HARBOUR PETROLEUM COMPANY LIMITED Suite 406 Calgary, Alberta T2P 1G2 Telephone: (403)265-5522 OVERRIDING ROYALTY AGREEMENT
HARBOUR PETROLEUM COMPANY LIMITED
Xxxxx 000
000 - 0xx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0
Telephone: (000)000-0000
THIS AGREEMENT made as of the 4th day of August, A.D. 1981
BETWEEN:
HARBOUR PETROLEUM COMPANY LIMITED,
a body corporate, having an office in the City of Calgary,
in the Province of Alberta,
(hereinafter referred to as "Harbour")
OF THE FIRST PART
- and -
N.D.G. XXXXX, a geologist, having an office in the
City of Calgary, in the Province of Alberta,
(hereinafter referred to as "the Geologist")
OF THE SECOND PART
WHEREAS the Geologist has developed hydrocarbon prospects underlying certain lands in the Province of Alberta,
which prospects and land are set out in Schedule "A" attached hereto (hereinafter referred to as "the said lands"), and;
WHEREAS Harbour has agreed to grant to the Geologist a certain percentage overriding royalty on the said lands set
out in Schedule "A".
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the premises and of the
covenants and agreements of the parties hereinafter set forth, the parties do hereby covenant and agree as follows:
1. In this Agreement, unless the context otherwise requires:
(a) "the prospects" means the prospects described in Schedule "A" hereto;
(b) "the said lands" means the lands described in Schedule "A" hereto where and if Harbour acquires an interest
therein within 6 months of the date of this agreement.
(c) "petroleum substances" means petroleum, natural gas and all other substances which may be produced from
the said lands, the rights to which are granted by the documents of title for the said lands.
(d) "market value" means the current market value of petroleum substances at the wellhead calculated by
deducting from the selling price of such petroleum substances the cost of gathering, transporting, extracting,
fractionating, dehydrating, processing, treating or otherwise rendering merchantable the petroleum
substances, including a reasonable return on plant, gathering and processing facilities investment.
2. Harbour hereby undertakes and agrees to pay to the Geologist a certain overriding royalty
(hereinafter called "the royalty") as set out in Schedule "A" hereto, of Harbour's undivided working interest in the said
lands from which Harbour has the right to recover, remove, treat, sell and dispose of the petroleum substances within,
upon or under the said lands and any renewal or renewals thereof.
3. Such overriding royalties on the said lands shall be calculated as herein specified on the petroleum
substances or any of them, produced, saved and marketed from Harbour's undivided working interest in the said
lands, and shall be paid by Harbour to the Geologist on or before the last day of each month for all crude oil, crude
naptha, natural gas and plant products sold during the previous month as follows:
(a) Crude Oil: The applicable royalty percentage of the market value of crude oil and crude naptha marketed;
(b) Natural Gas: The applicable royalty percentage of the market value of natural gas marketed.
(c) Plant Products: In the event that natural gas is transported to a plant for the purpose of extracting natural
gasoline therefrom or of extracting, condensing or saving additional petroleum products or sulphur; the
applicable royalty percentage of the market value received by Harbour on such plant products.
4. Notwithstanding anything to the contrary herein contained or implied, Harbour shall be entitled to
use free from the payment of royalty such part of the production of any petroleum substances required and used by
Harbour and/or its agents in carrying out petroleum and natural gas operations, including plant operations.
5. Harbour shall at all times keep complete and accurate records of production from the said lands and
the sale thereof, and said records shall be available for inspection by the Geologist and his authorized representatives
at mutually convenient times during normal business hours.
6. Pooling and Unitization: Harbour at any time and from time to time shall have the right to include
the said lands or any part or parts thereof and as to all or any of the leased substances and/or petroleum and natural
gas, in a unit operation or pooling agreement entered into by non-associated companies dealing at arms length for the
unitised or pooled development and/or operation thereof with other lands, if such becomes necessary or desirable in
the sole opinion of Harbour. In addition, Harbour shall have the right from time to time in their sole discretion to
alter, amend, extend or cancel any such unit operation or pooling agreement. The basis and manner of allocating
unitised or pooled production among several tracts of unitised or pooled land and the content of any such operating
agreement shall be in the sole discretion and determination of Harbour and if exercised bona fide shall be binding upon
the Geologist. Upon any such unitization or pooling the royalty payable in respect of production and sale of the
leased substances from any portion of the said lands set out in Schedule "A" hereto so unitised or pooled shall be
calculated as provided in Clause 3 hereof on the value of production or unitised or pooled substances produced and
sold from the unit and allocated under such unit operating agreement to that portion of the said lands included in the
unit from time to time.
7. The Geologist shall own and at its own expense take in kind or separately dispose of its royalty
share of the petroleum substances. If, and for so long as the geologist fails to take its royalty in kind, or if it so directs
Harbour, Harbour shall dispose of the Geologist's royalty share of the petroleum substances at the same price and on
the same terms as Harbour received for its own share of the petroleum substances, or at such price as Harbour, acting
as a reasonably prudent operator and having regard to current market prices, availability of markets and economic
conditions affecting the petroleum industry generally would dispose of its own share of the petroleum substances.
Harbour may, in such case enter into a contract for the disposition of the petroleum substances, but any such contract
shall be only for such reasonable period of time as is consistent with the immediate needs of the industry under the
circumstances. Subject to the sales contract, the geologist may commence or resume taking its share of petroleum
substances in kind by giving thirty (30) days written notice to Harbour of its desire to exercise this right. The
Geologist may not exercise this right more often than once in any six (6) month period. If Harbour does not dispose
of the Geologist's royalty share of petroleum substances, the Geologist shall at its own expense provide facilities for
the taking thereof.
8. In the event Harbour shall assign, convey, farmout or lease their interest in the petroleum
substances within, upon or under the said lands or any of them or in any portion thereof, it will cause to be inserted in
any such instrument of assignment, conveyance, farmout or lease an express provision whereby assignee, purchaser
farmee or lessee thereof shall assume and agree to perform and be bound by all the terms of this Agreement to the
extent of the term of the estate hereby created.
9. In the event the Geologist wishes to dispose of the royalty to any other party, the Geologist shall
give notice of its intention to dispose of such royalty and the price at which it wishes to dispose of the royalty.
Harbour shall have thirty (30) days from the date of receipt of the said notice to decide whether it wishes to acquire
the royalty at the price contained in the notice. If Harbour desires to purchase the royalty at the price stipulated in the
said notice, the Geologist shall be obligated to sell the same to Harbour at such price. If Harbour does not advise the
Geologist within the said (30) days of its intention to buy the royalty at the price stipulated in the said notice, then the
Geologist shall be entitled to dispose of the royalty at a price not less favourable than stipulated in the said notice. If
the Geologist has not disposed of the royalty on such terms within ninety (90) days of the termination of the above
mentioned thirty (30) day notice period, it must reoffer any intended disposition to Harbour with the same privileges
and notice period being in effect. In the event the Geologist assigns all or any part of its interest in the royalty,
Harbour shall not become liable to make payments, render statements or permit audits in respect of the overriding
royalty to more than one person. If the royalty is at any time owned by more than one person, such persons shall
nominate one person to act as a common trustee for receipt of the royalty payable hereunder and otherwise to deal
with Harbour in respect to such royalty.
10. Nothing in this Agreement shall require Harbour to perform any work on the said lands or leases
thereon and Harbour may at any time and from time to time surrender the said leases or any severable part thereof
without prior notice to the Geologist.
11. The parties hereto shall from time to time and at all times do all further acts and execute and deliver
all such further deeds and documents as shall be reasonably required in order to fully perform and carry out the terms
and provisions of this Agreement.
12. The address for service of notices, correspondence and reports required to be served by one party
upon the other to this Agreement shall be as follows:
HARBOUR PETROLEUM COMPANY LIMITED
0000 - 000 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0
N.D.G. XXXXX
00 Xxxxxxx Xxxxxxxx X.X.
Xxxxxxx, Xxxxxxx
Any notice required to be served hereunder shall be deemed to have been duly served on the second business day next
following the mailing hereof by the party giving the same by prepaid registered mail duly addressed as aforesaid to the
party upon whom the same is served; provided that any notices delivered by hand shall be deemed to have been served
as of delivery thereof.
In the event that post office mail service is for any reason temporarily suspended, notice shall be delivered by hand.
Any party hereto may change its address for service by notice served upon the other party in the manner aforesaid.
13. This Agreement shall continue in full force and effect as long as an interest in the lands subject to
this Agreement, or any of them, is owned by Harbour, its successors, or assigns, provided that land surrendered by
Harbour shall no longer be subject to this Agreement.
14. Time shall be of the essence of this Agreement.
15. This Agreement shall enure to the benefit of and be binding upon the parties hereto and their
respective successors and assigns.
16. This Agreement supercedes all other agreements, documents, writings and verbal understandings
among the parties relating to the said lands and prospectus.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day and year
first above written.
HARBOUR PETROLEUM COMPANY LIMITED
/s/President
/s/Secretary
/s/Xxxxxxx X. XxXxxxx /s/ N.D.G. Xxxxx
Xxxxxxx X. XxXxxxx N.D.G. Xxxxx
THIS IS SCHEDULE "A" ATTACHED TO AND FORMING PART
OF AN OVERRIDING ROYALTY AGREEMENT DATED
THE 4TH DAY OF AUGUST, A.D. 1981, BETWEEN HARBOUR
PETROLEUM COMPANY LIMITED AND N.D.G. XXXXX
|
Prospect |
Said Lands |
The Applicable
Royalty Percentage |
| Xxxxx Xxxxx | XXX 00 XXX 00 X0X
Section 19: All |
2% |
| Xxxxxx Xxxxx | XXX 00 XXX 00 X0X
Section 20: N½ Section 21: N½ Section 28: All Section 29: All Section 30: All Section 31: All Section 32: All Section 33: All
XXX 00 XXX 00 X0X
Xxxxxxx 0: All Section 5: All Section 6: All |
2% |
| Xxxxxxxx | XXX 00 XXX 0 X0X
Section 32: All Section 33: N½ & SE¼ |
2% |
| Xxxxxx | XXX 00 XXX 0 X0X
Section 14: All Section 15: Portion NE¼ (161.0 acres) Section 15: Portion NE¼ (55.7 acres) Section 15: Portion SE¼ (109.8 acres) Section 21: Portion N½ (232.7 acres) Section 21: Portion NW¼ (4.7 acres) Section 21: Portion SE¼ (21.2 acres) Section 21: Portion NE¼ (82.6 acres) Section 21: Portion E½ (103.8 acres) Section 22: Portion SW¼ (160.0 acres) |
|
| Xxxxx Xxxxxxxxx | XXX 0 XXX 00 X0X
Section 31: N½ |
1% |
| Hildon | XXX 00 XXX 00 X0X
Xxxxxxx 00: All |
1% |
| Goose Xxxxx | XXX 00 XXX 00 X0X
Section 1: All Section 2: All Section 11: All Section 12: All Section 13: All Section 14: All Section 23: All Section 24: All |
1% |
| Xxxxx Xxxx | XXX 00 XXX 00 X0X
Section 30: E½ Section 31: All
XXX 00 XXX 00 X0X
Xxxxxxx 00: All
XXX 00 XXX 00 X0X
Xxxxxxx 6: S½
XXX 00 XXX 00 X0X
Xxxxxxx 0: N½ Section 9: N½ Section 17: All Section 18: All Section 19: All Section 20: All |
1% |
| Alix Xxxxx | XXX 00 XXX 00 X0X
Section 26: All Section 27: SE¼ Section 34: All Section 35: All
XXX 00 XXX 00 X0X
Xxxxxxx 0: SW¼ Section 4: All Section 9: SW¼ |
2% |
| Killarney | XXX 00 XXX 0 X0X
Xxxxxxx 00: SW¼ |
2% |
| Xxxxxxxx "27" | XXX 00 XXX 0 X0X
Xxxxxxx 00: All |
2% |
| Xxxxx Xxxxx | XXX 00 XXX 0 X0X
Section 31: All |
2% |
| Xxxxx | XXX 00 XXX 00 X0X
Section 10: All Section 11: All Section 14: All Section 15: All Section 21: All Section 22: All |
2% |
