Exhibit 10.01
COLORADO
VENTURE AGREEMENT OF
MID-POWER RESOURCE CORPORATION
AND XXXXXX XXXX XXXXX AND/OR HIS DESIGNEES
This Venture Agreement ("Agreement") is entered into this 24th day of September
2002, by and between Mid-Power Resource Corporation ("Mid-Power") and Xxxxxx
Xxxx Xxxxx and/or his designees ("Xxxxx"), collectively the Parties.
The parties hereto agree that this Venture Agreement shall cover all of Township
3 South, Ranges 49,50 and 51 West, and the Xxxx #2 Prospect, Township 2 North,
Range 50 West, all in Washington County, Colorado.
Mid-Power hereby agrees to advance to Xxxxx $750,000.00 upon signing of this
Venture Agreement to pay for all costs up to $750,000.00 associated with
acquiring lands and leases, shooting and interpreting seismic, geology, drilling
and completing xxxxx and any and all other expenses incurred in the above
described Township and Ranges and the Xxxx #2 Prospect for Xxxxx to identify
drilling prospects. Mid-Power shall earn a 35% working interest based on an 80%
net revenue interest equating to a 28% net revenue interest in the spacing unit
of any well drilled and completed, ready to sell oil and/or gas using the above
$750,000.00, in the Township and Ranges and the Xxxx #2 Prospect described
above, as designated by Xxxxx and approved by the State of Colorado Oil and Gas
Conservation Commission. Xxxxx does not warrant title either expressed or
implied on any of the lands mentioned above except by through and under Xxxxx.
After the $750,000.00 is spent, Mid-Power shall have the continuing right to
earn the above stated interest in designated spacing units within the Township
and Ranges and the Xxxx #2 Prospect described above by electing to drill as
mentioned above when notified by Xxxxx immediately and Mid-Power paying 100% of
all cost to drill and complete a well ready to sell oil and/or gas. Further,
should Mid-Power not elect to continue the right to earn at any point, then in
that event, Mid-Power shall earn only the designated spacing units previously
earned and shall no longer have any further rights in the Township and Ranges
and the Xxxx #2 Prospect described above.
The Parties shall enter into an AAPL 610-1989 Operating Agreement, like the one
used by the Parties on the Xxxxxx 2A-14 well in Colusa County, California,
naming Xxxxx or his designee as Operator. This Operating Agreement shall provide
for a One Hundred Percent (100%) Non-Consent Penalty and any other modifications
to be mutually agreed upon by the Parties hereto. There will also be attached to
the Operating Agreement, a XXXXX 1984 Onshore Accounting Procedure providing for
a $1,250.00 per month producing well change for the Well drilled pursuant to
this Agreement. In the event there is a conflict between the terms of the
Operating Agreement and this Agreement, the Provisions of this Agreement shall
prevail.
All operations on the above Lands shall be conducted in accordance with the
Terms and Conditions of the underlying Oil and Gas Leases and all related
Agreements and in accordance with the rules and regulations of the State of
Colorado Oil and Gas Conservation Commission and any and all governmental
bodies.
Mid-Power and Xxxxx hereby agree to treat this Letter Agreement as a Tax
Partnership and further agree that all allowable tax deductions generated by
this Venture shall be allocated to the party whose funds have been used to pay
such costs.
A Colorado Venture Agreement account between Mid-Power and Xxxxx shall be opened
at the Bank of America in Las Vegas, Nevada.
It is agreed by the Parties hereto that a fully executed fax copy of this
Agreement shall be deemed the same as a fully executed Original Agreement.
This agreement shall be binding upon and inure to the benefit of each Party,
their respective Legal Representatives, Heirs and Assigns.
IN WITNESS WHEREOF, the Parties have signed this Agreement effective as of the
date set forth above.
PARTIES:
Mid-Power Resource Corporation
/s/ Xxxxx X. Xxxxx
-----------------------------------
By: Xxxxx X. Xxxxx, President
/s/ Xxxxxx X Xxxxx
-----------------------------------
Xxxxxx Xxxx Xxxxx
