EXHIBIT 10.18
EAST TEXAS BOSSIER TREND
EXPLORATION AGREEMENT
This East Texas Bossier Trend Exploration Agreement ("Agreement") is
made and entered unto this 5th day of September, 2000, by and between Union
Oil Company of California, a California corporation with offices at 00000
Xxxxxxxxx Xxxxxxx, Xxxxx Xxxx, Xxxxx 00000, (hereinafter referred to as
"Unocal") and Matador E & P Company, a Texas corporation, with offices at 0000
Xxxxxx Xxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000-0000, (hereinafter referred to as
"Matador".)
RECITALS
WHEREAS, Matador is the owner of certain oil and gas leases and other
mineral interests identified on Exhibit "A" attached hereto, and included herein
for all purposes, comprising 40,872.59 net acres, more or less (the "Leases");
WHEREAS, the Leases exist in four prospect areas being 1) the "Xxxxx
Ranch Area"; 2) the "Hill Ranch/Bonnerville/Xxxx Prairie Area"; 3) the "Red Oak
Area"; and, 4) the "Simsboro Area". Such areas are depicted on the plats
attached hereto as Exhibit "A-1", Exhibit "A-2", and Exhibit "A-3" (being
individually referred to as "Prospect Area" and collectively referred to as
"Prospect Areas");
WHEREAS, Unocal has agreed to purchase from Matador and Matador has
agreed to sell to Unocal an undivided interest in the Leases and an undivided
interest in any additional oil and gas leases or other mineral interests
acquired or under contract for acquisition by Matador within the Prospect Areas
on or before June 14, 2000 ("Additional Leases"); and,
WHEREAS, Unocal and Matador desire to enter into an agreement for the
joint acquisition and development of the Leases, Additional Leases and Prospect
Areas and for the establishment of an Area Mutual Interest.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. ACQUISITION OF INTERESTS. Unocal agrees to purchase from Matador,
and Matador agrees to sell and convey to Unocal, an undivided 25% of 8/8ths of
the Leases and the Additional Leases on the form of assignment attached hereto
as Exhibit "B" (the "Assignment"). Unocal shall assume its proportionate part of
all burdens of record as of the date of the Assignment, and such further burdens
as may be contained in the agreements set forth in Paragraph 17a. (the "Xxxxxxx
Agreement"), Paragraph 17b., 17c., 17d., 17e., and 17f. (the "BK Agreements")
and Exhibit "O" (the "Xxxxx Agreement"), to the extent of Unocal's proportionate
interest in the properties to be assigned. In the event that there exists, or
may later exist, Additional Leases not included on the Assignment, to which
Matador receives title or a vested interest in or to after the execution and
closing of this Agreement, Matador shall, within 30 days of such receipt of
title or such vesting of interest, convey an undivided 25% of such Additional
Lease(s) to Unocal by an additional assignment(s) in the form of Exhibit "B".
All interests conveyed to Unocal hereunder shall be subject to proportionate
reduction; however, such interests shall not be proportionately reduced as to
any interest owned or subsequently acquired or owned by BK Partners, L.P., or
its
affiliates ("BK") pursuant to the BK Agreements, or the signatory parties to
the Xxxxxxx Agreement ("Xxxxxxx Parties"), pursuant to the Xxxxxxx Agreement.
It is the intent of the parties that within the Prospect Areas in which BK owns
an interest, the ownership shall be Matador 50%, Unocal 25% and BK 25%, and in
which the Xxxxxxx Parties own an interest, Matador 65%, Unocal 25%, and the
Xxxxxxx Parties 10%, and in which neither BK nor the Xxxxxxx Parties own any
interest, Matador 75% and Unocal 25%, proportionately reduced in all instances.
Nothing in this Agreement shall be construed as obligating Matador to acquire
any interest, nor shall Matador ever be obligated to sell and convey to Unocal
any interest greater than the interest Matador owns.
2. AREA OF MUTUAL INTEREST.
a. OUTLINE OF AREA AND OWNERSHIP. Matador and Unocal
hereby agree to an Area of Mutual Interest ("AMI"),
which shall consist of the lands outlined in red on
Exhibit "C" and Exhibit "C-1" attached hereto. It is
the intention of the parties that the AMI covers all
existing oil and/or gas leasehold interests, mineral
interests, farm-ins or other contractual term mineral
interests ("Mineral Interests") or the right to
acquire any of the same within the AMI currently held
by either party, and all Mineral Interests, as well
as any oil and/or gas xxxxx, production, or rights to
production ("Producing Interests") acquired on or
after the date hereof. Matador and Unocal agree to
execute assignments substantially in the form of
Exhibit "B" of undivided Mineral Interests within the
AMI such that the ownership within the AMI will be
Matador 75% and Unocal 25%; or to the extent that
such Mineral Interests overlap with the areas of
mutual interest contained in the BK Agreements,
Matador 50%, Unocal 25% and BK 25%; or further to the
extent that such mineral interests overlap the Area
of Mutual Interest contained in the Xxxxxxx
Agreement, Matador 65%, Unocal 25%, and the Xxxxxxx
Parties 10% ("Ownership Percentage"). This AMI does
not cover Mineral Interests or Producing Interests as
to currently producing interval(s) owned by a party
hereto in acreage within existing producing proration
units as designated with the Texas Railroad
Commission. Should production cease, then those
Mineral Interests shall be automatically committed to
this AMI for the term hereof. This Agreement covers
oil and gas, but not other minerals.
b. ACQUISITIONS WITHIN AMI. Should either party acquire
or propose to acquire at any time after the date
hereof, but prior to the date this AMI terminates,
Mineral Interest or Producing Interests covering
lands all, or a portion of which, are located within
the AMI, such party ("Acquiring Party") shall notify
the other party ("Non-Acquiring Party") in writing
within thirty (30) days of such acquisition or
proposed acquisition, to the extent same lies within
the confines of the AMI, and the consideration paid
or to be paid for the acquired interest.
Notwithstanding anything to the contrary herein, in
the event that a Mineral Interest or Producing
Interest lies partially within and partially outside
of the confines of the AMI, such interest shall be
deemed to lie within the confines of the AMI if
either 1) at least 25% of the surface acreage of such
acreage of such
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interest falls within the AMI; or 2) any portion of the
Mineral Interest or Producing Interest is immediately
adjacent to a producing unit within the AMI. Otherwise,
the Acquiring Party shall only be required to offer, and
the Non-Acquiring Party shall only be obligated to
acquire that portion of any such Mineral Interest or
Producing Interest that lies within the confines of the
AMI. The Non-Acquiring shall, within 15 days after
receipt of notice from the Acquiring Party, notify the
Acquiring Party in writing whether it wishes to
participate in such acquisition, provided that failure
to respond within the time and in the manner set forth
above shall be deemed to be an election to not
participate in such acquisition. Should a Non-Acquiring
Party elect to not participate in an acquisition and
that acquisition, or acquisition right is consummated
within 90 days of the receipt, then the interest
acquired will not be subject to this Agreement, the XXX
XXX, or the AMI; however, such interest shall be subject
to the terms and conditions of an Operating Agreement
substantially in the form as the XXX XXX. In the event
that the said acquisition is not consummated within the
90 day period, then the effect shall be that proper
notice of the acquisition was not made to the
Non-Acquiring Party. All parties electing to participate
shall pay their proportionate share of all costs
incurred in acquiring the Mineral Interest and Producing
Interest within 15 days after the receipt of an invoice
with supporting documentation, including recorded
instruments or other executed agreements reflecting the
Mineral Interests or Producing Interests acquired and
the amount due. All costs incurred in acquiring Mineral
Interests or Producing Interests shall be paid by the
participating parties in accordance with their
respective Ownership Percentage. Assignment(s)
associated with an affirmative election shall be
delivered substantially in the form of Exhibit "B"
within 15 days after receipt of payment for the
participating party's respective share of the
acquisition costs.
c. TERMINATION OF THE AMI. The term of the AMI shall be
for a period of three (3) years from the date hereof,
unless extended by mutual consent of both parties in
writing making express reference to this Agreement
and the AMI ("AMI Term").
3. TERMINATION OF THIS AGREEMENT. It is agreed that at such time as
production is established and acreage is placed in a proration unit or a pooled
unit (whichever is larger), said unit and operations will be subject to the
appropriate Joint Operating Agreement attached hereto (the "JOA's") which
contains the unit within its contract area ("Producing Units"). After the
expiration of the AMI Term, this Agreement shall terminate as to all of the
acreage contained within the contract areas designated by the JOA's, except as
to the Leases, Additional Leases, or any other leases acquired during the AMI
Term, which are either wholly or partially contained within a Producing Unit.
Notwithstanding the termination of this Agreement, any operating agreements,
assignments, reassignments, rights to assignments and reassignments, and the
rights and obligations of the parties thereunder, shall continue in full force
and effect in accordance with their terms, as will the obligations of either
party to deliver data or other information not previously delivered. The parties
agree to grant such rights of ingress and egress to acreage developed during the
term of this Agreement to the extent that such acreage is inaccessible but
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over or through land held or controlled by the other party. Upon termination
hereof, both parties shall be entitled to retain all data obtained during the
course of this Agreement, and in the event that such data is held by one party,
such party shall have the continuing obligation to deliver copies of such data
to the non-holding party. Further, upon termination, the parties shall remain
obligated to supply such other and further documents and other instruments as
may be reasonable necessary to evidence the termination of this Agreement, to
fulfill any necessary filing requirements under the Internal Revenue Code, to
comply with any audit requests or other accounting matters, or to undertake any
other obligation that either party may have regarding matters arising during
the term hereof.
4. CONSIDERATION. Leases, Additional Leases, and Mineral Interests
acquired or contracted to be acquired by Matador within the AMI through June 14,
2000, being approximately 10,218.15 net acres, more or less, shall be purchased
by Unocal for $350.00 per net mineral acre sold and conveyed to Unocal, for an
estimated total purchase price of $3,576,352.50. All payments under this
Agreement shall be due and payable within fifteen (15) days after receipt of the
Assignment(s) in cash or other immediately available funds at the address or to
the account designated by assignor. Said acreage cost shall be inclusive of all
broker, land, transactional, filing, title and other direct acquisition costs.
All Mineral Interests or Producing Interests acquired after June 14, 2000, and
shall be on a "heads up" basis, subject to the BK Agreements and the Xxxxxxx
Agreement, and at actual cost to the Acquiring Party, including, without
limitation, broker, land, transactional, filing, title and other direct
acquisition costs, but excluding any internal or general administrative costs.
5. JOINT OPERATING AGREEMENT.
a. APPLICABLE JOINT OPERATING AGREEMENTS. Matador agrees
to execute, as operator, and Unocal agrees to execute
or otherwise ratify, as a non-operator, the following
Joint Operating Agreements:
i. Exhibit "D", covering the Xxxxx Ranch Area;
ii. Exhibit "E" covering the Hill
Ranch/Bonnerville/Xxxx Prairie Area;
iii. Exhibit "F" covering the Simsboro Area;
iv. Exhibit "G" covering the Red Oak Area; and
v. Exhibit "H" ("XXX XXX"), which covers the
balance of the acreage within the AMI not
included within the contract areas of the
Xxxxx Ranch JOA, the Hill Ranch JOA, the
Simsboro JOA or the Red Oak JOA.
b. NON-CONSENT ELECTIONS. Notwithstanding any provisions
in any of the above JOA's to the contrary, Article VI
B.2 of the Xxxxx Ranch JOA, the Hill
Ranch/Bonnerville/Xxxx Prairie JOA, the Simsboro JOA
and the XXX XXX shall be amended to provide that in
the event a party receiving a proposal to drill
should elect not to participate in the proposal, the
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receiving party agrees to grant a farmout unto the
consenting party(s) delivering a proportionately
reduced 75% net revenue interest in and to 704 acres
surrounding the proposed location, as designated by
the proposing party, that has not previously been
placed in a pooled producing unit. The Red Oak JOA
shall be amended to provide that in the event a party
receiving a proposal to drill should elect not to
participate in the proposal, the receiving party
agrees to grant a farmout unto the consenting
party(s) delivering a proportionately reduced 75% net
revenue interest, up to a maximum retained overriding
royalty interest of 5% of 8/8ths, proportionately
reduced, in and to 2000 acres surrounding the
proposed location, as designated by the proposing
party, that has not previously been placed in a
pooled producing unit.
c. INITIAL XXXXX. There shall be no non-consent election
applicable as to the first well drilled in each
Prospect Area. In the event that the parties disagree
as to the proposed location of such initial well, the
parties agree to negotiate in good faith to determine
a mutually acceptable location.
x. XXXXX OVERHEAD CHARGES. Notwithstanding anything
contained in the JOA's listed in 5 a.i-v. above, the
following overhead rates shall apply to each
individual JOA:
Well Depth Drilling Rate Producing Rate Producing Rate
(Per Month) (Per Month) (Per Month)
Xxxxx 1 - 10 Xxxxx 11 and above
0 to 10,000 feet $ 5000 $ 500 $ 400
10,000 to 15,000 feet $ 6000 $ 600 $ 500
15,000 and deeper $ 8000 $ 800 $ 700
6. WELL PROPOSALS. Except as otherwise provided for herein, on a
Prospect Area by Prospect Area basis, no well may be proposed, except by the
operator: a) during the pendency of another well proposal on that Prospect Area;
or b) until at least 30 days after the previous well in the Prospect Area has
been completed as either a producer of oil and/or gas or as a dry hole. Such
restrictions shall not apply to the extent that the proposed operations are
necessary, in good faith, to acquire, maintain or hold a lease, farmin or other
Mineral Interest located within the AMI. Notwithstanding anything herein to the
contrary, a non-operator shall have the right to make a well proposal during the
periods outlined in a) or b) above, and said proposal shall be deemed submitted
for purposes of response on the first day after the expiration of such period.
In the event of competing well proposals, the parties agree to meet for a
technical review of each proposal and determine, in good faith, which proposal
to proceed under. For purposes of this paragraph, all acreage within the AMI
that is not within one of the designated Prospect Areas, shall constitute one
Prospect Area, the result being that for purposes of well proposals hereunder,
without the consent of all parties, one well, and no more than one well may be
proposed at a time in each of: a) the Xxxxx Ranch Area; b) the Hill
Ranch/Bonnerville/Xxxx Prairie Area; c) the Simsboro Area; d) the Red Oak Area;
and e) the balance of the area within the AMI. Notwithstanding the above, in no
event shall a party, other than the designated operator under the
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applicable JOA, propose more than three xxxxx on three Prospect Areas at any
given time. Furthermore, no xxxxx may be proposed within 1200 feet of any
currently existing producing well(s) in which either party has an interest
without the prior consent of such party.
7. EXCHANGE OF DATA AND OTHER INFORMATION.
a. PROPOSED PROJECTS. With respect to the drilling of
any well, or the undertaking of any workover or
recompletion on any existing well proposed under any
operating agreement or any proposal to acquire
additional seismic data over all or any portion of
the AMI ("Proposed Project"), upon request, the
non-proposing party may request such additional
information regarding the Proposed Project from the
proposing party as is reasonably necessary to
evaluate same. The proposing party will endeavor to
accommodate the non-proposing party by answering
questions and presenting relevant data regarding the
Proposed Project prior to the expiration of the
election period in the applicable operating
agreement, and the non-proposing party has a
reciprocal good faith obligation to share its data,
evaluations and interpretations to assist all parties
and evaluate the reasonableness and advisability of
the proposal. Nothing herein shall be construed as
extending any notice or election period under any
agreement.
b. GEOLOGICAL INFORMATION. The operating party agrees to
provide the non-operating party the geological data
as set forth in Exhibits "I" (Matador) and "J"
(Unocal), attached hereto. Should a party elect not
to participate in the drilling of a well, said party
shall remain entitled to receive such geological
data.
c. ACCESS TO DATA. During the term of this Agreement,
Matador and Unocal shall have mutual access to all
geological, seismic and geophysical, engineering
(excluding proprietary reserve estimates),
accounting, land and exploration data owned by or in
possession of either Matador or Unocal pertaining to
interests included within the AMI. Such access shall
be subject to the terms of any existing license
agreements or other contractual restrictions covering
such data. All such data shall be made available at
the respective party's office during normal business
hours, upon reasonable notice of the party requesting
to review same. Matador and Unocal shall have the
right to reprocess any available seismic data owned
or in the possession of the other party within the
AMI, provided that such reprocessing is permitted
under the governing license agreement covering such
data. Copies of the respective party's licensing
agreements shall be made available to the other party
upon request.
d. LIMITATION OF ACCESS TO DATA. Notwithstanding the
above, any party not participating in, or
contributing their proportionate share of the costs
of the acquisition of seismic or other data acquired
on or after the effective date of this Agreement
shall not be entitled to review or otherwise access
such data.
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8. CONFIDENTIAL DATA. "Confidential Data" shall be defined as any
proprietary seismic, geological, engineering, land, accounting or other data
that is not generally available to the public, or does not during the term of
this Agreement become generally available to the public through actions not in
violation of this Agreement, that is owned or obtained by either party to this
Agreement pertaining to any interests within the AMI. The provisions of this
paragraph shall remain in full force and effect for the term of this Agreement
plus an additional three (3) years and may be extended by mutual consent of both
parties.
a. PERMITTED DISCLOSURES. Confidential Data exchanged or
obtained by either party shall not be disclosed to
any third party except as expressly provided below.
As to any permitted disclosures, the third party to
whom Confidential Data is disclosed shall agree in
writing not to further disseminate or to disclose
such data.
i) A party may disclose Confidential Data to
any third party with whom purchase
negotiations are being conducted as to a
property(s) to which the Confidential Data
is applicable, any third party which becomes
subject to an operating agreement covering
interests in the AMI, or any affiliated
company.
ii) A party may disclose Confidential Data to
consultants, engineers or other parties who
are engaged by such party for the purpose of
evaluating such party's interest within the
AMI or to accountants, attorneys or other
professionals employed by such party and
whose duties require review of Confidential
Data.
iii) A party may disclose Confidential Data to
any bona fide potential mortgagee, bank or
lending institution of the party.
iv) A party may disclose Confidential Data to
gas purchasers or oil purchasers for
technical evaluations during negotiations
for the sale of the party's share of the gas
or oil produced from the AMI.
v) A party may disclose Confidential Data
required to be disclosed by any Federal,
State or local government or agency thereof
or any stock exchange upon which a party's
shares are traded.
b. SALE OF CONFIDENTIAL DATA. Notwithstanding
termination of this Agreement, any jointly owned
Confidential Data obtained or created under the terms
hereof shall not be sold or traded to any third-party
without the prior written consent of all parties. The
data shall be owned and the proceeds from any sale of
such data shall be shared based on each party's
interest in the land to which the data pertains.
8. NO WARRANTIES. Neither party covenants, warrants or represents to
the other, either expressly or impliedly, the present or continuing validity or
status of any lease or other instruments described or mentioned in this
Agreement, the number of acres or net mineral acres included in any tract, or
the extent of the party's ownership thereof, if any. Both parties agree,
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upon request and at the requesting party's expense, to furnish the requesting
party with copies of leases, instruments, title opinions and other related data
contained in its files. Neither party makes any representation as to the
accuracy or reliability of any information or data furnished to the other and
neither party assumes any responsibility with respect thereto.
10. NO PARTNERSHIP. The rights, duties, obligations and liabilities of
the parties hereunder shall be several, not joint or collective. It is not the
purpose or intention of this Agreement to create any mining partnership,
commercial partnership or other partnership relation and none shall be inferred
from the agreement to file an election to be excluded from the application of
certain United States tax laws. Each party agrees to elect to be excluded from
the application of Subchapter K of Chapter 1 of Subtitle A of the Internal
Revenue Code of 1986, and all amendments thereto.
11. TRANSFER OF INTEREST. Notwithstanding the terms of any JOA, should
any party desire to sell all or any part of its interests hereunder, such party
shall promptly give written notice to the other party with full information
concerning its proposed sale, which shall include the name and address of the
prospective purchaser, the purchase price and all other terms of the offer. If
the offer is: a) for non-cash consideration; b) is part of a larger acquisition
of properties; or c) is part of a corporate merger or takeover wherein the
selling party is not the surviving entity, a cash value shall be allocated, in
good faith, in affidavit form, to apply to the interests subject to this
Agreement. The non-selling party shall then have an optional prior right, for a
period of 10 days after receipt of the notice, to purchase on the same terms and
conditions, the interest which the selling party proposes to sell, and to
allocate such purchase, in its sole discretion, to affiliates and other parties
owning an interest in such properties.
12. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns; provided, however, nothing herein contained shall be construed as
permitting an assignment contrary to the terms, conditions and provisions of
this Agreement.
13. FURTHER DOCUMENTS. The parties agree to execute such other and
further instruments and other documents as are reasonably necessary to carry out
the commercial purposes of this Agreement.
14. NOTICES. All notices hereunder shall be deemed to be properly
given, if in writing, and sent addressed as set forth below:
As to Matador: Matador E & P Company
0000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Xxxx Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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As to Unocal: Union Oil Company of California
4021-4023 Ambassador Xxxxxxx Pkwy.
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxx Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
15. BINDING ARBITRATION. Any controversy or claim arising out of, or
relating to this Agreement, or its breach, shall be settled by binding
arbitration in the county of the party against whom the breach is alleged in
accordance with the then governing rules of the American Arbitration
Association. Judgment upon the award rendered may be entered and enforced in any
court of competent jurisdiction.
16. ENTIRE AGREEMENT. This Agreement including the Exhibits attached
hereto constitutes the entire Agreement between the parties with respect to the
subject matter hereof, superseding all prior discussions, agreements and
understandings relating to the subject matter and cannot be modified or
otherwise amended except by the written consent of both parties.
17. EXISTING AGREEMENTS. This Agreement shall be subject to the terms
of the following agreements:
a. Exploration Agreement, dated February 28, 2000, by
and between Matador E & P Company, Xxxx X. Xxxxxxx,
Xxxx X. Xxxxxx, Xx., Xxxx X. Xxxxxx, Xx. Trust, Xxxx
X. Xxxxxxxx, Xx., Xxxx X. Xxxxxxx, Xxxxx X.
Xxxxxxxxx, Estate of Xxxxxxx X. Xxxxx, and Xxxxxx X.
Xxxxxxx. (Red Oak Area) (Exhibit "K")
b. Letter Agreement, dated March 13, 2000, by and
between Matador Petroleum Corporation and BK
Partners, L.P. (Xxxxx Ranch Area) (Exhibit "L")
c. Letter Agreement, dated April 17, 2000, by and
between Matador Petroleum Corporation and BK
Partners, L.P. (Xxxxx Ranch Area) (Exhibit "M")
d. Joint Operating Agreement, dated April 17, 2000, by
and between Matador Operating Company, as Operator,
and Matador E & P Company and BK Partners, L.P., as
Non-Operators. (Xxxxx Ranch Area) (Exhibit "D")
e. Letter Agreement, dated May 18, 2000, by and between
Matador Petroleum Corporation and BK Partners, L.P.
(Hill Ranch/Bonnerville/Xxxx Prairie Area) (Exhibit
"N")
f. Joint Operating Agreement, dated June 1, 2000, by and
between Matador E & P Company, as Operator, and BK
Partners, as Non-Operator. (Hill
Ranch/Bonnerville/Xxxx Prairie Area) (Exhibit "E")
PAGE 9
g. Letter Agreement, dated June 14, 2000, by and between
the Estate of Xxxxxxx X. Xxxxx and Matador Petroleum
Corporation (Red Oak Area) (Exhibit "O")
Unocal shall assume its proportionate share of the rights and
obligations of Matador set forth in the existing agreements listed in this
Paragraph 17 as they relate to the interests acquired in this Agreement. Matador
and Unocal are parties to that certain East Texas Seismic Agreement, dated
October 1, 1998 ("East Texas Seismic Agreement"). To the extent that the AMI
provided for in this Agreement overlaps with any AMI set forth in the East Texas
Seismic Agreement, the terms and provisions of this Agreement shall govern and
prevail.
18. FORCE MAJEURE. If any party fails to comply with any provision of
this Agreement, or under any JOA executed pursuant hereto, due to Force Majeure,
other than an obligation to pay money, such delay or failure to act shall not
constitute a breach of this Agreement, provided the affected party immediately
communicates the existence of such Force Majeure to the other party, uses
reasonable diligence to remedy the cause of delay or failure to perform, and
resumes or completes performance within a reasonable time after the cause of
Force Majeure is removed. "Force Majeure" shall mean any act of God, strike,
lockout, or other industrial disturbances, act of the public enemy, war,
blockade, public riot, lightning, fire, storm, flood, explosion, governmental
action, governmental delay, restraint or inaction, unavailability of equipment,
and any other inability to perform for any other cause, whether of the kind
specifically enumerated above or otherwise which is not reasonably within the
control of the party claiming suspension, including rig availability or the
availability of equipment or services necessary to perform a given obligation.
19. CONFLICT OF AGREEMENTS. In the event of a conflict between this
Agreement and the Xxxxxxx Agreement or the BK Agreements, the Xxxxxxx Agreement
and/or the BK Agreements shall govern and prevail. If there is a conflict
between this Agreement and the form of the Assignment attached hereto as Exhibit
"B", it is agreed that this Agreement shall govern and prevail. If there is a
conflict between this Agreement and the Joint Operating Agreements attached
hereto as Exhibit "F" (Simsboro Area), Exhibit "G" (Red Oak Area), or Exhibit
"H" ("XXX XXX"), it is agreed that this Agreement shall govern and prevail.
20. RELATED PARTY TRANSACTION. Due to the fact that Unocal is a
significant shareholder of Matador, this Agreement is expressly subject to the
final approval of the Board of Directors of Matador. Each party represents and
warrants that: a) each has acted in good faith in the negotiation of this
Agreement and for the commercial purposes set forth in this Agreement; b) this
Agreement was the result of an arms-length negotiation; c) the terms contained
in this Agreement reflect reasonable and customary terms for transactions of
this type within the oil and gas industry; and, d) each party has had an
opportunity to withdraw from this Agreement after conducting due diligence and
has affirmatively elected to proceed with the transaction as provided for
herein. Each party agrees to indemnify and hold harmless the other party from
any action or loss that may occur as a result of any breach of these
representations and warranties by a party hereto.
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MATADOR E & P COMPANY
By: /s/ Xxxxx X. Manny
--------------------------------------
Xxxxx X. Xxxxx, Vice-President
UNION OIL COMPANY OF CALIFORNIA
By: /s/ Dacton Xxxxx III
--------------------------------------
Title: Attorney-in-Fact
-----------------------------------
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