MORTGAGE

EXHIBIT 10.5

This MORTGAGE is entered into effective as of this 9th day of November 2023, by Tilloo Exploration and Production, LLC, a Texas limited liability company (“Mortgagor”), whose address is 0000 Xxxxx Xxxxxx, Xxxxx 000, Xxxxxx Xxxxx 00000, in favor of Pacific Energy Development Corp., a Nevada corporation (“Mortgagee”), whose address is 000 Xxxxx Xxxxxxx Xxxxxx XX, Xxxxx 000, Xxxxxxx, Xxxxx 00000.

WITNESSETH:

For and in consideration paid, the receipt and sufficiency of which is hereby acknowledged, Xxxxxxxxx has mortgaged, granted, bargained, sold, assigned and conveyed, and by these presents, does mortgage, grant, bargain, sell, assign and convey unto Mortgagee, with mortgage covenants, the following:

A. The oil and gas leases, subleases and other leaseholds, interests in fee, carried interests, reversionary interests, net profits interests, royalty interests, forced pooled interests, overriding royalty interests, mineral interests and other property and interests more fully described in Exhibit A, to the extent such interests cover the lands described in Exhibit A, and all rights incident thereto and derived therefrom, together with all rights, benefits and powers conferred upon the holder thereof with respect to the use and occupation of the lands covered thereby (the “Leases”).

B. The xxxxx and units (including any drillable locations (PUDs)) more fully described on Exhibit B (the “Xxxxx”) and all lease and surface equipment, flowlines, pipelines and appurtenant thereto used or held for use in connection with the operation or production of the Assets, and all personal property, fixtures, plants, improvements, joint accounts, easements, rights-of-way and appurtenances used or related to the Xxxxx or the Leases.

C. Operating agreements, pooling and unitization agreements, declarations of pooling or unitization, communitization agreements, pooling orders, farmout and farmin agreements, exploration agreements, area of mutual interest agreements, participation agreements, assignments, oil sales contracts, gas sales, gas processing, gas gathering, and transportation agreements, surface leases, rights-of-way, easements, servitudes, permits, licenses, and other instruments and agreements pertaining to the Leases or the Xxxxx (the “Existing Contracts”).

D. Without limiting the foregoing, all other right, title and interest of Seller of whatever kind or character, whether legal or equitable, vested or contingent, in and to the oil, gas and other minerals in and under or that may be produced from or attributable to the lands described in Exhibit A, including but not limited to all Seller’s oil and gas interests located in Lea County, New Mexico and in Township 8 South, Range 34 East and Range 35 East, 6^th NMPM, situated in Roosevelt County, New Mexico, whether such interests are specifically described in Exhibit A, and even though such interest of Seller may be incorrectly described in or omitted from Exhibit A.

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X. Xxx files, records and data relating to the items described in subsections A through D above including well data, logs, geophysical data, engineering records, title records (including abstracts of title, title opinions, title reports and title curative documents), contracts, correspondence, and all related matters in the possession of Seller (the “Records”).

F. All proceeds of, additions and accretions to, substitutions and replacements for, and changes in any of the property described above.

(all of the property described hereinabove is sometimes hereinafter referred to as the “Mortgaged Property”).

Xxxxxxxxx does hereby covenant that it is lawfully seized of the Mortgaged Property; that the Mortgaged Property is free from encumbrances other than those held by Mortgagee, and that Mortgagor will warrant and defend title to the Mortgaged Property against the lawful claims and demands of all persons whomsoever. This Mortgage secures the performance of the following obligations:

	(a)	That certain Promissory Note executed by Xxxxxxxxx, payable to the order of Mortgagee, dated November 9, 2023, in the original principal amount of One Million One Hundred and Twenty Two Thousand Four Hundred Thirty-Six Dollars and 00/100 ($1,122,436.00). The Promissory Note contains such other provisions as are set forth therein, and reference is hereby made to the Promissory Note for all purposes; the aforesaid note is hereafter sometimes referred to herein as the “Note” or “Promissory Note”.

	(b)	Any and all indebtedness and other obligations owed by Xxxxxxxxx, to Mortgagee now or hereinafter incurred; and

	(c)	All other loans and future advances made by Mortgagee to Mortgagor and all the debts, obligations and liabilities of Mortgagor of every kind and character now or hereafter existing in favor of Mortgagee, whether direct or indirect, primary or secondary, joint or several, fixed or contingent, and whether originally payable to Mortgagee or to a third party and subsequently acquired by Mortgagee, it being contemplated that Mortgagor may hereafter become indebted to Mortgagee for such further debts, obligations and liabilities.

The indebtedness referred to hereinabove, and all renewals, extensions and modifications thereof, and all substitutions therefor, in whole or in part, are hereinafter referred to as the “secured indebtedness” or the “indebtedness secured hereby.”

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THE ORIGINAL PRINCIPAL INDEBTEDNESS UNDER THE PROMISSORY NOTE, TOGETHER WITH ALL FUTURE OR ADDITIONAL ADVANCES OR ANY AND ALL ADDITIONAL LOANS WHICH MORTGAGEE MAY ELECT TO MAKE TO MORTGAGOR SHALL NOT EXCEED AT ANY ONE TIME THE SUM OF TWO MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($2,500,000.00), WHICH SHALL CONSTITUTE THE MAXIMUM AMOUNT AT ANY TIME SECURED HEREBY.

Xxxxxxxxx further covenants and agrees for Xxxxxxxxx and Xxxxxxxxx’s heirs, successors and assigns as follows:

1. Mortgagor shall keep the Mortgaged Property in good condition and repair and shall not commit or allow waste of the Mortgaged Property. Mortgagor shall not remove or demolish the Mortgaged Property or any part of it, or alter, restore or add to the Mortgaged Property, or initiate or allow any change in any zoning or other land use classification which affects the Mortgaged Property or any part of it, except with Mortgagee’s express prior written consent in each instance.

2. If all or part of the Mortgaged Property becomes damaged or destroyed, Xxxxxxxxx shall promptly and completely repair and/or restore the Mortgaged Property in a good and workmanlike manner in accordance with sound building practices, regardless of whether or not Mortgagee agrees to disburse insurance proceeds or other sums to pay costs of the work of repair or reconstruction.

3. Mortgagor shall not commit or allow any act upon or use of the Mortgaged Property which would violate any applicable law or order of any governmental authority, whether now existing or later to be enacted and whether foreseen or unforeseen, or any public or private covenant, condition, restriction or equitable servitude affecting the Property. Mortgagor shall not bring or keep any article on the Mortgaged Property or cause or allow any condition to exist on it, if that could invalidate or would be prohibited by any insurance coverage required to be maintained by Mortgagor on the Mortgaged Property or any part of it under this Mortgage.

4. Mortgagor shall perform all other acts which from the character or use of the Mortgaged Property may be reasonably necessary to maintain and preserve its value.

5. To pay or cause to be paid, before the same become delinquent, all lawful taxes and assessments of every kind levied and assessed against the Mortgaged Property; and to promptly pay or cause to be paid all laborers and materialmen for labor and material furnished in connection with the development, operation and equipping of said property, and to permit no such obligations to become liens against the Mortgaged Property; and herein shall be deemed a waiver of the priority of the lien hereof as against the claims of any such laborer or materialmen, or to give to any such laborer or materialmen any rights hereunder, or the right of action against this covenant against the Mortgagor or Mortgagee.

6. If the Mortgagor shall fail to pay any claims for labor or material furnished for the use upon the Mortgaged Property which might become liens thereon or to pay any taxes, all as above provided, before the same become delinquent, or to pay any other sums reasonably necessary for the performance of the covenants and agreements herein contained, then the same may be paid by the Mortgagee, but there shall be no duty to do so. Upon such payment the same shall become a part of the debt hereby secured payable on demand and shall bear interest from the date of such payment by the Mortgagee at the rate of interest until paid as provided in the Promissory Note; or, at the option of the Mortgagee, if Xxxxxxxxx fails to pay the same within 30 days after written demand therefor, the entire principal indebtedness under the Promissory Note may be declared immediately due and payable and may be collected in any manner provided herein or by law.

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7. Mortgagor shall provide and maintain in force at all times all risk property damage insurance on the Mortgaged Property and such other type of insurance on the Mortgaged Property as may be required by Mortgagee in its reasonable judgment. At Mortgagee’s request, Mortgagor shall provide Mortgagee with a counterpart original of any policy, together with a certificate of insurance setting forth the coverage, the limits of liability, the carrier, the policy number and the expiration date. Each such policy of insurance shall be in an amount, for a term, and in form and content satisfactory to Mortgagee. In addition, each policy of hazard insurance shall include a loss payable endorsement in favor of Mortgagee, in a form acceptable to Mortgagee.

8. This Mortgage is upon the statutory mortgage condition for the breach of which it is subject to foreclosure as provided by law. In addition:

	(1)	If default be made in the payment of any part of the indebtedness hereby secured when and as the same becomes due in accordance with the terms and provisions of the Promissory Note evidencing the same or this Mortgage; or

	(2)	If there be any default by Mortgagor hereunder, other than in the payment of money as provided in Paragraph (1) above, then Mortgagee shall give Mortgagor written notice by certified mail setting out such default, and if Mortgagor fails to cure said default within 30 days from the mailing of such notice; provided, however, the Mortgagee is not obligated to provide more than three (3) such notices during any twelve (12) month period; or

	(3)	If there be any default by Xxxxxxxxx under the terms of the Promissory Note or of any note now or hereafter evidencing the secured indebtedness to Mortgagee or if at any time Mortgagee deems itself insecure and in good faith believes that the prospect of payment of the Promissory Note and indebtedness secured hereby is impaired; or

	(4)	If Mortgagor or its successors in interest applies for relief under any bankruptcy or other law for the relief of debtors, suffers, or is adjudicated bankrupt or insolvent under any federal or state law, or makes an assignment for the benefit of creditors, or applies for or suffers the appointment of a receiver, or if a receiver be appointed by any court for any of the Mortgaged Property, and such receiver is not discharged within 30 days after the date of such appointment;

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then in any event, at the option of the Mortgagee, the principal sum due under the Promissory Note evidencing the indebtedness hereby secured, together with accrued interest thereon, and all other sums secured by this Mortgage, shall immediately become due and payable, and the Mortgagee may have any and all of the following remedies, to-wit:

	(a)	The Mortgagee may take possession of the Mortgaged Property and maintain, operate and control said property, and apply all proceeds derived therefrom, after the payment of royalties and operating expenses, to the payment of the indebtedness secured hereby, until the obligations hereby secured are fully paid, the Mortgagor agrees to give the Mortgagee immediate peaceable possession.

	(b)	The Mortgagee may institute suit to foreclose this Mortgage in any court having jurisdiction. In any such suit the Mortgagee may, at its option, apply for and be entitled to, as a matter of right and without proof of insolvency, fraud, insecurity or mismanagement on the part of the Mortgagor, the appointment of a receiver to take possession, operate, and preserve the Mortgaged Property. Xxxxxxxxx agrees that such receiver may be appointed to take possession of, hold, maintain, operate and preserve said property, and apply the proceeds of the sale thereof to the payment of the indebtedness due the Mortgagee until such indebtedness and costs are fully paid; and said receiver may be authorized to sell and dispose of said Mortgaged Property under orders of the court appointing him such receiver.

9. To the extent allowable under the laws of the state in which the Mortgaged Property is located, the redemption period is specifically waived or if the laws in the state do not permit such rights to be waived, the redemption period is specifically reduced to the minimum period of time allowable by statute, and specifically for any Mortgaged Property located in the State of New Mexico, the redemption period hereunder shall be reduced to one month.

10. All of the terms, covenants and agreements contained in this Mortgage shall be binding upon Mortgagor, its successors and assigns, and shall be deemed to be covenants running with the land, estate or interest in the land, and all such terms, conditions, covenants and agreements shall inure to the benefit of Mortgagee, its successors or assigns. Pronouns in number and gender, and verbs in their number shall be construed to conform to the number and sex of the parties hereto wherever necessary in a particular clause or phrase hereof. Any notices provided for herein shall be given by regular mail, unless certified mail is specified herein, and all such notices shall be given to the parties at the addresses stated hereinabove or at such other addresses as the parties may designate in writing by certified mail from time to time in the future. Time shall be of the essence in the performance by Xxxxxxxxx of the obligations hereunder.

11. Xxxxxxxxx agrees to pay all costs in the preparation, filing and recording of this Mortgage in connection herewith, and Xxxxxxxxx agrees to pay all attorneys’ fees and costs incurred if Mortgagee is brought into litigation concerning the title to the Mortgaged Property or if the Promissory Note or other secured indebtedness is placed in the hands of an attorney for collection. Such costs and expenses shall become part of the indebtedness secured hereby if Xxxxxxxxx fails to properly pay the same.

12. This Mortgage shall be governed and construed in accordance with the laws of the State of New Mexico.

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IN WITNESS WHEREOF, this Mortgage is executed by Xxxxxxxxx as set forth below.

	MORTGAGEE:

	PACIFIC ENERGY DEVELOPMENT CORP.

	By:	/s/ X. Xxxxxxx Xxxxxx
	X. Xxxxxxx Xxxxxx, President

	MORTGAGOR:

	TILLOO EXPLORATION AND PRODUCTION, LLC

	By:	/s/ Xxxxxxx X. Xxxxxxxxxx Xx.
	Xxxxxxx X. Xxxxxxxxxx Xx., its Managing Member

STATE OF ____________________ )

) SS.

COUNTY OF __________________ )

The foregoing instrument was acknowledged before me this ___ day of ____________, 2023, by Xxxxx Xxxxxxxxxx, as the Managing Member of TILLO EXPLORATION AND PRODUCTION, LLC, a Texas limited liability company.