UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report October 15, 1996
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MAYNARD OIL COMPANY
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(Exact name of registrant as specified in its charter)
Delaware 0-5704 75-1362284
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
8080 N. Central Expressway, Suite 660, Dallas, Texas 75206
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Registrant's telephone number, including area code: (214) 891-8880
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INFORMATION TO BE INCLUDED
IN THE REPORT
Item 2. Acquisition or Disposition of Assets
Pursuant to seven purchase and sale agreements between the Registrant
and various oil and gas companies("Purchasers"), dated from March 6, 1996
through September 12, 1996, Registrant has sold interests in approximately 130
producing wells located in Texas and Oklahoma for cash consideration of
$8,043,657.
The first divestiture was closed on May 31, 1996 between ROC Energy,
Byrd Operating Company and the Registrant for cash of $1,380,000 representing
properties located in Crockett County, Texas.
Three additional property sales closed in August, 1996 between BMC,
Ltd., Chatham Oil Company, Javelina Energy, and the Registrant for total cash
consideration of $934,439. Properties involved in these three sales included
working interests in wells located in Grayson County, Texas and Carter County,
Oklahoma and overriding royalty interests in Texas and Oklahoma.
The last three property dispositions closed on September 30, 1996
between Enron Oil and Gas and the Registrant for total cash of $5,729,218
covering oil and gas properties located in Ellis, Roger Mills, Stephens, and
Woodward Counties Oklahoma.
There is no material relationship between the Purchasers and
Registrant or any of its affiliates, or with any directors, officers, or
associate of any director or officer of the Registrant.
Item 7. Pro Forma Financial Information and Exhibits.
Effective May 1, 1996 and August 1, 1996, the Company sold its
interests in approximately 130 producing wells in Texas and Oklahoma
for cash totaling $8,043,657 to six different entities.
The unaudited pro forma condensed consolidated balance sheet of
Maynard Oil Company and Subsidiaries has been prepared as if the
disposition of these assets occurred on June 30, 1996. The unaudited
pro forma condensed consolidated statements of operations for the six
months ended June 30, 1996 and for the year ended December 31, 1995
have been prepared as if the acquisition occurred at the beginning of
the respective periods. The condensed consolidated pro forma
information should be read in conjunction with the notes thereto.
Such pro forma information is not necessarily indicative of the
results which would have actually occurred had the transactions been
in effect on the dates or the periods indicated or which may occur in
the future.
(b) Pro Forma Financial Information.
INDEX TO PRO FORMA FINANCIAL INFORMATION
Pro Forma Condensed Consolidated Balance Sheet (Unaudited)
June 30, 1996
Pro Forma Condensed Consolidated Statement of Operations
(Unaudited) for the Year Ended December 31, 1995
Pro Forma Condensed Consolidated Statement of Operations
(Unaudited) for the Six Months Ended June 30, 1996
Notes to Pro Forma Condensed Consolidated Financial Statements
(unaudited)
Exhibits.
2(a) Purchase and Sale Agreement with ROC Energy, Inc. dated
March 6, 1996 together with certain Exhibits and Schedules.
2(b) Partial Assignment of Purchase and Sale Agreement and
Consent to Partial Assignment of Purchase and Sale Agreement
with ROC Energy, Inc. and Byrd Operating Company dated
May 8, 1996 together with certain Exhibits and Schedules.
2(c) Purchase and Sale Agreement with Javelina Energy, Inc. Dated
August 6, 1996 together with certain Exhibits and Schedules.
2(d) Purchase and Sale Agreement with Chatham Oil Company dated
August 12, 1996 together with certain Exhibits and
Schedules.
2(e) Purchase and Sale Agreement with BMC, Ltd. dated August 14,
1996 together with certain Exhibits and Schedules.
2(f) Purchase and Sale Agreement with Enron Oil & Gas Inc. Dated
September 12, 1996 together with certain Exhibits and
Schedules.
2(g) Purchase and Sale Agreement with Enron Oil & Gas Inc. Dated
September 12, 1996 together with certain Exhibits and
Schedules.
2(h) Purchase and Sale Agreement with Enron Oil & Gas Inc. Dated
September 12, 1996 together with certain Exhibits and
Schedules.
The Registrant Agrees to provide copies of any Exhibits and
Schedules upon request.
<TABLE>
<CAPTION>
MAYNARD OIL COMPANY
Pro Forma Condensed Consolidated Balance Sheets
June 30, 1996
(Unaudited)
Historical Pro Forma Pro Forma
Amounts Adjustments(a) Amounts
---------- -------------- ---------
(Thousands of Dollars)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 11,421 $ 6,664 $18,085
Accounts receivable, and other
current assets 4,898 -- 4,898
Total current assets 16,319 6,664 22,983
Property and equipment, at cost:
Oil and gas properties 111,160 (8,065) 103,095
Other property and equipment 514 -- 514
111,674 (8,065) 103,609
Less accumulated depreciation and
amortization (53,400) 6,721 (46,679)
Net property and equipment 58,274 (1,344) 56,930
$74,593 $ 5,320 $79,913
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion, long-term debt $ 5,000 $ -- $ 5,000
Accounts payable, accrued expenses
and other current liabilities 6,766 -- 6,766
Total current liabilities 11,766 -- 11,766
Deferred income taxes 2,012 -- 2,012
Long-term debt 18,750 -- 18,750
Shareholders' equity:
Common stock 489 -- 489
Additional paid-in capital 18,831 -- 18,831
Retained earnings 22,745 5,320 28,065
Total shareholders' equity 42,065 5,320 47,385
$74,593 $ 5,320 $79,913
See accompanying Notes to Pro Forma Condensed Consolidated Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
MAYNARD OIL COMPANY
Pro Forma Condensed Consolidated Statement of Operations
For the Twelve Months Ended December 31, 1995
(Unaudited)
Property
Historical Divestiture Pro Forma
Amounts Adjustments Amounts
---------- ----------- ---------
(Thousands of Dollars Except Per Share Amounts)
<S> <C> <C> <C>
Revenues:
Oil and gas sales $20,540 $(1,630)(b) $18,910
Interest and other 672 419 (c) 1,091
Gain (loss) on sale of assets 992 5,758 (d) 6,750
22,204 4,547 26,751
Costs and expenses:
Operating expenses 8,444 (875)(b) 7,569
Exploration, dry holes
and abandonments 609 -- 609
General and administrative 926 -- 926
Depreciation and amortization 6,880 (415)(b) 6,465
Interest and other 992 -- 992
17,851 (1,290) 16,561
Income before income taxes 4,353 5,837 10,190
Income tax expense 1,330 1,985 (g) 3,315
Net income $ 3,023 $ 3,852 $ 6,875
Weighted average number of common
shares outstanding 4,890,708 4,890,708
Net income per common share $ .62 $1.41
See accompanying Notes to Pro Forma Condensed Consolidated Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
MAYNARD OIL COMPANY
Pro Forma Condensed Consolidated Statement of Operations
For the Six Months Ended June 30, 1996
(Unaudited)
Property
Historical Divesture Pro Forma
Amounts * Adjustments Amounts
---------- ----------- --------
(Thousands of Dollars Except Per Share Amounts)
<S> <C> <C> <C>
Revenues:
Oil and gas sales $14,876 $(1,032)(e) $13,844
Interest and other 232 173 (f) 405
Gain (loss) on sale of assets 1 -- 1
15,109 (859) 14,250
Costs and expenses:
Operating expenses 5,027 (347)(e) 4,680
Exploration, dry holes
and abandonments 186 -- 186
General and administrative 521 -- 521
Depreciation and amortization 4,728 (205)(e) 4,523
Interest and other 914 -- 914
11,376 (552) 10,824
Income (loss) before income taxes 3,733 (307) 3,426
Income tax expense 1,087 (104)(g) 983
Net income $ 2,646 $ (203) $ 2,443
Weighted average number of common
shares outstanding 4,889,851 4,889,851
Net income (loss) per common share $ .54 $ .50
* Maynard's Historical Statement of Operations for the Six Months ended June
30, 1996 has been adjusted from those amounts disclosed in the 1996 Form
10-Q to exclude the gain from oil and gas properties sold during May, 1996
and also to exclude the tax expense associated with this May, 1996
disposition. The effects of this property disposition have already been
included on the Pro Forma Consolidated Statement of Operations for the
twelve months ended December 31, 1995 which is reflected on the Pro Forma
Statement of Operations for the Twelve Months ended December 31, 1995.
</TABLE>
MAYNARD OIL COMPANY
NOTES TO PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(a) Record cash from the sale of oil and gas properties received in August and
September, 1996 and remove the related property asset balances from the
accounts. Thus, the June 30, 1996 Pro Forma Balance Sheet is computed as
if all the sales transactions were consummated at June 30, 1996.
(b) Reduce oil and gas revenues, lease operating expenses, and depreciation and
amortization expense for the twelve months ended December 31, 1995 by the
amounts related to the properties sold in 1996.
(c) Recognize additional interest income at an annual rate of 5.75 percent as
if the property divestitures had occurred on January 1, 1995 and the
proceeds generated by the sales were available at that date.
(d) Recognize the gain generated from the disposition of all the property
groups as if the sale occurred at January 1, 1995.
(e) Reduce oil and gas revenues, lease operating expenses, and depreciation and
amortization expense for the six months ended June 30, 1996 by the amounts
related to the properties sold.
(f) Recognize additional interest income at an annual rate of 5.2 percent as if
all the property divestitures had occurred January 1, 1995 and the proceeds
generated by the sales were available at that date.
(g) Record the tax effect, at 34 percent for US Federal income taxes, of the
pro forma adjustments relating to the property divestitures for the
respective periods.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MAYNARD OIL COMPANY
By: /s/ Kenneth W. Hatcher
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Kenneth W. Hatcher
Vice President of Finance
Dated: October 15, 1996
EXHIBIT 2(a)
PURCHASE AND SALE AGREEMENT
This Agreement, when accepted and agreed to in the manner provided below
shall constitute the terms and provisions of an agreement under which Maynard
Oil Company, a Delaware corporation, with offices at 8080 North Central
Expressway, Suite 660, Dallas, Texas 75206, hereinafter referred to as "Seller,
agrees to sell and ROC Energy, Inc., a Texas corporation, with offices at 3300
North A Street, Building Two, Suite 218A, Midland, Texas 79705, hereinafter
referred to as "Buyer," agrees to purchase all of Seller's right, title and
interest in and to certain oil and gas properties owned by Seller and located
in Crockett County, Texas, hereinafter sometimes referred to as the
"Property."
1. PROPERTY BEING SOLD. At Closing, as hereinafter defined, Seller shall
convey to Buyer the Property identified on Exhibit "A", attached hereto and
made a part hereof, including:
(a) All of Seller's right, title and interest in and to the leasehold
estates described in Exhibit "A", such leases being hereinafter called "said
leases," represented to be no less than the working and net revenue interests
set forth therein;
(b) All of Seller's right, title and interest in and to all permits,
franchises, licenses, servitudes, easements, surface leases and rights-of-way
of every character relating to said leases;
(c) All of Seller's right, title and interest in and to any contracts or
agreements including, but not limited to, rights and interest in or derived
from unit agreements, gas processing agreements, joint operating agreements,
gas contracts, gas gathering agreements, gas balancing agreements, boundary or
well line agreements, assignments of operating rights, working interest and
subleases affecting said leases.
(d) All of Seller's right, title and interest in and to producing, non-
producing and shut-in oil and gas wells, salt water disposal wells and water
wells; and
(e) All of Seller's right, title and interest in and to all surface and
down-hole equipment, fixtures, related inventory and other personal property
used in connection with the Property described in paragraphs (a) through (d)
above, excluding, however, all automobiles, trucks and communications
equipment.
2. PERFORMANCE DEPOSIT. On or before 4:00 o'clock p.m., local time,
March 29, 1996, Buyer shall tender to Seller, by wire transfer, a performance
deposit in the amount of One Hundred Thirty Eight Thousand and 00/100 Dollars
($138,000.00). The performance deposit is received solely to assure the
performance of Buyer pursuant to the terms and conditions hereof. The
performance deposit will be returned to Buyer at Closing upon consummation of
the transaction, or at Buyer's election, may be credited to the Purchase Price.
No interest shall be paid or credited to the performance deposit. If Buyer
fails, refuses, or is unable to close the sale in accordance with the terms
herein, Seller, except as otherwise herein specifically provided, may, at its
option, retain the performance deposit as agreed liquidated damages and not as
a penalty. If Seller, through no fault of Buyer, refuses to close the sale in
accordance with the terms herein, the performance deposit shall be returned to
Buyer.
3. PURCHASE PRICE. The total sum which Buyer agrees to deliver to
Seller for the property is One Million Three Hundred Eighty Thousand and 00/100
($1,380,000.00).
4. CLOSING. The closing shall take place on or before May 31, 1996, at
10:00 a.m. local time at Seller's offices in Dallas, Texas, unless the parties
mutually agree upon a later date, or, at Buyer's election, such closing may be
handled by overnight mail upon confirmation of funds received by Seller. The
following shall occur at closing:
(a) Purchase Price. Buyer will make payment of the Purchase Price
pursuant to paragraph numbered 3 above, and adjusted by Sections 2, 9, 10, 12,
16 and 20, if applicable, by wire transfer to an acc"B".
5. CONVEYANCE EFFECTIVE DATE. The conveyance from Seller to Buyer shall
be effective as of March 1, 1996, at 7:00 a.m. local time, herein called the
"Effective Date." Buyer shall assume the risk of any change in the condition
of the Property from the date of this Agreement to the date of Closing.
6. FILES AND RECORDS. Prior to Closing, Seller will make available for
examination by Buyer such title information and abstract coverage as may be
available in Seller's files. Existing abstracts and title opinions will not be
brought down to date by Seller. Seller's files will be made available to Buyer
for examination at Seller's offices in Dallas, Texas, during normal working
hours. Buyer will be permitted, to make copies of pertinent instruments or
documents contained in Seller's files. No economic analyses, interpretive
geological or geophysical data considered proprietary by Seller shall be copied
by Buyer. As soon as practicable after Closing, Seller shall deliver all of
the original files to Buyer, at Buyer's expense
7. LIMITED WARRANTY. Conveyance of the property shall be WITHOUT
WARRANTY OF TITLE EITHER EXPRESS OR IMPLIED, EXCEPT BY, THROUGH AND UNDER
ASSIGNOR, BUT NOT OTHERWISE with the right of full substitution and subrogation
in and to all rights and actions of warranty which Seller has or may have
against any and all preceding owners or vendors of the Property.
8. INDEPENDENT EVALUATION. Buyer has made an independent evaluation of
the Property and acknowledges that Seller has made no statements or
representation concerning the present or future value of the anticipated
income, costs, or profits, if any, to be derived from the Property and that
Seller DOES NOT WARRANT TITLE, DESCRIPTION, VALUE, QUALITY, CONDITION,
MERCHANTABILITY, OR FITNESS FOR PURPOSE of any of the wells, equipment, or
other pr in executing this Agreement it has relied solely upon its independent
examination of the premisterm "significant title defect" shall include any
defect which results in a loss of title in Seller such that Buyer's net revenue
interest in the affected Property is reduced or Seller's right to use the
Property as an owner, lessee, licensee, or permittee, as applicable, is
extinguished or severely restricted.
On or before April 19, 1996, Buyer shall give written notice to Seller of
interests in the Property which have significant title defects. Buyer shall be
deemed to have waived all title defects and any other defect of which Seller
has not been given notice by April 19, 1996, unless it is a significant title
defect which did not exist on or before that date.
Interests which have significant title defects shall be excluded from the
Property to be conveyed and the Purchase Price shall be reduced by the purchase
price indicated for such property on the Property Schedule attached hereto
unless: (i) prior to closing, the basis for the significant title defect has
been removed, or (ii) Buyer agrees to accept the interest notwithstanding the
defect. Loss of any lease acreage between the Effective Date and Closing due
to expiration of the lease term will not constitute a significant title defect.
10. OPERATIONS AND PRODUCTION AFTER EFFECTIVE DATE. Since the Closing
will occur subsequent to the Effective Date, Buyer will continue to operate the
Property, or cause the Property to be operated, as appropriate for the account
of Seller until Closing. Seller shall be responsible for payments of all
expenses incurred against operation of the Property prior to the Effective
Data. All production from oil and gas wells, and all proceeds from the sale
thereof, including proceeds from any imbalance and oil in storage above the
pipeline connection, attributable to All production and proceeds attributable
to production after the Effective Date shall be the property of Buyer. At
Closing, a settlement shall be made between Buyer and Seller of all production
proceedand taxes paid by Seller for the time period between the Effective Date
and Closing. The net settlement balance shall be deducted from or added to the
Purchase Price. Applicable costs and expenses will include, without
limitation, royalties, rentals, any and all taxes related to said production,
and expenses of the type customarily billed under an operating agreement with
overhead on a Fixed Rate Basis not to exceed Four Hundred Forty and 00/100
Dollars ($440.00) per producing well located on said Property. Buyer will
reimburse Seller for all workover costs, plugging, abandoning and reabandoning
costs and other major costs that Seller incurs after the Effective Date, on an
actual cost basis. Seller shall not undertake any single project reasonably
estimated to require an expenditure in excess of $15,000.00, without the prior
written consent of Buyer; however, Seller may take such steps and incur such
expenses as in its opinion are required to deal with an emergency or to
safeguard life and property.
Within one hundred twenty (120) days after the Closing, Seller and Buyer
shall make a post-closing settlement to account for all production proceeds
received and all operating expenses and taxes paid by Seller after the
Effective Date. After the post-closing settlement, additional proceeds
received by or expenses paid by either Buyer or Seller on behalf of the other
shall be settled by invoicing the other party for expenses paid or remitting to
the other party any proceeds received.
Seller shall comply with all applicable laws, ordinances, rules, and
regulations, orders, terms of permits and authorizations, of any governmental
body which may have jurisdiction over the Property and shall promptly obtain
and maintain all permits and bonds required by public authorities in connection
with the Property. As of the Effective Date, Buyer shall assume and agrees to
perform all obligations and implied covenants of Seller relating to the
Property. Buyer shall assume the risk of any change in the condition of the
Property from the Effective Date to the Closing, except to the extent any
change of condition is attributable to the negligence or willful misconduct of
Seller.
11. SUSPENDED FUNDS. As soon as practicable after the Closing, Seller
shall provide to Buyer a listing showing all net proceeds from production
attributable to the royalty and overriding royalty interests which are
currently held in suspense because of lack of identity or address of owners,
change of ownership or similar reasons, and shall transfer to Buyer all those
suspended proceeds. Buyer shall be responsible for proper distribution of all
the suspended proceeds to the parties lawfully entitled to them.
12. TAXES. Buyer shall be responsible for payment of all taxes relating
to its interests in the Property from and after the Effective Date. Seller
shall be responsible for payment of all taxes relating to its interest in the
Property prior to the Effective Date. Property and ad valorem taxes payable on
an annual basis shall be prorated between Seller and Buyer as of the Effective
Date. Buyer shall be liable for any sales tax or other transfer tax.
13. EXISTING CONTRACTS. This sale will be made ch the Property is
subject.
14. NOTICES. All notices and communications required or permitted under
this Agreement shall be in writing, deliver to or sent by U. S. Mail or Express
Delivery, postage prepaid, or by facsimile transmission, addressed as follows:
Maynard Oil Company
Attention Mrs. Cassondra Foster
8080 North Central Expressway, Suite 660
Dallas, TX 75206
Phone: (214) 891-8461
Fax: (214) 891-8827
Roc Energy, Inc.
Attention Mr. Richard C. Bott
3300 North A Street, Building Two, Suite 218A
Midland, TX 79705
Phone: (915) 686-8120
Fax: (915)
15. PARTIES IN INTEREST. This Agreement shall inure to the benefit of
and be binding upon Seller and Buyer, their respective successors and assigns.
All references contained in the Agreement shall be deemed to include Seller and
Buyer's respective successors and assigns. No assignment by any party shall
relieve any party of any duties or obligations under this Agreement.
16. PREFERENTIAL RIGHTS TO PURCHASE. Should any of the Property offered
be subject to a preferential right to purchase or consent to assign, then the
proposed sale of the Property affected thereby will be subject to Seller's
obtaining any such waiver or consent. Seller shall not be liable to Buyer by
reason of inability or failure to obtain any such waiver or consent; however,
in the event of any such waiver or consent, the parties shall reduce the
purchase price by the purchase price mutually agreed upon for such property.
17. INDEMNITY. Buyer shall assume full responsibility for the Property
purchased as of the Effective Date and shall defend and indemnify Seller, its
employees, officers and agents, against any and all losses, claims, suits,
liabilities, and expenses arising out of, in connection with or resulting from
Buyer's ownership or operation of the Property purchased, including, but not
limited to the plugging and abandonment of all existing wells. Buyer shall
comply with all covenants in the instruments in the chain of title of the
Property purchased or the instruments to which the Property is subject.
Seller shall defend and indemnify Buyer, its employees, officers and
agents, against any and all losses, claims, suits, liabilities, and expenses
arising out of, in connection with or resulting from Seller's ownership or
operation of the Property purchased prior to the effective date.
18. REGULATORY FORMS. At Closing, Seller shall deliver to Buyer signed
forms to be filed with appropt as provided herein, Buyer is granted the right
to conduct reasonable tests on each of the wells located on the Property for
the purpose of confirming their individual producing capacities. Such tests
will be performed prior to Closing and in the presence of Seller's agents,
representatives or employees, who shall be authorized to terminate or prohibit
any test which, in their judgment, could constitute a threat to the continued
productivity of the well to be tested. Seller's Engineering Manager, Jerry
Keen, Dallas, Texas (214) 891-8457 should be contacted prior to conducting such
tests to apprise Buyer the name and telephone number of Seller's agent,
representative or employee, who shall be authorized to witness same.
20. NORM, RCRA AND CERLA Buyer has inspected the Assets for all
purposes, including without limitation, for the purpose of detecting the
presence or concentration of naturally occurring radium, thorium or other such
materials (hereinafter referred to as "NORM") and satisfied itself as to their
physical and environmental condition, both surface and subsurface, and that
Buyer accepts all of the same in their "AS IS, WHERE IS" condition. Seller
disclaims all liability arising in connection with the presence of
environmental conditions such as, but not limited to, NORM on the Property, and
if any tests have been conducted by Buyer for the presence of such conditions,
Buyer disclaims any warranty respecting the accuracy of such tests for such
presence on the Property or the results of those tests and disclaims any
liability in connection with the tests or results. Buyer certifies and
acknowledges that it has all the necessary licenses under applicable state and
federal law to accept assignment of the Property.
Subject to the other provisions of this section, at Closing Buyer shall
assume and be responsible for and comply with all duties and obligations of
Seller, express or implied arising on or after the Effective Date with respect
to the properties, including, without limitation, those arising under or by
virtue of any lease, contract, agreement, document, permit, applicable statute
or rule, regulation or order of any governmental authority specifically
including, without limitation, any governmental request or requirement to plug,
re-plug and/or abandon any well of whatsoever type, status or classification or
take any clean-up or other action with respect to the Property or premises,
including hazardous waste cleanup costs under the Resource and Recovery Act
("RCRA") and the Comprehensive Environmental Response, Compensation and
Liability Act ("CERLA"), or similar laws, rules or regulations and defend,
indemnify and hold Seller harmless from any and all claims arising out of or in
connection therewith.
If Buyer discovers a material environmental condition which would
adversely affect the value of the Property by $25,000.00 or more per defect net
to Seller's interest in the affected property and Seller is not in compliance
with environmental laws, rules and regulations with respect to such property
("Environmental Defect") Buyer shall give Seller written notice thereof not
later than ten (10) business days prior to Closing together with the basis for
such assertion and data in support thereof, and shall furnish Seller with any
proposed reduction in the Sales Price attributable to each such matter. Seller
may remove the defective property from the sale, attempt to cure the defect at
Seller's sole cost and expense within one hundred twenty (120) days after the
notice, agree to a mutually acceptable purchase price reduction or terminate
this Agreement without liability to Buyer except for return of the Performance
Deposit. If Seller is unable to cure the defect, the allocated value shall be
refunded to Buyer and the defective property reassigned to Seller effective as
of the Effective Date.
21. COMPLETE AGREEMENT; SAVINGS CLAUSE. When executed by Seller and
Buyer, this Agreement shall constitute the complete agreement between the
parties regarding the purchase and sale of the Property. Where applicable, the
terms of this Agreement shall survive the Closing.
22. GOVERNING LAW AND VENUE.
This Agreement and all of its terms and provisions shall be governed by
the laws of the State of Texas.
The parties agree that venue for any dispute between l court costs and
reasonable attorneys' fees incurred.
23. FURTHER ASSURANCES.
Seller agrees that, at any time and from time to time after the date
hereof, it will, upon request of buyer, execute, acknowledge and deliver or
cause to be executed, acknowledged and delivered all further documents or
instruments as may be required in connection with the assignment and conveyance
of the Property to Buyer; and Seller shall perform and take such actions as may
be necessary or appropriate in connection with the performance by Seller of the
transactions contemplated by this Agreement.
24. MISCELLANEOUS PROVISIONS.
(a) Captions have been inserted for reference purposes only and shall not
define or limit the terms of this Agreement;
(b) If any provision of this Agreement is held invalid, such invalidity
shall not affect the remaining provisions;
(c) This Agreement cannot be modified or amended except by a written
instrument duly executed by Seller and Buyer; and
(d) Neither Seller nor Buyer, without the prior written consent of the
other party shall assign any right or obligations under this Agreement prior to
the Closing, or attempt to delegate any duty to be performed under this
Agreement. Consent to assign shall not be unreasonably withheld by either
party.
TIME IS OF THE ESSENCE HEREOF. If the foregoing sets forth your
understanding of our agreement, please so indicate by dating, signing and
returning one copy hereof on or before March 18, 1996. Failure to do so shall
result in cancellation of this agreement at Seller's option.
EXECUTED this 6th day of March, 1996.
MAYNARD OIL COMPANY
By: /s/ L. B. Carruth
------------------------------
L. B. Carruth
Vice President
ROC ENERGY, INC.
By: /s/ Richard C. Bott
------------------------------
Richard C. Bott
EXHIBIT "A"
Attached to and made a part of Purchase and Sale Agreement dated
March 6, 1996, by and between Maynard Oil Company, Seller, and Roc
Energy, Inc., Buyer
PN 611007
FOSTER A-1
EXPENSE INTEREST 0.0000000
REVENUE INTEREST 0.0136719
PN 611008
FOSTER NO. 1
EXPENSE INTEREST 0.0000000
REVENUE INTEREST 0.0136719
Mineral Deed dated September 30, 1992, by and between Chevron U.S.A. Inc.,
Grantor and Chevron PBC, Inc., as Grantee, recorded in Volume 483, Page 286 of
the Official Public Records of Crockett County, Texas, covering all of Section
33, LESS AND EXCEPT, a tract BEGINNING at a point on the northwest boundary of
said Section 33 which is 1,320' Southwest of the Northwest (correctly called
the Northeast corner in that certain Assignment and Bill of Sale dated July 25,
1990, between Chevron USA Inc. and Tom Schneider recorded in Volume 455, page
332 of the Official Public Records of Crockett County, Texas) corner of said
Section 33; THENCE Southwesterly along the Northwest boundary of Section 33
1,320'; THENCE Southeasterly and parallel with the Northeast boundary of
Section 33, 2,640' to a point on the Southeast boundary of Section 33; THENCE
Northeasterly along the Southeast boundary of Section 33, 1,320'; THENCE
Northwesterly 2,640' to the POINT OF BEGINNING, containing 560.00 acres, more
or less, all in Block 31, H&TC RR Company Survey, Crockett County, Texas. (MOC
LF-05731-AA & AA-01)
Subject to Mineral Deed dated September 21, 1965, by and between Limpia
Royalties, Grantor, to Kewanee Oil Company, Grantee, recorded in Volume 221,
page 595 of the Official Public Records of Crockett County, Texas.
PN 611002
TIPPETT J H "E"
EXPENSE INTEREST 1.0000000
REVENUE INTEREST 0.8750000
Oil and Gas Lease dated May 26, 1944, by and between J. H. Tippett, as
Lessor, and Gulf Oil Corporation, as Lessee, recorded in Volume 81, Page 57 of
the Official Public Records of Crockett County, Texas, INSOFAR AND ONLY INSOFAR
as said lease covers the Northeasterly 1/2 of Section 36, Block 31, Abstract
5209, Certificate 38/4264, H&TC RR Company Survey, being that half of said
section not fronting on the Pecos River, and being bounded on the south by a
line drawn parallel to the northeasterly line of said section and containing
332.6 acres, more or less, Crockett County, Texas. (MOC LF-05734-00)
Subject to Water Disposal Agreement between Pennzoil Petroleum Company and
Memorial Exploration Company dated August 26, 1993; Waiver of Surface Rights
from Gulf Oil Corporation to Shell Oil Company dated August 6, 1962 and Waiver
of Surface Rights from Gulf Oil Corporation to Shell Oil Company dated January
11, 1971.
PN 611003
TIPPETT J H "E" NCT B
EXPENSE INTEREST 1.0000000
REVENUE INTEREST 0.8750000
Oil and Gas Lease dated May 26, 1944, by and between J. H. Tippett, as
Lessor, and Gulf Oil Corporation, as Lessee, recorded in Volume 81, Page 57, of
the Official Public Records of Crockett County, Texas, INSOFAR AND ONLY INSOFAR
as said lease covers the Southwesterly 1/2 of Section 38, Block 31, Abstract
5210, Certificate 38/4265, H&TC RR Company Survey, being that part of said
section fronting on the Pecos River and being bounded on the north by a line
drawn parallel to the northeasterly line of said Section, and containing 327.8
acres, more or less, Crockett County, Texas. (MOC LF-05734-00)
Subject to Water Disposal Agreement between Pennzoil Petroleum Company and
Memorial Exploration Company dated August 26, 1993; Waiver of Surface Rights
from Gulf Oil Corporation to Shell Oil Company dated August 6, 1962 and Waiver
of Surface Rights from Gulf Oil Corporation to Shell Oil Company dated January
11, 1971.
PN 611004
TIPPETT J H "E" NCT C
EXPENSE INTEREST 1.0000000
REVENUE INTEREST 0.8750000
Oil and Gas Lease dated May 26, 1944, by and between J. H. Tippett, as
Lessor, and Gulf Oil Corporation, as Lessee, recorded in Volume 81, Page 57, of
the Official Public Records of Crockett County, Texas, INSOFAR AND ONLY INSOFAR
as said lease covers the Southwesterly 1/2 of Section 34, Block 31, H&TC RR
Company Survey, Abstract 5205, Certificate 38/4263, being that part of said
section fronting on the Pecos River and being bounded on the north by a line
parallel to the northeasterly line of said section and containing 329.0 acre,
more or less, Crockett County, Texas. (MOC LF-05734-00)
Subject to Water Disposal Agreement between Pennzoil Petroleum Company and
Memorial Exploration Company dated August 26, 1993; Waiver of Surface Rights
from Gulf Oil Corporation to Shell Oil
Company dated August 6, 1962; and Waiver of Surface Rights from Gulf Oil
Corporation to Shell Oil Company dated January 11, 1971.
PN 611005
TIPPETT J H "G" (SWD)
EXPENSE INTEREST 1.0000000
REVENUE INTEREST 0.8750000
Oil and Gas Lease dated May 26, 1944, by and between J. H. Tippett, as
Lessor, and Gulf Oil Corporation, as Lessee, recorded in Volume 81, page 66 of
the Official Public Records of Crockett County, Texas, INSOFAR AND ONLY INSOFAR
as said lease covers the Northeasterly 1/2 of Section 40, Block 31, H&TC RR
Company Survey, Certificate 38/4266, Abstract 5208, and being the half of said
Section 40 not fronting on the Pecos River and being bounded on the south by a
line drawn parallel to the northeasterly line of said Section 40, and
containing 325.7 acres, more or less, Crockett County, Texas. (MOC LF-05730-00)
Subject to Right-of-Way Agreement dated September 28, 1966, from Velma
Amacker and Robert P. Amacker to Gulf Oil Corporation, recorded in Volume 230,
page 55 of the Official Public Records of Crockett County, Texas, and Salt
Water Disposal Agreement dated June 29, 1967, from Velma Amacker and Robert P.
Amacker to Gulf Oil Corporation, recorded in Volume 234, page 195 of the
Conveyance Records of Crockett County, Texas.
PN 611006
TIPPETT J H "G" NCT B
EXPENSE INTEREST 1.0000000
REVENUE INTEREST 0.8750000
Oil and Gas Lease dated May 26, 1944, by and between J. H. Tippett, as
Lessor, and Gulf Oil Corporation, as Lessee, recorded in Volume 81, page 66 of
the Official Public Records of Crockett County, Texas, INSOFAR AND ONLY INSOFAR
as said lease covers the Southwesterly 1/2 of Section 42, Block 31, H&TC RR
Company Survey, Certificate 38/4267, Abstract 5207, and being that part of said
Section 42 fronting on the Pecos River and being bounded on the north by a line
drawn parallel to the northeasterly line of said Section 42, and containing
332.6 acres, more or less, Crockett County, Texas. (MOC LF-05730-00)
Subject to Right-of-Way Agreement dated September 28, 1966, from Velma
Amacker and Robert P. Amacker to Gulf Oil Corporation, recorded in Volume 230,
page 55 of the Official Public Records of Crockett County, Texas, and Salt
Water Disposal Agreement dated June 29, 1967, from Velma Amacker and Robert P.
Amacker to Gulf Oil Corporation, recorded in Volume 234, page 195 of the
Conveyance Records of Crockett County, Texas.
TIPPETT J H (UNDEVELOPED ACRES)
EXPENSE INTEREST 1.0000000
REVENUE INTEREST 0.8750000
Oil and Gas Lease dated May 26, 1944, by and between J. H. Tippett, as
Lessor, and Gulf Oil Corporation, as Lessee, recorded in Volume 81, page 66 of
the Official Public Records of Crockett County, Texas, and amended by
instrument dated November 14, 1945, recorded in Volume 85, page 218 of the
Records of Crockett County, Texas, INSOFAR AND ONLY INSOFAR as said lease
covers the Northeasterly 1/2 of Section 44, Block 31, H&TC RR Company Survey,
Certificate 38/4268, Abstract 4983, and being that half of said Section 44 not
fronting on the Pecos River, and being bounded on the south by a line drawn
parallel to the northeasterly line of said Section 44, containing 324.1 acres,
more or less; the Southwesterly 1/2 of Section 46, Block 31, H&TC RR Company
Survey, Certificate 38/4269, Abstract 4986, being that part of said Section 46
fronting on the Pecos River and being bounded on the north by a line drawn
parallel to the northeasterly line of Section 46, containing 323.5 acres, more
or less; Being the Northeast 1/4 of Section 2, Block B, GC&SF RR Company
Survey, and containing 160.465 acres, more or less; and Section 8, Block PP,
T&C R Company Survey, beginning at the southeast corner of Section 8, Thence
North along the east line of said Section 1,595 varas to the point for the
northeast corner of this tract; Thence West 486 varas to a point in the west
line of said section; Thence South along the West line 627 varas to an Ell
corner of said Section; Thence West along with most southerly north line of
said Section 143 varas to its most westerly northwest corner; thence South
along the West line of said Section 968 varas to its Southwest corner; Thence
East along the south line of said section 629 varas to the Place of Beginning,
and containing 161.86 acres, more or less, Crockett County, Texas (MOC LF-
05730-00)
Subject to Right-of-Way Agreement dated September 28, 1966, from Velma
Amacker and Robert P. Amacker to Gulf Oil Corporation, recorded in Volume 230,
page 55 of the Official Public Records of Crockett County, Texas, and Salt
Water Disposal Agreement dated June 29, 1967, from Velma Amacker and Robert P.
Amacker to Gulf Oil Corporation, recorded in Volume 234, page 195 of the
Conveyance Records of Crockett County, Texas.
Oil and Gas Lease dated May 26, 1944, by and between J. H. Tippett,
as Lessor, and Gulf Oil Corporation, as Lessee, recorded in Volume 81, Page 57,
of the Official Public Records of Crockett County, Texas, INSOFAR AND ONLY
INSOFAR as said lease covers the Northeasterly 1/2 of Section 32, Block 31,
H&TC RR Company Survey, Abstract 5206, Certificate 38/4262, and being that 1/2
of said section not fronting on the Pecos River and being bounded on the south
by a line drawn parallel to the northeasterly line of said section, containing
302.2 acres, more or less, Crockett County, Texas (MOC LF-05734-00)
Subject to Water Disposal Agreement between Pennzoil Petroleum Company and
Memorial Exploration Company dated August 26, 1993; Waiver of Surface Rights
from Gulf Oil Corporation to Shell Oil Company dated August 6, 1962; and Waiver
of Surface Rights from Gulf Oil Corporation to Shell Oil Company dated January
11, 1971.
PN 611001
STATE SCHOOL BOARD MF
EXPENSE INTEREST 1.0000000
REVENUE INTEREST 0.8333333
Oil and Gas Lease dated April 4, 1967, by and between the Commissioner of
the General Land Office, bearing serial number M-60644, as Lessor, and Gulf Oil
Corporation, as Lessee, recorded in Volume 232, page 221 of the Official Public
Records of Crockett County, Texas, and in Volume 352, page 472 of the Official
Public Records of Pecos County, Texas, and amended by instrument dated February
13, 1987, recorded in Volume 526, page 616 of the Official Public Records of
Crockett County, Texas, and being State Tract 7, Pecos River, Block 31, H&TC
Railroad Company Survey, containing 80.00 acres, more or less, bounded on the
West by a northerly extension of the East line of Section 13, Block 12, H&GN
Railroad Co. Survey, Pecos County, Texas, and bounded on the East by a
southwesterly extension of the southeast line of Section 36, Crockett County,
Texas. (MOC LF-05733-00)
Subject to Right-of-Way Agreement dated July 10, 1986, between Velma
Amacker and Robert P. Amacker and Gulf Oil Corporation, recorded in Volume 240,
page 297, Official Public Records of Crockett County, Texas and Right-of-Way
Agreement dated May 29, 1987, between Robert Kent Amacker, et al and Chevron
USA Inc., recorded in Volume 422, page 447 of the Official Public Records of
Crockett County, Texas.
EXHIBIT "B"
Attached to and made a part of Purchase and Sale Agreement dated
March 6, 1996, by and between Maynard Oil Company, Seller, and Roc
Energy, Inc., Buyer
ASSIGNMENT AND BILL OF SALE
FROM MAYNARD OIL COMPANY
TO ROC ENERGY, INC.
THE STATE OF TEXAS )
) KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF CROCKETT )
THAT, the undersigned, MAYNARD OIL COMPANY, a Delaware corporation,
with offices at 8080 North Central Expressway, Suite 660, Dallas, Texas 75206
(hereinafter called "Assignor"), for and in consideration of Ten Dollars
($10.00) and other valuable consideration to it in hand paid by ROC ENERGY,
INC., a Texas corporation, with offices at 3300 North A Street, Building Two,
Suite 218A, Midland, Texas 79705 (hereinafter called "Assignee"), does hereby
TRANSFER, ASSIGN and CONVEY unto Assignee, WITHOUT WARRANTY OF TITLE EITHER
EXPRESS OR IMPLIED, EXCEPT BY, THROUGH AND UNDER ASSIGNOR, BUT NOT OTHERWISE,
with the right of full substitution and subrogation in and to all rights and
actions of warranty which Assignor has or may have against any and all
preceding owners of the said leases, subject to the terms and conditions
contained herein, the following:
(a) All of Assignor's right, title and interest in and to the leasehold
estates described in Exhibit "A", such leases being hereinafter called "said
leases," represented to be no less than the working and net revenue interests
set forth therein, subject to all burdens, encumbrances, contracts and
agreements, which are of record and/or listed in Exhibit "A" affecting said
leases to the extent that same are in force and effect;
(b) all of Assignor's right, title and interest in and to all permits,
franchises, licenses, servitudes, easements, surface leases and rights-of-way
of every character relating to said lease;
(c) all of Assignor's right, title and interest in and to any contracts
or agreements including, but not limited to, rights and interest in or derived
from unit agreements, gas processing agreements, joint operating agreements,
gas contracts, gas gathering agreements, gas balancing agreements, boundary or
well line agreements, assignments of operating rights, working interest and
subleases affecting said leases.
For the same consideration, Assignor does hereby BARGAIN, SELL and DELIVER
unto Assignee all of its right, title and interest in and to the wells located
on said leases described in said Exhibit "A"; and Assignor does hereby further
BARGAIN, SELL and DELIVER unto Assignee all of its right, title and interest in
and to all personal property and well equipment located in, on and used in
connection with the said leases, such well, personal property and the well
equipment being hereinafter collectively called "said wells". ASSIGNOR
EXPRESSLY DISCLAIMS AND NEGATES (a) ANY IMPLIED OR EXPRESS WARRANTY OF
MERCHANTABILITY, (b) ANY IMPLIED OR EXPRESS WARRANTY OF FITNESS FOR A
PARTICULAR PURPOSE, and (c) ANY IMPLIED OR EXPRESS WARRANTY OF CONFORMITY TO
MODELS OR SAMPLES OF MATERIALS. ASSIGNEE EXPRESSLY WAIVES THE PROVISIONS OF
CHAPTER XVII, SUBCHAPTER E, SECTIONS 17.41 THROUGH 17.63, INCLUSIVE (OTHER THAN
SECTION 17.555, WHICH IS NOT WAIVED), VERNON'S TEXAS CODE ANNOTATED, BUSINESS
AND COMMERCIAL CODE.
This Assignment and Bill of Sale is executed and delivered as part of
the consummation of the transaction contemplated by that certain Purchase and
Sale Agreement between Assignor, as Seller, and Assignee, as Buyer, dated March
6, 1996 (hereinafter referred to as "Sale Agreement"). The warranties,
representations, indemnities and covenants contained in the Sale Agreement
shall survive the delivery of this Assignment in accordance with the provisions
of the Sale Agreement and the delivery of this Assigenants made in the Sale
Agreement and the terms and conditions set forth therein; provided, however,
any third parties transacting with Assignee with respect to any of the
Interests may rely on this Assignment as vesting Assignee with all of
Assignor's right, title and interest in the said leases and wells.
This Assignment and Bill of Sale shall extend to, be binding upon and
inure to the benefit of Assignor and Assignee, their respective successors and
assigns and shall be deemed covenants running with the herein described lands
and leasehold estates.
Assignee expressly assumes, as of the Effective Date, all of Assignor's
obligations relating to the said leases, including, but not limited to, the
obligation of plugging and abandoning any well on the said leases, at
Assignee's sole cost, risk and expense.
This assignment shall be effective, for all purposes as of 7:00
o'clock a.m. March 1, 1996.
EXECUTED by Assignor and Assignee in Duplicate Originals on this ____
day of _______________, 1996, but to be effective as stated above.
MAYNARD OIL COMPANY
By: ___________________________
L. B. Carruth
Vice President
ROC ENERGY, INC.
By: ___________________________
Richard C. Bott
President
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
This instrument was acknowledged before me on __________, 1996,
by Richard C. Bott, President of Roc Energy, Inc., a Texas corporation,
on behalf of said corporation.
EXHIBIT 2(b)
PARTIAL ASSIGNMENT OF PURCHASE AND SALE AGREEMENT
AND CONSENT TO PARTIAL ASSIGNMENT OF
PURCHASE AND SALE AGREEMENT
This Partial Assignment of Purchase and Sale Agreement and Consent to
Partial Assignment of Purchase and Sale Agreement (this "Assignment") is made
and entered into this 8th day of May, 1996, by and among MAYNARD OIL COMPANY, a
Delaware corporation ("Maynard"), ROC ENERGY, INC., a Texas corporation ("ROC")
and BYRD OPERATING COMPANY, a Texas corporation ("Byrd").
WHEREAS, Maynard, as Seller, and ROC, as Buyer, have entered into a
Purchase and Sale Agreement dated March 6, 1996, pursuant to which ROC has the
right to purchase from Maynard certain oil and gas properties located in
Crockett County, Texas (the "Property"), on the terms and conditions contained
in said Agreement;
WHEREAS, ROC desires to assign to Byrd all of ROC's rights and obligations
in and under the Maynard Agreement, INSOFAR AND ONLY INSOFAR as the Maynard
Agreement covers or relates to the properties described on Exhibit "A" attached
hereto, and all associated personal property, equipment, permits, licenses,
easements, surface leases, contracts, agreements and wells (the "Subject
Property"), and Byrd desires to acquire ROC's rights and obligations under the
Maynard Agreement, INSOFAR AND ONLY INSOFAR as the Maynard Agreement covers or
relates to the Subject Property; and
WHEREAS, Maynard desires to consent to such partial assignment and
assumption pursuant hereto.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by the parties hereto, Maynard, ROC and Byrd agree as follows:
1. ROC hereby assigns and conveys to Byrd all of its rights and
obligations under the Maynard Agreement, INSOFAR AND ONLY INSOFAR as
said Agreement covers or relates to the Subject Property.
2. Byrd hereby assumes and agrees to perform all the duties and
obligations of ROC pursuant to the terms of the Maynard Agreement,
INSOFAR AND ONLY INSOFAR as such duties and obligations relate to the
Subject Property.
3. ROC hereby agrees to perform all the duties and obligations of ROC
pursuant to the Maynard Agreement, INSOFAR AND ONLY INSOFAR as such
duties and obligations relate to the Property, save and except the
Subject Property.
4. Maynard hereby consents to the foregoing partial assignment of the
Maynard Agreement from ROC to Byrd.
EXECUTED as of the date first above written
MAYNARD OIL COMPANY ROC ENERGY, INC.
By: /s/ L. B. Carruth By: /s/ Richard C. Bott
------------------------------ ------------------------------
L. B. Carruth Richard C. Bott
Vice President President
BYRD OPERATING COMPANY
By: /s/ Jack L. Byrd
-----------------------------
Jack L. Byrd, President
THE STATE OF_____________________
COUNTY OF________________________
This instrument was acknowledged before me on the 13th day of May, 1996, by
L. B. Carruth, Vice President of MAYNARD OIL COMPANY, a Delaware corporation, on
behalf of said corporation.
______________________________
NOTARY PUBLIC - State of Texas
Print Name:___________________
My Commission Expires:
THE STATE OF_____________________
COUNTY OF________________________
This instrument was acknowledged before me on the 8th day of May, 1996, by
Richard C. Bott, President of ROC ENERGY, INC., a Texas corporation, on behalf
of said corporation.
______________________________
NOTARY PUBLIC - State of Texas
Print Name:___________________
My Commission Expires:
THE STATE OF_____________________
COUNTY OF________________________
This instrument was acknowledged before me on the 8th day of May, 1996, by
Jack L. Byrd, President of BYRD OPERATING COMPANY, a Texas corporation, on
behalf of said corporation.
______________________________
NOTARY PUBLIC - State of Texas
Print Name:___________________
My Commission Expires:
EXHIBIT 2(c)
PURCHASE AND SALE AGREEMENT
This Agreement, when accepted and agreed to in the manner provided
below shall constitute the terms and provisions of an agreement under which
MAYNARD OIL COMPANY, a Delaware corporation, with offices at 8080 North
Central Expressway, Suite 660, Dallas, Texas 75206, hereinafter referred to
as "SELLER", agrees to sell or exchange and JAVELINA ENERGY, INC., a Texas
corporation, whose post office address is P. O. Box 1237, Kingsville, Texas
78364, hereinafter referred to as "BUYER", agrees to purchase or exchange
all of SELLER'S right, title and interest in and those certain oil and gas
properties owned by SELLER and described in Exhibit "A", Property Schedule
attached hereto and made a part hereof, hereinafter sometimes referred to as
the "PROPERTY".
1. PROPERTY BEING SOLD OR EXCHANGED. At Closing, as hereinafter
defined, SELLER shall convey to BUYER the PROPERTY identified on Exhibit
"A", including:
(a) All of SELLER'S interest whether present, contingent, reversionary
or other type of interest, in and to the leasehold estates created under the
oil, gas and mineral leases described in Exhibit "A", INSOFAR AS TO THE
LANDS DESCRIBED IN EXHIBIT "A" AND INSOFAR AND ONLY INSOFAR AS TO THOSE
DEPTHS SPECIFIED IN EXHIBIT "A" WHERE A DEPTH LIMITATION IS PROVIDED, (such
leases being hereinafter called "said leases"), which interest in said
Leases and the wells situated thereon, and in any pooled units pertaining
thereto, SELLER represents to be no less than the working and net revenue
interests set forth on such Exhibit "A";
(b) All of SELLER'S fee interests, royalties, overriding royalties,
production payments, rights to take royalties in kind, or other interests in
production of oil, gas or other minerals in the lands described in Exhibit
"A", INSOFAR AND ONLY INSOFAR AS TO THOSE DEPTHS SPECIFIED IN EXHIBIT "A"
WHERE A DEPTH LIMITATION IS PROVIDED, whether created under the leases,
deeds, assignments or other instruments described in Exhibit of oil, gas or
other minerals in said lands SELLER represents to be no less than the net
revenue interest set forth on such Exhibit "A";
(c) All of SELLER'S right, title and interest in and to all permits,
franchises, licenses, servitudes, easements, surface leases and rights-of-
way of every character relating to said leases;
(d) All of SELLER'S right, title and interest in and to any contracts
or agreements including, but not limited to, rights and interest in or
derived from unit agreements, gas processing agreements, joint operating
agreements, gas contracts, gas gathering agreements, gas balancing
agreements, boundary or well line agreements, assignments of operating
rights, working interest and subleases affecting said leases.
(e) All of SELLER'S right, title and interest in and to producing,
non-producing and shut-in oil and gas wells, salt water disposal wells,
injection wells and water wells on said leases or lands pooled, unitized or
communitized therewith; and
(f) All of SELLER'S right, title and interest in and to all surface
and down-hole equipment, fixtures, related inventory and other personal
property used in connection with the PROPERTY described in paragraphs (a)
through (e) above, excluding, however, all automobiles, trucks and
communications equipment.
2. PERFORMANCE DEPOSIT. On or before 4:00 o'clock p.m., local time,
August 15, 1996, BUYER shall tender to Bank One, Texas, N.A. ("Escrow
Agent", as provided for in Exhibit "C" hereto), by wire transfer, a
performance deposit in the amount of Fifteen Thousand and 00/100 Dollars
($15,000.00). The performance deposit is received solely to assure the
performance of BUYER pursuant to the terms and conditions hereof. The
performance deposit will be returned to BUYER at Closing upon consummation
of the transaction, or at BUYER'S election, may be credited to the Purchase
Price. No interest shall be paid or credited to the performance deposit.
If BUYER fails, refuses, or is unable to close the sale in accordance with
the terms herein, SELLER, except as otherwise herein specifically provided,
may, at its option, retain the performance deposit as agreed liquidated
damages and not as a penalty. If SELLER, through no fault of BUYER, refuses
to close the sale in accordance with the terms herein, the performance
deposit shall be returned to BUYER.
3. PURCHASE PRICE. The total sum which BUYER agrees to deliver to
Escrow Agent for the PROPERTY, is One Hundred Fifty Thousand and 00/100
Dollars ($150,000.00)
4. CLOSING. The closing shall take place on or before August 29,
1996, at 10:00 a.m. local time at SELLER'S offices in Dallas, Texas, unless
the parties mutually agree upon a later date, or, at BUYER'S election, such
closing may be handled by overnight mail upon confirmation of funds received
by the Escrow Agent. The following shall occur at closing:
(a) Purchase Price. BUYER will make payment of the Purchase Price
pursuant to paragraph numbered 3 above, and adjusted by Sections 2,d
(b) Conveyance. SELLER will convey the PROPERTY to BUYER by executing
and delivering Conveyances, Assignments and Bills of Sale, a form of which
is attached hereto as Exhibit "B".
5. CONVEYANCE EFFECTIVE DATE. The conveyance from SELLER to BUYER
shall be effective as of August 1, 1996, at 7:00 a.m. local time, herein
called the "Effective Date". BUYER shall assume the risk of any change in
the condition of the PROPERTY from the date of this Agreement to the date of
Closing.
6. FILES AND RECORDS. Prior to Closing, SELLER will make available
for examination by BUYER such title information and abstract coverage as may
be available in SELLER'S files. Existing abstracts and title opinions will
not be brought down to date by SELLER. SELLER'S files will be made
available to BUYER for examination at SELLER'S offices in Dallas, Texas,
during normal working hours. BUYER will be permitted, to make copies of
pertinent instruments or documents contained in SELLER'S files. No economic
analyses, interpretive geological or geophysical data considered proprietary
by SELLER shall be copied by BUYER. As soon as practicable after Closing,
SELLER shall deliver all of the original files or copies thereof to BUYER,
at BUYER'S expense.
7. LIMITED WARRANTY. Conveyance of the PROPERTY shall be WITHOUT
WARRANTY OF TITLE EITHER EXPRESS OR IMPLIED, EXCEPT BY, THROUGH AND UNDER
ASSIGNOR, BUT NOT OTHERWISE with the right of full substitution and
subrogation in and to all rights and actions of warranty which SELLER has or
may have against any and all preceding owners or vendors of the PROPERTY.
8. INDEPENDENT EVALUATION. BUYER has made an independent evaluation
of the PROPERTY and acknowledges that SELLER has made no statements or
representation concerning the present or future value of the anticipated
income, costs, or profits, if any, to be derived from the PROPERTY and that
SELLER DOES NOT WARRANT TITLpment, or other property located thereon or used
in connection therewith. BUYER further acknowledges that in executing this
Agreement it has relied solely upon its independent examination of the
premises and public records.
9. SIGNIFICANT TITLE DEFECT. As used in this Agreement, the term
"significant title defect" shall include any defect which results in a loss
of title in SELLER such that BUYER'S net revenue interest in the affected
PROPERTY is reduced or SELLER'S right to use the PROPERTY as an owner,
lessee, licensee, or permittee, as applicable, is extinguished or severely
restricted.
On or before ten (10) days prior to Closing, BUYER shall give written
notice to SELLER of interests in the PROPERTY which have significant title
defects. BUYER shall be deemed to have waived all title defects and any
other defect of which SELLER has not been given notice by ten (10) business
days prior to Closing, unless it is a significant title defect which did not
exist on or before that date.
Interests which have significant title defects shall be excluded from
the PROPERTY to be conveyed and the Purchase Price shall be reduced by the
price allocated by Buyer for such PROPERTY on Exhibit "A", Property
Schedule, attached hereto unless: (i) prior to closing, the basis for the
significant title defect has been removed, or (ii) BUYER agrees to accept
the interest notwithstanding the defect. Loss of any lease acreage between
the Effective Date and Closing due to expiration of the lease term will not
constitute a significant title defect.
10. PRODUCTION PROCEEDS AND EXPENSES AFTER EFFECTIVE DATE. All
production from oil and gas wells, and all proceeds from the sale thereof
attributable to production prior to the Effective Date shall be the property
of SELLER. All production and proceeds attributable to production after the
Effective Date shall be the property of BUYER. At Closing, a settlement
shall be made between BUYER and SELLER of all s paid by SELLER for the time
period between the Effective Date and Closing. The net settlement balance
shall be deducted from or added to the Purchase Price. Applicable costs and
expenses will include, without limitation, any and all taxes related to said
production.
Within one hundred twenty (120) days after the Closing, SELLER and
BUYER shall, if necessary, make a post-closing settlement to account for all
production proceeds received and all expenses, costs and taxes paid by
SELLER after the Effective Date. After the post-closing settlement,
additional proceeds received by or expenses paid by either BUYER or SELLER
on behalf of the other shall be settled by invoicing the other party for
expenses paid or remitting to the other party any proceeds received.
11. TAXES. BUYER shall be responsible for payment of all taxes
relating to its interests in the PROPERTY from and after the Effective Date.
SELLER shall be responsible for payment of all taxes relating to its
interests in the PROPERTY prior to the Effective Date. Property and ad
valorem taxes payable on an annual basis shall be prorated between SELLER
and BUYER as of the Effective Date. BUYER shall be liable for any sales tax
or other transfer tax.
12. EXISTING CONTRACTS. This sale will be made subject to any and all
existing operating agreements, unit agreements and interim assignments, as
well as any and all other agreements or contracts of any nature to which the
PROPERTY is subject.
13. NOTICES. All notices and communications required or permitted
under this Agreement shall be in writing, deliver to or sent by U. S. Mail
or Express Delivery, postage prepaid, or by facsimile transmission,
addressed as follows:
Maynard Oil Company
Attention Cassondra Foster
8080 North Central Expressway, Suite 660
Dallas, TX 75206
Phone: (214) 891-8461
Fax: (214) 891-8827
Javelina Energy, Inc.
Attention Mr. Ken Perkins
Highway 141 West
Armstrong Ranch
Kingsville, TX 78364
Phone: (512) 592-6000
Fax: (512) 592-2689
14. PARTIES IN INTEREST. This Agreement shall inure to the benefit of
and be binding upon SELLER and BUYER, their respective successors and
assigns. All references contained in the Agreement shall be deemed to
include SELLER and BUYER'S respective successors and assigns. No assignment
by any party shall relieve any party of any duties or obligations under this
Agreement.
15. PREFERENTIAL RIGHTS TO PURCHASE. Should any of the PROPERTY
offered be subject to a preferential right to purchase or consent to assign,
then the proposed sale of the PROPERTY affected thereby will be subject to
SELLER'S obtaining any such waiver or consent. SELLER shall not be liable
to BUYER by reason of inability or failure to obtain any such waiver or
consent. In the event any third party exercises its preferential right to
purchase, the price shall be the value indicated by SELLER on the Property
Schedule and the parties shall reduce the Purchase Price by the value
assigned. At Closing, if SELLER has been unable to obtain a required waiver
or consent (or the appropriate time period for asserting such rights has not
expired), the Purchase Price shall be reduced by an amount equal to the
value assigned to the interest affected by such waiver or consent. This
paragraph shall not be applicable to oil and gas leases requiring consent
by, filings with, or other actions by governmental 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.
16. INDEMNITY. BUYER shall assume full responsibility for the
PROPERTY purchased as of the Effective Date and shall defend and indemnify
SELLER, its employees, officers and agents, against any and all losses,
claims, suits, liabilities, and expenses arising out of, in connection with
or resulting from BUYER'S ownership of the PROPERTY purchased. BUYER shall
comply with all covenants in the insto which the PROPERTY is subject.
SELLER shall defend and indemnify BUYER, its employees, officers and
agents, against any and all losses, claims, suits, liabilities, and expenses
arising out of, in connection with or resulting from SELLER'S ownership of
the PROPERTY purchased prior to the effective date.
17. ALLOCATED VALUES. BUYER AND SELLER herein agree upon the
allocation of the Purchase Price among the properties. Such Allocated
Values are shown on Exhibit "A", Property Schedule which is attached hereto.
In the event the net amount of the Purchase Price adjustments downward
provided for in paragraphs numbered 9, and 15 exceeds fifteen percent (15%)
of the Purchase Price, then SELLER or BUYER may, upon written notice to the
other, cancel this Agreement and the same shall be of no further force and
effect and in such event, SELLER shall promptly refund to BUYER the
Performance Deposit.
18. COMPLETE AGREEMENT; SAVINGS CLAUSE. When executed by SELLER and
BUYER, this Agreement shall constitute the complete agreement between the
parties regarding the purchase and sale of the PROPERTY. Where applicable,
the terms of this Agreement shall survive the Closing.
19. GOVERNING LAW AND VENUE. This Agreement and all of its terms and
provisions shall be governed by the laws of the State of Texas.
The parties agree that venue for any dispute between the parties
pertaining to this Agreement shall be in Dallas County, Texas. In any such
dispute, the prevailing party shall be entitled to reimbursement of all
court costs and reasonable attorneys' fees incurred.
20. FURTHER ASSURANCES. SELLER agrees that, at any time and from time
to time after the date hereof, it will, upon request of BUYER, execute,
acknowledge and deliver or cause to be executed, acknowledged and delivered
all further documents or instruments as may be required in connection with
the assignment and conveyance of the PROPEth the performance by SELLER of
the transactions contemplated by this Agreement. SELLER agrees that
promptly after Closing they will prepare and send out letters-in-lieu to all
operators and remittors of proceeds from the sale of oil and gas from said
leases and said wells, notifying them of the transfer of SELLER'S interest
to BUYER.
21. TAX-FREE EXCHANGE. SELLER has elected to effect a like-kind
exchange pursuant to Section 1031 of the Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder, with respect to the
PROPERTY (a "Like-Kind Exchange"). In order to effect a Like-Kind Exchange,
BUYER shall cooperate and do all acts as may be reasonably required or
requested by SELLER with regard to effecting the Like-Kind Exchange,
including, but not limited to, executing an Exchange Escrow Agreement, a
form of which is attached hereto as Exhibit "C", in accordance with Treasury
Regulation Section 1.1031(k)-1(g)(3); provided, however, BUYER SHALL INCUR NO
EXPENSE IN CONNECTION WITH SUCH LIKE-KIND EXCHANGE AND BUYER SHALL NOT BE
REQUIRED TO TAKE TITLE TO ANY PROPERTY OTHER THAN THE PROPERTY IN CONNECTION
WITH THE LIKE-KIND EXCHANGE, AND BUYER'S POSSESSION OF THE PROPERTY WILL NOT
BE DELAYED BY REASON OF ANY SUCH LIKE-KIND EXCHANGE.
22. MISCELLANEOUS PROVISIONS.
(a) Captions have been inserted for reference purposes only and shall
not define or limit the terms of this Agreement;
(b) If any provision of this Agreement is held invalid, such
invalidity shall not affect the remaining provisions;
(c) This Agreement cannot be modified or amended except by a written
instrument duly executed by SELLER and BUYER; and
(d) Neither SELLER nor BUYER, without the prior written consent of the
other party shall assign any right or obligations under this Agreement prior
to the Closing, or attempt to delegate any duty to be performed under this
Agreement. Consent to assign shall not be unreasonably withheld by either
party.
TIME IS OF THE ESSENCE HEREOF. If the foregoing sets forth your
understanding of our agreement, please so indicate by dating, signing and
returning one copy hereof on or before August 12, 1996. Failure to do so
shall result in cancellation of this agreement at SELLER'S option.
EXECUTED this 6th day of August, 1996.
MAYNARD OIL COMPANY
By: /s/ L. B. Carruth
___________________________
L. B. Carruth
Vice President
75-1362284
Tax Identification Number
JAVELINA ENERGY, INC.
By: /s/ Ken Perkins
___________________________
Ken Perkins
President
________________________________
Tax Identification Number
EXHIBIT "A"
PROPERTY SCHEDULE
Attached to and made a part of PURCHASE AND SALE AGREEMENT dated
August 6, 1996, by and between Maynard Oil Company, SELLER, and
Javelina Energy, Inc., BUYER
NOTE: Any reference made in this Exhibit "A" to a
property name, a lease name, a well name, a unit name,
or a PN or property number is intended for the use of
Maynard Oil Company only, and is not intended to be, nor
shall it be construed as, a part of the description of
the property herein contained or in any way affecting
the property or property interest to be conveyed to
Javelina Energy, Inc.
POWDER RIVER COUNTY, MONTANA
PN 015506
ALLOCATED VALUE $22,189.00
BELL CREEK CONSOLIDATED (MUDDY) UNIT
EXPENSE INTEREST 0.0000000
REVENUE INTEREST 0.0033578
Mineral Deed dated May 6, 1969, by and between John A. Love, Jr., et
ux, as Grantors, and Echo Oil Corporation (predecessor in title by merger to
Maynard Oil Company), as Grantee, recorded in Book 34, page 267 of the Deed
Records of Powder River County, Montana, INSOFAR AND ONLY INSOFAR as said
Deed covers the S/2 and the SW/4 NW/4 Section 28, N/2 SE/4, SE/4 SE/4
Section 29, E/2 Section 32, NW/4 and the S/2 Section 33, Township 8 South,
Range 54 East, AND INSOFAR AND ONLY INSOFAR as said Deed covers the unitized
formation of the Bell Creek Consolidated (Muddy) Unit Powder River County,
Montana (LF-60110-AA)
Mineral Deed dated May 6, 1969, by and between John A. Love, Jr., et
ux, as Grantors, and Echo Oil Corporation (predecessor in title by merger to
Maynard Oil Company), as Grantee, recorded in Book 34, page 269 of the Deed
Records of Powder River County, Montana, INSOFAR AND ONLY INSOFAR as said
Deed covers the N/2 NE/4, SW/4 NE/4, SE/4 NW/4, NW/4 SE/4, N/2 SW/4, SE/4
SW/4 Section 27, Township 9 South, Range 53 East, AND INSOFAR AND ONLY
INSOFAR as said Deed covers the unitized formation of the Bell Creek
Consolidated (Muddy) Unit Powder River County, Montana (LF-60111-AA)
CARTER COUNTY, OKLAHOMA
PN 600350
ALLOCATED VALUE $648.00
MITCHELL
EXPENSE INTEREST 0.0000000
REVENUE INTEREST 0.0041667
Royalty interest conveyed by instrument titled Assignment and Bill of
Sale effective November 1, 1994, by and between Rosewood Resources, Inc., as
Assignor, and Maynard Oil Company, as Assignee, recorded in Volume 1950,
page 32 of the Records of Carter County, Oklahoma, covering 60.00 acres,
more or less, being the NW/4 SE/4 SE/4 and the S/2 SE/4 SE/4 Section 24,
Township 1 South, Range 3 West, Carter County, Oklahoma, LIMITED to rights
from the surface to 2,000 feet below the surface (base of the Permian
formation), Carter County, Oklahoma. (LF-05701-AA)
PN 443302
ALLOCATED VALUE $1,592.00
PICKENS NO. 1-28
BEFORE PAYOUT EXPENSE INTEREST 0.0000000
BEFORE PAYOUT REVENUE INTEREST 0.0047007
AFTER PAYOUT EXPENSE INTEREST 0.0112816
AFTER PAYOUT REVENUE INTEREST 0.0091663
Oil and Gas Lease dated December 18, 1989, by and between Bessie
Gillaspy, as Lessor, and Wager & Associates, Inc., as Lessee, recorded in
Book 1613, page 7 of the Records of Carter County, Oklahoma (LF-05083-AA)
Oil and Gas Lease dated December 6, 1989, by and between Robert Dean
Morgan, as Lessor, and Wager & Associates, Inc., as Lessee, recorded in Book
1612, page 248 of the Records of Carter County, Oklahoma (LF-05083-AB)
Oil and Gas Lease dated December 8, 1989, by and between Michael Henry
Beall, as Lessor, and Wager & Associates, Inc., as Lessee, recorded in Book
1612, page 323 of the Records of Carter County, Oklahoma (LF-05083-AC)
Oil and Gas Lease dated December 7, 1989, by and between Alvin D.
Morgan, as Lessor, and Wager & Associates, Inc., as Lessee, recorded in Book
1612, page 325 of the Records of Carter County, Oklahoma (LF-05083-AD)
Oil and Gas Lease dated December 6, 1989, by and between Edith E.
Morgan, et al, as Lessor, and Wager & Associates, Inc., as
Lessee, recorded in Book 1611, page 237 of the Records of Carter County,
Oklahoma (LF-05083-AE)
Oil and Gas Lease dated December 8, 1989, by and between Storm
Associates, as Lessor, and Wager & Associates, Inc., as Lessee, recorded in
Book 1612, page 327 of the Records of Carter County, Oklahoma (LF-05083-AF)
Oil and Gas Lease dated December 8, 1989, by and between Benjamin
Roland Beall, II, as Lessor, and Wager & Associates, Inc., as Lessee,
recorded in Book 1613, page 243 of the Records of Carter County, Oklahoma
(LF-05083-AG)
Oil and Gas Lease dated December 5, 1989, by and between Maurine Massad
1980 Trust, as Lessor, and Wager & Associates, Inc., as Lessee, recorded in
Book 1613, page 238 of the Records of Carter County, Oklahoma (LF-05083-AH)
Oil and Gas Lease dated December 18, 1989, by and between Terry
Gillaspy, as Lessor, and Wager & Associates, Inc., as Lessee, recorded in
Book 1613, page 245 of the Records of Carter County, Oklahoma (LF-05083-AI)
Oil and Gas Lease dated December 8, 1989, by and between Rose Sharon
Neall Ondracek, as Lessor, and Wager & Associates, Inc., as Lessee, recorded
in Book 1612, page 549 of the Records of Carter County, Oklahoma (LF-05083-
AJ)
Oil and Gas Lease dated December 18, 1989, by and between Randy
Gillaspy, as Lessor, and Wager & Associates, Inc., as Lessee, recorded in
Book 1615, page 201 of the Records of Carter County, Oklahoma (LF-05083-AK)
Oil and Gas Lease dated December 07, 1989, by and between Kennith G.
Morgan, as Lessor, and Wager & Associates, Inc., as Lessee, recorded in Book
1623, page 299 of the Records of Carter County, Oklahoma (LF-05083-AL)
covering 40.00 acres, more or less, being the SE/4 NW/4 of Section 28,
Township 1 South, Range 3 West, LIMITED to rights from the surface to the
base of the Woodford formation as found in the Pickens 1-28 well in the SE/4
NW/4 of Section 28, Township 1 South, Range 3 West, Carter County, Oklahoma
The hereinabove referenced lease is subject to Farmout Agreement dated
February 11, 1991, from Maynard Oil Company to Chesapeake Operating, Inc.
and Operating Agreement dated February 11, 1991, by and between Chesapeake
Operating, Inc., as Operator, and Maynard Oil Company, et al, as Non-
Operator.
GRADY COUNTY, OKLAHOMA
PN 438709
ALLOCATED VALUE $7,463.00
SARAH BURKES "B"
EXPENSE INTEREST 0.0000000
REVENUE INTEREST 0.0156250 (ORI)
Oil and Gas Lease dated November 3, 1922, by and between Mrs. Sarah P.
Burkes, Guardian of Lelah Morine Burkes, as Lessor, and Walter M. Young, as
Lessee, recorded in Volume 199, page 15 of the Records of Grady County,
Oklahoma, INSOFAR AND ONLY INSOFAR as said lease covers the SW/4 SW/4 NW/4,
W/2 NW/4 SW/4 of Section 16, Township 3 North, Range 5 West, Grady County,
Oklahoma, LIMITED to rights from the surface down to a depth of 4,000 feet
below the surface, excluding wells numbered 2, 3, 4 and 5. (LF-04714-00)
The hereinabove referenced lease is subject to Purchase and Sale Agreement
by and between Shell Western and Maynard Oil Company dated December 3, 1984;
Assignment, Conveyance and Bill of Sale by and between Shell Western E&P
Inc. and Maynard Oil Company effective November 1, 1984, recorded in Volume
1477, page 187 of the Records of Grady County, Oklahoma and in Volume 1585,
page 704 of the Records of Stephens County, Oklahoma.
PN 438701 (UT-377)
ALLOCATED VALUE $24,918.00
GAGE ORDOVICIAN UNIT
EXPENSE INTEREST 0.0000000
REVENUE INTEREST 0.0072632 (ORI)
Oil and Gas Lease dated January 3, 1966, by and between James H.
Belvin, et ux, as Lessor, and John W. Baker, as Lessee, recorded in Volume
709, page 348 of the Records of Grady County, Oklahoma, covering the W/2
SW/4, W/2 NE/4 SW/4 of Section 27, Township 5 North, Range 6 West, Grady
County, Oklahoma. (LF-04713-AA)
The hereinabove referenced lease is subject to Agreement dated March 7,
1961, by and between Shell Oil Company and Socony Mobil Oil Company, Inc.;
Assignment dated April 28, 1961, effective March 7, 1961, from Shell Oil
Company to Socony Mobil Oil Company, Inc., recorded in Volume 715, page 582;
Purchase and Sale Agreement by and between Shell Western and Maynard Oil
Company dated December 3, 1984; Assignment, Conveyance and Bill of Sale by
and between Shell Western E&P Inc. and Maynard Oil Company effective
November 1, 1984, recorded in Volume 1477, page 187 of the Records of Grady
County, Oklahoma and in Volume 1585, page 704 of the Records of Stephens
County, Oklahoma.
PN 438710
ALLOCATED VALUE $1,608.00
W. E. WOODS "A"
EXPENSE INTEREST 0.0000000
REVENUE INTEREST 0.0078125 (ORI)
Oil and Gas Lease dated April 6, 1926, by and between W. E. Woods, et
ux, as Lessor, and Joe Ray, as Lessee, recorded in Volume 224, page 370, of
the Records of Grady County, Oklahoma, INSOFAR AND ONLY INSOFAR as said
lease covers the NE/4 SE/4 NE/4 of Section 17, Township 3 North, Range 5
West, Grady County, Oklahoma, being a sliding scale 1/32 overriding royalty
LIMITED to rights from the surface to 4,000 feet, excluding well numbered 3.
(LF-04715-00)
The hereinabove referenced lease is subject to Operating Agreement dated
February 18, 1944, by and between T. H. McCasland, as Operator, and Wirt
Franklin Petroleum Corporation, as Non-Operator; Operating Agreement dated
January 9, 1948, by and between Ohio Oil Company, as Operator, and T. H.
McCasland, as Non-Operator; Gas Processing Agreement - Knox Plant dated May
27, 1959, by and between Gulf Oil Corporation, as Operator, and Shell Oil
Company, et al, as Non-Operators; Operating Agreement dated August 18, 1960,
by and between British American Oil Company, as Operator, and Shell Oil
Company, as Non-Operator; Purchase and Sale Agreement by and between Shell
Western and Maynard Oil Company dated December 3, 1984; Assignment,
Conveyance and Bill of Sale by and between Shell Western E&P Inc. and
Maynard Oil Company effective November 1, 1984, recorded in Volume 1477,
page 187 of the Records of Grady County, Oklahoma and in Volume 1585, page
704 of the Records of Stephens County, Oklahoma.
ANDREWS COUNTY, TEXAS
PN 610003
ALLOCATED VALUE $11,734.00
UNIVERSITY
EXPENSE INTEREST BEFORE PAYOUT 0.0000000
REVENUE INTEREST BEFORE PAYOUT 0.0937500
REVENUE INTEREST (SECONDARY RECOVERY) 0.2187500
PN 610004
ALLOCATED VALUE $5,390
UNIVERSITY 11
EXPENSE INTEREST 0.0000000
REVENUE INTEREST 0.0546880
Oil and Gas Lease dated December 14, 1946, by and between The State of
Texas, bearing serial number M-30514 and Gulf Oil Corporation, as Lessee,
recorded in Volume 78, Page 373, of the
Conveyance Records of Andrews County, Texas, covering the SW/4 of Section
11, Block 14, University Lands, Andrews County, Texas. (LF-05722-00)
Said lease is subject to an Assignment of Oil and Gas Lease dated October 1,
1959, by and between Gulf Oil Corporation to Inca Drilling Company, recorded
in Volume 245, page 275 of the Deed Records of Andrews County, Texas and
Assignment of Oil and Gas Lease dated April 16, 1957, by and between Gulf
Oil Corporation to Garland A. Smith, recorded in Volume 196, page 508 of the
Deed Records of Andrews County, Texas; Purchase and Sale Agreement effective
January 1, 1995, by and between Pennzoil Exploration and Production Company
and Maynard Oil Company and Assignment and Bill of Sale effective January 1,
1995, by and between Pennzoil Exploration and Production Company and Maynard
Oil Company recorded in Volume 679, page 889 of the Deed Records of Andrews
County, Texas.
COLEMAN COUNTY, TEXAS
PN 035808
ALLOCATED VALUE $4,461.00
HERRING NO. 1 RLTY
EXPENSE INTEREST 0.0000000
REVENUE INTEREST 0.0625000
Oil and Gas Lease dated March 20, 1961, by and between Edgar Herring,
et ux, as Lessor, to Haynes B. Ownby Drilling Company, as Lessee, recorded
in Volume 396, page 542 of the Deed Records of Coleman County, Texas,
covering 280 acres, more or less, being out of the D. McLean Survey No. 757,
Abstract 493, the H. M. Childress Survey No. 73 and the J. R. Merrill Survey
No. 10, more particularly described in said lease, less and except 40 acres,
more or less, around the Herring D-1 well, said 40 acres being more
particularly described in assignment from Maynard Oil Company to Oil
Management Corporation effective March 1, 1989, recorded in Volume _____,
page _____ of the Deed Records of Coleman County, Texas, such lands being
located in Coleman County, Texas (LF-00286-00)
The hereinabove referenced lease is subject to Farmout Agreement dated
November 25, 1980, as amended, from Maynard Oil Company to Delray Oil, Inc.
FREESTONE COUNTY, TEXAS
PN 010109
ALLOCATED VALUE $322.00
LAYTON NO. 1 (UT-121)
EXPENSE INTEREST 0.0000000
REVENUE INTEREST 0.0127945
Oil and Gas Lease dated August 10, 1967, by and between the Estate of
B. G. Byars, et al, as Lessor, and Equitable Petroleum Management, as
Lessee, recorded in Volume 372, page 143 of the Records of Freestone County,
Texas, covering 123.48 acres of land, more or less, being out of the
Jeremiah Lee Survey and the Juan Mata Survey, more particularly described in
said lease, LIMITED to a depth of 13,369' below the surface, more
particularly described in said lease, Freestone County, Texas (LF-00532-AA)
Oil and Gas Lease dated August 21, 1967, by and between R. L. Peveto,
as Lessor, and Equitable Petroleum Management Corporation, as Lessee,
recorded in Volume 372, page 371 of the Records of Freestone County, Texas,
covering 123.48 acres of land, more or less, being out of the Jeremiah Lee
Survey and the Juan Mata Survey, more particularly described in said lease,
LIMITED to a depth of 13,369' below the surface, more particularly described
in said lease, Freestone County, Texas (LF-00532-AB)
Oil and Gas Lease dated July 7, 1966, by and between J. H. Day, et al,
as Lessor, and Hal Newman, as Lessee, recorded in Volume 363, page 791 of
the Records of Freestone County, Texas, covering 89.5 acres, more or less,
being out of the Jessie A. Weaver Survey, Abstract 656 and the J. Wilson
Survey, Abstract 657, more particularly described in said lease, LIMITED to
a depth of 13,369 feet below the surface, more particularly described in
said lease, Freestone County, Texas (LF-00533-AA)
Oil and Gas Lease dated March 6, 1968, by and between Allen Robinson,
et ux, as Lessor, and John MacDonald, as Lessee, recorded in Volume 377,
page 70 of the Records of Freestone County, Texas, covering 52.181 acres,
more or less, being out of the J. Wilson Survey, Abstract 657, LIMITED to a
depth of 13,369 feet below the surface, Freestone County, Texas (LF-00533-
AB)
Oil and Gas Lease dated March 6, 1968, by and between Robert E. Lee, et
al, as Lessor, and John MacDonald, as Lessee, recorded in Volume 377, page
75 of the Records of Freestone County, Texas, covering 52.181 acres, more or
less, being out of the J. Wilson Survey, Abstract 657, more particularly
described in said lease, LIMITED to a depth of 13,369 feet below the
surface, Freestone County, Texas (LF-00533-AC)
Oil and Gas Lease dated March 7, 1968, by and between Geneva Prowell
Baker, as Lessor, and John MacDonald, as Lessee, recorded in Volume 377,
page 73 of the Records of Freestone County, Texas, covering 52.181 acres,
more or less, being out of the J. Wilson Survey, Abstract 657, more
particularly described in said lease, LIMITED to a depth of 13,369 feet
below the surface, Freestone County, Texas (LF-00533-AD)
Oil and Gas Lease dated March 8, 1968, by and between Myrtle Cain, et
al, as Lessor, and John MacDonald, as Lessee, recorded in Volume 377, page
329 of the Records of Freestone County, Texas, covering 52.181 acres, more
or less, being out of the J. Wilson Survey, Abstract 657, more particularly
described in said lease, LIMITED to a depth of 13,369 feet below the
surface, Freestone County, Texas (LF-00533-AE)
Oil and Gas Lease dated March 8, 1968, by and between Frankie Vickers
Kucera, et al, as Lessor, and John MacDonald, as Lessee, recorded in Volume
377, page 375 of the Records of Freestone County, Texas, covering 52.181
acres, more or less, being out of the J. Wilson Survey, Abstract 657, more
particularly described in said lease, LIMITED to a depth of 13,369 feet
below the surface, Freestone County, Texas (LF-00533-AF)
Oil and Gas Lease dated March 8, 1968, by and between Louetta Graves
Freeman, et al, as Lessor, and John MacDonald, as Lessee, recorded in Volume
377, page 67 of the Records of Freestone County, Texas, covering 52.181
acres, more or less, being out of the J. Wilson Survey, Abstract 657, more
particularly described in said lease, LIMITED to a depth of 13,369 feet
below the surface, Freestone County, Texas (LF-00533-AG)
Oil and Gas Lease dated March 8, 1968, by and between Millie Robinson,
et al, as Lessor, and John MacDonald, as Lessee, recorded in Volume 377,
page 210 of the Records of Freestone County, Texas, covering 52.181 acres,
more or less, being out of the J. Wilson Survey, Abstract 657, more
particularly described in said lease, LIMITED to a depth of 13,369 feet
below the surface, Freestone County, Texas (LF-00533-AH)
Oil and Gas Lease dated March 8, 1968, by and between Walker C. Harris,
et al, as Lessor, and John MacDonald, as Lessee, recorded in Volume 377,
page 126 of the Records of Freestone County, Texas, covering 52.181 acres,
more or less, being out of the J. Wilson Survey, Abstract 657, more
particularly described in said lease, LIMITED to a depth of 13,369 feet
below the surface, Freestone County, Texas (LF-00533-AI)
Oil and Gas Lease dated March 8, 1968, by and between Samuel T. Harris,
as Lessor, and John MacDonald, as Lessee, recorded in Volume 377, page 204
of the Records of Freestone County, Texas, covering 52.181 acres, more or
less, being out of the J. Wilson Survey, Abstract 657, more particularly
described in said lease, LIMITED to a depth of 13,369 feet below the
surface, Freestone County, Texas (LF-00533-AJ)
Oil and Gas Lease dated March 8, 1968, by and between A. W. Vickers, as
Lessor, and John MacDonald, as Lessee, recorded in Volume 377, page 494 of
the Records of Freestone County, Texas, covering 52.181 acres, more or less,
being out of the J. Wilson Survey, Abstract 657, more particularly described
in said lease, LIMITED to a depth of 13,369 feet below the surface,
Freestone County, Texas (LF-00533-AK)
Oil and Gas Lease dated March 8, 1968, by and between Eloise
McClintock, et vir, as Lessor, and John MacDonald, as Lessee, recorded in
Volume 377, page 491 of the Records of Freestone County, Texas, covering
52.181 acres, more or less, being out of the J. Wilson Survey, Abstract 657,
more particularly described in said lease, LIMITED to a depth of 13,369 feet
below the surface, Freestone County, Texas (LF-00533-AL)
Oil and Gas Lease dated March 8, 1968, by and between Billie Jayne
Parish, et al, as Lessor, and John MacDonald, as Lessee, recorded in Volume
377, page 471 of the Records of Freestone County, Texas, covering 52.181
acres, more or less, being out of the J. Wilson Survey, Abstract 657, more
particularly described in said lease, LIMITED to a depth of 13,369 feet
below the surface, Freestone County, Texas (LF-00533-AM)
Oil and Gas Lease dated March 18, 1968, by and between John Mitchell
Prowell, Jr., as Lessor, and John MacDonald, as Lessee, recorded in Volume
377, page 478 of the Records of Freestone County, Texas, covering 52.181
acres, more or less, being out of the J. Wilson Survey, Abstract 657, more
particularly described in said lease, LIMITED to a depth of 13,369 feet
below the surface, Freestone County, Texas (LF-00533-AN)
Oil and Gas Lease dated March 18, 1968, by and between Elizabeth C.
Elliott, et al, as Lessor, and John MacDonald, as Lessee, recorded in Volume
377, page 623 of the Records of Freestone County, Texas, covering 52.181
acres, more or less, being out of the J. Wilson Survey, Abstract 657, more
particularly described in said lease, LIMITED to a depth of 13,369 feet
below the surface, Freestone County, Texas (LF-00533-AO)
Oil and Gas Lease dated March 8, 1968, by and between Frances Vickers
Medlin, et al, as Lessor, and John MacDonald, as Lessee, recorded in Volume
377, page 670 of the Records of Freestone County, Texas, covering 52.181
acres, more or less, being out of the J. Wilson Survey, Abstract 657, more
particularly described in said lease, LIMITED to a depth of 13,369 feet
below the surface, Freestone County, Texas (LF-00533-AP)
Oil and Gas Lease dated March 8, 1968, by and between Ross E. Prowell,
as Lessor, and John MacDonald, as Lessee, recorded in Volume 378, page 50 of
the Records of Freestone County, Texas, covering 52.181 acres, more or less,
being out of the J. Wilson Survey, Abstract 657, more particularly described
in said lease, LIMITED to a depth of 13,369 feet below the surface,
Freestone County, Texas (LF-00533-AQ)
Oil and Gas Lease dated March 8, 1968, by and between Mary Scarbrough
French, et vir, as Lessor, and John MacDonald, as Lessee, recorded in Volume
378, page 163 of the Records of Freestone County, Texas, covering 52.181
acres, more or less, being out of the J. Wilson Survey, Abstract 657, more
particularly described in said lease, LIMITED to a depth of 13,369 feet
below the surface, Freestone County, Texas (LF-00533-AR)
Oil and Gas Lease dated March 8, 1968, by and between B. C. Prowell, as
Lessor, and John MacDonald, as Lessee, recorded in Volume 378, page 166 of
the Records of Freestone County, Texas, covering 52.181 acres, more or less,
being out of the J. Wilson Survey, Abstract 657, more particularly described
in said lease, LIMITED to a depth of 13,369 feet below the surface,
Freestone County, Texas (LF-00533-AS)
Oil and Gas Lease dated March 8, 1968, by and between Dollie Thompson,
et vir, as Lessor, and John MacDonald, as Lessee, recorded in Volume 377,
page 633 of the Records of Freestone County, Texas, covering 52.181 acres,
more or less, being out of the J. Wilson Survey, Abstract 657, more
particularly described in said lease, LIMITED to a depth of 13,369 feet
below the surface, Freestone County, Texas (LF-00533-AT)
Oil and Gas Lease dated March 8, 1968, by and between Calvin D.
Prowell, as Lessor, and John MacDonald, as Lessee, recorded in Volume 377,
page 673 of the Records of Freestone County, Texas, covering 52.181 acres,
more or less, being out of the J. Wilson Survey, Abstract 657, more
particularly described in said lease, LIMITED to a depth of 13,369 feet
below the surface, Freestone County, Texas (LF-00533-AU)
Oil and Gas Lease dated July 11, 1966, by and between Audie A.
Davidson, et ux, as Lessor, and Hal Newman, as Lessee, recorded in Volume
361, page 754 of the Records of Freestone County, Texas, covering 46.2
acres, more or less, being out of the Graham Jackson Survey, Abstract 341,
and the Jesse A. Weaver Survey, Abstract 656, more particularly described in
said lease, LIMITED to a depth of 13,369 feet below the surface, Freestone
County, Texas (LF-00534-00)
Oil and Gas Lease dated July 8, 1966, by and between John P. Neece,
Jr., et al, as Lessor, and Hal Newman, as Lessee, recorded in Volume 361,
page 717 of the Records of Freestone County, Texas, covering 35.0 acres,
more or less, being out of the Graham Jackson Survey, Abstract 341, more
particularly described in said lease, LIMITED to a depth of 13,369 feet
below the surface, Freestone County, Texas (LF-00535-00)
Oil and Gas Lease dated July 22, 1966, by and between Dee Garrett
Lively, et vir, as Lessor, and H. R. Lively, as Lessee, recorded in Volume
361, page 739 of the Records of Freestone County, Texas, covering 17.52
acres, more or less, being out of the Graham Jackson Survey, Abstract 341,
and the A. White Survey,
Abstract 648, more particularly described in said lease, LIMITED to a depth
of 13,369 feet below the surface, Freestone County, Texas (LF-00536-AA)
Oil and Gas Lease dated July 22, 1966, by and between W. L. Garrett, as
Lessor, and Hal Newman, as Lessee, recorded in Volume 361, page 742 of the
Records of Freestone County, Texas, covering 17.52 acres, more or less,
being out of the Graham Jackson Survey, Abstract 341, and the A. White
Survey, Abstract 648, more particularly described in said lease, LIMITED to
a depth of 13,369 feet below the surface, Freestone County, Texas (LF-00536-
AB)
Oil and Gas Lease dated July 25, 1966, by and between Fred Garrett, as
Lessor, and Hal Newman, as Lessee, recorded in Volume 362, page 407 of the
Records of Freestone County, Texas, covering 17.52 acres, more or less,
being out of the Graham Jackson Survey, Abstract 341, and the A. White
Survey, Abstract 648, more particularly described in said lease, LIMITED to
a depth of 13,369 feet below the surface, Freestone County, Texas (LF-00536-
AC)
Oil and Gas Lease dated July 25, 1966, by and between C. R. Ragsdale,
as Lessor, and Hal Newman, as Lessee, recorded in Volume 362, page 410 of
the Records of Freestone County, Texas, covering 17.52 acres, more or less,
being out of the Graham Jackson Survey, Abstract 341, and the A. White
Survey, Abstract 648, more particularly described in said lease, LIMITED to
a depth of 13,369 feet below the surface, Freestone County, Texas (LF-00536-
AD)
Oil and Gas Lease dated July 18, 1968, by and between Emmie H. Creecy,
et vir, as Lessor, and John MacDonald, as Lessee, recorded in Volume 377,
page 372 of the Records of Freestone County, Texas, covering 45.00 acres,
more or less, being out of the Graham Jackson Survey, Abstract 341, and the
A. White Survey, Abstract 648, more particularly described in said lease,
LIMITED to a depth of 13,369 feet below the surface, Freestone County, Texas
(LF-00536-AE)
Oil and Gas Lease dated March 8, 1968, by and between W. Edward
Garrett, et ux, as Lessor, and John MacDonald, as Lessee, recorded in Volume
377, page 207 of the Records of Freestone County, Texas, covering 45.00
acres, more or less, being out of the Graham Jackson Survey, Abstract 341,
and the A. White Survey, Abstract 648, more particularly described in said
lease, LIMITED to a depth of 13,369 feet below the surface, Freestone
County, Texas (LF-00536-AF)
Oil and Gas Lease dated February 24, 1968, by and between Olevia
Lowney, et vir, as Lessor, and L. R. Mabry, as Lessee, recorded in Volume
377, page 285 of the Records of Freestone County, Texas, covering 45.00
acres, more or less, being out of the Graham Jackson Survey, Abstract 341,
and the A. White Survey, Abstract 648, more particularly described in said
lease, LIMITED to a depth of 13,369 feet below the surface, Freestone
County, Texas (LF-00536-AG)
Oil and Gas Lease dated March 11, 1968, by and between Boyd E. Garrett,
as Lessor, and L. R. Mabry, as Lessee, recorded in Volume 377, page 747 of
the Records of Freestone County, Texas, covering 45.00 acres, more or less,
being out of the Graham Jackson Survey, Abstract 341, and the A. White
Survey, Abstract 648, more particularly described in said lease, LIMITED to
a depth of 13,369 feet below the surface, Freestone County, Texas (LF-00536-
AH)
Oil and Gas Lease dated February 27, 1968, by and between Katherine
Mitchell, as Lessor, and L. R. Mabry, as Lessee, recorded in Volume 377,
page 236 of the Records of Freestone County, Texas, covering 45.00 acres,
more or less, being out of the Graham Jackson Survey, Abstract 341, and the
A. White Survey, Abstract 648, more particularly described in said lease,
LIMITED to a depth of 13,369 feet below the surface, Freestone County, Texas
(LF-00536-AI)
Oil and Gas Lease dated February 27, 1968, by and between Thelma
Thompson, et vir, as Lessor, and L. R. Mabry, as Lessee, recorded in Volume
377, page 63 of the Records of Freestone County, Texas, covering 45.00
acres, more or less, being out of the Graham Jackson Survey, Abstract 341,
and the A. White Survey, Abstract 648, more particularly described in said
lease, LIMITED to a depth of 13,369 feet below the surface, Freestone
County, Texas (LF-00536-AJ)
Oil and Gas Lease dated June 18, 1966, by and between H. D. Wynne, et
ux, as Lessor, and Richard Clouse, as Lessee, recorded in Volume 361, page
751 of the Records of Freestone County, Texas, covering 50.00 acres, more or
less, being out of the J. Wilson Survey, Abstract 657, more particularly
described in said lease, LIMITED to a depth of 13,369 feet below the
surface, Freestone County, Texas (LF-00537-00)
Oil and Gas Lease dated November 21, 1967, by and between Audie Kay
Richardson, et al, as Lessor, and L. R. Mabry, as Lessee, recorded in Volume
374, page 327 of the Records of Freestone County, Texas, covering 74.229
acres, more or less, being out of the Jeremiah Lee Survey, Abstract 388,
more particularly described in said lease, LIMITED to a depth of 13,369 feet
below the surface, Freestone County, Texas (LF-00538-AA)
MARTIN COUNTY, TEXAS
PN 010103
ALLOCATED VALUE $6,254.00
ALLAR 925 NO. 1
EXPENSE INTEREST 0.0000000
REVENUE INTEREST 0.0625000
Oil and Gas Lease dated July 26, 1966, by and between The Allar
Company, as Lessor, and The Murmanill Corporation, as Lessee, recorded in
Volume 43, page 333 of the Oil and Gas Lease Records of Martin County,
Texas, covering 160.00 acres, more or less, being the NE/4 of Section 11,
Block 35, T-1-N, T&P RR Co. Survey, Martin County, Texas (LF-00467-00)
MOORE COUNTY, TEXAS
PN 414920
ALLOCATED VALUE $15,595.00
BAKER 39
EXPENSE INTEREST 0.0000000
REVENUE INTEREST 0.0200000
Oil and Gas Lease dated October 25, 1934, from Nettie L. Baker, as
Lessor, and Amarillo Oil Company, as Lessee, recorded in Volume 52, page 530
of the Records of Moore County, Texas, INSOFAR AND ONLY INSOFAR as said
lease covers 160 acres of land, more or less, described as follows:
Beginning at the southeast corner of said Section 39, Block O-18, D&P
Survey, go N 00'20'32"E along the east line of Section 39, 2,640 feet to a
point; thence N 89'38'35"W 2,640 feet to a point; thence S 00'20'32"W 2,650
feet to a point on the south line of Section 39; thence S 89'38'35"E along
the south line of Section 39, 2,640 feet to the Point of Beginning, and
LIMITED to rights from the surface of the ground to a depth of 2,439 feet
below the surface, Moore County, Texas. (LF-05709-00)
WISE COUNTY, TEXAS
PN 010203
ALLOCATED VALUE $6,689.00
J. S. FOX UNIT NO. 1 (UT-156)
(WELL NO. 3)
EXPENSE INTEREST 0.0000000
REVENUE INTEREST 0.0273438 (ORI)
Oil and Gas Lease dated February 6, 1962, by and between Jeff S. Fox,
et ux, as Lessor, and Frank M. Tye, Jr., as Lessee, recorded in Volume 135,
page 1 of the Records of Wise County, Texas, covering 437.9 acres, more or
less, being out of the Joseph Humphries Survey Abstract 357, the Margaret
Swift Survey and the Ed Wray Survey, Abstract 873, more particularly
described in said lease, Wise County, Texas. (LF-00501-00)
The hereinabove referenced leases are subject to Letter Agreement dated
January 10, 1967, by and between Maynard Oil Company and Mitchell & Mitchell
Properties; Gas Processing Agreement dated July 12, 1965, as amended, by and
between G M & M Gas Products Plant, Inc., and Maynard Oil Company; and
Declaration of Pool for the Jeff S. Fox Gas Unit No. 1 dated September 19,
1973, recorded in Volume 191, page 373 of the Records of Wise County, Texas.
PN 010302 (UT-112)
ALLOCATED VALUE $12,783.00
ZINA FOX NO. 1, 2 AND WELL NO. 3
EXPENSE INTEREST 0.0000000
REVENUE INTEREST 0.0273438
Oil and Gas Lease dated February 6, 1962, by and between Jeff S. Fox,
et ux, as Lessor, and Frank M. Tye, Jr., as Lessee, recorded in Volume 135,
page 1 of the Records of Wise County, Texas, covering 437.9 acres, more or
less, being out of the Joseph Humphries Survey, the Margaret Swift Survey
and the Ed Wray Survey, more particularly described in said lease, Wise
County, Texas. (LF-00501-00)
Oil and Gas Lease dated February 6, 1962, by and between Joe Lee Fox,
et ux, as Lessor, and Frank M. Tye, Jr., as Lessee, recorded in Volume 135,
page 5 of the Records of Wise County, Texas, covering 276.5 acres, more or
less, being out of the E. Whitson Survey, the Ed Wray Survey, and the John
Hicks Survey, more particularly described in said lease, Wise County,
Texas. (LF-00502-00)
Oil and Gas Lease dated February 6, 1962, by and between Zina Fox, as
Lessor, and Frank M. Tye, Jr., as Lessee, recorded in Volume 135, page 53 of
the Records of Wise County, Texas, covering 467 acres, more or less, being
out of the Joseph Humphries Survey, Abstract 357, the John Frederick Survey,
Abstract 309, the E. Wray Survey, Abstract 873, and the John Hicks Survey,
Abstract 999, more particularly described in said lease, Wise County, Texas.
(LF-00503-00)
The hereinabove referenced leases are subject to Letter Agreement dated
January 10, 1967, by and between Maynard Oil Company and Mitchell & Mitchell
Properties; Gas Processing Agreement dated July 12, 1965, as amended, by and
between G M & M Gas Products Plant, Inc., and Maynard Oil Company and the
Zina Fox Gas Unit No. 1 Declaration of Pool dated February 1, 1967, recorded
in Volume 171, page 539 of the Records of Wise County, Texas; the Zina Fox
Gas Unit No. 2 Declaration of Pool dated July 8, 1974, recorded in Volume
194, page 529 of the Records of Wise County, Texas.
PN 010205
ALLOCATED VALUE $3,042.00
M. E. PRUETT NO. 1
EXPENSE INTEREST 0.0000000
REVENUE INTEREST 0.0546875 (GAS)
REVENUE INTEREST 0.0273438 (OIL)
PN 094804 (UT-279)
ALLOCATED VALUE $5,562.00
J. R. WITT WELL NO. 1, 2, 3, 4 AND 5
EXPENSE INTEREST 0.0000000
REVENUE INTEREST 0.0273437 (OIL)
REVENUE INTEREST 0.0288973 (GAS)
Oil and Gas Lease dated February 10, 1962, by and between Margaret S.
Rasco, et vir, as Lessor, and Frank M. Tye, Jr., as Lessee, recorded in
Volume 135, page 349 of the Records of Wise County, Texas, covering 413.65
acres, more or less, being out of the E. Witson Survey, Abstract 881, and
the Joseph Humphries Survey, Abstract 357, more particularly described in
said lease, Wise County, Texas. (LF-00504-00)
Oil and Gas Lease dated February 9, 1962, by and between Jewell Ray
Witt, et vir, as Lessor, and Frank M. Tye, Jr., as Lessee, recorded in
Volume 135, page 285 of the Records of Wise County, Texas, covering 430.62
acres, more or less, being out of the Margaret Swift Survey, Abstract 740,
more particularly described in said lease, Wise County, Texas. (LF-00505-
00)
Oil and Gas Lease dated April 24, 1962, by and between M. E. Pruett,
et ux, as Lessor, and Frank M. Tye, Jr., as Lessee, recorded in Volume 136,
page 535 of the Records of Wise County, Texas, covering 917 acres, more or
less, being out of the Eli M. Thomasson Survey, Abstract 801, more
particularly described in said lease, Wise County, Texas. (LF-01066-AA)
Oil and Gas Lease dated April 16, 1965, by and between Aetna Life
Insurance Company, as Lessor, and Mack Natural Gas Company, as Lessee,
recorded in Volume 160, page 404 of the Records of Wise County, Texas,
covering 312.00 acres, more or less, being out of the Eli M. Thomasson
Survey, A-801, more particularly described in said lease, Wise County, Texas
(LF-01066-AB)
The above referenced leases are subject to Letter Agreement dated January
10, 1967, by and between Maynard Oil Company and Mitchell & Mitchell
Properties; Gas Processing Agreement dated July 12, 1965, as amended, by and
between G M & M Gas Products Plant, Inc., and Maynard Oil Company;
Declaration of Pool for the Jewell Ray Witt Gas Unit No. 1 dated February
18, 1981, recorded in Volume 235, page 299 of the Records of Wise County,
Texas and the Declaration of Pool for the M. E. Pruett Gas Unit dated
February 1, 1967, recorded in Volume 171, page 553 of the Records of Wise
County, Texas.
YOUNG COUNTY, TEXAS
PN 009706
ALLOCATED VALUE $19,750.00
ALLAR UNIT OHC
EXPENSE INTEREST 0.0000000
REVENUE INTEREST 0.0625000
Oil and Gas Lease dated March 11, 1938, by and between E. S. Graham, et
ux, and The Allar Company, as Lessor, and M. G. Cheney, as Lessee, recorded
in Volume 175, page 578 of the Deed Records of Young County, Texas; Oil and
Gas Lease dated February 7, 1938, by and between E. S. Graham, et ux, as
Lessor, and M. G. Cheney, as Lessee, recorded in Volume 175, page 580 of the
Deed Records of Young County, Texas; Oil and Gas Lease dated June 12, 1937,
by and between E. S. Graham, et ux, as Lessor, and M. G. Cheney, as Lessee,
recorded in Volume 174, page 105 of the Deed Records of Young County, Texas;
Oil and Gas Lease dated February 19, 1934, by and between E. S. Graham, et
ux, and the Allar Company, as lessor, and James P. Nash, as Lessee, recorded
in Volume 157, page 363 of the Deed Records of Young County, Texas; Oil and
Gas Lease dated June 12, 1937, by and between E. S. Graham, et ux, as
Lessor, and M. G. Cheney, as Lessee, recorded in Volume 174, page 104 of the
Deed Records of Young County, Texas, merged into one lease by Contract of
Agreement dated January 30, 1942, recorded in Volume 193, page 239 of the
Deed Records of Young County, Texas, as amended and ratified by instrument
dated March 23, 1948, recorded in Volume 242, page 587 of the Deed Records
of Young County, Texas, INSOFAR AND ONLY INSOFAR as said lease covers 20.00
acres, more or less, being described as follows: Beginning at a point on
the most westerly northwest corner of the Allen Hines Survey, Abstract 135;
Thence south 2,434.4 feet; Thence east 551 feet to the Point of Beginning;
Thence east 1,320 feet; Thence south 600 feet; Thence west 1,320 feet;
Thence north 660 feet to the Point of Beginning, LIMITED to rights from the
surface to the Base of the Mississippian formation and 20.00 acres, more or
less described as follows: Beginning at a point in the east line of the
Allen Hines Survey, Abstract 135, being south 0'42'27" west, 564.15 feet
from its northeast corner to point for corner; Thence south 0'42'27" ng and
with the east boundary line of said survey to point for corner; Thence north
89'17'33" west at 357.6 feet to point for corner; Thence north 0'42'27" east
2,436.92 feet to point for corner; Thence south 89'27'33" east 357.5 feet to
the Point of Beginning, LIMITED to rights from the surface to the Base of
the Mississippian formation, but excluding rights in the Conglomerate zone
or formation, which formation is found below the Base of the Caddo formation
and above the top of the Marble Falls formation, Young County, Texas. (LF-
00460-00-01)
The hereinabove referenced lease is subject to Gas Purchase Contract dated
August 26, 1980, by and between J. H. Taylor Gas Company, as Buyer, and
Maynard Oil Company, as Seller; Farmout Agreement dated November 7, 1985,
as amended, by and between Maynard Oil Company, as Farmor, and Maverick
Properties, Inc., as Farmee; Unit Agreement dated August 26, 1987; Unit
Agreement dated September 15, 1987.
EXHIBIT "B"
CONVEYANCE, ASSIGNMENT AND BILL OF SALE
FROM MAYNARD OIL COMPANY
TO JAVELINA ENERGY, INC.
Attached to and made a part of PURCHASE AND SALE AGREEMENT dated
August 6, 1996, by and between Maynard Oil Company, SELLER, and
Javelina Energy, Inc., BUYER.
THE STATE OF )
) KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF )
THAT, the undersigned, MAYNARD OIL COMPANY, a Delaware
corporation, with offices at 8080 North Central Expressway, Suite 660,
Dallas, Texas 75206 (hereinafter called "Assignor"), for and in
consideration of Ten Dollars ($10.00) and other valuable consideration to it
in hand paid by JAVELINA ENERGY, INC., a Texas corporation, whose post
office address is Box 1237, Kingsville, Texas 78364 (hereinafter called
"Assignee"), does hereby TRANSFER, ASSIGN and CONVEY unto Assignee, WITHOUT
WARRANTY OF TITLE EITHER EXPRESS OR IMPLIED, EXCEPT BY, THROUGH AND UNDER
ASSIGNOR, BUT NOT OTHERWISE, with the right of full substitution and
subrogation in and to all rights and actions of warranty which Assignor has
or may have against any and all preceding owners or vendors, subject to the
terms and conditions contained herein, the following (collectively, the
"Property"):
(a) All of Assignor's interest, whether present, contingent,
reversionary or other type of interest, in and to the leasehold estates
created under the oil, gas and mineral leases described in Exhibit "A",
(such leases being hereinafter called "said Leases"), which interest in said
Leases and the wells situated thereon, and in any pooled units pertaining
thereto, Assignor represents to be no less than the working and net revenue
interests set forth on such Exhibit "A", subject to all burdens,
encumbrances, contracts and agreements, which are of record and/or listed in
such Exhibit "A" affecting said Leases to the extent that same are in force
and effect;
(b) All of Assignor's royalties, overriding royalties, production
payments, rights to take royalties in kind, and other interests in
production of oil, gas or other minerals in the lands described in Exhibit
"A" attached hereto, whether created under the leases, deeds,
assignmicenses, servitudes, easements, surface leases and rights-of-way of
every character relating to said lease;
(d) all of Assignor's right, title and interest in and to any
contracts or agreements including, but not limited to, rights and interest
in or derived from unit agreements, gas processing agreements, joint
operating agreements, gas contracts, gas gathering agreements, gas
balancing agreements, boundary or well line agreements, assignments of
operating rights, working interest and subleases affecting said leases.
For the same consideration, Assignor does hereby BARGAIN, SELL and
DELIVER unto Assignee all of its right, title and interest in and to
producing, non-producing and shut-in oil wells and gas wells, salt water
disposal wells, injection wells and water wells located on said leases
described in said Exhibit "A" or on lands pooled, unitized or communitized
therewith; and Assignor does hereby further BARGAIN, SELL and DELIVER unto
Assignee all of its right, title and interest in and to all surface and
down-hole equipment, fixtures, related inventory and other personal property
and well equipment located in, on and used in connection with the property
described directly hereinabove and in paragraphs (a) through (d) above,
excluding. however, all automobiles, trucks and communications equipment,
such equipment being hereinafter collectively called "said wells". ASSIGNOR
EXPRESSLY DISCLAIMS AND NEGATES (a) ANY IMPLIED OR EXPRESS WARRANTY OF
MERCHANTABILITY, (b) ANY IMPLIED OR EXPRESS WARRANTY OF FITNESS FOR A
PARTICULAR PURPOSE, and (c) ANY IMPLIED OR EXPRESS WARRANTY OF CONFORMITY TO
MODELS OR SAMPLES OF MATERIALS. ASSIGNEE EXPRESSLY WAIVES THE PROVISIONS OF
CHAPTER XVII, SUBCHAPTER E, SECTIONS 17.41 THROUGH 17.63, INCLUSIVE (OTHER
THAN SECTION 17.555, WHICH IS NOT WAIVED), VERNON'S TEXAS CODE ANNOTATED,
BUSINESS AND COMMERCIAL CODE.
This Conveyance, Assignment and Bill of Sale is executed and
delivered as part of the consummation of the transaction contemplated by
that certain Purchase and Sale Agreement between Assignor, as SELLER, and
Assignee, as BUYER, dated August 6, 1996 (hereinafter referred to as "Sale
Agreement"). The warranties, representations, indemnities and covenants
contained in the Sale Agreement shall survive the delivery of this
Conveyance, Assignment and Bill of Sale in accordance with the provisions of
the Sale Agreement and the delivery of this Conveyance, Assignment and Bill
of Sale shall not affect, expand, diminish, or otherwise impair any of the
warranties, representations, indemnities or covenants made in the Sale
Agreement and the terms and conditions set forth therein; provided, however,
any third parties transacting with Assignee with respect to any of the
Property may rely on this Conveyance, Assignment and Bill of Sale as vesting
Assignee with all of Assignor's right, title and interest in said leases,
said wells, and all of the other Property.
This Conveyance, Assignment and Bill of Sale shall extend to, be
binding upon and inure to the respective successors and assigns, and shall
be deemed covenants running with the herein described lands and leasehold
estates.
Assignee expressly assumes, as of the Effective Date, all of Assignor's
obligations relating to the said leases, including, but not limited to, the
obligation of plugging and abandoning any well on the said leases, at
Assignee's sole cost, risk and expense.
This conveyance, assignment and bill of sale shall be effective,
for all purposes as of 7:00 o'clock a.m. August 1, 1996.
EXECUTED by Assignor and Assignee in Duplicate Originals on this
____ day of _______________, 1996, but to be effective as stated above.
ATTEST: MAYNARD OIL COMPANY
__________________________ By: ___________________________
Cassondra Foster L. B. Carruth
Assistant Secretary Vice President
SEAL
ATTEST: JAVELINA ENERGY, INC.
__________________________ By: ___________________________
Ken Perkins
President
SEAL
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
This instrument was acknowledged before me on __________, 1996, by L.
B. Carruth, Vice President of Maynard Oil Company, a Delaware corporation,
on behalf of said corporation.
MY COMMISSION EXPIRES:
___________________________
Kathryn Shaffer, Notary
Public in an
THE STATE OF TEXAS )
)
COUNTY OF )
This instrument was acknowledged before me on __________, 1996, by Ken
Perkins, President of Javelina Energy, Inc., a Texas corporation, on behalf
of said corporation.
MY COMMISSION EXPIRES:
___________________________
Notary Public in and for
the _____________________
EXHIBIT "C"
EXCHANGE ESCROW AGREEMENT
Attached to and made a part of PURCHASE AND SALE AGREEMENT dated
August 6, 1996, AND SHALL BE EFFECTIVE August 15, 1996, by and
between Maynard Oil Company, SELLER, and Javelina Energy, Inc.,
BUYER
This Agreement is dated the 6th day of August, 1996, AND SHALL BE
EFFECTIVE August 15, 1996, between MAYNARD OIL COMPANY, a Delaware
corporation, with offices at 8080 North Central Expressway, Suite 660,
Dallas, Texas 75206 (hereinafter referred to as "Seller") and Javelina
Energy, Inc., a Texas corporation, whose post office address is P. O. Box
1237, Kingsville, Texas 78364, (hereinafter referred to as "Purchaser") and
BANK ONE TEXAS, N.A., a national banking association (hereinafter referred
to as "Escrow Agent").
W I T N E S S E T H
WHEREAS, Seller and Purchaser have entered into that certain Purchase
and Sale Agreement dated August 6, 1996 (the "Contract), for the sale and
purchase of certain properties more particularly described in the Exhibit
"A" attached ("Seller's Property").
WHEREAS, Purchaser has agreed to accommodate Seller in effecting a tax
deferred exchange under Section 1031 of the Internal Revenue Code of 1986
(the "Code") by acquiring for the benefit of Seller and exchanging for
Seller's Property one or more like properties (collectively, "Exchange
Property"), to be designated by Seller and thereafter acquired and
transferred to Seller;
WHEREAS, unless notified otherwise by Seller and Purchaser jointly,
Escrow Agent may rely upon the date of this agreement, as set forth above,
being the date on which Seller's property was transferred to Purchaser; and
WHEREAS, this Exchange Escrow Agreement is referred to as the
"Agreement."
NOW THEREFORE, the parties agree as follows:
1. Creation of Escrow. Purchaser agrees to deposit with and deliver
to Escrow Agent, the net closing proceeds of the Seller's Property, which
net closing proceeds shall consist of cash in the amount of One Hundred
Fifty Thousand and 00/100 Dollars ($150,000.00) plus or minus any
adjustments allowed under Paragraph 4(a) of the Contract and less costs of
closing, fees, taxes, and other reductions contemplated by the Contract,
said net closing proceeds being hereinafter referred to as the "Escrow
Fund." Escrow Agent shall have no responsibility to ascertain whether the
funds deposited with it as the Escrow Funds are equal to the net closing
proceeds described in the immediately preceding sentence. Each deposit to
the Escrow Fund, whether initially made as contemplated above, or made
subsequently for whatever reason, shall be in cash, and shall be accompanied
by notice to Escrow Agent setting forth the time and method of delivery of
such cash, the amount thereof, and directions to Agent shall invest the
Escrow Fund at the written request of the parties hereto. Said request
shall be by notice, which shall specify the type of investment to be made,
the maturity date, and the principal amount to be invested. The Escrow
Agent shall not be liable for losses on any investments made by it pursuant
to and in compliance with such instructions; and Escrow Agent shall not be
responsible or liable for any penalty or loss incurred as a result of the
settlement or liquidation of any such investment prior to this maturity to
enable Escrow Agent to make any disbursement required hereunder. The Escrow
Fund will remain uninvested until such notice of investment instructions is
received. All interest earned on the Escrow Fund shall be added to and
shall become a part of the Escrow Fund, subject to the same restrictions on
distribution as contained herein for the Escrow Fund. No assignment,
transfer, conveyance or hypothecation of any right, title or interest in and
to the subject matter of this Escrow shall be binding upon Escrow Agent
unless notice thereof shall be served upon Escrow Agent and all fees, costs
and expenses incident thereto shall have been paid and then only upon Escrow
Agent's assent thereto in writing. Escrow Agent shall be under no duty or
obligation to ascertain the identity, authority or rights of the parties
executing, delivering or purporting to execute or deliver these instructions
or any documents, paper, or payments deposited or called for hereunder, and
assumes no responsibility or liability for the validity or sufficiency of
these instructions or any documents, papers or payments deposited or called
for hereunder.
2. Interests in Escrow Fund. Purchaser declares that the purpose of
the Escrow Fund is to secure to Seller the timely and faithful performance
of Purchaser's obligations under the Contract. Under no circumstances shall
the Escrow fund be disbursed, except pursuant to the terms of this
Agreement.
3. Escrow Fepon execution hereof fees as outlined on Exhibit "B" for
services rendered by it pursuant to the provisions of this Agreement, and
will reimburse Escrow Agent for its reasonable expenses, including
attorney's fees, incurred in connection with the performance of such
services as such expenses are incurred. Escrow Agent's expenses, including
reasonable attorney's fees for review, revision and approval of this
Agreement shall be paid by Seller to Escrow Agent upon execution of this
Agreement. Notwithstanding anything to the contrary contained in any other
provision of this Agreement or any instructions to the contrary from either
Purchaser or Seller, Escrow Agent shall be entitled to retain from any
disbursements requested hereunder any outstanding fees and/or expense due to
it hereunder. Escrow Agent shall be entitled to consult with counsel as it
deems necessary from time to time, and reasonable fees therefore shall be an
expense reimbursable to Escrow Agent as provided hereunder. Escrow Agent is
hereby granted a lien on the Escrow Fund for all indebtedness that may
become owing to Escrow Agent pursuant to this Agreement, which may be
enforced by Escrow Agent by appropriate foreclosure proceedings.
4. Identification and Acquisition of Exchange Property. Seller shall
identify and negotiate the terms of acquisition of one or more Exchange
Property or Exchange Properties. Upon Notice to Escrow Agent from Seller as
to the need for monies in the Escrow Fund to acquire an Exchange Property,
which notice shall provide a description of the Exchange Property, the
general terms of its acquisition and instructions for the disbursement of
Escrow Funds to accomplish acquisition of the Exchange Property, the Escrow
Agent shall disburse funds in accordance with the instructions in the
notification; provided that (i) such notice shall be given to Escrow Agent
at least three business days prior to any needed disbursement; (ii) once
disbursed, Escrow Agent shall have no further responsibility and (iii)
Escrow Agent shall never have any responsibility to supply funds needed by
Seller from its own assets. The Escrow Agent may rely conclusively upon the
information contained in the notification.
5. Termination; Disbursement to Seller. This Agreement shall
terminate automatically, without notice to any party, as follows: (a) in
the event Seller fails to give notice to Escrow Agent that it has designated
Exchange Property by the forty-fifth (45th) day following the date of this
Agreement at the close of business of such day, or (b) otherwise, on the one
hundred eightieth (180th) day following the date of this Agreement provided,
that if Seller designates Exchange Property and all property so designated
has been successfully acquired and transferred to Seller prior to the one
hundred eightieth (180th) day following the date of this Agreement, then
Seller shall so notify Escrow Agent, and this Agreement shall instead
terminate on the day following Escrow Agent's receipt of such notice. Upon
termination of this Agreement, the Escrow Fund as then constituted shall
become the property of Seller and shall promptly be paid over and delivered
to Seller subject to Escrow Agent's right to offset and deduct all unpaid
fees of Escrow Agent and all reasonable expenses, including attorney's fees,
and authorized disbursements. Under no circumstances shall any party of the
Escrow Fund be disbursed to Seller except upon termination of this Agreement
pursuant to this paragraph. Seller shall have no right to receive, pledge,
borrow, or otherwise obtain the benefits of the Escrow Fund prior to
termination of this Agreement pursuant to this paragraph.
6. Security Interest of Seller. Purchaser agrees the Escrow Fund is
hereby impressed with and made subject to a security interest in favor of
Seller securing Purchaser's performance to obtain and transfer title to the
Exchange Property as set forth above.
7. Successor Escrow Agent. Escrow Agent may at any time resign
hereunder by giving notice of its resignation to Seller and Purchaser at
least 10 days prior to the date specified for such resignation to take
effect. If Escrow Agent has so resigned, Seller and Purchaser shall appoint
a successor escrow agent within such notice period. Further, if Escrow
Agent has not previously given notice of resignation, Seller and Purchaser
may remove Escrow Agent by mutually naming a successor hereunder to Escrow
Agent, which shall be done by submitting notice to Escrow Agent of such
removal and appointment of the successor escrow agent at least ten (10) days
prior to the date specified for such removal to take place. Such successor
escrow agent, regardless of why appointed, shall have all the duties and
powers assumed and conferred in this Agreement upon Escrow Agent. Upon the
date on which the resignation or removal of Escrow Agent is specified to
take effect, the Escrow fund shall be delivered to the successor escrow
agent so named by Seller and Purchaser above in this paragraph, whereupon
all Escrow Agent's obligations hereunder shall cease. If no successor
escrow agent is so designated by such effective date, all obligations of
Escrow Agent hereunder, nevertheless, shall cease and terminate. Escrow
Agent's sole responsibility thereafter shall be to keep safely the Escrow
Fund and to deliver the same to a person designated by Seller and Purchaser
or in accordance with the directions of a final order or judgment of a court
of competent jurisdiction.
8. Escrow Agent Release. Escrow Agent shall have no liability under,
or duty to inquire into the terms and provisions of this Agreement or the
transactiot its duties hereunder are purely ministerial in nature, and
Escrow Agent shall incur no liability whatsoever except for its willful
misconduct or gross negligence so long as it has acted in good faith.
Escrow Agent shall not be bound by any modification, amendment, termination,
cancellation, rescission or revision of this Escrow Agreement unless the
same shall be in writing and signed by Seller and Purchaser, and if its
duties hereunder are affected thereby, unless it shall have given prior
written consent thereto. Escrow Agent shall have no liability for the acts
of any of its agents unless it has been grossly negligent or engaged in
wilful misconduct in the selection of such agent. Escrow Agent shall be
obligated only for the performance of such duties as are specifically set
forth in this Agreement and may rely upon and shall be protected in acting
or refraining from acting on any instrument in good faith believed by it to
be genuine and to have been signed or presented by the property party or
parties. Escrow Agent shall not be liable for any action taken or omitted
by it in good faith and believed by it to be authorized hereby, nor for any
action taken or omitted by it in accordance with the advice of its counsel.
Escrow Agent may, without further investigation, assume: (a) the accuracy
and truth of any written instrument, notice, certificate or opinion given to
it and (b) the authenticity of any signatures thereon.
9. Indemnity. In consideration of acceptance of this escrow by Escrow
Agent, Seller agrees for executors, personal representatives, successors and
assigns, to indemnify, defend, and hold Escrow Agent (in every capacity,
including its corporate capacity) harmless from and against any and all
claims, losses, damages, taxes, liabilities, and expenses (collectively
"Claims") that may be incurred by Escrow Agent arising out of or in
connection with its appointment, acceptance, service or performance
hereunder, including the legal costs and expenses of defendinin connection
with such expenses of defending itself against any Claims in connection with
such matters. "Claims" specifically includes Claims arising out of the
alleged or actual negligence of Escrow Agent, but this agreement to
indemnify, defend and hold harmless shall not extend to Claims which are
determined to be the result of gross negligence or willful misconduct of
Escrow Agent in bad faith. This agreement by Seller to indemnify, defend
and hold harmless is not limited to the amount of funds held in escrow
hereunder, and shall survive both the termination of the Agreement and any
resignation or removal of Escrow Agent. To further secure the performance
of Seller under this agreement to indemnify, defend and hold harmless,
Seller and Purchaser agree that Escrow Agent shall have a first and prior
lien upon all deposits made hereunder to secure the performance of said
agreement.
10. Interpleader. Should any controversy arise between the
undersigned with respect to this Agreement or with respect to the right to
receive the Escrow Fund, Escrow Agent shall have the right to institute a
bill of interpleader in any court of competent jurisdiction to determine the
rights of the parties. Should a bill of interpleader be instituted, or
should Escrow Agent become involved in litigation in any manner whatsoever
on account of this Agreement or the Escrow Fund, Seller and Purchaser hereby
bind themselves, their successors and assigns, to pay Escrow Agent, in
addition to any charge made for acting as Escrow Agent hereunder and
expenses incurred in connection therewith, reasonable attorney's fees
incurred by Escrow Agent and any other disbursements, expenses, losses,
costs and damages in connection with or resulting from such litigation.
11. Notices. Any notice required or permitted hereunder, to be
effective, must be in writing and shall be deemed given, except as provided
in the penultimate sentence of this paragraph 11 when
personally delivered to any party or matified mail, return receipt
requested, to the following addresses:
If to Purchaser: Javelina Energy, Inc.
Attention Mr. Ken Perkins
Highway 141 West
Armstrong Ranch
Kingsville, TX 78364
Phone: (512) 592-6000
Fax: (512) 592-2689
If to Seller: Maynard Oil Company
8080 North Central Expressway, Suite 660
Dallas, Texas 75206
Attention Cassondra Foster
Telephone: (214) 891-8461
Facsimile: (214) 891-8827
With Copy to: Maynard Oil Company
8080 North Central Expressway, Suite 660
Dallas, Texas 75206
Attention Kenneth Hatcher
Telephone: (214) 891-8471
Facsimile: (214) 891-8827
If to Escrow Agent: Bank One, Texas, N.A.
Attention Kay Lowrance
8111 Preston Road, 2nd Floor
Dallas, TX 75225
Telephone: (214) 360-3978
Facsimile: (214) 360-3980
Provided further, and in addition to the requirements set forth above, any
notice required or permitted to be given to Escrow Agent hereunder shall be
effective only when actually received in writing by Kay Lowrance, on behalf
of Escrow Agent, and not prior thereto. Any party may, by proper notice,
change its address for notice hereunder.
12. Amendment. This Agreement is irrevocable, and may not be amended,
modified or supplemented except by written instrument signed by Purchaser
and Seller and approved in writing by Escrow Agent.
13. Successors and Assigns. This Agreement shall inure to the benefit
of the parties, their respective heirs, executors, personal representatives,
successors and assigns.
14. Counterparts. This Agreement may be executed in several
counterparts, and the several signed counterparts shall be deemed a single,
integrated instrument.
15. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas. The venue for any action
arising hereunder or in connection herewith shall be in Dallas County,
Texas.
16. Time of Essence. Time is expressly declared to be of the essence
of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement in
triplicate as of the day and year first above written.
SELLER
MAYNARD OIL COMPANY
By: ___________________________
L. B. Carruth
Vice President
PURCHASER
JAVELINA ENERGY, INC.
By: ___________________________
Ken Perkins
President
ESCROW AGENT
BANK ONE, TEXAS, N.A.
By: ___________________________
Kay Lowrence
Assistant Vice President
EXHIBIT 2(d)
PURCHASE AND SALE AGREEMENT
This Agreement, when accepted and agreed to in the manner provided below
shall constitute the terms and provisions of an agreement under which MAYNARD
OIL COMPANY, a Delaware corporation, with offices at 8080 North Central
Expressway, Suite 660, Dallas, Texas 75206, hereinafter referred to as
"SELLER", agrees to sell and JIMMY R. CHATHAM, an individual doing business as
CHATHAM OIL COMPANY, whose address is in care of the First National Bank &
Trust Company, P. O. Box 69, Ardmore, Oklahoma 73402, hereinafter referred to
as "BUYER", agrees to purchase all of SELLER'S rights, titles and interests in
and to those certain oil and gas properties owned by SELLER and described in
Exhibit "A", Property Schedule attached hereto and made a part hereof,
hereinafter sometimes referred to as the "PROPERTY".
1. PROPERTY BEING SOLD. At Closing, as hereinafter defined, SELLER shall
convey to BUYER the PROPERTY identified on Exhibit "A", including:
(a) All of SELLER'S rights, titles and interests in and to the leasehold
estates described in Exhibit "A", such leases being hereinafter called "said
leases", represented to be no less than the working and net revenue interests
set forth on such exhibit;
(b) All of SELLER'S fee interests, royalties, overriding royalties,
production payments, rights to take royalties in kind, or other interests in
production of oil, gas or other minerals in the lands described in Exhibit "A";
(c) All of SELLER'S rights, titles and interests in and to all permits,
franchises, licenses, servitudes, easements, surface leases and rights-of-way
of every character relating to said leases;
(d) All of SELLER'S rights, titles and interests in and to any contracts
or agreements including, but not limited to, rights and interests in or derived
from unit agreements, gas processing agreements, joint operating agreements,
gas contracts, gas gathering agreements, gas balancing agreements, boundary or
well line agreements, assignments of operating rights, working interests and
subleases affecting said leases.
(e) All of SELLER'S rights, titles and interests in and to producing,
non-producing and shut-in oil and gas wells, salt water disposal wells,
injection wells and water wells on said leases or lands pooled, unitized or
communitized therewith; and
(f) All of SELLER'S rights, titles and interests in and to all surface
and down-hole equipment, fixtures, related inventory and other personal
property used in connection with the PROPERTY described in paragraphs (a)
through (e) above, excluding, however, all automobiles, trucks and
communications equipment.
2. PERFORMANCE DEPOSIT. On or before 4:00 o'clock p.m., local time,
August 20, 1996, BUYER shall tender to SELLER, by wire transfer, a performance
deposit in the amount of Forty Four Thousand Four Hundred Forty Four and 40/100
Dollars ($44,444.40). The performance deposit is received solely to assure the
performance of BUYER pursuant to the terms and conditions hereof. The
performance deposit will be returned to BUYER at Closing upon consummation of
the transaction, or at BUYER'S election, may be credited to the Purchase Price.
No interest shall be paid or credited to the performance deposit. If BUYER
fails, refuses, or is unable to close the sale in accordance with the terms
herein, SELLER, except as otherwise herein specifically provided, may, at its
option, retain the performance deposit as agreed liquidated damages and not as
a penalty. If SELLER, through no fault of BUYER, refuses to close the sale in
accordance with the terms herein, the performance deposit shall be returned to
BUYER.
3. PURCHASE PRICE. The total sum which BUYER agrees to deliver to
SELLER for the PROPERTY, is Four Hundred Forty Four Thousand, Four Hundred
Forty Four and 00/100 Dollars ($444,444.00).
4. CLOSING. The closing shall take place on September 30, 1996, at
10:00 a.m. local time at SELLER'S offices in Dallas, Texas, unless the parties
mutually agree upon a later date, or, at BUYER'S election, such closing may be
handled by overnight mail upon confirmation of funds received by SELLER. The
following shall occur at closing:
(a) Purchase Price. BUYER will make payment of the Purchase Price
pursuant to paragraph numbered 3 above, and adjusted by Sections 2, 9, 10, 12,
15, 18 and 20, if applicable, by wire transfer to an account designated by
SELLER; and
(b) Conveyance. SELLER will convey the PROPERTY to BUYER by executing
and delivering Assignments and Bills of Sale, a form of which is attaches of
August 1, 1996, at 7:00 a.m. local time, herein called the "Effective Date".
BUYER shall assume the risk of any change in the condition of the PROPERTY from
the date of this Agreement to the date of Closing.
6. FILES AND RECORDS. Prior to Closing, SELLER will make available for
examination by BUYER such title information and abstract coverage as may be
available in SELLER'S files. Existing abstracts and title opinions will not be
brought down to date by SELLER. SELLER'S files will be made available to BUYER
for examination at SELLER'S offices in Dallas, Texas, during normal working
hours. BUYER will be permitted, to make copies of pertinent instruments or
documents contained in SELLER'S files. No economic analyses, interpretive
geological or geophysical data considered proprietary by SELLER shall be copied
by BUYER. As soon as practicable after Closing, SELLER shall deliver all of
the original files or copies thereof to BUYER, at BUYER'S expense.
7. LIMITED WARRANTY. Conveyance of the PROPERTY shall be WITHOUT
WARRANTY OF TITLE EITHER EXPRESS OR IMPLIED, EXCEPT BY, THROUGH AND UNDER
ASSIGNOR, BUT NOT OTHERWISE with the right of full substitution and subrogation
in and to all rights and actions of warranty which SELLER has or may have
against any and all preceding owners or vendors of the PROPERTY.
8. INDEPENDENT EVALUATION. BUYER has made an independent evaluation of
the PROPERTY and acknowledges that SELLER has made no statements or
representation concerning the present or future value of the anticipated
income, costs, or profits, if any, to be derived from the PROPERTY and that
SELLER DOES NOT WARRANT TITLE, DESCRIPTION, VALUE, QUALITY, CONDITION,
MERCHANTABILITY, OR FITNESS FOR PURPOSE of any of the wells, equipment, or
other property located thereon or used in connection therewith. BUYER further
acknowledges that in executing this Agreement it has relied solely upon its
independent examination of the premises and peement, the term "significant
title defect" shall include any defect which results in a loss of title in
SELLER such that BUYER'S net revenue interest in the affected PROPERTY is
reduced or SELLER'S rights to use the PROPERTY as an owner, lessee, licensee,
or permittee, as applicable, is extinguished or severely restricted.
On or before ten (10) business days prior to Closing, BUYER shall give
written notice to SELLER of interests in the PROPERTY which have significant
title defects. BUYER shall be deemed to have waived all title defects and any
other defect of which SELLER has not been given notice by ten (10) business
days prior to Closing, unless it is a significant title defect which did not
exist on or before that date.
Interests which have significant title defects shall be excluded from the
PROPERTY to be conveyed and the Purchase Price shall be reduced by the price
allocated by Buyer for such PROPERTY on Exhibit "A", Property Schedule,
attached hereto unless: (i) prior to closing, the basis for the significant
title defect has been removed, or (ii) BUYER agrees to accept the interest
notwithstanding the defect. Loss of any lease acreage between the Effective
Date and Closing due to expiration of the lease term will not constitute a
significant title defect.
10. OPERATIONS AND PRODUCTION AFTER EFFECTIVE DATE. Since the Closing
will occur subsequent to the Effective Date, SELLER will continue to operate
the PROPERTY, or cause the PROPERTY to be operated, as appropriate for the
account of SELLER until Closing. SELLER shall be responsible for payments of
all expenses incurred against operation of the PROPERTY prior to the Effective
Date. All production from oil and gas wells, and all proceeds from the sale
thereof, including proceeds from any imbalance and oil in storage above the
pipeline connection, attributable to production prior to the Effective Date
shall be the property of SELLER. All production and proceeds attributable to
production aER. At Closing, a settlement shall be made between BUYER and
SELLER of all production proceeds received by SELLER and all operating
expenditures and taxes paid by SELLER for the time period between the Effective
Date and Closing. The net settlement balance shall be deducted from or added
to the Purchase Price. Applicable costs and expenses will include, without
limitation, royalties, rentals, any and all taxes related to said production,
and expenses of the type customarily billed under an operating agreement. As
to those properties not subject to an operating agreement, SELLER will charge
BUYER the appropriate Mean Fixed-Rate Overhead per producing, injection or
disposal well located on the PROPERTY as provided in the 1995 ERNST & YOUNG
LLP'S, "FIXED RATE OVERHEAD SURVEY". BUYER will reimburse SELLER for all
workover costs, plugging, abandoning and reabandoning costs and other major
costs that SELLER incurs after the Effective Date, on an actual cost basis.
SELLER shall not undertake any single project reasonably estimated to require
an expenditure in excess of $3,000.00 without the prior written consent of
BUYER; however, SELLER may take such steps and incur such expenses as in its
opinion are required to deal with an emergency or to safeguard life and
property. If timing allows, a Chatham pulling unit will be utilized for any
well servicing work prior to Closing.
BUYER shall assume SELLER'S position under any gas balancing arrangements.
The interest to be conveyed BUYER shall be burdened with any liability
attributable to SELLER'S interest for overproduction from the PROPERTY and
BUYER shall own and be entitled to any make-up production attributable to
SELLER'S interest for underproduction from the PROPERTY.
Within one hundred twenty (120) days after the Closing, SELLER and BUYER
shall make a post-closing settlement to account for all production proceeds
received and all operating expenses and taxes paid by SELLER after the
Effective Date. After the post-closing settlement, additional proceeds
received by or expenses paid by either BUYER or SELLER on behalf of the other
shall be settled by invoicing the other party for expenses paid or remitting to
the other party any proceeds received.
SELLER shall comply with all applicable laws, ordinances, rules, and
regulations, orders, terms of permits and authorizations, of any governmental
body which may have jurisdiction over the PROPERTY and shall promptly obtain
and maintain all permits and bonds required by public authorities in connection
with the PROPERTY. As of the Effective Date, BUYER shall assume and agrees to
perform all obligations and implied covenants of SELLER relating to the
PROPERTY. BUYER shall assume the risk of any change in the condition of the
PROPERTY from the Effective Date to the Closing, except to the extent any
change of condition is attributable to the negligence or willful misconduct of
SELLER.
11. SUSPENDED FUNDS. As soon as practicable after the Closing, SELLER
shall provide to BUYER a listing showing all net proceeds from production
attributable to the royalty and overriding royalty interests which are
currently held in suspense because of lack of identity or address of owners,
change of ownership or similar reasons, and shall transfer to BUYER all those
suspended proceeds. BUYER shall be responsible for proper distribution of all
the suspended proceeds to the parties lawfully entitled to them.
12. TAXES. BUYER shall be responsible for payment of all taxes relating
to its interests in the PROPERTY from and after the Effective Date. SELLER
shall be responsible for payment of all taxes relating to its interest in the
PROPERTY prior to the Effective Date. Property and ad valorem taxes payable on
an annual basis shall be prorated between SELLER and BUYER as of the Effective
Date. BUYER shall be liable for any sales tax or other transfer tax.
13. EXISTING CONTRACTS. This sale will be made signments, as well as any
and all other agreements or contracts of any nature to which the PROPERTY is
subject.
14. NOTICES. All notices and communications required or permitted under
this Agreement shall be in writing, deliver to or sent by U. S. Mail or Express
Delivery, postage prepaid, or by facsimile transmission, addressed as follows:
Maynard Oil Company
Attention Cassondra Foster
8080 North Central Expressway, Suite 660
Dallas, TX 75206
Phone: (214) 891-8461
Fax: (214) 891-8827
Chatham Oil Company
Attention Mr. Jimmy R. Chatham
P. O. Box 878
Healdton, OK 73438
Phone: (405) 229-1267
Fax: (405) 229-0971
15. PARTIES IN INTEREST. This Agreement shall inure to the benefit of
and be binding upon SELLER and BUYER, their respective successors and assigns.
All references contained in the Agreement shall be deemed to include SELLER and
BUYER'S respective successors and assigns. No assignment by any party shall
relieve any party of any duties or obligations under this Agreement.
16. PREFERENTIAL RIGHTS TO PURCHASE. Should any of the PROPERTY offered
be subject to a preferential right to purchase or consent to assign, then the
proposed sale of the PROPERTY affected thereby will be subject to SELLER'S
obtaining any such waiver or consent. SELLER shall not be liable to BUYER by
reason of inability or failure to obtain any such waiver or consent. In the
event any third party exercises its preferential right to purchase, the price
shall be the value indicated by SELLER on the Property Schedule and the parties
shall reduce the Purchase Price by the value assigned. At Closing, if SELLER
has been unable to obtain a required waiver or consent (or the appropriate time
period for asserting such rights has not expired), the Purchase Price shall be
reduced by an amount equal to the Allocated Value assigned to the interest
affected by such waiver or consent. This paragraph shall not be applicable to
oil and gas leases requiring consent by, filings with, or other actions by
governmental 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.
17. INDEMNITY. BUYER shall assume full responsibility for the PROPERTY
purchased as of the Effective Date and shall defend and indemnify SELLER, its
employees, officers and agents, against any and all losses, claims, suits,
liabilities, and expenses arising out of, in connection with or resulting from
BUYER'S ownership or operation of the PROPERTY purchased, including, but not
limited tth all covenants in the instruments in the chain of title of the
PROPERTY purchased or the instruments to which the PROPERTY is subject.
SELLER shall defend and indemnify BUYER, its employees, officers and
agents, against any and all losses, claims, suits, liabilities, and expenses
arising out of, in connection with or resulting from SELLER'S ownership or
operation of the PROPERTY purchased prior to the effective date.
18. REGULATORY FORMS. At Closing, SELLER shall deliver to BUYER signed
forms to be filed with appropriate governmental agencies, including, but not
limited to Change of Operator Forms. BUYER agrees to promptly file such forms
with the appropriate governmental agencies.
19. WELL TESTS. Upon acceptance of this Agreement as provided herein,
BUYER is granted the right to conduct reasonable tests on each of the wells
OPERATED by SELLER located on the PROPERTY for the purpose of confirming their
individual producing capacities. Such tests will be performed prior to Closing
and in the presence of SELLER'S agents, representatives or employees, who shall
be authorized to terminate or prohibit any test which, in their judgment, could
constitute a threat to the continued productivity of the well to be tested.
SELLER'S Engineering Manager, Tom Waller, Dallas, Texas, (214) 891-8472 should
be contacted prior to conducting such tests to apprise BUYER the name and
telephone number of SELLER'S agent, representative or employee, who shall be
authorized to witness same.
BUYER shall give SELLER written notice of an unsatisfactory well test not
later than ten (10) business days prior to Closing, together with the basis for
such assertion and data in support thereof, and shall furnish SELLER with any
proposed reduction in the Sales Price attributable to each such matter. SELLER
may remove the defective PROPERTY from the sale, attempt to cure the defect at
SELLER'S sole cost and expense, agree to a mutually acceptable Purchase Price
reduction or terminate this Agreement without liability to BUYER except for
return of the Performance Deposit.
20. NORM, RCRA AND CERLA After the execution of this agreement, BUYER
and its authorized representatives shall have physical access to the PROPERTY,
at BUYER'S sole cost, risk and expense for the purpose of inspecting the
PROPERTY, conducting such tests, examination, investigations and assessments as
may be reasonable and necessary or appropriate to evaluate environmental
conditions of the PROPERTY, including without limitation, for the purpose of
detecting the presence or concentration of naturally occurring radium, thorium
or other such materials (hereinafter referred to as "NORM"). Buyer shall
obtain permission from the operators to conduct such inspections. BUYER shall
defend and indemnify SELLER from any and all liability, claims, causes of
action, injury to agents or contractors or to BUYER'S property and/or injury to
SELLER'S property, employees, agents or contractors which may arise out of
BUYER'S inspections, but only to the extent of BUYER'S negligence. BUYER
should satisfy itself as to the physical and environmental condition, both
surface and subsurface, of the PROPERTY. SELLER disclaims all liability
arising in connection with the presence of environmental conditions such as,
but not limite and acknowledges that it has all the necessary licenses under
applicable state and federal law to accept assignment of the PROPERTY.
Subject to the other provisions of this section, at Closing, BUYER shall
assume and be responsible for and comply with all duties and obligations of
SELLER, express or implied, arising on or after the Effective Date with respect
to the PROPERTY, including, without limitation, those arising under or by
virtue of any lease, contract, agreement, document, permit, applicable statute
or rule, regulation or order of any governmental authority specifically
including, without limitation, any governmental request or requirement to plug,
re-plug and/or abandon any well of whatsoever type, status or classification or
take any clean-up or other action with respect to the PROPERTY or premises,
including hazardous waste cleanup costs under the Resource and Recovery Act
("RCRA") and the Comprehensive Environmental Response, Compensation and
Liability Act ("CERLA"), or similar laws, rules or regulations and defend,
indemnify and hold SELLER harmless from any and all claims arising out of or in
connection therewith.
If BUYER discovers a material environmental condition which would
adversely affect the value of the PROPERTY by fifteen percent (15%) or more per
defect net to SELLER'S interest in the affected PROPERTY and SELLER is not in
compliance with environmental laws, rules and regulations with respect to such
PROPERTY ("Environmental Defect") BUYER shall give SELLER written notice
thereof not later than ten (10) business days prior to Closing, together with
the basis for such assertion and data in support thereof, and shall furnish
SELLER with any proposed reduction in the Sales Price attributable to each such
matter. SELLER may remove the defective PROPERTY from the sale, attempt to
cure the defect at SELLER'S sole cost and expense within one hundred twenty
(120) days after the notice, agree to a mutually acceptable purchase price
reduction or terminate this Agreement without liability to BUYER except for
return of the Performance Deposit. If SELLER is unable to cure the defect, the
allocated value shall be refunded to BUYER and the defective PROPERTY
reassigned to SELLER effective as of the Effective Date.
21. ALLOCATED VALUES. BUYER AND SELLER herein agree upon the allocation
of the Purchase Price among the properties. Such Allocated Values are shown on
Exhibit "A", Property Schedule which is attached hereto. In the event the net
amount of the Purchase Price adjustments downward provided for in paragraphs
numbered 9, 16, 19, and 20 exceeds thirty percent (30%) of the Purchase Price,
then SELLER or BUYER may, upon written notice to the other, cancel this
Agreement and the same shall be of no fevent, SELLER shall promptly refund to
BUYER the Performance Deposit.
22. COMPLETE AGREEMENT; SAVINGS CLAUSE. When executed by SELLER and
BUYER, this Agreement shall constitute the complete agreement between the
parties regarding the purchase and sale of the PROPERTY. Where applicable, the
terms of this Agreement shall survive the Closing.
23. GOVERNING LAW AND VENUE. This Agreement and all of its terms and
provisions shall be governed by the laws of the State of Texas.
The parties agree that venue for any dispute between the parties
pertaining to this Agreement shall be in Dallas County, Texas. In any such
dispute, the prevailing party shall be entitled to reimbursement of all court
costs and reasonable attorneys' fees incurred.
24. FURTHER ASSURANCES. SELLER agrees that, at any time and from time to
time after the date hereof, it will, upon request of BUYER, execute,
acknowledge and deliver or cause to be executed, acknowledged and delivered all
further documents or instruments as may be required in connection with the
assignment and conveyance of the PROPERTY to BUYER; and SELLER shall perform
and take such actions as may be necessary or appropriate in connection with the
performance by SELLER of the transactions contemplated by this Agreement.
25. MISCELLANEOUS PROVISIONS.
(a) Captions have been inserted for reference purposes only and shall not
define or limit the terms of this Agreement;
(b) If any provision of this Agreement is held invalid, such invalidity
shall not affect the remaining provisions;
(c) This Agreement cannot be modified or amended except by a written
instrument duly executed by SELLER and BUYER; and
(d) Neither SELLER nor BUYER, without the prior written consent of the
other party shall assign any right or obligations under this Agreement prior to
the Closing, or attempt to delegaour understanding of our agreement, please so
indicate by dating, signing and returning one copy hereof on or before August
19, 1996. Failure to do so shall result in cancellation of this agreement at
SELLER'S option.
EXECUTED this 12th day of August, 1996.
MAYNARD OIL COMPANY
By: /s/ L. B. Carruth
___________________________
L. B. Carruth
Vice President
75-1362284
Tax Identification Number
CHATHAM OIL COMPANY
By: /s/ Jimmy R. Chatham
___________________________
Jimmy R. Chatham, Owner
###-##-####
Tax Identification Number
14490
Producer's OTC Reporting Number
EXHIBIT "A"
PROPERTY SCHEDULE
Attached to and made a part of PURCHASE AND SALE AGREEMENT dated
August 12, 1996, by and between Maynard Oil Company, SELLER, and
Chatham Oil Company, BUYER
CARTER COUNTY, OKLAHOMA
PN 440104, 440105 AND 440106
ALLOCATED VALUE $390,000.00
DEXTER-GREGG-HALE
EXPENSE INTEREST 1.0000000
REVENUE INTEREST 0.7656250
Oil and Gas Lease dated March 5, 1920, by and between Joseph H. Jennings
and Estella Jennings, as Lessor, and C. C. Lynch, as Lessee, recorded in Volume
43, page 398 of the Records of Carter County, Oklahoma, covering the NE/4 SW/4
SE/4, SE/4 NW/4 SE/4, W/2 SE/4 SE/4, SW/4 NE/4 SE/4 and the E/2 SE/4 SE/4 of
Section 28, Township 1 South, Range 3 West, Carter County, Oklahoma, LIMITED to
rights from the surface down to 3,800 feet below the surface. (LF-04842-00)
The hereinabove referenced lease is subject to Casinghead Gas Contract dated
August 25, 1956, by and between Signal Oil and Gas Company, as Buyer, and J. E.
Jackson, et al, as Seller; Operating Agreement dated February 18, 1965, by and
between Shell Oil Company, as Operator, and Loyd Benefield, et al, as Non-
Operators; Purchase and Sale Agreement dated December 19, 1985, by and between
Shell Western E&P Inc. and Maynard Oil Company; Assignment, Conveyance and Bill
of Sale effective December 1, 1985, by and between Shell Western E&P Inc. and
Maynard Oil Company recorded in Volume 1226, page 250 of the Records of Carter
County, Oklahoma.
PN 440125 (UT-474)
ALLOCATED VALUE $30,000.00
A. K. FRENCH NO. 1
BEFORE PAYOUT EXPENSE INTEREST 0.5000000
BEFORE PAYOUT REVENUE INTEREST 0.3750000
AFTER PAYOUT EXPENSE INTEREST 0.3750000
AFTER PAYOUT REVENUE INTEREST 0.3281250
Oil and Gas Lease dated February 26, 1926, by and between C. F. Adams, et
al, as Lessor, and Marguerite Noble, as Lessee, recorded in Volume 75, page 417
of the Miscellaneous Records of Carter County, Oklahoma, INSOFAR AND ONLY
INSOFAR as said lease covers the SE/4 SE/4 of Section 3, Township 2 South,
Range 3 West, Carter County, Oklahoma, AND INSOFAR AND ONLY INSOFAR as said
lease covers rights from the top of the Sycamore Formation down to the
stratigraphic equivalent of 9,210 feet, as identified in the A. K. French No. 1
well, located in the SE/4 SE/4 of Section 3, Township 2 South, Range 3 West,
Carter County, Oklahoma. (LF-05512-00)
The lease hereinabove referenced lease is subject to Farmout Agreement D-271-89
dated June 20, 1989, by and between Mobil Exploration & Producing U.S. Inc., as
Farmor, and Maynard Oil Company, as Farmee, by Letter Agreement dated September
19, 1989, as amended, by and between Maynard Oil Company and Mobil Exploration
& Producing U.S. Inc.; Letter Agreement dated July 19, 1989, by and between
Maynard Oil Company and Chesapeake Production Company; and Operating Agreement
dated September 8, 1989, as amended, by and between Maynard Oil Company, as
Operator, and Atlantic Richfield Company, et al, as Non-Operators, by Letters
of Agreement dated September 20, 1989, by and between Maynard Oil Company and
Atlantic Richfield Company, et al; Oklahoma Corporation Commission Spacing
Order No. 98237 (C.D. 36732) for the Sycamore Common Source of Supply; Oklahoma
Corporation Commission Spacing Order No. 344506 (C.D. 152117) for the Woodford
Common Source of Supply.
PN 440123 (UT-472)
ALLOCATED VALUE $24,444.00
H. W. WILLIAMSON AKA WILLIAMS NO. 1
EXPENSE INTEREST 0.5000000
REVENUE INTEREST 0.3750000
Oil and Gas Lease dated February 26, l926, by and between C. F. Adams, et
al, as Lessor, and Marguerite Noble, Lessee, recorded in Book 75, page 417 of
the Miscellaneous Records of Carter County, Oklahoma, INSOFAR AND ONLY INSOFAR
as said lease covers the NE/4 SE/4 of Section 3, Township 2 South, Range 3
West, Carter County, Oklahoma, LIMITED in depth from the top of the Sycamore
formation down to the stratigraphic equivalent of 8,688 feet, as identified in
the H. W. Williamson No. 1 well, located in the SW/4 NW/4 SE/4 of Section 3,
Township 2 South, Range 3 West, Carter County, Oklahoma. (LF-05512-00)
The hereinabove referenced lease is subject to Oklahoma Corporation Commission
Spacing Order No. 98237 (C.D. 36732) for the Sycamore Common Source of Supply;
Oklahoma Corporation Commission Spacing Order No. 344506 (C.D. 152117) for the
Woodford Common Source of Supply; Farmout Agreement D-271-89 dated June 20,
1989, by and between Mobil Exploration & Producing U.S. Inc., as Farmor, and
Maynard Oil Company, as Farmee, and Operating Agreement dated August 2, 1989
(effective July 19, 1989), by and between Maynard Oil Company, as Operator, and
Atlantic Richfield Company, as Non-Operator; and Letter Agreement dated August
9, 1989, by and between Maynard Oil Company and Mobil Exploration & Producing
U.S. Inc.
EXHIBIT "B"
ASSIGNMENT AND BILL OF SALE
FROM MAYNARD OIL COMPANY
TO CHATHAM OIL COMPANY
Attached to and made a part of PURCHASE AND SALE AGREEMENT dated
August 12, 1996, by and between Maynard Oil Company, SELLER, and
Chatham Oil Company, BUYER
THE STATE OF )
) KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF )
THAT, the undersigned, MAYNARD OIL COMPANY, a Delaware corporation, with
offices at 8080 North Central Expressway, Suite 660, Dallas, Texas 75206,
hereinafter called "Assignor", for and in consideration of Ten Dollars ($10.00)
and other valuable consideration to it in hand paid by JIMMY R. CHATHAM, an
individual doing business as CHATHAM OIL COMPANY, whose address is in care of
the First National Bank & Trust Company, P. O. Box 69, Ardmore, Oklahoma 63402,
hereinafter called "Assignee", does hereby TRANSFER, ASSIGN and CONVEY unto
Assignee, WITHOUT WARRANTY OF TITLE EITHER EXPRESS OR IMPLIED, EXCEPT BY,
THROUGH AND UNDER ASSIGNOR, BUT NOT OTHERWISE, with the right of full
substitution and subrogation in and to all rights and actions of warranty which
Assignor has or may have against any and all preceding owners of the said
leases, subject to the terms and conditions contained herein, the following:
(a) All of Assignor's rights, titles and interests in and to the
leasehold estates described in Exhibit "A", such leases being hereinafter
called "said leases", represented to be no less than the working and net
revenue interests set forth therein, subject to all burdens, encumbrances,
contracts and agreements, which are of record and/or listed in Exhibit "A"
affecting said leases to the extent that same are in force and effect;
(b) All of SELLER'S royalties, overriding royalties, production payments,
rights to take royalties in kind, or other interests in production of oil, gas
or other minerals;
(c) All of Assignor's rights, titles and interests in and to all permits,
franchises, licenses, servitudes, easements, surface leases and rights-of-way
of every character relating to said lease;
(d) All of Assignor's rights, titles and interests in and to any
contracts or agreements including, but not limited to, rights and interests in
or derived from unit agreements, gas processing agreements, joint operating
agreements, gas contracts, gas gathering agreements, gas balancing agreements,
boundary or well line agreements, assignments of operating rights, working
interests and subleases affecting said leases.
For the same consideration, Assignor does hereby BARGAIN, SELL and DELIVER
unto Assignee all of its rights, titles and interests in and to the wells
located on said leases described in said Exhibit "A"; and Assignor does hereby
further BARGAIN, SELL and DELIVER unto Assignee all of its rights, titles and
interests in and to all personal property and well equipment located in, on and
used in connection with the said leases, such well, personal property and the
well equipment being hereinafter collectively called "said wells". ASSIGNOR
EXPRESSLY DISCLAIMS AND NEGATES (a) ANY IMPLIED OR EXPRESS WARRANTY OF
MERCHANTABILITY, (b) ANY IMPLIED OR EXPRESS WARRANTY OF FITNESS FOR A
PARTICULAR PURPOSE, and (c) ANY IMPLIED OR EXPRESS WARRANTY OF CONFORMITY TO
MODELS OR SAMPLES OF MATERIALS. ASSIGNEE EXPRESSLY WAIVES THE PROVISIONS OF
CHAPTER XVII, SUBCHAPTER E, SECTIONS 17.41 THROUGH 17.63, INCLUSIVE (OTHER THAN
SECTION 17.555, WHICH IS NOT WAIVED), VERNON'S TEXAS CODE ANNOTATED, BUSINESS
AND COMMERCIAL CODE.
This Assignment and Bill of Sale is executed and delivered as part of the
consummation of the transaction contemplated by that certain Purchase and Sale
Agreement between Assignor, as SELLER, and Assignee, as BUYER, dated August 12,
1996, hereinafter referred to as "Sale Agreement". The warranties,
representations, indemnities and covenants contained in the Sale Agreement
shall survive the delivery of this Assignment in accordance with the provisions
of the Sale Agreement and the delivery of this Asswise impair any of the
warranties, representations, indemnities or covenants made in the Sale
Agreement and the terms and conditions set forth therein; provided, however,
any third parties transacting with Assignee with respect to any of the
Interests may rely on this Assignment as vesting Assignee with all of
Assignor's rights, titles and interests in the said leases and wells.
This Assignment and Bill of Sale shall extend to, be binding upon and
inure to the benefit of Assignor and Assignee, their respective successors and
assigns and shall be deemed covenants running with the herein described lands
and leasehold estates.
Assignee expressly assumes, as of the Effective Date, all of Assignor's
obligations relating to the said leases, including, but not limited to, the
obligation of plugging and abandoning any well on the said leases, at
Assignee's sole cost, risk and expense.
This assignment shall be effective, for all purposes as of 7:00
o'clock a.m. August 1, 1996.
EXECUTED by Assignor and Assignee in Duplicate Originals on this ____
day of _______________, 1996, but to be effective as stated above.
MAYNARD OIL COMPANY
By: ___________________________
Glenn R. Moore
President
CHATHAM OIL COMPANY
By: ___________________________
Jimmy R. Chatham, Owner
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
This instrument was acknowledged before me on __________, 1996,
by Jimmy R. Chatham, Owner.
EXHIBIT 2(e)
PURCHASE AND SALE AGREEMENT
This Agreement, when accepted and agreed to in the manner provided
below shall constitute the terms and provisions of an agreement under which
MAYNARD OIL COMPANY, a Delaware corporation, with offices at 8080 North
Central Expressway, Suite 660, Dallas, Texas 75206, hereinafter referred to
as "SELLER", agrees to sell and BMC, LTD., a California Limited Partnership,
with offices at 217 State Street, Suite 300, Santa Barbara, California
93101, hereinafter referred to as "BUYER", agrees to purchase all of
SELLER'S rights, title and interest in and to that certain oil and gas
property owned by SELLER and described in Exhibit "A", Property Schedule
attached hereto and made a part hereof, hereinafter sometimes referred to
as the "PROPERTY".
1. PROPERTY BEING SOLD. At Closing, as hereinafter defined, SELLER
shall convey to BUYER the PROPERTY identified on Exhibit "A", including:
(a) All of SELLER'S rights, title and interest in and to the leasehold
estate described in Exhibit "A", such lease being hereinafter called "said
lease", represented to be no less than the working and net revenue interests
set forth on such exhibit;
(b) All of SELLER'S fee interests, royalties, overriding royalties,
production payments, rights to take royalties in kind, or other interests in
production of oil, gas or other minerals in the lands described in Exhibit
"A";
(c) All of SELLER'S rights, title and interest in and to all permits,
franchises, licenses, servitudes, easements, surface leases and rights-of-
way of every character relating to said lease;
(d) All of SELLER'S rights, title and interest in and to any contracts
or agreements including, but not limited to, rights and interests in or
derived from unit agreements, gas processing agreements, joint operating
agreements, gas contracts, gas gathering agreements, gas balancing
agreements, boundary or well line agreements, assignments of operating
rights, working interest and subleases affecting said lease.
(e) All of SELLER'S rights, title and interest in and to producing,
non-producing and shut-in oil and gas wells, salt water disposal wells,
injection wells and water wells on said lease or lands pooled, unitized or
communitized therewith; and
(f) All of SELLER'S rights, title and interest in and to all surface
and down-hole equipment, fixtures, related inventory and other personal
property used in connection with the PROPERTY described in paragraphs (a)
through (e) above, excluding, however, all automobiles, trucks and
communications equipment.
2. PERFORMANCE DEPOSIT. On or before 4:00 o'clock p.m., local time,
August 23, 1996, BUYER shall tender to SELLER, by wire transfer, a
performance deposit in the amount of Twenty Thousand and 00/100 Dollars
($20,000.00). The performance deposit is received solely to assure the
performance of BUYER pursuant to the terms and conditions hereof. The
performance deposit will be returned to BUYER at Closing upon consummation
of the transaction, or at BUYER'S election, may be credited to the Purchase
Price. No interest shall be paid or credited to the performance deposit.
If BUYER fails, refuses, or is unable to close the sale in accordance with
the terms herein, by October 1, 1996, SELLER, except as otherwise herein
specifically provided, shall retain Five Thousand and 00/100 Dollars
($5,000.00) of the performance deposit as agreed liquidated damages and not
as a penalty. If SELLER, through no fault of BUYER, refuses to close the
sale in accordance with the terms herein, the balance of the performance
deposit shall be returned to BUYER.
3. PURCHASE PRICE. The total sum which BUYER agrees to deliver to
SELLER for the PROPERTY, is Three Hundred Forty Thousand and 00/100 Dollars
($340,000.00).
4. CLOSING. The closing shall take place on October 1, 1996, at
10:00 a.m. local time at SELLER'S offices in Dallas, Texas, or the next
business day after the closing of BMC, Ltd. and Shell Western E&P Inc.,
whichever is the later. At BUYER'S election, such closing may be handled by
overnight mail upon confirmation of funds received by SELLER. Unless the
parties mutually agree upon a later date, the closing shall not be delayed
beyond October 1, 1996. The following shall occur at closing:
(a) Purchase Price. BUYER will make payment of the Purchase Price
pursuant to paragraph numbered 3 above, and adjusted by Sections 2, 9, 10,
12, and 16, if applicable, by wire transfer to an account designated by
SELLER; and
(b) Conveyance. SELLER will convey the PROPERTY to BUYER by executing
and de CONVEYANCE EFFECTIVE DATE. The conveyance from SELLER to BUYER
shall be effective as of August 1, 1996, at 7:00 a.m. local time, herein
called the "Effective Date". BUYER shall assume the risk of any change in
the condition of the PROPERTY from the date of this Agreement to the date of
Closing.
6. FILES AND RECORDS. Prior to Closing, SELLER will make available
for examination by BUYER such title information and abstract coverage as may
be available in SELLER'S files. Existing abstracts and title opinions will
not be brought down to date by SELLER. SELLER'S files will be made
available to BUYER for examination at SELLER'S offices in Dallas, Texas,
during normal working hours. BUYER will be permitted, to make copies of
pertinent instruments or documents contained in SELLER'S files. No economic
analyses, interpretive geological or geophysical data considered proprietary
by SELLER shall be copied by BUYER. As soon as practicable after Closing,
SELLER shall deliver all of the original files or copies thereof to BUYER,
at BUYER'S expense.
7. LIMITED WARRANTY. Conveyance of the PROPERTY shall be WITHOUT
WARRANTY OF TITLE EITHER EXPRESS OR IMPLIED, EXCEPT BY, THROUGH AND UNDER
SELLER, BUT NOT OTHERWISE with the right of full substitution and
subrogation in and to all rights and actions of warranty which SELLER has or
may have against any and all preceding owners or vendors of the PROPERTY.
8. INDEPENDENT EVALUATION. BUYER has made an independent evaluation
of the PROPERTY and acknowledges that SELLER has made no statements or
representation concerning the present or future value of the anticipated
income, costs, or profits, if any, to be derived from the PROPERTY and that
SELLER DOES NOT WARRANT TITLE, DESCRIPTION, VALUE, QUALITY, CONDITION,
MERCHANTABILITY, OR FITNESS FOR PURPOSE of any of the wells, equipment, or
other property located thereon or used in connection therewith. BUYER
further acknowledges that in exehe premises and public records.
9. SIGNIFICANT TITLE DEFECT. As used in this Agreement, the term
"significant title defect" shall include any defect which results in a loss
of title in SELLER such that BUYER'S net revenue interest in the affected
PROPERTY is reduced or SELLER'S right to use the PROPERTY as an owner,
lessee, licensee, or permittee, as applicable, is extinguished or severely
restricted.
On or before September 15, 1996, BUYER shall give written notice to
SELLER of interests in the PROPERTY which have significant title defects.
BUYER shall be deemed to have waived all title defects and any other defect
of which SELLER has not been given notice by September 15, 1996, unless it
is a significant title defect which did not exist on or before that date.
Interests which have significant title defects shall be excluded from
the PROPERTY to be conveyed and the Purchase Price shall be reduced by the
price allocated by Buyer for such PROPERTY on Exhibit "A", Property
Schedule, attached hereto unless: (i) prior to closing, the basis for the
significant title defect has been removed, or (ii) BUYER agrees to accept
the interest notwithstanding the defect. Loss of any lease acreage between
the Effective Date and Closing due to expiration of the lease term will not
constitute a significant title defect.
10. OPERATIONS AND PRODUCTION AFTER EFFECTIVE DATE. Since the Closing
will occur subsequent to the Effective Date, SELLER will continue to operate
the PROPERTY, or cause the PROPERTY to be operated, as appropriate for the
account of SELLER until Closing. SELLER shall be responsible for payments
of all expenses incurred against operation of the PROPERTY prior to the
Effective Date. All production from oil and gas wells, and all proceeds
from the sale thereof, including proceeds from any imbalance and oil in
storage above the pipeline connection, attributable to production prior to
the Effective Date shall be the property of SEEffective Date shall be the
property of BUYER. At Closing, a settlement shall be made between BUYER and
SELLER of all production proceeds received by SELLER and all operating
expenditures and taxes paid by SELLER for the time period between the
Effective Date and Closing. The net settlement balance shall be deducted
from or added to the Purchase Price. Applicable costs and expenses will
include, without limitation, royalties, rentals, any and all taxes related
to said production, and expenses of the type customarily billed under an
operating agreement. BUYER will reimburse SELLER for all workover costs,
plugging, abandoning and reabandoning costs and other major costs that
SELLER incurs after the Effective Date, on an actual cost basis. SELLER
shall not undertake any single project reasonably estimated to require an
expenditure in excess of $15,000.00 without the prior written consent of
BUYER; however, SELLER may take such steps and incur such expenses as in its
opinion are required to deal with an emergency or to safeguard life and
property.
BUYER shall assume SELLER'S position under any gas balancing
arrangements. The interest to be conveyed BUYER shall be burdened with any
liability attributable to SELLER'S interest for overproduction from the
PROPERTY and BUYER shall own and be entitled to any make-up production
attributable to SELLER'S interest for underproduction from the PROPERTY.
Within one hundred twenty (120) days after the Closing, SELLER and
BUYER shall make a post-closing settlement to account for all production
proceeds received and all operating expenses and taxes paid by SELLER after
the Effective Date. After the post-closing settlement, additional proceeds
received by or expenses paid by either BUYER or SELLER on behalf of the
other shall be settled by invoicing the other party for expenses paid or
remitting to the other party any proceeds received.
SELLER shall comply with all applicable laws, ordinances, rules, and
regulations, orders, terms of permits and authorizations, of any
governmental body which may have jurisdiction over the PROPERTY and shall
promptly obtain and maintain all permits and bonds required by public
authorities in connection with the PROPERTY. As of the Effective Date,
BUYER shall assume and agrees to perform all obligations and implied
covenants of SELLER relating to the PROPERTY. BUYER shall assume the risk
of any change in the condition of the PROPERTY from the Effective Date to
the Closing, except to the extent any change of condition is attributable to
the negligence or willful misconduct of SELLER.
11. SUSPENDED FUNDS. As soon as practicable after the Closing, SELLER
shall provide to BUYER a listing showing all net proceeds from production
attributable to the royalty and overriding royalty interests which are
currently held in suspense because of lack of identity or address of owners,
change of ownership or similar reasons, and shall transfer to BUYER all
those suspended proceeds. BUYER shall be responsible for proper
distribution of all the suspended proceeds to the parties lawfully entitled
to them.
12. TAXES. BUYER shall be responsible for payment of all taxes
relating to its interests in the PROPERTY from and after the Effective Date.
SELLER shall be responsible for payment of all taxes relating to its
interest in the PROPERTY prior to the Effective Date. Property and ad
valorem taxes payable on an annual basis shall be prorated between SELLER
and BUYER as of the Effective Date. BUYER shall be liable for any sales tax
or other transfer tax.
13. EXISTING CONTRACTS. This sale will be made signments, as well as
any and all other agreements or contracts of any nature to which the
PROPERTY is subject.
14. NOTICES. All notices and communications required or permitted
under this Agreement shall be in writing, delivered to or sent by U. S. Mail
or Express Delivery, postage prepaid, or by facsimile transmission,
addressed as follows:
Maynard Oil Company
Attention Cassondra Foster
8080 North Central Expressway, Suite 660
Dallas, TX 75206
Phone: (214) 891-8461
Fax: (214) 891-8827
BMC, Ltd.
Attention Mr. Michael G. Edwards
217 State Street, Suite 300
Santa Barbara, CA 93101
Phone: (805) 966-6596
Fax: (805) 966-1425
15. PARTIES IN INTEREST. This Agreement shall inure to the benefit of
and be binding upon SELLER and BUYER, their respective successors and
assigns. All references contained in the Agreement shall be deemed to
include SELLER and BUYER'S respective successors and assigns. No assignment
by any party shall relieve any party of any duties or obligations under this
Agreement.
16. PREFERENTIAL RIGHTS TO PURCHASE. Should any of the PROPERTY
offered be subject to a preferential right to purchase or consent to assign,
then the proposed sale of the PROPERTY affected thereby will be subject to
SELLER'S obtaining any such waiver or consent. SELLER shall not be liable
to BUYER by reason of inability or failure to obtain any such waiver or
consent. In the event any third party exercises its preferential right to
purchase, the price shall be the value indicated by SELLER on the Property
Schedule and the parties shall reduce the Purchase Price by the value
assigned. At Closing, if SELLER has been unable to obtain a required waiver
or consent (or the appropriate time period for asserting such rights has not
expired), the Purchase Price shall be reduced by an amount equal to the
value assigned to the interest affected by such waiver or consent. This
paragraph shall not be applicable to an oil and gas lease requiring consent
by, filings with, or other actions by governmental entities in connection
with the sale or conveyance of the oil and gas lease or interests therein,
if the same are customarily obtained subsequent to such sale or conveyance.
17. INDEMNITY. BUYER shall assume full responsibility for the
PROPERTY purchased as of the Effective Date and shall defend and indemnify
SELLER, its employees, officers and agents, against any and all losses,
claims, suits, liabilities, and expenses arising out of, in connection with
or resulting from BUYER'S ownership or operation of the PROPERTY purchased,
including, but not limited to thll covenants in the instruments in the chain
of title of the PROPERTY purchased or the instruments to which the PROPERTY
is subject.
SELLER shall defend and indemnify BUYER, its employees, officers and
agents, against any and all losses, claims, suits, liabilities, and expenses
arising out of, in connection with or resulting from SELLER'S ownership or
operation of the PROPERTY purchased prior to the effective date.
18. REGULATORY FORMS. At Closing, SELLER shall deliver to BUYER
signed forms to be filed with appropriate governmental agencies, including,
but not limited to Change of Operator Forms. BUYER agrees to promptly file
such forms with the appropriate governmental agencies.
19. NORM, RCRA AND CERLA After the execution of this agreement, BUYER
and its authorized representatives shall have physical access to the
PROPERTY, at BUYER'S sole cost, risk and expense for the purpose of
inspecting the PROPERTY, conducting such tests, examination, investigations
and assessments as may be reasonable and necessary or appropriate to
evaluate the environmental conditions of the PROPERTY, including without
limitation, for the purpose of detecting the presence or concentration of
naturally occurring radium, thorium or other such materials (hereinafter
referred to as "NORM"). Buyer shall obtain permission from the operator to
conduct such inspections. BUYER shall defend and indemnify SELLER from any
and all liability, claims, causes of action, injury to agents or contractors
or to BUYER'S property and/or injury to SELLER'S property, employees, agents
or contractors which may arise out of BUYER'S inspections, but only to the
extent of BUYER'S negligence. BUYER should satisfy itself as to the
physical and environmental condition, both surface and subsurface, of the
PROPERTY. SELLER disclaims all liability arising in connection with the
presence of environmental conditions such as, but not limited to, NORM on
the PROPERTY. BUYER certifies and acle state and federal law to accept
assignment of the PROPERTY.
Subject to the other provisions of this section, at Closing, BUYER
shall assume and be responsible for and comply with all duties and
obligations of SELLER, express or implied, arising on or after the Effective
Date with respect to the PROPERTY, including, without limitation, those
arising under or by virtue of any lease, contract, agreement, document,
permit, applicable statute or rule, regulation or order of any governmental
authority specifically including, without limitation, any governmental
request or requirement to plug, re-plug and/or abandon any well of
whatsoever type, status or classification or take any clean-up or other
action with respect to the PROPERTY or premises, including hazardous waste
cleanup costs under the Resource and Recovery Act ("RCRA") and the
Comprehensive Environmental Response, Compensation and Liability Act
("CERLA"), or similar laws, rules or regulations and defend, indemnify and
hold SELLER harmless from any and all claims arising out of or in connection
therewith.
20. ALLOCATED VALUES. BUYER AND SELLER herein agree upon the
allocation of the Purchase Price among the properties. Such Allocated
Values are shown on Exhibit "A", Property Schedule which is attached hereto.
In the event the net amount of the Purchase Price adjustments downward
provided for in paragraphs numbered 9 and 16 exceeds twenty-five percent
(25%) of the purchase price, then SELLER or BUYER may, upon written notice
to the other, cancel this Agreement and the same shall be of no further
force and effect and in such event, SELLER shall promptly refund to BUYER
the Performance Deposit.
21. COMPLETE AGREEMENT; SAVINGS CLAUSE. When executed by SELLER and
BUYER, this Agreement shall constitute the complete agreement between the
parties regarding the purchase and sale of the PROPERTY. Where applicable,
the terms of this Agreement shall survive the Closing.
22. GOVERNING LAW AND VENUE. This Agreement and all of its terms and
provisions shall be governed by the laws of the State of Texas.
The parties agree that venue for any dispute between the parties
pertaining to this Agreement shall be in Dallas County, Texas. In any such
dispute, the prevailing party shall be entitled to reimbursement of all
court costs and reasonable attorneys' fees incurred.
23. FURTHER ASSURANCES. SELLER agrees that, at any time and from time
to time after the date hereof, it will, upon request of BUYER, execute,
acknowledge and deliver or cause to be executed, acknowledged and delivered
all further documents or instruments as may be required in connection with
the assignment and conveyance of the PROPERTY to BUYER; and SELLER shall
perform and take such actions as may be necessary or appropriate in
connection with the performance by SELLER of the transactions contemplated
by this Agreement.
24. MISCELLANEOUS PROVISIONS.
(a) Captions have been inserted for reference purposes only and shall
not define or limit the terms of this Agreement;
(b) If any provision of this Agreement is held invalid, such
invalidity shall not affect the remaining provisions;
(c) This Agreement cannot be modified or amended except by a written
instrument duly executed by SELLER and BUYER; and
(ddelegate any duty to be performed under this Agreement. Consent to
assign shall not be unreasonably withheld by either party.
TIME IS OF THE ESSENCE HEREOF. If the foregoing sets forth your
understanding of our agreement, please so indicate by dating, signing and
returning one copy hereof on or before August 19, 1996. Failure to do so
shall result in cancellation of this agreement at SELLER'S option.
EXECUTED this 14th day of August, 1996.
MAYNARD OIL COMPANY
By: /s/ L. B. Carruth
___________________________
L. B. Carruth
Vice President
75-1362284
Tax Identification Number
BMC, LTD.
By: Venoco, Inc., a California
corporation, the general
partner
By: /s/ Timothy Marquez
___________________________
Timothy Marquez
President
________________________________
Tax Identification Number
EXHIBIT "A"
PROPERTY SCHEDULE
Attached to and made a part of PURCHASE AND SALE AGREEMENT dated
August 14, 1996, by and between Maynard Oil Company, SELLER, and
BMC, Ltd., BUYER
GRAYSON COUNTY, TEXAS
PN 444103
ALLOCATED VALUE $43,046.00
BIG MINERAL CREEK BARNES UNIT (UT-484)
EXPENSE INTEREST 0.0701800
REVENUE INTEREST 0.0614075
PN 444101
ALLOCATED VALUE $107,315.00
BIG MINERAL CREEK S SAND UNIT (UT-482)
EXPENSE INTEREST 0.0338493
REVENUE INTEREST 0.0296182
PN 444102
ALLOCATED VALUE $175,475.00
BIG MINERAL CREEK STRAWN I UNIT (UT-483)
EXPENSE INTEREST 0.0664260
REVENUE INTEREST 0.0581236
PN 444105
ALLOCATED VALUE $14,164.00
BIG MINERAL CREEK UV UNIT (UT-499)
EXPENSE INTEREST 0.0408344
REVENUE INTEREST 0.0357300
Oil and Gas Lease dated January 12, 1951, effective March 26, 1951, by
and between Carlton Barnes, et al, as Lessor, and Sinclair Oil & Gas
Company, as Lessee, recorded in Volume 640, page 410 of the Deed Records of
Grayson County, Texas, covering 80.00 acres, more or less, being out of the
Wm. Allen Survey, Abstract 15, Grayson County, Texas (LF-05302-00)
The hereinabove referenced lease is subject to Casinghead Gas Contract
dated September 30, 1974, between Union Texas Petroleum, Buyer, and Atlantic
Richfield Company, Seller; Unit Agreement and Unit Operating Agreement for
the Big Mineral Creek (S Sand) Unit dated May 1, 1965, between Shell Oil
Company, Operator and Sinclair Oil and Gas Company, et al, Non-Operators
recorded in Volume 1042, page 83, Deed Records of Grayson County, Texas;
Unit Agreement and Unit Operating Agreement for the Big Mineral Creek
(Strawn I) Unit dated August 20, 1979, between Shell Oil Company, Operator
and Sinclair Oil and Gas Company, et al, Non-Operators; Unit Agreement and
Unit Operating Agreement for the Big Mineral Creek (Strawn I) Unit dated
August 20, 1979, between Shell Oil Company, Operator and Atlantic Richfield
Company, et al, Non-Operators; Unit Agreement and Unit Operating Agreement
for the Big Mineral Creek (UV Sand) Unit dated January 1, 1993, between
Shell Oil Company, Operator and Maynard Oil Company, et al, Non-Operators;
Big Mineral Creek Water Supply Facility letter agreement dated September 19,
1973; and Purchase and Sale Agreement dated February 21, 1990, between
Atlantic Richfield Company, as Seller and Maynard Oil Company, as Purchaser.
EXHIBIT "B"
ASSIGNMENT AND BILL OF SALE
FROM MAYNARD OIL COMPANY
TO BMC, LTD.
Attached to and made a part of PURCHASE AND SALE AGREEMENT dated
August 14, 1996, by and between Maynard Oil Company, SELLER, and
BMC, Ltd., BUYER
THE STATE OF TEXAS )
) KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF GRAYSON )
THAT, the undersigned, MAYNARD OIL COMPANY, a Delaware
corporation, with offices at 8080 North Central Expressway, Suite 660,
Dallas, Texas 75206, hereinafter called "Assignor", for and in consideration
of Ten Dollars ($10.00) and other valuable consideration to it in hand paid
by BMC, LTD., a California limited partnership, with offices at 217 State
Street, Suite 300, Santa Barbara, California 93101, hereinafter called
"Assignee", does hereby TRANSFER, ASSIGN and CONVEY unto Assignee, WITHOUT
WARRANTY OF TITLE EITHER EXPRESS OR IMPLIED, EXCEPT BY, THROUGH AND UNDER
ASSIGNOR, BUT NOT OTHERWISE, with the right of full substitution and
subrogation in and to all rights and actions of warranty which Assignor has
or may have against any and all preceding owners of the said lease, subject
to the terms and conditions contained herein, the following:
(a) All of Assignor's rights, title and interest in and to the
leasehold estate described in Exhibit "A", such lease being hereinafter
called "said lease", represented to be no less than the working and net
revenue interests set forth therein, subject to all burdens, encumbrances,
contracts and agreements, which are of record and/or listed in Exhibit "A"
affecting said lease to the extent that same are in force and effect;
(b) All of SELLER'S royalties, overriding royalties, production
payments, rights to take royalties in kind, or other interests in production
of oil, gas or other minerals;
(c) All of Assignor's rights, title and interest in and to all
permits, franchises, licenses, servitudes, easements, surface leases and
rights-of-way of every character relating to said lease;
(d) All of Assignor's rights, title and interest in and to any
contracts or agreements including, but not limited to, rights and interest
in or derived from unit agreements, gas processing agreements, joint
operating agreements, gas contracts, gas
gathering agreements, gas balancing agreements, boundary or well line
agreements, assignments of operating rights, working interest and subleases
affecting said lease.
For the same consideration, Assignor does hereby BARGAIN, SELL and
DELIVER unto Assignee all of its rights, title and interest in and to the
wells located on said lease described in said Exhibit "A"; and Assignor does
hereby further BARGAIN, SELL and DELIVER unto Assignee all of its rights,
title and interest in and to all personal property and well equipment
located in, on and used in connection with the said lease, such wells,
personal property and the well equipment being hereinafter collectively
called "said wells". ASSIGNOR EXPRESSLY DISCLAIMS AND NEGATES (a) ANY
IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, (b) ANY IMPLIED OR EXPRESS
WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, and (c) ANY IMPLIED OR EXPRESS
WARRANTY OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS. ASSIGNEE
EXPRESSLY WAIVES THE PROVISIONS OF CHAPTER XVII, SUBCHAPTER E, SECTIONS
17.41 THROUGH 17.63, INCLUSIVE (OTHER THAN SECTION 17.555, WHICH IS NOT
WAIVED), VERNON'S TEXAS CODE ANNOTATED, BUSINESS AND COMMERCIAL CODE.
This Assignment and Bill of Sale is executed and delivered as part of
the consummation of the transaction contemplated by that certain Purchase
and Sale Agreement between Assignor, as SELLER, and Assignee, as BUYER,
dated August 14, 1996, hereinafter referred to as "Sale Agreement". The
warranties, representations, indemnities and covenants contained in the Sale
Agreement shall survive the delivery of this Assignment in accordance with
the provisions of the Sale Agreement and the delivery of this Assignment air
any of the warranties, representations, indemnities or covenants made in the
Sale Agreement and the terms and conditions set forth therein; provided,
however, any third parties transacting with Assignee with respect to any of
the Interests may rely on this Assignment as vesting Assignee with all of
Assignor's rights, title and interest in the said lease and wells.
This Assignment and Bill of Sale shall extend to, be binding upon and
inure to the benefit of Assignor and Assignee, their respective successors
and assigns and shall be deemed covenants running with the herein described
lands and leasehold estates.
Assignee expressly assumes, as of the Effective Date, all of Assignor's
obligations relating to the said lease, including, but not limited to, the
obligation of plugging and abandoning any well on the said lease, at
Assignee's sole cost, risk and expense.
This assignment shall be effective, for all purposes as of 7:00 o'clock
a.m. August 1, 1996.
EXECUTED by Assignor and Assignee in Duplicate Originals on this
____ day of _______________, 1996, but to be effective as stated above.
MAYNARD OIL COMPANY
By: ___________________________
Glenn R. Moore
President
BMC, LTD.
By: Venoco, Inc., a California
corporation, the general
partner
By: _________________________
Timothy Marquez
President
MY COMMISSION EXPIRES:
___________________________
Notary Public in and for the __________
EXHIBIT 2(f)
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "AGREEMENT") is made and entered
into this 12th day of September, 1996, by and between MAYNARD OIL COMPANY, a
Delaware corporation, having its principal office at 8080 North Central
Expressway, Suite 660, Dallas, Texas 75206 ("SELLER") and ENRON OIL & GAS
COMPANY, a Delaware corporation, having its principal office at 1400 Smith
Street, Houston, Texas 77002 ("BUYER").
In consideration of the mutual promises contained herein, the benefits
to be derived by each party hereunder and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Buyer and Seller agree as follows:
ARTICLE I
PURCHASE AND SALE
1.01 Purchase and Sale. Seller agrees to sell and convey and Buyer agrees
to purchase and pay for the interests (as defined in Section 1.02) owned by
Seller, subject to the terms and conditions of this Agreement.
1.02 Interests. All of the following shall herein be called the
"INTERESTS":
(a) All of Seller's right, title and interest in and to the leasehold
estate and mineral rights created by the leases described in Exhibit A
(the "LEASES") together with any and all interest of Seller in and to
such property and in and to any agreements, leases, rights-of-way,
easements, licenses and permits incident thereto;
(b) All of Seller's right, title and interest in and to the wells, and
production therefrom, located on the Leases or lands pooled therewith,
including but not limited to the wells described in Exhibit A together
with any and all buildings or other improvements constructed thereon
(collectively the "WELLS", together with any and all interest of Seller
in and to such property and in and to any agreements, including,
without limitation, gas purchase agreements, farmin and farmout
agreements, operating agreements and pooling agreements, leases,
rights-of-way, easements, licenses and permits incident thereto);
(c) All of Seller's right, title and interest in and to the real and
personal property, fixtures, improvements and buildings now or as of
the Effective Time (as defined in Section 1.03) located on the lands
burdened by the Leases or lands pooled therewith (the LANDS"), and all
contract rights, rights of substitution and subrogation in and to any
rights and actions of warranty which Seller has or may have with
respect to the Interests;
(d) All of the files, records and data related to the items described
in Subsections (a), (b) and (c) above, and all the seismic and
geophysical data of Seller appurtenant to or crossing the Leases, Wells
and Lands; and
(e) Any and all other assets of Seller appurtenant or related to or
used in connection with the Leases and Wells.
1.03 Effective Time. The purchase and sale of the Interests shall be
effective as of August 1, 1996, at 7:00 A.M., local time (herein called the
"EFFECTIVE TIME ) in the county in which the Lands are located.
ARTICLE II
PURCHASE PRICE
2.01 Purchase Price. The purchase price for the Interests shall be Nine
Hundred Eighty Nine Thousand Four Hundred Thirty Four DOLLARS ($989,434.00)
(herein called the "PRELIMINARY PURCHASE PRICE"), subject to adjustment as
set forth in Section 2.02 and Section 2.03 below.
2.02 Performance Deposit. On or before 4:00 o'clock p.m., local time,
September 13, 1996, Buyer shall tender to Bank One, Texas, N.A. ("ESCROW
AGENT", as provided for in Exhibit D hereto), by wire transfer, a
performance deposit in the amount of Ninety Eight Thousand Nine Hundred
Forty Three DOLLARS ($98,943.00). The performance deposit is received
solely to assure the performance of Buyer pursuant to the terms and
conditions hereof. The performance deposit will be returned to Buyer at
Closing, upon consummation of the transaction, or at Buyer's election, may
be credited to the Preliminary Purchase Price. No interest shall be paid or
credited to the performance deposit. If Buyer fails, refuses, or is unable
to close the sale in accordance with the terms herein, Seller, except as
otherwise herein specifically provided, may, at its option, retain the
performance deposit as agreed liquidated damages and not as a penalty. If
Seller, through no fault of Buyer, refuses to close the sale in accordance
with the terms herein, the performance deposit shall be returned to Buyer.
2.03 Adjustments to Purchase Price. The Preliminary Purchase Price shall
be adjusted as follows and the resulting amount shall be herein called the
"FINAL PURCHASE PRICE".
(a) The Preliminary Purchase Price shall be increased by the
following:
(1) The value of all merchantable, allowable oil attributable to
the Leases, in storage above the pipeline connection at the
Effective Time, and not previously sold by Seller, that is
credited to the Interests, such value to be the net price realized
by Seller;
(2) The amount of all reasonable expenditures, including, without
limitation, royalties, rentals and other charges, ad valorem,
property, production, excise, severance, windfall profit and other
taxes based upon or measured by proceeds therefrom but not
including income or gross receipts taxes, expenses billed under
applicable operating agreements and, as compensation to Seller for
its general and administrative expenses as operator of interests
operated by it, in lieu of any other overhead charges in
connection with such particular Interests:
(i) that amount attributable to the Interests under any
existing joint operating agreement, or
(ii) in the absence of a joint operating agreement with
respect thereto, the applicable rate recommended in the
1995 Ernst & Young, L.L.P. s Fixed Rate Overhead
Survey in connection with the operation of the
Interests from the Effective Time to the Closing Date
(as defined in Section 9.01), as well as any
expenditures approved by Buyer;
(3) An amount equal to all prepaid expenses attributable to the
interests that are paid by or on behalf of Seller prior to the
Closing Date and that are, in accordance with generally accepted
accounting principles, attributable to the period after the
Effective Time including, without limitation, prepaid insurance,
prepaid ad valorem, property, production, severance and similar
taxes (but not including income taxes) based upon or measured by
the ownership of property or the production of hydrocarbons or the
receipt of proceeds therefrom;
(4) An amount equal to seventy-five cents per mcf for a net
underproduced gas imbalance; and
(5) Any other amount agreed upon by Seller and Buyer.
(b) The Preliminary Purchase Price shall be decreased by the
following:
(1) An amount equal to all proceeds of production received by
Seller prior to the Closing Date that are attributable to the
Interests and that are, in accordance with generally accepted
accounting principles, attributable to the period of time from the
Effective Time to the Closing Date;
(2) An amount equal to all unpaid ad valorem, property,
production, severance and similar taxes and assessments (but not
including income or gross receipts taxes) based upon or measured
by the ownership of property or the production of hydrocarbons or
the receipt of proceeds therefrom accruing with respect to the
Interests prior to the Effective Time, which amount shall be
computed based upon such taxes assessed against the applicable
portion of the Interests for the current tax fiscal year, or if
the assessments for the current tax fiscal year are unavailable,
for the preceding such year;
(3) An amount equal to the sum of all Defect Adjustments and
Exclusion Adjustments (as those terms are defined in Section
7.03); and
(4) Any environmental adjustment pursuant to ARTICLE V.(e);
(5) An amount equal to seventy-five cents ($0.75) per mcf for a
net overproduced gas imbalance; and
(6) Any other amount agreed upon by Seller and Buyer.
2.04 Actual Figures. When available, actual figures will be used for
adjustments at Closing. To the extent actual figures are not available,
estimates will be used subject to final adjustments as provided in Section
10.01 hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01 Representations and Warranties of Seller. Seller represents and
warrants to Buyer with respect to itself and, where applicable, with respect
to the Interests, that:
(a) Seller is a corporation duly organized, validly existing, and in
good standing under the laws of the jurisdiction of its incorporation,
and has all requisite power and authority to own and lease the
properties and assets it currently owns and leases and to carry on its
business as such business is currently conducted. Seller is duly
licensed or qualified to transact business and is in good standing in
all jurisdictions where the character of the properties and assets now
owned or leased by it or the nature of the business now conducted by it
require it to be so licensed or qualified if the failure to qualify
might reasonably be expected to have a material adverse effect on the
business or financial prospects of Seller. Seller is also duly
licensed or qualified to do business and is in good standing in each
jurisdiction where the Interests are located;
(b) Seller has all requisite power and authority to execute and
deliver this agreement, to consummate the transactions contemplated
hereby, and to perform the terms and conditions hereof to be performed
by it. This Agreement constitutes, and each of the documents required
to be delivered by Seller hereunder, shall constitute Seller's legal,
valid and binding obligation, enforceable against Seller in accordance
with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, or other laws relating to or affecting
generally the enforcement of creditors' rights and general principles
of equity, regardless of whether considered in proceeding in equity or
at law;
(c) This Agreement and its execution and delivery by Seller do not,
and the fulfillment and compliance by Seller with the terms and
conditions of this Agreement, and the consummation by Seller of the
transactions contemplated hereby, will not (i) require any filing,
consent, authorization, or approval under, any law or administrative
regulation or any judicial, administrative, or arbitration order,
aware, judgment, writ, injunction, or decrees applicable to or binding
upon Seller (assuming the receipt of all routine governmental consents
typically received after consummation of transactions of the nature
contemplated by this Agreement); and (ii) conflict with, result in a
breach of, constitute a default under (without regard to any
requirements of notice or the lapse of time), accelerate, or permit the
acceleration of the performance required by, any mortgage, indenture,
loan or credit agreement or other agreement or instrument evidencing
indebtedness for borrowed money to which such Seller is a party or by
which it is bound or to which any of the Interests are subject;
(d) As of the execution date hereof, there are no currently
outstanding and effective authorities for expenditure or third party
proposals for subsequent operations with respect to the Interests other
than as set forth in Exhibit B;
(e) As of the execution date hereof (i) no action, suit, or proceeding
is pending or, has been threatened against Seller before any court,
administrative agency, or arbitral tribunal, which involves or may
involve the Interests, the production of oil and gas therefrom, or the
use of and enjoyment thereof, or any operation or activity being
conducted therein or thereon or which challenges Seller's rights to
enter into this Agreement or materially adversely affects its ability
to perform its obligations under this Agreement; (ii) Seller has not
received written notice of nor been charged with any violation of, any
provision of any law or regulation relating to the Interests, and to
Seller's best knowledge, no third party has been charged with any
violation of any provision of any law or regulation relating to the
Interests;
(f) As of the execution date hereof Seller has not received written
notice that it is in default under (i) any applicable contract
affecting the Interests; (ii) any order, judgment, or decree of any
federal or state court or governmental authority relating to the
Interests; or (iii) any other agreement, contract, lease, license, or
other instrument;
(g) Exhibit A contains a complete list of the Interests wherein
Seller's interest is currently subject to reversionary interests or
non-consent operations. In each case, such Exhibit reflects the
interest of Seller before and after adjustment for such reversionary
interests or non-consent operations for each Well effected. Exhibit A-
1 reflects the remaining amount to be recouped, or account status as
appropriate, as of the date reflected thereon with respect to each such
well;
(h) As of the Effective Time, to the best of Seller s knowledge,
except as set forth in Exhibit A-1 hereto, there were no production
imbalances or transportation and processing imbalances affecting the
Interests;
(i) All of the written and electronic data (including, without
limitation, information relating to gathering, processing,
transportation and sale of hydrocarbons from the Interests and other
matters) at the time furnished or to be furnished by Seller to Buyer in
conjunction with Buyer's evaluation of the Interests was contained in
or derived from Seller's records kept in the ordinary course of
business; and no representation or warranty is made with respect to the
accuracy or correctness of any estimates, analysis, or projections or
any assumptions or other matters stated therein;
(j) No broker or finder is entitled to any brokerage or finder's fee,
or to any commission, based in any way on agreements, arrangements or
understandings made by or on behalf of Seller for which Buyer has any
liability or obligation (whether contingent or otherwise);
(k) Seller is not a foreign person, foreign corporation, foreign
partnership, foreign trust or foreign estate (as those terms are
defined in the Internal Revenue Code of 1986, as amended, and
regulations promulgated thereunder);
(l) From the Effective Time to the execution date hereof there
has not been: (i) any material adverse change in the condition of
the Interests, other than changes caused by the sale, production,
or disposition of production and changes resulting from reservoir
conditions other than fire, blowout, or act of God (provided that
any change or revision in existing laws, regulations, or
governmental policies applicable to the Interests or the sale,
production, or disposition of production therefrom and the
imposition of any new laws, regulations or governmental policies
with respect to the Interests or the sale, production, or
disposition of production therefrom shall be deemed not to be an
adverse change in the condition of the Interests), (ii) any sale,
lease, or other disposition of the Interests, (iii) any
condemnation or taking by eminent domain of any portion of any of
the Interests, or (iv) any contract or commitment to do any of the
foregoing;
(m) Seller or the Operator of any Interest has obtained or
applied for all governmental licenses, permits, certificates,
approvals, consents, authorizations and orders required for it to
own or lease the Interests and develop, construct, maintain, and
operate them, and to market the production therefrom, and no
proceeding is pending or threatened involving revocation of any
such licenses, permits, certificates, consents, authorizations or
orders, provided that this representation is limited to Seller's
best knowledge;
(n) There are no taxes due or tax liens on any of the Interests;
(o) To the best of Seller's knowledge, Seller is not a party to
any joint venture, partnership, limited liability company, farmin,
farmout, joint operating agreement, or other arrangement or
contract with respect to any of the Interests that is reported as
a partnership for federal or state income tax purposes;
(p) As of the execution date hereof all of the wells and all of
the equipment used in the drilling, completion and operation of
any such wells, or in the production, treatment, storage,
gathering and transportation of hydrocarbons from such wells, is
in good operating condition, ordinary wear and tear excepted,
provided that this representation is limited to Seller's best
knowledge with respect to such matters which are the
responsibility of the operator of any interest not operated by
seller;
(q) From the Effective Time to the execution date hereof, no
personal injuries or deaths have occurred in connection with any
of the Interests which should have been reported by Seller in
accident or incident reports in accordance with applicable law or
in accordance with Seller's usual operating procedures and
policies;
(r) To the best of Seller's knowledge, all royalties (including
without limitation royalties with respect to take-or-pay payments
or settlements), minimum royalties, rentals, shut-in gas payments
and other payments due with respect to the Interests have been
properly and timely paid in full, except for payments held in
suspense for title or other reasons that are customary in the
industry or which are being contested in an appropriate forum.
There are no amounts claimed to be due to Seller in respect of the
Interests that are being held in suspense because of a dispute as
to title to the Interests or for any other reason, and Seller is
entitled to be paid, and is being paid, with respect to production
from the Interests, its net revenue interest without indemnity or
guarantee other than those customarily found in division orders
and other similar agreements and documents;
(s) Except as detailed on Exhibit A-2, this Agreement and its
execution and delivery by Seller does not, and the fulfillment and
compliance by Seller with the terms and conditions of this
Agreement and the consummation by Seller of the transactions
contemplated hereby will not permit the exercise of or give rise
to (with the giving of any required notice) any preferential
purchase right, option or right of first refusal;
(t) To the best of Seller's knowledge, all of the wells in which
such Seller has an interest by virtue of its ownership of the
Leases have been (i) drilled and completed within the boundaries
of such Lease or within the limits otherwise permitted by
contract, pooling or unit agreement, and/or by law and (ii)
drilled and completed in compliance with all applicable laws,
rules and regulations; and
(u) Seller has reasonable surface access to each of the Interests
for purposes of oil and gas exploration, development and
production.
3.02 Representations and Warranties of Buyer. Buyer represents and
warrants to Seller that:
(a) Buyer is a corporation duly organized, validly existing, and in
good standing under the laws of the jurisdiction of its incorporation,
and has all requisite power and authority to own and lease the
properties and assets it currently owns and leases and to carry on its
business as such business is currently conducted. Buyer is duly
licensed or qualified to transact business and is in good standing in
all jurisdictions where the character of the properties and assets now
owned or leased by it or the nature of the business now conducted by it
requires it to be so licensed or qualified if the failure to qualify
might reasonably be expected to have a material adverse effect on the
business or financial prospects of Buyer. Buyer is also duly licensed
or qualified to do business and is in good standing in each
jurisdiction where the Interests are located;
(b) Buyer has all requisite power and authority to execute and deliver
this Agreement, to consummate the transactions contemplated hereby, and
to perform the terms and conditions hereof to be performed by it. This
Agreement constitutes, and each of the documents required to be
delivered by Buyer hereunder, shall constitute Buyer's legal, valid,
and binding obligation, enforceable against Buyer in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, or other laws relating to or affecting generally the
enforcement of creditors' rights and general principles of equity,
regardless of whether considered in a proceeding in equity or at law;
(c) This Agreement and its execution and delivery by Buyer does not,
and the fulfillment of and compliance by Buyer with the terms and
conditions of this Agreement, and the consummation by Buyer of the
transactions contemplated hereby, will not (i) require any filing,
consent, authorization, or approval under, any law or administrative
regulation or any judicial, administrative, or arbitration order,
award, judgment, writ, injunction or decree applicable to or binding
upon Purchaser (assuming the receipt of all routine governmental
consents typically received after consummation of transactions of the
nature contemplated by this Agreement), (ii) conflict with, result in a
breach of, constitute a default under (without regard to any
requirements of notice or the lapse of time), accelerate, or permit the
acceleration of the performance required by, any mortgage, indenture,
loan or credit agreement or other agreement or instrument evidencing
indebtedness for borrowed money to which Buyer is a party or by which
it is bound;
(d) No broker or finder is entitled to any brokerage or finder's fee,
or to any commission, based in any way on agreements, arrangements or
understandings made by or on behalf of Buyer for which Seller has any
liability or obligation (whether contingent or otherwise);
(e) Buyer is not a foreign person, foreign corporation, foreign
partnership, foreign trust, or foreign estate (as those terms are
defined in the Internal Revenue Code of 1986, as amended, and
regulations promulgated thereunder); and
(f) In making the acquisition of the Interests hereunder, Buyer is
acting in the conduct of its own business in the ordinary course. The
Interests are not being acquired for distribution or transfer in
violation of the securities laws of the United States or of any state
thereof.
ARTICLE IV
COVENANTS OF BUYER AND SELLER
4.01 Covenants of Seller. Seller covenants and agrees with Buyer that:
(a) After the execution of this Agreement, Seller will make available
to Buyer for examination at Seller's offices in Dallas, Texas, title
and other information relating to the Interests insofar as the same are
in Seller's possession and, subject to the consent and cooperation of
third parties, will cooperate with Buyer in Buyer's efforts to obtain,
at Buyer's expense, such additional information relating to the
Interests as Buyer may reasonably desire (to the extent that Seller may
do so without violating legal constraints or any obligation of
confidence or other contractual commitments of Seller to third
parties), including without limitation:
(1) Title opinions, title status reports and contracts or agreements
pertaining to the Interests;
(2) Copies of the leases, prior conveyances of Interests created
thereby, unitization, pooling and operating agreements, division
and transfer orders, mortgages, deeds of trust, security
agreements, financing statements, and other encumbrances not
discharged and affecting the title to or the value of the
Interests;
(3) Accounting and other records relating to the payment of rentals,
royalties, joint interest billings and other payments due under
the Leases or the Wells;
(4) Records relating to the payment of ad valorem, property,
production, severance, excise and similar taxes and assessments
based on or measured by the ownership of property or the
production of hydrocarbons or the receipt of proceeds therefrom on
the Interests;
(5) Ownership maps and surveys relating to the Interests;
(6) Copies of purchase, sale, processing and transportation agreements
relating to the production of gas from the Interests. Copies of
all gas balancing agreements and gas balancing statements;
(7) Copies of agreements, leases, permits, easements, licenses and
orders relating to the Interests;
(8) Production records relating to the Interests;
(9) Inventories of personal property and fixtures included in the
Interests; and
(10) Any and all other information contained in Seller's files that
relates to the Interests other than matters subject to attorney-
client or attorney work privilege or concerning Seller's economic
evaluation.
Seller shall permit Buyer to inspect and photocopy such information and
records at any reasonable time during the term of this Agreement. Seller
shall cooperate with Buyer in Buyer's efforts to obtain such additional
title information as Buyer may reasonably deem prudent.
(b) During the period from the date of this Agreement to the Date of
Closing, without the prior written consent of Buyer, Seller will not
(i) cause any of its portion of the Leases or other of the Interests to
be developed, maintained, or operated in a manner substantially
inconsistent with prior operations; (ii) abandon any material part of
any of its portion of the Interests; (iii) commence any material
operation of any of its portion of the Leases or the Interests
anticipated to cost Seller in excess of Fifteen Thousand Dollars
($15,000.00) per operation (except emergency operations, operations
required under presently existing contractual obligations, the on-going
commitments under the AFE's described in Exhibit B hereto, and
operations undertaken to avoid any penalty provisions of any applicable
agreement or order), or (iv) convey or dispose of any material part of
any of its portion of the Interests (other than oil, gas and other
liquid products produced from the Interests in the regular course of
business). Buyer acknowledges that Seller owns undivided interests in
certain of the Interests and Buyer agrees that the acts or omissions of
Seller's co-owners shall not constitute a violation of the provision of
this Section 4.01(b) nor shall any action required by a vote of co-
owners constitute such a violation so long as Seller has voted its
interest with Buyer's prior consent;
(c) Seller shall use all reasonable efforts to maintain its corporate
status from the date hereof until Closing and to assure that as of the
Closing Date it will not be under any corporate, legal or contractual
restriction that would prohibit or delay the timely consummation of
such transactions; and
(d) Seller shall promptly notify Buyer of any suit, action, claim,
threatened suit, action or claim, or other proceedings of the type
referred to in Section 3.01(e) or (f) that arises prior to the Closing
with respect to which Seller receives notice or otherwise obtains
knowledge following the execution of this Agreement.
4.02 Covenants of Buyer. Buyer covenants and agrees with Seller that:
(a) Buyer shall use all reasonable efforts to maintain its corporate
status and to assure that as of the Closing Date it will not be under
any corporate, legal or contractual restriction that would prohibit or
delay the timely consummation of such transactions;
(b) To the extent necessary to facilitate the consummation of the
transactions contemplated herein, Buyer agrees to enter into specific
agreements of assumption with respect to the obligations of Seller to
specific third parties or governmental authorities to the extent such
obligations are attributable to the Interests after the Effective Time.
Buyer also shall be obligated to obtain consents from all necessary
Federal authorities, including the Bureau of Indian Affairs, and State
authorities to the assignment of the Leases;
(c) For a period of ten (10) years after the Closing Date, Buyer shall
provide Seller with reasonable access to the Records so long as Buyer
is given reasonable notice prior to Seller's access; and
(d) Buyer represents that it has performed, or will perform prior to
Closing, sufficient review and due diligence with respect to the
Interests which includes reviewing well data, title and other files and
performing necessary evaluations, assessments, and other tasks involved
in evaluating the Interests, to satisfy its requirements, completely,
and enable it to make an informed decision to acquire the Interests
under the terms of this Agreement.
ARTICLE V
ASSUMPTION OF LIABILITIES
AND INDEMNITIES
As used in this ARTICLE V, and the paragraphs hereunder "CLAIMS" shall
include claims, demands, causes of action, liabilities, damages, penalties
and judgements of any kind or character and all costs and fees in connection
therewith.
(a) At the Closing, but effective as of the Effective Time, Buyer
shall (i) assume, and be responsible for and comply with all duties and
obligations of Seller, express or implied, with respect to the
Interests, including, without limitation, those arising under or by
virtue of the Seller's leases and contracts listed in Exhibit A, and
the permits, the applicable statutes or rules, regulations or orders of
any governmental authority (specifically including, without limitation,
any governmental request or requirement to plug, replug and/or abandon
any well of whatsoever type, status or classification, or to take any
clean-up, remediation or other action with respect to the Interests),
and (ii) except as otherwise provided herein, to defend, indemnify and
hold harmless Seller from any and all claims in connection therewith;
(b) Subject to the provisions of Paragraphs (c), (d) and (e) below
Seller shall defend, indemnify and hold harmless Buyer from any and all
claims, costs, expenses, liabilities or causes of action relating to or
arising out of Seller's ownership or operation of Seller's Interests
prior to the Effective Time and Buyer shall defend, indemnify and hold
harmless Seller from any and all claims, costs, expenses, liabilities
or causes of action relating to or arising out of Buyer's ownership and
operation of the Interests after the Effective Time. Each indemnified
party hereunder agrees that upon its discovery of facts giving rise to
a claim for indemnity under the provisions of this Agreement, including
receipt by it of any demand, assertion, claim, action or proceeding,
judicial or otherwise, by any third party (such third party actions
being referred to herein as a "THIRD PARTY CLAIM"), it will give prompt
notice thereof in writing to the indemnifying party together with a
statement of such information with respect to any of the foregoing as
it shall then have. Such notice shall include a formal demand for
indemnification under this Agreement. The indemnified party shall
afford the indemnifying party a reasonable opportunity to pay, settle,
or contest any Third Party Claim at its expense;
(c) Seller shall (i) be responsible for any and all claims, including
but not limited to claims for payment of royalties, arising out of the
production and sale of hydrocarbons by Seller from the Interests, and
the proper accounting and payment of expenses for the Interests,
insofar as such claims and payments relate to period of time prior to
the Effective Time, and (ii) defend, indemnify and hold harmless Buyer
from any and all of such claims and payments;
(d) Buyer shall (i) be responsible for any and all claims, including
but not limited to claims for payment of royalties, arising out of the
production and sale of hydrocarbons by Buyer from the Interests, and
the proper accounting and payment of expenses for the Interests,
insofar as such claims and payments relate to period of time beginning
at the Effective Time and thereafter, and (ii) defend, indemnify and
hold harmless Seller from any and all of such claims and payments; and
(e) After the execution of this Agreement, Buyer, at its option, and
its sole cost, risk and expense, may obtain an environmental audit of
the Interests at any time prior to September 20, 1996. Seller shall
provide the environmental auditors all information available to it
which they may reasonably request and shall grant said auditors
physical access to the Interests. For those Interests which are not
operated by Seller, Buyer shall obtain permission from the operator to
conduct such inspections. If the audit reveals any environmental
conditions which are not satisfactory to Buyer, Seller shall
immediately be provided a copy of the audit information and either
party shall have the option to terminate this Agreement as to the
affected Interest(s) with a deduction from the Preliminary Purchase
Price of the allocated value attributable to that Interest(s), without
liability, unless Seller affirms in writing that it will remediate such
conditions to the satisfaction of the Buyer prior to Closing. Buyer
shall defend and indemnify Seller from any and all liability, claims,
causes of action, injury to Buyer's employees, agents or contractors or
to Buyer's property and/or injury to Seller's property, employees,
agents or contracts which may arise out of Buyer's inspections, but
only to the extent of Buyer's negligence. If such deductions exceed
ten percent (10%) of the Preliminary Purchase Price and the parties are
unable to mutually agree to proceed with closing, then either party
shall have the right to terminate this Agreement without liability.
After Closing, Buyer shall be deemed to have fully inspected and accepted
the Interests "AS IS" in their then current physical and environmental
condition.
ARTICLE VI
DISCLAIMER OF WARRANTIES
Buyer acknowledges that in making the decision to enter into this Agreement
and consummate the transactions contemplated hereby, Buyer has relied only
upon its own independent investigation of the Lands. Accordingly, Buyer
acknowledges that Seller has not made and Seller hereby expressly disclaims
and negates any representation or warranty express or implied at common law,
by statute or otherwise relating to (i) condition of the Lands (including
but not limited to any implied or express warranty of merchantability or
fitness for a particular purpose or of conformity to models or samples of
materials) and (ii) any information, data or other materials (written or
oral) furnished to Buyer by or on behalf of Seller (including but not
limited to information, data or other materials regarding the existence or
extent of oil, gas or other mineral reserves, the recoverability of or the
cost of recovering such reserves, the value of such reserves, any producing
pricing assumption, present or past production rates, the environmental
condition of the Lands, including but not limited to the presence of
naturally occurring radioactive material ("NORM"), and the ability to sell
oil or gas production after Closing); provided, however, that the foregoing
disclaimer and negation of representations and warranties shall not affect
or impair the representations and warranties of Seller made in Section 3.01.
ARTICLE VII
TITLE MATTERS
7.01 Defensible Title.
(a) As used herein, the term "DEFENSIBLE TITLE" shall mean, as to each
of the Interests, such title which, subject to and except for the
Permitted Encumbrances (as defined hereinafter): (i) entitles Seller
to receive not less than the "NET REVENUE INTEREST" set forth in
Exhibit A of all oil, gas and associated liquid and gaseous
hydrocarbons produced, saved and marketed from the presently producing
formations in the presently producing wells bottomed in the Lands; and
(ii) obligates Seller to bear costs and expenses relating to the
maintenance, development and operation of those portions of the
presently producing wells bottomed in the Lands in an amount not
greater than the "WORKING INTEREST" set forth in Exhibit A;
(b) The term "PERMITTED ENCUMBRANCES", as used herein, shall mean:
(1) Lessor's royalties, overriding royalties, reversionary interests
and similar burdens provided that the net cumulative effect of
such burdens does not operate to reduce the Net Revenue Interest
of any interest to less than the Net Revenue Interest therefor set
forth in Exhibit A;
(2) Preferential rights to purchase and required third party consents
to assignments and similar agreements with respect to which, prior
to Closing; (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, or (iii) with respect to consents, such consents which
need not be obtained prior to an assignment, or the failure to
obtain such consents will not have a material adverse effect on
the value of the Interests to Buyer;
(3) Liens for taxes or assessments not yet due or not yet delinquent,
or if delinquent, that are being contested in good faith in the
ordinary course of business;
(4) All rights to consent by, required notices to, filings with, or
other actions by governmental entities in connection with the sale
or conveyance of any of the Interests if the same are customarily
obtained subsequent to such sale or conveyance;
(5) Rights of reassignment;
(6) Easements, rights-of-way, servitudes, permits, surface leases and
other rights in respect of surface operations, pipelines, grazing,
logging, canals, ditches, reservoir or the like; conditions,
covenants or other restrictions; 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;
(7) Such Title Defects or other defects as Buyer has waived pursuant
to the terms of this Agreement;
(8) Liens to be released at Closing;
(9) The terms and conditions of all leases, agreements, orders,
instruments, documents and other matters described in Exhibit A
hereto; and
(10) 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 governmental authority.
(c) The term "TITLE DEFECT" as used herein shall mean any encumbrance,
encroachment, irregularity, defect in or objection to Seller's title to
each Interest (expressly excluding Permitted Encumbrances), that alone
or in combination with other defects, renders Seller's title to that
Interest less than Defensible Title or which would adversely interfere
with the use, possession, ownership or value thereof, or any violation
of applicable laws, rules, regulations or orders of any governmental
agency having jurisdiction over the Interests which will likely result
in an impairment or loss of title to all or a portion of the Interests
or diminish the value thereof or likely will hinder or impede the
operation of such interest, or any matter constituting a breach of
Seller's representation and warranties as set forth in Section 3.01.
Materialmen's mechanics', repairmen's, employees', contractors',
operators' or other similar liens or charges arising in the ordinary
course of business incidental to construction, maintenance or operation
of the Interests shall not constitute a Title Defect: (i) if they have
not been filed pursuant to law, or (ii) if filed, they have not yet
become due and payable or payment is being withheld as provided by law,
or (iii) if their validity is being contested in good faith by
appropriate action.
7.02. Casualty Loss. If, prior to the Closing, all or any portion of the
Interests be destroyed by fire or other casualty, is taken in condemnation
or under the right of eminent domain or proceedings for such purpose are
pending or threatened, Buyer may elect (i) to treat the Interests affected
by such destruction, taking or pending or threatened taking as Defective
Interests in accordance with Section 7.03; or (ii) to purchase such
Interests notwithstanding any such destruction, taking or pending or
threatened taking (without reduction of the Preliminary Purchase Price
therefor), in which case, Seller shall, at the Closing, pay to Buyer all
sums paid to Seof the destruction or taking of such Interests to be assigned
to Buyer (including sums which are in the nature of compensation for any
lost or foregone income or production attributable to the time period
subsequent to the Effective Time) and shall assign, transfer and set over
unto Buyer all of the right, title and interest of Seller in and to any
unpaid claims, awards or other payments from third parties arising out of
the destruction, taking or pending or threatened taking as to such Interests
(including sums which are in the nature of compensation for any lost or
foregone income or production attributable to the time period subsequent to
the Effective Time). Seller agrees that, prior to Closing, it shall not
voluntarily compromise, settle or adjust any amounts payable by reason of
any destruction, taking or pending or threatened taking as to such of its
portion of the Interests to be assigned to Buyer without first obtaining the
written consent of Buyer.
7.03 Defect Adjustments.
(a) "DEFECTIVE INTEREST" shall mean that portion of the Interests (as
determined in accordance with Section 7.03(c)) affected by a Title
Defect or that Buyer is otherwise entitled under Sections 7.02 or 7.04
to treat as a Defective Interest, and of which Seller has been given
notice by Buyer prior to September 23, 1996, (the "DEFECT NOTICE
DATE"), except as provided hereinafter in this Section 7.03(a). Any
notice of any Defective Interest shall be in writing and shall include:
(i) a description of the Defective Interest, (ii) the specific basis
for the defect that Buyer believes causes such Interest to be a
Defective Interest, and (iii) the amount by which Buyer has determined
the value of the Defective Interest has been reduced and the
computations and information upon which Buyer's determination is based.
Buyer shall be deemed to have waived all Title Defects and any other
defect to any Interest of which Seller has not been given such notice
prior to the Defect Notice Date. If Seller (i) disagrees that a Defect
Adjustment or Exclusion Adjustment is warranted; (ii) disagrees that
the matter giving rise to such claims is uncured, or (iii) disagrees
with the amount of the related Defect Adjustment claimed by Buyer in
any notice given in accordance with this Section 7.03(a), then Seller,
at its option, may remove the defective property from the sale, attempt
to cure the defect at Seller's sole cost and expense, agree to a
mutually acceptable purchase price reduction or terminate this
Agreement without liability to Buyer except for return of the
Performance Deposit, without interest, provided that Seller may not
terminate this Agreement unless the aggregate value of Title Defects
exceeds twenty percent (20%) of the Preliminary Purchase Price;
(b) Defective Interests shall be excluded from the Interests to be
purchased by Buyer hereunder and the Preliminary Purchase Price shall
be reduced in accordance with Section 2.03 by an amount equal to the
value thereof, as agreed to between Buyer and Seller (which reduction
shall be called an "EXCLUSION ADJUSTMENT") unless (i) prior to the
Closing, the basis for treating an Interest as a Defective Interest has
been removed, (ii) Buyer agrees to waive the relevant Title Defect or
other defect and purchase the Defective Interest, notwithstanding the
defect, (iii) Seller agrees to indemnify, defend and hold Buyer
harmless and Buyer agrees to accept such indemnification against all
losses, costs, expenses and liabilities with respect to such Defective
Interest arising from the defect or basis for such Interest being
treated as a Defective Interest, or (iv) Buyer and Seller agree to an
amount by which the value of the Defective Interest has been reduced
and the Preliminary Purchase Price is reduced by such amount in
accordance with Section 2.03 (which reduction shall be called a "DEFECT
ADJUSTMENT"), in which event the Interest shall be included in the
Interests to be purchased by Buyer hereunder and, except in the case of
(iv), no adjustment shall be made to the Preliminary Purchase Price; or
(v) Buyer and Seller do not agree, on or before the Scheduled Closing
Date, as to the value of the Defective Interest that is to be excluded
from the Preliminary Purchase Price and none of Subsections (i) through
(iv) of Section 7.03(b) are applicable, in which event Buyer may
terminate this Agreement without further liability or obligation, by
giving written notice of termination on or before the Scheduled Closing
Date.
(c) The amount by which the Preliminary Purchase Price is to be
reduced in accordance with Section 7.03 as the result of any Interest
being treated as a Defective Interest shall be determined as follows:
(1) In the event that the cost of remedying any Title Defect exceeds
the amount allocated to the affected Interest as set forth in
Exhibit A, then such Interest shall be excluded from the
transaction contemplated hereby and the Preliminary Purchase Price
shall be reduced by the amount allocated to the Interest so
excluded as set forth in Exhibit A (which adjustment shall be
called an EXCLUSION ADJUSTMENT");
(2) In the event that the net revenue interest of Seller in any
Interest is less than that set forth in Exhibit A, that portion of
the Preliminary Purchase price allocated on Exhibit A-1 to such
particular Interest shall be reduced in the proportion that the
net revenue interest actually owned by Seller bears to that set
forth in Exhibit A;
(3) In the event that the working interest costs payable with respect
to a particular Interest is greater than the working interest set
forth in Exhibit A, the Preliminary Purchase Price allocated on
Exhibit A-1 to such particular Interest shall be reduced in the
proportion that the working interest percentage attributable to
such interest exceeds that set forth in Exhibit A;
(4) In the event that (i) the record title interest of Seller to any
Interest is burdened by any lien, encumbrance, mortgage, pledge,
or security interest, or (ii) ad valorem, property or other
similar taxes and assessments for any years prior to the Effective
Time have not been paid, the Preliminary Purchase Price of such
interest shall be reduced by the sum necessary to discharge and
obtain a full record release of such burden or to pay such taxes;
and
(5) In the event there exist other Title Defects which would
materially adversely affect or interfere with the use, possession,
ownership or value of any Interest, Buyer, at its option, may
either, (i) exclude the affected Interest from the transaction
contemplated hereby and the Preliminary Purchase Price shall be
reduced by the amount allocated to the affected Interest as set
forth in Exhibit A, or (ii) accept such Interest.
(d) In determining which portion of the Interests are Defective
Interests, it is the intent of the parties to include all portions of
the Interests affected by the defect or basis for such Interests being
treated as Defective Interests; and
(e) If the deductions in the Preliminary Purchase Price to be made
pursuant to this ARTICLE VII exceed twenty percent (20%) of the
Preliminary Purchase price, either party may terminate this agreement
at any time prior to Closing.
7.04 Identification of Additional Defective Interests.
(a) If, prior to the Closing, there has been non-compliance with the
laws, rules, regulations, ordinances or orders of any governmental
agency or authority having jurisdiction over the affected Interests,
resulting in risk of loss of the affected Interests or value thereof,
then Buyer may elect to treat such of the affected Interests as are
adversely affected by such noncompliance as Defective Interests by
giving Seller notice thereof in accordance with Section 7.03(a);
(b) If, prior to the Closing, any preferential right to purchase any
of the Interests is exercised, Buyer may elect to treat that portion of
the Interests affected by the exercise of such preferential right as
Defective Interests by giving Seller notice thereof in accordance with
Section 7.03(a);
(c) If any necessary third party consent to assignment of any of the
Interests is not obtained prior to the Closing, Buyer may elect to
treat that portion of the Interests subject to such consent requirement
as Defective Interests by giving Seller notice thereof in accordance
with Section 7.03(a). For purposes hereof "NECESSARY THIRD-PARTY
CONSENTS" shall not include:
(1) consents customarily obtained subsequent to such assignment
including without limitation any consent of the State or the
Bureau of Indian Affairs or other Federal agencies or governmental
offices;
(2) consents contractually permitted to be obtained subsequent to such
assignment; or
(3) consents that, if not obtained, will not affect the
transferability, without penalty, of, the operation of, or the
receipt of income from, the Interests subject thereto, or result
in termination of the interests subject thereto or a material
decrease in the value thereof.
(d) If, prior to the Closing, Buyer becomes aware of any suit, action
or other proceeding before any court or governmental agency that would
result in loss or impairment of Seller's title to any portion of the
Interests or a portion of the value thereof, Buyer may elect to treat
the portion of the Interests affected thereby as Defective Interests by
giving Seller notice thereof in accordance with Section 7.03(a); and
(e) If any inaccuracy in Exhibit A results in a loss of value of a
portion of the Interests, Buyer may elect to treat that portion of the
Interest subject to such reduction in value as Defective Interests by
giving Seller notice thereof in accordance with Section 7.03(a).
ARTICLE VIII
CONDITIONS TO CLOSING
8.01 Seller's Conditions. The obligations of Seller at the Closing are
subject, at the option of Seller, to the satisfaction, at or prior to the
Closing, of the following conditions:
(a) All representations and warranties of Buyer contained in this
Agreement shall be true, correct and not misleading in all material
respects at and as of the Closing as if such representations and
warranties were made at and as of the Closing, and Buyer shall have
performed and satisfied all agreements and covenants in all material
respects required by this Agreement to be performed and satisfied by
Buyer at or prior to the Closing;
(b) No suit or other proceeding shall be pending before any court or
governmental agency seeking to restrain, prohibit or declare illegal,
or seeking substantial damages in connection with, the purchase and
sale contemplated by this Agreement, except (i) matters with respect to
which Seller has been adequately indemnified by Buyer, or (ii) any suit
or proceeding affecting only a portion of the Interests, which portion
of the Interests could be treated as a Defective Interest in accordance
with Section 7.04(d);
(c) The aggregate sum of Defect Adjustments and Exclusion Adjustments
shall not exceed thirty percent (30%) of the Preliminary Purchase
Price; and
(d) All necessary and material permissions, approvals and consents
required which are obtainable prior to Closing shall be in full force
and effect.
8.02 Buyer's Conditions. The obligations of Buyer at the Closing are
subject, at the option of Buyer, to the satisfaction, at or prior to the
Closing, of the following conditions:
(a) All representations and warranties of Seller contained in this
Agreement shall be true, correct and not misleading in all material
respects at and as of the Closing as if such representations and
warranties were made at and as of the Closing, and Seller shall have
performed and satisfied all agreements and covenants in all material
respects required by this Agreement to be performed and satisfied by
Seller at or prior to the Closing;
(b) No suit or other proceeding shall be pending before any court or
governmental agency seeking to restrain, prohibit or declare illegal,
or seeking substantial damages in connection with, the purchase and
sale contemplated by this Agreement, except (i) matters with respect to
which Buyer has been adequately indemnified by Seller, or (ii) any suit
or proceeding affecting only a portion of the Interests, which portion
of the Interests could be treated as a Defective Interest in accordance
with Section 7.04(d);
(c) The aggregate sum of Defect Adjustments and Exclusion Adjustments
shall not exceed thirty percent (30%) of the Preliminary Purchase
Price;
(d) All necessary and material permissions, approvals and consents
required which are obtainable prior to Closing shall be in full force
and effect; and
(e) The provisions of ARTICLE V.(e) have been satisfied.
8.03 Satisfaction or Waiver. If Seller and Buyer proceed with the Closing
as specified in ARTICLE IX, all conditions of Closing shall be deemed to
have been satisfied or waived and neither of the parties shall have any
liability whatsoever to the other arising out of, resulting from, or
attributable to any such condition of Closing, irrespective of whether such
conditions of Closing were in fact satisfied or waived. Nothing contained
in this Section 8.03 shall be a waiver or release of any breach of a
representation or warranty contained in this Agreement.
ARTICLE IX
CLOSING
9.01 Date of Closing. Unless the parties hereto mutually agree otherwise
and subject to the conditions stated in this Agreement, the consummation of
the transactions contemplated hereby (herein called the "CLOSING") shall be
held on September 30, 1996, at 10:00 A.M. (the "SCHEDULED CLOSING DATE").
The date Closing actually occurs is herein called the "CLOSING DATE".
9.02 Place of Closing. The Closing shall be held at Seller's office in
Dallas, Texas, in accordance with the Closing Instructions to be mutually
given in writing by Seller and Buyer.
9.03 Closing Obligations. At the Closing the following events shall occur,
each being a condition concurrent to the others and each being deemed to
have occurred simultaneously with the others:
(a) Seller shall execute, acknowledge and deliver to Buyer assignment,
bill of sale and conveyance documents (in sufficient counterparts to
facilitate recording), in form and substance as set forth in Exhibit C
hereto, conveying its portion of the Interests (other than those
portions of the Interests excluded under Sections 7.03(b) and 7.04) to
Buyer.
(b) Seller and Buyer shall execute and deliver a settlement statement
(herein called the "PRELIMINARY SETTLEMENT STATEMENT") prepared by
Seller and furnished to Buyer no less than seven (7) days prior to the
Scheduled Closing Date) that shall set forth the Closing Amount (as
hereinafter defined) and each adjustment and the calculation of such
adjustments used to determine such amount. The term "CLOSING AMOUNT"
shall mean the Preliminary Purchase Price adjusted as provided in
Section 2.03, using for such adjustments the best information then
available. Seller and Buyer further agree that Seller shall be
entitled to receive all proceeds attributable to ownership of the
Interests prior to the Effective Time and Buyer shall be entitled to
receive all proceeds attributable to the Interests after the Effective
Time.
(c) Buyer shall deliver the Closing Amount in the form of immediately
available U.S. funds, by wire transfer in accordance with instructions
to be provided by Seller.
(d) Seller shall deliver to Buyer exclusive possession of its portion
of the Interests (other than Interests excluded under Section 7.03(b)
or Section 7.04)
(e) Seller and Buyer shall execute, acknowledge and deliver transfer
orders or letters in lieu thereof directing all purchasers of
production to make payment to Buyer of proceeds attributable to
production after the Effective Time from the Interests assigned to
Buyer under Section 9.03(a), but not theretofore paid to Seller.
ARTICLE X
OBLIGATIONS AFTER CLOSING
10.01 Post-Closing Adjustments. Within one hundred thirty (130) days after
the Closing, Seller shall prepare and deliver to Buyer, in accordance with
this Agreement and generally accepted accounting principles, a statement
(herein called the "POST CLOSING SETTLEMENT STATEMENT") setting forth each
adjustment or payment that was not included or correctly included in the
Preliminary Settlement Statement and showing the calculation of such
adjustments. Within thirty (30) days after receipt of the Post Closing
Settlement, Buyer shall deliver to Seller a written report containing any
changes that Buyer proposes to be made to the Post Closing Settlement
Statement. The parties shall undertake to agree with respect to the amounts
due pursuant to such Post Closing adjustment no later than one hundred sixty
(160) days after the Closing Date. The date upon which such agreement is
reached or upon which the Final Purchase Price is established, shall be
herein called the "SETTLEMENT DATE". In the event that (i) the Final
Purchase Price is more than the Closing Amount, Buyer shall pay to Seller,
in certified U.S. Funds, the amount of such difference (ii) the Final
Purchase Price is less than the Closing Amount, Seller shall pay to Buyer,
in certified U.S. funds, the amount of such difference. Payment by Buyer or
Seller shall be made within ten (10) days of the Final Settlement Date.
After the Settlement Date, additional proceeds received by or expenses paid
by either Buyer or Seller on behalf of the other shall be settled by
invoicing the other party for expenses paid or remitting to the other party
any proceeds received. The gas imbalances of the Interests shall be
considered final and neither party thereafter shall make claim upon the
other concerning same.
10.02 Files and Records. Seller shall have the right to make and retain
copies of the Records prior to delivery thereof to Buyer. Within thirty
(30) days after the Closing Date, Seller shall deliver to Buyer all original
files and Recoronveyed to Buyer.
10.03 Taxes and Recording Fees. Buyer shall pay all sales taxes occasioned
by the sale of the Interests, all ad valorem, property, production, excise,
severance, windfall profit and other taxes, except income taxes, based upon
or measured by the ownership of the property, the production of hydrocarbons
or the receipt of proceeds therefrom which apply to or arise from and after
the Effective Time together with all documentary, filing and recording fees
required in connection with the filing and recording of any assignments or
other documents recorded in connection with the sale of the Interests.
10.04 Further Assurances. After Closing, Seller and Buyer shall each
execute, acknowledge and deliver, or cause to be executed, acknowledged and
delivered, such instruments, and shall each take such other action, as may
be necessary or advisable to carry out their respective obligations under
this Agreement and under any document, certificate or other instrument
delivered pursuant hereto.
10.05 Survival. The warranties or representations herein made by Seller
are conditions to the obligations of Buyer hereunder and no warranty or
representation herein made by Seller (other than those contained in 3.01(a),
(b), (c), (d), (e), (f), (i), (j), (k), (o) and (q) shall survive the
Closing. The agreements set forth in ARTICLE X and the matters set forth in
ARTICLES V and VI and Section 13.12 shall survive the Closing for a period
of one (1) year from the Closing Date.
ARTICLE XI
TERMINATION OF AGREEMENT
11.01 Termination. This Agreement and the transactions contemplated hereby
may be terminated in the following instances:
(a) By Seller if the conditions set forth in Section 8.01(a)
through 8.01(d) are not satisfied in all material respects or
waived as of the Scheduled Closing Date;
(b) By Buyer if the conditions set forth in Section 8.02(a)
through 8.02(e) are not satisfied in all material respects or
waived as of the Scheduled Closing Date;
(c) By Buyer pursuant to Section 7.03(b);
(d) Pursuant to Article V.(e); or
(e) At any time by the mutual written agreement of Buyer and
Seller.
11.02 Liabilities Upon Termination. If this Agreement is breached by
either party, nothing contained herein shall be construed to limit Seller's
or Buyer's legal or equitable remedies, including, without limitation,
damages for the breach or failure of any representation, warranty, covenant
or agreement contained herein (whether or not the non-defaulting party has
terminated the Agreement) or the right to enforce specific performance of
this Agreement; provided, however, that a party terminating this Agreement
shall have no right to specific performance thereof, and provided, further,
that neither party shall have a right to specific performance thereof if
this Agreement is terminated pursuant to Section 11.01 hereof.
ARTICLE XII
TAX-FREE EXCHANGE
12.0 Tax-Free Exchange. Seller has elected to effect a like-kind exchange
pursuant to Section 1031 of the Internal Revenue Code of 1986, as amended,
and the regulations promulgated thereunder, with respect to the Interests (a
"Like-Kind Exchange"). In order to effect a Like-Kind Exchange, Buyer shall
cooperate and do all acts as may be reasonably required or requested by
Seller with regard to effecting the Like-Kind Exchange, including, but not
limited to, executing an Exchange Escrow Agreement, a form of which is
attached hereto as Exhibit D, in accordance with Treasury Regulation Section
1.1031(k)-1(g)(3); provided, however, Buyer shall incur no expense in
connection with such Like-Kind Exchange and Buyer shall not be required to
take title to any property other than the Interests in connection with the
Like-Kind Exchange, and Buyer's possession of the Interests will not be
delayed by reason of any such Like-Kind Exchange.
ARTICLE XIII
MISCELLANEOUS
13.01 Exhibits and Schedules. Exhibits A through D are attached hereto and
incorporated herein by this reference.
13.02 Expenses. Except as otherwise specifically provided, all fees, costs
and expenses incurred by Buyer or Seller in negotiating this Agreement or in
consummating the transactions contemplated by this Agreement shall be paid
by the party incurring the same, including, without limitation, legal and
accounting fees, costs and expenses.
13.03 Notices. All notices and communications required or permitted under
this Agreement shall be in writing, delivered to or sent by U. S. Mail or
Express Delivery, postage prepaid, or by facsimile transmission, addressed
as follows:
Maynard Oil Company
Attention Cassondra Foster
8080 North Central Expressway, Suite 660
Dallas, TX 75206
Phone: (214) 891-8461
Fax: (214) 891-8827
Enron Oil & Gas Company
Attention Lee McVay, Vice President and General Manager
20 North Broadway, Suite 800
Oklahoma City, OK 73102
Phone: (405) 239-7880
Fax: (405) 239-7858
Any party may, by written notice so delivered to the others, change the
address or individual to which delivery shall thereafter be made.
13.04 Amendments. Except as otherwise expressly provided herein, this
Agreement may not be amended nor any rights hereunder waived except by an
instrument in writing signed by the party to be charged with such amendment
or waiver and delivered by such party to the party claiming the benefit of
such amendment or waiver.
13.05 Assignment. Neither Seller nor Buyer shall assign all or any portion
of its rights or delegate all or any portion of its duties hereunder without
the prior written consent of the other to such assignment; provided,
however, that Buyer or Seller or both may assign all or part of this
Agreement to a qualified intermediary to facilitate a deferred like-kind
exchange for federal tax purposes. Subject to the foregoing, this Agreement
shall inure to the benefit of and be binding upon Seller, Buyer and their
respective successors and assigns.
13.06 Announcements. Seller and Buyer shall consult with each other with
regard to all press releases and other announcements issued at or prior to
the Closing concerning this Agreement or the transactions contemplated
hereby and, except as may be required by applicable laws or the applicable
rules, and regulations of any governmental agency or stock exchange, neither
Buyer nor Seller shall issue any such press release or other publicity
without the prior written consent of the other party.
13.07 Headings. The headings of the articles and sections of this
Agreement are for guidance and convenience of reference only and shall not
limit or otherwise affect any of the terms or provisions of this Agreement.
13.08 Counterparts. This Agreement, and any document or instrument entered
into, given or made pursuant to this Agreement or authorized hereby, and any
amendment or supplement thereto, may be executed in any number of
counterparts, and, when so executed, each of which shall be deemed an
original instrument, and shall have the same force and effect as though all
signatures appeared on a single document, and all of which together shall
constitute but one and the same instrument. Any signature page of this
Agreement or of such an amendment, supplement, document or instrument may be
detached from any counterpart thereof and attached to another counterpart
without impairing the legal effect of any signatures identical in form
thereto but having attached to it one or more additional signature pages.
13.09 References. References made in this Agreement, including the use of
a pronoun, shall be deemed to include where applicable, masculine, feminine,
singular or plural, individuals, partnerships or corporations. As used in
this Agreement, "person" shall mean any natural person, corpate or other
entity.
13.10 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Texas, without regard to its
choice of law principles provided, however, that issues in connection with
title to the Interests shall be governed by the applicable laws of the State
of Oklahoma.
13.11 Entire Agreement. This Agreement (including the Exhibits hereto)
constitutes the entire understanding among the parties with respect to the
subject matter hereof, superseding all negotiations, prior discussions and
prior agreements and understandings relating to such subject matter.
13.12 Securities Laws. Buyer has advised Seller that the interests are not
being acquired for distribution or transfer in violation of the securities
laws of the United States or of any state thereof. Buyer hereby agrees to
protect, indemnify and hold harmless Seller from and against any and all
claims, costs (including, without limitation, court costs and reasonable
attorney's fees), expenses, damages and liabilities which arise under
applicable state or federal securities laws as a result of acts or omissions
of Buyer or its affiliates which are contrary to such laws and which are in
connection with the transactions contemplated hereby or the sale or other
disposition of the Interests by Buyer or its affiliates.
Seller hereby agrees to protect, indemnify and hold harmless Buyer from
and against any and all claims, costs (including, without limitation, court
costs and reasonable attorney's fees), expenses, damages and liabilities
which arise under applicable state or federal securities laws as a result of
acts or omissions of Seller or its affiliates which are contrary to such
laws and which are in connection with the transactions contemplated hereby.
Executed as of the date first above written.
SELLER
MAYNARD OIL COMPANY
By: /s/ Glenn R. Moore
---------------------------------
Glenn R. Moore
President
BUYER
ENRON OIL & GAS COMPANY
By: /s/ Leland J. McVay
---------------------------------
Leland J. McVay
Vice President
EXHIBIT A
Attached to and made a part of Purchase and Sale Agreement dated
September 12, 1996, by and between Maynard Oil Company, Seller,
and Enron Oil & Gas Company, as Buyer
ELLIS COUNTY, OKLAHOMA
PN 440502 (UT-407)
EHRLICH B NO. 1-18
EXPENSE INTEREST 0.2543316
REVENUE INTEREST 0.2225402
PN 440522
EHRLICH B 2-18
EXPENSE INTEREST 0.2543316
REVENUE INTEREST 0.2225402
Oil and Gas Lease dated March 4, 1952, by and between Wesley Ehrlich
and Wilma E. Ehrlich, as Lessor, and Henry Clay, as Lessee, recorded in
Volume 58, page 10 of the Records of Ellis County, Oklahoma, covering the
NE/4 of Section 18, Township 23 North, Range 25 West, Ellis County,
Oklahoma, LIMITED to rights from the surface to the base of the Morrow
formation. (LF-04901-00)
The hereinabove referenced lease is subject to Operating Agreement
dated March 29, 1961, by and between Amoco Production Company, as Operator,
and Phillips Petroleum Company, et al, as Non-Operators; Gas Purchase and
Sale Agreement dated December 19, 1985, by and between Shell Western E&P
Inc. and Maynard Oil Company; Gas Agreement amending various Gas Purchase
Contracts, dated February 5, 1990, by and between Northern Natural Gas
Company, a division of Enron Corp., successor in interest to Northern
Natural Gas Company, as Buyer, and Maynard Oil Company, as Seller;
Assignment, Conveyance and Bill of Sale effective December 1, 1985, by and
between Shell Western E&P Inc. and Maynard Oil Company recorded in Volume
459, page 381 of the Records of Ellis County, Oklahoma.
PN 440506 (UT-417)
IRVIN NO. 1-25
EXPENSE INTEREST 0.0000000
REVENUE INTEREST 0.0068359 (ORI)
0.0039063 (ROYALTY)
Oil and Gas Lease dated January 5, 1952, by and between Carrie L.
O'Hern, as Lessor, and C. V. Richardson, as Lessee, recorded in Volume 58,
page 282 of the Records of Ellis County, Oklahoma, INSOFAR AND ONLY INOSFAR
as said lease covers the NE/4 NE/4 of Section 25, Township 24 North, Range
25 West, Ellis County, Oklahoma, LIMITED to rights from the surface to the
base of the Morrow formation. (LF-04923-00)
The hereinabove referenced lease is subject to Agreement dated November
27, 1961, by and between Shell Oil Company to Pan American Petroleum
Corporation; Partial Assignment dated December 22, 1961, by and between
Shell Oil Company to Pan American Petroleum Corporation.
An undivided one-half (l/2) interest in the oil, gas and other
minerals in and under and that may be produced from the NE/4 NE/4 of Section
25, Township 24 North, Range 25 West, Ellis County, Oklahoma, LIMITED to
rights from the surface to the base of the Morrow formation, as conveyed in
that certain Mineral Deed dated March 13, 1957, by and between James B.
Franklin, as Grantor, and Shell Canadian Exploration Company, as Grantee,
recorded in Volume 92, page 362 of the Records of Ellis County, Oklahoma.
(LF-04923-AA-01)
The hereinabove referenced mineral deed is subject to Oil and Gas Lease
dated January 5, 1952, from Carrie L. O'Hern to C. V. Richardson; Purchase
and Sale Agreement dated December 19, 1985, by and between Shell Western E&P
Inc. and Maynard Oil Company; Assignment, Conveyance and Bill of Sale
effective December 1, 1985, by and between Shell Western E&P Inc. and
Maynard Oil Company recorded in Volume 459, page 381 of the Records of Ellis
County, Oklahoma.
PN 440602 (UT-435)
KATTERJOHN NO. 1-2 AKA SHATTUCK OP UNIT
EXPENSE INTEREST 0.1174122
REVENUE INTEREST 0.1011284
PN 440601N
KATHY NO. 1-14
BEFORE PAYOUT EXPENSE INTEREST 0.0000000
BEFORE PAYOUT REVENUE INTEREST 0.0000000
AFTER PAYOUT EXPENSE INTEREST 0.1174122
AFTER PAYOUT REVENUE INTEREST 0.1027357
Oil and Gas Lease dated November 25, 1955, by and between D. L.
Katterjohn, as Lessor, and E. J. Farris, as Lessee, recorded in Volume 78,
pages 27-28 of the Records of Ellis County, Oklahoma, covering Lots 1 and 2
and S/2 NE/4 of Section 2, Township 22 North, Range 26 West, together with
any rights, titles and interests acquired by Shell Western E&P Inc. in and
to the Pan Am Shattuck Operating Unit by virtue of that certain unrecorded
Operating Agreement dated November 5, 1958 by and between Pan American
Petroleum Company, as Operator, and Shell Oil Company, et al, as Non-
Operators. (LF-04929-00)
The hereinabove referenced lease is subject to Gas Purchase Contract
dated October 1, 1989, as amended, by and between Production Gathering
Company, as Buyer, and Maynard Oil Company, as Seller; Operating Agreement
dated November 5, 1958, as amended, by and between Pan American Petroleum
Corporation, as Operator, and Shell Oil Company, et al, as Non-Operators,
May 1, 1959; Purchase and Sale Agreement dated December 19, 1985, by and
between Shell Western E&P Inc. and Maynard Oil Company; Assignment,
Conveyance and Bill of Sale effective December 1, 1985, by and between Shell
Western E&P Inc. and Maynard Oil Company recorded in Volume 459, page 381 of
the Records of Ellis County, Oklahoma.
PN 440508 (UT-442)
LUANE NO. 1-28
EXPENSE INTEREST 0.0625000
REVENUE INTEREST 0.0546875
0.0078125 (ORI)
An undivided one-fourth (1/4) interest in the oil, gas and other
minerals in and under and that may be produced from the SW/4 of Section 28,
Township 24 North, Range 25 West, Ellis County, Oklahoma, LIMITED to rights
from the surface to the base of the Morrow formation, as conveyed in that
certain Mineral Deed dated March 13, 1957, by and between James B. Franklin,
as Grantor, and Shell Canadian Exploration Company, as Grantee, recorded in
Volume 92, page 367 of the Records of Ellis County, Oklahoma and
subsequently conveyed to Maynard Oil Company from Shell Western E&P Inc. by
instrument entitled "Assignment, Conveyance and Bill of Sale" effective
December 1, 1985, recorded in Volume 459, page 381 of the Records of Ellis
County, Oklahoma. (LF-04893-AA)
The hereinabove referenced mineral deed is subject to Gas Purchase
Agreement dated October 1, 1989 by and between Production Gathering Company,
as Buyer, and Maynard Oil Company, as Seller; Operating Agreement dated
January 18, 1979, by and between Amoco Production Company, as Operator, and
Mattax Petroleum Corporation, et al, as Non-Operators; Purchase and Sale
Agreement dated December 19, 1985, by and between Shell Western E&P Inc. and
Maynard Oil Company; Assignment, Conveyance and Bill of Sale effective
December 1, 1985, by and between Shell Western E&P Inc. and Maynard Oil
Company recorded in Volume 459, page 381 of the Records of Ellis County,
Oklahoma.
PN 440509 (UT-446)
MASSEY UNIT NO. 1-22
EXPENSE INTEREST 0.0312500
REVENUE INTEREST 0.0273437
0.0039063 (ROYALTY)
An undivided one-fourth (1/4) interest in the oil, gas and other
minerals that may be produced from the N/2 NE/4 of Section 22, Township 24
North, Range 25 West, Ellis County, Oklahoma, LIMITED to rights from the
surface to the base of the Morrow formation, as conveyed in that certain
Mineral Deed dated March 30, 1957, by and between James B. Franklin, as
Grantor, and Shell Canadian Exploration Company, as Grantee, recorded in
Volume 91, page 181 of the Records of Ellis County, Oklahoma and
subsequently conveyed to Maynard Oil Company from Shell Western E&P Inc. by
instrument entitled "Assignment, Conveyance and Bill of Sale" effective
December 1, 1985, recorded in Volume 459, page 381 of the Records of Ellis
County, Oklahoma. (LF-04895-AA)
The hereinabove referenced mineral deed is subject to Gas Purchase
Contract dated December 4, l980 between Michigan-Wisconsin Pipeline Company
(N/K/A ANR Pipeline Companies), as Buyer, and Shell Oil Company, as Seller;
Operating Agreement dated May 11, 1978, by and between Amoco Production
Company, as Operator, and Kenneth D. Kirkland, et al, as Non-Operators;
Purchase and Sale Agreement dated December 19, 1985, by and between Shell
Western E&P Inc. and Maynard Oil Company; Assignment, Conveyance and Bill of
Sale effective December 1, 1985, by and between Shell Western E&P Inc. and
Maynard Oil Company recorded in Volume 459, page 381 of the Records of Ellis
County, Oklahoma.
PN 440513 (UT-412)
PARKER NO. 9-47
EXPENSE INTEREST 0.0000000
REVENUE INTEREST 0.0078125 (ORI)
Oil and Gas Lease dated September 9, 1947, by and between Carrie Lee
O'Hern, as Lessor, and W. G. Mouser, as Lessee, recorded in Volume 36, page
364 of the Records of Ellis County, Oklahoma, covering S/2 S/2 of Section
29, Township 24 North, Range 25 West, Ellis County, Oklahoma, LIMITED to
rights from the surface to the base of the Morrow formation. (LF-04896-00-
01)
The hereinabove referenced lease is subject to Assignment dated March
14, 1958, from the Texas Company to Shell Oil Company; Oklahoma Corporation
Commission CD No. 44469, Order No. 122911 dated July 19, 1976; Purchase and
Sale Agreement dated December 19, 1985, by and between Shell Western E&P
Inc. and Maynard Oil Company; Assignment, Conveyance and Bill of Sale
effective December 1, 1985, by and between Shell Western E&P Inc. and
Maynard Oil Company recorded in Volume 459, page 381 of the Records of Ellis
County, Oklahoma.
PN 440516 (UT-403)
SELLS UNIT NO. 1-24 AND 2-24
EXPENSE INTEREST 0.0000000
REVENUE INTEREST 0.0078125 (ROYALTY)
An undivided one-fourth (1/4) interest in the oil, gas and other
minerals in and under and that may be produced from the W/2 W/2 of Section
24, Township 24 North, Range 25 West, Ellis County, Oklahoma, LIMITED to the
Morrow Common Source of Supply, and being the same lands as conveyed in that
certain Mineral Deed dated March 13, 1957, by and between James B. Franklin,
as Grantor, and Shell Canadian Exploration Company, as Grantee, recorded in
Volume 92, page 365 of the Records of Ellis County, Oklahoma, and
subsequently conveyed to Maynard Oil Company from Shell Western E&P Inc. by
instrument entitled "Assignment, Conveyance and Bill of Sale" effective
December 1, 1985, recorded in Volume 459, page 381 of the Records of Ellis
County, Oklahoma. (LF-04918-AA-00)
The hereinabove referenced mineral interest is subject to Oil and Gas
Lease dated July 5, 1966, by and between Shell Oil Company, as Lessor, and
Tidewater Oil Company, as Lessee,; Purchase and Sale Agreement dated
December 19, 1985, by and between Shell Western E&P Inc. and Maynard Oil
Company; Assignment, Conveyance and Bill of Sale effective December 1, 1985,
by and between Shell Western E&P Inc. and Maynard Oil Company recorded in
Volume 459, page 381 of the Records of Ellis County, Oklahoma.
PN 440704 (UT-432)
SUTTER D NO. 1-21
EXPENSE INTEREST 0.2500000
REVENUE INTEREST 0.2187500
PN 440704N
SUTTER D NO. 2-21
BEFORE PAYOUT EXPENSE INTEREST 0.0000000
BEFORE PAYOUT REVENUE INTEREST 0.0312500
AFTER PAYOUT EXPENSE INTEREST 0.1000000
AFTER PAYOUT REVENUE INTEREST 0.0875000
Oil and Gas Lease dated May 22, 1956, by and between L. T. Sutter and
Naomi Sutter, et al, as Lessors, and James B. Franklin, as Lessee, recorded
in Volume 81, page 314 of the Records of Ellis County, Oklahoma, covering
SW/4 of Section 21, Township 23 North, Range 23 West, Ellis County,
Oklahoma. (LF-04885-00)
The hereinabove referenced lease is subject to Operating Agreement
dated December 3, 1964, by and between Pan American Petroleum Corporation,
as Operator, and Shell Oil Company, et al, as Non-Operators; Oklahoma
Corporation Commission Cause C.D. No. 14981; Order No. 45804; Purchase and
Sale Agreement dated December 19, 1985, by and between Shell Western E&P
Inc. and Maynard Oil Company; Assignment, Conveyance and Bill of Sale
effective December 1, 1985, by and between Shell Western E&P Inc. and
Maynard Oil Company recorded in Volume 459, page 381 of the Records of Ellis
County, Oklahoma; Limited and Partial Assignment of Oil and Gas dated
October 27, 1995, effective July 6, 1994, from Maynard Oil Company, as
Assignor, to Amoco Production Company, as Assignee, recorded in _____, page
_____ of the Records of Ellis County, Oklahoma.
PN 440705 (UT-399)
SUTTER STATE NO. 1-17
EXPENSE INTEREST 0.2500000
REVENUE INTEREST 0.2187500
PN 440705-N
SUTTER STATE NO. 2-17
BEFORE PAYOUT EXPENSE INTEREST 0.0000000
BEFORE PAYOUT REVENUE INTEREST 0.0000000
AFTER PAYOUT EXPENSE INTEREST 0.2500000
AFTER PAYOUT REVENUE INTEREST 0.2187500
Oil and Gas Lease dated July 28, 1964, by and between State of
Oklahoma bearing serial number 23-CS-10081, as Lessor, and Shell Oil
Company, as Lessee, recorded in Volume 145, page 629 of the Records of Ellis
County, Oklahoma, covering SW/4 NE/4, NW/4, NW/4 SE/4, N/2 SW/4 of Section
17, Township 22 North, Range 23 West, Ellis County, Oklahoma. (LF-04882-AA)
The hereinabove referenced lease is subject to Operating Agreement
dated July 20, 1965, by and between Gulf Oil Corporation, as Operator, and
Shell Oil Company, et al, as Non-Operators; Purchase and Sale Agreement
dated December 19, 1985, by and between Shell Western E&P Inc. and Maynard
Oil Company; Assignment, Conveyance and Bill of Sale effective December 1,
1985, by and between Shell Western E&P Inc. and Maynard Oil Company recorded
in Volume 459, page 381 of the Records of Ellis County, Oklahoma.
PN 439401
DAVID SWENN (UT-414)
EXPENSE INTEREST 0.0312500
REVENUE INTEREST 0.0273437
Oil and Gas Lease dated October 17, 1956, by and between L. J. Hamby,
et al, as Lessor, and James B. Franklin, as Lessee, recorded in Book 85,
page 535 of the Records of Ellis County, Oklahoma, INSOFAR AND ONLY INSOFAR
as said lease covers the 80.00 acres, more or less, being the S/2 SE/4 of
Section 10, Township 23 North, Range 26 West, LIMITED to rights from the
surface to the base of the Morrow formation, Ellis County, Oklahoma (LF-
04905-AA-02)
The hereinabove referenced lease is subject to Operating Agreement dated
June 13, 1960, by and between Texaco, Inc., as Operator, and Shell Oil
Company (predecessor in title to Maynard Oil Company), et al, as Non-
Operators.
PN 440518
WHITE NO. 1-21 1-C AND 1-T (UT-440)
EXPENSE INTEREST 0.1250000
REVENUE INTEREST 0.1093750
0.0156250 (ROYALTY)
An undivided one-fourth (1/4) interest in the oil, gas and other
minerals in and under and that may be produced from the E/2 of Section 21,
Township 24 North, Range 25 West, Ellis County, Oklahoma, as conveyed in
that certain Mineral Deed dated March 14, 1957, by and between James B.
Franklin, as Grantor, and Shell Canadian Exploration Company, as Grantee,
recorded in Volume 92, page 363 of the Records of Ellis County, Oklahoma,
LIMITED to rights from the surface to the base of the deepest producing
formation and subsequently conveyed to Maynard Oil Company from Shell
Western E&P Inc. by instrument entitled "Assignment, Conveyance and Bill of
Sale" effective December 1, 1985, recorded in Volume 459, page 381 of the
Records of Ellis County, Oklahoma. (LF-04892-AA)
The hereinabove referenced mineral deed is subject to Gas Purchase
Agreement dated October 1, 1989, Production Gathering Company, as Buyer, and
Maynard Oil Company, as Seller; Operating Agreement dated June 5, l980, by
and between Gibraltar Exploration, Ltd., as Operator and Shell Oil Company,
et al, as Non-Operators; Purchase and Sale Agreement dated December 19,
1985, by and between Shell Western E&P Inc. and Maynard Oil Company;
Assignment, Conveyance and Bill of Sale effective December 1, 1985, by and
between Shell Western E&P Inc. and Maynard Oil Company recorded in Volume
459, page 381 of the Records of Ellis County, Oklahoma.
STEPHENS COUNTY, OKLAHOMA
PN 438901 (UT-371)
ALLAMON NO. 15-A
EXPENSE INTEREST 0.2441400
REVENUE INTEREST 0.2136231
Oil and Gas Lease dated May 23, 1969, by and between Country Club Land
Co., as Lessor, and Shell Oil Company, as Lessee, recorded in Volume 1027,
page 275 of the Records of Stephens County, Oklahoma. (LF-04705-AA)
Oil and Gas Lease dated May 23, 1969, by and between Helen Kuhn, et
al, as Lessor, and Shell Oil Company, as Lessee, recorded in Volume 1027,
page 273 of the Records of Stephens County, Oklahoma. (LF-04705-AB)
The hereinabove referenced leases cover the N/2 NE/4, N/2 SW/4
NE/4 and the SE/4 SW/4 NE/4 of Section 15, Township 1 North, Range
7 West, Stephens County, Oklahoma.
Oil and Gas Lease dated June 6, 1969, by and between Edward Clark, as
Lessor, and Shell Oil Company, as Lessee, recorded in Volume 1028, page 13
of the Records of Stephens County, Oklahoma, covering the NW/4 of Section
15, Township 1 North, Range 7 West, Stephens County, Oklahoma. (LF-04706-
AA)
Oil and Gas Lease dated May 2, 1969, by and between Frazier Pierce and
Zuby Pierce, as Lessor, and Shell Oil Company, as Lessee, recorded in Volume
1025, page 235 of the Records of Stephens County, Oklahoma. (LF-04707-AA)
Oil and Gas Lease dated June 26, 1969, by and between Georgia Boyd, et
al, as Lessor, and Shell Oil Company, as Lessee, recorded in Volume 1030,
page 283 of the Records of Stephens County, Oklahoma. (LF-04707-AB)
The hereinabove referenced leases cover the SW/4 of Section 15,
Township 1 North, Range 7 West, Stephens County, Oklahoma.
The hereinabove referenced leases are subject to Farmout Agreement and
Assignment dated June 5, 1973, from Shell Oil Company to James R. Hazelwood;
Farmout Agreement and Assignment dated August 17, 1973, by and between James
R. Hazelwood and Tesoro Petroleum Corporation; Farmout Agreement and
Assignment dated December 6, 1976, from Shell Oil Company to Tesoro
Petroleum Corporation; Operating Agreement dated May 1, 1977, by and between
Tesoro Petroleum Corporation, as Operator, and Shell Oil Company, et al, as
Non-Operators, covering Section 15, Township 1 North, Range 7 West; Gas
Purchase Agreement by and between Tesoro Petroleum Corporation and Arkansas
Louisiana Gas Company and Gas Purchase Agreement dated May 7, 1978, by and
between Shell and Oklahoma Natural Gas Company; Purchase and Sale Agreement
dated December 3, 1984, by and between Shell Western E&P Inc. and Maynard
Oil Company; Assignment, Conveyance and Bill of Sale by and between Shell
Western E&P Inc. and Maynard Oil Company recorded in Volume 1585, page 704
of the Records of Stephens County, Oklahoma; Farmout Agreement dated
September 27, 1989, by and between Maynard Oil Company, as Farmor, and
Kaiser-Francis Oil Company, as Farmee; Corporation Commission Order No.
341238.
PN 438905 (UT-373)
BUMPASS NO. 1-22
EXPENSE INTEREST BEFORE PAYOUT 0.0000000
REVENUE INTEREST BEFORE PAYOUT 0.0151367
EXPENSE INTEREST AFTER PAYOUT 0.0302734
REVENUE INTEREST AFTER PAYOUT 0.0321655
Oil and Gas Lease dated October 16, 1969, by and between David Harris,
et al, as Lessor, and L. R. Snyder, as Lessee, recorded in Volume 1042, page
390 of the Records of Stephens County, Oklahoma, covering the E/2 NW/4, SW/4
NW/4, E/2 NW/4 NW/4, SW/4 NW/4 NW/4 and the NW/4 NW/4 SW/4 of Section 22,
Township 1 North, Range 7 West, Stephens County, Oklahoma. (LF-04708-00)
Oil and Gas Lease dated May 2, 1969, by and between Frances Louise
Jackson and Miles Jackson, as Lessor, and Shell Oil Company, as Lessee,
recorded in Volume 1024, page 428 of the Records of Stephens County,
Oklahoma. (LF-04709-AA)
Oil and Gas Lease dated May 21, 1969, by and between L. W. Corbett,
Executor of the Joseph E. Hanson Estate, deceased, as Lessor, and Shell Oil
Company, as Lessee, recorded in Volume 1024, page 426 of the Records of
Stephens County, Oklahoma. (LF-04709-AB)
The hereinabove referenced leases cover the E/2 SW/4, SW/4 SW/4,
S/2 NW/4 SW/4 and the NE/4 NW/4 SW/4 of Section 22, Township 1
North, Range 7 West, LIMITED to rights from the surface to 12,590
feet below the surface and LIMITED to the borehole of the Bumpass
No. 1-22, Stephens County, Oklahoma.
The hereinabove referenced leases are subject to Farmout Agreement and
Assignment dated June 5, 1973, from Shell Oil Company to James R. Hazelwood;
Assignment dated July 1, 1974, from Shell Oil Company to James R. Hazelwood,
recorded in Volume 1171, page 141; Gas Purchase Contract dated May 1, 1974,
as amended, by and between Arkansas Louisiana Gas Company, as Buyer, and
Tesoro Petroleum Corporation, et al, as Seller; Gas Purchase Contract dated
February 8, 1978, as amended, by and between Oklahoma Natural Gas Company,
as Buyer, and Shell Oil Company, et al, as Seller; Assignment from L. R.
Snyder to Shell Oil Company, recorded in Volume 1042, page 391; Purchase and
Sale Agreement dated December 3, 1984, by and between Shell Western E&P Inc.
and Maynard Oil Company; Assignment, Conveyance and Bill of Sale effective
November 1, 1984, by and between Shell Western E&P Inc. and Maynard Oil
Company, recorded in Volume 1585, page 704 of the Records of Stephens
County, Oklahoma; Farmout Agreement dated September 27, 1989, by and between
Maynard Oil Company, as Farmor, and Kaiser-Francis Oil Company, as Farmee;
Corporation Commission Order No. 341238; Operating Agreement dated October
17, 1973, by and between Tesoro Petroleum Corporation, as Operator, and
Montgomery Exploration Company, et al, as Non-Operators; Oklahoma
Corporation Commission Order No. 100058 dated September 25, 1973; Farmout
Agreement and Assignment dated August 17, 1973, by and between James R.
Hazelwood and Tesoro Petroleum Corporation; Limited and Partial Assignment
of Oil and Gas Leases dated May 24, 1995, from Maynard Oil Company to Apache
Corporation, recorded in Volume _____, page _____ of the Records of Stephens
County, Oklahoma.
EXHIBIT A-1
Attached to and made a part of Purchase and Sale Agreement dated September
12, 1996, by and between Maynard Oil Company as Seller, and Enron Oil & Gas
Company, as Buyer
<TABLE>
<CAPTION>
PRELIMINARY PROJECTED
WELLBORE UNIT PURCHASE IMBALANCE PAYOUT
VALUE VALUE PRICE VOLUME DATE AMOUNT
<S> <C> <C> <C> <C> <C> <C> <C>
440502 EHRLICH B 1-18 $21,588 $32,472 $54,060 10,059 N/APP N/APP
440522 EHRLICH B 2-18 $60,680 $22,892 $83,572 (3,046) N/APP N/APP
440506 IRVIN E 1-25 $1,961 $0 $1,961 0 N/APP N/APP
440601 KATHY 1-14 $0 $0 $0 0 N/APP N/APP
440602 KATTERJOHN 1-2 $13,837 $3,757 $17,594 13,593 N/APP N/APP
440508 LUANE 1-28 $8,679 $2,000 $10,679 2,699 N/APP N/APP
440509 MASSEY 1-22 $4,461 $37,528 $41,989 956 N/APP N/APP
440513 PARKER 9-47 $1,250 $0 $1,250 0 N/APP N/APP
440516 SELLS UNIT 1&2-24 $6,688 $0 $6,688 0 N/APP N/APP
440704 SUTTER D 1-21 $53,493 $8,000 $61,493 5,788 N/APP N/APP
440704 SUTTER D 2-21 $6,148 $0 $6,148 0 N/APP N/APP
440705 SUTTER ST 1-17 $55,590 $482,288 $537,878 (108) N/APP N/APP
440705 SUTTER ST 2-17 $0 $0 $0 0 06/95 $951,797
439401 DAVID SWENN $30,502 $26,226 $56,728 1 N/APP N/APP
440518 WHITE 1-21 1C&1T $10,261 $55,592 $65,853 (5,856) N/APP N/APP
438901 ALLAMON 15A $32,927 $9,816 $42,743 (5,860) KAISER- N/AVA
FRANCIS
438905 BUMPASS 1-22 $798 $0 $798 0 N/APP N/APP
TOTAL $308,863 $680,571 $989,434 18,226
</TABLE>
EXHIBIT A-2
PREFERENTIAL RIGHTS TO PURCHASE
Attached to and made a part of Purchase and Sale Agreement dated September
12, 1996, by and between Maynard Oil Company as Seller, and Enron Oil & Gas
Company, as Buyer
<TABLE>
<CAPTION>
PRELIMINARY
WELLBORE UNIT PURCHASE
VALUE VALUE PRICE
<S> <C> <C> <C> <C>
440704 SUTTER D 1-21 $53,493 $8,000 $61,493
440704 SUTTER D 2-21 $6,148 $0 $6,148
440705 SUTTER ST 1-17 $55,590 $482,288 $537,878
440705 SUTER ST 2-17 $0 $0 $0
439401 DAVID SWENN $30,502 $26,226 $56,728
$145,733 $516,514 $662,247
</TABLE>
EXHIBIT B
AUTHORIZATIONS FOR EXPENDITURE
Attached to and made a part of Purchase and Sale Agreement dated September
12, 1996, by and between Maynard Oil Company as Seller, and Enron Oil & Gas
Company, as Buyer
SUTTER STATE 3-17
DRILL & COMPLETE LOWER MORROW TEST
$229,025 DRY HOLE COST
$437,025 COMPLETION COSTS
EXHIBIT C
Attached to and made a part of Purchase and Sale Agreement dated September
12, 1996, by and between Maynard Oil Company, as Seller, and Enron Oil & Gas
Company, as Buyer.
ASSIGNMENT, BILL OF SALE AND CONVEYANCE
FROM MAYNARD OIL COMPANY TO ENRON OIL & GAS COMPANY,
EFFECTIVE AUGUST 1, 1996
THE STATE OF OKLAHOMA )
) KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF )
THAT, the undersigned, MAYNARD OIL COMPANY, a Delaware
corporation, having its principal office at 8080 North Central Expressway,
Suite 660, Dallas, Texas 75206 (hereinafter called "ASSIGNOR"), for and in
consideration of Ten Dollars ($10.00) and other valuable consideration to it
in hand paid by ENRON OIL & GAS COMPANY, a Delaware corporation, having its
principal office at 1400 Smith Street, Houston, Texas 77002 (hereinafter
called "ASSIGNEE"), does hereby GRANT, BARGAIN, SELL, ASSIGN and CONVEY unto
Assignee, subject to the terms and conditions contained herein, the
following:
(a) All of Assignor's right, title and interest in and to the
leasehold estate and mineral rights created by the leases described in
Exhibit A, attached hereto and made a part together with any and all
interest of Assignor in and to such property and in and to any
agreements, leases, rights-of-way, easements, licenses and permits
incident thereto, INSOFAR AND ONLY INSOFAR as the said rights cover the
lands and depths described in Exhibit A;
(b) All of Assignor's right, title and interest in and to the wells,
and production therefrom, located on the Leases or lands pooled
therewith, including but not limited to the wells described in Exhibit
A together with any and all buildings or other improvements constructed
thereon , together with any and all interest of Assignor in and to such
property and in and to any agreements, including, without limitation,
gas purchase agreements, farmin and farmout agreements, operating
agreements and pooling agreements, leases, rights-of-way, easements,
licenses and permits incident thereto;
(c) All of Assignor's right, title and interest in and to the real and
personal property, fixtures, improvements and buildings located on the
lands burdened by the Leases or lands pooled therewith, and all
contract rights, rights of substitution and subrogation in and to any
rights and actions of warranty which Assignor has or may have.
This Conveyance, Assignment and Bill of Sale is executed and delivered
as part of the consummation of the transaction contemplated by that certain
Purchase and Sale Agreement between Assignor, as SELLER , and Assignee, as
BUYER , dated September 12, 1996, hereinafter referred to as "Sale
Agreement". The warranties, representations, indemnities and covenants
contained in the Sale Agreement shall survive the delivery of this
Assignment in accordance with the provisions of the Sale Agreement and the
delivery of this Assignment shall not affect, expand, diminish, or otherwise
impair any of the warranties, representations, indemnities or covenants made
in the Sale Agreement and the terms and conditions set forth therein;
provided, however, any third parties transacting with Assignee with respect
to any of the interests may rely on this Assignment as vesting Assignee with
all of Assignor's rights, titles and interests in the said leases and wells.
Assignor warrants to Assignee title to the leases as described in said
Sale Agreement against any claims and demands of all persons whomsoever
claim the same or any part thereof by, through and under Assignor, but not
otherwise.
This Conveyance, Assignment and Bill of Sale shall extend to, be
binding upon and inure to the benefit of Assignor and Assignee, their
respective successors and assigns and shall be deemed covenants running with
the herein described lands and leasehold estates.
Assignee expressly assumes, as of the Effective Date, all of Assignor's
obligations relating to the said leases, including, but not limited to, the
obligation of plugging and aband expense. From and After the Effective Date
hereof, Assignee shall be solely responsible for the balancing of or payment
for any gas imbalances which may exist.
This assignment shall be effective, for all purposes as of 7:00 o'clock
a.m. August 1, 1996.
This assignment is being executed in several counterparts, all of which
are identical, except that, to facilitate recordation, only that portion of
Exhibit A which contains specific descriptions of the leases located in the
recording jurisdiction in which the particular counterpart is to be recorded
are included, and other portions of Exhibit A are included by reference
only. All of such counterparts together shall constitute one and the same
instrument. Complete copies of the Assignment containing the entire Exhibit
A have been retained by Assignor and Assignee.
EXECUTED this 30th day of September 1996, but to be effective as stated
above.
MAYNARD OIL COMPANY
By: ___________________________
Glenn R. Moore
President
ENRON OIL & GAS COMPANY
By: ___________________________
Leland J. McVay
Vice President
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
This instrument was acknowledged before me on September 30, 1996, by
Glenn R. Moore, President of Maynard Oil Company, a Delaware corporation, on
behalf of said corporation.
MY COMMISSION EXPIRES:
___________________________
Cassondra Foster, Notary
Public in and for the State
of Texas
THE STATE OF OKLAHOMA )
)
COUNTY OF OKLAHOMA )
This instrument was acknowledged before me on , 1996, by
Leland J. McVay, Vice President of Enron Oil & Gas Company, a Delaware
corporation, on behalf of said corporation.
MY COMMISSION EXPIRES:
___________________________
Notary Public in and for
the State of Oklahoma
EXHIBIT D
EXCHANGE ESCROW AGREEMENT
Attached to and made a part of Purchase and Sale Agreement dated
September 12, 1996, by and between Maynard Oil Company, as Seller, and
Enron Oil & Gas, Inc., as Buyer
This Agreement is dated the 12th day of September, 1996, BUT EFFECTIVE
September 13, 1996, between MAYNARD OIL COMPANY, a Delaware corporation,
having its principal office at 8080 North Central Expressway, Suite 660,
Dallas, Texas 75206 ("SELLER") and ENRON OIL & GAS, INC., a Delaware
corporation, having its principal office at 1400 Smith Street, Houston,
Texas 77002 ("BUYER") and BANK ONE TEXAS, N.A., a national banking
association, hereinafter referred to as "Escrow Agent".
W I T N E S S E T H
WHEREAS, Seller and Purchaser have entered into that certain Purchase
and Sale Agreement dated September 12, 1996 (the "CONTRACT ), for the sale
and purchase of certain properties more particularly described in the
Exhibit "A" attached ("SELLER'S PROPERTY").
WHEREAS, Purchaser has agreed to accommodate Seller in effecting a tax
deferred exchange under Section 1031 of the Internal Revenue Code of 1986
(the "CODE") by acquiring for the benefit of Seller and exchanging for
Seller's Property one or more like properties (collectively, "EXCHANGE
PROPERTY"), to be designated by Seller and thereafter acquired and
transferred to Seller;
WHEREAS, unless notified otherwise by Seller and Buyer jointly, Escrow
Agent may rely upon the date of this agreement, as set forth above, being
the date on which Seller's property was transferred to Buyer; and
WHEREAS, this Exchange Escrow Agreement is referred to as the
"AGREEMENT".
NOW THEREFORE, the parties agree as follows:
1. Creation of Escrow. Buyer agrees to deposit with and deliver to
Escrow Agent, the net closing proceeds of the Seller's Property, which net
closing proceeds shall consist of cash in the amount of Four Million Two
Hundred Seventy Seven Thousand One Hundred Thirty Eight Dollars
($4,277,138.00) plus or minus any adjustments allowed under ARTICLE II of
the Contract and less costs of closing, fees, taxes, and other reductions
contemplated by the Contract, said net closing proceeds being hereinafter
referred to as the "ESCROW FUND . Escrow Agent shall have no responsibility
to ascertain whether the funds deposited with it as the Escrow Funds are
equal to the net closing proceeds described in the immediately preceding
sentence. Each deposit to the Escrow Fund, whether initially made as
contemplated above, or made subsequently for whatever reason, shall be in
cash, and shall be accompanied by notice to Escrow Agent setting forth the
time and method of delivery of such cash, the amount thereof, and directions
to deposit such funds to the escrow account created hereunder. Escrow Agent
shall invest the Escrow Fund at the written request of the parties hereto.
Said request shall be by notice, which shall specify the type of investment
to be made, the maturity date, and the principal amount to be invested. The
Escrow Agent shall not be liable for losses on any investments made by it
pursuant to and in compliance with such instructions; and Escrow Agent shall
not be responsible or liable for any penalty or loss incurred as a result of
the settlement or liquidation of any such investment prior to this maturity
to enable Escrow Agent to make any disbursement required hereunder. The
Escrow Fund will remain uninvested until such notice of investment
instructions is received. All interest earned on the Escrow Fund shall be
added to and shall become a part of the Escrow Fund, subject to the same
restrictions on distribution as contained herein for the Escrow Fund. No
assignment, transfer, conveyance or hypothecation of any right, title or
interest in and to the subject matter of this Escrow shall be binding upon
Escrow Agent unless notice thereof shall be served upon Escrow Agent and all
fees, costs and expenses incident thereto shall have been paid and then only
upon Escrow Agent's assent thereto in writing. Escrow Agent shall be under
no duty or obligation to ascertain the identity, authority or rights of the
parties executing, delivering or purporting to execute or deliver these
instructions or any documents, paper, or payments deposited or called for
hereunder, and assumes no responsibility or liability for the validity or
sufficiency of these instructions or any documents, papers or payments
deposited or called for hereunder.
2. Interests in Escrow Fund. Buyer declares that the purpose of the
Escrow Fund is to secure to Seller ormance of Buyer's obligations under the
Contract. Under no circumstances shall the Escrow fund be disbursed, except
pursuant to the terms of this Agreement.
3. Escrow Fee; Costs. Seller shall pay to Escrow Agent upon
execution hereof fees as outlined on Exhibit "B" for services rendered by it
pursuant to the provisions of this Agreement, and will reimburse Escrow
Agent for its reasonable expenses, including attorney's fees, incurred in
connection with the performance of such services as such expenses are
incurred. Escrow Agent's expenses, including reasonable attorney's fees for
review, revision and approval of this Agreement shall be paid by Seller to
Escrow Agent upon execution of this Agreement. Notwithstanding anything to
the contrary contained in any other provision of this Agreement or any
instructions to the contrary from either Buyer or Seller, Escrow Agent shall
be entitled to retain from any disbursements requested hereunder any
outstanding fees and/or expense due to it hereunder. Escrow Agent shall be
entitled to consult with counsel as it deems necessary from time to time,
and reasonable fees therefore shall be an expense reimbursable to Escrow
Agent as provided hereunder. Escrow Agent is hereby granted a lien on the
Escrow Fund for all indebtedness that may become owing to Escrow Agent
pursuant to this Agreement, which may be enforced by Escrow Agent by
appropriate foreclosure proceedings.
4. Identification and Acquisition of Exchange Property. Seller shall
identify and negotiate the terms of acquisition of one or more Exchange
Property or Exchange Properties. Upon Notice to Escrow Agent from Seller as
to the need for monies in the Escrow Fund to acquire an Exchange Property,
which notice shall provide a description of the Exchange Property, the
general terms of its acquisition and instructions for the disbursement of
Escrow Funds to accomplish acquisition of the Exchange Property, the Escrow
Agent shall disburse funds in accordance wed that (i) such notice shall be
given to Escrow Agent at least three business days prior to any needed
disbursement; (ii) once disbursed, Escrow Agent shall have no further
responsibility with respect to such funds; and (iii) Escrow Agent shall
never have any responsibility to supply funds needed by Seller from its own
assets. The Escrow Agent may rely conclusively upon the information
contained in the notification.
5. Termination; Disbursement to Seller. This Agreement shall
terminate automatically, without notice to any party, as follows: (a) in
the event Seller fails to give notice to Escrow Agent that it has designated
Exchange Property by the forty-fifth (45th) day following the date of this
Agreement at the close of business of such day, or (b) otherwise, on the one
hundred eightieth (180th) day following the date of this Agreement provided,
that if Seller designates Exchange Property and all property so designated
has been successfully acquired and transferred to Seller prior to the one
hundred eightieth (180th) day following the date of this Agreement, then
Seller shall so notify Escrow Agent, and this Agreement shall instead
terminate on the day following Escrow Agent's receipt of such notice. Upon
termination of this Agreement, the Escrow Fund as then constituted shall
become the property of Seller and shall promptly be paid over and delivered
to Seller subject to Escrow Agent's right to offset and deduct all unpaid
fees of Escrow Agent and all reasonable expenses, including attorney's fees,
and authorized disbursements. Under no circumstances shall any party of the
Escrow Fund be disbursed to Seller except upon termination of this Agreement
pursuant to this paragraph. Seller shall have no right to receive, pledge,
borrow, or otherwise obtain the benefits of the Escrow Fund prior to
termination of this Agreement pursuant to this paragraph.
6. Security Interest of Seller. Buyer agrees the Escrow Fund is
hereby impressed with and made subject to a security interest in favor of
Seller securing Buyer's performance to obtain and transfer title to the
Exchange Property as set forth above.
7. Successor Escrow Agent. Escrow Agent may at any time resign
hereunder by giving notice of its resignation to Seller and Buyer at least
10 days prior to the date specified for such resignation to take effect. If
Escrow Agent has so resigned, Seller and Buyer shall appoint a successor
escrow agent within such notice period. Further, if Escrow Agent has not
previously given notice of resignation, Seller and Buyer may remove Escrow
Agent by mutually naming a successor hereunder to Escrow Agent, which shall
be done by s removal and appointment of the Successor Escrow Agent at least
ten (10) days prior to the date specified for such removal to take place.
Such Successor Escrow Agent, regardless of why appointed, shall have all the
duties and powers assumed and conferred in this Agreement upon Escrow Agent.
Upon the date on which the resignation or removal of Escrow Agent is
specified to take effect, the Escrow fund shall be delivered to the
Successor Escrow Agent so named by Seller and Buyer above in this paragraph,
whereupon all Escrow Agent's obligations hereunder shall cease. If no
Successor Escrow Agent is so designated by such effective date, all
obligations of Escrow Agent hereunder, nevertheless, shall cease and
terminate. Escrow Agent's sole responsibility thereafter shall be to keep
safely the Escrow Fund and to deliver the same to a person designated by
Seller and Buyer or in accordance with the directions of a final order or
judgment of a court of competent jurisdiction.
8. Escrow Agent Release. Escrow Agent shall have no liability under,
or duty to inquire into the terms and provisions of this Agreement or the
transaction between Seller and Buyer and it is agreed that its duties
hereunder are purely ministerial in nature, and Escrow Agent shall incur no
liability whatsoever except for its willful misconduct or gross negligence
so long as it has acted in good faith. Escrow Agent shall not be bound by
any modification, amendment, termination, cancellation, rescission or
revision of this Escrow Agreement unless the same shall be in writing and
signed by Seller and Buyer, and if its duties hereunder are affected
thereby, unless it shall have given prior written consent thereto. Escrow
Agent shall have no liability for the acts of any of its agents unless it
has been grossly negligent or engaged in willful misconduct in the selection
of such agent. Escrow Agent shall be obligated only for the performance of
such duties as are specifically set forth in this Agreement and may rely
upon and shall be protected in acting or refraining from acting on any
instrument in good faith believed by it to be genuine and to have been
signed or presented by the property party or parties. Escrow Agent shall
not be liable for any action taken or omitted by it in good faith and
believed by it to be authorized hereby, nor for any action taken or omitted
by it in accordance with the advice of its counsel. Escrow Agent may,
without further investigation, assume: (a) the accuracy and truth of any
written instrument, notice, certificate or opinion given to it and (b) the
authenticity of any signatures thereon.
9. Indemnity. In consideration of acceptance of this escrow by Escrow
Agent, Seller agrees for executors, personal representatives, successors and
assigns, to indemnify, defend, and hold Escrow Agent (in every capacity,
including its corporate capacity) harmless from and against any and all
claims, losses, damages, taxes, liabilities, and expene incurred by Escrow
Agent arising out of or in connection with its appointment, acceptance,
service or performance hereunder, including the legal costs and expenses of
defending itself against any Claims in connection with such expenses of
defending itself against any Claims in connection with such matters.
"CLAIMS" specifically includes Claims arising out of the alleged or actual
negligence of Escrow Agent, but this agreement to indemnify, defend and hold
harmless shall not extend to Claims which are determined to be the result of
gross negligence or willful misconduct of Escrow Agent in bad faith. This
agreement by Seller to indemnify, defend and hold harmless is not limited to
the amount of funds held in escrow hereunder, and shall survive both the
termination of the Agreement and any resignation or removal of Escrow Agent.
To further secure the performance of Seller under this agreement to
indemnify, defend and hold harmless, Seller and Buyer agree that Escrow
Agent shall have a first and prior lien upon all deposits made hereunder to
secure the performance of said agreement.
10. Interpleader. Should any controversy arise between the
undersigned with respect to this Agreement or with respect to the right to
receive the Escrow Fund, Escrow Agent shall have the right to institute a
bill of interpleader in any court of competent jurisdiction to determine the
rights of the parties. Should a bill of interpleader be instituted, or
should Escrow Agent become involved in litigation in any manner whatsoever
on account of this Agreement or the Escrow Fund, Seller and Buyer hereby
bind themselves, their successors and assigns, to pay Escrow Agent, in
addition to any charge made for acting as Escrow Agent hereunder and
expenses incurred in connection therewith, reasonable attorney's fees
incurred by Escrow Agent and any other disbursements, expenses, losses,
costs and damages in connection with or resulting from such litigation.
11. Notices. Any notice required or permitted hereunder, to be
effective, must be in writing and shall be deemed given, except as provided
in the penultimate sentence of this paragraph 11 when personally delivered
to any party or mailed, postage prepaid, registered or certified mail,
return receipt requested, to the following addresses:
If to Buyer: Enron Oil & Gas Company
Attention Mr. Robert W. Kelly, II
20 North Broadway, Suite 830
Oklahoma City, OK 73102
Phone: (405) 239-7800
Fax: (405) 239-7858
If to Seller: Maynard Oil Company
8080 North Central Expressway, Suite 660
Dallas, Texas 75206
Attention Cassondra Foster
Telephone: (214) 891-8461
Facsimile: (214) 891-8827
With Copy to: Maynard Oil Company
8080 North Central Expressway, Suite 660
Dallas, Texas 75206
Attention Kenneth Hatcher
Telephone: (214) 891-8471
Facsimile: (214) 891-8827
If to Escrow Agent: Bank One, Texas, N.A.
Attention Kay Lowrance
8111 Preston Road, 2nd Floor
Dallas, TX 75225
Telephone: (214) 360-3978
Facsimile: (214) 360-3980
Provided further, and in addition to the requirements set forth above, any
notice required or permitted to be given to Escrow Agent hereunder shall be
effective only when actually received in writing by Kay Lowrance, on behalf
of Escrow Agent, and not prior thereto. Any party may, by proper notice,
change its address for notice hereunder.
12. Amendment. This Agreement is irrevocable, and may not be amended,
modified or supplemented except by written instrument signed by Buyer and
Seller and approved in writing by Escrow Agent.
13. Successors and Assigns. This Agreement shall inure to the benefit
of the parties, their respective heirs, executors, personal representatives,
successors and assigns.
14. Counterparts. This Agreement may be executed in several
counterparts, and the several signed counterparts shall be deemed a single,
integrated instrument.
15. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas. The venue for any action
arising hereunder or in connection herewith shall be in Dallas County,
Texas.
16. Time of Essence. Time is expressly declared to be of the essence
of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement in
triplicate as of the day and year first above written.
SELLER
MAYNARD OIL COMPANY
By: _______________________________
Glenn R. Moore
President
BUYER
ENRON OIL & GAS, INC.
By: _______________________________
Leland J. McVay
Vice President
ESCROW AGENT
BANK ONE, TEXAS, N.A.
By: ______________________________
Kay Lowrence
Assistant Vice President
EXHIBIT 2(g)
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "AGREEMENT") is made and entered
into this 12th day of September, 1996, by and between MAYNARD OIL COMPANY, a
Delaware corporation, having its principal office at 8080 North Central
Expressway, Suite 660, Dallas, Texas 75206 ("SELLER") and ENRON OIL & GAS
COMPANY, a Delaware corporation, having its principal office at 1400 Smith
Street, Houston, Texas 77002 ("BUYER").
In consideration of the mutual promises contained herein, the benefits to
be derived by each party hereunder and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Buyer and Seller agree as follows:
ARTICLE I
PURCHASE AND SALE
1.01 Purchase and Sale. Seller agrees to sell and convey and Buyer agrees to
purchase and pay for the interests (as defined in Section 1.02) owned by
Seller, subject to the terms and conditions of this Agreement.
1.02 Interests. All of the following shall herein be called the "INTERESTS":
(a) All of Seller's right, title and interest in and to the leasehold
estate and mineral rights created by the leases described in Exhibit A
(the "LEASES") together with any and all interest of Seller in and to such
property and in and to any agreements, leases, rights-of-way, easements,
licenses and permits incident thereto;
(b) All of Seller's right, title and interest in and to the wells, and
production therefrom, located on the Leases or lands pooled therewith,
including but not limited to the wells described in Exhibit A together
with any and all buildings or other improvements constructed thereon
(collectively the "WELLS", together with any and all interest of Seller in
and to such property and in and to any agreements, including, without
limitation, gas purchase agreements, farmin and farmout agreements,
operating agreements and pooling agreements, leases, rights-of-way,
easements, licenses and permits incident thereto);
(c) All of Seller's right, title and interest in and to the real and
personal property, fixtures, improvements and buildings now or as of the
Effective Time (as defined in Section 1.03) located on the lands burdened
by the Leases or lands pooled therewith (the LANDS"), and all contract
rights, rights of substitution and subrogation in and to any rights and
actions of warranty which Seller has or may have with respect to the
Interests;
(d) All of the files, records and data related to the items described in
Subsections (a), (b) and (c) above, and all the seismic and geophysical
data of Seller appurtenant to or crossing the Leases, Wells and Lands; and
(e) Any and all other assets of Seller appurtenant or related to or used
in connection with the Leases and Wells.
1.03 Effective Time. The purchase and sale of the Interests shall be
effective as of August 1, 1996, at 7:00 A.M., local time (herein called the
"EFFECTIVE TIME ) in the county in which the Lands are located.
ARTICLE II
PURCHASE PRICE
2.01 Purchase Price. The purchase price for the Interests shall be Four
Million Two Hundred Seventy Seven Thousand One Hundred Thirty Eight DOLLARS
($4,277,138.00) (herein called the "PRELIMINARY PURCHASE PRICE"), subject to
adjustment as set forth in Section 2.02 and Section 2.03 below.
2.02 Performance Deposit. On or before 4:00 o'clock p.m., local time,
September 13, 1996, Buyer shall tender to Bank One, Texas, N.A. ("ESCROW
AGENT", as provided for in Exhibit D hereto), by wire transfer, a performance
deposit in the amount of Four Hundred Twenty Seven Thousand Seven Hundred
Fourteen DOLLARS ($427,714.00). The performance deposit is received solely to
assure the performance of Buyer pursuant to the terms and conditions hereof.
The performance deposit will be returned to Buyer at Closing, upon consummation
of the transaction, or at Buyer's election, may be credited to the Preliminary
Purchase Price. No interest shall be paid or credited to the performance
deposit. If Buyer fails, refuses, or is unable to close the sale in accordance
with the terms herein, Seller, except as otherwise herein specifically
provided, may, at its option, retain the performance deposit as agreed
liquidated damages and not as a penalty. If Seller, through no fault of Buyer,
refuses to close the sale in accordance with the terms herein, the performance
deposit shall be returned to Buyer.
2.03 Adjustments to Purchase Price. The Preliminary Purchase Price shall be
adjusted as follows and the resulting amount shall be herein called the "FINAL
PURCHASE PRICE".
(a) The Preliminary Purchase Price shall be increased by the following:
(1) The value of all merchantable, allowable oil attributable to the
Leases, in storage above the pipeline connection at the Effective
Time, and not previously sold by Seller, that is credited to the
Interests, such value to be the net price realized by Seller;
(2) The amount of all reasonable expenditures, including, without
limitation, royalties, rentals and other charges, ad valorem,
property, production, excise, severance, windfall profit and other
taxes based upon or measured by proceeds therefrom but not including
income or gross receipts taxes, expenses billed under applicable
operating agreements and, as compensation to Seller for its general
and administrative expenses as operator of interests operated by it,
in lieu of any other overhead charges in connection with such
particular Interests:
(i) that amount attributable to the Interests under any
existing joint operating agreement, or
(ii) in the absence of a joint operating agreement with respect
thereto, the applicable rate recommended in the 1995 Ernst
& Young, L.L.P. s Fixed Rate Overhead Survey in
connection with the operation of the Interests from the
Effective Time to the Closing Date (as defined in Section
9.01), as well as any expenditures approved by Buyer;
(3) An amount equal to all prepaid expenses attributable to the
interests that are paid by or on behalf of Seller prior to the
Closing Date and that are, in accordance with generally accepted
accounting principles, attributable to the period after the Effective
Time including, without limitation, prepaid insurance, prepaid ad
valorem, property, production, severance and similar taxes (but not
including income taxes) based upon or measured by the ownership of
property or the production of hydrocarbons or the receipt of proceeds
therefrom;
(4) An amount equal to seventy-five cents per mcf for a net
underproduced gas imbalance; and
(5) Any other amount agreed upon by Seller and Buyer.
(b) The Preliminary Purchase Price shall be decreased by the following:
(1) An amount equal to all proceeds of production received by Seller
prior to the Closing Date that are attributable to the Interests and
that are, in accordance with generally accepted accounting
principles, attributable to the period of time from the Effective
Time to the Closing Date;
(2) An amount equal to all unpaid ad valorem, property, production,
severance and similar taxes and assessments (but not including income
or gross receipts taxes) based upon or measured by the ownership of
property or the production of hydrocarbons or the receipt of proceeds
therefrom accruing with respect to the Interests prior to the
Effective Time, which amount shall be computed based upon such taxes
assessed against the applicable portion of the Interests for the
current tax fiscal year, or if the assessments for the current tax
fiscal year are unavailable, for the preceding such year;
(3) An amount equal to the sum of all Defect Adjustments and
Exclusion Adjustments (as those terms are defined in Section 7.03);
and
(4) Any environmental adjustment pursuant to ARTICLE V.(e);
(5) An amount equal to seventy-five cents ($0.75) per mcf for a net
overproduced gas imbalance; and
(6) Any other amount agreed upon by Seller and Buyer.
2.04 Actual Figures. When available, actual figures will be used for
adjustments at Closing. To the extent actual figures are not available,
estimates will be used subject to final adjustments as provided in Section
10.01 hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01 Representations and Warranties of Seller. Seller represents and warrants
to Buyer with respect to itself and, where applicable, with respect to the
Interests, that:
(a) Seller is a corporation duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its incorporation, and has
all requisite power and authority to own and lease the properties and
assets it currently owns and leases and to carry on its business as such
business is currently conducted. Seller is duly licensed or qualified to
transact business and is in good standing in all jurisdictions where the
character of the properties and assets now owned or leased by it or the
nature of the business now conducted by it require it to be so licensed or
qualified if the failure to qualify might reasonably be expected to have a
material adverse effect on the business or financial prospects of Seller.
Seller is also duly licensed or qualified to do business and is in good
standing in each jurisdiction where the Interests are located;
(b) Seller has all requisite power and authority to execute and deliver
this agreement, to consummate the transactions contemplated hereby, and to
perform the terms and conditions hereof to be performed by it. This
Agreement constitutes, and each of the documents required to be delivered
by Seller hereunder, shall constitute Seller's legal, valid and binding
obligation, enforceable against Seller in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency, or
other laws relating to or affecting generally the enforcement of
creditors' rights and general principles of equity, regardless of whether
considered in proceeding in equity or at law;
(c) This Agreement and its execution and delivery by Seller do not, and
the fulfillment and compliance by Seller with the terms and conditions of
this Agreement, and the consummation by Seller of the transactions
contemplated hereby, will not (i) require any filing, consent,
authorization, or approval under, any law or administrative regulation or
any judicial, administrative, or arbitration order, aware, judgment, writ,
injunction, or decrees applicable to or binding upon Seller (assuming the
receipt of all routine governmental consents typically received after
consummation of transactions of the nature contemplated by this
Agreement); and (ii) conflict with, result in a breach of, constitute a
default under (without regard to any requirements of notice or the lapse
of time), accelerate, or permit the acceleration of the performance
required by, any mortgage, indenture, loan or credit agreement or other
agreement or instrument evidencing indebtedness for borrowed money to
which such Seller is a party or by which it is bound or to which any of
the Interests are subject;
(d) As of the execution date hereof, there are no currently outstanding
and effective authorities for expenditure or third party proposals for
subsequent operations with respect to the Interests other than as set
forth in Exhibit B;
(e) As of the execution date hereof (i) no action, suit, or proceeding is
pending or, has been threatened against Seller before any court,
administrative agency, or arbitral tribunal, which involves or may involve
the Interests, the production of oil and gas therefrom, or the use of and
enjoyment thereof, or any operation or activity being conducted therein or
thereon or which challenges Seller's rights to enter into this Agreement
or materially adversely affects its ability to perform its obligations
under this Agreement; (ii) Seller has not received written notice of nor
been charged with any violation of, any provision of any law or regulation
relating to the Interests, and to Seller's best knowledge, no third party
has been charged with any violation of any provision of any law or
regulation relating to the Interests;
(f) As of the execution date hereof Seller has not received written
notice that it is in default under (i) any applicable contract affecting
the Interests; (ii) any order, judgment, or decree of any federal or state
court or governmental authority relating to the Interests; or (iii) any
other agreement, contract, lease, license, or other instrument;
(g) Exhibit A contains a complete list of the Interests wherein Seller's
interest is currently subject to reversionary interests or non-consent
operations. In each case, such Exhibit reflects the interest of Seller
before and after adjustment for such reversionary interests or non-consent
operations for each Well effected. Exhibit A-1 reflects the remaining
amount to be recouped, or account status as appropriate, as of the date
reflected thereon with respect to each such well;
(h) As of the Effective Time, to the best of Seller s knowledge, except
as set forth in Exhibit A-1 hereto, there were no production imbalances or
transportation and processing imbalances affecting the Interests;
(i) All of the written and electronic data (including, without
limitation, information relating to gathering, processing, transportation
and sale of hydrocarbons from the Interests and other matters) at the time
furnished or to be furnished by Seller to Buyer in conjunction with
Buyer's evaluation of the Interests was contained in or derived from
Seller's records kept in the ordinary course of business; and no
representation or warranty is made with respect to the accuracy or
correctness of any estimates, analysis, or projections or any assumptions
or other matters stated therein;
(j) No broker or finder is entitled to any brokerage or finder's fee, or
to any commission, based in any way on agreements, arrangements or
understandings made by or on behalf of Seller for which Buyer has any
liability or obligation (whether contingent or otherwise);
(k) Seller is not a foreign person, foreign corporation, foreign
partnership, foreign trust or foreign estate (as those terms are defined
in the Internal Revenue Code of 1986, as amended, and regulations
promulgated thereunder);
(l) From the Effective Time to the execution date hereof there has
not been: (i) any material adverse change in the condition of the
Interests, other than changes caused by the sale, production, or
disposition of production and changes resulting from reservoir
conditions other than fire, blowout, or act of God (provided that any
change or revision in existing laws, regulations, or governmental
policies applicable to the Interests or the sale, production, or
disposition of production therefrom and the imposition of any new
laws, regulations or governmental policies with respect to the
Interests or the sale, production, or disposition of production
therefrom shall be deemed not to be an adverse change in the
condition of the Interests), (ii) any sale, lease, or other
disposition of the Interests, (iii) any condemnation or taking by
eminent domain of any portion of any of the Interests, or (iv) any
contract or commitment to do any of the foregoing;
(m) Seller or the Operator of any Interest has obtained or applied
for all governmental licenses, permits, certificates, approvals,
consents, authorizations and orders required for it to own or lease
the Interests and develop, construct, maintain, and operate them, and
to market the production therefrom, and no proceeding is pending or
threatened involving revocation of any such licenses, permits,
certificates, consents, authorizations or orders, provided that this
representation is limited to Seller's best knowledge;
(n) There are no taxes due or tax liens on any of the Interests;
(o) To the best of Seller's knowledge, Seller is not a party to any
joint venture, partnership, limited liability company, farmin,
farmout, joint operating agreement, or other arrangement or contract
with respect to any of the Interests that is reported as a
partnership for federal or state income tax purposes;
(p) As of the execution date hereof all of the wells and all of the
equipment used in the drilling, completion and operation of any such
wells, or in the production, treatment, storage, gathering and
transportation of hydrocarbons from such wells, is in good operating
condition, ordinary wear and tear excepted, provided that this
representation is limited to Seller's best knowledge with respect to
such matters which are the responsibility of the operator of any
interest not operated by seller;
(q) From the Effective Time to the execution date hereof, no personal
injuries or deaths have occurred in connection with any of the
Interests which should have been reported by Seller in accident or
incident reports in accordance with applicable law or in accordance
with Seller's usual operating procedures and policies;
(r) To the best of Seller's knowledge, all royalties (including
without limitation royalties with respect to take-or-pay payments or
settlements), minimum royalties, rentals, shut-in gas payments and
other payments due with respect to the Interests have been properly
and timely paid in full, except for payments held in suspense for
title or other reasons that are customary in the industry or which
are being contested in an appropriate forum. There are no amounts
claimed to be due to Seller in respect of the Interests that are
being held in suspense because of a dispute as to title to the
Interests or for any other reason, and Seller is entitled to be paid,
and is being paid, with respect to production from the Interests, its
net revenue interest without indemnity or guarantee other than those
customarily found in division orders and other similar agreements and
documents;
(s) Except as detailed on Exhibit A-2, this Agreement and its
execution and delivery by Seller does not, and the fulfillment and
compliance by Seller with the terms and conditions of this Agreement
and the consummation by Seller of the transactions contemplated
hereby will not permit the exercise of or give rise to (with the
giving of any required notice) any preferential purchase right,
option or right of first refusal;
(t) To the best of Seller's knowledge, all of the wells in which
such Seller has an interest by virtue of its ownership of the Leases
have been (i) drilled and completed within the boundaries of such
Lease or within the limits otherwise permitted by contract, pooling
or unit agreement, and/or by law and (ii) drilled and completed in
compliance with all applicable laws, rules and regulations; and
(u) Seller has reasonable surface access to each of the Interests
for purposes of oil and gas exploration, development and production.
3.02 Representations and Warranties of Buyer. Buyer represents and warrants
to Seller that:
(a) Buyer is a corporation duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its incorporation, and has
all requisite power and authority to own and lease the properties and
assets it currently owns and leases and to carry on its business as such
business is currently conducted. Buyer is duly licensed or qualified to
transact business and is in good standing in all jurisdictions where the
character of the properties and assets now owned or leased by it or the
nature of the business now conducted by it requires it to be so licensed
or qualified if the failure to qualify might reasonably be expected to
have a material adverse effect on the business or financial prospects of
Buyer. Buyer is also duly licensed or qualified to do business and is in
good standing in each jurisdiction where the Interests are located;
(b) Buyer has all requisite power and authority to execute and deliver
this Agreement, to consummate the transactions contemplated hereby, and to
perform the terms and conditions hereof to be performed by it. This
Agreement constitutes, and each of the documents required to be delivered
by Buyer hereunder, shall constitute Buyer's legal, valid, and binding
obligation, enforceable against Buyer in accordance with its terms, except
as such enforceability may be limited by bankruptcy, insolvency, or other
laws relating to or affecting generally the enforcement of creditors'
rights and general principles of equity, regardless of whether considered
in a proceeding in equity or at law;
(c) This Agreement and its execution and delivery by Buyer does not, and
the fulfillment of and compliance by Buyer with the terms and conditions
of this Agreement, and the consummation by Buyer of the transactions
contemplated hereby, will not (i) require any filing, consent,
authorization, or approval under, any law or administrative regulation or
any judicial, administrative, or arbitration order, award, judgment, writ,
injunction or decree applicable to or binding upon Purchaser (assuming the
receipt of all routine governmental consents typically received after
consummation of transactions of the nature contemplated by this
Agreement), (ii) conflict with, result in a breach of, constitute a
default under (without regard to any requirements of notice or the lapse
of time), accelerate, or permit the acceleration of the performance
required by, any mortgage, indenture, loan or credit agreement or other
agreement or instrument evidencing indebtedness for borrowed money to
which Buyer is a party or by which it is bound;
(d) No broker or finder is entitled to any brokerage or finder's fee, or
to any commission, based in any way on agreements, arrangements or
understandings made by or on behalf of Buyer for which Seller has any
liability or obligation (whether contingent or otherwise);
(e) Buyer is not a foreign person, foreign corporation, foreign
partnership, foreign trust, or foreign estate (as those terms are defined
in the Internal Revenue Code of 1986, as amended, and regulations
promulgated thereunder); and
(f) In making the acquisition of the Interests hereunder, Buyer is acting
in the conduct of its own business in the ordinary course. The Interests
are not being acquired for distribution or transfer in violation of the
securities laws of the United States or of any state thereof.
ARTICLE IV
COVENANTS OF BUYER AND SELLER
4.01 Covenants of Seller. Seller covenants and agrees with Buyer that:
(a) After the execution of this Agreement, Seller will make available to
Buyer for examination at Seller's offices in Dallas, Texas, title and
other information relating to the Interests insofar as the same are in
Seller's possession and, subject to the consent and cooperation of third
parties, will cooperate with Buyer in Buyer's efforts to obtain, at
Buyer's expense, such additional information relating to the Interests as
Buyer may reasonably desire (to the extent that Seller may do so without
violating legal constraints or any obligation of confidence or other
contractual commitments of Seller to third parties), including without
limitation:
(1) Title opinions, title status reports and contracts or agreements
pertaining to the Interests;
(2) Copies of the leases, prior conveyances of Interests created thereby,
unitization, pooling and operating agreements, division and transfer
orders, mortgages, deeds of trust, security agreements, financing
statements, and other encumbrances not discharged and affecting the
title to or the value of the Interests;
(3) Accounting and other records relating to the payment of rentals,
royalties, joint interest billings and other payments due under the
Leases or the Wells;
(4) Records relating to the payment of ad valorem, property, production,
severance, excise and similar taxes and assessments based on or
measured by the ownership of property or the production of
hydrocarbons or the receipt of proceeds therefrom on the Interests;
(5) Ownership maps and surveys relating to the Interests;
(6) Copies of purchase, sale, processing and transportation agreements
relating to the production of gas from the Interests. Copies of all
gas balancing agreements and gas balancing statements;
(7) Copies of agreements, leases, permits, easements, licenses and orders
relating to the Interests;
(8) Production records relating to the Interests;
(9) Inventories of personal property and fixtures included in the
Interests; and
(10) Any and all other information contained in Seller's files that
relates to the Interests other than matters subject to attorney-
client or attorney work privilege or concerning Seller's economic
evaluation.
Seller shall permit Buyer to inspect and photocopy such information and records
at any reasonable time during the term of this Agreement. Seller shall
cooperate with Buyer in Buyer's efforts to obtain such additional title
information as Buyer may reasonably deem prudent.
(b) During the period from the date of this Agreement to the Date of
Closing, without the prior written consent of Buyer, Seller will not (i)
cause any of its portion of the Leases or other of the Interests to be
developed, maintained, or operated in a manner substantially inconsistent
with prior operations; (ii) abandon any material part of any of its
portion of the Interests; (iii) commence any material operation of any of
its portion of the Leases or the Interests anticipated to cost Seller in
excess of Fifteen Thousand Dollars ($15,000.00) per operation (except
emergency operations, operations required under presently existing
contractual obligations, the on-going commitments under the AFE's
described in Exhibit B hereto, and operations undertaken to avoid any
penalty provisions of any applicable agreement or order), or (iv) convey
or dispose of any material part of any of its portion of the Interests
(other than oil, gas and other liquid products produced from the Interests
in the regular course of business). Buyer acknowledges that Seller owns
undivided interests in certain of the Interests and Buyer agrees that the
acts or omissions of Seller's co-owners shall not constitute a violation
of the provision of this Section 4.01(b) nor shall any action required by
a vote of co-owners constitute such a violation so long as Seller has
voted its interest with Buyer's prior consent;
(c) Seller shall use all reasonable efforts to maintain its corporate
status from the date hereof until Closing and to assure that as of the
Closing Date it will not be under any corporate, legal or contractual
restriction that would prohibit or delay the timely consummation of such
transactions; and
(d) Seller shall promptly notify Buyer of any suit, action, claim,
threatened suit, action or claim, or other proceedings of the type
referred to in Section 3.01(e) or (f) that arises prior to the Closing
with respect to which Seller receives notice or otherwise obtains
knowledge following the execution of this Agreement.
4.02 Covenants of Buyer. Buyer covenants and agrees with Seller that:
(a) Buyer shall use all reasonable efforts to maintain its corporate
status and to assure that as of the Closing Date it will not be under any
corporate, legal or contractual restriction that would prohibit or delay
the timely consummation of such transactions;
(b) To the extent necessary to facilitate the consummation of the
transactions contemplated herein, Buyer agrees to enter into specific
agreements of assumption with respect to the obligations of Seller to
specific third parties or governmental authorities to the extent such
obligations are attributable to the Interests after the Effective Time.
Buyer also shall be obligated to obtain consents from all necessary
Federal authorities, including the Bureau of Indian Affairs, and State
authorities to the assignment of the Leases;
(c) For a period of ten (10) years after the Closing Date, Buyer shall
provide Seller with reasonable access to the Records so long as Buyer is
given reasonable notice prior to Seller's access; and
(d) Buyer represents that it has performed, or will perform prior to
Closing, sufficient review and due diligence with respect to the Interests
which includes reviewing well data, title and other files and performing
necessary evaluations, assessments, and other tasks involved in evaluating
the Interests, to satisfy its requirements, completely, and enable it to
make an informed decision to acquire the Interests under the terms of this
Agreement.
ARTICLE V
ASSUMPTION OF LIABILITIES
AND INDEMNITIES
As used in this ARTICLE V, and the paragraphs hereunder "CLAIMS" shall include
claims, demands, causes of action, liabilities, damages, penalties and
judgements of any kind or character and all costs and fees in connection
therewith.
(a) At the Closing, but effective as of the Effective Time, Buyer shall
(i) assume, and be responsible for and comply with all duties and
obligations of Seller, express or implied, with respect to the Interests,
including, without limitation, those arising under or by virtue of the
Seller's leases and contracts listed in Exhibit A, and the permits, the
applicable statutes or rules, regulations or orders of any governmental
authority (specifically including, without limitation, any governmental
request or requirement to plug, replug and/or abandon any well of
whatsoever type, status or classification, or to take any clean-up,
remediation or other action with respect to the Interests), and (ii)
except as otherwise provided herein, to defend, indemnify and hold
harmless Seller from any and all claims in connection therewith;
(b) Subject to the provisions of Paragraphs (c), (d) and (e) below Seller
shall defend, indemnify and hold harmless Buyer from any and all claims,
costs, expenses, liabilities or causes of action relating to or arising
out of Seller's ownership or operation of Seller's Interests prior to the
Effective Time and Buyer shall defend, indemnify and hold harmless Seller
from any and all claims, costs, expenses, liabilities or causes of action
relating to or arising out of Buyer's ownership and operation of the
Interests after the Effective Time. Each indemnified party hereunder
agrees that upon its discovery of facts giving rise to a claim for
indemnity under the provisions of this Agreement, including receipt by it
of any demand, assertion, claim, action or proceeding, judicial or
otherwise, by any third party (such third party actions being referred to
herein as a "THIRD PARTY CLAIM"), it will give prompt notice thereof in
writing to the indemnifying party together with a statement of such
information with respect to any of the foregoing as it shall then have.
Such notice shall include a formal demand for indemnification under this
Agreement. The indemnified party shall afford the indemnifying party a
reasonable opportunity to pay, settle, or contest any Third Party Claim at
its expense;
(c) Seller shall (i) be responsible for any and all claims, including but
not limited to claims for payment of royalties, arising out of the
production and sale of hydrocarbons by Seller from the Interests, and the
proper accounting and payment of expenses for the Interests, insofar as
such claims and payments relate to period of time prior to the Effective
Time, and (ii) defend, indemnify and hold harmless Buyer from any and all
of such claims and payments;
(d) Buyer shall (i) be responsible for any and all claims, including but
not limited to claims for payment of royalties, arising out of the
production and sale of hydrocarbons by Buyer from the Interests, and the
proper accounting and payment of expenses for the Interests, insofar as
such claims and payments relate to period of time beginning at the
Effective Time and thereafter, and (ii) defend, indemnify and hold
harmless Seller from any and all of such claims and payments; and
(e) After the execution of this Agreement, Buyer, at its option, and its
sole cost, risk and expense, may obtain an environmental audit of the
Interests at any time prior to September 20, 1996. Seller shall provide
the environmental auditors all information available to it which they may
reasonably request and shall grant said auditors physical access to the
Interests. For those Interests which are not operated by Seller, Buyer
shall obtain permission from the operator to conduct such inspections. If
the audit reveals any environmental conditions which are not satisfactory
to Buyer, Seller shall immediately be provided a copy of the audit
information and either party shall have the option to terminate this
Agreement as to the affected Interest(s) with a deduction from the
Preliminary Purchase Price of the allocated value attributable to that
Interest(s), without liability, unless Seller affirms in writing that it
will remediate such conditions to the satisfaction of the Buyer prior to
Closing. Buyer shall defend and indemnify Seller from any and all
liability, claims, causes of action, injury to Buyer's employees, agents
or contractors or to Buyer's property and/or injury to Seller's property,
employees, agents or contracts which may arise out of Buyer's inspections,
but only to the extent of Buyer's negligence. If such deductions exceed
ten percent (10%) of the Preliminary Purchase Price and the parties are
unable to mutually agree to proceed with closing, then either party shall
have the right to terminate this Agreement without liability.
After Closing, Buyer shall be deemed to have fully inspected and accepted the
Interests "AS IS" in their then current physical and environmental condition.
ARTICLE VI
DISCLAIMER OF WARRANTIES
Buyer acknowledges that in making the decision to enter into this Agreement and
consummate the transactions contemplated hereby, Buyer has relied only upon its
own independent investigation of the Lands. Accordingly, Buyer acknowledges
that Seller has not made and Seller hereby expressly disclaims and negates any
representation or warranty express or implied at common law, by statute or
otherwise relating to (i) condition of the Lands (including but not limited to
any implied or express warranty of merchantability or fitness for a particular
purpose or of conformity to models or samples of materials) and (ii) any
information, data or other materials (written or oral) furnished to Buyer by or
on behalf of Seller (including but not limited to information, data or other
materials regarding the existence or extent of oil, gas or other mineral
reserves, the recoverability of or the cost of recovering such reserves, the
value of such reserves, any producing pricing assumption, present or past
production rates, the environmental condition of the Lands, including but not
limited to the presence of naturally occurring radioactive material ("NORM"),
and the ability to sell oil or gas production after Closing); provided,
however, that the foregoing disclaimer and negation of representations and
warranties shall not affect or impair the representations and warranties of
Seller made in Section 3.01.
ARTICLE VII
TITLE MATTERS
7.01 Defensible Title.
(a) As used herein, the term "DEFENSIBLE TITLE" shall mean, as to each of
the Interests, such title which, subject to and except for the Permitted
Encumbrances (as defined hereinafter): (i) entitles Seller to receive not
less than the "NET REVENUE INTEREST" set forth in Exhibit A of all oil,
gas and associated liquid and gaseous hydrocarbons produced, saved and
marketed from the presently producing formations in the presently
producing wells bottomed in the Lands; and (ii) obligates Seller to bear
costs and expenses relating to the maintenance, development and operation
of those portions of the presently producing wells bottomed in the Lands
in an amount not greater than the "WORKING INTEREST" set forth in Exhibit
A;
(b) The term "PERMITTED ENCUMBRANCES", as used herein, shall mean:
(1) Lessor's royalties, overriding royalties, reversionary interests and
similar burdens provided that the net cumulative effect of such
burdens does not operate to reduce the Net Revenue Interest of any
interest to less than the Net Revenue Interest therefor set forth in
Exhibit A;
(2) Preferential rights to purchase and required third party consents to
assignments and similar agreements with respect to which, prior to
Closing; (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, or (iii) with respect
to consents, such consents which need not be obtained prior to an
assignment, or the failure to obtain such consents will not have a
material adverse effect on the value of the Interests to Buyer;
(3) Liens for taxes or assessments not yet due or not yet delinquent, or
if delinquent, that are being contested in good faith in the ordinary
course of business;
(4) All rights to consent by, required notices to, filings with, or other
actions by governmental entities in connection with the sale or
conveyance of any of the Interests if the same are customarily
obtained subsequent to such sale or conveyance;
(5) Rights of reassignment;
(6) Easements, rights-of-way, servitudes, permits, surface leases and
other rights in respect of surface operations, pipelines, grazing,
logging, canals, ditches, reservoir or the like; conditions,
covenants or other restrictions; 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;
(7) Such Title Defects or other defects as Buyer has waived pursuant to
the terms of this Agreement;
(8) Liens to be released at Closing;
(9) The terms and conditions of all leases, agreements, orders,
instruments, documents and other matters described in Exhibit A
hereto; and
(10) 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
governmental authority.
(c) The term "TITLE DEFECT" as used herein shall mean any encumbrance,
encroachment, irregularity, defect in or objection to Seller's title to
each Interest (expressly excluding Permitted Encumbrances), that alone or
in combination with other defects, renders Seller's title to that Interest
less than Defensible Title or which would adversely interfere with the
use, possession, ownership or value thereof, or any violation of
applicable laws, rules, regulations or orders of any governmental agency
having jurisdiction over the Interests which will likely result in an
impairment or loss of title to all or a portion of the Interests or
diminish the value thereof or likely will hinder or impede the operation
of such interest, or any matter constituting a breach of Seller's
representation and warranties as set forth in Section 3.01. Materialmen's
mechanics', repairmen's, employees', contractors', operators' or other
similar liens or charges arising in the ordinary course of business
incidental to construction, maintenance or operation of the Interests
shall not constitute a Title Defect: (i) if they have not been filed
pursuant to law, or (ii) if filed, they have not yet become due and
payable or payment is being withheld as provided by law, or (iii) if their
validity is being contested in good faith by appropriate action.
7.02. Casualty Loss. If, prior to the Closing, all or any portion of the
Interests be destroyed by fire or other casualty, is taken in condemnation or
under the right of eminent domain or proceedings for such purpose are pending
or threatened, Buyer may elect (i) to treat the Interests affected by such
destruction, taking or pending or threatened taking as Defective Interests in
accordance with Section 7.03; or (ii) to purchase such Interests
notwithstanding any such destruction, taking or pending or threatened taking
(without reduction of the Preliminary Purchase Price therefor), in which case,
Seller shall, at the Closing, pay to Buyer all sums paid to Seller by third
parties by reason of the destruction or taking of such Interests to be assigned
to Buyer (including sums which are in the nature of compensation for any lost
or foregone income or production attributable to the time period subsequent to
the Effective Time) and shall assign, transfer and set over unto Buyer all of
the right, title and interest of Seller in and to any unpaid claims, awards or
other payments from third parties arising out of the destruction, taking or
pending or threatened taking as to such Interests (including sums which are in
the nature of compensation for any lost or foregone income or production
attributable to the time period subsequent to the Effective Time). Seller
agrees that, prior to Closing, it shall not voluntarily compromise, settle or
adjust any amounts payable by reason of any destruction, taking or pending or
threatened taking as to such of its portion of the Interests to be assigned to
Buyer without first obtaining the written consent of Buyer.
7.03 Defect Adjustments.
(a) "DEFECTIVE INTEREST" shall mean that portion of the Interests (as
determined in accordance with Section 7.03(c)) affected by a Title Defect
or that Buyer is otherwise entitled under Sections 7.02 or 7.04 to treat
as a Defective Interest, and of which Seller has been given notice by
Buyer prior to September 23, 1996, (the "DEFECT NOTICE DATE"), except as
provided hereinafter in this Section 7.03(a). Any notice of any Defective
Interest shall be in writing and shall include: (i) a description of the
Defective Interest, (ii) the specific basis for the defect that Buyer
believes causes such Interest to be a Defective Interest, and (iii) the
amount by which Buyer has determined the value of the Defective Interest
has been reduced and the computations and information upon which Buyer's
determination is based.
Buyer shall be deemed to have waived all Title Defects and any other
defect to any Interest of which Seller has not been given such notice
prior to the Defect Notice Date. If Seller (i) disagrees that a Defect
Adjustment or Exclusion Adjustment is warranted; (ii) disagrees that the
matter giving rise to such claims is uncured, or (iii) disagrees with the
amount of the related Defect Adjustment claimed by Buyer in any notice
given in accordance with this Section 7.03(a), then Seller, at its option,
may remove the defective property from the sale, attempt to cure the
defect at Seller's sole cost and expense, agree to a mutually acceptable
purchase price reduction or terminate this Agreement without liability to
Buyer except for return of the Performance Deposit, without interest,
provided that Seller may not terminate this Agreement unless the aggregate
value of Title Defects exceeds twenty percent (20%) of the Preliminary
Purchase Price;
(b) Defective Interests shall be excluded from the Interests to be
purchased by Buyer hereunder and the Preliminary Purchase Price shall be
reduced in accordance with Section 2.03 by an amount equal to the value
thereof, as agreed to between Buyer and Seller (which reduction shall be
called an "EXCLUSION ADJUSTMENT") unless (i) prior to the Closing, the
basis for treating an Interest as a Defective Interest has been removed,
(ii) Buyer agrees to waive the relevant Title Defect or other defect and
purchase the Defective Interest, notwithstanding the defect, (iii) Seller
agrees to indemnify, defend and hold Buyer harmless and Buyer agrees to
accept such indemnification against all losses, costs, expenses and
liabilities with respect to such Defective Interest arising from the
defect or basis for such Interest being treated as a Defective Interest,
or (iv) Buyer and Seller agree to an amount by which the value of the
Defective Interest has been reduced and the Preliminary Purchase Price is
reduced by such amount in accordance with Section 2.03 (which reduction
shall be called a "DEFECT ADJUSTMENT"), in which event the Interest shall
be included in the Interests to be purchased by Buyer hereunder and,
except in the case of (iv), no adjustment shall be made to the Preliminary
Purchase Price; or (v) Buyer and Seller do not agree, on or before the
Scheduled Closing Date, as to the value of the Defective Interest that is
to be excluded from the Preliminary Purchase Price and none of Subsections
(i) through (iv) of Section 7.03(b) are applicable, in which event Buyer
may terminate this Agreement without further liability or obligation, by
giving written notice of termination on or before the Scheduled Closing
Date.
(c) The amount by which the Preliminary Purchase Price is to be reduced
in accordance with Section 7.03 as the result of any Interest being
treated as a Defective Interest shall be determined as follows:
(1) In the event that the cost of remedying any Title Defect exceeds the
amount allocated to the affected Interest as set forth in Exhibit A,
then such Interest shall be excluded from the transaction
contemplated hereby and the Preliminary Purchase Price shall be
reduced by the amount allocated to the Interest so excluded as set
forth in Exhibit A (which adjustment shall be called an EXCLUSION
ADJUSTMENT");
(2) In the event that the net revenue interest of Seller in any Interest
is less than that set forth in Exhibit A, that portion of the
Preliminary Purchase price allocated on Exhibit A-1 to such
particular Interest shall be reduced in the proportion that the net
revenue interest actually owned by Seller bears to that set forth in
Exhibit A;
(3) In the event that the working interest costs payable with respect to
a particular Interest is greater than the working interest set forth
in Exhibit A, the Preliminary Purchase Price allocated on Exhibit A-1
to such particular Interest shall be reduced in the proportion that
the working interest percentage attributable to such interest exceeds
that set forth in Exhibit A;
(4) In the event that (i) the record title interest of Seller to any
Interest is burdened by any lien, encumbrance, mortgage, pledge, or
security interest, or (ii) ad valorem, property or other similar
taxes and assessments for any years prior to the Effective Time have
not been paid, the Preliminary Purchase Price of such interest shall
be reduced by the sum necessary to discharge and obtain a full record
release of such burden or to pay such taxes; and
(5) In the event there exist other Title Defects which would materially
adversely affect or interfere with the use, possession, ownership or
value of any Interest, Buyer, at its option, may either, (i) exclude
the affected Interest from the transaction contemplated hereby and
the Preliminary Purchase Price shall be reduced by the amount
allocated to the affected Interest as set forth in Exhibit A, or (ii)
accept such Interest.
(d) In determining which portion of the Interests are Defective
Interests, it is the intent of the parties to include all portions of the
Interests affected by the defect or basis for such Interests being treated
as Defective Interests; and
(e) If the deductions in the Preliminary Purchase Price to be made
pursuant to this ARTICLE VII exceed twenty percent (20%) of the
Preliminary Purchase price, either party may terminate this agreement at
any time prior to Closing.
7.04 Identification of Additional Defective Interests.
(a) If, prior to the Closing, there has been non-compliance with the
laws, rules, regulations, ordinances or orders of any governmental agency
or authority having jurisdiction over the affected Interests, resulting in
risk of loss of the affected Interests or value thereof, then Buyer may
elect to treat such of the affected Interests as are adversely affected by
such noncompliance as Defective Interests by giving Seller notice thereof
in accordance with Section 7.03(a);
(b) If, prior to the Closing, any preferential right to purchase any of
the Interests is exercised, Buyer may elect to treat that portion of the
Interests affected by the exercise of such preferential right as Defective
Interests by giving Seller notice thereof in accordance with Section
7.03(a);
(c) If any necessary third party consent to assignment of any of the
Interests is not obtained prior to the Closing, Buyer may elect to treat
that portion of the Interests subject to such consent requirement as
Defective Interests by giving Seller notice thereof in accordance with
Section 7.03(a). For purposes hereof "NECESSARY THIRD-PARTY CONSENTS"
shall not include:
(1) consents customarily obtained subsequent to such assignment including
without limitation any consent of the State or the Bureau of Indian
Affairs or other Federal agencies or governmental offices;
(2) consents contractually permitted to be obtained subsequent to such
assignment; or
(3) consents that, if not obtained, will not affect the transferability,
without penalty, of, the operation of, or the receipt of income from,
the Interests subject thereto, or result in termination of the
interests subject thereto or a material decrease in the value
thereof.
(d) If, prior to the Closing, Buyer becomes aware of any suit, action or
other proceeding before any court or governmental agency that would result
in loss or impairment of Seller's title to any portion of the Interests or
a portion of the value thereof, Buyer may elect to treat the portion of
the Interests affected thereby as Defective Interests by giving Seller
notice thereof in accordance with Section 7.03(a); and
(e) If any inaccuracy in Exhibit A results in a loss of value of a
portion of the Interests, Buyer may elect to treat that portion of the
Interest subject to such reduction in value as Defective Interests by
giving Seller notice thereof in accordance with Section 7.03(a).
ARTICLE VIII
CONDITIONS TO CLOSING
8.01 Seller's Conditions. The obligations of Seller at the Closing are
subject, at the option of Seller, to the satisfaction, at or prior to the
Closing, of the following conditions:
(a) All representations and warranties of Buyer contained in this
Agreement shall be true, correct and not misleading in all material
respects at and as of the Closing as if such representations and
warranties were made at and as of the Closing, and Buyer shall have
performed and satisfied all agreements and covenants in all material
respects required by this Agreement to be performed and satisfied by Buyer
at or prior to the Closing;
(b) No suit or other proceeding shall be pending before any court or
governmental agency seeking to restrain, prohibit or declare illegal, or
seeking substantial damages in connection with, the purchase and sale
contemplated by this Agreement, except (i) matters with respect to which
Seller has been adequately indemnified by Buyer, or (ii) any suit or
proceeding affecting only a portion of the Interests, which portion of the
Interests could be treated as a Defective Interest in accordance with
Section 7.04(d);
(c) The aggregate sum of Defect Adjustments and Exclusion Adjustments
shall not exceed thirty percent (30%) of the Preliminary Purchase Price;
and
(d) All necessary and material permissions, approvals and consents
required which are obtainable prior to Closing shall be in full force and
effect.
8.02 Buyer's Conditions. The obligations of Buyer at the Closing are subject,
at the option of Buyer, to the satisfaction, at or prior to the Closing, of the
following conditions:
(a) All representations and warranties of Seller contained in this
Agreement shall be true, correct and not misleading in all material
respects at and as of the Closing as if such representations and
warranties were made at and as of the Closing, and Seller shall have
performed and satisfied all agreements and covenants in all material
respects required by this Agreement to be performed and satisfied by
Seller at or prior to the Closing;
(b) No suit or other proceeding shall be pending before any court or
governmental agency seeking to restrain, prohibit or declare illegal, or
seeking substantial damages in connection with, the purchase and sale
contemplated by this Agreement, except (i) matters with respect to which
Buyer has been adequately indemnified by Seller, or (ii) any suit or
proceeding affecting only a portion of the Interests, which portion of the
Interests could be treated as a Defective Interest in accordance with
Section 7.04(d);
(c) The aggregate sum of Defect Adjustments and Exclusion Adjustments
shall not exceed thirty percent (30%) of the Preliminary Purchase Price;
(d) All necessary and material permissions, approvals and consents
required which are obtainable prior to Closing shall be in full force and
effect; and
(e) The provisions of ARTICLE V.(e) have been satisfied.
8.03 Satisfaction or Waiver. If Seller and Buyer proceed with the Closing as
specified in ARTICLE IX, all conditions of Closing shall be deemed to have been
satisfied or waived and neither of the parties shall have any liability
whatsoever to the other arising out of, resulting from, or attributable to any
such condition of Closing, irrespective of whether such conditions of Closing
were in fact satisfied or waived. Nothing contained in this Section 8.03 shall
be a waiver or release of any breach of a representation or warranty contained
in this Agreement.
ARTICLE IX
CLOSING
9.01 Date of Closing. Unless the parties hereto mutually agree otherwise and
subject to the conditions stated in this Agreement, the consummation of the
transactions contemplated hereby (herein called the "CLOSING") shall be held on
September 30, 1996, at 10:00 A.M. (the "SCHEDULED CLOSING DATE"). The date
Closing actually occurs is herein called the "CLOSING DATE".
9.02 Place of Closing. The Closing shall be held at Seller's office in
Dallas, Texas, in accordance with the Closing Instructions to be mutually given
in writing by Seller and Buyer.
9.03 Closing Obligations. At the Closing the following events shall occur,
each being a condition concurrent to the others and each being deemed to have
occurred simultaneously with the others:
(a) Seller shall execute, acknowledge and deliver to Buyer assignment,
bill of sale and conveyance documents (in sufficient counterparts to
facilitate recording), in form and substance as set forth in Exhibit C
hereto, conveying its portion of the Interests (other than those portions
of the Interests excluded under Sections 7.03(b) and 7.04) to Buyer.
(b) Seller and Buyer shall execute and deliver a settlement statement
(herein called the "PRELIMINARY SETTLEMENT STATEMENT") prepared by Seller
and furnished to Buyer no less than seven (7) days prior to the Scheduled
Closing Date) that shall set forth the Closing Amount (as hereinafter
defined) and each adjustment and the calculation of such adjustments used
to determine such amount. The term "CLOSING AMOUNT" shall mean the
Preliminary Purchase Price adjusted as provided in Section 2.03, using for
such adjustments the best information then available. Seller and Buyer
further agree that Seller shall be entitled to receive all proceeds
attributable to ownership of the Interests prior to the Effective Time and
Buyer shall be entitled to receive all proceeds attributable to the
Interests after the Effective Time.
(c) Buyer shall deliver the Closing Amount in the form of immediately
available U.S. funds, by wire transfer in accordance with instructions to
be provided by Seller.
(d) Seller shall deliver to Buyer exclusive possession of its portion of
the Interests (other than Interests excluded under Section 7.03(b) or
Section 7.04)
(e) Seller and Buyer shall execute, acknowledge and deliver transfer
orders or letters in lieu thereof directing all purchasers of production
to make payment to Buyer of proceeds attributable to production after the
Effective Time from the Interests assigned to Buyer under Section 9.03(a),
but not theretofore paid to Seller.
ARTICLE X
OBLIGATIONS AFTER CLOSING
10.01 Post-Closing Adjustments. Within one hundred thirty (130) days after
the Closing, Seller shall prepare and deliver to Buyer, in accordance with this
Agreement and generally accepted accounting principles, a statement (herein
called the "POST CLOSING SETTLEMENT STATEMENT") setting forth each adjustment
or payment that was not included or correctly included in the Preliminary
Settlement Statement and showing the calculation of such adjustments. Within
thirty (30) days after receipt of the Post Closing Settlement, Buyer shall
deliver to Seller a written report containing any changes that Buyer proposes
to be made to the Post Closing Settlement Statement. The parties shall
undertake to agree with respect to the amounts due pursuant to such Post
Closing adjustment no later than one hundred sixty (160) days after the Closing
Date. The date upon which such agreement is reached or upon which the Final
Purchase Price is established, shall be herein called the "SETTLEMENT DATE".
In the event that (i) the Final Purchase Price is more than the Closing Amount,
Buyer shall pay to Seller, in certified U.S. Funds, the amount of such
difference (ii) the Final Purchase Price is less than the Closing Amount,
Seller shall pay to Buyer, in certified U.S. funds, the amount of such
difference. Payment by Buyer or Seller shall be made within ten (10) days of
the Final Settlement Date. After the Settlement Date, additional proceeds
received by or expenses paid by either Buyer or Seller on behalf of the other
shall be settled by invoicing the other party for expenses paid or remitting to
the other party any proceeds received. The gas imbalances of the Interests
shall be considered final and neither party thereafter shall make claim upon
the other concerning same.
10.02 Files and Records. Seller shall have the right to make and retain
copies of the Records prior to delivery thereof to Buyer. Within thirty (30)
days after the Closing Date, Seller shall deliver to Buyer all original files
and Records relating to the Interests conveyed to Buyer.<PAGE>
10.03 Taxes and
Recording Fees. Buyer shall pay all sales taxes occasioned by
the sale of the Interests, all ad valorem, property, production, excise,
severance, windfall profit and other taxes, except income taxes, based upon or
measured by the ownership of the property, the production of hydrocarbons or
the receipt of proceeds therefrom which apply to or arise from and after the
Effective Time together with all documentary, filing and recording fees
required in connection with the filing and recording of any assignments or
other documents recorded in connection with the sale of the Interests.
10.04 Further Assurances. After Closing, Seller and Buyer shall each execute,
acknowledge and deliver, or cause to be executed, acknowledged and delivered,
such instruments, and shall each take such other action, as may be necessary or
advisable to carry out their respective obligations under this Agreement and
under any document, certificate or other instrument delivered pursuant hereto.
10.05 Survival. The warranties or representations herein made by Seller are
conditions to the obligations of Buyer hereunder and no warranty or
representation herein made by Seller (other than those contained in 3.01(a),
(b), (c), (d), (e), (f), (i), (j), (k), (o) and (q) shall survive the Closing.
The agreements set forth in ARTICLE X and the matters set forth in ARTICLES V
and VI and Section 13.12 shall survive the Closing for a period of one (1) year
from the Closing Date.
ARTICLE XI
TERMINATION OF AGREEMENT
11.01 Termination. This Agreement and the transactions contemplated hereby may
be terminated in the following instances:
(a) By Seller if the conditions set forth in Section 8.01(a) through
8.01(d) are not satisfied in all material respects or waived as of
the Scheduled Closing Date;
(b) By Buyer if the conditions set forth in Section 8.02(a) through
8.02(e) are not satisfied in all material respects or waived as of
the Scheduled Closing Date;
(c) By Buyer pursuant to Section 7.03(b);
(d) Pursuant to Article V.(e); or
(e) At any time by the mutual written agreement of Buyer and Seller.
11.02 Liabilities Upon Termination. If this Agreement is breached by either
party, nothing contained herein shall be construed to limit Seller's or Buyer's
legal or equitable remedies, including, without limitation, damages for the
breach or failure of any representation, warranty, covenant or agreement
contained herein (whether or not the non-defaulting party has terminated the
Agreement) or the right to enforce specific performance of this Agreement;
provided, however, that a party terminating this Agreement shall have no right
to specific performance thereof, and provided, further, that neither party
shall have a right to specific performance thereof if this Agreement is
terminated pursuant to Section 11.01 hereof.
ARTICLE XII
TAX-FREE EXCHANGE
12.0 Tax-Free Exchange. Seller has elected to effect a like-kind exchange
pursuant to Section 1031 of the Internal Revenue Code of 1986, as amended, and
the regulations promulgated thereunder, with respect to the Interests (a "Like-
Kind Exchange"). In order to effect a Like-Kind Exchange, Buyer shall
cooperate and do all acts as may be reasonably required or requested by Seller
with regard to effecting the Like-Kind Exchange, including, but not limited to,
executing an Exchange Escrow Agreement, a form of which is attached hereto as
Exhibit D, in accordance with Treasury Regulation Section 1.1031(k)-1(g)(3);
provided, however, Buyer shall incur no expense in connection with such Like-
Kind Exchange and Buyer shall not be required to take title to any property
other than the Interests in connection with the Like-Kind Exchange, and Buyer's
possession of the Interests will not be delayed by reason of any such Like-Kind
Exchange.
ARTICLE XIII
MISCELLANEOUS
13.01 Exhibits and Schedules. Exhibits A through D are attached hereto and
incorporated herein by this reference.
13.02 Expenses. Except as otherwise specifically provided, all fees, costs
and expenses incurred by Buyer or Seller in negotiating this Agreement or in
consummating the transactions contemplated by this Agreement shall be paid by
the party incurring the same, including, without limitation, legal and
accounting fees, costs and expenses.
13.03 Notices. All notices and communications required or permitted under
this Agreement shall be in writing, delivered to or sent by U. S. Mail or
Express Delivery, postage prepaid, or by facsimile transmission, addressed as
follows:
Maynard Oil Company
Attention Cassondra Foster
8080 North Central Expressway, Suite 660
Dallas, TX 75206
Phone: (214) 891-8461
Fax: (214) 891-8827
Enron Oil & Gas Company
Attention Lee McVay, Vice President and General Manager
20 North Broadway, Suite 800
Oklahoma City, OK 73102
Phone: (405) 239-7880
Fax: (405) 239-7858
Any party may, by written notice so delivered to the others, change the address
or individual to which delivery shall thereafter be made.
13.04 Amendments. Except as otherwise expressly provided herein, this
Agreement may not be amended nor any rights hereunder waived except by an
instrument in writing signed by the party to be charged with such amendment or
waiver and delivered by such party to the party claiming the benefit of such
amendment or waiver.
13.05 Assignment. Neither Seller nor Buyer shall assign all or any portion of
its rights or delegate all or any portion of its duties hereunder without the
prior written consent of the other to such assignment; provided, however, that
Buyer or Seller or both may assign all or part of this Agreement to a qualified
intermediary to facilitate a deferred like-kind exchange for federal tax
purposes. Subject to the foregoing, this Agreement shall inure to the benefit
of and be binding upon Seller, Buyer and their respective successors and
assigns.
13.06 Announcements. Seller and Buyer shall consult with each other with
regard to all press releases and other announcements issued at or prior to the
Closing concerning this Agreement or the transactions contemplated hereby and,
except as may be required by applicable laws or the applicable rules, and
regulations of any governmental agency or stock exchange, neither Buyer nor
Seller shall issue any such press release or other publicity without the prior
written consent of the other party.
13.07 Headings. The headings of the articles and sections of this Agreement
are for guidance and convenience of reference only and shall not limit or
otherwise affect any of the terms or provisions of this Agreement.
13.08 Counterparts. This Agreement, and any document or instrument entered
into, given or made pursuant to this Agreement or authorized hereby, and any
amendment or supplement thereto, may be executed in any number of counterparts,
and, when so executed, each of which shall be deemed an original instrument,
and shall have the same force and effect as though all signatures appeared on a
single document, and all of which together shall constitute but one and the
same instrument. Any signature page of this Agreement or of such an amendment,
supplement, document or instrument may be detached from any counterpart thereof
and attached to another counterpart without impairing the legal effect of any
signatures identical in form thereto but having attached to it one or more
additional signature pages.
13.09 References. References made in this Agreement, including the use of a
pronoun, shall be deemed to include where applicable, masculine, feminine,
singular or plural, individuals, partnerships or corporations. As used in this
Agreement, "person" shall mean any natural person, corporation, partnership,
trust, estate or other entity.
13.10 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Texas, without regard to its choice
of law principles provided, however, that issues in connection with title to
the Interests shall be governed by the applicable laws of the State of
Oklahoma.
13.11 Entire Agreement. This Agreement (including the Exhibits hereto)
constitutes the entire understanding among the parties with respect to the
subject matter hereof, superseding all negotiations, prior discussions and
prior agreements and understandings relating to such subject matter.
13.12 Securities Laws. Buyer has advised Seller that the interests are not
being acquired for distribution or transfer in violation of the securities laws
of the United States or of any state thereof. Buyer hereby agrees to protect,
indemnify and hold harmless Seller from and against any and all claims, costs
(including, without limitation, court costs and reasonable attorney's fees),
expenses, damages and liabilities which arise under applicable state or federal
securities laws as a result of acts or omissions of Buyer or its affiliates
which are contrary to such laws and which are in connection with the
transactions contemplated hereby or the sale or other disposition of the
Interests by Buyer or its affiliates.
Seller hereby agrees to protect, indemnify and hold harmless Buyer from and
against any and all claims, costs (including, without limitation, court costs
and reasonable attorney's fees), expenses, damages and liabilities which arise
under applicable state or federal securities laws as a result of acts or
omissions of Seller or its affiliates which are contrary to such laws and which
are in connection with the transactions contemplated hereby.
Executed as of the date first above written.
SELLER
MAYNARD OIL COMPANY
By: /s/ Glenn R. Moore
------------------------------
Glenn R. Moore
President
BUYER
ENRON OIL & GAS COMPANY
By: /s/ Leland J. McVay
-------------------------------
Leland J. McVay
Vice President
EXHIBIT "A"
Attached to and made a part of Purchase and Sale Agreement dated
September 12, 1996, by and between Maynard Oil Company, Seller, and
Enron Oil & Gas Company, Buyer
ELLIS COUNTY, OKLAHOMA
PN 440401 (UT-424)
BROWN NO. 1-28
EXPENSE INTEREST 0.6406250
REVENUE INTEREST 0.5600586
Oil and Gas Lease dated August 3, 1956, by and between Elsie Nuttall, as
Lessor, and George L. Aycock, as Lessee, recorded in Volume 83, page 321 of the
Records of Ellis County, Oklahoma, covering the N/2 N/2 of Section 28, Township
17 North, Range 22 West, Ellis County, Oklahoma, LIMITED to rights from the
surface to the base of the Tonkawa formation. (LF-04954-AA-01)
Oil and Gas Lease dated April 12, 1966, by and between James W. McMahan,
et al, as Lessor, and L. C. Neeley, as Lessee, recorded in Volume 163, page 163
of the Records of Ellis County, Oklahoma, covering the N/2 NW/4 of Section 28,
Township 17 North, Range 22 West, Ellis County, Oklahoma. (LF-04954-AB-01)
Oil and Gas Lease dated August 3, 1956, by and between Roy P. Nuttall and
Eulah P. Nuttall, as Lessors, and George L. Aycock, as Lessee, recorded in
Volume 83, page 323 of the Records of Ellis County, Oklahoma, covering the SW/4
SW/4 of Section 28, Township 17 North, Range 22 West, Ellis County, Oklahoma.
(LF-04960-AA-01)
Oil and Gas Lease dated June 18, 1962, by and between Arnold W. Brown, et
ux, as Lessor, and Mike Rainbolt, as Lessee, recorded in Volume 129, page 464
of the Records of Ellis County, Oklahoma, covering the S/2 NE/4, SE/4 SW/4 and
the SE/4 of Section 28, Township 17 North, Range 22 West, Ellis County,
Oklahoma (LF-05076-00)
Leases numbered 04954-AA&AB-01 and 04960-AA-01 are subject to Operating
Agreement dated December 29, 1966, by and between Shell Oil Company, as
Operator, and Continental Oil Company, et al, as Non-Operators, Purchase and
Sale Agreement dated December 19, 1985, as amended, by and between Shell
Western E&P Inc. and Maynard Oil Company; Assignment, Conveyance and Bill of
Sale effective December 1, 1985, by and between Shell Western E&P Inc. and
Maynard Oil Company recorded in Volume 459, page 381 of the Records of Ellis
County, Oklahoma; lease numbered 05076-00 is subject to Purchase and Sale
Agreement dated June 1, 1989, and Partial Assignment dated May 31, 1989, by and
between Conoco, Inc. and Maynard Oil Company; leases numbered 04954-AB-01 &
04960-AA-01 are subject to Assignment and Bill of Sale effective May 1, 1986,
from Sabine Corporation to Maynard Oil Company.
PN 440501 (UT-445)
DEAL STATE NO. 1-13
EXPENSE INTEREST 0.8515625
REVENUE INTEREST 0.7391357
Oil and Gas Lease dated September 25, 1956, by and between State of
Oklahoma bearing serial number 23-EI-980, as Lessor, and Shell Oil Company, as
Lessee, recorded in Volume 86, page 152 of the Records of Ellis County,
Oklahoma, covering the NW/4 of Section 13, Township 24 North, Range 25 West,
Ellis County, Oklahoma, LIMITED to rights from the surface to the base of the
Morrow formation. (LF-04897-00)
Oil and Gas Lease dated September 25, 1956, by and between State of
Oklahoma bearing serial number 23-EI-981, as Lessor, and Shell Oil Company, as
Lessee, recorded in Volume 86, page 306 of the Records of Ellis County,
Oklahoma, covering the SE/4 of Section 13, Township 24 North, Range 25 West,
Ellis County, Oklahoma, LIMITED to rights from the surface to the base of the
Morrow formation. (LF-04898-00)
Oil and Gas Lease dated September 25, 1956, by and between State of
Oklahoma bearing serial number 23-EI-982, as Lessor, and Shell Oil Company, as
Lessee, recorded in Volume 86, page 309 of the Records of Ellis County,
Oklahoma, covering the SW/4 of Section 13, Township 24 North, Range 25 West,
Ellis County, Oklahoma, LIMITED to rights from the surface to the base of the
Morrow formation. (LF-04899-00)
Oil and Gas Lease dated August 9, 1956, by and between D. L. Berry, as
Lessor, and Carter Oil Company, as Lessee, recorded in Volume 83, Page 111 of
the Records of Ellis County, Oklahoma. (LF-04900-AA)
Oil and Gas Lease dated August 9, 1956, by and between W. W. Warner, as
Lessor, and Carter Oil Company, as Lessee, recorded in Volume 83, page 113 of
the Records of Ellis County, Oklahoma. (LF-04900-AB)
Oil and Gas Lease dated October 10, 1956, by and between Wood Oil
Company, as Lessor, and Shell Oil Company, as Lessee, recorded in Volume 85,
page 116 of the Records of Ellis County, Oklahoma. (LF-04900-AC)
Oil and Gas Lease dated October 24, 1956, by and between Charles A. Neal
& Company, as Lessor, and Shell Oil Company, as Lessee, recorded in Volume 85,
page 291 of the Records of Ellis County, Oklahoma. (LF-04900-AD)
Oil and Gas Lease dated December 16, 1957, by and between Wilbur J.
Holleman, as Lessor, and Keener Oil Company, as Lessee, recorded in Volume 95,
page 546 of the Records of Ellis County, Oklahoma. (LF-04900-AE)
Oil and Gas Lease dated June 21, 1961, by and between Keener Oil Company,
as Lessor, and Shell Oil Company, as Lessee, recorded in Volume 124, page 112
of the Records of Ellis County, Oklahoma. (LF-04900-AF)
The hereinabove referenced leases cover the NE/4 of Section 13,
Township 24 North, Range 25 West, Ellis County, Oklahoma, LIMITED to
rights from the surface to the base of the Morrow formation, as to
all leases numbered AC through AF and from the surface to the base of
the Chester formation as to leases numbered AA and AB, Ellis County,
Oklahoma.
The hereinabove referenced leases are subject to Operating Agreement dated
August 15, 1961, by and between Shell Oil Company, as Operator, and Amoco
Production Company, as Non-Operator; Purchase and Sale Agreement dated
December 19, 1985, by and between Shell Western E&P Inc. and Maynard Oil
Company; Assignment, Conveyance and Bill of Sale effective December 1, 1985, by
and between Shell Western E&P Inc. and Maynard Oil Company recorded in Volume
459, page 381 of the Records of Ellis County, Oklahoma; and Gas Purchase
Contract dated January 17, 1996, by and between GPM Gas Contract, as Buyer, and
Maynard Oil Company, as Seller. Leases numbered LF-04900-AA and AB are subject
to Farmout Agreement dated June 6, 1961, by and between Humble Oil and Refining
Company and Shell Oil Company and Assignment dated November 3, 1961 by and
between Humble Oil and Refining Company and Shell Oil Company. Lease numbered
LF-04900-AE is subject to Farmout Agreement dated June 6, 1961, by and between
Keener Oil Company, a co-partnership and Shell Oil Company and Assignment dated
October 6, 1961, by and between Keener Oil Company, a co-partnership and Shell
Oil Company recorded in Volume 126, page 272 of the Records of Ellis County,
Oklahoma.
PN 440701 (UT-433)
FEERER NO. 1-33
EXPENSE INTEREST 0.7500000
REVENUE INTEREST 0.6289062
Oil and Gas Lease dated March 27, 1956, by and between Leslie Feerer and
Edna Feerer, as Lessors, and J. B. Roberts, as Lessee, recorded in Volume 80,
page 333, of the Records of Ellis County, Oklahoma, covering SW/4 of Section
33, Township 23 North, Range 23 West, Ellis County, Oklahoma, LIMITED to rights
from the surface to the Base of the Chester (Mississippian) formation. (LF-
04886-AA)
Oil and Gas Lease dated April 5, l956, by and between Keith Sullivan and
Elzalene Sullivan, as Lessors, and Sinclair Oil and Gas Company, as Lessee,
recorded in Volume 80, page 319 of the Records of Ellis County, Oklahoma,
covering SW/4 of Section 33, Township 23 North, Range 23 West, Ellis County,
Oklahoma, LIMITED to rights from the surface to the base of the Chester
(Mississippian) formation. (LF-04886-AB)
The hereinabove referenced leases are subject to Farmout Agreement dated
September 13, 1962, by and between Sinclair Oil and Gas Company and Shell Oil
Company; Assignment dated January 17, 1963, recorded in Volume 134, page 510 of
the Records of Ellis County, Oklahoma, from Sinclair Oil and Gas Company to
Shell Oil Company.
Oil and Gas Lease dated July 23, 1958, by and between State of Oklahoma
bearing serial number 23-PB-277, as Lessor, and Shell Oil Company, as Lessee,
recorded in Volume 103, page 603 of the Records of Ellis County, Oklahoma,
covering NE/4 of Section 33, Township 23 North, Range 23 West, Ellis County,
Oklahoma. (LF-04932-00)
Oil and Gas Lease dated July 23, l958, by and between State of Oklahoma
bearing serial number 23-PB-278, as Lessor, and Shell Oil Company, as Lessee,
recorded in Volume 103, page 609 of the Records of Ellis County, Oklahoma,
covering NW/4 of Section 33, Township 23 North, Range 23 West, Ellis County,
Oklahoma. (LF-04933-00)
The hereinabove referenced leases are subject to Joint Operating Agreement
dated December 6, 1962, by and between Shell Oil Company, as Operator and Gulf
Oil Corporation, as Non-Operator; Salt Water Disposal Agreement dated December
18, 1967, by and between Pan American Petroleum Corporation and Shell Oil
Company; Purchase and Sale Agreement dated December 19, 1985, by and between
Shell Western E&P Inc. and Maynard Oil Company; Assignment, Conveyance and Bill
of Sale effective December 1, 1985, by and between Shell Western E&P Inc. and
Maynard Oil Company recorded in Volume 459, page 381 of the Records of Ellis
County, Oklahoma.
PN 440510 (UT-416)
McCLURE NO. 1-13
EXPENSE INTEREST 1.0000000
REVENUE INTEREST 0.8613281
Oil and Gas Lease dated September 25, 1956, by and between State of
Oklahoma bearing serial number 23-EI-983, as Lessor, and Shell Oil Company, as
Lessee, recorded in Volume 86, Page 318 of the Records of Ellis County,
Oklahoma, covering NE/4 of Section 13, Township 24 North, Range 26 West, Ellis
County, Oklahoma, LIMITED to rights from the surface to the base of the Morrow
formation. (LF-04919-00)
Oil and Gas Lease dated September 25, 1956, by and between State of
Oklahoma bearing serial number 23-EI-984, as Lessor, and Shell Oil Company, as
Lessee, recorded in Volume 86, page 173 of the Records of Ellis County,
Oklahoma, covering SE/4 of Section 13, Township 24 North, Range 26 West, Ellis
County, Oklahoma, LIMITED to rights from the surface to the base of the Morrow
formation. (LF-04920-00)
Oil and Gas Lease dated September 25, 1956, by and between State of
Oklahoma bearing serial number 23-EI-985, as Lessor, and Shell Oil Company, as
Lessee, recorded in Volume 86, page 176 of the Records of Ellis County,
Oklahoma, covering SW/4 of Section 13, Township 24 North, Range 26 West, Ellis
County, Oklahoma, LIMITED to rights from the surface to the base of the Morrow
formation. (LF-04921-00)
Oil and Gas Lease dated April 26, 1955, by and between J. R. McClure and
Reba Ruth McClure, as Lessor, and John Briggs, as Lessee, recorded in Volume
74, page 143 of the Records of Ellis County, Oklahoma, covering NW/4 of Section
13, Township 24 North, Range 26 West, Ellis County, Oklahoma, LIMITED to rights
from the surface to the base of the Chester formation, as to gas rights only.
(LF-04922-00)
The hereinabove referenced leases are subject to Agreement dated February 12,
1969, by and between Shell Oil Company and Cities Service Oil Company; Gas
Purchase Agreement dated October 1, 1989, as amended, by and between Production
Gathering Company, as Buyer, and Maynard Oil Company, as Seller; Purchase and
Sale Agreement dated December 19, 1985, by and between Shell Western E&P Inc.
and Maynard Oil Company; Assignment, Conveyance and Bill of Sale effective
December 1, 1985, by and between Shell Western E&P Inc. and Maynard Oil Company
recorded in Volume 459, page 381 of the Records of Ellis County, Oklahoma.
PN 440512 (UT-413)
O'HERN NO. 1-32
EXPENSE INTEREST 0.5067300
REVENUE INTEREST 0.4160450
Oil and Gas Lease dated September 9, 1947, by and between Carrie Lee
O'Hern, as Lessor, and W. G. Mouser, as Lessee, recorded in Volume 36, page 364
of the Records of Ellis County, Oklahoma, INSOFAR AND ONLY INSOFAR as said
lease covers all of Section 32, Township 24 North, Range 25 West, Ellis County,
Oklahoma, LIMITED to rights from the surface to the base of the Morrow
formation. (LF-04896-00)
The hereinabove referenced lease is subject to Gas Purchase Agreement dated
October 1, 1989, by and between Production Gathering Company, as Buyer, and
Maynard Oil Company, as Seller; Assignment dated March 15, 1958, from The Texas
Company to Shell Oil Company; Agreement dated October 21, 1969, by and between
Shell Oil Company and Cities Service Oil Company; Declaration of Pool dated
June 9, 1958; Operating Agreement dated Jaunary 18, 1957, as amended, by and
between Shell Oil Company, as Operator, and The Texas Company, as Non-Operator;
Purchase and Sale Agreement dated December 19, 1985, by and between Shell
Western E&P Inc. and Maynard Oil Company; Assignment, Conveyance and Bill of
Sale effective December 1, 1985, by and between Shell Western E&P Inc. and
Maynard Oil Company recorded in Volume 459, page 381 of the Records of Ellis
County, Oklahoma.
PN 440514
PEARSON NO. 1-14 AND 2-14 (UT-410)
EXPENSE INTEREST 0.6875000
REVENUE INTEREST 0.6015625
Oil and Gas Lease dated October 17, 1956, by and between Lulu Jane Davis
Hamby, et al, as Lessor, and James B. Franklin, as Lessee, recorded in Volume
85, page 535 of the Records of Ellis County, Oklahoma, INSOFAR AND ONLY INSOFAR
as said lease covers the NW/4, N/2 NE/4, N/2 SW/4 and SE/4 SW/4 of Section 14,
Township 23 North, Range 26 West, Ellis County, Oklahoma, LIMITED to rights
from the surface to the base of the Morrow formation. (LF-04905-AA-01)
The hereinabove referenced lease is subject to Purchase and Sale Agreement
dated December 19, 1985, by and between Shell Western E&P Inc. and Maynard Oil
Company; Assignment, Conveyance and Bill of Sale effective December 1, 1985, by
and between Shell Western E&P Inc. and Maynard Oil Company recorded in Volume
459, page 381 of the Records of Ellis County, Oklahoma.
Oil and Gas Lease dated September 20, 1949, by and between Sid Brown, et
ux, as Lessor, and John Briggs, as Lessee, recorded in Volume 43, page 196 of
the Records of Ellis County, Oklahoma, INSOFAR AND ONLY INSOFAR as said lease
covers the NW/4, N/2 NE/4, N/2 SW/4 and the SE/4 SW/4 of Section 14, Township
23 North, Range 26 West, Ellis County, Oklahoma. (LF-04905-AB)
Oil and Gas Lease dated August 24, 1959, by and between Anson J. Woods,
et ux, as Lessor, to Robert C. Green, as Lessee, recorded in Volume 113, page
370 of the Records of Ellis County, Oklahoma, covering the NW/4, N/2 NE/4, N/2
SW/4 and the SE/4 SW/4 of Section 14, Township 23 North, Range 26 West, Ellis
County, Oklahoma. (LF-04905-AC)
Oil and Gas Lease dated January 12, 1952, by and between T. O. Piersall,
et ux, as Lessor, and V. B. West, as Lessee, recorded in Volume 57, page 261 of
the Records of Ellis County, Oklahoma, INSOFAR AND ONLY INSOFAR as said lease
covers the S/2 SE/4 of Section 14, Township 23 North, Range 26 West, Ellis
County, Oklahoma (LF-05080-00)
The hereinabove referenced leases are subject to Operating Agreement dated
March 15, 1961, by and between Sinclair Oil and Gas Company, as Operator, and
Shell Oil Company, et al, as Non-Operators. The Pearson 1-14 is subject to
Natural Gas Purchase and Sale Contract dated November 16, 1993, October 1,
1989, as amended, by and between Production Gathering Company, as Buyer, and
Maynard Oil Company, as Seller. The Pearson 2-14 is subject to Gas Purchase
Contract dated January 17, 1996, by and between GPM Gas Corporation, as Buyer
and Maynard Oil Company, as Seller. Lease numbered LF-05080-00 is subject to
Sales Agreement dated January 4, 1989, by and between Deminex U.S. Oil Company
and Maynard Oil Company and Assignment, Bill of Sale and Agreement by and
between Deminex U.S. Oil Company and Maynard Oil Company dated January 10,
1989, effective January 1, 1989, recorded in Volume 508, page 258 of the
Records of Ellis County, Oklahoma. Leases numbered LF-04905-AB and AC are
subject to Purchase and Sale Agreement dated January 28, 1987, by and between
Atlantic Richfield Company and Maynard Oil Company, and Assignment dated
February 17, 1987, effective January 1, 1987, by and between Atlantic Richfield
Company and Maynard Oil Company, recorded in Volume 478, page 711 of the
Records of Ellis County, Oklahoma.
PN 440517 (UT-415)
SHEPHERD NO. 1-12
EXPENSE INTEREST 0.5000000
REVENUE INTEREST 0.4101562
Oil and Gas Lease dated March 12, 1952, by and between Stephen M. Dale
and Edna Walton Dale, as Lessors, and Roy W. Reed, as Lessee, recorded in
Volume 58, page 355 of the Records of Ellis County, Oklahoma, covering NE/4 of
Section 12, Township 23 North, Range 26 West, Ellis County, Oklahoma, LIMITED
to rights from the surface to the base of the Morrow formation. (LF-04915-00)
Oil and Gas Lease dated February 17, 1950, by and between Edith M.
Shepherd and Ferman C. Shepherd, as Lessors, and R. T. Bennett, as Lessee,
recorded in Volume 47, page 428 of the Records of Ellis County, Oklahoma,
covering the NW/4 of Section 12, Township 23 North, Range 26 West, Ellis
County, Oklahoma, LIMITED to rights from the surface to a depth of 8,724 feet
below the surface, as to gas rights only. (LF-04916-00)
Oil and Gas Lease dated March 24, 1959, by and between Anna Ehrlich, as
Lessor, and Vaughn S. Bryan, as Lessee, recorded in Volume 109, page 151 of the
Records of Ellis County, Oklahoma, covering the SW/4 of Section 12, Township 23
North, Range 26 West, Ellis County, Oklahoma, LIMITED to rights from the
surface to a depth of 8,724 feet below the surface, as to gas rights only.
(LF-04917-00)
The hereinabove referenced leases are subject to Agreement dated February 12,
1969, by and between Shell Oil Company and Cities Service Oil Company;
Operating Agreement dated January 8, 1960, by and between Shell Oil Company, as
Operator, and Sinclair Oil and Gas Company, et al, as Non-Operators; Farmout
Agreement dated March 3, 1960, from Sinclair Oil and Gas Company to Shell Oil
Company and Cities Service Oil Company; Natural Gas Purchase Contract dated
November 16, 1993, by and between Production Gathering Company, as Buyer, and
Maynard Oil Company, as Seller; Purchase and Sale Agreement dated December 19,
1985, by and between Shell Western E&P Inc. and Maynard Oil Company;
Assignment, Conveyance and Bill of Sale effective December 1, 1985, by and
between Shell Western E&P Inc. and Maynard Oil Company recorded in Volume 459,
page 381 of the Records of Ellis County, Oklahoma.
PN 440519
WHITE NO. 1-31 and NO. 2-31 (UT-406)
EXPENSE INTEREST 1.0000000
REVENUE INTEREST 0.8166254
Oil and Gas Lease dated May 1, 1948, by and between Investors Royalty
Company, Inc., as Lessor, and D. C. Matthews, as Lessee, recorded in Volume 37,
page 388 of the Records of Ellis County, Oklahoma. (LF-04906-AA)
Oil and Gas Lease dated May 18, 1948, by and between John M. McFadden and
Elizabeth B. McFadden, as Lessor, and D. C. Matthews, as Lessee, recorded in
Volume 37, page 488 of the Records of Ellis County, Oklahoma. (LF-04906-AB)
Oil and Gas Lease dated April 24, 1957, by and between Frederick William
Schuette, as Lessor, and Gene Goff, as Lessee, recorded in Volume 90, page 121
of the Records of Ellis County, Oklahoma. (LF-04906-AC)
Oil and Gas Lease dated August 24, 1957, by and between Manon M. White
and Charles J. White, as Lessor, and Shell Oil Company, as Lessee, recorded in
Volume 92, page 143 of the Records of Ellis County, Oklahoma. (LF-04906-AD)
The hereinabove referenced leases cover the NE/4 of Section 31,
Township 24 North, Range 25 West, LIMITED to rights from the surface
to the base of the Morrow formation, Ellis County, Oklahoma.
Oil and Gas Lease dated August 26, 1957, by and between Willis E. Case
and Martha M. Case, as Lessor, and Shell Oil Company, as Lessee, recorded in
Volume 92, page 416 of the Records of Ellis County, Oklahoma. (LF-04907-AA)
Oil and Gas Lease dated August 24, 1957, by and between Manon M. White
and Charles J. White, as Lessor, and Shell Oil Company, as Lessee, recorded in
Volume 92, page 145 of the Records of Ellis County, Oklahoma. (LF-04907-AB)
The hereinabove referenced leases cover Lots 3 and 4, E/2 SW/4 and
SE/4 of Section 31, Township 24 North, Range 25 West, LIMITED to
rights from the surface to the base of the Morrow formation, Ellis
County, Oklahoma.
The hereinabove referenced leases are subject to Assignment dated August 19,
1957, by and between Shell Oil Company to Gene Goff; Assignment dated October
22, 1957, by and between Shell Oil Company to James B. Franklin.
Oil and Gas Lease dated June 10, 1948, by and between Alberta C. Lloyd,
Individually and as Administratrix of the Estate of Lemuel E. Lloyd, deceased,
as Lessor, and W. G. Mouser, as Lessee, recorded in Volume 43, page 33 of the
Records of Ellis County, Oklahoma, INSOFAR AND ONLY INSOFAR as said lease
covers Lots l and 2 and the E/2 NW/4 of Section 31, Township 24 North, Range 25
West, Ellis County, Oklahoma, LIMITED to rights from the surface to the base of
the Morrow formation. (LF-04908-AA)
Oil and Gas Lease dated October 2, 1947, by and between Federal Farm
Mortgage Corporation, as Lessor, and W. G. Mouser, as Lessee, recorded in
Volume 39, page 137 of the Records of Ellis County, Oklahoma, as amended by
instruments entitled Amendment of Oil and Gas Lease dated July 22, 1957 and
August 29, 1957, recorded respectively in Volume 91, page 482 and Volume 94,
page 199 of the Records of Ellis County, Oklahoma, covering the NW/4 of Section
31, Township 24 North, Range 25 West, Ellis County, Oklahoma, Ellis County,
Oklahoma, LIMITED to rights from the surface to the base of the Morrow
formation. (LF-04908-AB)
The hereinabove referenced leases are subject to Assignment dated September 13,
1957, from The Texas Company to Shell Oil Company; Agreement dated February 12,
1969, by and between Shell Oil Company and Cities Service Oil & Gas Company;
Gas Purchase Agreement dated October 1, 1989, as amended, by and between
Production Gathering Company and Maynard Oil Company; Purchase and Sale
Agreement dated December 19, 1985, by and between Shell Western E&P Inc. and
Maynard Oil Company; Assignment, Conveyance and Bill of Sale effective December
1, 1985, by and between Shell Western E&P Inc. and Maynard Oil Company recorded
in Volume 459, page 381 of the Records of Ellis County, Oklahoma.
PN 440411
WOOD NO. 1-20 (UT-425)
EXPENSE INTEREST 0.6903717
REVENUE INTEREST 0.6024768
Oil and Gas Lease dated August 1, 1956, by and between Roy Wood, et al,
as Lessor, and Sidna Kruff, as Lessee, recorded in Volume 85, page 310 of the
Records of Ellis County, Oklahoma, INSOFAR AND ONLY INSOFAR as said lease
covers the NE/4 SE/4 of Section 20, Township 17 North, Range 22 West, Ellis
County, Oklahoma, LIMITED to rights from the surface to the base of the Tonkawa
formation. (LF-04875-AA-01)
Oil and Gas Lease dated April 20, 1966, by and between Harry Newman Oil
Company, as Lessor, and Shell Oil Company, as Lessee, recorded in Volume 162,
page 645 of the Records of Ellis County, Oklahoma, INSOFAR AND ONLY INSOFAR as
said lease covers the NE/4 SE/4 of Section 20, Township 17 North, Range 22
West, Ellis County, Oklahoma, LIMITED to rights from the surface to the base of
the Tonkawa formation. (LF-04875-AB-01)
Oil and Gas Lease dated April 21, 1966, by and between Pearl Nolf, as
Lessor, and Shell Oil Company, as Lessee, recorded in Volume 162, page 653 of
the Records of Ellis County, Oklahoma, INSOFAR AND ONLY INSOFAR as said lease
covers the NE/4 SE/4 of Section 20, Township 17 North, Range 22 West, Ellis
County, Oklahoma, LIMITED to rights from the surface to the base of the Tonkawa
Formation. (LF-04875-AC-01)
Oil and Gas Lease dated April 19, 1966, by and between Commercial
Minerals, Inc., as Lessor, and Shell Oil Company, as Lessee, recorded in Volume
162, page 651 of the Records of Ellis County, Oklahoma, INSOFAR AND ONLY
INSOFAR as said lease covers the NE/4 SE/4 of Section 20, Township 17 North,
Range 22 West, Ellis County, Oklahoma, LIMITED to rights from the surface to
the base of the Tonkawa formation. (LF-04875-AD-01)
Oil and Gas Lease dated April 29, 1966, by and between William Hiatt, as
Lessor, and Shell Oil Company, as Lessee, recorded in Volume 162, page 657 of
the Records of Ellis County, Oklahoma, INSOFAR AND ONLY INSOFAR as said lease
covers the NE/4 SE/4 of Section 20, Township 17 North, Range 22 West, Ellis
County, Oklahoma, LIMITED to rights from the surface to the base of the Tonkawa
formation. (LF-04875-AE-01)
Oil and Gas Lease dated April 29, 1966, by and between J. P. Hannigan, as
Lessor, and Shell Oil Company, as Lessee, recorded in Volume 162, page 655 of
the Records of Ellis County, Oklahoma, INSOFAR AND ONLY INSOFAR as said lease
covers the NE/4 SE/4 of Section 20, Township 17 North, Range 22 West, Ellis
County, Oklahoma, LIMITED to rights from the surface to the base of the Tonkawa
formation. (LF-04875-AF-01)
Oil and Gas Lease dated April 19, 1966, by and between Tulsa Royalties
Company, as Lessor, and Shell Oil Company, as Lessee, recorded in Volume 162,
page 647 of the Records of Ellis County, Oklahoma, covering the NE/4 SE/4 of
Section 20, Township 17 North, Range 22 West, Ellis County, Oklahoma, LIMITED
to rights from the surface to the base of the Tonkawa formation. (LF-04875-AG-
01)
Oil and Gas Lease dated August 1, 1956, by and between Roy Wood, et al,
as Lessor, and Sidna Kruff, as Lessee, recorded in Volume 85, page 313 of the
Records of Ellis County, Oklahoma, covering the NE/4 of Section 20, Township 17
North, Range 22 West, Ellis County, Oklahoma, LIMITED to rights from the
surface to the base of the Tonkawa formation. (LF-04876-AA)
Oil and Gas Lease dated April 27, 1966, by and between G. L. Gallaspy, as
Lessor, and Shell Oil Company, as Lessee, recorded in Volume 162, page 641 of
the Records of Ellis County, Oklahoma, covering the S/2 NE/4 of Section 20,
Township 17 North, Range 22 West, Ellis County, Oklahoma, LIMITED to rights
from the surface to the base of the Tonkawa formation. (LF-04876-AB)
Oil and Gas Lease dated April 21, 1966, by and between Farmers United
Coop. Pool, as Lessor, and Shell Oil Company, as Lessee, recorded in Volume
162, page 635 of the Records of Ellis County, Oklahoma, covering the S/2 NE/4
of Section 20, Township 17 North, Range 22 West, Ellis County, Oklahoma,
LIMITED to rights from the surface to the base of the Tonkawa formation. (LF-
04876-AC)
Oil and Gas Lease dated April 21, 1966, by and between Texas W. Allen, as
Lessor, and Shell Oil Company, as Lessee, recorded in Volume 162, page 639 of
the Records of Ellis County, Oklahoma, covering the S/2 NE/4 of Section 20,
Township 17 North, Range 22 West, Ellis County, Oklahoma, LIMITED to rights
from the surface to the base of the Tonkawa formation. (LF-04876-AD)
Oil and Gas Lease dated April 20, 1966, by and between Walter A. Povenz,
as Lessor, and Shell Oil Company, as Lessee, recorded in Volume 162, page 637
of the Records of Ellis County, Oklahoma, covering the S/2 NE/4 of Section 20,
Township 17 North, Range 22 West, Ellis County, Oklahoma, LIMITED to rights
from the surface to the base of the Tonkawa formation. (LF-04876-AE)
Oil and Gas Lease dated April 27, 1966, by and between George D.
Gallaspy, as Lessor, and Shell Oil Company, as Lessee, recorded in Volume 162,
page 643 of the Records of Ellis County, Oklahoma, covering the S/2 NE/4 of
Section 20, Township 17 North, Range 22 West, Ellis County, Oklahoma, LIMITED
to rights from the surface to the base of the Tonkawa formation. (LF-04876-AF)
Oil and Gas Lease dated August 1, 1956, by and between Roy Wood, et al,
as Lessor, and Sidna Kruff, as Lessee, recorded in Volume 85, page 440 of the
Records of Ellis County, Oklahoma, covering the NW/4 of Section 20, Township 17
North, Range 22 West, Ellis County, Oklahoma, LIMITED to rights from the
surface to the base of the Tonkawa formation. (LF-04955-AA)
Oil and Gas Lease dated April 21, 1966, by and between Farmers United
Coop. Pool, as Lessor, and Shell Oil Company, as Lessee, recorded in Volume
162, page 615 of the Records of Ellis County, Oklahoma, covering the SE/4 NW/4
of Section 20, Township 17 North, Range 22 West, Ellis County, Oklahoma,
LIMITED to rights from the surface to the base of the Tonkawa formation. (LF-
04955-AB)
Oil and Gas Lease dated April 20, 1966, by and between Walter A. Povenz,
as Lessor, and Shell Oil Company, as Lessee, recorded in Volume 162, page 617
of the Records of Ellis County, Oklahoma, covering the SE/4 NW/4 of Section 20,
Township 17 North, Range 22 West, Ellis County, Oklahoma, LIMITED to rights
from the surface to the base of the Tonkawa formation. (LF-04955-AC)
Oil and Gas Lease dated April 21, 1966, by and between Texas W. Allen, as
Lessor, and Shell Oil Company, as Lessee, recorded in Volume 162, page 619 of
the Records of Ellis County, Oklahoma, covering the SE/4 NW/4 of Section 20,
Township 17 North, Range 22 West, Ellis County, Oklahoma, LIMITED to rights
from the surface to the base of the Tonkawa formation. (LF-04955-AD)
Oil and Gas Lease dated April 27, 1966, by and between G. L. Gallaspy, as
Lessor, and Shell Oil Company, as Lessee, recorded in Volume 162, page 621 of
the Records of Ellis County, Oklahoma, covering the SE/4 NW/4 of Section 20,
Township 17 North, Range 22 West, Ellis County, Oklahoma, LIMITED to rights
from the surface to the base of the Tonkawa formation. (LF-04955-AE)
Oil and Gas Lease dated April 27, 1966, by and between George D.
Gallaspy, as Lessor, and Shell Oil Company, as Lessee, recorded in Volume 162,
page 623 of the Records of Ellis County, Oklahoma, covering the SE/4 NW/4 of
Section 20, Township 17 North, Range 22 West, Ellis County, Oklahoma, LIMITED
to rights from the surface to the base of the Tonkawa formation. (LF-04955-AF)
Oil and Gas Lease dated August 1, 1956, by and between Roy Wood, et al,
as Lessor, and Sidna Kruff, as Lessee, recorded in Volume 86, page 133 of the
Records of Ellis County, Oklahoma, INSOFAR AND ONLY INSOFAR as said lease
covers the NW/4 SE/4 of Section 20, Township 17 North, Range 22 West, Ellis
County, Oklahoma, LIMITED to rights from the surface to the base of the Tonkawa
formation. (LF-04957-AA-01)
Oil and Gas Lease dated April 27, 1966, by and between G. L. Gallaspy, as
Lessor, and Shell Oil Company, as Lessee, recorded in Volume 162, page 631 of
the Records of Ellis County, Oklahoma, covering the NW/4 SE/4 of Section 20,
Township 17 North, Range 22 West, Ellis County, Oklahoma, LIMITED to rights
from the surface to the base of the Tonkawa formation. (LF-04957-AB-01)
Oil and Gas Lease dated April 27, 1966, by and between George D.
Gallaspy, as Lessor, and Shell Oil Company, as Lessee, recorded in Volume 162,
page 633 of the Records of Ellis County, Oklahoma, covering the NW/4 SE/4 of
Section 20, Township 17 North, Range 22 West, Ellis County, Oklahoma, LIMITED
to rights from the surface to the base of the Tonkawa formation. (LF-04957-AC-
01)
Oil and Gas Lease dated April 21, 1966, by and between Texas W. Allen, as
Lessor, and Shell Oil Company, as Lessee, recorded in Volume 162, page 629 of
the Records of Ellis County, Oklahoma, covering the NW/4 SE/4 of Section 20,
Township 17 North, Range 22 West, Ellis County, Oklahoma, LIMITED to rights
from the surface to the base of the Tonkawa Formation. (LF-04957-AD-01)
Oil and Gas Lease dated April 21, 1966, by and between Farmers United
Coop. Pool, as Lessor, and Shell Oil Company, as Lessee, recorded in Volume
162, page 625 of the Records of Ellis County, Oklahoma, covering the NW/4 SE/4
of Section 20, Township 17 North, Range 22 West, Ellis County, Oklahoma,
LIMITED to rights from the surface to the base of the Tonkawa formation. (LF-
04957-AE-01)
Oil and Gas Lease dated April 20, 1966, by and between Walter A. Povenz,
as Lessor, and Shell Oil Company, as Lessee, recorded in Volume 162, page 627
of the Records of Ellis County, Oklahoma, covering the NW/4 SE/4 of Section 20,
Township 17 North, Range 22 West, Ellis County, Oklahoma, LIMITED to rights
from the surface to the base of the Tonkawa formation. (LF-04957-AF-01)
Rights pursuant to Force Pooling Election effective June 7, 1966, from
Charles O. Tilghman to Shell Oil Company recorded in Force Pooling Election,
Ellis County, Oklahoma, covering the S/2 SE/4 of Section 20, Township 17 North,
Range 22 West, Ellis County, Oklahoma, as to the Tonkawa formation, pursuant to
Oklahoma Corporation Commission Cause CD No. 24573, Order No. 62735. (LF-
04960-AB-02)
The hereinabove referenced leases are subject to Operating Agreement dated
July 5, 1966, by and between Shell Oil Company, as Operator, and Amerada
Petroleum Corporation, et al, as Non-Operators; Purchase and Sale Agreement
dated December 19, 1985, by and between Shell Western E&P Inc. and Maynard Oil
Company; Assignment, Conveyance and Bill of Sale effective December 1, 1985, by
and between Shell Western E&P Inc. and Maynard Oil Company recorded in Volume
459, page 381 of the Records of Ellis County, Oklahoma.
Oil and Gas Lease dated August 3, 1956, by and between Roy Nuttall, et ux,
as Lessor, and George R. Aycock, as Lessee, recorded in Volume 83, page 323 of
the Records of Ellis County, Oklahoma, covering the S/2 SE/4 of Section 20,
Township 17 North, Range 22 West, Ellis County, Oklahoma (LF-04960-AA-02)
Oil and Gas Lease dated June 20, 1956, by and between Alva T. Mitchell, et
ux, as Lessor, and George R. Aycock, as Lessee, recorded in Volume 82, page 522
of the Records of Ellis County, Oklahoma, covering the SW/4 of Section 20,
Township 17 North, Range 22 West, Ellis County, Oklahoma (LF-04987-00)
The hereinabove referenced leases are subject to Operating Agreement dated
July 5, 1966, by and between Shell Oil Company, as Operator, and Amerada
Petroleum Corporation, et al, as Non-Operators; Assignment and Bill of Sale
effective May 1, 1985, by and between Sabine Corporation and Maynard Oil
Company recorded in Volume 466, page 870 of the Records of Ellis County,
Oklahoma, and Assignment, of Oil, Gas and Mineral leases dated June 17, 1994
from Kerr McGee Corporation by and between Maynard Oil Company, recorded in
Volume 575, page 706 of the Records of Ellis County, Oklahoma.
ELLIS AND ROGER MILLS COUNTIES, OKLAHOMA
PN 440402 (UT-404)
BROWN NO. 1A-27
EXPENSE INTEREST 1.0000000
REVENUE INTEREST 0.8746330
Oil and Gas Lease dated June 18, 1962, by and between Arnold W. Brown and
Faye Brown, as Lessors, and Mike Rainbolt, as Lessee, recorded in Volume 129,
page 464 of the Records of Ellis County, Oklahoma, covering the SW/4 NW/4 and
the NW/4 SW/4 of Section 27, Township 17 North, Range 22 West, Ellis County,
Oklahoma, LIMITED to rights from the surface to the base of the Tonkawa
formation. (LF-04949-00)
Oil and Gas Lease dated April 1, 1963, by and between the Department of
the Interior, Bureau of Land Management, bearing serial number NM-0140971, as
Lessor, and Merchants Petroleum Company, as Lessee, covering that portion of
Tract 7 as described in said lease, lying within the S/2 of Section 27,
Township 17 North, Range 22 West, being a portion of the Canadian River
Riparian to Lot 1 of Section 35 and Lot 2 of Section 34, Township 17 North,
Range 22 West, Roger Mills County, Oklahoma, LIMITED to rights from the surface
to the base of the Tonkawa formation. (LF-04950-00-01)
Oil and Gas Lease dated February 3, 1966, by and between J. I. Kirbie and
Emma F. Kirbie, as Lessor, and El Paso Products Company, as Lessee, recorded in
Volume 69, page 424 of the Records of Roger Mills County, Oklahoma, covering a
part of the SE/4 of Section 27, being accretions to Lot 5 of Section 26,
Township 17 North, Range 22 West, containing 6.89 acres, more or less, as
described in Communitization Agreement dated February 10, 1967, covering all of
Section 27, Township 17 North, Range 22 West, Roger Mills County, Oklahoma, the
afore tract being one and the same as referred to in previous assignments as a
tract containing 2.45 acres in the SE/4 of Section 27, Township 17 North, Range
22 West, constituting accretions to Lot 5 of Section 26, Township 17 North,
Range 22 West, Roger Mills County, Oklahoma, LIMITED to rights from the surface
to the base of the Tonkawa formation. (LF-04951-AA)
Oil and Gas Lease dated February 3, 1966, by and between Federal Land
Bank of Wichita, as Lessor, and El Paso Products Company, as Lessee, recorded
in Volume 69, page 428 of the Records of Roger Mills County, Oklahoma, covering
a part of the SE/4 of Section 27, being accretions to Lot 5 of Section 26,
Township 17 North, Range 22 West, containing 6.89 acres, more or less, as
described in Communitization Agreement dated February 10, 1967, covering all of
Section 27, Township 17 North, Range 22 West, Roger Mills County, Oklahoma, the
afore tract being one and the same as referred to in previous assignments as a
tract containing 2.45 acres in the SE/4 of Section 27, Township 17 North, Range
22 West, constituting accretions to Lot 5 of Section 26, Township 17 North,
Range 22 West, Roger Mills County, Oklahoma, LIMITED to rights from the surface
to the base of the Tonkawa formation. (LF-04951-AB)
Oil and Gas Lease dated August 8, 1956, by and between Arnold W. Brown
and Faye Brown, as Lessor, and George L. Aycock, as Lessee, recorded in Volume
83, page 229 of the Records of Ellis County, Oklahoma, covering Lots 2, 3, 4,
5, 6, 7 and the SE/4 NW/4 of Section 27, Township 17 North, Range 22 West, and
accretion and riparian thereto, Ellis County, Oklahoma, LIMITED to rights from
the surface to the base of the Tonkawa formation. (LF-04953-AA-01)
Oil and Gas Lease dated June 20, 1966, by and between Arthur M. Green and
Nellie Jane Green, as Lessors, and Shell Oil Company, as Lessee, recorded in
Volume 167, page 163 of the Records of Ellis County, Oklahoma,covering Lots 2,
3, 4, 5, 6, 7 and the SE/4 NW/4 of Section 27, Township 17 North, Range 22
West, and accretion and riparian thereto, Ellis County, Oklahoma, LIMITED to
rights from the surface to the base of the Tonkawa formation. (LF-04953-AB-01)
Oil and Gas Lease dated June 20, 1966, by and between Bennie Harmon and
Jenseni Harmon, as Lessor, and Shell Oil Company, as Lessee, recorded in Volume
167, page 165 of the Records of Ellis County, Oklahoma, covering Lots 2, 3, 4,
5, 6, 7 and the SE/4 NW/4 of Section 27, Township 17 North, Range 22 West, and
accretion and riparian thereto, Ellis County, Oklahoma, LIMITED to rights from
the surface to the base of the Tonkawa formation. (LF-04953-AD-01)
Oil and Gas Lease dated May 2, 1966, by and between Ruby M. Steinfelt, as
Lessor, and Shell Oil Company, as Lessee, recorded in Volume 167, page 161 of
the Records of Ellis County, Oklahoma, covering Lots 2, 3, 4, 5, 6, 7 and the
SE/4 NW/4 of Section 27, Township 17 North, Range 22 West, and accretion and
riparian thereto, Ellis County, Oklahoma, LIMITED to rights from the surface to
the base of the Tonkawa formation. (LF-04953-AE-01)
Oil and Gas Lease dated June 20, 1966, by and between Raymond Kinaman, as
Lessor, and Shell Oil Company, as Lessee, recorded in Volume 167, page 167 of
the Records of Roger Mills County, Oklahoma, covering Lots 2, 3, 4, 5, 6, 7 and
the SE/4 NW/4 of Section 27, Township 17 North, Range 22 West, and accretion
and riparian thereto, Ellis County, Oklahoma, LIMITED to rights from the
surface to the base of the Tonkawa formation. (LF-04953-AF-01)
Oil and Gas Lease dated August 3, 1956, by and between Elsie Nuttall, as
Lessor, and George L. Aycock, as Lessee, recorded in Volume 83, page 321 of the
Records of Ellis County, Oklahoma, covering Lot 1, NW/4 NE/4 and the N/2 NW/4
of Section 27, Township 17 North, Range 22 West, Ellis County, Oklahoma,
LIMITED to rights from the surface to the base of the Tonkawa formation. (LF-
04954-AA-04)
The hereinabove referenced leases are subject to Communitization Agreement
dated February 10, 1967, by and between Shell Oil Company and Royalty Owners,
effective August 1, 1966; Oklahoma Corporation Commission Cause No. 24144,
Order No. 62086; Purchase and Sale Agreement dated December 19, 1985, by and
between Shell Western E&P Inc. and Maynard Oil Company; Assignment, Conveyance
and Bill of Sale effective December 1, 1985, recorded in Volume 782, page 1 of
the Records of Roger Mills County, Oklahoma, and in Volume 459, page 381 of the
Records of Ellis County, Oklahoma and Natural Gas Purchase and Sale Contract
dated November 16, 1993, by and between Production Gathering Company and
Maynard Oil Company.
ROGER MILLS COUNTY, OKLAHOMA
PN 440413
HILL NO. 1-24 (UT-448)
EXPENSE INTEREST 0.0000000
REVENUE INTEREST 0.0507813
PN 440410
WILSON NO. 1-24 (UT-423)
EXPENSE INTEREST 1.0000000
REVENUE INTEREST 0.8095703
Oil and Gas Lease dated September 13, 1966, by and between Etola Snell,
as Lessor, and Humble Oil & Refining Company, as Lessee, recorded in Volume 75,
page 9 of the Records of Roger Mills, Oklahoma, covering the SE/4 SW/4 and SW/4
SE/4 AND E/2 SE/4 of Section 24, Township 17 North, Range 22 West, Roger Mills
County, Oklahoma, LIMITED to rights from the surface to the base of the Tonkawa
formation. (LF-04946-AA)
Oil and Gas Lease dated September 12, 1966, by and between Jessie
Carpenter, as Lessor, and Humble Oil & Refining Company, recorded in Volume 74,
page 626, of the Records of Roger Mills County, Oklahoma, covering SE/4 SW/4
and SW/4 SE/4 and E/2 SE/4 of Section 24, Township 17 North, Range 22 West,
Roger Mills County, Oklahoma, LIMITED to rights from the surface to the base of
the Tonkawa formation. (LF-04946-AB)
Oil and Gas Lease dated September 12, 1966, by and between Zelma Dukes, a
widow, as Lessor, and Humble Oil & Refining Company, as Lessee, recorded in
Volume 74, page 624 of the Records of Roger Mills, Oklahoma, covering SE/4 SW/4
and SW/4 SE/4 and E/2 SE/4 of Section 24 ,Township 17 North, Range 22 West,
Roger Mills County, Oklahoma, LIMITED to rights from the surface to the base of
the Tonkawa formation. (LF-04946-AC)
Oil and Gas Lease dated September 13, 1966, by and between Willie Bailey,
as Lessor, and Humble Oil & Refining Company, as Lessee, recorded in Volume 74,
page 622 of the Records of Roger Mills, Oklahoma, covering SE/4 SW/4 and SW/4
SE/4 and E/2 SE/4 of Section 24, Township 17 North, Range 22 West, Roger Mills
County, Oklahoma, LIMITED to rights from the surface to the base of the Tonkawa
formation. (LF-04946-AD)
Oil and Gas Lease dated September 12, 1966, by and between L. B. Barker,
a single man, as Lessor, and Humble Oil & Refining Company, as Lessee, recorded
in Volume 74, page 599 of the Records of Roger Mills, Oklahoma, covering the
SE/4 SW/4 and SW/4 SE/4 and E/2 SE/4 of Section 24, Township 17 North, Range 22
West, Roger Mills, Oklahoma, LIMITED to rights from the surface to the base of
the Tonkawa formation. (LF-04946-AE)
Oil and Gas Lease dated April 11, 1957, by and between Elton Everett
Hill, Trustee for Edward Everett Hill Estate Farms, as Lessor, and J. D.
Wesner, as Lessee, recorded in Volume 19, page 94 of the Records of Roger
Mills, Oklahoma, covering E/2 NW/4 of Section 24, Township 17 North, Range 22
West, Roger Mills County, Oklahoma. (LF-04947-00)
Oil and Gas Lease dated September 2, 1966, by and between R. C. Green, et
ux, as Lessor, and Shell Oil Company, as Lessee, recorded in Volume 74, page
630 of the Records of Roger Mills County, Oklahoma, covering the NW/4 SE/4,
NE/4 SW/4 and the W/2 SW/4 of Section 24, Township 17 North, Range 22 West,
Roger Mills County, Oklahoma, LIMITED to rights from the surface to the base of
the Cherokee Formation. (LF-04880-AA)
Oil and Gas Lease dated September 2, 1966, by and between Jimmy Wilson,
et ux, as Lessor, and Shell Oil Company, as Lessee, recorded in Volume 74, page
628 of the Records of Rogers Mills County, Oklahoma, covering the NW/4 SE/4,
NE/4 SW/4 and the W/2 SW/4 of Section 24, Township 17 North, Range 22 West,
Roger Mills County, Oklahoma, LIMITED to rights from the surface to the base of
the Cherokee Formation. (LF-04880-AB)
Oil and Gas Lease dated September 10, 1966, by and between C. G. Theis,
et al, as Lessor, and Shell Oil Company, as Lessee, recorded in Volume 75, page
122 of the Records of Rogers Mills County, Oklahoma, covering Lots 5, 6, 7 and
8, and the SE/4 SE/4 Section 23, and 10.59 acres in the bed of the Canadian
River in Section 23 riparian to the NW/4 of Section 24 and the W/2 NW/4 of
Section 24, Township 17 North, Range 22 West, Roger Mills County, Oklahoma,
LIMITED to rights from the surface to the base of the Cherokee Formation in
Section 24 only and from the surface to the base of the Tonkawa Formation in
the balance of the acreage. (LF-04945-00)
Oil and Gas Lease dated April 11, 1957, by and between E. E. Hill,
Trustee, as Lessor, and J. D. Wesner, as Lessee, recorded in Volume 19, page 92
of the Records of Roger Mills County, Oklahoma, covering the NE/4 of Section
24, Township 17 North, Range 22 West, Roger Mills County, Oklahoma, LIMITED to
rights from the surface to the base of the Cherokee Formation. (LF-04948-AA)
Oil and Gas Lease dated May 25, 1966, by and between M. H. Fariss, as
Lessor, and J. Cooper West, as Lessee, recorded in Volume 73, page 163 of the
Records of Roger Mills County, Oklahoma, covering the NE/4 of Section 24,
Township 17 North, Range 22 West, Roger Mills County, Oklahoma, LIMITED to
rights from the surface to the base of the Cherokee Formation. (LF-04948-AB)
Oil and Gas Lease dated June 14, 1966, by and between R. W. Slemaker, et
ux, as Lessor, and J. Cooper West, as Lessee, recorded in Volume 73, page 203
of the Records of Roger Mills County, Oklahoma, covering the NE/4 of Section
24, Township 17 North, Range 22 West, Roger Mills County, Oklahoma, LIMITED to
rights from the surface to the base of the Cherokee Formation. (LF-04948-AC)
Oil and Gas Lease dated June 14, 1966, by and between L. D. Chilton, as
Lessor, and J. Cooper West, as Lessee, recorded in Volume 73, page 205 of the
Records of Roger Mills County, Oklahoma, covering the NE/4 of Section 24,
Township 17 North, Range 22 West, Roger Mills County, Oklahoma, LIMITED to
rights from the surface to the base of the Cherokee Formation. (LF-04948-AD)
Oil and Gas Lease dated September 2, 1966, by and between Floyd Blaine,
et ux, as Lessor, and J. Cooper West, as Lessee, recorded in Volume 75, page
271 of the Records of Roger Mills County, Oklahoma, covering the NE/4 of
Section 24, Township 17 North, Range 22 West, Roger Mills County, Oklahoma,
LIMITED to rights from the surface to the base of the Cherokee Formation. (LF-
04948-AE)
Oil and Gas Lease dated July 14, 1966, by and between Earl Sneed, as
Lessor, and J. Cooper West, as Lessee, recorded in Volume 74, page 35 of the
Records of Roger Mills County, Oklahoma, covering the NE/4 of Section 24,
Township 17 North, Range 22 West, Roger Mills County, Oklahoma, LIMITED to
rights from the surface to the base of the Cherokee Formation. (LF-04948-AF)
Oil and Gas Lease dated June 9, 1966, by and between W. E. Spaid, et ux,
as Lessor, and J. Cooper West, as Lessee, recorded in Volume 73, page 161 of
the Records of Roger Mills County, Oklahoma, covering the NE/4 of Section 24,
Township 17 North, Range 22 West, Roger Mills County, Oklahoma, LIMITED to
rights from the surface to the base of the Cherokee Formation. (LF-04948-AG)
The hereinabove referenced leases are subject to Purchase and Sale
Agreement and Assignment, Conveyance and Bill of Sale effective December 1,
1985, by and between Shell Western E&P Inc., and Maynard Oil Company.
EXHIBIT 2(h)
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "AGREEMENT") is made and entered
into this 12th day of September, 1996, by and between MAYNARD OIL COMPANY, a
Delaware corporation, having its principal office at 8080 North Central
Expressway, Suite 660, Dallas, Texas 75206 ("SELLER") and ENRON OIL & GAS
COMPANY, a Delaware corporation, having its principal office at 1400 Smith
Street, Houston, Texas 77002 ("BUYER").
In consideration of the mutual promises contained herein, the benefits
to be derived by each party hereunder and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Buyer and Seller agree as follows:
ARTICLE I
PURCHASE AND SALE
1.01 Purchase and Sale. Seller agrees to sell and convey and Buyer agrees
to purchase and pay for the interests (as defined in Section 1.02) owned by
Seller, subject to the terms and conditions of this Agreement.
1.02 Interests. All of the following shall herein be called the
"INTERESTS":
(a) All of Seller's right, title and interest in and to the leasehold
estate and mineral rights created by the leases described in Exhibit A
(the "LEASES") together with any and all interest of Seller in and to
such property and in and to any agreements, leases, rights-of-way,
easements, licenses and permits incident thereto;
(b) All of Seller's right, title and interest in and to the wells, and
production therefrom, located on the Leases or lands pooled therewith,
including but not limited to the wells described in Exhibit A together
with any and all buildings or other improvements constructed thereon
(collectively the "WELLS", together with any and all interest of Seller
in and to such property and in and to any agreements, including,
without limitation, gas purchase agreements, farmin and farmout
agreements, operating agreements and pooling agreements, leases,
rights-of-way, easements, licenses and permits incident thereto);
(c) All of Seller's right, title and interest in and to the real and
personal property, fixtures, improvements and buildings now or as of
the Effective Time (as defined in Section 1.03) located on the lands
burdened by the Leases or lands pooled therewith (the LANDS"), and all
contract rights, rights of substitution and subrogation in and to any
rights and actions of warranty which Seller has or may have with
respect to the Interests;
(d) All of the files, records and data related to the items described
in Subsections (a), (b) and (c) above, and all the seismic and
geophysical data of Seller appurtenant to or crossing the Leases, Wells
and Lands; and
(e) Any and all other assets of Seller appurtenant or related to or
used in connection with the Leases and Wells.
1.03 Effective Time. The purchase and sale of the Interests shall be
effective as of August 1, 1996, at 7:00 A.M., local time (herein called the
"EFFECTIVE TIME ) in the county in which the Lands are located.
ARTICLE II
PURCHASE PRICE
2.01 Purchase Price. The purchase price for the Interests shall be Five
Hundred Sixty Thousand Nine Hundred Sixty Four DOLLARS ($560,964.00) (herein
called the "PRELIMINARY PURCHASE PRICE"), subject to adjustment as set forth
in Section 2.02 and Section 2.03 below.
2.02 Performance Deposit. On or before 4:00 o'clock p.m., local time,
September 13, 1996, Buyer shall tender to Seller, by wire transfer, a
performance deposit in the amount of Fifty Six Thousand Ninety Six DOLLARS
($56,096.00). The performance deposit is received solely to assure the
performance of Buyer pursuant to the terms and conditions hereof. The
performance deposit will be returned to Buyer at Closing, upon consummation
of the transaction, or at Buyer's election, may be credited to the
Preliminary Purchase Price. No interest shall be paid or credited to the
performance deposit. If Buyer fails, refuses, or is unable to close the
sale in accordance with the terms herein, Seller, except as otherwise herein
specifically provided, may, at its option, retain the performance deposit as
agreed liquidated damages and not as a penalty. If Seller, through no fault
of Buyer, refuses to close the sale in accordance with the terms herein, the
performance deposit shall be returned to Buyer.
2.03 Adjustments to Purchase Price. The Preliminary Purchase Price shall
be adjusted as follows and the resulting amount shall be herein called the
"FINAL PURCHASE PRICE".
(a) The Preliminary Purchase Price shall be increased by the
following:
(1) The value of all merchantable, allowable oil attributable to
the Leases, in storage above the pipeline connection at the
Effective Time, and not previously sold by Seller, that is
credited to the Interests, such value to be the net price realized
by Seller;
(2) The amount of all reasonable expenditures, including, without
limitation, royalties, rentals and other charges, ad valorem,
property, production, excise, severance, windfall profit and other
taxes based upon or measured by proceeds therefrom but not
including income or gross receipts taxes, expenses billed under
applicable operating agreements and, as compensation to Seller for
its general and administrative expenses as operator of interests
operated by it, in lieu of any other overhead charges in
connection with such particular Interests:
(i) that amount attributable to the Interests under any
existing joint operating agreement, or
(ii) in the absence of a joint operating agreement with
respect thereto, the applicable rate recommended in the
1995 Ernst & Young, L.L.P. s Fixed Rate Overhead
Survey in connection with the operation of the
Interests from the Effective Time to the Closing Date
(as defined in Section 9.01), as well as any
expenditures approved by Buyer;
(3) An amount equal to all prepaid expenses attributable to the
interests that are paid by or on behalf of Seller prior to the
Closing Date and that are, in accordance with generally accepted
accounting principles, attributable to the period after the
Effective Time including, without limitation, prepaid insurance,
prepaid ad valorem, property, production, severance and similar
taxes (but not including income taxes) based upon or measured by
the ownership of property or the production of hydrocarbons or the
receipt of proceeds therefrom;
(4) An amount equal to seventy-five cents per mcf for a net
underproduced gas imbalance; and
(5) Any other amount agreed upon by Seller and Buyer.
(b) The Preliminary Purchase Price shall be decreased by the
following:
(1) An amount equal to all proceeds of production received by
Seller prior to the Closing Date that are attributable to the
Interests and that are, in accordance with generally accepted
accounting principles, attributable to the period of time from the
Effective Time to the Closing Date;
(2) An amount equal to all unpaid ad valorem, property,
production, severance and similar taxes and assessments (but not
including income or gross receipts taxes) based upon or measured
by the ownership of property or the production of hydrocarbons or
the receipt of proceeds therefrom accruing with respect to the
Interests prior to the Effective Time, which amount shall be
computed based upon such taxes assessed against the applicable
portion of the Interests for the current tax fiscal year, or if
the assessments for the current tax fiscal year are unavailable,
for the preceding such year;
(3) An amount equal to the sum of all Defect Adjustments and
Exclusion Adjustments (as those terms are defined in Section
7.03); and
(4) Any environmental adjustment pursuant to ARTICLE V.(e);
(5) An amount equal to seventy-five cents ($0.75) per mcf for a
net overproduced gas imbalance; and
(6) Any other amount agreed upon by Seller and Buyer.
2.04 Actual Figures. When available, actual figures will be used for
adjustments at Closing. To the extent actual figures are not available,
estimates will be used subject to final adjustments as provided in Section
10.01 hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01 Representations and Warranties of Seller. Seller represents and
warrants to Buyer with respect to itself and, where applicable, with respect
to the Interests, that:
(a) Seller is a corporation duly organized, validly existing, and in
good standing under the laws of the jurisdiction of its incorporation,
and has all requisite power and authority to own and lease the
properties and assets it currently owns and leases and to carry on its
business as such business is currently conducted. Seller is duly
licensed or qualified to transact business and is in good standing in
all jurisdictions where the character of the properties and assets now
owned or leased by it or the nature of the business now conducted by it
require it to be so licensed or qualified if the failure to qualify
might reasonably be expected to have a material adverse effect on the
business or financial prospects of Seller. Seller is also duly
licensed or qualified to do business and is in good standing in each
jurisdiction where the Interests are located;
(b) Seller has all requisite power and authority to execute and
deliver this agreement, to consummate the transactions contemplated
hereby, and to perform the terms and conditions hereof to be performed
by it. This Agreement constitutes, and each of the documents required
to be delivered by Seller hereunder, shall constitute Seller's legal,
valid and binding obligation, enforceable against Seller in accordance
with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, or other laws relating to or affecting
generally the enforcement of creditors' rights and general principles
of equity, regardless of whether considered in proceeding in equity or
at law;
(c) This Agreement and its execution and delivery by Seller do not,
and the fulfillment and compliance by Seller with the terms and
conditions of this Agreement, and the consummation by Seller of the
transactions contemplated hereby, will not (i) require any filing,
consent, authorization, or approval under, any law or administrative
regulation or any judicial, administrative, or arbitration order,
aware, judgment, writ, injunction, or decrees applicable to or binding
upon Seller (assuming the receipt of all routine governmental consents
typically received after consummation of transactions of the nature
contemplated by this Agreement); and (ii) conflict with, result in a
breach of, constitute a default under (without regard to any
requirements of notice or the lapse of time), accelerate, or permit the
acceleration of the performance required by, any mortgage, indenture,
loan or credit agreement or other agreement or instrument evidencing
indebtedness for borrowed money to which such Seller is a party or by
which it is bound or to which any of the Interests are subject;
(d) As of the execution date hereof, there are no currently
outstanding and effective authorities for expenditure or third party
proposals for subsequent operations with respect to the Interests other
than as set forth in Exhibit B;
(e) As of the execution date hereof (i) no action, suit, or proceeding
is pending or, has been threatened against Seller before any court,
administrative agency, or arbitral tribunal, which involves or may
involve the Interests, the production of oil and gas therefrom, or the
use of and enjoyment thereof, or any operation or activity being
conducted therein or thereon or which challenges Seller's rights to
enter into this Agreement or materially adversely affects its ability
to perform its obligations under this Agreement; (ii) Seller has not
received written notice of nor been charged with any violation of, any
provision of any law or regulation relating to the Interests, and to
Seller's best knowledge, no third party has been charged with any
violation of any provision of any law or regulation relating to the
Interests;
(f) As of the execution date hereof Seller has not received written
notice that it is in default under (i) any applicable contract
affecting the Interests; (ii) any order, judgment, or decree of any
federal or state court or governmental authority relating to the
Interests; or (iii) any other agreement, contract, lease, license, or
other instrument;
(g) Exhibit A contains a complete list of the Interests wherein
Seller's interest is currently subject to reversionary interests or
non-consent operations. In each case, such Exhibit reflects the
interest of Seller before and after adjustment for such reversionary
interests or non-consent operations for each Well effected. Exhibit A-
1 reflects the remaining amount to be recouped, or account status as
appropriate, as of the date reflected thereon with respect to each such
well;
(h) As of the Effective Time, to the best of Seller s knowledge,
except as set forth in Exhibit A-1 hereto, there were no production
imbalances or transportation and processing imbalances affecting the
Interests;
(i) All of the written and electronic data (including, without
limitation, information relating to gathering, processing,
transportation and sale of hydrocarbons from the Interests and other
matters) at the time furnished or to be furnished by Seller to Buyer in
conjunction with Buyer's evaluation of the Interests was contained in
or derived from Seller's records kept in the ordinary course of
business; and no representation or warranty is made with respect to the
accuracy or correctness of any estimates, analysis, or projections or
any assumptions or other matters stated therein;
(j) No broker or finder is entitled to any brokerage or finder's fee,
or to any commission, based in any way on agreements, arrangements or
understandings made by or on behalf of Seller for which Buyer has any
liability or obligation (whether contingent or otherwise);
(k) Seller is not a foreign person, foreign corporation, foreign
partnership, foreign trust or foreign estate (as those terms are
defined in the Internal Revenue Code of 1986, as amended, and
regulations promulgated thereunder);
(l) From the Effective Time to the execution date hereof there
has not been: (i) any material adverse change in the condition of
the Interests, other than changes caused by the sale, production,
or disposition of production and changes resulting from reservoir
conditions other than fire, blowout, or act of God (provided that
any change or revision in existing laws, regulations, or
governmental policies applicable to the Interests or the sale,
production, or disposition of production therefrom and the
imposition of any new laws, regulations or governmental policies
with respect to the Interests or the sale, production, or
disposition of production therefrom shall be deemed not to be an
adverse change in the condition of the Interests), (ii) any sale,
lease, or other disposition of the Interests, (iii) any
condemnation or taking by eminent domain of any portion of any of
the Interests, or (iv) any contract or commitment to do any of the
foregoing;
(m) Seller or the Operator of any Interest has obtained or
applied for all governmental licenses, permits, certificates,
approvals, consents, authorizations and orders required for it to
own or lease the Interests and develop, construct, maintain, and
operate them, and to market the production therefrom, and no
proceeding is pending or threatened involving revocation of any
such licenses, permits, certificates, consents, authorizations or
orders, provided that this representation is limited to Seller's
best knowledge;
(n) There are no taxes due or tax liens on any of the Interests;
(o) To the best of Seller's knowledge, Seller is not a party to
any joint venture, partnership, limited liability company, farmin,
farmout, joint operating agreement, or other arrangement or
contract with respect to any of the Interests that is reported as
a partnership for federal or state income tax purposes;
(p) As of the execution date hereof all of the wells and all of
the equipment used in the drilling, completion and operation of
any such wells, or in the production, treatment, storage,
gathering and transportation of hydrocarbons from such wells, is
in good operating condition, ordinary wear and tear excepted,
provided that this representation is limited to Seller's best
knowledge with respect to such matters which are the
responsibility of the operator of any interest not operated by
seller;
(q) From the Effective Time to the execution date hereof, no
personal injuries or deaths have occurred in connection with any
of the Interests which should have been reported by Seller in
accident or incident reports in accordance with applicable law or
in accordance with Seller's usual operating procedures and
policies;
(r) To the best of Seller's knowledge, all royalties (including
without limitation royalties with respect to take-or-pay payments
or settlements), minimum royalties, rentals, shut-in gas payments
and other payments due with respect to the Interests have been
properly and timely paid in full, except for payments held in
suspense for title or other reasons that are customary in the
industry or which are being contested in an appropriate forum.
There are no amounts claimed to be due to Seller in respect of the
Interests that are being held in suspense because of a dispute as
to title to the Interests or for any other reason, and Seller is
entitled to be paid, and is being paid, with respect to production
from the Interests, its net revenue interest without indemnity or
guarantee other than those customarily found in division orders
and other similar agreements and documents;
(s) Except as detailed on Exhibit A-2, this Agreement and its
execution and delivery by Seller does not, and the fulfillment and
compliance by Seller with the terms and conditions of this
Agreement and the consummation by Seller of the transactions
contemplated hereby will not permit the exercise of or give rise
to (with the giving of any required notice) any preferential
purchase right, option or right of first refusal;
(t) To the best of Seller's knowledge, all of the wells in which
such Seller has an interest by virtue of its ownership of the
Leases have been (i) drilled and completed within the boundaries
of such Lease or within the limits otherwise permitted by
contract, pooling or unit agreement, and/or by law and (ii)
drilled and completed in compliance with all applicable laws,
rules and regulations; and
(u) Seller has reasonable surface access to each of the Interests
for purposes of oil and gas exploration, development and production.
3.02 Representations and Warranties of Buyer. Buyer represents and
warrants to Seller that:
(a) Buyer is a corporation duly organized, validly existing, and in
good standing under the laws of the jurisdiction of its incorporation,
and has all requisite power and authority to own and lease the
properties and assets it currently owns and leases and to carry on its
business as such business is currently conducted. Buyer is duly
licensed or qualified to transact business and is in good standing in
all jurisdictions where the character of the properties and assets now
owned or leased by it or the nature of the business now conducted by it
requires it to be so licensed or qualified if the failure to qualify
might reasonably be expected to have a material adverse effect on the
business or financial prospects of Buyer. Buyer is also duly licensed
or qualified to do business and is in good standing in each
jurisdiction where the Interests are located;
(b) Buyer has all requisite power and authority to execute and deliver
this Agreement, to consummate the transactions contemplated hereby, and
to perform the terms and conditions hereof to be performed by it. This
Agreement constitutes, and each of the documents required to be
delivered by Buyer hereunder, shall constitute Buyer's legal, valid,
and binding obligation, enforceable against Buyer in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, or other laws relating to or affecting generally the
enforcement of creditors' rights and general principles of equity,
regardless of whether considered in a proceeding in equity or at law;
(c) This Agreement and its execution and delivery by Buyer does not,
and the fulfillment of and compliance by Buyer with the terms and
conditions of this Agreement, and the consummation by Buyer of the
transactions contemplated hereby, will not (i) require any filing,
consent, authorization, or approval under, any law or administrative
regulation or any judicial, administrative, or arbitration order,
award, judgment, writ, injunction or decree applicable to or binding
upon Purchaser (assuming the receipt of all routine governmental
consents typically received after consummation of transactions of the
nature contemplated by this Agreement), (ii) conflict with, result in a
breach of, constitute a default under (without regard to any
requirements of notice or the lapse of time), accelerate, or permit the
acceleration of the performance required by, any mortgage, indenture,
loan or credit agreement or other agreement or instrument evidencing
indebtedness for borrowed money to which Buyer is a party or by which
it is bound;
(d) No broker or finder is entitled to any brokerage or finder's fee,
or to any commission, based in any way on agreements, arrangements or
understandings made by or on behalf of Buyer for which Seller has any
liability or obligation (whether contingent or otherwise);
(e) Buyer is not a foreign person, foreign corporation, foreign
partnership, foreign trust, or foreign estate (as those terms are
defined in the Internal Revenue Code of 1986, as amended, and
regulations promulgated thereunder); and
(f) In making the acquisition of the Interests hereunder, Buyer is
acting in the conduct of its own business in the ordinary course. The
Interests are not being acquired for distribution or transfer in
violation of the securities laws of the United States or of any state
thereof.
ARTICLE IV
COVENANTS OF BUYER AND SELLER
4.01 Covenants of Seller. Seller covenants and agrees with Buyer that:
(a) After the execution of this Agreement, Seller will make available
to Buyer for examination at Seller's offices in Dallas, Texas, title
and other information relating to the Interests insofar as the same are
in Seller's possession and, subject to the consent and cooperation of
third parties, will cooperate with Buyer in Buyer's efforts to obtain,
at Buyer's expense, such additional information relating to the
Interests as Buyer may reasonably desire (to the extent that Seller may
do so without violating legal constraints or any obligation of
confidence or other contractual commitments of Seller to third
parties), including without limitation:
(1) Title opinions, title status reports and contracts or agreements
pertaining to the Interests;
(2) Copies of the leases, prior conveyances of Interests created
thereby, unitization, pooling and operating agreements, division
and transfer orders, mortgages, deeds of trust, security
agreements, financing statements, and other encumbrances not
discharged and affecting the title to or the value of the
Interests;
(3) Accounting and other records relating to the payment of rentals,
royalties, joint interest billings and other payments due under
the Leases or the Wells;
(4) Records relating to the payment of ad valorem, property,
production, severance, excise and similar taxes and assessments
based on or measured by the ownership of property or the
production of hydrocarbons or the receipt of proceeds therefrom on
the Interests;
(5) Ownership maps and surveys relating to the Interests;
(6) Copies of purchase, sale, processing and transportation agreements
relating to the production of gas from the Interests. Copies of
all gas balancing agreements and gas balancing statements;
(7) Copies of agreements, leases, permits, easements, licenses and
orders relating to the Interests;
(8) Production records relating to the Interests;
(9) Inventories of personal property and fixtures included in the
Interests; and
(10) Any and all other information contained in Seller's files that
relates to the Interests other than matters subject to attorney-
client or attorney work privilege or concerning Seller's economic
evaluation.
Seller shall permit Buyer to inspect and photocopy such information and
records at any reasonable time during the term of this Agreement. Seller
shall cooperate with Buyer in Buyer's efforts to obtain such additional
title information as Buyer may reasonably deem prudent.
(b) During the period from the date of this Agreement to the Date of
Closing, without the prior written consent of Buyer, Seller will not
(i) cause any of its portion of the Leases or other of the Interests to
be developed, maintained, or operated in a manner substantially
inconsistent with prior operations; (ii) abandon any material part of
any of its portion of the Interests; (iii) commence any material
operation of any of its portion of the Leases or the Interests
anticipated to cost Seller in excess of Fifteen Thousand Dollars
($15,000.00) per operation (except emergency operations, operations
required under presently existing contractual obligations, the on-going
commitments under the AFE's described in Exhibit B hereto, and
operations undertaken to avoid any penalty provisions of any applicable
agreement or order), or (iv) convey or dispose of any material part of
any of its portion of the Interests (other than oil, gas and other
liquid products produced from the Interests in the regular course of
business). Buyer acknowledges that Seller owns undivided interests in
certain of the Interests and Buyer agrees that the acts or omissions of
Seller's co-owners shall not constitute a violation of the provision of
this Section 4.01(b) nor shall any action required by a vote of co-
owners constitute such a violation so long as Seller has voted its
interest with Buyer's prior consent;
(c) Seller shall use all reasonable efforts to maintain its corporate
status from the date hereof until Closing and to assure that as of the
Closing Date it will not be under any corporate, legal or contractual
restriction that would prohibit or delay the timely consummation of
such transactions; and
(d) Seller shall promptly notify Buyer of any suit, action, claim,
threatened suit, action or claim, or other proceedings of the type
referred to in Section 3.01(e) or (f) that arises prior to the Closing
with respect to which Seller receives notice or otherwise obtains
knowledge following the execution of this Agreement.
4.02 Covenants of Buyer. Buyer covenants and agrees with Seller that:
(a) Buyer shall use all reasonable efforts to maintain its corporate
status and to assure that as of the Closing Date it will not be under
any corporate, legal or contractual restriction that would prohibit or
delay the timely consummation of such transactions;
(b) To the extent necessary to facilitate the consummation of the
transactions contemplated herein, Buyer agrees to enter into specific
agreements of assumption with respect to the obligations of Seller to
specific third parties or governmental authorities to the extent such
obligations are attributable to the Interests after the Effective Time.
Buyer also shall be obligated to obtain consents from all necessary
Federal authorities, including the Bureau of Indian Affairs, and State
authorities to the assignment of the Leases;
(c) For a period of ten (10) years after the Closing Date, Buyer shall
provide Seller with reasonable access to the Records so long as Buyer
is given reasonable notice prior to Seller's access; and
(d) Buyer represents that it has performed, or will perform prior to
Closing, sufficient review and due diligence with respect to the
Interests which includes reviewing well data, title and other files and
performing necessary evaluations, assessments, and other tasks involved
in evaluating the Interests, to satisfy its requirements, completely,
and enable it to make an informed decision to acquire the Interests
under the terms of this Agreement.
ARTICLE V
ASSUMPTION OF LIABILITIES
AND INDEMNITIES
As used in this ARTICLE V, and the paragraphs hereunder "CLAIMS" shall
include claims, demands, causes of action, liabilities, damages, penalties
and judgements of any kind or character and all costs and fees in connection
therewith.
(a) At the Closing, but effective as of the Effective Time, Buyer
shall (i) assume, and be responsible for and comply with all duties and
obligations of Seller, express or implied, with respect to the
Interests, including, without limitation, those arising under or by
virtue of the Seller's leases and contracts listed in Exhibit A, and
the permits, the applicable statutes or rules, regulations or orders of
any governmental authority (specifically including, without limitation,
any governmental request or requirement to plug, replug and/or abandon
any well of whatsoever type, status or classification, or to take any
clean-up, remediation or other action with respect to the Interests),
and (ii) except as otherwise provided herein, to defend, indemnify and
hold harmless Seller from any and all claims in connection therewith;
(b) Subject to the provisions of Paragraphs (c), (d) and (e) below
Seller shall defend, indemnify and hold harmless Buyer from any and all
claims, costs, expenses, liabilities or causes of action relating to or
arising out of Seller's ownership or operation of Seller's Interests
prior to the Effective Time and Buyer shall defend, indemnify and hold
harmless Seller from any and all claims, costs, expenses, liabilities
or causes of action relating to or arising out of Buyer's ownership and
operation of the Interests after the Effective Time. Each indemnified
party hereunder agrees that upon its discovery of facts giving rise to
a claim for indemnity under the provisions of this Agreement, including
receipt by it of any demand, assertion, claim, action or proceeding,
judicial or otherwise, by any third party (such third party actions
being referred to herein as a "THIRD PARTY CLAIM"), it will give prompt
notice thereof in writing to the indemnifying party together with a
statement of such information with respect to any of the foregoing as
it shall then have. Such notice shall include a formal demand for
indemnification under this Agreement. The indemnified party shall
afford the indemnifying party a reasonable opportunity to pay, settle,
or contest any Third Party Claim at its expense;
(c) Seller shall (i) be responsible for any and all claims, including
but not limited to claims for payment of royalties, arising out of the
production and sale of hydrocarbons by Seller from the Interests, and
the proper accounting and payment of expenses for the Interests,
insofar as such claims and payments relate to period of time prior to
the Effective Time, and (ii) defend, indemnify and hold harmless Buyer
from any and all of such claims and payments;
(d) Buyer shall (i) be responsible for any and all claims, including
but not limited to claims for payment of royalties, arising out of the
production and sale of hydrocarbons by Buyer from the Interests, and
the proper accounting and payment of expenses for the Interests,
insofar as such claims and payments relate to period of time beginning
at the Effective Time and thereafter, and (ii) defend, indemnify and
hold harmless Seller from any and all of such claims and payments; and
(e) After the execution of this Agreement, Buyer, at its option, and
its sole cost, risk and expense, may obtain an environmental audit of
the Interests at any time prior to September 20, 1996. Seller shall
provide the environmental auditors all information available to it
which they may reasonably request and shall grant said auditors
physical access to the Interests. For those Interests which are not
operated by Seller, Buyer shall obtain permission from the operator to
conduct such inspections. If the audit reveals any environmental
conditions which are not satisfactory to Buyer, Seller shall
immediately be provided a copy of the audit information and either
party shall have the option to terminate this Agreement as to the
affected Interest(s) with a deduction from the Preliminary Purchase
Price of the allocated value attributable to that Interest(s), without
liability, unless Seller affirms in writing that it will remediate such
conditions to the satisfaction of the Buyer prior to Closing. Buyer
shall defend and indemnify Seller from any and all liability, claims,
causes of action, injury to Buyer's employees, agents or contractors or
to Buyer's property and/or injury to Seller's property, employees,
agents or contracts which may arise out of Buyer's inspections, but
only to the extent of Buyer's negligence. If such deductions exceed
ten percent (10%) of the Preliminary Purchase Price and the parties are
unable to mutually agree to proceed with closing, then either party
shall have the right to terminate this Agreement without liability.
After Closing, Buyer shall be deemed to have fully inspected and accepted
the Interests "AS IS" in their then current physical and environmental
condition.
ARTICLE VI
DISCLAIMER OF WARRANTIES
Buyer acknowledges that in making the decision to enter into this Agreement
and consummate the transactions contemplated hereby, Buyer has relied only
upon its own independent investigation of the Lands. Accordingly, Buyer
acknowledges that Seller has not made and Seller hereby expressly disclaims
and negates any representation or warranty express or implied at common law,
by statute or otherwise relating to (i) condition of the Lands (including
but not limited to any implied or express warranty of merchantability or
fitness for a particular purpose or of conformity to models or samples of
materials) and (ii) any information, data or other materials (written or
oral) furnished to Buyer by or on behalf of Seller (including but not
limited to information, data or other materials regarding the existence or
extent of oil, gas or other mineral reserves, the recoverability of or the
cost of recovering such reserves, the value of such reserves, any producing
pricing assumption, present or past production rates, the environmental
condition of the Lands, including but not limited to the presence of
naturally occurring radioactive material ("NORM"), and the ability to sell
oil or gas production after Closing); provided, however, that the foregoing
disclaimer and negation of representations and warranties shall not affect
or impair the representations and warranties of Seller made in Section 3.01.
ARTICLE VII
TITLE MATTERS
7.01 Defensible Title.
(a) As used herein, the term "DEFENSIBLE TITLE" shall mean, as to each
of the Interests, such title which, subject to and except for the
Permitted Encumbrances (as defined hereinafter): (i) entitles Seller
to receive not less than the "NET REVENUE INTEREST" set forth in
Exhibit A of all oil, gas and associated liquid and gaseous
hydrocarbons produced, saved and marketed from the presently producing
formations in the presently producing wells bottomed in the Lands; and
(ii) obligates Seller to bear costs and expenses relating to the
maintenance, development and operation of those portions of the
presently producing wells bottomed in the Lands in an amount not
greater than the "WORKING INTEREST" set forth in Exhibit A;
(b) The term "PERMITTED ENCUMBRANCES", as used herein, shall mean:
(1) Lessor's royalties, overriding royalties, reversionary interests
and similar burdens provided that the net cumulative effect of
such burdens does not operate to reduce the Net Revenue Interest
of any interest to less than the Net Revenue Interest therefor set
forth in Exhibit A;
(2) Preferential rights to purchase and required third party consents
to assignments and similar agreements with respect to which, prior
to Closing; (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, or (iii) with respect to consents, such consents which
need not be obtained prior to an assignment, or the failure to
obtain such consents will not have a material adverse effect on
the value of the Interests to Buyer;
(3) Liens for taxes or assessments not yet due or not yet delinquent,
or if delinquent, that are being contested in good faith in the
ordinary course of business;
(4) All rights to consent by, required notices to, filings with, or
other actions by governmental entities in connection with the sale
or conveyance of any of the Interests if the same are customarily
obtained subsequent to such sale or conveyance;
(5) Rights of reassignment;
(6) Easements, rights-of-way, servitudes, permits, surface leases and
other rights in respect of surface operations, pipelines, grazing,
logging, canals, ditches, reservoir or the like; conditions,
covenants or other restrictions; 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;
(7) Such Title Defects or other defects as Buyer has waived pursuant
to the terms of this Agreement;
(8) Liens to be released at Closing;
(9) The terms and conditions of all leases, agreements, orders,
instruments, documents and other matters described in Exhibit A
hereto; and
(10) 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 governmental authority.
(c) The term "TITLE DEFECT" as used herein shall mean any encumbrance,
encroachment, irregularity, defect in or objection to Seller's title to
each Interest (expressly excluding Permitted Encumbrances), that alone
or in combination with other defects, renders Seller's title to that
Interest less than Defensible Title or which would adversely interfere
with the use, possession, ownership or value thereof, or any violation
of applicable laws, rules, regulations or orders of any governmental
agency having jurisdiction over the Interests which will likely result
in an impairment or loss of title to all or a portion of the Interests
or diminish the value thereof or likely will hinder or impede the
operation of such interest, or any matter constituting a breach of
Seller's representation and warranties as set forth in Section 3.01.
Materialmen's mechanics', repairmen's, employees', contractors',
operators' or other similar liens or charges arising in the ordinary
course of business incidental to construction, maintenance or operation
of the Interests shall not constitute a Title Defect: (i) if they have
not been filed pursuant to law, or (ii) if filed, they have not yet
become due and payable or payment is being withheld as provided by law,
or (iii) if their validity is being contested in good faith by
appropriate action.
7.02. Casualty Loss. If, prior to the Closing, all or any portion of the
Interests be destroyed by fire or other casualty, is taken in condemnation
or under the right of eminent domain or proceedings for such purpose are
pending or threatened, Buyer may elect (i) to treat the Interests affected
by such destruction, taking or pending or threatened taking as Defective
Interests in accordance with Section 7.03; or (ii) to purchase such
Interests notwithstanding any such destruction, taking or pending or
threatened taking (without reduction of the Preliminary Purchase Price
therefor), in which case, Seller shall, at the Closing, pay to Buyer all
sums paid to Seor any lost or foregone income or production attributable to
the time period subsequent to the Effective Time) and shall assign, transfer
and set over unto Buyer all of the right, title and interest of Seller in
and to any unpaid claims, awards or other payments from third parties
arising out of the destruction, taking or pending or threatened taking as to
such Interests (including sums which are in the nature of compensation for
any lost or foregone income or production attributable to the time period
subsequent to the Effective Time). Seller agrees that, prior to Closing, it
shall not voluntarily compromise, settle or adjust any amounts payable by
reason of any destruction, taking or pending or threatened taking as to such
of its portion of the Interests to be assigned to Buyer without first
obtaining the written consent of Buyer.
7.03 Defect Adjustments.
(a) "DEFECTIVE INTEREST" shall mean that portion of the Interests (as
determined in accordance with Section 7.03(c)) affected by a Title
Defect or that Buyer is otherwise entitled under Sections 7.02 or 7.04
to treat as a Defective Interest, and of which Seller has been given
notice by Buyer prior to September 23, 1996, (the "DEFECT NOTICE
DATE"), except as provided hereinafter in this Section 7.03(a). Any
notice of any Defective Interest shall be in writing and shall include:
(i) a description of the Defective Interest, (ii) the specific basis
for the defect that Buyer believes causes such Interest to be a
Defective Interest, and (iii) the amount by which Buyer has determined
the value of the Defective Interest has been reduced and the
computations and information upon which Buyer's determination is based.
Buyer shall be deemed to have waived all Title Defects and any other
defect to any Interest of which Seller has not been given such notice
prior to the Defect Notice Date. If Seller (i) disagrees that a Defect
Adjustment or Exclusion Adjustment is warranted; (ii) disagrees that
the matter giving rise to such claims is uncured, or (iii) disagrees
with the amount of the related Defect Adjustment claimed by Buyer in
any notice given in accordance with this Section 7.03(a), then Seller,
at its option, may remove the defective property from the sale, attempt
to cure the defect at Seller's sole cost and expense, agree to a
mutually acceptable purchase price reduction or terminate this
Agreement without liability to Buyer except for return of the
Performance Deposit, without interest, provided that Seller may not
terminate this Agreement unless the aggregate value of Title Defects
exceeds twenty percent (20%) of the Preliminary Purchase Price;
(b) Defective Interests shall be excluded from the Interests to be
purchased by Buyer hereunder and the Preliminary Purchase Price shall
be reduced in accordance with Section 2.03 by an amount equal to the
value thereof, as agreed to between Buyer and Seller (which reduction
shall be called an "EXCLUSION ADJUSTMENT") unless (i) prior to the
Closing, the basis for treating an Interest as a Defective Interest has
been removed, (ii) Buyer agrees to waive the relevant Title Defect or
other defect and purchase the Defective Interest, notwithstanding the
defect, (iii) Seller agrees to indemnify, defend and hold Buyer
harmless and Buyer agrees to accept such indemnification against all
losses, costs, expenses and liabilities with respect to such Defective
Interest arising from the defect or basis for such Interest being
treated as a Defective Interest, or (iv) Buyer and Seller agree to an
amount by which the value of the Defective Interest has been reduced
and the Preliminary Purchase Price is reduced by such amount in
accordance with Section 2.03 (which reduction shall be called a "DEFECT
ADJUSTMENT"), in which event the Interest shall be included in the
Interests to be purchased by Buyer hereunder and, except in the case of
(iv), no adjustment shall be made to the Preliminary Purchase Price; or
(v) Buyer and Seller do not agree, on or before the Scheduled Closing
Date, as to the value of the Defective Interest that is to be excluded
from the Preliminary Purchase Price and none of Subsections (i) through
(iv) of Section 7.03(b) are applicable, in which event Buyer may
terminate this Agreement without further liability or obligation, by
giving written notice of termination on or before the Scheduled Closing
Date.
(c) The amount by which the Preliminary Purchase Price is to be
reduced in accordance with Section 7.03 as the result of any Interest
being treated as a Defective Interest shall be determined as follows:
(1) In the event that the cost of remedying any Title Defect exceeds
the amount allocated to the affected Interest as set forth in
Exhibit A, then such Interest shall be excluded from the
transaction contemplated hereby and the Preliminary Purchase Price
shall be reduced by the amount allocated to the Interest so
excluded as set forth in Exhibit A (which adjustment shall be
called an EXCLUSION ADJUSTMENT");
(2) In the event that the net revenue interest of Seller in any
Interest is less than that set forth in Exhibit A, that portion of
the Preliminary Purchase price allocated on Exhibit A-1 to such
particular Interest shall be reduced in the proportion that the
net revenue interest actually owned by Seller bears to that set
forth in Exhibit A;
(3) In the event that the working interest costs payable with respect
to a particular Interest is greater than the working interest set
forth in Exhibit A, the Preliminary Purchase Price allocated on
Exhibit A-1 to such particular Interest shall be reduced in the
proportion that the working interest percentage attributable to
such interest exceeds that set forth in Exhibit A;
(4) In the event that (i) the record title interest of Seller to any
Interest is burdened by any lien, encumbrance, mortgage, pledge,
or security interest, or (ii) ad valorem, property or other
similar taxes and assessments for any years prior to the Effective
Time have not been paid, the Preliminary Purchase Price of such
interest shall be reduced by the sum necessary to discharge and
obtain a full record release of such burden or to pay such taxes;
and
(5) In the event there exist other Title Defects which would
materially adversely affect or interfere with the use, possession,
ownership or value of any Interest, Buyer, at its option, may
either, (i) exclude the affected Interest from the transaction
contemplated hereby and the Preliminary Purchase Price shall be
reduced by the amount allocated to the affected Interest as set
forth in Exhibit A, or (ii) accept such Interest.
(d) In determining which portion of the Interests are Defective
Interests, it is the intent of the parties to include all portions of
the Interests affected by the defect or basis for such Interests being
treated as Defective Interests; and
(e) If the deductions in the Preliminary Purchase Price to be made
pursuant to this ARTICLE VII exceed twenty percent (20%) of the
Preliminary Purchase price, either party may terminate this agreement
at any time prior to Closing.
7.04 Identification of Additional Defective Interests.
(a) If, prior to the Closing, there has been non-compliance with the
laws, rules, regulations, ordinances or orders of any governmental
agency or authority having jurisdiction over the affected Interests,
resulting in risk of loss of the affected Interests or value thereof,
then Buyer may elect to treat such of the affected Interests as are
adversely affected by such noncompliance as Defective Interests by
giving Seller notice thereof in accordance with Section 7.03(a);
(b) If, prior to the Closing, any preferential right to purchase any
of the Interests is exercised, Buyer may elect to treat that portion of
the Interests affected by the exercise of such preferential right as
Defective Interests by giving Seller notice thereof in accordance with
Section 7.03(a);
(c) If any necessary third party consent to assignment of any of the
Interests is not obtained prior to the Closing, Buyer may elect to
treat that portion of the Interests subject to such consent requirement
as Defective Interests by giving Seller notice thereof in accordance
with Section 7.03(a). For purposes hereof "NECESSARY THIRD-PARTY
CONSENTS" shall not include:
(1) consents customarily obtained subsequent to such assignment
including without limitation any consent of the State or the
Bureau of Indian Affairs or other Federal agencies or governmental
offices;
(2) consents contractually permitted to be obtained subsequent to such
assignment; or
(3) consents that, if not obtained, will not affect the
transferability, without penalty, of, the operation of, or the
receipt of income from, the Interests subject thereto, or result
in termination of the interests subject thereto or a material
decrease in the value thereof.
(d) If, prior to the Closing, Buyer becomes aware of any suit, action
or other proceeding before any court or governmental agency that would
result in loss or impairment of Seller's title to any portion of the
Interests or a portion of the value thereof, Buyer may elect to treat
the portion of the Interests affected thereby as Defective Interests by
giving Seller notice thereof in accordance with Section 7.03(a); and
(e) If any inaccuracy in Exhibit A results in a loss of value of a
portion of the Interests, Buyer may elect to treat that portion of the
Interest subject to such reduction in value as Defective Interests by
giving Seller notice thereof in accordance with Section 7.03(a).
ARTICLE VIII
CONDITIONS TO CLOSING
8.01 Seller's Conditions. The obligations of Seller at the Closing are
subject, at the option of Seller, to the satisfaction, at or prior to the
Closing, of the following conditions:
(a) All representations and warranties of Buyer contained in this
Agreement shall be true, correct and not misleading in all material
respects at and as of the Closing as if such representations and
warranties were made at and as of the Closing, and Buyer shall have
performed and satisfied all agreements and covenants in all material
respects required by this Agreement to be performed and satisfied by
Buyer at or prior to the Closing;<PAGE>
(b) No suit or other proceeding shall be pending before any court or
governmental agency seeking to restrain, prohibit or declare illegal,
or seeking substantial damages in connection with, the purchase and
sale contemplated by this Agreement, except (i) matters with respect to
which Seller has been adequately indemnified by Buyer, or (ii) any suit
or proceeding affecting only a portion of the Interests, which portion
of the Interests could be treated as a Defective Interest in accordance
with Section 7.04(d);
(c) The aggregate sum of Defect Adjustments and Exclusion Adjustments
shall not exceed thirty percent (30%) of the Preliminary Purchase
Price; and
(d) All necessary and material permissions, approvals and consents
required which are obtainable prior to Closing shall be in full force
and effect.
8.02 Buyer's Conditions. The obligations of Buyer at the Closing are
subject, at the option of Buyer, to the satisfaction, at or prior to the
Closing, of the following conditions:
(a) All representations and warranties of Seller contained in this
Agreement shall be true, correct and not misleading in all material
respects at and as of the Closing as if such representations and
warranties were made at and as of the Closing, and Seller shall have
performed and satisfied all agreements and covenants in all material
respects required by this Agreement to be performed and satisfied by
Seller at or prior to the Closing;
(b) No suit or other proceeding shall be pending before any court or
governmental agency seeking to restrain, prohibit or declare illegal,
or seeking substantial damages in connection with, the purchase and
sale contemplated by this Agreement, except (i) matters with respect to
which Buyer has been adequately indemnified by Seller, or (ii) any suit
or proceeding affecting only a portion of the Interests, which portion
of the Interests could be treated as a Defective Interest in accordance
with Section 7.04(d);
(c) The aggregate sum of Defect Adjustments and Exclusion Adjustments
shall not exceed thirty percent (30%) of the Preliminary Purchase
Price;
(d) All necessary and material permissions, approvals and consents
required which are obtainable prior to Closing shall be in full force
and effect; and
(e) The provisions of ARTICLE V.(e) have been satisfied.
8.03 Satisfaction or Waiver. If Seller and Buyer proceed with the Closing
as specified in ARTICLE IX, all conditions of Closing shall be deemed to
have been satisfied or waived and neither of the parties shall have any
liability whatsoever to the other arising out of, resulting from, or
attributable to any such condition of Closing, irrespective of whether such
conditions of Closing were in fact satisfied or waived. Nothing contained
in this Section 8.03 shall be a waiver or release of any breach of a
representation or warranty contained in this Agreement.
ARTICLE IX
CLOSING
9.01 Date of Closing. Unless the parties hereto mutually agree otherwise
and subject to the conditions stated in this Agreement, the consummation of
the transactions contemplated hereby (herein called the "CLOSING") shall be
held on September 30, 1996, at 10:00 A.M. (the "SCHEDULED CLOSING DATE").
The date Closing actually occurs is herein called the "CLOSING DATE".
9.02 Place of Closing. The Closing shall be held at Seller's office in
Dallas, Texas, in accordance with the Closing Instructions to be mutually
given in writing by Seller and Buyer.
9.03 Closing Obligations. At the Closing the following events shall occur,
each being a condition concurrent to the others and each being deemed to
have occurred simultaneously with the others:
(a) Seller shall execute, acknowledge and deliver to Buyer assignment,
bill of sale and conveyance documents (in sufficient counterparts to
facilitate recording), in form and substance as set forth in Exhibit C
hereto, conveying its portion of the Interests (other than those
portions of the Interests excluded under Sections 7.03(b) and 7.04) to
Buyer.
(b) Seller and Buyer shall execute and deliver a settlement statement
(herein called the "PRELIMINARY SETTLEMENT STATEMENT") prepared by
Seller and furnished to Buyer no less than seven (7) days prior to the
Scheduled Closing Date) that shall set forth the Closing Amount (as
hereinafter defined) and each adjustment and the calculation of such
adjustments used to determine such amount. The term "CLOSING AMOUNT"
shall mean the Preliminary Purchase Price adjusted as provided in
Section 2.03, using for such adjustments the best information then
available. Seller and Buyer further agree that Seller shall be
entitled to receive all proceeds attributable to ownership of the
Interests prior to the Effective Time and Buyer shall be entitled to
receive all proceeds attributable to the Interests after the Effective
Time.
(c) Buyer shall deliver the Closing Amount in the form of immediately
available U.S. funds, by wire transfer in accordance with instructions
to be provided by Seller.
(d) Seller shall deliver to Buyer exclusive possession of its portion
of the Interests (other than Interests excluded under Section 7.03(b)
or Section 7.04)
(e) Seller and Buyer shall execute, acknowledge and deliver transfer
orders or letters in lieu thereof directing all purchasers of
production to make payment to Buyer of proceeds attributable to
production after the Effective Time from the Interests assigned to
Buyer under Section 9.03(a), but not theretofore paid to Seller.
ARTICLE X
OBLIGATIONS AFTER CLOSING
10.01 Post-Closing Adjustments. Within one hundred thirty (130) days after
the Closing, Seller shall prepare and deliver to Buyer, in accordance with
this Agreement and generally accepted accounting principles, a statement
(herein called the "POST CLOSING SETTLEMENT STATEMENT") setting forth each
adjustment or payment that was not included or correctly included in the
Preliminary Settlement Statement and showing the calculation of such
adjustments. Within thirty (30) days after receipt of the Post Closing
Settlement, Buyer shall deliver to Seller a written report containing any
changes that Buyer proposes to be made to the Post Closing Settlement
Statement. The parties shall undertake to agree with respect to the amounts
due pursuant to such Post Closing adjustment no later than one hundred sixty
(160) days after the Closing Date. The date upon which such agreement is
reached or upon which the Final Purchase Price is established, shall be
herein called the "SETTLEMENT DATE". In the event that (i) the Final
Purchase Price is more than the Closing Amount, Buyer shall pay to Seller,
in certified U.S. Funds, the amount of such difference (ii) the Final
Purchase Price is less than the Closing Amount, Seller shall pay to Buyer,
in certified U.S. funds, the amount of such difference. Payment by Buyer or
Seller shall be made within ten (10) days of the Final Settlement Date.
After the Settlement Date, additional proceeds received by or expenses paid
by either Buyer or Seller on behalf of the other shall be settled by
invoicing the other party for expenses paid or remitting to the other party
any proceeds received. The gas imbalances of the Interests shall be
considered final and neither party thereafter shall make claim upon the
other concerning same.
10.02 Files and Records. Seller shall have the right to make and retain
copies of the Records prior to delivery thereof to Buyer. Within thirty
(30) days after the Closing Date, Seller shall deliver to Buyer all original
files and Recorrests, all ad valorem, property, production, excise,
severance, windfall profit and other taxes, except income taxes, based upon
or measured by the ownership of the property, the production of hydrocarbons
or the receipt of proceeds therefrom which apply to or arise from and after
the Effective Time together with all documentary, filing and recording fees
required in connection with the filing and recording of any assignments or
other documents recorded in connection with the sale of the Interests.
10.04 Further Assurances. After Closing, Seller and Buyer shall each
execute, acknowledge and deliver, or cause to be executed, acknowledged and
delivered, such instruments, and shall each take such other action, as may
be necessary or advisable to carry out their respective obligations under
this Agreement and under any document, certificate or other instrument
delivered pursuant hereto.
10.05 Survival. The warranties or representations herein made by Seller
are conditions to the obligations of Buyer hereunder and no warranty or
representation herein made by Seller (other than those contained in 3.01(a),
(b), (c), (d), (e), (f), (i), (j), (k), (o) and (q) shall survive the
Closing. The agreements set forth in ARTICLE X and the matters set forth in
ARTICLES V and VI and Section 12.12 shall survive the Closing for a period
of one (1) year from the Closing Date.
ARTICLE XI
TERMINATION OF AGREEMENT
11.01 Termination. This Agreement and the transactions contemplated hereby
may be terminated in the following instances:
(a) By Seller if the conditions set forth in Section 8.01(a)
through 8.01(d) are not satisfied in all material respects or
waived as of the Scheduled Closing Date;
(b) By Buyer if the conditions set forth in Section 8.02(a)
through 8.02(e) are not satisfied in all material respects or
waived as of the Scheduled Closing Date;
(c) By Buyer pursuant to Section 7.03(b);
(d) Pursuant to Article V.(e); or
(e) At any time by the mutual written agreement of Buyer and
Seller.
11.02 Liabilities Upon Termination. If this Agreement is breached by
either party, nothing contained herein shall be construed to limit Seller's
or Buyer's legal or equitable remedies, including, without limitation,
damages for the breach or failure of any representation, warranty, covenant
or agreement contained herein (whether or not the non-defaulting party has
terminated the Agreement) or the right to enforce specific performance of
this Agreement; provided, however, that a party terminating this Agreement
shall have no right to specific performance thereof, and provided, further,
that neither party shall have a right to specific performance thereof if
this Agreement is terminated pursuant to Section 11.01 hereof.
ARTICLE XII
MISCELLANEOUS
12.01 Exhibits and Schedules. Exhibits A through C are attached hereto and
incorporated herein by this reference.
12.02 Expenses. Except as otherwise specifically provided, all fees, costs
and expenses incurred by Buyer or Seller in negotiating this Agreement or in
consummating the transactions contemplated by this Agreement shall be paid
by the party incurring the same, including, without limitation, legal and
accounting fees, costs and expenses.
12.03 Notices. All notices and communications required or permitted under
this Agreement shall be in writing, delivered to or sent by U. S. Mail or
Express Delivery, postage prepaid, or by facsimile transmission, addressed
as follows:
Maynard Oil Company
Attention Cassondra Foster
8080 North Central Expressway, Suite 660
Dallas, TX 75206
Phone: (214) 891-8461
Fax: (214) 891-8827
Enron Oil & Gas Company
Attention Lee McVay, Vice President and General Manager
20 North Broadway, Suite 800
Oklahoma City, OK 73102
Phone: (405) 239-7880
Fax: (405) 239-7858
Any party may, by written notice so delivered to the others, change the
address or individual to which delivery shall thereafter be made.
12.04 Amendments. Except as otherwise expressly provided herein, this
Agreement may not be amended nor any rights hereunder waived except by an
instrument in writing signed by the party to be charged with such amendment
or waiver and delivered by such party to the party claiming the benefit of
such amendment or waiver.
12.05 Assignment. Neither Seller nor Buyer shall assign all or any portion
of its rights or delegate all or any portion of its duties hereunder without
the prior written consent of the other to such assignment; provided,
however, that Buyer or Seller or both may assign all or part of this
Agreement to a qualified intermediary to facilitate a deferred like-kind
exchange for federal tax purposes. Subject to the foregoing, this Agreement
shall inure to the benefit of and be binding upon Seller, Buyer and their
respective successors and assigns.
12.06 Announcements. Seller and Buyer shall consult with each other with
regard to all press releases and other announcements issued at or prior to
the Closing concerning this Agreement or the transactions contemplated
hereby and, except as may be required by applicable laws or the applicable
rules, and regulations of any governmental agency or stock exchange, neither
Buyer nor Seller shall issue any such press release or other publicity
without the prior written consent of the other party.
12.07 Headings. The headings of the articles and sections of this
Agreement are for guidance and convenience of reference only and shall not
limit or otherwise affect any of the terms or provisions of this Agreement.
12.08 Counterparts. This Agreement, and any document or instrument entered
into, given or made pursuant to this Agreement or authorized hereby, and any
amendment or supplement thereto, may be executed in any number of
counterparts, and, when so executed, each of which shall be deemed an
original instrument, and shall have the same force and effect as though all
signatures appeared on a single document, and all of which together shall
constitute but one and the same instrument. Any signature page of this
Agreement or of such an amendment, supplement, document or instrument may be
detached from any counterpart thereof and attached to another counterpart
without impairing the legal effect of any signatures identical in form
thereto but having attached to it one or more additional signature pages.
12.09 References. References made in this Agreement, including the use of
a pronoun, shall be deemed to include where applicable, masculine, feminine,
singular or plural, individuals, partnerships or corporations. As used in
this Agreement, "person" shall mean any natural person, corpll be governed
by, and construed in accordance with, the laws of the State of Texas,
without regard to its choice of law principles provided, however, that
issues in connection with title to the Interests shall be governed by the
applicable laws of the State of Oklahoma.
12.11 Entire Agreement. This Agreement (including the Exhibits hereto)
constitutes the entire understanding among the parties with respect to the
subject matter hereof, superseding all negotiations, prior discussions and
prior agreements and understandings relating to such subject matter.
12.12 Securities Laws. Buyer has advised Seller that the interests are not
being acquired for distribution or transfer in violation of the securities
laws of the United States or of any state thereof. Buyer hereby agrees to
protect, indemnify and hold harmless Seller from and against any and all
claims, costs (including, without limitation,and liabilities which arise
under applicable state or federal securities laws as a result of acts or
omissions of Buyer or its affiliates which are contrary to such laws and
which are in connection with the transactions contemplated hereby or the
sale or other disposition of the Interests by Buyer or its affiliates.
Seller hereby agrees to protect, indemnify and hold harmless Buyer from and
against any and all claims, costs (including, without limitation, court
costs and reasonable attorney's fees), expenses, damages and liabilities
which arise under applicable state or federal securities laws as a result of
acts or omissions of Seller or its affiliates which are contrary to such
laws and which are in connection with the transactions contemplated hereby.
Executed as of the date first above written.
SELLER
MAYNARD OIL COMPANY
By: /s/ Glenn R. Moore
----------------------------
Glenn R. Moore
President
BUYER
ENRON OIL & GAS COMPANY
By: /s/ Leland J. McVay
--------------------------------
Leland J. McVay
Vice President
EXHIBIT "A"
Attached to and made a part of Purchase and Sale Agreement dated
September 12, 1996, by and between Maynard Oil Company, as Seller,
and Enron Oil & Gas Company, as Buyer
BLAINE COUNTY, OKLAHOMA
PN 490005 (UT-459)
NIPPERT NO. 1-12
EXPENSE INTEREST 0.4375000
REVENUE INTEREST 0.3750000
Oil and Gas Lease dated July 29, 1963, by and between George E.
Nippert, et ux, as Lessor, and Tom R. Gray, Jr., as Lessee, recorded in
Volume 92, page 428 of the Records of Blaine County, Oklahoma, covering the
SE/4 of Section 12, Township 18 North, Range 13 West, Blaine County,
Oklahoma. (LF-05044-00)
Oil and Gas Lease dated May 1, 1957, by and between Ne sta ne (1882),
successor of Bob Tail Bear, Cheyenne-Arapaho No. 2184, approved by the
Bureau of Indian Affairs under serial number 14-20-205-854, as Lessor, and
Sun Oil Company, as Lessee, recorded in Book 41, page 205 of the Records of
Blaine County, Oklahoma, covering the NW/4 of Section 12, Township 18 North,
Range 13 West, Blaine County, Oklahoma, LIMITED to rights from the surface
to a depth of 8,660 feet below the surface and LIMITED to the borehole of
the Nippert No. 1-12 wellbore. (LF-05604-00)
Oil and Gas Lease dated May 1, 1957, by and between Bobtail Bear
(Andrew Mouse Trail) (1880), and Ruth May Mouse Trail (1906), successors of
Standing Calf, Cheyenne-Arapaho No. 2185, approved by the Bureau of Indian
Affairs under serial number 14-20-205-853, as Lessor, and Sun Oil Company,
as Lessee, recorded in Book 41, page 367 of the Records of Blaine County,
Oklahoma, covering the NE/4 of Section 12, Township 18 North, Range 13 West,
Blaine County, Oklahoma, LIMITED to rights from the surface to a depth of
8,660 feet below the surface and LIMITED to the borehole of the Nippert No.
1-12 wellbore.(LF-05605-00)
Oil and Gas Lease dated November 21, 1966, by and between M. W. Bahan,
et al, as Lessor, and Sun Oil Company, as Lessee, recorded in Book 125, page
11 of the Records of Blaine County, Oklahoma, covering the SW/4 of Section
12, Township 18 North, Range 13 West, Blaine County, Oklahoma, LIMITED to
rights from the surface to a depth of 8,660 feet below the surface and
LIMITED to the borehole of the Nippert No. 1-12 wellbore. (LF-05606-00)
The hereinabove referenced leases are subject to Communitization Agreement
dated June 12, 1967, by and between Sun Oil Company and Superior Oil
Company; Operating Agreement dated March 22, 1967, as amended by and between
Sun Oil Company and Superior Oil Company; Oklahoma Commission Order No.
63129 creating a 640 acre drilling and spacing unit for the Morrow Sand
Formation in Section 12, Township 18 North, Range 13 West, as amended.
Lease numbered LF-05044-00 is subject to Assignment and Bill of Sale
effective August 1, 1988, by and between Mobil Oil Corporation and Mobil
Exploration and Producing North America Inc. and Maynard Oil Company
recorded in Volume 557, page 696 of the Records of Blaine County, Oklahoma
and Limited Partial Assignment and Bill of Sale by and between Maynard Oil
Company and Coastal Oils, Inc. dated March 21, 1989, effective February 1,
1989, recorded in Volume 571, page 126 of the Records of Blaine County,
Oklahoma, conveying a wellbore interest only in the Bahan No. 1 Well located
in the SW/4 of Section 12, Township 18 North, Range 13 West, Blaine County,
Oklahoma. Leases numbered LF-05604-00, LF-05605-00 and LF-05606-00 are
subject to Farmout Letter Agreement by and between Sun Exploration and
Production Company and H&L Operating Company dated October 18, 1982;
Assignment of Operating Rights in Oil, Gas and Mineral Leases and
Stipulation dated December 17, 1985, effective November 1, 1985, by and
between Sun Exploration and Production Company and H&L Operating Company,
recorded in Volume 503, page 411 of the Records of Blaine County, Oklahoma,
and Assignment and Bill of Sale dated November 5, 1992, by and between Sun
Operating Limited Partnership and Maynard Oil Company recorded in Volume
647, page 261 of the Records of Blaine County, Oklahoma.
CADDO COUNTY, OKLAHOMA
PN 442001 (UT-476)
SCOTT B NO. 1
EXPENSE INTEREST 0.0585937
REVENUE INTEREST 0.0476074
Oil and Gas Lease dated October 18, 1982, by and between Mobil Oil
Corporation, as Lessor, and Avanti Energy Corporation, as Lessee, recorded
in Volume 972, page 512 of the Records of Caddo County, Oklahoma, covering
the SE/4 of Section 15, Township 9 North, Range 11 West, Caddo County,
Oklahoma, LIMITED to rights from surface of the ground to a depth of 16,250
feet. (LF-05078-AA)
The hereinabove referenced lease is subject to Operating Agreement dated
April 2, 1982, Cotton Petroleum Corp. (now APC Operating Partnership L. P.),
as Operator and Towner Petroleum et al, as Non-Operator; Communitization
Agreement dated August 1, 1982 approved by the Department of the Interior on
January 28, 1983 creating a 640 acre drilling and spacing unit for Section
15, Township 11 North, Range 10 West.
CANADIAN COUNTY, OKLAHOMA
PN 490008
STOVER UNIT NO. 1(UT-462)
EXPENSE INTEREST 0.1241856
REVENUE INTEREST 0.1086624
Oil and Gas Lease dated February 12, 1960, by and between John
Stringer, et al, as Lessor, and Vader W. Coontz, as Lessee, as recorded in
Volume 327, page 358 of the Records of Canadian County, Oklahoma, covering
Lot 2 and the SW/4 NE/4 (also described as the W/2 NE/4) of Section 3,
Township 14 North, Range 10 West, Canadian County, Oklahoma. (LF-05047-00)
The hereinabove referenced lease is subject to Gas Purchase Agreement dated
September 1, 1988, as amended, by and between Transok Pipe Line Company, as
Seller, and Mobil Oil Corporation, as Seller, Oklahoma Corporation
Commission dated January 25, 1966, Order No. 61449 creating a 640 acre
drilling and spacing unit in Section 26, Township 11 North, Range 10 West;
Communitization Agreement dated October 3, 1966, executed by Pan American
Petroleum Corp. et al and Oklahoma Corporation Commission Order No. 61449,
as amended, creating a 640 acre drilling and spacing unit cover all of
Section 26, Township 11 North, Range 10 West; Operating Agreement dated
February 10, 1966, as amended, by and between Pan American Petroleum
Corporation, as Operator and Union Oil Company of California et al, as Non-
Operator; Assignment and Bill of Sale effective August 1, 1988, by and
between Mobil Oil Corporation and Mobil Exploration and Producing North
America Inc., as Grantor, and Maynard Oil Company, as Grantee, recorded in
Volume 1541, page 290 of the Records of Canadian County, Oklahoma.
PN 490009 (UT-463)
WILLARD "A-1" UNIT
EXPENSE INTEREST 0.0880609
REVENUE INTEREST 0.0770533
PN 490010 (UT-463)
WILLARD "A-2" UNIT
BEFORE PAYOUT EXPENSE INTEREST 0.0000000
BEFORE PAYOUT REVENUE INTEREST 0.0000000
AFTER PAYOUT EXPENSE INTEREST 0.0880609
AFTER PAYOUT REVENUE INTEREST 0.0770533
Oil and Gas Lease dated August 14, 1970, by and between Marvin E.
Majors, et ux, as Lessor, and James W. Pitts, as Lessee, as recorded in
Volume 468, page 454 of the Records of Canadian County, Oklahoma, covering
Lots 3 and 4 of Section 31, Township 11 North, Range 9 West, Canadian
County, Oklahoma. (LF-05048-AA)
Oil and Gas Lease dated August 18, 1970, by and between Chickasha
Royalty Trust, as Lessor, and James W. Pitts, as Lessee, as recorded in
Volume 468, page 458 of the Records of Canadian County, Oklahoma, covering
Lots 3 and 4 of Section 31, Township 11 North, Range 9 West, Canadian
County, Oklahoma, as amended. (LF-05048-AB)
The hereinabove referenced leases are subject to Gas Purchase Contract dated
September 1, 1988, as amended, by and between Enogex Services Corporation,
as Buyer, and Maynard Oil Company, as Seller; Operating Agreement dated
March 29, 1975, as amended, by and between Amoco Production Company, as
Operator and Mobil Oil Corporation, et al, as Non-Operator; Assignment and
Bill of Sale effective August 1, 1988, by and between Mobil Oil Corporation
and Mobil Exploration and Producing North America Inc., as Grantor, and
Maynard Oil Company, as Grantee, recorded in Volume 1541, page 290 of the
Records of Canadian County, Oklahoma.
PN 490012 (UT-464)
JOHN WILLIAMS NO. 1-26
EXPENSE INTEREST 0.3125000
REVENUE INTEREST 0.2604167
Oil and Gas Lease dated March 18, 1970, by and between Frederick E.
Parton, (1925) successor to Ben Parton, Caddo Allotte No. 801, approved by
the Bureau of Indian Affairs under serial number 14-20-206-26169, as Lessor,
and Mobil Oil Corporation, as Lessee, recorded in Volume 464, page 677 of
the Records of Canadian County, Oklahoma, covering the NE/4 of Section 26,
Township 11 North, Range 10 West, Canadian County, Oklahoma, LIMITED to
rights from the surface of the ground to a depth of 12,894 feet. (LF-05049-
AA-00)
Oil and Gas Lease dated March 18, 1970, by and between Successors to
Alice Johnson, Caddo Allottee No. 800, approved by the Bureau of Indian
Affairs under serial number 14-20-206-26170, as Lessor, and Mobil Oil
Corporation, as Lessee, recorded in Volume 464, page 681, of the Records of
Canadian County, Oklahoma, covering the NW/4 Section 26, Township 11 North,
Range 10 West, Canadian County, Oklahoma, LIMITED to rights from the surface
of the ground to a depth of 12,894 feet below the surface. (LF-05050-00)
Oil and Gas Lease dated March 18, 1970, by and between Successor to
Annie Johnson, Caddo Allottee No. 778, approved by the Bureau of Indian
Affairs under serial number 14-20-206-26171, as Lessor, and Mobil Oil
Corporation, as lessee, recorded in Volume 464, page 689, of the Records of
Canadian County, Oklahoma, covering the SE/4 Section 26, Township 11 North,
Range 10 West, Canadian County, Oklahoma, LIMITED to rights from the surface
of the ground to a depth of 12,894 feet below the surface. (LF-05051-00)
The hereinabove referenced leases are subject to Gas Purchase Agreement
dated January 1, 1977, as amended, by and between Transok Pipe Line Company,
as Buyer, and Mobil Oil Corporation, as Seller; Operating Agreement dated
June 5, 1974, as amended, by and between Samedan Oil Corporation, as
Operator, and Woods Petroleum Corp. et al, as Non-Operator; Communitization
Agreement dated July 10, 1974, creating a 640 acre unit covering all of
Section 26, Township 11 North, Range 10 West; Assignment and Bill of Sale
effective August 1, 1988, by and between Mobil Oil Corporation and Mobil
Exploration and Producing North America Inc., as Grantor, and Maynard Oil
Company, as Grantee, recorded in Volume 1541, page 290 of the Records of
Canadian County, Oklahoma.
PN 440504 (UT-405)
HAYES UNIT NO. 1-27 & 2-27
EXPENSE INTEREST 0.0000000
REVENUE INTEREST 0.0154321 (ORI)
0.0154321 (ROYALTY)
An undivided one-half (1/2) interest in the oil, gas and other
minerals in and under and that may be produced from the SW/4 Section 27,
Township 24 North, Range 25 West, Ellis County, Oklahoma, LIMITED to rights
from the surface to the base of the Morrow formation, as conveyed in that
certain Mineral Deed dated March 13, 1957, by and between James B. Franklin,
as Grantor, and Shell Canadian Exploration Company, as Grantee, recorded in
Volume 92, page 366 of the Records of Ellis County, Oklahoma and
subsequently conveyed to Maynard Oil Company from Shell Western E&P Inc. by
instrument entitled "Assignment, Conveyance and Bill of Sale" effective
December 1, 1985, recorded in Volume 459, page 381 of the Records of Ellis
County, Oklahoma. (LF-04894-AA)
The hereinabove referenced mineral deed is subject to Oil and Gas Lease
dated December 21, 1973, from Shell Oil Company to Amoco Production;
Purchase and Sale Agreement dated December 19, 1985, by and between Shell
Western E&P Inc. and Maynard Oil Company; Assignment, Conveyance and Bill of
Sale effective December 1, 1985, by and between Shell Western E&P Inc. and
Maynard Oil Company recorded in Volume 459, page 381 of the Records of Ellis
County, Oklahoma.
PN 440601 (UT-435)
HEBNER (AKA HERBER) NO. 1-14
EXPENSE INTEREST 0.1174122
REVENUE INTEREST 0.1027357
Oil and Gas Lease dated November 25, 1955, by and between D. L.
Katterjohn, as Lessor, and E. J. Farris, as Lessee, recorded in Volume 78,
pages 27-28 of the Records of Ellis County, Oklahoma, covering Lots 1 and 2
and S/2 NE/4 of Section 2, Township 22 North, Range 26 West, together with
any rights, titles and interests acquired by Shell Western E&P Inc. in and
to the Pan Am Shattuck Operating Unit by virtue of that certain unrecorded
Operating Agreement dated November 5, 1958 by and between Pan American
Petroleum Company, as Operator, and Shell Oil Company, et al, as Non-
Operators, INSOFAR AND ONLY INSOFAR as said Operating Agreement pertains to
the spacing units established by the Oklahoma Corporation Commission and the
Hebner 1-14 well located in Section 14, Township 22 North, Range 26 West,
Ellis County, Oklahoma. (LF-04929-00)
The hereinabove referenced lease is subject to Gas Purchase Contract dated
October 1, 1989, as amended, by and between Production Gathering Company, as
Buyer, and Maynard Oil Company, as Seller; Operating Agreement dated
November 5, 1958, as amended, by and between Pan American Petroleum
Corporation, as Operator, and Shell Oil Company, et al, as Non-Operators,
May 1, 1959; Purchase and Sale Agreement dated December 19, 1985, by and
between Shell Western E&P Inc. and Maynard Oil Company; Assignment,
Conveyance and Bill of Sale effective December 1, 1985, by and between Shell
Western E&P Inc. and Maynard Oil Company recorded in Volume 459, page 381 of
the Records of Ellis County, Oklahoma.
PN 440505 (UT-443)
INGLE NO. 1-17
EXPENSE INTEREST 0.2500000
REVENUE INTEREST 0.2187500
PN 440505-N
INGLE NO. 2-17
BEFORE PAYOUT EXPENSE INTEREST 0.0000000
BEFORE PAYOUT REVENUE INTEREST 0.0000000
AFTER PAYOUT EXPENSE INTEREST 0.2500000
AFTER PAYOUT REVENUE INTEREST 0.2187500
Oil and Gas Lease dated December 4, 1956, by and between Mary L.
Babcock, et al, as Lessor, and James B. Franklin, as Lessee, recorded in
Volume 87, Page 393 of the Records of Ellis County, Oklahoma, covering the
SW/4 of Section 17, Township 23 North, Range 25 West, Ellis County,
Oklahoma, LIMITED to rights from the surface to the base of the Morrow
formation. (LF-04902-00)
The hereinabove referenced lease is subject to Operating Agreement dated May
29, 1962, by and between Phillips Petroleum Company, as Operator, and Shell
Oil Company, et al, as Non-Operators; Gas Agreement amending various Gas
Purchase Contracts, dated February 5, 1990, by and between Northern Natural
Gas Company, a division of Enron Corp., successor in interest to Northern
Natural Gas Company, as Buyer, and Maynard Oil Company, as Seller; Purchase
and Sale Agreement dated December 19, 1985, by and between Shell Western E&P
Inc. and Maynard Oil Company; Assignment, Conveyance and Bill of Sale
effective December 1, 1985, by and between Shell Western E&P Inc. and
Maynard Oil Company recorded in Volume 459, page 381 of the Records of Ellis
County, Oklahoma.
PN 440507 (UT-411)
IRVIN C NO. 1-6 AND C2
EXPENSE INTEREST 0.0642323
REVENUE INTEREST 0.0562033
Oil and Gas Lease dated August 12, 1959, by and between Mearl R.
Snyder and Edith J. Snyder, as Lessor, and Shell Oil Company, as Lessee,
recorded in Volume 112, page 390 of the Records of Ellis County, Oklahoma,
INSOFAR AND ONLY INSOFAR as said lease covers the SE/4 SW/4 of Section 6,
Township 23 North, Range 24 West, Ellis County, Oklahoma, LIMITED to rights
from the surface to the base of the Morrow formation. (LF-04910-00)
The hereinabove referenced lease is subject to Letter Agreement dated
December 21, 1989, and Agreement Amending Various Gas Purchase Contracts
dated February 5, 1990, as amended, by and between Northern Natural Gas
Company, a Division of Enron Corporation, successor in interest to Northern
Natural Gas Company, as Buyer, and Maynard Oil Company, as Seller; Operating
Agreement dated February 16, 1961, by and between Amoco Production Company,
as Operator, and Gulf Oil Corporation, et al, as Non-Operators; Purchase and
Sale Agreement dated December 19, 1985, by and between Shell Western E&P
Inc. and Maynard Oil Company; Assignment, Conveyance and Bill of Sale
effective December 1, 1985, by and between Shell Western E&P Inc. and
Maynard Oil Company recorded in Volume 459, page 381 of the Records of Ellis
County, Oklahoma.
PN 440702 (UT-430)
LYTLE NO. C 1-21
EXPENSE INTEREST 0.2500000
REVENUE INTEREST 0.2187500
PN 440706
LYTLE NO. C 2-21
BEFORE PAYOUT EXPENSE INTEREST 0.0000000
BEFORE PAYOUT REVENUE INTEREST 0.0312500
AFTER PAYOUT EXPENSE INTEREST 0.0875000
AFTER PAYOUT REVENUE INTEREST 0.0765625
Oil and Gas Lease dated July 7, 1956, by and between Loyd I. Haymaker
and Evangeline M. Hamaker, as Lessors, and George McDaniel, as Lessee,
recorded in Volume 82, page 273 of the Records of Ellis County, Oklahoma,
covering NW/4 of Section 21, Township 21 North, Range 23 West, Ellis County,
Oklahoma, LESS AND EXCEPT the interest assigned to Amoco Production Company
by instrument titled Limited and Partial Assignment of Oil and Gas Lease
dated October 17, 1995, effective September 6, 1994, from Maynard Oil
Company, and recorded in Volume _____, page _____ of the Records of Ellis
County, Oklahoma, in and to the borehole of the Lytle Well No. 2-21 located
1,320 feet from the south line and 1,320 feet from the west line of the NW/4
of Section 21, Township 21 North, Range 23 West, Ellis County, Oklahoma.
(LF-04833-00)
The hereinabove referenced lease is subject to Operating Agreement dated
April 1, 1965, by and between Pan American Petroleum Corporation, as
Operator, and Shell Oil Company, et al, as Non-Operators; Purchase and Sale
Agreement dated December 19, 1985, by and between Shell Western E&P Inc. and
Maynard Oil Company; Assignment, Conveyance and Bill of Sale effective
December 1, 1985, by and between Shell Western E&P Inc. and Maynard Oil
Company recorded in Volume 459, page 381 of the Records of Ellis County,
Oklahoma.
PN 440511
MOYER NO. 1-19 (UT-441)
EXPENSE INTEREST 0.2571800
REVENUE INTEREST 0.2099609
Oil and Gas Lease dated January 16, 1948, by and between Ruth Moyer,
et al, as Lessor, and W. G. Mouser, as Lessee, recorded in Volume 36, page
495 of the Records of Ellis County, Oklahoma, covering the SE/4 of Section
19, Township 24 North, Range 25 West, Ellis County, Oklahoma, LIMITED to
rights from the surface to the base of the Morrow formation. (LF-04904-00)
The hereinabove referenced lease is subject to Agreement dated February 12,
1969, between Shell Oil Company and Cities Service Oil and Gas Company;
Operating Agreement dated December 23, 1957, by and between Pan American
Petroleum Corporation (now Amoco Production Company), as Operator, and Gulf
Oil Corporation, et al, as Non-Operators; Gas Purchase Agreement dated
October 1, 1989, as amended, by and between Production Gathering Company, as
Buyer, and Maynard Oil Company, as Seller; Purchase and Sale Agreement dated
December 19, 1985, by and between Shell Western E&P Inc. and Maynard Oil
Company; Assignment, Conveyance and Bill of Sale effective December 1, 1985,
by and between Shell Western E&P Inc. and Maynard Oil Company recorded in
Volume 459, page 381 of the Records of Ellis County, Oklahoma.
STEPHENS COUNTY, OKLAHOMA
PN 438903 (UT-373)
CALDWELL NO. 22-A
EXPENSE INTEREST 0.1210937
REVENUE INTEREST 0.1059570
Oil and Gas Lease dated October 16, 1969, by and between David Harris,
et al, as Lessor, and L. R. Snyder, as Lessee, recorded in Volume 1042, page
390 of the Records of Stephens County, Oklahoma, covering the E/2 NW/4, SW/4
NW/4, E/2 NW/4 NW/4, SW/4 NW/4 NW/4 and the NW/4 NW/4 SW/4 of Section 22,
Township 1 North, Range 7 West, LESS AND EXCEPT rights limited to the
borehole of the Bumpass 1-22 Well located 1,320 feet from the south line and
1,320 feet from the east line of said Section and further limited to rights
from the surface to 12,590 feet from the surface, Stephens County, Oklahoma.
(LF-04708-00)
Oil and Gas Lease dated May 2, 1969, by and between Frances Louise
Jackson and Miles Jackson, as Lessor, and Shell Oil Company, as Lessee,
recorded in Volume 1024, page 428 of the Records of Stephens County,
Oklahoma. (LF-04709-AA)
Oil and Gas Lease dated May 21, 1969, by and between L. W. Corbett,
Executor of the Joseph E. Hanson Estate, deceased, as Lessor, and Shell Oil
Company, as Lessee, recorded in Volume 1024, page 426 of the Records of
Stephens County, Oklahoma. (LF-04709-AB)
The hereinabove referenced leases cover the E/2 SW/4, SW/4 SW/4,
S/2 NW/4 SW/4 and the NE/4 NW/4 SW/4 of Section 22, Township 1
North, Range 7 West, LESS AND EXCEPT rights limited to the
borehole of the Bumpass 1-22 Well located 1,320 feet from the
south line and 1,320 feet from the east line of said Section and
further limited to rights from the surface to 12,590 feet from the
surface, Stephens County, Oklahoma.
The hereinabove referenced leases are subject to Farmout Agreement and
Assignment dated June 5, 1973, from Shell Oil Company to James R. Hazelwood;
Assignment dated July 1, 1974, from Shell Oil Company to James R. Hazelwood,
recorded in Volume 1171, page 141; Gas Purchase Contract dated May 1, 1974,
as amended, by and between Arkansas Louisiana Gas Company, as Buyer, and
Tesoro Petroleum Corporation, et al, as Seller; Gas Purchase Contract dated
February 8, 1978, as amended, by and between Oklahoma Natural Gas Company,
as Buyer, and Shell Oil Company, et al, as Seller; Assignment from L. R.
Snyder to Shell Oil Company, recorded in Volume 1042, page 391; Purchase and
Sale Agreement dated December 3, 1984, by and between Shell Western E&P Inc.
and Maynard Oil Company; Assignment, Conveyance and Bill of Sale effective
November 1, 1984, by and between Shell Western E&P Inc. and Maynard Oil
Company, recorded in Volume 1585, page 704 of the Records of Stephens
County, Oklahoma; Farmout Agreement dated September 27, 1989, by and between
Maynard Oil Company, as Farmor, and Kaiser-Francis Oil Company, as Farmee;
Corporation Commission Order No. 341238; Operating Agreement dated October
17, 1973, by and between Tesoro Petroleum Corporation, as Operator, and
Montgomery Exploration Company, et al, as Non-Operators; Oklahoma
Corporation Commission Order No. 100058 dated September 25, 1973; Farmout
Agreement and Assignment dated August 17, 1973, by and between James R.
Hazelwood and Tesoro Petroleum Corporation; Limited and Partial Assignment
of Oil and Gas Leases dated May 24, 1995, from Maynard Oil Company to Apache
Corporation, recorded in Volume _____, page _____ of the Records of Stephens
County, Oklahoma.
WOODS COUNTY, OKLAHOMA
PN 429601
FORREST REX BAIRD NO. 1
EXPENSE INTEREST 0.2500000
REVENUE INTEREST 0.2187110
PN 429604
FORREST REX BAIRD NO. 2
EXPENSE INTEREST 0.2500000
REVENUE INTEREST 0.2187110
PN 429605
FORREST REX BAIRD NO. 3
EXPENSE INTEREST 0.2500000
REVENUE INTEREST 0.2187110
Oil and Gas Lease dated June 8, 1978, by and between Forrest Rex
Baird, et al, as Lessor, and Enserch Exploration Inc., as Lessee, recorded
in Volume 398, page 229 of the Records of Woods County, Oklahoma, covering
Lots 1, 2, 3, 4, and 5, NW/4 NE/4, E/2 NE/4 and all accretion and riparian
rights thereto and covering situated and located in Section 16, Township 23
North, Range 15 West, Woods County, Oklahoma. (LF-03228-00)
Oil and Gas Lease dated February 5, 1975, by and between Bess L.
Baird, et vir, as Lessor, and Deason & Vance, as Lessee, recorded in Volume
336, page 604 of the Records of Woods County, Oklahoma, INSOFAR AND ONLY
INSOFAR as said lease covers the accretion and riparian rights to Lot 1 of
Section 15 which fall in Section 16, Township 23 North, Range 15 West, Woods
County, Oklahoma. (LF-03233-00)
The hereinabove referenced leases are subject to Operating Agreement dated
January 21, 1981, as amended, by and between Enserch Exploration, Inc., as
Operator an Moore McCormack Oil & Gas Corporation, et al, as Non-Operator;
Oklahoma Corporation Commission Order No. 46673 (CD 15628) dated October 3,
1961 and Order No. 46674 (CD 15629) dated October 3, 1961, creating a 640
acre drilling and spacing unit for all of Section 16, Township 23 North,
Range 15 West, Woods County, Oklahoma.
WOODWARD COUNTY, OKLAHOMA
PN 440803 (UT-394)
HOHWEILER NO. 1-18
EXPENSE INTEREST 0.1945150
REVENUE INTEREST 0.1702006
Oil and Gas Lease dated March 7, 1966, by and between F. A. Morehart,
et ux, as Lessor, and L. D. Sargent, as Lessee, recorded in Volume 240, page
400 of the Records of Woodward County, Oklahoma, covering Lot 3, NE/4 SW/4
and South 20 acres of the S/2
NW/4 of Section 18, Township 22 North, Range 22 West, Woodward County,
Oklahoma. (LF-04891-00)
Oil and Gas Lease dated December 14, 1961, by and between F. A.
Morehart and Gladys Morehart, as Lessor, and Shell Oil Company, as Lessee,
recorded in Volume 184, page 438 of the Records of Woodward County,
Oklahoma. (LF-04936-AB)
Oil and Gas Lease dated September 10, 1965, by and between A. E.
Goerke and Frances Goerke, as Lessor, and Shell Oil Company, as Lessee,
recorded in Volume 233, page 266 of the Records of Woodward County,
Oklahoma. (LF-04936-AD)
Oil and Gas Lease dated September 10, 1965, by and between Kenneth C.
Scott, as Lessor, and Shell Oil Company, as Lessee, recorded in Volume 233,
page 268 of the Records of Woodward County, Oklahoma. (LF-04936-AE)
Oil and Gas Lease dated September 10, l965, by and between Clarence
Keller, Jr. and Laverne Keller, as Lessor, and Shell Oil Company, as Lessee,
recorded in Volume 233, page 270 of the Records of Woodward County,
Oklahoma. (LF-04936-AF)
Oil and Gas Lease dated September 20, 1965, by and between Clella C.
Short, as Lessor, and Shell Oil Company, as Lessee, recorded in Volume 233,
page 272 of the Records of Woodward County, Oklahoma. (LF-04936-AG)
Oil and Gas Lease dated September 10, 1965, by and between Mary R.
Washta, as Lessor, and Shell Oil Company, as Lessee, recorded in Volume 233,
page 274 of the Records of Woodward County, Oklahoma. (LF-04936-AH)
Oil and Gas Lease dated September 20, 1965, by and between Thomas
Howenstine and Jeanne E. Howenstine, as Lessor, and Shell Oil Company, as
Lessee, recorded in Volume 233, page 276 of the Records of Woodward County,
Oklahoma. (LF-04936-AI)
Oil and Gas Lease dated September 10, l965, by and between Charles S.
Wilson and Betty Ann Wilson, as Lessor, and Shell Oil Company, as Lessee,
recorded in Volume 233, page 278 of the Records of Woodward County,
Oklahoma. (LF-04936-AJ)
Oil and Gas Lease dated September 10, 1965, by and between Nadine
Wilson Stanford and Bobby Gene Stanford, as Lessor, and Shell Oil Company,
as Lessee, recorded in Volume 233, page 280 of the Records of Woodward
County, Oklahoma. (LF-04936-AK)
Oil and Gas Lease dated September 29, 1965, by and between L. J.
Barrett, Jr. and Marion E. Barrett, as Lessor, and Shell Oil Company, as
Lessee, recorded in Volume 233, page 282 of the Records of Woodward County,
Oklahoma. (LF-04936-AL)
Oil and Gas Lease dated September 10, l965, by and between Woodrow A.
Wilson and Eleanor Faye Wilson, as Lessor, and Shell Oil Company, as Lessee,
recorded in Volume 233, page 284 of the Records of Woodward County,
Oklahoma. (LF-04936-AM)
Oil and Gas Lease dated September 10, 1965, by and between James L.
Wilson and Wanda Joyce Wilson, as Lessor, and Shell Oil Company, as Lessee,
recorded in Volume 233, page 286 of the Records of Woodward County,
Oklahoma. (LF-04936-AN)
Oil and Gas Lease dated September 10, 1965, by and between Rosella L.
Scott, as Lessor, and Shell Oil Company, as Lessee, recorded in Volume 233,
page 288 of the Records of Woodward County, Oklahoma. (LF-04936-AO)
Oil and Gas Lease dated September 10, 1965, by and between J. C. Park,
Jr., and Blanche Park, as Lessor, and Shell Oil Company, as Lessee, recorded
in Volume 233, page 290 of the Records of Woodward County, Oklahoma. (LF-
04936-AP)
Oil and Gas Lease dated October 22, 1965, by and between Mary Washta,
Guardian of the Estate of George Washta, Incompetent, as Lessor, and Shell
Oil Company, as Lessee, recorded in Volume 234, page 268 of the Records of
Woodward County, Oklahoma. (LF-04936-AQ)
Oil and Gas Lease dated September 10, l965, by and between Alice Marie
Teis and Donald R. Teis, as Lessor, and Shell Oil Company, as Lessee,
recorded in Volume 234, page 432 of the Records of Woodward County,
Oklahoma. (LF-04936-AR)
Oil and Gas Lease dated September 10, 1965, by and between Stacy L.
Wilson, as Lessor, and Shell Oil Company, as Lessee, recorded in Volume 234,
page 434 of the Records of Woodward County, Oklahoma. (LF-04936-AS)
Oil and Gas Lease dated September 30, 1965, by and between Zollie E.
Larrabee, as Lessor, and Shell Oil Company, as Lessee, recorded in Volume
234, page 436 of the Records of Woodward County, Oklahoma. (LF-04936-AT)
Oil and Gas Lease dated September 10, 1965, by and between Willis
Buchanan Morter and Marion Callery Morter, as Lessor, and Shell Oil Company,
as Lessee, recorded in Volume 234, page 438 of the Records of Woodward
County, Oklahoma. (LF-04936-AU)<PAGE>
Oil and Gas Lease dated September 10, l965, by and between W. A.
Morter, as Lessor, and Shell Oil Company, as Lessee, recorded in Volume 234,
page 440 of the Records of Woodward County, Oklahoma. (LF-04936-AV)
Oil and Gas Lease dated October 25, 1965, by and between Everett G.
King and Marjorie P. King, as Lessor, and Shell Oil Company, as Lessee,
recorded in Volume 235, page 227 of the Records of Woodward County,
Oklahoma. (LF-04936-AW)
Oil and Gas Lease dated September 10, l965, by and between Ethel
Wilson Moran, as Lessor, and Shell Oil Company, as Lessee, recorded in
Volume 235, page 412 of the Records of Woodward County, Oklahoma. (LF-
04936-AX)
Oil and Gas Lease dated September 10, 1965, by and between Ruth Alene
Wheatley and C. D. Wheatley, as Lessor, and Shell Oil Company, as Lessee,
recorded in Volume 235, page 414 of the Records of Woodward County,
Oklahoma. (LF-04936-AY)
Oil and Gas Lease dated September 10, 1965, by and between Susan
McCabe, as Lessor, and Shell Oil Company, as Lessee, recorded in Volume 241,
page 33 of the Records of Woodward County, Oklahoma. (LF-04936-AZ)
Oil and Gas Lease dated September 10, 1965, by and between Gertrude H.
Camm, as Lessor, and Shell Oil Company, as Lessee, recorded in Volume 242,
page 319 of the Records of Woodward County, Oklahoma. (LF-04936-BA)
The hereinabove referenced leases cover Lot 1, Section 18,
Township 22 North, Range 22 West, Woodward County, Oklahoma.
The hereinabove referenced leases are subject to Operating Agreement dated
April 25, 1966, by and between Sun Oil Company, as Operator, and Shell Oil
Company, et al, as Non-Operators; Purchase and Sale Agreement dated December
19, 1985, by and between Shell Western E&P Inc. and Maynard Oil Company;
Assignment, Conveyance and Bill of Sale effective December 1, 1985, by and
between Shell Western E&P Inc. and Maynard Oil Company recorded in Volume
966, page 165 of the Records of Woodward County, Oklahoma.
EXHIBIT A-1
Attached to and made a part of Purchase and Sale Agreement
dated September 12, 1996, by and between Maynard Oil Company,
as Seller, and Enron Oil & Gas Company, as Buyer
<TABLE>
<CAPTION>
WELLBORE UNIT PRELIMINARY IMBALANCE PAYOUT
VALUE VALUE PURCHASE VOLUME DATE AMOUNT
<S> <C> <C> <C> <C> <C> <C> <C>
490005 NIPPERT 1-12 $85,666 $14,000 $99,666 0
442001 SCOT B-1 $46,764 $1,875 $48,639 1,328
490008 STOVER #1 $13,050 $3,974 $17,024 (115,829)
490009 WILLARD A-1 $5,867 $2,818 $8,685 (16,578)
490010 WILLARD A-2 $0 $0 $0 0
490012 JOHN WILLIAMS 1-26 $218,659 $10,000 $228,659 18,344
440504 HAYES UNIT 1-27 $3,875 $0 $3,875 0
440504 HAYES UNIT 2-27 $1,488 $0 $1,488 0
440601 HEBNER 1-14 $2,466 $3,749 $6,215 3,379
440505 INGLE 1-17 $24,139 $8,000 $32,139 9,269
440505 INGLE 2-17 $0 $0 $0 0
440507 IRVIN C $13,618 $2,056 $15,674 (794)
440702 LYTLE C 1-21 $6,976 $8,000 $14,976 12,970
440706 LYTLE C 2-21 $11,306 $0 $11,306 0
440511 MOYER 1-19 $231 $2,246 $2,477 (2,920)
438903 CALDWELL 22A $12,411 $3,875 $16,286 0
429601 FORREST REX BAIRD #1 $0 $0 $0 6,127
429604 FORREST REX BAIRD #2 $751 $0 $751 1,926
429605 FORREST REX BAIRD #3 $18,889 $8,000 $26,889 8,140
440803 HOHWEILER 1-18 $19,978 $6,237 $26,215 26,994
$486,134 $74,830 $560,964 (47,644)
</TABLE>
EXHIBIT A-1
PREFERENTIAL RIGHTS TO PURCHASE
Attached to and made a part of Purchase and Sale Agreement dated September
12, 1996, by and between Maynard Oil Company, as Seller, and Enron Oil & Gas
Company, as Buyer
<TABLE>
<CAPTION>
PRELIMINARY
WELLBORE UNIT PURCHASE
VALUE VALUE PRICE
<S> <C> <C> <C> <C>
440507 IRVIN C $13,618 $2,056 $15,674
440702 LYTLE C 1-21 $6,976 $8,000 $14,976
440706 LYTLE C 2-21 $11,306 $0 $11,306
440511 MOYER 1-19 $231 $2,246 $2,477
TOTAL $32,131 $12,302 $44,433
</TABLE>
EXHIBIT B
Attached to and made a part of Purchase and Sale Agreement dated September
12, 1996, by and between Maynard Oil Company, SELLER, and Enron Oil & Gas
Company, BUYER
THERE ARE NO OPEN AUTHORIZATIONS FOR EXPENDITURES
EXHIBIT C
Attached to and made a part of Purchase and Sale Agreement dated September
12, 1996, by and between Maynard Oil Company, as Seller, and Enron Oil & Gas
Company, as Buyer
ASSIGNMENT, BILL OF SALE AND CONVEYANCE
FROM MAYNARD OIL COMPANY TO ENRON OIL & GAS COMPANY,
EFFECTIVE AUGUST 1, 1996
THE STATE OF OKLAHOMA )
) KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF )
THAT, the undersigned, MAYNARD OIL COMPANY, a Delaware
corporation, having its principal office at 8080 North Central Expressway,
Suite 660, Dallas, Texas 75206 (hereinafter called "ASSIGNOR"), for and in
consideration of Ten Dollars ($10.00) and other valuable consideration to it
in hand paid by ENRON OIL & GAS COMPANY, a Delaware corporation, having its
principal office at 1400 Smith Street, Houston, Texas 77002 (hereinafter
called "ASSIGNEE"), does hereby GRANT, BARGAIN, SELL, ASSIGN and CONVEY unto
Assignee, subject to the terms and conditions contained herein, the
following:
(a) All of Assignor's right, title and interest in and to the
leasehold estate and mineral rights created by the leases described in
Exhibit A, attached hereto and made a part together with any and all
interest of Assignor in and to such property and in and to any
agreements, leases, rights-of-way, easements, licenses and permits
incident thereto, INSOFAR AND ONLY INSOFAR as the said rights cover the
lands and depths described in Exhibit A;
(b) All of Assignor's right, title and interest in and to the wells,
and production therefrom, located on the Leases or lands pooled
therewith, including but not limited to the wells described in Exhibit
A together with any and all buildings or other improvements constructed
thereon , together with any and all interest of Assignor in and to such
property and in and to any agreements, including, without limitation,
gas purchase agreements, farmin and farmout agreements, operating
agreements and pooling agreements, leases, rights-of-way, easements,
licenses and permits incident thereto;
(c) All of Assignor's right, title and interest in and to the real and
personal property, fixtures, improvements and buildings located on the
lands burdened by the Leases or lands pooled therewith, and all
contract rights, rights of substitution and subrogation in and to any
rights and actions of warranty which Assignor has or may have.
This Conveyance, Assignment and Bill of Sale is executed and delivered
as part of the consummation of the transaction contemplated by that certain
Purchase and Sale Agreement between Assignor, as SELLER , and Assignee, as
BUYER , dated September 12, 1996, hereinafter referred to as "Sale
Agreement". The warranties, representations, indemnities and covenants
contained in the Sale Agreement shall survive the delivery of this
Assignment in accordance with the provisions of the Sale Agreement and the
delivery of this Assignment shall not affect, expand, diminish, or otherwise
impair any of the warranties, representations, indemnities or covenants made
in the Sale Agreement and the terms and conditions set forth therein;
provided, however, any third parties transacting with Assignee with respect
to any of the interests may rely on this Assignment as vesting Assignee with
all of Assignor's rights, titles and interests in the said leases and wells.
Assignor warrants to Assignee title to the leases as described in said
Sale Agreement against any claims and demands of all persons whomsoever
claim the same or any part thereof by, through and under Assignor, but not
otherwise.
This Conveyance, Assignment and Bill of Sale shall extend to, be
binding upon and inure to the benefit of Assignor and Assignee, their
respective successors and assigns and shall be deemed covenants running with
the herein described lands and leasehold estates.
Assignee expressly assumes, as of the Effective Date, all of Assignor's
obligations relating to the said leases, including, but not limited to, the
obligation of plugging and abar all purposes as of 7:00 o'clock a.m. August
1, 1996.
Thisntical, except that, to facilitate recordation, only that portion of
Exhibit A which contains specific descriptions of the leases located in the
recording jurisdiction in which the particular counterpart is to be recorded
are included, and other portions of Exhibit A are included by reference
only. All of such counterparts together shall constitute one and the same
instrument. Complete copies of the Assignment containing the entire Exhibit
A have been retained by Assignor and Assignee.
EXECUTED this 30th day of September 1996, but to be effective as stated
above.
MAYNARD OIL COMPANY
By: ___________________________
Glenn R. Moore
President
ENRON OIL & GAS COMPANY
By: ___________________________
Leland J. McVay
Vice President
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
This instrument was acknowledged before me on September 30, 1996, by
Glenn R. Moore, President of Maynard Oil Company, a Delaware corporation, on
behalf of said corporation.
MY COMMISSION EXPIRES:
___________________________
Cassondra Foster, Notary
Public in and for the State
of Texas
THE STATE OF OKLAHOMA )
)
COUNTY OF )
This instrument was acknowledged before me on _________, 1996, by
Leland J. McVay, Vice President of Enron Oil & Gas Company, a Delaware
corporation, on behalf of said corporation.
MY COMMISSION EXPIRES:
_________________________________
Notary Public in and for the State
of ________
