January 25, 1999
BETAustralia, LLC
000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xx. 92660
Attention: Xxxxx Xxxxxxxxxxx
Re: ATP 554 P
Queensland, Australia
Gentlemen:
This letter when fully executed, including the terms and provisions provided for
herein, shall constitute an agreement between Dyad - Australia, Inc. (Dyad) and
BETAustralia LLC (Beta).
Dyad - Australia, Inc. is the holder of an exploration permit described as
Authority to Prospect 554P in Queensland, Australia. The permit covers an area
of 35 blocks as described in Exhibit A attached hereto.
Dyad has entered into an agreement with Duke Energy International of Brisbane,
Queensland for the funding of additional seismic data acquisition and the
drilling of an exploration well. Under the terms of the agreement with Duke
Energy, a copy of which is attached and made a part of this agreement, Dyad -
Australia will have the opportunity to buy into the exploratory well on a cost
only basis and after the well has been drilled and evaluated. Dyad also has the
option of postponing its buy-in until later stages in the development program.
The exact terms are more fully described in the agreement between Duke and Dyad.
Subject to the terms of this agreement Xxxx agrees to assign to Beta 20% of
Xxxx's rights under the first and subsequent Dyad Buy-In Options set out on page
2 and 3 of the Duke agreement specifically reserving to Dyad the existing 8%
royalty interests covered in the Duke agreement under "Existing Royalties." For
example, assuming Dyad and its group of investors elects to buy in at Stage 1 of
the program, thereby acquiring a 50% interest, the net working interest to Beta
shall be 10% (20% x 50%).
Should the Dyad group elect to acquire an economic interest under Stage 2 of the
Duke agreement, Beta's interest shall be 20% of that acquired interest.
(i.e.:20% x Interest.)
Assignment of the above described interest is subject to the following terms and
conditions:
1. Xxxx agrees to pay Dyad - Australia, Inc. a sum of US
$100,000 at the time this letter agreement is
executed and delivered to Dyad.
2. An Operating Agreement between Dyad-Australia, Inc.,
as Operator, or a third party acceptable to Xxxx and
Duke, as Operator, and Duke, as Non-Operator, the
terms and conditions of which Operating Agreement are
to be negotiated by and mutually acceptable to Xxxx
and Xxxx, at their sole discretion.
1. The election to either buy into the exploratory well and prospect at
Stage 1 of the Duke agreement or at some point in Stage 2, shall be by
a vote of the majority of the interest owners based on their
percentage of ownership in the Duke agreement. The parties to this
agreement and their percentage of ownership are set out in Exhibit
"A." Each party shall have 10 days after receipt of written notice by
Xxxx of the election to or not to Buy-In pursuant to the Duke
agreement. Failure of a party to forward its ballot within the 10-day
period shall be deemed a vote not to Buy-In.
3. In the event the majority percentage of ownership elects to
participate in a Buy-In under the Duke agreement, Xxxx will give each
party voting against said Buy-In the chance to participate in the
decision of the majority by giving Xxxx written notice of its election
to participate in the Buy-In within 5 days of notice from Dyad of the
election results. In the event said party still does not wish to
participate in the majority decision or fails to respond to the
election notice within said 5-day period, the non-participating party
shall forfeit all of his, her and/or its interest in all rights in the
Duke agreement and agrees to execute any documents reflecting said
forfeiture. Thereafter, each participating party, after receipt of
written notice from Dyad, shall advise Dyad, within 5 days of written
notice from Dyad, of its desire to (a) limit its ownership in the
agreement to the interest reflected on Exhibit "A" or (b) assume its
proportionate part of the non-participating parties' interest. Failure
to advise Dyad shall be deemed an election to limit the participating
party to its original interest. Following the election to purchase an
economic interest under the Duke agreement and subsequent election to
or not to bear more interest, Xxxx will invoice each participating
party for his, her and or its proportionate share of all costs,
including any additional share assumed from the forfeited interest.
Thereafter, each party shall have 30 days after receipt of said
invoice within which to pay the invoice amount either by wire transfer
and/or cashier's check. In the event any party fails to make the
required payment within 5 days after written notification of said
party's failure to make the payment within the 30-day period, said
party shall forfeit all of his, her and/or its interest in all rights
in the Duke agreement and agrees to execute any documents reflecting
said forfeiture.
4. The interest herein conveyed is subject to a 10% royalty to the State
of Queensland, Australia and a total of 8% overriding royalty which is
further described in the Duke agreement under "Existing Royalties".
6. A preferential right to purchase is retained by Dyad - Australia, Inc.
with respect to the sale or transfer of the interest here-in conveyed.
A party desiring to sell any or all of its interest created under this
agreement shall notify Dyad - Australia in writing of the name of
purchaser and the terms of the proposed sale. Dyad shall have a period
of 30 days in which to purchase the interest under the same terms and
price or elect not to acquire the interest. Specifically excluded from
the preferential right to purchase is the transfer of interest to a
subsidiary or affiliate of Beta.
7. Any expenses incurred by Xxxx in the management and administration of
the subject venture including a $250 per month overhead fee shall be
reimbursed proportionally to Dyad by the parties to this agreement.
8. This agreement shall be construed, governed and enforced by the laws
of the County of Midland, State of Texas, and all payments are payable
in Midland County, Texas unless otherwise instructed by Dyad.
If the foregoing terms are acceptable please indicate Beta's acceptance by
returning an executed notarized copy of this agreement to Xxxx's office's within
15 days of the above date.
Sincerely yours,
DYAD - AUSTRALIA, INC.
/s/Xxx X. Xxxxxx
President
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BETA OIL & GAS, INC.
By:/s/Xxxxx Xxxxx Title: President
STATE OF _________________________ ss.
ss.
COUNTY OF________________________ ss.
BEFORE Me, the undersigned authority, on this day personally appeared
__________________________________, known to me to be the person whose name is
subscribed to the foregoing instrument, as_____________________________
of_______________________________ and acknowledged to me that He executed the
same for the purposes and consideration therein expressed, in the capacity
stated, and as the act and deed of said corporation. Given under my hand and
seal of office this the _____ day of_______________, 19_____.
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Notary
Public
