EXHIBIT 10.34
JOINT EXPLORATION AND PARTICIPATION AGREEMENT
This Joint Exploration and Participation Agreement ("AGREEMENT") is made
and entered into this 3rd day of October, 1996 by and between Amoco Production
Company ("AMOCO"), and OEDC Exploration & Production, L.P. ("OEDC"). OEDC and
Amoco hereby agree as follows:
1. INTRODUCTION. Amoco and OEDC are interested in jointly developing oil
and gas prospects in the blocks in South Timbalier Area listed on EXHIBIT A (the
"SOUTH TIMBALIER AREA"). Amoco and OEDC have leasehold interests or operating
rights in certain blocks in the South Timbalier Area, including certain joint
interests in South Timbalier Block 162. OEDC desires to obtain certain seismic
data of Amoco covering the South Timbalier Area and develop drilling prospects
in the South Timbalier Area for the joint participation by Amoco and OEDC. The
purpose of this Agreement is to set forth the terms of the acquisition of such
data and the development of such prospects. In consideration of the benefits to
be derived by each party under this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
OEDC and Amoco hereby agree as follows:
2. 3-D SURVEYS. Contemporaneously with the execution of this Agreement,
Amoco shall provide to OEDC all of Amoco's proprietary 3-D survey covering the
South Timbalier Area (the "Amoco Survey") that Amoco has not already provided to
OEDC. The Amoco Survey shall be provided by Amoco at no cost to OEDC. OEDC has
obtained from Xxxxxxxxx Geophysical a license to use a 3-D survey covering South
Timbalier 161 (the "TGS Survey"). To the extent permitted by the terms of the
license, Amoco shall be entitled to review the TGS Survey.
3. PRESENTATION OF PROSPECTS. OEDC shall utilize the Amoco Survey and the
TGS Survey to develop drilling prospects in the South Timbalier Area prior to
the Termination Date. Prior to the Termination Date, OEDC shall present to Amoco
any prospects that it develops prior to such date in the South Timbalier Area
utilizing in whole or in part the Amoco Survey or the TGS Survey (each such
prospect is referred to herein as an "OEDC Prospect"). The presentation shall
include (i) all maps and other data and analyses developed by OEDC, (ii) an
estimate of the costs to acquire additional leases and drill the initial well on
the OEDC Prospect, (iii) an estimated schedule for the drilling of the initial
well and (iv) a description of the areal extent of the OEDC Prospect.
4. ACCEPTANCE OR REJECTION OF PROSPECTS. If Amoco intends to participate
in the development of any OEDC Prospect presented to Amoco pursuant to this
Agreement, Amoco shall notify OEDC within 30 days after OEDC has presented the
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OEDC Prospect to Amoco as provided in Section 3. If Amoco declines to
participate or fails to timely elect to participate in an OEDC Prospect, OEDC
may pursue the drilling and development of the OEDC Prospect free of any
restrictions in favor of Amoco, except for the convertible overriding royalty
interest described in Section 5(b) below.
5. PARTICIPATION PERCENTAGE.
(a) If Amoco elects to participate in any prospect covering leases in
which Amoco has an interest at the time the OEDC Prospect is presented by OEDC
("AMOCO LEASES"), then Amoco shall bear 75% of the cost of drilling such OEDC
Prospect and OEDC shall bear 25% of the cost of drilling such OEDC Prospect,
and, contemporaneously with the completion of a well capable of producing in
paying quantities, Amoco shall assign to OEDC 25% of the interest of Amoco in
sufficient acreage, as mutually agreed by the parties, to cover the prospect.
Such 25% interest shall not be burdened by any burdens other than the 1/6
lessor's royalty. If Amoco and OEDC agree, the 25% interest may be increased
prior to the drilling of the first well on the OEDC Prospect.
(b) If Amoco does not elect to participate in an OEDC Prospect covering
any Amoco Leases, OEDC may develop the OEDC Prospect without the participation
of Amoco, and Amoco will farmout the Amoco Leases to OEDC under the terms of a
farmout agreement in a form to be agreed to by the parties, which shall contain
the following business terms: (1) contemporaneously with the completion of a
well capable of producing in paying quantities, Amoco shall assign to OEDC 100%
of the interest of Amoco in sufficient acreage, as mutually agreed by the
parties, to cover the prospect; and (2) Amoco shall retain a 1/12th of 6/6ths
overriding royalty interest with option after well payout to either escalate the
retained overriding royalty interest to 1/10th of 6/6ths or convert to a 25%
working interest.
(c) If Amoco elects to participate in any OEDC Prospect covering leases in
which OEDC has an interest at the time the prospect is presented by OEDC ("OEDC
LEASES"), then Amoco shall bear 25% of the cost of drilling such OEDC Prospect
and OEDC shall bear 75% of the cost of drilling such OEDC Prospect and,
contemporaneously with the completion of a well capable of producing in paying
quantities, OEDC shall assign to Amoco 25% of the interest of OEDC in sufficient
acreage, as mutually agreed by the parties, to cover the prospect. Such 25%
interest shall not be burdened by any burdens other than the 1/6 lessor's
royalty. If Amoco and OEDC agree, the 25% interest may be increased prior to the
drilling of the first well on the OEDC Prospect.
(d) If Amoco elects to participate in any OEDC Prospect that covers any
leases that are neither OEDC Leases nor Amoco Leases ("NON-OWNED LEASES"), then
OEDC and Amoco shall have equal interests in any leases acquired. If leases are
to be acquired,
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OEDC and Amoco shall determine which entity shall negotiate for the joint
acquisition of the Non-owned Leases and they shall remain in contact throughout
the lease acquisition process and determine allocation of responsibilities as
they arise. Amoco and OEDC shall each bear 50% of all costs of acquiring the
Non-owned Leases. Amoco and OEDC shall each bear 50% of the cost of drilling any
OEDC Prospect that contains all or any Non-owned Leases. To the extent any such
OEDC Prospect contains any OEDC Leases or Amoco Leases, contemporaneously with
the completion of a well capable of producing in paying quantities, Amoco or
OEDC, as appropriate, shall assign to the other party 50% of the interest of the
assigning party in the Amoco Leases or the OEDC Leases, respectively, in
sufficient acreage, as mutually agreed by the parties, to cover the prospect.
Immediately after the Non-owned Leases are acquired by OEDC or Amoco, as the
case may be, the owner of such Non-owned Leases shall assign to the other party
50% of all of its interest in such Non-owned Leases.
6. OTHER PROSPECTS AND ASSIGNMENTS.
(a) If Amoco develops any prospect in the South Timbalier Area prior to
the Termination Date (each such prospect is referred to herein as an "Amoco
Prospect"), then Amoco shall present the Amoco Prospect to OEDC in the same
manner that OEDC is required to present OEDC Prospects to Amoco pursuant to this
Agreement. If OEDC elects to participate in an Amoco Prospect, OEDC shall be
entitled to receive from Amoco an interest in Amoco Leases and Nonowned Leases
acquired by Amoco, and shall be obligated to assign to Amoco interests in OEDC
Leases and Non-owned Leases acquired by OEDC, to the same extent as if the Amoco
Prospect were an OEDC Prospect. If OEDC does not elect to participate in an
Amoco Prospect covering any OEDC Leases, Amoco may develop the Amoco Prospect
without the participation of OEDC, and OEDC will farmout the OEDC Leases to
Amoco under the terms of a farmout agreement as described in Section 5(b) above.
(b) If OEDC or Amoco desires to sell or otherwise dispose (other than
pursuant to a mortgage or other collateral assignment) of any interest in any
xxxxx proposed and drilled pursuant to this agreement and any acreage
attributable thereto prior to the Termination Date, it shall promptly provide
written notice to the other with full information regarding the proposed
transfer. The other party shall have an optional prior right, for a period of
ten days after the notice is received, to purchase the interest in such xxxxx
and acreage on the same terms and conditions as stated in the notice.
7. EXCLUDED AREA. This Agreement does not affect, and the South Timbalier
Area shall not include, the interest of either Amoco or OEDC in South Timbalier
Block 162
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that is subject to the terms of the letter agreement dated March 16,
1995, between Amoco and OEDC.
8. OPERATIONS. OEDC and Amoco shall enter into an operating agreement
covering any prospects that are developed under this Agreement substantially in
the form of the operating agreement utilized by the parties for the South
Timbalier 162 B-7 well. Amoco shall handle OEDC's share of production, subject
to available capacity, from any prospects that include Amoco Leases or that can
be drilled from any of Amoco's platforms. Such handling shall be according to
the terms of a production handling agreement substantially in the form of the
production handling agreement utilized by the parties for the South Timbalier
162 B-7 well.
9. COMPETING XXXXX. No well shall be drilled or completed in any zone or
horizon which either party reasonably determines to be competitive, using modern
scientific methods, with any existing Amoco or OEDC well.
10. REPRESENTATIONS.
(a) Amoco represents and warrants to OEDC that the execution and delivery
of this Agree ment by Amoco does not (i) conflict with, (ii) result in a breach
of, (iii) constitute a default (or an event that with the lapse of time or
notice, or both would constitute a default) under, or (iv) require any consent,
authorization or approval under any agreement or instrument to which Amoco is a
party or by which Amoco is bound.
(b) OEDC represents and warrants to Amoco that the execution and delivery
of this Agree ment by OEDC does not (i) conflict with, (ii) result in a breach
of, (iii) constitute a default (or an event that with the lapse of time or
notice, or both would constitute a default) under, or (iv) require any consent,
authorization or approval under any agreement or instrument to which OEDC is a
party or by which OEDC is bound.
11. NOTICES. All notices required or permitted under this Agreement shall
be in writing and, (a) if by air courier, shall be deemed to have been given one
Business Day after the date deposited with a recognized carrier of overnight
mail, with all freight or other charges prepaid, (b) if by telecopier, shall be
deemed to have been given when actually received, and (c) if mailed, shall be
deemed to have been given three Business Days after the date when sent by
registered or certified mail, postage prepaid, addressed as follows:
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To Amoco: Amoco Production Company
0000 Xxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxx 00000
Attention: Xx. Xxxx Xxxx
Telecopier: 000-000-0000
To OEDC: OEDC Exploration & Production, L.P.
0000 Xxxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxxxxxx, Xxxxx 00000
Attention: Xx. Xxxxx X. Xxxxxxxxx
Telecopier: 000-000-0000
"BUSINESS DAY" shall mean a day other than Saturday or Sunday or any legal
holiday for commercial banking institutions under the laws of the State of
Texas.
12. ASSIGNMENT. Neither Amoco nor OEDC may assign its rights or delegate
its duties or obligations arising under this Agreement, in whole or in part, by
operation of law or otherwise, before or after Closing, without the prior
written consent of the other party.
13. GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Louisiana without giving effect to any
principles of conflicts of laws. The validity of the various conveyances
affecting the title to real property shall be governed by and construed in
accordance with the laws of the jurisdiction in which such property is situated.
The representations and warranties contained in such conveyances and the
remedies available because of a breach of such representations and warranties
shall be governed by and construed in accordance with the laws of the State of
Louisiana without giving effect to the principles of conflicts of laws.
14. TERMINATION DATE. As used herein, the term "Termination Date" shall be
October 1, 1997, unless mutually extended by the parties. Immediately after the
termination of this Agreement and all operations proposed hereunder, OEDC shall
return all of the Amoco Survey to Amoco.
15. AMENDMENTS. This Agreement may be amended, modified, superseded or
canceled, only by a written instrument executed by a duly authorized officer of
Amoco and OEDC.
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16. HEADINGS. The Section headings contained in this Agreement are for
convenient reference only and shall not in any way affect the meaning or
interpretation of this Agreement.
Executed as of the date first set forth above.
Witness: Amoco Production Company
/s/ XXXXXXXX XXXXX By: /s/ X. XXXXXX
Xxxxxxxx Xxxxx Name: X. Xxxxxx
Title: Attorney-in-fact
/s/ XXXXX X. XXXXXX
Xxxxx X. Xxxxxx
OEDC Exploration & Production, L.P.
By OEDC, Inc., its general partner
/s/ XXXXXXX X. XXXXXXXXXXX By: /s/ XXXXX X. XXXXXXXXX
Xxxxxxx X. Xxxxxxxxxxx Name: Xxxxx X. Xxxxxxxxx
Title:President
/s/ XXXXXXX X. XXXXXXXX
Xxxxxxx X. Xxxxxxxx
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STATE OF LOUISIANA ss.
ss.
PARISH OF ORLEANS ss.
This instrument was acknowledged before me on October 3, 1996, by X. Xxxxxx,
Attorney-in-fact of Amoco Production Company, a Delaware corporation, on behalf
of said corporation.
/s/ P. XXXXX XXXXXX
Notary Public in and for the State of Louisiana
Name: P. Xxxxx Xxxxxx
My Commission Expires: at Death
STATE OF TEXAS ss.
ss.
COUNTY OF XXXXXXXXXX xx.
This instrument was acknowledged before me on October 3, 1996, by Xxxxx X.
Xxxxxxxxx, President of OEDC, Inc., as the general partner of OEDC Exploration &
Production, L.P. a Texas limited partnership, on behalf of said limited
partnership.
/s/ XXXXX X. XXXXXX
Notary Public in and for the State of Texas
Name: Xxxxx X. Xxxxxx
My Commission Expires: Feb. 22, 1998
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EXHIBIT A
The following blocks in the South Timbalier Area:
Xxxxx 000
Xxxxx 000
Xxxxx 000
Xxxxx 138
Block 139
Block 146
Xxxxx 000
Xxxxx 000
Xxxxx 000
Xxxxx 150
Xxxxx 000
Xxxxx 000
Xxxxx 000
Xxxxx 160
Xxxxx 000
Xxxxx 000
Xxxxx 000
Xxxxx 174
Block 175
Block 176
Xxxxx 000
Xxxxx 000
Xxxxx 000
Xxxxx 188
Block 189
Block 190
Less and except the SW/4 of Block 161 down to the base of the lower Bul. 1 Sand
seen at a depth of 7,900' (MD) in the electric log for the D-1 well located on
South Timbalier Block 161.
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