JOINT OPERATING AGREEMENT
For Oil and Gas Permit No. 96-04, 05, 07, 08, 09, and 00
Xxxxxx Xxxxxx Xxxxxx, Xxxxxx
This Agreement dated the 22nd day of October, 2001.
AMONG:
Rally Energy Corp., a body corporate, having an office in the City of
Calgary, in the Province of Alberta (hereinafter called "Rally"); and
Osprey Energy Limited, a body corporate having an office in the City of
Bridgewater, in the Province of Nova Scotia (hereinafter called "Osprey");
and
Energy Power Systems Limited, a body corporate, having an office in the
city of Toronto, in the Province of Ontario (hereinafter called "EPS"); and
CMB Energy Corp., a body corporate, having an office in the City of
Bedford, in the Province of Nova Scotia (hereinafter called "CMB"); and
Xxxxxxx International Resources Inc., a body corporate, having an office in
the City of Calgary, in the Province of Alberta (hereinafter called
"Xxxxxxx").
WHEREAS the parties jointly own certain Title Documents covering the Joint
Lands as more particularly set forth in Schedule "A" attached hereto and forming
part of this Agreement; and
WHEREAS the parties desire to provide for the ownership, maintenance,
exploration, development and production of petroleum substances from the Joint
Lands in the manner hereinafter set forth.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
premises and mutual covenants herein contained, the parties covenant and agree
as follows:
1. DEFINITIONS
In this Agreement, including the recitals and Schedules, unless otherwise
defined herein, the definitions contained in Clause 101 of the Operating
Procedure shall apply. In addition to such definitions in the Operating
Procedure, the following expressions shall have the respective meanings herein
assigned to them, namely:
a. "Assignment Procedure" means the 1993 form of Canadian Association of
Petroleum Landmen Assignment Procedure, including the Notice of
Assignment form, both of which are incorporated by reference into this
Agreement;
b. "Joint Lands" means the lands set forth and described in Schedule "A",
and includes the petroleum substances within, upon or under such lands
insofar as the same are held pursuant to the Title Documents, or any
lands which may from time to time remain or become subject to this
Agreement;
c. "Operating Procedure" means the 1990 CAPL Operating Procedure attached
hereto as Schedule "B", and includes the PASC Accounting Procedure
attached hereto as Exhibit 1, as amended therein; and
d. "Party" means any person, firm, corporation or partnership bound by
this Agreement,
e. "Title Documents" means the documents of title described as such in
Schedule "A", insofar as they relate to the Joint Lands, or any of
them, and any renewals, extensions, continuations or conversions
thereof effected pursuant to the Regulations or otherwise.
2. GENERAL
a. The headings of the clauses in this Agreement are inserted for
convenience of reference only and shall not affect the meaning or
construction hereof.
b. Whenever the plural or masculine or neuter is used in this Agreement,
the same shall be construed as meaning singular or feminine or body
politic or corporate and vice versa where the context so requires.
3. SCHEDULES
The following Schedules are attached to and incorporated into and form a part of
this Agreement:
a. Schedule "A" which sets forth and describes the Title Documents and
Joint Lands;
b. Schedule "B" which is the Operating Procedure to which is attached the
Accounting Procedure as Exhibit 1;
4. ASSIGNMENT PROCEDURE
Clause 2404 of the Operating Procedure is deleted in its entirety and is
replaced by the Assignment Procedure. The Assignment Procedure shall apply with
respect to any assignment of an interest in this Agreement. Notwithstanding
Clause 2.02 of the Assignment Procedure, no provision of the Assignment
Procedure shall be construed so as to make the Assignee responsible for any
obligation or liability which had arisen or accrued prior to the Transfer Date
(as defined in the Assignment Procedure).
5. EFFECTIVE DATE
The Effective Date of this Agreement shall be October 23, 2001.
6. OPERATING PROCEDURE
a. From and after the Effective Date hereof, the parties shall bear all
costs and expenses paid or incurred under this Agreement and shall own
the Title Documents, the Joint Lands, all xxxxx thereon and
information obtained therefrom, the equipment pertaining thereto and
petroleum substances produced therefrom, and shall conduct operations
thereon in accordance with the Operating Procedure which together with
the body of this Agreement shall thereafter govern the relationship
between the parties in the following respective undivided working
interests:
Rally 55.0%
Osprey 10.0%
EPS 25.0%
CMB 5.0%
Xxxxxxx 5.0 %
-----
100.0%
b. As of the Effective Date, Rally is hereby appointed Operator of the
Joint Lands under the Operating Procedure and hereby accepts such
appointment and agrees to act in such capacity in accordance with the
provisions of the Operating Procedure.
7. WARRANTY OF TITLE
No party warrants title to its working interest in the Title Documents
or the Joint Lands. Each party covenants that it has complied with the
terms of the Title Documents to the extent necessary to keep them in
full force and effect and has good right, full power and authority to
enter into this Agreement and represents that it has not, as of the
Effective Date, received any notice of default in respect thereof. No
party warrants any better title than it now holds by virtue of the
Title Documents.
8. ENCUMBRANCES
If the interest of a party in the Joint Lands is now or hereafter
becomes encumbered by any royalty, excess royalty, overriding royalty,
production payment, carried interest or other charge of a similar
nature (herein called "encumbrances"), other than the royalties payable
under the Title Documents to the grantors thereof or as otherwise
identified herein, such encumbrances shall be charged to and paid
entirely by the party whose interest is or becomes encumbered. Such
party shall ensure that any such encumbrances shall either be
terminated upon that party ceasing to have an interest in the Joint
Lands so encumbered or shall be assumed by the transferee to which such
party transfers its interest, PROVIDED HOWEVER, that in no event shall
a party hereto acquiring an interest in the Joint Lands by virtue of
the operation of any provision of the body of this Agreement or of the
Operating Procedure (except for Clause 2401 B of the Operating
Procedure, where applicable), ever be required to assume any part of
such encumbrances, and the party which has so encumbered its interest
shall at all times indemnify and hold the other parties harmless.
9. FURTHER ASSURANCES
Each of the parties shall from time to time do such further acts and
execute and deliver all such further deeds and documents as shall be
reasonable required in order to fully perform and carry out the terms
of this Agreement.
10. MISCELLANEOUS
a. If any term or condition of this Agreement conflicts with a term or
condition in the Title Documents then such term or condition in the
Title Documents shall prevail and this Agreement shall be deemed to be
amended to the extent necessary to give effect to such term or
condition in the Title Documents concerned, and those Joint Lands
thereby covered. If any term or condition of this Agreement conflicts
with a term or condition of a parcel(s), then such term or condition
in the parcel(s) shall prevail and this Agreement shall be deemed to
be modified accordingly.
b. Wherever any term or condition, express or implied, of any such
Schedule, including the Operating Procedure, conflicts with or is at
variance with any term or condition of this Agreement, such term or
condition of this Agreement shall prevail.
c. This Agreement and the relationship between the parties shall be
construed and determined according to the laws of the Province of
Alberta. The paties agree to submit to the jurisdiction of the courts
of the Province of Alberta.
d. The terms of this Agreement express and constitute the entire
agreement between the parties and no implied covenant or liability of
any kind on the part of the parties is created or shall arise by
reason of these presents or anything contained in this Agreement.
e. This Agreement replaces and supersedes all prior agreements,
documents, writings and verbal understandings between the parties
relating to the Joint Lands and the Title Documents.
f. Subject to the terms herein, this Agreement shall be binding upon and
enure to the benefit of the parties and their respective successors
and permitted assigns.
g. This Agreement may be executed in counterpart and all of the executed
counterparts, when taken together, shall constitute one Agreement.
IN WITNESS whereof the parties have executed this Agreement as of the
date first written above.
Rally Energy Corp. Osprey Energy Limited
Per: Original "Signed" Per: Original "Signed"
----------------- ------------------
Per: Original "Signed" Per: Original "Signed"
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CMB Energy Corp. Xxxxxxx International Resources Inc.
Per: Original "Signed" Per: Original "Signed"
------------------ ------------------
Per: Original "Signed" Per: Original "Signed"
------------------ ------------------
Energy Power Systems Limited
Per: Original "Signed"
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Per: Original "Signed"
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Schedule "A"
Attached to and forming part of a Joint Operating Agreement dated the 23rd day
of October, 2001 between Rally Energy Corp., Ltd., Osprey Energy Limited, Energy
Power Systems Limited, CMB Energy Corp., and Xxxxxxx International Resources
Inc.
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TITLE DOCUMENTS:
Xxxxxx Xxxxxx Island Crown Oil and Gas Permit Xx. 00-00, 00, 00, 00, 00, 00, 00.
JOINT LANDS:
O&G Permit No.: Grid Areas:
96-04 46 degrees 30 minutes N. Lat. 63 degrees 45 minutes W. Long.
S. Half 46 degrees 40 minutes N. Lat. 63 degrees 45 minutes W. Long.
Acreage: 116,279
96-05 46 degrees 20 minutes N. Lat. 63 degrees 15 minutes W. Long.
Acreage: 58,139 (South half and NE Quad.)
96-07 46 degrees 20 minutes N. Lat 63 degrees 30 minutes W. Long
NE Quad 46 degrees 20 minutes N. Lat 63 degrees 45 minutes W. Long
Acreage: 96,898
96-08 46 degrees 20 minutes N. Lat 63 degrees 00 minutes W. Long
S. Half 46 degrees 30 minutes N. Lat 63 degrees 00 minutes W. Long
Acreage: 116,279
96-09 46 degrees 20 minutes N. Lat 62 degrees 45 minutes W. Long
46 degrees 30 minutes N. Lat 62 degrees 45 minutes W. Long
Acreage: 116, 279
96-10 46 degrees 10 minutes N. Lat 63 degrees 00 minutes W. Long
(NE Quad.)
Acreage: 21,983
For all permits, all PNG rights, surface to basement.
REGISTERED INTEREST OWNERS as of August 27, 2001:
Xxxxxx Xxxxxx Gas Company Inc. 10%
CMP Energy Corporation 25%
Energy Power Systems 25%
Osprey Energy Limited 10%
Rally Energy Corporation 30%
ENCUMBRANCES: Crown Royalty
Schedule "B"
Attached to a Joint Operating Agreement dated the 23rd day of October, 2001,
among Rally Energy Corp., Osprey Energy Limited, Energy Power Systems Limited,
CMB Energy Corp. and Xxxxxxx International Resources Inc.
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1990 CAPL OPERATING AGREEMENT
I. Insurance (Clause 311) Alternate A
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II. Marketing Fee (Clause 604) * Alternate A
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III. Casing Point Election (Clause 903) Alternate A
--------------------- ----
IV. Penalty for Independent Operations (Clause 1007) Development xxxxx 300 %
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Exploratory xxxxx 500 %
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V. Title Preserving well (Clause 1010) 365 days
--------------------- -----
VI. Disposition of Interests (Clause 2401) Alternate A
------------------------ ----
VII. Recognition Upon Assignment (Clause 2404) Alternate Delete; superceded by the 1993 CAPL Assignment Procedure
--------------------------- ----------------------------------------------------------
1996 PASC ACCOUNTING PROCEDURE
I. Operating Advance (Clause 105) Proportionate share of 10 %
----------------- -----
II. Approvals (Clause 110) 2 or more parties totaling 75 %
--------- ----- -----
III Expenditure Limits (Clause 112) (a) $100,000 (c) $25,000
------------------ --------- -------
IV. Employee Benefits (Clause 202(b) 25 %
----------------- ------
V. Housing (Clause 213(b)) Shall be chargeable
------- ------
V. Warehouse Handling (Clause 2l6) 5 %
------------------ --
VI Allocation Options (Clause 221) Delete
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VI. Overhead Rates (Clause 302)
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(a) For each Exploration Project:
(1) 5 % of first $ 50,000.00
---- ------------
(2) 3 % of next $ 150,000.00
---- ------------
(3) 1 % of cost over $ 200,000
---- ---------
(b) For each Drilling Well:
(1) 3 % of first $ 50,000.00
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(2) 2 % of next $ 150,000.00
----- ---------------
(3) 1 % of cost over $ 200,000
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(c) For each Initial Construction:
(1) 5 % of first $ 50,000.00
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(2) 3 % of next $ 150,000.00
----- ---------------
(3) 1 % of cost over $ 200,000
----- -----
(d) For each Construction Project:
Flat N/A
----
OR
(1) 5 % of first $ 50,000.00
-- --------------
(2) 3 % of next $ 150,000.00
-- ----------
(3) 1 % of cost over $ 200,000
-- ---------
(e) For Operation and Maintenance:
(1) 10 % of the cost; and
-----
(2) $ 250.00 per month for producing well per month; or
---------
(3) --- flat rate per month for producing, injection
--------- and water source operations
The rates in Subclauses (e)(2) and (e)(3) will /will not X be adjusted as
of the first day of July each year.
VII. Dispositions (Clause 406)
------------
$25,000.00 for requiring approval.
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