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EXHIBIT 10.19
AMERAC ENERGY CORPORATION
0000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
November 21, 1997
Southern Mineral Corporation
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Re: Richland Minerals, Inc.
Gentlemen:
Reference is made to the Agreement and Plan of Merger by and among
Southern Mineral Corporation ("Southern"), AEC Acquisition Corp. and Amerac
Energy Corporation ("Amerac") dated November 17, 1997 (the "Merger Agreement").
Capitalized terms used and not otherwise defined herein shall have the meanings
ascribed thereto in the Merger Agreement.
As you are aware, Amerac has offered to acquire certain leasehold and
other interests from Richland Minerals, Inc. pursuant to the letters attached
hereto as Exhibits "A" and "B" (each, an "Offer Letter" and together, the
"Offer Letters"). Amerac has orally agreed to increase the $460,000 gross
purchase price reflected in the November 19 Offer Letter to $480,000 (the
"Purchase Price"). In connection therewith, Amerac proposes to borrow $400,000
today (the "Borrowing") under its credit agreement with Bank One, Texas,
National Association (the "Credit Agreement"). This letter will evidence (i)
your consent, as required by the Merger Agreement, to (x) the transactions
described in the Offer Letters as modified orally as described above (the
"Transactions") and (y) the Borrowing and (ii) your agreement with respect to
funding 50% of the Purchase Price required to be paid by Amerac in connection
with the Transactions.
1. Consent. Southern hereby consents to (i) Amerac's entering into and
consummating the Transactions and (ii) the Borrowing, and agrees that such
actions do not and will not constitute a breach of any provision of the Merger
Agreement.
2. Funding Agreement. Southern hereby agrees to reimburse Amerac for 50%
of the Purchase Price (i.e., $240,000) promptly upon receipt of an invoice
therefor from Amerac. Upon receipt from Southern of such $240,000, in full
satisfaction of its obligations to you with respect to such reimbursement,
Amerac will assign to Southern, warranting title against claims made by,
through or under Amerac, but not otherwise, an undivided 50% of the interests
Amerac proposes to acquire pursuant to the Transactions. Thereupon, Southern
agrees to negotiate in good faith
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November 21, 1997
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with Amerac the terms of a mutually acceptable joint operating agreement
covering such interests and the interests of Amerac and its "Eastern Shelf
Group" joint venturers in the properties affected thereby.
If the foregoing accurately sets forth our agreement with respect to the
matters addressed herein, please so indicate by executing each copy of this
letter in the space provided below and returning one fully executed copy to
Amerac.
Very truly yours,
AMERAC ENERGY CORPORATION
By: /s/ XXXXXXX X. XXXXXXXX
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Xxxxxxx X. Xxxxxxxx
President and CEO
Agreed to and Accepted this
21st day of November 1997
SOUTHERN MINERAL CORPORATION
By: /s/ XXXXX X. XXXXX
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Xxxxx X. Xxxxx
Vice President - Finance
