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EXHIBIT 99.(a)(17)
September 16, 1998
Burlington Resources Oil & Gas Company
0000 Xxxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xx. Xxxx X. Xxxxx
Vice President, San Xxxx Division
Re: Letter of Intent
NE Xxxxxx Fruitland Coal
Gentlemen:
San Xxxx Partners, L.L.C. ("SJP") would like to purchase the following certain
interests of Burlington Resources Oil & Gas Company ("BR") in and to the
Fruitland coal formation in the Northeast Xxxxxx Unit ("NEBU"), San Xxxx and Rio
Arriba Counties, New Mexico, (i) the interests described in Part I of Exhibit A
attached hereto and made a part hereof for all purposes in leases covering the
lands in NEBU, which interests are burdened by a Net Profits Interest Conveyance
to Burlington Resources Coal Seam Gas Royalty Trust ("BRU"), said interest being
called herein the "Trust Interest", (ii) the interests described in Part II of
Exhibit A attached hereto in leases covering lands in NEBU, said interest being
called herein the "Non-Trust Interest", and (iii) associated rights and
obligations of BR and its affiliates in BRU (as more particularly described in
Section 8 below), all of said interests, rights and obligations hereinafter
collectively referred to as the "Properties". This letter will set
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Letter of Intent
September 16, 1998
Page 2
forth the general terms and conditions under which SJP would agree to purchase
and BR would agree to sell the Properties.
1. The purchase price for the Properties is Twenty Million Seven
Hundred- Fifty Thousand Dollars ($20,750,000) (the "Purchase
Price"), payable in cash at Closing.
2. The effective date of the sale is July 1, 1998, at 7:00 a.m.
M.S.T. (the "Effective Date").
3. It is the intent of the parties to negotiate and enter into a
mutually acceptable purchase and sale agreement (the
"Agreement") within thirty (30) days after receipt
of notification that the terms set forth herein are
acceptable. In the event the Agreement is not finalized within
this time period, this letter of intent shall be void and of
no further force and effect. The Agreement shall govern all
components of the transactions described herein including, but
not limited to, the due diligence procedures to be afforded
SJP, the representations and warranties of each party, the
obligations to be assumed by SJP as of the Effective
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September 16, 1998
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Date, and indemnities, which indemnities shall include,
without limitation, the indemnification of BR and its
affiliates by SJP from and against all costs, losses, claims,
liabilities, damages and judgments accruing on or after the
Effective Date and arising out of or relating to actions or
claims by or through any holder of any interest in BRU in
connection with the transactions contemplated hereby or the
termination or liquidation of BRU as contemplated in paragraph
4 hereof, any regulatory compliance associated therewith and
any federal, state or local securities laws applicable
thereto, excepting, however, any such liabilities arising from
the gross negligence or willful misconduct of BR and/or its
affiliates.
4. The closing of the transactions contemplated in the Agreement
(the "Closing") shall take place in Houston, Texas on or
before that date which is ten (10) business days following the
Termination Date (as hereinafter defined). As used herein, the
"Termination Date" shall mean the effective date on which all
the following conditions are fully satisfied: (i) the
Unitholders have approved, by an affirmative vote or consent,
of the termination and liquidation of BRU in accordance with
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September 16, 1998
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Article VIII and Sections 9.02 and 9.03 of that certain Trust
Agreement of Burlington Resources Coal Seam Gas Royalty Trust
dated May 1, 1993 among Meridian Oil Production Inc.,
Burlington Resources Inc., Mellon Bank (DE) National
Association and NationsBank of Texas, N.A. (the "Trust
Agreement"), and (ii) the clearance or approval of the
transactions contemplated in subparagraph 4(i) above and any
filings in connection therewith which may be required or
advisable under applicable laws, rules and/or regulations by
all applicable governmental authorities having jurisdiction
and the compliance of such transactions and filings with any
applicable stock exchange requirements.
5. Conditions of Closing shall include (i) the occurrence of the
Termination Date, (ii) the approval by the Board of Directors
of BR's parent, Burlington Resources Inc. ("BRI") of the
contemplated transactions, (iii) the delivery to, and
acceptance by, SJP of a legal opinion by BR's legal counsel
opining that all of the rights under Section 9.03 of the Trust
Agreement are assignable (the exact wording of which will be
included as an Exhibit to the Agreement), (iv) the termination
of all obligations under the Trust Agreement of BRI other than
those relating to the
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September 16, 1998
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wind-up of BRU as set forth in the Trust Agreement and/or the
Administrative Services Agreement dated May 1, 1993 by and
between BRI and BRU (the "Administrative Services Agreement"),
and (v) the absence of any pending legal or equitable action
seeking to enjoin, prohibit or declare illegal the
transactions contemplated hereby.
6. At Closing, BR will tender to SJP or its designee appropriate
documents of conveyance, including, without limitation, an
assignment of title in and to the Trust Interest and the
Non-Trust Interest with a special warranty of title and an
assignment of rights under the Trust Agreement and the
Administrative Services Agreement.
7. In the event (i) Closing has not occurred on or prior to the
time BR shall have the right under Section 9.03(c) of the
Trust Agreement to make a cash offer to purchase all of the
Remaining Royalty Interests (as defined in the Trust
Agreement), and (ii) this letter of intent or the Agreement
remains in force and effect, BR agrees not to exercise such
right at any time prior to the Option Period Termination Date
(as defined in the Trust Agreement).
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September 16, 1998
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8. In addition to the acquisition of the Trust Interest and the
Non-Trust Interest, SJP will also (i) acquire, to the extent
assignable, and assume from BRI, all of its duties,
obligations and rights under and pursuant to the Trust
Agreement and the Administrative Services Agreement, and (ii)
acquire from BR's affiliate, Burlington Resources Trading Inc.
("BRTI"), all rights in and to the Price Credit Account as
defined in that certain Gas Purchase Contract dated May
1, 1993, by and between Meridian Oil Trading Inc., n/k/a BRTI,
and Meridian Oil Production Inc., n/k/a BR (the "Gas
Contract").
9. Upon the last day of the month in which the Termination Date
occurs, the Gas Contract shall terminate and no longer burden
the Trust Interest. Thereafter, SJP shall be free to market
its gas from the Trust Interest; provided, however, that prior
to committing to sell its gas, SJP shall give BRTI the
opportunity to make a proposal to buy its gas. After
termination of the Gas Contract, if SJP shall receive an offer
from any third party to purchase the gas for a term of greater
than six (6) months, SJP shall provide BRTI with written
notice thereof setting forth all of the relevant terms and
provisions, and BRTI shall have the right
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September 16, 1998
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of first refusal to purchase such gas upon the same terms and
conditions.
10. At Closing, SJP shall receive and accept an assignment of the
Gathering, Dehydrating and Treating Agreement between Meridian
Oil Gathering Inc. and Meridian Oil Trading Inc., dated May 3,
1990, as amended (the "GGTA"). At SJP's request, Paragraph 4.1
of the GGTA shall be deleted and restated and amended to
provide for a fee of $0.365/MCF for the Middle Mesa Receipt
Point and $0.341/MCF for the Xxxx/Pump Mesa Receipt Points
with an annual $0.01 per MCF increase, effective January 1,
1999 and with an ultimate cap on the fee for the Middle Mesa
Receipt Point of $0.415/MCF and on the fee for the Xxxx/Pump
Mesa Receipt Points of $0.381/MCF. Additionally, Paragraph 6.1
of the GGTA shall be deleted and restated and amended to
provide that the term of the GGTA shall continue until
December 31, 2007, and thereafter, month to month unless
canceled by thirty (30) days prior written notice from one
party to the other.
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11. XX agrees to cease discussions or negotiations with any third
parties concerning the sale of the Properties and to hold the
Properties exclusively for the sale to SJP under the terms of
the Agreement. In the event SJP fails to timely initiate
proceedings to terminate or liquidate BRU as contemplated in
the definition of Termination Date in Section 4 hereof, SJP
shall pay BR TWO MILLION DOLLARS (U.S.)
($2,000,000).
12. SJP and BR recognize that certain aspects of this letter may
need to be made public for regulatory purposes. Prior to any
disclosure of such information, SJP and BR shall both approve
the content and language of any such disclosure. The parties
recognize and agree that time is of the essence in connection
with any such disclosures and agree to use all good faith
efforts in approving such disclosures to assure any filing or
other deadlines are met.
13. Except for Sections 3 (second sentence), 11, and 12 above and
15 below, the parties hereto confirm that the terms and
conditions contained herein are exploratory and preliminary to
the consummation of the
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September 16, 1998
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execution of the Agreement; accordingly, (i) this letter does
not constitute a binding offer to purchase the Properties and
the execution hereof by BR does not constitute an agreement to
sell the Properties, (ii) no contract or agreement providing
for the sale or purchase of the Properties shall be deemed to
exist until the Agreement has been executed by both parties
and (iii) neither BR nor SJP shall be legally bound by the
terms hereof.
14. SJP shall have the right to assign all of its rights, duties
and obligations under this letter and the Agreement to any
affiliate of SJP without the prior consent of BR. Except as
set forth in the prior sentence, neither BR nor SJP shall
assign their respective rights, duties or obligations
hereunder or under the Agreement without the prior written
consent of the other party, which consent shall not be
unreasonably withheld.
15. BR and SJP agree to cooperate fully with each other and to
provide access to all relevant data and information required
in connection with the preparation of all regulatory filings
to be made by the parties in connection with the transactions
contemplated herein; provided,
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however, that each party shall maintain confidential all such
data and information obtained from the other party in
connection with the proposed transaction and shall not
disclose same to any third party except (i) upon the written
consent of the party on whose behalf the information was
provided, (ii) as may be required in connection with the
transaction contemplated herein and in the Agreement, and
(iii) as may be required by law.
If the foregoing correctly reflects your understanding of our discussions, then
please indicate so by executing this letter in the space provided below and
returning an executed original to the undersigned.
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SJP is interested in acquiring the Properties in accordance with the general
terms and conditions contained in this letter of intent, agrees to the
provisions of Sections 3 (second sentence), 11, 12, 13 and 15 above, and will
proceed to negotiate a definitive Agreement.
Very truly yours,
SAN XXXX PARTNERS, L.L.C.
By: X'XXXXXXXX OIL & GAS COMPANY, INC., MANAGER
By: /s/ C.N. X'Xxxxxxxx
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C.N. X'Xxxxxxxx, President
XX is interested in selling the Properties in accordance with the general terms
and conditions contained in this letter of intent, agrees to the provisions of
Sections 3 (second sentence), 11, 12, 13 and 15 above, and will proceed to
negotiate a definitive Agreement.
BURLINGTON RESOURCES OIL & GAS COMPANY
By: /s/ Xxxx X. Xxxxx
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Xxxx X. Xxxxx, Vice President
