June 22, 2001
Xx. Xxx Xxxx
Bail Corporation
00000 Xxxxxx
Xxxxxxxx Xxxx, XX 00000
RE: Shiloh Project
Cherokee Basin Coal Bed Methane
Dear Xxx:
This letter shall serve as our agreement regarding the development of a coal bed
methane project in Southeast Kansas. This agreement is between Bail Corporation
hereinafter called "Company" and TCC Royalty Corp. and Austin Exploration
L.L.C., jointly hereinafter called "Consultants."
1. Consultants agree to develop a coal bed methane project in Southeast Kansas
called the Shiloh Project for the Company. The Shiloh Project is a specific
area considered prospective for coal bed methane development and is termed
the "Project." Consultants shall provide the usual geological and land maps
for such a play.
2. Company shall pay Consultants a $25,000.00 (U.S.) prospect fee for the
project developed and pursued by Company. Company shall pay Consultants
actual costs, including day rates, for scouting and takeoffs associated
with determining land availability in the Project area. After development
of the Shiloh Project, geological consulting services shall be billed at
$500.00 per day and land consulting services shall be billed at $300.00 per
day for landmen, $150.00 for staff time on an as needed basis. The first
$5,000.00 of said services are included in the project fee paid herein.
3. A ten township area of mutual interest (AMI) shall be formed around the
Project area developed by Consultants. The AMI is defined in Exhibit A
attached to this Agreement. within the AMI so formed, Consultants shall
receive a 3% of 8/8ths overriding royalty on all leases, fee purchases or
other contracts covering oil, and gas purchased within the AMI by Company
or any of company's officers, directors, affiliates and subsidiaries.
Except as required by statute or regulation the Company agrees to keep all
information relating to the geological project developed under this
agreement confidential and agree not to disclose said information to 3rd
parties without first obtaining a confidentiality agreement.
4. Said overriding royalty shall be free of all costs to the inlet of an
independent third party's gathering system. Said overriding royalty shall
apply to any extensions and renewals of said leases, purchases and
contracts. The AMI so formed shall be for a period of 24 months and so long
thereafter as Company actively pursues the leasing and development of coal
bed methane in the project area.
July 11,2001
Page 2
5. Consultants offer no warranties on the project developed or services
delivered under this agreement. Company agrees to indemnify and hold
Consultants harmless from any and all claims, damages and judgments,
including penalties, attorney's fees, costs and interest, if any, which may
be a direct or indirect result of use or reliance upon any information or
services supplied under this agreement.
This letter covers our entire understanding as of the date above. Please signify
your acceptance of the terms and conditions by signing and returning an original
copy.
Sincerely,
Xxxx X. Xxxxxx
Accepted and agreed:
TCC Royalty Corp.
Dated
---------------------------------------- --------------------
Xxxxxx Xxxxxxx
Xxxxxx Exploration, L.L.C.
Dated
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Xxxx X. Xxxxxx, Member
Dated
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Xxxxxxx Xxxx
Xxxx Corporation/President
EXHIBIT A
The area as defined by the AMI between the Bail Corporation, the "Company"
and TCC Royalty Corp. and Austin Exploration L.L.C. Company, the "Consultants"
is as follows:
Township 21 South Range 14 East: All
Township 21 South Range 15 East: All
Township 21 South Range 16 East: All
Township 21 South Range 17 East: All
Township 22 South Range 14 East: All
Township 22 South Range 15 East: All
Township 22 South Range 16 East: All
Township 22 South Range 17 East: All
Township 23 South Range 14 East: North half of the Township
Township 23 South Range 15 East: North half of the Township
Township 23 South Range 16 East: North half of the Township
Township 23 South Range 17 East: North half of the Township
A-1
