February ____, 1998
BETAustralia, LLC
000 Xxxx Xxxxxx, Xxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxx, President
Gentlemen:
BETAustralia, LLC ("Farmee") has agreed to acquire, and Xxxxxx
(Australia) Ltd. ("Xxxxxx") and Brown (Australia) Ltd. ("Brown") (individually a
"Farmor" and collectively, "Farmors") have agreed to transfer, convey and
assign, a five percent (5%) undivided interest in each of two petroleum
exploration licenses, P.E.L. 53 and P.E.L. 59, issued by the government of South
Australia, as varied and amended from time to time (as so varied and amended,
the "Licenses") on the terms and conditions set forth in this letter agreement.
1. To earn a five percent (5%) undivided interest in the Licenses, Xxxxxx
agrees to pay (a) ten percent (10%) of the Drilling Costs (as defined
below) of the Initial Xxxxx (as defined below), subject to the
limitation set forth below and (b) six and seven-tenths percent (6.7%)
of the Completion Costs (as defined below), if any, of the Initial
Xxxxx, subject to the limitation set forth below. As used in this
letter agreement, "Initial Xxxxx" means the first exploration well
drilled by the parties to the Operating Agreements (as defined in
Paragraph 8 below) on the structural play shown on Exhibit A attached
to this letter agreement (the "Structural Play") with a stated
objective that includes the Winulta formation and the first exploration
well drilled by the parties to the Operating Agreements on the reef
play shown on Exhibit A attached to this letter agreement (the "Reef
Play") with a stated objective that includes the Parara/Koolywurtie
formation. The "Drilling Costs" of an Initial Well for purposes of
this letter agreement shall include (i) all costs of drilling and
open-hole testing the well (including all costs of drilling and testing
any sidetrack or substitute well, should the initial wellbore fail to
reach its objective depth), (ii) if no production casing is set or
production tests are not run, all costs incurred through plugging and
abandoning the well, and (iii) all overhead charges applicable to the
preceding costs under the Operating Agreements. The "Completion Costs"
of an Initial Well for purposes of this letter agreement shall include
(i) all costs of setting and perforating production casing or setting
a liner in the Initial Well, (ii) all costs of production or pressure
tests, and (iii) all overhead charges applicable to the preceding costs
under the Operating Agreements. Drilling Costs and Completion Costs
shall include costs incurred both prior to and after the date of this
letter agreement but shall not include any costs attributable to
operations carried out prior to March 17, 1997, costs of rig
mobilization and demobilization to and from the drillsite License or
any costs beyond the wellhead(s), including, but not limited to, the
costs of platform(s) and the costs of any equipment or facilities for
processing, handling, separating, dehydrating, treating, compressing,
gathering or transporting production from the License(s).
Notwithstanding the foregoing, should the total Drilling Costs of
either Initial Well exceed U.S. $4,819,787.00 or should the total
Completion Costs of either Initial Well exceed U.S. $2,213,305.00,
Farmee shall be obligated to pay only a five percent (5%) share of
those Drilling Costs or Completion Costs of such Initial Well, as
applicable, which are in excess of such amount, and such cost
limitation shall not affect the interest earned by Xxxxxx under the
terms of this letter agreement. The dollar figures set forth in the
preceding sentence for each Initial Well shall be deemed revised to
equal the applicable amounts set forth in the Authority for Expenditure
for such Initial Well when each such Authority for Expenditure is
issued. The parties agree that the Initial Well on the Reef Play shall
be drilled prior to the Initial Well on the Structural Play. The
parties further agree that the two Initial Xxxxx shall be drilled
before any other well is drilled on either License.
2. The Drilling Costs and Completion Costs payable by Farmee under the
terms of Paragraph 1 above shall be paid in accordance with Operator's
periodic cash calls and xxxxxxxx under the Operating Agreements and
subject to the terms and provisions of the Operating Agreements.
3. In addition to the Drilling Costs and Completion Costs of the Initial
Xxxxx, Farmee shall pay in accordance with the provisions of the
Operating Agreements a five percent (5%) share of rig mobilization
and demobilization costs for the Initial Xxxxx and all other costs
incurred pursuant to the Operating Agreements in connection with the
ownership and operation of the Licenses, whether prior to or after the
date of this letter agreement, but excluding costs incurred for
geological and geophysical data acquired by Farmors prior to
September 25, 1996 and any costs, debts or liabilities attributable to
operations carried out prior to March 17, 1997 (including,
specifically, all costs and liabilities attributable to the
November 1996 incident involving the Maersk Victory Rig). The parties
agree that time is of the essence for all payments owing under this
letter agreement.
4. In consideration of Farmee's agreements contained in this letter
agreement and subject to satisfaction of all of Farmee's earning
obligations under this letter agreement in accordance with paragraphs
1 and 2 above, Farmors have executed and delivered to Farmee,
simultaneously with their execution and delivery of this Agreement,
assignments in substantially the form of Exhibit B attached hereto (the
"Assignments"), transferring, conveying and assigning to Farmee a five
percent (5%) undivided interest in the Licenses (the "Assigned
Interest"), with an undivided one-half of the Assigned Interest being
conveyed by each Farmor. The Assignments are subject to a
proportionate share of obligations to the government of South Australia
(the "Government") and existing overriding royalty interests equal to
four percent (4%) of 8/8ths of production (the "Third Party Overriding
Royalties"), to the consent of the Government, and to the consent of
the present parties to the Operating Agreements, and are further
subject to the reservation and exception of the Overriding Royalty
described in Paragraph 7 below. The Assignments contain a special
warranty of title from each Farmor warranting against all persons
claiming by, through or under such Farmor, but not otherwise, title to
an undivided two and one-half percent(2.5%) interest under each License
having at least an undivided two and three-fortieths percent (2.075%)
net revenue interest in production from the License (after deduction of
royalties, overriding royalties and other burdens on production). The
Assignments are subject to obligations to the Government, the terms of
the Overriding Royalty, the terms of the Third Party Overriding
Royalties and any applicable standard exceptions to title. Farmors
and Farmee agree to use all reasonable efforts to obtain the
Government's approval of the Assignments and agree to make such changes
to the form of the Assignments (provided they do not alter the
substance of the deal between the parties) as may be reasonably
requested by the Government. If the Government should fail to approve
the Assignments within one hundred eighty (180) days after submission
of the application, then Farmee shall furnish to the Government the
technical and/or financial assurances reasonably necessary to obtain
such approval. Nothing in this letter agreement shall be deemed to
impact that certain letter agreement among Farmors, Forcenergy
International Inc. and Canyon (Australia) PTY. Limited dated
September 25, 1996 (the "Forcenergy Agreement") or that certain letter
agreement among Farmors and Xxxxxx OAD IV (Australia),L.L.C. dated
March 17, 1997 (the "Xxxxxx Agreement" and, together with the
Forcenergy Agreement, the "Prior Letter Agreements").
5. In the event that (a) Farmee does not satisfy all of Farmee's earning
obligations under this letter agreement in accordance with paragraphs
1 and 2 above by paying all amounts payable under such paragraphs on or
before the dates due and (b) either Farmor terminates this letter
agreement under Paragraph 9, the Assigned Interest shall automatically
revert to Farmors, free and clear of any liens or encumbrances
attaching during the period of Farmee's ownership, in the proportions
one-half to Xxxxxx and one-half to Brown. To provide additional
evidence of such reversion, Xxxxxx has executed and delivered to
Farmors, simultaneously with its execution and delivery of this
Agreement, reassignments in substantially the form of Exhibit C
attached hereto (the "Reassignments") transferring, conveying and
assigning to Farmors the Assigned Interest. The Reassignments are
subject to a proportionate share of obligations to the Government, and
to the Third Party Overriding Royalties and to the consent of the
Government and to the consent of the present parties to the Operating
Agreements, and are further subject to the Overriding Royalty. The
Reassignments contain a special warranty of title from Farmee
warranting against all persons claiming by, through or under Farmee,
but not otherwise, title to an undivided five percent (5%) interest
under each License having at least an undivided four and
three-twentieths percent (4.15%) net revenue interest in production
from the License (after deduction of royalties, overriding royalties
and other burdens on production), subject only to encumbrances
burdening the Assigned Interest prior to the date of the Assignment and
any applicable standard exceptions to title. Farmors shall hold the
Reassignments until filed or returned in accordance with this letter
agreement. If and only if Farmee has failed to pay on or before the
date due any amount payable under paragraphs 1 and 2 of this letter
agreement and either Farmor has terminated this letter agreement under
Paragraph 9, Farmors are authorized to insert the effective date of
termination as the effective date in each of the Reassignments, to
insert the resulting percentage ownership of each party in the
appropriate blanks in the Reassignments, and to file the Reassignments
with the Government. Farmee and Farmors shall each use all reasonable
efforts to obtain the Government's approval of the Reassignments and
agree to make such changes to the form of the Reassignments (provided
they do not alter the substance of the deal between the parties) as may
be reasonably requested by the Government. Should Farmee earn the
Assigned Interest under the terms of this Agreement, the Reassignments
shall be void and Farmors shall return the Reassignments to Farmee.
6. Farmee shall bear and pay any stamp duty payable under the South
Australian Stamp Duties Act with respect to this letter agreement and
the Assignments and with respect to any Reassignments. Farmee shall be
responsible for lodging this letter agreement and the Assignments for
stamping and Farmors shall be responsible (subject to receipt of
payment from Farmee) for lodging the Reassignments for stamping. Each
party shall bear and pay its own legal fees and all taxes, fees or
similar costs (except stamp duty) assessed against such party by the
Government or any other governmental authority in connection with the
Assignments, Reassignments and other transactions contemplated by this
letter agreement. Any taxes, fees or similar costs (except stamp duty)
incurred in connection with the Assignments or Reassignments and not
assessed against a particular party shall be paid by Farmee.
7. In each Assignment, each Farmor shall reserve an overriding royalty
interest equal to three-fortieths of one percent (0.075%) of 8/8's of
all oil, gas and other substances that may be produced and saved under
the applicable License, for a total reservation by both Farmors of
three-twentieths of one percent (0.15%) (the "Overriding Royalty").
The Overriding Royalty shall be free and clear of all costs of
exploring, drilling, appraising, developing, and operating each License
but shall bear its proportionate share of all costs of separating,
treating, gathering, compressing, processing, transporting and
marketing such production, and its proportionate share of any liability
for property taxes or taxes determined by gross production. Each
Farmor shall have the option to take its Overriding Royalty for any six
month period in kind by written notice to Farmee at least ten (10) days
prior to the first day of the first month of such period. If a Farmor
does not elect to take its Overriding Royalty in kind, Farmee shall pay
the Farmor, or arrange for the Farmor to be paid, the following amounts
with respect to sales of production from each License attributable to
any month in which the Farmor is not taking in kind:
(a) In the case of sales of oil or gas to
non-affiliates in arm's length transactions, Farmee shall pay
each Farmor for which it is marketing production 1.5% of the
gross proceeds received by Farmee from such sale less 1.5% of
deductible costs incurred by Farmee in connection with the
production sold; or
(b) In the case of sales of production to an
affiliate or otherwise disposed of in a non-arm's length
transaction, Farmee shall pay to each Farmor for which it is
marketing production 1.5% of the market value of the oil or
gas sold by Farmee in such sale less 1.5% of deductible costs
incurred by Farmee in connection with the production sold.
"Market value," for purposes of this Paragraph, shall mean the
product of the quantity of oil or gas in question and the
highest price actually received in an arm's-length sale to a
non-affiliate by either Farmor during the month in question
or, if there was no such sale, then the prevailing price for
oil or gas of similar quality in Adelaide during the month in
question.
All payments to the Farmor shall be due within thirty (30) business
days after the applicable sales proceeds are received by Farmee.
8. The activities of the parties with respect to the Licenses shall be
subject to the laws and regulations of the Government and any other
government authority having jurisdiction and to the terms of the
Licenses. Operations by the parties on the Licenses shall be conducted
pursuant to the terms of the two Operating Agreements dated
September 25, 1996, one for P.E.L. 53 and one for P.E.L. 59, attached
to this letter agreement as Exhibit D, as amended from time to time
(as so amended, the "Operating Agreements"). Canyon (Australia) PTY.
Limited, ACN 053 781 909, a corporation organized under the laws of
Australia and an affiliate of Farmors ("Canyon"), is the operator under
each Operating Agreement (the "Operator"). Simultaneously with its
execution of this Agreement, Xxxxxx has executed a document evidencing
its intention to be bound by the terms of each Operating Agreement
substantially in the form of Exhibit E. In the event of a conflict
between the provisions of this letter agreement and the provisions of
either Operating Agreement, the provisions of this letter agreement
shall prevail.
9. Either Farmor may terminate this letter agreement by written notice to
Farmee if before earning its interests hereunder, Xxxxxx fails to pay
any of the Drilling Costs or Completion Costs when due and fails to pay
all past due amounts within five business days of written notice of its
default. This remedy shall be in addition to any remedies available to
Farmors under the terms of the Operating Agreements. Following either
Farmor's termination of this letter agreement under this Paragraph 9,
the Reassignments described in Paragraph 5 shall become effective and
Farmee shall have no further rights hereunder. Without limiting the
generality of the preceding sentence, upon any termination under this
Paragraph 9 Farmee shall lose all rights to receive an Assigned
Interest in the Licenses and shall have no right to receive a refund of
any amounts previously paid pursuant to this letter agreement. Xxxxxx
shall execute a release and any other instruments reasonably requested
by either Farmor to evidence the termination of this letter agreement
and reversion of the Assigned Interest. Farmee shall remain liable
for any amounts then owing under Paragraph 2 of this letter agreement
plus interest thereon from the date due until paid at the rate provided
for late payments in the P.E.L. 53 Operating Agreement.
10. Representations.
a. Each Farmor represents to Farmee that:
i. Such Farmor is a limited partnership duly organized
and validly existing under the laws of the State of
Texas, U.S.A.
ii. Such Farmor has the all necessary power and authority
under its agreement of limited partnership and the
partnership laws of the State of Texas, U.S.A. to
execute, deliver and perform this letter agreement,
the Assignments and the Reassignments.
iii. The execution, delivery and performance of this
letter agreement and the Assignments and the
execution, acceptance and performance of the
Reassignments by such Farmor have been duly
authorized by all necessary partnership action
(including any necessary general partner action) on
the part of such Farmor.
iv. This letter agreement, the Assignments and the
Reassignments have been duly executed and delivered
on behalf of such Farmor.
v. There are no suits, actions or proceedings pending,
or to the best knowledge of such Farmor, threatened,
against such Farmor before any court or governmental
authority, which relate to the Licenses or, if
adversely determined, would prevent the consummation
of the transactions contemplated hereby other than
suits, actions or proceedings relating to operations
prior to the date of this letter agreement for which
Farmee will have no liability.
vi. The execution, delivery and performance of this
letter agreement, the Assignments and the
Reassignments do not and will not contravene or
violate (i) the agreement of limited partnership of
such Farmor, (ii) to the best of such Farmor's
knowledge, any law, statute, rule or regulation of
any governmental authority having jurisdiction over
such Farmor, (iii) any material contract to which
such Farmor is a party or, to the best of such
Farmor's knowledge, by which the Assigned Interest
is bound or (iv) to the best of such Farmor's
knowledge, any writ, order or decision of any court
or governmental authority binding on such Farmor or
the Assigned Interest.
vii. Such Farmor has not directly or indirectly employed
any broker, finder or intermediary to whom Farmee
shall have any liability in connection with the
transactions contemplated hereby.
viii. Such Farmor has and at the time of delivery of the
Assignments will have title to the Assigned Interest
that is free and clear of all encumbrances asserted
by persons claiming by, through or under such Farmor,
or, to the knowledge of such Farmor, by, through or
under any predecessor in title, other than
obligations to the Government, the Third Party
Overriding Royalties and the Overriding Royalty (the
net cumulative effect of which does not cause the net
revenue interest attributable to the undivided
interest in the Assigned Interest that is assigned
by such Assignor to be less than 2.075%), but subject
to the Operating Agreements, the terms of the
Licenses, and all applicable laws, rules and
regulations.
ix. Except for agreements relating to the Third Party
Overriding Royalties, agreements relating to the
acquisition of geological and geophysical data,
agreements relating to the drilling of the Initial
Xxxxx, the Prior Letter Agreements and related
documents, agreements related to the acquisition of
P.E.L. 53 by Farmors and the agreements contemplated
by this letter agreement, neither the Licenses nor
the Assigned Interest are subject to any agreement or
contract to which such Farmor is a party or, to the
knowledge of such Farmor, by which the Licenses or
Assigned Interest are otherwise bound.
x. No third party has a preferential right to purchase
the Assigned Interest (or any portion thereof) and,
except for necessary consents from the Government and
the parties to the Operating Agreements, no third
party consent is required to effect the assignment of
the Assigned Interest.
xi. No oil or gas drilling or production operations have
been conducted under the Licenses.
b. Farmee represents to each Farmor that:
i. Farmee is a limited liability corporation duly
organized, validly existing, and in good standing
under the laws of the state of California.
ii. Farmee has the necessary corporate power and
authority to execute, deliver and perform this letter
agreement, the Assignments and the Reassignments.
iii. The execution, delivery and performance of this
letter agreement and the Reassignments and the
execution, acceptance and performance of the
Assignments by Farmee have been duly authorized by
all necessary corporate action (including any
necessary shareholder action) on the part of Farmee.
iv. This letter agreement, the Assignments and the
Reassignments have been duly executed and delivered
on behalf of Farmee.
v. There are no suits, actions or proceedings pending,
or to the best knowledge of Farmee, threatened,
against Farmee before any court or governmental
authority, which, if adversely determined, would
prevent the consummation of the transactions
contemplated hereby.
vi. The execution, delivery and performance of this
letter agreement, the Assignments and the
Reassignments do not and will not contravene or
violate (i) the articles of incorporation or bylaws
of Farmee, (ii) to the best of Farmee's knowledge,
any law, statute, rule or regulation of any
governmental authority having jurisdiction over
Farmee, (iii) any material contract to which Farmee
is a party or (iv) to the best of Farmee's knowledge,
any writ, order or decision of any court or
governmental authority binding on Farmee.
vii. Farmee has not directly or indirectly employed any
broker, finder or intermediary to whom either Farmor
shall have any liability in connection with the
transactions contemplated hereby.
viii. Farmee has the financial resources available to it to
meet its obligations under this letter agreement.
ix. Except for obtaining the approval of the Government
as described in Paragraphs 4 and 5 and obtaining the
consent of the parties to the Operating Agreements,
no approval, authorization, waiver, or order of any
court or governmental authority is or was necessary
for the execution, delivery and performance of this
letter agreement, the Assignments and the
Reassignments by Farmee.
x. Farmee at the time of delivery of the Reassignments
will have title to the Assigned Interest that is free
and clear of all encumbrances asserted by persons
claiming by, through or under Farmee, but subject to
encumbrances burdening the Assigned Interest prior to
the date of the Assignments, the Operating
Agreements, the terms of the Licenses, and all
applicable laws, rules and regulations.
c. Except as expressly set forth above in this Paragraph 10, or
as expressly contained in the Assignments and Reassignments,
each Farmor, and Farmee, make no, and disclaim any,
representations or warranties, whether express or implied,
as to title or any other matter. WITHOUT LIMITING THE
GENERALITY OF THE PRECEDING SENTENCE, ALL PERSONAL PROPERTY
INCLUDED IN THE ASSIGNED INTEREST IS ASSIGNED AS IS, AND EACH
FARMOR (AND FARMEE) MAKES NO, AND DISCLAIMS AND NEGATES ANY,
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO (i)
MERCHANTABILITY, (ii) FITNESS FOR ANY PARTICULAR PURPOSE,
(iii) CONDITION AND (iv) CONFORMITY TO MODELS OR SAMPLES OF
MATERIALS.
11. Farmors have prior to the date hereof and shall from time to time
hereafter provide Farmee with access to or copies of geological,
geophysical, engineering, financial, and other confidential information
in connection with the Licenses. All such information shall be
maintained by Farmee in confidence and shall not be disclosed by Farmee
other than in accordance with the applicable Operating Agreement.
Furthermore, all parties agree to maintain the contents of this letter
agreement in confidence and to not disclose the same to any third party
without the prior written consent of the others except to the extent
disclosure would be allowed if such contents were confidential
information under the Operating Agreements and except for disclosure by
Farmors to the parties to the Prior Letter Agreements as Farmors deem
appropriate to comply with their obligations under those agreements.
If this letter agreement terminates and the Assigned Interest reverts
to Farmors, Farmee shall return all confidential information received
from Farmors, together with all copies and extracts thereof, promptly
upon request by Farmors and shall not thereafter disclose such
confidential information to any person or use such confidential
information for any purpose.
12. Farmee may not assign, pledge, encumber or otherwise transfer all or
any part of its rights in this letter agreement, the Operating
Agreements or the Assigned Interest prior to earning its interest under
this letter agreement without the prior written consent of Farmors.
After any such assignment, both Farmee and the assignee shall be liable
for Farmee's obligations under this letter agreement. Except as set
forth in this Paragraph, the rights of either party to assign, pledge,
encumber or otherwise transfer its interest in the Licenses, or to
withdraw in whole or in part from the Licenses and the Operating
Agreements, shall be governed by the terms of the Licenses and the
Operating Agreements.
13. The representations and warranties in this letter agreement shall
survive the execution and delivery of the Assignments and (a) the
satisfaction of Farmee's obligations under Paragraphs 1 and 2 or (b)
reversion of the Assigned Interest to Farmors, as applicable, for a
period of one year from (a) or (b), as applicable, after which they
shall terminate and be of no further effect.
14. If not terminated sooner pursuant to Paragraph 9, this letter agreement
shall terminate upon the earlier of (a) termination of the Licenses and
any petroleum production license(s) issued in connection therewith or
(b) upon mutual written agreement of Farmors and Farmee to terminate
the same.
15. This letter agreement shall be construed in accordance with, and the
rights and obligations of the parties governed by, the laws of the
State of Texas, U.S.A. Each party consents to be subject to the
jurisdiction of the courts of Texas for the limited purpose of the
enforcement of this letter agreement.
16. It is not the intention of the parties to create, nor shall this letter
agreement be construed as creating, a mining or other partnership or
other association or otherwise render the parties liable as partners.
The liability of the parties hereto shall be several and not joint or
collective. Nothing in this letter agreement or the Operating
Agreements shall preclude any party, or its affiliates, from engaging
in any business or purchasing any property of any sort whatsoever,
whether or not in competition with operations under this letter
agreement or the Operating Agreements, without consulting the other
parties or inviting or allowing the other parties to participate
therein, except for the restrictions on use of confidential information
by Farmee contained in Paragraph 11.
17. Unless otherwise specifically provided, all notices under this letter
agreement shall be given in writing and in the English language and
shall be delivered in accordance with the notices article in the P.E.L.
53 Operating Agreement, as supplemented by the Accession Agreement
attached to this letter agreement as Exhibit E.
18. This letter agreement (including the Exhibits) constitutes the entire
understanding of the parties with respect to the subject matter hereof
and supersedes any prior agreements, whether written or oral. This
letter agreement may be amended only in a writing signed by all
parties.
19. This letter agreement shall be binding upon and inure to the benefit of
the parties and their respective permitted successors and assigns.
20. Each party agrees to execute and deliver such further documents and
take such further actions as the other may reasonably request to
consummate and assure the effectiveness of the transactions
contemplated by this letter agreement.
21. As provided in each Operating Agreement, if Canyon ceases to serve as
Operator, whether through resignation or removal, and another affiliate
of either Farmor is not appointed as successor Operator, then the party
holding the largest participating interest in each Operating Agreement
who is not affiliated with Farmors shall become Operator under that
Operating Agreement without the need for a vote. In the event two
parties are tied for the largest non-affiliated participating interest,
the successor Operator shall be chosen as provided in each Operating
Agreement.
22. If between the date of this letter agreement and the date of spudding
the first Initial Well, either Farmor enters into any agreement(s)
transferring an interest in the Licenses, or either of them, to a third
party or allowing a third party to earn an interest in the Licenses, or
either of them, then Farmors shall offer to Farmee the right to acquire
or earn the Assigned Interest on the same terms and conditions as
agreed with said third party(ies), pro rated based on the relative
size of the third party interest and the Assigned Interest, and shall
provide Farmee with a copy of any such agreement promptly after it has
been entered into. Farmee shall then have ten (10) days from receipt
of such notice and a copy of the third party agreement, or until the
date of spudding of the first Initial Well, whichever is earlier, in
which to give Farmors written notice of its election to acquire or
earn the Assigned Interest pursuant to the financial terms of such
third party agreement, as so prorated, in place of the provisions of
Paragraphs 1, 2, 3, 4, 5 and 7 of this letter agreement. Should Farmee
fail to give such written notice within said time period, such failure
shall be conclusively deemed to be an election by Farmee not to acquire
or earn the Assigned Interest based on the financial terms of such
third party agreement and to continue to earn the Assigned Interest
pursuant to this letter agreement. Should Farmee elect to acquire or
earn the Assigned Interest based on the financial terms of such third
party agreement, then Paragraphs 1, 2, 3, 4, 5 and 7 of this letter
agreement shall be replaced or modified as necessary to reflect the
financial terms of such third party agreement, as prorated, and except
as so modified, this letter agreement shall remain in force and effect.
If the third party agreement requires the third party or its affiliates
to provide services in connection with the Licenses in addition to or
in lieu of cash, Farmee shall have the right to acquire or earn the
Assigned Interest on the same terms and conditions, as described above,
by providing the same services itself, or through an affiliate, if
Farmee or its affiliate are qualified to provide such services.
Farmee may not delegate the performance of such services to a third
party, and if neither Farmee nor its affiliates are qualified to
provide such services, the rights granted in this Paragraph 22 shall
not apply.
23. Subject to Section 42 of the Petroleum Act, 1940, this letter agreement
shall have no effect until approved by the Minister of Mines and Energy
of South Australia. In addition, Farmors and Farmee agree that to the
extent required by applicable law, they shall provide notice of this
letter agreement to the Australian Foreign Investment Review Board.
24. This letter agreement may be executed in any number of counterparts,
and by different parties in separate counterparts, all of which shall
be considered to be one agreement.
If the foregoing accurately sets forth your understanding,
please execute two originals of this letter agreement in the space provided
below, retain one fully executed original for your files, and return the other
to the undersigned. This letter agreement will expire unless a signed copy is
received by the undersigned on or before 5:00 p.m. on February ____, 1998.
Very truly yours,
XXXXXX (AUSTRALIA), LTD.
By: Elkhorn Oil & Gas, LLC, General Partner
By:
Name:
Title:
BROWN (AUSTRALIA), LTD.
By: Elkhorn Oil & Gas, LLC, General Partner
By:
Name:
Title:
AGREED TO AND ACCEPTED THIS
____ DAY OF February, 1998
BETAUSTRALIA, LLC
By: Beta Oil & Gas, Inc., Managing Member
By:
Xxxxx Xxxxx, President
