THIS DOCUMENT IS A COPY OF THE FORM 10-K FOR JUNE 30, 1997 FILED ON
OCTOBER 15, 1997 PURSUANT TO A RULE 201 TEMPORARY HARDSHIP EXEMPTION.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[ X ] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the fiscal year ended June 30, 1997 or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission File No: 0-9261
KESTREL ENERGY, INC.
(Exact name of registrant as specified in its charter)
State of Incorporation: Colorado I.R.S. Employer Identification No. 84-
0772451
999 - 18th Street, Suite 1100
Denver, Colorado 80202
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 295-0344
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
TITLE OF EACH CLASS
COMMON STOCK, NO PAR VALUE
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
[X]......YES .....[ ]......NO
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
At August 31, 1997 4,419,624 common shares (the registrant's only
class of voting stock) were outstanding. The aggregate market value of
the 3,230,659 common shares of the registrant held by nonaffiliates on
that date (based upon the mean of the closing bid and asked price on the
NASDAQ system) was approximately $8,076,648.
TABLE OF CONTENTS
PART 1 3
Item 1. Business 3
General Description of Business 3
Recent Activities 3
Operations and Policies 4
Item 2. Properties 5
Oil and Gas Interests 5
Royalty Interests Under Producing Properties 5
Permit Obligations 6
Drilling Activities 9
Oil and Gas Production, Prices and Costs 9
Customers 9
Office Facilities and Administrative Services 9
Item 3. Legal Proceedings 9
Item 4. Submission of Matters to a Vote of Security Holders 9
PART II 10
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters 10
Outstanding Shares of Common Stock 10
Stock Price 10
Dividend Policy 10
Item 6. Selected Financial Data 11
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations 11
Liquidity and Capital Resources 11
Results of Operations 14
Item 8. Financial Statements and Supplementary Data 15
Financial Statements 15
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 15
PART III 16
Item 10. Directors and Executive Officers 16
Item 11. Executive Compensation 16
Item 12. Security Ownership of Certain Beneficial Owners and
Management 16
Item 13. Certain Relationships and Related Transactions 16
PART IV 16
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K 16
SIGNATURES 19
PART I
ITEM 1. BUSINESS.
General Description Of Business
- -------------------------------
Kestrel Energy, Inc. (the "Company") was incorporated under the laws
of the State of Colorado on November 1, 1978. The Company's principal
business at this time is the acquisition, either alone or with others, of
interests in proved developed producing oil and gas leases, and
exploratory and developmental drilling. The Company plans to continue its
international exploration program during fiscal 1998.
The Company presently owns oil and gas interests in the states of
California, Colorado, Kansas, Louisiana, New Mexico, Oklahoma, South
Dakota, Texas, and Wyoming.
The Company has also acquired farm-in interests in Production
Prospecting License (PPL) 106 in Papua New Guinea and Exploration Permit
(EP) 325, EP 359, WA-254-P, WA-261-P, ATP 593 and ATP 560P in Australia.
The Company, through its affiliation with Victoria International Petroleum
N.L., has earned farm-in interests ranging from 2.14% to 5% in various
wells on the prospects listed above. The Company earns the farm-in
interest by contributing to the costs of drilling a well on the prospect.
To date, the Company has earned: (i) a 5% working interest in PPL 106 in
Papua New Guinea; (ii) a 3.75% working interest in EP 359; (iii) a 3.0%
working interest in WA-254-P in Western Australia; (iv) a 3% working
interest in WA-261-P, Western Australia; (v) a 5% interest in EP 325,
Western Australia; (vi) a 3% interest in Authority To Prospect (ATP) 560P
in Queensland; and (vii) a 3% working interest in ATP 593, Heather Downs
Block, respectively. The Company believes that the international permits
diversify its drilling program. The Company's obligations relating to the
international permits are more fully described in Item 2, Properties under
Permit Obligations.
On the domestic front, the Company through it's wholly owned
subsidiary, Kestrel Energy California, Inc., acquired a 50% working
interest in certain petroleum leases in California's San Joaquin Basin in
March of 1997. This acquisition totaled 9,000 acres net to Kestrel,
seismic data covering 16,000 miles, well data from 3,800 wells as well as
technical interpretations on that information from Ampolex (USA), Inc.
Recent Activities
- -----------------
The Company is acting as operator of the San Joaquin Basin properties
acquired from Ampolex (USA), Inc. in March of 1997. The Company will
operate an Area of Mutual Interest covering approximately 8,000 square
miles of land in Fresno, Kings, Tulare, and Kern Counties of California,
areas which are already the site of several large oil fields. The Company
and its largest shareholder, Victoria International Petroleum N.L., will
each have through their respective wholly owned subsidiaries, a 50%
working interest in the project. The Company acquired its 50% interest at
a cost of approximately $781,000.
The Company participated in the drilling of the Daisy 31-26 well on
the Goose Lake Prospect in the San Joaquin Basin in California in August,
1997. The well was abandoned as a dry hole at an approximate cost of
$65,000 to the Company. The Company continues to evaluate this prospect
as well as a number of others included in the San Joaquin Basin
acquisition for future drilling opportunities.
The Company participated in the drilling of the Heather Downs-1 in
the ATP-593-P Prospect in Western Australia. The well was abandoned as a
dry hole in July, 1997 at no cost to Kestrel by virtue of a carried
interest in the drilling. The Company also participated in the drilling
of the Longhorn-1 well in the WA-261-P Prospect, Western Australia in
August, 1997. The well was abandoned as a dry hole at no cost to the
Company. The Company had a carried interest in the well under a farmout
agreement with unrelated third parties. The Company continues to evaluate
the permit for future drilling opportunities by participating in
additional seismic acquisition.
The Company participated in the successful completion of an offset
well, the Gallion #6, N.E. Krebs prospect, Pittsburg County Oklahoma, in
June, 1997. The Company anticipates additional costs of approximately
$15,000 to complete the well. The Gallion #6 is a gas well, and increased
the Company's proved gas reserves by approximately 24,000 mcf. The
Company also participated in the successful completion of an offset well,
the Scribner Federal 11-10, Scribner Prospect, Campbell County, Wyoming in
August, 1997. The Company anticipates additional costs of approximately
$30,000 to complete the well.
In May 1997, the Company completed a private offering of 2,502,000
shares of its common stock at $2.00 per share. Net proceeds to the
Company were $4,711,100 after offering and related expenses of $292,900.
The private placement of shares will provide the Company with resources to
expand its exploration activities in the San Joaquin Basin in California,
as well as other opportunities developed by the Company. The shares sold
in the offering were sold to offshore purchasers in accordance with SEC
Regulation S but the Company has since registered the shares with the SEC
on Form S-3 for resale in the U.S.
Operations and Policies
- -----------------------
The Company does not limit its consideration of acquisition
opportunities to any geographical area. However, the acquisition,
development, production and sale of oil and gas acreage are subject to
many factors outside the Company's control. These factors include
worldwide and domestic economic conditions; proximity to pipelines;
existing oil and gas sales contracts on properties being evaluated; the
supply and price of oil and gas as well as other energy forms; anticipated
prices of oil and gas; the regulation of prices, production,
transportation and marketing by federal and state governmental
authorities; and the availability of and interest rates charged on
borrowed funds.
Historically, in attempting to acquire, explore and drill for oil and
gas leases, the Company has often been at a competitive disadvantage since
it had to compete with many companies and individuals with greater capital
and financial resources and larger technical staffs. The Company is
attempting to alleviate some of these problems by forming acquisition
joint ventures with other companies, including its affiliate parent,
Victoria International Petroleum N.L. These joint ventures allow the
Company access to more acquisition candidates and enable the Company to
share the evaluation and other costs among the ventures partners.
The Company's operations are subject to various provisions of
federal, state and local laws regarding environmental matters. The impact
of these environmental laws on the Company may necessitate significant
capital outlays, which may materially affect the earnings potential of the
Company's oil and gas business in particular, and could cause material
changes in the industry in general. The Company strongly encourages the
operators of the Company's oil and gas wells to do periodic environmental
assessments of potential liabilities. No significant liabilities of this
kind are known to the Company at this time. To date, the existence of
environmental laws has not materially hindered nor adversely affected the
Company's business.
The Company has four full-time employees, including the Company's
President, Timothy L. Hoops. The Company also hires outside professional
consultants to handle certain additional aspects of the Company's
business. Management believes this type of contracting for professional
services is the most economical and practical means for the Company to
obtain such services at this time.
The Company intends to actively review, select and negotiate for the
purchase of producing oil and gas properties, subject to the Company's
ability to obtain reasonable and adequate financing for such properties.
The Company will also continue to explore for oil and gas by participating
in prospects generated by outside parties. Such prospects are often
subject to a premium, or promote, to the generating party. The Company is
willing to pay these promotes as an alternative to internally generating
all of its prospects with Company personnel or consultants. A willingness
to consider transactions brought to the Company by third parties affords
the Company a wider range of opportunities than could be generated in-
house. The Company has agreed to pay to its affiliate, Victoria
International Petroleum N.L., a 5% royalty with respect to the Company's
working interest in the international permits, acquired by the Company
from its affiliate which produce net revenues for the Company.
ITEM 2. PROPERTIES
Oil and Gas Interests
- ---------------------
The following table sets forth information concerning the Company's
leasehold interests in developed and undeveloped oil and gas acreage at
June 30, 1997.
<TABLE>
<CAPTION>
Total Total
Developed Undeveloped
Acreage(1)(2) Acreage(1)(2)
State Gross Net Gross Net
- ----- ----- --- ----- ---
<S> <C> <C> <C> <C>
California 290 44 22,003 17,835
Colorado -0- -0- -0- -0-
Kansas 480 62 -0- -0-
Louisiana 6,202 1,623 -0- -0-
New Mexico 2,520 1,456 -0- -0-
Oklahoma 3,332 415 -0- -0-
South Dakota 160 20 -0- -0-
Texas 1,140 74 -0- -0-
Wyoming 35,143 2,896 5,370 1,755
------ ----- ------ ------
TOTAL 49,687 6,590 27,373 19,590
Canada 640 19 -0- -0-
Papua New Guinea -0- -0- 1,828,790 91,440(3)
Australia -0- -0- 723,240 35,385
</TABLE>
(1) Gross acres are the total acreage involved in a single lease or group
of leases. Net acres represent the number of acres attributable to
an owner's proportionate working interest in a lease (e.g., a 50%
working interest in a lease covering 320 acres is equivalent to 160
net acres).
(2) The acreage figures are stated on the basis of applicable state oil
and gas spacing regulations.
(3) If the Papua New Guinea government elects to back-in for 22.5%, then
net acreage would be reduced to 70,866 acres.
Royalty Interests Under Producing Properties
- --------------------------------------------
At June 30, 1997 the Company held overriding royalty interests ranging
from 0.013% to 9.26% in 116 producing oil and gas wells located on 30,245
gross developed acres in the United States.
Permit Obligations
- ------------------
Irrespective of the Company's current exploration plans for a given
prospect, many of the international permits in which the Company has an
interest require certain actions to be taken by the Company or co-holders
of the permits for the Company to retain or continue to earn its interest
in the permit.
PPL 106, Papua New Guinea
- -------------------------
In November, 1994 the Company earned a 5% working interest in PPL 106
by the drilling of the Menga #1. Concurrent with the earning of the
working interest are the following permit obligations. The Company can
withdraw from the permit at the end of any permit year without penalty.
<TABLE>
<CAPTION>
Kestrel Share of
Anticipated
Expenditures
Current: Work 5% Working Interest
- ------- ------------- -------------------
<S> <C> <C>
Years 3&4 (ending January 31, 1998) Regional & $ 95,000
Detail
Geological
Mapping or
Seismic Survey
Year 5 (ending January 31, 1999) One well $ 600,000
---------
Total $ 695,000
</TABLE>
The royalty to Papua New Guinea from petroleum production is 1.25%
with a 50% income tax being applied to gross revenues less royalty,
depreciation and expenses. An Additional Profits Tax (APT) of 50% is
levied on net cash flow after a return on investment of 27% is achieved.
The state has a right to participate in any Petroleum Development
License (PDL) which is granted at up to a 22.5% interest level on a
carried basis (shared proportionally between license holders). The
carried previous exploration and development costs are recovered by taking
the State entity's share of production until made up with interest at the
US AAA Corporate rate plus 5%.
EP 325, Australia
- -----------------
Exploration Permits (EP) for petroleum are granted by the State of Western
Australia over exploration areas in state controlled inshore waters and
onshore for a period of five years in exchange for a five year work
program on a year by year bass.
Permitees may withdraw without penalty from a permit once the current
year's work program is satisfied and prior to entry into the next year's
program.
At the end of the five year term, permitees may relinquish the permit or
apply for renewal of the permit with a further five year work program
acceptable to the state and 50% relinquishment of the existing permits
acreage.
<TABLE>
<CAPTION>
Kestrel Share of
Anticipated
Expenditures
Current: Work 5% Working Interest
- ------- ----------- -------------------
<S> <C> <C>
Year 5 (ending January 20, 1998) Data review
& One Well $ 35,000
--------
Total $ 35,000
</TABLE>
EP 359 Australia
- -----------------
<TABLE>
<CAPTION>
Kestrel Share of
Anticipated
Expenditures
3.75% Working
Current: Work Interest
- ------- --------------- -------------------
<S> <C> <C>
Year 1 ending November 12, 1997 One Well and a
Data Review $ 12,000
Year 2 ending November 12, 1998 Data Review $ 3,000
Year 3 ending November 12, 1999 50 kms Seismic $ 12,000
Year 4 ending November 12, 2000 One Well $ 30,000
Year 5 ending November 12, 2001 Data Review $ 3,000
--------
TOTAL $ 60,000
</TABLE>
WA-254-P, Australia
- -------------------
<TABLE>
<CAPTION>
Kestrel Share of
Anticipated Future
Expenditures
Current: Work 3% Working Interest
- ------- ----------------- -------------------
<S> <C> <C>
Year 4 (ending January 30, 1998) 400 kms Seismic $ 41,000
Year 5 (ending January 30, 1999) 100 miles seismic $ 8,000
Year 6 (ending January 30, 2000) One well $ 187,500
---------
Total $ 236,500
---------
</TABLE>
The permit WA-254-P is an offshore federal permit granted by the
commonwealth of Australia under the Petroleum Submerged Lands Act.
Permits are granted for a period of 6 years on the basis of a six year
work program, the work program specified on a year by year minimum work
commitment basis. The first three year's work program is mandatory.
After completion of the first three years work program, permitees can
withdraw from the permit at any time once the current year's work program
is satisfied and prior to entry into the next year's program.
At the end of the six year term, permitees may relinquish the permit
or apply for a renewal of the permit with a further six year work program
acceptable to the federal commonwealth authority and 50% relinquishment of
the existing permits acreage.
WA-261-P, Australia
- -------------------
<TABLE>
<CAPTION>
Kestrel Share of
Anticipated Future
Expenditures
Current: Work 3% Working Interest
- ------- ------------- -------------------
<S> <C> <C>
Year 2 (ending January 2, 1998) One Well $ 3,000
Year 3 (ending January 2, 1999) Data review $ 5,000
Year 4 (ending January 2, 2000) 100 km 3D Seismic $ 20,000
Year 5 (ending January 2, 2001) One Well $ 40,000
Year 6 (ending January 2, 2002) Data Review $ 5,000
--------
Total $ 73,000
</TABLE>
The permit WA-261-P is an offshore federal permit granted by the
commonwealth of Australia under the Petroleum Submerged Lands Act.
Permits are granted for a period of 6 years on the basis of a six year
work program, the work program specified on a year by year minimum work
commitment basis. The first three year's work program is mandatory.
After completion of the first three years work program, permitees can
withdraw from the permit at any time once the current year's work program
is satisfied and prior to entry into the next year's program.
At the end of the six year term, permitees may relinquish the permit
or apply for a renewal of the permit with a further six year work program
acceptable to the federal commonwealth authority and 50% relinquishment of
the existing permits acreage.
ATP 560P, Australia
- -------------------
<TABLE>
<CAPTION>
Kestrel Share of
Anticipated Future
Expenditures
Current: Work 3% Working Interest
- ------- ----------- -------------------
<S> <C> <C>
Year 4 (ending December 1, 1997) Data review $ 1,500
-------
Total $ 1,500
</TABLE>
The McIver Block is contained within Authority to Prospect No. 560
for petroleum (ATP 560P). The McIver Block is subject to the following
royalties (ORRI) on production: 2% ORRI to Australian Grazing and
Pastoral Company Pty. Ltd.; 2% ORRI to Sheri L. Harley.
ATP 593, Heather Downs Block, Australia
- ---------------------------------------
<TABLE>
<CAPTION>
Kestrel Share of
Anticipated Future
Expenditures
Current: Work 3% Working Interest
- ------- ------------ -------------------
<S> <C> <C>
Year 3 (ending September 30, 1997) One Well $ 1,000
Year 4 (ending September 30, 1998) 50 kms Seismic $ 10,000
--------
Total $ 11,000
</TABLE>
The Heather Downs Block is contained within Authority to Prospect No.
593 for petroleum (ATP 593P). The McIver Block is subject to a 5% ORRI to
Victoria Petroleum NL.
Authorities to Prospect for Petroleum (ATPP) are granted by the State
of Queensland for a period of four years in exchange for a four year
exploration expenditure work program on a year by year basis. Permitees
may withdraw without penalty from a permit once the current year's work
program is satisfied and prior to entry into the next year's work program.
At the end of the three year term, permitees are required to
relinquish 25% of the permit with a further 25% of the permit at the end
of the four year term. Permitees may at the end of the four year term
apply for renewal of the permit with a further four year work expenditure
program acceptable to the state.
Authorities to Prospect for Petroleum are subject to a 10% net
interest royalty on production payable to the State of Queensland.
Drilling Activities
- -------------------
The Company has participated in drilling five gross (.8743 net) wells
since June 30, 1996. Three of the wells drilled were dry holes. The
unsuccessful wells were the Daisy 31-26 well on the Goose Lake Prospect in
Kern County, California in August, 1997, the Heather Downs-1 on ATP-593-P,
Western Australia in July, 1997, and the Longhorn-1, located on WA-261-P,
Western Australia in August, 1997. The Company is in the process of
completing two offset wells, the Gallion #6, N.E. Krebs Prospect in
Pittsburg County, Oklahoma, and the Scribner Federal 11-10, Scribner
Prospect, Campbell County, Wyoming.
Oil and Gas Production, Prices and Costs
- ----------------------------------------
As of June 30, 1997, the Company had a royalty and/or working
interest in 94 gross (7.18 net) wells that produce oil only, 20 gross
(2.57 net) wells that produce gas only, and 178 (11.4 net) wells that
produce both oil and gas. All wells that produced gas were connected to
pipelines.
For information concerning the Company's oil and gas production,
estimated oil and gas reserves, and estimated future cash inflows relating
to proved oil and gas reserves, see Note 9 to the financial statements
included in Item 8 of this Report. The reserve estimates for the reporting
year were prepared by Reed Ferrill of Ferrill & Associates, an
independent petroleum engineer. The Company did not file any oil and gas
reserve estimates with any federal authority or agency during its fiscal
year ended June 30, 1997.
For the year ended June 30, 1997, the Company's average operating
cost (including taxes and marketing) per barrel of oil equivalent (BOE)
(converting gas to oil at 6:1) was $7.13. The average operating cost per
BOE on an equivalent basis for fiscal years 1996 and 1995 was $6.94 and
$6.22, respectively. The average sales price per barrel of oil sold was
$21.86 for 1997, $18.65 for 1996, and $16.64 for 1995. The average sales
price per Mcf of gas sold was $2.22 for 1997, $1.60 in 1996, and $1.35 for
1995.
Customers
- ---------
During fiscal year 1997 the Company had two major customers, Eighty-
Eight Oil Co. and Saba Energy. Sales to these customers accounted for 22%
and 18%, respectively, of oil and gas sales in 1997. The Company does not
believe that it is dependent on a single customer. The Company has the
option at most properties to change purchasers if conditions so warrant.
Office Facilities and Administrative Services
- ---------------------------------------------
The Company's executive offices are currently located at 999 18th
Street, Suite 1100, Denver, Colorado 80202. The Company's current lease
obligation expires November 30, 1997.
ITEM 3. LEGAL PROCEEDINGS.
The Company is not a party to, nor is any of its property subject to,
any material pending legal proceedings. The Company knows of no material
legal proceedings contemplated or threatened against it.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
Outstanding Shares of Common Stock
- ----------------------------------
The Company's common stock trades over-the-counter on the NASDAQ
SmallCap Market under the symbol "KEST." At June 30, 1997 the Company had
4,414,624 shares outstanding. At June 30, 1997, the Company had
approximately 1,300 shareholders of record, although the Company believes
that there are more beneficial owners of its stock, the number of which is
unknown.
Stock Price
- -----------
These quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commission and may not necessarily represent actual
transactions.
<TABLE>
<CAPTION>
Fiscal Year June 30, 1996 Sales Price
------------------------- -----------
<S> <C> <C>
High Low
------ ------
First Quarter $ 4.88 $ 1.13
Second Quarter 5.13 2.88
Third Quarter 3.75 1.63
Fourth Quarter 5.13 2.38
Fiscal Year June 30, 1997 Sales Price
------------------------- -----------
High Low
------ -----
First Quarter $ 4.50 $ 1.00
Second Quarter 2.50 .94
Third Quarter 2.88 1.13
Fourth Quarter 3.13 1.75
</TABLE>
Dividend Policy
- ---------------
While there are no covenants or other aspects of any finance
agreements or Bylaws that restrict the declaration or payment of cash
dividends, the Company has not paid any dividends on its common stock and
does not expect to do so in the foreseeable future.
ITEM 6. SELECTED FINANCIAL DATA.
The summary of selected financial data for the Company for its last
five fiscal years is as follows:
<TABLE>
<CAPTION>
Years ended June 30,
1997 1996 1995 1994 1993
---------- ---------- ------------------- -------
<S> <C> <C> <C> <C> <C>
Oil and Gas
Sales $1,278,502 $1,198,795 $1,334,667 $ 706,337 $ 985,428
Total Revenue 1,420,056 1,268,456 1,397,775 730,413 1,025,375
Net Income (Loss)(1,312,365) (160,231) (1,119,133) 928 349,956
Income (Loss) per
Share (.56) (.08) (.64) * .75
At June 30,
Total Assets 7,638,626 4,115,211 4,287,984 4,044,086 2,606,818
Long-term Debt - - - 600,000 1,058,000
Stockholders'
Equity 7,432,443 3,964,708 4,072,225 3,226,022 1,488,931
</TABLE>
* Less than .01 per share
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources
- -------------------------------
Working Capital and Cash Flows: Net working capital at June 30,
1997, was $5,026,785 compared to working capital of $1,009,113 on June 30,
1996 and working capital of $1,035,859 at June 30, 1995. The increase in
working capital of $4,017,672 for the current year ended June 30, 1997 was
a result of a private placement of the Company's stock in May 1997, less
amounts expended on drilling and operating activities. The decease in
working capital of $26,746 from June 30, 1995 to 1996 was a result of
lower operating cash flows.
Net Cash provided by operating activities totaled $35,143 for fiscal
year 1997 as compared to cash used by operating activities of $28,380 for
fiscal 1996, an increase of $63,523. The increase was a result of higher
oil and gas revenues, and overall revenues, despite higher operating and
general and administrative expenses. Net cash used by operating
activities totaled $28,380 for fiscal year 1996 as compared to cash used
by operating activities of $272,492 for fiscal year 1995, a decrease of
$244,112. Factors contributing to the reduction in operating cash flows
used were higher oil and gas prices, lower production expenses, and a
reduction in dry hole costs.
Net cash used by investing activities was $3,522,504 in 1997 as
compared to $500,076 used in 1996 and $781,457 in 1995. During the fiscal
year ended June 30, 1997, $836,197 was used to purchase producing and non-
producing leasehold interests and fixed assets. The Company also
purchased short term investments in the amount of $2,764,253 with it's
excess cash in 1997 as compared to investment purchases of $348,360, and
purchases of $296,474 in 1996 and 1995, respectively. Property
acquisitions included $714,000 to acquire non-producing leasehold
interests in the San Joaquin Basin from Ampolex (USA), Inc., approximately
$88,000 was used to acquire well equipment on various wells and to
commence the drilling of two offset wells, the Gallion #6 in Oklahoma, and
the Scribner 11-10 in Wyoming. The Company spent $34,000 to acquire
computers, software and related equipment in 1997. During the fiscal year
ended June 30, 1996, $212,595 was used to purchase producing and non-
producing leasehold interests and fixed assets. The expenditures included
the purchase of a 20% working interest in the Boos Unit, Campbell County,
Wyoming, and additional investments in various Australian prospects,
including WA-254-P and EP 325, and PPL 106 in Papua, New Guinea. During
the fiscal year ended June 30, 1995, $527,382 was used for capital
expenditures. The expenditures included a waterflood project on the
Pierce field, lease acquisition costs on the Menga #1 and the Jasper #1,
and the drilling of developmental wells on the Walker Creek Field.
Proceeds from sale of assets were $77,946 for the fiscal year ended June
30, 1997. The Company sold its 20% working interest in the Boos Unit,
Campbell County, Wyoming for approximately $9,000 in June. All other
proceeds were related to the sale of well equipment on the Kuenhe Ranch
and Pierce Unit properties. Proceeds from assets sales for 1996 were
$60,879, consisting of sales of used well equipment, and the sale of the
Company's interests in the Sam Acola lease in Texas and the Royal Federal
35-7 on the North Adon leasehold in Wyoming. Proceeds from asset sales
were $42,399 in 1995, consisting of the sale of a compressor.
Cash provided by financing activities was $4,711,100 in 1997 as
compared to $52,714 last year. The increase in cash from financing
activities was a result of the Company's private placement of 2,502,000
shares of its common stock at $2.00 per share less offering and related
expenses. Cash provided by financing activities was $52,714 in 1996 as
compared to $1,365,336 in 1995. Approximately $41,625 of the cash
provided in 1996 was attributable to the payment to the Company of the
short-term gain realized by an affiliate on the sale of shares of the
Company's stock held less than six months. Additional proceeds from the
issuance of common stock in the amount of $11,089 were received by the
Company in 1996 pursuant to the exercise of stock options under the
Company's Nonqualified Stock Option Plan. In 1995, the Company sold
551,200 shares of its common stock at $2.50 per share in a private
placement.
The Company acquired a 70% interest in the Rocky Butte Field in
Campbell County, Wyoming as part of the purchase from Victoria
Exploration, Inc. in June 1992. At that time, Victoria Petroleum N.L.
guaranteed that the property would produce a minimum of $600,000 in
positive cash flow. In December 1994, the Company entered into an
agreement with Victoria International Petroleum N.L. to transfer its
interest in the non-producing Rocky Butte Prospect in exchange for the
long term debt owed to Victoria International Petroleum N.L. in the amount
of $600,000. As a result of this transaction, the Company expensed its
cost in the prospect in the amount of $479,119 and increased stockholders
equity by the amount of the debt extinguished.
The Company has capital commitments of approximately $189,000 for the
fiscal year ending June 30, 1998, as described more fully under Permit
Obligations on Pages 6-8. These commitments can increase if operators of
various permits and prospects propose additional exploration or
development projects. Commitments can also be less if the Company elects
to withdraw or reduce its interest in a permit. The Company, through its
wholly owned subsidiary, Kestrel Energy California, Inc., has entered into
a contract with Black Coral LLC, in which Black Coral will provide ongoing
geological and geophysical consulting with regard to an Area of Mutual
interest located in the San Joaquin Basin in California. The contract
term is for a period of one year ending July 31, 1998. The parties can
renew the contract annually upon mutual agreement. The Company's share of
Black Coral LLC consulting costs under the contract for the fiscal year
ending June 30, 1998 are anticipated to approximate $240,000.
Stockholder's Equity: Stockholder's equity increased $3,467,735 or
87% to $7,432,443 for the fiscal year ended June 30,1997. The increase
was primarily a result of the private placement of stock during the year
offset by the net loss incurred during the year. Stockholder's equity
decreased 3% to $3,964,708 in fiscal 1996 from $4,072,225 in fiscal 1995.
That decrease was attributable to the net loss incurred by the Company for
the year. Stockholder equity previously had increased 26% to $4,072,225
during fiscal year 1995 from $3,226,022 in 1994. The increase was a
result of the private placement of common stock during that year.
Debt Obligations: The Company had no long term debt at June 30,
1997, 1996 and 1995. In fiscal year 1995, the Company transferred a non-
producing property in exchange for the $600,000 debt as described above.
Reserves and Future Cash Flows: For the fiscal year ended June 30,
1997, the Company's proved oil reserves decreased approximately 213,000
Bbls. to 267,000 Bbls., or 44%, from year ago levels of 480,000 Bbls. The
Company's proved gas reserves decreased 283 Mmcf from 4,900 Mmcf in 1996
to 4,617 Mmcf in 1997, a 6% decrease. The decreases in proved reserves is
attributable to revisions of previous quantity estimates, production and
changes in oil and gas prices for the fiscal year ended June 30, 1997.
The Company's proved oil reserves increased by approximately 41,000 Bbls,
or 10% from 439,000 Bbls. in 1995 to 480,000 Bbls. in 1996. The Company's
proved gas reserves increased 575 Mmcf from 4,325 Mmcf in 1995 to 4,900
Mmcf in 1996, a 13% increase. The increases are a function of revisions
due to higher oil and gas prices. During the fiscal 1996, the Company
added approximately 159,000 mcf of gas reserves.
The Company's undiscounted net future cash flows have been estimated
by Ferrill & Associates, an independent petroleum engineering firm to be
approximately $8,281,000 as of June 30, 1997. This compares to $9,300,000
in 1996 and $6,990,000 in 1995. The decrease in the current year is a
result of revisions of previous quantity estimates made by the Company's
previous consulting petroleum engineer, Jeffrey Rhodes. The increase in
1996 versus 1995 was due to higher oil and gas prices.
Gas Balancing: The Company at June 30, 1997 was underproduced by
approximately 31,000 Mcf. At June 30, 1996, the Company was underproduced
approximately 33,000 Mcf. The Company was underproduced by 16,000 Mcf of
gas at June 30, 1995. These amounts are reflected in the reserves and
estimated net future cash flows.
Natural Gas Sales Contracts: The Company's gas production is
generally sold under short term contracts with pricing set on current spot
markets with adjustments for marketing and transportation costs. All
contracts are cancelable within 30-90 days notice by the Company. The
Company has no contracts that are based on a fixed natural gas price.
Net Operating Loss and Tax Credit Carryforwards: At June 30, 1997,
the Company estimated that, for United States federal income tax purposes,
it had consolidated net operating loss carryforwards of approximately
$5,460,000. The utilization of approximately $2,340,000 of these
carryforwards are limited to an estimated $80,000 annually. The balance
of the loss carryforwards, $1,900,000 are limited to the extent of future
taxable income to be generated by the Company's subsidiary, Victoria
Exploration, Inc., and $1,220,000 is available to offset future taxable
income of the Company. If not utilized, the net operating loss
carryforwards will expire during the period from 1998 through 2011.
Accounting Policies: In March 1995, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No.
121 ("SFAS No. 121"), Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of. This Statement is effective
for financial statements for fiscal years beginning after December 15,
1995. Under SFAS No. 121 the Company is required to review long-lived
assets and certain identifiable intangibles to be held and used for
impairment whenever events or changes in circumstances indicate that the
carrying amount for an asset may not be recoverable. The Company must also
estimate the future cash flows expected to result from the use of such
assets and their eventual disposition. Future cash flows are future cash
inflows expected to be generated by an asset less the future cash outflows
expected to be necessary to obtain those inflows. If the sum of expected
future cash flows (undiscounted and without interest charges) is less than
the carrying amount of the asset, the Company is required to recognize an
impairment loss in accordance with SFAS No. 121. The Company adopted SFAS
No. 121 as of July 1, 1997 and has recorded a provision of approximately
$841,000 for the impairment of certain of its oil and gas properties.
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock Based Compensation" (SFAS No. 123), was issued by the Financial
Accounting Standards Board in October 1995. SFAS No. 123 establishes
financial accounting and reporting standards for stock-based employee
compensation plans as well as transactions in which an entity issues its
equity instruments to acquire goods or services from non-employees. The
Company has included the disclosures required by SFAS No. 123 in the notes
to the financial statements. See Note 4 to the financial statements.
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, Earnings Per Share
("SFAS No. 128") which will be effective for years ending after December
15, 1997. SFAS No. 128 specifies the computation, presentation, and
disclosure requirements for earnings per share for entities with publicly
held common stock or potential, common stock. The Company will adopt SFAS
No. 128 in the year ending June 30, 1998. The effect of such adoption is
not expected to have a material impact on the earnings per share of the
Company.
Results of Operations
- ---------------------
Fiscal 1997 vs. Fiscal 1996
- ---------------------------
Net Earnings: The Company reported a loss of $1,312,365 in fiscal
1997 compared to a loss of $160,231 in 1996, an increase of $1,152,134.
The increase in loss is attributable to impairment and abandonment costs
of $999,181, higher exploration expenses, and an increase in general and
administrative expenses, as described below. Of the $999,181 recorded as
abandonment or impaired property expense for 1997, approximately $953,000
was non-cash and therefore had no effect on current year working capital.
The Company also recorded $69,000 in non-cash public relations expense as
required by SFAS No. 123, because the Company issued stock options to
various consultants for services. Excluding non-cash expenses required
under certain accounting pronouncements, the Company lost $290,365 in the
current fiscal year from operations as a result of increased exploration
activity.
Revenue: Total revenue increased in fiscal 1997 by $151,600, or 12%,
to $1,420,056 versus $1,268,456 in 1995. The increase in revenues was
associated with higher average oil and gas prices, increased interest
income and higher gains attributed to property sales.
Revenue from oil and gas sales was $1,278,502 in 1997, an increase of
$79,707, or 7%, from the $1,198,795 recorded in 1996. Sales volumes
decreased for both oil and gas during the year to 33,000 Bbls. of oil and
251 Mmcf of gas from 41,000 Bbls. of oil and 273 Mmcf of gas in 1996.
Average prices per barrel of oil increased 17% to $21.86 from $18.65 a
year ago. Average prices received per Mcf of gas increased 39% to $2.22
versus $1.60 in 1996.
Lease Operating Expenses: Lease operating expenses decreased
$60,812, or 10%, to $533,120 from $593,932 a year ago. The decrease in
lease operating expenses was a result of lower expenses on the Pierce Unit
in Wyoming and the Kuehne Ranch Unit. Lease Operating costs on a BOE
(barrel of oil equivalent) increased 3% to $7.13 from $6.94 a year ago,
despite lower lease operating expenses, due to lower barrels of oil
equivalent.
Exploration Expenses: Exploration expenses increased $188,356 to
$192,911 from $4,555, a year ago. The increase in exploration costs is
attributable to the Company's exploration program in the San Joaquin Basin
in California, which began in March, 1997. The Company is incurring
geological and geophysical costs to identify various prospects for future
drilling. Exploration costs from a year ago were attributable to the
payment of delay rentals by the Company on various leaseholds held by the
Company.
Dry Holes, Abandoned and Impaired Properties: No dry hole costs were
recorded during the current fiscal year versus $135,448 a year ago.
Abandonment costs increased $83,447 to $101,929 from $18,482 a year ago.
The Company abandoned the EP 367 Permit in Australia at a cost of $51,068,
various non-producing leaseholds domestically at a cost of $15,000 and
incurred abandonment expense relating to the N.E. Kuehne Ranch Field of
$36,000. Impairment expense increased $848,435 to $897,252 from $48,817 a
year ago. The Company adopted SFAS No. 121 in July, 1997 and accordingly,
recorded a provision for impairment of its proved oil and gas properties
of $841,262. The remaining impairment expense of $55,990 related to
various international permits. Included in the $897,252 of impairment
expense for the current year was the write down of the Pierce Waterflood
project in Wyoming at a cost of $454,000. The Company continues to
evaluate this waterflood project and is taking remedial steps to restore
production to previous levels.
General and Administrative Expense: General and administrative
expenses increased $170,884, or 39%, to $608,278 versus $437,394 in 1996.
Included in the increased general and administrative expenses is $69,000
of non-cash expense for common stock and options issued for services. The
increase in general and administrative expense is a result of higher
public relations expense, higher travel expense relating to the California
properties, higher professional fees, and higher employee costs.
Interest Expense: There was no interest expense in 1997 or 1996.
Fiscal 1996 vs. Fiscal 1995
- ---------------------------
Net Earnings: The Company reported a loss of $160,231 in fiscal 1996
compared to a loss of $1,119,133 in 1995, a decrease of $958,902. The
reduction in net loss was a result of lower dry hole costs, lower lease
operating expenses, and lower depletion expense incurred during the year.
Revenue: Total revenue decreased in fiscal 1996 by $129,319, or 9%,
to $1,268,456 versus $1,397,775 in 1995. The decrease in revenues was
associated with lower sales volumes of both oil and gas during the year.
Revenue from oil and gas sales was $1,198,795 in 1996, a decrease of
$135,872, or 10%, from $1,334,667 recorded in 1995. Sales volumes
decreased for both oil and gas during the year to 41,000 Bbls. of oil and
273 Mmcf of gas from 54,000 Bbls. of oil and 303 Mmcf of gas in 1995.
Average prices per barrel of oil increased 12% to $18.65 from $16.64 a
year ago. Average prices received per Mcf of gas increased 19% to $1.60
versus $1.35 in 1995.
Lease Operating Expenses: Production expenses decreased $53,513, or
8%, to $598,487 from $652,000 a year ago. The decrease in production
expense was a result of lower workover costs and production taxes. Lease
operating costs incurred on a BOE (barrel of oil equivalent) basis
increased 12% to $6.94 from $6.22 a year ago.
Dry Holes, Abandoned and Impaired Properties: Dry hole costs
decreased by $435,210 to $135,448 for fiscal 1996 from $570,658 in 1995.
The Company drilled three dry holes during the year, all on leaseholds in
Australia. Abandonment costs were $18,482, a decrease of $466,920, or 96%
from year ago levels. The Company abandoned the N.E. Dry Gulch Prospect,
and plugged and abandoned the McIlhenny gas well in Louisiana. Impairment
expense of $48,817 has been recorded for fiscal 1996.
General and Administrative Expense: General and administrative
expenses increased $13,903, or 3%, to $437,394 versus $423,491 in 1995.
Interest Expense: There was no interest expense in 1996 versus
$22,058 a year ago. The decrease in interest expense was attributable to
the transfer during 1995 of the Rocky Butte property to Victoria
International Petroleum N.L. in exchange for a note payable to Victoria in
the amount of $600,000.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
See pages F-1 through F-17 for this information.
KESTREL ENERGY, INC.
AND SUBSIDIARIES
Consolidated Financial Statements
June 30, 1997 and 1996
(With Independent Auditors' Report Thereon)
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Kestrel Energy, Inc.:
We have audited the accompanying consolidated balance sheets of Kestrel
Energy, Inc. and subsidiaries as of June 30, 1997 and 1996, and the
related consolidated statements of operations, stockholders' equity, and
cash flows for each of the years in the three-year period ended June 30,
1997. These consolidated financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these consolidated 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 audit 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Kestrel Energy, Inc. and subsidiaries as of June 30, 1997 and 1996, and
the results of their operations and their cash flows for each of the years
in the three-year period ended June 30, 1997, in conformity with generally
accepted accounting principles.
As discussed in Note 1 to the consolidated financial statements, Kestrel
Energy, Inc. adopted the provisions of Statement of Financial Accounting
Standards No. 121, Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of, in the year ended June 30, 1997.
KPMG Peat Marwick LLP
Denver, Colorado
September 29, 1997
KESTREL ENERGY, INC.
AND SUBSIDIARIES
Consolidated Balance Sheets
June 30, 1997 and 1996
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS 1997 1996
--------- -------
<S> <C> <C>
Current assets:
Cash and cash equivalents $1,524,138 300,399
Short-term investments 3,409,087 644,834
Accounts receivable 162,108 164,805
Related party receivable 128,989 25,560
Other current assets 8,646 24,018
----------- -----------
Total current assets 5,232,968 1,159,616
----------- -----------
Property and equipment, at cost:
Oil and gas properties, successful
efforts method of accounting
(notes 2, 3, and 8):
Unproved 911,485 309,931
Proved 4,128,034 4,084,044
Furniture and equipment 92,009 58,554
----------- -----------
5,131,528 4,452,529
Accumulated depreciation and
depletion (2,725,870) (1,496,934)
----------- -----------
Net property and equipment 2,405,658 2,955,595
----------- -----------
$7,638,626 4,115,211
=========== ===========
</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
<S> <C> <C>
Current liabilities:
Accounts payable:
Trade $165,041 78,680
Related party 23,972 32,742
Accrued liabilities 17,170 39,081
----------- -----------
Total current liabilities 206,183 150,503
----------- -----------
Stockholders' equity (note 4):
Preferred stock, $1 par value.
1,000,000 shares
authorized; none issued - -
Common stock, no par value.
20,000,000 shares
authorized; 4,414,624 and
1,908,612 shares issued
at June 30, 1997 and
1996, respectively 13,154,754 8,374,654
Accumulated deficit (5,722,311) (4,409,946)
----------- -----------
Total stockholders' equity 7,432,443 3,964,708
----------- -----------
Commitments (note 7) $7,638,626 4,115,211 4,115,211
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
KESTREL ENERGY, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
<TABLE>
<CAPTION>
Years Ended June 30, 1997, 1996, and 1995
- --------------------------------------------------------------------------
1997 1996 1995
------ ------ -----
<S> <C> <C> <C>
Revenue:
Oil and gas sales $1,278,502 1,198,795 1,334,667
Gain on sale of property and
equipment 43,993 14,289 10,176
Interest income 67,986 44,147 44,361
Other, net 29,575 11,225 8,571
---------- ---------- ----------
Total revenue 1,420,056 1,268,456 1,397,775
---------- ---------- ----------
Costs and expenses:
Lease operating expenses 533,120 593,932 652,000
Dry holes, abandoned and
impaired properties 999,181 202,747 1,056,060
Exploration expenses 192,911 4,555 -
Depreciation and depletion 398,931 190,059 363,299
General and administrative 608,278 437,394 423,491
Interest expense - - 22,058
---------- ---------- ----------
Total costs and expenses 2,732,421 1,428,687 2,516,908
---------- ---------- ----------
Net loss $(1,312,365) (160,231) (1,119,133)
=========== ========== ==========
Loss per share $(.56) (.08) (.64)
Weighted average number of
common shares outstanding 2,325,041 1,908,612 1,738,732
=========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
KESTREL ENERGY, INC.
AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
<TABLE>
<CAPTION>
Years Ended June 30, 1997, 1996, and 1995
- --------------------------------------------------------------------------
Total
Common stock Accumulated stockholders'
Shares Amount deficit equity
---------- -------- -------- ---------
<S> <C> <C> <C> <C>
BALANCE, JUNE 30, 1994 1,349,588 $6,356,604 (3,130,582) 3,226,022
Common shares issued,
net of offering costs
(note 4) 551,200 1,365,336 - 1,365,336
Adjustment for previously
issued and unrecorded
shares (note 4) 20 - - -
Exchange of non-producing
property for debt
owed to Victoria
International
Petroleum N.L.
(VIP) (note 2) - 600,000 - 600,000
Net loss - - (1,119,133)(1,119,133)
---------- -------- ---------- ---------
BALANCE, JUNE 30, 1995 1,900,808 8,321,940 (4,249,715) 4,072,225
Exercise of stock
options 6,750 11,089 - 11,089
Proceeds from sale
of stock by VIP
(note 6) - 41,625 - 41,625
Adjustment for
previously issued
and unrecorded
shares (note 4) 44 - - -
Net loss - - (160,231) (160,231)
---------- ---------- ---------- ----------
BALANCE, JUNE 30, 1996 1,907,602 8,374,654 (4,409,946) 3,964,708
Common shares issued,
net of offering
costs
(note 4) 2,502,000 4,711,100 - 4,711,100
Common shares
issued for
services (note 4) 5,000 12,500 - 12,500
Options issued
for services (note 4) - 56,500 - 56,500
Adjustment for
previously issued
and unrecorded
shares (note 4) 22 - - -
Net loss - - (1,312,365) (1,312,365)
---------- ---------- ---------- ----------
BALANCE, JUNE 30, 1997 4,414,624 $13,154,754 (5,722,311) 7,432,443
========== ========== ========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
KESTREL ENERGY, INC.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Years Ended June 30, 1997, 1996, and 1995
- --------------------------------------------------------------------------
1997 1996 1995
---------- --------- --------
<S> <C> <C> <C>
Cash flows from operating
activities:
Net loss $(1,312,365) (160,231) (1,119,133)
Adjustments to reconcile
net income (loss) to net
cash provided (used) by
operating activities:
Depreciation and depletion 398,931 190,059 363,299
Abandoned and impaired
properties 953,250 56,717 479,119
Gain on sale of property
and equipment (43,993) (14,289) (10,176)
Noncash compensation
expense for common
stock and options
issued for services 69,000 - -
Changes in operating
assets and liabilities,
net of acquisition:
(Increase) decrease
in accounts receivable 2,697 (13,581) 40,608
Increase in related
party receivables (103,429) - (25,560)
(Increase) decrease
in other current assets 15,372 (21,799) 1,656
Increase (decrease)
in accounts payable
- trade 86,361 (28,067) (40,816)
Increase (decrease)
in accounts payable -
related party (8,770) 29,986 (15,191)
Increase (decrease)
in accrued liabilities (21,911) (67,175) 53,702
--------- --------- ---------
Net cash provided
(used) by operating
activities 35,143 (28,380) (272,492)
--------- --------- ---------
Cash flows from investing activities:
Capital expenditures (836,197) (212,595) (527,382)
Purchase of short-term
investments, net (2,764,253) (348,360) (296,474)
Proceeds from sale of
property and equipment 77,946 60,879 42,399
--------- --------- ---------
Net cash used by
investing
activities (3,522,504) (500,076) (781,457)
--------- --------- ---------
Cash flows from financing
activities:
Proceeds from issuance of
common stock, net of
offering costs 4,711,100 - 1,365,336
Proceeds from exercise
of stock options - 11,089 -
Proceeds from sale of
stock by VIP - 41,625 -
--------- --------- ---------
Net cash provided
by financing
activities 4,711,100 52,714 1,365,336
--------- --------- ---------
Net increase
(decrease) in cash
and cash equivalents 1,223,739 (475,742) 311,387
Cash and cash equivalents
at beginning of year 300,399 776,141 464,754
--------- --------- ---------
Cash and cash equivalents at
end of year $ 1,524,138 300,399 776,141
=========== =========== ===========
Selected cash payments and
noncash activities were
as follows:
Cash paid for interest $ - - 22,058
Noncash investing
and financing activities -
Transfer of oil
and gas property
to VIP in exchange
for note
payable to VIP - - 600,000
</TABLE>
See accompanying notes to consolidated financial statements.
KESTREL ENERGY, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1997, 1996, and 1995
- --------------------------------------------------------------------------
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Kestrel Energy, Inc. (the Company) was incorporated under the laws of the
State of Colorado on November 1, 1978. The Company's principal business
is the acquisition, either alone or with others, of interests in proved
developed producing oil and gas leases, and exploratory and development
drilling.
The Company presently owns oil and gas interests in the states of
California, Colorado, Kansas, Louisiana, New Mexico, Oklahoma, South
Dakota, Texas, and Wyoming. The Company also has an interest in seven
international exploration permits, one in New Guinea and six in Australia.
Victoria International Petroleum N. L. (VIP) owns 26.4% of the common
shares of the Company at June 30, 1997.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its subsidiaries, Victoria Exploration, Inc. (Victoria) and Kestrel
Energy California, Inc. All significant intercompany accounts and
transactions have been eliminated in consolidation.
ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
CASH EQUIVALENTS
Cash equivalents consist of money market funds. For purposes of the
consolidated statements of cash flows, the Company considers all highly
liquid investments with original maturities of three months or less to be
cash equivalents.
SHORT-TERM INVESTMENTS
Short-term investments at June 30, 1997 consist primarily of U.S. Treasury
securities with maturities of less than one year which are classified as
available for sale. Short-term investments are recorded at cost, which
approximates market value.
KESTREL ENERGY, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
- --------------------------------------------------------------------------
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PROPERTY AND EQUIPMENT
The Company follows the successful efforts method of accounting for its
oil and gas activities. Accordingly, costs associated with the
acquisition, drilling, and equipping of successful exploratory wells are
capitalized. Geological and geophysical costs, delay and surface rentals
and drilling costs of unsuccessful exploratory wells are charged to
expense as incurred. Costs of drilling development wells, both successful
and unsuccessful, are capitalized. Upon the sale or retirement of oil and
gas properties, the cost thereof and the accumulated depreciation or
depletion are removed from the accounts and any gain or loss is credited
or charged to operations.
Depreciation and depletion of capitalized exploration and development
costs is computed on the units-of-production method by individual fields
as the related proved reserves are produced. A reserve is provided for
estimated future costs of site restoration, dismantlement, and abandonment
activities, net of residual salvage value, as a component of depletion.
Furniture and equipment are depreciated using the straight-line method
over estimated lives ranging from three to five years.
Management periodically evaluates capitalized costs of unproved properties
and provides for impairment, if necessary, through a charge to operations.
In March 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 121 (SFAS No. 121), Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of. This Statement is effective for financial statements for
fiscal years beginning after December 15, 1995. Under SFAS No. 121 an
entity shall review long-lived assets and certain identifiable intangibles
to be held and used for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. If the changes in circumstances are present or if other
events in circumstances indicate that the carrying amount of an asset that
an entity expects to hold and use may not be recoverable, the entity shall
estimate the future cash flows expected to result from the use of the
asset and its eventual disposition. Future cash flows are the future cash
inflows expected to be generated by an asset (grouped at the lowest level
for which there are identifiable cash flows which is on a field by field
basis) less the future cash outflows expected to be necessary to obtain
those inflows. If the sum of expected future cash flows (undiscounted and
without interest charges) is less than the carrying amount of the asset,
the entity shall recognize an impairment loss in accordance with SFAS No.
121. Otherwise, an impairment loss shall not be recognized. The Company
adopted SFAS No. 121 effective July 1, 1997 and recorded a provision for
impairment of its proved oil and gas properties of approximately $841,000
for the year ended June 30, 1997.
Prior to July 1, 1996, the Company assessed the impairment of proved oil
and gas properties on an aggregate basis using undiscovered estimated
future net revenue and constant prices and costs.
KESTREL ENERGY, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
- --------------------------------------------------------------------------
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
GAS BALANCING
The Company uses the sales method of accounting for gas balancing of gas
production. Under this method, all proceeds from production credited to
the Company are recorded as revenue until such time as the Company has
produced its share of related reserves. Thereafter, additional amounts
received are recorded as a liability.
As of June 30, 1997 and 1996, the Company is in an under-produced position
of approximately 31,000 MCFs and 33,000 MCFs, respectively. Accordingly,
these amounts have been included in the reserve quantities as set forth in
note 9.
INCOME TAXES
The Company accounts for income taxes under the provisions of Statement of
Financial Accounting Standards No. 109 (SFAS No. 109), Accounting for
Income Taxes. Under the asset and liability method of SFAS No. 109,
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective
tax bases and operating loss and tax credit carryforwards. Deferred tax
assets and liabilities are measured using enacted income tax rates
expected to apply to taxable income in the years in which those
differences are expected to be recovered or settled. Under SFAS No. 109,
the effect on deferred tax assets and liabilities of a change in income
tax rates is recognized in the results of operations in the period that
includes the enactment date.
STOCK-BASED COMPENSATION
In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation (SFAS 123), effective for fiscal years beginning after
December 15, 1995. This statement defines a fair value method of
accounting for employee stock options and encourages entities to adopt
that method of accounting for its stock compensation plans. SFAS 123
allows an entity to continue to measure compensation costs for these plans
using the intrinsic value based method of accounting as prescribed in
Accounting Pronouncement Bulletin Opinion No. 25, Accounting for Stock
Issued to Employees (APB 25). The Company has elected to continue to
account for its employee stock compensation plans as prescribed under APB
25. The pro forma disclosures of net income and earnings per share
required by SFAS 123 are included in note 4.
LOSS PER SHARE
Loss per share is computed by dividing net income or loss by the weighted
average number of shares of common stock and common stock equivalents
outstanding during the year. Outstanding stock options are excluded from
the computation as their effect was antidilutive.
KESTREL ENERGY, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
- --------------------------------------------------------------------------
(2) ACQUISITIONS
Effective January 1, 1992, the Company acquired various operating and
royalty interests in producing and non-producing oil and gas properties in
Wyoming, Louisiana and Oklahoma from a subsidiary of VIP for $1,644,058.
The acquisition was originally financed by a $1,600,000 note payable.
Subsequently, in 1992, $600,000 of the note payable was converted to
common stock of the Company.
The Company obtained a guarantee from VIP in 1992 that an unproved
waterflood prospect acquired in the aforementioned property acquisition
would generate $600,000 in positive cash flow to the Company or, that in
the opinion of an independent petroleum engineering firm, to be obtained
in 1997, it could reasonably be expected to generate this amount. In the
event that the property failed to meet either of these criteria, VIP was
obligated to contribute additional properties or cash to meet any
shortfall.
In December 1994, the Company determined that it would not be able to
develop the property, and entered into an agreement with VIP to transfer
its interest in the property in cancellation of the note payable to VIP in
the amount of $600,000 (see note 3). As a result of the transaction, the
Company expensed its cost in the prospect in the amount of $479,119 and
increased stockholders' equity by the amount of the debt extinguished.
(3) NOTES PAYABLE TO RELATED PARTY
In conjunction with the property acquisition from a subsidiary of VIP (see
note 2), the Company had a $1,000,000 note payable outstanding in 1992
with interest payable at the prime rate. In December 1992, the terms of
a $58,550 unsecured short-term note payable to the subsidiary of VIP were
conformed to the terms of the $1,000,000 note payable and the notes were
combined. Effective January 1, 1994, $466,343 of indebtedness (including
$7,793 of accrued interest) was canceled in exchange for 207,263 shares of
the Company's common stock. Effective December 24, 1994, the remaining
$600,000 note was canceled in exchange for a non-producing property (see
note 2). Related party interest expense was approximately $22,058 for the
year ended June 30, 1995.
(4) STOCKHOLDERS' EQUITY
PREFERRED STOCK
The Company is authorized to issue up to 1 million shares of $1 par value
preferred stock, the rights and preferences of which are to be determined
by the Board of Directors at or prior to the time of issuance.
COMMON STOCK
During 1995, the Company sold 551,200 shares of common stock at a price of
$2.50 per share in a private placement. Total proceeds, net of brokers
commissions, were $1,365,336.
In May 1997, the Company sold 2,502,000 shares of common stock at a price
of $2.00 per share in a private placement. Total proceeds, net of brokers
commissions, were $4,711,100.
KESTREL ENERGY, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
- --------------------------------------------------------------------------
(4) STOCKHOLDERS' EQUITY (CONTINUED)
Also in May 1997, the Company issued 5,000 shares of common stock at a
price of $2.50 per share to a company for services. The fair value of the
common stock of $12,500 was charged to expense in fiscal 1997.
During the years ended June 30, 1997, 1996 and 1995, certificates for
previously issued shares of the Company's common stock, representing 22,
44 and 20 shares, respectively, were presented for transfer. Prior to
presentment, such shares had not been recorded as issued by the Company.
STOCK OPTION PLANS
The Company has reserved 36,000 shares of its no par common stock for key
employees of the Company under its 1993 Amended Restated Stock Incentive
Plan (the Incentive Plan). Under the terms of the Plan, no stock options
are exercisable more than ten years after the date of grant (five years
after date of grant for 10% shareholders). As of June 30, 1997, all
options had been granted under the Incentive Plan.
The Company has reserved 750,000 shares of its no par common stock for
employees, officers, directors, consultants and advisors of the Company
under its 1993 Nonqualified Stock Option Plan (the Nonqualified Plan).
Under the terms of the Nonqualified Plan, no stock options are exercisable
more than ten years after the date of grant (five years after date of
grant for 10% shareholders).
During fiscal 1997, 1996 and 1995, the Board of Directors granted options
to purchase shares of common stock to key employees and directors pursuant
to the Nonqualified Plan. The exercise prices of the options range from
$1.25 to $4.00 per share. The options granted are exercisable upon
issuance.
The Company applies APB Opinion 25 and related interpretations in
accounting for its plans. Accordingly, no compensation cost has been
recognized for stock options granted to key employees and directors. Had
compensation cost for the Company's two stock-based compensation plans
been determined based on the fair value at the grant dates for awards
under those plans consistent with the method prescribed in FASB Statement
123, the Company's net loss and loss per share would have been increased
to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
Years Ended June 30,
1997 1996
---- ----
<S> <C> <C>
Net loss:
As reported $(1,312,365) (160,231)
Pro forma (1,400,899) (843,311)
Loss per share:
As reported (0.56) (0.08)
Pro forma (0.60) (0.44)
</TABLE>
KESTREL ENERGY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
- --------------------------------------------------------------------------
(4) STOCKHOLDERS' EQUITY (CONTINUED)
The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option-pricing model with the following weighted
average assumptions used for grants in fiscal 1997 and 1996, respectively:
no dividend yield for both years; expected volatility of 98% for both
years; weighted average risk-free interest rates of 6.5% in fiscal 1997
for the Incentive Plan options and 6.7% and 6.2% for the Nonqualified Plan
options; and expected lives of seven years for both years.
During fiscal 1997, the Company granted options to purchase 35,500 shares
of common stock at prices ranging from $1.47 to $3.69 per share to
consultants for services. The fair value of the options granted of
$56,500 was charged to expense in fiscal 1997.
A summary of the status of the Company's two fixed stock options plans as
of June 30, 1997, 1996 and 1995, and changes during the years then ended
is presented below:
<TABLE>
<CAPTION>
1997 1996
---- ----
Weighted Weighted
average average
exercise exercise
Fixed options Shares price Shares price
------------- ------- -------- ------ -------
<S> <C> <C> <C> <C>
Outstanding at beginning
of year 570,000 $ 2.54 311,000 $ 2.27
Granted 81,500 2.11 267,250 2.86
Exercised - - (8,250) 2.61
-------- -------
Outstanding at end
of year 651,500 2.49 570,000 2.54
======= =======
Options exercisable at
year end 651,500 570,000
Weighted average fair
value of options
granted during
the year $ 1.78 $ 2.56
</TABLE>
<TABLE>
<CAPTION>
1995
----
Weighted
average
exercise
Fixed options Shares price
------------- ------- --------
<S> <C> <C>
Outstanding at beginning
of year 182,500 $ 2.44
Granted 128,500 2.04
Exercised - -
--------
Outstanding at end
of year 311,000 2.27
=======
Options exercisable at
year end 311,000
Weighted average fair
value of options
granted during
the year
</TABLE>
The following table summarizes information about fixed stock options
outstanding at June 30, 1997 (all of which are exercisable):
<TABLE>
<CAPTION> Weighted
average
remaining Weighted
Range of exercise Number contractural average
price outstanding life exercise price
- ----------------- ----------- ------------ --------------
<S> <C> <C> <C>
$ 1.25-1.3125 68,500 6.5 years $ 1.30
1.875-2.00 144,500 9.0 1.90
2.25-2.875 319,000 8.1 2.53
3.625-4.00 119,500 8.2 3.78
- -------
1.25-4.00 651,500 8.2 2.49
=======
</TABLE>
KESTREL ENERGY, INC.
AND SUBSIDIARIES
- --------------------------------------------------------------------------
Notes to Consolidated Financial Statements, Continued
(5) INCOME TAXES
At June 30, 1997 and 1996, the Company's significant deferred tax assets
are as follows:
<TABLE>
<CAPTION>
1997 1996
----- ----
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards $ 2,129,000 2,180,000
Depletion carryforwards 103,000 67,000
Investment tax credit carryforwards 47,000 47,000
Oil and gas properties,
principally due to differences
in depreciation and depletion
and impairment 418,000 5,000
Other 22,000 -
----------- ----------
Gross deferred tax assets 2,719,000 2,299,000
Valuation allowance (2,719,000) (2,299,000)
------------ ----------
Net deferred tax assets $ - -
============ ==========
</TABLE>
The valuation allowance for deferred tax assets as of June 30, 1997 was
$2,719,000. The net change in the valuation allowance for the year ended
June 30, 1997 was an increase of $420,000.
At June 30, 1997, the Company had net operating loss carryforwards of
approximately $5,460,000. The utilization of approximately $2,340,000 of
these loss carryforwards is limited to an estimated $80,000 per year as a
result of a change of ownership which occurred June 30, 1994. Of the
balance of the net operating loss carryforwards, $1,900,000 is limited to
the extent of future taxable income generated by Victoria, and $1,220,000
is available to offset future taxable income of the Company. If not
utilized, the tax net operating losses will expire during the period from
1998 through 2009.
(6) RELATED PARTY TRANSACTIONS
The Company, through its affiliation with VIP, has the opportunity to
participate in various international permits throughout the world. The
Company earns a right to participate by sharing in the costs of data
review, seismic, and drilling. To date, the Company has agreed to farm-in
on seven international permits, one in New Guinea, and six in Australia.
The Company has agreed to pay VIP a 5% royalty with respect to the
Company's interest in the international permits for any permits which
produce net revenues for the Company.
In 1996, the Company received a payment of $41,625 from VIP, attributed to
the gain realized by VIP on the sale of shares of the Company's stock held
less than six months.
KESTREL ENERGY, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(7) LEASE COMMITMENTS
The Company has noncancelable operating leases, primarily for rent of
office facilities that expire over the next five years. Rental expense
for operating leases was $33,958, $31,179 and $28,960 for the years ended
June 30, 1997, 1996 and 1995, respectively.
Future minimum rental commitments under noncancelable operating leases as
of June 30, 1997 are $12,777 payable in fiscal 1998.
The Company currently has a 2% to 5% interest in one prospect in Papua New
Guinea and six in Australia. Under the terms of the exploration permits,
the Company is obligated to share in spending specified amounts in each
annual period in order to retain its interest in the permit. The Company
can generally withdraw from the permit at the end of any annual period
without penalty and forfeit its interest in the permit. Estimated permit
obligations expected to be incurred over the next 5 years are as follows:
<TABLE>
<CAPTION>
Permit Year
-----------
<S> <C>
1997 $ 24,500
1998 177,000
1999 625,000
2000 237,500
2001 43,000
2002 5,000
-----------
$ 1,112,00
===========
</TABLE>
(8) DISCLOSURES ABOUT CAPITALIZED COSTS, COSTS INCURRED, AND MAJOR
CUSTOMERSCapitalized costs related to oil and gas producing activities are
as follows:
<TABLE>
<CAPTION>
June 30,
-------------------------------
1997 1996
----- ----
<S> <C> <C>
Unproved: $ 750,714 99,665
Domestic 160,771 210,266
Foreign 160,771 210,266
Proved 4,128,034 4,084,044
--------- ---------
5,039,519 4,393,975
Accumulated depreciation
and depletion
and impairment (2,678,585) (1,458,192)
---------- ----------
$2,360,934 2,935,783
========== ==========
</TABLE>
KESTREL ENERGY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
- --------------------------------------------------------------------------
Costs incurred in oil and gas producing activities for the years ended June 30,
1997, 1996 and 1995 were approximately as follows:
<TABLE>
<CAPTION>
1997 1996 1995
----- ----- -----
<S> <C> <C> <C>
Unproved property acquisition costs 714,000 123,000 338,000
Proved property acquisition costs - 37,000 -
Development costs 88,000 52,000 333,000
Exploration costs - 146,000 577,000
</TABLE>
During fiscal 1997, the Company had two major customers. Sales to these
customers accounted for approximately 22% and 18% of fiscal 1997 oil and
gas sales. During fiscal 1996, the Company had two major customers.
Sales to these customers accounted for approximately 26% and 15% of fiscal
1996 oil and gas sales. During fiscal 1995, the Company had two major
customers. Sales to these customers accounted for approximately 35% and
15% of fiscal 1995 oil and gas sales.
(9) INFORMATION REGARDING PROVED OIL AND GAS RESERVES (UNAUDITED)
The information presented below regarding the Company's oil and gas
reserves were prepared by independent petroleum engineering consultants.
All reserves are located within the continental United States.
Proved oil and gas reserves are the estimated quantities of crude oil,
natural gas, and natural gas liquids which geological and engineering data
demonstrate with reasonable certainty to be recoverable in future years
from known reservoirs under existing economic and operating conditions.
Proved developed oil and gas reserves are those expected to be recovered
through existing wells with existing equipment and operating methods. The
determination of oil and gas reserves is highly complex and interpretive.
The estimates are subject to continuing changes as additional information
becomes available.
KESTREL ENERGY, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
- --------------------------------------------------------------------------
(9) INFORMATION REGARDING PROVED OIL AND GAS RESERVES (UNAUDITED)
(CONTINUED)
Estimated net quantities of proved reserves of oil and gas for the years
ended June 30, 1997, 1996, and 1995 are as follows:
<TABLE>
<CAPTION>
1997
---------------------------
Oil Gas
(BBLS) (MCF)
------- ----------
<S> <C> <C>
Beginning of year 480,000 4,900,000
Purchases of oil and
gas reserves in place - -
Revisions of previous
quantity estimates (182,000) (59,000)
Extensions, discoveries
and improved recovery 10,000 24,000
Sales of reserves
in place (8,000) -
Production (33,000) (248,000)
--------- ---------
End of year 267,000 4,617,000
========= =========
Proved developed
reserves - beginning
of year 400,000 2,717,000
========= =========
Proved developed
reserves - end of
year 211,000 2,735,000
========= =========
</TABLE>
<TABLE>
<CAPTION>
1996
---------------------------
Oil Gas
(BBLS) (MCF)
------- ----------
<S> <C> <C>
Beginning of year 439,000 4,325,000
Purchases of oil and
gas reserves in place 8,000 -
Revisions of previous
quantity estimates 77,000 689,000
Extensions, discoveries
and improved recovery - 159,000
Sales of reserves
in place (1,000) -
Production (43,000) (273,000)
--------- ---------
End of year 480,000 4,900,000
========= =========
Proved developed
reserves - beginning
of year 327,000 2,436,000
========= =========
Proved developed
reserves - end of
year 400,000 2,717,000
========= =========
</TABLE>
<TABLE>
<CAPTION>
1995
---------------------------
Oil Gas
(BBLS) (MCF)
------- ----------
<S> <C> <C>
Beginning of year 471,000 4,768,000
Purchases of oil and
gas reserves in place - -
Revisions of previous
quantity estimates 22,000 (140,000)
Extensions, discoveries
and improved recovery - -
Sales of reserves
in place - -
Production (54,000) (303,000)
--------- ---------
End of year 439,000 4,325,000
========= =========
Proved developed
reserves - beginning
of year 324,000 2,817,000
========= =========
Proved developed
reserves - end of
year 327,000 2,436,000
========= =========
</TABLE>
KESTREL ENERGY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
- --------------------------------------------------------------------------
(9) INFORMATION REGARDING PROVED OIL AND GAS RESERVES (UNAUDITED)
(CONTINUED)
Standardized Measure of Discounted Future
Net Cash Flows Relating to Proved Oil and Gas Reserves
Future net cash flows presented below are computed using year-end
prices and costs. Future corporate overhead expenses and interest
expense have not been included.
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Future cash inflows $13,230,000 16,470,000 13,113,000
Future costs:
Production (4,326,000) (6,227,000) (5,310,000)
Development (623,000) (893,000) (813,000)
Income taxes - (50,000) -
----------- ----------- -----------
Future net cash flows 8,281,000 9,300,000 6,990,000
10% discount factor (3,074,000) (3,855,000) (2,871,000)
----------- --------- -----------
Standardized measure
of discounted future
net cash flows $5,207,000 5,445,000 4,119,000
========== ========== ==========
</TABLE>
The principal sources of changes in the standardized measure of discounted
future net cash flows during the years ended June 30, 1997, 1996, and 1995
are as follows:
<TABLE>
<CAPTION> 1997 1996 1995
----- ----- -----
<S> <C> <C> <C>
Beginning of year $ 5,445,000 4,119,000 5,555,000
Sales of oil and gas
produced during the
period, net of
production costs (745,000) (605,000) (683,000)
Net change in prices and
production costs 650,000 750,000 (1,027,000)
Changes in estimated future
development costs 169,000 (46,000) (105,000)
Purchase of reserves in place - 22,000 -
Extensions, discoveries
and improved recovery 50,000 112,000 -
Revisions of previous
quantity estimates
and other (934,000) 732,000 (9,000)
Net change in income taxes 50,000 (50,000) (168,000)
Sales of reserves in place (23,000) (1,000) -
Accretion of discount 545,000 412,000 556,000
----------- --------- -----------
End of year $ 5,207,000 5,445,000 4,119,000
========== ========== ==========
</TABLE>
KESTREL ENERGY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
- --------------------------------------------------------------------------
(9) INFORMATION REGARDING PROVED OIL AND GAS RESERVES (UNAUDITED)
(CONTINUED)
The standardized measure of discounted future net cash flows relating to
proved oil and gas reserves and the changes in standardized measure of
discounted future net cash flows relating to proved oil and gas reserves
were prepared in accordance with the provisions of Statement of Financial
Accounting Standards No. 69. Future cash inflows were computed by
applying current prices at year-end to estimated future production.
Future production and development costs are computed by estimating the
expenditures to be incurred in developing and producing the proved oil and
gas reserves at year-end, based on year-end costs and assuming
continuation of existing economic conditions. Future income tax expenses
are calculated by applying appropriate year-end tax rates to future pretax
net cash flows relating to proved oil and gas reserves, less the tax basis
of properties involved and tax credits and loss carryforwards relating to
oil and gas producing activities. Future net cash flows are discounted at
a rate of 10% annually to derive the standardized measure of discounted
future net cash flows. This calculation procedure does not necessarily
result in an estimate of the fair market value or the present value of the
Company's oil and gas properties.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Set forth below are the names of all directors and executive officers
of the Company, their ages, all positions and offices held by each such
person, the period during which he has served as such, and the principal
occupations of each such person during at least the last five years:
TIMOTHY L. HOOPS, age 41, was appointed President, Chief Executive
Officer and Director on June 1, 1992. Mr. Hoops is a petroleum geologist
with 15 years experience in the continental USA and Australia. Mr. Hoops
has been Vice President and a Director of the Company's wholly owned
subsidiary, Victoria Exploration, Inc., an independent oil and gas
producer, since 1987. He has also been a Director of Victoria
International Petroleum N.L. and of Victoria Petroleum N.L. since 1987.
Mr. Hoops was Exploration Manager for Royal Resources Corporation, a
publicly held Denver based company engaged in the exploration and
development of oil and gas, from 1984 to 1987. Prior to 1984, Mr. Hoops
was employed by Amoco Production, Cities Service and Santa Fe Energy. Mr.
Hoops is a 1979 graduate of the Colorado School of Mines, with a degree in
geology. Mr. Hoops is the brother-in-law of Mr. Boatright.
ROBERT J. PETT, age 50, was appointed as a Director on June 1, 1992
and Chairman of the Board on January 16, 1995. Mr. Pett served as
Secretary from June 1, 1992 until December 16, 1992, as Vice President
from November 1, 1992 until January 16, 1995, and as Treasurer from
January 4, 1993 to January 16, 1995. Mr. Pett has been a director of
Victoria International Petroleum N.L. since 1986. Mr. Pett has been
Chairman of Victoria Petroleum N.L. for 13 years. He is currently
Chairman of Resolute Samantha Limited, an Australian mining and natural
resources company, which provides office facilities and administrative
services to Victoria Petroleum N.L. on a pro-rata reimbursement of
expenses basis. He is a Director of Sapphire Mines N.L., an Australian
precious gem mining company, and President and a Director of Victoria
Exploration, Inc., an independent oil and gas producer which is a wholly
owned subsidiary of the Company. Mr. Pett holds a Masters Degree in
Economics (Queens University, Canada).
MARK A. BOATRIGHT, age 40, was appointed a Director on October 18,
1993, and as Vice President - Finance, Chief Financial Officer, Treasurer
and Secretary on January 16, 1995. Mr. Boatright is President of Boatright
and Associates, P.C., Certified Public Accountants. Mr. Boatright has
over 18 years experience in financial accounting and specializes in oil
and gas accounting and international taxation. Mr. Boatright currently
acts as a consultant in international taxation and accounting for various
oil and gas companies. He also is President of Regatta Financial
Services, a registered investment advisory firm. Prior to establishing
his own accounting practice, Mr. Boatright was the tax manager for
Bradley, Allen & Associates, P.C., Certified Public Accountants. Mr.
Boatright is a 1979 cum laude graduate of the University of Colorado with
a degree in finance. He has been providing accounting and financial
services to the Company since June, 1992. Mr. Boatright is the brother-in-
law of Mr. Hoops.
JOHN T. KOPCHEFF, age 49, was appointed as Vice President -
International and a Director of the Company on January 16, 1995. Mr.
Kopcheff is a geologist with 27 years experience in petroleum in
Australia, Southeast Asia, United States, South America and the North Sea,
both in field geological operations and management. Mr. Kopcheff has been
a Director and Secretary of Victoria Exploration, Inc. since 1986, a
Director of Victoria International Petroleum N.L. since 1986, and a
Director of Victoria Petroleum N.L. since 1984. Prior to his appointment,
he provided various services to the Company relating to the Company's
international exploration activities on a consulting basis. He received a
Bachelor of Science degree with honors from the University of Adelaide in
1970.
KENNETH W. NICKERSON, age 77, is an independent petroleum and mineral
geologist with over 49 years experience. He was appointed as a Director
of the Company on December 16, 1992. From 1981 until 1988, Mr. Nickerson
served as President, Director and Chief Operating Officer of Royal
Resources Corporation, a publicly held Denver based company engaged in the
exploration and development of oil and gas. Since then Mr. Nickerson has
worked as a consulting geologist for various energy companies. Mr.
Nickerson is a 1948 graduate of the Colorado School of Mines with a degree
in geological engineering.
There is no arrangement or understanding between any of the
directors, executive officers or any other persons pursuant to which he
was or is to be selected as a director or executive officer, nor is there
any family relationship between or among any executive officers, except
that Mr. Boatright is the brother-in-law of Mr. Hoops.
SECTION 16(a) REPORTING UNDER THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's executive
officers and directors, and persons who own more than ten percent of the
common stock of the Company, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission and the exchange on
which the common stock is listed for trading. Those persons are required
by regulations promulgated under the Exchange Act to furnish the Company
with copies of all reports filed pursuant to Section 16(a). One of the
Company's executive officers and directors, Timothy L. Hoops, failed to
make a timely filing of an ownership report required by Section 16(a) with
the Securities and Exchange Commission. Mr. Hoops failed to file timely a
report on Form 4 relating to his exercise of a stock option to purchase
27,884 shares of the Company's Common Stock in July 1997 with the delivery
of 10,544 shares of his Common Stock. The report was filed in late August
1997.
ITEM 11. EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
The following sets forth in summary form the compensation received
during each of the Company's last three completed fiscal years by the
Chief Executive Officer of the Company. No other officers of the Company
received salary, bonus or other annual compensation in total from the
Company, in excess of $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
-------------------
NAME AND Fiscal Salary(1) Bonus Options
PRINCIPAL POSITION Year ($) ($) (#)
- ------------------------ ------ --------- ----- -------
<S> <C> <C> <C> <C>
Timothy L. Hoops, 1997 $75,000 $35,000 18,000
President, 1996 $75,000 $0 80,000
Chief Executive 1995 $88,950 $0 40,000
Officer, and
Director
- ----------------------------
</TABLE>
(1) Until January of 1995, Mr. Hoops provided consulting services to the
Company via a retainer agreement between the Company and his
employer, Peak Resource Management, Inc. ("Peak) which fees are set
forth under the salary column above. Beginning January 1, 1995, Mr.
Hoops became an employee of the Company and, in that capacity,
provides services to the Company and the Company's wholly owned
subsidiary, Victoria Exploration, Inc. ("VicX").
Mr. Hoops did not receive additional compensation other than noted
above the aggregate amount of which was the lesser of either $50,000 or
10% of the total of annual salary, bonus and consulting fees reported for
the executive officer.
The Company reimburses its officers and directors for ordinary and
necessary business expenses incurred by them on behalf of the Company.
It is anticipated that, in fiscal 1998, Mr. Hoops will be paid a
salary of $144,000 for services rendered to the Company and VicX plus
retirement and health benefits. Payment for his services from July 1,
1994 through December 31, 1994 was made through his employer, Peak
Resource Management, Inc. Since January 1, 1995, Mr. Hoops has been paid
as an employee of the Company. In fiscal 1997, Mr. Hoops received
approximately $18,000 in consulting fees from Victoria Petroleum N.L.
("VP") and companies owned by VP for services provided to those companies
in fiscal 1997. Mr. Hoops will no longer receive those consulting fees in
fiscal 1998. In addition, Mr. Hoops received fees as a director of VP in
the amount of Australian $5,000 for fiscal 1997 and he expects to receive
the same amount in 1998. Resolute Samantha Limited, a publicly held
Australian mining and natural resources company, owns 28.45% of VP, which
indirectly owns 26.4% of the Company.
OPTION GRANTS FOR FISCAL YEAR ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
% of Potential
Total Realizable
Options Value at Assumed
Number Granted Annual Rates of
of to Exercise Stock Price
Securities Employees or Appreciation
Underlying in Base for Option Term
Options Fiscal Price Expiration 5%($)(1)/
Name Granted Year ($/share) Date 10%($)(2)
- ---------------- ---------- --------- --------- ---------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Timothy L. Hoops 18,000(3) 44% $2.5625 6/16/07 $29,059 $73,339
President,
Chief Executive
Officer and
Director
Robert J. Pett 0 0% N/A N/A N/A N/A
Chairman of
the Board and
Director
Mark A. Boatright 5,000(4) 56% $1.25 9/30/06 $3,938 $9,938
Vice President- 18,000(3) $2.5625 6/16/07 $29,059 $73,339
Finance, Chief
Financial
Officer
and Director
John T. Kopcheff 0 0% N/A N/A N/A N/A
Vice President-
International
and Director
Kenneth W. 5,000(4) N/A $1.25 9/30/06 $3,938 $9,938
Nickerson
Director
Denis I. Rakich 0 0% N/A N/A N/A N/A
Assistant
Secretary
Lynnette M. 0 0% N/A N/A N/A N/A
Carpenter
Assistant
Secretary
</TABLE>
(1) This column represents the potential realizable value of each grant
of options, based on the assumption that the market price of shares
of Common Stock underlying the options will appreciate in value from
the date of the grant to the end of the option term at the annual
rate of five percent.
(2) This column represents the potential realizable value of each grant
of options, based on the assumption that the market price of shares
of Common Stock underlying the options will appreciate in value from
the date of the grant to the end of the option term at the annual
rate of ten percent.
(3) Of this grant, all were incentive stock options.
(4) Of this grant, all were nonqualified stock options.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES FOR FISCAL YEAR ENDED JUNE 30, 1997
AND YEAR END OPTION VALUES
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money-
Shares Options at Options at
Exercised June 30, 1997 June 30, 1997
during Value (#) ($)(1)
fiscal year Realized Exercisable/ Exercisable/
Name to date(#) ($) Unexercisable Unexercisable
<S> <C> <C> <C> <C>
Timothy L. Hoops 0 0 173,000/30,000 $120,500/0
President, Chief
Executive
Officer,
and Director
Robert J. Pett 0 0 77,500/15,000 $56,875/0
Chairman of the
Board and
Director
Mark A. Boatright 0 0 23,000/11,500 $15,188/0
Vice President -
Finance, Chief
Financial and
Accounting
Officer
and Director
John T. Kopcheff 0 0 130,000/30,000 $73,125/0
Vice President -
International and
Director
Kenneth W. Nickerson 0 0 6,500/11,500 $10,875/0
Director
Denis I. Rakich 0 0 65,000/15,000 $43,594/0
Assistant
Secretary
Lynnette M. Carpenter 0 0 20,000/5,000 $11,162/0
Assistant Secretary
</TABLE>
(1) For all unexercised options held as of June 30, 1997, the aggregate
dollar value is the excess of the market value of the stock
underlying those options over the exercise price of those unexercised
options. The price used to calculate these figures is the closing
price as of June 30, 1997 on the Nasdaq SmallCap Market, which was
$2.9375 per share.
KESTREL ENERGY, INC.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
COMPENSATION POLICIES TOWARD EXECUTIVE OFFICERS
The Compensation Committee's executive compensation polices are
designed to provide competitive levels of compensation through a
combination of base level compensation, incentive stock options and cash
bonus awards.
The Committee reviews the President's performance periodically and
reports to the Board of Directors on its evaluation of that performance.
The Committee does not believe that it is reasonable, necessary or
appropriate for such a small company to require or establish a direct or
fixed relationship between the Company's financial performance and the
Chief Executive Officer's compensation. The Committee instead considers a
number of factors in making a subjective determination as to the
compensation of the Chief Executive Officer, including determinations as
to the level of salary, options and benefits: quality of service
provided, amount of time devoted to the Company's business, level of
expertise, dedication to the Company and its best interests, general
management abilities and the Company's operational and financial
performance.
Mr. Hoops, the President of the Company received total cash
compensation from the Company of $110,000 in fiscal 1997, consisting of
$75,000 in base salary and a $35,000 bonus. He also received $18,000 in
consulting fees from Victoria Petroleum, N.L., the parent company of one
of the Company's largest shareholders. While this was an increase from
the $75,000 in total cash compensation paid to Mr. Hoops by the Company in
1996, the increase in base level cash compensation was intended to be only
a restructuring of Mr. Hoops' total compensation package from the Company,
Victoria Petroleum, and the Company's then newly acquired subsidiary,
Victoria Exploration, Inc., with the intent that the total compensation
(cash and benefits) in 1997 would be substantially equivalent to that in
1996. Mr. Hoops' planned increase to $144,000 in fiscal 1998 is based on
the Company's expectation that Mr. Hoops will be required to devote
substantially all of his time and expend an even greater level of effort
on the Company's affairs than he did in 1997 as a result of the Company's
expansion of its domestic exploration efforts, largely as the result of
its acquisition of a 50% working interest in 9,000 net acres of petroleum
leases in the San Joaquin Basin in California and the Company's
appointment as operator of those properties. Because of the greater
burden of these additional responsibilities, Mr. Hoops will no longer be
able to supplement his income by providing consulting services to Victoria
Petroleum or other companies. Moreover, the Committee believes that the
Company's financial results for fiscal 1997, which include a substantial
amount of non-cash write downs, are not reflective of the dramatic
successes achieved by management in that year, including but not limited
to the successful placement of $5 million in common stock in private
overseas transactions and the purchase of the San Joaquin Basin properties
from Ampolex (USA), Inc.
In an effort to further strengthen the Company's management capabilities,
Mark Boatright, the Company's Vice President of Finance, became an
employee of the Company effective July 1, 1997 at an annual salary of
$48,000. The Committee believes that this change will permit Mr.
Boatright, who had previously provided services to the Company on a
contract basis through his accounting firm, Boatright & Associates, to
provide even greater support for the Company's financial and recordkeeping
functions.
In May of 1997, the Compensation Committee declared a cash bonus of
$25,000 for John T. Kopcheff, Vice President - International of the
Company, for his efforts in connection with the Company's international
exploration program. Mr. Kopcheff, who also serves on the Company's Board
of Directors, received no other cash remuneration from the Company in
fiscal 1997.
Stock options are granted to key personnel of the Company by the
Compensation Committee as a means of providing an equitable long term
incentive to the Company's personnel. The Compensation Committee believes
that stock options can be used in the best interest of the Company to
reward past efforts of the Company's executive officers, to encourage the
present and future performance by the Company's executive officers and to
align the interests of the Company's personnel with the interests of the
Company's shareholders.
During the 1997 fiscal year, each Compensation Committee member
received an automatic grant of options to purchase 5,000 shares pursuant
to the Nonqualified Stock Option Plan. On June 16, 1997, 18,000 options
were granted to each of the Company's President and Vice President-
Finance. The options were granted at the fair market value on the date of
grant. The award of these options was in accordance with the above stated
policy of the Compensation Committee and the terms of the Nonqualified
Stock Option and Incentive Stock Option Plans. In particular, the awards
to Messrs. Hoops and Boatright were made in recognition of their
substantial efforts during the year in effecting the acquisition of the
San Joaquin Basin properties from Ampolex (USA), Inc. and as an incentive
to help the Company and its shareholders fully realize the value of those
and other properties held by the Company.
October 8, 1997 Compensation Committee Of
The Board of Directors
Kenneth W. Nickerson
Mark A. Boatright
DIRECTORS' REMUNERATION
Directors are not paid any remuneration for attendance at meetings of
the Board. Any director who serves on the Compensation Committee
automatically receives 5,000 options each September 30 pursuant to the
Company's Nonqualified Stock Option Plan. On September 30, 1996, both
Messrs. Boatright and Nickerson, as members of the Compensation Committee,
received fully vested options to purchase 5,000 shares of Common Stock at
an exercise price of $1.25 per share, the fair market value on the date of
grant. The options are exercisable for ten years from the date of grant.
The only other option awarded to a member of the Compensation Committee
during fiscal 1997 was the grant to Mr. Boatright on June 16, 1997 of
fully vested options to purchase 18,000 shares at an exercise price of
$2.5625 per share, the fair market value on the date of grant. In
addition, on the same date, Mr. Hoops, who is not a member of the
Committee, received the same number of shares at the same exercise price.
These grants were made from the Company's Incentive Stock option Plan and
are exercisable for ten years from the date of grant.
PERFORMANCE GRAPH
The following line graph compares the yearly percentage change in the
cumulative total shareholder return for (i) the Company, (ii) the MG
Industry Group 353 - Oil and Natural Gas Exploration and (iii) the NASDAQ
Market Index. The MG Industry Group 353 consists of approximately 137
companies involved in the oil and gas industry, including the Company.
The line graph and table cover the five year period from July 1992 through
June 1997 and represent the total value of a $100 investment in each
security/market index on July 1, 1992. All dividends are assumed to be
reinvested
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C>
Kestrel
Energy Inc. 100 440.00 240.00 110.00 290.00 235.00
MG Industry
Group 353 100 113.87 118.37 130.71 158.96 179.61
NASDAQ
Market Index 100 122.76 134.61 157.88 198.73 239.40
</TABLE>
The information contained in this graph was compiled by Media General
Financial Services of Richmond, Virginia. The Company will provide a list
of the companies included in the various indices upon the written request
of any shareholder.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
STOCK OWNERSHIP OF PRINCIPAL SHAREHOLDERS
AND MANAGEMENT
The following table sets forth, as far as is known to the Board of
Directors or the management of the Company, the only persons owning on
October 7, 1997 more than five percent of the outstanding shares of the
Company's Common Stock. For purposes of this disclosure, the amount of
the Company's Common Stock beneficially owned is the aggregate number of
shares of the Common Stock outstanding on such date plus an amount equal
to the aggregate amount of Common Stock which could be issued upon the
exercise of stock options within 60 days of such date.
<TABLE>
<CAPTION>
Number of Shares of Common Stock Beneficially Owned
----------------------------------------------------
Voting and Investment Power
---------------------------
Percent
Name and Address Direct Indirect Total Shares Owned
- ---------------------------- ---------- --------- ------------- -------
<S> <C> <C> <C> <C>
Victoria International 1,166,221 --- 1,166,221(1) 26.4%
Petroleum N.L.
4th Flr., Griffin Centre
28 The Esplanade
Perth 6000
Western Australia
Victoria Petroleum N.L. --- 1,166,221(2) 1,166,221 26.4%
4th Flr., Griffin Centre
28 The Esplanade
Perth 6000
Western Australia
Timothy L. Hoops 197,026(3) 1,166,221(4) 1,363,247 29.7%
P.O. Box 1079
Denver, CO 80201-1079
Robert J. Pett 102,500(5) 1,166,221(6) 1,268,721 28.1%
4th Flr., Griffin Centre
28 The Esplanade
Perth 6000
Western Australia
John T. Kopcheff 164,000(7) 1,166,221(8) 1,330,221 29.0%
4th Flr., Griffin Centre
28 The Esplanade
Perth 6000
Western Australia
The Equitable Life 840,000 --- 840,000 19.0%
Assurance Society
City Place House
55 Basinghall St.
London England EC2V 5DR
Hare & Co. 325,000(9) --- 325,000 7.4%
Deloitte & Touche House
29 Earlsfort Terrace
Dublin 2 Ireland
</TABLE>
(1) Does not include unvested options to purchase 1,285,353 shares if
certain undeveloped properties are successfully developed into proved
producing properties. See CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS.
(2) Victoria International Petroleum N.L. ("VIP"), the record holder of
the shares, is a wholly owned subsidiary of Victoria Petroleum N.L.
("VP"), which is therefore deemed to be another beneficial owner of
the shares. Resolute Samantha Limited, a publicly held Australian
mining and natural resources company ("Resolute"), owns 28.45% of VP.
Resolute disclaims beneficial ownership of the shares.
(3) Includes vested options to purchase up to 175,116 shares
(4) Mr. Hoops is a director of VIP and of VP. As a result, all shares
held by VIP directly and VP indirectly are listed as indirectly held
by Mr. Hoops.
(5) Includes vested options to purchase up to 92,500 shares
(6) Mr. Pett is the Chairman and a director of VIP and a director of VP.
As a result, all shares held by VIP directly and VP indirectly are
listed as indirectly held by Mr. Pett.
(7) Includes vested options to purchase up to 160,000 shares
(8) Mr. Kopcheff is a director of VIP and VP. As a result, all shares
held by VIP directly and VP indirectly are listed as indirectly held
by Mr. Kopcheff.
(9) Reflects the record ownership of 325,000 shares by Hare & Co. The
Company has been unable to determine whether Hare & Co. is the
beneficial owner of all of the shares for which it is listed as
record owner.
The following table sets forth the number of shares beneficially
owned on October 7, 1997 by the Company's executive officers and
directors, and by all of the executive officers and directors as a group.
For purposes of this disclosure, the amount of the Company's Common Stock
beneficially owned is the aggregate number of shares of the Common Stock
outstanding on such date plus an amount equal to the aggregate amount of
Common Stock which could be issued upon the exercise of stock options
within 60 days of such date.
<TABLE>
<CAPTION>
Shares of
Common Stock
Position(s) Beneficially
With the Owned and Percent
Name and Address Company Options Granted Owned
- ---------------------------- -------------------- --------------- -------
<S> <C> <C> <C>
Timothy L. Hoops President, Chief
P.O. Box 1079 Executive Officer
Denver, CO 80201- 1079 and Director 1,363,247(1)(2) 29.7%
Robert J. Pett Chairman of the 1,268,721(3)(4) 28.1%
4th Flr., Griffin Centre Board and Director
28 The Esplanade
Perth 6000
Western Australia
Mark A. Boatright Vice President - 38,500(5) *
1475 Lawrence St. Finance, Chief
Suite 310 Financial Officer
Denver, CO 80202 and Director
John T. Kopcheff Vice President -
4th Flr., Griffin Centre International and
28 The Esplanade Director 1,330,221(5)(6) 29.0%
Perth 6000
Australia
Kenneth W. Nickerson Director 23,000(5) *
10780 Hanson St.
Johannesburg, MI 49751
All Directors and Executive 1,699,247 34.6%
Officers as a Group
(5 persons)
</TABLE>
* Less than one percent (1.0%)
(1) Mr. Hoops is a director of Victoria International Petroleum N.L.
("VIP") and of Victoria Petroleum N.L. ("VP"). As a result, all
shares held by VIP directly and by VP indirectly are listed as held
by Mr. Hoops.
(2) Includes vested options to purchase up to 175,116.
(3) Mr. Pett is the Chairman and a director of VIP and a director of VP.
As a result, all shares held by VIP directly and VP indirectly are
listed as held by Mr. Pett.
(4) Includes vested options to purchase up to 92,500 shares.
(5) Includes vested options to purchase up to 34,500 shares, 160,000
shares and 23,000 shares granted to Messrs. Boatright, Kopcheff and
Nickerson, respectively.
(6) Mr. Kopcheff is a director of VIP and VP. As a result, all shares
held by VIP directly and VP indirectly are listed as indirectly held
by Mr. Kopcheff.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 31, 1993, the Board of Directors authorized the exchange
of 207,263 restricted shares of the Company's Common Stock for $466,343 in
indebtedness owed to Victoria Exploration, Inc. ("VicX") effective January
1, 1994. Because the shares received were issued in a private,
unregistered transaction, several years ago, they can be publicly resold
by VicX or its successors in interest in accordance with the provisions of
Securities Act Rule 144, including the limitation on the amount of shares
which may be sold in any ninety (90) day period. The exchange rate for
the transaction was approximately $2.25 per share. As a result of the
transaction, VicX owned 380,913 shares, or 59% of the outstanding Common
Stock at that time. The remaining debt owed to VicX after the transaction
amounted to approximately $600,000.
On June 10, 1994, the Company transferred 709,108 shares of its
Common Stock and unvested options to acquire up to an additional 1,285,353
shares of that stock to Victoria International Petroleum N.L. ("VIP") in
exchange for all of the outstanding shares of VicX. The shares of VicX
were valued at $1,595,493, the aggregate value of the assets of VicX less
certain undeveloped properties. The value of the Company's Common Stock
in the exchange was an agreed upon value of $2.25 per share. At the time
of the exchange the Company's Common Stock was being traded at prices
between $1.75 and $2.00 per share. The options were given in
consideration for certain undeveloped properties owned by VicX which the
Company agreed to develop. It was agreed that these options would only
vest to VIP if the undeveloped properties were successfully developed into
proved producing properties by June 30, 1997. These options, and the
vesting determination date relating thereto, have been extended to
December 31, 1997. The options were granted on the formula of cash
received by the Company from the undeveloped properties less the cash used
to develop those properties plus 60% of the reclassified present value
discounted at 10%, divided by $3.00 per share. The properties will be
evaluated annually by a qualified independent evaluator to determine the
number of options to be vested to VIP. Because certain of the officers
and directors of the Company have similar positions with VicX and VIP, the
Company's Board required as a condition to the transaction, and obtained,
a written opinion from an independent firm experienced in oil and gas
mergers and acquisitions that the transaction was fair from a financial
point of view to the shareholders of the Company. All shares issued in
this transaction were unregistered. Prior to the transaction, VicX
transferred all of its holdings in the Company, 380,913 shares (59%) and
its note receivable from the Company, to VIP.
In conjunction with the foregoing acquisition of undeveloped oil and
gas properties from VicX, the Company issued a $1,000,000 note payable to
VicX, which bore interest at the Norwest Bank Denver, N.A. prime rate with
quarterly interest payments. In December 1992, the terms of a $58,500
unsecured short term note to VicX were conformed to the terms of the
$1,000,000 note payable and the notes were combined. The note was secured
by the oil and gas properties acquired from VicX. As noted above, the
note was reduced to approximately $600,000 by the exchange of 207,263
shares of Common Stock for $466,343 in indebtedness owed to VicX on
December 31, 1993. Also, as indicated above, VicX transferred the note to
VIP on June 10, 1994. On December 27, 1994, prior to the December 31,
1994 maturity date of the note, the Company agreed to assign an unproved
waterflood project (Rocky Butte) acquired in a June 1992 transaction to
VIP in exchange for the surrender of indebtedness to VIP in the amount of
approximately $600,000, thereby eliminating the note receivable from the
Company to VIP.
On November 8, 1994, VIP purchased 75,000 additional shares of Common
Stock for $2.50 per share as part of a private placement of 550,000 shares
by the Company, most of which was sold overseas. On June 26, 1995, VIP
purchased 50,000 additional shares in the open market. In August 1995,
VIP sold 48,800 shares. VIP's current shareholding interest in the
Company is 26.4% (23.8% diluted for currently vested options).
Mark A. Boatright has been providing accounting and financial
services to the Company since June, 1992. On November 15, 1994, the
Company entered into an agreement with Mr. Boatright whereby he would
provide services to the Company and VicX through his company, Boatright &
Associates, P.C. for $1,500 per month. The amount was increased to $1,667
per month in fiscal 1997 and such fees were terminated at the end of that
fiscal year. The Board of Directors believes these fees were in line with
industry standards. As of July 1, 1997, Mr. Boatright became an employee
of the Company and will be paid a salary of $48,000 per annum.
As a result of the Company's close relationship with its majority
shareholder VIP, it has been afforded the opportunity to participate in
various international oil and gas drilling opportunities located by VIP.
In most cases, VIP has its own interest in the same drilling projects in
which the Company agrees to participate and in some cases the Company has
acquired its interest from VIP rather than directly from the operator or
lead promoter of the prospects.
To date, the Company has agreed to farm-in on four such international
drilling permits, including one in Papua New Guinea and three in Western
Australia. The Company earns a right to participate by sharing in the
costs of data review, seismic and drilling. In addition to the benefit,
if any, to VIP's interest in these permits resulting from the Company's
agreement to share these costs, the Company has agreed to pay a 5% royalty
to VIP on the Company's interest in any international permits referred to
the Company by VIP which produce net revenues for the Company. The
Company believes that this arrangement is fair and reasonable and that the
potential compensation to VIP is no greater than the Company would have
paid in an arms length transaction with an unrelated party who provided
comparable services.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Exhibits
EXHIBIT NO. DESCRIPTION
3.1 Amended and Restated Articles of Incorporation,
as filed with the Secretary of State of Colorado
on March 16, 1995, filed as Exhibit (3)1 to the
Annual Report on Form 10-K/A for the fiscal year
ended June 30, 1994 and incorporated herein by
reference.
3.2 Amended and Restated Bylaws, as adopted by the
Board of Directors on January 16, 1995, filed as
Exhibit (3)2 to the Annual Report on Form 10-K/A
for the fiscal year ended June 30, 1994 and
incorporated herein by reference.
4.1 The form of common stock share certificate filed
as Exhibits 5.1 to the Registrant's Form S-2
Registration (No. 2-65317) and Article II of the
Registrant's Articles of Incorporation filed as
Exhibit 4.1 thereto, as amended on March 4, 1994
and filed with the Annual Report on Form 10-K for
the fiscal year ended June 30, 1994 are
incorporated herein by reference.
4.2 That portion entitled "Selling Restriction" of
the Registrant's Private Placement memorandum
dated April 2, 1997 filed as Exhibit 4.4 to the
Registrant's Form S-3 Registration Statement (No.
333-27769) and incorporated herein by reference.
10.1 Purchase and Sale Agreement between the Company
and Victoria Exploration, Inc. dated June 1,
1992, and filed as Exhibit B with the Form 8-K
filed on June 15, 1992 and incorporated herein by
reference.
10.2 Consent to Corporate Action dated June 1, 1992 of
Victoria Exploration, Inc. and filed as Exhibit C
with the Form 8-K filed on June 15, 1992 and
incorporated herein by reference.
10.3 Mortgage, Security Agreement, Assignment of
Proceeds, and Financing Statement between the
Company and Victoria Exploration, Inc. dated June
1, 1992, and filed as Exhibit D with the Form 8-K
filed on June 15, 1992 and incorporated herein by
reference.
10.4 Administrative Services Agreement dated September
15, 1992 between Victoria Exploration, Inc. and
the Company filed as Exhibit 10.12 with the
Annual Report on Form 10-K for the fiscal year
ended June 30, 1992 and incorporated herein by
reference.
10.5 Agreement for Exchange of Stock dated May 3, 1994
filed as Exhibit 2.01 with the Form 8-K filed on
July 8, 1994 and incorporated herein by
reference.
10.6 $600,000 Promissory Note dated September 23, 1994
payable to Victoria International Petroleum N.L.,
as amended, filed as Exhibit 10.10 with the
Annual Report on Form 10-K for the fiscal year
ended June 30, 1994 and incorporated herein by
reference.
10.7 Amended and Restated Incentive Stock Option Plan
as amended March 14, 1995 and filed as Exhibit
10.7 with the Annual Report on Form 10-K for the
fiscal year ended June 30, 1995 and incorporated
herein by reference.
10.8 1993 Nonqualified Stock Option Plan as amended
March 14, 1995 and December 12, 1995 and filed as
Exhibit 4.3 with the Company's Registration
Statement on Form S-8 (SEC No. 33-63171) and
Incorporated herein by reference.
10.9 Purchase and Sale Agreement between Ampolex
(USA), Inc., Kestrel Energy California, Inc. and
Victoria Petroleum USA, Inc. dated March 21,
1997.
21 Subsidiaries of the Registrant
23 Consent of KPMG Peat Marwick LLP
27 Financial Data Schedule
(b) Financial Statements.
Independent Auditors' Report F-1
Consolidated Balance Sheets F-2
Consolidated Statements of Operations F-3
Consolidated Statements of Stockholders' Equity F-4
Consolidated Statements of Cash Flows F-5
Notes to Consolidated Financial Statements F-6
All schedules are omitted as the required information is
inapplicable or presented in the financial statements or related
notes.
(c) Reports on Form 8-K.
A report on Form 8-K dated April 30, 1997 under Item 9, Sales of
Equity Securities Pursuant to Regulation S, was filed with the Commission
to report the sale of 2,502,000 shares of the Company's Common Stock under
Regulation S to qualified non-U.S. investors.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly authorized.
KESTREL ENERGY, INC.
(Registrant)
Date: October 14, 1997 By: /s/ Timothy L. Hoops
-----------------------------
Timothy L. Hoops, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated.
Date: October 14, 1997 By: /s/ Timothy L. Hoops
-----------------------------
Timothy L. Hoops, President,
Chief Executive Officer,
and Director
Date: October 14, 1997 By:/s/ Robert J. Pett
-----------------------------
Robert J. Pett, Chairman of
the Board
Date: October 14, 1997 By:/s/ Mark A. Boatright
-----------------------------
Mark A. Boatright, Vice
President, Finance, Chief
Financial Officer, and
Director
Date: October 14, 1997 By:/s/ Kenneth W. Nickerson
-----------------------------
Kenneth W. Nickerson,
Director
Date: October 14, 1997 By:/s/ John T. Kopcheff
-----------------------------
John T. Kopcheff, Vice
President -
International, and Director
EXHIBIT INDEX
Exhibit Method of Filing
- ------- ----------------
10.9 Purchase and Sale Agreement
between Ampolex (USA), Inc.,
Kestrel Energy California, Inc.
and Victoria Petroleum USA, Inc.
dated March 21, 1997. Filed herewith electronically
21 Subsidiaries of the Registrant Filed herewith electronically
23 Consent of KPMG Peat Marwick LLP Filed herewith electronically
27 Financial Data Schedule Filed herewith electronically
PURCHASE AND SALE AGREEMENT
BETWEEN
AMPOLEX (USA), INC.
KESTREL ENERGY CALIFORNIA, INC.
AND
VICTORIA PETROLEUM USA, INC.
PURCHASE AND SALE AGREEMENT
WITNESSETH THIS PURCHASE AND SALE AGREEMENT, made as of this 21st day
of March, 1997 ("Agreement"), between AMPOLEX (USA), INC., a Texas
corporation with a place of business at 1050 Seventeenth Street, Suite
2500, Denver, Colorado 80265 ("Seller") AND KESTREL ENERGY CALIFORNIA,
INC., a Colorado corporation with a place of business at 999 18th Street,
Suite 1100, Denver Colorado, 80202 ("Kestrel"), and VICTORIA PETROLEUM
USA, INC., a Colorado Corporation with a place of business at 999 18th
Street, Suite 1100, Denver, Colorado 80202 ("Victoria). Kestrel and
Victoria are collectively referred to as "Purchaser". Seller and
Purchaser are referred to individually herein as a "Party" and
collectively herein as the "Parties.
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to
purchase from Seller, on the terms and conditions set forth in this
Agreement, certain interests and operating rights in certain oil and gas
leases, agreements, contracts, real property, and personal property
located in the State of California subject to the terms and conditions
herein provided.
NOW, THEREFORE, for good and valuable consideration and for the mutual
covenants herein contained, Seller and Purchaser agree as follows:
ARTICLE 1. EFFECTIVE TIME
The "Effective Time" of the sale and purchase provided for in this
Agreement shall be January 1, 1997, as of 12:01 am., local time, Denver,
Colorado.
ARTICLE 2. PURCHASE AND SALE
2.01 THE INTERESTS: Subject to the terms, conditions, reservations, and
exceptions specified in this Agreement, Seller shall sell, and Kestrel and
Victoria shall each purchase as of the Effective Time an undivided fifty
percent (500/o) interest in all of Seller's right, title and interest in
and to the following assets described in Subsections 2.01(a) through
2.01(f) (collectively called the "Interests"):
(a) All real property interests owned by Seller located in the State of
California, United States, including but not limited to the oil, gas and
other mineral leasehold interests described in Exhibits "Al-A3"
(collectively called the "Real Property"), together with Seller's interest
in any pooled, communitized, or unitized acreage derived by virtue of
Seller's ownership of the Real Property;
(b) To the extent transferable, all contracts and agreements concerning
the Real Property including, but not limited to the area of mutual
interest agreements, farmout agreements, farmin agreements, road use
agreements, operating agreements, supplier contracts, service Contracts,
and lease purchase option agreements described in Exhibit "B";
(c) To the extent transferable, all surface use agreements, and
easements, rights-of-way, licenses, authorizations, permits, and similar
rights and interests applicable to, or used or useful in connection with,
any or all of the Real Property.
(d) All files, documents and other records relating to the Interests made
available to Purchaser pursuant to Section 6.01;
(e) To the extent transferable, all non-proprietary scientific data and
information, geophysical, seismic, and other technical data and
interpretations thereof related to the Real Properties in Seller's
possession or control as of the Effective Time including, but not limited
to, the items more particularly described in Exhibit "C";
(f) Personal property owned by Seller consisting of one dedicated
Landmark workstation located at the offices of Black Coral LLC, 1825
Lawrence Street, Suite 115, Denver, Colorado 80202, including the
following hardware: 2 monitors 20" Model No. GDM-1962B, 1 disk pack/tape
drive Model No. 0820-12, and 1 CPU/Spark 10 Model No. 600-3142-01
(hereinafter referred to as the "Movables").
2.02 EXCLUDED ASSETS: This Agreement is not intended to include, and
Seller shall expressly reserve from the Assignments any and all rights and
obligations relating to or arising out of any oil and gas wells operated
by Seller or in which Seller owned a working or other interest prior to
the Effective Date in California, and which have been sold or otherwise
disposed of or have been (or should have been) plugged and abandoned prior
to the Effective Time, including, but not limited to, the Barnes 33x well
in Solano County.
2.03 EXCLUSION OF PRIOR EXISTING RIGHTS OR CLAIMS: THERE IS SPECIFICALLY
EXCEPTED; EXCLUDED AND RESERVED FROM THIS PURCHASE AND SALE TRANSACTION
THOSE RIGHTS AND CLAIMS ARISING, OCCURRING, OR EXISTING IN SELLER PRIOR TO
THE CLOSING DATE, INCLUDING, BUT NOT LIMITED TO, ANY AND ALL CONTRACT
RIGHTS, CLAIMS, PENALTIES, RECEIVABLES, REVENUES, RECOUPMENT RIGHTS,
RECOVERY RIGHTS, ACCOUNTING ADJUSTMENTS, MISPAYMENTS, ERRONEOUS PAYMENTS
OR OTHER CLAIMS OF ANY NATURE RELATING TO ANY TIME PERIOD PRIOR TO THE
CLOSING DATE, EXCEPT TO THE EXTENT SUCH RIGHTS OR CLAIMS WOULD OPERATE TO
SETOFF OR REDUCE THIRD PARTY CLAIMS ARISING BEFORE THE CLOSING DATE FOR
WHICH PURCHASER ASSUMES LIABILITY PURSUANT TO ARTICLES 12 OR 13 OR SECTION
16.01 OF THIS AGREEMENT.
ARTICLE 3. SALE PRICE AND MANNER OF PAYMENT
3.01 SALE PRICE AND PAYMENT: The sale price for the Interests shall be ONE
MILLION AND FIFTY THOUSAND AND NO/100 DOLLARS ($1,050,000.00) (hereinafter
called the "Sale Price") and shall be paid as follows:
(a) Within twenty four (24) hours of executing this Agreement, Purchaser
shall pay or cause to be paid to Seller the sum of ONE HUNDRED FIVE
THOUSAND AND 00/100 DOLLARS ($105,000.00) (hereinafter called the
"Performance Deposit") which shall be credited against the Sale Price and
held by Seller or, at Seller's option, Seller's designee. Payment of the
Performance Deposit shall be by wire transfer as provided in Subsection
3.01(d), or at Seller's option, by certified funds or cashier's check.
(b) Except as provided in Article 8, Seller shall not be obligated to
segregate the Performance Deposit in a separate account, but may commingle
the Performance Deposit with other funds in Seller's accounts and the
Performance Deposit shall not accrue interest for the benefit of
Purchaser. Likewise, in the event the Performance Deposit is refunded to
Purchaser pursuant to this Agreement; Purchaser shall not be entitled to
any interest on the Performance Deposit.
(c) At the Closing (as defined in Article 4), Purchaser shall pay Seller
or Seller's designee the balance of the Sale Price, NINE HUNDRED FORTY
FIVE THOUSAND AND 00/100 DOLLARS ($945,000.00), plus or minus any
adjustments as hereinafter provided in this Agreement (hereinafter called
the "Adjusted Sale Price").
(d) No later than 12:00 p.m. Denver local time on March 25, 1997, Seller
shall present to Purchaser a proposed preliminary settlement statement
showing the calculation of the Adjusted Sale Price, including any
applicable sales and gross receipts taxes on the Movables (hereinafter
called the "Settlement Statement"). Purchaser shall advise Seller of any
proposed changes or objections to the proposed Settlement Statement not
later than 12:00 am. local Denver time on March 26, 1997 and the Parties
shall thereafter diligently attempt to resolve all issues in regard to the
Settlement Statement on or before Closing. If such matters cannot be
resolved as of the Closing Date, the Adjusted Sale Price shall be the
average of the Adjusted Sale Prices proposed by Seller and Purchaser and
the matter shall be resolved pursuant to Section 20.16.
(e) The Performance Deposit and Adjusted Sale Price shall be paid to
Seller by wire transfer of immediately available funds to Seller's account
at NORWEST BANK COLORADO N.A., 1700 BROADWAY, DENVER, COLORADO 80274, ABA
# 102 000 076 A/C # 101 0736 821, unless Seller shall give notice to
Purchaser not less than two (2) business days prior to the date such
payment is due that it prefers payment to be made by another method or to
another account or payee in which case such payment shall be made in that
manner.
3.02 ALLOCATION OF SALE PRICE: Purchaser shall allocate the Sale
Price among the working interests, operating rights and tangible real and
personal property constituting the Interests. Said allocation shall be
incorporated in this Agreement as Exhibit "D". The allocation of the
Purchase Price provided for herein is intended to comply with the location
method required by Section 1060 of the Internal Revenue Code. Purchaser
and Seller shall cooperate to comply with all substantive and procedural
requirements of Section 1060 and regulations thereunder, including,
without Stations the filing by Purchaser and Seller of an IRS Form 8594
with their federal income tax returns for the taxable year in which the
Closing occurs. Purchaser and Seller agree that each will not take for
income tax purposes, or permit any affiliate to take, any position
inconsistent with the allocation of Purchase Price prescribed herein.
ARTICLE 4. THE CLOSING
The sale and purchase described in Article 2 shall take place at a Closing
(hereinafter called the "Closing"), at which the Purchaser shall pay or
cause to be paid to Seller the Adjusted Sale Price and Seller shall
deliver, or cause to be delivered, the Assignments and Bills of Sale and
other conveyance instruments referred to in Article 10 to Purchaser. The
Closing shall occur at Seller's office located at 1050 Seventeenth Street,
Suite 2500, Denver, Colorado 80265 at 1:00 p.m., local time on March 27,
1997, or at such other time and place to which the Parties may agree in
writing (hereinafter called the "Closing Date").
ARTICLE 5. TERMINATION FOR BREACH OR DEFAULT
5.01 PURCHASER'S BREACH OR DEFAULT: IF THE PURCHASE AND SALE OF THE
INTERESTS IS NOT COMPLETED AS CONTEMPLATED HEREIN BY REASON OF ANY BREACH
OR DEFAULT BY PURCHASER, THEN SELLER SHALL, IN CONSIDERATION OF HAVING
HELD THE INTERESTS OFF THE MARKET AND HAVING REFRAINED FROM DEALING WITH
OTHERS CONCERNING THE INTERESTS AND AS LIQUIDATED DAMAGES IN LIEU OF ALL
OTHER DAMAGES (AND AS SELLER'S SOLE REMEDY), RETAIN THE PERFORMANCE
DEPOSIT. THE PARTIES HEREBY ACKNOWLEDGE THAT THE EXTENT OF DAMAGES TO
SELLER OCCASIONED BY SUCH BREACH OR DEFAULT BY PURCHASER WOULD BE
IMPOSSIBLE OR EXTREMELY DIFFICULT TO ASCERTAIN AND THAT THE AMOUNT OF THE
PERFORMANCE DEPOSIT IS A FAIR AND REASONABLE ESTIMATE OF SUCH DAMAGES
UNDER THE CIRCUMSTANCES.
5.02 OTHER TERMINATION: IF THE PURCHASE AND SALE OF THE INTERESTS IS NOT
COMPLETED BECAUSE OF A DEFAULT OR BREACH BY SELLER PURCHASER SHALL BE
ENTITLED TO THE PROMPT RETURN OF THE PERFORMANCE DEPOSIT WITHOUT INTEREST,
THE RECOVERY OF WHICH SHALL BE PURCHASER'S SOLE REMEDY AGAINST SELLER.
ARTICLE 6. DUE DILIGENCE AND TITLE AND CASUALTY DEFECTS
6.01 ACCESS TO SELLER'S NON-PROPRIETARY INFORMATION: Subject to
Purchaser's confidentiality obligations described in Subsection 20.14,
below and subject to Seller's obtaining a waiver of any third party
restrictions prohibiting disclosure, Seller shall make available to
Purchaser and Purchaser's authorized consultants, agents and
representatives, during normal business hours at Seller's offices, all
files, records, documents and data in Seller's possession relating to the
Interests, including but not limited to, lease, land, title and division
order files (including any available abstracts of title, title opinions
and title curative documents), accounting files and records, environmental
audit reports and other data and information respecting the environmental
condition of the Interests, contracts, correspondence, permitting files,
and all geophysical and geological data, including interpretations
thereof. Seller shall not be obligated to perform any additional title
work and Seller shall not be obligated to make any existing abstracts and
title opinions current.
6.02 ACCESS TO SELLER'S PROPERTY: Seller shall give Purchaser and
Purchaser's authorized consultants, agents and representatives, at any
reasonable time(s) before the Closing and upon adequate notice to Seller,
physical access to the Real Property, for the purpose of inspecting same
and conducting or having conducted an environmental audit of the Real
Property. Such environmental audit may include, upon Purchaser's request,
examination of Seller's files and public documents, visual inspection of
the Interests, and such other audit activities as Purchaser may reasonably
request. Such access shall be at Purchaser's sole risk, cost and expense
and Purchaser shall indemnify, defend, save, discharge, release and hold
harmless Seller and its Affiliates from, and pay or reimburse Seller on a
current basis for, any and all losses, liabilities, liens or encumbrances
for labor or materials, claims and causes of action arising out of or in
any way connected with or related to any personal injury to or death of
any persons or damage to property occurring to or on the Interests as a
result of Purchaser's exercise of its rights under this Section 6.02,
whether latent or patent, unless such personal injury, death or property
damage is caused by SELLER'S (OR ITS AGENTS, EMPLOYEES OR CONTRACTORS)
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. As used in this Agreement "Gross
Negligence" shall mean any act or failure to act (whether sole, joint,
contributing, or concurrent) by a person or entity which was intended to
cause or which was in reckless disregard of or wanton indifference to the
harmful consequences such a person or entity knew, or should have known,
such act or failure would have had on the safety or property of another
person or entity. Notwithstanding the above, "Gross Negligence" shall not
include any error of judgment or mistake made by such person or entity in
the exercise in good faith of any function, authority or discretion
conferred on a person or entity under this Agreement. Purchaser agrees to
comply fully with the rules, regulations and instructions issued by Seller
regarding the actions of Purchaser while upon, entering or leaving the
Real Property. Seller shall have the right at all times to participate in
the preparation for and conducting of any hearing or trial related to the
indemnity set forth in this Section, as well as the right to appear on its
own behalf or to retain separate counsel to represent it at any such
hearing or trial.
6.03 TITLE DEFECT: For the purpose of this Agreement, a "Title Defect"
shall mean a material deficiency in one or more of the following respects,
provided that the non-transferability requirement in any license, permit,
right-of-way, pipeline franchise or easement affecting the Real Property
or a requirement that it be renegotiated upon a transfer of ownership
shall not constitute a Title Defect:
(a) One or more of the leases described in Exhibits A-1 to A-3: (i) fail
to cover all or part of the oil and gas Interests purported to be covered
by such leases, (ii) are subject to full or partial failure based on the
legally enforceable claims or potential claims of persons other than the
lessor(s) of such lease; or (ii) are subject to cancellation or
termination by the lessor(s) thereof based upon a failure of consideration
at the time that Seller obtained the lease, failure by Seller to pay
rentals in a timely and proper manner, or failure by Seller to take other
measures required by law or contract to maintain such leases in full force
and effect.
(b) Seller's title at the Effective Time, as to one or more of the Real
Properties, is subject to an outstanding mortgage, deed of trust, lien or
encumbrance, or other adverse claim or liability not shown on Exhibit "E"
(hereinafter called "Permitted Encumbrances") or otherwise disclosed in
any exhibit attached hereto.
(c) Seller's net revenue interest in any of the Real Property is less
than the net revenue interest which is set forth in Exhibits "A-1 to A-3"
for such Real Property, or Seller's working interest in any of the Real
Property is greater than the working interest shown in Exhibits "A-1 to A-
3" for such Real Property without a corresponding increase in the net
revenue interest for such Real Property;
(d) Seller is in default under a material provision of a lease, agreement
or other contract affecting the Interests; or
(e) Seller's rights and interests are subject to being reduced by virtue
of the exercise by a third party of a reversionary, back-in or similar
right including, but not limited to, those reflected or provided for in
the agreements or other materials set forth in Exhibits "A-1 to A-3";
6.04 NOTICE OF TITLE DEFECT: Upon discovery of a Title Defect, Purchaser
shall immediately notify Seller in writing of the nature of the Title
Defect and furnish Seller Purchaser's basis for the assertion of such
Title Defect and data in support thereof. Seller may request an increase
in the Sale Price by delivery to Purchaser of written notice that the net
revenue interest actually owned by Seller in any of the Real Properties is
greater than that shown on Exhibits "A-1 to A-3". Any Title Defect which
is not disclosed to Seller by 12:00 p.m. local Denver time on Tuesday,
March 25, 1997, shall conclusively be deemed waived by Purchaser for all
purposes.
6.05 REMEDIES FOR TITLE DEFECTS: Upon timely delivery of notice, either
by Purchaser of a Title Defect or by Seller of an increase in net revenue
interest, Purchaser and Seller shall meet and use their best efforts to
agree on the validity of the claim and the amount of any required
adjustment to the Sale Price, provided that in no event shall any Sale
Price reduction for an affected Real Property exceed the amount allocated
to the affected Real Property on Exhibit "D" and any such adjustments
shall be further subject to Section 6.05(e). If Purchaser and Seller
cannot agree on the amount of such a Sale Price adjustment, said amount
shall be determined in accordance with the following guidelines:
(a) If the Title Defect is based upon Purchaser's notice that Seller owns
a lesser net revenue interest, or the notice is from Seller to the effect
that Seller owns a greater net revenue interest, than that shown on
Exhibits "A-1 to A-3", then the portion of the Sale Price allocated on
Exhibit "D" to the affected Real Property shall be reduced or increased
(as the case may be) in the same proportion that the actual net revenue
interest bears to the net revenue interest shown on Exhibits "A-1 to A-3"
for such Real Property.
(b) If the Title Defect is a lien, encumbrance or other charge upon Real
Property which is liquidated in amount, then the adjustment shall be the
sum necessary to be paid to the obligee to remove the Title Defect from
the affected Real Property. If the Title Defect represents an obligation
or burden upon the affected Real Property for which the economic detriment
to Seller is not liquidated but can be estimated with reasonable certainty
as agreed to by the Parties, the adjustment shall be the sum necessary to
compensate Purchaser at the Closing for the adverse economic effect which
the Title Defect will have on the affected Real Property. If there is a
lien or encumbrance in the form of a judgment secured by a supersedeas
bond or other security approved by the court issuing such order, it shall
not be considered a Title Defect under this Agreement.
(c) If the Title Defect is based upon a failure, partial failure,
cancellation or termination identified in Section 6.03(a), and such defect
does not represent an obligation or burden upon the Real Property which is
liquidated in amount, then the portion of the Sale Price allocated on
Exhibit "D" to the affected Real Property shall be reduced by an amount
proportionate to the defect.
(d) Subject to Subsection 6.05(d), if the Title Defect cannot be remedied
pursuant to Subsections 6.05(a) (b) or (c) or the Parties cannot otherwise
agree on the amount of such an adjustment to the Sale Price or Seller
cannot cure the Title Defect to the reasonable satisfaction of Purchaser
prior to the Closing, and the Parties do not both agree to submit the
matter to binding arbitration, the Real Property affected by the Title
Defect shall be excluded from the Interests conveyed to Purchaser at the
Closing and the Sale Price shall be reduced by the amount allocated by
Purchaser to the affected Real Property on Exhibit "D".
(e) Purchaser may only adjust the Sale Price for Title Defects at the
Closing if the cumulative amount of such adjustments in its favor exceeds
ONE HUNDRED THOUSAND AND 00/100 DOLLARS ($100,000.00), in which case
Purchaser may adjust the Sale Price for the total amount of Title Defects.
Similarly, Seller may only adjust the Sale Price by reason of it owning a
greater net revenue interest at the Closing if the cumulative amount of
such adjustments in its favor exceeds ONE HUNDRED THOUSAND AND 00/100
DOLLARS ($100,000.00), in which case Seller may adjust the Sale Price for
the total amount of adjustments in its favor. In the event the net amount
of the Sale Price adjustments downward or upward pursuant to the foregoing
equals or exceeds TIME HUNDRED THOUSAND AND 00/100 DOLLARS ($3 00,000.00)
then Seller or Purchaser may, upon written notice to the other party,
terminate this Agreement and the same shall be of no further force and
effect, save and except that Seller shall return the Performance Deposit
to Purchaser without interest.
(f) If Purchaser shall receive an adjustment at the Closing on account of
a Title Defect pursuant to this Article, Seller shall have until a date
that is thirty (30) days after the Closing Date to cure the Title Defect
at its cost. If by such date Seller can demonstrate to Purchaser's
reasonable satisfaction the Title Defect has been cured, then Seller shall
be entitled to payment by Purchaser for the amount of the adjustment
received by Purchaser at the Closing as a result of the Title Defect.
Purchaser shall pay such amount to Seller within ten (10) business days
from the date that the Parties agree the Title Defect has been cured.
6.06 CASUALTY DEFECT: If prior to the Closing any of the Interests are
substantially damaged or destroyed by fire or other unforeseen casualty
(hereinafter called "Casualty Defect"), Seller shall notify Purchaser
promptly after Seller learns of such event. Seller shall have the right,
but not the obligation, to cure the Casualty Defect by repairing such
damage or, in the case of personal property or fixtures, replacing them
with equivalent items, no later than the Closing Date, all to Purchaser's
reasonable satisfaction. If any uncured Casualty Defects exist at the
Closing, Purchaser shall proceed to purchase the Interests affected
thereby, and the Sale Price shall be reduced by the by the amount
allocated by Purchaser to the affected Interest on Exhibit "D".
ARTICLE 7. THIRD PARTY RIGHTS AND CONSENTS
It is understood by Purchaser that certain of the Interests may be subject
to lessors' approvals or other consents to transfer any part of the
Interests (other than governmental approvals and other consents routinely
acquired after a transfer), including the non-transferability requirement
of a license, permit, right-of-way, or easement, or a requirement for
renegotiation upon transfer of ownership (collectively referred to
hereinafter as, "Consents to Assign"). This Agreement shall be subject to
the terms and conditions of such Consents to Assign.
Not later than 12:00 p.m. local Denver time on March 26, 1997, Seller
shall identify those Consents to Assign which have not been obtained, and
the Real Properties affected thereby. The Sale Price payable at Closing
shall be adjusted by the amount allocated to the affected Real Property in
Exhibit "D".
If Purchaser shall receive an adjustment at the Closing on account of any
Consent to Assign that has not been obtained, then Seller shall have until
a date that is forty-five (45) days after the Closing Date, or such other
later date as the parties may mutually agree, within which to obtain all
necessary Consents to Assign (hereinafter referred to as the "Post Closing
Adjustment Date.
Seller shall provide written notice, together with supporting
documentation, of such Consents to Assign as are obtained by Seller after
the Closing. Within three (3) business days of Purchaser having received
such notice, Purchaser shall pay to Seller the amount allocated to the
affected Real Property in Exhibit "D", together with interest at the
thirty day LIBOR rate from Closing Date to the date of such payment.
Payment shall be made by wire transfer in accordance with Section 3.01
(e), or such other payment instructions as Seller may provide.
If a Consent to Assign is not obtained by the Post Closing Adjustment
Date, then the affected Real Property shall be excluded from the Interests
and the Sale Price reduced by the amount allocated to the affected Real
Property in Exhibit "D", and the Seller shall issue a final settlement
statement in connection therewith.
ARTICLE 8. REPRESENTATIONS
8.01 EXCLUSIVITY OF REPRESENTATIONS: THE EXPRESS REPRESENTATIONS OF SELLER
CONTAINED IN THIS ARTICLE 8 OR OTHERWISE STATED IN THIS AGREEMENT ARE
EXCLUSIVE AND ARE IN LIEU OF ALL OTHER REPRESENTATIONS, EXPRESS, IMPLIED,
STATUTORY, OR OTHERWISE. FURTHERMORE, THE REPRESENTATIONS CONTAINED IN
THIS ARTICLE 8 SHALL SURVIVE THE CLOSING FOR A PERIOD OF. ONE (1) YEAR,
BUT ALL OTHER REPRESENTATIONS IN THIS AGREEMENT SHALL TERMINATE AT, AND
SHALL NOT SURVIVE, THE CLOSING.
8.02 MUTUAL RE REPRESENTATIONS: Seller represents to Purchaser, and each
of Kestrel and Victoria represents to the Seller that:
(a) it is a corporation, duly organized, validly existing and in
good standing Under the laws of the State of its incorporation, and is
duly qualified to do business in the States in which the Interests are
located or, in the case of the Purchaser, will be so qualified by Closing;
(b) it has all authority necessary to enter into this Agreement and
to perform all its obligations hereunder;
(c) its execution, delivery and performance of this Agreement and
the transactions contemplated hereby will not: (i) violate or conflict
with any provision of its Certificate of Incorporation or By-Laws or its
Articles of Organization, as the case may be, or other governing
documents; (ii) result in the breach of any term or condition of, or
constitute a default or cause the acceleration of any obligation under,
any agreement or instrument to which it is a party or by which it is
bound; or (iii) violate or conflict with any applicable judgment, decree,
order, permit, law, rule or regulation;
(d) this, Agreement has been duly executed and delivered on its
behalf, and at the Closing all documents and instruments required
hereunder will have been duly executed and delivered. This Agreement, and
all such documents and instruments shall constitute legal, valid and
binding obligations enforceable in accordance with their respective terms,
except to the extent enforceability may be affected by bankruptcy,
reorganization, insolvency or similar laws affecting creditors' rights
generally; and
(e) it has been represented by legal counsel of its own selection
who has reviewed this Agreement.
8.03 BROKERS: Each Party represents to the other that it has not
incurred any obligation or liability, contingent or otherwise, for
brokers' or finders' fees in connection with this Agreement in respect of
which the other Party may have any responsibility; and any such obligation
or liability that might exist shall be the sole obligation of the Party
whose action gave rise thereto.
8.04 COMPLIANCE WITH SECURITIES LAWS: The Purchaser represents that
it is acquiring the Interests for its own account and not with the intent
to make a distribution thereof within the meaning of the Securities Act of
1933, as amended, and the rules and regulations thereunder, or
distribution thereof in violation of any other applicable securities laws
which may apply to the sale of an undivided fractional interest in oil and
gas properties
8.05 SELLER'S REPRESENTATIONS: To the extent the following
representations are made to the best of Seller's knowledge and belief,
such reference shall mean the actual and current knowledge of Seller's
officers and managers, after reasonable inquiry by such persons. Subject
to the foregoing, Seller represents to Purchaser as follows:
(a) OWNERSHIP: Seller owns the Interests and has the full power and
right to sell and convey the same, subject to any Consents to Assign that
may exist with respect thereto;
(b) COMPLIANCE: Seller has complied in all material respects with
the provisions and requirements of all orders, regulations and rules
issued or promulgated by governmental authorities having jurisdiction with
respect to the Interests operated by Seller and has filed for and obtained
all governmental certificates, permits and other authorizations necessary
for Seller's operation of the Interests other than permits, consents and
authorizations required for the sale and transfer of the Interests to
Purchaser, which shall be the responsibility of Purchaser.
(c) NO VIOLATION: To the best of Seller's knowledge and belief,
Seller has not defaulted or violated any agreement to which Seller is a
party or any obligation to which Seller is bound affecting or pertaining
to the Interests.
(d) PROCEEDINGS PENDING: There are no suits, actions, claims,
investigations or any legal, administrative or arbitration proceedings
pending, or to the best of Seller's knowledge and belief, threatened
against the Seller which affect or pertain to the Interests.
(e) LEASES IN EFFECT: To the best of Seller's knowledge and belief,
the oil and gas leases included within the Interests are valid and
subsisting oil and gas leases, and all payments required to maintain such
leases in full force and effect have been timely and properly paid.
(f) AUTHORIZATIONS FOR EXPENDITURES: There are no outstanding calls
under Authorizations for Expenditures for payments which are due or which
Seller has committed to make which have not been made; there are no
material operations with respect to which Seller has become a
nonconsenting party which have not been disclosed hereunder; and there are
no commitments for the expenditure of funds for drilling or other capital
projects other than projects with respect to which the operator is not
required under the applicable operating agreement to seek consent.
(g) PERSONAL PROPERTY: To the best of Seller's knowledge and belief,
the Movables have been maintained in a state of repair so as to be
adequate for normal operations.
(h) ENVIRONMENTAL: To the best of Seller's knowledge and belief,
Seller is in substantial compliance in all material respects with all
environmental laws applicable to the Interests. Seller has not received
nor has any reasonable cause to believe it will receive any inquiry or
notice that alleges non-compliance with such laws.
(i) TITLE: The Interests to be assigned by Seller hereunder are
free and clear of any liens, encumbrances, or other charges created by,
through and under Seller, but without further warranty of title.
(j) TAX PARTNERSHIPS: The Interests are not subject to any tax
partnership agreement or provisions requiring a partnership income tax
return to be filed under Subchapter K of Chapter 1 of Subtitle A of the
Internal Revenue Code, or any similar state statute.
(k) DATA AND INFORMATION: Subject to any legal obligations which
restrict such disclosure, to the best of Seller's knowledge and belief, it
has provided Purchaser with access to all the data, reports, records,
projections, information and material respecting the Interests which
Seller has in its possession as required by the provisions of Sections
6.01 and 11.06.
ARTICLE 9. DISCLAIMER OF REPRESENTATIONS AND WARRANTIES
9.01 NO WARRANTY OR REPRESENTATION BY SELLER: EXCEPT AS PROVIDED IN
SECTION 8.05(i), THE TRANSACTION CONTEMPLATED HEREBY SHALL BE (i) WITHOUT
ANY WARRANTY OR REPRESENTATION OF TITLE, EITHER EXPRESS, IMPLIED,
STATUTORY OR OTHERWISE; (ii) WITHOUT ANY EXPRESS, IMPLIED, STATUTORY OR
OTHER WARRANTY OR REPRESENTATION AS TO THE CONDITION, QUANTITY, QUALITY,
FITNESS FOR A PARTICULAR PURPOSE, FREEDOM FROM HIDDEN VICES OR DEFECTS,
CONFORMITY TO MODELS OR SAMPLES OF MATERIALS OR MERCHANTABILITY OF ANY OF
THE MOVABLES OR ITS FITNESS FOR ANY PURPOSE; AND (iii) EXCEPT AS PROVIDED
IN ARTICLE 8, WITHOUT ANY OTHER EXPRESS, IMPLIED, STATUTORY OR OTHER
WARRANTY OR REPRESENTATION WHATSOEVER. PURCHASER SHALL HAVE INSPECTED OR
WAIVED ITS RIGHT TO INSPECT THE INTERESTS FOR ALL PURPOSES AND SATISFIED
ITSELF AS TO THEIR PHYSICAL AND ENVIRONMENTAL CONDITION. PURCHASER IS
RELYING SOLELY UPON ITS OWN INSPECTION OF THE INTERESTS, AND PURCHASER
SHALL ACCEPT ALL OF THE SAME IN THEIR "AS IS, WHERE IS" CONDITION WITH ALL
FAULTS IN ADDITION, SELLER MAKES NO WARRANTY OR REPRESENTATION, EXPRESS,
IMPLIED, STATUTORY OR OTHERWISE, AS TO THE ACCURACY OR COMPLETENESS OF ANY
DATA, REPORTS, RECORDS, PROJECTIONS, INFORMATION OR MATERIALS NOW,
HERETOFORE OR HEREAFTER FURNISHED OR MADE AVAILABLE TO PURCHASER IN
CONNECTION WITH THIS AGREEMENT INCLUDING, WITHOUT LIMITATION, ANY
DESCRIPTION OF THE INTERESTS, OR THE ABILITY OR POTENTIAL OF THE INTERESTS
TO PRODUCE HYDROCARBONS, OR THE ENVIRONMENTAL CONDITION OF THE INTERESTS
OR ANY OTHER MATTERS CONTAINED IN THE NONPROPRIETARY DATA OR ANY OTHER
MATERIALS FURNISHED OR MADE AVAILABLE TO PURCHASER BY SELLER OR BY
SELLER'S AGENTS OR REPRESENTATIVES. ANY AND ALL SUCH DATA, RECORDS,
REPORTS, PROJECTIONS, INFORMATION AND OTHER MATERIALS FURNISHED BY SELLER
OR OTHERWISE MADE AVAILABLE TO PURCHASER ARE PROVIDED PURCHASER AS A
CONVENIENCE AND SHALL NOT CREATE OR GIVE RISE TO ANY LIABILITY OF OR
AGAINST SELLER. ANY RELIANCE ON OR USE OF THE SAME SHALL BE AT
PURCHASER'S SOLE RISK TO THE EXTENT PERMITTED BY LAW.
9.02 EXPRESS DISCLAIMERS OF REPRESENTATIONS AND WARRANTIES: THE
ASSIGNMENTS AND BILLS OF SALE OR OTHER NECESSARY CONVEYANCE INSTRUMENTS TO
BE DELIVERED BY SELLER AT CLOSING SHALL EXPRESSLY SET FORTH DISCLAIMERS OF
REPRESENTATIONS AND WARRANTIES.
9.03 WAIVER OF RIGHTS FOR HIDDEN DEFECTS: THE PURCHASER EXPRESSLY
WAIVES THE WARRANTY OF FITNESS FOR INTENDED PURPOSES OR GUARANTEE AGAINST
HIDDEN OR LATENT VICES UNDER COLORADO LAW OR UNDER THE LAW OF ANY STATE
WHERE THE INTERESTS MAY BE LOCATED; ACKNOWLEDGES THAT THIS EXPRESS WAIVER
SHALL BE CONSIDERED A MATERIAL AND INTEGRAL PART OF THIS SALE AND THE
CONSIDERATION THEREOF; AND ACKNOWLEDGES THAT THIS WAIVER HAS BEEN BROUGHT
TO THE ATTENTION OF PURCHASER AND EXPLAINED IN DETAIL AND THAT PURCHASER
HAS VOLUNTARILY AND KNOWINGLY CONSENTED TO THIS WAIVER OF WARRANTY OF
FITNESS AND/OR WARRANTY AGAINST HIDDEN VICES AND DEFECTS FOR THE
INTERESTS.
9.04 PURCHASER'S ACKNOWLEDGMENT: PURCHASER ACKNOWLEDGES THAT THE
WAIVERS AND DISCLAIMERS IN THIS ARTICLE 9 ARE CONSPICUOUS.
9.05 Any Claim for an alleged breach of representation or warranty
arising out of Articles 8 and 9 of this Agreement shall be made by written
notice from the Party claiming breach to the other Party (the "Breaching
Party") within 30 days of the date such breach was discovered or should
have been discovered , stating the nature and basis of such Claim and, if
ascertainable, the amount of any damages arising therefrom. The Breaching
Party shall have a period of thirty (30) days after receipt of such notice
within which to respond thereto (the "Notice period"), and or attempt to
remedy the alleged breach before Mediation proceedings under Section 20.16
are initiated. In no event shall mediation or any other legal proceeding
be brought based upon such a Claim unless such mediation or legal
proceeding is initiated within one (1) calendar year from the Closing
Date.
ARTICLE 10. CONDITIONS OF CLOSING
Each Party's obligation to consummate the transaction provided for
herein is subject to the satisfaction or waiver by the other Party of the
following conditions:
1O.01 REPRESENTATIONS: The representations contained in Article 8
shall be true and correct in all material respects on the Closing Date as
though made on and as of the Closing Date.
10.02 PERFORMANCE: Each Party shall have performed in all
material respects the obligations, covenants and agreements hereunder to
be performed by it at or prior to the Closing Date.
10.03 PENDING MATTERS: No suit, action or other proceeding by
a third party or a governmental authority shall be pending which seeks to
restrain, enjoin or otherwise prohibit the consummation of the
transactions contemplated by this Agreement.
10.04 GOVERNMENTAL BONDS: Upon written request by Seller,
Purchaser shall deliver or cause to be delivered to Seller proof of bonds,
in form and substance and issued by corporate sureties satisfactory to
Seller, covering the Interests required under any laws, rules or
regulations of any federal, state or local government agencies having
jurisdiction over the Interests, or a commitment by a surety company,
satisfactory to Seller, to issue such bonds upon Closing, or such other
security or form of guarantee of such obligations that may be satisfactory
to the appropriate agency.
10.05 MANAGEMENT APPROVAL: Seller shall have obtained management
approval of the transactions contemplated herein, and shall have notified
the Purchaser in writing that the appropriate level of management approval
has been obtained.
10.06 OPINIONS OF COUNSEL. Each Party shall have delivered to
the other an opinion of its counsel, dated as of the Closing, in form and
substance reasonably satisfactory to the receiving Party, to the effect
that:
1. It is a corporation duly incorporated and legally existing in
good standing under the laws of such State of incorporation or
organization;
2. This Agreement, and the transactions contemplated hereby, have
been duly and validly approved by all necessary action by the Party and
this Agreement constitutes a valid and binding agreement of the Party,
enforceable against same in accordance with its terms, subject, however to
the effect of bankruptcy, insolvency, reorganization, fraudulent
conveyance and similar laws from time to time in effect relating to the
rights and remedies of creditors, as well as to general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law); and
3. This Agreement has been duly executed and delivered by the
Party.
In giving this opinion, each Party's counsel may rely upon
certificates of governmental officials and of each Party's officers or
managers as to matters of fact, and may qualify the opinion with such
other assumptions and exceptions as are reasonable under the
circumstances.
ARTICLE 11. TRANSACTIONS ON AND AFTER CLOSING
At the Closing, the following shall occur:
11.01 ADJUSTED SALE PRICE: Purchaser shall deliver to Seller or
Seller's designee the Adjusted Sale Price.
11.02 ASSIGNMENTS AND BILLS OF SALE: Seller shall execute,
acknowledge and deliver to Purchaser Assignments and Bills of Sale
(hereinafter called the "Assignments" and other necessary conveyance
instruments covering the Interests in forms that are mutually acceptable
to the Parties and contain terms and conditions consistent with the terms
and conditions contained in this Agreement
11.03 RECORDING. Purchaser shall be solely responsible for
promptly recording the Assignments, and any other documents related to the
conveyance of the Interests, and shall promptly furnish Seller with the
recording information. All governmental office recording and filing fees
shall be paid by Purchaser and, if paid by Seller, shall be reimbursed by
Purchaser promptly after receipt of an invoice.
11.04 POSSESSION OF THE INTERESTS: Seller shall (subject to the
terms of applicable operating agreements and other provisions hereof)
deliver to Purchaser exclusive possession of the Interests upon the
Closing.
11.05 NOTICE OF SALE: Immediately after the Closing, Purchaser
shall notify Black Coral and Conoco Inc., both overriding royalty holders,
that it has purchased the Interests. Seller shall execute such
instruments and take such other actions as Purchaser may reasonably
request to assist Purchaser with such notifications.
11.06 RECORDS AND DOCUMENTS: Seller shall, at or as promptly as
reasonably possible after the Closing, deliver to Purchaser the originals
of records and documents in Seller's possession or in off-site storage
relating to the Interests, including, but not limited to, land and lease
files, division of interest computer printouts, contract files, well files
and well logs, and accounting records. Seller may copy, at its expense,
any such records and documents prior to delivering them to Purchaser.
SELLER SHALL HAVE NO OBLIGATION TO FURNISH PURCHASER ANY DATA OR
INFORMATION WHICH SELLER IS RESTRICTED FROM PROVIDING BECAUSE OF
OBLIGATIONS TO THIRD-PARTIES provided, however, that Seller shall identify
any data or information withheld under this provision and the basis for
such withholding. Seller shall retain the right for seven years (7) from
the Closing Date to access and copy such records and documents at all
reasonable times during Purchaser's normal business hours at Seller's sole
risk and expense upon giving Purchaser reasonable notice in writing of the
date such access is required and upon nominating in such notice the names
of the authorized representatives to whom such access is to be granted.
This right shall survive termination of this Agreement and shall be
binding on Purchaser's successors and assigns. Notwithstanding the
foregoing, should Purchaser wish to destroy any such records or documents
prior to the expiration of such seven (7) year retention period, it shall
notify Seller in writing to such effect and, if Seller does not provide
Purchaser with written notice within thirty (30) days of its receipt of
Purchaser's notice that Purchaser should deliver such records or
documents, or any portions thereof, to Seller, Purchaser may implement
such destruction. The cost of delivering such documents shall be borne by
the Seller.
11.07 TRANSFER OF LICENSES: Purchaser and Seller shall undertake to
arrange, at Purchaser's sole cost, the transfer to Purchaser of any
seismic licenses or permits, geological data licenses, and software
licenses related to the Interests held by the Seller. Seller agrees to
request on behalf of Purchaser the transfer of such licenses or permits
from the holders thereof.
ARTICLE 12. RESPONSIBILITY FOR PAYMENTS AND OBLIGATIONS
Seller shall be responsible for (i) all lease rentals and (ii) all
operating costs, vendor and contractor invoices and other liquidated
monetary obligations of Seller that in each case accrued prior to the
Effective Time and are attributable to the ownership, operation, use or
maintenance of or otherwise relate to the Interests. Purchaser shall be
responsible for all of the abovedescribed payments and obligations that
have accrued or may accrue on and after the Effective Time, and shall
reimburse Seller for any such payments or obligations paid by Seller on or
after the Effective Time. Notwithstanding the foregoing, Seller agrees to
make on behalf of Purchaser all of the payments referred to in item (i)
above for a period ending April 30, 1997, unless Purchaser directs Seller
in writing not to make any such payment. These amounts shall be set forth
in the Settlement Statement and reflected in the Adjusted Sale Price.
ARTICLE 13. TAXES AND PREPAID ITEMS
13.01 APPORTIONMENT OF TAXES: All real property taxes, personal
property taxes and similar obligations with respect to the Interests for
the tax period in which the Effective Time occurs shall be apportioned as
of the Effective Time between Seller and Purchaser. The portion of such
apportioned tax liability which is paid by Purchaser but is attributable
to Seller shall be reimbursed by Seller within fifteen (15) business days
of Seller's receipt of an invoice therefor from Purchaser. Purchaser
shall file or cause to be filed all required reports and returns incident
to such taxes and shall pay or cause to be paid to the taxing authorities
all such taxes relating to the tax period in which the Effective Time
occurs. Purchaser shall supply Seller with copies of the filed reports
and proof of payment, promptly after filing and paying same.
13.02 APPORTIONMENT OF PREPAIDS: Unearned insurance premiums
applicable to periods following the Effective Time, prepaid rentals, and
any other prepaids or accrued payables, if any, attributable to the
Interests shall be prorated as of the Effective Time and amounts owing
from such proration shall be set forth in the Settlement Statement and
reflected in the Adjusted Sale Price.
ARTICLE 14. COVENANTS BY SELLER
From the date hereof until the Closing Date, except as otherwise
consented to by Purchaser in writing, Seller shall (i) not mortgage,
pledge or subject to any security interest any of the Interests; (ii) not
enter into any termination or amendment of any agreement affecting the
Interests; (iii) not enter into any settlement of any pending or
threatened litigation involving the Interests; (iv) not consent to the
entry of any decree or order by a governmental body or pay any fine
relating to the Interests; (v) not enter into any agreement affecting the
Interests with a term in excess of thirty (30) days and (vi) not subject
the Interests to any lien, claim or encumbrance other than a Permitted
Encumbrance.
ARTICLE 15. ADVERSE ENVIRONMENTAL CONDITION
15.01 Purchaser shall advise Seller of any Adverse Environmental
Condition (as defined herein) related to the Interests of which Purchaser
has actual knowledge not later than 12:00 p.m. local Denver time on
Tuesday, March 25, 1997. Except as provided below, Seller, after the
Closing, at its sole cost, shall remedy such Adverse Environmental
Condition(s), individually or in the aggregate, to the reasonable
satisfaction of Purchaser and in accordance with applicable Environmental
Laws (as defined herein) in effect as of the Closing Date. In the event
Seller reasonably determines in good faith that the cost of remediating
Adverse Environmental Condition(s) as to any wells, units or other
subdivision of the Real Property listed on Exhibits "A-1 to A-3", exceeds
the lesser of $300,000.00 or the corresponding allocated value in Exhibit
"D", or that the aggregate cost of remediating Adverse Environmental
Conditions as to all affected Interests exceeds $300,000,00, Seller may
elect, by written notice to Purchaser not later than 12:00 p.m. local
Denver time on Tuesday, March 26, 1997, not to remedy such Adverse
Environmental Condition(s) under this Agreement. If Seller declines to
remediate any Adverse Environmental Condition(s), Purchaser shall have the
option to: (1) exclude the affected property and adjust the Sale Price by
the value allocated thereto in Exhibit "D", or (2) terminate this
Agreement without liability, in which event the Performance Deposit shall
be returned to Purchaser, without interest. If Purchaser elects to
exclude affected Interests aggregating more than twenty percent (20%) of
the Sale Price, then Seller shall have the option to terminate the
Agreement without liability, in which event the Performance Deposit shall
be returned to Purchaser, without interest. As for Interests containing
Adverse Environmental Condition(s) that are conveyed to and accepted by
Purchaser that Seller undertakes to remedy, Seller shall indemnify, save,
discharge, release and hold Purchaser harmless against all penalties,
fines, cleanup or remediation liabilities, claims, demands and causes of
action, resulting from the remediation of, or the failure to, fully and
completely perform the remediation of the Adverse Environmental
Condition(s) in accordance with applicable Environmental Laws. Seller
agrees that it will exercise all reasonable efforts and diligence to
complete any required environmental cleanup and remediation. according to
plans approved by the appropriate regulatory agency within one (1) year of
the Closing unless an such regulatory agency orders Purchaser and/or
Seller to complete such cleanup and remediation on an expedited basis.
Any failure to complete such efforts by such time shall not relieve Seller
of its duty to fully and completely satisfy its obligations hereunder.
Purchaser shall grant Seller and its representatives, at Seller's and such
representatives' sole risk and expense, such access to the Interests as
may be reasonably necessary to satisfy its obligations under this Article,
provided such access does not unreasonably interfere with Purchaser's
operations and Seller agrees to allow Purchaser and its representatives
and consultants the opportunity to monitor the cleanup and remediation
operations hereunder, provided that such monitoring not unreasonably
interfere with such operations. Once Seller's cleanup and remediation
operations bring the Adverse Environmental Condition into compliance with
the requirements of the applicable regulations, Purchaser shall be deemed
to have accepted full responsibility for the environmental condition of
the affected Interest.
15.02 As used herein, "Adverse Environmental Condition" shall
mean any contamination or condition that is the result of any discharge,
release, disposal, production, storage or treatment on, in or below the
Interests or migration to or from the Interests to any other land or body
of water, wherever located, prior to the Closing Date, of any wastes,
pollutants, contaminants, hazardous materials or other materials or
substances for which and to the extent that remediation is required by any
laws, rules, orders, regulations, permits or judgments in effect as of the
Closing Date relating to the protection of the environment (hereinafter
called "Environmental Laws").
ARTICLE 16. INDEMNIFICATIONS
16.01 INDEMNIFICATION: As used in this Article 16 and in the other
provisions of this Agreement, "Claims" shall include claims, demands,
causes of action, liabilities, damages, fines, penalties and Judgments of
any kind or character, whether matured or unmatured, absolute or
contingent, accrued or unaccrued, liquidated or unliquidated or known or
unknown, and whether or not resulting from third party claims, and all
costs and fees (including, without limitation, interest, reasonable
attorneys' fees, reasonable costs of experts, court costs and reasonable
costs of investigation, including those incurred in enforcing the
indemnification provisions contained in this Agreement) in connection
therewith.
Except as otherwise provided in this Agreement:
(a) As of the Effective Time, Purchaser shall assume, be responsible
for and comply with all duties and obligations of the Seller expressed or
implied with respect to the Interests. Such duties and obligations shall
include, without limitation, those which arise under or by virtue of any
lease, contract, agreement (including without limitation the Black Coral
Agreement), document, permit, applicable law or statute and any rule,
regulation or order of any governmental authority. Such duties and
obligations shall not include, and Purchaser shall not assume liability
for, the obligations of the Seller to pay liquidated obligations that
accrued prior to the Effective Time as described in Articles 12 and 13.
Purchaser shall defend, indemnify, save, discharge, and release Seller;
hold Seller harmless from; and pay or reimburse Seller, on a current basis
as such obligations arise, for any and all Claims in connection with the
duties and obligations assumed by the Purchaser under this Section
16.01(a) except (i) to the extent any such Claim has been asserted against
Seller prior to the Effective Time, (ii) as otherwise set forth in this
Agreement, (iii) with respect to any Claim expressly retained by Seller
pursuant to Section 15.01 of this Agreement, and (iv) any broker's or
finder's fees or commissions arising with respect to brokers or finders
retained or engaged by Seller and resulting from or relating to the
transaction contemplated in this Agreement. With respect to any Claim for
cleanup or remediation of the Interests, such Claim shall be deemed
asserted against Seller at the time the notice requiring cleanup or
remediation has been issued by the appropriate regulatory agency or a
complaint or other written notice is received.
(b) Except as provided for in Section 6.02, Seller shall defend,
indemnify, save, discharge, release and hold Purchaser harmless from any
and all Claims for personal injury, death or damage to personal property
arising directly or indirectly from or incident to, the use, occupation,
operation, maintenance, condition (whether latent or patent) or
abandonment of any of the Interests prior to the Closing Date, and
asserted against Purchaser and/or Seller within one (1) year of the
Closing Date.
(c) Except as provided in Subsection 16.01(b), Purchaser shall
defend, indemnify, save, discharge, release and hold Seller harmless from
and pay or reimburse Seller on a current basis for any and all Claims for
personal injury, death or damage to personal property arising directly or
indirectly from or incident to, the use, occupation, operation,
maintenance, condition (whether latent or patent) or abandonment of any of
the Interests, prior to, on or after the Closing Date.
(d) Purchaser shall defend, indemnify, save, discharge, release and
hold Seller harmless from and pay or reimburse Seller on a current basis
for any and all Claims for damage to the environment, environmental
cleanup, remediation, or compliance, or for any other relief, arising
directly or indirectly from or incident to, the use, occupation,
operation, maintenance, condition (whether latent or patent) or
abandonment of any of the Interests, including without limitation,
contamination of the property or premises with Naturally Occurring
Radioactive Materials (NORM), whether or not any such Claims result from
conditions, actions or inactions present or existing on or before the
Closing Date, unless Seller had actual knowledge prior to the Closing Date
that the basis for such Claim constituted an Adverse Environmental
Condition and did not inform Purchaser of such Adverse Environmental
Condition so that Purchaser, in turn, could advise Seller pursuant to
Section 15.01. In such case, Seller shall be responsible for, and shall
defend, indemnify, save, discharge, release and hold Purchaser harmless
from, and pay or reimburse Purchaser on current basis for, any such Claim.
(e) Any claim for indemnity under Subsections 16.01 (a) through
16.01(d) above or under any other provision of this Agreement shall be
made by written notice from the Party sending indemnification (the
"Indemnified Party") to the Party required to provide same (the
"Indemnifying Party"), together with a written description of any third-
party Claim against the Indemnified Party, stating the nature and basis of
such Claim and, if ascertainable, the amount thereof. The Indemnifying
Party shall have a period of thirty (30) business days after receipt of
such notice within which to respond thereto or, in the case of a third-
party Claim which requires a shorter time for response, then within such
shorter period as specified by the Indemnified Party in such notice (the
"Notice Period"). If the Indemnifying Party denies liability for
indemnification under the terms of this Agreement or fails to respond to
the notice within the Notice Period, then the Indemnified Party may defend
or compromise the Claim as it deems appropriate without prejudice to any
of the Indemnified Party's rights hereunder, with no further obligation to
inform the Indemnifying Party of the status of the Claim and no right of
the Indemnifying Party to approve or disapprove any actions taken in
connection therewith by the Indemnified Party. If the Indemnifying Party
accepts liability for indemnification under the terms of this Agreement,
then it shall so notify the Indemnified Party within the Notice Period and
elect either (a) to undertake the defense or compromise of such third-
party Claim with counsel selected by the Indemnifying Party and reasonably
approved by the Indemnified Party or (b) to instruct the Indemnified Party
to defend or compromise such Claim. If the Indemnifying Party undertakes
the defense or compromise of such third-party Claim, then the Indemnified
Party shall be entitled, at its own expense, to participate in such
defense. No compromise or settlement of any third-party Claim shall be
made without reasonable notice to the Indemnified Party and, unless such
compromise or settlement includes a general release of the Indemnified
Party in respect of the matter with no admission of liability on the part
of the Indemnified Party and no constraints on the future conduct of its
business, without the prior written approval of the Indemnified Party.
16.02 EXTENSION AND APPLICATION OF INDEMNITIES: Each Party's
indemnity obligations in this Agreement shall extend to the other and to
the other's parent, subsidiaries and affiliates and their present and
former directors, officers, employees, contractors and agents, and to each
of their heirs, executors, successors and assigns.
16.03 LIMITATION OF INDEMNITIES: Neither Party shall be required
to indemnify the other Party or pay any other amount pursuant to Articles
15, 16 or otherwise in connection with or with respect to the transactions
contemplated in this Agreement in any amount exceeding, in the aggregate,
the Sale Price.
16.04 SOLE AND EXCLUSIVE REMEDY: If the Closing occurs, the sole
and exclusive remedy of each of the Indemnified Parties with respect to
the purchase and sale of the Interests shall be pursuant to the express
provisions of this Agreement. If the Closing occurs, each of Purchaser
and Seller shall be deemed to have waived, to the fullest extent permitted
under applicable law, any right of contribution against Seller, its
shareholders, or any of its Affiliates or Purchaser, its shareholders, or
any of its Affiliates, respectively, and any and all rights, claims and
causes of action it may have against Seller, its shareholders or any of
its Affiliates or Purchaser, its shareholders, or any of its Affiliates,
respectively, arising under or based on any federal, state or local
statue, law, ordinance, rule or regulation or common law or otherwise.
For purposes of this Agreement, "Affiliate" shall mean a company,
partnership or other legal entity which controls, or is controlled by, or
which is controlled by an entity which controls a Party. In Seller's
case, "Affiliate" includes Mobil Corporation and all entities which have
Mobil Corporation as an ultimate parent company. "Control" means power to
direct, administer and dictate policies of a company, partnership of other
legal entity through the direct or indirect ownership of fifty percent
(50%) or more of such entity's voting securities or other voting rights.
The terms "controlling" and "controlled" have meaning correlative to the
foregoing.
16.05 EXPRESS NEGLIGENCE APPLICABILITY: THE INDEMNIFICATION,
RELEASE AND ASSUMPTION PROVISIONS PROVIDED FOR IN THIS AGREEMENT SHALL BE
APPLICABLE WHETHER OR NOT THE LOSSES, COSTS, EXPENSES AND DAMAGES IN
QUESTION AROSE SOLELY OR IN PART FROM THE GROSS, ACTIVE, PASSIVE,
CONCURRENT, SIMPLE OR SOLE NEGLIGENCE, OR STRICT LIABILITY OR OTHER FAULT
OF ANY INDEMNIFIED PARTY OR ANY OTHER THEORY OF LIABILITY OR FAULT,
WHETHER IN LAW (WHETHER COMMON OR STATUTORY) OR EQUITY, UNLESS SUCH
LIABILITY OR FAULT IS BASED UPON THE WILLFUL MISCONDUCT OF THE PARTY OR
ITS AGENTS, EMPLOYEES OR CONTRACTORS. PURCHASER AND SELLER ACKNOWLEDGE
THAT THIS STATEMENT COMPLIES WITH THE EXPRESS NEGLIGENCE RULE AND IS
CONSPICUOUS.
16.06 NO LIABILITY FOR KNOWN BREACHES AND FACTS: Neither Seller
nor Purchaser shall have any obligation or liability under this Agreement
or in connection with or with respect to the transactions contemplated in
this Agreement for any breach, misrepresentation or noncompliance with
respect to any representation, warranty, covenant or obligation, if such
other Party had actual knowledge of such breach, misrepresentation or
noncompliance at least two (2) days prior to the Closing and did not give
the non-complying Party the opportunity to cure such breach or
misrepresentation prior to or at Closing.
ARTICLE 17. PHYSICAL CONDITION OF THE INTERESTS:
PURCHASER'S INVESTIGATION AND LIABILITY: PURCHASER ACKNOWLEDGES THAT: (i)
UNDER THIS AGREEMENT SELLER IS REQUIRED TO GIVE PURCHASER AN OPPORTUNITY
PRIOR TO CLOSING TO (A) EXAMINE THE REAL PROPERTIES, MOVABLES, AND
MATERIALS AS IT HAS REQUESTED TO BE PROVIDED TO IT BY SELLER, (B) DISCUSS
WITH REPRESENTATIVES OF SELLER SUCH MATERIALS AND THE NATURE AND OPERATION
OF THE INTERESTS AND (C) INVESTIGATE THE CONDITION OF THE REAL PROPERTY;
AND (ii) IN ENTERING INTO THIS AGREEMENT, PURCHASER HAS RELIED SOLELY ON
THE EXPRESS REPRESENTATIONS (SOME OF WHICH REPRESENTATIONS TERMINATE AT
THE CLOSING) AND COVENANTS OF SELLER IN THIS AGREEMENT, ITS INDEPENDENT
INVESTIGATION OF, AND JUDGMENT WITH RESPECT TO THE INTERESTS, INCLUDING
BUT NOT LIMITED TO SURFACE CONDITIONS, AND THE OTHER INTERESTS AND THE
ADVICE OF ITS OWN LEGAL, TAX, ECONOMIC, ENVIRONMENTAL, ENGINEERING,
GEOLOGICAL AND GEOPHYSICAL ADVISORS AND NOT ON ANY COMMENTS OR STATEMENTS
OF ANY REPRESENTATIVES OF, OR CONSULTANTS OR ADVISORS ENGAGED BY SELLER.
SELLER DISCLAIMS ANY LIABILITY ARISING OUT OF OR IN CONNECTION WITH ANY
PRESENCE OF NORM OR MMMF ON THE PROPERTY AND ON THE CLOSING DATE, SUBJECT
TO ARTICLES 15 AND 16, PURCHASER SHALL ASSUME THE RISK THAT THE INTERESTS
MAY CONTAIN WASTES OR CONTAMINANTS AND THAT ADVERSE PHYSICAL CONDITIONS,
INCLUDING THE PRESENCE OF WASTES OR CONTAMINANTS, MAY NOT HAVE BEEN
REVEALED BY PURCHASER'S INVESTIGATION OR DISCLOSED TO PURCHASER BY SELLER.
EXCEPT AS PROVIDED IN ARTICLES 15 AND 16, AS OF THE CLOSING DATE, ALL
RESPONSIBILITY AND LIABILITY RELATED TO DISPOSAL, SPILLS, WASTE, OR
CONTAMINATION ON AND BELOW THE INTERESTS SHALL BE TRANSFERRED FROM SELLER
TO PURCHASER AND, PURCHASER SHALL INDEMNIFY, DEFEND, SAVE, DISCHARGE,
RELEASE AND HOLD SELLER HARMLESS THEREFROM. SELLER AND PURCHASER AGREE
THAT THE PROVISIONS OF THIS ARTICLE 17 SHALL SURVIVE THE CLOSING.
ARTICLE 18. FURTHER ASSURANCES:
18.01 PERFORMANCE OF OBLIGATIONS: Seller and Purchaser shall use
all reasonable efforts to take, or cause to be taken, all actions and to
do, or cause to be done, all things necessary, proper or advisable to
carry out all of their respective obligations under this Agreement and to
consummate and make effective the purchase and sale of the Interests
pursuant to this Agreement.
18.02 FURTHER CONVEYANCES AND ASSUMPTIONS: After the Closing
Date, Seller and Purchaser shall execute, acknowledge and deliver all such
further conveyances, transfer orders, notices, assumptions and releases
and such other instruments, and shall take such further actions, as may be
necessary or appropriate to convey or to confirm the conveyance to
Purchaser and its successors or assigns all of the Interests and to
complete the transfer of liabilities and obligations to Purchaser.
ARTICLE 19. NOTICES
All notices and consents to be given hereunder shall be in writing
and shall be deemed to have been duly given if delivered personally; faxed
(i.e., sent by facsimile) with receipt acknowledged; mailed by registered
mail, return receipt requested, postage prepaid; or delivered by a
recognized commercial courier to the Party at the address set forth below
or such other party and/or other address as any Party shall have
designated for itself by ten (1O) business days' prior notice to the other
Party.
Notice is deemed to have been duly received on the day personally
delivered; on the day after it is sent by fax, four (4) days after mailing
by certified or registered mail and the day after it is received from a
recognized commercial courier.
Seller:
AMPOLEX (USA), INC.
Attn: E.F. Delfos
1050 Seventeenth Street, Suite 2500
Denver, Colorado 80265
Phone: (303) 595-9000
FAX No.:(303) 595-0110
Purchaser:
KESTREL ENERGY, INC. VICTORIA PETROLEUM USA, INC.
Attn: Mr. Timothy L. Hoops Attn: Mr. John Kopcheff
999 18th Street, Suite 1100 CC: Mr. Timothy L. Hoops
Denver, Colorado 80202 9th Floor Griffin Centre
Phone: (303) 295-0344 28 The Esplanade
Fax No.: (303) 295-1862 Perth, Western Australia, 6000
Phone: (619)2616100
Fax: (619) 261-6138
ARTICLE 20. MISCELLANEOUS
20.01 ENTIRE AGREEMENT: This Agreement, together with its
Exhibits, the Parties' letter agreement dated February 20, 1997, and their
confidentiality agreement dated January 27, 1997, relating to the
Interests constitute the entire agreement between the Parties and
supersede all prior agreements, understandings, negotiations and
discussions, whether oral or written, of the Parties. No supplement,
amendment, alteration, modification, waiver or termination of this
Agreement shall be binding unless executed in writing by the Parties
hereto after the execution of this Agreement. The provisions of Sections
6.02, 8.01, 11.06, 15.01, and Articles 16, 17, 18 and this Article 20
shall survive the Closing or any termination of this Agreement, except as
otherwise provided therein.
20.02 SEVERABILITY: In the event any covenant, condition, or
provision contained herein is held to be invalid by a court of competent
jurisdiction, the invalidity of any such covenant, condition or provision
shall in no way affect any other covenant, condition or provision
contained herein; provided, however, that any such invalidity does not
materially prejudice either Purchaser or Seller in its respective rights
and obligations contained in the valid covenants, conditions, and
provisions of this Agreement.
20.03 WAIVER: No waiver of any of the provisions of this
Agreement shall constitute a waiver of any other provisions hereof
(whether or not similar), nor shall such waiver constitute a continuing
waiver unless otherwise expressly provided. Any waiver must be in writing
and signed by an authorized representative of the waiving Party.
20.04 CONSTRUCTION OF AMBIGUITY: In the event of any ambiguity in
any of the terms or conditions of this Agreement, including any exhibits
thereto and whether or not placed of record, such ambiguity shall not be
construed for or against any Party hereto on the basis that such Party did
or did not author the same.
20.05 CAPTIONS: The captions in this Agreement are for
convenience only and shall not be considered a part of or affect the
construction or interpretation of any provisions of this Agreement.
20.06 GOVERNING LAW: This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Colorado, without
reference to the conflict of laws principles applied by the courts of the
State of Colorado. All assignments and instruments of conveyance executed
in accordance with this Agreement shall be governed by and interpreted and
enforced in accordance with the laws of the state where the Interests
conveyed thereby are located.
20.07 WAIVER OF JURY TRIAL: SELLER AND PURCHASER DO HEREBY
IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL
RIGHT TO A TRIAL BY JURY IN ANY ACTION, SUIT OR OTHER LEGAL PROCEEDING
BASED UPON, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
20.08 LIMITATION OF LIABILITY: Seller and Purchaser do hereby
covenant and agree that the recovery by either Party hereto of any damages
suffered or incurred by it as a result of any breach by the other Party of
any provision of this Agreement shall, in addition to such other
limitations as are set forth in this Agreement, be limited to the actual
damages suffered or incurred by the nonbreaching Party as a result of the
breach by the breaching Party and in no event shall the breaching Party be
liable to the non-breaching Party for any indirect, consequential,
exemplary or punitive damages suffered or incurred by the non-breaching
Party as a result of the breach by the breaching Party. This Section
shall not limit Seller's right to retain the Performance Deposit as
liquidated damages under Section 5.01.
20.09 PUBLICITY: Seller and Purchaser shall consult with each
other with regard to all publicity and other releases at or prior to the
Closing concerning this Agreement and the transactions contemplated hereby
and, except as required by applicable law or the applicable rules or
regulations of any governmental body or stock exchange, neither Party
shall issue any publicity or other release without the prior written
consent of the other Party.
20.10 COUNTERPARTS: This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
20.11 ASSIGNMENT: This Agreement may not be assigned by either
Party to a third party other than an Affiliate without the prior written
consent of the other Party, which consent shall not be unreasonably
withheld. This Agreement shall be binding upon and inure to the benefit
of the Parties hereto and their respective permitted successors and
assigns. All future conveyances of all or any portion of the Interests
shall expressly recognize and perpetuate the rights and obligations set
out in this Agreement.
20.12 COSTS AND EXPENSES: Except as otherwise expressly provided
herein, each Party shall bear and pay its own costs and expenses,
including, but not limited to attorneys fees, incurred in connection with
this transaction.
20.13 JOINT VENTURE, PARTNERSHIP AND AGENCY: Nothing contained in
this Agreement shall be deemed to create a joint venture, partnership, tax
partnership or agency relationship between the Parties.
20.14 CONFIDENTIALITY: The Parties shall continue to be subject
to the Confidentiality Agreement dated January 22, 1997, which agreement
is hereby incorporated by reference.
20.15 SALE OF INTERESTS LOCATED ON FEDERAL LANDS: If the
Interests are located on federal lands, Purchaser agrees to obtain
approval from the appropriate federal and/or state agencies as soon as
practicable after the Closing and to provide Seller with a copy thereof
Purchaser shall indemnify, defend, save, discharge, release and hold
Seller harmless from and against any liability resulting from Purchasee's
failure to comply with this provision.
20.16 MEDIATION: If a dispute arises out of or relates to this
Agreement, or the breach thereof, and if the dispute cannot be settled
through negotiation, the Parties agree first to try in good faith to
settle the dispute by mediation administered by the American Arbitration
Association under its Commercial Mediation Rules (or such other form of
mediation as is reasonably acceptable to both Parties) before resorting to
arbitration, litigation, or some other dispute resolution procedure. The
mediator selected to resolve any dispute hereunder shall be acceptable to
both Parties. If the Parties cannot agree on a mediator, then they shall
make application to the Administrative Judge of the State District Courts
of Denver County, Denver, Colorado for appointment of a mediator. Each
Party shall bear its own attorneys' fees in connection with any mediation
and the cost of the mediation shall be shared equally by both Parties. In
the event of any arbitration, the rules of the American Arbitration
Association shall apply.
20.17 NON-COMPETE AGREEMENTS: If Closing occurs, Purchaser shall
prepare, and Seller shall execute, prior to the Post Closing Adjustment
Date, assignments transferring all of Seller's rights and obligations
under the confidentiality and non-compete agreements entered into between
Seller and third parties with respect to the Interests, copies of which
are attached as Exhibit "F" (hereinafter called "Non-Compete Agreements"),
to the extent such rights are transferable.
(i) Should any issue arise regarding the assignability of the Non-
Compete Agreements to Purchaser, including any Claim by a third party or
by Purchaser, Seller or its successor or Affiliate shall have no
obligation to enforce the Non-Compete Agreements against such third
parties, but shall reasonably cooperate with Purchaser in its efforts to
enforce such Agreements.
(ii) With respect to any Non-Compete Agreement that Seller is unable
to Assign to Purchaser, should Seller receive from any third party an
assignment of a lease or an interest in the area of mutual interest
defined in a Non-Compete Agreement, Seller agrees to prepare and execute
an assignment transferring all of Seller's rights and obligations
thereunder to Purchaser, to the extent such leases or interests are
transferable. Purchaser shall pay no additional consideration to Seller
or its successor for the transfer of any such leases or interests.
Purchaser, at its sole cost, shall be responsible for recording any
assignment that needs to be recorded.
(iii) Purchaser shall indemnify, defend, save, discharge, release
and hold harmless Seller and its Affiliates from, and pay or reimburse
Seller on a current basis for, any and all losses, liabilities, Claims (as
defined in Section 16.01), and causes of action arising out of, or in any
way connected with or as a result of the provisions of this Section 20.17.
20.18 JOINT AND SEVERAL LIABILITY: Kestrel and Victoria shall be
jointly and severally liable for all obligations arising under this
Agreement.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement
as of the day and year first above set forth.
SELLER:
AMPOLEX (USA), INC.
By: /s/ Ernest F. Delfos
--------------------------------
Ernest F. Delfos
Title: Vice President and General Manager
PURCHASER:
KESTREL CALIFORNIA VICTORIA PETROLEUM USA, INC.
ENERGY, INC.
By: /s/ Timothy L. Hoops By: /s/ Timothy L. Hoops
-------------------------------- ------------------------------
Timothy L. Hoops Timothy L. Hoops
Title: President Title: Vice President
Goose Lake Prospect
Kern County, California
EXHIBIT "A-1"
Attached to and made a part of that certain Purchase and Sale Agreement
between AMPOLEX (USA), INC., and KESTREL ENERGY CALIFORNIA, INC. and
VICTORIA PETROLEUM USA, INC., dated effective January 1, 1997.
Ampolex
Lease Ampolex Recording
No. Lessor Lease Date WI/NRI Document #
- ------ ------------------------ ----------- ---------------- ---------
William T. Hollinger, 13 Nov 1996 100% WI 0196161370
a married man as his 16.67% base roy.
Separate property 3% Conoco orri
(GL#11) 2% Coral orri*
Margaret Anne Cooper, 5 Nov 1996 100% WI 0196161388
as Trustee of the 16.67% base roy.
Finis G. Cooper and 3% Conoco orri
Ethel B. Cooper 1977 2% Coral orri*
Trust (GL#49, 120)
LIMITED insofar as said
lease covers the
Following described
lands:
T-25-S, R-22-E
Sec. 32: SE/4SW/4
Margaret Anne Cooper, 5 Nov 1996 100% WI 0196161388
as Trustee of the 16.67% base roy.
Finis G. Cooper and 3% Coral orri*
Ethel B. Cooper 1977 Trust
(GL#49, 120)
All portions of this
lease EXCEPT for the
following lands:
T-25-S. R-22-E
Sec. 32: SE/4SW/4
Patricia Devin, also 26 Nov 1996 100% WI 0197027803
known as Patricia Lucey 16.67% base roy.
Devin, a married woman 3% Conoco orri
as her separate 2% Coral orri*
Property
Roger B. Williams, a 22 Oct 1996 100% WI 0196161391
Married man as his sole 16.67% base roy.
and separate property 3% Conoco orri
(GL#53) 2% Coral orri*
Gloria Jamieson, a 12 Nov 1996 100% WI 0196161393
married woman as her 16.67% base roy.
separate property 3% Conoco orri
(GL#62, 63) 2% Coral orri*
Billy Andrews and 26 Nov 1996 100% WI 0197027804
Shirley Ann Andrews, 16.67% base roy.
husband and wife as 3% Conoco orri
joint tenants 2% Coral orri*
Antoinette Oesterling, 22 Jan 1997 100% WI 197030501
a married woman as her 16.67% base roy.
separate property 3% Coral orri*
(GL #18)
Gilbert M. Nishimura as 26 Dec 1996 100% WI 197030502
Trustee of the 16.67% base roy.
Nishimura Family Trust, 3% Conoco orri.
dated October 31, 1991. 2% Coral orri*
(GL # 28)
Goose Lake Prospect
Kern County, California
Ampolex
Lease Ampolex Recording
No. Lessor Lease Date WI/NRI Document #
- ------ ------------------------ ----------- ---------------- ---------
Leo K. Hamako and 27 Feb 1997 100% WI 197030503
Momoye Hamako, husband 16.67% base roy.
and wife as joint 3% Conoco orri.
tenants (GL #24) 2% Coral orri*
George A. Skrivanek 14 Oct 1996 100% WI 0196161404
and Roberta C. Skrivanek, 16.67% base roy.
husband and wife as joint 3% Coral orri*
Tenants
Roberta C. Skrivanek, 14 Oct 1996 100% WI 0196161405
a married woman as her 16.67% base toy
separate property 3% Coral orri*
Bradley Charles 13 Nov 1996 100% WI 0196161386
Campbell, a single man 16.67% base roy.
3% Coral orri*
Carla Baggiani, a 14 Oct 1996 100% WI 0196161403
single woman, and 16.67% base roy.
Rose Munoz, a 3% Coral orri*
married woman as her
separate property
Texaco Exploration 25 Nov 1996 100% WI 0196161369
and Production Inc., a 18.75% base roy.
Delaware Corporation 3% Coral orri*
2137 Wimmer E. Cooper and 29 Mar 1996 100% WI 0196154805
Betty J. Cooper, as 16.67% base roy.
Trustees of the Wimmer E. 3% Conoco orri
Cooper Trust No. 1 2% Coral orri*
established June 5, 1979
(GL#21)
2140A Ralph John Lachenmaier 23 Apr 1996 100% WI 0196154830
a married man as his 16.67% base roy.
separate property and 3% Conoco orri
William Richard 2% Coral orri*
Lachenmaier, a married man
as his separate property
(GL#47)
2140B Karmen K. Jacobsen, 29 April 1996 100% WI 0196158500
Trustee of the R. A. 18.75% base roy.
and K. K. Jacobsen Family 3% Conoco orri
Trust dated May 29, 1991 2% Coral orri*
(GL#47)
2140C June I. Jeffries and 29 Apr 1996 100% WI 0196154833
Silver D. Sack, as Co- 16.67% base roy.
successor Trustees of the 3% Conoco orri
Testamentary Trust under 2% Coral orri*
Will of William
Lachenmaier, deceased
(GL#47)
2140D Lon V. Smith 15 May 1996 100% WI 0196154835
Foundation, a 16.67% base roy.
corporation (GL#47) 3% Conoco orri
2% Coral orri*
Goose Lake Prospect
Kern County, California
Ampolex
Lease Ampolex Recording
No. Lessor Lease Date WI/NRI Document #
- ------- ----------------------- ----------- ---------------- ---------
2140E William J. Murphy, a 18 June 1996 100% WI 0196158501
widower (GL#47) 16.67% roy.
3% Conoco orri
2% Coral orri*
214OF The Trustees of The Rolf 15 May 1996 100% WI 0196154834
A. Jacobsen Testamentary 16.67% base roy.
Trust "B" under Will of 3% Conoco orri
Rolf A. Jacobsen, deceased 2% Coral orri*
(GL#47)
214OG William G. Henshaw, a 16 Apr 1996 100% WI 0196154831
married man as his 16.67% base roy..
separate property 3% Conoco orri
(GL#47) 2% Coral orri*
2140H Mary-tom Leefeldt, a 18 Apr 1996 100% WI 0196154832
married woman as her 16.67% base roy.
separate property (GL#47) 3% Conoco orri
2% Coral orri*
2141A Elmyra Babcock, a widow 2 Apr 1996 100% WI 0196154822
(GL#43) 16.67% base roy.
3% Conoco orri
2% Coral orri*
2141B Sandra Babcock, a single 2 May 1996 100% WI 0196154825
woman (GL#43) 16.67% base roy.
3% Conoco orri
2% Coral orri*
2141C Frank L. Nagle, an 12 June 1996 100% WI 0196158498
unmarried man 16.67% base roy.
3% Conoco orri
2% Coral orri*
2141D Leland C. Launer, Trustee 11 June 1996 100% WI 0196158499
Jane K. Metcalf Revocable 16.67% base roy.
Trust and The Edwards H. 3% Conoco orri
Metcalf Revocable Trust 2% Coral orri*
and Edwards H. Metcalf,
Sole Heir and Beneficiary
(GL#43)
2141E Harry Babcock, a married 2 May 1996 100% WI 0196154824
married man as his 16.67% base roy.
separate property (GL#43) 3% Conoco orri
2% Coral orri*
2141F Mertin Wade Ritchie, a 16 Apr 1996 100% WI 0196154823
married man as his 16.67% base roy.
separate property 3% Conoco orri
(GL#43) 2% Coral orri*
Goose Lake Prospect
Kern County, California
Ampolex
Lease Ampolex Recording
No. Lessor Lease Date WI/NRI Document #
- ------- ----------------------- ----------- ---------------- ---------
2142A Mary-Tom Leefeldt, a 18 Apr 1996 100% WI 0196154811
married woman as her 16.67% base roy.
separate property 3% Coral orri*
(GL#31)
2142B William G. Henshaw, a 16 Apr 1996 100% WI 0196154812
married man as his 16.67% base roy.
separate property 3% Coral orri*
(GL#31)
2143A Barbara Bell, a widow 15 Apr 1996 100% WI 0196154827
(GL#45) 16.67% base roy.
3% Coral orri*
2143B Margaret Kendall, 5 Apr 1996 100% WI 0196154828
a widow (GL#45) 16.67% base roy.
3% Coral orri*
2143C Bank of America NT & SA 17 June 1996 100% WI 0196161385
and Fay H. Farmer, 16.67% base roy.
Successor in interest by 3% Coral orri*
merger to Security Pacific
National Bank, a national
banking association as Co-
Trustee U/W/O/Etta Helm
(GL#45)
2152 Edmund W. Clarke, a 19 Apr 1996 100% WI 0196154842
married man as his 16.67% base roy.
separate property (GL#55) 3% Conoco orri
2% Coral orri*
2153A Vernon Denman Gilbreath 9 Apr 1996 100% WI 0196154850
and Katherine Florence 16.67% base roy.
Gilbreath, Trustees of the 3% Conoco orri
Vernon Denman Gilbreath 2% Coral orri*
and Katherine Florence
Gilbreath Living Trust,
dated January 20,1993
(GL#33)
2153B Vernon Gilbreath, as to a 21 May 1996 100% WI 0196155321
Life Estate and Vernon 16.67% base roy.
Gilbreath, Alfred M. 3% Conoco orri
Gilbreath and Emily A. 2% Coral orri*
Simpson Lundquist, as to
the remainder Base/
Counterpart "A"/
Counterpart "B" (GL#33)
2153C Alfred M. Gilbreath, an 18 July 1996 100% WI 0196158493
unmarried man (GL#33) 16.67% base roy.
3% Conoco orri
2% Coral orri*
2153D Cheryl Nedine Hartshorn, 25 June 1996 100% WI 0196158494
a married woman as her 16.67% base roy.
separate property (GL#33) 3% Conoco orri
2% Coral orri*
2153E Judy Henson, a married 19 Aug 1996 100% WI 0196161382
woman as her separate 16.67% base roy.
property; Linda E. Keller, 3% Conoco orri
a married woman as her 2% Coral orri*
separate property; and
Marla Kirkman, a married
woman as her separate
property (GL#33)
Goose Lake Prospect
Kern County, California
Ampolex
Lease Ampolex Recording
No. Lessor Lease Date WI/NRI Document #
- ------ ----------------------- ----------- ---------------- ---------
2153F Emily A. Gilbreath 5 Aug 1996 100% WI 0196161380
Lundquist, as to a Life 16.67% base roy.
Estate and John J. 3% Conoco orri
Schultz, Michael C. 2% Coral orri*
Schultz and Samuel M.
Schultz, as to the
remainder and individually
(GL#33-Base Lease)
2153F Emily A. Gilbreath 5 Aug 1996 100% WI 0196161381
Lundquist, as to a Life 16.67% base roy.
Estate and John J. 3% Conoco orri
Schultz, Michael C. 2% Coral orri*
Schultz and Samuel M.
Schultz, as to the
remainder and individually
(GL#33-Counterpart "A")
2154 Catherine Antongiovanni 8 Apr 1996 100% WI 0196154810
and Phillip Joseph Jacobs, 20% base roy.
Successor Trustees of the 3% Conoco orri
Thomas Antongiovanni 2% Coral orri*
Trust No. 1, established
March 21, 1980 (GL#27)
2155A Helen Solomon, as Trustee 3 Apr 1996 100% WI 0196154809
under the Will of Joseph 16.67% base roy.
B. Solomon, deceased, 3% Conoco orri
Trust and Helen Solomon, a 2% Coral orri*
widow (GL#26)
2156A Hideo Murata and Marian 12 Apr 1996 1 00% WI 0196154808
Murata, husband and wife 16.67% base roy.
as joint tenants (GL#23) 3% Conoco orri
2% Coral orri*
2157A Irene Terry, a widow, and 3 Apr 1996 100% WI 0196154799
Irene Terry, Trustee of 16.67% base roy.
the Leonard J. 3% Conoco orri
Terry and Irene Terry 1984 2% Coral orri*
Trust (GL#l1)
2157B Frank Albert Ralphs, a 8 Apr 1996 100% WI 0196154800
married man as his 16.67% base roy.
separate property (GL# 11) 3% Conoco orri
2% Coral orri*
2157C Glen Alan Smith and Shelle 12 July 1996 100% WI 0196158487
Rene Smith, aka Shelley 16.67% base roy.
Rene Smith and Lee Kent 3% Conoco orri
Smith and Cheryl Wagner 2% Coral orri*
Smith, aka Cheryl W.
Smith (GL#11)
2157D Patricia Devin, also 26 Nov 1996 100% WI 0197027803
known as Patricia Lucey 16.67% base roy.
Devin, a married woman as 3% Conoco orri
her separate property 2% Coral orri*
2158 Edmund W. Clarke, a 8 Apr 1996 100% WI 0196154801
married man as his 16.67% base roy.
separate property (GL#17) 3% Coral orri*
2159 Lyle Beranek and Velda 24 Apr 1996 100% WI 0196154836
Beranek, husband and wife 16.67% base roy
(GL#48) 3% Coral orri*
Goose Lake Prospect
Kern County, California
Ampolex
Lease Ampolex Recording
No. Lessor Lease Date WI/NRI Document #
- ------ ----------------------- ----------- ---------------- ---------
2160A Spur Land and Cattle 26 Apr 1996 100% WI 0196154839
Company, a corporation 16.67% base roy.
(GL#52,57) 3% Conoco orri
2% Coral orri*
LIMITED insofar as said
lease covers the following
described lands:
T-26-S, R-22-E
Sec. 5: NE/4NW/4
2160A Spur Land and Cattle 26 Apr 1996 100% WI 0196154839
Company, a corporation 16.67% base roy.
(GL#52,57) 3% Coral orri*
All of lease EXCEPT for
the following described
land:
T-26-S, R-22-E
Sec. 5: NE/4NW/4
2160B Lon V. Smith Foundation, 15 May 1996 100% WI 0196154840
a corporation(GL#52,57) 16.67% base roy.
3% Conoco orri
LIMITED insofar as said 2% Coral orri*
lease covers the following
described lands:
T-26-S, R-22-E
Sec. 5: NE/4NW/4
2160B Lon V. Smith Foundation, 15 May l996 100% WI 0196154840
a corporation (GL#52,57) 16.67% base roy.
3% Coral orri*
All of lease EXCEPT for
the following described
land:
T-26-S, R-22-E
Sec. 5: NE/4NW/4
2161A Paul G. Skipper, a married 29 Apr 1996 100% WI 0196154838
man as his separate 16.67% base roy.
property (GL#51) 3% Coral orri*
2161B Sidney Clark, DVM, an 22 April 1996 100% WI 0196158504
unmarried man (GL#51) 16.67% base roy.
3% Coral orri*
2161C Stanley A. Bergstrom, 9 May 1996 100% WI 0196154837
a married man as his 16.67% base roy.
separate property (GL#51) 3% Coral orri*
2162A Lon V. Smith Foundation, 15 May 1996 100% WI 0196154847
a corporation (GL#66) 16.67% base roy.
3% Conoco orri
2% Coral orri*
Goose Lake Prospect
Kern County, California
Ampolex
Lease Ampolex Recording
No. Lessor Lease Date WI/NRI Document #
- ------ ----------------------- ----------- ---------------- ---------
2162B Karmen K. Jacobsen, Trustee 29 April 1996 100% WI 0196158508
of the R. A. and K. K. 18.75% base roy.
Jacobsen Family Trust dated 3% Conoco orri
May 29, 1991 (GL#66) 2% Coral orri*
2162C June I. Jeffries and Silver 29 Apr 1996 100% WI 0196154845
D. Sack, as Successor Co- 16.67% base roy.
trustees of Testamentary 3% Conoco orri
Trust under the Will of 2% Coral orri*
William Lachenmaier,
deceased (GL#66)
2162D Ralph John Lachenmaier, a 23 Apr 1996 100% WI 0196154844
married man as his 16.67% base roy.
separate property, and 3% Conoco orri
William Richard Lacherimaier, 2% Coral orri*
a married man as his
separate property (GL#66)
2162E Douglas C. Elliott and 21 May 1996 100% WI 0196154848
Patsy Ann Elliott, 16.67% base roy.
Trustees of the Douglas C. 3% Conoco orri
Elliott Family Trust (GL#66) 2% Coral orri*
2162F The Trustees of The 15 May 1996 100% WI 0196154846
Rolf A. Jacobsen 16.67% base roy.
Testamentary Trust "B" 3% Conoco orri
under the Will of Rolf A. 2% Coral orri*
Jacobsen, deceased (GL#66)
2163A Arthur S. Gerquest, Sonja 5 June 1996 100% WI 0196158491
Gerquest and Peter S. 16.67% base roy.
Gerquest, Heirs at Law to 3% Conoco orri
the Estate of Llewellyn 2% Coral orri*
Prior Gerquest, deceased
(GL#22, 54)
2163B Anne Orme Allan, a widow 15 May 1996 100% WI 0196154841
(GL#54) 16.67% base roy.
3% Conoco orri
2% Coral orri*
2163C Anne Orme Allan, a widow 23 Apr 1996 100% WI 0196154806
(GL#22) 16.67% base roy.
3% Conoco orri
2% Coral orri*
2163D Madeleine C. Chaffey, 23 Apr 1996 100% WI 0196154807
Trustee under Declaration 16.67% base roy.
of Trust dated September 12, 3% Conoco orri
1984 (GL#22, 54) 2% Coral orri*
2164A Hideo Murata and Marian 12 Apr 1996 100% WI 0196154798
Murata, husband and wife 16.67% base roy.
as joint tenants (GL#7, 8, 28) 3% Conoco orri
LIMITED insofar as said 2% Coral orri*
lease covers the following
described lands:
Goose Lake Prospect
Kern County, California
Ampolex
Lease Ampolex Recording
No. Lessor Lease Date WI/NRI Document #
- ------ ----------------------- ----------- ---------------- ---------
T-25-S, R-22-E
Sec. 34: W/2E/2SW/4
2164A Hideo Murata and Marian 12 Apr 1996 100% WI 0196154798
Murata, husband and wife 16.67% base roy.
as joint tenants 3% Coral orri*
(GL#7, 8, 28)
All of lease EXCEPT for the
following described land:
T-25-S, R-22-E
Sec. 34: W/2E/2SW/4
2164B Hatsuye Moriguchi, 12 June 1996 100% WI 0196158492
a widow (GL#28) 16.67% base roy.
3% Conoco orri
LIMITED insofar as said 2% Coral orri*
lease covers the
following described lands:
T-25-S, R-22-E
Sec. 34: W/2E/2SW/4
2164B Hatsuye Moriguchi, 12 June 1996 100% WI 0196158492
a widow (GL#28) 16.67% base roy.
3% Coral orri*
All portions of this lease
EXCEPT for the following
described land:
T-25-S, R-22-E
Sec. 34: W/2E/2SW/4
2167A H. P. Anderson, III, 7 Aug 1996 100% WI 0196122606
a married man as his 16.67% base roy.
separate property 3% Coral orri*
(GL#5, 119)
2167B Mercy Healthcare, 25 June 1996 100% WI 0196122608
Bakersfield, a non-profit 16.67% base roy.
California corporation 3% Coral orri*
(GL#5)
2167C Mercy Healthcare, 7 June 1996 100% WI 0196122607
Bakersfield, a non-profit 16.67% base roy.
California corporation 3% Coral orri*
(GL#5)
2168 Mercy Healthcare, 25 June 1996 100% WI 0196122609
Bakersfield, a non-profit 16.67% base roy.
California corporation 3% Coral orri*
(GL#122,123)
2169A The Estate of Albert 22 July 1996 100% WI 0196158490
Levinson, deceased, Albert 16.67% base roy.
J. Galen, Executor (GL#18) 3% Coral orri*
2169B Robert Roe Blacker, a 24 May 1996 100% WI 0196154802
married man as his separate 16.67% base roy.
property (GL# 18) 3% Coral orri*
2169C Pamela Crabb Allen, a 1 Aug 1996 100% WI 0196161371
married woman as her 16.67% base roy.
separate property (GL#18) 3% Coral orri*
Goose Lake Prospect
Kern County, California
Ampolex
Lease Ampolex Recording
No. Lessor Lease Date WI/NRI Document #
- ------ ----------------------- ----------- ---------------- ---------
2169D Joseph M. O'Sullivan, 16 Aug 1996 100% WI 0196161372
Heir to the Estate of 16.67% base roy.
Elizabeth Van Houten Law 3% Coral orri*
O'Sullivan, who acquired
title as Elizabeth Van
Houten Law (GL#18)
2169E M. Patricia Danielson, 29 Aug 1996 100% WI 0196161373
Heir to the Estate of 16.67% base roy.
Elizabeth Van Houten Law 3% Coral orri*
O'Sullivan, who acquired
title as Elizabeth Van
Houten Law (GL#18)
2169F Richard P. O'Sullivan, 28 Aug 1996 100% WI 0196161374
Heir to the Estate of 16.67% base roy.
Elizabeth Van Houten Law 3% Coral orri*
O'Sullivan, who acquired
title as Elizabeth Van
Houten Law (GL#18)
2169G Bruce L. Cronander, a 17 July 1996 100% WI 0196161375
single man (GL#18) 16.67% base roy.
3% Coral orri*
2169H William R. Van Houten, a 12 Sep 1996 100% WI 0196161316
married man as his separate 16.67% base roy.
property (GL#18) 3% Coral orri*
2170 T. Roger Duncan, a single 24 May 1996 100% WI 0196154826
man, and Alan Clawson 16.67% base roy.
Duncan, a single man (GL#44) 3% Coral orri*
2171A Lon V. Smith Foundation, 15 May 1996 100% WI 0196154829
a corporation (GL#46) 16.67% base roy.
3% Conoco orri
2% Coral orri*
2171B Bank of America NT & SA, 9 July 1996 100% WI 0196161387
Successor in interest by 16.67% base roy.
merger to Security Pacific 3% Conoco orri
National Bank, a national 2% Coral orri*
banking association as
Trustee U/W/O/ E. E. Potter
and Elizabeth F. Potter,
Trust Nos. 2079270 and
2835530 (GL#46)
2172A Howard S. Ramsden, Donald 15 May 1996 100% WI 0196154849
L. Houchin and Charles J. 16.67% base roy.
Lentz, as Trustees under (note: base royalty
Declaration of Trust dated can escalate to
June 14, 1994, known as the 20%, see addendum
Houchin Family Trust (GL#77) to lease)
3% Conoco orri
2% Coral orri*
2172B Leslie Jill Jurhs, a 1 July 1996 100% WI 0196161400
married woman as her 16.67% base roy.
separate property (GL#77) (note: base royalty
can escalate to
20%, see addendum
to lease)
3% Conoco orri
2% Coral orri*
Goose Lake Prospect
Kern County, California
Ampolex
Lease Ampolex Recording
No. Lessor Lease Date WI/NRI Document #
- ------ ----------------------- ----------- ---------------- ---------
2172C Robert Bruce Lumis, a 9 July 1996 100% WI 0196158509
married man as his separate 16.67% base roy.
property (GL#77) (note: base royalty
can escalate to
20%, see addendum
to lease)
3% Conoco orri
2% Coral orri*
2172D Walter R. Nordin and 8 July 1996 100% WI 0196161401
Frances E. Nordin, as 16.67% base roy.
Trustees of the Walter R. (note: base royalty
Nordin and Frances E. can escalate to
Nordin Trust, dated August 20%, see addendum
14, 1991 (GL #77) to lease)
3% Conoco orri
2% Coral orri*
2172E Louise Willson, a single 24 June 1996 100% WI 0196161399
woman (GL#77) 16.67% base roy.
(note: base royalty
can escalate to
20%, see addendum
to lease)
3% Conoco orri
2% Coral orri*
2172F Robert B. Jacobsen, an 25 June 1996 100% WI 0196161402
unmarried man (GL#77) 16.67% base roy.
(note: base royalty
can escalate to
20%, see addendum
to lease)
3% Conoco orri
2% Coral orri*
2172G Frank W. Clark, Jr., a 18 June l996 100% WI 0196161398
married man as his separate 16.67% base roy.
property (GL#77) (note: base royalty
can escalate to
20%, see addendum
to lease)
3% Conoco orri
2% Coral orri*
2184 Wade L. Sargent and 6 May 1996 100% WI 0196154843
Genevieve G. Sargent, 16.67% base roy.
husband and wife (GL#59) 3% Conoco orri
2% Coral orri*
Goose Lake Prospect
Kern County, California
Ampolex
Lease Ampolex Recording
No. Lessor Lease Date WI/NRI Document #
- ------ ----------------------- ----------- ---------------- ---------
2185A H. Dan Temple and Beverly 7 May 1996 100% WI 0196154817
Temple, Co-trustees of 16.67% base roy.
the Temple Living Trust, 3% Coral orri*
under Trustee's Deed dated
May 31,1984 (GL#40)
2185B Richard Stone, a married 21 May 1996 100% WI 0196158496
man as his separate 16.67% base roy.
property (GL#40) 3% Coral orri*
2185C Richard Stone, Trustee 21 May 1996 100% WI 0196158497
for Michelle Stone, a minor 16.67% base roy.
(GL#40) 3% Coral orri*
2185D Richard Stone, Trustee 21 May 1996 100% WI 0196154814
for Robin Stone, a minor 16.67% base roy.
(GL#40) 3% Coral orri*
2185E Janet Temple Bogen, a 3 May 1996 100% WI 0196154816
married woman as her 16.67% base roy.
separate property (GL#40) 3% Coral orri*
2185F Marshall Stone, a married 10 May 1996 100% WI 0196154815
man as his separate 16.67% base roy.
property (GL#40) 3% Coral orri*
2185G Linda Temple-Martinie, an 30 May 1996 100% WI 0196154820
unmarried woman (GL#40) 16.67% base roy.
3% Coral orri*
2185H William Stone, an unmarried 1 May 1996 100% WI 0196154818
man (GL#40) 16.67% base roy.
3% Coral orri*
2185I Carol Stone, an unmarried 2 May 1996 100% WI 0196154819
woman (GL#40) 16.67% base roy.
3% Coral orri*
2186 A. Sterling Cole and 10 May 1996 100% WI 0196154821
Kathleen Zimmerman, Co- 16.67% base roy.
executors of the Estates of 3% Conoco orri
Amos Sterling Cole and Helen 2% Coral orri*
Cole, deceased (GL#41)
2187A Howard S. Ramsden, 15 May 1996 100% WI 0196154813
Donald L. Houchin and 16.67% base roy.
Charles J. Lentz, as 3% Conoco orri
Trustees under Declaration 2% Coral orri*
of Trust dated June 14, 1994,
known as the Houchin Family Trust
(GL#39,72,76)
LIMITED insofar as said
lease covers the
following described lands:
T-26-S, R-22-E
Sec. 4: N/2
Goose Lake Prospect
Kern County, California
Ampolex
Lease Ampolex Recording
No. Lessor Lease Date WI/NRI Document #
- ------ ----------------------- ----------- ---------------- ---------
2187A Howard S. Ramsden, 15 May 1996 100% WI 0196154813
Donald L. Houchin and Charles 16.67% base roy.
J. Lentz, as Trustees under (note: base
Declaration of Trust royalty can
dated June 14, 1994, known escalate to 20%,
as the Houchin Family Trust see addendum to
(GL#39, 72, 76) lease)
3% Coral orri*
All of lease EXCEPT for the
following described land:
T-26-S, R-22-E
Sec. 4: N/2
2187B Louise Willson, a single 24 June 1996 100% WI 0196161384
woman (GL# 76) 16.67% base roy.
(note: base
LIMITED insofar as said royalty can
lease covers the following escalate to 20%,
described lands: see addendum to
T-26-S, R-22-E lease)
Sec. 4: N/2 3% Conoco orri
2% Coral orri*
2187B Louise Willson, a single 24 June 1996 100% WI 0196161384
woman (GL#39, 72,76) 16.67% base roy.
(note: base
All portions of this lease royalty can
EXCEPT for the following escalate to 20%,
lands: see addendom to
T-26-S, R-22-E lease)
Sec. 4: N/2 3% Coral orri*
2187C Walter R. Nordin and 8 July 1996 100% WI 0196161383
Frances E. Nordin, as 16.67% base roy.
Trustees of the Walter R. (note: base royalty
Nordin and Frances E. Nordin can escalate to 20%,
Trust, dated August 14, 1991 see addendum to
(GL#39, 72, 76) lease)
3% Conoco orri
LIMITED insofar as said lease 3% Coral orri*
covers the following
described lands:
T-26-S, R-22-E
Sec. 4: N/2
2187C Walter R. Nordin and 8 July 1996 100% WI 0196161383
Frances E. Nordin, as 16.67% base roy.
Trustees of the Walter R. (note: base royalty
Nordin and Frances E. Nordin can escalate to 20%,
Trust, dated August 14, 1991 see addendum to
(GL#39, 72, 76) lease)
3% Coral orri
All portions of this lease
EXCEPT for the following
lands:
T-26-S, R-22-E
Sec. 4: N/2
2187D Frank W. Clark, Jr., 18 June 1996 100% WI 0196158495
a married man as his 16.67% base roy.
separate property (note: base royalty
(GL#39,72,76) can escalate to 20%,
see addendum to
LIMITED insofar as said lease)
lease covers the following 3% Conoco orri
described lands: 2% Coral orri*
T-26-S, R-22-E
Sec. 4: N/2
Goose Lake Prospect
Kern County, California
Ampolex
Lease Ampolex Recording
No. Lessor Lease Date WI/NRI Document #
- ------ ----------------------- ----------- ---------------- ---------
2187D Frank W. Clark, Jr., 18 June 1996 100% WI 0196158495
a married man as his 16.67% base roy.
separate property (note: base royalty
(GL#39,72,76) can escalate to 20%,
see addendum to
All portions of this lease lease)
EXCEPT for the following 3% Coral orri*
described land:
T-26-S, R-22-E
Sec. 4: N/2
2188A Sally Jean Stephenson, a 17 May 1996 100% WI 0196154804
married woman as her 16.67% base roy.
separate property (GL#19) 3% Conoco orri
2% Coral orri*
2188B Alvin M. Sanborn, a married 3 May 1996 100% WI 0196154803
man as his separate 16.67% base roy.
property (GL#19) 3% Conoco orri
2% Coral orri*
2193A E. G. Berchtold, Trustee of 18 June 1996 100% WI 0196158511
the Wilhelmina Westlund 16.67% base roy.
Berchtold Trust (GL#99) 3% Coral orri*
2193B The Elfva W. Johnson 18 June 1996 100% WI 0196158512
Revocable Inter Vivos Trust, 16.67% base roy.
dated May 13, 1985 (GL#99) 3% Coral orri*
2194 Edmund Day Pruett and 17 June 1996 100% WI 0196158510
Helen S. Pruett, husband 16.67% base roy.
and wife as joint tenants 3% Coral orri*
(GL#98)
2195A Arthur Dare Fell, a 5 July 1996 100% WI 0196161395
single man (GL#65) 16.67% base roy.
3% Conoco orri
2% Coral orri*
2195B James F. Hendrickson, a 4 June 1996 100% WI 0196161394
married man as his separate 16.67% base roy.
property (GL#65) 3% Conoco orri
2% Coral orri*
2195C Robert G. Adams, Heir to 3 June 1996 100% WI 0196161396
the Estate of Marion 16.67% base roy.
Adams (GL#65) 3% Conoco orri
2% Coral orri*
Goose Lake Prospect
Kern County, California
Ampolex
Lease Ampolex Recording
No. Lessor Lease Date WI/NRI Document #
- ------ ----------------------- ----------- ---------------- ---------
2196 Bruce Edward Treadwell, 15 June 1996 100% WI 0196161397
Heir of Phyllis Thomas 16.67% base roy.
Treadwell (GL#73) 3% Coral orri*
2197A Elizabeth Schulte, a 21 June 1996 100% WI 0196158507
widow (GL#63) 16.67% base roy.
3% Conoco orri
2% Coral orri*
2198A Max W. Bell and Letha 20 June 1996 100% WI 0196158505
Bell, husband and wife 16.67% base roy.
(GL#62) 3% Conoco orri
2% Coral orri*
2198B Elizabeth Schulte, a 21 June 1996 100% WI 0196158506
widow (GL#62) 16.67% base roy.
3% Conoco orri
2% Coral orri*
2199A Audrey McLaurin and 8 Aug 1996 100% WI 0196161389
John J. McLauren, husband 16.67% base roy.
and wife as joint tenants 3% Conoco orri
(GL#50) 2% Coral orri*
2199B Ruby Oleta Aerni, a widow 18 June 1996 100% WI 0196161390
(GL#62) 16.67% base roy.
3% Conoco orri
2% Coral orri*
2199C Melvyn T. Miller, a 3 July 1996 100% WI 0196158502
single man (GL#50) 16.67% base roy.
3% Conoco orri
2% Coral orri*
2199D Alice Miller, a widow 3 July 1996 100% WI 0196158503
(GL#50) 16.67% base roy.
3% Conoco orri
2% Coral orri*
2200A Michael Patrick Curran, 5 June 1996 100% WI 0196158489
Jr., a single man (GL#16) 16.67% base roy.
3% Coral orri*
2200B Ron Hurlbert, a married 20 June 1996 1 00% WI 0196158488
man as his separate property 16.67% base roy.
(GL#16) 3% Coral orri*
2201A Louise Casassa, aka 14 June 1996 100% WI 0196158486
Louise E. Casassa, a 16.67% base roy.
married woman as her 3% Coral orri*
separate property (GL#3)
2202A Irene Sinclair, a married 12 July 1996 100% WI 0196161377
woman as her separate 16.67% base roy.
property (GL#29) 3% Conoco orri
2% Coral orri*
Goose Lake Prospect
Kern County, California
Ampolex
Lease Ampolex Recording
No. Lessor Lease Date WI/NRI Document #
- ------ ----------------------- ----------- ---------------- ---------
2202B Hugh Ford Stewart III, an 25 July 1996 100% WI 0196161379
unmarried man (GL#29) 16.67% base roy.
3% Conoco orri
2% Coral orri*
2202C Tenaya S. Custer, an 24 July 1996 100% WI 0196161378
unmarried woman (GL#29) 16.67% base roy.
3% Conoco orri
2% Coral orri*
2274 Patricia Ann Young, a 12 Aug 1996 100% WI 0196161392
widow and Hans-Peter 16.67% base roy.
Lehmann, a single man 3% Conoco orri
(GL#61) 2% Coral orri*
2332 Mobil Oil Corporation 2 Sep 1996 100% WI 0196136099
(GL# 2, 4, 124) 16.67% base roy.
3% Coral orri*
2372 Mobil Exploration & 2 Sep 1996 100% WI 0196136098
Producing North America, 16.67% base roy.
Inc. (GL#12, 13, 15, 25, 3% Conoco orri
34, 35, 37, 38, 79, 8 1) 2% Coral orri*
LIMITED insofar as said
lease covers the following
described lands:
T-25-S, R-22-E
Sec. 32: S/2
Sec. 33: S/2SW/4
T-26-S, R-22-E
Sec. 5: S/2NE/4
Sec. 10: NW/4NE/4
Sec. 13: N/2SW/4
Sec. 14: N/2SE/4
Sec. 15: S/2NE/4
2372 Mobil Exploration & 2 Sep 1996 100% WI 0196136098
Producing North America, 16.67% base roy.
Inc. (GL#12,13,15,25,34,35, 3% Coral orri*
37,38,79,81)
All portions of this lease
EXCEPT for the following
described land:.
T-25-S, R-22-E
Sec. 32: S/2
Sec. 33: S/2SW/4
T-26-S, R-22-E
Sec. 5: S/2NE/4
Sec. 10: NW/4NE/4
Sec. 13: N/2SW/4
Sec. 14: N/2SE/4
Sec. 15: S/2NE/4
Goose Lake Prospect
Kern County, California
Ampolex
Lease Ampolex Recording
No. Lessor Lease Date WI/NRI Document #
- ------ ----------------------- ----------- ---------------- ---------
*This overriding royalty interest is subject to the terms and provisions
of that certain Joint Venture Agreement ("Joint Venture Agreement").
between Black Coral Limited Liability Company and Ampolex (USA), Inc.,
dated 20 June 1995, as amended. Said Joint Venture Agreement provides for
this overriding royalty to escalate upon the occurrence of certain events,
as described therein and specifically subject to the terms of such Joint
Venture Agreement.
W. Lemoore Prospect
Kings County, California
EXHIBIT "A-2"
Attached to and made a part of that certain Purchase and Sale
Agreement between AMPOLEX (USA), INC., and KESTREL ENERGY CALIFORNIA, INC.
and VICTORIA PETROLEUM USA, INC., dated effective January 1, 1997.
Ampolex Recording
Lessor Lease Date WI/NRI Document #
----------------------- ----------- ---------------- ---------
1. Robert F. Ingold 21 Mar 1996 100% WI 9609408
Robert F. Ingold, Jr. 12.5% base roy.
Richard C. Ingold 3% Conoco orri
Randall Ingold Trust 2% Coral orri*
Insofar as said lease
covers the following
described lands;
T-19-S, R-19-E
Sec. 12: SE/4NE/4SE/4,SE/4SE/4
Sec. 13: NE/4SE/4NE/4,NE/4NE/4
T-19-S, R-20-E
Sec. 18: N/2
As to the balance of this 100% WI
lease: 12.5% base roy.
3% Coral orri*
2. Southern Realty Co., a 20 Mar 1996 100% WI 9624424
corporation; et al 16.67% base roy.
3% Conoco orri
Insofar as said lease 2% Coral orri*
covers the following
described lands:
T-18-S, R-19-E
Sec. 26: All
Sec. 27: NW/4NE/4
Sec. 34: N/2NE/4, SE/4NE/4,
NE/4SW/4NE/4
As to the balance of 100% WI
this lease: 16.67% base roy.
3% Coral orri*
3. Frances Land Going Rev. 24 May 1996 100% WI 9621180
Trust 16.67% base roy.
Jack and Meta Going Rev. 3% Conoco orri
Trust 2% Coral orri*
Insofar as said lease
covers the following
described lands:
T-19-S, R-19-E
Sec. 13: NE/4NE/4, NE/4SE/
4NE/4
T-19-S, R-20-E
Sec. 18: N/2
As to the balance of 100% WI
of this lease: 16.67% base roy.
3% Coral orri*
4. Ferdinand L. L. Pecci-Blunt, 9 May 1996 100% WI 9610353
et al 12.5% base roy.
Insofar as said lease covers 3% Conoco orri
the following described lands: 2% Coral orri*
T-19-S, R-19-E
Sec. 13: NE/4NE/4, NE/4SE/4NE/4
T-19-S, R-20-E
Sec. 18: N/2
As to the balance of this 100% WI
lease: 12.5% base roy.
3% Coral orri*
5. Joe M. Carvalho and Frances 5 Aug 1996 100% WI 9621179
C. Carvalho 12.5% base roy.
3% Conoco orri
2% Coral orri*
Corrective Memorandum of Oil 13 Jab 1996 9700815
and Gas Lease for Oil and Gas
Lease recorded 10 Oct 1996 at
document no. 9621179 (Joe M.
Carvalho and Frances C.
Carvalho)
6. Case S. Droogh and Corrie J. 1 June 1996 100% WI 9621177
Droogh, CoTrustees u/d/t dtd 16.67% base roy.
October 1991 3% Conoco orri
John C. Droogh 2% Coral orri*
Joe Cordoza and Maria Cordoza
Tony Cordoza and Pauline
Cordoza
Corrective Memorandum of Oil 1 June 1996 9700816
and Gas Lease for Oil and Gas
Lease recorded 10 Oct 1996 at
document no. 9621177 (Case S.
Droogh, et al)
7. Sacred Heart Corporation, a 30 Dec 1996 100% WI 9700272
California nonprofit religious 16.67% base roy.
corporation 3% Conoco orri
2% Coral orri*
Insofar as said lease covers
the following described lands:
T-18-S, R-20-E
Sec. 36: N/2
As to the balance of this 100% WI
lease: 16.67% base roy.
2% Coral orri*
8. South Fork Ranch. Inc., a 12 Dec 1996 100% WI 9700271
California corporation 16.67% base roy.
3% Conoco orri
Insofar as said lease covers 2% Coral orri*
the following described lands:
T-18-S, R-20-E
Sec. 36: N/2
As to the balance of this 100% WI
lease: 16.67% base roy.
3% Coral orri*
9. Transamerica Minerals Company, 12 March 100% WI 9606833
a California corporation 1996 20% base roy.
3% Coral orri*
10. Vernon Chinn, et al 13 March 100% WI 9606832
1996 16.67% base roy.
3% Coral orri*
11. J. G. Stone Land Company, 28 Mar 1996 100% WI 9606836
a corporation 12.5% base roy.
3% Coral orri*
12. Murray Farms Revocable Trust 28 Mar 1996 100% WI 9606835
12.5% base roy.
3% Coral orri*
13. Grant H. Hampton, individually 30 Mar 1996 100% WI 9621178
and as executive rights holder 12.5% base roy.
by Jeri A. Medak, legal 3% Coral orri*
guardian for Grant H. Hampton
14. John V. Hefton 22 Mar 1996 100% WI 9606834
16.67% base roy.
3% Coral orri*
*This overriding royalty interest is subject to the terms and provisions
of that certain Joint Venture Agreement ("Joint Venture Agreement")
between Black Coral Limited Liability Company and Ampolex (USA), Inc.,
dated 20 June 1995, as amended. Said Joint Venture Agreement provides for
this overriding royalty to escalate upon the occurrence of certain events,
as described therein and specifically subject to the terms of such Joint
Venture Agreement.
Wildlife and Raven Prospects
Tulare County, California
EXHIBIT "A-3"
Attached to and made a part of that certain Purchase and Sale Agreement
between AMPOLEX (USA), INC., and KESTREL ENERGY CALIFORNIA, INC. and
VICTORIA PETROLEUM USA, INC., dated effective January 1, 1997.
Ampolex
Lease Ampolex Recording
No. Lessor WI/NRI Document #
1. Russell M. Doe, a married man 100% WI 96-039370
as his sole and separate property 12.5% base roy.
3% Conoco orri
2% Coral orri*
2. Verne Irene Kelly, a widow 100% WI 96-048089
William Wilson Kelly, a married man 12.5% base roy.
3% Conoco orri
2% Coral orri*
3. Barbara Schmitz, a married woman 100% WI 96-048094
12.5% base roy.
3% Conoco orri
2% Coral orri*
4. Fairway Investment, Inc. 100% WI 96-048092
a Calif. Corp. 16.67% base roy.
(note: base royalty
can escalate to 20%,
see addendum to
lease)
3% Conoco orri
2% Coral orri*
5. Ruth Hanisch, a widow 100% WI 96-048090
12.5% base roy.
3% Conoco orri
2% Coral orri*
6. Bernice Prochaska, a widow 100% WI 96-065191
12.5% base roy.
3% Conoco orri
2% Coral orri*
7. Betty M. Czarnek, a married woman 100% WI 96-065190
12.5% base roy.
3% Conoco orri
2% Coral orri*
8. Owen J. Brady, a widower 100% WI 96-065189
12.5% base roy.
3% Conoco orri
2% Coral orri*
9. Milfred D. Koliha, a widower 100% WI 96-065188
12.5% base roy.
3% Conoco orri
2% Coral orri*
10. Charles E. Koliha, a married man 100% WI 96-065187
12.5% base roy.
3% Conoco orri
2% Coral orri*
11. Carol Kellerhals, an unmarried 100% WI 96-065185
woman 12.5% base roy.
3% Conoco orri
2% Coral orri*
12. Sharon Carson, a married woman 100% WI 96-065184
12.5% base roy.
3% Conoco orri
2% Coral orri*
13. Delphia I. Naylor, a married woman 100% WI 96-065186
12.5% base roy.
3% Conoco orri
2% Coral orri*
14. Jane Randolph and Clinton E. 100% WI 96-070741
Randolph, wife and husband 12.5% base roy.
3% Conoco orri
All portions of this lease EXCEPT 2% Coral orri*
for the following described land:
T-23-S, R-24-E
Sec. 11: SW/4
14A. Jane Randolph and Clinton E. 100% WI 96-070741
Randolph, wife and husband 12.5% base roy.
3% Coral orri*
LIMITED insofar as said lease
covers the following described
lands:
T-23-S, R-24-E
--------------
Sec. 11: SW/4
15. Parker & Parsley Producing L.P. 100% WI 96-065183
20% base roy.
3% Coral orri*
2205A William R. White and Diane E. 100% WI 96-039414
White, husband and wife, said 12.5% base roy.
William R. White having acquired 3% Conoco Orri
title as Wm. R. White 2% Coral orri*
2205B John Vander Poel and Nellie Vander 100% WI 96-039367
Poel, husband and wife 12.5% base roy.
3% Conoco orri
2% Coral orri*
2205C Mark S. Beaver, a married man 100% WI 96-048095
12.5% base roy.
3% Conoco orri
2% Coral orri*
2205D James T. Beaver, a married man as 100% WI 96-039386
his sole and separate property 12.5% base roy.
3% Conoco orri
2% Coral orri*
2206A Daniel Lee Panetta, a married man 100% WI 96-039374
as his sole and separate property 12.5% base roy.
and Peter Anthony Panetta II and 3% Conoco orri
Grace Lucille Panetta 2% Coral orri*
2206B Pete P. Portnoff and Mary 100% WI 96-039416
Portnoff, husband and wife 12.5% base roy.
3% Conoco orri
2% Coral orri*
2206C Daniel Lee Panetta as successor 100% WI 96-039396
Trustee for the Matilda D. 12.5% base roy.
Panetta Living Trust dated 3% Conoco orri
October 20, 1990 2% Coral orri*
2206D Satgur S. Kahal and Ravinder 100% WI 96-039379
K. Kahal, husband and wife 12.5% base roy.
3% Conoco orri
2% Coral orri*
2209A John Siemens, an unmarried man 100% WI 96-039394
12.5% base roy.
3% Conoco orri
2% Coral orri*
2210A John Siemens, an unmarried man 100% WI 96-039392
12.5% base roy.
3% Conoco orri
2% Coral orri*
2210B Anthony Nunes, Jr. and Toni Nunes, 100% WI 96-039362
husband and wife 12.5% base roy.
3% Conoco orri
2% Coral orri*
2211A John E. Risi and Phyllis Matilda 100% WI 96-039364
Risi, husband and wife, as 12.5% base roy.
Trustees of the John E. Risi 3% Conoco orri
Trust, established May 10, 1976 2% Coral orri*
2211B Marion 0. Howard, a married man 100% WI 96-039358
as his sole and separate property 12.5% base roy..
3% Conoco orri
All portions of this lease EXCEPT 2% Coral orri*
for the following described land:
T-23-S, R-24-E
Sec. 14: NW/4
2211B Marion 0. Howard, a married man 100% WI 96-039358
as his sole and separate property 12.5% base roy.
3% Coral orri*
LIMITED insofar as said lease
covers the following described
lands:
T-23-S, R-24-E
Sec. 14: NW/4
2211C Beverlee M. Schroll, a married 100% WI 96-039404
woman as her sole and separate 12.5% base roy.
property 3% Conoco orri
2% Coral orri*
2211D John Cornelius Vander Poel and 100% WI 96-039366
Nellie Clara Vander Poel, Trustees 12.5% base roy.
of the Vander Poel Family Trust 3% Conoco orri
dated February 17, 1995 2% Coral orri*
All portions of this lease EXCEPT
for the following described land:
T-23-S, R-24-E
Sec. 14: W/2NW/4
2211D John Cornelius Vander Poel and 100% WI 96-039366
Nellie Clara Vander Poel, Trustees 12.5% base roy.
of the Vander Poel Family Trust 3% Coral orri*
dated February 17, 1995
LIMITED insofar as said lease
covers the following described
lands:
T-23-S, R-24-E
Sec. 14: W/2NW/4
2212A Roger F. Hillstrom, a married man 100% WI 96-O39407
as his sole and separate property 12.5% base roy.
3% Conoco orri
All portions of this lease EXCEPT 2% Coral orri*
for the following described land:
T-23-S, R-24-E
Sec. 11: SW/4
2212A Roger F. Hillstrom, a married man 100% WI 96-039407
as his sole and separate property 12.5% base roy.
3% Coral orri*
LIMITED insofar as said lease
covers the following described
lands:
T-23-S, R-24-E
Sec. 11: SW/4
2212B S.A. Camp Ginning Company, a 100% WI 96-039388
California corporation 12.5% base roy.
3% Conoco orri
All portions of this lease EXCEPT 2% Coral orri*
for the following described land:
T-23-S, R-24-E
Sec. 11: SW/4
2212B S.A. Camp Ginning Company, a 100% WI 96-039388
California corporation 12.5% base roy.
3% Coral orri*
LIMITED insofar as said lease
covers the following described
lands:
T-23-S, R-24-E
Sec. 11: SW/4
2212C Geraldine Clausen, a widow 100% WI 96-039371
12.5% base roy.
All portions of this lease EXCEPT 3% Conoco orri
for the following described land: 2% Coral orri*
T-23-S, R-24-E
Sec. 11: SW/4
2212C Geraldine Clausen, a widow 100% WI 96-039371
12.5% base roy.
LIMITED insofar as said lease 3% Coral orri*
covers the following described
lands:
T-23-S, R-24-E
Sec. 11: SW/4
2212D Elizabeth Evans, a widow 100% WI 96-039393
12.5% base roy.
All portions of this lease EXCEPT 3% Conoco orri
for the following described land: 2% Coral orri*
T-23-S, R-24-E
Sec. 11: SW/4
2212D Elizabeth Evans, a widow 100% WI 96-039393
12.5% base roy.
LIMITED insofar as said lease 3% Coral orri*
covers the following described
lands:
T-23-S, R-24-E
Sec. 11: SW/4
2212E Louie Heitzeg, a married man as 100% WI 96-039409
his sole and separate property, 12.5% base roy.
also known as Louie C. Heitzeg 3% Conoco orri
2% Coral orri*
All portions of this lease EXCEPT
for the following described land:
T-23-S, R-24-E
Sec. 11: SW/4
2212E Louie Heitzeg, a married man as 100% WI 96-039409
his sole and separate property, 12.5% base roy.
also known as Louie C. Heitzeg 3% Coral orri*
LIMITED insofar as said lease
covers the following described
lands:
T-23-S, R-24-E
Sec. 11: SW/4
2212F Dale D. Larson, a married man as 100% WI 96-039408
his sole and separate property 12.5% base roy.
3% Conoco orri
All portions of this lease EXCEPT 2% Coral orri*
for the following described land:
T-23-S, R-24-E
Sec. 11: SW/4
2212F Dale D. Larson, a married man as 100% WI 96-039408
his sole and separate property 12.5% base roy.
3% Coral orri*
LIMITED insofar as said lease
covers the following described
lands:
T-23-S, R-24-E
Sec. 11: SW/4
2212G David W. Mutschler, a married man 100% WI 96-039399
as his sole and separate property 12.5% base roy.
3% Conoco orri
All portions of this lease EXCEPT 2% Coral orri*
for the following described land:
T-23-S, R-24-E
Sec. 11: SW/4
2212G David W. Mutschler, a married man 100% WI 96-039399
as his sole and separate property 12.5% base roy.
3% Coral orri*
LIMITED insofar as said lease
covers the following described
lands:
T-23-S, R-24-E
Sec. 11: SW/4
2212H Duane D. Mutschler, a married man 100% WI 96-039398
as his sole and separate property 12.5% base roy.
3% Conoco orri
All portions of this lease EXCEPT 2% Coral orri*
for the following described land:
T-23-S, R-24-E
Sec. 11: SW/4
2212H Duane D. Mutschler, a married man 100% WI 96-039398
as his sole and separate property 12.5% base roy.
3% Coral orri*
LIMITED insofar as said lease
covers the following described
lands:
T-23-S, R-24-E
Sec. 11: SW/4
2212I Darrel P. Mutschler, a married man 100% WI 96-039397
as his sole and separate property 12.5% base roy.
3% Conoco orri
All portions of this lease EXCEPT 2% Coral orri*
for the following described land:
T-23-S, R-24-E
Sec. 11: SW/4
2212I Darrel P. Mutschler, a married man 100% WI 96-039397
as his sole and separate property 12.5% base roy.
3% Coral orri*
LIMITED insofar as said lease
covers the following described
lands:
T-23-S, R-24-E
Sec. 11: SW/4
2212J Charles Taylor, a married man as 100% WI 96-039387
his sole and separate property 12.5% base roy.
3% Conoco orri
All portions of this lease EXCEPT 2% Coral orri*
for the following described land:
T-23-S, R-24-E
Sec. 11: SW/4
2212J Charles Taylor, a married man as 100% WI 96-039387
his sole and separate property 12.5% base roy.
3% Coral orri*
LIMITED insofar as said lease
covers the following described
lands:
T-23-S, R-24-E
Sec. 11: SW/4
2212K Donald J. Larson, a married man 100% WI 96-039406
as his sole and separate property 12.5% base roy.
3% Conoco orri
All portions of this lease EXCEPT 2% Coral orri*
for the following described land:
T-23-S, R-24-E
Sec. 11: SW/4
2212K Donald J. Larson, a married man as 100% WI 96-039406
his sole and separate property 12.5% base roy.
3% Coral orri*
LIMITED insofar as said lease
covers the following described
lands:
T-23-S, R-24-E
Sec. 11: SW/4
2212L Howard T. Heitzeg, a married man 100% WI 96-039400
as his sole and separate property 12.5% base roy.
3% Conoco orri
All portions of this lease EXCEPT 2% Coral orri*
for the following described land:
T-23-S, R-24-E
Sec. 11: SW/4
2212L Howard T. Heitzeg, a married man 100% WI 96-039400
as his sole and separate property 12.5% base roy.
3% Coral orri*
LIMITED insofar as said lease
covers the following described
lands:
T-23-S, R-24-E
Sec. 11: SW/4
2212M Carol M. Seljeseth, an unmarried 100% WI 996-039401
woman as her sole and separate 12.5% base roy.
property, also known as Carol 3% Conoco orri
Seljeseth 2% Coral orri*
All portions of this lease EXCEPT
for the following described land:
T-23-S, R-24-E
Sec. 11: SW/4
2212M Carol M. Seljeseth, an unmarried 100% WI 996-039401
woman as her sole and separate 12.5% base roy.
property, also known as Carol 3% Coral orri*
Seljeseth
LIMITED insofar as said lease
covers the following described
lands:
T-23-S, R-24-E
Sec. 11: SW/4
2212N Dirk Taylor also known as J. Dirk 100% WI 96-048091
Taylor, a married man 12.5% base roy.
3% Conoco orri
All portions of this lease EXCEPT 2% Coral orri*
for the following described land:
T-23-S, R-24-E
Sec. 11: SW/4
2212N Dirk Taylor also known as J. Dirk 100% WI 96-048091
Taylor, a married man 12.5% base roy.
3% Coral orri*
LIMITED insofar as said lease
covers the following described
lands:
T-23-S, R-24-E
Sec. 11: SW/4
2212O Michal Taylor, a single woman 100% WI 96-048093
12.5% base roy.
All portions of this lease EXCEPT 3% Conoco orri
for the following described land: 2% Coral orri*
T-23-S, R-24-E
Sec. 11: SW/4
22120 Michal Taylor, a single woman 100% WI 96-048093
12.5% base roy.
LIMITED insofar as said lease 3% Coral orri*
covers the following described
lands:
T-23-S, R-24-E
Sec. 11: SW/4
2228 Sam A. White and Esther White, 100% WI 96-039417
husband and wife 12.5% base roy.
3% Conoco orri
2% Coral orri*
2229 William S. Walker as Trustee of 100% WI 96-039361
the William S. Walker Revocable 12.5% base roy.
Trust and Sharon J. Walker as 3% Coral orri*
Trustee of the Sharon J. Walker
Revocable Trust
2232A Doris J. Williams, Trustee of the 100% WI 96-039357
Testamentary Trust created under 12.5% base roy.
the Will of James Doyle Williams, 3% Conoco orri
deceased for the benefit of Doris 2% Coral orri*
J. Williams and Doris J. Williams
as Trustee of the Doris J. Williams
Revocable Living Trust dated
September 20, 1993
2232B Betty Valoff, a married woman as 100% WI 96-039413
her sole and separate property, 12.5% base roy.
an heir of William Kalpakoff, 3% Conoco orri
deceased and Hazel Kalpakoff, 2% Coral orri*
deceased
2232C T. A. Davis 100% WI 96-039373
12.5% base roy.
3% Conoco orri
2% Coral orri*
2232D Frances Stupin, a widow, an heir 100% WI 96-039405
of William Kalpakoff, deceased and 12.5% base roy.
Hazel Kalpakoff, deceased 3% Conoco orri
2% Coral orri*
2239A Aldo Emilio Risi and Cecelia 100% WI 96-039365
Annette Risi, as Trustees of the 12.5% base roy.
Aldo E. Risi and Cecelia A. Risi 3% Conoco orri
Living Trust dated April 26, 1991 2% Coral orri*
All portions of this lease EXCEPT
for the following described land:
T-23-S, R-24-E
Sec. 13: NE/4
2239A Aldo Emilio Risi and Cecelia 100% WI 96-039365
Annette Risi, as Trustees of the 12.5% base roy.
Aldo E. Risi and Cecelia A. Risi 3% Coral orri*
Living Trust dated April 26, 1991
LIMITED insofar as said lease
covers the following described
lands:
T-23-S, R-24-E
Sec. 13: NE/4
2240A Betty J. Garman, a widow 100% WI 96-039368
12.5% base roy.
3% Conoco orri
2% Coral orri*
2240B Dorothy Raymond, a widow 100% WI 96-039369
12.5% base roy.
3% Conoco orri
2% Coral orri*
2241A Ashley S. Orr and Nancy M. 100% WI 96-039390
Orr, Trustees of the A and N 12.5% base roy.
Orr Living Trust 3% Coral orri*
2241B Edgar R. Orr and Betty B. 100% WI 96-039391
Orr, Trustees of the Edgar R. 12.5% base roy.
Orr and Betty B. Orr Living Trust 3% Coral orri*
2242 Joe E. Kasiner, Sr. and Dorothy 100% WI 96-039360
Kasiner, husband and wife 12.5% base roy.
3% Conoco orri
2% Coral orri*
2243 Smith A. Ellis, an unmarried man 100% WI 96-039359
12.5% base roy.
3% Conoco orri
2% Coral orri*
2244A Laurence S. Davis, a single man 100% WI 96-039363
12.5% base roy.
3% Conoco orri
2% Coral orri*
2245 Robert T. Burson, a married man 100% WI
as his sole and separate property, 12.5% base roy.
James M. Burson and Ruth M. 3% Conoco orri
Burson, Trustees of the James M. 2% Coral orri*
Burson and Ruth M. Burson 1991 Trust
established April 17, 1991.
Original Counterpart 96-039410
Counterpart-A 96-039411
2246A Joan King, a married woman as her 100% WI 96-039412
sole and separate property 12.5% base roy.
3% Conoco orri
2% Coral orri*
2246B Pauline Duer, a married woman as 100% WI 96-039385
her sole and separate property 12.5% base roy.
3% Conoco orri
2% Coral orri*
2246C James D. McCracken, an unmarried 100% WI 96-039378
man 12.5% base roy.
3% Conoco orri
2% Coral orri*
2246D Irene Sapp, an unmarried woman 100% WI 96-039403
12.5% base roy.
3% Conoco orri
2% Coral orri*
2246E Robert D. Lohrei, sole heir of 100% WI 96-039384
Georgia McCracken, deceased 12.5% base roy.
3% Conoco orri
2% Coral orri*
2246F Iola M. Nixon, an unmarried woman 100% WI 96-039402
12.5% base roy.
3% Conoco orri
2% Coral orri*
2246G Ivan J. Ramsey, a married man as 100% WI 96-039372
his sole and separate property 12.5% base roy.
and Karl Ramsey, a married man 3% Conoco orri
as his sole and separate as 2% Coral orri*
property
2246H Verlin C. Weaver, an unmarried man 100% WI 96-039389
12.5% base roy.
3% Conoco orri
2% Coral orri*
2246I Clarence R. Weaver, a married man 100% WI 96-048096
12.5% base roy.
3% Conoco orri
2% Coral orri*
2246J David James Weaver, a married man 100% WI 96-039382
as his sole and separate property 12.5% base roy.
3% Conoco orri
2% Coral orri*
2246K Kinnie Clifford Davis, heir of the 100% WI 96-039377
Estate of Rosa Davis deceased, a 12.5% base roy.
single man 3% Conoco orri
2% Coral orri*
2246L Gordon Lee Conner, a single man 100% WI 96-039376
an heir of the Estate of Barbara 12.5% base roy;
Ellen Connors, deceased who was an 3% Conoco orri
heir of the Estate of Martha Ellen 2% Coral orri*
Jones, deceased
2246M Nancy Cypert, an unmarried woman, 100% WI 96-039375
an heir of the Estate of Barbara 12.5% base roy.
Ellen Connors, deceased who was an 3% Conoco orri
heir of the Estate of Martha Ellen 2% Coral orri*
Jones, deceased
2246N Melva Choate, an unmarried woman 100% WI 96-039383
12.5% base roy.
3% Conoco orri
2% Coral orri*
22460 Richard W. Jones, a married man as 100% WI 96-039395
his sole and separate property, an 12.5% base roy.
heir to the Estate of Martha Ellen 3% Conoco orri
Jones 2% Coral orri*
2273A Garnet R. Batti, also known as 100% WI 96-039415
Garnet B. Batti and Rome Batti, 12.5% base roy
husband and wife; Garnet R. Batti, 3% Conoco orri
also known as Garnet B. Batti, a 2% Coral orri*
married woman as her separate
property
All portions of this lease EXCEPT
for the following described land:
T-23-S, R-24-E
Sec. 12: SE/4
2273A Garnet R. Batti, also known as 100% WI 96-039415
Garnet B. Batti and Rome Batti, 12.5% base roy.
husband and wife; Garnet R. Batti, 3% Coral orri*
also known as Garnet B. Batti, a
married woman as her separate
property
LIMITED Insofar as said lease
covers the following described
lands:
T-23-S, R-24-E
Sec. 12: SE/4
2273B Crystal 0. Mills, a widow 100% WI 96-039381
12.5% base roy.
All portions of this lease EXCEPT 3% Conoco orri
for the following described land: 2% Coral orri*
T-23-S, R-24-E
Sec. 12: SE/4
2273B Crystal 0. Mills, a widow 100% WI 96-039381
12.5% base roy.
LIMITED insofar as said lease 3% Coral orri*
covers the following described
lands:
T-23-S, R-24-E
Sec. 12: SE/4
2273C Nancy G. Hise, an unmarried woman 100% WI 96-039380
12.5% base roy.
All portions of this lease EXCEPT 3% Conoco orri
for the following described land: 2% Coral orri*
T-23-S, R-24-E
Sec. 12: SE/4
2273C Nancy G. Hise, an unmarried woman 100% WI 96-039380
12.5% base roy.
LIMITED insofar as said lease 3% Coral orri*
covers the following described
lands:
T-23-S, R-24-E
Sec. 12: SE/4
76. Transamerica Minerals Company, a 100% WI 97-000948
California corporation 20% base roy.
3% Conoco orri
2% Coral orri*
77. Dayle E. Rushing and/or Jeanette 100% WI 97-000847
M. Rushing, as Trustees of the 20% base roy.
Dayle E. and Jeanette M. Rushing 3% Conoco orri
Family Trust 2% Coral orri*
78. Mobil Oil Corporation 100% WI 97-003259
16.67% base roy.
3% Conoco orri
2% Coral orri*
*This overriding royalty interest is subject to the terms and provisions
of that certain Joint Venture Agreement ("Joint Venture Agreement")
between Black Coral Limited Liability Company and Ampolex (USA), Inc.,
dated 20 June 1995, as amended. Said Joint Venture Agreement provides for
this overriding royalty to escalate upon the occurrence of certain events,
as described therein and specifically subject to the terms of such Joint
Venture Agreement.
EXHIBIT "B"
Attached to and made a part of that certain Purchase and Sale Agreement
between AMPOLEX (USA), INC., and KESTREL ENERGY CALIFORNIA, INC. and
VICTORIA PETROLEUM USA, INC., dated effective January 1, 1997.
Title of Agreement or Contract Parties
1. Joint Venture Agreement dated June 20, Black Coral Limited Liability
1995, as amended November 17, 1995; Company and Ampolex (USA),
May 15, 1996; August 22, 1996; August Inc.
27, 1996; and November 27, 1996.
2. Ratification and Joinder of Agreement Conoco Inc. and Black Coral
executed by Ampolex (USA), Inc. on Limited Liability Company
August 15, 1995 of Joint Venture
Agreement #3 dated July 12, 1995.
3. Ratification and Joinder of Agreement Conoco Inc. and Black Coral
executed by Ampolex (USA), Inc. on Limited Liability Company
August 27, 1996 of Joint Venture
Agreement #2 dated July 12, 1995
LIMITED in areal extent to those lands
within the Ampolex-Black Coral Area of
Mutual Interest, as amended.
4. Letter Agreement dated September 2, Mobil Exploration & Producing
1996 from Mobil Exploration & U.S. Inc. and Ampolex (USA),
Producing U.S. Inc. to Ampolex (USA), Inc.
Inc. granting a first right of refusal
to purchase an oil and gas lease
covering 865.40 acres, more or less,
in Kern County, California (Goose
Lake Prospect).
5. Confidentiality Agreement dated Enron Oil & Gas Company,
September 24, 1996 for Enron's Turk Black Coral Limited Liability
Anticline Area in Fresno County, Company, and Ampolex (USA),
California. Inc.
6. Ampolex Letter Agreement dated October Ampolex (USA), Inc., Black
8, 1996 amending the August 27, 1996 Coral Limited Liability
amendatory letter agreement between Company, and Lario Oil & Gas
Ampolex (USA), Inc. and Black Coral Company
Limited Liability Company regarding
the acquisition of 3-D seismic by Lario
Oil & Gas in the Liberty Ditch/Murphy
Slough prospect area, Fresno & Kings
Counties, California.
Title of Agreement or Contract Parties
7. Geophysical Data Licensing Agreement Ampolex (USA), Inc. and Black
dated September 30, 1996 regarding the Coral Limited Liability
acquisition of 3-D seismic by Lario Oil Company as Licensees, and
& Gas in the Liberty Ditch/Murphy Slough Lario Oil & Gas Company, as
prospect area, Fresno & Kings Counties, Licensor
California.
8. Confidentiality and Non-Compete Ampolex (USA), Inc. and Black
Agreement dated September 5, 1996 for Coral Limited Liability
the Liberty Ditch/Murphy Slough Area in Company (disclosing parties),
Fresno and Kings Counties, California. and Equity Oil Company
(receiving party).
9. Confidentiality and Non-Compete Ampolex (USA), Inc. and Black
Agreement dated September 10, 1996 Coral Limited Liability
for the Liberty Ditch/Murphy Slough Company (disclosing parties),
Area in Fresno and Kings Counties, and Lario Oil and Gas
California. Company (receiving Party)
10. Noncompetitive Federal "Over-
The- James B. Lynn, as agent for
Counter" Offer No. CACA 36898 dated Ampolex (USA), Inc.
stamped "received" May 13, 1996 by
the California State Office, Bureau
of Land Management covering federally-
owned minerals underlying Sections 28
and 33, T18S-R19E and Section 4,
T19S-R19E, in Kings County, California
(West Lemoore prospect).
EXHIBIT C
LIST OF NON-PROPRIETARY DATA
Seismic 2D data
A. S.E.I. seismic line SEI-805
B. S.E.I. Spec (formerly Western Geophysical's data)
C. Texaco - two (2) lines
D. Geoone - 48 miles
E. Echo Geophysical - The State of California Seismatch program
Geologic data
A. Landgrid for San Joaquin Basin
B. Southern San Joaquin Geological Database provided by QuantStrat
Inc.
C. Digital well information from 13S 15E - 13SS 26E &
10N 24W - 10N 18W
EXHIBIT D
ALLOCATION SCHEDULE
Prospect Name Allocated Value Approximate Net Acres Value ($)/net acre
Goose Lake $300,000 7636$ 39.29
West Lemoore $250,000 6546$ 38.19
Raven $75,000 1108$ 67.69
Wildlife $50,000 2713$ 18.43
Remaining Prospects $325,000
Including but not
limited to:
Cross Creek
Tweetie
Tom
Jerry
Wasco
Lost Hills
Zachary/Taylor
Guiness
Pintail
Mudhen
Moveables $50,000
Total Allocated
Price: $1,050,000
EXHIBIT E
PERMITTED ENCUMBRANCES
The term "Permitted Encumbrances," as used herein, shall mean:
(1) lessors' royalties, overriding royalties, division orders, sales
contracts, unitization and pooling designations and agreements,
reversionary interests and similar burdens if the net cumulative effect of
such burdens does not operate to reduce the revenue interests of any of
the interests to less than the Revenue Interests set forth in Exhibit A;
(2) preferential rights to purchase and required third-party consents to
assignments and similar agreements with respect to which (i) waivers or
consents are obtained from the appropriate parties, (ii) the appropriate
time period for asserting such rights has expired without an exercise of
such rights, (iii) arrangements can be made by Purchaser and Sellers to
allow Purchaser to receive substantially the same economic benefits as if
all such waivers and consents had been obtained, (iv) such consent need
not be obtained prior to an assignment, or (v) failure to obtain such
consent will not have a material adverse effect on the value of the
affected Interests to Purchaser;
(3) all rights to consent by, required notices to, filings with, or other
actions by governmental or entities in connection with the sale or
conveyance of oil and gas leases or interests therein if the same are
customarily obtained subsequent to such sale or conveyance;
(4) rights of reassignment providing for reassignment elections prior to
relinquishment;
(5) easements, rights of way, servitudes, permits, surface leases and
other rights in respect of surface operations, pipelines, grazing,
logging, canals, ditches, reservoirs or the like; and easements for
streets, alleys, highways, pipelines, telephone lines, power lines,
railways and other easements and rights of way, on, over or in respect of
any of the Interests to the extent that all of the foregoing do not have a
material adverse effect on the operation, use o value of the affected
Interests by or to Purchaser;
(6) all other liens, charges, encumbrances, contracts, agreements,
instruments, obligations, defects and irregularities affecting the
Interests (including, without limitation, liens of operators relating to
obligations not yet due or pursuant to which Sellers are not in default)
that are not such as to interfere materially with the operation, value or
use of the affected Interests;
(7) such Title Defects (as defined in Section 6.03) or other matters as
Purchaser has waived pursuant to the terms of this Agreement;
(8) the terms and conditions of all agreements, orders, instruments,
documents and other matters described in or referred to by this Agreement
and Exhibits attached hereto, including, but not limited to, the Black
Coral Joint Venture Agreement dated June 20, 1995, as amended;
(9) rights reserved to or vested in any municipality or governmental,
statutory or public authority to control or regulate any of the interests
in any manner, and all applicable laws, rules and orders of government and
authorities.
EXHIBIT F
CONFIDENTIALITY NON COMPETE AGREEMENTS
Attached to and made part of the Purchase and Sale Agreement between
Ampolex (USA), Inc. and Kestrel Energy California, Inc. and Victoria
Petroleum USA, Inc., are copies of certain agreements between Ampolex
(USA), Inc. and the following:
1.) Barrett Resources Corporation, dated November 14, 1996;
2.) Ballard and Associates, Inc., dated November 8, 1996;
3.) Celcius Energy Company, dated November 12, 1996;
4.) Flying J Oil & Gas, Inc. dated November 8, 1996;
5.) JHS Energy, dated November 15, 1996;
6.) Gulf Canada Resources Limited, dated November 12, 1996;
7.) Samedan Oil Corporation, dated November 14, 1996;
8.) Tower Energy Corporation, dated November 19, 1996;
9.) Westport Oil and Gas, dated November 13, 1996;
10.) Medallion Exploration, dated November 14, 1996;
11.) Gotland Oil, Inc., dated January 7, 1997;
12.) Lario Oil & Gas Company, dated January 8, 1997;
CONFIDENTIALITY AGREEMENT
THIS AGREEMENT, entered into this the 14th day of Nov. 1996, by and
between Ampolex (USA), Inc., a corporation organized and existing under
the laws of Texas (hereinafter referred to as the "Disclosing Party") and
Barrett Resources Corporation, a corporation organized and existing under
the laws of Delaware (hereinafter referred to as the "Receiving Party").
1. In connection with the evaluation and the possible acquisition by the
Receiving Party of certain petroleum exploration and production interests
located in the United States as more fully described in Exhibits A-1 and A-
2 attached hereto and made a part hereof (hereinafter referred to as the
"Area") the Disclosing Party is willing, in accordance with the terms and
conditions of this Agreement, to disclose to the Receiving Party certain
confidential information which is proprietary, relating to the Area which
includes, but is not necessarily limited to, geological and geophysical
data, maps, models and interpretations and may also include commercial,
contractual and financial information whether written or oral (hereinafter
referred to as the "Confidential Information"). In no event shall the
Receiving Party be entitled to make or receive photocopies or
reproductions (whether digital or electronic) of such Confidential
Information except to the extent that the Disclosing Party, in its sole
discretion, issues written authorization permitting same.
2. In consideration of the disclosure referred to in Paragraph 1 hereof,
the Receiving Party agrees that the Confidential Information shall be kept
strictly confidential and shall not be sold, traded, published or
otherwise disclosed to anyone in any manner whatsoever, including by means
of photocopy or reproduction, without the Disclosing Party's prior written
consent, except as provided in Paragraphs 3, 4 and 5 below.
3. The Receiving Party may disclose the Confidential Information without
the Disclosing Party's prior written consent only to the extent such
information.
(a) is already known to the Receiving party as of the date of
disclosure hereunder,
(b) is already in possession of the public or becomes available to
the public other than through the act or omission of the Receiving Party;
(c) is required to be disclosed under applicable law or by a
governmental order, decree, regulation or rule (provided that the
Receiving Party shall give written notice to the Disclosing Party prior to
such disclosure); or
(d) is acquired independently from a third party that represents
that it has the right to disseminate such information at the time it is
acquired by the Receiving Party.
4. The Receiving Party may disclose the Confidential Information without
the Disclosing Party's prior written consent to an Affiliated Company (as
hereinafter defined), provided that the Receiving Party guarantees the
adherence of such Affiliated Company to the terms of this Agreement.
"Affiliated Company" shall mean any company or legal entity which (a)
controls either directly or indirectly a Receiving Party, or (b) which is
controlled directly or indirectly by such Receiving Party, or (c) is
directly or indirectly controlled by a company or entity which directly or
indirectly controls such Receiving Party. "Control" means the right to
exercise 50% or more of the voting rights in the appointment of the
directors of such company.
5. The Receiving Party shall be entitled to disclose the Confidential
Information without the Disclosing Party's prior written consent to such
of the following persons who have a clear need to know in order to
evaluate the Area:
(a) employees, officers and directors of the Receiving Party;
(b) employees, officers and directors of an Affiliated Company
(c) any professional consultant or agent retained by the Receiving
Party for the purpose of evaluating the Confidential Information; or
(d) any bank financing Receiving Party's participation in the Area,
including any professional consultant retained by such bank for the
purpose of evaluating the Confidential Information.
Prior to making any such disclosures to persons under subparagraphs
(c) and (d) above, however, the Receiving Party shall obtain a written
undertaking of confidentiality, in the same form and content as this
Agreement, from each such person.
6. The Receiving Party and its Affiliated Companies, if any, shall only
use or permit the use of the Confidential Information disclosed under
Paragraphs 4 and 5 above to evaluate the Area and determine whether to
enter into negotiations concerning the acquisition of all or part of the
Disclosing Party's rights in the Area.
The Receiving Party and its Affiliated Companies shall not, during
the term hereof, acquire any rights or otherwise seek to compete with
Disclosing Party in the Area without Disclosing Party's prior written
consent. In the event the Receiving Party and its Affiliated Companies
acquire any rights in the Area during the term hereof other than the
Disclosing Party's rights as provided in Paragraph 9 below, it shall
promptly assign such rights at cost to the Disclosing Party.
7. The Receiving Party shall be responsible for ensuring that all
persons to whom the Confidential Information is disclosed under this
Agreement shall keep such information confidential and shall not disclose
or divulge the same to any unauthorized person. Neither Party shall be
liable in an action initiated by one against the other for special,
indirect or consequential damages resulting from or arising out of this
Agreement, including, without limitation, loss of profit or business
interruptions, however same may be caused.
8. The Confidential Information shall remain the property of the
Disclosing Party, and the Disclosing Party may demand the return thereof
at any time upon giving written notice to the Receiving Party. Within 30
days of receipt of such notice, the Receiving Party shall return all of
the original confidential Information and shall destroy all copies and
reproductions (both written and electronic) in its possession and in the
possession of persons to whom it was disclosed pursuant to Paragraphs 4
and 5 hereof.
9. If the Receiving Party acquires any of the Disclosing Party's rights
in the Area, then this Agreement shall terminate automatically on the date
the Receiving Party enters into a further agreement which contains
provisions covering the confidentiality of data in the Area. Unless
earlier terminated under the preceding sentence, the confidentiality
obligations set forth in this Agreement shall terminate one year after the
date of this Agreement.
10. The Disclosing Party hereby represents and warrants that it has the
right and authority to disclose the Confidential Information to the
Receiving Party. However, the Disclosing Party, its subsidiaries,
Affiliated Companies and their officers, directors and employees make no
representations or warranties, express or implied, as to the quality,
accuracy or completeness of the information disclosed hereunder or the
ability of the properties to produce. The information provided hereunder
contains estimates reflecting various assumptions concerning anticipated
results, and may or may not prove to be correct. The Disclosing Party its
subsidiaries, Affiliated Companies and their officers, directors and
employees shall have no liability whatsoever with respect to the use of,
or reliance upon such information, or for any omissions from same. The
Receiving Party expressly acknowledges the inherent risk of error in the
acquisition, processing and interpretation of geological and geophysical
data. Any descriptions of documents disclosed hereunder do not purport to
be complete statements thereof, and are qualified and subject to the
detailed provisions of such documents. In all cases, the Receiving Party
should conduct its own investigation and analysis of the Confidential
Information.
11. (a) This Agreement shall be governed by and interpreted in
accordance with the substantive and procedural laws of the State of
Colorado.
(b) Any dispute arising out of or relating to this Agreement,
including any question regarding its existence, validity or termination,
which cannot be amicably resolved by the Parties, shall be settled before
three arbitrators, one to be appointed by each Party and the two so
appointed shall appoint the third arbitrator, in accordance with the
Arbitration Rules of the American Arbitration Association in Denver,
Colorado, and judgment upon the award rendered by the arbitrators may be
entered in any court having jurisdiction thereof. A dispute shall be
deemed to have arisen when either Party notifies the other Party in
writing to that effect.
12. Unless otherwise expressly agreed to in writing, any prior or future
proposals or offers made in the course of the Parties' discussions are
implicitly subject to all necessary management and government approvals
and may be withdrawn by either at any time. Nothing contained herein is
intended to confer upon the Receiving Party any right whatsoever to the
Disclosing Party's interest in the Area.
13. No amendments, changes or modifications to this Agreement shall be
valid except if the same are in writing and signed by a duly authorized
representative of each of the Parties herein.
14. This Agreement comprises the full and complete agreement of the
Parties hereto with respect to the disclosure of the Confidential
Information and supersedes and cancels all prior communications,
understandings and agreements between the Parties hereto, whether written
or oral, expressed or implied.
IN WITNESS WHEREOF, the duly authorized representatives of the Parties
have caused this Agreement to be executed on the date first written above.
DISCLOSING PARTY
AMPOLEX (USA), INC.
By: /s/
Title: Team Leader, North America
RECEIVING PARTY
BARRETT RESOURCES CORPORATION
By: /s/ Joseph P. Barrett
Joseph P. Barrett
Title: Vice President, Land
Exhibit A2 *
The following table lists the township and ranges which are consider to be
the exploration areas included in the confidentiality agreement under
paragraph 1.
California
San Joaquin Basin
14S 15E to 21E
15S 15E to 22E
16S 15E to 23E
17S 15E to 24E
18S 15E to 24E
19S 15E to 25E
20S 15E to 25E
21S 15E to 27E
22S 15E to 28E
23S 15E to 28E
24S 15E to 28E
25S 17E to 28E
26S 17E to 28E
27S 17E to 29E
28S 17E to 29E
29S 17E to 30E
30S 17E to 30E
Utah
Paradox Basin
21S 15E to 18E
22S 15E to 18E
23S 17E to 18E
24S 17E to 19E
25S 18E to 20E
26S 18E to 21E
27S 19E to 21E
28S 20E to 23E
29S 21E to 24E
30S 20E to 24E
North Dakota
Williston Basin
153N 91W to 87W
152N 92W to 88W
151N 93W to 89W
150N 94W to 90W
149N 95W to 91W
* There is no Exhibit A1 to this Agreement.
CONFIDENTIALITY AGREEMENT
THIS AGREEMENT, entered into this the 8th day of November, 1996, by and
between Ampolex (USA), Inc., a corporation organized and existing under
the laws of Texas (hereinafter referred to as the "Disclosing Party") and
Ballard and Associates, Inc., a corporation organized and existing under
the laws of Montana (hereinafter referred to as the "Receiving Party").
1. In connection with the evaluation and the possible acquisition by the
Receiving Party of the Disclosing Party's Corporation and/or certain
petroleum exploration and production interests located in the United
States as more fully described in Exhibits A-1 and A-2 attached hereto and
made a part hereof (hereinafter referred to as the "Area") the Disclosing
Party is willing, in accordance with the terms and conditions of this
Agreement, to disclose to the Receiving Party certain confidential
information which is proprietary, relating to the Area which includes, but
is not necessarily limited to, geological and geophysical data, maps,
models and interpretations and may also include commercial, contractual
and financial information whether written or oral (hereinafter referred to
as the "Confidential Information"). In no event shall the Receiving Party
be entitled to make or receive photocopies or reproductions (whether
digital or electronic) of such Confidential Information except to the
extent that the Disclosing Party, in its sole discretion, issues written
authorization permitting same.
2. In consideration of the disclosure referred to in Paragraph 1 hereof,
the Receiving Party agrees that the Confidential Information shall be kept
strictly confidential and shall not be sold, traded, published or
otherwise disclosed to anyone in any manner whatsoever, including by means
of photocopy or reproduction, without the Disclosing Party's prior written
consent, except as provided in Paragraphs 3,4 and 5 below.
3. The Receiving Party may disclose the Confidential Information without
the Disclosing Party's prior written consent only to the extent such
information.
(a) is already known to the Receiving Party as of the date of
disclosure hereunder;
(b) is already in possession of the public or becomes available to
the public other than through the act or omission of the Receiving Party;
(c) is required to be disclosed under applicable law or by a
governmental order, decree, regulation or rule (provided that the
Receiving Party shall give written notice to the Disclosing Party prior to
such disclosure); or
(d) is acquired independently from a third party that represents that
it has the right to disseminate such information at the time it is
acquired by the Receiving Party.
4. The Receiving Party may disclose the Confidential Information without
the Disclosing Party's prior written consent to an Affiliated Company (as
hereinafter defined), provided that the Receiving Party guarantees the
adherence of such Affiliated Company to the terms of this Agreement.
"Affiliated Company" shall mean any company or legal entity which (a)
controls either directly or indirectly a Receiving Party, or (b) which is
controlled directly or indirectly by such Receiving Party, or (c) is
directly or indirectly controlled by a company or entity which directly or
indirectly controls such Receiving Party. "Control" means the right to
exercise 50% or more of the voting rights in the appointment of the
directors of such company.
5. The Receiving Party shall be entitled to disclose the Confidential
Information without the Disclosing Party's prior written consent to such
of the following persons who have a clear need to know in order to
evaluate the Area:
(a) employees, officers and directors of the Receiving Party;
(b) employees, officers and directors of an Affiliated Company;
(c) any professional consultant or agent retained by the Receiving
Party for the purpose of evaluating the Confidential Information; or
(d) any bank financing Receiving Party's participation in the Area,
including any professional consultant retained by such bank for the
purpose of evaluating the Confidential Information.
Prior to making any such disclosures to persons under subparagraphs (c)
and (d) above, however, each such party shall agree to be bound by the
confidentiality provisions from this Agreement The Receiving Party shall
be bound to handle said disclosure according to the confidentiality
provisions of this agreement.
6. The Receiving Party and its Affiliated Companies, if any, shall only
use or permit the use of the Confidential Information disclosed under
Paragraphs 4 or 5 above to evaluate the Area and determine whether to
enter into negotiations concerning the acquisition of all or part of the
Disclosing Party's rights in the Area.
The Receiving Party and its Affiliated Companies shall not, during the
term hereof, use the Confidential Information to acquire any rights in the
Area. In the event the Receiving Party and/or its Affiliated Companies
acquire any such rights in the Area through the use of the Confidential
Information during the term hereof other than the Disclosing Party's
rights as provided in Paragraph 9 below, it shall promptly assign such
rights at cost to the Disclosing Party.
7. The Receiving Party shall be responsible for ensuring that all
persons to whom the Confidential Information is disclosed under this
Agreement shall keep such information confidential and shall not disclose
or divulge the same to any unauthorized person. Neither Party shall be
liable in an action initiated by one against the other for special,
indirect or consequential damages resulting from or arising out of this
Agreement, including, without limitations loss of profit or business
interruptions, however same may be caused.
8. The Confidential Information shall remain the property of the
Disclosing Party, and the Disclosing Party may demand the return thereof
at any time upon giving written notice to the Receiving Party. Within 30
days of receipt of such notice, the Receiving Party shall return all of
the original confidential Information and shall destroy all copies and
reproductions (both written and electronic) in its possession and in the
possession of persons to whom it was disclosed pursuant to Paragraphs 4
and 5 hereof.
9. If the Receiving Party acquires any of the Disclosing Party's rights
in the Area, then this Agreement shall terminate automatically on the date
the Receiving Party enters into a further agreement which contains
provisions covering the confidentiality of data in the Area. Unless
earlier terminated under the preceding sentence, the confidentiality
obligations set forth in this Agreement shall terminate six months after
the date of this Agreement.
10. The Disclosing Party hereby represents and warrants that it has the
right and authority to disclose the Confidential Information to the
Receiving Party. However, the Disclosing Party, its subsidiaries,
Affiliated Companies and their officers, directors and employees make no
representations or warranties, express or implied, as to the quality,
accuracy or completeness of the information disclosed hereunder or the
ability of the properties to produce. The information provided hereunder
contains estimates reflecting various assumptions concerning anticipated
results, and may or may not prove to be correct. The Disclosing Party its
subsidiaries, Affiliated Companies and their officers, directors and
employees shall have no liability whatsoever with respect to the use of,
or reliance upon such information, or for any omissions from same. The
Receiving Party expressly acknowledges the inherent risk of error in the
acquisition, processing and interpretation of geological and geophysical
data. Any descriptions of documents disclosed hereunder do not purport to
be complete statements thereof, and are qualified and subject to the
detailed provisions of such documents. In all cases, the Receiving Party
should conduct its own investigation and analysis of the
Confidential Information.
11. (a) This Agreement shall be governed by and interpreted in
accordance with the substantive and procedural laws of the State of
Colorado.
(b) Any dispute arising out of or relating to this Agreement,
including any question regarding its existence, validity or termination,
which cannot be amicably resolved by the Parties, shall be settled before
three arbitrators, one to be appointed by each Party within fourteen days
after one party notifies the other of its desire to arbitrate and the two
so appointed shall appoint the third arbitrator within thirty days after
the last of the first two arbitrators are appointed, in accordance with
the Arbitration Rules of the American Arbitration Association in Denver,
Colorado, and judgment upon the award rendered by the arbitrators may be
entered in any court having jurisdiction thereof. The arbitrators shall
issue a decision within ninety days after appointment of the third
arbitrator. A dispute shall be deemed to have arisen when either Party
notifies the other Party in writing to that effect.
12. Unless otherwise expressly agreed to in writing, any prior or future
proposals or offers made in the course of the Parties' discussions are
implicitly subject to all necessary management and government approvals
and may be withdrawn by either at any time. Nothing contained herein is
intended to confer upon the Receiving Party any right whatsoever to the
Disclosing Party's interest in the Area.
13. No amendments, changes or modifications to this Agreement shall be
valid except if the same are in writing and signed by a duly authorized
representative of each of the Parties herein.
14. This Agreement comprises the full and complete agreement of the
Parties hereto with respect to the disclosure of the Confidential
Information and supersedes and cancels all prior communications,
understandings and agreements between the Parties hereto, whether written
or oral, expressed or implied.
IN WITNESS WHEREOF, the duly authorized representatives of the Parties
have caused this Agreement to be executed on the date first written above.
DISCLOSING PARTY
By: /s/
Title: Team Leader, North America
RECEIVING PARTY
By: /s/ H. J. Kagie
H.J. Kagie
Title: Vice President of Acquisitions,
Engineering and Operations
David P. Stimack
Certified Professional Landman
November 12, 1996
Leslie A. Burget
BALLARD & ASSOCIATES, INC.
518 Seventeenth, Suite 400
Denver, Colorado 80202
RE: CONFIDENTIAL ACQUISITION
Ampolex (USA), Inc.
Dear Leslie:
Whereas, reference is made to that certain Confidentiality Agreement,
dated November 8, 1996, between Ampolex (USA), Inc., as Disclosing Party
and Ballard and Associates, Inc., as Receiving Party.
Pursuant to paragraph 5(c) thereof, any professional consultant retained
by Receiving Party must agree to be bound by the terms of such Agreement.
Therefore, please be advised, that the undersigned do hereby ratify and
adopt the conditions set forth in such Agreement as though each of the
undersigned had executed same.
Very truly yours,
JERRY P. HILL, INC.
David P. Stimack, C.P.L. Jerry P. Hill, C.P.L.
1580 Lincoln Street, Suite 650 . Denver, Colorado 80203 . (303) 837-0500
CONFIDENTIALITY AGREEMENT
THIS AGREEMENT, entered into this the 12 day of November, 1996, by and
between Ampolex (USA), Inc., a corporation organized and existing under
the laws of Texas (hereinafter referred to as the "Disclosing Party") and
Celsius Energy Company, a corporation organized and existing under the
laws of Nevada (hereinafter referred to as the "Receiving Party").
1. In connection with the evaluation and the possible acquisition by the
Receiving Party of certain petroleum exploration and production interests
located in the United States as more fully described in Exhibits A-1 and A-
2 attached hereto and made a part hereof (hereinafter referred to as the
"Area") the Disclosing Party is willing, in accordance with the terms and
conditions of this Agreement, to disclose to the Receiving Party certain
confidential information which is proprietary, relating to the Area which
includes, but is not necessarily limited to, geological and geophysical
data, maps, models and interpretations and may also include commercial,
contractual and financial information whether written or oral (hereinafter
referred to as the "Confidential Information"). In no event shall the
Receiving Party be entitled to make or receive photocopies or
reproductions (whether digital or electronic) of such Confidential
Information except to the extent that the Disclosing Party, in its sale
discretion, issues written authorization permitting same.
2. In consideration of the disclosure referred to in Paragraph 1 hereof,
the Receiving Party agrees that the Confidential Information shall be kept
strictly confidential and shall not be sold, traded, published or
otherwise disclosed to anyone in any manner whatsoever, including by means
of photocopy or reproduction, without the Disclosing Party's prior written
consent, except as provided in Paragraphs 3, 4 and 5 below.
3. The Receiving Party may disclose the Confidential Information without
the Disclosing Party's prior written consent only to the extent such
information.
(a) is already known to the Receiving Party as of the date of
disclosure hereunder,
(b) is already in possession of the public or becomes available to
the public other than through the act or omission of the Receiving Party;
(c) is required to be disclosed under applicable law or by a
governmental order, decree, regulation or rule (provided that the
Receiving Party shall give written notice to the Disclosing Party prior to
such disclosure); or
(d) is acquired independently from a third party that represents that
it has the right to disseminate such information at the time it is
acquired by the Receiving Party.
4. The Receiving Party may disclose the Confidential Information without
the Disclosing Party's prior written consent to an Affiliated Company (as
hereinafter defined), provided that the Receiving Party guarantees the
adherence of such Affiliated Company to the terms of this Agreement.
"Affiliated Company" shall mean any company or legal entity which (a)
controls either directly or indirectly a Receiving Party, or (b) which is
controlled directly or indirectly by such Receiving Party, or (c) is
directly or indirectly controlled by a company or entity which directly or
indirectly controls such Receiving Party. "Control" means the right to
exercise 50% or more of the voting rights in the appointment of the
directors of such company.
5. The Receiving Party shall be entitled to disclose the Confidential
Information without the Disclosing Party's prior written consent to such
of the following persons who have a clear need to know in order to
evaluate the Area:
(a) employees, officers and directors of the Receiving Party;
(b) employees, officers and directors of an Affiliated Company;
(c) any professional consultant or agent retained by the Receiving
Party for the purpose of evaluating the Confidential Information; or
(d) any bank financing Receiving Party's participation in the Area,
including any professional consultant retained by such bank for the
purpose of evaluation the Confidential Information.
Prior to making any such disclosures to persons under subparagraphs (c)
and (d) above, however, the Receiving Party shall obtain a written
undertaking of confidentiality, in the same form and content as this
Agreement, from each such person.
6. The Receiving Party and its Affiliated Companies, if any, shall only
use or permit the use of the Confidential Information disclosed under
Paragraphs 4 or 5 above to evaluate the Area and determine whether to
enter into negotiations concerning the acquisition of all or part of the
Disclosing Party's rights in the Area.
The Receiving Party and its Affiliated Companies shall not, during the
term hereof, acquire any rights or otherwise seek to compete with
Disclosing Party in the Area Without Disclosing Party's prior written
consent in the event the Receiving Party and its Affiliated Companies
acquire any rights in the Area during the term hereof other than the
Disclosing Party's rights as provided in Paragraph 9 below, it shall
promptly assign such rights at cost to the Disclosing Party. However, the
foregoing restrictions upon acquisition of rights or interests in an Area
without the Disclosing Party's consent shall not apply in any Area in
which the Receiving Party owned a right or interest on and prior co
November 1, 1996, nor shall it apply in an Area in which the Receiving
Party owned no right or interest as of November 1, 1996 but later acquires
a right or interest from a third party based solely upon review of such
third party's information.
It is expressly understood that participation against Disclosing Party at
any public auction or other lease sale by the Receiving Party or its agent
or representative as a result of inspecting Disclosing Party's data is
prohibited for 12 months from the date of this Agreement.
7. The Receiving Party shall be responsible for ensuring that all
persons to whom the Confidential Information is disclosed under this
Agreement shall keep such information confidential and shall not disclose
or divulge the same to any unauthorized person. Neither Party shall be
liable in an action initiated by one against the other for special,
indirect or consequential damages resulting from or arising out of this
Agreement, including, without limitation, loss of profit or business
interruptions, however same may be caused.
8. The Confidential Information shall remain the property of the
Disclosing Party, and the Disclosing Party may demand the return thereof
at any time upon giving written notice to the Receiving Party. Within 30
days of receipt of such notice, the Receiving Party shall return all of
the original confidential Information and shall destroy all copies and
reproductions (both written and electronic) in its possession and in the
possession of persons to whom it was disclosed pursuant to Paragraphs 4
and 5 hereof.
9. If the Receiving Party acquires any of the Disclosing Party's rights
in the Area, then this Agreement shall terminate automatically on the
closing date of the transaction contemplated in such further agreement.
Unless earlier terminated under the preceding sentence, the
confidentiality obligations set forth in this Agreement shall terminate
one year after the date of this Agreement.
10. The Disclosing Party hereby represents and warrants that it has the
right and authority to disclose the Confidential Information to the
Receiving Party. However, the Disclosing Party, its subsidiaries,
Affiliated Companies and their officers, directors and employees make no
representations or warranties, express or implied, as to the quality,
accuracy or completeness of the information disclosed hereunder or the
ability of the properties to produce. The information provided hereunder
contains estimates reflecting various assumptions concerning anticipated
results, and may or may not prove to be correct. The Disclosing Party its
subsidiaries, Affiliated Companies and their officers, directors and
employees shall have no liability whatsoever with respect to the use of,
or reliance upon such information, or for any omissions from same. The
Receiving Party expressly acknowledges the inherent risk of error in the
acquisition, processing and interpretation of geological and geophysical
data. Any descriptions of documents disclosed hereunder do not purport to
be complete statements thereof, and are qualified and subject to the
detailed provisions of such documents. In all cases, the Receiving Party
should conduct its own investigation and analysis of the Confidential
Information.
11. (a) This Agreement shall be governed by and interpreted in
accordance with the substantive and procedural laws of the State of
Colorado.
(b) Any dispute arising out of or relating to this Agreement,
including any question regarding its existence, validity or termination,
which cannot be amicably resolved by the Parties, shall be settled before
three arbitrators, one to be appointed by each Party and die two so
appointed shall appoint the third arbitrator. in accordance with the
Arbitration Rules of the American Arbitration Association in Denver,
Colorado, and judgment upon the award rendered by the arbitrators may be
entered in any court having jurisdiction thereof. A dispute shall be
deemed to have arisen when either Party notifies the other Party in
writing to that effect.
12. Unless otherwise expressly agreed to in writing, any prior or future
proposals or offers made in the course of the Parties' discussions are
implicitly subject to all necessary management and government approvals
and may be withdrawn by either at any time. Nothing contained herein is
intended to confer upon the Receiving Party any right whatsoever to the
Disclosing Party's interest in the Area.
13. No amendments, changes or modifications to this Agreement shall be
valid except if the same are in writing and signed by a duly authorized
representative of each of the Parties herein.
14. This Agreement comprises the full and complete agreement of the
Parties hereto with respect to the disclosure of the Confidential
Information and supersedes and cancels all prior communications,
understandings and agreements between the Parties hereto, whether written
or oral, expressed or implied.
IN WITNESS WHEREOF, the duly authorized representatives of the Parties
have caused this Agreement to be executed on the date first written above.
DISCLOSING PARTY
By: /s/
Title: Team Leader, North American
RECEIVING PARTY
By: /s/ G. L. Nordloh
G. L. Nordloh
Title: President & CEO
CONFIDENTIALITY AGREEMENT
THIS AGREEMENT, entered into this the 8th day of November, 1996, by and
between Ampolex (USA), Inc., a corporation organized and existing under
the laws of Texas (hereinafter referred to as the "Disclosing Party" and
Flying J Oil & Gas, Inc., a corporation organized and existing under the
laws of Utah (hereinafter referred to as the "Receiving Party").
1. In connection with the evaluation and the possible acquisition by the
Receiving Party of certain petroleum exploration and production interests
located in the United States as more fully described in Exhibits A-1 and A-
2 attached hereto and made a part hereof (hereinafter referred to as the
"Area") the Disclosing Party is willing, in accordance with the terms and
conditions of this Agreement, to disclose to the Receiving Party certain
confidential information which is proprietary, relating to the Area which
includes, but is not necessarily limited to, geological and geophysical
data, maps, models and interpretations and may also include commercial,
contractual and financial information whether written or oral unless
subject to paragraph 3 (hereinafter referred to as the "Confidential
Information"). In no event shall the Receiving Party be entitled to make
or receive photocopies or reproductions (whether digital or electronic) of
such Confidential Information except to the extent that the Disclosing
Party, in its sole discretion, issues written authorization permitting
same.
2. In consideration of the disclosure referred to in Paragraph 1 hereof,
the Receiving Party agrees that the Confidential Information shall be kept
strictly confidential and shall not be sold, traded, published or
otherwise disclosed to anyone in any manner whatsoever, including by means
of photocopy or reproduction, without the Disclosing Party's prior written
consent, except as provided in Paragraphs 3, 4 and 5 below.
3. None of the following shall constitute the Confidential Information
as stated Paragraph 1 of this Agreement.
(a) information which is already known to the Receiving Party as of
the date of disclosure hereunder;
(b) information which is already in possession of the public or
becomes available to the public other than through the act or omission of
the Receiving Party;
(c) information which is required to be disclosed under applicable
law or by a governmental order, decree, regulation or rule (provided that
the Receiving Party shall give written notice to the Disclosing Party
prior to such disclosure); or
(d) information which is acquired independently from a third party
that represents that it has the right to disseminate such information at
the time it is acquired by the Receiving Party.
4. The Receiving Party may disclose the Confidential Information without
the Disclosing Party's prior written consent to an Affiliated Company
(hereinafter defined, provided that the Receiving Party guarantees the
adherence of such Affiliated Company to the terms of this Agreement.
"Affiliated Company" shall mean any company or legal entity which (a)
controls either directly or indirectly a Receiving Party, or (b) which is
controlled directly or indirectly by such Receiving Party, or (c) is
directly or indirectly controlled by a company or entity which directly or
indirectly controls such Receiving party. "Control" means the right to
exercise 50% or more of the voting rights in the appointment of the
directors of such company.
5. The Receiving Party shall be entitled to disclose the Confidential
Information without the Disclosing Party's prior written consent to such
of the following persons who have a clear need to know in order to
evaluate the Area:
(a) employees, officers and directors of the Receiving Party;
(b) employees, officers and directors of an Affiliated Company;
(c) any professional consultant or agent retained by the Receiving
Party for the purpose of evaluating the Confidential Information; or
(d) any bank financing Receiving Party's participation in the Area,
including any professional consultant retained by such bank for the
purpose of evaluating the Confidential Information.
Prior to making any such disclosures to persons under subparagraphs (c)
and (d) above, however, the Receiving Party shall obtain a written
undertaking of confidentiality, in the same form and content as this
Agreement, from each such person.
6. The Receiving Party and its Affiliated Companies, if any, shall only
use or permit the use of the Confidential Information disclosed under
Paragraphs 4 or 5 above to evaluate the Area and determine whether to
enter into negotiations concerning the acquisition of all or part of the
Disclosing Party's rights in the Area.
Disclosing Party acknowledges and agrees that Receiving Party is actively
exploring for and/or producing oil and/or gas in the following portions of
the Area: the Williston Basin and the Powder River Basin as described in
Exhibit A-2 (hereinafter referred to as the "Excluded Areas").
Accordingly, Disclosing Party acknowledges and agrees that notwithstanding
any other term, condition or provision of this Agreement to the contrary,
Receiving Party shall have the full and unrestricted right to conduct its
business and operations in the Excluded Areas without any obligations or
responsibilities to Disclosing Party whatsoever.
Subject to the foregoing, the Receiving Party and its Affiliated Companies
shall not, during the term hereof, acquire any rights or otherwise seek to
compete with Disclosing Party in the Area without Disclosing Party's prior
written consent. Except as otherwise provided herein, in the event the
Receiving Party and its Affiliated Companies acquire any rights in the
Area and with the exception of the Excluded Areas during the term hereof
other than the Disclosing Party's rights as provided in Paragraph 9 below,
it shall promptly assign such rights at cost to the Disclosing Party.
Provided, however, that in no event shall this provision apply to any
portion of exploration prospects or oil and/or gas production properties
acquired by Receiving Party from third parties, pursuant to a farmin or
other deal arrangement. It is expressly understood that participation
against Disclosing Party at any public auction or other lease sale by the
Receiving Part or its agent or representative is prohibited for 12 months
from the date of this Agreement.
7. The Receiving Party shall be responsible for ensuring that all
persons to whom the Confidential Information is disclosed under this
Agreement shall keep such information confidential and shall not disclose
or divulge the same to any unauthorized person. Neither Party shall be
liable in an action initiated by one against the other for special,
indirect or consequential damages resulting from or arising out of this
Agreement, including, without limitation, loss of profit or business
interruptions, however same may be caused.
8. The Confidential Information shall remain the property of the
Disclosing Party, and the Disclosing Party may demand the return thereof
at any time upon giving written notice to the Receiving Party. Within 30
days of receipt of such notice, the Receiving Party shall return all of
the original confidential Information and shall destroy all copies and
reproductions (both written and electronic) in its possession and in the
possession of persons to whom it was disclosed pursuant to Paragraphs 4
and 5 hereof.
9. If the Receiving Party acquires any of the Disclosing Party's rights
in the Area, then this Agreement shall terminate automatically on the date
the Receiving Party enters into a further agreement which contains
provisions covering the confidentiality of data in the Area. Unless
earlier terminated under the preceding sentence, the confidentiality
obligations set forth in this Agreement shall terminate one year after the
date of this Agreement.
10. The Disclosing Party hereby represents and warrants that it has the
right and authority to disclose the Confidential Information to the
Receiving Party. However, the Disclosing Party, its subsidiaries,
Affiliated Companies and their officers, directors and employees make no
representations or warranties, express or implied, as to the quality,
accuracy or completeness of the information disclosed hereunder or the
ability of the properties to produce. The information provided hereunder
contains estimates reflecting various assumptions concerning anticipated
results, and may or may not prove to be correct. The Disclosing Party its
subsidiaries, Affiliated Companies and their officers, directors and
employees shall have no liability whatsoever with respect to the use of,
or reliance upon such information, or for any omissions from same. The
Receiving Party expressly acknowledges the inherent risk of error in the
acquisition, processing and interpretation of Geological and Geophysical
data. Any descriptions of documents disclosed hereunder do not purport to
be complete statements thereof, and are qualified and subject to the
detailed provisions of such documents. In all cases, the Receiving Party
should conduct its own investigation and analysis of the Confidential
Information.
11. (a) This Agreement shall be governed by and interpreted in
accordance with the substantive and procedural laws of the State of
Colorado.
(b) Any dispute arising out of or relating to this Agreement,
including any question regarding its existence, validity or termination,
which cannot be amicably resolved by the Parties, shall be settled before
three arbitrators, one to be appointed by each Party and the two so
appointed shall appoint the third arbitrator, in accordance with the
Arbitration Rules of the American Arbitration Association in Denver,
Colorado, and judgment upon the award rendered by the arbitrators may be
entered in any court having jurisdiction thereof. A dispute shall be
deemed to have arisen when either Party notifies the other Party in
writing to that effect.
12. Unless otherwise expressly agreed to in writing, any prior or future
proposals or offers made in the course of the Parties' discussions are
implicitly subject to all necessary management and government approvals
and may be withdrawn by either at any time. Nothing contained herein is
intended to confer upon the Receiving Party any right whatsoever to the
Disclosing Party's interest in the Area.
13. No amendments, changes or modifications to this Agreement shall be
valid except if the same are in writing and signed by a duly authorized
representative of each of the Parties herein.
14. This Agreement comprises the full and complete agreement of the
Parties hereto with respect to the disclosure of the Confidential
Information and supersedes and cancels all prior communications,
understandings and agreements between the Parties hereto, whether written
or oral, expressed or implied.
IN WITNESS WHEREOF, the duly authorized representatives of the Parties
have caused this Agreement to be executed on the date first written above.
DISCLOSING PARTY
By: /s/
Title: Team Leader, North American
RECEIVING PARTY
By: /s/
Title: VP, Exploration
Exhibit A2
The following table lists the townships and ranges which are consider to
be the exploration areas included in the confidentiality agreement under
paragraph 1.
California Wyoming
San Joaquin Powder River
Basin Basin
Attachment 1 partial 3D seismic outline
14S 15E to 21E and
15S 15E to 22E 37N 71W
16S 15E to 23E
17S 15E to 24E
18S 15E to 24E
19S 15E to 25E
20S 15E to 25E
21S 15E to 27E
22S 15E to 28E
23S 15E to 28E
24S 15E to 28E
25S 17E to 28E
26S 17E to 28E
27S 17E to 29E
28S 17E to 29E
29S 17E to 30E
30S 17E to 30E
North Dakota
Williston Basin
Attachment 23D seismic outline with a 1 mile apron
Exhibit A2 Attachment 1 (Map)
Exhibit A2 Attachment 2 (Map)
CONFIDENTIALITY AGREEMENT
THIS AGREEMENT entered into this 15th day of November, 1996, by and
between Ampolex (USA), Inc., a corporation organized and existing under
the laws of Texas (hereinafter referred to as the "Disclosing Party") and
JHS Energy, Inc., a corporation organized and existing under the laws of
hereinafter referred to as the ("Receiving Party").
1. In connection with the evaluation and the possible acquisition by the
Receiving Party of certain petroleum exploration and production interests
located in the United States as more fully described in Exhibits A-1 and A-
2 attached hereto and made a part hereof (hereinafter referred to as the
"Area") the Disclosing Party is willing, in Accordance with the terms and
conditions of this Agreement, to disclose to the Receiving Party certain
confidential information which is proprietary, relating to the Area which
includes, but is not necessarily limited to, geological and geophysical
data, maps, models and interpretations and may also include commercial,
contractual and financial information whether written or oral (hereinafter
referred to as the "Confidential Information"). In no event shall the
Receiving Party be entitled to make or receive photocopies or
reproductions (whether digital or electronic) of such Confidential
Information except to the extent that the Disclosing Party, in its sole
discretion, issues written authorization permitting same.
2. In consideration of the disclosure referred to in Paragraph 1 hereof,
the Receiving Party agrees that the Confidential Information shall be kept
strictly confidential and shall not be sold, traded, published or
otherwise disclosed to anyone in any manner whatsoever, including by means
of photocopy or reproduction, without the Disclosing Party's prior written
consent, except as provided in Paragraphs 3,4 and 5 below.
3. The Receiving Party may disclose the Confidential Information without
the Disclosing Party's prior written consent only to the extent such
information.
(a) is already known to the Receiving Party as of the date of disclosure
hereunder,
(b) is already in possession of the public or becomes available to the
public other than through the act or omission of the Receiving Party;
(c) is required to be disclosed under applicable law or by a governmental
order, decree, regulation or rule (provided that the Receiving Party shall
give written notice to the Disclosing Party prior to such disclosure); or
(d) is acquired independently from a third party that represents that it
has the right to disseminate such information at the time it is acquired
by the Receiving Party.
4. The Receiving Party may disclose the Confidential Information without
the Disclosing Party's prior written consent to an Affiliated Company (as
hereinafter defined), provided that the Receiving Party guarantees the
adherence of such Affiliated Company to the terms of this Agreement.
"Affiliated Company" shall mean any company or legal entity which (a)
controls either directly or indirectly a Receiving Party, or (b) which is
controlled directly or indirectly by such Receiving Party, or (c) is
directly or indirectly controlled by a company or entity which directly or
indirectly controls such Receiving Party. "Control" means the right to
exercise 50% or more of the voting rights in the appointment of the
directors of such company.
5. The Receiving Party shall be entitled to disclose the Confidential
Information without the Disclosing Party's prior written consent to such
of the following persons who have a clear need to know in order to
evaluate the Area:
(a) employees, officers and directors of the Receiving Party;
(b) employees, officers and directors of an Affiliated Company;
(c) any professional consultant or agent retained by the Receiving Party
for the purpose of evaluating the Confidential Information; or
(d) any bank financing Receiving Party's participation in the Area,
including any professional consultant retained by such bank for the
purpose of evaluating the Confidential Information.
Prior to making any such disclosures to persons under subparagraphs (c)
and (d) above, however, the Receiving Party shall obtain a written
undertaking of confidentiality, in the same form and content as this
Agreement, from each such person.
6. The Receiving Parry and its Affiliated Companies, if any, shall only
use or permit the use of the Confidential Information disclosed under
Paragraphs 4 or 5 above to evaluate the Area and determine whether to
enter into negotiations concerning the acquisition of all or part of the
Disclosing Party's rights in the Area.
The Receiving Party and its Affiliated Companies shall not, during the
term hereof, acquire any rights or otherwise seek to compete with
Disclosing Party in the Area without Disclosing Party's prior written
consent. In the event the Receiving Party and its Affiliated Companies
acquire any rights in the Area during the term hereof other than the
Disclosing Party's rights as provided in Paragraph 9 below, it shall
promptly assign such rights at cost to the Disclosing Party.
7. The Receiving Party shall be responsible for ensuring that all
persons to whom the Confidential Information is disclosed under this
Agreement shall keep such information confidential and shall not disclose
or divulge the same to any unauthorized person. Neither Party shall be
liable in an action initiated by one against the other for special,
indirect or consequential damages resulting from or arising out of this
Agreement, including, without limitation, loss of profit or business
interruptions, however same may be caused.
8. The Confidential Information shall remain the property of the
Disclosing Party, and the Disclosing Party may demand the return thereof
at any time upon giving written notice to the Receiving Party. Within 30
days of receipt of such notice, the Receiving Party shall return all of
the original Confidential Information and shall destroy all copies and
reproductions (both written and electronic) in its possession and in the
possession of persons to whom it was disclosed pursuant to Paragraphs 4
and 5 hereof.
9. If the Receiving Party acquires any of the Disclosing Party's rights
in the Area, then this Agreement shall terminate automatically on the date
the Receiving Party enters into a further agreement which contains
provisions covering the confidentiality of data in the Area. Unless
earlier terminated under the preceding sentence, the confidentiality
obligations set forth in this Agreement shall terminate three years after
the date of this Agreement.
10. The Disclosing Party hereby represents and warrants that it has the
right and authority to disclose the Confidential Information to the
Receiving Party. However, the Disclosing Party, its subsidiaries,
Affiliated Companies and their officers, directors and employees make no
representations or warranties, express or implied, as to the quality,
accuracy or completeness of the information disclosed hereunder or the
ability of the properties to produce. The information provided hereunder
contains estimates reflecting various assumptions concerning anticipated
results, and may or may not prove to be correct. The Disclosing Party its
subsidiaries, Affiliated Companies and their officers, directors and
employees shall have no liability whatsoever with respect to the use of,
or reliance upon such information, or for any omissions from same. The
Receiving Party expressly acknowledges the inherent risk of error in the
acquisition, processing and interpretation of geological and geophysical
data. Any descriptions of documents disclosed hereunder do not purport to
be complete statements thereof, and are qualified and subject to the
detailed provisions of such documents. In all cases, the Receiving, Party
should conduct its own investigation and analysis of the Confidential
Information.
11. (a) This Agreement shall be governed by and interpreted in accordance
with the substantive and procedural laws of the State of Colorado.
(b) Any dispute arising out of or relating to this Agreement, including
any question regarding its existence, validity or termination, which
cannot be amicably resolved by the Parties, shall be settled before three
arbitrators, one to be appointed by each Party and the two so appointed
shall appoint the third arbitrator, in accordance with the Arbitration
Rules of the American Arbitration Association in Denver, Colorado, and
judgment upon the award rendered by the arbitrators may be entered in any
court having jurisdiction thereof. A dispute shall be deemed to have
arisen when either Party notifies the other Party in writing to that
effect.
12. Unless otherwise expressly agreed to in writing, any prior or future
proposals or offers made in the course of the Parties' discussions are
implicitly subject to all necessary management and government approvals
and may be withdrawn by either at any time. Nothing contained herein is
intended to confer upon the Receiving Party any right whatsoever to the
Disclosing Party's interest in the Area.
13. No amendments, changes or modifications to this Agreement shall be
valid except if the same are in writing and signed by a duly authorized
representative of each of the Parties herein.
14. This Agreement comprises the full and complete agreement of the
Parties hereto with respect to the disclosure of the Confidential
Information and supersedes and cancels all prior communications,
understandings and agreements between the Parties hereto, whether written
or oral, expressed or implied..
IN WITNESS WHEREOF, the duly authorized representatives of the Parties
have caused this Agreement to be executed on the date first written above.
DISCLOSING PARTY
By: /s/
Title: Team Leader, North American
RECEIVING PARTY
By: /s/
Title:
Gulf Canada Resources Limited
CONFIDENTIALITY AGREEMENT
THIS AGREEMENT, entered into this the 12th day of November 1996, by and
between Ampolex (USA), Inc., a corporation organized and existing under
the laws of Texas (hereinafter referred to as the "Disclosing Party") and
GCRL Energy Ltd., a corporation organized and existing under the laws of
Delaware (hereinafter referred to as the "Receiving Party").
1. In connection with the evaluation and the possible acquisition by the
Receiving Party of certain petroleum exploration and production interests
located in the United States as more fully described in Exhibits A-1 and A-
2 attached hereto and made a part hereof (hereinafter referred to as the
"Area") the Disclosing Party is willing, in accordance with the terms and
conditions of this Agreement, to disclose to the Receiving Party certain
confidential information which is proprietary, relating to the Area which
includes, but is not necessarily limited to, geological and geophysical
data, maps, models and interpretations and may also include commercial,
contractual and financial information whether written or oral (hereinafter
referred to as the "Confidential Information"). In no event shall the
Receiving Party be entitled to make or receive photocopies or
reproductions (whether digital or electronic) of such Confidential
Information except to the extent that the Disclosing Party, in its sole
discretion, authorizes same.
2. In consideration of the disclosure referred to in Paragraph 1 hereof,
the Receiving Party agrees that the Confidential Information shall be kept
strictly confidential and shall not be sold, traded, published or
otherwise disclosed to anyone in any manner whatsoever, including by means
of photocopy or reproduction, without the Disclosing Party's prior written
consent, except as provided in Paragraphs 3,4 and 5 below.
3. The Receiving Party may disclose the Confidential Information without
the Disclosing Party's prior written consent only to the extent such
information.
(a) is already known to the Receiving Party as of the date of disclosure
hereunder;
(b) is already in possession of the public or becomes available to the
public other than through the act or omission of the Receiving Party;
(c) is required to be disclosed under applicable law or by a governmental
order, decree, regulation or rule or by the requirements of a stock
exchange upon which Receiving Party's shares are listed (provided that the
Receiving Party shall give written notice to the Disclosing Party prior to
such disclosure); or
(d) is acquired independently from a third party that represents that it
has the right to disseminate such information at the time it is acquired
by the Receiving Party.
4. The Receiving Party may disclose the Confidential Information without
the Disclosing Party's prior written consent to an Affiliated Company (as
hereinafter defined), provided that the Receiving Party guarantees the
adherence of such Affiliated Company to the terms of this Agreement.
"Affiliated Company" shall mean any company or legal entity which (a)
controls either directly or indirectly a Receiving Party, or (b) which is
controlled directly or indirectly by such Receiving Party, or (c) is
directly or indirectly controlled by a company or entity which directly or
indirectly controls such Receiving Party. "Control" means the right to
exercise 50% or more of the voting rights in the appointment of the
directors of such company.
5. The Receiving Party shall be entitled to disclose the Confidential
Information without the Disclosing Party's prior written consent to such
of the following persons who have a clear need to know in order to
evaluate the Area:
(a) employees, officers and directors of the Receiving Party;
(b) employees, officers and directors of an Affiliated Company;
(c) any professional consultant or agent retained by the Receiving Party
for the purpose of evaluating the Confidential Information; or
(d) any bank financing Receiving Party's participation in the Area,
including any professional consultant retained by such bank for the
purpose of evaluating the Confidential Information.
By making any such disclosures to persons under subparagraphs (c) and (d)
above, the Receiving Party assumes responsibility to Disclosing Party
pursuant to Paragraph 7 for compliance by such persons with this
Agreement.
6. Receiving Party and its Affiliated Companies may use the Confidential
Information to evaluate any Area and for the conduct of their own
respective operations, including without limitation the acquisition of
other interests or properties, PROVIDED that, if Receiving Party or an
Affiliated Company makes an Eligible Acquisition during the term of this
Agreement, then the Receiving Party shall offer, or cause its Affiliated
Company to offer where applicable, to Disclosing Party a 50 per cent share
in the Eligible Acquisition. Such offer shall be made in writing
accompanied by reasonable particulars of the Aggregate Consideration
payable by Receiving Party, or Affiliated Company where applicable, for
the Eligible Acquisition and will be considered rejected by Disclosing
Party unless accepted by written notice within the Required Time from the
receipt of the offer. Acceptance by Disclosing Party shall require
Disclosing Party to pay to Receiving Party, or Affiliated Company where
applicable, for such 50 per cent interest one half of the Aggregate
Consideration. For the purposes of this Paragraph:
(a) an "Eligible Acquisition" means an acquisition, whether through
purchase, farm in or other means, of any oil or natural gas rights or
interests to the extent contained in an Eligible Area but excludes any
rights or interests that would be subject to preferential rights of
purchase for a third party upon any proposed disposition to Disclosing
Party which such third party will not waive on prior request and, for
certainty, also excludes an acquisition of shares in a corporation or an
interest in a partnership unless Control of the corporation or partnership
is acquired and the rights or interests within Eligible Areas constitute
at least 2/3 of the value of the assets of such Controlled corporation or
partnership;
(b) an "Eligible Area" means any Area subject to this Agreement other
than North Dakota (it being hereby agreed that the rights of use in this
Paragraph 6 apply to the Confidential Information regarding North Dakota
but that the North Dakota Area is not subject to the obligation to make
the offer in this Paragraph);
(c) "Control" has, in the case of a corporation, the meaning contained in
Paragraph 4 and, in the case of a partnership, means sufficient voting
interests to determine business decisions of the partnership;
(d) "Required Time" means 30 days if the Aggregate Consideration is $1
million (U.S.) or less and 60 days in all other cases; and
(e) "Aggregate Consideration" means the price and other consideration,
including the cost of any work obligations and the fair market value of
any non monetary consideration, payable by the Receiving Party, or
Affiliated Company where applicable, for the entire Eligible Acquisition.
Any disagreement over the allocation of purchase price to the Eligible
Acquisition or fair market value of non monetary consideration shall be
determined by arbitration as provided in this Agreement.
7. The Receiving Party shall be responsible for ensuring that all
persons to whom the Confidential Information is disclosed under this
Agreement shall keep such information confidential and shall not disclose
or divulge the same to any unauthorized person. Neither Party shall be
liable in an action initiated by one against the other for special,
indirect or consequential damages resulting from or arising out of this
Agreement, including, without limitation, loss of profit or business
interruptions, however same may be caused.
8. The Confidential Information shall remain the property of the
Disclosing Party, and the Disclosing Party may demand the return thereof
at any time upon giving written notice to the Receiving Party. Within 30
days of receipt of such notice, the Receiving Party shall return all of
the original confidential Information and shall destroy all copies and
reproductions (both written and electronic) in its possession and in the
possession of persons to whom it was disclosed pursuant to Paragraphs 4
and 5 hereof.
9. If the Receiving Party acquires any of the Disclosing Party's rights
in the Area, then this Agreement shall terminate automatically on the date
the Receiving Party enters into a further agreement which contains
provisions covering the confidentiality of data in the
Area. Unless earlier terminated under the preceding sentence, the
confidentiality obligations set forth in this Agreement shall terminate
one year after the date of this Agreement.
10. The Disclosing Party hereby represents and warrants that it has the
right and authority to disclose the Confidential Information to the
Receiving Party. However, the Disclosing Party, its subsidiaries,
Affiliated Companies and their officers, directors and employees make no
representations or warranties, express or implied, as to the quality,
accuracy or completeness of the information disclosed hereunder or the
ability of the properties to produce. The information provided hereunder
contains estimates reflecting various assumptions concerning anticipated
results, and may or may not prove to be correct. The Disclosing Party its
subsidiaries, Affiliated Companies and their officers, directors and
employees shall have no liability whatsoever with respect to the use of,
or reliance upon such information, or for any omissions from same. The
Receiving Party expressly acknowledges the inherent risk of error in the
acquisition, processing and interpretation of geological and geophysical
data. Any descriptions of documents disclosed hereunder do not purport to
be complete statements thereof, and are qualified and subject to the
detailed provisions of such documents. In all cases, the Receiving Party
should conduct its own investigation and analysis of the Confidential
Information.
11. (a) This Agreement shall be governed by and interpreted in accordance
with the substantive and procedural laws of the State of Colorado.
(b) Any dispute arising out of or relating to this Agreement, including
any question regarding its existence, validity or termination, which
cannot be amicably resolved by the Parties, shall be settled before three
arbitrators, one to be appointed by each Party and the two so appointed
shall appoint the third arbitrator, in accordance with the Arbitration
Rules of the American Arbitration Association in Denver, Colorado, and
judgment upon the award rendered by the arbitrators may be entered in any
court having jurisdiction thereof. A dispute shall be deemed to have
arisen when either Party notifies the other Party in writing to that
effect.
12. Nothing contained herein is intended to confer upon the Receiving
Party any right or obligation whatsoever to acquire the Disclosing Party's
interest in the Area.
13. No amendments, changes or modifications to this Agreement shall be
valid except if the same are in writing and signed by a duly authorized
representative of each of the Parties herein.
14. This Agreement comprises the full and complete agreement of the
Parties hereto with respect to the disclosure of the Confidential
Information and supersedes and cancels all prior communications,
understandings and agreements between the Parties hereto, whether written
or oral, expressed or implied.
IN WITNESS WHEREOF, the duly authorized representatives of the Parties
have caused this Agreement to be executed on the date first written above.
DISCLOSING PARTY
By: /s/
Title: Team Leader, North American
RECEIVING PARTY
By: /s/ D. A. Rubenstein
D. A. (Donna) Rubenstein
Title: Director, Acquisitions
CONFIDENTIALITY AGREEMENT
THIS AGREEMENT, entered into this 14th day of November, 1996, by and
between AMPOLEX (USA), INC., a corporation organized and existing under
the laws of Texas (hereinafter referred to as the "Disclosing Party") and
SAMEDAN OIL CORPORATION, a corporation organized and existing under the
laws of Delaware (hereinafter referred to as the "Receiving Party").
1. In connection with the evaluation and the possible acquisition by the
Receiving Party of certain petroleum exploration and production interests
located in the United States as more fully described in Exhibits "A-1" and
"A-2" attached hereto and made a part hereof (hereinafter referred to as
the "Area" the Disclosing Party is willing, in accordance with the terms
and conditions of this Agreement, to disclose to the Receiving Party
certain confidential information imprinted form or by formal presentation
which is proprietary, relating to She Area which includes, but is not
necessarily limited to, geological and geophysical data, maps, models and
interpretations and may also include commercial, contractual and financial
information (hereinafter referred to as the "Confidential Information").
In no event shall the Receiving Party be entitled to make or receive
photocopies or reproductions (whether digital or electronic) of such
Confidential Information except to the extent that the Disclosing Party,
in its sole discretion, issues written authorization permitting same.
2. In consideration of the disclosure referred to in Paragraph 1 hereof,
the Receiving Party agrees that the Confidential Information shall be kept
strictly confidential and shall not be sold, traded, published or
otherwise disclosed to anyone in any manner whatsoever, including by means
of photocopy or reproduction, without the Disclosing Party's prior written
consent, except as provided in Paragraphs 3, 4 and 5 below.
3. The receiving Party may disclose the Confidential Information without
the Disclosing Party's prior written consent only to the extent such
information
a. is already known to the Receiving Party as of the date of
disclosure hereunder;
b. is already in possession of the public or becomes available to
the public other than through the act or omission of the Receiving Party;
c. is required to be disclosed under applicable law or by a
governmental order, decree, regulation or rule (provided that the
Receiving Party shall give written notice to the Disclosing Party prior to
such disclosure); or
d. is acquired independently from a third party that represents
that it has the right to disseminate such information at the time it is
acquired by the Receiving Party.
4. The Receiving Party may disclose the Confidential Information without
the Disclosing Party's prior written consent to an Affiliated Company (as
hereinafter defined), provided that the Receiving Party guarantees the
adherence of such Affiliated Company to the terms of this Agreement.
"Affiliated Company" shall mean any company or legal entity which (a)
controls either directly or indirectly a Receiving Party, or (b) which is
controlled directly or indirectly by such Receiving Party, or (c) is
directly or indirectly controlled by a company or entity which directly or
indirectly controls such Receiving Party. "Control" means the right to
exercise 50% or more of the voting rights in the appointment of the
directors of such company.
5. The Receiving Party shall be entitled to disclose the Confidential
Information without the Disclosing Party's prior written consent to such
of the following persons, who have a clear need to know in order to
evaluate the Area:
a. employees, officers and directors of the Receiving Party;
b. employees, officers and directors of an Affiliated Company;
c. any professional consultant or agent retained by the Receiving Party
for the purpose of evaluating the Confidential Information; or
d. any bank financing Receiving Party's participation in the Area,
including any professional consultant retained by such bank for the
purpose of evaluating the Confidential Information.
Prior to making any such disclosures to persons under subparagraphs (c)
and (d) above, however, the Receiving Party shall obtain in writing the
agreement of such person to be bound by the terms of this Agreement.
6. This Receiving Party and its Affiliated Companies, if any, shall only
use or permit the use of the Confidential Information disclosed under
Paragraphs 4 or 5 above to evaluate the Area and determine ,whether to
enter into negotiations concerning the acquisition of all or part of the
Disclosing Party's rights in the Area.
The Receiving Party and its Affiliated Companies shall not, during the
term hereof, acquire any rights or otherwise seek to compete with
Disclosing Party in the Area without Disclosing Party's prior written
consent. In the event the Receiving. Party and its Affiliated Companies
acquire any rights in the Area during the term hereof other than the
Disclosing Party's rights as provided in Paragraph 9 below, it shall
promptly assign such rights at cost to the Disclosing Party. Provided,
however, that in no event shall this provision apply to any portion of
exploration prospects generated by Receiving Party within the Area or to
oil and/or gas production properties acquired by Receiving Party from
third parties, pursuant to a farmin or other deal arrangement. It is
expressly understood that participation against Disclosing Party as a
result of findings under this agreement at any public auction or other
lease sale by the Receiving Party or its agent or representative is
prohibited for six months from the date of this agreement.
7. The Receiving Party shall be responsible for ensuring that all
persons to whom the Confidential Information is disclosed under this
Agreement shall keep such information confidential and shall not disclose
or divulge the same to any person other than those to whom disclosure is
permitted under Paragraphs 4 and 5 of this Agreement.
If Receiving Party acquires rights in the Area during the terms of this
Agreement, the sole remedy available to Disclosing Party shall be the
remedy provided in Section 6. Receiving Party shall not be liable to
Disclosing Party, or to any other party who acquires the interest of
Disclosing Party in any part or all of the Area, for special, indirect or
consequential damages (resulting from or arising out of this Agreement,
including, without limitation, loss of profit or business interruption,
however the same be caused.
8. The Confidential Information shall remain the property of the
Disclosing Party, and the Disclosing Party may demand the return thereof
at any time upon giving written notice to the Receiving Party. Within 30
days of receipt of such notice, the Receiving Party shall return all of
the original Confidential Information and shall destroy all copies and
reproductions (both written and electronic) in its possession and in the
possession of persons to whom it was disclosed pursuant to Paragraphs 4
and 5 hereof.
9. If the Receiving Party acquires any of the Disclosing Party's rights
in the Area, then this Agreement shall terminate automatically on the date
the Receiving Party enters into a further agreement which contains
provisions covering the confidentiality of data in the Area. Unless
earlier terminated under the preceding sentence, the confidentiality
obligations set forth in this Agreement shall terminate six months after
the date of this Agreement.
10. The Disclosing Party hereby represents and warrants that it has the
right and authority to disclose the Confidential Information to the
Receiving Party. However, the Disclosing Party, its subsidiaries,
Affiliated Companies and their officers, directors and employees make no
representations or warranties, express or implied, as to the quality,
accuracy of completeness of the information disclosed hereunder or the
ability of the properties to produce. The information provided hereunder
contains estimates reflecting various assumptions concerning anticipated
results, and may or may not prove to be correct. The Disclosing Party,
its subsidiaries, Affiliated Companies and their officers, directors and
employees shall have no liability whatsoever with respect to the use of,
or reliance upon such information, or for any omissions from same. The
Receiving Party expressly acknowledges the inherent risk of error in the
acquisition, processing and interpretation of geological and geophysical
data. Any descriptions of documents disclosed hereunder do not purport to
be complete statements thereof, and are qualified and subject to the
detailed provisions of such documents. In all cases, the Receiving Party
should conduct its own investigation and analysis of the Confidential
Information.
a. This Agreement shall be governed by and interpreted in accordance
with the substantive and procedural laws of the State of Colorado.
b. Any dispute arising out of or relating to this Agreement, including
any question regarding its existence, validity or termination, which
cannot be amicably resolved by the Parties, shall be settled in Denver,
Colorado before three arbitrators, one to be appointed by each Party and
the two so appointed shall appoint the third arbitrator, in accordance
with the Arbitration Rules of the American Arbitration Association in
Denver, Colorado, and judgment upon the award rendered by the arbitrators
may be entered in any court having jurisdiction thereof. A dispute shall
be deemed to have arisen when either Party notifies the other Party in
writing to that effect.
12. Unless otherwise expressly agreed to in waiting, any prior or future
proposals or offers made in the course of the Parties' discussions are
implicitly subject to all necessary management and government approvals
and may be withdrawn by either at any time. Nothing contained herein is
intended to confer upon the Receiving Party any right whatsoever to the
Disclosing Party's interest in the Area.
13. No amendments, changes or modifications to this Agreement shall be
valid except if the same are in writing and signed by a duly authorized
representative of each of the Parties herein.
14. This Agreement comprises the full and complete agreement of the
Parties hereto with respect to the disclosure of the Confidential
Information and supersedes and cancels all prior communications,
understandings and agreements between the Parties hereto, whether written
or oral, expressed or implied.
IN WITNESS WHEREOF, the duly authorized representatives of the Parties
have caused this Agreement to be executed on the date first written above.
DISCLOSING PARTY
By: /s/ Ernie Delfos
Title: Team Leader, North American
RECEIVING PARTY
By: /s/ R. P. McCuistion
Title: Region Manager
CONFIDENTIALITY AGREEMENT
THIS AGREEMENT, entered into this the 19th day of November, 1996, by
and between Ampolex (USA), Inc., a corporation organized and existing
under the laws of Texas (hereinafter referred to as the "Disclosing
Party") and Tower Energy Corporation, a corporation organized and existing
under the laws of Colorado (hereinafter referred to as the "Receiving
Party").
1. In connection with the evaluation and the possible acquisition by the
Receiving Party of certain petroleum exploration and production interests
located in the United States as more fully described in Exhibits A-1 and A-
2 attached hereto and made a part hereof (hereinafter referred to as the
"Area") the Disclosing Party is willing, in accordance with the terms and
conditions of this Agreement, to disclose to the Receiving Party certain
confidential information which is proprietary, relating to the Area which
includes, but is not necessarily limited to, geological and geophysical
data, maps, models and interpretations and may also include commercial,
contractual and financial information whether written or oral (hereinafter
referred to as the "Confidential Information"). In no event shall the
Receiving Party be entitled to make or receive photocopies or
reproductions (whether digital or electronic) of such Confidential
Information except to the extent that the Disclosing Party, in its sole
discretion, issues written authorization permitting same.
2. In consideration of the disclosure referred to in Paragraph 1 hereof,
the Receiving Party agrees that the Confidential Information shall be kept
strictly confidential and shall not be sold, traded, published or
otherwise disclosed to anyone in any manner whatsoever, including by means
of photocopy or reproduction, without the Disclosing Party's prior written
consent, except as provided in Paragraphs 3,4 and 5 below.
3. The Receiving Party may disclose the Confidential Information without
the Disclosing Party's prior written consent only to the extent such
information.
(a) is already known to the Receiving Party as of the date of disclosure
hereunder;
(b) is already in possession of the public or becomes available to the
public other than through the act or omission of the Receiving Party;
(c) is required to be disclosed under applicable law or by a governmental
order, decree, regulation or rule (provided that the Receiving Party shall
give written notice to the Disclosing Party prior to such disclosure); or
(d) is acquired independently from a third party that represents that it
has the right to disseminate such information at the time it is acquired
by the Receiving Party.
4. The Receiving Party may disclose the Confidential Information without
the Disclosing Party's prior written consent to an Affiliated Company (as
hereinafter defined), provided that the Receiving Party guarantees the
adherence of such Affiliated Company to the terms of this Agreement.
"Affiliated Company" shall mean any company or legal entity which (a)
controls either directly or indirectly a Receiving Party, or (b) which is
controlled directly or indirectly by such Receiving Party, or (c) is
directly or indirectly controlled by a company or entity which directly or
indirectly controls such Receiving Party. "Control" means the right to
exercise 50% or more of the voting rights in the appointment of the
directors of such company.
5. The Receiving Party shall be entitled to disclose the Confidential
Information without the Disclosing Party's prior written consent to such
of the following persons who have a clear need to know in order to
evaluate the Area:
(a) employees, officers and directors of the Receiving Party;
(b) employees, officers and directors of an Affiliated Company;
(c) any professional consultant or agent retained by the Receiving Party
for the purpose of evaluating the Confidential Information; or
(d) any bank financing Receiving Party's participation in the Area,
including any professional consultant retained by such bank for the
purpose of evaluating the Confidential Information.
Prior to making any such disclosures to persons under subparagraphs (c)
and (d) above, however, the Receiving Party shall obtain a written
undertaking of confidentiality, in the same form and content as this
Agreement, from each such person.
6. The Receiving Party and its Affiliated Companies, if any, shall only
use or permit the use of the Confidential Information disclosed under
Paragraphs 4 or 5 above to evaluate the Area and determine whether to
enter into negotiations concerning the acquisition of all or part of the
Disclosing Party's rights in the Area.
The Receiving Party and its Affiliated Companies shall not, during the
term hereof, acquire any rights or otherwise seek to compete with
Disclosing Party in the Area without Disclosing Party's prior written
consent. In the event the Receiving Party and its Affiliated Companies
acquire any rights in the Area during the term hereof other than the
Disclosing Party's rights as provided in Paragraph 9 below, it shall
promptly assign such rights at cost to the Disclosing Party.
7. The Receiving Party shall be responsible for ensuring that all
persons to whom the Confidential Information is disclosed under this
Agreement shall keep such information confidential and shall not disclose
or divulge the same to any unauthorized person. Neither Party shall be
liable in an action initiated by one against the other for special,
indirect or consequential damages resulting from or arising out of this
Agreement, including, without limitation, loss of profit or business
interruptions, however same may be caused.
8. The Confidential Information shall remain the property of the
Disclosing Party, and the Disclosing Party may demand the return thereof
at any time upon giving written notice to the Receiving Party. Within 30
days of receipt of such notice, the Receiving Party shall return all of
the original confidential Information and shall destroy all copies and
reproductions (both written and electronic) in its possession and in the
possession of persons to whom it was disclosed pursuant to Paragraphs 4
and 5 hereof.
9. If the Receiving Party acquires any of the Disclosing Party's rights
in the Area, then this Agreement shall terminate automatically on the date
the Receiving Party enters into a further agreement which contains
provisions covering the confidentiality of data in the Area. Unless
earlier terminated under the preceding sentence, the confidentiality
obligations set forth in this Agreement shall terminate three years after
the date of this Agreement.
10. The Disclosing Party hereby represents and warrants that it has the
right and authority to disclose the Confidential Information to the
Receiving Party. However, the Disclosing Party, its subsidiaries,
Affiliated Companies and their officers, directors and employees make no
representations or warranties, express or implied, as to the quality,
accuracy or completeness of the information disclosed hereunder or the
ability of the properties to produce. The information provided hereunder
contains estimates reflecting various assumptions concerning anticipated
results, and may or may not prove to be correct. The Disclosing Party its
subsidiaries, Affiliated Companies and their officers, directors and
employees shall have no liability whatsoever with respect to the use of,
or reliance upon such information, or for any omissions from same. The
Receiving Party expressly acknowledges the inherent risk of error in the
acquisition, processing and interpretation of geological and geophysical
data. Any descriptions of documents disclosed hereunder do not purport to
be complete statements thereof, and are qualified and subject to the
detailed provisions of such documents. In all cases, the Receiving Party
should conduct its own investigation and analysis of the Confidential
Information.
11. (a) This Agreement shall be governed by and interpreted in accordance
with the substantive and procedural laws of the State of Colorado.
(b) Any dispute arising out of or relating to this Agreement, including
any question regarding its existence, validity or termination, which
cannot be amicably resolved by the Parties, shall be settled before three
arbitrators, one to be appointed by each Party and the two so appointed
shall appoint the third arbitrator, in accordance with the Arbitration
Rules of the American Arbitration Association in Denver, Colorado, and
judgment upon the award rendered by the arbitrators may be entered in any
court having jurisdiction thereof. A dispute shall be deemed to have
arisen when either Party notifies the other Party in writing to that
effect.
12. Unless otherwise expressly agreed to in writing, any prior or future
proposals or offers made in the course of the Parties' discussions are
implicitly subject to all necessary management and government approvals
and may be withdrawn by either at any time. Nothing contained herein is
intended to confer upon the Receiving Party any right whatsoever to the
Disclosing Party's interest in the Area.
13. No amendments, changes or modifications to this Agreement shall be
valid except if the same are in writing and signed by a duly authorized
representative of each of the Parties herein.
14. This Agreement comprises the full and complete agreement of the
Parties hereto with respect to the disclosure of the Confidential
Information and supersedes and cancels all prior communications,
understandings and agreements between the Parties hereto, whether written
or oral, expressed or implied.
IN WITNESS WHEREOF, the duly authorized representatives of the
Parties have caused this Agreement to be executed on the date first
written above.
DISCLOSING PARTY
By: /s/
Title: Team Leader, North American
RECEIVING PARTY
By: /s/
Title: Chairman
CONFIDENTIALITY AGREEMENT
THIS AGREEMENT, entered into this the 13th day of November, 1996, by
and between Ampolex (USA), Inc., a corporation organized and existing
under the laws of Texas (hereinafter referred to as the "Disclosing
Party") and Westport Oil and Gas, a corporation organized and existing
under the laws of Delaware (hereinafter referred to as the "Receiving
Party").
1. In connection with the evaluation and the possible acquisition by the
Receiving Party of certain petroleum exploration and production interests
located in the United States as more fully described in Exhibits A-1 and A-
2 attached hereto and made a part hereof (hereinafter referred to as the
"Area") the Disclosing Party is willing, in accordance with the terms and
conditions of this Agreement, to disclose to the Receiving Party certain
confidential information which is proprietary, relating to the Area which
includes, but is not necessarily limited to, geological and geophysical
data, maps, models and interpretations and may also include commercial,
contractual and financial information whether written or oral (hereinafter
referred to as the "Confidential Information"). In no event shall the
Receiving Party be entitled to make or receive photocopies or
reproductions (whether digital or electronic) of such Confidential
Information except to the extent that the Disclosing Party, in its sole
discretion, issues written authorization permitting same.
2. In consideration of the disclosure referred to in Paragraph 1 hereof,
the Receiving Party agrees that the Confidential Information shall be kept
strictly confidential and shall not be sold, traded, published or
otherwise disclosed to anyone in any manner whatsoever, including by means
of photocopy or reproduction, without the Disclosing Party's prior written
consent, except as provided in Paragraphs 3,4 and 5 below.
3. The Receiving Party may disclose the Confidential Information without
the Disclosing Party's prior written consent only to the extent such
information.
(a) is already known to the Receiving Party as of the date of disclosure
hereunder;
(b) is already in possession of the public or becomes available to the
public other than through the act or omission of the Receiving Party;
(c) is required to be disclosed under applicable law or by a governmental
order, decree, regulation or rule (provided that the Receiving Party shall
give written notice to the Disclosing Party prior to such disclosure); or
(d) is acquired independently from a third party that represents that it
has the right to disseminate such information at the time it is acquired
by the Receiving Party.
4. The Receiving Party may disclose the Confidential Information without
the Disclosing Party's prior written consent to an Affiliated Company (as
hereinafter defined), provided that the Receiving Party guarantees the
adherence of such Affiliated Company to the terms of this Agreement.
"Affiliated Company" shall mean any company or legal entity which (a)
controls either directly or indirectly a Receiving Party, or (b) which is
controlled directly or indirectly by such Receiving Party, or (c) is
directly or indirectly controlled by a company or entity which directly or
indirectly controls such Receiving Party. "Control" means the right to
exercise 50% or more of the voting rights in the appointment of the
directors of such company.
5. The Receiving Party shall be entitled to disclose the Confidential
Information without the Disclosing Party's prior written consent to such
of the following persons who have a clear need to know in order to
evaluate the Area:
(a) employees, officers and directors of the Receiving Party;
(b) employees, officers and directors of an Affiliated Company;
(c) any professional consultant or agent retained by the Receiving Party
for the purpose of evaluating the Confidential Information; or
(d) any bank financing Receiving Party's participation in the Area,
including any professional consultant retained by such bank for the
purpose of evaluating the Confidential Information.
Prior to making any such disclosures to persons under subparagraphs (c)
and (d) above, however, the Receiving Party shall obtain a written
undertaking of confidentiality, in the same form and content as this
Agreement, from each such person.
6. The Receiving Party and its Affiliated Companies, if any, shall only
use or permit the use of the Confidential Information disclosed under
Paragraphs 4 or 5 above to evaluate the Area and determine whether to
enter into negotiations concerning the acquisition of all or part of the
Disclosing Party's rights in the Area.
The Receiving Party and its Affiliated Companies shall not, during the
term hereof, acquire any rights or otherwise seek to compete with
Disclosing Party in the Area without Disclosing Party's prior written
consent. In the event the Receiving Party and its Affiliated Companies
acquire any rights in the Area during the term hereof other than the
Disclosing Party's rights as provided in Paragraph 9 below, it shall
promptly assign such rights at cost to the Disclosing Party.
7. The Receiving Party shall be responsible for ensuring that all
persons to whom the Confidential Information is disclosed under this
Agreement shall keep such information confidential and shall not disclose
or divulge the same to any unauthorized person. Neither Party shall be
liable in an action initiated by one against the other for special,
indirect or consequential damages resulting from or arising out of this
Agreement, including, without limitation, loss of profit or business
interruptions, however same may be caused.
8. The Confidential Information shall remain the property of the
Disclosing Party, and the Disclosing Party may demand the return thereof
at any time upon giving written notice to the Receiving Party. Within 30
days of receipt of such notice, the Receiving Party shall return all of
the original confidential Information and shall destroy all copies and
reproductions (both written and electronic) in its possession and in the
possession of persons to whom it was disclosed pursuant to Paragraphs 4
and 5 hereof.
9. If the Receiving Party acquires any of the Disclosing Party's rights
in the Area, then this Agreement shall terminate automatically on the date
the Receiving Party enters into a further agreement which contains
provisions covering the confidentiality of data in the Area. Unless
earlier terminated under the preceding sentence, the confidentiality
obligations set forth in this Agreement shall terminate after six months
after the date of this Agreement.
10. The Disclosing Party hereby represents and warrants that it has the
right and authority to disclose the Confidential Information to the
Receiving Party. However, the Disclosing Party, its subsidiaries,
Affiliated Companies and their officers, directors and employees make no
representations or warranties, express or implied, as to the quality,
accuracy or completeness of the information disclosed hereunder or the
ability of the properties to produce. The information provided hereunder
contains estimates reflecting various assumptions concerning anticipated
results, and may or may not prove to be correct. The Disclosing Party its
subsidiaries, Affiliated Companies and their officers, directors and
employees shall have no liability whatsoever with respect to the use of,
or reliance upon such information, or for any omissions from same. The
Receiving Party expressly acknowledges the inherent risk of error in the
acquisition, processing and interpretation of geological and geophysical
data. Any descriptions of documents disclosed hereunder do not purport to
be complete statements thereof, and are qualified and subject to the
detailed provisions of such documents. In all cases, the Receiving Party
should conduct its own investigation and analysis of the Confidential
Information.
11. (a) This Agreement shall be governed by and interpreted in accordance
with the substantive and procedural laws of the State of Colorado.
(b) Any dispute arising out of or relating to this Agreement, including
any question regarding its existence, validity or termination, which
cannot be amicably resolved by the Parties, shall be settled before three
arbitrators, one to be appointed by each Party and the two so appointed
shall appoint the third arbitrator, in accordance with the Arbitration
Rules of the American Arbitration Association in Denver, Colorado, and
judgment upon the award rendered by the arbitrators may be entered in any
court having jurisdiction thereof. A dispute shall be deemed to have
arisen when either Party notifies the other Party in writing to that
effect.
12. Unless otherwise expressly agreed to in writing, any prior or future
proposals or offers made in the course of the Parties' discussions are
implicitly subject to all necessary management and government approvals
and may be withdrawn by either at any time. Nothing contained herein is
intended to confer upon the Receiving Party any right whatsoever to the
Disclosing Party's interest in the Area.
13. No amendments, changes or modifications to this Agreement shall be
valid except if the same are in writing and signed by a duly authorized
representative of each of the Parties herein.
14. This Agreement comprises the full and complete agreement of the
Parties hereto with respect to the disclosure of the Confidential
Information and supersedes and cancels all prior communications,
understandings and agreements between the Parties hereto, whether written
or oral, expressed or implied.
IN WITNESS WHEREOF, the duly authorized representatives of the
Parties have caused this Agreement to be executed on the date first
written above.
DISCLOSING PARTY
By: /s/
Title: Team Leader, North American
RECEIVING PARTY
By: /s/
Title:
EXHIBIT A2
The following table lists the township and ranges which are consider to be
the exploration areas included in the confidentiality agreement under
paragraph 1.
California Wyoming
San Joaquin Powder River
Basin Basin
14S 15E to 21E 43N 73W
15S 15C to 22E 42N 73W
16S 15E to 23E
17S 15E to 24E
18S 15E to 24E 37N 71W Sections 1-16, 22-
27, 34-36
19S 15E to 25E
20S 15E to 25E
21S 15E to 27E
22S 15E to 28E Utah
23S 15E to 28E Paradox Basin
24S 15E to 28E 29S 23E Sec 18 & 24
25S 17E to 28E 29S 24E Sec 7,8,17,18,
26S 17E to 28E & 19
27S 17E to 29E
28S 17E to 29E
29S 17E to 30E
30S 17E to 30E
North Dakota
Williston Basin
Limited to the 3D outline as
shown in Attachment 1 as
part of Exhibit A2
Exhibit A2 Attachment 2 (Map)
CONFIDENTIALITY AGREEMENT
THIS AGREEMENT, entered into this the 14th day of November, 1996, by
and between Ampolex (USA), Inc., a corporation organized and existing
under the laws of Texas (hereinafter referred to as the "Disclosing
Party") and Medallion Exploration, a corporation organized and existing
under the laws of Utah (hereinafter referred to as the "Receiving Party").
1. In connection with the evaluation and the possible acquisition by the
Receiving Party of certain petroleum exploration and production interests
located in the United States as more fully described in Exhibits A-1 and A-
2 attached hereto and made a part hereof (hereinafter referred to as the
"Area") the Disclosing Party is willing, in accordance with the terms and
conditions of this Agreement, to disclose to the Receiving Party certain
confidential information which is proprietary, relating to the Area which
includes, but is not necessarily limited to, geological and geophysical
data, maps, models and interpretations and may also include commercial,
contractual and financial information whether written or oral (hereinafter
referred to as the "Confidential Information"). In no event shall the
Receiving Party be entitled to make or receive photocopies or
reproductions (whether digital or electronic) of such Confidential
Information except to the extent that the Disclosing Party, in its sole
discretion, issues written authorization permitting same.
2. In consideration of the disclosure referred to in Paragraph 1 hereof,
the Receiving Party agrees that the Confidential Information shall be kept
strictly confidential and shall not be sold, traded, published or
otherwise disclosed to anyone in any manner whatsoever, including by means
of photocopy or reproduction, without the Disclosing Party's prior written
consent, except as provided in Paragraphs 3,4 and 5 below.
3. The Receiving Party may disclose the Confidential Information without
the Disclosing Party's prior written consent only to the extent such
information.
(a) is already known to the Receiving Party as of the date of disclosure
hereunder;
(b) is already in possession of the public or becomes available to the
public other than through the act or omission of the Receiving Party;
(c) is required to be disclosed under applicable law or by a governmental
order, decree, regulation or rule (provided that the Receiving Party shall
give written notice to the Disclosing Party prior to such disclosure); or
(d) is acquired independently from a third party that represents that it
has the right to disseminate such information at the time it is acquired
by the Receiving Party.
4. The Receiving Party may disclose the Confidential Information without
the Disclosing Party's prior written consent to an Affiliated Company (as
hereinafter defined), provided that the Receiving Party guarantees the
adherence of such Affiliated Company to the terms of this Agreement.
"Affiliated Company" shall mean any company or legal entity which (a)
controls either directly or indirectly a Receiving Party, or (b) which is
controlled directly or indirectly by such Receiving Party, or (c) is
directly or indirectly controlled by a company or entity which directly or
indirectly controls such Receiving Party. "Control" means the right to
exercise 50% or more of the voting rights in the appointment of the
directors of such company.
5. The Receiving Party shall be entitled to disclose the Confidential
Information without the Disclosing Party's prior written consent to such
of the following persons who have a clear need to know in order to
evaluate the Area:
(a) employees, officers and directors of the Receiving Party;
(b) employees, officers and directors of an Affiliated Company;
(c) any professional consultant or agent retained by the Receiving Party
for the purpose of evaluating the Confidential Information; or
(d) any bank financing Receiving Party's participation in the Area,
including any professional consultant retained by such bank for the
purpose of evaluating the Confidential Information.
Prior to making any such disclosures to persons under subparagraphs (c)
and (d) above, however, the Receiving Party shall obtain a written
undertaking of confidentiality, in the same form and content as this
Agreement, from each such person.
6. The Receiving Party and its Affiliated Companies, if any, shall only
use or permit the use of the Confidential Information disclosed under
Paragraphs 4 or 5 above to evaluate the Area and determine whether to
enter into negotiations concerning the acquisition of all or part of the
Disclosing Party's rights in the Area.
The Receiving Party and its Affiliated Companies shall not, during the
term hereof, acquire any rights or otherwise seek to compete with
Disclosing Party in the Area without Disclosing Party's prior written
consent. In the event the Receiving Party and its Affiliated Companies
acquire any rights in the Area during the term hereof other than the
Disclosing Party's rights as provided in Paragraph 9 below, it shall
promptly assign such rights at cost to the Disclosing Party.
7. The Receiving Party shall be responsible for ensuring that all
persons to whom the Confidential Information is disclosed under this
Agreement shall keep such information confidential and shall not disclose
or divulge the same to any unauthorized person. Neither Party shall be
liable in an action initiated by one against the other for special,
indirect or consequential damages resulting from or arising out of this
Agreement, including, without limitation, loss of profit or business
interruptions, however same may be caused.
8. The Confidential Information shall remain the property of the
Disclosing Party, and the Disclosing Party may demand the return thereof
at any time upon giving written notice to the Receiving Party. Within 30
days of receipt of such notice, the Receiving Party shall return all of
the original confidential Information and shall destroy all copies and
reproductions (both written and electronic) in its possession and in the
possession of persons to whom it was disclosed pursuant to Paragraphs 4
and 5 hereof.
9. If the Receiving Party acquires any of the Disclosing Party's rights
in the Area, then this Agreement shall terminate automatically on the date
the Receiving Party enters into a further agreement which contains
provisions covering the confidentiality of data in the Area. Unless
earlier terminated under the preceding sentence, the confidentiality
obligations set forth in this Agreement shall terminate three years after
the date of this Agreement.
10. The Disclosing Party hereby represents and warrants that it has the
right and authority to disclose the Confidential Information to the
Receiving Party. However, the Disclosing Party, its subsidiaries,
Affiliated Companies and their officers, directors and employees make no
representations or warranties, express or implied, as to the quality,
accuracy or completeness of the information disclosed hereunder or the
ability of the properties to produce. The information provided hereunder
contains estimates reflecting various assumptions concerning anticipated
results, and may or may not prove to be correct. The Disclosing Party its
subsidiaries, Affiliated Companies and their officers, directors and
employees shall have no liability whatsoever with respect to the use of,
or reliance upon such information, or for any omissions from same. The
Receiving Party expressly acknowledges the inherent risk of error in the
acquisition, processing and interpretation of geological and geophysical
data. Any descriptions of documents disclosed hereunder do not purport to
be complete statements thereof, and are qualified and subject to the
detailed provisions of such documents. In all cases, the Receiving Party
should conduct its own investigation and analysis of the Confidential
Information.
11. (a) This Agreement shall be governed by and interpreted in accordance
with the substantive and procedural laws of the State of Colorado.
(b) Any dispute arising out of or relating to this Agreement, including
any question regarding its existence, validity or termination, which
cannot be amicably resolved by the Parties, shall be settled before three
arbitrators, one to be appointed by each Party and the two so appointed
shall appoint the third arbitrator, in accordance with the Arbitration
Rules of the American Arbitration Association in Denver, Colorado, and
judgment upon the award rendered by the arbitrators may be entered in any
court having jurisdiction thereof. A dispute shall be deemed to have
arisen when either Party notifies the other Party in writing to that
effect.
12. Unless otherwise expressly agreed to in writing, any prior or future
proposals or offers made in the course of the Parties' discussions are
implicitly subject to all necessary management and government approvals
and may be withdrawn by either at any time. Nothing contained herein is
intended to confer upon the Receiving Party any right whatsoever to the
Disclosing Party's interest in the Area.
13. No amendments, changes or modifications to this Agreement shall be
valid except if the same are in writing and signed by a duly authorized
representative of each of the Parties herein.
14. This Agreement comprises the full and complete agreement of the
Parties hereto with respect to the disclosure of the Confidential
Information and supersedes and cancels all prior communications,
understandings and agreements between the Parties hereto, whether written
or oral, expressed or implied.
IN WITNESS WHEREOF, the duly authorized representatives of the
Parties have caused this Agreement to be executed on the date first
written above.
DISCLOSING PARTY
By: /s/
Title: Team Leader, North American
RECEIVING PARTY
By: /s/
Title: President
CONFIDENTIALITY AGREEMENT
THIS AGREEMENT, entered into this the 7th day of January, 1997, by
and between Ampolex (USA), Inc., a corporation organized and existing
under the laws of Texas USA (hereinafter referred to as the "Disclosing
Party") and Gotland Oil, Inc., a corporation organized and existing under
the laws of Texas (hereinafter referred to as the "Receiving Party").
1. In connection with the evaluation and the possible acquisition by the
Receiving Party of certain petroleum exploration and production interests
located in the United States as more fully described in Exhibits A-1 and A-
2 attached hereto and made a part hereof (hereinafter referred to as the
"Area") the Disclosing Party is willing, in accordance with the terms and
conditions of this Agreement, to disclose to the Receiving Party certain
confidential information which is proprietary, relating to the Area which
includes, but is not necessarily limited to, geological and geophysical
data, maps, models and interpretations and may also include commercial,
contractual and financial information whether written or oral (hereinafter
referred to as the "Confidential Information"). In no event shall the
Receiving Party be entitled to make or receive photocopies or
reproductions (whether digital or electronic) of such Confidential
Information except to the extent that the Disclosing Party, in its sole
discretion, issues written authorization permitting same.
2. In consideration of the disclosure referred to in Paragraph 1 hereof,
the Receiving Party agrees that the Confidential Information shall be kept
strictly confidential and shall not be sold, traded, published or
otherwise disclosed to anyone in any manner whatsoever, including by means
of photocopy or reproduction, without the Disclosing Party's prior written
consent, except as provided in Paragraphs 3,4 and 5 below.
3. The Receiving Party may disclose the Confidential Information without
the Disclosing Party's prior written consent only to the extent such
information.
(a) is already known to the Receiving Party as of the date of disclosure
hereunder;
(b) is already in possession of the public or becomes available to the
public other than through the act or omission of the Receiving Party;
(c) is required to be disclosed under applicable law or by a governmental
order, decree, regulation or rule (provided that the Receiving Party shall
give written notice to the Disclosing Party prior to such disclosure); or
(d) is acquired independently from a third party that represents that it
has the right to disseminate such information at the time it is acquired
by the Receiving Party.
4. The Receiving Party may disclose the Confidential Information without
the Disclosing Party's prior written consent to an Affiliated Company (as
hereinafter defined), provided that the Receiving Party guarantees the
adherence of such Affiliated Company to the terms of this Agreement.
"Affiliated Company" shall mean any company or legal entity which (a)
controls either directly or indirectly a Receiving Party, or (b) which is
controlled directly or indirectly by such Receiving Party, or (c) is
directly or indirectly controlled by a company or entity which directly or
indirectly controls such Receiving Party. "Control" means the right to
exercise 50% or more of the voting rights in the appointment of the
directors of such company.
5. The Receiving Party shall be entitled to disclose the Confidential
Information without the Disclosing Party's prior written consent to such
of the following persons who have a clear need to know in order to
evaluate the Area:
(a) employees, officers and directors of the Receiving Party;
(b) employees, officers and directors of an Affiliated Company;
(c) any professional consultant or agent retained by the Receiving Party
for the purpose of evaluating the Confidential Information; or
(d) any bank financing Receiving Party's participation in the Area,
including any professional consultant retained by such bank for the
purpose of evaluating the Confidential Information.
Prior to making any such disclosures to persons under subparagraphs (c)
and (d) above, however, the Receiving Party shall obtain a written
undertaking of confidentiality, in the same form and content as this
Agreement, from each such person.
6. The Receiving Party and its Affiliated Companies, if any, shall only
use or permit the use of the Confidential Information disclosed under
Paragraphs 4 or 5 above to evaluate the Area and determine whether to
enter into negotiations concerning the acquisition of all or part of the
Disclosing Party's rights in the Area.
The Receiving Party and its Affiliated Companies shall not, during the
term hereof, acquire any rights or otherwise seek to compete with
Disclosing Party in the Area without Disclosing Party's prior written
consent. In the event the Receiving Party and its Affiliated Companies
acquire any rights in the Area during the term hereof other than the
Disclosing Party's rights as provided in Paragraph 9 below, it shall
promptly assign such rights at cost to the Disclosing Party.
7. The Receiving Party shall be responsible for ensuring that all
persons to whom the Confidential Information is disclosed under this
Agreement shall keep such information confidential and shall not disclose
or divulge the same to any unauthorized person. Neither Party shall be
liable in an action initiated by one against the other for special,
indirect or consequential damages resulting from or arising out of this
Agreement, including, without limitation, loss of profit or business
interruptions, however same may be caused.
8. The Confidential Information shall remain the property of the
Disclosing Party, and the Disclosing Party may demand the return thereof
at any time upon giving written notice to the Receiving Party. Within 30
days of receipt of such notice, the Receiving Party shall return all of
the original confidential Information and shall destroy all copies and
reproductions (both written and electronic) in its possession and in the
possession of persons to whom it was disclosed pursuant to Paragraphs 4
and 5 hereof.
9. If the Receiving Party acquires any of the Disclosing Party's rights
in the Area, then this Agreement shall terminate automatically on the date
the Receiving Party enters into a further agreement which contains
provisions covering the confidentiality of data in the Area. Unless
earlier terminated under the preceding sentence, the confidentiality
obligations set forth in this Agreement shall terminate three years after
the date of this Agreement.
10. The Disclosing Party hereby represents and warrants that it has the
right and authority to disclose the Confidential Information to the
Receiving Party. However, the Disclosing Party, its subsidiaries,
Affiliated Companies and their officers, directors and employees make no
representations or warranties, express or implied, as to the quality,
accuracy or completeness of the information disclosed hereunder or the
ability of the properties to produce. The information provided hereunder
contains estimates reflecting various assumptions concerning anticipated
results, and may or may not prove to be correct. The Disclosing Party its
subsidiaries, Affiliated Companies and their officers, directors and
employees shall have no liability whatsoever with respect to the use of,
or reliance upon such information, or for any omissions from same. The
Receiving Party expressly acknowledges the inherent risk of error in the
acquisition, processing and interpretation of geological and geophysical
data. Any descriptions of documents disclosed hereunder do not purport to
be complete statements thereof, and are qualified and subject to the
detailed provisions of such documents. In all cases, the Receiving Party
should conduct its own investigation and analysis of the Confidential
Information.
11. (a) This Agreement shall be governed by and interpreted in accordance
with the substantive and procedural laws of the State of Colorado.
(b) Any dispute arising out of or relating to this Agreement, including
any question regarding its existence, validity or termination, which
cannot be amicably resolved by the Parties, shall be settled before three
arbitrators, one to be appointed by each Party and the two so appointed
shall appoint the third arbitrator, in accordance with the Arbitration
Rules of the American Arbitration Association in Denver, Colorado, and
judgment upon the award rendered by the arbitrators may be entered in any
court having jurisdiction thereof. A dispute shall be deemed to have
arisen when either Party notifies the other Party in writing to that
effect.
12. Unless otherwise expressly agreed to in writing, any prior or future
proposals or offers made in the course of the Parties' discussions are
implicitly subject to all necessary management and government approvals
and may be withdrawn by either at any time. Nothing contained herein is
intended to confer upon the Receiving Party any right whatsoever to the
Disclosing Party's interest in the Area.
13. No amendments, changes or modifications to this Agreement shall be
valid except if the same are in writing and signed by a duly authorized
representative of each of the Parties herein.
14. This Agreement comprises the full and complete agreement of the
Parties hereto with respect to the disclosure of the Confidential
Information and supersedes and cancels all prior communications,
understandings and agreements between the Parties hereto, whether written
or oral, expressed or implied.
IN WITNESS WHEREOF, the duly authorized representatives of the
Parties have caused this Agreement to be executed on the date first
written above.
DISCLOSING PARTY
By: /s/
Title: Team Leader, North American
RECEIVING PARTY
By: /s/
Title: Vice President
CONFIDENTIALITY AGREEMENT
THIS AGREEMENT, entered into this the 8th day of January, 1997, by
and between Ampolex (USA), Inc., a corporation organized and existing
under the laws of Texas (hereinafter referred to as the "Disclosing
Party") and Lario Oil & Gas, a corporation organized and existing under
the laws of --------- (hereinafter referred to as the "Receiving Party").
1. In connection with the evaluation and the possible acquisition by the
Receiving Party of certain petroleum exploration and production interests
located in the United States as more fully described in Exhibits A-1 and A-
2 attached hereto and made a part hereof (hereinafter referred to as the
"Area") the Disclosing Party is willing, in accordance with the terms and
conditions of this Agreement, to disclose to the Receiving Party certain
confidential information which is proprietary, relating to the Area which
includes, but is not necessarily limited to, geological and geophysical
data, maps, models and interpretations and may also include commercial,
contractual and financial information whether written or oral (hereinafter
referred to as the "Confidential Information"). In no event shall the
Receiving Party be entitled to make or receive photocopies or
reproductions (whether digital or electronic) of such Confidential
Information except to the extent that the Disclosing Party, in its sole
discretion, issues written authorization permitting same.
2. In consideration of the disclosure referred to in Paragraph 1 hereof,
the Receiving Party agrees that the Confidential Information shall be kept
strictly confidential and shall not be sold, traded, published or
otherwise disclosed to anyone in any manner whatsoever, including by means
of photocopy or reproduction, without the Disclosing Party's prior written
consent, except as provided in Paragraphs 3,4 and 5 below.
3. The Receiving Party may disclose the Confidential Information without
the Disclosing Party's prior written consent only to the extent such
information.
(a) is already known to the Receiving Party as of the date of disclosure
hereunder;
(b) is already in possession of the public or becomes available to the
public other than through the act or omission of the Receiving Party;
(c) is required to be disclosed under applicable law or by a governmental
order, decree, regulation or rule (provided that the Receiving Party shall
give written notice to the Disclosing Party prior to such disclosure); or
(d) is acquired independently from a third party that represents that it
has the right to disseminate such information at the time it is acquired
by the Receiving Party.
4. The Receiving Party may disclose the Confidential Information without
the Disclosing Party's prior written consent to an Affiliated Company (as
hereinafter defined), provided that the Receiving Party guarantees the
adherence of such Affiliated Company to the terms of this Agreement.
"Affiliated Company" shall mean any company or legal entity which (a)
controls either directly or indirectly a Receiving Party, or (b) which is
controlled directly or indirectly by such Receiving Party, or (c) is
directly or indirectly controlled by a company or entity which directly or
indirectly controls such Receiving Party. "Control" means the right to
exercise 50% or more of the voting rights in the appointment of the
directors of such company.
5. The Receiving Party shall be entitled to disclose the Confidential
Information without the Disclosing Party's prior written consent to such
of the following persons who have a clear need to know in order to
evaluate the Area:
(a) employees, officers and directors of the Receiving Party;
(b) employees, officers and directors of an Affiliated Company;
(c) any professional consultant or agent retained by the Receiving Party
for the purpose of evaluating the Confidential Information; or
(d) any bank financing Receiving Party's participation in the Area,
including any professional consultant retained by such bank for the
purpose of evaluating the Confidential Information.
Prior to making any such disclosures to persons under subparagraphs (c)
and (d) above, however, the Receiving Party shall obtain a written
undertaking of confidentiality, in the same form and content as this
Agreement, from each such person.
6. The Receiving Party and its Affiliated Companies, if any, shall only
use or permit the use of the Confidential Information disclosed under
Paragraphs 4 or 5 above to evaluate the Area and determine whether to
enter into negotiations concerning the acquisition of all or part of the
Disclosing Party's rights in the Area.
The Receiving Party and its Affiliated Companies shall not, during the
term hereof, acquire any rights or otherwise seek to compete with
Disclosing Party in the Area without Disclosing Party's prior written
consent. In the event the Receiving Party and its Affiliated Companies
acquire any rights in the Area during the term hereof other than the
Disclosing Party's rights as provided in Paragraph 9 below, it shall
promptly assign such rights at cost to the Disclosing Party.
7. The Receiving Party shall be responsible for ensuring that all
persons to whom the Confidential Information is disclosed under this
Agreement shall keep such information confidential and shall not disclose
or divulge the same to any unauthorized person. Neither Party shall be
liable in an action initiated by one against the other for special,
indirect or consequential damages resulting from or arising out of this
Agreement, including, without limitation, loss of profit or business
interruptions, however same may be caused.
8. The Confidential Information shall remain the property of the
Disclosing Party, and the Disclosing Party may demand the return thereof
at any time upon giving written notice to the Receiving Party. Within 30
days of receipt of such notice, the Receiving Party shall return all of
the original confidential Information and shall destroy all copies and
reproductions (both written and electronic) in its possession and in the
possession of persons to whom it was disclosed pursuant to Paragraphs 4
and 5 hereof.
9. If the Receiving Party acquires any of the Disclosing Party's rights
in the Area, then this Agreement shall terminate automatically on the date
the Receiving Party enters into a further agreement which contains
provisions covering the confidentiality of data in the Area. Unless
earlier terminated under the preceding sentence, the confidentiality
obligations set forth in this Agreement shall terminate three years after
the date of this Agreement.
10. The Disclosing Party hereby represents and warrants that it has the
right and authority to disclose the Confidential Information to the
Receiving Party. However, the Disclosing Party, its subsidiaries,
Affiliated Companies and their officers, directors and employees make no
representations or warranties, express or implied, as to the quality,
accuracy or completeness of the information disclosed hereunder or the
ability of the properties to produce. The information provided hereunder
contains estimates reflecting various assumptions concerning anticipated
results, and may or may not prove to be correct. The Disclosing Party its
subsidiaries, Affiliated Companies and their officers, directors and
employees shall have no liability whatsoever with respect to the use of,
or reliance upon such information, or for any omissions from same. The
Receiving Party expressly acknowledges the inherent risk of error in the
acquisition, processing and interpretation of geological and geophysical
data. Any descriptions of documents disclosed hereunder do not purport to
be complete statements thereof, and are qualified and subject to the
detailed provisions of such documents. In all cases, the Receiving Party
should conduct its own investigation and analysis of the Confidential
Information.
11. (a) This Agreement shall be governed by and interpreted in accordance
with the substantive and procedural laws of the State of Colorado.
(b) Any dispute arising out of or relating to this Agreement, including
any question regarding its existence, validity or termination, which
cannot be amicably resolved by the Parties, shall be settled before three
arbitrators, one to be appointed by each Party and the two so appointed
shall appoint the third arbitrator, in accordance with the Arbitration
Rules of the American Arbitration Association in Denver, Colorado, and
judgment upon the award rendered by the arbitrators may be entered in any
court having jurisdiction thereof. A dispute shall be deemed to have
arisen when either Party notifies the other Party in writing to that
effect.
12. Unless otherwise expressly agreed to in writing, any prior or future
proposals or offers made in the course of the Parties' discussions are
implicitly subject to all necessary management and government approvals
and may be withdrawn by either at any time. Nothing contained herein is
intended to confer upon the Receiving Party any right whatsoever to the
Disclosing Party's interest in the Area.
13. No amendments, changes or modifications to this Agreement shall be
valid except if the same are in writing and signed by a duly authorized
representative of each of the Parties herein.
14. This Agreement comprises the full and complete agreement of the
Parties hereto with respect to the disclosure of the Confidential
Information and supersedes and cancels all prior communications,
understandings and agreements between the Parties hereto, whether written
or oral, expressed or implied.
IN WITNESS WHEREOF, the duly authorized representatives of the
Parties have caused this Agreement to be executed on the date first
written above.
DISCLOSING PARTY
By: /s/
Title: Team Leader, North American
RECEIVING PARTY
By: /s/ Duane L. Haley
Title: Division Landman
Exhibit 21
Subsidiaries of the Registrant
State of Doing
Name Incorporation Business As
- ---- ------------- -----------
Victoria Exploration, Inc. Colorado Same
Kestrel Energy California, Inc. Colorado Same
Exhibit 23
----------
Independent Auditors' Consent
-----------------------------
The Board of Directors
Kestrel Energy, Inc.:
We consent to the incorporation by reference in the registration statement
(No. 33-63171)on Form S-8, registration statement (No. 33-89716) on Form S-
3 and registration statement (No. 333-27769) on Form S-3 of Kestrel
Energy, Inc. of our report dated September 29, 1997 relating to the
consolidated balance sheets of Kestrel Energy, Inc. and subsidiaries as of
June 30, 1997 and 1996, and the related consolidated statements of
operations, stockholders' equity, and cash flows for each of the years in
the three-year period ended June 30, 1997, which report appears in the
June 30, 1997 Annual Report on Form 10-K of Kestrel Energy, Inc.
Our report on the consolidated financial statements refers to the adoption
of the provisions of Statement of Accounting Standards No. 121, ACCOUNTING
FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE
DISPOSED OF in the year ended June 30, 1997.
/s/KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Denver, Colorado
October 13, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<CASH> 1,524
<SECURITIES> 3,409
<RECEIVABLES> 291
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,233
<PP&E> 5,132
<DEPRECIATION> 2,726
<TOTAL-ASSETS> 7,639
<CURRENT-LIABILITIES> 206
<BONDS> 0
0
0
<COMMON> 13,155
<OTHER-SE> (5,722)
<TOTAL-LIABILITY-AND-EQUITY> 7,639
<SALES> 1,279
<TOTAL-REVENUES> 1,420
<CGS> 0
<TOTAL-COSTS> 2,732
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,312)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,312)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,312)
<EPS-PRIMARY> (.56)
<EPS-DILUTED> (.56)
</TABLE>
