide storage fot royally paid in amount in ex ess of tankage required when royalty is paid in value. When royal ties are paid in amount, the Lesaee shall not be held liable for ths loaa or destruction of royalty oil or other liquid products in storage from causes over which the Lessee has no control.

Sor. 7. Payeato. The Lessee shall make all pay menu to the Leaaor by check, bank draft, or money ofder unleaa otherwise provided by regulations or by direction of tlie Lessor. Rentals, royalties, and any other paymenta required by this least shall be made payable to the Minerds Management Service and tendered to the Director.

Soc. 8. Bonda. The Lessee shall maintain at d l times the bond(s) required by regulation prior to the iaauance of the lease and shall fur­nish such additiond security aa may be required by the l-essor if, after operations have begun, the Leaaor deema auch additiond security to bc necessary.

Sec. 9. PlaaB. The Lessee shdl conduct d l operationa on lhe leased area in accordance with approved exploration plans, and approved development and production plana ai are required by regulaUona. Tlte Lessee may depart from an approved plan ody a- provided by ap plicable regulations.

Sec. 10. Performance The Lesaee shdl comply with dl regulations and ordera relating to exploration, development, and production. After due notice in writing, the Lessee shdl drill such wells and produce at such rates aa the Lessor may require i . . order that the leaaed ana or any part thereof may be properly and timely developed and produced in accordance with sound operating principles.

Sec. 11. Dtrecttoad Drilling. A directiund well drilled under the leued araa from a surface location on nearby tand not covered by this lease shall be deemed to have the same effect for d l purpoaes of the lease as a well drilled from a surface location on the leaaed an-a In those circumstances, drilling ohdl be considered to have been com­menced un the leaaed araa when drilling is commenced on the nearby land for the purpose of directionally drilling under tiw leased area, and pniducuon uf oil or gas from the leased area tiirough any directinmtl well surfaced on nearby land or drilling or reworking nf any such direc tiond well shdl be considered production or drilling or reworking operations on the leaaed area for all purpoaes of the lease. Nothing con uuned in thia Section shdl be construed as granting to the lessee any mtfrest, license, easement, or other nght in any nearby laml

S M . IX. Bfairty B i a i f w w t e . The Letaee ahall (a) maintain all placea of employment within the Icated arca in compliance with occupational aafety and health standards and, in addition, free from recognised hasarda to employeea of the Lettee o. of any contractor or tub-contractor operating within the leased area;

(b/ maintain all operationt within the Icated area in compliance with regulationa intended to protect persons, property, and thc environ mcnt on thc Outer Continental Shelf; and

(c) allow prompt access, at the rite of any operation aubject to aafety regulationa. to any authorised Pederal inapector and thall provide tny documenta and records which are pertinent to occupational or public health, aafety, or environmental protection aa may bc requested

Soc. 13. Seaf anatan and Caacellatiea (a) The Lesaor may suspend or cancel this lease purauant to Section 5 of the Act and compenaation ahall be paid when provided by the Act.

(b) Thc Leaaor may, upun recommendation of the Secretary uf Defenae, during a atate of war or national emergency declared by Con­greaa or thc Preaident of the United Statet, suspend operationt under thc Icaaa, aa provided in Section 12(c) of the Act, and jutt compeiusi tion thall bc paid to the Lettee for tuch suspension.

Sec. 14. Indsiniflrstisa. The Lessee shall mdi mfy the Lessor fnr, and hold it harmless from, any claim, includn., aims for loss or damage to property or injury to persons caused by or resulting from sny opcation on the leased area conducted by or un behalf of the Laaaae. However, the Leasee thall not be held responsible to the Leaaor under thia section for any kaa, damage, or injury cauaed by or resulting from:

(a) negligence of the Lesaor other than the commission or omission of a discretionary function or duty on the part of a Federal sgency whether or not the discretion involved is abused; or

(b) th* Leaaee s compliance with an order or directive of the Lesaor againat whieh an administrative appeal by the Leaaee is filed before th* cauae of action for the claim arises snd is pursued diligently thereafter.

Boc. 10. Diaytattlon of Prodactioa. (a) As provided in Section 27(a)|2| of thc Act. the Lessor shall have the nght to purchaae not more than 16-2/3 percent by volume of the oil and gaa produced pursuant tn the loaae at the regulated pnce, or if no regulated pnce applies, at the fair market value at the wellhead of the oil and gas sav*d. removed, or sold, escept that any ml or gas nbtained by the Lessor as royalty ur net pr-fit ahare ahall be credited against the amount that may be purchased under thia subsection

(b) Aa provided in Section 27(d) of the Act, the Leaaee shall take any Federal oil or gas fur which no acceptable bids arc received, as drter mined by the Lessor, and which is not transferred to a Federal agency purauant to SecUon 27(a|(3) of the Act, and shall pay to the Letsor a cash amount equal to the regulated pnce, or if no regulated pnce ap plies, thc fair market value of Ihe oil or gat to obtained

(c) At provided in Section B(b)|7) of the Act. thc Letaee shall offer V) percent uf thc crude oil, condenaate, and natural gaa liquida pmduced on the leate. at thc market value and point of delivery aa pmvided hy reguiationt applicable to Federal royslty oil. to small or independent refiners aa defined in the Emergency Petroleum Allocation Act of 1973.

(d) In time of war, or when the Preaident of thc United Statet thall to preacribe, thc Lessor ahali have the right of firat refuaal to purchase at thc market price all or any ponion of the oU or gaa produced frum the lensed area, aa provided in Section 12(b) of the Act.

Sec. 16. Unltlaation, Peellai, and Drilllag ta Within such time aa vhe Laaaor may preacribe. 'he Leaaee ahall subscn be to and operat* under a umt. pooling, r, billing agreement embracing all or part of thc landa subject loth" lcate as the Leaaor may determine ui bc appropriate or necessary. Where any proviaion of a unit. pooling, or driUing agreement, approved by the Lessor, is inconaiatent with a pro­viaion of thia leaae, thc provision of the sgrecment shall govern.

Sec. 17. Equal Opportaalty Clawa*. During the performance of this lesse. the Lesaee shall fully comply with paragrapha (1) through (7) of Section 202 of ExecuUve Order 11246. as amended (reprinted in 41 CFR 60 - 1 ((all. and the implementing regulations, which are for the purpose of preventing employment discrinunatiuii against pertont on the baais of race, color, religion, sex. or national origin. Paragraphs (1) through (7) of Section 202 of ExecuUve (>rder 11246. as amended, are incorporated in this u ase by reference

Sec. 18. Certification of Nonsegregated Facilities. By entering into this lease, the Lessee certifies, as specified in 41 CFR 60-1.8. that it does not and will not maintain or provide for ita employees any segregated facilities at any of ils eslablishmenu. and that it doet not and will not pemiit its employees to perform their services at any loca­tion under its contml where segregated facilities are maintained Aa used in this cenificatem. the term "segregated facili'ies" means, but is not limited tc. any waiting rooms, work arear. restrooms and wash­rooms, restaurants and other eating areas, timeclocks, locker rooms and other storage or dressing areas, parking lots, drinking fountaina, recreation ur entertainment aresj, transportation, and housing facilities provided for employees which are segregated by explicit directive nr are in fact segregated on the basis of race, color, religion, or national ongin. because of habit, local custom, or otherwise. The Leaaee further agrees that it will obtain identical certificationa from proposed contractors and subcontractors prior to award of contracta or subcontracts unless they arr exempt under 41 CFR 60 -1 5

Sec. 19. Reset-ations to Lessor All rights in the leased area not expressly granted to the l<essee by the Act, the regulations, or this leaae are hereby reserved to the I r Without limiting the generali­ty of the fureguing, reserved rights includo;

(al t'ie right to authorize geoli gical and gf ophysical exploration in the i< ased area which does not unreasonably interfere with or en­danger actuil iperatiot > under th' lease, and thu nght to grent such easements or nghts-of way upon, ti -ough. ur in the leased area aa may he neceasary or appropnate to the working of nther lands or to the treatment and shipment uf products "hereof hy or under authority of •he lessor.

ibi the right to grant leases for any minerals other than oi' and gas withm the leased area, except that operations under such leases shall not unn-a.sonablv interfere with nr endanger operations under thia lease.

(Otlu nght. aa provided m Section 12(diof theAct. to restrict opera tums in the leased area or any pan tiiereof which may be designated by the Seeretary of Ilvfense, with approval of the Preaident. as being within an area needed for national defense, and so long as such I' -igna'.ion remam:> in effect no operations may be conducted on the

face of the leaded area or the pan thereof included within the designation except with the concurrence of the Secretary of Defenae. If operations or pnxluction under this lease » ' mn any designated area are suspended pursuant to ',his paragraph, iny paymenta of rentals and rnyalty prescnlied by this lease likewise snail he suspended during tuch penod of suspension of operations and prudurtiori. and the term of this leaae shall be extended by adding thereto any such suspension period, and the larssor shall be liable to the Lessee fur such compensa­tion as is required to lie paid under the Cunatitution uf the United Sutes

Sec. 20. Trantfer of Leaae The Lessee shall file for approval with the appmpnate field office of the Minerals Management Service any in­strument of assignment or other transfer of this leasr, or any inUreat therein, in accordance with applicable regulations

(ConUnued on reversei BEST WMLABLE COPY

8 M . X I . Bmnmim W L M M . The U M M may surrender this entire laaM or any officially designated subdivision of th* leaaed ana by fil­ing with th* appropnale field offic* of th* .dinerals Management Ser vice n written rebnquishmer.l, in triplicate, which shall be effective as of th* date of filing. No surrenJer of thia I M M or of any portion of the leaaed ana shall relieve the Lesaee or i t t aurety of the obligation to pay all accrued rentals, royalties, and other financial obligations or to abandon all wells on lhe area to be surrendered in a manner satisfac­tory to the Director.

S M . XX. Be—ral of Pnparty M T*nnlnatiea of LOOM. Within a period of on* year afttr termination of thia IOOM in whol* or in part the Laaaee ahaU remove all devices, worka. and structures from the premiaea no longer subject to the lease in accordance with applicable regulations and orders of the Director. HOWOVM. the Lssas t may, with the approval of the Director, continue to maintain devices, works, and slnictures on the leaaed area for drilling or producing on other leases.

S M . XS. geMedlM In Caae of D*faiUt (a) Whenever the Leaaee fails to comply withany of the provisions of the Act the reguUtions issued pursuant to the Acl, or Die terms of this leaae, the lease shall be subjeci

to cancellation in accordance with the proviaiona of Section 6(c) and (d) of th* Act and th* Lessor may exerciae any other remedies which the Laaaor may havt. including the penalty proviaioM ai Section 24 of thc Act Furthermore, pursuant to Section 8(0) of the Act the Lesaor may cancel the leeoe if it ia obtained by fraud or miarepreaenution.

(b) Nonenforcement by the Laaaor of a remedy for any particular violation of thc provitiont of the Act the reguiationt issuod punuant to the Act. or the terma of thit leate thall pot prevent the cancellaiion of this leate or the exercise of any other remedies under paragraph (a) of thia aection for any other violation or for the aame violation occur­ring at any other time.

8 M . X4. Unlnwihl intereat No member of, or Ddenatt to. C o f W M or Resident Commissioner, afler election or appoinlment. or either before or afttr they hi ve qualified, and during their continuance in of­ficc, and no officer, agent or employee of the Departinent of the In­tarior, except as provided in 43 CFR Part 7. ahnll be admitted to any ahan or part in this leaae or derive any benefit lhat may ariae Iherefrom. Thc proviaion of Section 3741 of th* Reviaed Statutts, as amended, 41 U.S.C. 22. and thc Act of J U M 26,1948,62 Stat 702. aa amended. 18 U.S.C. 431-433, relating to contracta mad* or entered into, or accepted by or on behalf of the Umted States, form a pert of this lease insofar aa they may be applicable.

( I *«ee) THE UNITED STATES OF AMERICA. Lessor

(Signature of Authorized Officer) (Signature of Authorixed Officer)

(Name of Signatory)

(Tide)

(Name of Signatory) Regional Director Gulf of Mexico OCS Region Minerals Management Service

(TiUe)

(Dale) (Dale)

J Address of LeaMC).

UNITED STATES DEPARTMENT OP THE INTERIOR MINEIALS MANAGEMENT SERVICE

Outar Continental Sbalf. Eastern. Culf of Hexico Oil aad Caa Uaaa Sal* 94

OCS-C 8345

Stipulation Bo. 1—Protaction of Archaaoloatcal Raaourcaa.

(a) "Archaeological reaource" neans aay prehistoric or hlatorlc d i s tr i c t , alta, building, structure, or object (Including ahlpwrecks); such term Includes artlfacta, racorda. and remains which ara related to ooch a d ia tr i c t , alto, building, atruetura. or object. (Soctlon 301(5), National Hlatorlc Preservation Act. aa aaandad, 16 U.S.C. 470w(S)). "Oparationa" aaana any drill ing, nlnlag. or construction or plaeeaent of my atructure for exploration, development, or production of tho lease.

(b) If th* Regional Director (ID) believes an archaeological reeouree aey ealat in che leaea area, tbe RD v l l l notify tbe looooe In writing. The lee*** ahal! tUn coaply v l t h aubparagrapha (1) through (3) .

(1) Pr 4 or t o cooBenclng eny operetione, tha leeaae ehel l pro-pore e r e p o r t , ea apecifled by t i e RD. to detaralne th* p o t e n t i a l existence of eny archaeological reeouree that aay be a f f a c t a d by operetione. The r epo r t , prepared by en archaeologist and a geophysicist, sha l l be based on en eeeeaaaent of dete f roa reaote-eenalng eunreye and of other pert inent archoeoloplcal and -nvironmental In foraa t ion . Tbe leeeoe eha l l subnit tb le report to the RD f o r review.

I*) I f th* evidence suggestu that an archaeological resource may be preeent. the leaaee ehall either:

( I ) Locate tbe elte of eny operation eo ea not to adversely affect the eree vhere the archaeological reeouree aey be; or

( I I ) Es tabl i sh to tbe eat lefect ion o f the RD tbat en erehaoologlcle l reaource doee not ealet or v l l l not bo adversely affected by operetione. Thla e b a l l bo done by f u r t h e r archaeolog lca: Inves t iga t ion conducted by an archaeologist end e geophy*lcl*t , using eunrey equipaent end technlquee deeaed neceaaary by the RD. A report on the invest igat ion shal l bn subait ted to tbe RD f o r review.

(3) I f th* RD deteralnee tbat an archaeological reeouree le l ikely te be preeent lo cbe leeee eree end aey be adverooly effected by operat ns, tbe RD v l l l notify tho lessee imne-d iat ely. The leeeee ehell teke no ection thet aey sdvereely ef fect the archaeological reeouree unti l tb* RD hes told the leeeee hov to protect I t .

(e) If che leeeee discovers eny srcheeologlcel reeouree vhlle conducting operations In the leaae eree, tbe leeeee ehall report the discovery Iaaedlately to tb* IS . Th* leasee ehell make every raaaonable effort to preserve cb* archaeological resourc* unti l the RO bee told tbe leeeee hov to protect I t .

Stlpuletion No. 2--Llve Bottoa Areae.

For activities conducted under Plena - f Exploretlon, the provisions of tble stipulation shel l apply only In voter depths of 100 aeters or Ioee. Por activities conducted under Developaent end Production Plana, the proviaiona of thla atlpulatlon ehel l epply In vscer depche of 200 meters or leea.

COW

Prior to ray drilllag activity or tho construction or plaeoamt of ray structure for exploration or development oo this leaae Including, but not limited to, rail d r i l l i n g md pipolino rad p l o t f o n placaeont. Cho lessee v i l l subait to tbo Regional Director (ID) o bathyratry nap proparod ut i l i r ing remote sensing snd/or Othor survey techniques. This u p v l l l Include interpretations for tbo prooraca of live bottoa araas vlthln a alnlaua of 1.820 raters radius of s propoeed exploration or production activity site.

Per the purpose of this stipulation, "live bottoa areas" are daflrad aa seagrass cosaunieiea; or theee areaa vhich contain biological eeeeahlsgss consisting of euch eeeelle invertebrates aa era fane, era rtlpe. hydroids. saeaons:, aacldlans, sponges, bryosoeae. or corala living upon end attached to naturally occurring hard or rocky foraetioae vich rough, broken, or smooth topography; or araa* vho a* llthotope fevore tho accuauletlon of turtloe. fishes, end other faune.

Tbe lessee v i l l aloo submit to the ID photodocumentation of the eea bottoa vlthln 1.820 meters of the propoaed exploration drilling eitee or propoeed plstfora locatioAO.

If it ie doterainod that lies bottoa ereae might be adversely lapactad by tbe proposed ectivity. than the ID vi l l require tha lessee to undertake aay a***ur* deemed economically, environmentally, and technically feasible to protect l ive bottoa ereae. Thase aeaeuree aey Include, but ere not Halted to. the folloving:

(e) the relocation of operetions to evoid live ottea areas;

(b) the ehunting of el l drilling fluids and cuttings in euch e aanner aa to ev .« bottoa areas:

(c) tho trat.spcrtat K approvad dlapo*

d-ll l lng f luid* and cuttings to «t and

(d) tbe aonlcorlng i t bottoa areae to eeacae che adequacy of ray mitigatl . aur** taken end che Inpact of leeeee initiated actlvlcae.

Stipulation Wo. 3—Hlllfry Wamtna Area*.

Warning Arra W-ISI (Eglin API rnd Naval Coastal Systems Crater)

(a) Mold Harmleas

Whether compensation fcr euch daaage or Injury might be due under e theory of scrlcc or abaciote liebility or otharvlae, tho leeeee raeuBee el l risks of danage ur Injury to peraons or property vhich occur in. on. or ebove the Outer Continental Shelf (OCS). co ray persoi-.s o' te any property of eny pereon or persona who are agenta. eaployeea, or Invitees of the leeeee, ble agents. Independent controctoro, or aubeontraetora doing business vlth the leeeee In connection vlth eny activities being perfecaed by the leeeee In. on. or ebove cbe OCS, tf euch iniury or deaege to euch pereon or propercy occurs by reeeon of Che activit iea of eny egency of the O.S. Government. I t * contractors or subconcrsctore, or eny of choir offlcere, egante. or employees, being conducced ee e psrt of. or ia conneccion vich, che progreae end activities of the Commander, Naval Coaetel Systea Center, Cede 30, Pamma City, Plorida, end che Commander, Armament Dlviaion. Eglin APB, Plorida.

Notvicheteadlrg ray llaltetlon of ch* leeeoo'e liability in Section U of the leeee, che lesaee aeeuaea tble riak vhether euch Injury or deaege le caused in uhole or In pact by any act or omission, regardleee of negligence or feult. of tbe United Statee, ite contreccore or subcontractora. or ray of ite offlcere, agents, or employees. The lessee further egreee to indemnify rad aave harmless the United Stetee egeinet ell cleiae fer looe, deaege* or injury sustained by the leeeee end to Indoanlfy end eeve baralces tbe United Stetee sgsinst s l l cleiae for Ioee, deaege. or injury sustained by tbe agent.-,, employ tes. or inviteea of the leesee, hie egents. or ray independent contraetora or subcontractors doing buelneee vith tho leeeee in connection vitb chs progrsas end ect lvl tlee of che ebove coaaand, vhecher che eeae be crarad In

whol* er In part by the ntgllgence or faalt of cha Ualtad Stotoo. Ito contractor* or aubcontractors, or any of I t s of f lcors . agant a, or aaploy ees and whether oocb cleloa Bight bo sustained under a theory of Strict or abaolute l iebil ity or othonriea.

(b) Electroaagnacic bdeslona

The lessee egreee co ooatrol hie own eloctrnswgnetic osdeeione end chone of hie egents. enployees, inviteee, independent conCractors. or subcontractora, ensnsting frca individual deelgnated Department of Defense (DOO) varnlng areae ia accordance with requirements specified by tho commander a of tho I f—Slid headquarters Hated above to the degree naeaaaary to prevent daaage to, or unacceptable intorforonce vitb DOO f l ight , coating, or operational act iv i t iea . conducted vithin individual deeignsted varnlng araaa. Macoeeery aonlcorlng control end coordination vith tho laeaoa. hia agente, eaployeea, invi tooo. Independent controctoro or aubeontraetora v l l l be effected ty tho cn—endor of the Appropriate onshore a l l l t a r y installat .a conducting operetione In tho particular varnlng area; provided, however, thac control of euch electromagnetic emiaeions ehell In no inatance prohibit e l l manner of electromagnetic coaauuicatlon during any pariod of time between a laaaaa. hie egante. employeeB, inviteee, independent contractors, or subcontractors, end onshore f s c i l i t i e s .

(c) Operstiona! Controls

The leeeoe. when oporatlng or causing to bo operated on hie behalf boat or a i r ­craft t ra f f i c in cho individual designated varnlng aroa, ahall enter into an agreement vith tbo coaaander of tb Individual command headquarters liated above, on u t i l i s i n g an individual designated warning araa prior to commencing euch tref f l c . Such an agreeaent v i l l provido for positive control of boats end eircreft operating in tha varnlng araaa at a l l tines.

(d) Evacuation

Mhen tbe act iv i t i es of tho Araonent Developaent end Teet Center et Eglin Air Poree Iaee. F lor ida , aay endanger personnel or proparty, tbo leaaaa agrees, upon reeelpt of a directive froa the Regional Director (RD). to evacuate a l l personnel froa a l l atructurea on the Ioooo and to ahut-in end secure a l l walla end equipaent. including pipolines on the Ioaoo, within 48 hours or vii.bin ouch other period of t iao oo aoy bo specified by cho directive. Such dfroctivo ehsll aot reguire evacuation of personnel and shutting-in and securing of equipaent for a pariod of tlaa graatar Chan 72 hours: howavar. each a period of tins asy ba extended by a eubeequent directiva froa the ID. Equipment and atructures aey remain in place on cbe leaaa during auch tiae ee the directive remains tn of fac t .

Btipuletion Wo. 4—Trtneportetlon.

(e) Pipolinoo w i l l ba roquirod: (1) i f pipalina rights-of-way eon be detenined end obtained; (2) i f laying of euch pipelines ie technologically feeslble end environmentally preferable; end (3) i f . in tho opinion of tho leeaer. plpelinaa ean ba laid vithout not social looe. Coking inco eccount eny Increaentel coece of pipelines over alternative aethods ef transportation end eny Incremental benefita in tbe f o n of incraaaad environmental protection or reducea multiple woo confl icts . Tbe loooor opocificolly reserves the right to require that any pipalina need for transporting produccion to ahore bo pieced in certain deaignated management areas. In selecting the means of transportation, eonoidorotion v i l l be given f dny rocoaaendetlone of tbo Regional Technical Working Croup for aasessment and mansgement of tranaportation of offehore o i l end gas v i th tho participation of Padaral. State, end local governments and Induatry. A l l pipaiinaa. inclading boch flov lines end gathering lines fer o i l and goo. ohall be designed and conatrueted Co provide fer adequate protection from water currents, storm scouring, and ocher hessrds es deterained on e case-by-case baala.

(b) Folloving cho development of sufficient pip«l ine capacity, no crude o i l v i l l be transported by aurface vessels froa offehore production eitee except in the caae of eaergency. Determination ae to emergency condltlone end eppropriete responses to theee conditio- s v i l l bo node by Cho Regloral Director.

B E S T WMLABLE COPY

(c) Men th. thrM erlttria Mt forth la tho firot ooatonco of thio otinoU-tlon aro aot aot oad oarfoeo traaaportatioa aoot bo taployad, a l l vaoaata aaad for ctrrying hydrocarbona froa tho loooad araa v i l l conform with al l ttandardt aatabllahad fer anch vaarala. purauant to tbo Porta and Hatarvaya Safaty Aet (33 O.S.C. 1221 at e«q.).

ttioulation »e t S—Iaatrlctlon on Exploretlon Aetlvitleo

The plaraaMt. locatioa, aad planned parioda of opera' n of aurface atructuraa on tble IOOM during tho exploration attge ore aubjoc approval by tha Regional Diractor (ID) after tho revlev of an operator • an of Exploration (POE). Prior to opproval of tbo POS. tba ID ahall con ault vith cho Coaaander, Aaaaant Divio ion. Egim Air Perce Booo. Plorida. and tbo CoMondina Offlcar, SMOI Coeatal Syetoao Contac, Panama City, Plorida, in ordar to determine tha POE a compatibility vitb scheduled military operationa. Tbe POE v i l l aerve ao Che lutraaoat fer promoting a predictable and orttrly dlatribution of turface structuree, determining tlu location and danalty of each atructurea. aad aoxiaialaf exploration while minimi ng confllcta with Doportaont of Defenae activitiea. A POE will bo ditapprovad la acccrdance wich 30 CPI 250.34-1(e) (2)(iii) if it ia determi.ied that cha propoeed operetloao will raault ta interference with acheduled militery aieeiono in euch e manner aa to pottibly Jooperdiaa tho nacional dafooM ar to pooo uneccepteble rieka co l i fa and property. Moreover, i f there ie e serious throat of bora or damage to Ufa or proparty, or i t ic ia ia cha Intaraat of national aecurity or defente. approve*1

operatione aey bo auapended ia accordance with 30 Cfl 250.12(a)(1)(11) aad ( l i l ) . Tbe tera of tbo IOOM v i l l bo extended to cover cho pariod of auch eoepeaelon or prohibition. It le recogalxed that tha Ittuance of a leaoo conveyt Cbe right Co tha lessee as provided in Section 8(b)(4) of the OCS Lande Act to engage in exploretion. development, and productioa activities conditioned upon other Ototutovy and regulatory requirementa.

I n Reply Refer To : K > - 3 - l iMM 0 6 1988

S h o l l Offst iure I n c . A t t o n t i o n i Proper ty Ao iu ln l&t ra t lon P o s t O f f i c e Bo* 576 Houston* Texas 77001

Gontleurmt

>**—mmm

On Oeceuber 20* I9d4» & l e t t e r was torwaroco t c you as n o v l f i c a t i o n * pursuant t o S t i p u l a t i o n t to. 5* t h a t App l i ca t i ons f o r Pormit t o D r i l l t o I n ^ l euen i epprovoc Plans o f E x p l o r a t i o n ^ I t h i n a s p e c i f i c u r i l l i n g windom f o r a bpec I f lc tltoe p e r i o o would ou u t l l l z o e as t he <.«ans of approving the t i d i n g o f placesont ana l o c a t i o n of &urfaco s t r u c t u r e s associated w i t h exp lo ra to ry O r l l l l n g on a f f e c t e o leases ana ' o r uax l t nU In^ e f f i c i e n t e x p l o r e t l o n and lu ln lo i iz lns c o n f l i c t s t o Departine, o f Defense a c t i v i t i e s .

On Fehruary 4« 1965* a Not ice t o Lessees and Operatorsr No. 65-2* " E f f e c t o f D r i l l i n g "t i lndow* App iova ls * " n o t i f i e d appl I ca t tu lessees o f the e f f e c t o f f i x i n g the d r i l l i n g wlnouws. I t s t a t o s In p a r t t h a t pursuant t o 30 LF.. 2 5 0 . U a H I X U D * a suspension o f operat ions w i l l be d t rec tec artd w i l l be in e f f e c t f o r a l l leases In t he Eas tem Gulf o f Mexico which were Issued pursuant t o t n e January 5* 1964* lease o f f o r i i . ^ t h a t c o n t a i n S t i p u l a t i o n t io. 5 anc which are not l oca tec w i t h i n an approved o r l 11 inc, window. S imi la r suspensiuo^ w i l l l i k e w i s e bo d i rec tou oy separate l e t t e r s f o r a l l such leases a f f e c t e d by f u t u r e d r i l l i n g window openings ano s h a l l be e f f e c t i v e as u f t h e date o l the openings of t ne c i 1; . i;.. windows.

S ince Lease^JCS^G,6245* Dor»tlti L'OH.O i i l c ck 201* was not Included in tho c u r r e n t l y ttpprovec f i f t h d r i l l i n g window a t o u t l l n o u In our October 23* 19b7* l e t t e r * wu ^roby u i r e c t a Suspension o f opera t ions f o r Lease L C ? - ' . 6345 t o cotiwience .nuary I * 1968i and iuir . i1natv* pursuant t o 30 CFK 250 .12 (d } (2 ) , when thu d r i n . winaow In wnich t h i s lease i s t i c i ucuu Is upeneo. Pursuant t o 30 CFR 25t . ' u ) ( l ) « t i te cen of t f i i s Iwose w f l l bu extenueu fo r a po r fb t f w

o f t l u a equ lvd ic i i t t o t he perioo chut t i l l s suspension of opera t ions i s in u f f e c t .

NOTED - HDTOTnOB

iM «ccoro«ftC9 w i t h thm pivcodores t o r c o l l e c t loa o l r e n t A i s «itc roy*) t10& cite Uta Fdo«r«) l tovern««fi t« tne f c i ' uw inv , M ^ U I C De neteet

1 . PurftUMit t c end censtsxent M i m Uie |»iu*pcM o f 30 CFH 2 I t , 1 5 4 ( « i « no , yuent of r e n t e l o r ftilniaum r o y e l t y shai t i>e roqu i rod f o r o r cur tny ^hu per ioc of u i&puneion.

2 , Pursueut t o 30 CfR . . . ^ » e u t U not rosu i rue in edvunce of uny leeee enn Uur sary uuv. s i l b l t t U.v* ^ r i u * . o f suepeublue o f operat ions, houever* prorateU renvai s i i i Ue aue end payable a i of the dete t l i i a bu&penuion o f operat ions t e r u l n a u e s , Tne afnount of r u i a a i Cue v i l l De coupuieo anc ycu m U l DO n o t i f ieo t h e r e o f . Th« atnount uuu sh«.i > u . pate u i t h to 30 days a f t e r rece lpv c t seen n o l i c e . Tne ai .n iversary oa lu of U t l s iease a l l l not chaoge heuausu uf t h i s iease suspension or the ren ta l r e l i e f r e s u l t i n g t h o r e f r o u .

i f yuu havu any v iues t ions c o n c u m ) ^ ti.esu pa^went proceduree* please contac t the Chief v f t h e Reference Data Branch* Minerals har.ojjeMsa Surv Ice* Lakeuuoo. Ccloraoo* a t (303) 231-3437.

b i nee re l y yuui *f

Or ig Sgd.) J . nogei s Pearcy

J . Rogers Peaicy Rey lone i D i rec to r

hect Royaltv M n e ^ e u e n t Pro i rup IF/iDHiDU) LIS 652. Lease OCSHi 0345 (CPS-3-2/ PRO 9 (OPS-3-2) ORD deeding F i ie

LFO-5 I A - > 1 0 P ^ a

QATrante.'* i j (PD-3- i ) ; i op t 0 i - 0 5 - o u i u i s x - l « \

GOV

^ 3

fn Rtpl> Refer To: PO-3-1

Shull Offshore Inc. Attention: Prooer Vy Adfiilnlstretlon Pott Office SOA 576 NoyttM. Texas 77001

ten Oa LA,J>ei ZO* J?o4, i letter Mas fwadrueu to /M I sf nc L. f icat loi.. parMant to Stlpaiailon No. S* Uiat AM)Ucatior« for Paralt '.o Dri l l t^ It^lenent acorovec Plans of Ca^lotatloa MlU;.. a specific dril l iny w'.Ow w for a specif le tlaa parlod would be vt . I i ika as tha neans ot approving tha tU<lng ol placanent and locatior of surface ttructarns associated Mith exploratory drilling on affected laasas and for uaxlolzlw afflciant exploration ind •Inialxlng conflicts tc DeperUfit of Defense act iv i t ies .

On Februery 4. 1985. a Notf..c .c .assets ano 0,Mrator£. No. 65-2* "Effect ot Mi l l . iy "Window* xppicv* ..^ notified applicable Ussees of tha effect of i ainy these dri i l ing •-In UM*. It states Sti part i. ^;;rsuant to Al CfR 250.12(*;v31 (currentl, 30 CfR 250.1C(b)(i:.i. e sespc.' * ion of operations Mill Oa directed a.c will ba In effact fa. a l l i j v s In Ue Eastern Gulf ..f Haatcu uhlch were Issued pursuant, to tha J« . - 5» l.'h4 lut.se effarlM that contain Stipulattor fto. 5 and .' . ich u l ' • •c« Mithin an appr;i»cd hr in iny window. Sla l lar mtpeaol^ri ' .^u.1se c dlrectoJ by v o.rata letters for ..li such le^-.cs aff»< .ga ty u u a drl l i lny wlndeu 'oMfr.s ^nd shall be ef/s^tive as of tha date of tue J c.-.t igs o' t* k <r*' I' .tt .1 M)OWS.

I^as : 5-u &i4S. Oestin Dos« Blouv. xas not i.-^iuued In tha seventh dri' ... ^ M nuow as outllnao in our tCwieuber 13. 1912. i ( U e i . tto hereby ut.*-. a suspension of operations for OCS-G C345. to coruk.nce October I, WU. nd terUnato. pursuaiit to 30 CFR 2SC.10(j ) t whc. a dri l l ing window in u nc' this laasa Is Included is opened. Pursuant to 0 CFR 250.10(f). Uie of this lease will be eiunded for period of Umt euulvah i A> Uie period that this suspensicri U operatioi... U in effcci

.ml •5jW'f| ,"!'

lm ort?* Ue prectOMrti for coll ect fon pf rtnttls tie rtdtral teMfMwt. tht tcllowlns shouio bt noted:

end c It Us

_ > ' ^ f S " ? ! f t i P t r t i « U t purpose of 30 CFR 21*.IS*,ft), no p^.,;r.c of / w U l ST afaltM royalty shar. St requ«reo for or dw UM Ptr ltd vif stlpretgfor ^

of 2. Purs. - .Jt U 30 CfR Zifi.lMu}. U l ptymf«t ^ er

turret of at ease annlversiry data u l l ^ wiu If t. .* + . of i ^ ^ u l t * ef vptrttltnt hMMVtr. pror tted rental will bt «a« aad ptythlt ar of U N dtte this stf>«iBlea ef G e»a I** teralietes. (t t ew^t of . v ^ ' set will ^ f g i ^ m i l » ^ ^ * ' * t h m * * . T ^ a a f eta.: . ihtn beptld within 30 days t^ttr nmA* J >«ch tett^i. Tbt v mivr.r.u* ditt ef U i i lease will not ciwinge btcb> rf i . is leas.- suspetsloo w the reetsl relief resulting therefroo.

t f m . t i p aty question ^ncern.-.c these payaant procedir «, pItase ceattct tht Chief ef USc hafsres^a U U Branch, mt r * * * ^iietaaal Strvict, Ukewood. Colo. aro. at (303) 231-3437. —rw—

Slaeerely years.

it-ig Uff *' wvr .lt r* GuiUoj.

Ralph J . Nr jtisceo Regioaal atparvlsor Production and Oavalopuant

bcc: Royal Managescnt Program i\ C-RDB) (HS 657 Leasa OCS-6 8345 (OPS-3- V

.PRO 9 (OPS-3-2) if0-3 Lf-3-1

. nur, 2:(P0-3-l):rap:09-7-88:01 sk-lA

^ 4 I n Reply Refer To: MS 5321

Shel 1 Onshore Im . A t f .'.ion: Ms. Hiiry Ooklenos Prs t Office Box 61933 iiew Orleeiis, Lcuisiana 70161

Gentlemen:

5? le t te r of Decenber 20, 1984, you were no t i f i ed thdt Applications for pemf t Lo D r i l l would be u t i l i z e d to loplemeot approved Pluis r f Exploration w1th!n a spec i f i c d r i l l i ng window fo r & specific t ine parloh. Tiai. lett^-. specified the onans of approving the timing of placement and locai ion «>f surface structures associated w i th exploratory d r i l l i n g ori affec>e0 leases while maximizing e f f i c ien t explorat ion and minimizing confl lc'.s to Departnent of Defense ac t i v i t i es .

Or ebruary 4. 1985, a Notice to Lessees and Opers to rNP« 85-2. "Effect of D r i l l i n g 'Window' Approvals." not i f lea applicable lessees of the ef fect of f l /x ing these d r i l l i n g windows. I t staces in part thot pursuant to 30 CFR 9 ^0 .12 (a ) ( l i ( l i i * (cur rent ly 30 CF: ^ . 1 0 ( L ) ( 3 ) ) . a suspension of operations ( S C J ) wi l l be directe*! and w i l l b.' i.i e f fect for a l l leases in the Eastem Gulf of Mexico which were issued ^nz'xmX to the Ji nuary 5, 1984, lease e f f f . '. K- that contain St lpu la t ic i i No. 5 ano which a.e net located within m ap> 0\'ed b i l l i n g window. Slr. i lar ^jspersions w i l l ^.kewlse be directed by r*r '%rtwe levters for a l l such lease*, a f f i c ted by future d r i l l i n g window i . enlogs and shall be e f fec t i ve as of the date of the openings of th» d r i l l i n y windows. Only one d r i l l i n g window w i l l be open at any time.

The GCS-G senai nu»L>ers Indicated on the enclosed H s t for leases *;« v'h<.* Dest in Dome Area were not Included in the f i f teen th d r i l l i n g window as out l ined in our Apr i l 23, 1991. l e t t e r . Therefore, we hereby d i rect a-t SOO f c r cach lease specif ied on the enclosure to cor, -ence February 1, 1992. and _

te i lb lnate. pursuant to 30 CFR 250.10(j) , when a d r i l l i n g w'.ndow in whlcS th i s Uase is included is opened. Pursuant to 30 CFR 250.10(f). the term of ih r. leasr* 'AW be ex undea for a period of tima equivalent to the period that t h i s SOC is in eftaut.

In ac. ordance w!t' the procedures for col lect ion of rental •. tnd royal t ies due the Federal Governuei.U t!>e followiny should be noted:

1. Pursuant 'cr and CORt1tt?Rt m l . thc purpose of SC. CFR 218.154(a), no •iayment of rental or r tn lnun royalty shall be required for or during the psr iod of suspens.fr.

W s e « • v c o

FEB C \ 1992

2 . Putsuant to 30 CFR 2.8.154(c), r e r i ^ payment i s not required In advance of am lease annlvers iry datt f a i l l r g within t h i s period of suspension. However, pror* J.I ent*)'. v i V be due and payable ss of .ne date i h i s SOO teruinates. The afcc^*- ,f rental riue w i l l be computed, and you w i l l on n o t i f i e s thereof. Tte aar* ooc- *hall be pa i i wi th in 30 days a f ter rece ip t stch ««vtfet. The anniv-rwry datr of tMs lease w i l l not charge because of t h i : W s e ^uspen-ilon or the rental r e l i e f resul t ing therefroo.

Xf vou heve any ' u c t i o n s concerning these payaent procedures, olease co r rec t Mr. Charla f . Ross, Reference Oata Branch, Minerals Manege^t s#r . ^ce, Lakewood, CoivrS'te, at (303) P31-3857.

Sincerely,

ftrlff. f l f fnoi - J . Roc J . Rogers Pearcy Regional Director

Enclosure

bcc: Royalty Management P ro j ra i . u/encl (FAD-ROB) (MS 3240) Lease OCS-G 0327 w/encl. J337, 8338, 3339, 8341, 8342.

8345 (MS 5032) 1101-02a(3)(b). Lease OCS-G 8327 w/encl, 8337, 8338.

8319, 8341. 83-1:, 8345 (IIS 5321) fS 5000 Reading F i le MS 5232, w/encl

Zifi.5250. w/encl MS 5421, w/e- i MS 5030. w/er. .

KJKarl :css:wp51:driUwin.doc:January 2£. 1992