A BINDING FARM-OUT AGREEMENT EAST WADI ARABA CONCESSION - EGYPT
EXHIBIT
10.1
A
BINDING FARM-OUT AGREEMENT
EAST
WADI ARABA CONCESSION - EGYPT
This
Agreement made the 6th
day of
August, 2005 between Dover Investments Limited a Corporation organized
and
existing under the laws of the Province of Ontario, Canada (hereinafter
referred
to as “Dover”), TransPacific Petroleum Corp., a Corporation organized and
existing under the laws of the Province of British Columbia, Canada (hereinafter
referred to as "TransPacific") and Mogul Energy Ltd., a Corporation organized
and existing under the laws of the Province of British Columbia Canada
(hereinafter referred to as “Mogul”) and Xxxxxxx Xxxx of the City of Richmond
British Columbia, Canada (hereinafter referred to as “Xxxx”).
Whereas
Dover
has entered into a Concession Agreement with the Egyptian General Petroleum
Corporation (hereinafter referred to as the “EGPC”) and the Arab Republic of
Egypt (hereinafter referred to as the “ARE”) for the Concession known as East
Wadi Araba (hereinafter referred to as “EWA”) effective as of July 18, 2002
(hereinafter referred to as the “Concession Agreement”).
Whereas
the
initial exploration period in the Concession Agreement expires on July
17, 2005.
Whereas
pursuant
to the terms of the Concession Agreement Dover had extended the Concession
Agreement for a first extension period of two years starting on July 18,
2005.
Whereas
exploration and related costs in the approximate amount of Eight Million
US
Dollars ($8,000,000 US) have been incurred with respect to the EWA
Concession.
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Whereas
Dover
and
Xxxx wish to farm-out EWA and Mogul wishes to farm-in EWA. It has been
mutually
agreed by and between the parties to the following:
1. Pursuant
to the terms of
the Concession Agreement Dover had advised the EGPC and the Arab Republic
of
Egypt that it wishes to extend the Concession Agreement for the first extension
period of two years.
2. For
a period of 60 days
of signing this agreement, Mogul will be allowed to review the seismic
data of
EWA and if at Mogul’s sole discretion, is satisfied, will provide a
non-refundable deposit of US$25,000 and within an additional 6 months,
it will
issue to the benefit of EGPC or Dover a letter of guarantee in a form and
content that is acceptable to Dover or EGPC from a major bank in Egypt
in the
amount of Two Million US Dollars ($2,000,000 US) to secure Mogul’s obligations
hereunder and to be used in the drilling of their two well obligation.
Within
one week of issuing the letter of guarantee to EGPC or Dover, Dover will
forthwith apply for the consent of the Arab Republic of Egypt to assign
to Mogul
and TransPacific an Eighty Five percent (85%) interest in the EWA Concession
Agreement. Mogul hereby agrees to meet all of the requirements of the EGPC
and
ARE to complete the assignment to it. In the event that Mogul is not approved
by
the EGPC, Dover shall maintain the interest in trust for Mogul and TransPacific.
This shall not give reason to any of the parties to terminate this agreement.
Mogul will remain liable for all requirements under both this agreement
and the
concession agreement.
3. On
or before October 16,
2005 Mogul will submit a non- refundable US$25,000 deposit to Dover. Upon
the
submission of the US$2 million L/G by Mogul and the deed of assignment
by Dover
to EGPC, such deposit will be credited in-full against the cost of acquiring
the
EWA materials. In the event that Mogul does not proceed with the placing
of the
US$2,000,000 letter of guarantee on time, the US$25,000 shall be forfeited.
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4. In
the event that Mogul
fails to deliver the letter of guarantee to EGPC or Dover within the time
set
out above, this agreement shall be at an end and the parties shall have
no
further obligations hereunder except that Mogul will forthwith return to
Dover
all information that it received hereunder pertaining to the EWA Concession
and
agrees to keep all such information confidential.
5. Mogul
completely at its
own expense hereby agrees to drill, complete or abandon two xxxxx in the
EWA
Concession to test the Xxxxx or 9,000 feet (whichever comes first) and
spend a
minimum amount of four million US Dollars ($4,000,000 US) in the drilling
and
testing of the two xxxxx and, the financial expenditures to be approved
by the
EGPC. The first well is to be completed to the approval of the EGPC, within
two
months of Dover submitting for a deed of assignment to Mogul and TransPacific,
subject to rig availability. The second well is to be completed to the
approval
of the EGPC before July 17TH,
2007.
In the event of a commercial discovery, Mogul shall pay at its expense
all costs
to put the xxxxx into production. Dover will allow Mogul to purchase all
existing EWA inventory of materials in its EWA drilling operations at cost
plus
the standard EGPC handling uplift, just prior to drilling their first
exploration well.
6. Upon
the signing of this
agreement by Dover and Mogul, the submission of a letter of guarantee to
EGPC
and the assignment of 85% interest to Mogul and TransPacific, Xxxx and
Transpacific will release Dover, and its officers, directors, employees,
agents
and servants of all claims arising under the May 28, 2001 concerning assignment
of an interest in the EWA Concession. Xxxx hereby agrees that any interest
that
he or TransPacific may acquire in EWA Concession will be acquired from
Mogul’s
85% interest and not from Dover’s interest in the EWA Concession or any interest
held by Dover for Dover Petroleum Corp., Xxxxxx Xxxxx or Brokton International.
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7. Dover
will have a fifteen
percent (15%) carried working interest in the EWA Concession. Save and
except
for the expenses set out herein, Dover will not be responsible for paying
any of
the expenses and costs howsoever incurred related to the EWA Concession
without
limiting the generality of the foregoing Dover has no responsibility whatsoever
to pay any costs and expenses whether directly or indirectly related to
the
drilling of the xxxxx in the EWA Concession, nor any such costs related
to the
development and production of the these xxxxx, except for its proportionate
share of all costs incurred by any operating company formed under the Concession
Agreement on a commercial discovery being made and only after commercial
production is achieved.
8. TransPacific
will assist
Mogul in its efforts to evaluate the EWA area and select drilling locations,
using Dover’s existing data base and exploration facilities. Transpacific and
Mogul will
enter into a separate agreement to define each party’s interest in EWA at a
subsequent date to be agreed upon between the two parties.
9. In
the case of
establishing a discovery or discoveries in EWA, Dover, Mogul and TransPacific
will share proportionately, in accordance with their respective interest,
all
the benefits of the entire cost recovery oil pool, and the profit oil portion
of
oil production under the Concession Agreement.
10. Within
one month of the
approval of the assignment by the Arab Republic of Egypt, Mogul, Dover
and
TransPacific agree to sign a Joint Operating Agreement, based on the Association
of International Petroleum Negotiators (AIPN) most recent model operating
agreement, to reflect the terms and spirit of this agreement. The operating
agreement shall not be inconsistent with the plain and ordinary meaning
of this
agreement. If these parties cannot agree as to the terms of the Joint Operating
Agreement, this agreement shall remain in full force and effect and constitute
the entire agreement between the parties.
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11. Mogul
hereby agrees that
it shall be fully responsible for all financial commitments that are required
and arises by extending the Concession Agreement for the third exploration
period of two more years and agrees to pay all costs related thereto right
through to production.
12. Mogul,
Dover, Xxxx and
Transpacific agree that all disputes related to this agreement will be
determined by arbitration, in accordance with the arbitration rules of
the
Province of Alberta - Canada by three Arbitrators, one Arbitrator to be
selected
by each party and the two Arbitrators should agree on the third one. This
agreement is governed by the laws of the Province of Alberta, and any disputes
arising hereunder shall be resolved by Arbitration to take place in that
Province.
13. This
Agreement is the
entire agreement between the parties and may not be modified except in
writing
by agreement of Mogul, Dover, TransPacific and Xxxx. This agreement supersedes
all prior oral and written representations and agreements that Dover is
a party
to with respect to EWA Concession and becomes effective only after all
parties
have signed this agreement and the Two Million US Dollars ($2,000,000 US)
letter
of guarantee is in place to the benefit of Dover or the EGPC.
14. Dover,
Transpacific and Mogul agree that by this agreement they shall not be partners,
joint venturers, co-venturers, and fiduciaries to each other. Dover,
Transpacific and Mogul agreed that they shall have no liability for the
acts or
omissions of each other. Mogul and TransPacific cannot extend the third
exploration term unless a letter of guarantee for the full financial requirement
is in place to cover all the costs of the third term exploration commitments.
Mogul is responsible for any financial liabilities it may cause to Dover
in the
event of an accident or disaster that may occur during the course of its
operations that is related to Mogul’s performance of its
obligations.
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15. This
agreement shall
inure to the benefit of and shall be binding upon the parties hereto and
their
respective successors, heirs and approved assignors. Each party is free
to
re-assign all or portion of its interest in this agreement to another party,
without the approval of any of the parties to this agreement, provided
that EGPC
will approve such assignments.
In
witness whereof, the parties have executed this Agreement this 6th
day of
August, 2005.
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/s/
Xxxxxx X. Xxxxx
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Dover
Investments Limited
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Dated:
August 6, 2005
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Xx.
Xxxxxx X. Xxxxx - President
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/s/
Xxxxxx Xxxx
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Mogul
Energy Ltd.
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Dated:
August 6, 2005
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Xx.
Xxxxxx Tyab - President
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/s/
Ghareeb X. Xxxx
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Xx.
Xxxxxxx X. Xxxx
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Dated:
August 6, 2005
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/s/
Ghareeb X. Xxxx
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TransPacific
Petroleum Corp.
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Dated:
August 6, 2005
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Xx.
Xxxxxxx X. Xxxx - President
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