EXHIBIT 10.14
FARMOUT AGREEMENT
THIS AGREEMENT, made and entered into this the 2nd day of November 2004,
by and between XXXXXXXXX EXPLORATION, LLC., 0000 Xxxxxxxx Xx, Xxxxxxxxxxxx,
Xxxxxxxx 00000, hereinafter referred to as "XXXXXXXXX", and BPI Industries,
Inc., 000 Xxxx XxXxxxx Xxxxxx, Xxxxxx, Xxxxxxxx 00000 hereinafter referred to as
"FARMEE".
WITNESSETH, THAT:
WHEREAS, XXXXXXXXX is the owner of the following Coal Seam Gas Leases,
hereinafter called Farmout Tract;
Coal Seam Gas lease dated February 1, 1999, recorded March 15, 1999, in
Book 455, at pages 183-200, by and between Meadowlark Farms, Inc., as
Lessor, and Xxxxxxxxx, as Lessee, and pertaining to 22,997 acres located
in Perry County, Illinois, as more specifically described in said lease.
Coal Seam Gas lease dated February 1, 1999, recorded March 15, 1999 in
Book 1036, at pages 218-224, by and between Meadowlark Farms, Inc., as
Lessor, and Xxxxxxxxx, as Lessee, and pertaining to 41,253 acres located
in Macoupin County, Illinois, as more specifically described in said
lease.
WHEREAS, XXXXXXXXX has agreed to assign to FARMEE and FARMEE has agreed to
accept from XXXXXXXXX the aforesaid Coal Seam Gas Leases which includes coal bed
methane gas, coal bed gas, methane gas, gob gas, occluded natural gas in any
formation or other naturally occurring gases contained in or associated with any
coal seam, hereinafter referred to as "Gas".
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, it is agreed by and between the parties hereto as follows:
1. TITLES. XXXXXXXXX does not warrant the title to the Farmout Tract but
it shall, upon request, make available to FARMEE such abstracts and other
documents, without warranty or liability, as it has in its files together with
copies of the lease and all intermediate assignments thereof. There shall be no
obligation on the part of XXXXXXXXX to secure new or supplemental abstracts nor
secure any curative instruments in connection with the title to said Farmout
Tract. Furthermore, FARMEE shall furnish to XXXXXXXXX free of all costs copies
of all abstracts or title opinions FARMEE acquires on the Farmout Tract.
XXXXXXXXX agrees to assign any prior warranties of title it received in the
lease.
2. INSURANCE. All operations shall be at the sole risk, cost and expense
of FARMEE and XXXXXXXXX shall not be subject to any obligation or liability
whatsoever in connection therewith. While operations are being conducted
hereunder on the lands subject hereto, FARMEE agrees to acquire and/or maintain
adequate Worker's Compensation, and a minimum of Five Million Dollars
($5,000,000) of Comprehensive General Liability, Excess Liability and Automobile
Liability Insurance. FARMEE further agrees to name XXXXXXXXX as an additional
insured under such insurance policies and further agrees to secure a waiver of
subrogation in favor of XXXXXXXXX under each of the insurance policies noted
above.
FARMEE shall provide XXXXXXXXX with current copies of said Certificates of
Insurance, so as to have on file with XXXXXXXXX current copies at all times
during the term of this Agreement. FARMEE shall notify XXXXXXXXX immediately of
any changes in its insurance coverage. Each insurance carrier shall agree to
give XXXXXXXXX ten (10) days notice prior to the cancellation or material change
of said insurance policies.
3. INFORMATION CONCERNING XXXXX.
FARMEE shall furnish XXXXXXXXX information for any xxxxx drilled by FARMEE
on the Farmout Tract. All well(s) drilled on the Farmout Tract shall be at legal
locations as approved by the Illinois Department of Natural Resources. Refer to
Exhibit 'A', Geological and Drilling Requirements, for further details.
4. PROTECTION OF LEASES.
FARMEE agrees to preserve and protect the leasehold estate to be assigned
to FARMEE hereunder, in full compliance with the express and implied terms,
conditions and covenants thereof, and give to XXXXXXXXX the full right to
enforce all of the terms and conditions of said lease, both express and implied,
either alone or in conjunction with the mineral owners. FARMEE agrees to protect
and preserve said estate from any and all liens, judgments and any other claims
whatsoever. Should FARMEE fail to comply with any of the terms and provisions
hereof, XXXXXXXXX, in addition to any other relief to which it may be entitled,
may demand a reassignment of the interest transferred, or any portion thereof,
as provided for herein, and FARMEE shall thereupon execute and deliver to
XXXXXXXXX an assignment covering the interest assigned hereunder to FARMEE in
the Farmout Tract and FARMEE shall warrant title against the claims and demands
of any and all persons claiming by, through or under FARMEE.
5. SURRENDER, EXPIRATION OR ABANDONMENT.
In the event FARMEE, or its successors or assigns, hereafter desires to
surrender, let expire or abandon all or any portion of the Farmout Tract, FARMEE
agrees to give XXXXXXXXX at least sixty (60) days notice in writing of its
intention to so surrender, let expire or abandon and shall, if requested to do
so by XXXXXXXXX, reassign said Farmout Tract insofar as it covers the portion
being surrendered, expiring or abandoned to XXXXXXXXX free of any encumbrances
suffered by, through or under FARMEE, in which event XXXXXXXXX shall have the
option if it so desires to purchase any casing and other equipment in any well
or xxxxx that may be situated thereon at the prevailing market price for second
hand material of like quality and kind.
6. PAYMENTS.
In the event prior to the delivery of an assignment by XXXXXXXXX to FARMEE
hereunder any payments necessary to maintain the Farmout Tract in force and
effect should become due, XXXXXXXXX shall make such payments and FARMEE shall
reimburse XXXXXXXXX for the total amount thereof within thirty (30) days after
receiving XXXXXXXXX'x billing therefore.
Should FARMEE desire to cease payments necessary to maintain the Farmout
Tract, or any portion thereof, in force and effect or should FARMEE desire that
XXXXXXXXX cease to make such payments for the account of FARMEE, FARMEE shall
give notice thereof to XXXXXXXXX in writing no less than sixty (60) days prior
to the due date of such payments and
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upon request by XXXXXXXXX, FARMEE shall immediately assign all of its right,
title and interest in and to the Farmout Tract which requires such payment to
XXXXXXXXX without warranty of title except against the claims and demands of any
and all persons claiming by, through, or under FARMEE.
If XXXXXXXXX, through mistake, oversight or inadvertence fails to make any
payments necessary to maintain the Farmout Tract in force and effect as required
hereunder, there shall be no liability on the part of XXXXXXXXX acting in good
faith.
7. PERFORMANCE.
If initial testing of any well or xxxxx drilled under the terms of this
Agreement proves to be capable of producing Gas in commercial quantities, it, or
they, shall be equipped for production by FARMEE. The maximum lime for sales of
production from this farmout acreage shall commence within 24 months after the
initial 36-month evaluation period. If any well proves to be incapable of
producing Gas in commercial quantities, FARMEE shall plug and abandon same in
accordance with the rules and regulations of any regulatory body having
jurisdiction. FARMEE shall restore the premises to its original contour as
nearly as practicable and settle and dispose of all claims for damage including
but not limited to grass, crops and the surface of the land, as to all
disturbances caused by FARMEE.
If and when FARMEE has completed any well drilled as a producer of Gas in
the manner and within the time herein provided into the pipeline and has
otherwise complied with and performed all the other terms, covenants and
conditions herein made binding xxxx XXXXXX, XXXXXXXXX shall execute and deliver
to FARMEE an assignment of its right, title and interest in and to the Farmout
Tract, subject to the terms of this Agreement and in the form attached as
Exhibit 'B', insofar only as said Farmout Tract covers and is limited to all
depths and formations underlying said lands from the surface to Fifty (50) feet
below the deepest coal seam, namely the Xxxxxxx seam, lying approximately
800'-1000' below the surface, penetrated or underlying said well and rights to
XXXXXXXXX'x leasehold within the one hundred sixty (160) acre quarter section
surrounding each well in the event the well is a vertical well, or each quarter
section penetrated by the wellbore to total depth in the event the well is a
horizontal well.
XXXXXXXXX and FARMEE recognize if FARMEE earns rights as set forth herein
above, such earning of rights may result in the formation of overlapping
squares. In the event of this occurrence, XXXXXXXXX and FARMEE agree previously
drilled and completed xxxxx, and the acreage allocated thereto, shall take
precedence over subsequently drilled and completed xxxxx whose acreage overlaps
therewith. In this event, the acreage assigned to FARMEE for such subsequently
drilled well shall exclude that portion of acreage that fails within the
boundaries of a square which would be applicable to a previously drilled and
completed well(s).
The assignment shall specifically refer to depths and formations assigned
and be subject to the terms and conditions of this agreement. In addition, said
assignment shall be without warranty, express or implied, but shall assign unto
FARMEE all warranties of title it received in the lease(s), and shall reserve
unto XXXXXXXXX a Three percent (3%) of 8/8ths overriding royalty on the gas sold
of Gas produced and sold from that portion of the Farmout Tract so assigned, or
any renewals, extensions or modifications of any lease covering the Farmout
Tract taken within two years of its expiration; which interest shall be free
from any and all costs or
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charges whatsoever, including without limitation, costs of gathering,
compression, or marketing, and based on the highest price attainable in an arms
length transaction.
The overriding royalty on the Gas payable by FARMEE, in those cases where
FARMEE enters into a gas sales contract for the sale of Gas produced from or
attributable to the Farmout Tract with a purchaser which is owned or controlled
by, is an affiliate or subsidiary of FARMEE, or of which FARMEE is a subsidiary,
shall be calculated and paid on the basis of the market value of the gas using
the Appalachian Basin Index as a basis. Further, should FARMEE pre-sell, pledge
or otherwise commit the gas produced from the Farmout Tract for a period of more
than twelve months, it shall nevertheless make payment of the overriding royalty
based on the current market value of the gas using the Appalachian Basin Index
as a basis. Should FARMEE pre-sell, pledge or otherwise commit the Gas produced
from the Farmout Tract for a period of less than twelve months, it shall
nevertheless make payment of the overriding royalty based on the actual price
received for Gas delivered provided the Gas is sold in an arms length
transaction.
XXXXXXXXX, upon notice in writing to FARMEE shall have the right to audit
FARMEE's accounts and records. XXXXXXXXX'x right to audit shall be limited to
those accounts and records pertaining to this agreement, including without
limitation, all accounts and records regarding income, expenses and production
from the farmout premises, relating to the Overriding Royalty for any calendar
year within the twenty-four (24) month period following the end of such calendar
year. FARMEE shall bear no portion of the audit cost incurred under this
paragraph. Audits shall not be conducted more than once each year without prior
approval of FARMEE and shall be made at the expense of XXXXXXXXX. FARMEE shall
reply in writing to an audit report within 180 days after receipt of such
report. Any applicable statute of limitation related to matters contained in the
audit report shall be tolled during any period after which the report has been
furnished to FARMEE and until the FARMEE shall reply in writing to such report.
FARMEE agrees to indemnify and hold XXXXXXXXX harmless from any claim(s),
demand(s) or lien(s) asserted by any person or persons pursuant to FARMEE's
operations and to pay promptly all invoices for labor, materials and other items
as they occur.
As a condition precedent to XXXXXXXXX'x obligation to perform in
accordance with the provisions of Article 7 hereof, FARMEE shall furnish
evidence satisfactory to XXXXXXXXX that all bills have been paid in connection
with said test well or xxxxx.
8. DEFAULT. If FARMEE is in breach of the terms of this agreement and
after proper notice as set out herein, XXXXXXXXX, at its option, may terminate
this agreement; provided, that in so doing XXXXXXXXX shall not waive or
otherwise be precluded from exercising any other rights or remedies, at law or
in equity, which it may have for the breach of this agreement by FARMEE or for
FARMEE's failure to perform under this agreement in whole or in part. XXXXXXXXX
shall give the FARMEE written notice by certified letter fully describing the
breach or default. After receipt of the written notice, the FARMEE shall have
fifteen (15) days in which to commence satisfactory actions. Once satisfactory
actions are commenced, the FARMEE shall then have thirty (30) days to fully
remedy the breach or default.
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9. OTHER CONDITIONS.
A. As initial consideration for this agreement, FARMEE shall pay to
XXXXXXXXX One Hundred Thousand Dollars ($100,000.00) for the
leasehold farmed out hereunder upon execution of the Farmout
Agreement. For purposes of this agreement the Farmout Tract shall be
considered as containing 64,250 acres, whether actually more or
less.
B. This Agreement will be in force for an initial period of 36 months
from the date hereof, hereinafter called the "Evaluation Period",
during which time FARMEE may test and evaluate the properties
subject to this agreement to determine coal thickness, permeability,
porosity, and related gas content. FARMEE may conduct any tests that
it feels are necessary to meet the requirements of this agreement
including drilling test xxxxx as necessary to conduct its tests. Any
test xxxxx drilled that are capable of producing Gas may be placed
into production, at the option of FARMEE.
C. At any time on or before the termination of the Evaluation Period,
FARMEE may request from XXXXXXXXX an extension of this agreement in
order to produce Gas. Provided FARMEE has evaluated the properties
in a good and xxxxxxx like manner, has not created a nuisance nor
environmental damage and has otherwise performed as a prudent
operator, XXXXXXXXX shall grant an extension, hereinafter called the
"Development Period", of this Agreement under the following terms.
a. FARMEE shall pay to XXXXXXXXX an initial rental for the
Development Period of this Agreement for the first (1st)
year of the Development Period of $0.50 per acre for
every acre that FARMEE desires to retain during the
Development Period. FARMEE shall be given credit for
each quarter section where a vertical well or xxxxx have
been drilled and each quarter section penetrated (in
whole or in part) by the wellbore for each horizontal
well drilled and which xxxxx have been put into
production during the Evaluation Period in which case
FARMEE shall not be required to pay the rental for the
Development Period for the acreage in production. For
every year after the first year, there will be an
increase of $0.50 per acre per year for all unearned
acreage relating to both vertical and horizontal xxxxx.
Refer to the following table:
YEAR OF DEVELOPMENT
PERIOD FROM THE EFFECTIVE
DATE OF FARMOUT
AGREEMENT RENTAL PER YEAR FOR UNEARNED ACREAGE
------------------------- ------------------------------------
1st year $0.50
2nd year $1.00
3rd year $1.50
4th year $2.00
5th year and beyond $2.50
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b. Upon completion of drilling to TD of three hundred
twenty-five (325) vertical xxxxx, the Farmout Tract
shall be considered fully developed under the term of
this Agreement. XXXXXXXXX shall deliver to FARMEE an
assignment of the balance of the Farmout Tract.
D. FARMEE shall have ninety (90) days from the signing of this Farmout
Agreement in which to review title to the lease. Should there be a
title failure, or any order from a court of final jurisdiction,
which would prevent FARMEE from drilling on the Farmout Tract, and
if XXXXXXXXX is unable to cure the title failure to FARMEE's
satisfaction within thirty (30) days of receipt of notice of said
title failure, XXXXXXXXX shall reimburse FARMEE the bonus paid upon
execution of this Agreement for that portion of the Farmout Tract on
which there is title failure. This Farmout Agreement shall
thereafter be null and void as to that portion of the Farmout Tract
on which there is a title failure. Title failure shall be defined as
title less perfect than marketable title for the tract in question.
E. FARMEE agrees to comply with the Shut-In Gas provisions as set out
in the coal seam gas leases under Section 3 c.
F. FARMEE acknowledges that XXXXXXXXX is not the owner of the surface
of the lands farmed out hereunder and FARMEE shall be totally
responsible for acquiring any surface rights that are necessary to
accomplish the terms of this agreement.
10. NOTICE. All notices and information to be given or supplied pursuant
to the foregoing provisions shall be given at the following addresses:
XXXXXXXXX EXPLORATION LLC. BPI INDUSTRIES, INC.
0000 Xxxxxxxx Xx. 000 Xxxx XxXxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000 Xxxxxx, XX 00000
Ph: 000-000-0000 Ph: 000-000-0000
Fax: 000-000-0000 Fax: 000-000-0000
11. EFFECT OF AGREEMENT. The terms, covenants and conditions of this
agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors or assigns; and said terms, covenants and
conditions shall be covenants running with the Farmout Tract covered hereby and
with each transfer or assignment of said Farmout Tract.
This agreement is subject to all valid and applicable federal, state and
local laws and the rules and regulations of any regulatory body or authority
having jurisdiction thereof, and all development and operations hereunder shall
be conducted in conformity therewith.
This agreement is not intended to create and nothing contained herein
shall be construed to create an association, trust, joint venture, mining
partnership, or other partnership or entity of any kind, nor to constitute
FARMEE the agent of XXXXXXXXX.
12. COMPLIANCE WITH LAWS AND REGULATIONS. FARMEE covenants that all work
performed hereunder shall comply with and is subject to all valid and applicable
federal,
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state and local laws and the rules and regulations of any regulatory body or
authority having jurisdiction thereof, and all development and operations
hereunder shall be conducted in conformity therewith including, without
limitation, The Occupational Safety and Health Act of 1970 (29 U.S.C. 651, et
Seq.); Hazardous Materials Transportation Uniform Safety Act of 1990 (49 U.S.C.
1801, et seq.); Equal Opportunity: E.O. 11246 and 41 CFR 60-1.4 and 60-1.7; The
Americans with Disabilities Act of 1990 (42 U.S.C. 12101, et seq.); Utilization
of Minority Business Enterprises: E.O. 1625 and 41 CFR Subpart 1-1: 13; Age
discrimination: E.O. 111412; and Employment of Veterans: E.O. 11701 and 41 CFR
50-250.4, which provisions are incorporated by reference. FARMEE shall indemnify
XXXXXXXXX, its parent corporations, subsidiaries, affiliates, successors and
assigns, and its and their directors, officers, shareholders, employees and
agents, against any damages, penalties, costs or expenses incurred in connection
with any alleged violation of any federal, state law or local law or regulation
with regard to FARMEE' performance of this agreement.
13. ASSIGNABILITY. FARMEE shall not assign this agreement in whole or in
part without the written consent of XXXXXXXXX. Nothing in this paragraph shall
prevent FARMEE from assigning the right to drill and produce coal mine gas xxxxx
to a subsidiary or a sister or parent company, provided however XXXXXXXXX shall
be notified of the pending assignment prior to actual assignment of said right
to drill and produce coal mine gas xxxxx.
14. RECORDING. This Farmout Agreement shall not be recorded in the County
Records without the express written permission of the parties hereto.
15. EXECUTION OF AGREEMENT. This agreement shall be null and void at the
option of XXXXXXXXX unless one (1) fully executed copy is returned to XXXXXXXXX
at the above address within ten (10) days from the date first stated herein.
16. Executed as of the date first set out above.
XXXXXXXXX EXPLORATION, INC. BPI INDUSTRIES, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx By: /s/ Xxxxx Xxxxxx
---------------------------- -----------------------------------
Xxxxxxx X. Xxxxxxxx Xxxxx Xxxxxx
Its: General Manager Its: President
Accepted this 2nd day of November 2004.
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EXHIBIT 'A'
DRILLING AND GEOLOGICAL REQUIREMENTS
Attached to and made a part of that certain Farmout Agreement dated November 2,
2004 by and between XXXXXXXXX EXPLORATION, LLC. (XXXXXXXXX) and BPI INDUSTRIES,
INC. (FARMEE).
I. Any well drilled pursuant to the terms and conditions hereinafter
stated and of the agreement to which this exhibit is attached shall
be located and drilled in compliance with all federal and state
laws, executive orders, rules and regulations of any legally
constituted regulatory body of the state in which operations are
being performed and any other governing body having jurisdiction
thereof.
II. Without XXXXXXXXX'x prior written consent, FARMEE shall not divulge
any information obtained from operations hereunder to any third
party other than a party owning an interest under this Agreement or
to a governmental authority having jurisdiction. XXXXXXXXX conveys
the ability to FARMEE to disclose necessary information to its'
employees, consultants and contracted service companies.
III. Prior to the date that any well is commenced under this agreement,
FARMEE shall furnish to XXXXXXXXX a copy of the permit to drill the
well and its accompanying location plat. FARMEE shall inform
XXXXXXXXX of the expected time of spud of any well drilled hereunder
twenty-four (24) hours in advance in such spud.
IV. During the course of the drilling and completion of any well,
XXXXXXXXX or its authorized representatives shall at all times have
access to the well and xxxxxxx floor. XXXXXXXXX shall at all times
have access to the lands covered hereby to inspect operations
thereon and FARMEE, upon request, shall furnish XXXXXXXXX full
information in regard thereto.
V. Casing shall be properly set and the well tested and such other
preparations made as necessary to conduct satisfactory tests of the
showing or showings. Operator shall properly test each prospective
coal seam gas horizon and, upon encountering such horizon in the
drilling of any well, shall notify XXXXXXXXX when such horizon is to
be tested and shall allow XXXXXXXXX sufficient time to have a
representative present when such horizon is tested. FARMEE also
agrees to notify XXXXXXXXX in ample time to have a representative
present when conducting electrical wireline surveys. If the
information from any electrical wireline survey, made either before
or after contract depth has been reached, and considered by itself
or in conjunction with other indications or evidence from cuttings,
cores or showings, makes the formation appear promising of being a
prospective coal seam gas horizon, FARMEE, in it's sole judgment,
shall properly test such horizon if it was not adequately tested at
the time it was penetrated.
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VI. With respect to any well drilled hereunder, FARMEE shall:
a.) Furnish XXXXXXXXX one large-scale copy of all open-hole
logs run through all formations of interest;
Upon completion of any well drilled hereunder, FARMEE shall furnish
XXXXXXXXX with two copies of all final wireline logs
b.) Provide to XXXXXXXXX one copy of the following:
a.) Application for permit to drill, location plat and
drilling permit
b.) Monthly reports of coal seam gas production
c.) Furnish to XXXXXXXXX, upon request, such additional
information as it may reasonably require relative to any
phase of the operations conducted pursuant to this
Agreement. XXXXXXXXX shall have access to and copies of
any geophysical data or seismic surveys which are
conducted on or across the lease acreage during the term
of this Agreement. XXXXXXXXX shall have free access
during customary business hours to all records relative
to such operations.
VII. All logs, reports and other information required under this
provision shall be addressed to Mr. Xxxx Xxxxxxxx.
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Phone (day): (000) 000-0000 xxx.000
Phone (night): (000) 000-0000
Fax: (000) 000-0000
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EXHIBIT "B"
Attached to and made a part of that certain Farmout Agreement dated
_____________ 2004, by and between XXXXXXXXX EXPLORATION, LLC. and BPI
INDUSTRIES, INC. (FARMEE).
ASSIGNMENT, XXXX OF SALE AND CONVEYANCE
STATE OF ILLINOIS
COUNTY OF ______________
XXXXXXXXX EXPLORATION, LLC, whose address is 0000 Xxxxxxxx, Xxxxxxxxxxxx,
Xxxxxxxx 00000 ("Assignor"), for and in consideration of the sum of Ten and
No/100ths Dollars ($10.00) and other good and valuable consideration, the
receipt, adequacy, and sufficiency of which are hereby acknowledged, does hereby
sell, transfer, assign and convey unto BPI INDUSTRIES, INC., whose address is
000 Xxxx XxXxxxx Xxxxxx, Xxxxxx, Xxxxxxxx 00000 ("Assignee"), effective as of
______________________, at 7:00 a.m. local time where each Property is located
("Effective Time") the following:
(a) All of its' right, title and interest in and to the coal seam gas
leases described in the attached Exhibit A (the "Leases"), and the lands covered
by the Leases (the "Land"), together with corresponding interests in and to all
the property and rights incident thereto, including all rights in any pooled or
unitized acreage by virtue of the Land being a part thereof, all production from
the pool or unit allocated to any of the Land, INSOFAR AND ONLY INSOFAR AS SAID
LEASES COVER ONE HUNDRED SIXTY (160) ACRES (A QUARTER SECTION) FOR A VERTICAL
WELL AND EACH QUARTER SECTION PENETRATED BY THE WELLBORE TO TOTAL DEPTH FOR A
HORIZONTAL WELL SURROUNDING THE ___________________________ WELL AS FURTHER
SHOWN ON THE ATTACHED PLAT LABELED EXHIBIT "__" and insofar and only insofar
said leases cover and pertain to those coal-bearing formations from the surface
to fifty feet (50') below the Xxxxxxx seam which formation lies approximately
800'-1000' beneath the surface.
TO HAVE AND TO HOLD unto Assignees and its heirs, devisees, successors and
assigns forever, but subject to the following:
1. That certain Farmout Agreement dated ________________.
2. All outstanding royalties, overriding royalties, other burdens on production,
prior reservations, agreements, and other matters of record.
3. Assignor reserves, as an overriding royalty interest of three percent (3%) of
8/8ths of all gas sold. The foregoing reservation is subject to the following:
(a) If the lease covers less than all of the oil and gas in the above land or if
Assignor should own less than all interest of the original lessee, the portion
of production herein reserved as an overriding royalty shall be reduced
proportionately; (b) This overriding royalty interest applies to any renewals,
extensions or modifications of any lease covering Farmout Tract taken within two
(2) years of its expiration. (c) Assignor reserves the right to take its
overriding royalty interest in kind.
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Assignor warrants title to the leases hereinto assigned through itself, but
through no other.
TO HAVE AND TO HOLD the interest and rights herein conveyed, subject to
the terms and conditions hereof, this Assignment shall be binding upon the inure
to the benefit of Assignor and Assignee, their successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused their names to be
signed this ____ day of _______________, 2004.
WITNESS: XXXXXXXXX EXPLORATION, INC.
____________________________________ BY: ____________________________________
Xxxxxxx X. Xxxxxxxx, General Manager
WITNESS: BPI INDUSTRIES, INC.
____________________________________ BY: ____________________________________
Xxxxx Xxxxxx, President
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