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OPERATING AGREEMENT: Elaine Prospect

THIS AGREEMENT is made and entered into between Royal Texan Resources,
LLC hereinafter referred to as “Operator,” and

(Hereinafter referred to as “Owner”)

W I T N E S S E T H:

WHEREAS, Owner owns an undivided working interest in a certain oil, gas
and/or mineral lease, the location and description of which are attached hereto as
Part “A” and made a part hereof; whereas, Operator shall develop, maintain,
operate, produce and abandon the property described in said Part “A” on behalf of
Owner and all other persons owning interest in the property, all in accordance with
the terms of this agreement;

NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties hereto, for themselves, their successors
and assigns, in and to the undivided interest in the leasehold and/or wells to be
drilled or reworked situated and described in Part “A”, do hereby promise, covenant,
and agree as follows:

1. Royal Texan Resources, LLC is hereby designated as Operator of the
property. Owner hereby engages Operator to develop, maintain, operate,
produce, and abandon the property. Royal Texan Resources, LLC may also
own working interests in said property and those interests are subject to the
same charges and conditions herein laid out to all Owners.
2.
A. All costs, expenses and liabilities accruing or resulting from the
development and operation of the premises pursuant to this
agreement, shall be borne by the Owners in proportion to their
respective ownership interests, except drilling, testing, completing,
equipping and other development costs which are covered by the
separate Purchase Agreement between the parties.
B. All production of oil, gas and other minerals from the property are
subject to the payment of royalties, overriding royalties and the
satisfaction of any other encumbrances applicable to the respective
interests of the parties.
C. All materials and equipment acquired in connection with developing,
operating, maintaining and producing hydrocarbons on or from the
property shall be owned by each party hereto in proportion to his/her
respective interest in the property.

Operating Agreement - Page 1 of 15