Exhibit 10.01
HARVESTER PROPERTY AGREEMENT
INTERNATIONAL XXXXXX PETROLEUM LTD.
Penthouse, 000 Xxxx Xxxxxx, Xxxxxxxxx, X.X., Xxxxxx X0X 0X0
Tel: (000) 000-0000 / Toll-Free: 0-000-000-0000 / Fax: (000) 000-0000
E-mail: xxx@xxxxx.xxx
26 February 2001
Asdar Group
0000 - 0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, X.X.
X0X 0X0
Attn: Xxxxxx Xxxxxx, President
Dear Sirs:
Re: Harvester Property, Kings County, California (the "Property")
This letter evidences the agreement between International Xxxxxx Petroleum
Ltd. ("IBP") and Asdar Group ("Asdar") whereby IBP has agreed to farmout to
Asdar an undivided fifty percent (50%) working interest (the "Working
Interest") to all rights, titles, and interest presently owned or to be
acquired by IBP in and to the following lands:
The property is described as the E/2 of Section 24, All of Section 25, and the
NE/4 of Section 36 all located within Township 23 South, Range 21 East, Mount
Diablo Base and Meridian, Kings County, California (the "Property") containing
1,120 acres more or less.
IBP represents to Asdar that it holds a one hundred percent (100%) working
interest and a seventy five percent (75%) net royalty interest in and to the
Property.
1. To earn the Working Interest Asdar agrees to pay a total of $300,000
USD to IBP which funds will be expended by IBP in accordance with paragraph 2
hereof. These funds will be advanced to IBP on the following basis:
a) $30,000 U.S. non-refundable deposit on execution of this agreement; and
b) $270,000 U.S. to be paid to Xxxxxxxxx & Company In Trust on or before five
business days following execution of this agreement, which funds shall be held
subject to the terms of this agreement. These funds will be held in a U.S.
bank account to be used for the purposes of the Re-Entry Program (the
"Workover Account"). The signatories to the Workover Account shall be Xxxxx
Xxxxxx, P.Geol., and Xxxxxx X. Xxxxxxxx P. Eng.
2. IBP is hereby designated as Operator of a re-entry program designed to
test a previously drilled well located on the Property (the "Re-Entry
Program"). IBP as Operator shall have full discretion to conduct the Re-Entry
Program in such manner as it considers appropriate provided that it is in
conformity with the authorization for expenditure (the "AFE"), attached hereto
as schedule "A", and generally accepted industry practice. All final
decisions will be made based on the recommendations given by the designated on
site independent consulting engineer. The designated on site engineer shall be
Xxxxxx X. Xxxxxxxx P.Eng. unless otherwise replaced for reasons of incapacity.
It is understood and acknowledged by the parties hereto that preliminary
expenditures stipulated in the AFE, will be incurred in anticipation of the
commencement of on site work stipulated by the AFE. No on site work will be
commenced prior to 60 days from the date of execution of this agreement.
3. Provided that Asdar is not in default of any term or provision of this
Agreement, on completion or abandonment of the Re-Entry Program, Asdar shall
have earned and IBP shall convey to Asdar the Working Interest. It being
further provided that when the Operator has spent $300,000 USD pursuant to the
Re-Entry Program, which funds were advanced by Asdar, then the Operator shall
give written notice of the expenditure (the "Notice") to each party at the
address of such party as noted herein. On receipt of the Notice, each party
hereto shall have the right to elect (the "Election") to participate in
further expenditures on the Re-Entry Program. Where each party elects to
participate in further expenditures then Asdar and IBP agree to share those
additional costs on a 50%/50% basis. In the event that IBP elects not to
participate in further expenditures then IBP agrees to transfer its interest
in the Property to Asdar. In the event that Asdar elects not to participate
in further expenditures, then Asdar agrees to waive and relinquish the Right
of Repayment stipulated in paragraph 7 hereof and agrees to share working
interest revenues on a 50%/50% basis with IBP. Any election made hereunder
shall be in writing and delivered to the address of the Operator on or before
10 business days from the date of the Notice.
4. In the event that the Re-Entry Program is terminated for any reason
recommended by the on site engineers, then all expenditures made pursuant to
the AFE, to the date of termination, shall be paid out of the funds advanced
by Asdar to the limit of $300,000 USD. In the event that expenditures do not
exceed $300,000 USD incurred pursuant to the AFE, then the difference between
the expenditures incurred and $300,000 USD will be returned to Asdar on
demand.
5. There shall be designated an area of mutual interest extending one
mile from the boundaries of the Property (the "Area of Mutual Interest"). In
the event that the parties hereto mutually agree to acquire additional lands
within the Area of Mutual Interest then each party hereto shall pay such costs
of acquisition in proportion to their respective interests hereunder. The
exploration of such additional lands shall be shared in proportion to the
working interest held by each party hereunder and shall be governed by this
agreement.
6. In the event any party elects not to participate in the drilling or
completion of any particular well on the Property as proposed by the Operator,
each such non-consenting party shall assign all of its right, title and
interest in and to the proposed or particular well, as the case may be, to the
other consenting parties and shall be totally excluded therefrom. However,
the non-consenting party will retain its interest in the spacing unit ascribed
to any previously completed, producing or shut-in oil or gas well on the
Property.
7. In the event that production is obtained from any well on the
Property, the parties hereto mutually agree that IBP shall be the Operator and
operations shall be conducted in accordance with the Model Form Operating
Agreement APL Form 610-1989 and such agreement is incorporated by reference.
Accounting procedures will be those contained in the XXXXX format. It is
further agreed that in the event of production, Asdar shall receive 75% of all
working interest revenues and IBP shall receive 25% of all working interest
revenues until Asdar has received a total of $300,000 USD (the "Right of
Repayment") subject to the Election made under paragraph 3 hereof.
Thereafter, IBP and Asdar shall share revenues on a 50%/50% basis.
8. During the Re-Entry Program, all parties hereto shall have access to
the well and to all depth information, test results and logs and all other
information relative thereto. IBP hereby agrees to give sufficient notice to
Asdar prior to running any electric log or testing to allow Asdar to have a
representative at the well when such logging, coring or testing is done.
9. Upon completion of the Re-Entry Program, IBP agrees to furnish Asdar
with copies of all logs, test records and completion forms relating to the Re-
Entry Program.
10. In the event production is established, IBP shall assign to Asdar its
pro rata share of the designated spacing unit around each producing oil or gas
well.
11. As each producing well on the Property is abandoned, the lease acreage
and all rights, title and interest in and to the lease acreage relating to
that well shall automatically terminate and shall revert to and vest in IBP.
Asdar shall without delay execute, acknowledge and deliver a recordable
instrument acknowledging such termination and reassign the lease acreage
insofar as it covers such unit.
12. Each party represents and warrants to the other party that it has the
full right, power and capacity to enter into this Agreement, and that it has
not made any assignment for the benefit of creditors, filed any petition in
bankruptcy, been adjudicated insolvent or bankrupt, petitioned or applied to
any tribunal for any receiver or trustee of it or any of its properties or
assets, or commenced any proceeding under any arrangement of readjustment of
debt, and that no such action or proceedings has been commenced or threatened
against either party by any creditor, claimant, governmental agency or other
person. Each party shall promptly notify the other party of any such action
or proceeding arising or threatened during the term of this Agreement.
13. Asdar shall not assign this Agreement, in whole or in part, without
obtaining the consent of IBP to such assignment, which consent shall not be
unreasonably withheld. Notwithstanding any assignment by Asdar hereunder, IBP
may look solely to Asdar for performance of any duties and obligations
required to be carried out under this Agreement by Asdar, its successors and
assigns.
14. IBP as Operator recognizes that each of the parties hereto is a
publicly traded company and is required to make public disclosure.
Accordingly, IBP shall provide access to all information relating to the Re-
Entry Program, including daily reports prepared by the on site engineer or
company representative, on a timely basis. All public disclosure shall be
made on a joint basis after due consideration of the contents of such
disclosure and in a timely fashion. The Operator shall have final approval on
all public disclosure.
15. This agreement may be executed in counterpart and by fax.
16. This agreement shall be binding on each parties respective successors
and assigns.
Yours truly,
INTERNATIONAL XXXXXX PETROLEUM LTD.
/S/ XXXXXX XXXXXX
-------------
XXXXXX XXXXXX
PRESIDENT & CEO
Agreed, Accepted and Approved this 27 day of February, 2001.
ASDAR GROUP
/S/ XXXXXX XXXXXX
-------------
XXXXXX XXXXXX
PRESIDENT
WELL COST ESTIMATE Schedule "A"
------------------
DATE: AUGUST 21, 2000
OPERATOR: INTERNATIONAL XXXXXX PETROLEUM LTD.
WELL: HARVESTER I-25 RE-ENTRY PROSPECT
LOCATION: NW/4 SEC. 00., X.00X, X00X
XXXXXX: XXXXX XXXXXX
XXXXX: CALIFORNIA
DESCRIPTION: WORKOVER WELL
INTANGIBLE DEVELOPMENT EXPENSES * all figures in U.S. Dollars
-------------------------------------------------------------
Prospect/Geology 2,000
Lease 1120 acres more or less and project origination cost (prepaid) 62,000
Xxxxxxx/Title check 6,000
Administration 5,000
Surveyor 2,300
State bond 30,000
General Liability insurance 1,000
Subtotal $108,300 U.S. Dollars
WORKOVER EXPENSES
Build Location 6,000
Crop and/or Soil Damage 1,500
Rig - 16 days @ $4000/day 64,000
Rig Move In & Out 5,000
Drilling Bits 3,560
Backhoe 700
Cellar culvert 800
Rental tools including trucking 35,000
Well head 10 3/4 2,000
Well head 7 7/8 4,000
Perforating and testing 25,000
Packers and setting charge 22,000
Tree and well head 8,500
Treating 140,000
BOP - rental 2,000
Electric Logs, - Schlumberger cased hole logging 5,000
Transportation of Equipment & Materials 2,420
Tanks - test 2,000
Welding 1,500
Professional engineer and site supervision 20,000
Trailers 3,000
Site Restoration, Clean Up 5,000
Tubing 58,000
Contingency 25,000
Subtotal $441,980 U.S. Dollars
========
TOTAL $550,280 U.S. Dollars
