Exhibit 10.4
MOFFAT RANCH EXPLORATION AGREEMENT
between Northwest PetroLenm, Inc., and Hadro Resources, Inc
Dated April 24, 2001
WHEREAS, Hadro Resources, Inc., a Nevada corporation, ("URF") located at 000
Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxx, XX 9S230 desires to enter into an Exploration
Agreement ("this Agreement") with Northwest Petroleum, Inc., a California
Corporation, ("Northwest") located at 0000 Xxxxxxx Xxxxxx, Xxxxx 000,
Xxxxxxxxxxx, Xxxxxxxxxx 00000 ("Northwest") regarding the Moffat Ranch Gas Field
and seismic oil and gas lease options; and
WHEREAS, Northwest is the Lessee of approximately 760 acres of oil and gas lease
mineral interests of the Moffat Ranch Gas Field in Madera County, California and
Northwest is the owner of oil, gas and seismic lease options comprising of
approximately 4522.75 acres and excluding the NW 1/4 of the NW 1/4 of Section 3
and the NE 1/4 of the NE 1/4 of Section 4 that is 320 acres more or less of the
Moffat Ranch Gas Field in Madera County, California more specifically described
in Exhibit "A" known here and throughout as "Xxxxxxx Ranch Leases"; and
WHEREAS Canadian Metals Exploration Limited ("CME") has already entered into an
agreement with Northwest in which CME agreed to acquire interests in the Moffat
Ranch Leases; and
1.
WHEREAS Northwest is the Oil and Gas Field Operator of the lands described in
Exhibit "A"; and
WHEREAS Northwest has submitted to HR1 geologic data to HRI for their
geologist's review; and
WHEREAS HR1 desires to earn a Working Interest and a Net Revenue Interest in the
Moffat Ranch Leases
NOW THEREFORE, HRI and Northwest agree to the following tenxis and conditions.
1. HRI agrees that Northwest shall be the oil and gas fleld operator of
the Moffat Ranch Leases.
2. HRI agrees that Northwest shall be the operator for the Northwest
Moffat #1 and Northwest Moffat #2 xxxxx under a Model Form 610
Operating Agreement, XXXXX accounting agreement and participation
agreement dated March 12, 2001 known here and throughout as "Operating
Agreement" and agrees to sign the Operating Agreement upon payment of
the xxxxx. In the event of a conflict between the Operating Agreement
and this Agreement, it is agreed that the provisions of the Operating
Agreement shall control.
3. HRI will earn 37.5% Net Revenue Interest carrying 50% Working Interest
"cost interest" to the gas sales production point. Then HRI will have
32.81% Net Revenue Interest carrying 43.75% Working Interest and
Northwest will be entItled to 4.68% Net Revenue Interest carrying
6.25% Working Interest Before Payout. After Payout occurs when HRI
recovers all of its costs of seismic, drilling and completion
Northwest will revert in for 9.37% Net Revenue Interest carrying
12.5% Working Interest.
2.
4. HRI agrees to pay Northwest for Land and Leasing according with the
schedule below and all lease rentals for the Moffat Ranch Leases, if
not held by production, will be paid by the Working Interest owners
per their pro rata share of their Working Interest.
5. HRI agrees to fund a 3-D Seismic Survey Program over the Moffat Ranch
Leases on or before July 2, 2001 for $280,000.
6. HRI agrees to sign Operating Agreements for the Northwest Moffat #1
well and the Northwest Moffat #2 well, and provide the drilling
funds of $500,000 on or before August 15, 2001 subject to the
independent interpretation of the 3-D Seismic Survey. If HRI elects
not to drill there is no fault or penalty except that Northwest will
retain all rights to the Moffat Ranch Leases. The consideration HRI
agrees to pay Northwest herein shall be in U.S. dollars and is to be
paid to Northwest by bank wire to Northwest Petroleum, Inc. Account
#0903 604940, Routing #122000248, Xxxxx Fargo Bank, 0000 Xxxxxxxxxx
Xxxxxx, Xxxxxxxxxxx, XX 00000; Phone (000) 000-0000.
AMOUNT PAYMENT DATES FOR
(a) $2,500 April 27, 2001 Upon Signing
(b) $50,000 May 9, 2001 2-D Seismic and
Land & Leasing
(c) $81,500 June 5, 2001 Land and Leasing
(d) $280,000 July 2, 2001 3-D Seismic Survey
(e) $500,000 August 15, 2001 Drilling 2 xxxxx
3.
Should HRI fail to make a payment on any of the above payment dates Northwest
shall send HRI a default notice to pay and HRI will have Five (5) days to cure
the default by making the payment to Northwest's bank account per the above bank
wire instructions, if payment is not received HRI will be in default of this
contract and it will terminate.
7. It is agreed between the parties that the estimated drilling and
completion costs for the above xxxxx, as detailed within an
Authorization for Expenditure, can be revised 30 days before the
anticipated spud date to more accurately reflect the current drilling
and completion costs.
8. Northwest agrees to provide HRI with the following:
(a) Northwest will provide HRI and its representatives with full and
continuing access to the Moffat Ranch Leases in accordance with
the lease terms and all data and information reasonably requested
by HRI for the purpose of carrying out its Research and
Development and due diligence investigations hereunder, and will
endeavor to make available to HRI such of its employees and
officers as HRI may reasonably request for this purpose, at
reasonable times.
(b) Title documents for the Lands described in Exhibit "A," including
a schedule of lease rentals payments and dates for the payments
of the rentals on or before June 1, 2001.
(c) Interpreted copies of 2D seismic lines and intepretations within
Northwest's possession which cover the Lands described ILl
Exhibit "A".
4.
(d) Geologic information within Northwest's possession which cover
the Lands described in Exhibit "A."
(e) During the progrcss of the drilling of the xxxxx and regardless
of the depth, HRI shall have access to the well and to all cores,
cutting, depth, logs, and all other information relative thereto.
HRI is to be notified immediately in the event any oil or gas
shows are encountered in drilling the Northwest Moffat #1 well
and Northwest agrees to provide reasonable notice to HRI prior to
the running of electric logs, coring or testing to allow HRI to
have a representative at the well for such operations.
9. No Partnership: It is understood that this Agreement shall not create
the relationship of an association, partnership between the parties
hereto, and that no act done by any party pursuant to the provisions
hereto, shall operate to create such relationship, nor shall the
provisions of the Agreement be construed as creating such
relationship. Both of the parties hereto further agree that this
Agreement shall not constitute a partnership as defined in the
Internal Revenue Code of 1986.
10. Conflicts of Interest: Northwest being in the oil and gas exploration
and development land and leasing business has provided similar
services for other entities in the area and has future obligations
under contract to those entities. HRI understands that there may be
conflicts of interest and agrees to hold Northwest harmless for any
conflicts of interest. In the event Northwest becomes aware of an
actual conflict of interest, Northwest agrees to notify HRI of such
conflict of interest.
5.
11. Notices: All notices authorized or required by the terms of this
Agreement shall be given in writing by telecopy "Fax", mail or
telegram, postage or charges prepaid and addressed to the address
below. The originating notice to be given under any provision hereof
shall be deemed given only when received by the party to whom such
notice is directed and the time for such party to give any notice in
response thereto shall run from date originating notice is received.
The second or any responsive notice shall be deemed given when
deposited in the mail or with the delivery of telegraph company, with
postage or charges prepaid.
12. Force Majeure: In the event any party hereof is prevented from
complying with any of the obligations imposed upon it hereunder, or
from exercising any of the rights granted to it hereunder, as a result
if an act of God, government, agency or any other cause, whether
similar or dissimilar, reasonably proved to be completely beyond the
control of such party, the time within which said party may perform
such obligations or exercise such rights shall be extended for a
period equal to the time during which said party was prevented from
the performance of such obligations, or the exercise of such rights.
The party having the difficulty shall take all reasonable steps to
remedy such condition as rapidly as possible.
13. Attorney Fees: Should any party bring any action in a court of
competent jurisdiction to enforce the terms and provisions of this
Agreement, the Losing party in such action shall pay the prevailing
party, in addition to any relief ordered by the court, the prevailing
party's costs and expenses in connection with the
6.
litigation, including reasonable attorney's fees, and such costs
incurred in connection with any appellate review.
14. Governing Law: The governing law of this Agreement shaLl be that of
the State of California. Venue and jurisdiction to be in the Xxxx
County Superior Court, State of California.
15. Entire Agreement: The parties acknowledge this Agreement contains the
entire agreement among the parties and that it supersedes all prior
understandings or agreements with respect to its subject matter. There
are no implied covenants in this Agreement nor is there any liability
of any kind arising from any alleged breach of any implied covenant or
implied obligation. Any modification to this Agreement must be in
writing and approved and executed by all parties thereto.
16. This Agreement may be executed in counterpart and by fax.
17. Subject to the conditions outlined in the Operating Agreement, and
upon the written consent of the other party hereto to any assignment
of this Agreement, this Agreement shall ensure to the benefit of and
be binding on the parties hereto and their respective assigns and
successors.
7.
Hadro Resources, Inc. ("HRI")
By:
--------------------------------------
Xxxxx Xxxxxx, President
ACKNOWLEDGED AND AGREES THIS 25th DAY OF
APRIL 2001 BY:
Northwest Petroleum, Inc. ("Northwest")
By: /s/ Xxxxxxx Xxxxxxxxx (MA)
-------------------------------------
Xxxxxxx Xxxxxxxxx, President
8.
EXHIBIT "A"
Attached to and made a part of that certain Xxxxxxx Ranch Exploration Agreement
dated April 24, 2001, by and between Northwest Petroleum, Inc., and Hadro
Resources, Inc.
Deseription~
All those certain sections, blocks or tracts of land located in the County of
Madera, State of California, more particularly described as follows:
BEGINNING at the Northeast corner of Section 0, Xxxxxxxx 00 Xxxxx, Xxxxx 15
East, M.D.B.&M. thence South 0 (degrees) 16-1/2' East 5147.20 feet to the
Southeast corner of Section 6, thence South 0 (degrees) 20-1/2 West 5268.55 feet
to the Southeast corner of Section 7, thence South 89 (degree) 09-1/2' West
5289.95 feet to the Southwest corner of Section 7, thence South 0(degree) 08'
East 5289 feet to the Southeast corner of Section 00, Xxxxxxxx 00 Xxxxx, Xxxxx
14 East, M.D.B.&M, thence South 89(degree) 38-l/2' West 4695.02 feet to the
center line of Lone Willow Slough, thence along the center line of Lone Willow
Slough North 72(degree) 58' West 146.52 feet, South 73(degree) 25' West. 333.72
feet North 47 (degree) 25' West 72.59 feet, thence leaving Lone Willow Slough
South 89(degree) 38-1/2 West 54.84 feet to the Southwest corner of Section 13,
thence North 0 (degree) 04' West 5284.0 feet to the Northwest corner of Section
13, thence South 89(degree) 36' West 4183.0 feet to a point (said point bearing
North 89(degree) 36' East 1074.30 feet to the Southwest corner of Section 11),
thence along a fence North 53 (degree) 40' West 4650.75 feet, North 26(degree)
43' West 2905.23 feet to a point on the North line of Section 10 (said point
bearing South 89(degree) 56-1/2 'East 1370.84 feet from the Northwest corner of
Section 10), thence continuing along fence North 26 (degree) 43' West 3130.57
feet to a point on the West line of Section 3 (said point bearing North 0
(degree) 45-1/2' West 2796.60 feet from the Southwest corner of said Section 3),
thence continuing along fence North 26(degree) 43' West 2628.55 feet thence
leaving fence North 89(degree) 45-1/2 East 1150.95 feet to the Northeast corner
of Section 4 thence North 89(degree) 52-1/2' East 5277.90 feet to the Northeast
corner of Section 3, thence North 89(degree) 50' East 5277.70 feet to the
Northeast corner of Section 2, thence North 89(degree) 50' East 5277.60 feet to
the Northeast corner of Section 0, Xxxxxxxx 00 Xxxxx, Xxxxx 14 East, M.D.B.& M.,
thence North 89(degree) 47-1/2' East 5395.65 feet to the point of beginning,
containing 5282.75 acres, more or less.
EXCLUDING the NW 1/4 of the NW 1/4 of Section 3 and Excluding the NE 1/4 of the
NE1/4 of Section 4 Township 12 South, Range 14 East, MDB&M Excluding all xxxxx
drilled before April 24, 2001.
