SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (d) of
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) November 9, 1995
HUNTER RESOURCES, INC.
(Exact name of Registrant as specified in its Charter)
Commission file number 1-1705
Pennsylvania 87-0205057
(State of Incorporation) (I.R.S. Employer Identification No.)
600 East Las Colinas Blvd., Suite 1200, Irving, Texas 75039
(Address of principal executive offices) (Zip Code)
(214) 401-0752
(Registrant's telephone number, including area code)
<PAGE>1
CURRENT REPORT OF EVENTS
Item 2. Recent Developments
- -------------------------------
On November 9, 1995, Magnum Hunter Production, Inc. ( Magnum Hunter ), a
wholly-owned subsidiary of Hunter Resources, Inc., closed on an acquisition
( Tana ) of domestic producing oil and gas properties for $4.229 million from
a Corpus Christi, Texas based independent. The purchase price was comprised
of $3.104 million cash, funded by an existing bank line of credit, and a note
payable to the previous owner in the amount of $1.125 million secured by
610,170 shares of restricted common stock of Magnum Petroleum, Inc., the new
parent of Magnum Hunter (subject to shareholder approval). The acquisition
had an effective date of August 1, 1995. The properties are concentrated in
two counties in Texas and include ownership interest in 38 wells.
Item 7. Financial Statements and Exhibits.
- ----------------------------------------------
Sequentially
Numbered Page
---------------
(a) Financial Statements of the Business Acquired:
Independent Auditor's Report
Historical Summary of Revenue and Direct Operating Expenses for the
Year Ending December 31, 1994 and Nine Months Ending September
30, 1995
Notes to Historical Summary of Revenues and Direct Operating Expenses
for the Year Ending December 31, 1994 and Nine Months Ending
September 30, 1995
(b) Pro forma financial information:
Pro Forma Consolidated Financial Information (unaudited)
Pro Forma Consolidated Balance Sheet (unaudited) as of September 30,
1995
Pro Forma Consolidated Statement of Operations (unaudited)
For the Twelve Months Ended December 31, 1994
Pro Forma Consolidated Statement of Operations (unaudited)
For the Nine Months Ended September 30, 1995
Notes to Unaudited Pro Forma Consolidated Financial Statements
(c) Exhibits:
Agreement to Acquire Assets
SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
DATED: January 23, 1996 HUNTER RESOURCES, INC.
By: /s/ Gary C. Evans
Gary C. Evans
President
<PAGE>2
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Hunter Resources, Inc.
Irving, Texas
We have audited the accompanying Historical Summaries of Revenue and Direct
Operating Expenses of Properties Acquired November 9, 1995, for the nine
months ended September 30, 1995 and the year ended December 31, 1994. The
Historical Summaries are the responsibility of the Company s management. Our
responsibility is to express an opinion on the Historical Summaries based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the Historical Summaries are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the Historical Summary.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
Historical Summary presentation. We believe that our audit provides a
reasonable basis for our opinion.
The accompanying Historical Summaries were prepared for the purpose of
complying with the rules and regulations of the Securities and Exchange
Commission ( for inclusion in the Form 8-K/A of Hunter Resources, Inc.) as
described in Note 2 and are not intended to be a complete presentation of the
properties revenues and expenses.
In our opinion, the Historical Summaries referred to above present fairly, in
all material respects, the revenue and direct operating expenses of the
Properties Acquired November 9, 1995, for the nine months ended September 30,
1995 and the year ended December 31, 1994, in conformity with generally
accepted accounting principles.
HEIN + ASSOCIATES LLP
December 21, 1995
Dallas, Texas
<PAGE>3
HUNTER RESOURCES, INC. AND SUBSIDIARIES
PROPERTIES ACQUIRED NOVEMBER 9, 1995
Historical Summary of Revenues and Direct Operating Expenses for the
Year Ending December 31, 1994 and the Nine Months Ending September 30, 1995
<TABLE>
<CAPTION>
Year Nine Months
Ended Ended
1994 1995
------------- -----------
<S> <C> <C>
Oil and gas sales $ 3,176,000 $ 1,495,000
Direct operating expenses (674,000) (531,000)
Net revenues $ 2,502,000 $ 964,000
</TABLE>
See Notes to Historical Summary
<PAGE>4
HUNTER RESOURCES, INC. AND SUBSIDIARIES
Properties Acquired November 9, 1995
Notes to Historical Summary of Revenues and Direct Operating Expenses for
Year Ending December 31, 1994 and Nine Months Ending September 30, 1995
1. Basis of Presentation
The accompanying Historical Summary of Revenues and Direct Operating
Expenses relates to the operations of the oil and gas properties acquired
by Hunter Resources, Inc. (the Company ) on November 9, 1995. The
properties were acquired in exchange for $3,104,000 in cash, funded by an
existing bank line of credit, and a note payable to the previous owner in
the amount of $1,125,000 secured by 610,170 shares of restricted common
stock of Magnum Petroleum, Inc. Revenues are recorded when oil and gas
is produced and direct operating expenses are recorded when the related
liability is incurred. Direct operating expenses include lease operating
expenses and production taxes. Depreciation and amortization of oil and
gas properties and general and administrative expenses have been excluded
from operating expenses in the accompanying historical summary because
the amounts would not be comparable to those resulting from proposed
future operations.
2. The Historical Summary presented herein was prepared for the purposes of
complying with the financial statement requirements of a business
acquisition to be filed on Form 8-K/A as promulgated by Regulation S-B
Item 3-10 of the Securities Exchange Act of 1934.
3. The following estimates of proved oil and gas reserves for the Tana
properties were prepared by the Company in accordance and with guidelines
established by the Securities and Exchange Commission and the Financial
Accounting Standards Board, which require that reserve reports be prepared
under existing economic and operating conditions with no provision for
price and cost escalation except by contractual agreement. The Company
emphasizes that reserve estimates of new discoveries or undeveloped
properties are more imprecise than those of producing oil and gas
properties. Accordingly, these estimates are expected to change as
future information becomes available. All of the Tana reserves are
located onshore in the continental United States.
The following unaudited table sets forth the proved oil and gas reserves
for the Tana properties at December 31, 1994 and September 30, 1995,
together with the changes therein:
<TABLE>
<CAPTION>
Proved developed and undeveloped reserves:
Oil and Natural
Condensate Gas
Proved developed and
undeveloped resources: (BBLS) (MCF)
---------- ----------
<S> <C> <C>
Balance at January 1, 1994 719,000 4,125,000
Revisions of previous estimates 4,000 (284,000)
Production (112,000) (651,000)
---------- ----------
Balance at December 31, 1994 611,000 3,190,000
Revisions of previous estimates (2,000) (11,000)
Production (47,000) (348,000)
---------- ----------
Balance at September 30, 1995 562,000 2,831,000
========== ==========
Proved developed reserves at:
December 31, 1994 264,000 2,164,000
========== ==========
September 30, 1995 215,000 1,788,000
========== ==========
</TABLE>
<PAGE>5
Standardized Measure of Discounted Future Net Cash Flows
Relating to Proved Reserves:
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------- ------------
<S> <C> <C>
Future Cash Flows $ 15,216,000 $ 16,172,000
Future Production Costs (4,655,000) (4,925,000)
Future Development Costs (1,571,000) (1,571,000)
------------- ------------
Future Net Cash Flows,
Before Income Tax 8,990,000 9,676,000
Future Income Tax Expenses (1,666,000) (1,906,000)
------------- ------------
Future Net Cash Flows 7,324,000 7,770,000
10% Discount to Reflect
Timing of Net Cash Flows (1,570,000) (1,851,000)
------------- ------------
Standardized Measure of
Discounted Future Net Cash Flows $ 5,754,000 $ 5,919,000
============= ============
</TABLE>
Changes in Standardized Measure of Discounted Future Net Cash Flows
Relating to Proved Reserves:
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------- ------------
<S> <C> <C>
Standardized measure, beginning of period $ 5,919,000 $ 6,726,000
Revisions:
Net Change in sales price, net of
production costs 442,000 1,047,000
Revisions of quantity estimates (43,000) (425,000)
Accretion of discount 592,000 673,000
Changes in timing, future
development and other (381,000) (30,000)
Sales, net of production costs (964,000) (2,502,000)
Net changes in income taxes 189,000 430,000
------------- ------------
Standardized measure, end of period $ 5,754,000 $ 5,919,000
</TABLE>
<PAGE>6
HUNTER RESOURCES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
(unaudited)
The following unaudited pro forma consolidated balance sheet of the Company
is based on the historical consolidated balance sheet as of September 30,
1995, adjusted to give effect for the acquisition of the Tana oil and gas
properties acquired November 9, 1995 and the Reef oil and gas properties
acquired October 25, 1995 as if the acquisitions had been consummated at the
balance sheet date. The historical consolidated statements of operations of
the Company for the year ended December 31, 1994 and the nine months ended
September 30, 1995 have been adjusted to give effect for the acquisition as
if the acquisition had been consummated at the beginning of each respective
period presented. In addition, the Company has also adjusted the consolidated
statements of operations for the acquisition on March 31, 1995 of the
Arrington oil and gas properties and the October 25, 1995 acquisition of the
Reef oil and gas properties as if the acquisitions had been consummated at
the beginning of each respective period presented. The Arrington and Reef
acquisitions were previously reported on amended Forms 8-K filed September
26, 1995 and December 5, 1995, respectively.
The pro forma consolidated balance sheet and statements of operations
have been prepared based on estimates and assumptions deemed by management of
the Company to be appropriate and do not purport to be indicative of the
results of operations which would actually have been obtained if the
acquisitions had occurred as presented in such statements, or which may be
obtained in the future. The pro forma consolidated balance sheet and
statements of operations should be read in conjunction with the historical
consolidated financial statements and notes thereto included in the Company's
Annual Report on Form 10-KSB for the year ended December 31, 1994 and the
Company's Quarterly Report on Form 10-QSB for the nine months ended September
30, 1995, which have been filed with the Securities and Exchange Commission.
<PAGE>7
HUNTER RESOURCES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1995
(unaudited)
<TABLE>
<CAPTION>
Hunter ProForma Combined
Historical Adjustments ProForma
---------- ----------- -----------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 87,000 $ $ 87,000
Notes and accounts receivable,
net: Trade (less reserve 852,000 852,000
of $84,000)
Affiliates 79,000 79,000
Prepaids 91,000 91,000
---------- -----------
TOTAL CURRENT ASSETS 1,109,000 1,109,000
PROPERTY AND EQUIPMENT:
Oil and gas properties, full
cost method 8,780,000 6,564,000(A) 15,344,000
Pipeline 674,000 674,000
Other property 218,000 218,000
---------- ----------- -----------
9,672,000 6,564,000 16,236,000
Accumulated depreciation,
depletion, amortization
and impairment (4,934,000) (4,934,000)
---------- ----------- -----------
PROPERTY AND EQUIPMENT, NET 4,738,000 6,564,000 11,302,000
Excess of cost of investments in
subsidiaries over net assets
acquired, net 963,000 963,000
Accounts and notes receivable, net:
Trade - -
Affiliates 86,000 86,000
Deposits and other assets 4,000 4,000
---------- ----------- -----------
TOTAL ASSETS $6,900,000 $ 6,564,000 $13,464,000
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued
liabilities: Trade $ 957,000 $ 20,000(A) $ 977,000
Affiliates 19,000 19,000
Suspended revenue interests 733,000 733,000
Notes payable, current 575,000 2,481,000(A) 3,056,000
---------- ----------- ----------
TOTAL CURRENT LIABILITIES 2,284,000 2,501,000 4,785,000
Deferred income tax 7,000 7,000
Long-term debt, less current
portion 1,166,000 4,063,000(A) 5,229,000
Production Payment Liability
(Non-Recourse) 305,000 305,000
Other Liabilities 85,000 85,000
---------- ----------- ----------
TOTAL LIABILITIES 3,847,000 6,564,000 10,411,000
---------- ----------- ----------
Commitments and contingencies - - -
STOCKHOLDERS' EQUITY:
Preferred stock, no par value;
1,000,000 shares authorized
for each Class A,B,C;
90,000 shares (Class A,
Series 1) issued and
outstanding 90,000 90,000
Common stock, $.10 par
value; 100,000,000 shares
authorized; 18,354,261
shares issued and outstanding 1,835,000 1,835,000
Capital in excess of par value 1,816,000 1,816,000
Accumulated deficit (668,000) (668,000)
---------- ----------- -----------
3,073,000 3,073,000
Less 22,000 shares of treasury
stock at cost and Put stock (20,000) (20,000)
---------- ----------- -----------
TOTAL STOCKHOLDERS' EQUITY 3,053,000 3,053,000
---------- ----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $6,900,000 $ 6,564,000 $13,464,000
See notes to Pro Forma Consolidated Financial Statements
</TABLE>
<PAGE>8
HUNTER RESOURCES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
For the Twelve Months ended December 31, 1994
-------------------------------------------------------------------------------
Hunter Arrington Reef Tana Pro forma Combined
Historical Historical Historical Historical Adjustments Pro forma
---------- ---------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Gas gathering and marketing $ 443,000 $ $ $ $ $ 443,000
Oil and gas sales 581,000 563,000 1,446,000 3,176,000 5,766,000
Oil field services and Commissions 1,122,000 48,000(B) 1,170,000
Interest 26,000 26,000
Other 184,000 184,000
---------- ---------- ---------- ---------- ----------- ----------
TOTAL REVENUES 2,356,000 563,000 1,446,000 3,176,000 48,000 7,589,000
---------- ---------- ---------- ---------- ----------- ----------
Expenses:
Purchases of natural gas 262,000 262,000
Pipeline operations 76,000 76,000
Lease operating 412,000 153,000 327,000 674,000 1,566,000
Cost of services 654,000 654,000
Depreciation, depletion,
amortization and impairment 263,000 1,352,000(C) 1,615,000
General and administrative 513,000 38,000(D) 551,000
Interest 44,000 543,000(E) 587,000
Legal settlement expenses 117,000 117,000
---------- ---------- ---------- ---------- ----------- ----------
TOTAL EXPENSES 2,341,000 153,000 327,000 674,000 1,933,000 5,428,000
---------- ---------- ---------- ---------- ----------- ----------
NET INCOME (LOSS) 15,000 410,000 1,119,000 2,502,000 (1,885,000) 2,161,000
PREFERRED DIVIDENDS (9,000) (9,000)
---------- ---------- ---------- ---------- ----------- ----------
NET INCOME (LOSS) APPLICABLE
TO COMMON STOCK $ 6,000 $ 410,000 $1,119,000 $2,502,000 $(1,885,000) $2,152,000
========== ========== ========== ========== =========== ==========
NET INCOME PER SHARE
(primarily and fully diluted) $ * $ 0.02 $ 0.06 $ 0.14 $ (0.10) $ 0.12
========== ========== ========== ========== =========== ==========
* Less than $.01 per share
</TABLE>
See notes to Pro Forma Consolidated Financial Statements
<PAGE>9
HUNTER RESOURCES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
For the Nine Months ended September 30, 1995
--------------------------------------------
Hunter Arrington Reef Tana Pro forma Combined
Historical Historical Historical Historical Adjustments Pro forma
---------- ---------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Gas gathering and marketing $ 144,000 $ $ $ $ $ 144,000
Oil and gas sales 708,000 123,000 859,000 1,495,000 3,185,000
Oil field services and commissions 409,000 11,000(B) 420,000
Interest 20,000 20,000
Other 271,000 271,000
---------- ---------- ---------- ---------- ----------- ----------
TOTAL REVENUES 1,552,000 123,000 859,000 1,495,000 11,000 4,040,000
---------- ---------- ---------- ---------- ----------- ----------
Expenses:
Purchases of natural gas 83,000 83,000
Pipeline operations 41,000 41,000
Lease operating 329,000 32,000 225,000 531,000 1,117,000
Cost of services 299,000 299,000
Depreciation, depletion,
amortization and impairment 284,000 724,000(C) 1,008,000
General and administrative 349,000 26,000(D) 375,000
Interest 129,000 493,000(E) 622,000
---------- ---------- ---------- ---------- ----------- ----------
TOTAL EXPENSES 1,514,000 32,000 225,000 531,000 1,243,000 3,545,000
---------- ---------- ---------- ---------- ----------- ----------
NET INCOME (LOSS) $ 38,000 $ 91,000 $ 634,000 $ 964,000 $(1,232,000) $ 495,000
========== ========== ========== ========== =========== ==========
NET INCOME PER SHARE
(primarily and fully diluted) $ * $ * $ 0.04 $ 0.05 $ (0.06) $ 0.03
========== ========== ========== ========== =========== ==========
* Less than $0.01 per share
</TABLE>
<PAGE>10
HUNTER RESOURCES, INC. AND SUBSIDIARIES
Notes to Unaudited Pro Forma Consolidated Financial Statements
The following adjustments have been reflected in the accompanying Pro Forma
Consolidated Balance Sheet as of September 30, 1995 and Consolidated
Statements of Operations for the year ended December 31, 1994 and the nine
months ended September 30, 1995 to give effect for the Tana acquisition of
oil and gas properties on November 9, 1995.
A) To reflect the acquisition of the Tana properties for $4,229,000 funded
by a borrowing from the Company s principal lending bank for $3,104,000
and the issuance of a note payable to the previous owner in the amount of
$1,125,000. In addition, the adjustment reflects the acquisition of the
Reef properties on October 25, 1995 for $2,335,000 funded by a borrowing
from the Company s principal lending bank and the issuance of a note
payable to Magnum Petroleum, Inc. for $257,000, representing the value of
the Magnum Petroleum, Inc. shares issued in the acquisition.
B) To reflect overhead fee income charged to outside owners on the acquired
properties for which operating rights were also acquired. The overhead
fee income generated by the Arrington acquisition was estimated at
$43,000 and $7,000 for the year ended December 31, 1994 and the nine
months ended September 30, 1995, respectively. The remainder of $5,000
and $4,000 arose from the Reef acquisition.
C) To reflect additional depreciation and depletion on oil and gas
properties as recalculated using the full cost method.
D) To reflect additional estimated general and administrative costs
associated with the increase in the number of properties and the
assumption of operator s duties on the acquired properties. The
estimated additional general and administrative expense for the Arrington
acquisition was $6,000 and $2,000 for the year ended December 31, 1994
and the nine months ended September 30, 1995, respectively. An
additional $12,000 and $9,000, respectively, arose from the Reef
acquisition, while the Tana acquisition accounted for $20,000 and
$15,000, respectively.
E) To reflect interest expense associated with the financed portion of the
acquisitions. The estimated interest expense for the Arrington
acquisition amounted to $120,000 and $32,000 for the year ended
December 31, 1994 and the nine months ended September 30, 1995. The Reef
acquisition amounted to $169,000 and $170,000 for the respective periods,
while the Tana acquisition amounted to $254,000 and $291,000,
respectively.
<PAGE>11
EXHIBIT
PURCHASE AND SALE AGREEMENT
BETWEEN
TANA OIL AND GAS CORPORATION, AS "SELLER",
AND
MAGNUM HUNTER PRODUCTION, INC., AS "BUYER",
AND
MAGNUM PETROLEUM, INC., AS "BUYER'S PARENT",
DATED NOVEMBER 9, 1995
<PAGE>12
PURCHASE AND SALE AGREEMENT
---------------------------
This Purchase and Sale Agreement (this "Agreement") dated September 27,
1995, is between TANA OIL AND GAS CORPORATION ("Seller"), MAGNUM HUNTER
PRODUCTION, INC. ("Buyer"), and MAGNUM PETROLEUM, INC. ("Buyer's Parent").
In consideration of the mutual promises contained herein, the benefits to
be derived by each party hereunder and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Buyer, Buyer's
Parent and Seller agree as follows:
ARTICLE I
---------
PURCHASE AND SALE
1.01 Purchase and Sale. Seller agrees to sell and convey and Buyer
-----------------
agrees to purchase and pay for the Interests (as defined in Section
1.02 below), subject to the terms and conditions of this Agreement.
1.02 Interests. All of the following shall be referred to as the
---------
"Interests":
(a) The undivided working interests described in Exhibit A hereto in
and to the entire estates created by the leases, licenses, permits and
other agreements described in Exhibit C ("Leases"), together with
identical undivided interests in and to all the property and rights
incident thereto, including all rights and obligations in, to and under
all agreements, product purchase and sale contracts, leases, permits,
rights-of-way, easements, licenses, farmouts, options and orders in any
way relating thereto;
(b) Identical undivided interests in and to all of the personal
property, wells, fixtures and improvements now or as of the Effective
Time (as defined in Section 1.03 below) on the Leases, appurtenant
thereto or used or obtained in connection therewith or with the
production, treatment, sale or disposal of hydrocarbons or water
produced therefrom or attributable thereto and all other appurtenances
there unto belonging;
(c) All other leasehold interests, whether now owned or hereafter
acquired by Seller, in and to the Leases and in or attributable to
production therefrom, SAVE AND EXCEPT those certain overriding royalty
interests described on Schedule 1.01(c) attached hereto and incorporated
herein by reference which have been conveyed or will be conveyed prior
to closing with respect to the Leases. The net revenue interests
described on Exhibit A are net of said overriding royalty interests.
1.03 Effective Time. The purchase and sale of the Interests shall be
--------------
effective for all purposes as of August 1, 1995, at 7:00 A.M.,
Central Standard Time (the "Effective Time").
<PAGE>13
ARTICLE II
----------
PURCHASE PRICE
2.01 Purchase Price. The purchase price for the Interests shall be
--------------
$4,500,000.00 (the "Purchase Price"), which shall be adjusted as
set forth in Section 2.03 below. The Purchase Price shall be
allocated 10% to personal property and 90% to leasehold.
2.02 [This Section intentionally left blank.]
2.03 Adjustments to Purchase Price. The Purchase Price shall be
-----------------------------
adjusted as follows and the resulting amount shall be referred to
as the "Adjusted Purchase Price":
(a) The Purchase Price shall be adjusted upward by the following:
(1) The value of all merchantable, allowable oil in storage above
the pipeline connection at the Effective Time that is credited
to the Interests, the value to be the market price in effect
as of the Effective Time less applicable taxes; and
(2) The amount of all actual direct operating expenditures
(including royalties, delay rentals and production taxes paid
with respect to the Interests), Seller's overhead and
administrative expenses, and necessary capital expenditures
paid by Seller that are attributable to the Interests during
the period of time between the Effective Time and the Closing
Date (as defined in Section 10.01 below).
(b) The Purchase Price shall be adjusted downward by the following:
(1) The proceeds (other than those referred to in Section
2.03(b)(2) below) received by Seller that are attributable to
the Interests during the period of time between the Effective
Time and the Closing Date;
(2) The amount of the proceeds received by Seller from the
disposition (with the prior written consent of Buyer as
provided in Section 4.01(d) below) of all or any portion of
the Interests; and
(3) An amount equal to all unpaid ad valorem, property,
production, severance and similar taxes and assessments based
upon or measured by the ownership of property or the
production of hydrocarbons or the receipt of proceeds
therefrom accruing to the Interests prior to the Effective
Time, which amount shall be based upon such taxes assessed
against the applicable portion of the Interests for the
preceding calendar year if the amount assessed for the year of
closing is not known or, in the cases where such taxes are
assessed on other than a calendar year basis, for the tax
related year last ended. Notwithstanding anything in this
Agreement to the contrary, Buyer and Seller shall make a final
adjustment and proration of such taxes between them within
thirty (30) days after the amount of such taxes is known with
certainty.
<PAGE>14
ARTICLE III
-----------
REPRESENTATIONS AND WARRANTIES
3.01 Representations and Warranties of Seller. Seller represents and
----------------------------------------
warrants to Buyer as follows:
(a) Seller is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, and Seller
is duly qualified to carry on its business in Texas.
(b) Seller has all requisite power and authority to carry on its
business as presently conducted, to enter into this Agreement, and to
perform its obligations under this Agreement. The consummation of
the transactions contemplated by this Agreement will not violate, nor
be in conflict with, any provision of Seller's charter, bylaws or
governing documents, or any agreement or instrument to which Seller
is a party or is bound, or any judgment, decree, order, statute, rule
or regulation applicable to Seller.
(c) The execution, delivery and performance of this Agreement and
the transactions contemplated hereby have been duly and validly
authorized by all requisite action, corporate and otherwise, on the
part of Seller.
(d) This Agreement has been duly executed and delivered on behalf
of Seller, and at the Closing all documents and instruments required
hereunder to be executed and delivered by Seller shall have been duly
executed and delivered. This Agreement does, and such documents and
instruments shall, constitute legal and valid obligations of Seller.
(e) The Leases are in full force and effect, are valid and
subsisting (subject to any depth severances contained in the Leases
and/or of record) subject to matters of record in the counties where
the Leases are situated.
(f) All royalties, rentals and other payments due under the Leases
have been properly and timely paid, and all conditions necessary to
keep the Leases in force have been fully performed.
(g) Seller is not obligated, by virtue of a prepayment
arrangement, a "take or pay" arrangement, a production payment or any
other arrangement, to deliver hydrocarbons produced from the
Interests at some future time without then or thereafter receiving
full payment therefor.
<PAGE>15
(h) All ad valorem, property, production, severance, excise and
similar taxes and assessments based on or measured by the ownership
of property or the production of hydrocarbons or the receipt of
proceeds therefrom on the Interests that have become due and payable
have been properly and timely paid.
(i) Seller has incurred no liability, contingent or otherwise, for
brokers' or finders' fees relating to the transactions contemplated
by this Agreement for which Buyer shall have any responsibility
whatsoever.
(j) To Seller's knowledge, all laws, rules, regulations,
ordinances and orders of all local, tribal, state and federal
governmental bodies, authorities and agencies having jurisdiction
over the Interests have been complied with.
(k) No portion of the Interests is either overproduced or
underproduced in natural gas under any gas balancing agreement or gas
storage agreement or in regard to any well, pooling unit or unitized
area without such an agreement.
(l) None of the Leases are subject to any preferential right to
purchase in favor of any third party which has not been waived by
such third party in connection with Seller's proposed conveyance to
Buyer.
(m) None of the Leases are subject to any pending, or to the best
of Seller's knowledge, threatened claims, lawsuits or governmental
investigations, except as disclosed in Schedule 4.02(e).
3.02 Representations and Warranties of Buyer and Buyer's Parent. Buyer
----------------------------------------------------------
and Buyer's Parent represent and warrant to Seller as follows:
(a) Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the State of Texas. Buyer's Parent
is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada and Buyer's Parent is
duly qualified to carry on its business in Texas.
(b) Buyer and Buyer's Parent have all requisite power and
authority to carry on their business as presently conducted, to enter
into this Agreement, to purchase the Interests on the terms described
in this Agreement and to perform its other obligations under this
Agreement. The consummation of the transactions contemplated by this
Agreement will not violate, nor be in conflict with, any provision of
Buyer's or Buyer's Parent's charter, bylaws or governing documents,
or any agreement or instrument to which Buyer or Buyer's Parent is a
party or is bound, or any judgment, decree, order, statute, rule or
regulation applicable to Buyer or Buyer's Parent.
<PAGE>16
(c) The execution, delivery and performance of this Agreement and
the transactions contemplated hereby have been duly and validly
authorized by all requisite action, corporate and otherwise, on the
part of Buyer and Buyer's Parent.
(d) This Agreement has been duly executed and delivered on behalf
of Buyer and Buyer's Parent, and at the Closing all documents and
instruments required hereunder to be executed and delivered by Buyer
or Buyer's Parent shall have been duly executed and delivered. This
Agreement does, and such documents and instruments shall, constitute
legal and valid obligations of Buyer and Buyer's Parent.
(e) Neither Buyer nor Buyer's Parent have incurred any liability,
contingent or otherwise, for brokers' or finders' fees relating to
the transactions contemplated by this Agreement for which Seller
shall have any responsibility whatsoever.
(f) There is no injunction or restraining order or legal,
administrative or arbitration proceeding pending against Buyer or
Buyer's Parent which restrains or prohibits the consummation of the
transactions contemplated by this Agreement.
(g) Buyer and Buyer's Parent will have available (including funds
that can be drawn under existing lines of credit) all funds necessary
to pay the cash portion of the Purchase Price at the Closing and any
other amounts contemplated by this Agreement. Buyer's ability to
consummate the transactions contemplated hereby is not contingent on
its ability to complete any financing prior to or upon the Closing.
(h) Buyer's Parent has all requisite power and authority and
corporate authorization to issue to Buyer shares of the common
capital stock of the Buyer's Parent valued at an amount equal to the
principal amount of the Promissory Note as set forth in Section
10.03(d) multiplied by 2.0 (the "Pledged Shares") to be pledged by
Buyer to Seller pursuant to the security agreement and pledge
described in Section 10.03(f) below.
<PAGE>17
ARTICLE IV
----------
COVENANTS
4.01 Covenants of Seller. Seller covenants and agrees with Buyer as
-------------------
follows:
(a) Prior to Closing, Seller shall make available for inspection and
photocopying by Buyer at Seller's principal office all of Seller's files
and records pertaining to the Interests. Such files and record shall
include the following to the extent the same are in Seller's possession:
(1) Title opinions;
(2) Abstracts of title and status reports;
(3) Other land records;
(4) Rental and royalty payments records;
(5) Tax payment records;
(6) Production sale, processing and transportation agreements;
(7) General permits, easements, licenses and orders;
(8) Production records;
(9) Operating expense records; and,
(10) Inventories.
All such inspection and photocopying by Buyer shall be at Buyer's expense.
If the transaction contemplated hereby fails to close for any reason, Buyer
shall return to Seller all files, records, copies and other materials
pertaining to the Interests which Buyer obtained from Seller.
(b) Seller shall cause the Interests to be maintained and operated
in a good and workmanlike manner, shall maintain insurance now in
force with respect to the Interests, shall pay or cause to be paid
all costs and expenses incurred in connection therewith, shall keep
the Leases in full force and effect and shall perform and comply with
all of the covenants and conditions contained in the Leases and all
agreements relating to the Interests; provided, however, that Seller
shall not commence operations for the drilling of any new well or the
redrilling of any existing well on the Interests after the Effective
Date of this Agreement without the prior written consent of Buyer.
(c) Seller shall carry on the business of Seller with respect to
the Interests in substantially the same manner as Seller has
heretofore and shall not introduce any new method of management,
operation or accounting with respect to the Interests.
<PAGE>18
(d) Without the prior written consent of Buyer and Buyer's Parent,
Seller shall not enter into any new agreements or commitments with
respect to the Interests which extend beyond the Closing, shall not
make any expenditures on any Interest in excess of $5,000, shall not
abandon any well located on the Interests nor release or abandon all
or any portion of any of the Leases, shall not modify or terminate
any of the agreements relating to the Interests and shall not
encumber, sell or otherwise dispose of any of the Interests other
than personal property that is replaced by equivalent property or
consumed in the normal operation of the Interests.
(e) Seller shall take all reasonable actions to obtain the
required consent of any third party to assign the Interests.
(f) All laws, rules, regulations, ordinances and orders of all
local, tribal, state and federal governmental bodies, authorities and
agencies having jurisdiction over the Interests shall be complied
with.
(g) Seller shall take or cause to be taken all such reasonable
actions as may be necessary or advisable to consummate and make
effective the sale of the Interests and the transactions contemplated
by this Agreement and to assure that as of the Closing Date it will
not be under any material corporate, legal or contractual restriction
that would prohibit or delay the timely consummation of such
transactions.
(h) Seller shall cause all the representations and warranties of
Seller contained in this Agreement to be true and correct on and as
of the Closing Date. To the extent the conditions precedent to the
obligations of Buyer or Buyer's Parent are within the control of
Seller, Seller shall cause such conditions to be satisfied on or
prior to the Closing Date and, to the extent the conditions precedent
to the obligations of Buyer or Buyer's Parent are not within the
control of Seller, Seller shall take all reasonable actions to cause
such conditions to be satisfied on or prior to the Closing Date.
(i) Seller shall promptly notify Buyer (1) if any representation or
warranty of Seller contained in this Agreement is discovered to be or
becomes untrue, or (2) if Seller fails to perform or comply with any
covenant or agreement contained in this Agreement or it is reasonably
anticipated that Seller will be unable to perform or comply with any
covenant or agreement contained in this Agreement.
4.02 Covenants of Buyer and Buyer's Parent. Buyer and Buyer's Parent
-------------------------------------
covenant and agree with Seller as follows:
(a) Buyer and Buyer's Parent shall take or cause to be taken all
such reasonable actions as may be necessary or advisable to consummate
and make effective the purchase of the Interests and the transactions
contemplated by this Agreement and to assure that as of the Closing
Date it will not be under any material corporate, legal or contractual
restriction that would prohibit or delay the timely consummation of
such transactions.
<PAGE>19
(b) Buyer and Buyer's Parent shall cause all the representations
and warranties of Buyer and Buyer's Parent contained in this Agreement
to be true and correct on and as of the Closing Date. To the extent
the conditions precedent to the obligations of Seller are within the
control of Buyer and Buyer's Parent, Buyer and Buyer's Parent shall
cause such conditions to be satisfied on or prior to the Closing Date
and, to the extent the conditions precedent to the obligations of
Seller are not within the control of Buyer or Buyer's Parent, Buyer
and Buyer's Parent shall take all reasonable actions to cause such
conditions to be satisfied on or prior to the Closing Date.
(c) Buyer or Buyer's Parent shall promptly notify Seller (1) if any
representation or warranty of Buyer or Buyer's Parent contained in
this Agreement is discovered to be or becomes untrue, or (2) if Buyer
or Buyer's Parent fails to perform or comply with any covenant or
agreement contained in this Agreement or it is reasonably anticipated
that Buyer or Buyer's Parent will be unable to perform or comply with
any covenant or agreement contained in this Agreement.
(d) For a period of five (5) years after the Closing, Buyer and
Buyer's Parent shall use their best efforts in safeguarding and
maintaining in a secure manner all engineering, geological and
geophysical data, reports and maps, and all other confidential data
received from Seller and in the possession of Buyer or Buyer's Parent,
relating to the Interests.
(e) The Interests are subject to the Litigation described on
Schedule 4.02(e) (the "Litigation"). Seller shall indemnify and hold
Buyer and Buyer's Parent harmless with respect to the Litigation in
accordance with Section 11.03(c). Seller shall retain all claims that
arose prior to the Effective Time which are relevant to the
Litigation. Buyer, at no expense to Buyer, agrees to cooperate with
Seller as reasonably necessary to permit Seller to continue and
conclude the Litigation.
4.03 Records: Access and Retention.
------------------------------
(a) Prior to Closing, Seller shall give Buyer and its authorized
representatives such access, during normal business hours, to the
records and files associated with the Interests, as may be reasonably
required by Buyer, provided that such access does not unreasonably
interfere with the ongoing operations of Seller. Buyer shall be
entitled to make copies of such records and files at Buyer's expense.
(b) For a period of seven years after the Closing Date, Buyer shall
preserve and retain all such Records, provided, however, that in the
event that Buyer transfers all or a portion of the Interests to any
third party during such period, Buyer may transfer to such third party
all or a portion of the Records related thereto, provided such third
party transferee expressly assumes in writing the obligations of Buyer
under this Section 4.03 and Buyer first offers to Seller the
opportunity, at Seller's expense, to copy the Records to be
transferred.
<PAGE>20
ARTICLE V
---------
TITLE REVIEW: ADJUSTMENTS FOR TITLE DEFECTS
5.01 Title Defect. The term "Title Defect" shall mean that Seller's
------------
title to the Interests shown on Exhibit A shall be subject to one or
more of the following conditions which are not "Permitted
Exceptions" as defined on Schedule 5.01(a):
(i) Seller's title at the Effective Time shall be subject to any of
the following which are not Permitted Exceptions: an outstanding
mortgage, deed of trust, pledge, lawsuit, enforceable lien or
encumbrance or other adverse claim or existing condition which
affects the value of the Interests or an associated right or
property, or use thereof.
(ii) Seller shall own less than the Net Revenue Interest described
for any well listed on Exhibit A.
(iii) Seller's rights and interests in any part of the Interests
shall be subject to being reduced by virtue of the failure to obtain
any consent to assign required under any Lease or contract, the
exercise by a third party of reversionary, back-in or similar rights
not reflected on Exhibit A (or reflected in the calculation of net
revenue interest contained therein).
(iv) Seller shall be in default (and such default shall be
continuing) under any material provision of a lease, farmout
agreement or other agreement, materially and adversely affecting
the value of any of the Interests.
5.02 Title Review. Buyer, at Buyer's sole cost and expense, has
------------
conducted such examination of title to the Interests as it deems
necessary or proper. Buyer has had such access to and copies of all
documents and materials in Seller's possession and/or control that
Buyer deemed necessary to determine the validity of Seller's title
in and to the Interests. Buyer has concluded Buyer's title review
and has asserted no Title Defects.
5.03 [This Section intentionally left blank.]
<PAGE>21
ARTICLE VI
----------
6.01 Pre-Acquisition Review. Upon execution of this Agreement:
----------------------
(a) Buyer and the employees and agents of Buyer have had access to
the Interests and have had the right to inspect the Interests (but not
to conduct well tests thereon without Seller's prior written
permission) (the "Pre-Acquisition Review"). BUYER HEREBY AGREES TO
DEFEND, INDEMNIFY, RELEASE, PROTECT, SAVE AND HOLD HARMLESS THE SELLER
INDEMNITEES (AS HEREINAFTER DEFINED) FROM AND AGAINST ANY AND ALL
LOSSES (AS HEREINAFTER DEFINED) ARISING OUT OF OR RELATING TO ANY
FIELD VISIT, OR OTHER DUE DILIGENCE ACTIVITY, CONDUCTED BY BUYER OR
ANY AFFILIATE, SUCCESSOR, ASSIGN, OFFICER, REPRESENTATIVE, DIRECTOR,
CONTROLLING PERSON AND AGENT (EACH A "BUYER PARTY"), INCLUDING WITHOUT
LIMITATION ANY LOSSES RESULTING, IN WHOLE OR IN PART, FROM THE
CONCURRENT OR JOINT NEGLIGENCE OR STRICT LIABILITY OF ANY SELLER
INDEMNITEE. NOTWITHSTANDING THE FOREGOING, BUYER SHALL NOT BE
OBLIGATED TO INDEMNIFY ANY SELLER INDEMNITEE FOR LOSSES (WITH THE
EXPRESS EXCEPTION OF LOSSES SUFFERED BY ANY BUYER PARTY) THAT WERE
SOLELY THE RESULT OF ANY SELLER INDEMNITEE'S STRICT LIABILITY OR THE
SOLE NEGLIGENCE OF ONE OR MORE SELLER INDEMNITEES. THE PARTIES AGREE
THAT THIS PARAGRAPH CONSTITUTES A CONSPICUOUS LEGEND.
(b) As a result of the Pre-Acquisition Review, Buyer has determined
in its sole judgment that the physical and environmental condition of
the Interests is acceptable for Buyer's purposes.
<PAGE>22
ARTICLE VII
-----------
CASUALTY LOSS
7.01 Casualty Loss. If, prior to the Closing, all or any material
-------------
portion of the Interests shall be destroyed by fire or other
casualty, or if any material portion of the Interests shall be
taken in condemnation or under the right of eminent domain or if
proceedings for such purposes shall be pending or threatened, Buyer
may elect to terminate this Agreement. If Buyer shall so elect,
neither party shall have any further obligation to the other
hereunder. If not so terminated, this Agreement shall remain in
full force and effect notwithstanding any such destruction or
taking, and Seller shall at the Closing pay to Buyer all sums paid
to Seller by reason of such destruction or taking. In addition,
Seller shall assign, transfer and set over unto Buyer all of the
right, title and interest of Seller in and to any unpaid awards,
insurance payment, or other payments arising out of such
destruction or taking. Seller shall not voluntarily compromise,
settle or adjust any amounts payable by reason of such destruction
or taking without first obtaining the written consent of Buyer.
Until closing, Seller will maintain in full force and effect all
policies of insurance currently covering the Interests.
<PAGE>23
ARTICLE VIII
------------
CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller to consummate the transaction contemplated by
this Agreement are subject, at the option of Seller, to the following
conditions:
8.01 Representations. The representations and warranties of Buyer and
---------------
Buyer's Parent herein contained shall be made again at Closing and
shall be true and correct in all material respects on the Closing
Date.
8.02 Performance. Buyer and Buyer's Parent shall have performed all
-----------
material obligations, covenants and agreements contained in this
Agreement to be performed or complied with by it at or prior to the
Closing.
8.03 Pending Matters. No suit, action or other proceeding shall be
---------------
pending that could reasonably be expected to restrain, enjoin or
otherwise prohibit the consummation of the transaction contemplated
by this Agreement.
8.04 Sale to Rosewood. Seller has entered into a Purchase and Sale
----------------
Agreement dated September 13, 1995, with Rosewood Resources, Inc.
(the "Rosewood Agreement"). The Rosewood Agreement pertains to the
sale by Seller of undivided working interests in the identical
Leases which are not included in the "Interests" covered by this
Agreement. The closing of the sale contemplated by the Rosewood
Agreement is a precondition to Seller's and Buyer's obligation to
close the sale contemplated by this Agreement. If for any reason
the sale under the Rosewood Agreement does not close as
contemplated therein, then either Seller or Buyer may cancel this
Agreement and the same shall be of no further force and effect.
<PAGE>24
ARTICLE IX
----------
CONDITIONS TO OBLIGATIONS OF BUYER AND BUYER'S PARENT
The obligations of Buyer and Buyer's Parent to consummate the
transaction contemplated by this Agreement are subject, at the option of
Buyer, to the following conditions:
9.01 Representations. The representations and warranties of Seller
---------------
herein contained shall be made again at Closing and shall be true
and correct in all material respects on the Closing Date.
9.02 Performance. Seller shall have performed all material obligations,
-----------
covenants and agreements contained in this Agreement to be
performed or complied with by it at or prior to the Closing.
9.03 Pending Matters. No suit, action or other proceeding shall be
---------------
pending that could reasonably be expected to restrain, enjoin or
otherwise prohibit the consummation of the transactions
contemplated by this Agreement.
<PAGE>25
ARTICLE X
---------
CLOSING
10.01 Date of Closing. Subject to the conditions stated in this
---------------
Agreement, the consummation of the transactions contemplated by
this Agreement (the "Closing") shall be held on November 9, 1995,
or such other date as the parties shall agree in writing. Said
date, as amended, if amended, shall be referred to as the "Closing
Date".
10.02 Place of Closing. The Closing shall be held at the offices of
----------------
Tana Oil and Gas Corporation, 500 N. Water Street, Suite 1100 N.,
Corpus Christi, Texas 78471-0901, or at such other place as Buyer
and Seller may agree upon in writing.
10.03 Closing Obligations. At the Closing the following events shall
-------------------
occur, each being a condition precedent to the others and each
being deemed to have occurred simultaneously with the others:
(a) Seller shall execute, acknowledge and deliver (in sufficient
counterparts to facilitate recording) the assignment, bill of sale
and conveyance attached hereto as Exhibit F conveying the Interests
to Buyer. As appropriate, Seller shall also execute, acknowledge and
deliver separate assignments of the Interests on officially approved
forms in sufficient counterparts to satisfy applicable statutory and
regulatory requirements.
(b) Seller and Buyer shall execute and deliver a settlement
statement (the "Preliminary Settlement Statement") prepared by Seller
that shall set forth the Preliminary Amount (as hereinafter defined)
and each adjustment and the calculation of such adjustments used to
determine such amount. The term "Preliminary Amount" shall mean the
Adjusted Purchase Price (adjusted as provided in Section 2.03 using
for such adjustments the best information then available) reduced by
the amount of the Purchase Money Note (as defined below).
(c) Buyer or Buyer's Parent shall deliver to Seller or to Seller's
account at the Closing a wire transfer for the Preliminary Amount.
(d) Buyer's Parent shall execute and deliver to Seller, Buyer's
Parent's Promissory Note in the principal amount of $1,125,000.00,
payable to the order of Seller, bearing interest at the rate of 8.0%
per annum, and being finally due and payable on or before February
28, 1996, in the form attached hereto as Exhibit D (the "Purchase
Money Note").
<PAGE>26
(e) Buyer's Parent shall issue to Buyer the Pledged Shares in an
amount sufficient to equal the principal amount of the Promissory
Note as set forth in Section 10.03(d) multiplied by 2.0 as based on
the Closing Price of the Buyer's Parent common stock as listed on the
American Stock Exchange as of the close of business on the day
immediately preceding the Closing.
(f) Buyer shall execute and deliver to Seller the Security
Agreement-Pledge attached hereto as Exhibit G, which shall secure
payment of the Purchase Money Note together with all other
certificates, instruments and documents contemplated therein.
(g) Seller shall deliver to Buyer exclusive possession of the
Interests.
(h) Seller and Buyer shall execute, acknowledge and deliver
transfer orders or letters in lieu thereof directing all purchasers
of production to make payment of proceeds attributable to production
from the Interests after the Effective Time to Buyer.
(i) Seller shall execute and deliver to Buyer its non-foreign
affidavit in substantially the form attached hereto as Exhibit E.
<PAGE>27
ARTICLE XI
----------
OBLIGATIONS AFTER CLOSING
11.01 Post-Closing Adjustments. Within sixty (60) days after the Closing,
------------------------
Seller and Buyer shall cooperate to prepare, in accordance with this
Agreement, a statement (the "Final Settlement Statement") setting
forth each adjustment or payment which was not finally determined as
of the Closing and showing the calculation of such adjustments. The
parties shall undertake to agree with respect to the amounts due
pursuant to such post-closing adjustment no later than sixty (60)
days after the Closing Date. If such post-closing adjustment has
not been agreed to within sixty (60) days after the Closing Date,
either party may seek to enforce any rights it claims hereunder.
The date upon which such agreement is reached or upon which the
Adjusted Purchase Price is established, shall be referred to as
the "Final Settlement Date". In the event that (1) the Adjusted
Purchase Price is more than the Preliminary Amount, Buyer shall
deliver to Seller or to Seller's account the amount of such
difference in immediately available funds, or (2) the Adjusted
Purchase Price is less than the Preliminary Amount, the difference
between the Preliminary Amount and the Adjusted Purchase Price
shall be credited against the Purchase Money Note effective for
purposes of calculating interest as of the date of Closing.
Payment by Buyer to Seller shall be made within five (5) days of
the Final Settlement Date.
11.02 Sales Taxes and Recording Fees. Buyer shall pay all sales taxes
------------------------------
occasioned by the sale of the Interests. Buyer shall pay all
documentary, filing and recording fees required in connection with
the filing and recording of the assignments described in Section
10.03(a) above.
11.03 Indemnification. After the Closing, Buyer and Seller shall
---------------
indemnify each other as follows:
(a) Assumption of Liabilities Relating to the Assets. As of the
------------------------------------------------
Effective Time and subject to Seller's indemnification obligation set
forth in Subsection (c), Buyer shall assume the Assumed Obligations.
"Assumed Obligations" shall mean all liabilities, duties, and
obligations of every kind whatsoever relative to (a) ownership,
operation, occupancy, condition or use of the Interests on and after
the Effective Time (other than liabilities, duties and obligations
which result from the actions or omissions of Seller prior to the
Closing and which are the subject matter of the Litigation);
(b) operating agreements, unit agreements, gas and/or oil purchase,
sales or transportation contracts, and all other contracts or
agreements to which the Interests are subject; and (c) matters
arising out of any matter or circumstance relating to Environmental
Laws, the release of materials into the environment or protection of
the environment, whether known or unknown, attributable to period of
time after the Effective Time. For the purposes of this Agreement,
the term "Environmental Laws" shall mean all laws, statutes,
ordinances, rules and regulations of any governmental authority
pertaining to the environment or human health.
<PAGE>28
(b) Indemnification by Buyer and Buyer's Parent. Buyer and Buyer's
-------------------------------------------
Parent shall indemnify, release, defend, and hold harmless Seller,
its officers, directors, employees, agents, representatives,
affiliates, subsidiaries, successors and assigns (collectively, the
"Seller Indemnitees") from and against any and all claims,
liabilities, losses, causes of actions, costs and expenses
(including, without limitation, court costs and attorneys' fees)
("Losses") asserted against, resulting from, imposed upon or incurred
by any of the Seller Indemnitees as a result of, or arising out of:
(a) the breach of any of the representations, warranties, covenants
or agreements of Buyer or Buyer's Parent contained in this Agreement,
or (b) the Assumed Obligations, or (c) any liability for taxes
(including interest, penalties or fines related thereto) the
responsibility for payment of which was assumed by Buyer pursuant to
this Agreement; provided, however, that neither Buyer nor Buyer's
Parent shall have an obligation to indemnify any of the Seller
Indemnitees with respect to any matter for which Sellers are
indemnifying Buyer pursuant to Sections 11.03(c).
(c) Indemnification by Seller. Seller shall indemnify, defend and
-------------------------
hold harmless Buyer and Buyer's Parent, their officers, directors,
employees, agents, representatives, affiliates, subsidiaries,
successors and assigns (collectively, the "Buyer Indemnitees") from
and against any and all Losses asserted against, resulting from,
imposed upon or incurred by any of the Buyer Indemnitees as a result
of, or arising out of: (a) the breach of any of the representations,
warranties, covenants or agreements of Seller contained in this
Agreement, (b) the actions or omissions of Seller prior to the
Closing which are the subject matter of the Litigation, and (c) the
ownership, operation, occupancy, use or condition of the Interests
prior to the Effective Time, other than matters relating to the
Assumed Obligations, but expressly including matters relating to
Environmental Laws. Notwithstanding the foregoing, Seller's
indemnity obligation shall apply only to Claim Notices (defined
below) received by Seller prior to the expiration of two (2) years
after the Closing Date.
Notwithstanding anything in this Agreement or this Article XI
to the contrary, Buyer and Seller agree as follows:
(i) The term "Litigation" as used in this Article XI shall not
include the Neimeyer Lawsuit and the Tana Lawsuit as defined
on Schedule 4.02(e). The Neimeyer Lawsuit and the Tana
Lawsuit are collectively referred to herein as the "Additional
Lawsuits".
<PAGE>29
(ii) Seller shall indemnify, defend and hold harmless the Buyer
Indemnitees from and against any and all Losses asserted
against, resulting from, imposed upon or incurred by any of
the Buyer Indemnitees as a result of, or arising out of the
actions or omissions of Seller prior to the Closing which are
the subject matter of the Additional Lawsuits. If any of the
Buyer Indemnitees are made a party to any of the Additional
Lawsuits, Seller shall, at Seller's expense, provide counsel
chosen by Seller to defend the Buyer Indemnitees. From and
after the Closing, Buyer shall assume and shall be responsible
for all Losses (excluding Court Costs and attorney's fees for
the counsel provided and paid for by Seller) as a result of,
or arising out of the actions or omissions of Buyer after the
Closing which relate to or become a part of the subject matter
of the Additional Lawsuits. Buyer agrees that counsel
provided by Seller as set forth above may also represent other
owners of working interests in the Leases.
(d) Limitation on Damages.
(i) NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, IN
NO EVENT SHALL NEITHER BUYER NOR BUYER'S PARENT BE LIABLE TO
THE SELLER INDEMNITEES FOR ANY EXEMPLARY, PUNITIVE, REMOTE OR
SPECULATIVE DAMAGES; PROVIDED, HOWEVER, THAT IF ANY SELLER
INDEMNITEE IS HELD LIABLE TO A THIRD PARTY FOR ANY SUCH DAMAGES
AND BUYER IS OBLIGATED TO INDEMNIFY SUCH SELLER INDEMNITEE FOR
THE MATTER THAT GAVE RISE TO SUCH DAMAGES, THEN BUYER SHALL BE
LIABLE FOR, AND OBLIGATED TO REIMBURSE SUCH SELLER INDEMNITEE
FOR, SUCH DAMAGES.
(ii) Notwithstanding anything to the contrary in this Agreement,
the liability of Seller under this Agreement and any documents
delivered in connection herewith or contemplated hereby shall
be limited as follows: IN NO EVENT SHALL SELLER BE LIABLE TO
THE BUYER INDEMNITEES FOR ANY EXEMPLARY, PUNITIVE, REMOTE OR
SPECULATIVE DAMAGES; PROVIDED, HOWEVER, THAT IF ANY BUYER
INDEMNITEE IS HELD LIABLE TO A THIRD PARTY FOR ANY SUCH
DAMAGES AND SELLER IS OBLIGATED TO INDEMNIFY SUCH BUYER
INDEMNITEE FOR THE MATTER THAT GAVE RISE TO SUCH DAMAGES,
SELLER SHALL BE LIABLE FOR, AND OBLIGATED TO REIMBURSE SUCH
BUYER INDEMNITEE FOR, SUCH DAMAGES.
<PAGE>30
(e) Notice of Asserted Liability; Opportunity to Defend. All claims
for indemnification under Sections 11.03(b) and (c) shall be asserted
and resolved pursuant to this Section 11.03(e). Any person claiming
indemnification hereunder is hereinafter referred to as the
"Indemnified Party" and any person against whom such claims are
asserted hereunder is hereinafter referred to as the "Indemnifying
Party." In the event that any Losses are asserted against or sought
to be collected from an Indemnified Party by a third party, said
Indemnified Party shall with reasonable promptness provide to the
Indemnifying Party a written notice of claim specifying in reasonable
detail the specific nature of the Losses and the estimated amount of
such Losses (a "Claim Notice"). The Indemnifying Party shall not be
obligated to indemnify the Indemnified Party with respect to any such
Losses if the Indemnified Party fails to notify the Indemnifying
Party thereof in accordance with the provisions of this Agreement in
reasonable sufficient time so that the Indemnifying Party's ability
to defend against the Losses is not prejudiced. The Indemnifying
Party shall have 30 days from the personal delivery or receipt of the
Claim Notice (the "Notice Period") to notify the Indemnified Party
(i) whether or not it disputes the liability of the Indemnifying
Party to the Indemnified Party hereunder with respect to such Losses
and/or (ii) whether or not it desires, at the sole cost and expense
of the Indemnifying Party, to defend the Indemnified Party against
such Losses; provided, however, than any Indemnified Party is hereby
authorized prior to and during the Notice Period to file any motion,
answer or other pleading that it shall deem necessary or appropriate
to protect its interests or those of the Indemnifying Party (and of
which it shall have given notice and opportunity to comment to the
Indemnifying Party) and not prejudicial to the Indemnifying Party.
In the event that the Indemnifying Party notifies the Indemnified
Party within the Notice Period that it desires to defend the
Indemnified Party against such Losses, the Indemnifying Party shall
have the right to defend all appropriate proceedings, and with
counsel of its own choosing, which proceedings shall be promptly
settled or prosecuted by them to a final conclusion. If the
Indemnified Party desires to participate in, but not control, any
such defense or settlement it may do so at its sole cost and expense.
If requested by the Indemnifying Party, the Indemnified Party agrees
to cooperate with the Indemnifying Party and its counsel in
contesting any Losses that the Indemnifying Party elects to contest
or, if appropriate and related to the claim in question, in making
any counterclaim against the person asserting the third party Losses,
or any cross-complaint against any person. No claim may be settled
or otherwise compromised without the prior written consent of the
Indemnifying Party.
(f) NEGLIGENCE AND STRICT LIABILITY WAIVER. WITHOUT LIMITING OR
ENLARGING THE SCOPE OF THE INDEMNIFICATION OBLIGATIONS SET FORTH IN
THIS AGREEMENT, AN INDEMNIFIED PARTY SHALL BE ENTITLED TO
INDEMNIFICATION HEREUNDER IN ACCORDANCE WITH THE TERMS HEREOF,
REGARDLESS OF WHETHER THE LOSS OR CLAIM GIVING RISE TO SUCH
INDEMNIFICATION OBLIGATION IS THE RESULT OF THE SOLE, CONCURRENT OR
COMPARATIVE NEGLIGENCE, STRICT LIABILITY OR VIOLATION OF ANY LAW OF
OR BY SUCH INDEMNIFIED PARTY. THE PARTIES AGREE THAT THIS PARAGRAPH
CONSTITUTES A CONSPICUOUS LEGEND.
<PAGE>31
11.04 Proceeds of Production. Buyer shall be entitled to receive all
----------------------
proceeds of production, attributable to the Interests after the
Effective Time. Seller shall be entitled to receive all proceeds
of production, attributable to the Interests prior to the
Effective Time.
11.05 Further Assurances. Seller, Buyer and Buyer's Parent shall
------------------
execute, acknowledge and deliver or cause to be executed,
acknowledged and delivered such instruments and take such other
action as may be necessary or advisable to carry out their
obligations under this Agreement and under any exhibit, document,
certificate or other instrument delivered pursuant hereto.
<PAGE>32
ARTICLE XII
-----------
TERMINATION OF AGREEMENT
12.01 Effect of Termination. In the event that Closing does not occur
---------------------
as a result of either party exercising its right to terminate as
may be provided herein, then neither party shall have any further
rights or obligations under this Agreement, except that
(a) nothing herein shall relieve either party from any liability
for any willful breach hereof and (b) Buyer's indemnification and
related obligations under Section 6.01(a) shall survive any such
termination.
12.02 Liabilities Upon Termination. If this Agreement is terminated
----------------------------
for any reason or is breached, nothing contained herein shall be
construed to limit Seller's or Buyer's legal or equitable
remedies including, without limitation, damages for the breach or
failure of any representation, warranty, covenant or agreement
contained herein and the right to enforce specific performance of
this Agreement.
<PAGE>33
ARTICLE XIII
------------
MISCELLANEOUS
13.01 Expenses. Except as otherwise specifically provided in this
--------
Agreement, all fees, costs and expenses incurred by Buyer, Buyer's
Parent or Seller in negotiating this Agreement or in consummating
the transactions contemplated by this Agreement shall be paid by
the party incurring the same, including without limitation, legal
and accounting fees, costs and expenses.
13.02 Notices. All notices and communications required or permitted
-------
under this Agreement shall be in writing and shall be effective
when delivered addressed as follows:
If to Seller:
------------
Tana Oil and Gas Corporation
500 N. Water Street, Suite 1100 N.
Corpus Christi, Texas 78471-0901
Attention: Michael T. Popejoy, President
If to Buyer:
-----------
Magnum Hunter Production, Inc.
600 East Las Colinas Boulevard, Suite 1200
Irving, Texas 75039
Attention: Gary C. Evans, President
If to Buyer's Parent:
--------------------
Magnum Petroleum, Inc.
42-600 Cook Street, Suite 160
Palm Desert, California 92211
Attention: Lloyd T. Rochford, Chairman
Either party may, by written notice so delivered to the other, change the
address to which delivery shall thereafter be made.
13.03 Amendment. This Agreement may not be altered or amended, nor any
---------
rights hereunder be waived, except by an instrument in writing
executed by the party or parties to be charged with such amendment
or waiver. No waiver of any term, provision or condition of this
Agreement, in any one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of any such term,
provision or condition or as a waiver of any other term, provision
or condition of this Agreement.
<PAGE>34
13.04 Assignment. Neither Seller, Buyer, nor Buyer's Parent may assign
----------
any portion of its rights or delegate any portion of its duties or
obligations under this Agreement without the prior written consent
of the other party.
13.05 Announcements. Seller, Buyer and Buyer's Parent shall consult
-------------
with each other with regard to all press releases and other
announcements concerning this Agreement or the transaction
contemplated hereby and, except as may be required by applicable
laws or regulations of any governmental agency or stock exchange,
neither Buyer, Buyer's Parent, nor Seller shall issue any such
press release or make any other announcement without the prior
written consent of the other party.
13.06 Generality of Provisions. The specificity of any representation,
------------------------
warranty, covenant, agreement or indemnity included or provided in
this Agreement, or in any exhibit, document, certificate or other
instrument delivered pursuant hereto, shall in no way limit the
generality of any other representation, warranty, covenant,
agreement or indemnity included or provided in this Agreement, or
in any exhibit, document, certificate or other instrument
delivered pursuant hereto.
13.07 Headings. The headings of the articles and sections of this
--------
Agreement are for guidance and convenience of reference only and
shall not limit or otherwise affect any of the terms or provisions
of this Agreement.
13.08 Counterparts. This Agreement may be executed by Buyer, Buyer's
------------
Parent and Seller in any number of counterparts, each of which
shall be deemed an original instrument, but all of which together
shall constitute but one and the same instrument. This Agreement
shall become operative when each party has executed at least one
counterpart of this Agreement.
13.09 References. References made in this Agreement, including use of a
----------
pronoun, shall be deemed to include where applicable, masculine,
feminine, singular or plural, individuals, partnerships or
corporations. As used in this Agreement, "person" shall mean any
natural person, corporation, partnership, trust, estate or other
entity. As used in this Agreement, "affiliate" of a person shall
mean any partnership, joint venture, corporation or other entity
in which such person has an interest or which controls, is
controlled by or is under common control with such person.
<PAGE>35
13.10 Entire Agreement. This Agreement (including the exhibits hereto)
----------------
constitutes the entire understanding between the parties with
respect to the subject matter hereof and supersedes all
negotiations, prior discussions and prior agreements and
understandings relating to such subject matter. No material
representation, warranty, covenant, agreement, promise, inducement
or statement, whether oral or written, has been made by Seller,
Buyer, or Buyer's Parent and relied upon by the other that is not
set forth in this Agreement or in the instruments referred to
herein, and neither Seller, Buyer, nor Buyer's Parent shall be
bound by or liable for any alleged representation, warranty,
covenant, agreement, promise, inducement or statement not so set
forth. Notwithstanding the foregoing, the terms and conditions
set forth in the Conditions of Offering dated July 17, 1995, form
an integral part of this Agreement and are incorporated herein by
reference. Buyer acknowledges receipt of the Conditions of
Offering and the parties agree that in the event of a conflict
between the terms of this Agreement and the terms of the
Conditions of Offering, the terms of this Agreement shall govern
and control.
13.11 Parties in Interest. This Agreement shall be binding upon, and
-------------------
shall inure to the benefit of, the parties hereto and, except as
otherwise prohibited, their respective successors and assigns.
Nothing contained in this Agreement, express or implied, is
intended to confer upon any other person or entity any benefits,
rights or remedies.
13.12 Applicable Law; Alternative Dispute Resolution.
----------------------------------------------
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas without giving effect
to any choice or conflict of law provision or rule (whether of the
State of Texas or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of
Texas.
(b) Any dispute arising under this Agreement shall be resolved
pursuant to this Section 13.12:
(i) Any party has the right to request the other to meet to
discuss a dispute. The party requesting the meeting will give
at least 10 business days notice in writing of the subject it
wishes to discuss, provide a written statement of the dispute,
and designate an officer of the company with complete power to
resolve the dispute to attend the meeting. Within three
business days after receipt of such request, the party
receiving the request will provide a responsive written
statement and will designate an officer of the company who
will attend the meeting with complete power to resolve the
dispute.
<PAGE>36
(ii) If the meeting fails to resolve the dispute by a signed
agreement among the officers, the dispute shall be submitted
for nonappealable, binding determination through arbitration.
The parties agree that an officer with authority to resolve
the dispute for each entity shall attend the arbitration.
The arbitrator chosen by the parties from the arbitrators
available through Judicial Arbitration & Mediation Services,
Inc. ("JAMS") shall be the arbitrator unless the parties agree
on a substitute arbitrator. If the parties cannot agree on an
arbitrator, then the arbitrator shall be chosen by JAMS.
Unless otherwise agreed by the parties, the arbitrator shall
be a person with at least eight years of professional
experience in the natural gas industry or the judiciary and
who is not, and within the previous five years has not been,
an employee or independent contractor of either Seller or
Buyer (of any affiliate thereof), and does not have a direct
or indirect interest in either Seller or Buyer (or any
affiliate thereof) or the subject matter of the arbitration.
(iii) The parties agree to make discovery and disclosure of all
matters relevant to the dispute to the extent and in the
manner provided by the Federal Rules of Civil Procedure.
The arbitrator will rule on all requests for discovery and
disclosure and discovery shall be completed within 90 days
of the date of the first notice pursuant to Section
13.1(b)(i). The arbitrator shall follow the statutes and
decisions of the substantive law of Texas relevant to the
subject. The arbitrator's powers shall be limited to
enforcement of this Agreement as to the issues raised by the
parties, and shall not include tort claims or the power to
award punitive damages. The arbitrator shall not have the
authority or power to alter, amend or modify any of the terms
and conditions of the agreement of the parties. The
arbitrator shall issue a final ruling within 180 days of the
date of the first notice pursuant to Section 13.1(b)(i).
(iv) The ruling of the arbitrator shall be in writing and signed,
shall contain a statement of findings and conclusions and
shall be final and binding upon the parties. The fees and
expenses of counsel, witnesses and employees of the parties
and all other costs and expenses incurred exclusively for the
benefit of the party incurring the same shall be borne by the
party incurring such fees and expenses. All other fees and
expenses, including, without limitation, compensation for the
arbitrator shall be divided equally between the parties. All
meetings and arbitration hearings held pursuant to this
Section 13.13 shall take place in Corpus Christi, Texas.
Judgment on the arbitration award or decision may be entered
in any court having jurisdiction.
13.14 Independent Investigation. Buyer and Buyer's Parent represent and
-------------------------
acknowledge that they are knowledgeable of the business associated
with the Interests and that they have had access to the assets
which comprise the Interests, the officers and employees of Seller
and the Records of Seller relating to the Interests and in making
the decision to enter into this Agreement and consummate the
transactions contemplated hereby, Buyer and Buyer's Parent have
relied solely on the basis of their own independent due diligence
investigation of the Interests and upon the representations and
warranties of Seller made in Section 3.01 and on the covenants of
Seller in this Agreement.
<PAGE>37
13.15 Disclaimer Regarding Interests. Except as otherwise expressly
------------------------------
provided in this Agreement, BUYER AND BUYER'S PARENT ACKNOWLEDGE
THAT SELLER HAS NOT MADE, AND SELLER HEREBY EXPRESSLY DISCLAIMS
AND NEGATES, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED,
RELATING TO THE CONDITION OF ANY PART OF THE INTERESTS (INCLUDING,
WITHOUT LIMITATION, (a) ANY IMPLIED OR EXPRESS WARRANTY OF
MERCHANTABILITY, (b) ANY IMPLIED OR EXPRESS WARRANTY OF FITNESS
FOR A PARTICULAR PURPOSE, (c) ANY IMPLIED OR EXPRESS WARRANTY OF
CONFORMITY TO MODELS OR SAMPLES OF MATERIALS, AND (d) ANY IMPLIED
OR EXPRESS WARRANTY OF FREEDOM FROM PATENT OR TRADEMARK
INFRINGEMENT) IT BEING THE EXPRESS INTENTION OF BUYER AND SELLER
THAT (EXCEPT TO THE EXTENT EXPRESSLY PROVIDED IN THIS AGREEMENT)
THE INTERESTS SHALL BE ACCEPTED BY BUYER AS IS AND IN THEIR
PRESENT CONDITION AND STATE OF REPAIR; AND BUYER REPRESENTS TO
SELLER THAT BUYER HAS MADE OR CAUSED TO BE MADE SUCH INSPECTIONS
WITH RESPECT TO THE INTERESTS AS BUYER DEEMS APPROPRIATE AND BUYER
WILL ACCEPT THE INTERESTS AS IS, IN THEIR PRESENT CONDITION AND
STATE OF REPAIR. THE PARTIES AGREE THAT THIS PARAGRAPH
CONSTITUTES A CONSPICUOUS LEGEND.
13.16 Waiver of Trade Practices Acts.
------------------------------
(a) It is the intention of the parties that Buyer's and Buyer's
Parent's rights and remedies with respect to this transaction and
with respect to all acts or practices of Seller, past, present or
future, in connection with this transaction shall be governed by
legal principles other than the Texas Deceptive Trade
Practices--Consumer Protection Act, Tex. Bus. 7 Com. Code Ann.
17.41 et seq. (the "DTPA"). AS SUCH, BUYER AND BUYER'S PARENT
HEREBY WAIVE THE APPLICABILITY OF THE DTPA TO THIS TRANSACTION AND
ANY AND ALL DUTIES, RIGHTS OR REMEDIES THAT MIGHT BE IMPOSED BY THE
DTPA, WHETHER SUCH DUTIES, RIGHTS AND REMEDIES ARE APPLIED DIRECTLY
BY THE DTPA ITSELF OR INDIRECTLY IN CONNECTION WITH OTHER STATUTES;
PROVIDED, HOWEVER, BUYER AND BUYER'S PARENTS DO NOT WAIVE 17.555 OF
THE DTPA. BUYER AND BUYER'S PARENT ACKNOWLEDGE, REPRESENT AND
WARRANT THAT BUYER IS PURCHASING THE GOODS AND/OR SERVICES COVERED BY
THIS AGREEMENT FOR COMMERCIAL OR BUSINESS USE; THAT EACH OF BUYER AND
BUYER'S PARENT HAVE ASSETS OF $5 MILLION OR MORE ACCORDING TO THEIR
MOST RECENT FINANCIAL STATEMENT PREPARED IN ACCORDANCE WITH GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES; THAT THEY HAVE KNOWLEDGE AND
EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS THAT ENABLE THEM TO
EVALUATE THE MERITS AND RISKS OF A TRANSACTION SUCH AS THIS; AND THAT
THEY ARE NOT IN A SIGNIFICANTLY DISPARATE BARGAINING POSITION WITH
SELLER.
(b) TO THE MAXIMUM EXTENT PERMITTED BY LAW, BUYER AND BUYER'S PARENT
HEREBY WAIVE ALL PROVISIONS OF CONSUMER PROTECTION ACTS, DECEPTIVE
TRADE PRACTICE ACTS AND OTHER ACTS SIMILAR TO THE DTPA IN ALL
JURISDICTIONS IN WHICH ANY OF THE INTERESTS ARE LOCATED (SUCH ACTS,
TOGETHER WITH THE DTPA, ARE HEREINAFTER COLLECTIVELY REFERRED TO AS
THE "TRADE PRACTICES ACTS").
(c) BUYER AND BUYER'S PARENT EXPRESSLY RECOGNIZE THAT THE PRICE FOR
WHICH SELLER HAS AGREED TO PERFORM ITS OBLIGATIONS UNDER THIS
AGREEMENT HAS BEEN PREDICATED UPON THE INAPPLICABILITY OF THE TRADE
PRACTICES ACTS AND THIS WAIVER OF THE TRADE PRACTICES ACTS. BUYER
AND BUYER'S PARENT FURTHER RECOGNIZE THAT SELLER, IN DETERMINING TO
PROCEED WITH THE ENTERING INTO OF THIS AGREEMENT, HAS EXPRESSLY
RELIED ON THIS WAIVER AND THE INAPPLICABILITY OF THE TRADE PRACTICES
ACTS.
<PAGE>38
13.17 Survival. The representations, warranties and covenants of Buyer,
--------
Buyer's Parent and Seller set forth herein shall survive Closing.
13.18 Audit. Until August 1, 1997, either Buyer or Seller may, at its
-----
own expense, audit the other party's books, accounts and records
relating to the Interests.
13.19 Additional Acreage. Seller has agreed to attempt to acquire
------------------
certain additional acreage adjacent to the existing Tana wells
listed on Exhibit B of this agreement. In the event Seller is
successful in acquiring all or a portion of the additional
acreage, it shall deliver to Buyer the working interest and net
revenue interest listed on said Exhibit B. If for any reason
whatsoever Buyer does not acquire any such additional acreage or
does not deliver the full net revenue interest or working interest
listed, Seller shall have no liability to Buyer as a result of
such failure, and the Purchase Price shall not be reduced.
13.20 Operations. Buyer acknowledges and agrees that Rosewood will
----------
become the Operator of the Interests upon the closing of the sale
contemplated by the Rosewood Agreement.
<PAGE>39
EXECUTED as of the date first above mentioned.
SELLER:
TANA OIL AND GAS CORPORATION
By /s/ Michael T. Popejoy
Michael T. Popejoy, President
BUYER:
MAGNUM HUNTER PRODUCTION, INC.
By /s/ Gary C. Evans
Gary C. Evans, President
BUYER'S PARENT:
MAGNUM PETROLEUM, INC.
By /s/Stanley McCabe
Print Name: Stanely McCabe
Print Title: Vice President
STATE OF TEXAS
COUNTY OF NUECES
This instrument was acknowledged before me on this the __________ day of
__________________________, 1995, by MICHAEL T. POPEJOY, President of
TANA OIL AND GAS CORPORATION, a Delaware corporation, on behalf of said
corporation.
____________________________________________
Notary Public, State of Texas
<PAGE>40
STATE OF TEXAS
COUNTY OF DALLAS
This instrument was acknowledged before me on this the __________ day of
________________________________, 1995, by GARY C. EVANS, as President
of MAGNUM HUNTER PRODUCTION, INC., a Texas corporation, on behalf of
said corporation.
_____________________________________________
Notary Public, State of Texas
STATE OF ____________________
COUNTY OF ___________________
This instrument was acknowledged before me on this the __________ day of
________________________________, 1995, by ___________________________,
as _______________________ of MAGNUM PETROLEUM, INC., a Texas
corporation, on behalf of said corporation.
_____________________________________________
Notary Public, State of _____________________
<PAGE>41
