EXHIBIT 10.1
OPTION AGREEMENT
(OPTION TO ACQUIRE OIL AND GAS LEASES IN BEAVER COUNTY, OKLAHOMA)
Xxxxxx Creek Energy Corp.
0000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
AND
Bonanza Resources (Texas), Inc.
0000 Xxxxxxxx Xxxxxxx, Xxx. 000
XxXxxxxx, Xxxxx 00000
Further to the Letter Agreement signed by Xxxxxx Creek Energy Corp. (hereinafter
referred to as "Xxxxxx") and Bonanza Resources (Texas), Inc. (hereinafter
referred to as"Bonanza"). Xxxxxx and/or its affiliates, wish to purchase a
percentage of Bonanza's eighty-five (85) percent leasehold interest (the
"Bonanza Interest") in and to the Property on the terms set forth below. The
Bonanza Interest is held by Bonanza pursuant to a letter agreement between
Bonanza, Xxxx Petroleum, LLC and Radian Energy, LC, dated February 25, 2008 (the
"Original Agreement'), a copy of which is attached as Schedule "A" to this
Agreement.
Xxxxxx has utilized information provided by Bonanza for purposes of entering in
to this Option Agreement. This is Option Agreement is based on the
representation that Bonanza owns all rights to all depths pursuant to the oil
and gas leases (totaling up to approximately eighty-five (85) percent 8,500 net
acres with a 75% net revenue interest).
Xxxxxx and Bonanza have agreed to the following:
1. PAYMENT. Xxxxxx agrees to pay Bonanza a non-refundable deposit of
USD$50,000.00 (fifty thousand). Payment due and payable by August 10,
2009.
2. OPTION PERIOD. Bonanza hereby grants to Xxxxxx an option, having an
exercise period of one year (the "Option Period") to purchase sixty
(60) percent (the "Partial Interest") of the Bonanza Interest (the
"Option"). In order to exercise the Option, Xxxxxx must incur
USD$2,400,000 in exploration and drilling expenditures (the
"Exploration Expenditures") on the Property within the Options Period.
During the Option Period, Xxxxxx Creek shall assume that amount of
Bonanza's rights, title, interest and obligations under the Original
Agreement as is proportionate to the Partial Interest.
3. EXERCISE PERIOD. In order to exercise the Option, Xxxxxx must incur
USD$2,400,000 in exploration and drilling expenditures (the
"Exploration Expenditures") on the Property within the Options Period.
4. FAILURE TO EXERCISE OPTION. In the event that Xxxxxx does not exercise
the Option, Bonanza shall retain the Cash Considerations as liquidated
damages for Xxxxxx'x failure to incur the Exploration Expenditures.
5. ASSIGNMENT. Bonanza, at Closing upon expenditure by Xxxxxx of
USD$2,400,000, shall convey the sixty percent of Bonanza's eighty-five
percent in Bonanza Interest to Xxxxxx by a mutually acceptable
assignment and xxxx of sale, which shall include a special warranty of
title, defending against any person claiming by, through or under
Bonanza, but not otherwise.
6. LIENS AND ENCUMBRANCES. The Bonanza Interest shall be transferred from
Bonanza to Xxxxxx free and clear of all liens, mortgages, rights or
reassignment, reversionary rights, calls on production, preferential
rights, consents to assign, taxes (other than those for the current
year), obligations (including delinquent operating expenses), claims,
suits, or any other encumbrances.
7. EFFECTIVE DATE, CLOSING. The effective date of the granting of the
Option of the Acquired Properties shall be at 4:00 P.M. local time on
the Closing Date (the" Effective Date"). The parties will use their
best efforts to close no later than August 26, 2010.
8. CONFIRMING DUE DILIGENCE. Xxxxxx will conduct confirming due diligence
("Due Diligence") which shall include, but not limited to the
following:
A. Confirmation of the marketability of title (including
verification of HBP leases being in full force and effect). If,
in the reasonable opinion of Xxxxxx, Bonanza does not own
marketable title to at least a 75% net revenue interest in up to
8,000 net acres which are included in Bonanza's interest in the
properties, Xxxxxx, at its direction may terminate this Option
Agreement and any deposits or expenditures incurred by Xxxxxx on
the neither party shall have any further obligations to the other
hereunder.
B. Review of all lease agreements (including lease expirations,
surface access restrictions and drilling commitments, if any),
unit agreements, and other contracts applicable to Bonanza's
interest in the properties. Xxxxxx'x obligations hereunder shall
be subject to its reasonable approval of the lease agreements and
other material agreements affecting Bonanza's interest in the
properties.
C. Other acts of Due Diligence appropriate to the transaction as
mutually agreed between the parties.
9. COOPERATION AND EXCLUSIVITY. Xxxxxx and Bonanza will cooperate in good
faith and proceed expeditiously in the preparation of all documents
necessary to consummate the transaction contemplated hereby. Bonanza
agrees that after execution of this Option Agreement, and for sol long
as it is in effect, it will not directly or indirectly solicit or
entertain any other offer to acquire Bonanza's interest in the
properties or enter into any negotiations or agreement that provides
for the acquisition of Bonanza's interest in the properties.
10. ACCESS TO DATA. Bonanza agrees to provide Xxxxxx reasonable access in
Bonanza's office to the books and records of Bonanza pertaining to
Bonanza's interest in the properties promptly after execution of this
Option Agreement.
11. CONFIDENTIALITY. It is understood and agreed that this Option
Agreement and its substance shall remain confidential by and between
Bonanza and Xxxxxx and shall not be disclosed to any third parties,
other than those persons who have a confidential relations with
Bonanza or Xxxxxx, all of who shall agree to be bound by this
confidentiality obligation. Any public announcement of the proposed
transaction by either party shall be approved in advance by the other
party.
12. COUNTERPARTS. This Option Agreement may be executed in any number of
counterparts each of which will be deemed to be an original but all of
which shall be deemed one and the same document.
13. GOVERNING LAW. This Option Agreement shall be governed by and
construed and enforced in accordance with the laws of the Province of
British Columbia.
14. EXPENSES. Each party will pay its own expenses and costs incidental to
the negotiation and completion of the transaction, including legal and
accounting fees.
Both parties agree to the terms and provisions set forth is this Option
Agreement;
AGREED TO AND ACCEPTED THIS 7TH DAY OF AUGUST, 2009
BONANZA RESOURCES (TEXAS), INC.
By: _________________________________
Xxxxx Xxxxxxxxx - President
XXXXXX CREEK ENERGY CORP.
By: ________________________________
Xxxxx Xxxxxx - President
