EXHIBIT 10.1
FARM-OUT AGREEMENT
In consideration of the benefits to accrue to the parties hereto and
the covenants and obligations contained herein, it is hereby mutually agreed as
follows:
I. PARTIES:
The parties hereto are Quinton Rental & Repair Service, Inc., P. O. Xxx
000, Xxxxxxx, XX, 00000 (hereinafter QUINTON) and Oak Hills Energy, Inc., P. O.
Xxx 000, Xxxxxxxxxxx, XX 00000 (hereinafter OAK HILLS).
II. ACREAGE:
QUINTON is the owner of an oil and gas leasehold known as the Xxxxxx
Lease covering Section 2-8N-17E, Pittsburg County, Oklahoma (THE PROPERTY).
III. OBLIGATIONS:
OAK HILLS will commence or cause to be commenced the actual drilling of
a horizontal well at a legal location on THE PROPERTY on or before 360 days
after the execution of this Agreement or 30 days after all necessary Corporation
Commission orders are entered, whichever is later. QUINTON agrees to give OAK
HILLS the right to drill subsequent xxxxx, said well or xxxxx to be drilled
within 180 days from the completion of the previous well. If no well is
commenced within 360 days after execution of this Agreement, OAK HILLS will have
no right, title or interest in the subject land and all rights will revert to
XXXXXXX.
IV. ASSIGNMENT OF LEASEHOLD INTEREST:
After completion of a producing well by OAK HILLS, QUINTON shall
assign all of its right, title and interest in and to the wellbore only of the
producing well subject to the terms of this Agreement and subject to a five
percent (5%) carried working interest to the tanks. However, notwithstanding
anything else herein contained, QUINTON shall deliver to OAK HILLS at least a
75% NRI in THE PROPERTY. Upon receipt of an assignment from QUINTON of all its
working interest with a minimum of 75% NRI in THE PROPERTY, OAK HILLS shall
assign to QUINTON the 5% working interest carried to the tanks. QUINTON shall
also be entitled to an overriding royalty interest equal to the difference
between the net revenue interest conveyed by QUINTON to OAK HILLS and 75%, if
any. To the extent that the net revenue delivered by QUINTON is less than 75%,
the carried working interest shall be reduced accordingly. In the event that
QUINTON does not own 100% of THE PROPERTY, and OAK HILLS obtains additional
working interest through its own efforts, said additional interests shall not be
used in computing QUINTON'S right to a carried working interest and/or
overriding royalty interest. After production is delivered to the tanks, QUINTON
agrees to pay its share of the working interest expenses attributable to its 5%
carried working interest should QUINTON be entitled to said carried interest
under the terms of this Agreement.
V. OPERATOR:
OAK HILLS will be the Operator of any xxxxx drilled on THE PROPERTY and
the parties hereto agree to be bound by the terms of the June 30, 1982 Operating
Agreement covering the above described PROPERTY with OAK HILLS as Operator.
VI. COSTS:
The entire cost and risk of conducting the above described operations
shall be borne by OAK HILLS to the tanks. If any of the above operations result
in a dry hole, OAK HILLS shall plug and abandon the well at its sole cost, risk
and expense. If any well drilled pursuant hereto results in a producer of oil
and/or gas in paying quantities, OAK HILLS shall complete and equip the well to
produce at its sole cost and risk to the tanks. Subsequently, QUINTON shall pay
its proportionate costs of operations.
VII. INFORMATION AND REPORTS:
OAK HILLS agrees to give XXXXXXX access to the rig floor and all
drilling reports, electric logs and other information pertinent to the drilling,
testing and completing of the well upon request.
VII. STATUS OF PARTIES:
In the drilling of the xxxxx above described and otherwise complying
with the terms and provisions of this Agreement, the parties hereto are acting
independently and not as partners in any capacity, mining or otherwise.
DATED this 5TH day of DECEMBER, 2003.
OAK HILLS ENERGY, INC.
PITTSBURG COUNTY FILED OR RECORDED
By: /s/ XXXX XXXXXXXXX
__________________
Xxxx Xxxxxxxxx
2
QUINTON RENTAL & REPAIR SERVICE, INC.
By: _________________________________
Xxxxx Xxxx
State of Oklahoma )
) ss
County of Xxxxxx )
Before me, the undersigned, a Notary Public, in and for said County and
State on this 5TH day of December, 2003, personally appeared Xxxx Xxxxxxxxx, to
me known to be the identical person who subscribed the name of the maker thereof
to the within and foregoing instrument as its President and acknowledged to me
that he executed the same as his free and voluntary act and deed and as the free
and voluntary act and deed of said corporation, for the use and purposes therein
set forth.
Given under my hand and seal of office the day and year last above
written.
My Commission Expires
______________________' _______________________
Notary Public
State of Oklahoma )
) ss
County of Xxxxxx )
Before me, the undersigned, a Notary Public, in and for said County and
State on this 5th day of December, 2003, personally appeared Xxxxx Xxxx, to me
known to be the identical person who subscribed the name of the maker thereof to
the within and foregoing instrument as its President and acknowledged to me that
he executed the same as his free and voluntary act and deed and as the free and
voluntary act and deed of said corporation, for the use and purposes therein set
forth.
Given under my hand and seal of office the day and year last above
written. My Commission Expires:
4-4-2007 _______________________
_____________________
Notary Public
3
