U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SECOND AMENDED FORM 10-SB
General Form For Registration of Securities
of Small Business Issuers Under Section 12(b) or 12(g) of
the Securities Act of 1934
Oilex, Inc.
(Name of Small Business Issuer in Its Charter)
Nevada 33-0194489
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
3050 Post Oak Blvd.,Suite 1760 Houston, Texas 77056
(Address of Principal Executive Offices) (Zip Code)
713.629.5998
(Issuer's telephone number)
Securities to be registered under Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which
to be so Registered Each Class is to be Registered
Not applicable Not applicable
Securities to be registered under Section 12(g) of the Act:
Common Stock, par value $.001 per share
(Title of Class)
Page 1 of 83 pages contained in the sequential numbering system.
The Exhibit Index may be found on page 24 of the sequential
numbering system. <PAGE>
TABLE OF CONTENTS
Page
Part I
Item 1. Description of Business ........................ 3
Item 2. Plan of Operation .............................. 6
Item 3. Description of Property......................... 9
Item 4. Security Ownership of Certain Beneficial
Owners and Management .......................... 11
Item 5. Directors, Executive Officers, Promoters
and Control Persons ............................ 13
Item 6. Executive Compensation ........................ 14
Item 7. Certain Relationships and Related
Transactions .................................. 14
Item 8. Description of Securities...................... 14
Part II
Item 1. Market Price of and Dividends on the
Registrant's Common Equity and Other
Stockholder Matters ............................ 15
Item 2. Legal Proceedings .............................. 16
Item 3. Changes in and Disagreements With
Accountants .................................... 16
Item 4. Recent Sales of Unregistered Securities ........ 16
Item 5. Indemnification of Directors and Officers ...... 17
Part F/S Financial Statements and Exhibits .............. 19
Part III
Item 1. Index to Exhibits .............................. 24
<PAGE>
PART I
Item 1. Description of Business
General
Oilex, Inc. (the "Company") was incorporated under the laws of
the State of Nevada on June 10, 1986 under the name of "Akteck,
Inc." The Company later changed its name to Oilex International
Investments, Inc. on December 31, 1991 and to Oilex, Inc. on July
3, 1996.
Oilex, Inc is an oil and gas exploration and production
company. Present management acquired the controlling interest in
Oilex in November 1994, including $5.4 million in tax loss
carry-forwards along with a minority lease interest (2%) in five
wells in Clark and Smith Counties, Mississippi. Oilex is a
non-operating participant in these wells. In 1995 management
began acquiring additional assets, and since December 1995 the
company has added oil, gas and mineral leases and wells in Texas,
Colorado, Utah and West Virginia through acquisitions and lease
purchases.
In December, 1995, the Company acquired the fee mineral
interest in and under 83,751 acres situated in Greenbriar and
Pocahontas Counties, West Virginia. Also in December, 1995, the
Company acquired 35 existing oil and gas wells together with 780
acres of oil and gas leasehold property on which to conduct
future operations. The company has further acquired 11,535 acres
of oil and gas leasehold interest under the White River Dome NE
Prospect in Rio Blanco County, Colorado in 1996. Exploration
activities are scheduled to begin in the fourth quarter, 1996.
The Company acquired approximately 5,885 oil and gas
leasehold acres in Carbon, San Juan and Uintah Counties, Utah, in
1996.
From January of 1996 through June of 1996, the Company was
not operating any of its wells or drilling on any of its fields.
Since June, the operations have been very limited, and the only
productive properties as of late 1996 consist of a very minor
working interest in Mississippi.
The Company recently has acquired an additional 935 acres
with 19 existing oil and gas wells in the Big Foot Field, Frio
County, Texas adjacent to its initial Big Foot Field holdings.
Management intends to continue adding to reserves through
acquisitions while it undertakes drilling programs, the first of
which is slated to begin in October, 1997, in the Big Foot field
in Frio County, Texas.
In May of 1996, the company acquired one Klaeger Oil
Retrieval system from Klaeger Manufacturing, for cash. This
equipment has now been eclipsed in the marketplace by more
efficient and less expensive competitive equipment and is no
longer competitive with the machinery produced by Titan Energy
Corp., Inc., of Fort Worth, Texas. Based upon this obsolescence,
the company has abandoned any further purchase of the
Klaeger-built units.
World Interactive Networks Transaction.
In December of 1994, the company entered into a contract with
World Interactive Networks ("WIN") to exchange the company's
Class A Preferred stock for preferred stock of WIN, with purchase
prices determined by reference to the then-current Private
Placement of Series "A" Cumulative Convertible Preferred shares
being conducted by WIN. Under the terms of the agreement, the
Company issued 2,500,000 shares of its Series A, 10% Cumulative
Convertible Preferred Stock to World Interactive Networks, Inc.
in exchange for 149,200 shares of WIN's Series A Cumulative
Convertible Preferred Stock, valued at $16.67 per share as a
liquidation preference. The Oilex preferred stock carried a
liquidation preference of $2.00 per share. WIN's business plan
called for the development of entertainment, home shopping and
interactive television programming to be aired over a new network
to bear the call letters "WIN". The business approach would be
the providing of audio, video and graphical content for cable,
broadcast, CD-Rom and on-line services for entertainment,
information, merchandising, advertising and educational services.
WIN was to acquire FCC low-power television and Multiple
Multi-Point Distribution Services licenses related to future
programming distribution. WIN planned to have accomplished its
licensing by December 31, 1995, and then actual airing of product
during 1996. As of December of 1995, WIN was severely delayed in
its licensing progress, and creation of suitable programming,
creation of network distribution, and the Company elected, in the
first quarter of 1996, to terminate its agreements with WIN,
effective June 1, 1996. During September of 1996, WIN and Oilex
returned their respective shares to the issuing company and those
shares were canceled. WIN no longer has any shares of stock in
the company, and the company has no interest in any of WIN's
activities or the entity itself.
Products
The Company intends to conduct exploratory drilling activities
with the aim of producing and selling oil, casinghead gas
(produced in conjunction with oil) and natural gas from its
holdings in Texas, Utah and Colorado.
The Company currently sells its oil, at the lease sites, to major
oil refining companies, which agree with the Company to
purchase the oil at pre-negotiated benchmark prices, adjusted
daily based upon world market price fluctuations, and
specifically spot market prices for the quality of oil being
produced at each location. The current buyers for the oil are
Sun Oil Company, Howell Oil, EOTT, Texaco, and Northridge Energy
and Marketing. There are several buyers of oil in each region,
all of which pay the "market price", with the only negotiation
being the benchmark price against which fluctuations will be
measured for the Company's actual quality or grade of crude oil
being delivered. The Company does not maintain written
agreements with these buyers, since there are several buyers
available at each field site and competition among the buyers
keeps the prices at or near the published price for crude in
those regions, adjusted for the specific gravity of the product
being delivered. The buyer of the oil changes on a load-by-load
basis. There is always a demand for the volume of oil that the
Company produces and for all probable increases, because the
market for oil is global in nature, with transportation charges
and specific gravity (quality) being the determinants of the
price at the well-head. The buyers that the Company deals with
are all major oil companies or subsidiaries of major oil
companies, such that the Company is not critically dependent upon
any of these purchasers, nor is the amount of crude being
produced by the Company ever likely to be in excess of the
amounts demanded by the available buyers.
The buyers provide tank trucks to collect the oil at the lease
production site, from storage tanks maintained at the leases for
purposes of accumulating sufficient stores of oil to fill a
tanker truck. There is no need, nor any plan, for the Company to
own its own fleet of tankers to transport the crude to a more
distant refinery or buyer of the product. This problem is solved
by dealing with the purchasers in the local areas and by
utilizing their transportation resources. There are no pipelines
in the areas in which the Company currently has operational
leases, and none likely to be built unless a very large amount of
crude becomes available on an ongoing basis and with a great
number of years of steady production predicted.
From January through June of 1996, the Company had no operations.
All income was derived from passive investments in the
Mississippi leases as interest holders, which resulted in income
of less than $100. Beginning in the third quarter of 1996,
the Company commenced actual operation of its own leases, with
the Frio Lease being the initial subject of application of
swabbing techniques. The Company secured limited production from
these leases.
Expansion Strategy
The Company intends to continue its acquisition of oil and gas
properties and leases primarily in, but not limited to, Texas,
Utah and Colorado. The Company will acquire funds necessary for
these acquisitions and development costs through borrowings from
private investors, with an offer of conversion of these
borrowings into common stock of the Company at some point in the
future, or be definition within the borrowing documents at the
time of the loans. If funds are available from producing wells,
which is not currently the case, then those funds will be
available for expansion and for increasing production facilities.
Competition
The search for viable oil and gas prospects and leases is
intensely competitive. It is likely that in seeking future
acquisitions, the company will compete with firms which have
substantially greater financial and management resources than the
company. The Company focuses on mineral leases and lease
acquisition opportunities in known, proven, producing fields, and
any drilling that the Company undertakes, is generally associated
with "in-fill" of existing, producing leases, to more rapidly
exploit the identified reservoirs of oil contained within those
fields. The Company does not focus on the identification and
location of unknown, unproven territories or leases and does not
drill "wildcat" wells (wells with no contiguous producing
wellsites). The Company's competition is widely diverse, and
comes primarily from two sources of funds: (1) those competitors
that are seeking fields for expansion, further drilling, or
increasing production through improved engineering techniques
(generally direct competitors of the Company) and (2)
income-seeking entities purchasing a predictable stream of
earnings based upon historic production from the field being
acquired. Because Oilex (the Company) believes that it can
operate a field more efficiently than most other companies in the
oil and gas business, it can usually acquire fields at market
prices that have been established by less efficient
owner/operators, and therefore at prices well below a reasonable
rate of return for Oilex. There are very few companies buying
older, "stripper" (fields ready to be stripped of their pumping
equipment and only able to produce at the barest minimum of
profit) fields with the intent to increase production by
engineering and drilling improvements, and even those are
generally only willing to pay market prices based upon actual,
current income, utilizing existing costs for operations. The
fields that the Company is interested in are fields that have
little or no value to their current owners because the cost of
producing oil from these fields, for their current owners, is in
excess of the price to be obtained when the oil is sold.
The Company's swabbing units are built by Oil Retrieval
Systems, Inc., located in Ft. Worth, Texas. These units can be
efficiently utilized for producing oil and gas from shallow wells
up to those that are 8000' in depth. Truck or tractor mounted
portable swabbing units eliminate the need to rig up and run
tubing, rods, downhole pumps, packers and surface pump jacks.
Instead, each unit is equipped with a 40 or 80 barrel holding
tank for hauling the fluids swabbed from the well bores. The
swabbing procedure takes approximately 10 minutes per well and a
one-worker crew can swab 15 to 30 wells per day. On a
comparative basis, using conventional pump jacks, the same volume
of fluid removal would take 14 to 24 hours and require a nearly
constant source of electrical power. One major determinant of
the efficiency of operation is in the distance that must be
traversed between each of the wells on a swabbing units' route.
The greater the distance, the fewer wells that can be serviced in
a specified time period. The units eliminate the need for
continuous electrical power, which is generally 35% to 50% of the
cost of operating low-yield fields. Based upon these savings,
the Company can afford to purchase rights in fields that may be
unprofitable to others, but with this technology, can be returned
to profitability, even with lower crude oil outflows.
As of the end of 1997, the Company has two swabbing units in
operation, and is achieving the savings described above.
Employees
The Company currently employs four full time people, including
the President, Secretary/Treasurer and support staff. The
President and Secretary/Treasurer of the Company have not drawn a
salary to date and do not intend to do so until the Company is
profitable. None of the Company's employees is represented by a
labor union. The Company has experienced no work stoppages and
believes that its employee relations are good.
Item 2. Plan of Operation
The Company's general business plan is to acquire additional
petroleum leases on older, low-production, low-profit fields, and
improve the operation of the fields by altering the extraction
methods, primarily by utilizing the much more efficient swabbing
and recovery process. By reduction of the costs of operation,
existing flow rates will be more profitable for the Company than
for the previous owners, who were not able to improve their cost
structure, because they did not have access to newer
technologies, such as swabbing extraction via motorized
collection equipment, at an economy of scale that allows for
application of the technology across hundreds of wells rather
than on a well-by-well basis.
The Company is a licensed operator in all of the states in which
it owns leases, and will become licensed in any states in which
it acquires leases in the future.
The Company complies with all requirements for operating fields
in the various states and local jurisdictions, and in all cases
has indemnity bonds, plugging and abandonment bonds and similar
assurances from state or private insurance facilities. For
example, the Texas leases are governed by the Texas Railroad
Commission, which regulates environmental aspects of extraction
throughout the State of Texas. Since crude oil is a "naturally
occurring substance" it is not, by definition, hazardous waste.
The environmental regulations in most areas generally attempt to
prevent spillage from tanks, lines and equipment, or seepage from
open wells, so that pools of oil are not available as a fire
hazard. On a yearly basis, the Company pays a portion of its
proceeds derived from Texas-based wells to the Railroad
Commission for participation in a State-mandated and
managed environmental program. The Company is not aware of any
non-compliance as to existing properties with any environmental
regulations governing any of its leased properties. Wells that
are no longer producing are "plugged", meaning they are capped
and sealed such that no fluids reach the surrounding environment,
and the Company pays for this process, which costs from $2,000 to
$10,000 on a per-well basis. The Company is not abandoning or
plugging any of the wells it has because it believes that it can
still recover profitable production from the wells that it is
acquiring. Plugging and abandoning is only required when the
operator and the owner determine that a well no longer has any
possibility of useful production. The Company does not have any
significant costs associated with environmental regulation at
this stage of its existence.
Research and Development. The Company has not allocated any of
its resources to research and development during the previous two
years, and does not plan on any research and development
expenditures during fiscal 1997. The Company is continually
seeking new technologies for application to its operations, but
acquires these technologies either by purchase or lease from
third parties, rather than by internal development.
Management's Discussion and Analysis of Financial
Condition and Results of Operation
Shown below is certain selected consolidated financial data
of the Company for the years ended December 31, 1995, and 1996.
This data should be read in conjunction with the Company's
financial statements and notes included elsewhere herein. The
Company's auditors, Simonton, Kutac & Barnidge, have issued a
"going concern" qualification of their opinion, which notes that
the significant operating losses and working capital deficit
raise substantial doubt about the company's ability to continue
as a going concern. The financial statements do not include any
adjustments that might result from the outcome of that particular
uncertainty.
During the fourth quarter of 1994, the current management of
Oilex took control of the Company, modifying and altering the
Company's approach to business. Generally, the then-existing
lines of business of the Company were sold, and the new
management embarked on a plan of oil and gas lease acquisitions,
exchanging equity in the company for the lease rights acquired.
Several executive positions were eliminated and overhead was cut
substantially, from $241,498 to $42,817. During 1995, the
Company's revenues were derived from its interests in the
Mississippi leases, in which the Company has a very minor
interest, and the revenues were consequently very low, reaching
only $41,349 for the entire year, and then falling lower, in
1996, to $34,236. During 1996 the company sold some of its
wellhead equipment, such as pumps and tubing, and received an
additional $22,289 in cash for these items. This was occasioned
by the shift in operational focus from one of a pumping company
operating numerous pumps on the well sites, to that of an oil
collection methodology whereby the swabbing units would operate
across a route comprised of many well sites, allowing lower
operational expenses, and freeing the pumping equipment for sale.
In 1995, the Company acquired significant additional lease
properties, in Greenbriar and Pocahontas Counties (see Brush
Prairie Minerals transaction below), valued at $1,256,265, but
these fields were not in a production mode. These properties
were acquired with the intent of reactivating them, utilizing the
Company's ability to improve operating profits by lowering costs
of operations.
In 1996, the company continued to acquire additional fields
which were of minor production value for their former owners,
planning to exploit the reduced operating costs inherent in
utilizing the swabbing technology. Leaseholds in Colorado (White
River Dome and Rio Blanco), in Frio County, Texas (Big Foot
Field), in Carbon County, Utah, and in the Uintah Basin in Utah
were acquired, for a total capital expense (primarily in company
stock), cumulatively valued at $2,246,309. This compares to the
acquisitions in 1995 of fields valued at $1,335,984.
A concomitant result of the acquisition of the fields and
their preparation for use of the swabbing technology, was an
immediate and extraordinary expense (increasing from $42,817 in
1995, to $920,106 in the 9-month period ending September 30,
1996). This increase was caused by the necessity of improving
road access in the areas, for the swabbing vehicles, increasing
the wellhead accessibility for heavy equipment, removal of all of
the downhole and surface equipment, removal and termination of
electrical power conduits, and training of staff in the
utilization of the new equipment.
Lease operating expenses increased from $4,349 in all of
1995 to $69,627 during the first nine months of 1996,
attributable directly to the greatly increased number of leases
and contained wells thereon.
During 1996, the Company, in addition to receiving small
amounts of income from the Mississippi leases, has also been
selling off surplus, used oil field equipment, in anticipation of
operating with the portable swabbing units. As of December 31,
1996, 2 swabbing units have been acquired and placed in operation
on the company's leases. Revenues from these low-production,
low-overhead, low yield fields are just starting to occur in the
fourth quarter of 1996.
Also, during the 1996 year, the company abandoned fully
depleted oil and gas properties, recognizing a non-cash loss of
$5,500,858 from properties that would no longer be producible for
oil and gas.
The company plans to borrow funds from investors, generally
in exchange for convertible debentures, allowing the investors to
participate in the potential improvement in profitability of the
company should the value of the company's stock increase. Upon
conversion of these equities, the company would also be retiring
the debt carried from development of these fields.
As of July 1, 1997, the company was preparing to commence
drilling operations in its Big Foot Field holdings in Frio
County, Texas. The Company plans to initially re-enter 55
existing wells and place them back into production. Once the
initial phase of operations is completed, the Company plans to
initiate a drilling program to fully develop the 3,100 foot Olmos
"B" sand underlying its Frio County, acreage.
STATEMENT OF OPERATIONS:
For the Years Ended
December 31,
1996 1995
(9 Mo) (Full Yr)
Revenue:
Oil and gas sales 8,315 41,349
Other -- --
8,315 41,349
Expenses:
Lease operating 69,627 4,349
General and administrative 920,106 42,817
Depreciation, depletion and
amortization 17,520 80,375
Interest 16,506 26,198
1,023,759 153,739
Loss before income taxes (1,015,444) (112,390)
Provision for income taxes -- --
Net loss (1,015,444) (112,390)
Net loss per share (0.04) $(0.01)
<PAGE>
BALANCE SHEET DATA:
LIABILITIES AND STOCKHOLDERS EQUITY
December 31,
1996 1995
Current Liabilities (9Mos)
Bonds payable 259,369 $ 244,577
Accounts payable 260 --
Notes payable to related parties 34,981 33,475
Total Current Liabilities 294,610 278,052
Deferred income tax liability 721,439
Stockholders' Equity
Preferred stock, Series A,
$.001 par value 10% cumulative
convertible; 2,500,000 shares
authorized, issued and outstanding; 0 2,500 fn1
Common stock, $.001
par value; 25,000,000 shares
authorized 24,726,775, 14,327,570,
and 13,812,570 shares issued and
outstanding at December 31, 1995,
and 1994, respectively 24,727 14,328
Paid-in capital 12,768,434 11,229,414
Accumulated deficit (7,556,506) (6,541,062)
Total Stockholders' Equity 5,236,655 4,705,180
Total Liabilities and
Stockholders' Equity 6,252,704 4,983.232
FN1 Effective June 1, 1996, the Company and World Interactive
Networks, Inc. entered into an agreement to terminate the Stock
Exchange Agreement dated January 5, 1995 and to return the
149,970 shares of Series 'C' Preferred stock issued pursuant
thereto. WIN has returned the 2,500,000 shares of Series 'A'
Preferred stock issued by Oilex. Both parties have released and
held harmless the other from all future claims and causes of
action. See Note 4 - Stockholders Equity of the 1996 Audited
Financial Statement.
<PAGE>
Item 3. Description of Non-oil and Gas Property
The Company's executive offices occupy approximately 2,200
square feet of office space in Houston, Harris County, Texas,
under a multi year lease which provides for rent of approximately
$2,150 per month. These facilities are adequate for the
Company's purposes, and will expire on May 31, 1998. In the
event additional space is required, the Company believes it will
be readily available. The Company also leases a 1995 Jeep 4-door
Sport Limited, at a monthly cost of $527.63. The lease expires
on January 1, 1998.
Description of Oil and Gas Property
(Guide 2, Item 4)
The Company has ownership or lease holder rights in its oil and
gas properties. These are of two types: net revenue interest
and working interest. The net revenue interest is a percentage
of the gross sales of product, before deducting any costs of
extracting and selling the product. The Working Interest is an
interest in the actual operations of the oil field. Before there
is any return or profit to working interest participants, all
costs of operation must be paid, such as electricity, labor,
maintenance, parts and other items of overhead. The working
interest participant then receives a share of the remaining
"profit".
The only productive properties owned or leased by the Company as
of September 30, 1996 were a series of very minor working
interests in Mississippi, generally described as:
1) "Burns Baptist Church": A 2.6166% Working Interest insofar
and only insofar as to the portion of the leases listed below
which fall within the boundary of the unit for the Norcen
Explorer, Inc. Burns Baptist Church et al No. 1 as evidenced by
Declaration of Pooled Oil Unit dated September 7, 1990 and
recorded in Book No. 325, Page 676 of the records of Smith
County, Mississippi and further limited to the depths between the
surface and 9,986 feet subsurface.
2) "Henderson": A 2.6166% Working Interest insofar and only
insofar as to the portion of the leases listed below which fall
within the boundary of the unit for the Norcen Explorer, Inc.
John C. Henderson et al No. I as evidenced by Declaration of
Pooled Oil Unit dated July 22, 1991 and recorded in Book No. 338,
Page 126 of the records of Smith County, Mississippi and further
limited to the depths between the surface and 10,644 feet
subsurface.
3) "Kearney": A 3.4016% Working Interest insofar and only
insofar as to the portion of the leases listed below which fall
within the boundary of the Unit for the Norcen Explorer, Inc.
Allan P. Kearney et al No. 1 as evidenced by Declaration of
Pooled Oil Unit dated April 27, 1992 and recorded in the records
of Smith County, Mississippi and further limited to the depths
between the surface and 10,644 feet subsurface).
4) "Gladstone-Winstead": A 2.6166% Working Interest (insofar
and only insofar as to the portion of the leases listed below
which fall within the boundary of the unit for the Norcen
Explorer, Inc.-Gladstone-Winstead et al No. 1 as evidenced by
Declaration of Pooled Oil Unit dated of the records of Smith
County, June 2, 1992 and recorded in the records of Smith County,
Mississippi and further limited to the depths between the surface
and 10,644 feet subsurface).
The Company also has a much larger working interest position in a
series of leases in Frio County, Texas, identified as:
A One Hundred Percent (100%) Gross Working Interest and a
Seventy Percent (70%) Net Revenue Interest in and to the oil
rights down to 3,330 feet and all rights below 3,300 feet in and
under the acreage covered by the following Oil, Gas and Mineral
Leases 1 through 5 and all rights in and under the acreage
covered by the following Oil, Gas and Mineral Leases 6 through
10:
1. Oil, Gas and Mineral Lease dated December 1, 1995, executed
by Carol Thompson Crouch, as Lessor, in favor of Oilex
International Investments, Inc., as Lessee, covering 150 acres of
land, a Memorandum of which is recorded in Volume 886, Page 245,
Deed Records of Frio County, Texas.
2. Oil, Gas and Mineral Lease dated December 1, 1995, executed
by Carol Thompson Crouch, as Lessor, in favor of Oilex
International Investments, Inc., as Lessee, covering 310.68 acres
of land, a Memorandum of which is recorded in Volume 886, Page
249, Deed Records of Frio County, Texas.
3. Oil, Gas and Mineral Lease dated December 1, 1995, executed
by Carol Thompson Crouch, as Lessor, in favor of Oilex
International Investments, Inc., as Lessee, covering 80 acres of
land, a Memorandum of which is recorded in Volume 886, Page 247,
Deed Record of Frio County, Texas.
4. Oil, Gas and Mineral Lease dated December 1, 1995, executed
by Carol Thompson Crouch, as Lessor, in favor of Oilex
International Investments, Inc., as Lessee, covering 160 acres of
land, a Memorandum of which is recorded in Volume 886, Page 243,
Deed Records of Frio County, Texas.
5. Oil, Gas and Mineral Lease dated December 1, 1995, executed
by Carol Thompson Crouch, as Lessor, in favor of Oilex
International Investments, Inc., as Lessee, covering 77.65 acres
of land, a Memorandum of which is recorded in Volume 886, Page
241, Deed Records of Frio County, Texas.
6. Oil, Gas and Mineral Lease dated February 14, 1996, executed
by Jim Biediger, as Lessor, in favor of Oilex International
Investments, Inc., as Lessee, covering 965.3 acres of land, a
Memorandum of which is recorded in Volume 886, Page 268, Deed
Records of Frio County, Texas.
7. Oil, Gas and Mineral Lease dated June 8, 1996, executed by
Fay Brown, as Lessors, in favor of Oilex International
Investments, Inc., as Lessee, covering 965.3 acres of land, a
Memorandum of which is recorded in Volume 886, Page 285, Deed
Records of Frio County, Texas.
8. Oil, Gas and Mineral Lease dated June 8, 1996, executed by
Theresa Biediger, as Lessor, in favor of Oilex International
Investments, Inc., as Lessee, covering 965.3 acres of land, a
Memorandum of which is recorded in Volume 886, Page 276, Deed
Records of Frio County, Texas.
9. Oil, Gas and Mineral Lease dated June 8, 1996, executed by
Helen Branham, as Lessor, in favor of Oilex International
Investments, Inc., as Lessee, covering 965.3 acres of land, a
Memorandum of which is recorded in Volume 886, Page 259, Deed
Records of Frio County, Texas.
10. Oil, Gas and Mineral Lease dated June 8, 1996, executed by
Connie Bradley, as Lessor, in favor of Oilex International
Investments, Inc., as Lessee, covering 965.3 acres of land, a
Memorandum of which is recorded in Volume 886, Page 251, Deed
Records of Frio County, Texas.
Total production from the Frio County leases amounted to 54
barrels of oil as of September 30, 1996. This was based upon a
price per barrel of $19.90 and an average lifting cost of $12.00
per barrel. 6 wells were in production (out of 63 existing
wells) over 1800 acres. The restrictions in this area allow for
10-acre spacing, so an additional 117 wells could be drilled if
conditions favored such additional drilling.
Total production attributable to Oilex's minority interest from
the Mississippi leases was 693 barrels of oil through September
30, 1996, and was based upon a price per barrel of $18.00 and a
lifting cost per barrel of $11.00. Numerous wells were in
production over but Oilex is holding less than 1% of the working
interest and does not have any information concerning the total
potential drilling rights and the plans of the majority-in-
interest holder of the working interest.
Item 4. Security Ownership of Certain
Beneficial Owners and Management
The following table sets forth information as of October 23,
1996, relating to the beneficial ownership of the Company's
Common Stock by (i) each person known by the Company to be the
beneficial owner of more than five percent of the Company's
outstanding Common Stock, (ii) each of the Company's directors,
(iii) the Company's Chief Executive Officer, and (iv) all
officers and directors of the Company as a group.
Name and Address of Amount of Percent
Beneficial Owner Beneficial Ownership of Class
Oliver H. Timmins III 1,823,845 9.34%
Cynthia C. Timmins
3050 Post Oak Blvd., Suite 1760
Houston, Texas 77056
Richard G. Clark 50,000 .26%
2 Saddle River Road
Saddle River, New Jersey 07458
Deborah K. Sacrey 50,000 .26%
7035 W. Tidwell, Ste J103
Houston, Texas 77092
All directors and officers 1,923,845 9.86%
as a group (5 people)
Phoenix Reserves, Inc. 8,685,378 44.47%
P. O. Box 460767
Houston, Texas 77056
Brush Prairie Minerals, Inc. 1,256,265 6.43%
905 Pines Road, Suite A
Spokane, Washington 99214
Pioneer Oil and Gas 1,125,000 5.76%
1225 Ft. Union Blvd., Suite 100
Midvale, Utah 84047
Phoenix Reserves, Inc., a Nevada corporation, obtained its
holdings in 1994, by virtue of a private placement pursuant to
Rule 506 under Regulation D, wherein Phoenix exchanged the
entirety of its interest in the Wilson leases, in consideration
of the issuance to it of 8,685,378 shares of restricted common
stock of the Company. This transaction was valued at $640,000
for purposes of the company's books and records. Willie C. Davis
and John Craig, who are officers and directors of the Phoenix
Reserves (not Oilex), did not and do not own any shares of
Phoenix. Allen Burditt II, owns 100% of Phoenix.
Brush Prairie Minerals, Inc., a Washington corporation
having 20 shareholders, obtained its holdings in December of
1995 (closing January, 1996), under a private placement
transaction pursuant to Rule 505 of Regulation D, by which Brush
Prairie obtained 1,256,265 shares of the Company's restricted
common stock, valued at $1,256,265, in exchange for 100% of Brush
Prairie's holdings in Greenbriar and Pocahontas Counties, West
Virginia. Fred C. Rahn was president and William Campbell was
the vice-president of Brush Prairie during 1996. No single
shareholder of group of shareholders of Brush Prairie owns a
controlling interest in Brush Prairie. In December of 1996,
Western Continental, Inc., a public company, acquired all of the
assets of Brush Prairie, to include the 1,256,265 shares of Oilex
common stock.
Pioneer Oil and Gas, a Nevada corporation, obtained its
1,500,000 shares of restricted common stock (valued at $0.23 per
share) in the Company on April 17, 1996 in exchange for 100% of
Pioneer's interest in the White River Dome leases in Colorado.
This transaction was conducted under the private placement
exemption of Rule 505 of Regulation D, and valued at $345,000.
Don J. Colton, is the President, and Gregg B. Colton is the Vice
President and Secretary of Pioneer, and together control over 51%
of Pioneer's equity interests. John Anderson, Gregg Colton, and
Don Colton are the only directors of the company. None of the
other officers or directors of Pioneer owns more than 10% of
Pioneer.
There are no contracts, option agreements, warrants or other
agreements outstanding by which any individual or entity can
increase its interest in the Company in reliance on pre-existing
terms and conditions.
Item 5. Directors, Executive Officers,
Promoters and Control Persons
The company has a 5-person board of directors (with one
vacancy), each member of which is described below, serving for
terms of one year, or until the annual shareholder's meeting, at
which time they could be replaced. The officers and directors of
the Company are:
Name Age Position with the C`ompany
Oliver H. Timmins III 43 President and Director
Richard G. Clark 69 Director
Deborah K. Sacrey 43 Director
Cynthia C. Timmins 36 Secretary/Treasurer and Director
Oliver H. Timmins III, President & Director, is a graduate of
Saint Mary s School of Law (Juris Doctor). Mr. Timmins has been
an attorney practicing in oil and gas related areas for over 16
years, during which period of time he has worked on the
negotiation of mergers and acquisitions, preparation of
securities filings, SEC filings for reporting and non-reporting
companies, title examination, preparation of gas purchase
contracts and preparation of joint operating agreements. In
addition, Mr. Timmins has specific experience in both exploration
and production, as well as supervising of day to day operations
of oil and gas related service companies. During the past 5
years, Mr. Timmins worked directly in the oil and gas industry,
serving as counsel at Chase Energy, Navarro Gas, Wellington
Funding Group, and Carancahua Resources, Inc. His primary
responsibility was title examination, preparation of and
negotiation for purchase contracts, preparation of Joint
Operating Agreements, and litigation support for clients who had
oil and gas related disputes. Commencing in 1994, he has been
working for Oilex, initially as general counsel and then as
President from 1995 to the present.
Richard G. Clark, Director - For the past 30 years, Mr. Clark has
been involved in dealer finance Banking, investment banking,
management related to institutional sales, branch management and
national marketing. A graduate of New York University s School
of Business and Finance, Mr. Clark has consulted for numerous
companies. His expertise and experience include corporate under
writings, financing, merger activities relating to retail
facilities, as well as numerous activities related to the oil and
gas, mining, and rail transportation industries, computer
products, and environmental issues and in negotiating the
acquisition of a New York Stock Exchange brokerage house.
Deborah K. Sacrey, Director - Ms. Sacrey is President of a full
service geological, drafting, geotechnical support facility with
in-house Diazo (printing and mylars), autocad with Terra Sciences
capabilities. Geological consulting areas include southern
Louisiana, Texas Gulf Coast, Mississippi, Arkansas and West
Virginia. Ms. Sacrey has a Bachelor of Science degree in Geology
and Geophysics.
Cynthia C. Timmins, Secretary/Treasurer & Director - Mrs.
Timmins, the wife of Oliver Timmins (see above), is an elementary
school assistant teacher and has assisted Oliver Timmins in
numerous corporate businesses over the past 14 years. Mrs.
Timmins attended the University of Texas at Austin.
Item 6. Executive Compensation
None of the executive officers or directors of the Company
receives a salary or other compensation from the Company. Mr.
Timmins, the President of the Company, does not intend to request
any compensation unless and until the Company is profitable. In
the future, the Company intends to pay fees and grant stock
options to its non-employee directors. There are no outstanding
options nor claims of deferred salary as of June 30, 1997.
The Company does not currently have any stock option plans
or long term incentive compensation plans. In addition, the
Company does not award stock appreciation rights, restricted
stock awards or long term incentive plan pay-outs.
Item 7. Certain Relationships and
Related Transactions
None.
Item 8. Description of Securities
The Company's authorized capital stock consists of
50,000,000 shares of Common Stock (as of July 3, 1996), par value
$.001 per share, of which 19,531,835 are presently issued and
outstanding. Each share of Common Stock is entitled to one vote
on all matters to be voted on by stockholders, including the
election of directors. At each election for directors, every
stockholder entitled to vote at such election has the right to
vote, in person or by proxy, the number of shares owned by them
for as many persons as there are directors to be elected and for
whose election they have a right to vote.
Common Stock
Subject to preferential rights with respect to any
outstanding Preferred Stock, holders of Common Stock are entitled
to receive ratably such dividends as may be declared by the Board
of Directors out of funds legally available therefor. In the
event of a liquidation, dissolution or winding up of the Company,
holders of Common Stock are entitled to share ratably in all
assets remaining after payment of liabilities and satisfaction of
preferential rights and have no rights to convert their Common
Stock into any other securities. All shares of Common Stock have
equal, noncumulative voting rights, and have no preference,
exchange, preemptive or redemption rights. The outstanding
shares of Common Stock are fully paid and nonassessable.
PART II
Item 1. Market Price of and Dividends
on the Registrant's Common Equity
and Related Stockholder Matters
The Company's common stock is listed on the OTC Bulletin
Board of the NASD under the symbol "OLEX". No assurance can be
given that the present market for the Company's common stock will
continue.
The high and low bid quotations per share published by the
National Quotation Bureau Inc. for the quarterly periods
indicated are set forth below:
Fiscal Year High Low
1993
Second Quarter .0625 .0625
Third Quarter 1.00 .05
Fourth Quarter .25 .25
1994
First Quarter .25 .125
Second Quarter .125 .03125
Third Quarter .03125 .03125
Fourth Quarter 2.875 .03125
1995
First Quarter 1.75 .375
Second Quarter .5625 .125
Third Quarter .8125 .09375
Fourth Quarter .75 .20
1996
First Quarter 1.06 0.44
Second Quarter 0.44 1.34
Third Quarter 0.91 0.47
The over-the-counter market quotations set forth in the
foregoing table reflect inter-dealer prices, without retail
markup, markdown or commission, and may not necessarily represent
actual transactions.
As of September 30, 1996, the Company had 121 holders of
record of its shares of Common Stock, although many more holders
may exist under "street names."
The Company has not paid any cash dividends and does not
anticipate that it will pay any cash dividends on its Common
Stock in the foreseeable future. Payment of dividends is within
the discretion of the Company's Board of Directors and will
depend, among other factors, upon the Company's earnings,
financial condition and capital requirements.
Item 2. Legal Proceedings
The Company is not a party to any legal proceedings which
could have a material adverse effect on its business.
Item 3. Changes in and Disagreements With
Accountants on Accounting and
Financial Disclosure
None.
Item 4. Recent Sales of Unregistered Securities for Acquisition
of Properties and Payment of Services
During the period from January 1, 1993 to September 30,
1996, the Company acquired various assets and properties in
exchange for its common stock.
Phoenix Reserves, Inc., a Nevada corporation, obtained its
holdings in 1994, by virtue of a private placement pursuant to
Rule 506 under Regulation D, wherein Phoenix exchanged the
entirety of its interest in the Wilson leases, in consideration
of the issuance to it of 8,685,378 shares of restricted common
stock of the Company. This transaction was valued at $640,000
for purposes of the company's books and records. Willie C. Davis
and John Craig, who are officers and directors of the Phoenix
Reserves (not Oilex), did not and do not own any shares of
Phoenix. Allen Burditt II, owns 100% of Phoenix.
Brush Prairie Minerals, Inc., a Washington corporation
having 20 shareholders, obtained its holdings in December of
1995 (closing January, 1996), under a private placement
transaction pursuant to Rule 505 of Regulation D, by which Brush
Prairie obtained 1,256,265 shares of the Company's restricted
common stock, valued at $1,256,265, in exchange for 100% of Brush
Prairie's holdings in Greenbriar and Pocahontas Counties, West
Virginia. Fred C. Rahn was president and William Campbell was
the vice-president of Brush Prairie during 1996. No single
shareholder of group of shareholders of Brush Prairie owns a
controlling interest in Brush Prairie. In December of 1996,
Western Continental, Inc., a public company, acquired all of the
assets of Brush Prairie, to include the 1,256,265 shares of Oilex
common stock.
Pioneer Oil and Gas, a Nevada corporation, obtained its
1,500,000 shares of restricted common stock (valued at $345,000)
in the Company on April 17, 1996 in exchange for 100% of
Pioneer's interest in the White River Dome leases in Colorado.
This prospect consists of 11,535 acres located in Rio Blanco
County. Oilex exchanged 1,500,00 shares of its common
stock along with $25,000 cash for these leaseholds.
Additionally, the Seller signed an agreement whereby these shares
will be voted in accordance with current management. This
transaction was conducted under the private placement exemption
of Rule 505 of Regulation D. Don J. Colton, is the President,
and Gregg B. Colton is the Vice President and Secretary of
Pioneer, and together control over 51% of Pioneer's equity
interests. John Anderson, Gregg Colton, and Don Colton are the
only directors of the company. None of the other officers or
directors of Pioneer owns more than 10% of Pioneer.
Effective in January, 1996, Oilex issued 500,000 shares of
common stock, pursuant to Rule 505 of Regulation D, in exchange
for oil and gas leaseholds and equipment located in the Big Foot
Field area of Frio County, Texas. Oilex has retained the voting
rights to these common shares. The purchase price valued at
$500,000.
On March 24, 1996, the Company issued 100,000 shares of its
common stock, pursuant to Rule 505 of Regulation D, in exchange
for 1,939 acres of lease rights in the Carbon County, Utah field.
The value of the acreage was approximately $50 per acre, or
$96,950.
On March 24, 1996, the Company acquired 3,945 acres of oil
and gas leases in the Unitah Basin area of Utah. The Company
issued 42,000 shares of its common stock, pursuant to Rule 505 of
Regulation D, for these lease rights, which were valued at
approximately $11 per acre, or a total of $43,395.
During November, 1996, the Company purchased oil and gas
properties and tangible equipment from Phoenix in exchange for
3,500,000 shares of Oilex common stock. This issuance was
conducted under the auspices of Rule 506 and the resulting shares
are restricted against transfer by virtue of their private
placement origins.
Also during November of 1996, the Company agreed to acquire
additional leases in Pecos County, Texas (the "Walker Queen
Prospect"), in exchange for $925,000, payable by revenue interest
payments on a promissory note, for $800,000 and the issuance of
common stock, at $1.00 per share, for $125,000. This transaction
was not concluded at November 1, 1996.
Issuance of Stock in Payment of Services or Cancellation of Debt
In 1996, a corporate stockholder, Phoenix Reserves, Inc.
("Phoenix"), who owns 36.5% of Oilex's outstanding common stock
advanced $790,210 to Oilex. As payment, Oilex issued 1,200,000
shares of its common stock to Phoenix which shares are included
in total stockholders' equity at December 31, 1996. The funds
were used for working capital purposes. Phoenix has common
management with Oilex and it was a majority shareholder of Oilex
in prior years.
During 1996, the Company received advances from its
President totaling $186,386 for which Oilex issued 500,000 shares
of its common stock as payment. The funds were used for working
capital purposes. Additionally, another 640,000 shares of common
stock were issued to the President of Oilex as compensation for
personal services.
A stockholder of the Company is a principal in a firm that
provides oil and gas reserve evaluation services to the Company.
A total of 152,700 shares of Oilex common stock was issued during
1996 in exchange for oil and gas reserve evaluation services.
In 1996, the Company issued 150,000 shares of common stock
for directors' fees to three of its directors.
On November 12, 1996, the Company entered into an agreement
with a financial consulting firm whereby, as consideration for
services rendered, the Company granted an option to purchase
300,000 shares at $0.50 per share. The agreement expired on May
15, 1997. No options were ever exercised.
At various times during 1996, the Company issued shares of
its common stock in the amounts and for the types of services as
follows, pursuant to Rule 505 of Regulation D, resulting in
restricted stock: 46,240 common shares for leasing, geological
and engineering; 100,000 common shares for investor relations;
702,000 common shares for financial consulting and public
relations; and 10,000 common shares for other services rendered.
Item 5. Indemnification of Directors and Officers
Section 78.751(l) of the Nevada Revised Statutes ("NRS")
authorizes a Nevada corporation to indemnify any director,
officer, employee, or corporate agent "who was or is a party or
is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, except an action by or in the
right of the corporation" due to his corporate role. Section
78.751(1) extends this protection "against expenses, including
attorneys' fees, judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with the
action, suit or proceeding if he acted in good faith and in a
manner which he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful."
Section 78.751(2) of the NRS also authorizes indemnification
of the reasonable defense or settlement expenses of a corporate
director, officer, employee or agent who is sued, or is
threatened with a suit, by or in the right of the corporation.
The party must have been acting in good faith and with the
reasonable belief that his actions were not opposed to the
corporation's best interests. Unless the court rules that the
party is reasonably entitled to indemnification, the party
seeking indemnification must not have been found liable to the
corporation.
To the extent that a corporate director, officer, employee,
or agent is successful on the merits or otherwise in defending
any action or proceeding referred to in Section 78.751 (1) or
78.751(2), Section 78.751(3) of the NRS requires that he be
indemnified "against expenses, including attorneys' fees,
actually and reasonably incurred by him in connection with the
defense."
Section 78.751(4) of the NRS limits indemnification under
Sections 78.751(1) and 78.751(2) to situations in which either
(1) the stockholders, (2) the majority of a disinterested quorum
of directors, or (3) independent legal counsel determine that
indemnification is proper under the circumstances.
Pursuant to Section 78.751(5) of the NRS, the corporation
may advance an officer's or director's expenses incurred in
defending any action or proceeding upon receipt of an
undertaking. Section 78.751(6)(a) provides that the rights to
indemnification and advancement of expenses shall not be deemed
exclusive of any other rights under any bylaw, agreement,
stockholder vote or vote of disinterested directors. Section
78.751(6)(b) extends the rights to indemnification and
advancement of expenses to former directors, officers, employees
and agents, as well as their heirs, executors, and
administrators.
Each of the Company's officers and directors is serving
subject to and in reliance upon the provisions of Nevada law
granting indemnification for company-related activities as set
forth above, and the board of directors has approved such
indemnity to the maximum extent allowable.
<PAGE>
PART F/S
Index to Audited Financial Statements
Financial Statements Sequential
Page No.
1996 Audited Statement 26
PART III
Item 1. Index to Exhibits
The following Exhibits are filed as a part of this
Registration Statement:
Exhibit Sequential
Number Description* Page No.
3.1 Initial Articles of Incorporation
filed June 6, 1986 42
3.2 Articles of Amendment filed January
23, 1992 reflecting a name change
to Oilex International Investments, Inc. 44
3.3 Articles of Amendment filed June 3,
1995 effecting an increase in the
number of authorized shares
to 25,000,000 46
3.4 Bylaws of Oilex, Inc. 48
3.5 Articles of Amendment filed July 8, 1996
changing the name to Oilex, Inc. and effecting
an increase in the number of authorized
shares to 50,000,000 59
10.1 General Form for Oil and Gas Mineral Leases in
Texas
60
10.2 Letter dated September 5, 1996 re WIN Transaction 64
99 Guide 2: Disclosure of Oil and Gas
Operations 65
* Summaries of all exhibits contained
within this Registration Statement
are modified in their entirety by
reference to these Exhibits
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the registrant has duly caused this
registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
Oilex, Inc.
By: /s/ Oliver H. Timmins
Oliver H. Timmins III,
Dated: April 19, 1998 President
<PAGE>
OILEX, INC.
FINANCIAL STATEMENTS
December 31, 1996 and 1995
Independent Auditors' Report
SIMONTON, KUTAC
& BARNIDGE, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS
909 Fannin, Suite 2050
Houston, Texas 77010-1007
Telephone:(713) 658-9755 Facsimile: (713) 658-0298
May 1, 1997
Board of Directors and Stockholders
Oilex, Inc.
Houston, Texas
We have audited the accompanying balance sheets of Oilex, Inc. as
of December 31, 1996 and 1995, and the related statements of
operations, changes in stockholders' equity, and cash flows for
the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Oilex, Inc. at December 31, 1996 and 1995, and the results of
its operations and its cash flows for the years then ended, in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed
in Note 8 to the financial statements, the Company's significant
operating losses and working capital deficit raises substantial
doubt about its ability to continue as a going concern. The
financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ Simon, Kutac & Barnidge <PAGE>
<PAGE>
OILEX, INC.
BALANCE SHEET
(December 31, 1996)
ASSETS
December 31,
1996 1995
Current Assets:
Cash 14,630 15,272
Oil and gas receivables 9,929 --
Prepaid Expenses 11,503 --
Total Current Assets 36,062 15,272
Property and Equipment:
Oil and gas properties -
full cost method
Subject to amortization 7,519,000 7,969,529
Undeveloped properties 1,217,000 --
Production equipment 300,584 --
Furniture and equipment 61,081 --
Accumulated depreciation, depletion
and amortization (66,549) (5,567,407)
Net Property and Equipment 9,031,116 2,402,122
Investment in marketable securities -- 2,500,000
Organization costs, net of amortization 59,252 65,838
Total Assets $9,126,430 $4,983,232
<PAGE>
OILEX, INC.
BALANCE SHEET
(December 31, 1996)
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31,
1996 1995
Current Liabilities
Amounts due for oil and gas
properties $925,000 $ --
Bonds payable 233,161 244,577
Advances from related parties 11,610 --
Accounts payable 250 --
Note payable to related parties 35,484 33,475
Total Current Liabilities 1,205,505 278,052
Deferred income tax liability 3,032,000 --
Commitments and contingencies -- --
Stockholders' Equity
Preferred stock, Series A, $.001 par
value 10% cumulative convertible;
2,500,000 shares authorized, issued
and outstanding -- 2,500
Common stock, $.001 par value; 50,000,000
and 25,000,000 shares authorized at
December 31, 1996 and 1995,
respectively, 24,726,775, and
14,327,570 shares issued and out-
standing at December 31, 1996 and 1995,
respectively 24,727 14,328
Paid-in capital 12,768,434 11,229,414
Accumulated deficit (7,904,236)( 6,541,062)
Total Stockholders' Equity 4,888,925 4,705,180
Total Liabilities and
Stockholders' Equity $9,126,430 $4,983,232
<PAGE>
STATEMENT OF OPERATIONS
(December 31, 1996)
For the Years Ended
December 31,
1996 1995
Revenue:
Oil and gas sales $ 34,236 $ 41,349
Other income 22,289 --
56,525 41,349
Expenses:
Lease operating 181,906 4,349
General and administrative 1,143,276 42,817
Depreciation, depletion and amortization 72,135 80,375
Interest 22,382 26,198
1,419,699 153,739
Loss before income taxes (1,363,174) (112,390)
Provision for income taxes -- --
Net loss (1,363,174) (112,390)
Weighted average common shares outstanding:
Primary and fully diluted 19,004,250 13,898,750
Loss per common share:
Primary and fully diluted $ (0.07) $ (0.01)
<PAGE>
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (December 31, 1996)
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Preferred Stock Common Stock Paid-In Accumulated
Shares Amount Shares Amount Capital Deficit Total
Balance,
December 31, 1994 -- -- 13,812,570 13,813 7,396,445 (6,428,672) 981,586
Issuance of Series
A Preferred Stock 2,500,000 2,500 -- -- 2,497,500 -- 2,500,000
Issuance of common
stock in exchange
for oil and gas
properties -- -- 515,000 515 1,335,469 -- 1,335,984
Net loss -- -- -- -- -- ( 112,390)(112,390)
Balance,
December 31, 1995 2,500,000 2,500 14,327,570 14,328 11,229,414
(6,541,062)4,705,180
Retirement of Series
A Preferred Stock (2,500,000)(2,500) -- -- (2,497,500) -- (2,500,000)
Common stock issued
in exchange for oil
and gas properties -- -- 6,898,265 6,898 2,239,411 -- 2,246,309
Common stock issued
for personal
services -- -- 3,500,940 3,501 1,797,109 -- 1,800,610
Net loss -- -- -- -- -- (1,363,174)(1,363,174)
Balance,
December 31, 1996 -- $ -- 24,726,775 24,727 12,768,434 (7,904,236) 4,888,925
</TABLE>
<PAGE>
STATEMENT OF CASH FLOWS
(December 31, 1996)
For the Years Ended
December 31,
1996 1995
Cash Flows from Operating Activities:
Net loss (1,363,174) $(112,390)
Adjustments to reconcile net loss to net
cash provided (used) by operating activities:
Depreciation, depletion and amortization 78,721 80,375
Increase in oil and gas receivables (9,929) --
Increase in prepaid expenses (11,503) --
Increase in amounts due for oil and gas
properties acquired 925,000 --
Increase in accounts payable 250 --
Net cash provided by operating activities 1,419,975 1,326,143
Cash Flows Used in Investing Activities:
Increase in oil and gas properties, net (1,061,155)(1,281,265)
Purchase of production equipment (300,584) --
Purchase of furniture and equipment (61,081) --
Other -- (56,416)
Net cash used by investing activities (1,422,820)(1,337,681)
Cash Flows from Financing Activities:
Increase in advances from related party 11,610 --
(Decrease) increase in bonds payable (11,416) 18,563
Increase in notes payable to
related parties 2,009 6,583
Net Cash Provided from Financing Activities 2,208 25,146
Disposal (investment) in marketable
securities 2,500,000 (2,500,000)
Decrease in accumulated depreciation,
depletion and amortization (5,500,858) --
Increase in deferred tax liability 3,032,000 --
Other (65,549) (56,416)
Net Change in Cash (642) 13,508
Cash, beginning of year 15,272 1,764
Cash, end of year 14,630 15,272
<PAGE>
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
Organization --- Oilex, Inc. ("Company") was incorporated under
the laws of the State of Nevada on June 10, 1986 under the name
of "Akteck, Inc." The Company later changed its name to "Oilex
International Investments, Inc.," and in July, 1996 changed its
name to "Oilex, Inc."
Description of the Business --- The primary business activities
of Oilex, Inc. is oil and gas exploration, development and
acquisitions. The Company currently owns oil and gas leaseholds
and fee property interests in Texas, Mississippi, Colorado, West
Virginia and Utah.
Oil and Gas Properties --- The Company follows the full cost
method of accounting whereby all costs, including direct,
general and administrative expenses, associated with property
acquisition, exploration and development activities are
capitalized. Cost associated with proved reserves are amortized
by the unit-of-production method using independent engineers'
estimates of unrecovered proved oil and gas reserves. The costs
of unproved properties are excluded from amortization until the
properties are evaluated. Interest is capitalized on oil and gas
properties not subject to amortization and in the process of
development. Proceeds from the sale of properties are accounted
for as reductions to capitalized costs unless such sales involve
a significant change in the relationship between costs and the
estimated value of proved reserves or the underlying value of
unproved properties, in which case, a gain or loss is recognized.
Unamortized costs of proved properties are subject to a ceiling
which limits such costs to the estimated present value of oil and
gas reserves reduced by future operating expenses, development
expenditures and income taxes.
During 1996, certain depleted and abandoned oil and gas
properties were written off, resulting in the accumulated
depreciation, depletion and amortization account of approximately
$5,500,000.
Income Taxes --- The Company accounts for income taxes in
accordance with Statement of Financial Accounting Standards No.
106, "Accounting for Income Taxes," which requires the use of the
"liability method" of accounting for income taxes. Deferred
taxes are provided using the liability method whereby deferred
tax assets are recognized for deductible temporary differences
and deferred tax liabilities are recognized for taxable temporary
differences. Temporary differences are the differences between
the reported amounts of assets and liabilities and their tax
bases. Deferred tax assets and liabilities are adjusted for the
effects of changes in tax laws and rates on the date of
enactment.
The Company has incurred operating losses in each of the last
seven years. As the utilization of such losses can not be
anticipated, a corresponding benefit has not been recorded.
Accounting Estimates --- The preparation of financial statements
in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect
the amounts reported in the financial statements and the
accompanying notes. The actual results could differ from those
estimates.
The Company's financial statements are based on a number of
significant estimates including selection of the useful lives for
property and equipment and oil and gas reserve quantities which
are the basis for the calculation of depreciation, depletion and
impairment of oil and gas properties. Management emphasizes that
reserve estimates are inherently imprecise and that estimates of
more recent discoveries and reserves associated with
non-producing properties are more imprecise than those for
producing properties with long production histories.
Accordingly, the Company's estimates are expected to change as
future information becomes available.
Other Property and Equipment --- Depreciation of property and
equipment, other than oil and gas properties, is provided
generally on the straight-line basis over the estimated useful
lives of the assets as follows:
Office equipment 3-7 years
Oil field service equipment 3-7 years
Ordinary maintenance and repairs are charged to income and
expenditures which extend the physical or economic life of the
assets are capitalized. Gains or losses on disposition of assets
other than oil and gas properties and equipment are recognized in
income, and the related assets and accumulated depreciation
accounts are adjusted accordingly.
Other Non-Current Assets --- Other non-current assets include
organization costs, which are being amortized over five years.
Reclassification --- Certain reclassifications have been made to
the 1995 financial statements to conform to the 1996
presentation.
Loss Per Common Share --- Primary earnings per common share are
based upon the weighted average number of common and common
equivalent shares outstanding. Fully diluted earnings per common
share are based on the assumption that all convertible debentures
and stock options were converted at the beginning of the year.
Common stock equivalents were excluded from the calculation of
loss per common share as such inclusion would have had an
anti-dilutive effect; therefore, fully diluted earnings per share
is considered to be the same as primary earnings per share.
NOTE 2 - AMOUNTS DUE FOR OIL AND GAS PROPERTIES
Effective November 1, 1996, Oilex entered into an agreement to
acquire an approximate 75% gross working interest in the Walker
(Queen) Field) in Pecos County, Texas. This prospect consist of
3,040 acres of oil and gas leases, for which Oilex will pay
$925,000.
At December 31, 1996, $800,000 of the total $925,000 of amounts
due for oil and gas properties is payable solely from the 25%
gross working interest of net oil and gas revenues derived from
the Walker (Queen) Field. The remainder is to be paid by the
issuance of 125,000 shares of Oilex common stock, valued by
management at $1 per share.
NOTE 3 - BONDS PAYABLE
Bonds payable consists of the following:
December 31,
1996 1995
10.0% bonds payable, secured by certain of the
Company's oil and gas properties; due on
demand and convertible into common
stock at $2.00 per share. $ 166,098 $ 154,848
9.75% bonds payable to an insurance
company; secured by certain of the
Company's oil and gas properties;
due on demand and convertible into
common stock at $2.00 per share. -- 89,729
15.0% convertible subordinated bonds
payable, due April, 1997, and
convertible into common stock
at $0.28 per share. 67,063 --
$ 233,161 $ 244,577
In February, 1997, the 15.0% convertible bonds were converted
into 238,000 shares of Oilex common stock.
<PAGE>
NOTE 4 - STOCKHOLDERS' EQUITY
Effective in January, 1996, Oilex exchanged 1,256,265 shares of
its common stock in exchange for 100% mineral rights in 83,751
acres located in Pocahontas and Greenbriar Counties, West
Virginia. These shares are included in stockholders' equity at
December 31, 1996. Oilex has retained the voting rights to these
common shares. The purchase price was valued at approximately
$1,256,265.
Effective in January, 1996, Oilex issued 500,000 shares of common
stock in exchange for oil and gas leaseholds and equipment
located in the Big Foot Field areas of Frio County, Texas. Oilex
has retained the voting rights to these common shares. The
purchase price was approximately $500,000.
In December, 1994, the Company agreed to issue 2,500,000 shares
of its Series A, 10% Cumulative Convertible Preferred Stock to
World Interactive Networks, Inc. ("WIN") in exchange for 149,200
shares of WIN's Series A Cumulative Convertible Preferred Stock
valued at $16.67 per share, which was the quoted market value of
these securities at the transaction date. The Oilex preferred
stock had a liquidation preference of $2.00 per share. This
transaction was subsequently rescinded on June 1, 1996, as Oilex
management decided to terminate all non-oil and gas related
activities.
On March 24, 1996, the Company issued 100,000 shares of its
common stock in exchange for 1,939 acres of lease rights in the
Carbon County, Utah field. The value of the acreage was
approximately $50 per acre.
On March 24, 1996, the Company acquired 3,945 acres of oil and
gas leases in the Unitah Basin area of Utah. The Company issued
42,000 shares of its common stock for these lease rights, which
were valued at approximately $11 per acre.
On April 17, 1996, Oilex entered into an agreement to acquired
100% of the working interest in the White River Dome Prospect
located in Rio Blanco County, Colorado. This prospect consists
of 11,535 acres. Oilex exchanged 1,500,00 shares of its common
stock along with $25,000 cash for these leaseholds.
Additionally, the Seller signed an agreement whereby these shares
will be voted in accordance with current management.
On November 12, 1996, the Company entered into an agreement with
a financial consulting firm whereby, as consideration for
services rendered, the Company has granted an option to purchase
300,000 shares at $0.50 per share. The agreement expired on May
15, 1997. No options were exercised.
At various times during 1996, the Company issued shares of its
common stock in the amounts and for the types of services as
follows: 46,240 common shares for leasing, geological and
engineering; 100,000 common shares for investor relations;
702,000 common shares for financial consulting and public
relations; and 10,000 common shares for other services rendered.
See Note 6 - Related Parties for additional disclosure regarding
stockholders' equity.
NOTE 5 - COMMITMENTS AND CONTINGENCIES
The Company is currently in dispute with a corporation owned
by certain stockholders of the Company. These stockholders were
formerly part of the management team of Oilex. They contend
that Oilex owes the company approximately $141,000 on a demand
note. The Company has recorded a $35,484 note payable to the
company at December 31, 1996. The amount in dispute is related
to certain general and administrative expense reimbursements.
Although no lawsuit has been filed, the management of Oilex
intends to vigorously defend its position in this matter should a
lawsuit be instituted. It believes that the amounts recorded in
its financial statements at December 31, 1996, for this note
payable is correct and accurate. Accordingly, no provision has
been made for the disputed difference herein.
NOTE 6 - LEASES
The Company, as lessee, has entered into and/or assumed various
operating leases for office equipment, vehicles, and office
facilities.
Future minimum lease payments under operating leases at December
31, 1996 are as follows:
Year Ending December 31,
1997 $ 45,666
1998 20,371
1999 10,864
2000 10,475
2001 6,354
Thereafter --
Total minimum lease payments $93,730
Rent expense during the years ended December 31, 1996 and 1995
for operating leases was $29,025 and $13,420, respectively, and
is included in general and administrative expenses.
NOTE 7 - RELATED PARTIES
In 1996, a corporate stockholder, Phoenix Reserves, Inc.
("Phoenix"), who owns 36.5% of Oilex's outstanding common stock
advanced $790,210 to Oilex. As payment, Oilex issued 1,200,000
shares of its common stock to Phoenix and are included in total
stockholders' equity at December 31, 1996. The funds were used
for working capital purposes. Phoenix has common management with
Oilex and it was a majority shareholder of Oilex in prior years.
During 1996, the Company received advances from its President
totaling $186,386 for which Oilex issued 500,000 shares of its
common stock as payment. The funds were used for working capital
purposes. Additionally, another 640,000 shares of common stock
were issued to the President of Oilex as compensation for
personal services.
A stockholder of the Company is a principal in a firm that
provides oil and gas reserve evaluation services to the Company.
A total of 152,700 shares of Oilex common stock was issued during
1996 in exchange for oil and gas reserve evaluation services.
As discussed in Note 4, the Company had a note payable of $35,484
and $33,475 as of December 31, 1996 and 1995, respectively, due
to a company owned by certain stockholders of Oilex who were
formerly part of the management of Oilex.
During 1996, the Company purchased oil and gas properties and
tangible equipment from Phoenix in exchange for 3,500,000 shares
of Oilex common stock.
During 1996 Oilex paid $52,949 for legal services to its
President and Director who is an attorney.
In 1996, the Company issued 150,000 shares of common stock for
directors' fees to three of its directors.
See Note 9 - Significant Subsequent Events, for additional
related parties transactions.
NOTE 8 - GOING CONCERN
The Company has incurred net losses since its inception creating
an accumulated deficit balance of $7,904,236 and $6,541,062 at
December 31, 1996 and 1995, respectively. Additionally, there is
a working capital deficit of $1,169,443 and $262,780 at December
31, 1996 and 1995, respectively.
These factors raise substantial doubt about the Company's ability
to continue as a going concern. Management intends to make an
equity financing which will infuse additional working capital
into the Company so that it can exploit and develop its newly
acquired oil and gas properties, thereby generating a positive
cash flow.
The accompanying financial statements have been prepared on a
going concern basis, which contemplates continuity of operations,
realization of assets and liquidation of liabilities in the
ordinary course of business, and therefore do not include any
adjustments that result from the outcome of this uncertainty.
NOTE 9 - SIGNIFICANT SUBSEQUENT EVENTS
On February 20, 1997, the holders of the 15.0% Convertible
Subordinated Bonds elected to convert their bonds into 238,000
shares of Oilex common stock, par value $0.001 per share, at
$0.28 per share.
Additionally, on February 20, 1997, the Company issued 198,000
shares of Oilex common stock, par value $0.001 per share, to
three individual investors.
In January, 1997, the Board of Directors approved the acquisition
from Phoenix of a 20% interest it owned in Oil Retrieval Systems,
Inc. ("ORS") an Arizona corporation. ORS designs, engineers,
produces and sells portable swabbing units to the oil and gas
industry. ORS is a development stage company.
Oilex issued 3,000,000 shares of common stock to Phoenix in
exchange for its ownership of 1,205,420 common shares of ORS.
In May, 1997, Funscape Corp. (formerly Imperial Energy Corp.), a
Colorado corporation, acquired ORS. Funscape Corp. issued 2.5
million shares of its common stock in exchange for all of the
outstanding shares of ORS.
Funscape Corp. has stockholders and management who are also
stockholders and have management responsibilities in Oilex,
Phoenix and ORS.
Reference is made here to Note 7 - Related Parties of these
financial statements.
NOTE 10 - SUPPLEMENTAL CASH FLOW INFORMATION
There were no cash payments for interest nor income taxes during
the years ended December 31, 1996 and 1995. Non-cash investing
and financing activity was as follows:
For the years Ended:
December 31
1996 1995
Issuance of preferred stock for
marketable securities ---- 2,500,000
Issuance of common stock for oil
and gas properties 2,246,309 ---
Issuance of common stock for
services 1,800,610 ---
Cancellation of preferred stock
for marketable securities 2,500,000 ---
Abandonment of fully depleted
oil and gas properties (5,500,858) ---
NOTE 11 - OIL AND GAS PROPERTIES
Capitalized Costs --- The following table presents the aggregate
capitalized cost subject to amortization relating to the
Company's oil and gas acquisition, exploration and development
activities, and the aggregate related accumulated depreciation,
depletion and amortization ("DD&A").
December 31,
1996 1995
Proved properties $ 7,519,000 $ 7,969,529
Unproved properties 1,217,000 --
Accumulated DD&A -- (5,567,407)
Net capitalized costs $ 8,736,000 $ 2,402,122
Cost Incurred --- The Company's oil and gas acquisition,
exploration and development activities are conducted in Texas,
Mississippi, Colorado, West Virginia and Utah. The following
table summarizes the costs incurred in connection therewith.
December 31,
1996 1995
Property acquisition costs:
Unproved properties $ 1,217,000 $ --
Proved properties 6,506,801 1,281,265
Exploration costs -- --
Development costs -- --
$ 7,723,801 $ 1,281,265
Cost Not Subject to Amortization --- The Company had $1,217,000
of acquisition cost not subject to amortization at December 31,
1996. Unproved properties not subject to amortization consists
mainly of lease costs and seismic data related to unproved areas.
The Company will continue to evaluate these properties over the
lease term; however, the timing of the ultimate evaluation and
disposition of a significant portion of properties has not been
determined. Costs associated with seismic data and all other
costs will become subject to amortization as the prospects to
which they relate are evaluated.
NOTE 12 - SUPPLEMENTAL RESERVE INFORMATION (Unaudited)
The following information summarize the Company's net proved
reserves of oil (including condensate and natural gas liquids)
and gas and the present values thereof for the years ended
December 31, 1996 and 1995. The reserve estimates are based upon
reports of Ultra Engineering, Inc., an oil and gas reserve
engineering firm whose principal is a stockholder and director of
Oilex. The estimates are in accordance with regulations
prescribed by the Securities and Exchange Commission. Future net
revenue is estimated by the petroleum engineers using oil and gas
prices in effect as of the end of each respective year. Price
escalations are permitted only for those properties which have
contracts allowing for specific increases. Future operating
costs are based upon the average level of expenses during each
year.
The reliability of any reserve estimate is function of the
quality of available information and of engineering
interpretation and judgment. In management's opinion, the
reserve estimates presented herein, in accordance with generally
accepted engineering and evaluation principles consistently
applied, are believed to be reasonable. These reserves should be
accepted with the understanding that drilling activities or
additional information subsequent to the date of this report
might require their revision. Moreover, certain quantities of
the reserves included in this study were estimated using the
volummetric method, and such estimates are particularly
susceptible to revision as a result of subsequent drilling
activities or production information.
Estimated Quantities of Oil and Gas Reserves (Unaudited) --- The
following table sets forth certain data pertaining to the
Company's proved and proved developed reserves for the years
ended December 31, 1996 and 1995.
December 31,
1996 1995
Gas Oil Gas Oil
(Mcf) (Bbl) (Mcf) (Bbl)
Proved Reserves:
Beginning balance 36,075,492 3,981,731 27,930,994 1,208,804
Purchase of reserves
in place -- 1,725,594 8,144,498 2,775,433
Production -- (2,054) -- (2,506)
Revisions (36,066,040)(3,259,506) -- --
Ending balance 9,452 2,445,765 36,075,492 3,981,731
December 31,
1996 1995
Gas Oil Gas Oil
(Mcf) (Bbl) (Mcf) (Bbl)
Proved Developed
Reserves:
Beginning balance 7,610,696 1,359,952 5,565,696 595,582
Purchase of reserves
in place -- 1,725,594 2,045,000 766,876
Production -- (2,054) -- (2,506)
Revisions (7,601,244) (637,727) -- --
Ending balance 9,452 2,445,765 7,610,696 1,359,952
Standard Measure of Discounted Future Net Cash Flows (Unaudited)
- --- The standardized measure of discounted future net cash flows
and changes therein relating to proved oil and gas reserves is
presented below:
December 31,
1996 1995
Future cash inflows $ 48,933,726 $ 134,803,769
Future development costs (760,000) (15,279,040)
Future production costs (25,291,508) (25,902,840)
Future income tax expense (8,580,832) (32,000,000)
Future net cash flows 14,301,386 61,621,889
Discounted at 10% per year (8,951,208) (23,786,049)
Standardized measure of discounted future
net cash flows $ 5,350,178 $ 37,835,840
The "standardized measure" does not purport to represent and is
generally unrelated to the fair market value of the Company's oil
and gas reserves.
The principle sources of changes in the standardized measure of
future net cash flows are as follows:
December 31,
1996 1995
Balance, beginning of year $ 12,359,619 $ 2,178,648
Sales, net of production costs (26,019) (37,000)
Purchase of reserves in-place 8,560,285 26,616,225
Revisions of previous estimates (12,333,600) --
Accretion of discount -- (4,398,245)
Net change in income taxes ( 3,210,107) (12,000,000)
Balance, end of year $ 5,350,178 $ 12,359,628
Page 41
PAGE
<PAGE>
EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
AKTECH, INC.
ARTICLE I
The name of this corporation is AKTECH, INC.
ARTICLE II
This corporation shall have perpetual existence.
ARTICLE III
The purpose of this corporation is to engage in 'any lawful
activity permitted under the laws of the State of Nevada.
ARTICLE IV
The aggregate number of shares which this corporation shall
have authority to issue is 25,000,000 shares of a par value of
$0.001 per share. Fully paid stock of this corporation shall not
be liable to any further call or assessment.
ARTICLE V
The authorized and treasury stock of this corporation may be
issued at such time, upon such terms and conditions. and for such
consideration as the Board of Directors shall determine.
Shareholders, shall not have preemptive' rights to acquire
unissued shares of the stock of this corporation and cumulative
voting is denied.
ARTICLE VI
The principal place of business of this corporation in the
State of Nevada is One East First Street, Reno, Nevada 89501.
ARTICLE VII
The number of Directors constituting the initial Board of
Directors of this corporation. is three (3) . The names and
addresses of persons who are to serve as Directors until the
first annual meeting of stockholders, or until their successors
are elected and qualified are:
NAME ADDRESS
Mark Kallenberger 180 Newport Center Drive
Suite 180
Newport Beach, California 92660
James R. Lewis 14772 Plaza Drive
Tustin, California 92681
John W. Crane 10 Cresthaven
Irvine, California 92714
The Board of Directors shall be limited in number to no less
than three (3) nor more than nine (9).
ARTICLE VIII
The name and address of the initial Incorporator is as
follows: James R. Lewis, 14772 Plaza Drive, Tustin, California
92681.
IN WITNESS WHEREOF, the undersigned Incorporator has
executed these Articles of Incorporation as indicated below.
Dated: June 6, 1986
original signed by James R. Lewis
James R. Lewis
STATE OF CALIFORNIA
COUNTY OF ORANGE
On June 6, 1986, personally appeared before me, a notary
public, who acknowledged that James R. Lewis executed the above
instrument.
Original signed by Betty R. Slipp
Signature of Notary
PAGE
<PAGE>
EXHIBIT 3.2
CERTIFICATE OF AMENDMENT TO ARTICLES OF INCORPORATION OF
AKTECK, INC.
We the undersigned, Ron F. Bearden, President and Gwen S.
Stallworth, Secretary of Akteck, Inc. do hereby certify:
That the Board of Directors of said corporation at a meeting
duly convened, held on the 16th day of December, 1991, adopted a
resolution to amend the original articles as follows:
Article I is hereby amended to read as follows:
The name of the corporation hereafter is
Oilex International Investments, Inc.
The number of shares of the corporation outstanding and
entitled to vote on an amendment to the Article of Incorporation
is 1,075,000; that said change and amendment have been consented
to and approved by a majority vote of the stockholders holding a
majority of each class of stock outstanding and entitled to vote
thereon.
Original signed by Ron F. Bearden
Ron F. Bearden, President
Original signed by Gwen C. Stallworth
Gwen C. Stallworth, Secretary
STATE OF TEXAS
COUNTY OF HARRIS
This Instrument was acknowledged before me by Ron F.
Bearden, President of Oilex International Investments, Inc..
Signature of Notary illegible
Notary Public, State of Texas
My Commission expires:
STATE OF TEXAS
COUNTY OF HARRIS
On December 20, 1991, personally appeared before me, a
Notary Public Gwen Stallworth, who acknowledged that they
executed the above instrument.
Original signed by Rebecca Bearden
My commission expires 6/28/93 Notary
Public, State of Texas
My Commission expires:
<PAGE> <PAGE>
EXHIBIT 3.3
CERTIFICATE OF AMENDMENT TO ARTICLES OF INCORPORATION OF
OILEX INTERNATIONAL INVESTMENTS, INC.
We the undersigned, Oliver H. Timmins,III, President and
Cynthia C. Timmins, Secretary of Oilex International Investments,
Inc. do hereby certify:
That the Board of Directors of said corporation at a meeting
duly convened, held on the 5th day of April, 1995, adopted a
resolution to amend the original articles as follows:
Article IV is hereby amended to read as follows:
The aggregate number of shares which this corporation
shall have the authority to issue is 25,000,000 shares of a par
value of $0.001 per share. Fully paid stock of the corporation
shall not be liable to any further call or assessment. The Board
of Directors of the corporation is expressly authorized to
determine by resolution classes, series and numbers of each class
or series of the stock of the corporation.
The number of shares of the corporation outstanding and
entitled to vote on an amendment to the Article of Incorporation
is 13,987,470; that said change and amendment have been consented
to and approved by a majority vote of the stockholders holding a
majority of each class of stock outstanding and entitled to vote
thereon.
Original signed by Oliver H. Timmins III
/s/ Oliver H. Timmins III, President
Original signed by Cynthia C. Timmins
/s/ Cynthia C. Timmins, Secretary
STATE OF TEXAS
COUNTY OF BEXAR
This Instrument was acknowledged before me on this 3rd
day of June, 1995, by Oliver H. Timmins III, President of Oilex
International Investments, Inc..
Original signed by Dolores Railsback
Notary Public, State of Texas
My Commission expires:
STATE OF TEXAS
COUNTY OF BEXAR
This Instrument was acknowledged before me on this 3rd
day of June, 1995, by Cynthia C. Timmins, Secretary of Oilex
International Investments, Inc.
original signed by Dolores Railsback
Notary Public, State of Texas
My Commission expires:
PAGE
<PAGE>
EXHIBIT 3.4
AKTECH, INC.
Bylaws
ARTICLE I
OFFICES
Section 1. The corporation shall maintain a principal office
in the State of Nevada as set forth in the articles of
incorporation or determined from time to time by the board of
directors
Section 2. The corporation may also have offices at such
other places both within and without the State of Nevada as the
board of directors may from time to time determine or the
business of the corporation may require either inside or outside
the State of Nevada.
ARTICLE II
ANNUAL MEETINGS OF SHAREHOLDERS
Section 1. All meetings of shareholders for the election of
directors shall be held at such place as may be fixed from time
to time by the board of directors.
Section 2. Annual meetings of shareholders, commencing with
the year 1987, shall be held on the second Monday of June if not
a legal holiday, and if a legal holiday, then on the next secular
day following, at 1:00 p.m., at which they shall elect by a
plurality vote a board of directors, and transact such other
business as may properly be brought before the meeting.
Section 3. Written or printed notice of. the annual meeting
stating the place, day and hour of the meeting shall be delivered
not less than ten nor more than sixty days before the date of the
meeting, either personally or by mail, by or at the direction of
the president, the secretary, or the officer or persons calling
the meeting, to each shareholder of record entitled to vote at
such meeting.
ARTICLE III
SPECIAL MEETING OF SHAREHOLDERS
Section 1. Special meetings of shareholders for any
purpose other than the election of directors may be held at such
time and place within or without the State of Nevada as shall be
stated in the notice of the meeting or in a duly executed waiver
of notice thereof.
Section 2. Special meetings of the shareholders, for any
purpose or purposes, unless otherwise prescribed by statute or by
the articles of incorporation, may be called by the president,
the board of directors, or the holders of not less than one-tenth
of all the shares entitled to vote at the meeting.
Section 3. Written or printed notice of a special meeting
stating the place, day and hour of the meeting and the purpose or
purposes for which the meeting is called, shall be delivered not
less than ten nor more than sixty days before the date of the
meeting, either personally or
- -2-
by mail, by or at the direction of the president, the secretary,
or the officer or persons calling the meeting, to each
shareholder of record entitled to vote at such meeting.
Section 4. The business transacted at any special meeting of
shareholders shall be limited to the purposes stated in the
notice.
ARTICLE IV
QUORUM AND VOTING STOCK
Section 1. The holders of one-third of the shares of stock
issued and outstanding and entitled to vote, represented in
person or by proxy, shall constitute a quorum at all meetings of
the shareholders for the transaction of business except as
otherwise provided by statute or by the articles of
incorporation. If, however, such quorum shall not be present or
represented at any meeting of the shareholders, the shareholders
present in person or represented by proxy shall have power to
adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which. a quorum shall
be present or represented any business may be transacted which
might have been transacted at the meeting as originally notified.
Section 2. If a quorum is present, the affirmative vote of
a majority of the shares of stock represented at the meeting
shall be the act of the shareholders unless
- -3-
the vote of a greater number of shares of stock is required by
law or the articles of incorporation.
Section 3 . Each outstanding share of stock, having
voting power, shall be entitled to one vote on each matter
submitted to a vote at a meeting of shareholders. A shareholder
may vote either in person or by proxy executed in writing by the
shareholder or by his duly authorized attorney-in-fact.
In all elections for directors every shareholder, entitled to
vote, shall have the right to vote, in person or by proxy, the
number of shares of stock owned by him, for as many persons as
there are directors to be elected.
Section 4. Any action required to be taken at a meeting
of the shareholders may be taken without a meeting if a consent
in writing, setting forth the action so taken, shall be signed by
all of the shareholders entitled to vote with respect to the
subject matter thereof.
ARTICLE V
DIRECTORS
Section 1. The number of directors shall be three.
Directors need not be residents of the State of Nevada nor
shareholders of the corporation. The directors, other than the
first board of directors, shall be elected at the annual meeting
of the shareholders, and each director elected shall serve until
the next succeeding annual meeting and until his successor shall
have been elected and qualified. The first board of directors
shall hold office
- -4-
until the first annual meeting of shareholders.
Section 2. Any vacancy occurring in the board of directors
may be filled by the affirmative vote of a majority of the
remaining directors though less than a quorum of the board of
directors. A director elected to fill a vacancy shall be elected
for the unexpired portion of the term of his predecessor in
office.
Any directorship to be filled by reason of an increase in
the number of directors shall be filled by election at an annual
meeting or at a special meeting of shareholders called for that
purpose. A director elected to fill a newly created directorship
shall serve until the next succeeding annual meeting of
shareholders and until his successor shall have been elected and
qualified.
Section 3. The business affairs of the corporation shall be
managed by its board of directors which may exercise all such
powers of the corporation and do all such lawful acts and things
as are not by, statute or by the articles of incorporation or by
these bylaws directed or required to be exercised or done by the
shareholders.
Section 4. The directors may keep the books of the
corporation, except such as are required by law to be kept within
the state, outside of the State of Nevada, at such place or
places as they may from time to time determine.
Section 5. The board of directors, by the affirmative vote
of a majority of the directors then in office, and irrespective
of any personal interest of any of its members, shall have
authority to establish reasonable compensation of all directors
for services to the corporation as directors, officers or
otherwise.
ARTICLE VI
MEETINGS OF THE BOARD OF DIRECTORS
Section 1. Meetings of the board of directors, regular or
special, may be held inside or outside the State of Nevada.
Section 2. The first meeting of each newly elected board of
directors shall be held at such time and place as shall be fixed
by the vote of the shareholders at the annual meeting and no
notice of such meeting shall be necessary to the newly elected
directors in order legally to constitute the meeting, provided a
quorum shall be present, or it may convene at such place and time
as shall be fixed by the consent in writing of all the directors.
Section 3. Regular meetings of the board of directors may be
held upon such notice, or without notice, and at such time and at
such place as shall from time to time be determined by the board.
Section 4. Special meetings of the board of directors may be
called by the president on three days' notice to each director,
either personally or by mail or by telegram; special meetings
shall be called by the president or secretary in like manner and
on like notice on the written request of two directors.
- -6-
Section 5. Attendance of a director at any meeting shall
constitute a waiver of notice of such meeting, except where a
director attends for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully
called or convened. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the board
of directors need be specified in the notice or waiver of notice
of such meeting.
Section 6. A majority of the directors shall constitute a
quorum for the transaction of business unless a greater number is
required by law or by the articles of incorporation. The act of
a majority of the directors present at any meeting at which a
quorum is present shall be the act of the board of directors,
unless the act of a greater number is required by statute or by
the articles of incorporation. If a quorum shall not be present
at any meeting of directors, the directors present thereat may
adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 7. Any action required or permitted to be taken by
the board of directors may be taken without a meeting if all
members of the board consent in writing to the action and the
consents are filed with the minutes.
- -7-
ARTICLE VII
EXECUTIVE COMMITTEE
Section 1. The board of directors, by resolution adopted by
a majority of the number of directors fixed by the bylaws or
otherwise, may designate two or more directors to constitute an
executive committee, which committee, to the extent provided in
such resolution, shall have and exercise all of the authority of
'the board of directors in the management of the corporation,
except as otherwise required by law. Vacancies in the membership
of the committee shall be filled by the board of directors at a
regular or special meeting of the board of directors. The
executive committee shall keep regular minutes of its proceedings
and report the same to the board when required.
ARTICLE VIII
NOTICES
Section 1. Whenever, under the provisions of the statutes or
of the articles of incorporation or of these bylaws, notice is
required to be given to any director or shareholder, it shall not
be construed to mean personal notice, but such notice may be
given in writing, by mail, addressed to such director or
shareholder, at this address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall
be deemed to be given at the time when the same shall be
deposited in the United States mail. Notice to directors may
also be
- -8-
given by telegram.
Section 2. Whenever any notice whatever is required to be
given under the provisions of the statutes or under the
provisions of the articles of incorporation or these bylaws, a
waiver thereof in writing signed by the person or persons
entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.
ARTICLE IX
OFFICERS
Section 1. The officers of the corporation shall be chosen
by the board of directors and shall be a president, a
vice-president, a secretary and a treasurer. The board of
directors may also choose additional vice-presidents, and one or
more assistant secretaries and assistant treasurers.
Section 2. The board of directors at its first meeting after
each annual meeting of' shareholders shall choose a president,
one or more vice-presidents, a secretary and a treasurer, none of
whom need be a member of the board.
Section 3. The board of directors may appoint such other
officers and agents as it shall deem necessary who shall hold
their offices for such terms and shall exercise such powers and
perform such duties as shall be determined from time to time by
the board of directors.
Section 4. The salaries of all officers and
- -9-
agents of the corporation shall be fixed by the board of
directors.
Section 5. The officers of the corporation shall hold office
until their successors are chosen and qualify. Any officer
elected or appointed by the board of directors may be removed at
any time by the affirmative vote of a majority of the board of
directors. Any vacancy occurring in any office of the
corporation shall be filled by the board of directors.
THE PRESIDENT
Section 6. The president shall be the chief executive
officer of the corporation, shall preside at all meetings of the
shareholders and the board of directors, shall have general and
active management of the business of the corporation and shall
see that all orders and resolutions of the board of directors are
carried into effect.
Section 7. He shall execute bonds, mortgages and other
contracts requiring a seal, under the seal of the corporation,
except where required or permitted by law to be otherwise signed
and executed and except where the signing and execution thereof
shall be expressly delegated by the board of directors to some
other officer or agent I of the corporation.
THE VICE-PRESIDENTS
Section 8. The vice-president, or if there shall be more
than one, the vice-presidents in the order de-
- -10-
termined by the board of directors, shall, in the absence or
disability of the president, perform the duties and exercise the
powers of the president and shall perform such other duties and
have such other powers as the board of directors may from time to
time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 9. The secretary shall attend all meetings of the
board of directors and all meetings of the shareholders and
record all the proceedings of the meetings of the corporation and
of the board of directors in a book to be kept for that purpose
and shall perform like duties for the standing committees when
required. He shall give, or cause to be given, notice of all
meetings of the shareholders and special meetings of the board of
directors, and shall perform such other duties as may be
prescribed by the board of directors or president, under whose
supervision he shall be. He shall have custody of the corporate
seal of the corporation and he, or an assistant secretary, shall
have authority to affix the same to any instrument requiring it
and when so affixed, it may be attested by his signature or by
the signature of such assistant secretary. The board of
directors may give general authority to any other office to affix
the seal of the corporation and to attest the affixing by his
signature.
Section 10. The assistant secretary, or if there be more
than one, the assistant secretaries in the order determined by
the board of directors, shall, in the absence or disability of
the secretary, perform the duties and exercise the powers of the
secretary and shall perform such other duties and have such other
powers as the board of directors may from time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 11. The treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate
accounts of receipts and disbursements in books belonging to the
corporation and shall deposit all moneys and other valuable
effects in the name and to the credit of the corporation in such
depositories as may be designated by the board of directors.
Section 12. He shall disburse the funds of the corporation
as may be ordered by the board of directors, taking proper
vouchers for such disbursements, and shall render to the
president and the board of directors, at its regular meetings, or
when the' board of directors so requires, an account of all his
transactions as treasurer and of the financial condition of the
corporation.
Section 13. If required by the board of directors, he shall
give the corporation a bond in such sum and with such surety or
sureties as shall be satisfactory to the board of directors for
the faithful performance of the duties of his office and for the
restoration to the corporation, in case of his death,
resignation, retirement or removal from office, of all books,
papers, vouchers, money and other property of whatever kind in
his possession or
-12-
under his control belonging to the corporation.
Section 14. The assistant treasurer, or, if there shall be
more than one, the assistant treasurers in the order determined
by the board of directors, shall, in the absence or disability of
the treasurer, perform the duties and exercise the powers of the
treasurer and shall perform such other duties and have such other
powers as the board of directors may from time to time prescribe.
ARTICLE X
CERTIFICATES FOR SHARES
Section 1. The shares of the corporation shall be
represented by certificates signed by the president or a vice-
president and the secretary or an assistant secretary of the
corporation, and may be sealed with the seal of the corporation
or a facsimile thereof.
When the corporation is authorized to issue shares of more
than one class there shall be set forth upon the face or back of
the certificate, or tire certificate shall have a statement that
the corporation will furnish to any shareholder upon request and
without charge, a full or summary statement of the designations,
preferences, limitations, and relative rights of the shares of
each class authorized to be issued and, if the corporation is
authorized to issue any preferred or special class in series, the
variations in the relative rights and preferences between the
shares of each such series so far as the same have been fixed and
determined and the authority of the
- -13-
board of directors to fix and determine the relative rights and
preferences of subsequent series.
Section 2. The signatures of the officers of the corporation
upon a certificate may be facsimiles if the certificate is
countersigned by a transfer agent, or registered by a registrar,
other than the corporation itself or an employee of the
corporation. In case any officer who has signed or whose
facsimile signature has been placed upon such certificate shall
have ceased to be such officer before such certificate is issued,
it may be issued by the corporation with the same effect as if he
were such officer at the date of its issue.
LOST CERTIFICATES
Section 3. The board of directors may direct anew
certificate to be issued in place of any certificate theretofore
issued by the corporation alleged to have been lost or destroyed.
When authorizing such issue of a new certificate, the board of
directors, in its discretion and as a condition precedent to the
issuance thereof, may prescribe such terms and conditions as it
deems expedient, and may require such indemnities as it deems
adequate, to: protect the corporation : from any claim that may
be made against it with respect to any such certificate alleged
to have been lost or destroyed.
TRANSFERS OF SHARES
Section 4. Upon surrender to the corporation or
- -14-
the transfer agent of the corporation of a certificate
representing shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, a
new certificate shall be issued to the person entitled thereto,
and the old certificate canceled and the transaction recorded
upon the books of the corporation.
CLOSING OF TRANSFER BOOKS
Section 5. For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of shareholders,
or any adjournment thereof or entitled to receive payment of any
dividend, or in order to make a determination of shareholders for
any other proper purpose, the board of directors may provide that
the stock transfer books shall be closed for a stated period but
not to exceed, in any case, sixty days. If the stock transfer
books shall be closed for the purpose of determining shareholders
entitled to notice of or to vote at a meeting of shareholders,
such books shall be closed for at least ten days immediately
preceding such meeting. In lieu of closing the stock transfer
books, the board of directors may fix in advance a date as the
record date for any such, determination of shareholders, such
date in any case to be not more than sixty days and, in case of a
meeting of shareholders, not less than ten days prior to the date
on which the particular action, requiring such determination of
shareholders, is to be taken. If the stock transfer books ate
not closed and no record date is fixed for the
- -15-
determination of shareholders entitled to notice of or to vote at
a meeting of shareholders, or shareholders entitled to receive
payment of a dividend, the date on which notice of the meeting is
mailed or the date on which the resolution of the board of
directors declaring such dividend is adopted, as the case may be,
shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this
section, such determination shall apply to any adjournment
thereof.
REGISTERED SHAREHOLDERS
Section 6. The corporation shall be entitled to recognize
the exclusive right of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner,
and to hold liable for calls and assessments a person registered
on its books as the owner of shares, and shall not be bound to
recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as
otherwise, provided by the laws of Nevada.
LIST OF SHAREHOLDERS
Section 7. The officer or agent having charge of the
transfer books for shares shall make, at least ten days before
each meeting of shareholders, a complete list of the
- -16-
shareholders entitled to vote at such meeting, arranged in
alphabetical order, with the address of each and the number of
shares held by each, which list, for a period of ten days prior
to such meeting, shall be kept on file at the registered office
of the corporation and shall be subject to inspection by any
shareholder at any time during usual business hours. Such list
shall also be produced and kept open at the time and place of the
meeting and shall be subject to the inspection of any shareholder
during the whole time of the meeting. The original share ledger
or transfer book, or a duplicate thereof, shall be prima facie
evidence as to who are the shareholders entitled to examine such
list or share ledger or transfer book or to vote at any meeting
of the shareholders.
ARTICLE XI
GENERAL PROVISIONS
DIVIDENDS
Section 1. Subject to the provisions of the articles of
incorporation relating thereto, if any, dividends may be declared
by the board of directors at any regular or special meeting,
pursuant to law. Dividends may be paid in cash, in property or
in shares of the capital stock, subject to any provisions of the
articles of incorporation.
Section 2. Before payment of any dividend, there may be set
aside out of any funds of the corporation available for dividends
such sum or sums as the directors
- -17-
from time to time, in their absolute discretion, think proper as
a reserve fund to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the
corporation, or for such other purpose as the directors shall
think conducive to the interest of the corporation, and the
directors may modify or abolish any such reserve in the manner in
which it was created.
CHECKS
Section 3. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such
other person or persons as the board of directors may from time
to time designate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed
by resolution of the board of directors.
SEAL
Section 5. The corporate seal shall have inscribed thereon
the name of the corporation, the year of its organization and the
words "Corporate Seal, Nevada". The seal may be used by causing
it or a facsimile thereof to be impressed or affixed or in any
manner reproduced.
ARTICLE XII
AMENDMENTS
Section 1. These by-laws may be altered, amended, or
repealed or new by-laws may be adopted by the affirmative vote of
a majority of the board of directors at any regular or special
meeting of the board.
CERTIFICATION
I hereby certify that the foregoing is the original or a
true copy of the bylaws adopted by Aktech, Inc., pursuant to the
organizational action of its directors.
Dated: June 1986
James R. Lewis, Secretary
PAGE
<PAGE>
EXHIBIT 3.5
CERTIFICATE OF AMENDMENT TO ARTICLES OF INCORPORATION OF
OILEX INTERNATIONAL INVESTMENTS, INC.
We the undersigned, Oliver H. Timmins, III, President and Cynthia
C. Timmins, Secretary of Oilex International Investments, Inc. do
hereby certify:
That the board of directors of said corporation at a meeting duly
convened, held on the 5th day of June, 1996, adopted a resolution
to amend the original articles as follows:
Article I is hereby amended to read as follows:
The name of this corporation is OILEX, INC.
Article IV is hereby amended to read as follows:
The aggregate number of shares which this corporation shall
have the authority to issue is 50,000,000 shares of a par value
of $0.001 per share. Fully paid stock of the corporation shall
not be liable to any further call or assessment. The Board of
Directors of the corporation is expressly authorized to determine
by resolution classes, series and numbers of each class or series
of the stock of the corporation.
The number of shares of the corporation outstanding and
entitled to vote on an amendment to the Articles of Incorporation
is 19,531,835; that said change and amendment have been consented
to and approved by a majority vote of the stockholders holding a
majority of each class of stock outstanding and entitled to vote
thereon.
/s/ Oliver Timmins III, President
/s/ Cynthia Timmins, Secretary
STATE OF TEXAS
COUNTY OF BEXAR
This instrument was acknowledged before me on this 3rd day of
July, 1996, by Oliver H. Timmins III, President of Oilex
International Investments, Inc.
/s/Dolores C. Railsback
Notary Public, State of Texas
This instrument was acknowledged before me on this 3rd day of
July, 1996, by Cynthia C. Timmins, Secretary of Oilex
International Investments, Inc.
/s/Dolores C. Railsback Notary Public, State of Texas
<PAGE>
Exhibit 10.1: Master Lease Provisions for "Oil, Gas and Mineral
Lease in Texas.
This agreement made this [date] between [Lessor] (whether one or
more), whose address is [stated address], and Lessee
[identified].
1. Lessor, in consideration of $10.00 and other valuable
consideration, in hand paid, of the royalties herein provided,
and of the agreements of Lessee herein contained, hereby grants,
leases and lets exclusively unto Lessee for the purpose of
investigating, exploring, prospecting, drilling and mining for
and producing oil, gas and all other minerals, conducting
exploration, geologic and geophysical surveys by seismograph,
core test, gravity and magnetic methods, injecting gas, water and
other fluids, and air into subsurface strata, laying pipe lines,
building roads, tanks, power stations, telephone lines and other
structures thereon and on, over and across lands owned or claimed
by Lessor adjacent and contiguous thereto, to produce, save, take
care of, treat, transport and own said products, and housing its
employees, the following described land in [description of
general acreage with more precise description to follow on
Exhibit "A"]
This lease also covers and includes all land owned or claimed by
Lessor adjacent or contiguous to the land particularly described
above, whether the same be in said survey or surveys or in
adjacent surveys, although not included within the boundaries of
the land as particularly described above.
2. This is a paid up lease and subject to the other
provisions herein contained, this lease shall be for a term of
[specific #] years from this date (called "primary term") and as
long thereafter as oil, gas or other mineral is produced from
said land or land with which said land is pooled thereunder.
3. As royalty, lessee covenants and agrees: (a) to deliver
to the credit of lessor, in the pipe line to which lessee may
connect its wells, the equal one-eighth part of all oil produced
and saved by lessee from said land, or from time to time, at the
option of lessee, to pay lessor the average posted market price
of such one-eighth part of such oil at the wells as of the day it
is run to the pipe line or storage tanks, lessor's interest, in
either case, to bear one-eighth of the cost of treating oil to
render it marketable pipe line oil; (b) to pay lessor for gas and
casinghead gas produced from said land (1) when sold by lessee,
one-eighth of the amount realized by lessee, computed at the
mouth of the well, or (2) when used by lessee off said land or in
the manufacture of gasoline or other products, one-eighth of the
amount realized from the sale of gasoline or other products
extracted therefrom and one-eighth of the amount realized from
the sale of residue gas after deducting the amount used for plant
fuel and/or compression; (c) to pay lessor on all other minerals
mined and marketed or utilized by lessee from said land, one-
tenth either in kind or value at the well or mine at lessee's
election, except that on sulphur mined and marketed the royalty
shall be one dollar ($1.00) per long ton. If, at the expiration
of the primary term or at any time or times thereafter, there is
any well on said land or on lands with which said land or any
portion thereof has been pooled, capable of producing oil or gas,
and all such wells are shut-in, this lease shall nevertheless
continue in force as though operations were being conducted on
said land for so long as said wells are shut-in, and thereafter
this lease may be continued in force as if no shut-in had
occurred. Lessee covenants and agrees to use reasonable
diligence to produce, utilize, or market the minerals capable of
being produced from said wells, but in the exercise of such
diligence, lessee shall not be obligated to install or furnish
facilities other than well facilities and ordinary lease
facilities of flow lines, separator, and lease tank, and shall
not be required to settle labor trouble or to market gas upon
terms unacceptable to lessee. If, at any time or times after the
expiration of the primary term, all such wells are shut-in for a
period of ninety consecutive days and during such time there are
no operations on said land, then at or before the expiration of
said ninety day period, lessee shall pay or tender, by check or
draft of lessee, as royalty, a sum equal to one dollar ($1.00)
for each acre of land then covered hereby. Lessee shall make
like payments or tenders at or before the end of each anniversary
of the expiration of said ninety day period if upon such
anniversary this lease is being continued in force solely by
reason of the provisions of this paragraph. Each such payment or
tender shall be made to the parties who at the time of payment
would be entitled to receive the royalties which would be paid
under this lease if the wells were producing, and may be
deposited in the [see lease addendum attached] bank at, or its
successors, which shall continue as the depositories, regardless
of changes in the ownership of shut-in royalty. If at any time
that lessee pays or tenders shut-in royalty, two or more parties
are, or claim to be, entitled to receive same, lessee may, in
lieu of any other method of payment herein provided, pay or
tender such shut-in royalty, in the manner above specified,
either jointly to such parties or separately to each in
accordance with their respective ownerships thereof, as lessee
may elect. Any payment hereunder may be made by check or draft
of lessee deposited in the mail or delivered to the party
entitled to receive payment or to a depository bank provided for
above on or before the last date for payment. Nothing herein
shall impair lessee's right to release as provided in paragraph 5
hereof. In the event of assignment of this lease in whole or in
part, liability for payment hereunder shall rest exclusively on
the then owners of this lease, severally as to acreage owned by
each.
4. Lessee, at its option, is hereby given the right and
power to pool or combine the acreage covered by this lease or any
portion thereof as to oil and gas, or either of them, with any
other land covered by this lease, and/or with any other land,
lease or leases in the immediate vicinity thereof to the extent
hereinafter stipulated, when in Lessee's judgment, it is
necessary or advisable to do so in order properly to explore, or
to develop and operate said leased premises in compliance with
the spacing rules of the Railroad Commission of Texas, or other
lawful authority, or when to do so would, in the judgment of
lessee, promote the conservation of oil and gas in and under and
that may be produced from said premises. Units pooled for oil
hereunder shall not substantially exceed 40 acres each in area,
and units pooled for gas hereunder shall not substantially exceed
in area 640 acres each plus a tolerance of ten percent (10% )
thereof, provided that should governmental authority having
jurisdiction prescribe or permit the creation of units larger
than those specified, for the drilling or operation of a well at
regular location or for obtaining maximum allowable from any well
to be drilled, drilling or already drilled, units thereafter
created may conform substantially in size with those prescribed
pro permitted by governmental regulations. Lessee under the
provisions hereof may pool or combine acreage covered by this
lease or any portion thereof as above provided as to oil in any
one or more strata and as to gas in any one or more strata. The
units formed by pooling as to any stratum or strata need not
conform in size or area with the unit or units into which the
lease is pooled or combined as to any other stratum or strata,
and oil units need not conform as to acre with gas units. The
pooling in one or more instances shall not exhaust the rights of
the Lessee hereunder to pool this lease or portions thereof into
other units. Lessee shall file for record in the appropriate
records of the county in which the leased premises are situated
an instrument describing and designating the pooled acreage as a
pooled unit; and upon such recordation the unit shall be
effective as to all parties hereto, their heirs, successors, and
assigns, irrespective of whether or not the unit is likewise
effected as to all other owners of surface, mineral, royalty, or
other rights in land included in such unit. Lessee may at its
election exercise its pooling option before or after commencing
operations for or completing an oil or gas well on the leased
premises, and the pooled unit may include, but it is not required
to include, land or leases upon which a well capable of producing
oil or gas in playing quantities has theretofore been completed
or upon which operations for the drilling of a well for oil or
gas have theretofore been commenced. In the event of operations
for drilling or for production of oil or gas from any part of a
pooled unit which includes all or a portion of the land covered
by this lease, regardless of whether such operations for drilling
were commenced or such production was secured before or after the
execution of this instrument or the instrument designating the
pooled unit, such operations shall be considered as operations
for drilling or for production of oil or gas from land covered by
this lease whether or not the well or wells be located on the
premises covered by this lease an in such event operations for
drilling shall be deemed to have been commenced on said land
within the meaning of paragraph 5 of this lease; and the entire
acreage constituting such unit or units, as to oil and gas, or
either of them as herein provided, shall be treated for all
purposes, except the payment of royalties on production from the
pooled unit, as if the same were included in this lease. For the
purpose of computing the royalties to which owners of royalties
and payments out of production and each of them shall be entitled
on production of oil and gas, or either of them, from the pooled
unit, there shall be allocated to the land covered by this lease
and included in said unit (or to each separate tract within the
unit if this lease covers separate tracts within the unit) a pro
rata portion of the oil and gas, or either of them produced from
the pooled unit after deducting that used for operations on the
pooled unit. Such allocation shall be on an acreage basis ---
that is to say; there shall be allocated to the acreage covered
by this lease and included in the pooled unit (or to each
separate tract within the unit if this lease covers separate
tracts within the unit) that pro rata portion of the oil and gas,
or either of them, produced from the pooled unit which the number
of surface acres covered by this lease (or in each such separate
tract) and included in the pooled unit bears to the total number
of surface acres included in the pooled unit. Royalties
hereunder shall be computed on the portion of such production,
whether it be oil and gas, or either of them, so located to the
land covered by this lease and included in the unit just as
though such production were from such land. The production from
an oil well will be considered as production from the lease or
oil pooled unit from which it is producing and not as production
from a gas pooled unit; and production from a gas well will be
considered as production from the lease or gas pooled unit from
which it is producing and not from an oil pooled unit. The
formation of any unit hereunder shall not have the effect of
changing the ownership of any shut-in production royalty which
may become payable under this lease. If this lease now or
hereafter covers separate tracts, no pooling or unitization of
royalty interest as between any such separate tracts is intended
or shall be implied or result merely from the inclusion of such
separate tracts within this lease but Lessee shall nevertheless
have the right to pool as provided above with consequent
allocation of production as above provided. As used in this
paragraph 4, the words "separate tract" mean any tract with
royalty ownership differing, now or hereafter, either as to
parties or amounts, from that as to any other part of the leased
premises.
PAGE
<PAGE>
Exhibit 10.2
[Letterhead of Oliver Timmins]
September 5, 1996
By Federal Express and
Certified Mail No. Z 205 425 230
Return Receipt Requested
David C. Meyer, Esq.
1875 Century Park East, Suite 930
Los Angeles, California 90067
Re: Return of Preferred Stock
Pursuant to Joint Revocation
and
Termination Agreement
Dear Mr. Meyer:
Pursuant to the June 17, 1996 Joint Revocation and
Termination Agreement (the "Agreement") by and between Oilex
International investments, Inc. ("Oilex") and World Interactive
Network, Inc. ("WIN") to revoke and terminate the January 5, 1995
Stock Agreement, enclosed please find WIN certificate number 59
inn the name of Oilex. A stock power naming you as escrow agent
for Oilex to transfer the shares is also attached. At such time
as WIN delivers to you its Oilex certificate you are authorized
to release the stock to WIN. A copy of the agreement to revoke
the January 5, 1995 agreement is attached signed by both parties.
Oilex has noticed its auditor of the Agreement and any value
assigned to the stock has been deleted.
Oilex and WIN agree to mutually release and hold harmless
each other from any and all liability and potential causes of
action regarding the January 5, 1995 Stock Exchange Agreement and
the June 17, 1996 Joint Revocation and Termination Agreement.
Thank you for your attention to this matter.
Oilex International Investments, Inc.
By: /s/ Oliver H. Timmins III
Oliver H. Timmins III
PAGE
<PAGE>
Exhibit 99: Disclosure of Oil and Gas Operations/Guide 2
Item 4:
Mississippi Leases
A 1.022834% Net Working Interest insofar and only insofar as to
the portion of the leases listed below which fall within the
boundary of the unit for the Norcen Explorer, Inc. Burns Baptist
Church et al No. 1 as evidenced by Declaration of Pooled Oil Unit
dated September 7, 1990 and recorded in Book No. 325, Page 676 of
the records of Smith County, Mississippi and further limited to
the depths between the surface and 9,986 feet subsurface.
<PAGE>
<TABLE>
<S> <C> <C> <C>
Lessor Lessee Date Vol/Page
Ruth Toler Tower Exploration,Inc. 032588 294/657
Oliver Properties Tower Exploration,Inc. 033088 294/64
James Harrison Buchanan Tower Exploration,Inc. 042588 297/13
William Thomas Buchanan Tower Exploration,Inc. 042588 297/15
Sarah Caroline Buchanan Tower Exploration,Inc. 042588 297/20
Fred E. Moss Tower Exploration,Inc. 042188 297/22
Linda M. Moss Tower Exploration,Inc. 042188 295/558
Ridgway Energy, Inc Tower Exploration,Inc. 042188 295/561
Ridgway Management, Inc Tower Exploration,Inc. 042188 295/568
John D. Fournet,Et Ux Tower Exploration,Inc. 050588 295/548
R.N. Turnbow Oil Invest Norcen Explorer, Inc. 072688 301/26
Edith G. Hamilton Mitchell Energy Corp. 122387 291/362
Martha Hamilton Williams Mitchell Energy Corp. 122387 291/364
Fannie Robinson Graham Mitchell Energy Corp. 012288 291/359
Gladstone Winstead, EtUx Mitchell Energy Corp. 092287 287/236
James P. Michael Mitchell Energy Corp. 111187 287/529
Helen Dow Bryant Mitchell Energy Corp. 111287 291/142
</TABLE>
A 2.178866% Net Working Interest insofar and only insofar as to
the portion of the leases listed below which fall within the
boundary of the unit for the Norcen Explorer, Inc. John C.
Henderson et al No. I as evidenced by Declaration of Pooled Oil
Unit dated July 22, 1991 and recorded in Book No. 338, Page 126
of the records of Smith County, Mississippi and further limited
to the depths between the surface and 10,644 feet
subsurface.
<TABLE>
<S> <C> <C> <C>
Lessor Lessee Date Vol/Page
Ruth Toler Tower Exploration, Inc. 032588 294/657
Oliver Properties Tower Exploration, Inc. 033088 294/646
James Harrison Buchanan Tower Exploration, Inc. 042588 297/13
William Thomas Buchanan Tower Exploration, Inc. 042588 297/15
Sarah Caroline Buchanan Tower Exploration, Inc. 042588 297/20
Fred E. Moss Tower Exploration, Inc. 042188 297/22
Linda M. Moss Tower Exploration, Inc. 042188 295/558
Ridgway Energy, Inc Tower Exploration, Inc. 042188 295/561
Ridgway Management, Inc Tower Exploration, Inc. 042188 295/568
John D. Fournet,Et Ux Tower Exploration, Inc. 050588 295/548
Fannie Robinson Graham Mitchell Energy Corp. 012288 291/359
Gladstone Winstead,EtUx, Mitchell Energy Corp. 092287 287/236
Helen Dow Bryant Mitchell Energy Corp. 111287 291/142
James F. Michael Norcen Explorer, Inc. 111290 329/159
A.P. Kearney, Et Ux Mitchell Energy Corp. 102987 287/551
Arward Winstead, Et Ux Mitchell Energy Corp. 110387 291/14
Carl J. Winstead Hoberr Petro. Resources 081388 297/565
Pauline Winstead Brown Hoberr Petro. Resources 020388 291/301
Dorothy Winstead Robbins Hoberr Petro. Resources 012788 291/303
Dorothy Winstead Robbins Hoberr Petro. Resources 012788 291/303
W.G. Singleton Norcen Explorer, Inc. 022890 317/351
Yvonne Gredler Norcen Explorer, Inc. 022890 317/343
Margaret N. Singleton Norcen Explorer, Inc. 022890 317/349
Ercelle N. Singleton Norcen Explorer, Inc. 022890 317/347
Eva N. Franklin Norcen Explorer, Inc. 022890 317/341
David Singleton Norcen Explorer, Inc. 022890 317/345
John C. Henderson, Et Ux Mitchell Energy Corp. 091487 287/223
Job T. Payne, Et Ux Thomas W. Rogers 111087 287/332
Allan P. Kearney, Et Ux Mitchell Energy Corp. 120286 286/284
James Prentiss Husband Norcen Explorer, Inc. 010290 315/218
James M. Henderson,EtUx Mitchell Energy Corp. 091187 287/233
</TABLE>
A 2.277794% Net Working Interest insofar and only insofar as to
the portion of the leases listed below which fall within the
boundary of the Unit for the Norcen Explorer, Inc. Allan P.
Kearney et al No. 1 as evidenced by Declaration of Pooled
Oil Unit dated April 27, 1992 and recorded in the records of
Smith County, Mississippi and further limited to the depths
between the surface and 10,644 feet subsurface).
<TABLE>
<S> <C> <C> <C>
Lessor Lessee Date Vol/Page
Ross Holmes Norcen Explorer, Inc. 081688 299/264
John L. Townsend, Indiv Norcen Explorer, Inc. 081288 299/266
Bruce Dixon, Sr., Et Al Norcen Explorer, Inc. 081588 299/262
George G. Townsend,Indiv Norcen Explorer, Inc. 081288 299/268
Joe L. Townsend, Indiv Norcen Explorer, Inc. 081288 299/465
Mary Alice Smith, Et Al Norcen Explorer, Inc. 040690 319/394
Dorothy West Townsend Norcen Explorer, Inc. 062091 335/161
A.H. Barber Tower Exploration, Inc. 111887 287/377
Wayne H. Wedgeworth, Tower Exploration, Inc. 102087 287/257
A.P. Kearney, et ux Mitchell Energy Corp. 102987 287/551
Herschel Muckelrath Mitchell Energy Corp. 102887 287/361
Wilodyne M. Rhinehart Mitchell Energy Corp. 102887 287/363
Winfred H. Muckelrath Mitchell Energy Corp. 102887 287/359
</TABLE>
A 0.512306% Net Working Interest (insofar and only insofar as to
the portion of the leases listed below which fall within the
boundary of the unit for the Norcen Explorer, Inc. -Gladstone
Winstead et al No. 1 as evidenced by Declaration of Pooled Oil
Unit dated of the records of Smith County, June 2, 1992 and
recorded in the records of Smith County, Mississippi and further
limited to the depths between the surface and 10,644 feet
subsurface).
<TABLE>
<S> <S> <C> <S><C>
Lessor Lessee Date Vol/Page
Oliver Properties Tower Exploration,Inc. 033088 294/646
Fannie Robinson Graham Mitchell Energy Corp. 012288 291/359
Gladstone Winstead,etux, Mitchell Energy Corp. 092287 287/236
James F. Michael Norcen Explorer, Inc. 111290 329/159
Ridgway Management, Inc. Norcen Explorer, Inc. 042191 335/629
Ridgway Energy, Inc. Norcen Explorer, Inc. 042191 335/625
James Prentiss Husband Norcen Explorer, Inc. 010290 315/218
R.N. Turnbow Oil Norcen Explorer, Inc. 042089 307/168
Homer Lynn Norcen Explorer, Inc. 041989 307/174
June C. Coutant Norcen Explorer, Inc. 041989 307/172
Mary S. Reeves, Norcen Explorer, Inc. 041989 307/170
Herman Mcdaniel, Norcen Explorer, Inc. 032789 307/160
Mary Lou Burns Powell, Norcen Explorer, Inc. 032589 303/120
L.B. Porter Norcen Explorer, Inc. 092889 312/170
Betty Sue Glaze Nygren Norcen Explorer, Inc. 080889 311/602
Ruth E. Toler Norcen Explorer, Inc. 072689 311/585
QuinfournetOilProperties Norcen Explorer, Inc. 072689 311/599
Jack I. Miles, Norcen Explorer, Inc. 032789 303/412
Jimmy Ray Burns, Norcen Explorer, Inc. 032589 303/114
Ruth H. Miller Norcen Explorer, Inc. 031889 302/43
Betty C. Husbands Norcen Explorer, Inc. 091988 301/396
Ernest C. Husbands Norcen Explorer, Inc. 101988 301/394
Thomas Hallman Sr. Norcen Explorer, Inc. 032789 313/283
Thomas Wilson Hallman Norcen Explorer, Inc. 032589 303/116
Corinne Yelverton Watts Norcen Explorer, Inc. 032589 307/158
Jasper Maurice Yelverton Norcen Explorer, Inc. 032789 313/281
Eloise Burns Flaherty Norcen Explorer, Inc. 033089 303/410
A.H. Barber Norcen Explorer, Inc. 042689 307/331
John H. Townsend Norcen Explorer, Inc. 042389 300/587
</TABLE>
<PAGE>
Texas Leases
Frio County
A One Hundred Percent (100%) Gross Working Interest and a
Seventy Percent (70%) Net Revenue Interest in and to the oil
rights down to 3,330 feet and all rights below 3,300 feet in and
under the acreage covered by the following Oil, Gas and Mineral
Leases 1 through 5 and all rights in and under the acreage
covered by the following Oil, Gas and Mineral Leases 6 through
10:
1. Oil, Gas and Mineral Lease dated December 1, 1995, executed
by Carol Thompson Crouch, as Lessor, in favor of Oilex
International Investments, Inc., as Lessee, covering 150 acres of
land, a Memorandum of which is recorded in Volume 886, Page 245,
Deed Records of Frio County, Texas.
2. Oil, Gas and Mineral Lease dated December 1, 1995, executed
by Carol Thompson Crouch, as Lessor, in favor of Oilex
International Investments, Inc., as Lessee, covering 310.68 acres
of land, a Memorandum of which is recorded in Volume 886, Page
249, Deed Records of Frio County, Texas.
3. Oil, Gas and Mineral Lease dated December 1, 1995, executed
by Carol Thompson Crouch, as Lessor, in favor of Oilex
International Investments, Inc., as Lessee, covering 80 acres of
land, a Memorandum of which is recorded in Volume 886, Page 247,
Deed Record of Frio County, Texas.
4. Oil, Gas and Mineral Lease dated December 1, 1995, executed
by Carol Thompson Crouch, as Lessor, in favor of Oilex
International Investments, Inc., as Lessee, covering 160 acres of
land, a Memorandum of which is recorded in Volume 886, Page 243,
Deed Records of Frio County, Texas.
5. Oil, Gas and Mineral Lease dated December 1, 1995, executed
by Carol Thompson Crouch, as Lessor, in favor of Oilex
International Investments, Inc., as Lessee, covering 77.65 acres
of land, a Memorandum of which is recorded in Volume 886, Page
241, Deed Records of Frio County, Texas.
6. Oil, Gas and Mineral Lease dated February 14, 1996, executed
by Jim Biediger, as Lessor, in favor of Oilex International
Investments, Inc., as Lessee, covering 965.3 acres of land, a
Memorandum of which is recorded in Volume 886, Page 268, Deed
Records of Frio County, Texas.
7. Oil, Gas and Mineral Lease dated June 8, 1996, executed by
Fay Brown, as Lessors, in favor of Oilex International
Investments, Inc., as Lessee, covering 965.3 acres of land, a
Memorandum of which is recorded in Volume 886, Page 285, Deed
Records of Frio County, Texas.
8. Oil, Gas and Mineral Lease dated June 8, 1996, executed by
Theresa Biediger, as Lessor, in favor of Oilex International
Investments, Inc., as Lessee, covering 965.3 acres of land, a
Memorandum of which is recorded in Volume 886, Page 276, Deed
Records of Frio County, Texas.
9. Oil, Gas and Mineral Lease dated June 8, 1996, executed by
Helen Branham, as Lessor, in favor of Oilex International
Investments, Inc., as Lessee, covering 965.3 acres of land, a
Memorandum of which is recorded in Volume 886, Page 259, Deed
Records of Frio County, Texas.
10. Oil, Gas and Mineral Lease dated June 8, 1996, executed by
Connie Bradley, as Lessor, in favor of Oilex International
Investments, Inc., as Lessee, covering 965.3 acres of land, a
Memorandum of which is recorded in Volume 886, Page 251, Deed
Records of Frio County, Texas.
Scurry County
A 75% Working Interest and a 56.25% Net Revenue Interest in and
to the following Oil, Gas and Mineral Leases included within the
bounds of the Revilo Glorieta Unit, Scurry County, Texas.
Lessor: Alex Collins, et al
Lessee: Stanolind Oil and Gas Company
Dated: September 27, 1948
Recorded: Volume 45, Page 5 of the oil and Gas Records
of Scurry County, Texas
Lessor: Alex Collins, et al
Lessee: C. R. Craig
Dated: March 2, 1949
Recorded: Volume 54, Page 219 of the Oil and Gas
Records of Scurry County, Texas
Lessor: Alex Collins, et al
Lessee: C. R. Craig
Dated: March 2, 1949
Recorded: Volume 54, Page 219 of the Oil and Gas
Records of Scurry County, Texas
Lessor: Alex Collins, et al
Lessee: Sun Oil Company
Dated: April 8, 1949
Recorded: Volume 38, Page 243 of the Oil and Gas
Records of Scurry County, Texas
Lessor: A. G. Mitchell, et ux
Lessee: Sun Oil Company
Dated: February 26, 1948
Recorded: Volume 37, Page 193 of the Oil and Gas
Records of Scurry County, Texas
Lessor: A. G. Mitchell, et ux
Lessee: Sun Oil Company
Dated: April 12, 1948
Recorded: Volume 37, Page 387 of the Oil and Gas
Records of Scurry County, Texas
Lessor: John W. Nichols, et al
Lessee: Intex Oil Company
Dated: March 7, 1955
Recorded: Volume 157, Page 37 of the Oil and Gas
Records of Scurry County, Texas
Lessor: A. M. Wright
Lessee: Intex Oil Company
Dated: March 7, 1955
Recorded: Volume 157, Page 39 of the Oil and Gas
Records of Scurry County, Texas
Lessor: Ernst M. Loosen, et al
Lessee: Intex Oil Company
Dated: March 7, 1955
Recorded: Volume 160, Page 279 of the Oil and Gas
Records of Scurry County, Texas
Lessor: H. A. Dever, et ux
Lessee: Sun Oil Company
Dated: February 27, 1948
Recorded: Volume 37, Page 177 of the Oil and Gas
Records of Scurry County, Texas
Lessor: C. E. Eastman, et ux
Lessee: Sun Oil Company
Dated: April 14, 1948
Recorded: Volume 37, Page 393 of the Oil and Gas
Records of Scurry County, Texas
Lessor: T. H. Eastman, et ux
Lessee: Sun Oil Company
Dated: April 22, 1948
Recorded: Volume 37, Page 445 of the Oil and Gas
Records of Scurry County, Texas
Lessor: Ruth S. Davis
Lessee: Sun Oil Company
Dated: February 27, 1948
Recorded: Volume 37, Page 163 of the Oil and Gas
Records of Scurry County, Texas
Lessor: Roy G. Woods
Lessee: Sun Oil Company
Dated: June 26, 1953
Recorded: Volume 137, Page 319 of the Oil and Gas
Records of Scurry County, Texas
Lessor: F. M. Walker
Lessee: Sun Oil Company
Dated: February 10, 1956
Recorded: Volume 170, Page 414 of the Oil and Gas
Records of Scurry County, Texas
Lessor: C. E. Eastman, et al
Lessee: Ohio Oil Company
Dated: April 3, 1946
Recorded; Volume 29, Page 273 of the Oil and Gas
Records of Scurry County, Texas
Lessor: C. E. Eastman, et al
Lessee: Ohio Oil Company
Dated: April 3, 1946
Recorded: Volume 29, Page 273 of the Oil and Gas
Records of Scurry County, Texas
Lessor: C. E. Eastman, et al
Lessee: Ohio Oil Company
Dated: April 3, 1946
Recorded: Volume 29, Page 273 of the Oil and Gas
Records of Scurry County, Texas
Lessor: C. E. East, et al
Lessee: Ohio Oil Company
Dated: April 3, 1946
Recorded: Volume 29, Page 273 of the oil and Gas
Records of Scurry County, Texas
Lessor: George W. Bynum, et al
Lessee: Magnolia Petroleum Company
Dated: September 28, 1948
Recorded: Volume 42, Page 351 of the Oil and Gas
Records of Scurry County, Texas
Lessor: Hugh Boren, et al
Lessee: Magnolia Petroleum Company
Dated: October 4, 1948
Recorded: Volume 43, Page 91 of the Oil and Gas Records
of Scurry County, Texas
Lessor: W. R. Bowden, et al
Lessee: Magnolia Petroleum Company
Dated: October 6, 1948
Recorded: Volume 43, Page 435 of the Oil and Gas
Records of Scurry County, Texas
Lessor: George W. Bynum, et al
Lessee: Magnolia Petroleum Company
Dated: September 28, 1948
Recorded: Volume 42, Page 351 of the Oil and Gas
Records of Scurry County, Texas
Lessor: Hugh Boren, et al
Lessee: Magnolia Petroleum Company
Dated: October 4, 1948
Recorded: Volume 43, Page 91 of the Oil and Gas Records
of Scurry County, Texas
Lessor: W. R. Bowden, et al
Lessee: Magnolia Petroleum Company
Dated: October 6, 1948
Recorded: Volume 43, Page 435 of the Oil and Gas
Records of Scurry County, Texas
Lessor: Geraldine Davis
Lessee: J. C. Davis, Jr.
Dated: July 11, 1955
Recorded: Volume 164, Page 259 of the Oil and Gas
Records of Scurry County, Texas
Lessor: Ruth Bell Davis
Lessee: J. C. Davis, Jr.
Dated: June 27, 1955
Recorded: Volume 164, Page 261 of the Oil and Gas
Records of Scurry County, Texas
Lessor: W. A. Vaughn, et ux
Lessee: Intex Oil Company
Dated: February 23, 1955
Recorded: Volume 157, Page 31 of the Oil and Gas
Records of Scurry County, Texas
Lessor: George L. Brumley, et al
Lessee: Intex oil Company
Dated: February 23, 1955
Recorded: Volume 157, Page 33 of the Oil and Gas Records of
Scurry County,Texas
Lessor: George L. Brumley, et al
Lessee: Intex Oil Company
Dated: February 23, 1955
Recorded: Volume 157, Page 33 of the Oil and Gas Records of
Scurry County, Texas
Lessor: Bart Branson, et ux
Lessee: Intex Oil Company
Dated: June 28, 1955
Recorded: Volume 162, Page 285 of the Oil and Gas Records of
Scurry County, Texas
Lessor: Jeanne Bullard, et vir
Lessee: Intex Oil Company
Dated: May 10, 1955
Recorded: Volume 163, Page 290 of the Oil and Gas Records of
Scurry County, Texas
Lessor: R. J. Randals, et ux
Lessee: Sun Oil Company
Dated: June 28, 1948
Recorded: Volume 40, Page 289 of the Oil and Gas Records of
Scurry County, Texas
Lessor: Lone Star Producing Company
Lessee: Landa Oil Company
Dated: April 16, 1956
Recorded: Volume 173, Page 84 of the Oil and Gas Records of
Scurry County, Texas
Lessor: Lone Star Producing Company
Lessee: Landa Oil Company
Dated. June 12, 1956
Recorded: Volume 175, Page 54 of the Oil and Gas Records of
Scurry County, Texas
Lessor: Lone Star Producing Company
Lessee: Landa Oil Company
Dated: October 1, 1956 e
Recorded: Volume 178, Page 145 of the Oil and Gas Records of
Scurry County, Texas
Lessor: Lone Star Producing Company
Lessee: Landa Oil Company
Dated: December 28, 1956
Recorded: Volume 180, Page 435 of the Oil and Gas Records of
Scurry County, Texas
Lessor: R. J. Randals
Lessee: James G. White
Dated: July 21, 1945
Recorded: Volume 28, Page 33 of the Oil and Gas Records of
Scurry County, Texas
Lessor: R. J. Randals
Lessee: Sun Oil Company
Dated: June 28, 1948
Recorded: Volume 40, Page 209 of the Oil and Gas Records of
Scurry County, Texas
Lessor: R. J. Randals
Lessee: Sun Oil Company
Dated: July 12, 1948
Recorded: Volume 41, Page 231 of the Oil and Gas Records of
Scurry County, Texas
Lessor: Von Roeder, Myers
Lessee: A. J. Slagter, Jr.
Dated: May 22, 1947
Recorded: Volume 42, Page 311 of the Oil and Gas Records of
Scurry County, Texas
Lessor: R. J. Randals
Lessee: James G. White
Dated: July 21, 1945
Recorded: Volume 28, Page 33 of the Oil and Gas Records of
Scurry County, Texas
Lessor: Charles S. Stewart, et al
Lessee: James G. White
Dated: June 26, 1945
Recorded: Volume 27, Page 613 of the Oil and Gas Records of
Scurry County, Texas
Pecos County, Texas
A 87.5% Gross Working Interest and a 61.25% Net Revenue Interest
in and to the following Oil, Gas and Mineral Leases included
within the bounds of the Walker (Queen) Field Unit, Pecos County,
Texas.
White & Baker 'A" Lease
(1) Oil and Gas Lease executed by G. R. White and J. T.
Baker, as Lessors, to R. L. Walker, as Lessee, dated November 3,
1939, recorded in Volume 127, Page 101, Lease Records of Pecos
County, Texas
(2) Oil and Gas Lease executed by Indian Territory Illuminating
Oil Company and Foster Petroleum Corporation, as Lessors, to R.L.
Walker, as Lessee, dated November 3, 1939, recorded in Volume
127, Page 58, Lease Records of Pecos County, Texas
(3) Oil and Gas Lease executed by Indian Territory Illuminating
Oil Company and Foster Petroleum Corporation, as Lessors, to R.L.
Walker, as Lessee, dated November 3, 1939, recorded In Volume
127, Page 64, Lease Records of Pecos County, Texas
(4) Oil and Gas Lease executed by Indian Territory Illuminating
Oil Company and Poster Petroleum, as Lessors, to R.L. Walker, as
Losses, dated November 3, 1939, recorded in Volume 127, Page 69,
Lease Records of Pecos County, Texas
White & Baker B" Lease
(1) Oil and Gas Lease executed by G.R. White and I.T. Baker,
as Lessors, to R.L. Walker, an Lessee, dated November 3, 1939,
recorded in Volume 127, Page 101, Lease Records of Pecos County,
Texas
(2) Oil and Gas Lease executed by Indian Territory Illuminating
Oil Company and Poster Petroleum Corporation, as Lessors, to R.L.
Walker, an Lessee, dated November 3, 1939, recorded in Volume
127, Page 64, Lease Records of Pecos County, Texas
White & Baker C Lease
(1) Oil and Gas Lease executed by G.R. White and J.T. Baker,
an Lessors, to R.L. Walker, an Lessee, dated November 3, 1939,
recorded in Volume 127, Page 101, Lease Records of Pecos County,
Texas
(2) Oil and Gas Lease executed by Cities Service Oil Company, as
Lessor, to N.V. Hardin, E.L. Martin, and Derwood Langston, as
Lessees, dated November 1, 1969, recorded in Volume 386, Page
33, Lease Records of Pecos County, Texas
White & Baker "D Lease
(1) Oil and Gas Lease dated November 3, 1939, recorded in
Volume 127, Page 101, Lease Records of Pecos County, Texas, from
G.R. White, et al, as Lessors, to R.L. Walker, an Lessee; and
(2) Oil and Gas Lease dated November 3, 1939, recorded in
Volume 127, Page 64, Lease Records of Pecos County, Texas, from
Indian Territory Illuminating Oil Company, et al, as Lessors, to
R.L. Walker, as Lessee;
White & Baker E Lease
(1) Oil and Gas Lease dated November 3, 1939, recorded in
Volume 127, Page 101, Lease Records of Pecos County, Texas, from
G.R. White, at al, as Lessors, to R.L. Walker, as Lessee; and
(2) Oil and Gad Leads dated November 3, 1939, recorded in
Volume 127, Page 64, Lease Records of Pecos County, Texas, from
Indian Territory illuminating Oil Company, et al, an Lessors, to
R.L. Walker, as Lessee;
White & Baker G Lease
(1) Oil and Gas Lease executed by G.R. White, et al, as
Lessors, to R.L. Walker, as Lessee, dated November 3, 1939,
recorded in Volume 127, Page 101, Lease Records of Pecos County,
Texas
(2) Oil and Gas Lease executed by Cities Service Oil
company, et al, am Lessors, to R. Kirk Johnson, as Lessee, dated
February 20, 1956, recorded in Volume 229, Page 206, Lease
Records of Pecos County, Texas
White & Baker H Lease
(1) Oil and Gas Lease executed by G.R. White, et al, an
Lessors, to Cardinal Oil Company, an Lessee, dated September 9,
1936, recorded in Volume 110, Page 129, Lease Records of Pecos
County, Texas
(2) Oil and Gas Lease executed by Cities Service Oil
company, et al, an Lessors, to F. Kirk Johnson, as Lessee, dated
February 20, 1956, recorded in Volume 229, Page 206, Lease
Records of Pecos County, Texas
White & Baker J Lease
(1) Oil and Gas Lease executed by G.R. White, et al, as
Lessors, to R.L. Walker, as Lessee, dated November 3, 1939,
recorded in Volume 127, Page 101, Lease Records of Pecos County,
Texas
White & Baker K Lease
(1) Oil and Gas Lease executed by o.R. White, et al, as
Lessor, to R.L. Walker, an Lease&, dated November 3, 1939,
recorded in Volume 127, Page 101, Lease Records of Pecos County,
Texas
White & Baker L Lease
(1) Oil and Gas Loans executed by G.R. White, at al, as
Lessors, to R.L. Walker, as Lessee, dated November 3, 1939,
recorded in Volume 127, Page 101, Loan* Records of Pecos County,
Texas
White & Baker M Lease
(2) Oil and Gas Lease executed by G.R. White, at al, as
Lessor, to R.L. Walker, as Lessee, dated November 3, 1939,
recorded in Volume 127, Page 101, Lease Records of Pecos County,
Texas
White & Baker N Lease
(1) Oil and Gas Lease executed by G.R. White, et al, as
Lessors, to R.L. Walker, as Lessee, dated November 3, 1939,
recorded in Volume 127, Page 101, Lease Records of Pecos County,
Texas
(2) Oil and Gas Lease executed by Indian Territory
illuminating Oil Company and Poster Petroleum Corporation, as
Lessors, to R.L. Walker, as Lessee, dated November 3, 1939,
recorded in Volume 127, Page 64, Lease Records of Pecos County,
Texas
White & Baker O Lease
(1) Oil and Gas Lease executed by G.R. White, at al, as
Lessors, to R.L. Walker, as Lessee, dated November 3, 1939,
recorded in Volume 127, Page 101, Lease Records of Pecos County,
Texas
White & Baker P Lease
(1) Oil and Gas Lease executed by G.R. White, et al, as
Lessors, to R.L. Walker, as Lessee, dated November 3, 1939,
recorded in Volume 127, Page 101, Lease Records of Pecos County,
Texas
(2) Oil and Gas Lease executed by Indian Territory
Illuminating Oil Company and Foster Petroleum Corporation, as
Lessors, to R.L. Walker, as Lessee, dated November 3, 1939,
recorded in Volume 127, Page 64, Lease Records of Pecos County,
Texas;
White and Baker Lease
The Southeast 40 acres and the Northwest 40 acres of the
South 160 acres of Section 84, Block 194, GC&SF Ry. Co. Survey,
Pecos County, Texas, said leasehold interest being the same as
recorded in the office of the County Clerk of Pecos County,
Texas, at Volume 580, Page 175, of the lease records of said
County and whereas the said lease and all rights thereunder or
incident thereto are now owned by Sam Chadic, dba Black Badger
Exploration, to a depth of 3,000 feet from the surface thereof
University "B" Lease
State Lease Number 26751 and being Section 24, Block 16,
University Land Survey, Pecos County, Texas.
University "G" Lease
State Lease Number 96991 and being the NE/4 of Section 25, Block
16, University Land Survey, Pecos County, Texas.
Guide 2: Item 5: UNDEVELOPED ACREAGE
Colorado Leases
Rio Blanco County
A One Hundred Percent (100%) Gross Working Interest and an
Eighty Percent (80%) Net Revenue Interest in and to the following
Oil, Gas And Mineral Leases:
1. United States Department of the Interior Lease
Number C-49415, effective January 1, 1989, covering T2N-R96W, 6th
P.M., Sec. 33: S/2SE/4, Sec 34: S/2NE/4, SW/4, Surface to the
Base of the Mesa Verde;
2. United States Department of the Interior Lease Number
C-42236, effective February 1, 1986, covering T2N-R96W, 6th P.M.,
Sec. 17: NE /4, Sec 22: N/2NW/4, SE/4NW/4, N/2 SE/4, Surface to
the Base of the Mesa Verde;
3. United States Department of the Interior Lease Number
C-50981, effective February 1, 1990, covering T2N-R95W, 6th P.M.,
Sec. 7: Lots 1 through 4,5,7, W/2E/2, E/2W/2, Surface to the Base
of the Mesa Verde;
4. United States Department of the Interior Lease Number
C-50983, effective February 1, 1990, covering T2N-R95W, 6th P.M.,
Sec. 18: Lots 1 through 4, E/2W/2, Surface to the Base of the
Mesa Verde;
5. United States Department of the Interior Lease Number
C-50984, effective February 1, 1990, covering T2N-R95W, 6th P.M.,
Sec. 19: Lots 1 and 2, E/2NW/4, Surface to the Base of the Mesa
Verde;
6. United States Department of the Interior Lease Number
C-50987, effective February 1, 1990, covering T2N-R95W, 6th P.M.,
Sec. 30: Lots 1 through 4, E/2NW/4, NE/4SW/4, Surface to the Base
of the Mesa Verde;
7. United States Department of the Interior Lease Number
C-38050, effective March 1, 1984, covering T2N-R96W, 6th P.M.,
Sec. 1: Lots 15 and 26, E/2SE/4, Sec. 3: Lots 5 through 8,15,
SE/4NE/4, SW/4NW/4, SE/4Sw/4, Se/4, Sec: 4: Lots 5 through 8,
S/2N/2, S/2, Sec. 5: Lots 5 through 8, S/2N/2, S/2, Sec. 6: Lots
8 through 12, S/2NE/4, SE/4NW/4, SE/4, Sec. 9: NE/4, W/2,
W/2SE/4, SE/4SE/4, Sec. 10: E/2, E/2W/2, SW/4SW/4, Sec. 12: Lots
1,4,10 NE/4NE/4, S/2NE/4, S/2, Sec. 13: N/2, SE/4, Sec. 14:
NE/4, Sec. 15: S/2, Sec. 16: SW/4NE/4, Surface to the Base of the
Mesa Verde;
8. United States Department of the Interior Lease Number
C-46794, effective March 1, 1988, covering T2N-R96W, 6th P.M.,
Sec. 22: N/2NE/4, Surface to the Base of the Mesa Verde;
9. United States Department of the Interior Lease Number
C-56261, effective March 1, 1988, covering T2N-R96W, 6th P.M.,
Sec. 34: SE, Surface to the Base of the Mesa Verde;
10. United States Department of the Interior Lease Number
C-37308, effective July 1, 1987, covering T2N-R96W, 6th P.M.,
Sec. 1: Lots 5 through 8,11,14,20,21,23, SE/4NE/4, SW/4NW/4,
NW/4SW/4, Sec. 2: Lots 5 through 8, S/2N/2,S/2, Sec. 22: All,
Sec. 25: SE/4, Surface to the Base of the Mesa Verde;
11. United States Department of the Interior Lease Number
C-50227, effective August 1, 1989, covering T2N-R96W, 6th P.M.,
Sec. 23: E/2, NW/4, E/2SW/4, SW/4SW/4, Sec. 24: W/2, Sec. 26:
NE/4, N/2SE/4, SW/4SE/4, Surface to the Base of the Mesa Verde;
12. United States Department of the Interior Lease Number
C-48855, effective November 1, 1988, covering T2N-R96W, 6th P.M.,
Sec. 14: W/2, Sec. 16: N/2N/2, SE/4NE/4, Sec. 22: S/2NE/4,
Surface to the Base of the Mesa Verde;
13. United States Department of the Interior Lease Number
C-56910, effective October 1, 1994, covering T2N-R96W, 6th P.M.,
Sec. 24: E/2, Sec. 25: N/2, SW/4, Sec. 26: SE/4SE/4, Surface to
the Base of the Mesa Verde;
Texas Leases
Jackson County
A One Hundred Percent (100%) Gross Working Interest and an
Eighty Percent (72%) Net Revenue Interest in and to an undivided
Fifty Percent (50%) of the acreage covered by the following Oil,
Gas And Mineral Lease:
1. Oil, Gas and Mineral Lease dated August 11, 1995,
executed by Allen N. Burditt, Brenda L. Burditt Miller, B. R.
Burditt Taylor and Allen L. Burditt, II, as Lessors, in favor of
Phoenix Reserves, Inc., As Lessee, covering Lessor's undivided
one-half interest in and to 534.55 acres, being out of the John
Brown League, Abstract No. 10, Jackson County, Texas, the said
574.55 acres being more particularly described in a Deed from
Mrs. Mary Dulaney, et al to Allen L. Burditt, dated January 14,
1944, recorded in Volume 150, Page 269, Deed Records of Jackson
County, Texas.
Utah Leases
Carbon County
A One Hundred Percent (100%) Gross Working Interest and an
Eighty Five Percent (85%) Net Revenue Interest in and to the
following Oil, Gas And Mineral Leases:
1. Utah State Mineral Lease dated December 26, 1983, in
favor of Anchor Resources, Inc., Mineral Lease Number ML-46477,
covering 1939.42 acres of land described as Township 13 South,
Range 7 East, SLB&M, Sec. 1: Lots 3,4,5,6,S/2N/2, S/2 (All), Sec.
2: Lots 1,2,3,4,5,6,7, S/2NE/4, SE/4NW/4, E/2SW/4, SW/4 (All),
Sec. 3: Lots 1,2,5, SW/4NE/4, Sec. 22: NE/4SE/4, Sec. 23:
SW/4NE/4, Sec. 24: S/2E/4, Sec. 26: E/2NW/4, NW/4SW/4, SE/4SW/4,
Sec. 34: SE/4NE/4, Sec. 35: NW/4NW/4
San Juan County
A One Hundred Percent (100%) Gross Working Interest and an
Eighty Six and One Half Percent (86.5%) Net Revenue Interest in
and to the following Oil, Gas And Mineral Leases:
1. United States Department of the Interior Lease Number
UTU 69084 effective January 1, 1992 covering TOWNSHIP 27 SOUTH,
RANGE 22 EAST, SLM being 776.00 acres, more or less, in San Juan
County, Utah being described as Sec. 3, lot 1, SENE (excluding
Wilderness Study Area); Sec. 9, SWNE, N/2NW, SENW, N/2SE, SWSE
(excluding Wilderness Study Area); Sec. 10, SWSW (excluding
Wilderness Study Area); Sec. 11, NE (excluding Wilderness Study
Area); Sec. 12, W/2SW, SESW (excluding Wilderness Study Area);
Sec. 13, , W/2NE, SENE, NENW, SE (excluding Wilderness Study
Area); Sec. 14, W/2NW, (excluding Wilderness Study Area); Sec.
15, SWNE, N/2NW (excluding Wilderness Study Area), SENW; Sec. 24,
lot 1, SENE, SENW (excluding Wilderness Study Area).
2. United States Department of the Interior Lease Number
UTU 69085 effective January 1, 1992 covering TOWNSHIP 35 SOUTH,
RANGE 22 EAST, SLM being 789.59 acres, more or less, in San Juan
County, Utah being described as Sec. 19, lots 1,2, NE, E/2NW,
Sec. 20: NENE, W/2E/2, SESE, Sec. 21: NW, E/2SW
Uintah County
A One Hundred Percent (100%) Gross Working Interest and an Eighty
Six and One Half Percent (86.5%) Net Revenue Interest in and to
the following Oil, Gas And Mineral Leases:
1. United States Department of the Interior Lease Number
UTU 68645 effective October 1, 1991 covering TOWNSHIP 6 SOUTH,
RANGE 22 EAST, SLM being 720 acres, more or less, situated in
Uintah County, Utah, described as Sec. 21: all, Sec. 22: W/2SW/4.
2. United States Department of the Interior Lease Number
UTU 68707 effective October 1, 1991 covering TOWNSHIP 4 SOUTH,
RANGE 22 EAST, SLM being 640 acres, more or less, situated in
Uintah County, Utah, described as Sec. 21: SESW, W/2SE, SESE,
Sec. 22: N/2NE, NENW, Sec. 28: W/2NE, NW, N/2SW, NWSE.
3. United States Department of the Interior Lease Number
UTU 69083 effective January 1, 1992, covering TOWNSHIP 4 SOUTH,
RANGE 22 EAST, SLM being 159.57 acres, more or less, situated in
Uintah County, Utah, described as Sec. 26: Lots 4 and 5, N/2SW.
4. United States Department of the Interior Lease Number
UTU 68703 effective October 1, 1991 covering TOWNSHIP 4 SOUTH,
RANGE 21 EAST, SLM being 235.5 acres, more or less, situated in
Uintah County, Utah, described as Sec. 18: lots 2 through 4,
E/2NW, NESW.
5. United States Department of the Interior Lease Number
UTU 68647 effective October 1, 1991 covering TOWNSHIP 8 SOUTH,
RANGE 22 EAST, SLM being 585.25 acres, more or less, situated in
Uintah County, Utah, described as Sec. 5: lots 1 through 3, 6
through 8, ten through 14, S/2NE, SENW, NESW, N/2SE.
6. United States Department of the Interior Lease Number
UTU 45465 effective October 1, 1991 covering TOWNSHIP 3 SOUTH,
RANGE 1 WEST, USB&M being 40 acres, more of less, situated in
Uintah County, Utah, described as Sec. 26: SW/4NE/4.
Item 6: Drilling Activity
None.
Item 7: Present Activities
Smith County, Mississippi
Nonoperator working interest in four producing units
Frio County, Texas
As of the date of July 1, 1997, the company was
preparing to commence operations in its Big Foot Field holdings
in Frio County, Texas. The Company plans to initially re-enter
55 existing wells and place themback into production. Once the
initial phase of operations is completed, the Company plans to
initiate a drilling program to fully develop the 3,100 foot Olmos
"B" sand underlying its Frio County, acreage.
Rio Blanco County, Colorado
The Company is planning a re-entry on a wellbore
situated on its Rio Blanco acreage prior to October 31, 1998.
Item 8: Delivery Commitments
None.
