MASTER WORK/SERVICE AGREEMENT

THIS MASTER WORK/SERVICE AGREEMENT (this “Agreement”) is made and entered into this ______day of ______, 201___ (the “Effective Date”), by and between Capitan Energy, Inc., a Texas Corporation (the “Company”), and ______, a(n) ______(the “Contractor”) (collectively the “Parties”).

In consideration of the mutual promises and agreements herein contained, the Company and the Contractor do hereby contract and agree as follows:

1. Services. All work (“Work”) which may be Company’s convenience, the Company shall offered by the Company, either orally or in incur no liability to the Contractor by reason of writing, and accepted by the Contractor during such termination, except that the Contractor the term of this Agreement, or any other work shall be compensated for all Work performed that is performed for the benefit of Company prior to the termination date together with all after the Effective Date, shall be subject to and reasonable expenses incurred by the Contractor governed by all the terms and provisions of this which are directly attributable to the Agreement to the same extent and with the same termination, the total of which shall in no event effect as if the terms and provisions herein were exceed the contractual price agreed upon. incorporated in any work order, either oral or Termination of this Agreement for any reason written, given to the Contractor by the whatsoever shall not affect (1) any right or Company, any delivery ticket, purchase order, obligation of any party which has accrued or invoice, and other papers or documents executed vested prior to such termination, which is hereby or passed between the Parties in connection with deemed to survive the termination of this the subject matter herein (collectively “Work Agreement or (2) any continuing obligation, Order”). If there is a conflict between the liability or responsibility of the Contractor or his provisions herein and any Work Order, then the subcontractors which shall otherwise survive the provisions of this Agreement shall be termination of this Agreement, including, controlling. Nothing herein shall be construed without limitation, the Contractor’s to require Company to use the services or any indemnification obligations under this services of Contractor or Contractor to accept Agreement. Work offered by Company at any time and both parties may contract with competitors of the 3. Contractor Warranties. The Contractor agrees other for Work. to perform all Work with due diligence and care, and in a good workmanlike manner satisfactory 2. Term. This Agreement shall commence on the and acceptable to the Company. In addition to Effective Date and shall continue in full force any specific guaranty required in the applicable and effect for a period of five (5) years from that Work Order, the Contractor agrees at its own date, unless sooner terminated by the parties as expense to replace or repair any faulty or provided below (the “Primary Term”). Upon defective material or workmanship in expiration of the Primary Term (and each connection with a job within one (1) year from Extended Term), this Agreement shall the date of final completion of such job. In automatically renew for successive six (6) addition, the Contractor shall be responsible for month periods (each such period an “Extended and pay for replacement or repair of adjacent Term”) until such time as the Agreement is materials or work which may be damaged due to terminated by the parties as set forth below. The the failure of the Contractor’s material or Work Contractor may terminate this Agreement at any and/or damaged as a result of the replacement or time by giving the Company ninety (90) days repairs thereof. If Contractor has not prior written notice via Certified Mail, Return commenced such repairs within ten (10) days of Receipt Requested, of such termination; notice thereof and diligently pursued completion provided, however, the Contractor shall have no of such repair, Company may undertake such right to terminate this Agreement pursuant to repairs and Contractor shall reimburse Company this paragraph for any job in progress. The within ten (10) days of invoice for all reasonable Company may, at any time, terminate for its costs incurred by Company for such repairs. own convenience this Agreement or any part of the Work or all remaining Work in connection 4. Liens. In connection with all Work performed with any or all jobs by giving thirty (30) days by the Contractor for the Company, the written notice via Certified Mail, Return Receipt Contractor shall pay all legal claims for labor Requested, of such termination to the and material and agrees that it will not permit Contractor. In the event of termination for the any liens of any kind to be affixed against the

D:\Docs\2018-04-03\01203c2e18bbb4f059553f233ed72f2b.docx Page 1 of 13 property of the Company or the lease or DEFEND, INDEMNIFY AND HOLD property of others arising out of claims of the HARMLESS COMPANY GROUP, FROM AND Contractor’s employees, mechanics, or AGAINST ALL CLAIMS, DEMANDS, materialmen. If such liens are so affixed to any LIABILITIES, AND CAUSES OF ACTION OF such property in violation of this paragraph 4, EVERY KIND AND CHARACTER WITHOUT Contractor shall cause same to be released LIMIT AND WITHOUT REGARD TO THE within ten (10) days of notice from the CAUSE OR CAUSES THEREOF OR THE Company. Upon the completion of any job, the NEGLIGENCE OR FAULT (ACTIVE OR Contractor shall, if requested, furnish the PASSIVE) OF ANY PARTY OR PARTIES Company with satisfactory evidence of the INCLUDING THE JOINT OR CONCURRENT payment of all such claims. THE CONTRACTOR NEGLIGENCE OF A MEMBER OF COMPANY AGREES TO INDEMNIFY, DEFEND AND HOLD GROUP, AND INCLUDING, WITHOUT HARMLESS THE COMPANY AND ALL OTHER LIMITATION, ANY PRE-EXISTING INDEMNITIES AS DESCRIBED BELOW FROM AND CONDITIONS, DEFECT OR RUIN OF AGAINST ALL SUCH CLAIMS OR LIENS, and further PREMISES OR EQUIPMENT, ANY THEORY agrees that any sums due to the Contractor by OF STRICT LIABILITY, REGULATORY OR the Company may be withheld and applied STATUTORY LIABILITY, PRODUCTS toward the discharge or payment of any such LIABILITY, BREACH OF REPRESENTATION claims or liens to prevent the filing of a lien or OR WARRANTY (EXPRESS OR IMPLIED), to release a lien that has been filed without BREACH OF DUTY (WHETHER STATUTORY, obligation to participate in any controversy or CONTRACTUAL OR OTHERWISE) ANY negotiation between the parties or liability to THEORY OF TORT, OR BREACH OF Contractor for any amount so paid. CONTRACT, ARISING IN CONNECTION HEREWITH IN FAVOR OF CONTRACTOR 5. Limit on Indemnity. If the indemnities or GROUP, INCLUDING BUT NOT LIMITED TO insurance required in this Agreement hereunder ANY CLAIM ON ACCOUNT OF BODILY are judicially determined to exceed the INJURY, DEATH OR DAMAGE TO maximum limits permissible under applicable PROPERTY, BUT SPECIFICALLY law, then the indemnity and insurance EXCLUDING ANY CLAIM MADE BY requirements shall automatically be amended to CONTRACTOR AGAINST COMPANY FOR conform to the maximum limits permitted under BREACH OF THIS AGREEMENT AND ANY such law and will be liberally construed to CLAIM HEREUNDER FOR WHICH effectuate the intent and enforceability of these COMPANY HAS AGREED TO INDEMNIFY provisions. Furthermore, for Work performed in CONTRACTOR GROUP. the State of Texas and covered by TEX. CIV. PRAC. & REM. CODE ANN. §§ 121.001-007 (B) COMPANY AGREES TO PROTECT, DEFEND, (Vernon 1986 and 1992 Supp.), as amended, (a) INDEMNIFY AND HOLD HARMLESS Section 6 below is subject to and expressly CONTRACTOR GROUP, FROM AND limited by the terms and conditions of that AGAINST ALL CLAIMS, DEMANDS, statute, and (b) that statute is incorporated LIABILITIES, AND CAUSES OF ACTION OF herein. EVERY KIND AND CHARACTER WITHOUT LIMIT AND WITHOUT REGARD TO THE 6. INDEMNITIES. CAUSE THEREOF OR THE NEGLIGENCE OR FAULT (ACTIVE OR PASSIVE) OF ANY As used herein “Company Group” means PARTY OR PARTIES INCLUDING THE JOINT Company, Co-lessees, lessors, joint venturers, OR CONCURRENT NEGLIGENCE OF ANY partners, co-owners, affiliates and contractors MEMBER OF CONTRACTOR GROUP, AND (including subcontractors of every tier) and each INCLUDING, WITHOUT LIMITATION, PRE- of their owners, partners, shareholders, EXISTING CONDITIONS, DEFECT OR RUIN members, officers, directors, managers, agents, OF PREMISES OR EQUIPMENT, ANY employees, and invitees, but excluding all THEORY OF STRICT LIABILITY, members of Contractor Group. As used herein REGULATORY OR STATUTORY LIABILITY, “Contractor Group” means Contractor and its PRODUCTS LIABILITY, BREACH OF joint venturers, partners, co-owners, affiliates REPRESENTATION OR WARRANTY and subcontractors (of every tier) and each of (EXPRESS OR IMPLIED), BREACH OF DUTY their owners, partners, shareholders, members, (WHETHER STATUTORY, CONTRACTUAL officers, directors, managers, agents, employees, OR OTHERWISE) ANY THEORY OF TORT, and invitees. OR BREACH OF CONTRACT, ARISING IN CONNECTION HEREWITH IN FAVOR OF A MEMBER OF COMPANY GROUP ON (A) CONTRACTOR AGREES TO PROTECT,

D:\Docs\2018-04-03\01203c2e18bbb4f059553f233ed72f2b.docx Page 2 of 13 ACCOUNT OF BODILY INJURY, DEATH OR above the surface, while the DAMAGE TO PROPERTY, BUT radioactive source or material is SPECIFICALLY EXCLUDING ANY CLAIM in the sole custody or under the MADE BY COMPANY AGAINST sole control of any member of CONTRACTOR FOR BREACH OF THIS company group, including the AGREEMENT AND ANY CLAIM expense of containment, HEREUNDER FOR WHICH CONTRACTOR cleanup and disposal; and HAS AGREED TO INDEMNIFY COMPANY GROUP. (iii) Subsurface trespass or any action in the nature thereof; and (C) CONTRACTOR AGREES TO RELEASE, PROTECT, DEFEND, INDEMNIFY AND HOLD (iv) Subsurface loss or damage, HARMLESS COMPANY GROUP FROM ANY including loss of or damage to AND ALL CLAIMS, INCLUDING, WITHOUT any reservoir, production LIMITATION, THE COST OF CONTROL AND formation, well or borehole or CLEANUP, ARISING OUT OF POLLUTION OR down-hole equipment, or CONTAMINATION IN THE PERFORMANCE impairment of any property, OF THIS AGREEMENT FROM FUELS, right to water, oil, gas or other LUBRICANTS, MOTOR OILS, PAINTS, mineral substances; and SOLVENTS, GARBAGE, CHEMICALS, PRODUCED FLUIDS, (v) Damage, loss or destruction of DRILLING/COMPLETION FLUIDS, equipment of any member of CUTTINGS AND OTHER POLLUTANTS company group and any third ORIGINATING FROM CONTRACTOR’S party, and personal injury, EQUIPMENT. Contractor’s liability for illness or death of any member pollution hereunder is expressly limited of company group, or any third to contamination occurring above the party as a result of uncontrolled surface of the land or water, originating well conditions, fire, or from Contractor’s equipment or explosion, pollution and/or vessel(s), originating from equipment, radiation contamination, machinery or tools under Contractor’s including but not limited to control, or contamination resulting from damage to or loss or destruction Contractor’s sole negligence. or replacement of any equipment, drilling (D) Specific Events. Notwithstanding any rig/unit/vessel, platform or other provision of this Agreement to the other fixed or floating structure contrary, Company shall be responsible (in the case of services for and agrees to release, defend, provided offshore), including indemnify and hold harmless Contractor oil/gas production facilities or Group from and against any and all pipelines, at or around a site Claims arising out of or in connection (including any downtime, with: remediation or recovery time); and (i) Pollution (including any environmental pollution) and/or (vi) Expenses for killing or bringing contamination as a result of a wild well under control; and uncontrolled well conditions, including the expense of (vii) Any re-drilling, fishing or containment, cleanup and reworking costs; and disposal; and (viii) The expenses for removal and (ii) Radioactive pollution and/or disposal of debris. contamination (including environmental pollution or Unless, with regard to any of the contamination) originating foregoing (i) – (viii): (a) Any such event from below the surface of the is solely attributable to a member of land or water or emanating Contractor Group’s gross negligence; (b) from the wellbore, or in the Any such event is attributable in whole event of radioactive pollution or in part to a member of Contractor or contamination originating

D:\Docs\2018-04-03\01203c2e18bbb4f059553f233ed72f2b.docx Page 3 of 13 Group’s willful misconduct; or (c) Such APPLY TO CLAIMS OR CAUSES OF claim is in favor of a member of ACTION ASSERTED AGAINST Contractor Group, in which event (a)- COMPANY OR CONTRACTOR BY (c), CONTRACTOR AGREES TO PROTECT, REASON OF ANY AGREEMENT OF DEFEND, INDEMNIFY, AND HOLD INDEMNITY WITH A PERSON OR HARMLESS ALL MEMBERS OF COMPANY ENTITY NOT A PARTY TO THIS GROUP FROM AND AGAINST ANY AND ALL CONTRACT WHERE SUCH CLAIMS, DEMANDS, AND CAUSES OF CONTRACTUAL INDEMNITIES ARE ACTION OF EVERY KIND AND CHARACTER RELATED TO OR ANCILLARY TO WITHOUT LIMITATION. THE PERFORMANCE OF THE WORK CONTEMPLATED UNDER THE AGREEMENT AND OR Company and Contractor acknowledge (E) COMPANY’S PROJECT AND ARE and agree that neither party shall be INDEMNITIES NOT UNCOMMON IN liable for any incidental, consequential, COMPANY’S INDUSTRY. indirect or special damages, including, but not limited to, lost profits, business interruption, or lost production, whether 7. I nsurance. Contractor and Company agree that arising under breach of warranty or all indemnity obligations and other liabilities contract, strict liability, indemnity or any assumed by either party in this agreement shall other theory of liability. be supported by liability insurance of like kind and in equal amounts as is permitted or required by applicable law, but at a minimum the Nothing in this paragraph 6 shall require (F) amounts required as set forth in Exhibit “A”. Company to indemnify Contractor Except where required by law, such policy Group for any claim, action, or demand amounts enumerated on Exhibit “A”, or as may resulting solely from Contractor’s gross actually be obtained, shall not act as a cap or negligence or willful misconduct. limit on liability. Contractor shall secure and maintain during the term of this agreement at the (G) Nothing in this paragraph 6 shall require Contractor’s sole expense the insurance set forth Contractor to indemnify Company on Exhibit “A” with insurance carriers Group for any claim, action, or demand satisfactory to the Company and licensed to do resulting solely from Company’s gross business in the state where the Work is being negligence or willful misconduct. performed. Contractor covenants that all subcontractors shall also maintain insurance set (H) Nothing in this paragraph 6 shall require forth on Exhibit “A.” It is agreed that the either party to indemnify the other for monetary limited enumerated herein and in any claim, action, or demand resulting or Exhibit “A” shall automatically be amended to arising solely from a certified act of conform to the maximum monetary limited terrorism, as defined in the Terrorism required by the law to support the indemnity and Risk Insurance Act. defense obligations hereunder to ensure that they are valid and operative. Contractor hereby (I) THE TERMS AND PROVISIONS OF waives any and all rights of subrogation that it THIS PARAGRAPH 6 SHALL HAVE or its insurers may have against any member of NO APPLICATION TO CLAIMS OR Company Group. Contractor shall provide CAUSES OF ACTION ASSERTED certificates of insurance, properly endorsed, as AGAINST COMPANY OR provided in Exhibit “A”. CONTRACTOR BY REASON OF ANY AGREEMENT OF INDEMNITY 8. Contractor’s Personnel, Equipment & WITH A PERSON OR ENTITY NOT Material. A PARTY TO THIS AGREEMENT IN THOSE INSTANCES WHERE SUCH (A) The Contractor shall supply and utilize CONTRACTUAL INDEMNITIES ARE only experienced, qualified personnel NOT RELATED OR ANCILLARY TO when performing the Work, with each THE PERFORMANCE OF THE such employee, contractor or WORK CONTEMPLATED UNDER subcontractor having the requisite THE AGREEMENT OR ARE knowledge, skill and ability to perform INDEMNITIES UNCOMMON TO such person’s duties with due diligence COMPANY’S INDUSTRY. THE and care, and in a good and TERMS AND PROVISIONS OF THIS workmanlike manner satisfactory and PARAGRAPH 6 SHALL EXPRESSLY acceptable in the industry. The

D:\Docs\2018-04-03\01203c2e18bbb4f059553f233ed72f2b.docx Page 4 of 13 Contractor has the duty to instruct, insurer’s right of subrogation in favor of notify, train and equip its employees and the Company. Verification of this waiver contractors and the employees of any shall be included on the Certificates of subcontractor as to competent, safe Insurance. Any renewal of the performance of the Work and shall at all Certificates of Insurance shall contain times supervise same. Contractor shall this waiver. have a safety program and routine safety training in place consistent with the best 9. Company’s Equipment. The Company shall be industry practices to ensure and instruct liable at all times for damages to or destruction its personnel in maintaining a safe of the Company’s equipment and materials and worksite. Contractor shall provide each hereby waives any claim against any member of employee, contractor, or subcontractor Contractor Group for same, even if such damage with personal protection equipment, in was caused by the negligence of any member of compliance with law including but not Contractor Group. Notwithstanding the limited to providing flame resistant foregoing, the Contractor shall examine all clothing to each person at any time a equipment, machinery, tools or other items hazardous condition warrants the use of furnished by the Company which are directly such clothing. The foregoing is a employed during the course of the Work. If material provision of this agreement and defects come to the Contractor’s attention, then Contractor’s breach of this subparagraph the Contractor shall immediately notify the 8(A) shall be a material breach. In Company of such defect or defects and shall not addition to the right to terminate any use the item until the defect is removed. Other work then in progress, CONTRACTOR than for damage or destruction of the material or SHALL BE LIABLE TO AND equipment, the Contractor shall be deemed to SHALL INDEMNIFY AND DEFEND have assumed all risk and liability for any COMPANY FOR ANY AND ALL mishap which may occur in connection with the ACTUAL DAMAGES AND COSTS use of equipment, machinery, tools or other INCURRED BY COMPANY GROUP items furnished by Company. RESULTING FROM CONTRACTOR’S BREACH OF 10. Taxes, Compliance with Law. The Contractor THIS SUBPARAGRAPH 8(A), agrees to obtain all permits and licenses required INCLUDING ANY COSTS AND for the Contractor’s performance of Work under DAMAGES FOR WHICH this Agreement and to pay all taxes, licenses, COMPANY MUST INDEMNIFY and fees levied or assessed on the Contractor in CONTRACTOR GROUP FOR connection with or incident to the performance UNDER PARAGRAPH 6 ABOVE of this Agreement by any governmental agency. BUT EXCLUDING ANY COSTS The Contractor agrees to require the same of its AND DAMAGES FOR WHICH subcontractors and to be liable for any of its COMPANY MUST INDEMNIFY subcontractors’ failures to satisfy these CONTRACTOR GROUP FOR requirements. The Contractor agrees to UNDER PARAGRAPH 6(B) reimburse the Company on demand for all such ABOVE. taxes or governmental charges, state or federal, which the Company may be required or deem it (B) The Contractor shall be liable at all necessary to pay. The Company is authorized to times for damages to or destruction of deduct all sums so paid for such taxes and the Contractor’s equipment and governmental charges from such amounts as materials and hereby waives any claim may be or become due to the Contractor. against any member of Company Group Contractor shall comply with all applicable for same, even if such damage or laws, ordinances, permits, rules, regulations and destruction is caused in whole or in part lease or agreement provisions. The Contractor by the negligence of any member of agrees to comply with federal and state laws Company Group. Any insurance policy (including labor laws, ordinances and rules, covering owned or rented equipment or regulations and orders of governmental materials of the Contractor or its agencies) applicable to Work performed under subcontractors (including, but not this Agreement. limited to, vehicles, rigs, mobile equipment, platforms, machinery, 11. Independent Contractor. The Contractor shall appliances and tools of any type) against be an independent contractor with respect to the loss by physical damage or theft, shall performance of all Work hereunder, and neither include an endorsement waiving the the Contractor nor anyone employed by the

D:\Docs\2018-04-03\01203c2e18bbb4f059553f233ed72f2b.docx Page 5 of 13 Contractor shall be deemed for any purpose to to test, notify, provide appropriate safety be the employee, agent, servant, or equipment for and train its employees and the representative of the Company. The Company employees of any subcontractor as to these shall have no direction or control of the exposures. The Contractor has the duty to Contractor or its employees and agents except in monitor a safety program addressing these the results to be obtained. The Work points when these exposures exist and will insist contemplated herein shall meet the approval of that all safety measures be carried out by all the Company and be subject to the general right such employees. The Contractor will require that of inspection for the Company to secure its all such employees wear appropriate safety satisfactory completion. The actual performance equipment when the Work contemplates and supervision of all Work hereunder shall be exposure to hazardous substances. by the Contractor, but the Company or its representatives shall have unlimited access to 14. Waste. The Contractor agrees to assume the operations to determine whether Work is responsibility for and to properly handle and being performed in accordance with all the dispose of all wastes generated by it in provisions of this Agreement and any Work performance of the Work and to report all spills Order. The Contractor agrees to accept full and or releases to the Company immediately. exclusive liability for the payment of any and all Contractor will keep records of the volume and premiums, contributions, and taxes for Workers’ nature of all wastes generated and their Compensation Insurance, Unemployment disposition and shall provide such records to the Insurance, health insurance, pensions, annuities Company upon request. The Contractor agrees and retirement benefits, now or hereafter to require the same of its subcontractors and to imposed by or pursuant to federal and state laws, be liable for any of its subcontractor’s failure to whether or not measured by the wages, salaries comply with these requirements. CONTRACTOR or other remuneration paid to persons employed SHALL INDEMNIFY COMPANY GROUP FROM ANY by the Contractor in connection with the ACTION, CLAIM, PENALTY, FINE, INCLUDING BUT performance of the Work; and THE NOT LIMITED TO ANY COSTS OF TESTING AND CONTRACTOR FURTHER AGREES TO INDEMNIFY MONITORING, IMPOSED BY A STATE OR FEDERAL AND HOLD THE COMPANY AND ALL OTHER AGENCY FOR CONTRACTOR’S VIOLATION OF THIS INDEMNITEES HARMLESS AGAINST ANY LIABILITY PARAGRAPH 14. FOR TAXES, CONTRIBUTIONS, OR OTHER SUCH PAYMENTS WHICH MAY BE ASSESSED AGAINST 15. Force Majeure. Neither the Company nor the THE COMPANY BY VIRTUE OF CONTRACTOR’S Contractor shall be liable to the other for any WORK HEREUNDER. delays or damages or any failure to act due, occasioned or caused by reason of federal or 12. Default or Delay. In the event the Contractor state laws or the rules, regulations or orders of shall unreasonably delay the performance of the any public body or official purporting to Work or otherwise fail to fully perform its exercise authority or control respecting the obligations hereunder, the Company, at its Work, including the use of tools and equipment; election and without prejudice to any other right area-wide industry strikes; Acts of God; or remedy, may either immediately terminate unusually adverse weather, such as tornado or this Agreement for cause or, take over hurricane; or other extreme or unusual causes Contractor’s equipment and complete the job beyond the control of the Parties affected and pay the Contractor the reasonable value of hereby. Such delays shall not be deemed to be a all Work theretofore done and all materials breach of or failure to perform under this theretofore furnished, which shall not exceed the Agreement if the party experiencing such force contractual price agreed upon less any actual majeure delay notifies the other party promptly costs incurred by the Company to complete the in writing of the cause for the delay, specifies Work. These remedies shall not be exclusive, therein that it is claiming a force majeure delay, however, and the exercise thereof shall not be and estimates therein the probable duration deemed to constitute a waiver of any other rights thereof. The party claiming a force majeure or remedies which Company may have under event shall take all reasonable action to remove applicable law in the event of Contractor’s the cause of the force majeure delay. default. 16. Patents. Contractor represents and warrants 13. Hazardous Substances. It is specifically that the use or construction of any and all tools, understood that the Work may involve exposure equipment, and other materials furnished by to hazardous substances, including but not Contractor and used in the work provided under limited to hydrogen sulfide gas, commonly any Work Order or this Agreement will not known as sour gas. The Contractor has the duty infringe upon any license or patent issued to or

D:\Docs\2018-04-03\01203c2e18bbb4f059553f233ed72f2b.docx Page 6 of 13 applied for, and CONTRACTOR AGREES TO permitting verification by the Company PROTECT, DEFEND, AND INDEMNIFY COMPANY of any amounts paid to or claimed by the GROUP FROM AND AGAINST ANY AND ALL Contractor, the Contractor shall keep CLAIMS, DEMANDS, AND CAUSES OF ACTION OF and preserve, for not less than two (2) EVERY KIND AND CHARACTER IN FAVOR OF OR years from date of invoice all general MADE BY ANY PATENTEE, LICENSEE, OR ledgers, work orders, receipts, CLAIMANT OF ANY RIGHTS OR PRIORITY TO SUCH disbursements journals, bids, bid TOOL OR EQUIPMENT, OR THE USE OR proposals, price lists, and supporting CONSTRUCTION THEREOF, THAT MAY RESULT documentation obtained from FROM OR ARISE OUT OF FURNISHING OR USE OF manufacturers and suppliers in ANY SUCH TOOLS, EQUIPMENT, AND OTHER connection with performance of the MATERIALS BY CONTRACTOR IN CONNECTION Work (these items are collectively called WITH SUCH WORK. “items”). At any time upon 24 hours advance notice to the Contractor, the 17. Notice. All notices to be given with respect to Company or its agents or this Agreement and applicable Work Orders, representatives, including accountants, unless otherwise expressly provided for, shall be may, during regular business hours, in writing and sent or delivered to the Company examine or audit the items for which and to the Contractor, respectively, at the Company is invoiced for reimbursement. addresses below (which may be changed at any time by providing written notice as provided (B) Reports. Contractor shall provide to herein), Certified Mail, Return Receipt Company an oral report, confirmed in Requested . Notices so sent shall be deemed writing as soon as practicable, of all given upon the earlier of actual receipt or the accidents or occurrences resulting in third day following deposit with the U. S. Postal death or injuries to Contractor’s Service. All other methods of delivery of a employees, subcontractors, or any third written notice, including by fax, email, parties, damage to Company’s property, overnight courier or otherwise, will be effective or physical damage to the property of only when actually received by the intended Contractor or any third party, arising out recipient. of or during the course of Work to be performed. Contractor shall furnish 18. Assignment. This Agreement, including Company with a copy of all reports payments accruing hereunder, shall not be made by Contractor to Contractor’s assigned without the written consent of the insurer, governmental authorities, or to Company. Notwithstanding the foregoing, others of such accidents or occurrences. Contractor may assign its interest hereunder to the extent Contractor sells all or a majority of its (C) Successors and Assigns. This corporate securities or assets by providing notice Agreement shall inure to and be binding to Company of same. No assignment hereunder upon the Parties hereto and their legal shall relieve Contractor of its duties or liabilities representatives, heirs, successors and under this Agreement and any Work performed permitted assigns. by such an Assignee of Contractor shall evidence Contractor and Assignee’s joint and (D) Payment Terms. Regardless of any several liability hereunder. contrary provision in any credit application or other agreement, 19. Severability. If any provision herein is invalid or Company agrees to pay Contractor for unenforceable in any jurisdiction, the other any Work at the rates set forth in the provisions herein shall remain in full force and applicable work order or purchase effect in such jurisdiction and the remaining order. Contractor shall promptly invoice provisions herein shall be liberally construed in Company upon the completion of any order to effectuate the intent of the invalid or Work, but in any event shall invoice unenforceable provision. A determination that any Company (i) at least once every ninety provision is invalid or unenforceable in any (90) days and (ii) within thirty (30) days jurisdiction shall not affect the validity or following completion of all of the Work enforceability of any such provision in any other under any applicable work order or jurisdiction. purchase order, and (iii) in the unlikely event that Work is completed without an 20. Miscellaneous. applicable work order or purchase order, within ten (10) days of completion of (A) Record Keeping. For the purposes of such Work at Contractor’s best rates in

D:\Docs\2018-04-03\01203c2e18bbb4f059553f233ed72f2b.docx Page 7 of 13 the geographical area where the Work (I) Choice of Law. This Agreement shall be was completed. Company shall remit governed by and construed in full payment of all undisputed portions accordance with the laws of the State of of any and all invoices in full in United Texas without regard to its choice of law States funds by check, bank draft, provisions. Venue for any dispute money order, or bank/wire transfer arising under this Agreement shall lie payable to Contractor at its offices (or solely in Midland County, Texas, the bank account) within sixty (60) days county in which the parties entered into following actual receipt of Contractor's this Agreement. invoice. In the event Company has a bona fide question or dispute concerning (J) NO LACK OF NOTICE . BOTH PARTIES a Contractor invoice or a portion thereof, AGREE THAT THE AGREEMENT COMPLIES Company may withhold the disputed WITH THE REQUIREMENTS, KNOWN AS THE portion of the payment only. Company EXPRESS NEGLIGENCE AND shall give written notice of any disputed CONSPICUOUSNESS RULES, TO EXPRESSLY amounts to Contractor specifying the STATE IN A CONSPICUOUS MANNER TO reasons therefore within sixty (60) days AFFORD FAIR AND ADEQUATE NOTICE THAT after receipt of the applicable invoice. THIS AGREEMENT HAS PROVISIONS REQUIRING ONE PARTY TO BE RESPONSIBLE (E) No delay. In no case (unless otherwise FOR THE NEGLIGENCE, STRICT LIABILITY , directed in writing by the Company) OR OTHER FAULT OF ANOTHER PERSON OR shall any claim or dispute, whether or ENTITY. BOTH PARTIES REPRESENT TO not involving litigation, permit the EACH OTHER THAT THEY HAVE CONSULTED Contractor to delay or discontinue any of AN ATTORNEY CONCERNING THIS the Work hereunder, but rather the AGREEMENT OR, IF THEY HAVE NOT Contractor shall diligently pursue the CONSULTED WITH AN ATTORNEY, THAT Work hereunder while awaiting the THEY WERE PROVIDED THE OPPORTUNITY resolution of any dispute or claim; AND HAD THE ABILITY TO SO CONSULT, BUT provided, however, that the Company MADE AN INFORMED DECISION NOT TO DO shall not withhold, pending the SO; AND THEY FULLY UNDERSTAND THEIR resolution of any claim or dispute, the RIGHTS AND OBLIGATIONS UNDER THIS payment of any undisputed sum AGREEMENT . otherwise due Contractor under this Agreement. 21. Added Special Provisions.

(F) Attorney’s Fees. If any action at law or (A) Drugs, Alcohol & Firearms. To help in equity is necessary to enforce or ensure a safe, productive work interpret the terms of this Agreement, environment, Company prohibits the the prevailing party shall be entitled to use, transportation and possession of reasonable attorneys’ fees, costs, and firearms, drugs and/or controlled necessary disbursements in addition to substances, drug paraphernalia and any other relief to which it may be alcoholic beverages on the Company’s entitled. premises. Illegal drugs shall include, but not be limited to, marijuana, (G) Counterparts. This Agreement may be amphetamines, barbiturates, opiates, executed in multiple counterparts, each cocaine, codeine, morphine, of which shall, for all purposes, be hallucinogenic substances (LSD) and deemed an original but which together any similar drugs and/or chemical shall constitute one and the same synthetics deemed hazardous by instrument. Company. Such prohibitions shall apply to Contractor and its employees, (H) Confidentiality. Information obtained by agents, servants and subcontractors. the Contractor in the conduct of its Contractor’s employees, agents, Work under this Agreement or any contractors and invitees shall abide the Work Order shall be considered and more stringent of Contractor’s or treated as confidential and shall not be Company’s drug, alcohol and firearm divulged by the Contractor or any of its policy. Company may request that employees to any third party without Contractor carry out drug and alcohol Company’s written permission. tests of its employees and/or that Contractor carry out reasonable

D:\Docs\2018-04-03\01203c2e18bbb4f059553f233ed72f2b.docx Page 8 of 13 searches of individuals, their personal (C) Factoring. To the greatest extent effects and vehicles when entering on allowed by applicable law, the anti- and leaving Company’s premises at any assignment provision provided above time, at scheduled times, or at random. prohibits factoring of the Contractor’s Individuals found in violation shall be invoices. In the event that Contractor removed from Company’s premises by enters into any relationship to factor its Contractor immediately. Submission to invoices despite such provision: (i) such a search is strictly voluntary, Contractor shall be in material breach however, refusal may be cause for not of this Agreement entitling Company to allowing that individual on the well site terminate this Agreement for cause or Company’s other premises. (without waiving any other remedy Contractor shall (1) test at Contractor’s afforded to Company hereunder, in expense any individual involved in or equity or by law), (ii) each invoice that related to an accident or injury on is factored shall be a separate breach, Company’s premises within twelve and (iii) the failure of Company to (12) hours of such accident or injury immediately declare such event a and (2) submit to Company any drug or breach or terminate this Agreement alcohol test results for any individual shall not be deemed a waiver of such involved in or related to an accident or breach or otherwise prevent Company injury on Company’s premises. It is from enforcing any such breach or Contractor’s responsibility to notify its future breach. In the event that employees, contractors, subcontractors, Contractor enters into any relationship agents and invitees of this prohibition, to factor its invoices despite such the provisions of this paragraph and its provision or in the event applicable law enforcement and obtain any prohibits a limitation on assigning a acknowledgement or release from any right to receive payment: (iv) person in order to comply with this Contractor shall provide immediate provision and applicable law. written notice to Company of the factoring relationship when entered, (v) (B) Contractor’s Equipment & Materials on Contractor shall ensure that the factor’s Company’s Premises. Contractor is right to payment is at all times subject responsible for retrieving and removing to the terms of this Agreement and any its equipment and materials from Work Order between Company and Company’s premises or worksite Contractor, and (vi) CONTRACTOR following completion of the Work. WAIVES ANY CLAIM IT MAY Contractor shall promptly remove its HAVE AGAINST COMPANY AND equipment, materials, tools and SHALL FURTHER INDEMNIFY, supplies from Company’s location and DEFEND AND HOLD COMPANY may not store any equipment, HARMLESS FROM ANY AND ALL materials, tools or supplies on any lease COSTS, ATTORNEY’S FEES, or at any yard operated or owned by EXPENSES, DAMAGES, CLAIMS Company, unless done so with AND ALL OTHER AMOUNTS Company’s express written consent and INCURRED BY COMPANY AS A then only for the term specified therein. RESULT OF OR IN ANY WAY Any equipment, materials, tools or RELATED TO CONTRACTOR’S supplies of Contractor not removed FACTORING OF ITS INVOICES, within thirty (30) days of written INCLUDING, WITHOUT ANY demand by Company shall (i) incur LIMITATION, ANY AMOUNTS storage costs at Company rates upon CLAIMED BY CONTRACTOR TO demand and (ii) if said storage costs are HAVE BEEN WRONGFULLY PAID not promptly paid when due and/or the TO ITS FACTOR AND/OR ANY equipment or material remains on AMOUNTS DUE CONTRACTOR’S Company’s location ten (10) days SUBCONTRACTORS OR following Company’s second written SUPPLIERS FOR WHICH notice for removal, be removed by PAYMENT IS INCLUDED IN ANY Company, at Contractor’s sole expense, PAYMENT MADE TO and disposed of. Company shall have CONTRACTOR’S FACTOR. If no liability to Contractor for loss or Company receives any notification that damage thereto. a right to payment has been assigned and that payment is to be made to the

D:\Docs\2018-04-03\01203c2e18bbb4f059553f233ed72f2b.docx Page 9 of 13 assignee (the “factor”), Company shall liability therefore, or may, if done forward such notification to Contractor under the advice of counsel, continue to and thereafter immediately begin pay the factor until such time as making any payment due Contractor Contractor obtains an order from a hereunder to the factor. If the court of competent jurisdiction Company receives written notice from relieving Company of the obligation to Contractor that Contractor disputes the pay the factor. No rights or defenses of factor’s right to receive payment(s) due Company under this Agreement shall Contractor hereunder, Company may, be waived by any action or inaction or at its election, hold all such payments any oral agreement; all such rights and due the factor or Contractor hereunder defenses may only be waived by in suspense until receipt of joint Company in writing specifying instruction from the factor and the specifically such waiver and Contractor, interplead the funds into a identifying this paragraph by number. court registry in Midland County, Texas and thereafter be relieved of all

IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be effective as of the day and year first written above.

COMPANY: ADDRESS FOR NOTICE AND INVOICING:

CAPITAN ENERGY, INC., a Texas Corporation

By:______P. O. Box 2476 Name:______Carlsbad, New Mexico 88221-2746 Title:______Attn: ______

CONTRACTOR: ADDRESS FOR NOTICE AND PAYMENT:

______a(n) ______By:______Name:______Title:______Attn: ______

D:\Docs\2018-04-03\01203c2e18bbb4f059553f233ed72f2b.docx Page 10 of 13 EXHIBIT “A”

A. Statutory Workers’ Compensation Insurance and Employer’s Liability Insurance in full compliance with applicable State and Federal laws and regulations where the Work is to be performed. This policy shall include a waiver of subrogation in favor of the indemnities (as defined in the Agreement). The Employer’s Liability Insurance shall have minimum limits of: $1,000,000 Each Accident $1,000,000 Disease — Policy Limit $1,000,000 Disease — Each Occurrence

B. Commercial General Liability Insurance with minimum limits of: $1,000,000 Per occurrence $2,000,000 General aggregate $1,000,000 Products/completed operations aggregate

The policy will be on a form acceptable to the Company, be endorsed to include the indemnitees as additional insureds, include a waiver of all rights of subrogation against the indemnitees and state that this insurance is primary as regards any other insurance carried by any indemnitee. The policy will include the following coverages:

I. Surface Damage for Blowout or Explosion; II. Premises/Operations; III. Independent Contractors; IV. Broad Form Contractual Liability (insuring the indemnity obligations in the Agreement); V. Completed Operations Coverage and/or Products Liability Coverage for a period of two (2) years following the date of the final completion of the Work for each job performed; VI. Underground Property Damage Coverage; and VII. Personal Injury Liability.

C. Comprehensive Commercial Automobile Liability Insurance with minimum limits of $1,000,000 combined single limit. The policy shall be on a standard form written to cover all owned, hired and non-owned automobiles, be endorsed to include the indemnitees as additional insureds, include a waiver of all rights of subrogation against the indemnitees and state that this insurance is primary insurance as regards any other insurance carried by any indemnitee.

D. Umbrella Liability Insurance written on a following form umbrella excess basis above A, B and C with minimum limits of $5,000,000. This policy shall be endorsed to include the indemnitees as additional insureds and include a waiver of all rights of subrogation against the indemnitees.

E. If the Contractor performs work or renders services in, on or with relation to navigable waters, the Contractor shall carry insurance as set forth on Attachment “1” to this Exhibit “A” attached hereto and made a part herein for all purposes.

F. The Contractor will require all of its subcontractors to procure insurance coverage (including all endorsements and waivers) as that required of the Contractor under the Agreement.

G. In the event Contractor is a self-insurer and the Company has consented to the Contractor being a self-insurer as to any one or more of the risks to which coverage is herein required, evidence of such consent must be in writing and approved by a representative of the Company authorized to enter into such consent agreement. Furthermore, if the Contractor (or any of its subcontractors) self-insures a risk as set forth in this section, the Contractor (or any of its subcontractors) hereby waives any claim for damage or loss as to that risk in favor of the indemnities.

Evidence of the above coverage, or self-insurance, represented by Certificates of Insurance, or documents verifying the self-insurance, must be furnished to the Company prior to the Contractor starting Work. Certificates of Insurance shall specify the additional insured status mentioned above as well as waiver of subrogation. Such Certificates of Insurance shall state that the Company will be notified in writing thirty (30) days prior to cancellation, material change or non-renewal of insurance. Renewal Certificates of Insurance will be furnished thirty (30) days prior

D:\Docs\2018-04-03\01203c2e18bbb4f059553f233ed72f2b.docx Page 11 of 13 to expiration of any coverage and will comply with the requirements stated above. It is expressly understood that the self-insurance permitted above does not contemplate the revocation of any State Workers’ Compensation Act and does not relieve the Contractor (or any of its subcontractors) of its statutory obligations under such Act.

D:\Docs\2018-04-03\01203c2e18bbb4f059553f233ed72f2b.docx Page 12 of 13 ATTACHMENT “1” TO EXHIBIT “A”

Insurance Requirements Applicable to Contractors who Perform Work or Render Services in, on or with Relation to Navigable Water

1. Workers’ Compensation and Employer’s Liability

a. Compliance with the United States Longshoreman’s and Harbor Worker’s Compensation Act, as amended, including protection with respect to the extension of said Act under the Outer Continental Shelf Lands Act.

b. Maritime Liability coverage as provided for under the Jones Act and Death on the High Seas Act, with coverage for transportation, wages, maintenance and cure, with limits of $500,000 each person and $500,000 each accident.

2. Commercial General Liability providing coverage and conditions outlined in Section 7.B of the Agreement, in addition to the following:

a. Endorsement providing claim “in rem” shall be treated as a claim against the insured. b. Policy territory to include Gulf of Mexico (or other offshore if applicable). c. Deletion of Watercraft exclusion from General Liability and Contractual Liability coverage part for watercraft exposure not covered by P & I policy in item 4 below.

3. Hull and Machinery Insurance in an amount less than the actual value of each vessel owned or chartered by Contractor and used in performing work or rendering services under this Agreement. Said insurance shall include full Tower’s Liability with the Sistership Clause unamended.

4. Protection and Indemnity Insurance on the Standard Ocean Form (SP 23) (or equivalent) in amounts of not less than $1,000,000.00, including coverage for crew (where coverage under Worker’s Compensation laws is not applicable), employees of the owner, passengers and third parties.

5. Full Collision Liability Insurance with Sistership Clause unamended, with a total minimum limit of $1,000,000.00.

6. Vessels in U.S. waters must certify that vessel owners and/or operators are in compliance with Federal Water Pollution Control Act, as amended, and Water Quality Improvement Act of 1970.

7. The insurance coverage described in this Attachment “1” to Exhibit “A” shall include a waiver of subrogation in favor of the indemnitees. The insurance policies under Subsections 2, 3 and 4 of the Attachment “1” to Exhibit “A” shall include appropriate navigation limits covering all work places. Policies carried by owners of vessels chartered by Contractor shall satisfy the requirements of Subsections 2, 3 and 4 of this Attachment “1” to Exhibit “A” provided they afford Contractor and Company full protection and meet the requirements hereof in all other respects. The insurance policies under Subsections 2, 3 and 4 of this Attachment “1” to Exhibit “A” shall include the indemnitees as additional insureds, and state that this insurance is primary insurance as regards any other insurance carried by any indemnitees.

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