Exhibit 10.4
KEROGEN RESOURCES, INC.
October 12, 2005
Calibre Energy, Inc.
0000 X Xxxxxx XX
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, Snr. VP of Operations
RE: Xxxxxxxxx Agreement Fort Worth Basin
Dear Xx. Xxxxx:
Calibre' Energy Company (hereinafter "you") has elected to participate with
Kerogen Resources, Inc. ("Kerogen") in that certain Purchase and Sale Agreement
dated October 12, 2005 by and between Kerogen Resources, Inc and Xxxx-Xxxxxx
Energy, Inc. ("WCE Deal"), which is subject to the terms and conditions of a
Purchase and Sale Agreement dated October 12, 2005 by and between Xxxxxxxxx
Petroleum Corp. and Xxxx-Xxxxxx, Inc. (Xxxxxxxxx Deal) both purchase and Sale
Agreements are attached as Exhibits "A" and "B" respectively.
Pursuant to the terms of the Xxxxxxxxx Deal, Xxxx-Xxxxxx Energy, Inc. will earn
25% of 8/8ths Working Interest in and to certain lands consisting of
approximately 4662 net acres in Johnson, Tarrant, Xxxxxx, and Xxxxxx Counties
Texas. Pursuant to the terms of the WCE Deal, Kerogen will earn an undivided 50%
of the Xxxx-Xxxxxx Energy 25% interest in the same lands. Kerogen will earn such
interest by assuming and paying 50% of all of the costs and obligations of
Xxxx-Xxxxxx Energy, Inc. as set forth in the Xxxxxxxxx Deal.
Kerogen will invoice you and you will pay for all of the costs incurred by
Kerogen pursuant to the terms and conditions of the WCE Deal (including but not
limited to leases, title and seismic expenses) for each well drilled in the
contract area of the Xxxxxxxxx deal until each well drilled there under is
completed fraced and tied into the meter, including tap fee (if any). At which
point, Calibre will receive a recordable assignment of 10.9375% WI in the well
and the spacing unit tied thereto. Kerogen will retain a 1.5625% WI in the well
and acreage attributable thereto. All percentages will be proportionately
reduced in the same manner as described in the Xxxxxxxxx and WCE deals. All
assignments delivered pursuant to the terms of this Agreement will be without
warranty of title express or implied.
As a well is proposed under the terms of the Xxxxxxxxx deal, you will promptly
be notified and be presented with a recommendation as to Kerogen's election to
participate in the drilling proposal. You will have 15 days to make an election
to participate in the proposed well. In the event you elect to participate in
the well, you will fax a response to Kerogen within that 15 day period and wire
the DHC costs set forth in the Proposal AFE
to Kerogen within 2 business days. Kerogen will make the formal election on your
behalf. In the event you elect not to participate in said well (which will occur
automatically should you fail to make a timely election by providing written
consent and wiring the funds as described herein), you will forfeit the right to
earn an assignment in the well, the leases for that well and Prospect as that
term is used in the Xxxxxxxxx Deal, which have not been previously earned.
Kerogen will then own the interest from the WCE Deal free and clear of this
agreement as that interest applies to the prospect, which has not previously
been assigned.
Your interest and rights will be subject to all of the terms and conditions of
the agreements attached as Exhibits "A" and "B".
Once Kerogen delivers the Assignment, terms of this Agreement will be of no
further force and effect as to the earned acreage. The parties will each execute
the JOA and become responsible for their interests,
Please note your agreement by signing and returning the attached copy of this
letter.
Sincerely
Kerogen Resources, Inc.
By: /s/ Xxxxxx X. Xxxxxx
-------------------------
Xxxxxx X. Xxxxxx
President
Calibre Energy, Inc.
By: /s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx
Snr. VP Operations
