EXHIBIT 2.1
FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT
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THIS FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT ("Amendment") is
entered into this 22nd day of May, 1998, by and between Amoco Production
Company, with a mailing address of 000 XxxxXxxx Xxxx Xxxxxxxxx, Xxxxxxx,
Xxxxx 00000 ("Amoco") and Xxxxxx Petroleum Corporation, with a mailing
address of 0000 Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000-0000 ("Xxxxxx").
WHEREAS, on the 20th day of November, 1997, Amoco and Xxxxxx entered
into a Purchase and Sale Agreement wherein Amoco agreed to sell and Xxxxxx
agreed to purchase certain oil and gas properties and related interests (the
"Purchase and Sale Agreement").
WHEREAS, Amoco and Xxxxxx desire to amend the terms of the Purchase and
Sale Agreement.
NOW, THEREFORE, based upon the mutual covenants and considerations
contained herein, the parties agree as follows:
1. Xxxxxx and Amoco agree the Purchase and Sale Agreement shall be
amended by deleting from the definition of "Properties" the interest which
make up the Beaver Creek Unit (as defined in that certain Cooperative
Development Contract, Beaver Creek Structure dated the 29th day of March,
1937) (the "Beaver Creek Unit") and the Beaver Creek Gas Processing Plant (as
more particularly described in that certain Agreement Construction and
Operation of the Beaver Creek Processing Plant Agreement dated 11th day of
March, 1959) (the "Beaver Creek Plant") as more fully described on Attachment
"1".
2. Xxxxxx represents and warrants to Amoco that it has not: (a) entered
into any contracts or commitments (that as of the date of this Amendment have
not been released or waived) which encumber the Beaver Creek Unit or Beaver
Creek Plant, or products attributable thereto, or (b) granted any Third Party
rights (that as of the date of this Amendment have not been released or
waived) with respect to the Beaver Creek Unit or Beaver Creek Plant, or
products attributable thereto.
3. Notwithstanding anything contained in the Purchase and Sale
Agreement to the contrary, Amoco shall release Xxxxxx from and shall fully
protect, indemnify and defend Xxxxxx, its officers, agents, employees and
affiliates and hold them harmless from and against any and all claims,
demands, suits, causes of action, losses, damages, liabilities, fines,
penalties and costs (including attorneys' fees and costs of litigation)
(collectively "Claims"), relating to, arising out of, or connected with,
directly or indirectly, the ownership or operation of the Beaver Creek Unit
or Beaver Creek Plant, including without limitation, Claims relating to: (a)
injury or death of any person or persons whomsoever, (b) damages to or loss
of any property or resources, (c) common law causes of action such as
negligence, gross negligence, strict liability, nuisance or trespass, and/or
(d) fault imposed by statute, rule, regulation or otherwise.
4. Xxxxxx and Amoco agree the Purchase and Sale Agreement shall be
amended to add to the definition of "Properties" the interests described in
Attachment "2". For the purpose of this Amendment, the interest described in
Attachment "2" shall be referred to as "Supplemental Properties".
5. Amoco and Xxxxxx agree the Purchase and Sale Agreement shall be
amended by deleting Article 3.1 in its entirety and replacing the same with
the following:
"3.1 Purchase Price. The total purchase price, subject to adjustments as
set forth in this Agreement, paid to Amoco by Buyer for the Properties
shall be One Hundred Twenty Six Million Four Hundred Forty Nine Thousand
Xxx Xxxxxxx Xxxxxx Xxxxx xxx Xx/000 Xxxxxx Xxxxxx Dollars (US
$126,449,128) ("Purchase Price"), payable in full at Closing in
immediately available funds.
6. Amoco and Xxxxxx agree the Purchase and Sale Agreement shall be
amended by reducing the Deposit from Twenty Million and No/100 United States
Dollars (US $20,000,000) to Seven Million Six Hundred Thirty One Thousand Two
Hundred Fifty Four and No/100 United States Dollars (US $7,631,254).
7. Amoco and Xxxxxx agree the Purchase and Sale Agreement shall be
amended by deleting the allocation of the Purchase Price for the Grass Creek
Unit as more particularly described in that certain Unit Agreement and Unit
Operating Agreement (Phosphoria Tensleep) dated April 1, 1974 and for the
Pitchfork Unit as more particularly described in that certain Unit Operating
Agreement dated December 23, 1970 referenced in Exhibit "B" to the Purchase
and Sale Agreement and replacing the same with the allocation of the Purchase
Price set forth in Attachment "3".
8. Amoco and Xxxxxx agree, with respect to the Supplemental Properties
only, that the following defined terms shall apply:
(a) "Close" or "Closing" means the consummation of the transfer of
title to the Supplemental Properties to Buyer, including execution and
delivery of all documents provided for in this Agreement;
(b) "Closing Date" means the 22 day of May, 1998;
(c) "Effective Time" means the 1st Day of May, 1998, at 7:00 a.m.,
local time where the Supplemental Properties are located;
(d) "Alleged Adverse Condition" means an environmental or physical
condition asserted by Buyer in accordance with Article 5.2 that, as of
Closing, is not in compliance with the then existing Laws, and the costs
associated with remediating such individual Alleged Adverse Condition
exceeds Seventy-Five Thousand and No/100 United States Dollars (US
$75,000) net to Seller's interests. Notwithstanding anything contained
in this Agreement to the contrary, Buyer shall not be entitled to raise
an Alleged Adverse Condition unless the aggregate cost associated with
remediating all such Alleged Adverse Condition(s) and value associated
with all Alleged Title Defect(s) exceed Six Hundred and Sixty Thousand
and No/100 United States Dollars (US $660,000) (it being acknowledged
and agreed that Buyer shall be solely responsible for any and all
Alleged Adverse Condition(s) and all Alleged Title Defect(s) up to Six
Hundred and Sixty Thousand and No/100 United States Dollars (US
$660,000)); and
(e) "Alleged Title Defect" means a Title Defect which is asserted by
Buyer in accordance with Article 4.2, and the costs associated with
curing such individual Alleged Title Defect exceeds Seventy-Five
Thousand and No/100 United States Dollars (US $75,000) net to Seller's
interests. Notwithstanding anything contained in this Agreement to the
contrary, Buyer shall not be entitled to raise an Alleged Title Defect
unless the aggregate value associated with all such Alleged Title
Defect(s) and cost associated with remediating all Alleged Adverse
Condition(s) exceed Six Hundred and Sixty Thousand and No/100 United
States Dollars (US $660,000)(it being acknowledged and agreed that Buyer
shall be solely responsible for any and all Alleged Title Defect(s) and
all Alleged Adverse Condition(s) up to Six Hundred and Sixty Thousand
and No/100 United States Dollars (US $660,000)).
9. Amoco and Xxxxxx agree, with respect to the Supplemental Properties
only, that Articles 3.2, 12.3, 12.4, 12.5, 12.6, 12.7, 12.9, 13.1 through
13.8, 16.2.9, 16.2.10, 16.2.11, 16.3.9, 16.3.10, 16.3.11, 17.1.3, Exhibit
"O", Exhibit "P", Exhibit "Q" and Exhibit "S" contained in the Purchase and
Sale Agreement shall not be applicable.
10. Amoco and Xxxxxx agree that Article 6.5 of the Purchase and Sale
Agreement and Article 7 of the Non-Beaver Creek Transition Agreement shall be
deleted in their entirety, and Article 6.5 of the Purchase and Sale Agreement
and Article 7 of the Non-Beaver Creek Transition Agreement shall be replaced
with the following:
"6.5 Final Accounting Settlement. As soon as reasonably practicable,
but in no event later than June 30, 1998, Amoco shall deliver to Xxxxxx
a Closing statement setting forth a detailed calculation of all
adjustments applicable to the period of time between the Effective Time
and February, 28, 1998 ("Final Accounting Settlement"). As soon as
reasonably practicable, but in no event later than sixty (60) Days after
Xxxxxx receives the Closing statement, Xxxxxx shall deliver to Amoco a
written report containing any changes which Xxxxxx proposes to be made
to such Closing statement. If Xxxxxx fails to timely deliver the
written report to Amoco containing changes Xxxxxx proposes to be made to
the Closing statement, the Closing statement delivered by Amoco shall be
deemed to be true and correct and the same shall be final and binding on
the parties and not subject to arbitration hereunder. As soon as
reasonably practicable, but in no event later than fifteen (15) Days
after Amoco receives Xxxxxx'x written report, the parties shall meet and
undertake to agree on the final Closing adjustments. If the parties
fail to agree on the final post-Closing adjustments within such fifteen
(15) Day period, the disputed items shall be resolved by submitting the
same to Ernst and Young (the "Accounting Referee"). The Accounting
Referee shall resolve the dispute(s) regarding the Closing adjustments
within thirty (30) Days after having the relevant materials submitted
for review. The decision of the Accounting Referee shall be binding on
and non-appealable by the parties. The fees and expenses associated
with the Accounting Referee shall be borne equally by Xxxxxx and Amoco.
The date upon which all amounts associated with the Final Accounting
Settlement are agreed to by the parties, whether by decision of the
Accounting Referee or otherwise, shall be herein called the "Final
Settlement Date". Any amounts owed by either party to the other as a
result of such Closing adjustments shall be paid within five (5)
Business Days after the Final Settlement Date."
Notwithstanding anything contained herein, this Paragraph 10 shall not apply
to the Supplemental Properties.
11. Amoco and Xxxxxx agree the Purchase and Sale Agreement shall be
amended by reducing the fee (set forth in Paragraph 5 of the Transition
Agreement) from Four Hundred and Fifty Thousand and No/100 United States
Dollars (US $450,000) to Three Hundred Nineteen Thousand Four Hundred and
No/100 United States Dollars (US $319,400) per month. Amoco and Xxxxxx
additionally agree the Non-Beaver Creek Transition Agreement shall be amended
by reducing the fee (set forth in Paragraph 5 of the Non-Beaver Creek
Transition Agreement) from Three Hundred and Fifty Thousand and No/100 United
States Dollars (US $350,000) to Three Hundred Nineteen Thousand Four Hundred
and No/100 United States Dollars (US $319,400) per month.
12. Amoco and Xxxxxx shall, at the Closing referenced in Paragraph 8(a)
above, enter into a Supplemental Properties Transition Agreement in the form
attached hereto as Attachment "4".
13. Amoco and Xxxxxx agree the Purchase and Sale Agreement shall be
amended by deleting the Sublease Novation Agreement.
14. Xxxxxx acknowledges that Lease No. 600196 dated the 2nd day of
February, 1974 is subject to that certain confidential Land Grant Settlement
Agreement dated August 20, 1990 by and between Amoco and Union Pacific
Resources Company. Xxxxxx agrees that Lease No. 600196 (only insofar as the
leasehold interests affected thereby) is made subject to the terms and
provisions of the synopsis set forth in Attachment "5" hereto.
15. The terms not defined herein shall have the meaning set forth in
Article 1 of the Purchase and Sale Agreement. Except as expressly amended
herein, the terms of the Purchase and Sale Agreement shall remain unchanged,
and the parties ratify and reaffirm the same.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first set forth above.
AMOCO PRODUCTION COMPANY
By: ____________________________
Name: Xxx X. Xxxxxxx
Title: Attorney-in-Fact
ATTEST: XXXXXX PETROLEUM CORPORATION
By:________________________________ By: ____________________________
Name: Xxxx X. Xxxxxxxx, Xx. Name: Xxxxxx X. Xxxxxxx
Title: Assistant Secretary Title: Vice President
ATTACHMENT "1"
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To First Amendment to Purchase and Sale Agreement
by and between
Amoco Production Company
and
Xxxxxx Petroleum Corporation
DELETED PROPERTIES
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ATTACHMENT "2"
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To First Amendment to Purchase and Sale Agreement
by and between
Amoco Production Company
and
Xxxxxx Petroleum Corporation
SUPPLEMENTAL PROPERTIES
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ATTACHMENT "3"
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To First Amendment to Purchase and Sale Agreement
by and between
Amoco Production Company and Xxxxxx Petroleum Corporation
REVISED ALLOCATION
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Properties Allocated Value
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Grass Creek Unit Area Properties
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Grass Creek Unit as more particularly $11,301,000
described in that certain Unit Agreement
and Unit Operating Agreement (Phosphoria
Tensleep) dated April 1, 1974
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Other Interests $100,000
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Pitchfork Unit Area Properties
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Pitchfork Unit as more particularly $9,019,000
described in that certain Unit Operating
Agreement dated December 23, 1970
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Four Bear Pipeline located in Park $348,000
County, Wyoming
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Xxxxxxx Unit Area Properties
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Xxxxxxx Interests $2,400,000
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Natural Buttes Unit Area Properties
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Natural Buttes Interests $8,600,000
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ATTACHMENT "4"
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To First Amendment to Purchase and Sale Agreement
by and between
Amoco Production Company and Xxxxxx Petroleum Corporation
SUPPLEMENTAL PROPERTIES TRANSITION AGREEMENT
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THIS SUPPLEMENTAL PROPERTIES TRANSITION AGREEMENT ("Agreement") is
entered into this 22nd day of May, 1998, by and between Amoco Production
Company, with a mailing address of 000 XxxxXxxx Xxxx Xxxxxxxxx, Xxxxxxx,
Xxxxx 00000 ("Amoco") and Xxxxxx Petroleum Corporation, with a mailing
address of 0000 Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000-0000 ("Xxxxxx").
WHEREAS, on the 20th day of November, 1997, Amoco and Xxxxxx entered
into a Purchase and Sale Agreement wherein Amoco agreed to sell and Xxxxxx
agreed to purchase certain oil and gas properties and related interests (the
"Purchase and Sale Agreement").
WHEREAS, on the 22nd day of May, 1998, Amoco and Xxxxxx entered into the
First Amendment to Purchase and Sale Agreement wherein Amoco agreed to sell
and Xxxxxx agreed to purchase certain oil and gas properties and related
interests (the "First Amendment").
WHEREAS, Amoco currently conducts various administrative functions
associated with the Supplemental Properties (as defined in the First
Amendment).
WHEREAS, Xxxxxx desires that Amoco continue to conduct the
administrative functions associated with the Supplemental Properties for a
limited period of time in accordance with the terms of this Agreement.
NOW, THEREFORE, based upon the mutual covenants and considerations
contained herein, the parties agree as follows:
1. SCOPE OF SERVICES: Effective as of the Closing (as defined in the First
Amendment), Amoco shall continue to conduct the administrative functions
associated with the Supplemental Properties in conformity with general
practices in the oil and gas industry and in accordance with the various
agreements. The services to be performed by Amoco under the terms of this
Agreement shall be limited to the following:
(a) Employ such personnel as may be reasonably necessary to perform the
services provided under this Agreement;
(b) Administer the books, records and accounts associated with the
ownership and operation of the Supplemental Properties;
(c) Purchase supplies, materials, tools, facilities and equipment
associated with the ownership and operation of the Supplemental
Properties; provided however, Amoco shall not, without the prior written
consent of Xxxxxx, purchase any of the above if such purchase would
result in a change, obligation or liability in excess of One Hundred
Thousand and No/100 Dollars ($100,000) for any single item, except in
cases reasonably believed by Amoco to constitute an emergency;
(d) Contract for services associated with the ownership and operation
of the Supplemental Properties; provided however, Amoco shall not,
without the prior written consent of Xxxxxx, enter into a service
contract which would result in a charge, obligation or liability in
excess of One Hundred Thousand and No/100 Dollars ($100,000), except in
cases reasonably believed by Amoco to constitute an emergency;
(e) Pay all lease rentals, shut-in royalties, minimum royalties,
payments in lieu of production, royalties, overriding royalties,
production payments, net profit payments and similar burdens, and pay
all operating costs, vendor invoices and contractor invoices which are
required to be paid under the terms and provisions of the applicable
agreements and which are associated with the ownership and operation of
the Supplemental Properties;
(f) Pay all lease settlements and other liquidated monetary obligations
which are associated with the ownership and operation of the
Supplemental Properties;
(g) Provide marketing, gas control and other similar services necessary
to sell the products produced from or associated with the Supplemental
Properties in a manner consistent with Amoco's past practices;
(h) Execute routine contracts or documents necessary for carrying on
business related to the Supplemental Properties; provided however, Amoco
shall not, without the prior written consent of Xxxxxx, enter into any
single contractual arrangement which would result in a charge,
obligation or liability in excess of One Hundred Thousand and No/100
Dollars ($100,000), except in cases reasonably believed by Amoco to
constitute an emergency;
(i) Submit reports to state, federal or tribal authorities, as
appropriate; and
(j) Provide assistance, as reasonably requested by Xxxxxx, in
familiarizing Xxxxxx'x personnel (including contract personnel) with the
services conducted associated with the Supplemental Properties.
2. LIMITATION ON SERVICES; COOPERATION: Notwithstanding anything contained
in Section 1 to the contrary, Amoco shall not have the obligation to provide
services under the terms of this Agreement (including without limitation
providing Xxxxxx with records, information and data) which Amoco did not
perform for its own account immediately prior to Closing.
3. TERMINATION AND TURNOVER DATE: This Agreement shall commence on the
date first referenced above and shall terminate when the services have been
performed with respect to June, 1998 production.
4. REIMBURSEMENT: Xxxxxx shall reimburse Amoco for any and all costs,
expenses and XXXXX overhead charges (billed by third parties) incurred by
Amoco and associated with operating the Supplemental Properties during the
term of this Agreement.
5. FEES: Xxxxxx shall pay to Amoco a fee of Five Thousand and No/100
United States Dollars (US $5,000) per month commencing on May 1, 1998 through
June 30, 1998, each calendar month thereafter to compensate Amoco for the
services performed hereunder.
6. MONTHLY STATEMENT: Within thirty (30) days after each calendar month,
Amoco shall submit to Xxxxxx a statement substantially in the form attached
hereto as Exhibit "1" ("Estimated Monthly Statement"). The Estimated Monthly
Statement shall include the following information to the extent the
information is attributable to Amoco's interest in the Supplemental
Properties immediately prior to Closing:
(a) Amoco's estimate of sales volumes and value;
(b) All direct costs, expenses and XXXXX overhead charges billed by
third parties to Amoco, including without limitation settlement to
leases and other liquidated monetary obligations;
(c) Estimated capital expenditures recorded by Amoco;
(d) Amoco's fee; and
(e) Net estimated cash available for transfer.
If the cash available for transfer shown on Exhibit "1" is positive, Amoco
shall remit such amount to Xxxxxx within thirty (30) days of delivery of the
Estimated Monthly Statement. If the cash available for transfer shown on
Exhibit "1" is negative, Xxxxxx shall remit such amount to Amoco within
thirty (30) days of Xxxxxx'x receipt of the Estimated Monthly Statement.
7. FINAL SETTLEMENT: As soon as reasonably practicable, but in no event
more than ninety (90) days after termination of this Agreement, Amoco shall
prepare and deliver to Xxxxxx a final statement in a form similar to Exhibit
"1" setting forth actual revenues, direct costs, expenses, XXXXX charges,
revenues returned to leases and capitalized expenditures for the Supplemental
Properties from May 1, 1998 through June 30, 1998 ("Final Statement").
Within forty-five (45) days after receipt of the Final Statement, Xxxxxx
shall deliver to Amoco a written report containing any changes that Xxxxxx
proposes be made to the Final Statement. If Xxxxxx fails to timely deliver
the written report to Amoco containing Xxxxxx proposals to be made to the
Final Statement, the Final Statement delivered by Amoco shall be deemed to be
true and correct and the same shall be binding on and non-appealable by the
parties. The parties shall undertake to agree with respect to the amounts
due no later than thirty (30) days after Amoco's receipt of Xxxxxx'x report.
If the parties fail to agree within such thirty (30) day period, the disputed
items shall be resolved by submitting the same to a firm of independent
nationally recognized accountants mutually acceptable to the parties (the
"Accounting Referee"). The Accounting Referee shall resolve the dispute
within thirty (30) days after having the relevant materials submitted for
review. The decision of the Accounting Referee shall be binding on the
parties and non-appealable. The fees and expenses associated with the
Accounting Referee shall be borne equally by Amoco and Xxxxxx. The date upon
which all amounts are agreed to by the parties, whether by decision of the
Accounting Referee or otherwise, shall be herein called the "Final Settlement
Date." Any amounts owed by either party to the other as a result of such
adjustments shall be paid within five (5) days after the Final Settlement
Date.
8. INDEMNIFICATION: Amoco, its officers, agents, employees and Affiliates
(collectively "Amoco Group") shall not be liable for any claims, demands,
suits, causes of action, losses, damages, liabilities and costs (including
attorneys' fees and costs of litigation) ("Claims") arising out of or
resulting from the services provided by the Amoco Group under the terms of
this Agreement, except for matters caused by or resulting solely from a
criminal act, fraudulent act, gross negligence or willful misconduct of the
Amoco Group. Xxxxxx shall release the Amoco Group from and shall fully
protect, indemnify and defend the Amoco Group and hold each of them harmless
from and against any and all Claims arising out of or resulting from the
services provided by the Amoco Group under the terms of this Agreement,
regardless of cause or of any negligent acts or omissions of any of the Amoco
Group, other than matters caused by or resulting solely from a criminal act,
fraudulent act, gross negligence or willful misconduct of the Amoco Group.
9. ASSIGNABILITY: The rights, duties and privileges under this Agreement
shall not be assigned by the parties hereto without the prior written consent
of the non-assigning party; provided however, Amoco shall be entitled to
engage contract personnel to perform services contemplated under this
Agreement.
10. GOVERNING LAW: This Agreement shall be governed by and construed under
the laws of the State of Wyoming, excluding any conflict of law rules which
may require the application of laws of another jurisdiction.
11. NOTICES: All notices, requests and other communications shall be
provided in accordance with the terms of the Purchase and Sale Agreement.
12. OTHER AGREEMENTS: If there is a conflict between the terms of the First
Amendment and the terms of this Agreement, the terms of this Agreement shall
control the rights and obligations of the parties, but only to the extent
necessary to resolve the conflict. All capitalized terms not defined in this
Agreement, shall have the meaning contained in the Purchase and Sale
Agreement, as amended by the First Amendment.
IN WITNESS WHEREOF, the parties agree to the foregoing on the day and
year first set forth above.
AMOCO PRODUCTION COMPANY
By: _____________________________
Name: Xxx X. Xxxxxxx
Title: Attorney-in-Fact
ATTEST: XXXXXX PETROLEUM CORPORATION
By:___________________________ By: _____________________________
Name: Xxxx X. Xxxxxxxx, Xx. Name: Xxxxxx X. Xxxxxxx
Title: Assistant Secretary Title: Vice President
EXHIBIT "1"
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TO SUPPLEMENTAL PROPERTIES TRANSITION AGREEMENT
ESTIMATED MONTHLY STATEMENT
FOR THE PERIOD (MONTHLY DURING TRANSITION PERIOD)
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(In Thousands)
CASH FLOWS PROVIDED BY (UTILIZED IN)
OPERATING AND INVESTING ACTIVITIES:
Revenue $XXX
Less:
Direct costs, expenses and XXXXX charges XXX
Revenues returned to leases XXX
Capital expenditures XXX
Amoco's fee XXX
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CASH AVAILABLE FOR TRANSFER $XXX
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ATTACHMENT "5"
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UNION PACIFIC RESOURCES CORPORATION LANDS
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A portion of the interests being conveyed in accordance with the First
Amendment to the Purchase and Sale Agreement are owned, as to the mineral
interests, by Union Pacific Resources Company (UPRC), whose predecessors in
interest include Xxxxxxxx Petroleum Company (UPRC Lands). Said UPRC Lands
are subject to a confidential Land Grant Settlement Agreement dated August
20, 1990 between Amoco and Union Pacific Resources Company. The following
provisions have been included herein to comply with the terms thereof and
with the policies of Amoco Production Company relating thereto.
1. SURFACE ACCESS:
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1.1 Xxxxxx shall make no entry for the conduct of drilling operations
and no facilities shall be installed upon UPRC Lands until a Surface Owner's
Agreement has been secured by UPRC or until UPRC shall waive such
requirement. Without the prior written consent of the owner(s) thereof, no
entry shall be made upon or under any portion of any railroad right of way or
station grounds nor shall any oil and gas operations be conducted within two
hundred feet (200') of: (a) any railroad tracks or buildings upon such right
of way or station grounds, or (b) any building upon the Subject Lands in
which UPRC owns a mineral estate.
1.2 Xxxxxx shall negotiate and make any payments for the use of said
lands (except payments based upon or measured by production); and shall make
satisfactory arrangements to take care of damages to any surface owner's
lands, buildings and growing crops arising from or with respect to its
operations hereunder.
1.3 Xxxxxx shall bury all pipelines below plow depths where they cross
cultivated lands; shall construct gates or, at Xxxxxx'x option, shall install
cattle guards where necessary for crossing fenced lands in connection with
operations conducted hereunder and will keep such gates or cattle guards in
repair and all gates closed.
2. NON-DEVELOPMENT:
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2.1 Notwithstanding anything to the contrary herein contained, it is
agreed that Xxxxxx shall reassign to Amoco, free of any burden or encumbrance
created by through or under Xxxxxx, within two (2) years of the effective
date hereof [NOTE, THIS PERIOD CANNOT EXTEND PAST AUGUST 31, 1998], all of
the UPRC Lands excluding and excepting all acreage and depths included in:
(a) each governmental Section or spacing unit if larger than a Section, on
which there is then located a well capable of production in paying
quantities; (b) each governmental Section any portion of which is pooled or
unitized with lands on which there is then located a well that is capable of
production in paying quantities; (c) each governmental Section all or a
portion of which is fully committed to an approved Federal unit; and (d) each
governmental Section in which drilling operations have been commenced and are
thereafter diligently prosecuted in accordance with the applicable lease
terms.
2.2 On or before June 1, 2005, Xxxxxx shall execute and deliver to
Amoco a reassignment of all UPRC Lands or portion thereof then held by Xxxxxx
or its successor(s) insofar and only insofar as said UPRC Lands or portion
thereof cover those depths and formations lying deeper than one-hundred (100)
feet below the stratigraphic equivalent of the deepest formation in the
deepest thrust plate penetrated if applicable or in the event no thrust plate
is penetrated, deeper than one-hundred (100) feet below the stratigraphic
equivalent of the deepest formation from which a well located on the Section,
or on lands pooled or unitized therewith, is producing or capable of
production in quantities sufficient to pay the cost of producing operations
attributable to such well and provide a positive cash flow.
3. COST REPORTING:
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3.1 Within thirty (30) days of the commencement of any well drilled on
UPRC Lands, or on lands spaced or pooled therewith, Xxxxxx shall furnish
Amoco a completed A.F.E. for said well.
3.2 Within thirty (30) days of the completion of any such well Xxxxxx
shall report its actual costs of drilling, testing and completing or plugging
and abandoning if a dry hole (Drilling Costs).
3.3 Upon Amoco's request, Xxxxxx shall furnish to Amoco a statement
showing its actual expenditures of Drilling Costs for any xxxxx then in
process of drilling or completing hereunder from beginning up to the date of
such request.
3.4 In the event Xxxxxx fails to furnish Amoco the cost information
required or requested pursuant to this provision, and should Xxxxxx fail to
provide such information within thirty (30) days of its receipt of Amoco's
written notice of such failure, then the interest of Xxxxxx in the
wellbore(s) for which information was requested, the equipment therein or
appurtenant thereto and production therefrom, together with its interest in
the UPRC Lands in the spacing unit or other unit for such well, shall
immediately revert to Amoco and Xxxxxx shall execute and deliver to Amoco all
documents necessary to evidence the reversion.
4. GEOLOGICAL REQUIREMENTS:
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4.1 In addition to any geological information to be furnished to Amoco
hereunder, Xxxxxx shall furnish to UPRC the geological information and
notices with respect to any well drilled on UPRC Lands.
5. TERMINATION BY ELIMINATION:
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5.1 The interest of Xxxxxx in any UPRC Lands which are eliminated from
an approved Federal unit or other pooling unit shall, in the absence of a
well which is capable of production in paying quantities located thereon,
terminate on the effective date of such elimination and Xxxxxx shall reassign
to Amoco, within thirty (30) days of such termination, all of its right title
and interest in and to such excluded UPRC Lands free and clear of any burden
or encumbrance crated by, through or under Xxxxxx.
6. PERMANENT CESSATION OF PRODUCTION:
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6.1 With respect to each Section of UPRC Lands, no part of which is
subject to the terms of a Federal Unit Agreement, within thirty (30) days of
permanent cessation of production (permanent cessation of production being
defined as: more than sixty (60) days elapsing between the cessation of
production and the re-establishment of production or commencement of drilling
or reworking operations) from the last well capable of production within said
Section or the conclusion of drilling or reworking operations without
re-establishment of production within said Section, as the case may be,
Xxxxxx shall be deemed to have relinquished and shall reassign to Amoco,
within thirty (30) days of such relinquishment, all of its right title and
interest in and to such Section of UPRC Lands free and clear of any burden or
encumbrance created by, through or under Xxxxxx.
6.2 This Article 6 does not cover cessation of production due to the
shutting in of a gas well which is otherwise capable of production in paying
quantities.
7. ROYALTY TERMINATION:
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7.1 Amoco shall notify Xxxxxx of any claim of UPRC, acting as Lessor of
all or part of the Subject Lands, that royalty has not been paid, whereupon
Xxxxxx shall have sixty (60) days from receipt of such notice to make the
royalty payment. In the event the payment is not timely made and Xxxxxx'x
reasons for withholding payment are not bona fide, Xxxxxx shall be deemed to
have relinquished and shall, within thirty (30) days of the termination of
the above sixty (60) day period, execute and deliver a reassignment of its
interest in that portion of the Subject Lands subject to UPRC's claim
(including the wellbore, the equipment appurtenant thereto and production
therefrom, if said wellbore is located on UPRC Lands) free and clear of any
burden or encumbrance created by, through or under Xxxxxx.
8. SHUT-IN XXXXX:
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8.1 After September 1, 2005, any interests earned by Xxxxxx hereunder
in any Section of UPRC Lands which are held by production by virtue of a
shut-in gas well shall terminate when and if such well remains shut in for a
period of nine (9) consecutive months. Should Xxxxxx'x interest terminate
pursuant to this Article 8, then Xxxxxx shall, within thirty (30) days of
such termination, reassign to Amoco all of its right title and interest in
and to such Section of UPRC Lands free and clear of any burden or encumbrance
created by, through or under Xxxxxx.
9. REASSIGNMENT OF ACREAGE:
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9.1 Any reassignment permitted or required under this Agreement shall
be made free and clear of all lease burdens created by, through or under
Xxxxxx.
9.2 The provisions of this Article 9 relative to the relinquishment and
reassignment of interests earned by Xxxxxx shall not be construed to relieve
or otherwise affect any obligations which Xxxxxx may have, under this or any
other agreement, to plug and abandon xxxxx drilled on the Subject Lands or to
remove facilities and restore the surface.
