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EXHIBIT 10.4
[GEOCAN ENERGY INC. LETTERHEAD]
September 29, 1998
West Central Contracting Ltd.
General Delivery
Sezsmith, Alberta
XXX 3CD
Attention: Xx. Xxxxx Xxxxxxx
President
Dear Xxx,
RE: OFFER TO PURCHASE BY GEOCAN ENERGY INC. (PURCHASER TO WEST CENTRAL
CONTRACTING LTD. (VENDOR) CERTAIN ASSETS IN THE XXXX AREA, ALBERTA
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1. The Purchaser hereby offers to purchase all of the Vendor's right, title
and interest in:
(a) the petroleum, natural gas and related hydrocarbons (the "Petroleum
and Natural Gas Rights") within, upon or under the lands which are
more particularly described in Schedule "A" hereto (the "Lands")
including Vendor's right, license and privilege to explore, drill for
and recover petroleum, natural gas and related hydrocarbons from the
Lands, to the extant the same are granted by the lessee pertaining to
the Lands;
(b) all equipment, facilities and other tangible depreciable property and
all other materials, supplies, well equipment and other assets that
are presently located in, on or about the Lands and used or intended
for use in connection with the exploration, production, development,
operation, processing, gathering, storage, treatment or transportation
of the Petroleum and Natural Gas Rights (the "Tangibles"); and
(c) all other properties, rights and assets (other than the Petroleum and
Natural Gas Rights or Tangibles) which are directly related to the
Petroleum and Natural Gas Rights or the Tangibles, including without
limitation title and operating agreements, well files and
non-interpretive production and engineering information which is not
proprietary to Vendor or others, relating to the Petroleum and Natural
Gas Rights that Vendor has in its custody or has access to (the
"Miscellaneous Interests");
(The Petroleum and Natural Gas Rights, the Tangibles and the Miscellaneous
Interests are hereinafter collectively called the "Assets").
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2. The purchase price for the Assets is FORTY-SIX THOUSAND ($46,000.00)
CANADIAN DOLLARS ("Purchase Price"), exclusive of GST, which is payable by
certified cheque or bank draft at closing by Purchaser. All costs, expenses
and revenues relating to the Assets accruing in the ordinary course of
business shall be adjusted for between Vendor and Purchaser as of the
Effective Date.
3. This offer to purchase is made on the following terms and conditions:
(a) The effective date for the purposes of adjustments shall be September
1, 1998 ("Effective Date") with closing taking at the Vendor's offices
in Calgary on November 19, 1998 or such date as the parties hereto may
mutually agree upon in writing ("Closing Date");
(b) As and from the Effective Date, Purchaser will assume all
environmental liabilities for the Assets, including without limitation
all well abandonment and reclamation costs associated with the Assets
whether they accrued before or after the Effective Date;
(c) Purchaser's obligation to close is subject to:
(i) Purchaser acting reasonably, being satisfied on the Closing
Date that, between the date hereof and the Closing Date, there
has been no material change to the Assets including but not
limited to substantial physical damage effecting the condition
of the Tangibles which are not insured so as to have a
material adverse effect on the aggregate value of the Assets;
(ii) Purchaser, acting reasonably, being satisfied on the Closing
Date that no material adverse environmental damage or
liability is associated with the Assets; and
(iii) Purchase being satisfied on the Closing Date that Vendor
holds the undivided working interests in the Lands, subject
only to Crown royalties and any additional encumbrances
described in Schedule "A" hereto, as were taken into
consideration by Purchaser in connection with the preparation
of this offer to purchase.
(iv) Any restrictions on the transfer, sale or assignment of the
Assets and all applicable legal and regulatory requirements
relating to the sale of the Assets shall be waived or
complied with to the satisfaction of the Purchaser so that on
the Closing Date the Assets can validly and effectively be
transferred to Purchaser free and clear of all encumbrances
other than as expressly permitted herein; and
(v) There shall be no claims or proceedings threatened or pending
involving Vendor in connection with the Assets which claims
or proceedings in the aggregate would, in the opinion of the
Purchaser have a material adverse effect on the Assets; and
(vi) This offer is also firstly subject to financing upon terms
completely satisfactory to the Purchaser and secondly to the
Purchaser's Board of Director approval.
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(d) Vendor shall provide to Purchaser and its advisors, reasonable access
to the Lands and to the Vendor's land records and documents regarding
Vendor's title to the Assets, on a confidential basis, for the sole
purpose of Purchaser conducting its due diligence in respect of the
Assets and Vendor's title with respect thereto. No later than October
23, 1998, Purchaser shall give Vendor written notice of all defects
which Purchaser is aware, which in the reasonable opinion of
Purchaser, adversely effect the title of Vendor to the Assets and
which Purchaser does not waive ("Title Defects"). If Title Defects are
not cured or removed by Vendor at least two (2) days before the
Closing Date, then 1 (1) day prior to the Closing Date, Purchaser may
elect:
(i) with the agreement of Vendor, to grant a further period within
which Vendor may cure or remove Title Defects;
(ii) to waive Title Defects and proceed with Closing;
(iii) not purchase these Assets affected by Title Defects, which
Purchaser does not waive, in which event the Purchase Price
shall be reduced by an amount agreed to by Vendor and Purchaser,
and Purchaser shall proceed with the closing of the transaction
for the Assets not affected by such Title Defects. The Purchase
Price shall be net of the amount agreed to by the parties which
is attributable to the Assets affected by Title Defects which
have not been waived by Purchaser or failing such agreement,
such amount shall be determined by an independent engineering
firm acceptable to Vendor and Purchaser; and
(iv) If such amount attributable to the Assets affected by Title
Defects which have not been waived by Purchaser is 5% or more of
the Purchase Price, then, notwithstanding the foregoing,
Purchaser or Vendor may terminate this agreement and neither
party shall have any further obligation or liability to the
other.
(e) Without providing a warranty of title, Vendor does warrant that, as of
the closing Date the Assets will be free and clear of all encumbrances
created by, through or under Vendor, except for, the applicable
lessors royalties payable under the title documents covering the
Lands and those encumbrances as set out on Schedule "A" attached
hereto.
4. The Vendor shall also provide all appropriate representations and warranties
to Purchaser including without limitation the following, all of which shall
apply as of the Closing Date.
(a) Environmental Matters: Vendor is not aware of and has not received:
(i) any orders of directives under the Regulations which relate to
environmental matters and which require any work, repairs,
construction or capital expenditures with respect to the Assets,
where such orders or directives have not been compiled with in
all material respects; and
(ii) any demand or notice issued under the Regulations with respect
to the breech of any environmental, health and safety law
applicable to the Assets, including without limitation, any
Regulations respecting the use, storage, treatment,
transportation or disposition of environmental contamminants,
which demand or notice remains outstanding on the Closing Date.
(b) Environmental Information: Vendor has made available to the Purchaser
as information within the Vendor's possession, and has not knowingly
withheld any such information from the Purchaser, relevant to any
environmental damage or contamination or other environmental problems
pertaining to the Assets:
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(c) Condition of Xxxxx: Each well located on the Lands, whether producing,
shut-in, injection, disposal or otherwise, has been drilled and, if
completed, completed and operated in accordance with generally
accepted industry practices and in full compliance with existing
Regulations;
(d) Abandonment of Xxxxx: To the best of the information, knowledge and
belief of the Vendor, each well located on the Lands which has been
abandoned has been plugged and abandoned, and the wellsite therefore
properly restored, in accordance with generally accepted industry
practices and in full compliance with existing Regulations;
(e) Condition of Tangibles: To the best of the information, knowledge and
belief of Vendor, the Tangibles have been constructed, installed,
maintained and operated in accordance with generally accepted
engineering and industry practices and in full compliance with
existing Regulations;
Regulations means all statutes, laws, rules, orders and regulations in
effect at the applicable time and made by governmental boards or
agencies having jurisdiction over the Assets.
5. If any of the Assets are subject to rights of first refusal then the
parties shall deal with such rights of first refusal promptly prior to
closing. Within five (5) days of Vendor so requesting, Purchaser shall
provide its bona fide allocation of the Purchase Price among the Assets
which are subject to rights of First refusal for use by Vendor in complying
with rights of first refusal.
6. Time shall be of the essence hereof.
7. Any notice required or permitted to be given shall be delivered by hand or
by telefacsimile to Purchaser at 000 000-0xx Xxx X.X. Calgary, Alberta, T2P
023, Fax: 000-0000, Attention: Xx. Xxxxx Xxxxxx and to Vendor at General
Delivery, Saxsmith, Alberta TCN 3CO, Fax (000) 000-0000, Attention: Xx.
Xxxxx Xxxxxxx.
8. If this offer to purchase is accepted by Vendor, this letter shall become
a binding agreement between the parties in accordance with the terms
hereof.
9. The parties shall use reasonable efforts to enter into a formal agreement
of purchase and sale by November 6, 1998, which shall be prepared by legal
counsel for the Purchaser. The formal agreement of purchase and sale shall
contain the terms and conditions set forth in this letter and such other
terms and conditions as are customary for agreements of purchase and sale
in the oil and gas industry for operated assets, to the extent they do not
conflict with the terms and conditions of this offer to purchase. Purchaser
shall also be responsible for preparing and providing to purchaser
conveyancing documentation relating to the Assets.
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This offer is open for acceptance by Vendor until 4:00 p.m., Calgary time
October 2, 1998. If Vendor wishes to accept this offer to purchase, please
signify, by signing and returning, prior to such time, via fax copy of this
letter to the attention of Xx. Xxxxx Xxxxxx at GEOCAN Energy Inc.
Yours very truly,
GEOCAN ENERGY INC.
/s/ XXXXX XXXXXX
Xxxxx Xxxxxx, President
ACCEPTED AND AGREED TO THIS 2 DAY OF OCTOBER, 1998
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WEST CENTRAL CONTRACTING LTD.
PER: /s/ XXXXX XXXXXXX
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THIS IS SCHEDULE "A" ATTACHED TO AND FORMING A PART OF AN OFFER TO PURCHASE
DATED SEPTEMBER 29, 1988 BETWEEN WEST CENTRAL CONTRACTING LTD. AS VENDOR AND
GEOCAN ENERGY INC. AS PURCHASER.
1. ASSETS:
LANDS: P & NG RIGHTS: INTEREST: RNCUMS: HECTARES:
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045-07 WeM: SW 16 P & NG Lease No. 20.0000% Crown SS 64
0485110052 W.I. 5.00% XXXX
From Base Viking to
Base Mannville Grp
2. XXXXX:
TCRL Xxxx 102/03-16-048-01W4M
