Re: Letter Exploration Participation Agreement dated September 12, 2006 Arkansas, USA
Exhibit
10.1
September
19, 2006
Triangle
USA Petroleum Corporation
Xxxxx
0000, 000- 0xx
Xxxxxx
X.X.
Xxxxxxx,
Xxxxxxx X0X 0X0
Attention:
Xx. Xxx Xxxxxxx
| Re: |
Letter
Exploration Participation Agreement dated September 12,
2006
Arkansas,
USA
|
The
following shall evidence the agreement reached between Kerogen Resources Inc.
(herein referred to as the “Kerogen”) and Triangle USA Corporation (herein
referred to as “Triangle”) with respect to the following:
Triangle
commits to participate for a 50% Working Interest in the joint exploration
and
development of the prospects contained herein:
Commitment:
Triangle
shall have the right to acquire 50% of Kerogen’s land position, approximately
17,000 acres, upon execution of this agreement. In addition, Triangle will
participate in two 3-D seismic programs, on a 50/50 basis, in order to evaluate
these lands. Triangle agrees to carry a portion of Kerogen’s working interest in
the land and seismic programs, as described below. Triangle agrees to pay a
promoted cost for land and seismic up to $9,609,039 after which the costs shall
be shared 50/50.
Upon
completion of the seismic interpretation, Kerogen and Triangle shall jointly
participate in two net test xxxxx per area on or before December 31, 2007.
Triangle agrees to carry a portion of Kerogen’s working interest in the test
xxxxx as described below. Triangle agrees to pay a promoted cost for the test
xxxxx up to $3,266,340 after which the costs shall be shared 50/50.
All
of
the land, seismic and test well costs are subject to the Carried Interest
described below.
Carried
Interest:
In
addition to Triangle’s 50% share of the costs, Triangle will carry a
proportional share of Kerogen’s costs for the land, seismic, drilling and
completing of the commitment xxxxx, up to the total capital commitment listed
below, being equal to 16.6666% for a total commitment of 66.6666%. Any costs
incurred above the capital commitment listed below shall be shared
50/50.
1
Total
Capital Commitment:
|
Prospect
|
Land
and Seismic Costs
|
Commitment
Well Costs
|
Total
Cost
|
|
Arkansas
Area 1
|
$4,076,259
|
$3,266,340
|
$7,342,599
|
|
Xxxxxxxx
Xxxx 0
|
$5,532,780
|
$3,266,340
|
$8,799,120
|
|
Total
|
$9,609,039
|
$6,532,680
|
$16,141,719
|
Interest
Earned:
By
paying
its proportionate share of the land and seismic costs, as well as participating
in the test xxxxx, Triangle will earn an undivided 50% of Kerogen’s interest in
each prospect. Upon earning, Kerogen will assign 50% of its interest in all
the
leases contained within each prospect.
Area
of
Mutual Interest:
Kerogen
and Triangle hereby establish an area of mutual interest (“AMI”) for each
prospect for a term of three years. If at any time during the term of the AMI
either party acquires an interest within the AMI, such acquiring party shall
make available 50% of such acquired interest to the other party.
Failure
to Drill Commitment Xxxxx:
If
Kerogen fails to commence the drilling of any commitment well on or before
December 31, 2007 the prospect will no longer be subject to this agreement.
Kerogen will tender assignment of 50% interest in the leases for no additional
cost and Triangle will have full right of ownership as if all commitment xxxxx
had been drilled.
Additional
Terms:
All
other
terms are to be agreed between the parties using Kerogen’s standard Joint
Operating Agreements.
2
Yours
truly,
KEROGEN
RESOURCES INC.
“Xxxxxx
X. Xxxxxx”
Xxxxxx
X.
Xxxxxx
President
ACCEPTED
AND AGREED TO THIS 19th
DAY OF SEPTEMBER, 2006
“Xxx
Xxxxxxx”
Xxx Xxxxxxx
President
Triangle
USA Petroleum Corporation
3
