(ii) except for resolution of gas imbalances which are included in
Section 1.18(a)(vi) above, any amounts which would otherwise be Production Costs but which are attributable to periods before the Effective Date; and
(iii) costs that otherwise would be treated as Production Costs but which have already been excluded or deducted from Gross
Proceeds under Section 1.09; and
(iv) costs incurred by any Affiliate of Assignor for which such Affiliate has
received a fee, reimbursement or other payment from Assignor, where such payment by Assignor constitutes a Production Cost; and
(v) costs paid or accrued by Assignor during the month of December 1998 for the drilling, equipping, reworking, plugging back,
completing or recompleting of any well on the Subject Lands.
SECTION 1.19. Property Taxes means the sum of all general
property (ad valorem), production, severance, sales, gathering and excise taxes and other taxes (whether state, federal or otherwise), except income taxes, assessed or levied on or in connection with the Subject Interests, the Royalty Interest or
the production therefrom or equipment on the Subject Lands, or against Assignor as owner of the Subject Interests or Assignee as owner of the Royalty Interest.
SECTION 1.20. Property Tax Accrual means, for any Computation Period, an amount that may be set aside by Assignor as an accrual to
be applied against Property Taxes other than those that are deducted or excluded from Gross Proceeds pursuant to Section 1.09(a) above, which accruals shall be adjusted to the extent actual Property Taxes differ.
SECTION 1.21. Sale and Sold mean all forms of dispositions of Subject Hydrocarbons for value, including exchanges and
other dispositions for value.
SECTION 1.22. Sales Contracts means all contracts and agreements for the sale of Subject
Hydrocarbons.
SECTION 1.23. Separation means liquid separation operations in the vicinity of the well using a conventional
mechanical liquid gas separator but excluding operations involving heat exchange, adiabatic cooling, absorption, adsorption or refrigeration principles.
SECTION 1.24. Subject Hydrocarbons means all Hydrocarbons in and under, and which may be produced, saved and sold from, and which
shall accrue and be attributable to, the Subject Interests, including plant products attributable thereto from Processing gas or casinghead gas included in the Subject Hydrocarbons before sale thereof (but not including products derived from
processing oil).
SECTION 1.25. Subject Interests means, subject to the exclusions stated below, each kind and character of
right, title, claim or interest which Assignor has on the Effective Date in or under each oil, gas or mineral lease, unitization or pooling agreement (and the units created thereby), royalty interests, overriding royalty interests, fee mineral
interests and net profits interests and any other agreements, conveyances, assignments or instruments which are described or referred to in Schedule A, and all the right, title, claim or interest which Assignor has on the Effective Date in and to
the Subject Lands, whether such right, title, claim or interest be under and by virtue of a lease, a unitization or pooling agreement or order, an operating agreement, a division order, a transfer order or any other type of agreement, conveyance,
assignment or instrument or under any other type of claim or title, legal or equitable, recorded or unrecorded, even though Assignors interests be incorrectly or incompletely described in, or a description thereof be omitted from, Schedule A,
all as the same shall be enlarged by the discharge of any payments out of production or by the removal of any charges or encumbrances to which any of the same are subject and any and all renewals and extensions of any of the same, but subject to all
burdens to which Assignors such right, title, claim or interest is subject (while same remains so subject), limited, however, if Assignors interest in any Subject Interest should terminate at any time, to the period to
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