Bayshore Exploration L.L.C. 00000 Xxx Xxxxxxx, Xxxxx 000
Xxxx, Xxxxx 00000
Phone (000) 000-0000
Fax (000) 000-0000
PARTICIPATION AGREEMENT
Bayshore Exploration L.L.C.
00000 Xxxx Xxxxxxx, Xxxxx 000
Xxxx, Xxxxx 00000
RE: Xxxxxxxxxx No. 1 Well
Xxxxx Ranch Prospect
La Salle County, Texas
Gentlemen:
I desire to apply for the purchase of a working interest in the Xxxxx
Ranch Prospect in La Salle County, Texas. I ("Participant") hereby acknowledge
that Bayshore Exploration L.L.C. ("Bayshore") will drill and put into
production, if warranted, a one-well prospect (Xxxxxxxxxx No. 1 Well) in the
Xxxxx Ranch Field Area for Xxxxxx and Escondido oil/gas production.
I hereby apply for the purchase of 20 point(s) at $9,900.00 per each
point (1.00% working interest) payable upon application, and tender herewith a
check in the amount of $198,000.00.
I hereby make the following representations, warranties and
commitments:
Initial only what is applicable:
a. By executing this Participation Agreement, I have committed myself to become
a (20%) working interest owner in this prospect. KJM initials
b. The undersigned has such knowledge and experience in financial and business
matters that the undersigned is capable of evaluating the merits and risks of an
investment in this oil prospect and of making an informed investment decision.
KJM initials
DRILLING OPERATIONS: Upon acceptance of the same above recited consideration,
Bayshore, as operator, agrees to drill and test, and if warranted, complete and
equip one oil and/or gas well at a location of Bayshore's choice on the subject
leases, with the following terms and conditions:
1. Bayshore shall permit said test well with the Railroad Commission of Texas,
survey and stake the drilling location, build a necessary lease road, prepare
the location, cure title to the drillsite, contract with third party contractors
and drill with due diligence one test well to a total depth of 6,800 feet, or a
depth sufficient to test the Escondido formation, log and test said well for the
purpose of establishing commercial oil/gas production or plugging and abandoning
same. Net revenue interest in the well is 75% before payout of the test well and
73% after payout.
Page 2 November 22, 2005
2. Bayshore agrees that, during drilling and completion operations, Participant
shall receive the following:
a. Daily drilling and completion reports on the subject well.
b. Copies of all logs, tests and samples gained from the drilling and
completion of the subject well.
c. Copies of all Railroad Commission of Texas filings on the subject
well.
3. In the event that an oil and/or gas well completion is attempted on the
subject test well, Participant agrees to pay its proportionate share of the
completion costs for the well per the Authority for Expenditure (AFE) which
equals $4,500.00 per each percentage point upon written and/or verbal
notification from Bayshore.
4. In the event that commercial oil and/or gas production is established on the
subject leases with said test well, then both Participant and Bayshore shall
enter into a mutually acceptable Joint Operating Agreement Model Form 610-1989
for the operation of the subject well. All subsequent operations and subsequent
xxxxx drilled and completed on the prospect acreage shall be governed by the
Joint Operating Agreement.
I recognize that an investment in oil exploration involves a high
degree of risk of loss of my entire investment. I have been advised to consult
with my own financial advisors regarding this investment. My commitments to all
investments bear a reasonable relationship to my net worth and I am able to bear
the risk of loss of my entire investment in this prospect.
In the event that a dispute arises between Participant and Bayshore or
its affiliates, or any of their respective successors, representatives, agents,
officers or employees, in connection with this offering, the offer and sale of
working interest, or this Participation Agreement, the parties hereto hereby
expressly agree that any such dispute shall be resolved through Arbitration
rather than litigation, and to submit the dispute to the American Arbitration
Association within 15 days after receiving a written request to do so. If any
party hereto fails to submit the dispute to Arbitration with in the specified
time above, the requesting party may then file any papers necessary to commence
arbitration. The parties hereto agree that any hearing scheduled after an
Arbitration proceeding is initiated, by either party, shall take place in
Houston, Xxxxxx County, Texas.
This Participation Agreement, and all of its terms and conditions,
represent the entire agreement between Participant and Bayshore pertaining to
the Xxxxx Ranch Prospect, and supersedes any and all prior agreements, written
or oral. Any changes to this agreement must be agreed to in writing by both
parties hereto.
Amount of Working Interest: Participant represents that he is
delivering herewith a check or certified funds in the amount of $7,200.00 per
each point. The total point(s) for which Participant is offering to purchase and
the total amount of the aforementioned check or certified funds are as follows:
Total Point(s) Desired: 20
Amount of Subscription: $198,000.00
Page 3 November 22, 2005
**Make check payable to Bayshore Exploration L.L.C.
IN WITNESS WHEREOF, the undersigned has executed this Agreement on the date set
forth below:
/s/ Xxxxx X. XxXxxxxx
S.S. No./Federal I.D. No. Participant's Signature
Xxx Xxxxxx Xxxxxxxx
Xxxxx 0000-000 Xxxxxxx Xxxxxx Xxxxxx Energy, Inc.
Business Address-Street Participant's Name & Date
Xxxxxxxxx, X.X. Xxxxxx X0X 0X0 0000-000 Xxxxxxx Xxxxxx
Xxxx, Xxxxx & Zip Home Address
000-000-0000 Xxxxxxxxx, X.X. X0X 0X0
Business Telephone City, State & Zip
000-000-0000 000-000-0000
Fax Number Home Telephone
xxx@xxxxxxxxxxxxxxx.xxx
E-Mail Address
**Please note where and how you would like to receive your reports.
ACCEPTANCE
Bayshore Exploration L.L.C. hereby accepts the offer represented by the
foregoing Participation Agreement, subject to the terms and conditions thereof.
AGREED AND ACCEPTED ON THIS 20TH DAY OF NOVEMBER, 2005.
By: /s/ Xxxxx Xxxxxxxx
Xxxxx Xxxxxxxx, President
JJS:jr
