EXHIBIT 3.6
BIRD CREEK RESOURCES, INC.
0000 Xxxxx Xxxxxxx, Xxxxx 000
Xxxxx, Xxxxxxxx 00000-0000
(000) 000-0000
Fax (000) 000-0000
March 7, 2002
Xxxx XxXxxx
Arena Resources, Inc.
0000 X. Xxxxx, Xxxxx 000
Xxxxx, XX 00000
RE: Farmout Agreement
Auntie EM Prospect
Xxxxxxx & Xxxx Counties, Kansas
Gentlemen:
This farmout agreement is in response to our letter of February 19, 2002
concerning Arena Resources, Inc. desire to acquire an interest in Bird
Creek Resources, Inc. and its partners holdings in the captioned lands
(herein also referred to as the "Farmout Acreage"). In consideration of the
mutual covenants and agreements hereinafter set forth, it is agreed by the
parties as follows, to wit:
1. On or before June 1, 2002, Arena Resources, Inc. shall commence or
cause to be commenced the actual drilling of an initial test well to a
depth sufficient to test the Chase formation. Arena Resources, Inc. shall
drill such well at a legal location, to be selected solely by Arena
Resources, Inc., that will be on or which spacing will include the SW/4
Section 19-27S-30W; NW/4 Section 30-27S-30W in Xxxx County, Kansas and the
SE/4 Section 24-27S-31W; NE/4 Section 25-27S-31W in Xxxxxxx County, Kansas.
The only consequence of Arena Resources, Inc. failure to drill the proposed
Test Well hereinabove provided for shall be the ipso facto cancellation of
this Agreement in its entirety.
2. Upon completion of the initial test as a well capable of producing oil
and/or gas in commercial quantities, Arena Resources, Inc. shall have
earned and Bird Creek Resources, Inc. and its partners shall assign to
Arena Resources, Inc. an eighty percent (80%) net revenue interest in all
of their right, title and interest in and to the Farmout Acreage allocated
to the production, spacing or proration unit for such well, from the
surface down to 100 feet below the stratigraphic equivalent of the total
depth drilled in said well, or to the base of the Chase formation,
whichever is the lesser depth, subject to a proportionate reduced twenty-
five percent (25%) working interest back-in after payout. "Payout" as used
herein shall be defined as the recovery of 100% of the drilling, equipping,
completing and operating said test well. Payout as herein defined shall be
effective the 1st day of the 1st month following the occurrence of payout.
3. Arena Resources, Inc. shall have the option, to be initially exercised
within one year following the completion of the initial test well, to
commencing the drilling of an additional well at legal location, to be
selected solely by Arena Resources, Inc. within said Farmout Acreage.
4. Arena Resources, Inc. shall notify Bird Creek Resources, Inc. of the
selected location and proposed spud date to commence drilling the
subsequent well. Bird Creek Resources, Inc. and its partners shall, within
thirty days following receipt of such information, but in no event less
than five (5) business days prior to the proposed spud date, advise Arena
Resources, Inc. that Bird Creek Resources, Inc. and its partners intends to
(1) participate in such well with its working interest, or (2) farmout its
interest to Arena Resources, Inc., reserving an option to back-in for a
twenty-five percent (25%) working interest at payout.
5. Upon completion of each subsequent well capable of producing oil
and/or gas in commercial quantities, Arena Resources, Inc. shall have
earned and Bird Creek Resources, Inc. and its partners shall assign to
Arena Resources, Inc. a minimum of an eighty percent (80%) net revenue
interest in all of Bird Creek Resources, Inc. right, title and interest in
and to the Farmout Acreage allocated to the production or proration unit
for each such subsequent well, from the surface down to 100 feet below the
stratigraphic equivalent of the total depth drilled in said well, or to the
base of the Chase formation, whichever is the lesser depth.
6. Arena Resources, Inc. shall furnish all geological and well
information on any well drilled hereunder.
7. As to payout of the test well and subsequent well, Arena Resources,
Inc. and Bird Creek Resources, Inc. agree to be subject to the terms of
that certain Joint Operating Agreement dated June 22, 2001 and the
Exploration Agreement date covering the Auntie EM Prospect and its
leasehold acreage naming Arena Resources, Inc. as Operator for the proposed
Chase Test well, which JOA shall be agreed upon, attached to, and made a
part of this Agreement as Exhibit "A".
8. This Agreement is personal in nature and may not be assigned without
our written consent being first obtained. When requesting consent to make
an assignment of all or portion of this Agreement you will advise the
parties to whom the assignment will be made.
9. In the drilling of the Test Well and otherwise complying with the
terms and provisions of this Agreement, Arena Resources, Inc. is acting
independently of Bird Creek Resources, Inc. and it partners and not as a
partner in any capacity, mining or otherwise. Bird Creek Resources, Inc.
and its partners shall have no responsibility whatsoever in connection with
the drilling of said test well and it shall be drilled at Arena Resources,
Inc. sole cost, risk and expense. Arena Resources, Inc. further agree to
hold Bird Creek Resources, Inc. and its partners harmless from any and all
debts, claims or damages incurred in connection with the performance of
this Agreement.
It is understood and agreed that Time is of the Essence. If the terms and
provisions of this Agreement in its entirety are acceptable, please sign in
the space provided and return one executed copy of this Agreement to our
office within the next 10 day. Failure to do so will result in the
cancellation of this Agreement at our option.
Sincerely,
Bird Creek Resources, Inc.
/s/ Xxxxxx X. Xxxxxxxx
Vice President - Land
Accepted and approved to this 12th day of March, 2002.
Arena Resources, Inc.
BY: /s/ Xxxxxxx XxXxxx
