Sunray Operating Company LLC 16444 Old Richmond Road Sugar Land, Texas 77478 281/879-9973 (o) 281/933-9054 (f) w5bxx@aol.com
Sunray
Operating Company LLC
00000
Xxx
Xxxxxxxx Xxxx
Sugar
Land, Texas 77478
281/879-9973
(o)
281/734-5849
(c)
281/933-9054
(f)
x0xxx@xxx.xxx
|
Xxxxx X. Xxxx
President
|
October
26, 2006
Matrixx
Resource Holdings, Inc..
00000
Xxxxxxx Xxxxx Xxx., Xxxxx 000
Malibu,
CA 90265
Attn:
Xxxxxxxxx Xxxxxxxx
Re:
Participation
Agreement
Xxxx
No.
3 Well
Xxxxx
Point Prospect
Brazoria
County, Texas
Dear
Xxx.
Xxxxxxxx:
Sunray
Operating Company LLC (“Sunray”) is the owner of oil and gas leases (“Leases”)
covering 196 acres, more or less, in the captioned area as described on Exhibit
“A” attached hereto. Based on information provided by Xxxxxx, you (“Matrixx”)
have agreed to acquire an undivided interest in the Leases and participate
in
the drilling of a 6700’ well, subject to the following terms and
conditions:
| 1. |
On
or before November 8, 2006, Matrixx shall pay to Sunray the sum of
$7,428.57 as consideration for an assignment from Sunray of an undivided
10.00% interest in the Leases.
|
| 2. |
The
assignment shall be subject to this agreement, the terms of the Leases,
the Joint Operating Agreement (“JOA”) mentioned below, and burdened with
royalty and existing overriding royalty interests equal to 25% of 8/8.
Additionally, Sunray shall be entitled to a one-eighth of eight-eighths
(12.50% 0f 8/8) working interest, proportionally reduced, at payout
of the
above well.
|
| 3. |
The
assignment shall be without warranty of title, either express or implied,
except as to acts by, through or under Sunray, but not
otherwise.
|
| 4. |
Concurrently
with the receipt by Xxxxxx of the above sum and the receipt by Matrixx
of
the above assignment, the parties hereto agree to be bound by the terms
of
the form of JOA which names Xxxxxx as the initial Operator and governs
all
further operations on the Leases, a copy of which is submitted
herewith.
|
| 5. |
Since
it is anticipated the drilling of the Xxxx No. 3 well is eminent, you
will
forward to Sunray $44,500.00, representing your proportionate share
of the
estimated dry hole cost of $445,000.00, on or before November 8,
2006.
|
The
activities of this drilling program will involve a high degree of risk and
results cannot be predicted. There is no assurance that any oil or gas
production will be obtained through the activities undertaken pursuant to this
program or that such production, if obtained, will enable Matrixx to make a
profit on or even recoup its investment. In addition, hazards such as unusual
or
unexpected formations, pressures or other conditions are involved in drilling
xxxxx.
Matrixx
represents that it is aware that there is no assurance that this drilling
program will not be treated as an association, taxable as a corporation and
further, that there is no assurance that the current Federal income tax laws
will not be changed.
It
is not
the purpose or the intention of this Agreement to create, nor shall the same
be
construed as creating any mining partnership, commercial partnership, or other
partnership relation; nor shall the operations of parties hereunder be construed
to be considered a joint venture or any association that would make either
party
liable to the other party for any claims whatsoever.
Kindly
acknowledge that the foregoing represents the entire agreement between Sunray
and Matrixx by executing below and returning one fully executed copy to
Sunray.
Sunray
Operating Company LLC
By___________________________
Xxxxx
X.
Xxxx
President
AGREED
TO
AND ACCEPTED
This_____day
of _________, 2006.
Matrixx
Resource Holdings, Inc.
By________________________________
Xxxxxxxxx
Xxxxxxxx
President
