EXHIBIT 10.2
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SEISMIC DATA ACQUISITION
AND FARM OUT AGREEMENT
THIS AGREEMENT, made and entered into this ___ day of _______, 2007, by
and between, NATIONAL GULF PRODUCTION, INC., of Giddings, Texas (hereinafter
referred to as "NATIONAL") and TRANS ENERGY, INC., of St. Mary's, West Virginia
(hereinafter referred to as "TRANS ENERGY"). WITNESSETH:
WHEREAS, National has acquired a Farmout Agreement from Wevco
Production, Inc. in and to the Oil and Gas Leases, covering the oil and gas in
and under certain tracts of land, containing 3,120 acres, more or less, situated
in Xxxxx County, Kansas, described on Exhibit "A" attached hereto and made a
part hereof; and,
WHEREAS, National is willing to Farmout to Trans Energy 75 percent of
its rights and interests with respect to the above described leases, and Trans
Energy desires to acquire that 75 percent interest on the above leases, pursuant
to the provisions contained herein.
NOW THEREFORE, in consideration of the above premises and the mutual
covenants and agreements set forth herein, National and Trans Energy
agree as follows:
1. National and Trans Energy will acquire 3-D Seismic Data on the above
leases , in conjunction with the North Cedar Bluff Group Shoot that
will commence early 2007 and each will pay its proportionate share of
approximately $37,000 to $39,000 per square mile.
2. Upon execution of this agreement, Trans Energy will pay its
proportionate 75 percent of the farmout fee of $ 62.50 per acre on
3,120 acres or ( $195,000 * .75 = $ 146,250 ) plus its proportionate 75
percent of the approximate seismic acquisition, processing, and
interpretation cost of $ 37,000 per square mile on 5 square miles or (
$ 185,000 * .75 = $ 138,750 ) or a total of $ 285,000.The final seismic
cost will be adjusted when complete.
3. The leases will have a reservation by Wevco, of an overriding royalty
interest of 3.5 percent and the right, but not the obligation, to
participate up to 25 percent at cost, in the xxxxx drilled by National
and Trans Energy. There will also be an overriding royalty interest of
1 percent to the Project Geophysicist and National will retain an
overriding royalty interest of 2 percent, resulting in an 81 percent
working interest.(87.5 - 6.5). National will also earn a 6.15 percent
carried working interest.
4. If Wevco elects to participate in the drilling of a well or xxxxx, then
the parties will pay and be entitled to receive as follows:
Wevco National Trans Energy
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Pay .25 .25(.75) = .1875 75(.75) = .5625
Receive.25(.81) = .2025 1875+0615 =.249(.81)=.20169 501(.81) = .40581
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5. Upon completion of each well capable of commercial production, Trans
Energy shall be entitled to receive an Assignment of its proportionate
share of the 20 acre producing unit, or other unit size as may be
directed or allowed by the State. This assignment will be made without
warranty of title, express or implied.
6. National and Trans Energy shall have 1 year from the date of this
agreement to drill the first well and shall have an option for 6 months
after completion of any well to drill another well until all drillable
20 acre units in the leases are drilled. In the event National and
Trans Energy do not drill the first well within one year or do not
drill subsequent xxxxx within the prescribed six month periods, then
this agreement terminates with respect to all undrilled areas, unless
such failure to perform is due to an act of God, labor disputes, riots,
or any other cause beyond the control of the parties, in which case the
required time to perform would be extended for the period of the
interruption.
7. Trans Energy shall be entitled to all data pertaining to the project
area including, but not limited to, all seismic and geologic data, and
logs and test results on the xxxxx drilled on the leases.
8. National and Trans Energy shall enter into a mutually acceptable
Participation and Operating Agreement whereby National will be the
Operator and will drill and operate the xxxxx that are drilled on the
leases. The owners of a majority of the working interest, may, however,
remove and replace National as Operator for negligence or willful
misconduct.
9. Should National or Trans Energy desire to sell any of its interest in
the xxxxx drilled on the leases or its interest under this agreement to
a third party, the selling party shall present the other party with the
bona fide offer and the other party shall have the first right of
refusal to purchase the xxxxx or the interest under like terms and
conditions. If the other party elects not to purchase the interest,
then the selling party may sell, transfer and assign said interest to
the third party.
10. It is understood that National and Trans Energy will be responsible for
the payment of all delay rentals due on the leases from the date of
this agreement.
This Agreement sets forth the understandings and agreements of the
parties hereto and shall be binding upon and inure to their respective
successors or assigns.
NATIONAL GULF PRODUCTION , INC. TRANS ENERGY, INC.
By: _____________________________ By_____________________________
Xxx Xxxxxxxxxxxxx,
President
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EXHIBIT A
REMIS W. and XXXXXXX X. XXXXXXXXX 1840 acres
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N/2 and SW/4 of Section 19-14S-22W except a Tract, SE/4 of Section
2-14S-23W, SW/4 of Section 10-14S-23W, N/2 and SE/4 of Section
10-14S-23W, N/2 of the NE/4 of Section 11-14S-23W, S/2 of Section
14-14S-23W less a Tract, NW/4 of Section 15-14S-23W of the 6th P.M.,
Xxxxx County, Kansas
XXXXXXX X. XXXXX,f/k/a XXXXXXX X. XXXXXXXXX and XXXXXX XXXXX
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320 acres
West Half (W/2) of Section Twenty-five (25), Township Thirteen (13)
South, Range Twenty-three (23) West of the 6th P.M., Xxxxx County,
Kansas
XXXXXX X. XXXX and XXXXXXXXX XXX XXXX 320 acres
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North Half (N/2) of Section Thirty-five (35), Township Thirteen (13)
South, Range Twenty- three (23) West of the 6th P.M., Xxxxx County,
Kansas
XXXXX X. XXXXXXXXX 480 acres
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NW/4 and NE/4 and SW/4 of Section 36-13S-23W of the 6th P.M., Xxxxx
County, Kansas
XXXXX X. XXXX, TRUSTEE 160 acres
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SW/4 of Section 2-14S-23W of the 6th P.M., Xxxxx County, Kansas
3,120 acres
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