EXHIBIT 10.10
SFD SURVEY AGREEMENT
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THIS AGREEMENT made as of the 1st day of November, 1997.
BETWEEN:
PINNACLE OIL INTERNATIONAL, INC., a body corporate, having
an office in the City of Vancouver, in the Province of
British Columbia (hereinafter referred to as "Pinnacle")
- and -
RENAISSANCE ENERGY LTD., a body corporate, having an office
in the City of Calgary, in the Province of Alberta
(hereinafter referred to as "Renaissance")
1. DEFINITIONS
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In this Agreement, unless the context otherwise requires:
(a) "Exploratory Drilling Prospects" means drilling locations on the
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Prospect Lands which Pinnacle reasonably is of the view that the
anticipated output of petroleum substances from the proposed well
warrants the drilling of the same;
(b) "Party" means a party to this Agreement;
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(c) "Program Period" means the period commencing on November 15, 1997 and
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ending December 15, 1997;
(d) "Prospect Lands" means lands within Twps. 99-103 Rges. 6-12 W6M and in
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which Renaissance now or hereafter acquires a 100% working interest
excluding Twp. 100 Rge. 6 W6M; Secs. 21-23, 26-28, 33-35; Twp. 101
Rge. 6 W6M: Secs. 2-4; Twp. 100 Rge. 7 W6M: Secs. 25-27 and 34-36;
Twp. 101 Rge. 7 W6M: Secs. 1-3; Twp. 100 Rge. 8 W6M: Secs. 14-16 and
21-23; Xxx. 000 Xxx, 00 X0X: Secs. 20-23, 26-29 and 32-35; Twp. 101
Rge. 10 W6M: Secs. 2-5 and 8-11; Twp. 101 Rge. 8 W6M: Secs. 27-29 and
32-34; Twp. 102 Rge. 8 W6M: Xxxx. 0-0; Xxx. 000 Xxx. 0 X0X: Secs. 6-8,
17-20, 29 and 30; Xxx. 000 Xxx 00 X0X; Secs 1-4, 8-17 and 21-25;
(e) "Royalty Agreement" means a royalty agreement substantially in the
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form attached hereto as Schedule "A", which Royalty Agreement will be
entered into by the Parties upon the conditions contained in clause
3(b) having been satisfied; and
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(f) "this Agreement", "herein", "hereto", "hereof" and similar expressions
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mean and refer to this SFD Survey Agreement.
2. SCHEDULE
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Schedule "A", pertaining to the Royalty Agreement, is appended to this
Agreement. Wherever any term or condition of Schedule "A" conflicts or is at
variance with any term or condition in the body of this Agreement, such term or
condition in the body of this Agreement shall prevail.
3. PROGRAM
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(a) Pinnacle covenants to:
(i) perform stressfield tool surveys over the Prospect Lands in
attempts to locate Exploratory Drilling Prospects during the
Program Period; and
(ii) submit to Renaissance as and when identified and before the
expiration of the Program Period, one or two Exploratory Drilling
Prospects identified during the Program Period.
(b) If Renaissance, acting on the Exploratory Drilling Prospect,
determines in its sole discretion to drill and subsequently drills a
well at a location identified in an Exploratory Drilling Prospect to a
depth deeper than below base Mississippian on or before March 31,
1998, Renaissance agrees, with respect to any xxxxx so drilled on or
before March 31, 1998 under an Exploratory Drilling Prospect, up to a
maximum of 2 xxxxx, to hereby reserve and grant to Pinnacle a 5%
royalty to be calculated and paid in accordance with the terms and
conditions set out in the Royalty Agreement (which Royalty Agreement
shall be entered into on a well by well basis).
4. PINNACLE'S INDEMNITIES
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Pinnacle shall be liable to Renaissance for and shall, in addition,
indemnify Renaissance from and against, all losses, costs, claims, damages,
expenses and liabilities suffered, sustained, paid or incurred by Renaissance
which arise out of any matter or thing occurring or arising from and after the
date hereof and which arise out of acts or omissions of Pinnacle, provided
however that Pinnacle shall not be liable to nor be required to indemnify
Renaissance in respect of any losses, costs, claims, damages, expenses and
liabilities suffered, sustained, paid or incurred by Renaissance which arise out
of acts or omissions of Renaissance.
5. CONFIDENTIALITY AND PUBLIC ANNOUNCEMENTS
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Each Party shall keep confidential all information obtained from the
other Party in connection with this Agreement and shall not release any
information concerning this Agreement and the operations herein provided for,
without the prior written consent of the other Party, which consent shall not be
unreasonably withheld. Nothing contained herein shall prevent a Party at any
time from furnishing information to any governmental agency or regulatory
authority or to the public if required by applicable
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law, provided that the Parties shall advise each other and agree as to content
in advance of any public statement which they propose to make.
6. AIRPLANE COSTS
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Renaissance shall reimburse Pinnacle for 50% of all charter airplane
costs and expenses actually incurred by Pinnacle hereunder during the Program
Period.
7. ENTIRE AGREEMENT
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No amendments shall be made to this Agreement unless in writing,
executed by the Parties. This Agreement supersedes all other agreements,
documents, writings, and verbal understandings among the Parties relating to the
subject matter hereof and expresses the entire agreement of the Parties with
respect to the subject matter hereof.
8. GOVERNING LAW
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This Agreement shall, in all respects, be subject to, interpreted,
construed and enforced in accordance with and under the laws of the Province of
Alberta and the laws of Canada applicable therein and shall, in every regard, be
treated as a contract made in the Province of Alberta. The Parties irrevocably
attorn and submit to the jurisdiction of the courts of the Province of Alberta
and courts of appeal therefrom in respect of all matters arising out of this
Agreement.
9. ENUREMENT
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This Agreement shall be binding upon and shall enure to the benefit of
the Parties and their respective administrators, trustees, receivers,
successors and assigns.
10. TIME OF ESSENCE
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Time shall be of the essence in this Agreement.
11. TERM
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This Agreement shall terminate on March 31, 1998.
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12. NO PARTNERSHIP
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Nothing contained in this Agreement shall be construed as creating a
partnership, joint venture or association of any kind or as imposing upon any
Party, andy partnership duty, obligation or liability to any other Party.
IN WITNESS WHEREOF the parties have executed and delivered this
Agreement as of the date first above written.
PINNACLE OIL INTERNATIONAL, INC. RENAISSANCE ENERGY LTD.
Per: [SIGNATURE ILLEGIBLE] Per: [SIGNATURE ILLEGIBLE]
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Per: ___________________________ Per: ____________________________
THE FOLLOWING 8 PAGES COMPRISE SCHEDULE "A" ATTACHED TO AND FORMING PART OF AN
SFD SURVEY AGREEMENT MADE AS OF THE 1ST DAY OF NOVEMBER, 1997 BETWEEN PINNACLE
OIL INTERNATIONAL, INC. AND RENAISSANCE ENERGY LTD.
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ROYALTY AGREEMENT
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THIS AGREEMENT made as of the . day of ., 199..
BETWEEN:
RENAISSANCE ENERGY LTD., a body corporate, having an office
in the City of Calgary, in the Province of Alberta
(hereinafter referred to as "Grantor")
-and-
PINNACLE OIL INTERNATIONAL, INC., a body corporate, having
an office in the City of Calgary, in the Province of Alberta
(hereinafter referred to as "Grantee")
WHEREAS:
(A) By virtue of an SFD Survey Agreement dated November 1, 1997 between
the parties hereto, Grantor has drilled a well at a location identified in an
Exploratory Drilling Prospect (as defined in the SFD Survey Agreement); and
(B) The parties hereto desire to provide that from and after the Effective
Time, the Royalty Lands shall be subject to the terms and provisions of this
Agreement;
NOW THEREFORE for good and valuable consideration, the parties hereto
covenant and agree as follows:
1. Interpretation
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1.1 In this Agreement, including the premises hereto, this article and
Schedule "A" hereto, unless the context otherwise requires:
(a) "Condensate" means a mixture mainly of pentanes and heavier
hydrocarbons that may be contaminated with sulphur compounds, that is
recovered or is recoverable at a well from an underground reservoir
and that is gaseous in its virgin reservoir state but is liquid at the
conditions under which its volume is measured or estimated;
(b) "Crown" means the Crown in Right of the Province of Alberta;
(c) "Delivery Point" means the place where Petroleum Substances are
delivered to the purchase thereof, or as otherwise provided herein;
(d) "Effective Time" means the . day of . 199.;
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(e) "Natural Gas" means a mixture containing methane, other paraffinic
hydrocarbons, nitrogen, carbon dioxide, hydrogen sulphide, helium and
minor impurities, or some of them, which is recovered or is
recoverable at a well from an underground reservoir and which is
gaseous at the conditions under which its volume is measured or
estimated, inclusive of all other products (excluding Petroleum and
Condensate) necessarily produced in connection therewith:
(f) ("Overriding Royalty" means the royalty reserved to Grantee pursuant
to article 2 hereof:)
(g) "Petroleum" means a mixture mainly of pentanes and heavier
hydrocarbons that may be contaminated with sulphur compounds, that is
recovered or is recoverable at a well from an underground reservoir
and that is liquid at the conditions under which its volume is
measured or estimated, but does not include Condensate;
(h) "Petroleum Substances" means Petroleum, Natural Gas, Condensate and
every other mineral or substance, or any of them;
(i) "Royalty Lands" means the lands, zones and formations set forth and
described in Schedule "A" hereto and so much thereof as from time to
time remain subject to this Agreement, but only insofar as rights to
the same are granted by the Title Documents;
(j) "Title Documents" means the documents and leases by virtue of which
Grantor is entitled to drill for, win, take, or remove Petroleum
Substances and underlying all or any part of ., and includes any
amendments thereto, renewals or extensions thereof and any documents
of title issued therefrom or in substitution therefor.
1.2 Schedule "A" hereto is incorporated herein by reference as though
contained in the body hereof. Wherever any term or condition, expressed or
implied, in Schedule "A" hereto conflicts or is at variance with any term or
condition in the body hereof, such term or condition in the body hereof shall
prevail.
1.3 If any term or condition of this Agreement or Schedule "A" hereto,
whether express or implied, conflicts with or is at variance with a term or
condition in the Title Documents, then such term or condition in the Title
Documents shall prevail, and this Agreement shall be deemed to be amended to the
extent necessary to give effect to such term or condition in the Title
Documents.
2. Overriding Royalty
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2.1 There is hereby reserved to and owned by Grantee, an overriding
royalty of five (5%) percent of the wellhead value on that portion of Petroleum
Substances attributable to the interest of Grantor in the Royalty Lands
(understood by Grantor to be set out in Schedule "A" hereto) produced, saved and
marketed from . (the "Well") each month during the term of the Title Documents.
2.2 Grantor shall sell the Overriding Royalty share of Grantee at the same
price and on the same terms as Grantor receives for its own share of such
Petroleum Substances, which shall not be less than the price at which a
reasonably prudent operator would dispose of such Petroleum Substances having
regard to current market prices, availability of markets and economic conditions
affecting the industry
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generally. In calculating the (Overriding Royalty, Grantor may deduct before
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applying the percentages aforesaid all charges and costs incidental or
pertaining to gathering, storing, processing, treating and transporting
Petroleum Substances to the Delivery Point, in the same manner allowed by the
Crown when it is lessor, without regard to any royalty holidays, cash payments,
incentives, grants, waivers, exemptions, abatements and benefits of any nature
whatsoever received by or available to Grantor.
2.3 Notwithstanding any other provision of this Agreement, Grantor shall
be entitled to use, free from the obligation to deliver or pay the Overriding
Royalty, such part of the Petroleum Substances as is reasonably required for and
used by it in its operations upon ., including treating and preparing Petroleum
Substances for market but not including injection thereof in connection with any
secondary recovery operations. Any Petroleum Substances used by Grantor other
than as permitted in this clause 2.3 shall be deemed to have been marketed by
Grantor at the time of use for a price at which a reasonably prudent operator
would dispose of such Petroleum Substances having regard to current market
prices, availability of markets and economic conditions affecting the industry
generally. For greater certainty, any Petroleum Substances that are not
marketed or deemed to have been marketed due to shrinkage or loss shall not be
subject to the Overriding Royalty.
2.4 Notwithstanding any other provision of this Agreement, if pursuant to
any agreement governing operatorship of all or any part of the Royalty Lands,
whether such agreement presently exists or is subsequently entered into, Grantor
elects or is deemed to have elected not to participate in an operation on or in
respect of all or any part of the Royalty Lands, such that Grantor is thereafter
permanently or temporarily disentitled to all or any part of Grantor's working
interest share of the Petroleum Substances or any of them, then, in each such
instance, such Petroleum Substances shall not be subject to the Overriding
Royalty during such time of disentitlement.
2.5 Any cash payment required to be paid by Grantor to Grantee in
respect of the Overriding Royalty shall be made on the fortieth (40th) day
following the month in which the Petroleum Substances to which such amount
relates were produced and marketed from the Well, to Grantee at its address for
notices as hereinafter provided.
2.6 At the same time as the cash payment pursuant to clause 2.5 herein is
due, Grantor shall forward to Grantee a written statement of Grantee's
Overriding Royalty share due to it for the production in the month concerned
showing production, inventories and sales; and the said statement shall be
conclusive of the amount thereof unless Grantee objects thereto by notice in
writing specifying the particulars of any error or deficiency therein within
six (6) months after the end of the calendar year in which the said statement
was received.
2.7 Grantor shall keep and maintain in the Province of Alberta at all
times during the term hereof true and accurate books, statements, records, and
accounts evidencing the quantity of Petroleum Substances produced from the Well
and the disposition thereof. Grantor shall permit Grantee to inspect such
records during normal business hours and to make extracts or copies thereof and
at all times permit Grantee to ascertain the quantity, kind, and nature of the
Petroleum Substances produced or taken from the Well and the costs associated
with any such production.
2.8 Grantee may transfer or assign its Overriding Royalty in whole or
part, but Grantor shall not be required to make payments to more than one party.
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2.9 If Grantor transfers or assigns all or any part of its interest in the
Well, it shall continue to be bound by, observe, and perform all of the
covenants and terms of this Agreement as if there had been no transfer or
assignment until such time as the party acquiring such interest delivers to
Grantee notice of such transfer or assignment and a written undertaking to be
bound by, observe, and perform all of the covenants and terms of this Agreement
then binding on Grantor insofar as they relate to the interest transferred or
assigned and until Grantee consents to such transfer or assignment, which
consent shall not be unreasonably withheld. Upon the giving of such consent and
upon receipt by Grantee of such notice and undertaking, Grantor shall be
released and discharged from any and all liability and obligations thereafter
accruing under this Agreement, or the Title Documents relating to the Royalty
Lands, insofar as they relate to the interest so transferred or assigned.
2.10 Grantor shall be entitled to pool all or a part of the Royalty Lands
with any other lands for the purposes of creating a spacing unit for production
of the Petroleum Substances or to utilize all or a part of the Royalty Lands
with any other lands, if such pooling or unitization becomes necessary or
desirable in the opinion of Grantor. The basis and manner of such pooling or
unitization, the manner of allocating pooled and unitized lands, and the
contents of any agreement pertaining thereto shall be in the sole discretion and
determination of Grantor, and when so determined shall be binding upon Grantee.
Upon any such pooling and unitization the Overriding Royalty shall be paid on
the basis of production deemed to be produced from or allocated to Royalty Lands
under the plan of unitization or pooling and not upon the basis of actual
production from the Well.
3. RENTALS
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3.1 As of the Effective Time, Grantor shall be responsible for the payment
of all rentals, shut-in gas royalties, performance bonds, and other maintenance
costs falling due with respect to the Title Documents.
4. TAXES
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4.1 Each party hereto shall be liable for all taxes and other charges
levied or assessed against its interest as set out herein in the Petroleum
Substances, which shall be deemed to include freehold mineral tax in respect of
any Royalty Lands that are freehold, and in lieu of payment by Grantee of its
share thereof Grantor may make such payment and deduct the amount thereof from
any money payable by it to Grantee.
4.2 The payment on behalf of Grantee by Grantor of any tax or other charge
pursuant to the provisions of clause 4.1 herein shall not in any way relieve
Grantee from its obligation and responsibility to reimburse Grantor for its
share of such costs.
5. SURRENDER
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5.1 Grantor shall not surrender any of its interest in the Royalty Lands
or that portion of the Title Documents relating thereto, in whole or in part, at
any time that Grantee is receiving, or is entitled to receive, its Overriding
Royalty unless Grantee consents thereto in writing, such consent not to be
unreasonably withheld, provided that if Grantee does not consent as aforesaid
within three (3) days of notice of Grantor's intentions, it shall be bound to
accept an assignment of the entire right, title, estate, and interest of Grantor
in the Royalty Lands or the portion thereof surrendered, and thereupon Grantee
shall be deemed to have assumed all obligations of Grantor with respect to the
interest assigned.
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6. Other Encumbrances
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6.1 If the interest of Grantor in the Royalty Lands now or hereafter shall
become encumbered by any royalty, production payment, or other charge of a
similar nature, other than the royalties as set forth under the terms of the
Title Documents covering such lands, such royalty, production payment, or other
charge shall be charged to and paid entirely by Grantor.
7. NOTICES
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7.1 The addresses for service and the fax numbers of the parties hereto
shall be as follows:
Grantor - Renaissance Energy Ltd.
X.X. Xxx 0000
Xxxxxxx "X"
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Land Department
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Fax: (000) 000-0000
Grantee - Pinnacle Oil International, Inc.
00 Xxxxxxxxx Xxxxx X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: President
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Fax: (000) 000-0000
All notices, communications and statements required, permitted or contemplated
hereunder shall be in writing, and shall be delivered as follows:
(a) by personal service on the other party hereto at the relevant address
set out above, in which case the item so served shall be deemed to
have been received by that party when personally served;
(b) by facsimile transmission to the other party hereto to the relevant
fax number set out above, in which case the item so transmitted shall
be deemed to have been received by that party when transmitted; or
(c) except in the event of an actual or threatened postal strike or other
labour disruption that may affect mail service, by mailing first class
registered post, postage prepaid, to the other party hereto at the
relevant address set out above, in which case the item so mailed shall
be deemed to have been received by that party on the fifth day
following the date of mailing.
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Grantor and Grantee may from time to time change their respective addresses for
service or their respective fax numbers or both by giving written notice to the
other.
8. Force Majeure
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8.1 The obligations of the parties hereto shall be suspended; and there
shall be no liability for damages during the time and to the extent that any
party hereto is prevented from complying with its obligations under this
Agreement in part or in whole by strikes, lock-outs, acts of God or the Queen's
enemies, war, blockades, riots, laws, orders, or regulations of governmental
bodies or agencies, unavoidable accidents, delays in transportation, inability
to obtain necessary materials in the open market, or any other cause, except
financial, whether similar or dissimilar to those specifically enumerated,
beyond the reasonable control of the party hereto affected. The party hereto
whose obligations under this Agreement are suspended shall give notice,
including reasonably full particulars, of the cause of such suspension, to the
other party or parties hereto within a reasonable time after the occurrence
thereof. The performance of such obligations shall begin or be resumed within a
reasonable time after such cause has been removed. No party hereto shall be
required against its will to settle any labour dispute.
9. Miscellaneous
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9.1 Subject to the terms contained herein, this Agreement shall continue
for the life of the Title Documents.
9.2 All terms, covenants, and conditions in this Agreement shall run with
and are binding upon the Title Documents, the Royalty Lands, and the estates
affected thereby for the duration of this Agreement.
9.3 This Agreement supersedes and replaces all previous agreements,
whether written or oral, memoranda, and correspondence among the parties hereto
with respect to the subject matter of this Agreement.
9.4 Should any clause, provision, or condition of this Agreement be or
become illegal or unenforceable, it shall be considered separate and severable
from this Agreement and the remaining provisions and conditions shall continue
in full force and be binding upon the parties hereto as though the said clause,
provision, or condition had never been included.
9.5 The parties hereto covenant, so long as this Agreement is in force and
effect, to comply with any and all regulations and other laws with respect to
anything done, or purported to be done, pursuant to this Agreement, and with
respect to the operations carried out hereunder.
9.6 No waiver by any party hereto of any term of this Agreement shall take
effect or be binding upon that party unless the same be expressed in writing and
any waiver so given shall extend only to the particular breach so waived and
shall not limit or affect any rights with respect to any other or future breach.
9.7 This Agreement shall be binding upon and shall enure to the benefit of
each of the parties hereto and their respective heirs, executors,
administrators, trustees, receivers, successors and assigns.
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9.8 This is of the essence of this Agreement.
9.9 This Agreement shall, in all respects, be subject to and interpreted,
construed and enforced in accordance with and under the laws of the Province of
Alberta and shall, in every regard, be treated as a contract made in the
Province of Alberta. The parties hereto irrevocably attorn and submit to the
jurisdiction of the courts of the Province of Alberta in respect of all matters
arising out of this Agreement.
9.10 This Agreement may be executed in counterpart, no one copy of which
need be executed by each of the parties hereto. When copies have been executed
by each of the parties hereto, all copies together shall constitute one
agreement and shall be a valid and binding contract among the parties as of the
date first above written.
IN WITNESS WHEREOF THE PARTIES hereto have duly executed this
Agreement as of the day and year first above written.
RENAISSANCE ENERGY LTD. PINNACLE OIL INTERNATIONAL, INC.
Per: ______________________________ Per: ________________________________
Per: ______________________________ Per: ________________________________
SCHEDULE "A" ATTACHED TO AND FORMING PART OF A ROYALTY AGREEMENT MADE AS OF THE
. DAY OF ., 199. BETWEEN RENAISSANCE ENERGY LTD. AND PINNACLE OIL INTERNATIONAL.
INC.
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Royalty Lands
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[to be inserted] (below base Mississippian)
Interest
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[to be inserted]
Title Documents
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[to be inserted]
[LETTERHEAD OF RENAISSANCE ENERGY LTD. APPEARS HERE]
January 14, 1998
VIA FAX: 000-0000
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Pinnacle Oil International, Inc.
00 Xxxxxxxxx Xxxxx X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0
ATTENTION: MR. R. XXXX XXXXXXX
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Dear Sir:
RE: SFD Survey Agreement dated November 1, 0000
XXXXXXX Xxxx, Xxxxxxx
REL File: G-1475-0
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This letter shall confirm that no Exploratory Drilling Prospects were identified
pursuant to the subject agreement.
Please acknowledge your agreement to the foregoing by signing and returning the
enclosed duplicate hereof.
Yours truly,
RENAISSANCE ENERGY LTD.
/s/ Xxxx X. Xxxxxxx
Xxxx X. Xxxxxxx
Vice President, Land and Contracts
ACKNOWLEDGED AND AGREED TO this 14 day of JANUARY 1998.
PINNACLE OIL INTERNATIONAL, INC.
Per: [SIGNATURE ILLEGIBLE]
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