Page 35 - Petrospex_Elaine Prospect

P A R T “C”
INSURANCE

Operator shall, at the joint expense and for the joint benefit of the parties hereto, at
all times while operations are conducted hereunder, provide with responsible
insurance companies, insurance as follows:

3. Commercial General Liability Insurance:

$1,000,000.00 for each occurrence.

$2,000,000.00 General Aggregate

The Operator shall promptly notify OWNERS of any loss, damage or claim
not covered by the insurance obtained hereunder for the joint account.

Operator shall notify OWNERS in writing, if it is unable to obtain or
maintain such insurance.

A. Except by mutual consent of the parties, no other insurance shall be
maintained for the joint account and all losses not covered by such
insurance shall be charged to the joint account. Each independent
contractor performing work for the joint account shall be required to
maintain in force, with respect to the work performed by such contractor,
the same insurance as that specified above, and whenever Operator
performs a drilling or reworking operation for the joint account with its
own equipment, Operator, at its own expense, shall provide the same
insurance coverage in respect thereof as would be required if the work were
performed by an independent contractor.

B. It is understood and agreed that Operator is not a warrantor of the
financial responsibility of the insurer with whom such insurance is carried,
and that except for gross negligence, Operator shall not be liable to Non-
Operator(s) for any loss suffered on account of the insufficiency of the
insurance carrier, or of the insurers with who carried.

Operating Agreement - Page 15 of 15