Page 23 - Petrospex_Elaine Prospect

4. Operator shall pay and discharge all cost and expenses incurred pursuant
hereto and shall charge each Owner with her/his proportionate share
thereof. All charges to Owners shall be payable to Operator in Breckenridge,
Texas. Charges and credits to the account shall be made in accordance with this
agreement and the Accounting Procedure, attached hereto as Part “B”, and made a
part hereof for all purposes. Operator shall maintain sufficient insurance coverage
for the joint benefit of the parties of the types and in the amounts specified in Part
“C”.

5. At Operator's election, Operator shall not be required to rework any well,
install any equipment or perform any work or operation hereunder unless
and until each Owner shall have advanced her/his proportionate part of the
estimated cost thereof, or shall have secured the payment thereof in a
manner satisfactory to Operator. At Operator’s election, if after 30 days
notification of proposed rework any Owner has not tendered their pro rata
share of the estimated cost, Operator may proceed with the proposed rework
any Owner’s interest in the entire property who has not tendered their pro
rata share of the cost will forfeit their entire Working Interest in the
property/lease.

6. If this Agreement is applicable to a property which requires additional wells
to fully develop it and Operator desires to drill an additional well(s) on the
property. Purchasers will be notified in writing of any such proposed
Subsequent Development of the Prospect not less than thirty (30) days prior
to the commencement of activities and must expressly exercise their rights to
participate therein by tendering their pro rata shares of the assessment
therefore within fifteen (15) days of receipt of such notice, or they lose their
unqualified rights to participate therein and their pro rata interests may be
sold to third parties. Each Owner that elects not to participate in any
subsequent development will forfeit her/his interest in and to their
undeveloped portion of the property and in all future development and such
interest shall revert to Operator except that each Owner will retain her/his
interest in and to the well(s) previously drilled or reworked and its
production unit.

7. OPERATOR'S LIEN

A. Each Owner hereby grants to Operator a first and prior lien on
her/his interest and rights in the property and her/his rights hereunder
and, on her/his interest in and rights to the production of oil, gas and
related hydrocarbons from the property and the proceeds thereof, and on
her/his interest in all material and equipment on the property or used or
obtained in connection therewith, to secure payment of her/his
proportionate share of all the costs and expenses incurred by Operator on
behalf of the parties hereunder. In the enforcement of such lien, in

Operating Agreement - Page 3 of 15