The “EBITDAX Measure” means, for the Company and each Peer Company: Performance Period Pretax Operating Income per BOE.

Annual TSR for the Company and each Peer Company for each Calendar Year within the Performance Period shall equal the result of the following calculation for each such company:

“Performance Percentage” means, that percentage determined based upon the relative ranking of the Company’s EBITDAX Measure for the Performance Period compared to the EBITDAX Measure of each Peer Company for the Performance Period as determined under the provisions of Section 4(e), subject to reduction under Sections 5 and 12, if any.

The EBITDAX Measure of the Company and each Peer Company is to be calculated as soon as practical after the end of the Performance Period. Once calculated for the Company and for each Peer Company, the exact EBITDAX Measure for each such company shall be listed in Column 3 of the table below in descending order of their respective EBITDAX Measure from the highest percentage to the lowest percentage.

“Performance Criteria” means the EBITDAX Measure defined in Section 4 for the Performance Period.

Calculation of Bonus Earned by a Participant. The Committee shall determine the amount of an earned award by measuring performance against the goals for each performance measure independently and then taking the sum of the earned amounts for each performance measure and comparing it to the target performance. Specifically, each performance measure shall be assigned a percentage of the total target award based on its relative weighting among the performance measures.

The Company’s earned Performance Percentage will be that percentage shown in Column 5 (subject to adjustment, if any, provided in Sections 5 or 12) opposite the ranking of the Company in Column 1 (for example, in the following table for 17 Companies, being ranked as eighth would equal a Performance Percentage of 13%). The earned Performance Percentage will be adjusted to reflect adjustments made to the percentages in Column 4, if any, pursuant to Section 4(d) above; provided however, that the earned Performance Percentage may not be greater than 100%.

A Participant shall be eligible to receive payment in respect of a Performance Compensation Award only to the extent that the Performance Measure(s) for such Award is achieved and the Performance Formula(e) as applied against such Performance Measure(s) determines that all or some portion of such Participant’s Award has been earned for the Performance Period. As soon as practicable after the close of each Performance Period, the Committee shall review and certify in writing whether, and to what extent, the Performance Measure(s) for the Performance Period have been achieved and, if so, determine and certify in writing the amount of the Performance Compensation Award to be paid to the Participant and, in so doing, may use negative discretion to decrease, but not increase, the amount of the Award otherwise payable to the Participant based upon such performance.

“Earned Bonus Percentage” for the Participant for the Performance Period shall mean the percentage established by the Committee for the Participant in accordance with Section 4 hereof. The Committee shall in every case provide for a specific Earned Bonus Percentage, which Earned Bonus Percentage will be used to determine the Cash Bonus.

“Cash Bonus” with respect to the Performance Period shall mean the dollar amount which is equal to the product of the Target Amount multiplied by the Earned Bonus Percentage for the Performance Period.