Exhibit 10.1
AMENDMENT A TO FARMOUT AGREEMENT EXECUTED JUNE 4, 2007 BETWEEN
XXXXXXX XXXXXXXX ENERGY, INC., AND NEW FRONTIER ENERGY, INC.
The Farmout Agreement executed June 4, 2007 between Xxxxxxx Xxxxxxxx
Energy, Inc. ("Farmor") and New Frontier Energy, Inc. ("Farmee") is hereby
amended as follows:
I. Article 1.1(a) of the Farmout Agreement is amended to read as follows:
(a) In exchange for the Consideration described in Article 3, Farmor shall
transfer to Farmee an undivided 100% of Farmor's Interests in the
Underlying Leases, and the Parties shall execute and deliver the
Assignment within seven (7) days of written request by Farmee, but in
no case earlier than August 15, 2007 or later than fifteen (15) days
after production operations under this Agreement have been completed,
as determined in Farmee's sole discretion. The above described
interests shall be from surface to total depth, and include rights to
oil, gas, or any other substance covered by the Underlying Leases.
Farmee's interests under this Agreement shall be fully assignable.
Farmor shall submit the Assignment to the Government for approval
within five (5) days of the execution and delivery of the Assignments.
1. Farmor shall use best efforts, and work in conjunction with
Farmee, to effectuate an assignment of the Surface Use Agreements
relating to the Xxxxx Ranch and Sheep Mountain Ranch.
II. Articles 1.1(b) through Articles 1.1(e) are hereby rescinded in their
entirety.
III. Article 1.1(g) is amended to read as follows:
(g) Concurrent with making the Assignments described in Article 1.1(a),
Farmor shall resign as operator of the Focus Ranch Unit and agrees to
vote for Farmee as successor unit operator under the terms of the
Focus Ranch Unit Agreement and Unit Operating Agreement.
IV. Article 3 of the Farmout Agreement is hereby rescinded in its entirety.
Article 3 shall be replaced by the following section:
ARTICLE 3
CONSIDERATION:
3.1 Consideration for Initial Assignment
In consideration for receiving the assignment described in section 2.1,
Farmee agrees as follows:
a. Farmee shall be liable for all plugging, abandoning, and reclaiming of
all areas within the Focus Ranch Unit.
b. In the event that Farmee establishes commercial production from the
Focus Ranch Federal 12-1 well, Farmor shall own a production payment
("Production Payment") in an amount equal to Two Million Dollars
($2,000,000 U.S.) payable out of 35% of the Net Proceeds at the
wellhead from the sale of oil, gas, and associated hydrocarbons
produced from the Underlying Leases subject to this Agreement to the
extent that such Net Proceeds are attributable to the Underlying
Leases. "Net Proceeds" shall mean revenues from the sale of such
production by Farmee less royalties, existing overriding royalties,
taxes measured by the value of production, operating costs, and costs
to gather, treat, process, compress, dehydrate, and sell the
production. Farmor's rights are limited to funds payable out of Net
Proceeds from the Underlying Leases subject to this Agreement and
Farmor shall have no recourse against Farmee for any amounts other
than those payable out of Net Proceeds.
c. In the event that, prior to Farmor receiving its full Production
Payment described above, any additional well drilled or reentered by
Farmee located on the Underlying Leases begins producing hydrocarbons
in commercial quantities, Farmor shall be entitled to a Production
Payment equal to 35% of the Net Proceeds from this well, in addition
to Farmor's Production Payment from the Focus Ranch Federal 12-1 well,
until such time as Farmor's total Production Payments received under
this Agreement total $2,000,000.
d. Farmee shall have the right to fulfill its obligations under this
Agreement in total by making payments to Farmor totaling $2,000,000,
regardless of the source of the payments.
e. At such time as Farmor has received out of production from all xxxxx
subject to this Agreement the full amount of its Production Payment as
described above, or at such time as Farmee has fulfilled its
obligations to Farmor under Paragraph 1.1(d), or at such time as
Farmee ceases production on the Underlying Leases prior to Farmor
receiving the full amount of its Production Payment as described
above, Farmor's right to any Production Payment shall expire and
Farmor shall no longer have any interest in any of the Underlying
Leases or the Focus Ranch Unit.
V. The second sentence of Article 1.3 shall be amended to read as follows:
Beginning with rental payment due on or after the first of the month of the
month following Farmee's receipt of the assignments described in Article 1.1(a),
Farmee shall be responsible for the payment of all rentals, shut-in gas
royalties, and minimum royalties payable under the terms of the Underlying
Leases.
VI. The Condition Precedent stated in Article 2.1(E) is hereby waived by Farmee.
[THE REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]
New Frontier Energy, Inc. Xxxxxxx Xxxxxxxx Energy, Inc
by by
/s/ Xxx Xxxxx /s/ Xxxxxxx Xxxxxxxx
------------------------ ------------------------
Dated this 31st day of July, 2007 Dated this 31st day of July, 2007
