Exhibit 10.1
[Bridas Energy USA, Inc. letterhead]
April 30, 2003
Cadence Resources Corporation
P.O. Box 2056
Walla Walla, Washington 99362
Re: Joint Exploration Agreement
Northeast Logansport Prospect (the "Prospect")
DeSoto Parish, Louisiana
Gentlemen:
This letter when accepted by you in the space provided below, will
constitute a joint exploration agreement that evidences the understandings and
obligations between Bridas Energy USA, Inc., a Delaware corporation ("BEUSA")
and Cadence Resources Corporation, a Utah corporation ("Cadence"), relating to
the exploration and development of the Prospect (this "Agreement").
1. PROSPECT LEASES
------------------
Cadence is the owner of leasehold working interests in the oil and gas
leases covering lands located in Sections 27, 28, 33, 34, and the E/2 of both
Sections 29 and 32, T-13-N, R-15-W, DeSoto Parish Louisiana, which leases are
described in Exhibit "A-1 " attached to this Agreement (the "Prospect Leases").
The lands covered by the Prospect Leases are depicted by yellow shading on the
plat attached to this Agreement as Exhibit "A-2" (the "Plat"). Cadence
represents that, its interests in the Prospect Leases are 100% working interest
and an approximate 80% weighted average net revenue interest.
2. PROSPECT ASSEMBLY COSTS
--------------------------
As part of the consideration for Xxxxxxx's execution and return of this
Agreement, BEUSA agrees to pay in cash to Cadence the sum of $50,000. Such
payment shall serve as reimbursement for BEUSA's share of the total of
geological, overhead, seismic, lease acquisition, drafting, and other generation
costs relating to the assembly of the Prospect. All subsequent acquisitions of
leases on lands covered by the AMI shall be borne proportionately by the parties
hereto according to their proportionate ownership set out below.
Cadence Resources Corporation
April 30, 2003
Page 2
3. INITIAL ASSIGNMENT
---------------------
Upon receipt of such consideration, Cadence shall assign to BEUSA, by
recordable conveyance containing a special warranty of title only, an undivided
55% leasehold working interest in the Prospect Leases. This undivided 55%
working interest shall be subject to its proportionate share of existing
landowners' royalties and an undivided 2% overriding royalty interest to be
assigned by Cadence to the generators of the Prospect. The reserved overriding
royalty interest shall be free of all cost and expense of drilling and
producing, but shall bear its proportionate share of all severance, production
and windfall profits taxes. The execution of this Agreement, the payment by
BEUSA of the cash consideration, the execution by the parties of the Operating
Agreement described below, and the execution by Cadence of the initial
assignment above shall occur on or before April 30, 2003 at a mutually
acceptable location (the "Closing").
4. ACREAGE SELECTION
--------------------
Within 60 days from the execution date of this Agreement, BEUSA shall
select, in writing furnished to Cadence, 640 acres covered by the Prospect
Leases (the "Selection Acreage"), which shall include the location for the first
well to be drilled on the Prospect. The Selection Acreage shall consist of one
(1) regular section, two (2) adjacent half-sections, or four (4) contiguous
quarter sections, each in the shape of a square.
5. INITIAL WELL
---------------
As additional consideration for this Agreement, BEUSA agrees to commence or
cause to be commenced the drilling of a well in search of oil and/or natural gas
in commercial quantities (the "Initial Well") on the Selection Acreage. The
Initial Well will be drilled at a location of BEUSA's choice. Drilling
operations shall be commenced on or before 150 days from the execution date of
this Agreement. The Initial Well shall be drilled in a good and workmanlike
manner to a depth of 10,000 feet or to the Cotton Valley formation, whichever is
the lesser depth (the "Contract Depth"). The Initial Well shall be drilled at
the sole risk and expense of BEUSA through completion and, if such well is
successfully completed as a producer of oil and/or gas in commercial quantities,
into the tanks or pipeline connection without cost to Cadence. Should BEUSA
elect to abandon the Initial Well, before or after making a completion attempt,
Xxxxxxx will have the right to assume operations thereof at its own risk for its
own account and will not deliver the Secondary Assignment provided below.
6. SECONDARY ASSIGNMENT FOLLOWING INITIAL WELL
----------------------------------------------
In addition to the 55% working interest in the Prospect Leases, as
conveyed by the initial assignment in Paragraph 3, Xxxxxxx hereby agrees to
convey an additional 20% working interest in
Cadence Resources Corporation
April 30, 2003
Page 3
the Prospect Leases when the Initial Well has been drilled to the objective
depth described in paragraph 5 (the "Secondary Assignment"). The Secondary
Assignment shall be limited to the Selection Acreage and shall be subject to its
proportionate share of existing landowners' royalties and an undivided 2%
overriding royalty interest. The reserved overriding royalty interest shall be
free of all cost and expense of drilling and producing, but shall bear its
proportionate share of all severance, production and windfall profits taxes.
7. OPERATING AGREEMENT
----------------------
Following completion of the Initial Well as a producer of oil and/or
natural gas, all operations hereunder shall be conducted pursuant to the terms
and provisions of the A.A.P.L. Form 610-1989 Model Form Operating Agreement
attached hereto as Exhibit "B" (the "Operating Agreement"), naming BEUSA as
Operator. BEUSA and Xxxxxxx agree to execute and file for record the Model Form
Recording Supplement to the Operating Agreement and Financing Statement attached
to the Operating Agreement. Each party agrees to abide by all of the terms,
provisions and conditions thereof; provided, however, in the event of a conflict
between the terms of this Agreement and those of the Operating Agreement, the
terms and provisions hereof shall prevail. The percentage interests in the
Prospect Leases to be owned by the parties to this Agreement are set forth as
follows:
Selection Acreage
-----------------
At closing
BEUSA
55%
Cadence 45%*
---------
100%
Upon Designating Selection Acreage
BEUSA 75%
Cadence 25%*
---------
100%
All Other Acreage
-----------------
At Closing and Thereafter
BEUSA
55%
Cadence 45%
---------
100%
Cadence Resources Corporation
April 30, 2003
Page 4
* Xxxxxxx's interest in the Initial Well shall be a carried working interest.
As such, Cadence shall not pay or bear any costs related to the
exploration, drilling, testing, equipping, completing, and producing the
Initial Well, and that such interest shall be cost-free to Cadence as to
the oil and condensate produced through the initial deposit of such oil or
condensate into the tanks, and, as to gas produced, through the initial
delivery of gas to the purchaser of same; provided, however, (i) that
Cadence shall have to pay and bear its proportionate share of the costs
related to the operation and maintenance of the Initial Well which occur
subsequent in time to the initial deposit of oil or condensate or initial
delivery of such gas and (ii) that Cadence shall also have to pay and bear
its proportionate share of the costs related to the recompleting, reworking
or plugging back of the Initial Well once completed as a producer of oil or
gas, as well as all of the costs related to the drilling and producing of
any xxxxx subsequent to the Initial Well.
8. SUBSTITUTE WELL
------------------
In the event the Initial Well fails to reach Contract Depth, BEUSA shall be
entitled to notify Cadence of the drilling of a "Substitute Well." A Substitute
Well shall be any well drilled as an attempt to reach Contract Depth, in the
event the Initial Well failed to reach Contract Depth. Such notice must be
submitted in writing to Cadence within thirty (30) days from the date that the
Initial Well is abandoned. The Substitute Well shall be drilled under the same
terms and conditions applicable to the Initial Well.
9. NONPERFORMANCE
-----------------
Should BEUSA fail or refuse to drill the Initial Well in the time and
manner as provided above (subject to standard regional conditions affecting
ability to gain access to the drillsite with a suitable drilling rig), BEUSA
shall forfeit all rights only in the Prospect Leases and this Agreement shall
terminate. BEUSA agrees to reconvey to Cadence all of its working interest in
the Prospect Leases, free and clear of any encumbrances or burdens created
subsequent to its acquisition of such working interest.
10. AREA OF MUTUAL INTEREST PROVISIONS
--------------------------------------
The Plat attached hereto as Exhibit "A-2" contains a description of an area
which shall be an Area of Mutual Interest (sometimes the "AMP") between the
parties hereto. The AMI is delineated on the Plat by a heavy, bold-faced
boundary line and is intended to be located one-half mile from all of the
outer-most boundaries of the Prospect Leases. If any party hereto acquires a
leasehold, mineral or royalty interest, farmout, seismic and/or drilling option,
including an extension or renewal of a Prospect Lease subject to this Agreement,
either directly or indirectly, located wholly or partly within said Area of
Mutual Interest, after the execution of this Agreement and during the term of
and until the Prospect Leases and/or interests subject to this Agreement
terminate, the acquiring party shall advise the other parties hereto in writing
of such acquisition, including the location of the
Cadence Resources Corporation
April 30, 2003
Page 5
acreage acquired and a full description of the leases, interests and terms of
such acquisition, including the purchase price. The party receiving such notice
shall, within thirty (30) days after receipt of notice (or within seventy-two
(72) hours thereafter when there is a well drilling or other exploration
activity in the area, the information from which will affect the value of the
interest offered), advise the acquiring party whether it elects to purchase its
share (such share being equal to the working interest owned at such time by the
party in the Prospect Leases) of the acquired interest, and, if so, such notice
shall be accompanied by payment for its share of such acquired interest. Upon
receipt of such payment, the acquiring party shall immediately execute and
deliver to such other party an assignment, with special warranty of title, of
such party's interest in the leasehold or other interest so acquired, insofar as
such interest covers lands located within the AMI, and such interest shall
thereupon become subject to this Agreement. If the notified party elects not to
purchase such interest, the interest acquired shall be free and clear of the
terms of this Agreement.
In the event more than two (2) parties ever own the Prospect Leases, the
provisions hereof shall not apply to acquisitions by any party hereto of a part
or all of the interest owned by any other party hereto or acquisitions via
mergers, corporate reorganizations or through consolidations with a subsidiary
or affiliated company, partnership or individual.
11. MISCELLANEOUS
-----------------
(a) This Agreement is not intended to create and shall not be construed as
creating a mining partnership or joint venture between the parties. For federal
income tax purposes this Agreement will be subject to the provisions set out in
Article IX of the Operating Agreement.
(b) Nothing herein shall be construed as authorization of one party hereto
to act as general agent for the other party nor to permit either party to act
for or on behalf of the other party outside the terms of the Agreement.
(c) Time is of the essence of each and every provision of this Agreement.
(d) The parties hereto agree to execute, acknowledge, and deliver, as
appropriate, such other and further instruments, documents, and assurances as
the other of them may reasonably require to effectuate the purpose and intent of
this Agreement.
Cadence Resources Corporation
April 30, 2003
Page 6
(e) All notices, requests, and other communications required or permitted
hereunder shall be in writing and shall be deemed to have been duly given if
delivered by hand (including, without limitation, by overnight courier),
transmitted by facsimile, or mailed, certified or registered mail (return
receipt requested) with postage prepaid to the applicable party as follows:
Bridas Energy USA, Inc.
0 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Mr. Xxxx Xxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Cadence Resources Corporation
c/o Xxxxxx X. Xxxx & Associates
00000 Xxxx Xxxxxxx, Xxxxx 000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
or to such other persons or entities or addresses as the applicable party shall
furnish to the other party in writing in accordance with this section. Delivery
of notices shall be effective only upon actual receipt by the intended recipient
(or in the case of facsimile transmission, the completion of such transmission
during the recipient's normal business hours).
(f) This Agreement, and the legal relations among the parties hereto
arising from this Agreement, shall be governed by and construed in accordance
with the laws of the State of Texas.
(g) This Agreement (including the Exhibits hereto and the other instruments
referred to herein) embodies the entire agreement and understanding of the
parties hereto in respect of the subject matter contained herein; there are no
restrictions, promises, warranties, covenants or undertakings, other than those
expressly set forth or referred to herein; and this Agreement supercedes all
prior agreements and understandings among the parties with respect to such
subject matter.
(h) Neither this Agreement nor any other agreement between the parties nor
any uncertainty or ambiguity herein or therein shall be construed or resolved
using any presumption against any party hereto or thereto, whether under any
rule of construction or otherwise. On the contrary, this Agreement and the other
agreements between the parties have been reviewed by the
Cadence Resources Corporation
April 30, 2003
Page 7
parties and their counsel and, in the case of any ambiguity or uncertainty,
shall be construed according to the ordinary meaning of the words used so as to
fairly accomplish the purposes and intentions of all parties hereto.
(i) The headings contained in this Agreement are inserted for convenience
only and shall not affect in any way the meaning or interpretation of this
Agreement.
(j) Any controversy or claim arising out of or relating to this Agreement,
or the breach thereof, shall be settled by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association ("AAA") by
three (3) arbitrators. Each party shall appoint one (1) arbitrator who shall be
an impartial and independent person. If a party fails to appoint an arbitrator
within thirty (30) days from the date a Demand to Arbitrate was made under Rule
6, the AAA shall make the appointment of the arbitrator. The two (2) arbitrators
thus appointed shall appoint the third arbitrator who shall be an impartial and
independent person. If said two (2) arbitrators fail to appoint the third
arbitrator within sixty (60) days from the date a Demand to Arbitrate was made
under Rule 6, the AAA shall make the appointment of the third arbitrator. Should
any of the arbitrators appointed die, resign, refuse or become unable to act
before a decision is given, the vacancy shall be filled by the method set forth
in this clause for the original appointment. The arbitration shall be held in
Houston, Texas. Judgment upon the award rendered by the arbitrators may be
entered in any court having jurisdiction thereof.
(k) This Agreement and all of the terms and provisions hereof shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, successors, representatives and assigns.
If the foregoing correctly sets forth our agreement relating to the matters
herein, please signify by signing two (2) copies of this Agreement, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument, and returning one (1) executed copy to our office
at the address shown above.
Very truly yours,
BRIDAS ENERGY USA, INC.
By: /s/ Xxxx Xxxxxx
-------------------------------------
General Manager
Cadence Resources Corporation
April 30, 2003
Page 8
ACCEPTED ND AGREED TO
this 30th day of April, 2003.
CADENCE RESOURCES CORPORATION
/s/ Xxxx X. Xxxx
-----------------------------
Xxxx X. Xxxx
Vice President
EXHIBIT "A"
Attached to and made a part of that certain Joint Exploration Agreement between
Bridas Energy USA, Inc.and Cadence Resources Corporation dated April 30, 2003
but effective May 1, 2003
RECORDING DATA
DESOTO PARISH, LA
LESSOR LEASE DATE REGISTRY NO.
Xxxxx X. Xxxxxx, separate property September 1, 2001 590361
Xxxxxxx Xxxxx X. Xxxxx, separate property September 1, 2001 590364
Xxxxxxxx X. Xxxxx, et ux September 1, 2001 590367
Xxxx X. Xxxxxxx September 1, 2001 590366
Xxxxx Xx Xxxxxxx Xxxxxx, separate property September 1, 2001 590362
Xxxxxx Xxxxxxx Xxxxxxx, separate property September 1, 2001 590365
Xxxx Xxxxx Xxxxx, separate property September 1, 2001 590356
Xxxxxx Xxxxxx Xxxxxx Xxxxx, separate property September 1, 2001 590352
Xxxxx Xxxxx Xxxxxxxxx, et ux September 1, 2001 590353
Xxxxxx Xxxxxx September 1, 2001 590355
Xxxxx X. Xxxxx, separate property October 1, 2001 590612
Xxxxx X. Xxxxxx October 1, 2001 590351
Xxxxxx X. Xxxxxx, Xx. October 1, 2001 590354
Smyrna Community Cemetary, Inc. October 1, 2001 590358
Xxxxx Xxxxx Xxxxxx, et al October 1, 2001 590349
Xxxxxxx Xxxxx, et ux November 1, 2001 590617
Smyrna Presbyterian Church, Inc. November 1, 2001 590357
Xxxxxxx Xxxxx Xxxxx, separate property November 1, 2001 590615
Xxxxxx Xxxx Xxxxxxx, separate property November 1, 2001 590618
Virginia Xxx Xxxxxxxx, separate property November 1, 2001 590563
Xxxxx Xxxxx Xxxxx, separate property November 1, 2001 590360
Xxx. Xxx Xxxxx Xxxxxxx, separate property November 1, 2001 590347
Xxxx X. Xxxxxx, separate property November 1, 2001 590348
Xxxx Xxxx Xxxxxx, separate property November 1, 2001 590350
Xxxxxx Xxxxxx Company, L.L.C. November 1, 2001 590610
Xxxxx X. Xxxxxxx, separate property September 1, 2001 590611
Xxx Xxxxxxxxxxx Xxxxxxx, et al September 1, 2001 590342
Xxxxxx X. Xxxxxxxxxxx, separate property September 1, 2001 590343
Xxx Xxxx Xxxxxxxxxxx, separate property September 1, 2001 590344
Xxxx Xxxxx Xxxxx, separate property September 1, 2001 590337
Xxxxx Xxxxx Xxxxxx, separate property September 1, 2001 590335
Xxxxxx X. Xxxxx, separate property September 1, 2001 590339
Xxxxxx X. Xxxxx, separate property September 1, 2001 590345
Xxx Xxxxx Xxxxx, separate property September 1, 2001 590346
Xxxxxx Xxxxx Xxxxxxx, separate property September 1, 2001 590359
Xxxxx Xxxxxx, et ux September 1, 2001 590340
Israelite Baptist Church September 1, 2001 590341
Xxxxxxx Xxxxxx, et ux September 1, 2001 590336
Xxxx Dell Xxxxxx Xxxxx, separate property April 4, 2002 596904
Charlotte Xxx Xxxxxxx, separate property April 4, 2002 596905
Xxxxxx Xxxxx Xxxxxxxxx, et ux April 4, 2002 596906
Xxxxxx Xxxxx, separate property April 4, 2002 596907
Xxxx Xxxxxxxx Xxxxxx, separate property April 4, 2002 596908
Xxx Xxxxxxxxxxx Xxxxxxx, separate property April 4, 2002 596910
Page 1 of 3
EXHIBIT "A"
Attached to and made a part of that certain Joint Exploration Agreement between
Bridas Energy USA, Inc.and Cadence Resources Corporation dated April 30, 2003
but effective May 1, 2003
RECORDING DATA
DESOTO PARISH, LA
LESSOR LEASE DATE REGISTRY NO.
Xxx Xxxxxx Xxxxxx Xxxxxxxx, separate property April 4, 2002 596911
Xxxxxxx Xxxxxxx Xxxxxx Xxxxxxx, separate
property April 4, 2002 596912
Xxxxxx X. Xxxxx, separate property October 1, 2001 590375
X. Xxxxxx Xxxxxxxx, Marital Trust October 1, 2001 590371
AT&N Xxxxxxxx Land Company, LLC October 1, 2001 590372
Xxxxx Xxxx XxXxxxx, III, separate property May 1, 2002 596909
Xxxxxxx X. Xxxxx, et ux October 1, 2001 590338
Xxxx Xxxxxxxx Xxxxxx, separate property October 1, 2001 590373
Xxxx Xxxxxxx Xxxxxx, separate property October 1, 2001 590377
Xxxxxx Xxxxx Xxxxxxx, separate property October 1, 2001 590378
Xxxxxx X. Xxxxxxx Xxxxx, separate property October 1, 2001 590380
Xxxxxxx Xxxxx Xxxxxxx Xxxxxxx, separate October 1, 2001 590379
property
Xxxx Xxxx Xxxxxxx Xxxx, separate propety October 1, 2001 590381
Xxx. Xxxxxxx Xxxx Xxxxx Xxxx, separate October 1, 2001 590613
property
Mrs. Xxxxxxx Xxxxx Xxxxx Xxxxx, separate October 1, 2001 590614
property
Xxx. Xxxxxxx Xxxxxx Xxxxx Xxxx, separate October 1, 2001 590616
property
Xxxx Xxxx Xxxxxxx Xxxx, separate property October 1, 2001 590374
Xxxxxx Dohrmiere Xxxxxx, separate October 1, 2001 590369
property
Xxxx Xxxxxxx Xxxxxx Xxxxxxx, separate October 1, 2001 596927
property
Xxxxxxxxxxx Xxxxxxx, separate property 596928
Xxxxxx X. Xxxxxx, et ux October 1, 2001 590368
Xxxxx Xxxxx, Xx., separate property October 1, 2001 590376
Xxxxxx X. Xxxxxxx, Executor of the Estate October 1, 2001 590370
of Xxxxxxxxx Xxxxx Xxxxxxx, deceased
Xxxxxx Xxxxxx Xxxxxx Xxxxx, separate June 1, 2002 596923
property
Xxxxxx Xxxxxx, husband of Xxxxxx Xxxxxx July 1, 2002 596913
Xxxxx Xxxxx Xxxxxx, husband of Xxxxx X. July 1, 2002 596914
Xxxxxxx Xxxxxx
Xxxxxx Xxxx Xxxxxx, husband of Xxxxxx X. July 1, 2002 596915
Bumum Xxxxxx
Xxxxxx Sixty, Inc. July 1, 2002 596916
Xxxxxxx X. Xxxxxxx, widow of Xxxxxx X. July 1, 2002 596917
Xxxxxxx
Xxxxxx Xxxxx Xxxxx, separate property July 1, 2002 596920
Xx. Xxxx Xxxxxx Xxxxxxx, a single man July 1, 2002 596921
Xxxxx Xxxxx Xxxx, separate property July 1, 2002 596922
Page 2 of 3
EXHIBIT "A"
Attached to and made a part of that certain Joint Exploration Agreement between
Bridas Energy USA, Inc.and Cadence Resources Corporation dated April 30, 2003
but effective May 1, 2003
RECORDING DATA
DESOTO PARISH, LA
LESSOR LEASE DATE REGISTRY NO.
Xxxxxx Xxxx Xxxxxx, husband of Xxxxxx X. July 1, 2002 596929
Xxxxxx Xxxxxx
Xxx. Xxxx Xxxxxx Register, separate July 1, 2002 596930
property
Xx. Xxxxxx X. "Xxxxx" Xxxxxxx, husband July 1, 2002 596918
of Xxxxx X. Xxxxxxx
Xxxxxx Dohrmiere Xxxxxx, husband of August 1,2002 596900
Xxxxx Xxxxx Xxxxxx
Xxxx Xxxx Xxxxxxxx, separate property August 1,2002 596919
Xxx Xxxx Xxxxxx, a single woman August 1,2002 596901
Xxxxx Xxxxx Xxxxxx, a single man August 1,2002 596902
Xxx Law Xxxxxx, widow of Xxxxxx X. Xxxxxx 1,2002 596903
Xxxxxx
Xxxxxxxx Xxxx Xxxxx, a single man August 1,2002 596924
Xxx. Xxxxxxx Xxxxx Xxxxxx, widow of Xxx Xxxxxx 1,2002 596925
Xxxxxx
Xxx X. Xxxxxx Lumber Company, L.P. August 12, 2002 596926
Xxxx Xxxxx Xxxx Xxxxx 15, 2003 600333
END OF EXHIBIT
Page 3 of 3
EXHIBIT A-2 - PLAT - OMITTED
