EXHIBIT 10.2
BLUE RIDGE ENERGY, INC.
00000 Xxxx Xxxxxxx
XXXXX 000
XXXXXXX, XXXXX 00000
PHONE: 000-000-0000
FACSIMILE: 830-358-3903
MARCH 3, 2003
Xx. Xxxxxx X. Xxxx
Blue Ridge Group, Inc.
000 Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxx 00000
RE: Letter Agreement Regarding Participation in Various Oil and Gas Prospects
Dear Xx. Xxxx:
This letter ("Agreement") when accepted by you, shall constitute the
agreement by which Blue Ridge Group, Inc. ("BRG"), shall acquire working
interest in all oil and gas prospects generated by Blue Ridge Energy,
Inc. ("XXXX").
WHEREAS, XXXX is an oil and gas exploration company with expertise in
the generation of oil and gas prospects, acquiring oil and gas leases covering
such prospects, and drilling xxxxx on and producing reserves from such
prospects,
WHEREAS, BRG desires to acquire the exclusive right to purchase
working interest, and otherwise participate with XXXX, in the drilling of xxxxx
on, and the production of reserves from all prospects generated by XXXX, under
the terms and conditions set forth in this Agreement,
WHEREAS, this Agreement shall be limited to only those prospects which
are wholly generated by geologists, geophysicists and contract consultants
directly employed by XXXX. Any prospects which XXXX may, from time to time,
acquire from outside sources are specifically excluded from this Agreement,
WHEREAS, XXXX and BRG desire to enter into this Agreement to more fully
set forth their understandings regarding their respective responsibilities,
rights and interests hereunder,
NOW, THEREFORE, in consideration of the benefits to accrue to XXXX and
BRG, it is agreed as follows:
1. RESPONSIBILITIES OF BLUE RIDGE ENERGY, INC.
X. XXXX shall generate geological and geophysical prospects which
are prospective for the exploration and production of oil and
gas,
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X. XXXX shall prepare an AFE showing the estimated cost to drill,
complete, equip, and put in to production, or plug and abandon
and restore the surface location surrounding the Initial Test
Well to be drilled on each prospect generated,
X. XXXX shall conduct Lease Checks, and make other appropriate
inquires, in a effort to gather as much information as possible
concerning the current status of the lease acreage which is
included in each prospect generated.
X. XXXX shall prepare a Participation Agreement for each prospect
generated in substantially the same form as that attached hereto
as Exhibit "A",
X. XXXX shall present to BRG the geological and geophysical merits
of each prospect generated, including but not by way of
limitation, a fully completed form similar to that attached
hereto as Exhibit "B", the AFE for the Initial Test Well to be
drilled thereon, and the Participation Agreement for such
prospect, all as provided herein,
F. Upon the timely election of BRG to participate in any prospect
presented to it, as provided hereunder, XXXX shall at its sole
cost and expense, attempt to acquire oil and gas leases covering
the prospect acreage,
G. Upon XXXX'X completion of lease acquisition, as provided in F.
above, XXXX shall make an assignment to BRG of its Ownership
Producing Well Interest (Working Interest and Net Revenue
Interest) as provided in the Participation Agreement covering
such prospect,
X. XXXX shall serve as operator for the drilling, completion and
operation of all xxxxx drilled on each prospect generated in
which BRG elects to participate.
2. RESPONSIBILITIES OF BLUE RIDGE GROUP, INC.
A. BRG shall pay to XXXX, a Prospect Assembly Cost equal to Two
Hundred Fifty and No/100 Dollars times the total number of net
mineral acres leased in each prospect generated, in which it
elects to participate,
B. BRG shall pay to XXXX a Management Fee equal to seven and
one-half percent (7.5%) of the total actual cost to drill,
complete, equip and put in to production, or plugged, abandoned
and restore the surface location surrounding, each well drilled
on each prospect in which it elects to participate,
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C. BRG shall pay one-hundred percent (100.0%) of the actual cost to
drill, complete, equip, and put in to production, or plug and
abandon and restore the surface location surrounding each well
drilled on each prospect in which it elects to participate.
3. OPTION TERMS.
A. BRG shall have a thirty (30) day decision period within which to
elect to participate in each prospect generated and subsequently
presented to it by XXXX, as herein provided. Such thirty (30)
day decision period shall commence on the day XXXX presents a
prospect to BRG and shall continue for thirty (30) consecutive
days thereafter,
B. In the event BRG timely elects to participate in a prospect
presented to it by XXXX, then BRG shall give XXXX written notice
of its election. Such written notice shall be deemed to have
been timely given by BRG if at any time prior to the expiration
of the thirty (30) day decision period such notice is delivered
as provided in 9. NOTICES, below.
C. In the event BRG elects not to participate in any prospect
presented to it by XXXX, or if BRG fails to give written notice
of its election to participate in any prospect presented to it
by XXXX prior to the expiration of the thirty (30) day decision
period, it shall be deemed that BRG has elected not to
participate in such prospect, and such prospect shall no longer
be subject to this Agreement and XXXX shall be free to develop
such prospect as it otherwise deems fit.
D. The term of this Agreement shall be for one (1) year from the
Acceptance Date hereof,
4. PARTICIPATION AGREEMENT AND OPERATING AGREEMENT.
A. The election by BRG to participate in a prospect presented to it
by XXXX shall include the execution of a Participation Agreement
and AAPL Form 610-1989 Model Form Operating Agreement
("Participation Agreement") covering such prospect. The
Participation Agreement covering each separate prospect shall be
in substantially the same form as that attached hereto as
Exhibit "A", with modifications specific to such prospect
including, but not by way of limitation, the location and depth
of the Initial Test Well, and adjustments as to Overhead - Fixed
Rate Charges according to the most current Survey of Fixed Rate
Overhead Charges then available,
B. Should there be a conflict between the terms of this Agreement
and the terms of the Participation Agreement prior to the
election by BRG to
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participate in any prospect presented to it by XXXX, the terms
and provisions of this Agreement shall control,
C. Should there be a conflict between the terms of this Agreement
and the terms of the Participation Agreement, after the election
by BRG to participate in any prospect presented to it by XXXX,
the terms of the Participation Agreement shall control,
D. All operations conducted on, and in connection with, any
prospect in which BRG elects to participate shall be governed by
the Participation Agreement covering such prospect.
5. INTERESTS TO BE OWNED, AND SHARE OF COSTS TO BE PAiD, BY BLUE RIDGE
GROUP, INC. AND BLUE RIDGE ENERGY INC.
In the event BRG elects to participate in any prospect presented to it
by XXXX, as herein provided, the interests and share of costs of BRG and
XXXX in such prospect shall be as follows:
-------------------------------------------------------------------
BLUE RIDGE BLUE RIDGE
INTEREST OR SHARE GROUP, INC. ENERGY, INC.
-------------------------------------------------------------------
-------------------------------------------------------------------
Prospect Assembly 0.0% 100.00%
Cost Share
-------------------------------------------------------------------
7.5% Management Fee
Share 100.0% 0.00%
-------------------------------------------------------------------
Ownership Before 100.0% 0.00%
Casing Point Share
-------------------------------------------------------------------
Ownership After Casing 100.0% 0.00%
Point Share
-------------------------------------------------------------------
Ownership Producing 88.0% 12.0%
Well Interest - WI
-------------------------------------------------------------------
6. GOVERNING LAW AND INVALIDITY.
A. This Agreement shall be governed by, construed and interpreted
in accordance with the laws of the State of Texas.
B. The invalidity or unenforceability of any particular provision
of this Agreement shall not affect the other provisions of this
Agreement, and this Agreement shall be construed in all respects
as if the invalid or unenforceable provision were omitted.
7. ENTIRE AGREEMENT
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A. This Agreement, including the Exhibit to this Agreement,
constitutes and represents the entire understanding and
agreement of XXXX and BRG with respect to the subject matter of
this Agreement and supersedes all prior negotiations,
understandings, agreements and representations relating to the
subject matter of this Agreement.
B. No change, waiver, modification, or amendment of this Agreement
shall be binding or of any effect unless in writing duly signed
by both XXXX and XXX.
0. WAIVER OF DEFAULT OR BREACH.
No waiver by any party to any default or breach by any other party under
this Agreement shall operate as a waiver of any future default or
breach, whether of like or different character or nature.
9. NOTICES.
Unless otherwise provided in this Agreement, all notices, statements,
requests, or demands which are required or contemplated by this
Agreement shall be in writing and delivered in person or by registered
or certified United States mail, courier service, telegram, telex,
telecopier or other form of facsimile, all postage or charges prepaid,
to the following addresses:
Blue Ridge Energy, Inc.
00000 Xxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Phone: 000-000-0000
Facsimile: 000-000-0000
Attention: Xx. Xxx Xxxxxxxx
Blue Ridge Group, Inc.
000 Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxx 00000
Phone: 000-000-0000
Facsimile: 000-000-0000
Attention: Xx. Xxxxxx X. Xxxx
Notice given under any provision hereof shall be deemed delivered only
when received by the party to whom such notice is directed.
10. INTERPRETATION.
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The titles of the Sections in this Agreement are for convenience of
reference only and shall not control or affect the meaning or
construction of any of the terms and provisions of this Agreement. As
used in this Agreement, the plural shall include the singular and the
singular shall include the plural whenever appropriate.
11. DEFINITIONS.
The definition of various terms used in the Agreement shall be the same
as those provided in the Participation Agreement attached hereto as
Exhibit "A".
If the foregoing terms and conditions are acceptable to you, please so
indicate your acceptance by executing this Agreement in the space provided below
and returning to the undersigned one fully executed original copy of this entire
Agreement within ten (10) calendar days of your receipt hereof.
BLUE RIDGE ENERGY, INC.
By: /s/ XXXXXXX X. XXXXXXXX
---------------------------
XXXXXXX X. XXXXXXXX
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Name
PRES. 3/12/03
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Title
AGREED AND ACCEPTED THIS ___ DAY OF MARCH, 2003.
BLUE RIDGE GROUP, INC.
By: /S/ XXXXXX X. XXXX
---------------------------
XXXXXX X. XXXX
------------------------------
Name
PRES. 3/17/03
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Title
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